TIDMTOOP
RNS Number : 0247Z
Toople PLC
15 May 2019
Strictly embargoed until: 07.00, 15(th) May 2019
Toople PLC
("Toople" or the "Company")
Interim results for the six months ended 31 March 2019
Toople PLC (LSE: TOOP), a provider of bespoke telecom services
to UK SMEs, today announces interim results for the six months
ended 31 March 2019.
Commenting on the results Richard Horsman Non-Executive Chairman
said:
"We continue to add more customers, typically on two year fixed
term contracts. Our growing customer base will result in a lower
cost of acquisition per customer and will boost our future outlook.
We are now seen as a major disruptor in the SME telecommunications
space, and we are being benchmarked against by a major tier one UK
carrier. Our competitors find our transparency and fixed price
contracts unsettling as this clearly appeals to small businesses.
The major incumbents have traditionally used 'increase in price'
strategies linked to RPI. We offer a product that provides
customers with exactly what they need, at a fixed price and are
increasingly becoming a natural choice for customers looking for an
easy to use, no hidden costs, telecoms service."
Financial and Operational Highlights:
-- Group revenue grew year on year by 57% to GBP1.08m for the six month period
o 169% revenue growth attributable to our directly contracted
SME business
o Broadband revenue grew by 159%
o Cloud telephony revenue grew by 82%
o Mobile revenue grew by 124%
o 7% decline in wholesale revenue - largely expected as we take
action to eliminate legacy, low margin revenue
-- Gross profit increased by 150% (up 72% on H2 2018)
-- Gross margins improved by 7 percentage points over same period last year
-- 80% increase in marketing spend (102% higher than H2 2018)
reflecting increased level of spending to grow the business,
driving significant increase in lead conversion and sales, which
will ultimately lead to a lower cost of acquisition per
customer
-- New Head of Digital and Commercial Marketing appointed
focussed on driving growth, innovation and sales
-- Major contract win of GBP3.5m as previously announced
performing in line with expectations and the first batches of
customers have been transferred over to the Toople billing
platform
-- New contract wins and partnership agreements continue,
validating management decision to increase marketing spend
-- Strong current trading including a record month in April 2019
and a healthy new business pipeline, with over 900 orders in the
month from over 600 small businesses placing orders with Toople for
the first time
-- Cash at period end of GBP1.15 million in-line with
expectations and sufficient to allow business to continue with the
growth plan outlined at time of Placing completed in September
2018
Commenting on summary and outlook, Andy Hollingworth, CEO at
Toople added:
"This has been an excellent six months for the Company. We
continue to execute on our growth strategy and are performing well
against all our key operational and financial benchmarks. Our cash
position as at 31 March 2019 stood at GBP1.15m and the Board
believes that the current cash position is sufficient to allow the
business to continue to pursue the marketing strategy outlined at
the time of our Placing. The investments we have made in people and
digital marketing are paying off. In our direct business we
continue to generate an increased level of enquiries from potential
customers and our conversion rate remains strong. Additionally, our
decision to move away from onerous historic partnership contracts
with high debtor risk and low margin, will sacrifice revenue in the
short term, but will deliver overall improvement in gross margins
and ultimately profitability. Current trading is strong with
another record month in April and a healthy new business pipeline,
with over 900 orders in the month from over 600 small businesses
placing orders with Toople for the first time. We believe we can
still grow our customer acquisition rate with the same level of
marketing spend and will be able to drive further efficiencies with
our marketing and sales performance. We look forwards with
confidence."
This announcement contains inside information for the purposes
of Article 7 of the Regulation (EU) No 596/2014 on market
abuse.
-ends-
For further information please visit www.toople.com or
contact:
Toople PLC Tel: 0800 0499 499
Andy Hollingworth, Chief Executive
Officer /
Kevin Lawrence, Chief Financial
Officer
Cairn Financial Advisers LLP Tel: 020 7213 0880
David Coffman / Richard Nash
Novum Securities Limited Tel: 020 7399 9400
Colin Rowbury
Turner Pope Investments Limited Tel: 020 3621 4120
Andy Thacker
Belvedere Communications Tel: 020 3687 2754
John West / Llew Angus
About Toople PLC
Toople Plc, a company incorporated in the UK provides a range of
telecoms services primarily targeted at the UK SME market. Services
offered by the Group include business broadband, fibre, EFM and
Ethernet data services, business mobile phones, cloud PBX and SIP
Trunking and Traditional Services (calls and lines) all of which
are delivered and managed through Merlin, the Group's proprietary
software platform.
