TIDMTOOP
RNS Number : 5238V
Toople PLC
31 January 2017
31 January 2017
Toople Plc
("Toople" or the "Company" or the "Group")
Final Results
Publication of Annual Report
Toople Plc (LSE: TOOP), a provider of bespoke telecom services
to UK SMEs, is pleased to announce its final results for the year
ended 30 September 2016.
Highlights:
- Launch of the Toople brand in May 2016
- Strong growth in the second half of the year, driven by
consolidation of the wholesale business and acquisition of the
Company's first SME customers
- Revenue for the year to 30 September increased to GBP957,749 (2015 GBP36,799)
- Revenue grew to GBP555,140 in H2; representing a 38% increase on H1
- Gross margin was GBP77,641 (8.1%)
- Loss before Taxation of GBP1,733,578
- Cash at 30 September 2016 of GBP743,824, following one-off
costs of listing, repayment of debt, launch of the brand and
expansion of the Group's services
Post period highlights:
- Orders across channels steadily increasing, reaching over 200
new orders on average per month since market entry up to 31(st)
December2016
- Finessed digital marketing strategy resulting in consistent new customer growth
- Expect to achieve a 30% margin over the contract life of a typical customer
- Breadth of portfolio driving additional "bolt-on" product sales
- Increased 4G capabilities with the addition of O2 and Vodafone
to the offered networks, complementing its existing EE services
- The launch of Toople's new broad cloud business telephony
service is expected to be a key driver for new customer acquisition
with attractive margins
- The Group is now able to offer a unified communications package
- Accredited by more than 30 of the UKs biggest B2B cashback and
comparison sites, with the most notable listings on; uSwitch,
Quidco, Topcashback, and Broadband Genie
- Achieved an average customer satisfaction score of 8.5 out of
10 via Trustpilot with its "Right first time" customer service
strategy
Andy Hollingworth, CEO, Toople Plc, said, "Since our Standard
Listing on the Official List in May 2016, our focus has been to
validate the Toople concept and opportunity, and asses the market's
willingness to accept a new brand. The Company remains at an early
stage and performance thus far has been encouraging, with
consistently increasing customer numbers, new product launches and
high customer satisfaction scores.
The foundations are in place for us to continue on this positive
trajectory, with a scalable platform and experienced Management
team. As such, the Company is on course towards its strategic
ambition of becoming the UK's leading provider of bespoke telecom
services to UK SMEs."
A copy of the Company's Annual Report is available on the
Company's website: www.toople.com. An electronic version has been
submitted to the National Storage Mechanism, which will shortly be
available for inspection at http://www.morningstar.co.uk/uk/NSM.
Notice of the Company's Annual General Meeting will be sent to
shareholders in due course.
-S -
For further information:
Toople PLC 0800 0499 499
Andy Hollingworth, Chief Executive Officer
Cairn Financial Advisers LLP 020 7 213 0880
Emma Earl / Rebecca Anderson, Financial Adviser
Vicarage Capital 020 3651 2911
Broker
Rupert Williams / Jeremy Woodgate
Redleaf Communications 020 7382 4730
Rebecca Sanders-Hewett toople@redleafpr.com
Sarah Fabietti-Dallison
Sam Modlin
Chairman's Statement
I am pleased to announce the maiden annual results of the
Company following its successful admission to the Main Market on 10
May 2016.
The year to 30 September 2016 saw the formation of the Toople
Plc Group of companies, following the acquisition of the business
of Toople.com in April 2016. This initial period has very much been
about validating the Toople concept and the market opportunity,
together with assessing the market's willingness to accept a new
brand. We are pleased with the results of this process, which has
given the Board confidence that there is a real opportunity for a
Company such as Toople to build a profitable and cash generative
business in the Small Business Sector. Furthermore, the experience
gained during the period endorses the Board's belief that the
business can deliver strong growth without significantly increasing
its direct cost base.
As a result of this activity, it is pleasing to note that the
Company delivered strong trading growth in the second half of the
year, with revenue growth of 38% compared to the first half of the
year. This growth was driven by both the consolidation of the
wholesale business and the acquisition of the first SME
customers.
Following admission to the market, the initial phase of targeted
digital marketing proved to be too competitive and so far, more
expensive than anticipated. Management enacted a number of demand
generation campaigns in order to determine the most effective
method to balance customer acquisition costs relative to the
investment and customer lifetime value. The Board is highly
cognizant of the need to balance customer acquisition against
upfront cash investment and long-term sustainable
profitability.
Since the year end, our finessed digital marketing strategy has
resulted in consistent new customer growth. The breadth of our
portfolio is also driving additional "bolt-on" product sales, which
is expected to lead to further half on half revenue growth during
2017.
The year under review has involved a huge amount of sustained
activity from management and staff alike. We have gained admission
to the Main Market, built the capability of the business, launched
the brand, and acquired customers. The Board would therefore like
to thank everyone involved for their hard work and contribution
during this time.
Richard Horsman
Non-Executive Chairman
Chief Executive Officer's Review
Introduction
During the course of the year, the Group has progressed towards
its strategic ambition of becoming the UK's leading provider of
bespoke telecom services to UK SMEs.
Since going live in the market less than six months ago,
progress has been encouraging, and gives the Board confidence that
the Company will deliver further growth in the coming months.
Revenue grew to GBP555,140 in the second half of the year,
representing a 38% increase on H1, with customer numbers continuing
to grow during H1 of 2017.
As at February 2016, there were around 5.4 million SME
businesses in the UK. Of these, more than 5 million (96%) fall into
the category of having less than 50 employees: this group
represents the Group's Target Market. BT are the largest telecoms
provider, receiving nearly 50% of the total market fixed line
revenues. The Board believes that this market size and share
represents a significant opportunity, with early trading suggesting
that Toople's brand, price, and approach can be successful.
Strategy and business overview
The Group provides a range of telecoms services primarily
targeted at the UK SME market. Its services offered include
business broadband, fibre, data services (Ethernet First Mile and
Ethernet), business mobile phones, cloud PBX and traditional
services (calls and lines), all of which are delivered and managed
through Merlin, the Group's proprietary software platform.
The Directors believe that the Merlin platform is a key
differentiator for the Group. 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.