The Group is differentiated by its focus on creating small
business connectivity solutions, with robust and reliable packages
that will enhance our customer's companies. In addition, our vision
is based on trust and transparency, with no hidden fees within our
pricing policy providing customers with a clear understanding of
cost.
Toople Plc has a strong and highly experienced Board and
management team who are focused on growing the business both
organically and by identifying earnings enhancing strategic
acquisition opportunities.
Chairman's Statement
Introduction
UK Small and Medium Enterprises (SMEs) continue to switch to
Toople and we have seen record numbers of new customers signing up
with us. For customers who want certainty and ease of use, Toople
is a natural choice. Our fixed rate propositions satisfy all SME
telecommunications needs; broadband, cloud telephony and mobile.
Our pricing is transparent and we have UK-based support desks
offering premium quality customer service, which makes us unique.
Our products are flexible and carrier agnostic.
Underlying market dynamics and our product mix change all the
time, but we consistently make progress towards becoming the
leading provider of fixed price and transparent telecommunication
services to UK SMEs. Our customer satisfaction scores are positive,
especially when compared to other UK providers. We continue to grow
both by adding new customers as well as selling add-ons to existing
customers, typically on two-year fixed term contracts, giving us an
increasing degree of revenue visibility. Our success is being
driven by our digital marketing strategy and the investments we
have made in this area are clearly paying off.
Another growth driver for us is our partnership agreements. As
previously indicated, we have evaluated this area of our business
following the appointment of a new dedicated partner channel
manager and following an assessment of our legacy contracts, the
majority of which were signed before our IPO. We are now focused on
signing new partnership agreements that deliver gross margin
improvements. Furthermore, as old contracts come to an end we will
either renegotiate them on better terms or else terminate those
which provide risk without sufficient reward.
Our growing customer base will result in a lower cost of
acquisition per customer and will boost our future outlook, as
operational automation further develops and we start to see average
revenue per user improve. We are now seen as a major disruptor in
the SME telecommunications space, and Toople is being benchmarked
against by a major tier one UK carrier. Our competitors find our
transparency and fixed price contracts unsettling as this clearly
appeals to small businesses. The major incumbents have
traditionally used 'increase in price' strategies linked to RPI. We
offer a product that provides customers with exactly what they
need, at a fixed price and are increasingly becoming a natural
choice for customers looking for an easy to use, no hidden costs,
telecoms service.
Macroeconomic factors, such as Brexit uncertainty, do not
negatively affect Toople; as all our customers are UK SMEs and now,
perhaps more than ever, they need our fixed price propositions as
it is business critical and it allows full cost visibility.
Our cash position as at 31 March 2019 stood at GBP1.15m and the
Board believes that the current cash position is sufficient to
allow the business to continue to pursue the marketing strategy
outlined at the time of our Placing that was completed in September
2018. We are on a strong growth trajectory and momentum is with us.
As planned, we have increased our marketing spend, which is
required to grow the business, but we believe this will lead to a
commensurate increase in customer numbers and we have a strategy in
both our direct business as well as with our partnership contracts
to maintain and improve gross margins, even if this means
sacrificing short term revenue growth.
These initiatives and our excellent product offering and
customer service will, we believe, ultimately set us on the road to
achieve our stated goal of long term future profitability.
Richard Horsman
Non-Executive Chairman
CEO's Review
Overview
In our last six months, we have continued to work hard at
further developing the Toople brand and ensuring it is front of
mind for SMEs. We have said before that we aim to be disruptive in
an industry dominated by old legacy providers who are well known to
the market but do not have as attractive an offering as we do.
There is proof that these goals are being achieved; a well-known
tier one UK provider has recently started using Toople as the
number one comparator against which they market their products.
Industry benchmarking by an established provider of its pricing and
service offering against ours is a clear indicator of how far we
have come in a short space of time.
Financial and Operational Performance
Financially and operationally we have exceeded or performed at
least in line with all our KPIs. Group revenue grew year on year by
an impressive 57% to GBP1.08m. Revenue growth excluding our
wholesale business was even stronger at 169%, justifying our
decision to invest in digital marketing and our in-house sales
team. The cost of new customer acquisitions is declining and we are
generating new incremental business for the Company with existing
customers providing an increasing number of orders.
Within our business all our segments improved. Broadband revenue
grew by 159%, cloud telephony revenue grew by 82% and mobile
revenue grew by 124%. An overall increase in the number of Revenue
Generating Units (RGUs) has led to a growth in gross profit, which
increased by 150% (up 72% on H2 2018). Gross margins have also
improved by 7 percentage points over the same period last year,
given the strategic investments which we have made to drive future
profitability. Although EBITDA has declined when compared to last
year, this is as a result of the continued investment in marketing
related activities to grow the business. Our operating loss was
GBP0.8m compared with GBP0.7m. This performance is in line with our
expectations at this stage of the Company's development.