As a result of the in-house Merlin capability, Toople can be
very agile in the market. The business had initially assumed that
its margins would largely be driven by customers purchasing
broadband and calls. Whilst this remains true, the business has
also recognised the high-growth, profitable market opportunity that
Hosted telephony is fast becoming. Accordingly, the Company has
recently brought its global Broad cloud platform to market, with
its first customers already signed up.
The market opportunity for Hosted telephony is supported by the
latest forecasts from Gartner, Inc., which projects the worldwide
public cloud services market to be worth $208.6 billion in 2016*.
*Gartner, Inc.: Forecast Analysis: Public Cloud Services,
Worldwide, 2Q16 Update Report.
Financial summary
The financial results for the year ended 30 September 2016
include the full year financial results for the operating companies
acquired by Toople Plc in April 2016. Revenue for the year ended 30
September 2016 was GBP957,749, which generated a Gross Margin of
GBP77,641 (8.1%), recognising the predominance of wholesale
revenues across the full year period. Operating Losses were
GBP1,714,559 and Losses before Taxation of GBP1,733,578. Loss per
share was 2.76p. This includes pre-admission costs in the
subsidiaries.
At 30 September 2016, the Group had cash balances totaling
GBP743,824. Cash raised on admission was GBP2m: this funded the
one-off cost of admission to the market, GBP0.343m (including
GBP0.080m recognised in share premium in the year); the repayment
of a short-term loan to David Breith, GBP0.065m; and the repayment
of the overdraft in the subsidiary businesses, GBP0.103m. The
residual cash balance of GBP1.489m has been utilised in the
business to fund working capital and to make investments in
building the brand, acquiring customers and increasing the
capability of the business.
At 30 September 2016, the Group was partially financed by loans
from David Breith, a major shareholder. The loans cannot be
recalled until the third anniversary of the agreement, and after
this date only if the Board consider the Company to be in a
position to service the debt.
Operational update
Henry Howard Finance Agreements
In May, the Group announced an agreement with Henry Howard
Finance plc ("HHF"), to facilitate the launch of its mobile phone
offering, without the need for a large, and risky, cash outlay to
fund handsets. Since then, the favourable commercial terms the
Company has with its suppliers, has changed the funding model, so
that the Company retains the risk and cashflow benefits, without
the need to use the HHF facility.
Increased mobile network propositions
Also in May, the Company added both O2 and Vodafone to the
networks supporting its mobile offering on 4G capability, to
complement its existing EE services. This was 5 months ahead of the
original target date, allowing the Company to launch its mobile
propositions earlier than planned. The Company's mobile
propositions are aligned with Toople's values, offering highly
competitive fixed price calls, texts and data bundles, to SMEs.
Post period update
Customer numbers
Since launch, the Company has been steadily increasing the
number of customers it attracts to its platform, with orders across
all its channels steadily increasing, reaching over 200 new orders
on average per month, since market entry up to 31st December 2016.
The Directors are targeting an increased average monthly order rate
during 2017.
As the business grows, absolute customer numbers will become a
less relevant metric due to the increase in the number of customers
taking more than one product. Going forward, the Company believes
it is appropriate to report on Revenue Generating Units ("RGUs"),
which will represent the number of individual services that result
in recurring billable revenue and margin. This can encompass
telephone lines; broadband lines, data lines, sim cards and hosted
seats. This performance measure is in line with industry
standards.
Marketing opportunities
The management team continues to use its telecoms experience to
identify marketing opportunities that it considers to offer the
best return on investment. The current cost of customer acquisition
ranges between GBP40 and GBP91 per customer. The Company expects to
achieve a 30% margin over the contract life of a typical customer.
The majority of customer contracts are 24 months on broadband and
mobile and 36 months on hosted telephony
Comparison site recognition
Toople has been accredited by more than 30 of the UKs biggest
business-to-business cashback and comparison sites, with the most
notable listings on; uSwitch, Quidco, Topcashback, Money
Supermarket and Broadband Genie. Orders online and over the phone
have already started to be received through these websites. Brand
presence on these sites will also drive overall brand recognition
for the Company resulting in organic brand search achieving lower
customer acquisition costs overall.
Customer service
Customer service is central to Toople's strategy and Toople.com
aims to attract and retain its customers by delivering "right first
time" UK based customer service. It is therefore pleased to have
achieved an average customer satisfaction score of 8.5 out of 10
via Trustpilot, which is significantly higher than the average
scores achieved by the leading companies operating in the sector.
Customer experience is critical to delivering best in class
retention rates: and as customer contracts mature, provides the
Company the best opportunity to sell more than one product to
re-contracting customers.
Wholesale customers
In addition to its SME customer base, the Group provides
telecoms services (minutes, lines, broadband, cloud PBX) and
billing functionality, through the Company's bespoke telecoms
platform, Merlin, to a number of wholesale customers. These
services are provided on a license fee and provision agreement.
There continues to be a number of orders for these services, and
whilst the wholesale market is not the strategic focus of the
Company, it will continue to monitor and review potential
opportunities for revenue and margin growth going forward.
Senior management changes
On 21 November, 2016, Mark Evans was appointed Chief Operating
Officer, having joined Toople shortly after admission. Mark had
been leading the Company's digital channel sales and contact centre
strategy since launch.
With more than 14 years' industry experience and having
previously held senior positions at O2, Mark now leads the Toople
customer engagement functions both from a people, software and
channel marketing perspective. Mark and the team are focused on
ensuring the Group's back office process is best in class and
delivering a great customer experience to small businesses.
Telephony Service Launch
In H1 2017 the Company launched a new cloud business telephony
service for its SME target market, and wholesale customers. The two
simple propositions: Toople.com Classic and Toople.com Premium,
provide an efficient way for small businesses to have a reliable,
maintenance free phone system that requires minimum capital
expenditure and no advance payment.
These products can be ordered on line or over the phone, with
unlimited calls bundles for a fixed monthly fee and come with the
handset included in the seat price. Toople.com Premium provides
customers with full phone system functionality and mobility via an
additional IOS or Andriod app on their mobile, tablet or laptop.
Customers will be able to take their office with them on any
device, ensuring they never miss a call.