Overall marketing costs increased by 80% (105% higher than H2
2018) reflecting an increased level of spending to grow the
business, driving a significant increase in lead conversion and
sales, which ultimately will result in a lower cost of acquisition
per customer.
The increase in costs from our investment in bringing the sales
team in-house and in digital marketing are driving an increase in
lead conversion and sales. The majority of these new clients are on
two-year fixed contracts, giving us clear visibility of earnings.
The major contract win previously announced is performing in line
with expectations and the first batches of customers have been
transferred over to the Toople Merlin billing and provisioning
platform.
As discussed in the Chairman's statement, our legacy contracts
have historically delivered low gross margins and our strategy is
now to only sign partnership agreements which are more profitable,
as well as renegotiating or terminating historic unattractive
contracts as they come to an end. As a result we have continued to
sign a number of new agreements, but only where we are satisfied
that debtor risk is low and margins are attractive. This strategy
and the termination of onerous partnership agreements means that in
the short term we might see headline revenues decline, but the
overall margin mix is improved and this will result in improved
gross margin for the business.
Market
The Government continues to expand the availability of superfast
broadband. All indications are that the demand of broadband and
broadband solutions will grow as more users gain access to high
speed fibre networks. We also continue to see an increased demand
for cloud based technology solutions which are a key driver for new
customer acquisitions.
All our products are delivered and managed through Merlin, the
Group's proprietary software platform. Merlin provides an
end-to-end automated process that allows customers to place orders
easily and enables the business to grow its customer base, without
the need to scale expensive resources. This helps support one of
our key differentiators - quality of customer service. There
continues to be consolidation in our sector, with notable deals
recently announced such as the proposed acquisition of KCOM Group
for in excess of GBP500 million who were a major player in the UK
SME market. Over time we believe we will have a role to play in
this M&A activity.
Customer acquisition and service
Toople's approach to customer acquisition is to deploy a
marketing and advertising strategy aimed at delivering high-levels
of online market penetration, either directly or via affiliate
sites in order to increase brand awareness. The focus is on
attracting customers through the quality and transparency of
Toople's products and retaining them through their service
experience once they are live. This provides opportunities for us
to progressively grow the number of solutions they purchase.
Summary and Outlook
Toople propositions continue to be disruptive and competitive in
the market. Whether business confidence grows or shrinks,
businesses need to remain connected and we offer the best
telecommunications technology at a fixed price that will always
remain attractive against sluggish incumbents.
This has been an excellent six months for the Company. We
continue to execute our growth strategy and are performing well
against all our key operational and financial benchmarks. In our
direct business we continue to generate an increased level of
enquiries from potential customers and our conversion rate remains
strong. Additionally, our decision to move away from onerous
historic partnership contracts with high debtor risk and low
margin, will sacrifice revenue in the short term, but will deliver
overall improvement in gross margins and ultimately
profitability.
Current trading is strong with another record month in April and
a healthy new business pipeline, with over 900 orders in the month
from over 600 small businesses placing orders with Toople for the
first time. We believe we can still grow our customer acquisition
rate with the same level of marketing spend and will be able to
drive further efficiencies with our marketing and sales
performance. We look forwards with confidence.
Andrew Hollingworth
Chief Executive Officer
Principal risks and uncertainties relating to the Company's
business strategy
The Group is subject to a number of risk factors. The Company's
prospectus published at the time of its Standard Listing and the
further prospectuses published in June 2017 and September 2018
included detailed assessments of the risks facing the business. The
Directors have remained cognisant of the following key risks in the
first six months of this financial year. Other risk factors not
presently known or currently deemed immaterial may also apply.
-- The Company is dependent on the ability of the Directors to
implement the Company's strategy and significantly increase
customer numbers. There is no assurance that the Company's business
strategy will ultimately be successful;
-- The Group operates in a competitive market and may not be
able to sell multiple products to customers;
-- The loss of, or inability to attract, key personnel could adversely affect the Group;
-- The technology upon which the Group's products and services
are based may become obsolete; in
particular, the Group is reliant on the technical robustness of its software platform;
-- An increase in supplier costs could result in significantly reduced gross profit margins;
-- The Group is currently dependent on marketing spend to
generate customers. The Group may not be able to acquire customers
at a cost that will generate sufficient gross profit margins for
the Group, particularly if competition in the market increases;
-- The Company may not be able to secure capital to provide
working capital for the Group to drive the
growth of the business on terms acceptable to the Group, or at all
-- The ownership and use of intellectual property by the Group
may be challenged by third parties or otherwise disputed;
-- From time to time the Group may be subject to complaints or
claims in the normal course of business;
-- The Company is exposed to the risk that third parties that
owe the Group money, securities or other assets may not fulfil
their obligations. These parties may default on their obligations
due to bankruptcy, lack of liquidity, operational failure or other
reasons;
-- The Group's performance could be adversely affected by poor economic conditions;
-- The Group's infrastructure and systems could be targeted by cyber-attacks;
-- The pricing environment in the telecoms industry could become more difficult;
-- The UK telecoms market is subject to regulation by Ofcom and
subject to high incidence of fraud and bad debt risk;
-- New data protection legislation ("GDPR") became effective on
25(th) May 2018. The Group relies on
assurances from its data suppliers that such data is compliant.
The Directors seek to mitigate these risks by applying their
considerable experience of operating businesses in the sector and
by devising trading and operating strategies designed to seek out
and exploit profitable trading opportunities whilst seeking to
protect the business from downside risks.
Responsibility Statement
The Directors are responsible for preparing the Interim Report
in accordance with the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority ('DTR') and with
International Accounting Standard 34 on Interim Financial Reporting
(IAS 34).
The Directors confirm that the interim financial statements have
been prepared in accordance with IAS 34 and that as required by DTR
4.2.7 and DTR 4.2.8, the Interim Report includes a fair review
of:
-- important events that have occurred during the first six months of the year;
-- the impact of those events on the financial statements;
-- a description of the principal risks and uncertainties for
the remaining six months of the financial year;
-- details of any related party transactions that have
materially affected the Company's financial position or performance
in the six months ended 31 March 2019; and
-- any changes in the related parties transactions described in
the last annual report that could have a material effect on the
financial position or performance of the enterprise in the first
six months of the current financial year.
The Directors who served during the period and up to the date of
signing the interim financial statements were:
Richard Horsman
Geoffrey Wilson
Andrew Hollingworth
Kevin Lawrence
Company Secretary:
WKH Company Secretary Services
By Order of the Board
Andrew Hollingworth
Chief Executive Officer
15 May 2019
Condensed Consolidated Statement of Comprehensive Income
The condensed consolidated statement of comprehensive income of
the Group for the six month period from 1 October 2018 to 31 March
2019 is set out below.
NOTE
Period Ended Period Ended
31 Mar 2019 31 Mar 2018
GBP GBP
------------------------------ ----- --------------- ---------------
Continuing operations
Revenue 1,084,078 689,769
Cost of Sales (876,584) (606,816)
------------------------------ ----- --------------- ---------------
Gross Profit 207,494 82,953
Other Income 51,715 50,891
Administrative expenses (1,077,698) (821,788)
Operating loss (818,489) (687,944)
Interest payable and similar
charges (29,225) (26,455)
Interest receivable 4,135 366
------------------------------ ----- --------------- ---------------
Loss before taxation (843,579) (714,033)
Taxation - -
------------------------------ ----- --------------- ---------------
Loss for the period (843,579) (714,033)
Other comprehensive loss for - -
the period
------------------------------ ----- --------------- ---------------
Total comprehensive loss for
the period attributable to
the equity owners (843,579) (714,033)
------------------------------ ----- --------------- ---------------
Earnings per share
Basic and diluted earnings
per share 5 (0.09) (0.35)
------------------------------ ----- --------------- ---------------
Condensed Consolidated Statement of Financial Position
The condensed consolidated statement of financial position as at
31 March 2019 is set out below:
As at As at
31 Mar 19 30 Sep 18
NOTE GBP GBP
---------------------------------------- ------------ ------------
ASSETS
Non-current assets
Intangible Assets 84,271 42,375
Current assets
Trade and other receivables 456,366 301,415
Cash and cash equivalents 1,147,509 2,144,209
------------------------------------ ------------ ------------
1,603,875 2,445,624
------------------------------------ ------------ ------------
Total assets 1,688,146 2,487,999
------------------------------------ ------------ ------------
EQUITY and LIABILITIES
Capital and reserves attributable
to equity shareholders
Share capital 6 636,572 636,572
Share premium 4,921,145 4,923,336
Merger reserve (25,813) (25,813)
Share-based payment reserve 255,099 255,099
Capital contribution reserve 5,014 34,239
Accumulated deficit (5,275,487) (4,461,133)
------------------------------------ ------------ ------------
Total equity 516,530 1,362,300
------------------------------------ ------------ ------------
Current liabilities
Trade and other payables 7 570,289 553,597
Non-current liabilities
Financial liabilities - borrowings 601,327 572,102
Total equity and liabilities 1,688,146 2,487,999
------------------------------------ ------------ ------------
Condensed Consolidated Statement of Changes in Equity
The unaudited condensed consolidated statement of changes in
equity of the Group for the period to 31 March 2019 is set out
below:
Share Share Merger Share Capital Accumulated Total
capital premium reserve Based contribution deficit
Payment Reserve
reserve