The services also offer the added ability to cross sell and up
sell into the existing customer base, which the business is already
seeing early signs of success with.
The launch of Toople's business phone systems enables the
Company to deliver complete unified communications to its small
business customers. The Company believes this service will become
an increasingly important part of its proposition mix, being a
great value-add for existing customers, and a key driver for new
customer acquisition with good margin and cash generation for the
Company.
Merlin platform
The integration of the Group's proprietary bespoke telecoms
platform, Merlin, into the business has been completed. Toople
continues to own the full Intellectual Property Rights for the
platform.
EU Referendum / Brexit
Whilst the process to leave the EU will provide a period of
uncertainty for UK small businesses, the Company believes that
Toople's transparency, fixed prices and service levels will
continue to appeal to business owners.
Ofcom regulation
Ofcom's plans to close the gap in fibre deployment between the
UK and some continental European countries, in order to ensure
everyone has the right to request service of 10 megabits per second
by 2020, is fully supported by the Board. The Board considers the
proposed changes to BT Group Plc's network to ease access for
competitors, to be an opportunity for a new company to enter and
establish itself in the UK market. Toople believes it will give
transparency for infrastructure investment, R&D and a cost base
equitable to all service providers. However, there is still a way
to go to guarantee the speeds that countries such as Spain and
Japan deliver.
Toople will remain a strong voice within the UK SME regulatory
and legislative environment, its core customer segment.
Prospects
While it is still early days for the Company, its performance
thus far is encouraging. The upward trend in orders and revenue
demonstrates that the SME market is prepared to accept a new brand
and Toople remains well placed to take advantage of the market
opportunity that exists, with its competitive propositions in
broadband, mobile, and increasingly, Hosted telephony. The Toople
brand and its associated values is now successfully launched in the
market, and the Board believes it will generate future growth. The
Company will always follow a profitable market share growth
strategy rather than just market share at all costs.
My thanks go to customers, shareholders, and most importantly
the team here at Toople for what has been delivered so far.
Andrew Hollingworth
Chief Executive Officer
Strategic Report
The Directors present the Strategic Report of Toople Plc for the
year ended 30 September 2016.
Principal Activities
The Company is newly incorporated, on 2 March 2016, for the
purpose of becoming a holding company for the Group. The Group
consists of the Company and a number of wholly owned subsidiaries
with the main operating entities being Toople.com Limited and
AskMerlin Limited. In April 2016, the Company successfully
completed the acquisition of the business of Toople.com and in May
2016 completed the fundraising necessary to develop the
business.
Toople.com is a business that provides a range of telecoms
services primarily targeted at the UK SME market. Services offered
by the business 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.
Review of business in the year
Details of the Company's strategy, business model, results and
prospects are set out in the Chairman's Statement and in the Chief
Executive Officer's Review on pages 3 - 6.
Key Performance Indicators
At this stage in its development, the Company is focusing on the
establishment and development of the business of Toople.com.
The Group monitors its key performance indicators (KPI's)
regularly. In this, its first period of trading as a Group, the
KPI's are set out below:
Revenue Gross profit Loss per share
GBP'000 GBP'000 (pence)
------ --------- ------------- ---------------
2016 958 78 (2.76)
------ --------- ------------- ---------------
2015 37 (39) (1.02)
------ --------- ------------- ---------------
In future periods, when the activities of the Group are more
developed, the Directors intend to publish additional KPI's
including:
-- Cost of acquisition per customer
-- New orders serviced (Revenue Generating Units)
-- Customer satisfaction scores
Social/Community/Human rights matters
The Company operates a gender diverse business, and would ensure
any future employment took into account the necessary diversity
requirements and compliance with all employment law. The Board has
experience in dealing with such issues and sufficient
training/qualifications to ensure they would meet all
requirements.
Principal risks and uncertainties relating to the Company's
business strategy
The Group operates in an uncertain environment and is subject to
a number of risk factors.
The Company's prospectus included a detailed assessment of the
risks facing the business. The Directors consider the following
risk factors are of particular relevance to the Group's activities,
although it should be noted that the list is not exhaustive and
that other risk factors not presently known or currently deemed
immaterial may apply.
-- The Company will be dependent on the ability of the Directors
to identify suitable investment opportunities and to implement the
Company's strategy. There is no assurance that the Company's
business strategy will ultimately be successfully developed
-- As the Group has a limited trading history, actual
performance may differ materially from expectations and the Group
may generate sustained losses
-- The Group anticipates being able to sell multiple products to
customers in a competitive market. The marketing investment
estimated to be required by the Group may not be sufficient to
attract the number of customers that the Group intends to
target
-- The loss of, or inability to attract key personnel could
adversely affect the business of 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 ownership and use of intellectual property by the Group
may be challenged by third parties or otherwise disputed
-- The Group may require additional capital in the medium to
long term and no assurance can be given that such capital will be
available on terms acceptable to the Group, or at all
-- By the very nature of the Group's business, it is expected
that from time to time the Group will 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 in the UK
-- The Group's infrastructure and systems could be targeted by cyber attacks
-- The pricing environment in the telecoms industry could become
more difficult than anticipated
-- The UK telecoms market is subject to regulation by Ofcom and
subject to high incidence of fraud and bad debt risk
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.
Composition of the Board
A full analysis of the Board, its function, composition and
policies, is included in the remuneration report. A gender analysis
is included in the governance report.
Capital structure
The Company's capital consists of ordinary shares which rank
pari passu in all respects which are traded on the Standard segment
of the Main Market of the London Stock Exchange. David Breith and
Andrew Hollingworth, who together own 65% of the Company's ordinary
share capital, have entered into a relationship agreement with the
Company to ensure that the Board of the Company operates
independently of them and that all decisions taken by the Board
will be made for the benefit of shareholders as a whole. There are
no restrictions on the transfer of securities in the Company or
restrictions on voting rights and none of the Company's shares are
owned or controlled by employee share schemes. There are no
arrangements in place between shareholders that are known to the
Company that may restrict voting rights, restrict the transfer of
securities, result in the appointment or replacement of directors
amend the Company's articles of association or restrict the powers
of the Company's directors, including in relation to the issuing or
buying back by the company of its shares or any significant
agreements to which the company is a party that take effect after
or terminate upon, a change of control of the company following a
takeover bid or arrangements between the Company and its directors
or employees providing for compensation for loss of office or
employment (whether through resignation, purported redundancy or
otherwise) that may occur because of a takeover bid.