--------------------- --------- ---------- --------- --------- -------------- ---------------- --------------
CURRENT YEAR GBP GBP GBP GBP GBP GBP GBP
Brought forward
at 1 October
2018 636,572 4,923,336 (25,813) 255,099 34,239 (4,461,133) 1,362,300
Loss for the
period - - - - - (843,579) (843,579)
--------------------- --------- ---------- --------- --------- -------------- ---------------- --------------
Total comprehensive
loss for the
period - - - - - (843,579) (843,579)
Transactions
with owners
Additional
share issue
costs - (2,191) - - - - (2,191)
Transfer of
interest accrued - - - - (29,225) 29,225 -
--------------------- --------- ---------- --------- --------- -------------- ---------------- --------------
At 31 March
2019 636,572 4,921,145 (25,813) 255,099 5,014 (5,275,487) 516,530
--------------------- --------- ---------- --------- --------- -------------- ---------------- --------------
Share Share Merger Share Capital Accumulated Total
capital premium reserve Based contribution deficit
Payment Reserve
reserve
--------------------- --------- ---------- --------- --------- -------------- ------------ ----------
PRIOR PERIOD GBP GBP GBP GBP GBP GBP GBP
Brought
forward
at 1 October
2017 117,084 3,261,279 (25,813) 114,417 88,499 (3,289,350) 266,116
Loss for
the period - - - - - (714,033) (714,033)
--------------------- --------- ---------- --------- --------- -------------- ------------ ----------
Total comprehensive
loss for
the period - - - - - (714,033) (714,033)
Transactions
with owners
Share-based
payment
charge credited
to equity - - - 31,575 - - 31,575
Issue of
share capital
net of share
costs 18,927 258,577 - - - - 277,504
Transfer
of interest
accrued - - - - (26,455) 26,455 -
--------------------- --------- ---------- --------- --------- -------------- ------------ ----------
At 31 March
2018 136,011 3,519,856 (25,813) 145,992 62,044 (3,976,928) (138,838)
--------------------- --------- ---------- --------- --------- -------------- ------------ ----------
Condensed Consolidated Statement of Cash Flows
The condensed consolidated cash flow statement of the Group from
1 October 2018 to 31 March 2019 is set out below:
Period ended Period ended
------------------------------------------- ----
31 Mar 2019 31 Mar 2018
------------------------------------------- --- ------------- -------------
GBP GBP
Cash flows from operating activities
Operating loss (818,489) (687,944)
Depreciation and amortisation 7,404 4,450
Share-based payment charge - 31,575
Changes in working capital
Increase in receivables (154,951) (66,353)
Increase / (decrease) in payables 16,692 (6,322)
------------------------------------------------- ------------- -------------
Net cash outflow from operating
activities (949,344) (724,594)
------------------------------------------------- ------------- -------------
Cash flows from financing activities
Proceeds from issues of share
capital (net of issue costs) (2,191) 277,504
Finance costs - -
Net cash from financing activities (2,191) 277,504
------------------------------------------------- ------------- -------------
Cash flows from investing activities
Acquisition of intangible assets (49,300) -
Interest received 4,135 366
Net cash from investing activities (45,165) 366
------------------------------------------------- ------------- -------------
Net increase in cash and cash equivalents (996,700) (446,724)
Cash and cash equivalents at
start of year 2,144,209 820,767
------------------------------------------------- ------------- -------------
Cash and cash equivalents at
end of year 1,147,509 374,043
------------------------------------------------- ------------- -------------
Notes to the Condensed Consolidated Interim Report
1. General information
The Company was incorporated in England and Wales on 2 March
2016 as a public limited company. The Company's registered office
is located at PO Box 501, The Nexus Building, Broadway, Letchworth
Garden City, Hertfordshire, SG6 9BL.
The Group provides a range of telecoms services primarily
targeted at the UK SME market. Services offered by the Group
include business broadband, fibre, Ethernet First Mile and Ethernet
data services, business mobile phones, cloud PBX and SIP Trunking
and traditional services (calls and lines) all of which are
delivered and managed through Merlin, the Group's proprietary
software platform.
On 15 April 2016, the Company entered into four share for share
exchange agreements with David Breith pursuant to which the Company
acquired the entire issued share capital of each of Toople.com
Limited, Toople Finance Limited, Toople Management Services Limited
and AskMerlin Limited (together the "Subsidiaries") in
consideration for the issue and allotment to David Breith of
39,000,000 ordinary shares in the Company.