Environmental and other regulatory requirements
In the event of a breach with any environmental or regulatory
requirements this may give rise to reputational, financial or other
sanctions against the Company, and therefore the Board considers
these risks seriously and designs, maintains and reviews its
policies and processes so as to mitigate or avoid these risks.
Approved by the Board on 30 January 2017.
Richard Horsman
Chairman
Independent auditor's report to the members of Toople Plc
Opinion on financial statements
In our opinion the financial statements:
-- give a true and fair view of the Group's and of the Parent
Company's state of affairs as at 30 September 2016 and of the
Group's loss for the year then ended;
-- have been properly prepared in accordance with IFRSs as adopted by the European Union;
-- the parent Company financial statements have been properly
prepared in accordance with IFRSs as adopted by the European Union
and as applied in accordance with the provisions of the Companies
Act 2006; and
-- have been prepared in accordance with the requirements of the
Companies Act 2006 and, as regards the group financial statements,
Article 4 of the IAS Regulation.
Opinion on other matters prescribed by the Companies Act
2006
In our opinion:
-- the part of the Directors' Remuneration Report to be audited
has been properly prepared in accordance with the Companies Act
2006; and
-- the information given in the Strategic Report and the
Directors' Report for the financial year for which the financial
statements are prepared is consistent with the financial
statements.
Basis for opinion
We have audited the financial statements of Toople Plc for the
year ended 30 September 2016 which comprise the Consolidated
Statement of Comprehensive Income, the Consolidated and parent
company statement of Financial Position, the Consolidated and
parent company statement of Cash Flows, the Consolidated and parent
company Statement of Changes in Equity and the related notes
numbered 1 - 19.
The financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union.
Respective responsibilities of Directors and auditors
As explained more fully in the Statement of Directors
Responsibilities, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they give
a true and fair view. Our responsibility is to audit an express an
opinion on the financial statements in accordance with applicable
law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's
Ethical Standards for Auditors.
This report is made solely to the Company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Out audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Our application of materiality
We apply the concept of materiality both in planning and
performing our audit, and in evaluating the effect of misstatements
on our audit and on the financial statements. For the purposes of
determining whether the financial statements are free from material
misstatement we define materiality as the magnitude of misstatement
that makes it probable that the economic decisions of a reasonably
knowledgeable person, relying on the financial statements, would be
changed or influenced. We also determine a level of performance
materiality which we use to determine the extent of testing needed
to reduce to an appropriately low level the probability that the
aggregate of uncorrected and undetected misstatements exceeds
materiality for the financial statements as a whole.
Independent auditor's report to the members of Toople Plc
(continued)
When establishing our overall audit strategy, we determined a
magnitude of uncorrected misstatements that we judged would be
material for the financial statements as a whole. We determined
materiality for the Company to be GBP60,000, which is approximately
4% of the loss before taxation for the period after adjusting for
admission costs charged as an expense. Our objective in adopting
this approach is to ensure that total detected and undetected audit
differences do not exceed our materiality of GBP60,000 for the
financial statements as whole. We agreed with the Audit Committee
that we would report to the Committee all audit differences in
excess of GBP1,000, as well as differences below that threshold
that, in our view, warranted reporting.
The Scope of our audit
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the Company's circumstances and have been
consistently applied and adequately disclosed; the reasonableness
of significant accounting estimates made by the Directors; and the
overall presentation of the financial statements. In addition we
read all the financial and non-financial information in the Annual
Report to identify material inconsistencies with the audited
financial statements and to identify any information that is
apparently materially incorrect based on, or materially
inconsistent with, the knowledge acquired by us in the course of
performing the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for
our report.
Our assessment of risks of material misstatement
We identified the risks that we believe to have had the greatest
impact on our audit strategy and scope. We scoped our response to
the significant risks identified as follows:
Risk Response
-------------------------------------------------------- ------------------------------------------------------------
The basis of preparation and accounting for the We reviewed the accounting treatment adopted, discussed
share for share exchange in which the Company acquired alternative treatments with management and concluded
its subsidiaries is a judgemental area and could that the accounting treatment adopted best reflects
give rise to a material misstatement the substance of the share for share exchange transaction.
-------------------------------------------------------- ------------------------------------------------------------
The fair value of long term financial liabilities We reviewed the loan documentation to agree the
with interest charges at below market rates may terms of the underlying loan. We reviewed management's
be misstated calculation of the present value of the loan and
the discount rate applied. We reviewed the accounting
entries recording the fair value of the liability
at the recognition date and the subsequent recognition
of the interest charge to the year end.
-------------------------------------------------------- ------------------------------------------------------------
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the International Standards on Auditing (UK and Ireland),
we are required to report to you if, in our opinion, information in
the annual report is:
-- materially inconsistent with the information in the audited financial statements; or
-- apparently materially incorrect based on, or materially
inconsistent with, our knowledge of the Company acquired in the
course of performing our audit; or
-- otherwise misleading
Independent auditor's report to the members of Toople Plc
(continued)
In particular, we are required to report to you if;
-- we have identified any inconsistencies between our knowledge
acquired during the audit and the Directors' statement that they
consider the annual report is fair, balanced and understandable;
or
-- the annual report appropriately discloses those matters that
we communicated to the audit committee which we consider should
have been disclosed.
Under the Companies Act 2006, we are required to report to you
if, in our opinion:
-- certain disclosures of Directors' remuneration specified by law are not made;
-- we have not received all the information and explanations we require for our audit;
-- adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches not
visited by us; or
-- the financial statements are not in agreement with the accounting records and returns.