The Directors consider the substance of the acquisition of the
Subsidiaries by the Company to have been a reverse asset
acquisition by the Subsidiaries and that the substance of the
Subsidiaries was that of a single business under common ownership
and control. Further, the Directors consider that the Company did
not meet the definition of a business set out in IFRS3 'Business
combinations'. As a consequence, the Directors consider that the
transaction which gave rise to the formation of the Group fell
outside the scope of IFRS3 and have applied the business
reorganisation principles of UK GAAP to account for the
combination. The consolidated financial statements therefore
present the combination as a continuation of the combined financial
information of the Subsidiaries with no goodwill arising on the
transaction.
2. BASIS OF PREPARATION
The interim, condensed, unaudited financial statements for the
period ended 31 March 2019 have been prepared in accordance with
IAS 34 Interim Financial Reporting. They do not include all the
information required for a complete set of IFRS financial
statements. However, selected explanatory notes are included to
explain events and transactions that are significant to an
understanding of the changes in the Group's financial position and
performance since the last annual consolidated financial statements
as at the year ended 30 September 2018. The results for the period
ended 31 March 2019 are unaudited.
The condensed unaudited consolidated financial statements for
the period ended 31 March 2019 have adopted accounting policies
consistent with those followed in the preparation of the Group's
annual consolidated financial statements for the year ended 30
September 2018.
The Group is not subject to seasonal fluctuations in
operations
The Board have considered the impact of first time adoption of
IFRS 9 "Financial Instruments" and IFRS 15 "Revenue from Contracts
with Customers". No impact, other than disclosure, is considered to
have arisen.
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial statements requires the use of
accounting estimates which, by definition, will seldom equal the
actual results. Management also needs to exercise judgment in
applying the group's accounting policies.
This note provides an overview of the areas that involved a
higher degree of judgment or complexity, and of items which are
more likely to be materially adjusted due to estimates and
assumptions turning out to be wrong. Detailed information about
each of these estimates and judgments is included together with
information about the basis of calculation for each affected line
item in the financial statements.
The area involving significant estimates or judgments is:
-- Going concern
At 31 March 2019 the Group had GBP1,147,509 of cash and net
assets of GBP1,033,586 excluding the non-current liability owed to
a shareholder that (at the option of the company) is not payable
until 2019, and then only at the Boards discretion with reference
to liquidity of the business.
The going concern basis of accounting has been applied based on
management's consideration of financial projections and business
plan for the business. These include a number of forward looking
assumptions about the future growth in the customer base.
Estimates and judgments are continually evaluated. They are
based on historical experience and other factors, including
expectation of future events that may have a financial impact on
the entity and that are believed to be reasonable under the
circumstances.
4. Business Segments
For the purpose of IFRS 8 the chief operating decision maker
("CODM") is the Board of Directors. The Directors are of the
opinion that the business comprises a single economic activity,
being the provision of telephony services and that currently this
activity is undertaken solely in the United Kingdom. All of the
income and non-current assets are derived from the United Kingdom.
The Company has a single customer that, in the reporting period,
amounted to more than 10% of the Company's revenue; revenue
generated from this customer amounted to GBP277,309. At meetings of
the Directors, income, expenditure, cash flows, assets and
liabilities are reviewed on a whole Group basis. Based on the above
considerations there is considered to be one reportable segment
only, namely telephony services.
Therefore, the financial information of the single segment is
the same as that set out in the consolidated statement of
comprehensive income, consolidated statement of financial position,
consolidated statement of changes to equity and the consolidated
statement of cash flows.
5. Earnings per share
The calculation of earnings per share is based on the following
loss and number of shares:
Period Ended Period Ended
31 Mar 2019 31 Mar 2018
GBP GBP
---------------------------------------------- ------------- -------------
Loss for the year from continuing operations (843,579) (714,033)
Weighted average number of shares in
issue 954,380,559 203,913,894
Basic and diluted earnings per share (0.09p) (0.35p)
---------------------------------------------- ------------- -------------
As detailed in note 1, the consolidated financial statements
present the combination as a continuation of the combined financial
information of the Subsidiaries with no goodwill arising on the
transaction. Basic loss per share is calculated by dividing the
loss for the period from continuing operations of the Company by
the number of ordinary shares in issue during at the period
end.
The Company has in issue 40,997,291 warrants at 31 March 2019.
The inclusion of the warrants in the number of shares in issue
would be anti-dilutive and therefore they have not been
included.