We also confirm that we do not have anything material to add or
to draw attention to in relation to:
-- the Directors' confirmation in the annual report that they
have carried out a robust assessment of the principal risks facing
the group including those that would threaten its business model,
future performance, solvency or liquidity;
-- the disclosures in the annual report that describe those
risks and explain how they are being managed or mitigated;
-- the Directors' statement in the financial statements about
whether they have considered it appropriate to adopt the going
concern basis of accounting in preparing them, and their
identification of any material uncertainties to the group's ability
to continue to do so over a period of at least twelve months from
the date of approval of the financial statements; and
-- the Directors' explanation in the annual report as to how
they have assessed the prospects of the Group, over what period
they have done so and why they consider that period to be
appropriate, and their statement as to whether they have a
reasonable expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over the period
of their assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
Stephen Bullock
Senior Statutory Auditor
For and on behalf of
Crowe Clark Whitehill LLP
Statutory Auditor
London
30 January 2017
Consolidated statement of comprehensive income
NOTE Year ended Year ended
30 Sep 2016 30 Sep 2015
-------------------------------------- ----- ------------ ------------
Continuing operations GBP GBP
Revenue 957,749 36,799
Cost of sales (880,108) (76,083)
------------ ------------
Gross profit/(loss) 77,641 (39,284)
Administrative expenses (1,792,200) (381,278)
Operating loss (1,714,559) (420,562)
Interest payable and similar charges (20,041) -
Interest receivable 1,023 -
Loss before taxation 3 (1,733,578) (420,562)
------------ ------------
Taxation 4 - 21,336
Loss for the year (1,733,578) (399,226)
------------ ------------
Other comprehensive loss for the - -
year
Total comprehensive loss for the
year attributable to the equity
owners of the parent (1,733,578) (399,226)
Loss per share
Basic and diluted loss per share
(pence) 5 (2.76) (1.02)
The notes to the financial statements form an integral part of
these financial statements.
Consolidated statement of financial position
As at As at
Note 30 Sep 2016 30 Sep 2015
GBP GBP
----------------------------------------- ------------ ------------
Assets
Non-current assets
Intangible assets 6 14,546 2,328
------------ ------------
14,546 2,328
------------ ------------
Current assets
Trade and other receivables 7 223,674 194,758
Cash and cash equivalents 8 743,824 130,853
------------ ------------
967,498 325,611
------------ ------------
Total assets 982,044 327,939
------------ ------------
Equity and liabilities
Share capital 9 66,700 26,013
Share premium 1,900,245 -
Merger reserve (25,813) (25,813)
Share based payment reserve 24,130 -
Capital contribution reserve 137,616 -
Accumulated deficit (1,975,364) (260,851)
------------ ------------
Total equity 127,514 (260,651)
------------ ------------
Current liabilities
Trade and other payables 10 385,390 588,590
------------ ------------
385,390 588,590
------------ ------------
Non-current liabilities
Financial liabilities - borrowings 10 469,140 -
------------ ------------
469,140 -
------------ ------------
Total equity and liabilities 982,044 327,939
------------ ------------
The notes to the financial statements form an integral part of
these financial statements
This report was approved by the Board and authorised for issue
on and signed on its behalf by;
Andrew Hollingworth
Director
30 January 2017
Company Registration Number: 10037980
Consolidated statement of changes in equity
Share Share premium Share Capital Accumulated Total
capital Merger based contribution deficit
reserve payment Reserve
reserve
GBP GBP GBP GBP GBP GBP GBP
--------------------- --------- -------------- --------- --------- -------------- ------------ ------------
Brought
forward
at 1 October
2015 26,013 - (25,813) - - (260,851) (260,651)
Loss for
the year - - - - - (1,733,578) (1,733,578)
--------- -------------- --------- --------- -------------- ------------ ------------
Total comprehensive
loss for
the year - - - - - (1,733,578) (1,733,578)
Transactions with owners
Share based
payment
charge
credited
to equity - - - 24,130 - 24,130
Issue of
share capital
net of
share issue
costs 40,687 1,900,245 - - - 1,940,932
Equity
component
of interest
free loan - - - - 156,681 - 156,681
Transfer
of interest
accrued - - - - (19,065) 19,065 -
--------- -------------- --------- --------- -------------- ------------ ------------
At 30 September
2016 66,700 1,900,245 (25,813) 24,130 137,616 (1,975,364) 127,514
--------- -------------- --------- --------- -------------- ------------ ------------
Consolidated statement of changes in equity (continued)
Share based Capital
Share Merger payment contribution Accumulated
capital Share premium reserve reserve deficit Total
GBP GBP GBP GBP GBP GBP GBP
------------------- -------------- -------------- --------- ------------ -------------- ------------ ----------
Brought forward
at 1 October
2014 26,013 - (25,813) - - 138,375 138,575
Loss for
the year - - - - - (399,226) (399,226)
-------------- -------------- --------- ------------ -------------- ------------ ----------
Total
comprehensive
loss for
the year - - - - - (399,226) (399,226)
Transactions with owners
Issue of
share capital
net of share
issue costs - - - - - - -
-------------- -------------- --------- ------------ -------------- ------------ ----------
At 30 September
2015 26,013 - (25,813) - - (260,851) (260,651)
-------------- -------------- --------- ------------ -------------- ------------ ----------
Share capital comprises the ordinary share capital of the
Company.
Share premium represents the aggregated excess of the fair value
of consideration received for shares issued over par value in
respect of shares issued by the Company net of attributable share
issue costs and other permitted reductions.
The merger reserve arose on the share for share exchange is
described in note 2a.
Share based payments reserve represents the cumulative value of
share based payments recognised through equity.
Capital contribution reserve represents the present value
adjustment to the interest free loan detailed in note 10.
Accumulated deficit represent the aggregate retained deficit of
the Group.
The notes to the financial statements form an integral part of
these financial statements.
Consolidated statement of cash flows
Year ended 30 Year ended
Sep 2016 30 Sep 2015
GBP GBP
---------------------------------------------- -------------- -------------
Cash flows from operating activities
Operating loss (1,714,559) (420,562)
Adjustments for:
Depreciation and amortisation 4,914 8,861
Loss on disposal of fixed assets 2,328 35,411
Share based payment charge 21,050 -
Changes in working capital
Increase in receivables (28,916) (96,082)
Increase/(decrease) in payables 292,318 (66,094)
Net cash outflow from operating
activities (1,422,865) (573,877)
-------------- -------------
Cash flows from financing activities
Proceeds from issues of share
capital net of issue costs 1,940,932 -
Finance costs (976) -
Proceeds from shareholder loan 177,657 512,141
Repayment of loan (65,000) -
Net cash from financing activities 2,052,613 512,141
-------------- -------------
Cash flows from investing activities
Acquisition of intangible fixed
assets (17,800) (2,328)
Finance income 1,023 -
Net proceeds from disposal
of fixed assets - 194,436
Net cash (used in)/from investing
activities (16,777) 192,108
-------------- -------------
Net increase in cash and cash equivalents 612,971 130,372
Cash and cash equivalents at
start of year 130,853 481
-------------- -------------
Cash and cash equivalents at
end of year 8 743,824 130,853
-------------- -------------
The notes to the financial statements form an integral part of
these financial statements
Notes to the consolidated financial statements
1. General Information
a) Nature of operations
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.
b) Component undertakings
The undertakings included in the financial statements are as
follows:
Name Incorporated Activities Capital % held
------------------- ----------------- ---------------------- ----------------- -------
Toople.com Provision of
Limited England & Wales telecoms services Ordinary shares 100%
------------------- ----------------- ---------------------- ----------------- -------
Ask Merlin
Limited England & Wales Software development Ordinary shares 100%
------------------- ----------------- ---------------------- ----------------- -------
Toople Finance
Limited England & Wales Dormant Ordinary shares 100%
------------------- ----------------- ---------------------- ----------------- -------
Toople Management
Services Limited England & Wales Dormant Ordinary shares 100%
------------------- ----------------- ---------------------- ----------------- -------
Ask Merlin
Poland sp Zoo* Poland Software development Ordinary shares 100%
------------------- ----------------- ---------------------- ----------------- -------
-- Owned by Ask Merlin Limited
2. Summary of Significant Accounting Policies
The principal accounting policies adopted by the Company in
preparation of these financial statements are set out below:
a) Basis of Preparation
The financial statements have been prepared in accordance with
International Financial
Reporting Standards ("IFRS") as adopted for use by the European
Union, and effective,
or issued and early adopted, as at the date of these statements.
The financial statements
have been prepared under the historical cost convention.
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. The financial information prior to the date of the
combination on 15 April 2016 is pro forma.
At the date of approval of these financial statements, certain
new standards, amendments and interpretations have been published
by the International Accounting Standards Board but are not as yet
effective and have not been adopted early by the Group. All
relevant standards, amendments and interpretations will be adopted
in the Group's accounting policies in the first period beginning on
or after the effective date of the relevant pronouncement.
The Directors do not anticipate that the adoption of these
standards, amendments and interpretations will have a material
impact on the Group's financial statements in the periods of
initial application except that:
IFRS15 'Revenue from contracts with customers' may have an
impact on revenue recognition and related disclosures. IFRS15 is
effective for annual periods beginning on or after 1 January 2018
and will be applied retrospectively. At this point it is not
practicable for the Directors to provide an estimate of the effect
of IFRS15 as a detailed review of this standard is ongoing in light
of the Group's evolving business model.
IFRS16 'Leases' is expected to result in the capitalisation of a
significant portion of the Group's operating leases. IFRS16 is
effective for annual periods beginning on or after 1 January 2019
and may be applied retrospectively.
b) Going Concern
The Group's business activities and financial position, together
with the factors likely to affect its future development,
performance and position are set out in the front end of the
financial statements.
The Directors have carried out a detailed assessment of going
concern as part of the financial reporting process, taking into
consideration a number of matters including forecast cash flows for
a period of at least 12 months from the date of approval of the FS,
medium and long term business plans and expectations.
On the basis of their assessment, the Directors have concluded
that it is appropriate to prepare the financial statements on a
going concern basis, see note 2 (c).
c) Significant accounting judgements, estimates and assumptions
Management consider the significant accounting judgements,
estimates and assumptions used within the financial statements to
be:
Going concern
At 30 September 2016 the Group had GBP743k of cash and net
assets of GBP128k, this includes 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. Having undertaken a detailed
budgeting exercise covering a period of at least 12 months from the
date of approval of the financial statements, the Directors have a
reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future and
therefore continue to adopt the going concern basis of accounting
in preparing the annual financial statements.
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 and a
reduction in costs following the successful website development,
digital marketing, and Merlin integration with its associated
consultants and agencies.
d) Financial Instruments
Financial assets and liabilities are recognised in the Company's
statement of financial position when the Company becomes a party to
the contractual provisions of the instrument. The Company currently
does not use derivative financial instruments to manage or hedge
financial exposures or liabilities.
e) Trade and Other Receivables and Payables
Trade and other receivables and trade and other payables are
initially recognised at fair value. Fair value is considered to be
the original invoice amount, discounted where material, for
short-term receivables and payables. Long term receivables and
payables are measured at amortised cost using the effective
interest rate method.
f) Taxation
Current tax
Current tax assets and liabilities for the current and prior
periods are measured at the amount expected to be recovered from or
paid to the tax authorities. The tax rates and the tax laws used to
compute the amount are those that are enacted or substantively
enacted by the statement of financial position date.
Deferred tax
Deferred income tax is recognised on all temporary differences
arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements, with the following
exceptions:
-- deferred income tax assets are recognised only to the extent
that it is probable that taxable profit will be available against
which the deductible temporary differences, carried forward tax
credits or tax losses can be utilised. Deferred income tax assets
and liabilities are measured on an undiscounted basis at the tax
rates that are expected to apply when the related asset is realised
or liability is settled, based on tax rates and laws enacted or
substantively enacted at the statement of financial position
date.
g) Revenue recognition
Revenue is measured at the fair value of consideration received
and receivable and represents amounts received for services
provided in the course of ordinary activities, net of discounts and
sales related taxes.
Services and installation- the Group provides multiple services
including the provision of broadband, mobile phones, telephony
calls and minutes and wholesale services; revenue is recognised as
the services are performed with up front connection fees charges
charged at point of installation and a fixed monthly fee on all
services. Calls to certain destinations can be bought by customers
under fixed price bundles which are recognised as monthly fees.