6. SHARE CAPITAL
2019 2018
No. GBP No. GBP
------------------------- ------------ ------------ -------------- --------------
Allotted and fully paid
Ordinary shares 954,380,559 636,572 203,913,894 136,010
------------------------- ------------ ------------ -------------- --------------
Ordinary
shares Share Capital Share Premium
No. GBP GBP
------------------------- ------------ ------------ -------------- --------------
Share capital
At 1 October 2018 954,380,559 636,572 4,921,336
Additional share issue
costs - - (2,191)
------------------------- ------------ ------------ -------------- --------------
At 31 March 2019 954,380,559 636,572 4,921,145
------------------------- ------------ ------------ -------------- --------------
On incorporation, the Company had an unlimited authorised share
capital and an issued share capital of 36,000,000 ordinary shares
of par value 0.0667 pence each.
At 30 September 2016 the Company had 100,000,000 ordinary
0.0667p shares in issue, being 36,000,000 issued on incorporation,
39,000,000 shares were issued on 15 April 2016 to David Breith in
accordance with the terms of the share exchange agreements in
relation to the acquisition of the subsidiaries and 10 May 2016
following the Company's listing on the London Stock Exchange,
25,000,000 ordinary shares of par value 0.0667 pence each were
issued, fully paid at GBP0.08 per share. A commission of GBP80,000
was payable to the brokers at the time and this has been recognised
against the share premium account.
On 12 June 2017 the Company placed 70,537,732 ordinary 0.0667p
shares at a subscription price of 2p per share. Commissions of
GBP72,200 were payable to the brokers at the time and this has been
recognised against share premium. At the same time the Company
issued 5,000,000 shares at the same subscription price to Directors
of the Company to settle GBP100,000 of unpaid fees owed to
them.
On 8 March 2018 the company placed 24,462,268 ordinary 0.0667p
shares at a subscription price of 1.022p per share. Commissions of
GBP12,500 were payable to the brokers at the time and this has been
recognised against share premium. At the same time the Company
issued 3,913,894 shares at the same subscription price to the
brokers of the Company to settle GBP40,000 of fees owed to
them.
On 25 September 2018 the Company placed 733,333,333 ordinary
0.0667p shares at a subscription price of 0.3p per share.
Commissions of GBP165,000 were payable to the brokers at the time
and this has been recognised against share premium. At the same
time the Company issued 17,133,332 shares at the same subscription
price to the Directors of the Company to settle GBP51,400 of unpaid
fees owed to them.
Warrants
On 10 May 2016 following the Company's listing on the London
Stock Exchange, the Company issued warrants over 8,100,000 ordinary
shares as follows:
-- 3,000,000 warrants to the Non-Executive Directors to
subscribe for one new ordinary share at GBP0.08 per share at any
time during the period commencing on the second anniversary of
Admission ("Vesting Date") and at the second anniversary of the
Vesting Date, a vesting condition of the warrants was that the
holder is a
Director of the Company on the date of vesting;
-- 5,000,000 warrants to the subscribers to the placing to
subscribe for one new ordinary share at GBP0.16 per share at any
time during the period commencing on admission and expiring at
midnight on the second anniversary thereof save that in the event
that the closing price of the ordinary shares is equal to or in
excess of GBP0.24 pence for 10 consecutive trading days then the
Company may serve notice on the warrant holders requesting that
they exercise their warrants within 14 days in lieu of which they
shall lapse; and
-- 100,000 warrants to Cairn Financial Advisers to subscribe for
one new ordinary share at GBP0.08 per share at any time during the
period commencing on admission and expiring at midnight on the
second anniversary thereof
The ordinary shares have attached to them full voting, dividend
and capital distribution rights (including on a winding up). The
ordinary shares do not confer any rights of redemption.
The fair value of the 3,000,000 warrants issued to the
Non-Executive Directors and of the 100,000 warrants issued to Cairn
Financial Advisers have been determined using the Black-Scholes
option pricing model. The fair value at the date of grant per
warrant was GBP0.04 for the 3,000,000 tranche and GBP0.03 for the
100,000 tranche. The fair value of the warrants issued to the
Non-Executive Directors has been charged to the income statement
evenly over the vesting period resulting in a charge in the current
period of GBPNIL (2017: GBP63,150). The fair value of the warrants
issued to Cairn Financial Advisers of GBP3,080 has been included in
the costs of the Company's placing and therefore debited to share
premium in the prior year.
The inputs to the Black-Scholes model were as follows:
Warrants granted 3,100,000
Stock price 8p
Exercise price 8p
Risk free rate 1%
Volatility 70%
Time to maturity 4 years/2 years
------------------ ----------------
The Company listed on the main market of the London Stock
Exchange on 10 May 2016. It is difficult to calculate the expected
volatility of its share price at the year end. Management have
therefore considered volatility of listed entities in similar
operating environments to calculate the expected volatility.