Where calls are made outside these bundles, they are treated as a
variable revenue stream based on a number of minutes multiplied by
unit price, recognised at the point of usage.
h) Segmental reporting
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 revenue, revenue generated
from this customer amounted to GBP568,796. 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.
i) Share based payments
The cost of equity settled transactions is recognised, together
with any corresponding increase in equity, over the period in which
the performance and/or service conditions are fulfilled, ending on
the date when the individuals become fully entitled to the award
('vesting period'). The cumulative expense recognised for equity
settled transactions at each reporting date until the vesting date
has expired represents the Group's best estimate of the number of
equity instruments and the value which will ultimately vest. The
statement of comprehensive income charge for the period represents
the movement in the cumulative expense recognised at the end of
that period.
The fair value of share based remuneration is determined at the
date of grant and recognised as a expense in the statement of
comprehensive income on a straight line basis over the vesting
period taking into account the estimated number of shares that will
vest. Unless otherwise stated the value is determined by use of a
Black-Scholes model.
j) Financial risk management objectives and policies
The Group does not enter into any forward exchange rate
contracts.
The main financial risks arising from the Group's activities are
cash flow interest rate risk, liquidity risk, price risk (fair
value) and credit risk. The Board reviews and agrees policies for
managing each of these risks and they are summarised as:
Cash flow interest rate risk - the Group's exposure to the risk
of changes in market interest rates relates primarily to the
Group's overdraft accounts with major banking institutions and on
loans from shareholders
Liquidity risk - the Company raises funds as required on the
basis of budgeted expenditure and inflows. When funds are sought,
the Company balances the costs and benefits of equity and debt
financing. When funds are received they are deposited with banks of
high standing in order to obtain market interest rates.
Credit risk - with respect to credit risk arising from other
financial assets of the Group, which comprise cash deposits and
accounts receivable, the Group's exposure to credit risk arises
from default of the counterparty, with a minimum exposure equal to
the carrying amount of these instruments. The credit risk on cash
is limited as cash is placed with substantial financial
institutions.
k) Borrowings
Borrowings are recorded in accordance with IAS 32.
l) Equity
Equity instruments issued by the Company are recorded net at
proceeds after direct issue costs.
m) Intangible assets
All intangible assets, are stated at cost less accumulated
amortisation and any accumulated impairment losses. The Group's
intangible assets arise from expenditure relating to website
development.
These are amortised over their useful lives which are
individually assessed:
Website development - 2 years
3. Loss before taxation
The loss before taxation is stated after charging:
Year ended Year ended
30 Sep 16 30 Sep 15
----------- -----------
GBP GBP
Depreciation and amortisation 4,914 8,861
Loss on disposal of intangible fixed 2,328 -
assets
Loss on disposal of tangible fixed
assets - 35,411
Impairment of trade receivables 15,864
Fees payable to the Company's auditor
for the audit of the Company's annual
accounts 21,000 1,000
Payments made under operating leases 92,283 8,347
Share based payment charges 21,050 -
Administrative expenses include:
Admission costs* 263,136 -
Marketing costs 342,552 105,504
Wages (including Directors) 322,600 107,796
Social security (including Directors) 30,279 11,661
Customer service 147,193 -
* A commission of GBP80,000 was payable to the brokers following
the Company's listing on the London Stock Exchange and this has
been recognised against the share premium account.
4. Taxation
Analysis of charge in the year
Year ended Year ended
30 Sept 30 Sept
2016 2015
GBP GBP
Current tax:
UK corporation tax on loss for - -
the year
Deferred tax release - 21,336
--------------- -----------------
Tax on loss on ordinary activities - 21,336
Loss on ordinary activities
before tax (1,733,578) (420,562)
Analysis of charge in the year
Loss on ordinary activities
multiplied by small companies
rate of corporation tax in the
UK of 20% (346,716) (84,112)
Tax effects of:
Non-deductible expenses 810 -
Trading losses carried forward 345,906 84,112
Deferred tax release - 21,336
-------------- --------------
- 21,336
Current tax charge for the year
as above
The Group has accumulated tax losses arising in the UK of
approximately GBP2,150,000 (2015: GBP421,000) that are available,
under current legislation, to be carried forward against future
profits.
No deferred tax asset has been recognised in respect to these
losses due to the uncertainty of future trading profits.
5. Loss per share
The calculation of loss per share is based on the following loss
and number of shares:
Year ended Year ended
30 Sep 16 30 Sep 15
------------ -----------
Loss for the year from
continuing operations (1,733,578) (399,225)
------------ -----------
Weighted average shares in issue
Basic and diluted number
of shares 62,898,630 39,000,000
Basic and diluted loss
per share (2.76) (1.02)
As detailed in note 2a, 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 year from continuing operations of the Company by the
weighted average number of ordinary shares in issue during the
year.
The Company has in issue warrants at 30 September 2016, these
are detailed in note 9. The inclusion of the warrants in the
weighted average number of shares in issue would be anti dilutive
and therefore they have not been included.
6. Intangible assets
Website Development Year ended Year ended
costs 30 Sep 16 30 Sep 15
GBP GBP
Cost or valuation
Costs brought forward 2,328 -
Additions 17,800 2,328
Disposals (2,328) -
----------- -----------
Costs carried forward 17,800 2,328
----------- -----------
Accumulated amortisation
Amortisation brought - -
forward
Charge for the year 3,254 -
----------- -----------
Amortisation carried 3,254 -
forward
----------- -----------
Net book value 14,546 2,328
----------- -----------
Assets are amortised at 50% on a straight- line basis over their
expected useful lives.
7. Trade and other receivables
As at As at
30 Sep 16 30 Sep 15
Current GBP GBP
Trade receivables 16,912 44,371
Other receivables 125,312 150,387
Prepayments and accrued 81,450 -
income
223,674 194,758
----------- -----------
There are no material differences between the fair value of
trade and other receivables and their carrying value at the year
end.
At 30 September 2015 no receivables were past due or impaired,
at 30 September 2016 management reviewed the trade receivables
balance and have recognised an impairment charge of GBP15,864
against receivables where there is uncertainty over
recoverability.
8. Cash and cash equivalents
30 Sep 16 30 Sep 15
GBP GBP
Bank current account 743,824 130,853
----------- -----------
9. Called up share capital
Ordinary shares of 0.0667 pence No Nominal value
per share GBP
On incorporation 36,000,000 24,012
Shares issued on acquisition
of Subsidiaries 39,000,000 26,013
Share placing 25,000,000 16,675
Share capital at 30 September
2016 100,000,000 66,700
------------ --------------
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.
On 15 April 2016, 39,000,000 ordinary shares were issued and
allotted to David Breith in accordance with the terms of the share
exchange agreements in relation to the acquisition of the
subsidiaries
On 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 and this has
been recognised against the share premium account.
Also 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 is 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 GBP21,050. The fair value of the warrants issued to Cairn
Financial Advisers of GBP3,080 has been included in the costs of
the Company's and placing and therefore debited to share
premium.
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 has recently listed on the main market of the London
Stock Exchange. 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.
10. Trade and other payables
As at As at
30 Sep 16 30 Sep 15
GBP GBP
Trade payables 187,087 69,449
Social security and other taxes 56,606 -
Other payables 10,271 -
Shareholder loan account - 512,141
Accruals and deferred income 131,426 7,000
----------- -----------
385,390 588,590
----------- -----------
As at As at
30 Sep 16 30 Sep 15
Non - current liabilities
----------- -----------
Shareholder loan account 469,140 -
----------- -----------
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 but is shown
as current in the comparative.
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 3(rd) party to be
10%. The present value of the loan is GBP469,140 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 30 September 2016 is
GBP19,065.
11. Related party disclosures
12 months to 12 months
30 Sep 2016 to 30 Sep
2015
Goods/services purchased from Vitrx
Limited 4,362 6,000
Goods/services purchased from Blabbermouth
Marketing Limited - 15,767
Goods/services purchased from Diffrenet
Limited 8,368
Goods/services purchased from Dotfusion 60,000 -
Limited
Goods/services supplied to Vitrx Limited 74,510 21,790
Goods/services supplied to Diffrenet
Limited 546
The above companies are disclosed as related parties due to the
nature of the business relationship with Mr David Breith, a major
shareholder of Toople PLC. Mr David Breith is a Director or
co-owner of the above companies, excluding Dotfusion.
Mr Piotr Kwiatowski is the owner of Dotfusion and is a
shareholder in Toople PLC, there were no balances outstanding
between the parties at 30 September 2016.
There were no balances outstanding between the parties at 30
September 2016.
During the year to 30 September 2016 Toople Plc recharged
certain administrative expenses to its subsidiaries through a
management fee. The total amount charged was GBP501,375. At 30
September 2016 Toople Plc was owed GBP1,400,175 from its
subsidiaries.
12. Directors, key management and employees
Details of the Directors and key management personnel are set
out on pages 7 to 8.
Details of Directors' remuneration are set out in the
Remuneration Committee Report on page 20 to 25.
The total remuneration of the directors and key management
personnel is GBP141,383, as set out below in aggregate for each of
the categories specified in IAS24:
Directors
2016 2015
GBP GBP
Short term benefits - Salaries and 120,333 -
fees
Share based payments 21,050 -
-------- -----
Total 141,383 -
-------- -----
The average number of persons employed by the Group (excluding
Directors) during the year was 14 (2015: 4), analysed by category
as follows:
30 Sept 30 Sept
2016 2015
Management and Finance 1 0
Sales and Marketing 1 1
Administration 1 1
Operations 11 2
-------- --------
Total 14 4
-------- --------
13. Financial instruments
The Group's principal financial instruments comprise cash
balances, accounts payable and accounts receivable arising in the
normal course of its operations.
The financial instruments of the Group at year-end were:
30 Sept 30 Sept
2016 2015
-------- --------
GBP GBP
Loans and receivables - Cash and cash
equivalents 743,824 130,853
Loans and receivables - Trade and other
receivables 142,224 194,758
Financial liabilities
Financial liabilities measured at amortised -
cost - Cash and cash equivalents -
Financial liabilities measured at amortised
cost - Trade and other payables 854,530 588,590
-------- --------
a) Interest rate risk
The Group has floating rate financial assets in the form of
deposit accounts with major banking institutions; however, it is
not currently subjected to any other interest rate risk.
Based on cash balances at the statement of financial position
date, a rise in interest rates of 1% would not have a material
impact on the profit and loss of the Group.
b) Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. The Group's
exposure to liquidity risk arises primarily from mismatches of the
maturities of financial assets and liabilities.
The Group maintains a level of cash and cash equivalents and
bank facilities deemed adequate by management to ensure, as far as
possible, that it will have sufficient liquidity to meet its
liabilities when they fall due. All current liabilities are
considered to be repayable on demand.
c) Credit risk
The Group had receivables of GBP223,674 at 30 September 2016.
Receivables at the year-end were not past due, and the Directors
consider there to be no significant credit risk arising from these
receivables. At 30 September 2016, the directors management
reviewed all trade and other receivables that were greater than 60
days old and included a provision for impairment of GBP15,864.
d) Capital risk management
The Group defines capital as the total equity of the Company and
its subsidiaries. The Group's objectives when managing capital are
to safeguard the Group's ability to continue as a going concern in
order to provide returns for shareholders of the Company and
benefits for other stakeholders and to maintain an optimal capital
structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the
Company may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell assets to
reduce debt.
e) Fair value of financial assets and liabilities
There are no material differences between the fair value of the
Group's financial assets and liabilities and their carrying values
in the financial information.
14. Pension Commitments
The Group had no pension commitments outstanding at the year
end.
15. Dividends
No dividends have been proposed or paid for either the current
or previous reporting periods.
16. Ultimate Controlling Party
The Directors have determined that there is no controlling party
as no individual shareholder holds a controlling interest in the
Company.
17. Subsequent events
There were no subsequent events.
18. Operating leases
The amounts of minimum lease payments under non-cancellable
operating leases are as follows:
Operating leases which are due: 30 Sept 2016 30 Sept 2015
Within one year 92,283 92,283
In the second to fifth years inclusive 207,212 299,495
Over five years - -
The Company has entered into operating leases on its premises
and certain computer equipment and fixtures and fittings.
Lease terms are between three and five years.
19. Copies of the Annual Report
Copies of the annual report will be available on the Company's
website at www.toople.com and from the Company's registered
office.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SDLESSFWSESF
(END) Dow Jones Newswires
January 31, 2017 02:00 ET (07:00 GMT)
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