The fair value of the 5,000,000 warrants issued to subscribers
to the placing is considered to comprise a component of the fair
value of the ordinary shares issued in the placing. The Directors
do not consider the fair value of the warrants to be a material
component of the fair value of the shares issued in the
placing.
On 20 June 2017 the Company issued 3,230,625 warrants advisers
to the company to subscribe for one new ordinary share at GBP0.02
per share at any time from the date of issue to the third
anniversary of date of issue.
The inputs to the Black Scholes model were as follows:
Warrants granted 3,230,625
Stock price 2p
Exercise price 2p
Risk free rate 1%
Volatility 70%
Time to maturity 3 years
------------------ ----------
On 25 September 2018 the Company issued 34,666,666 warrants as
follows:
-- 1,666,666 warrants to advisers to the Company to subscribe
for one new ordinary share at GBP0.003 per share;
-- and 33,000,000 warrants to advisers to the Company to
subscribe for one new ordinary share at GBP0.005 per share at any
time from the date of issue to the third anniversary of date of
issue.
The inputs to the Black Scholes model were as follows:
Warrants granted 34,666,666
Stock price 0.31p
Exercise price 0.3/0.5p
Risk free rate 0.83%
Volatility 271%
Time to maturity 2 years
------------------ -----------
The fair value of the warrants was GBP101,661 and this was
recognised in share premium on the basis they were issued for
services relating to the placing.
At 31 March 2019, warrants for 40,997,291 new Ordinary Shares in
the Company were in issue.
7. TRADE AND OTHER PAYABLES
As at As at
31 Mar 19 30 Sep18
GBP GBP
--------------------------------- ----------- ----------
Trade payables 319,183 304,527
Social Security and other taxes 58,658 35,576
Other payables 22,613 22,613
Accruals and deferred income 169,835 190,881
--------------------------------- ----------- ----------
570,289 553,597
--------------------------------- ----------- ----------
2019 2018
GBP GBP
Non - current liabilities
--------------------------------- ----------- ----------
Shareholder loan account 601,327 572,102
--------------------------------- ----------- ----------
Financial liabilities, with the exception of the shareholder
loan included within trade and other payables, are all considered
to be repayable within 30 days.
On 3 May 2016, the Company put in place formal documentation
relating to the balance owed to David Breith, the majority
shareholder. The balance cannot be recalled by the shareholder
until the third anniversary of the agreement and after this
anniversary only repayable if the board consider the Company in a
position to service the debt. Therefore, the balance has been
classified as non-current in the financial statements.
The loan is interest free and has a cash value of GBP606,756,
the Directors consider the market rate of interest that they may be
able to obtain for a similar borrowing from a 3rd party to be 10%.
The present value of the loan is GBP601,327 and the present value
adjustment has been recognised as a capital contribution within
equity. The value of the interest that has been recognised in the
statement of comprehensive income at 31 March 2019 is
GBP29,255.
8. RELATED PARTY TRANSACTIONS
6 months 6 months to
to 31 Mar 18
31 Mar 19
GBP GBP
----------------------------------------- ----------- ------------
Goods/services purchased from Vitrx
Limited 3,801 5,843
Goods/services purchased from Dotfusion
Limited 39,120 30,330
Goods/services purchased from Highlees
Consulting Limited - -
Goods/services purchased from KBL
Consulting Limited 16,450 -
Goods/services supplied to Vitrx
Limited 4,1469 5,481
63,540 41,655
----------------------------------------- ----------- ------------
The companies, Vitrx, Diffrenet & Dotfusion are disclosed as
related parties due to the nature of the business relationship with
Mr David Breith, who was a major shareholder of Toople PLC until
July 2018. Mr David Breith is a Director or co-owner of the above
companies, excluding Dotfusion. Vitrx Limited was a related party
for five months of the previous period, as David Breith resigned as
director of Vitrx Limited on 19 February 2018.
Mr Piotr Kwiatkowski is the owner of Dotfusion and is a
shareholder in Toople PLC.
Mr Richard Horsman is the owner of Highlees Consulting Limited
and is a shareholder in Toople Plc and non-executive Chairman.
Mr Kevin Lawrence is the owner of KBL Consulting Limited and is
a shareholder in Toople Plc and Chief Financial Officer.
9. SUBSEQUENT EVENTS
The Board does not believe there are any subsequent events
requiring further disclosure or comment.
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 rns@lseg.com or visit www.rns.com.
END
IR QZLFFKEFBBBE
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May 15, 2019 02:00 ET (06:00 GMT)
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