TIDMTOOP
RNS Number : 1571C
Toople PLC
17 June 2021
Strictly embargoed until: 07.00, 17(th) June 2021
Toople PLC
("Toople" or the "Company" or the "Group")
Interim results for the six months ended 31 March 2021
Toople PLC (LSE: TOOP), a provider of bespoke telecom services
to UK SMEs, today announces interim results for the six months
ended 31 March 2021.
Commenting on the results, Richard Horsman, Non-Executive
Chairman, said:
"COVID-19 has caused great uncertainty for businesses and for
the market in general, but on the whole we have traded
satisfactorily through it, winning new business and reducing costs.
We continued to strengthen our balance sheet and have seen an
increase in both gross profit and gross margin, whilst delivering
much improved performance at the EBITDA level. We adopted a
proactive approach to bad debt and pleasingly levels have
substantially improved following the implementation of a number of
new measures last year. As a result, we are reporting no material
bad debt with only a GBP43,000 charge, compared to GBP309,000 for
the same period last year and over GBP1.1m for the full year
2020."
Financial and Operational Highlights:
-- Substantial improvement in EBITDA loss : GBP595,000 compared
to EBITDA loss GBP1.04 million for same period last year; an
improvement of 43% year on year
-- Gross profit increased by 40% to GBP470,000 (HY 2020: GBP335,000)
-- Gross margin improved by 9 percentage points to 31%
-- Group revenue was flat year on year at GBP1.5m million for
the six month period (HY2020: GBP1.5 million)
-- Cash at bank was over GBP990,000 at period end
-- Substantial reduction in bad debt charge: HY21 only GBP43,000
compared to HY20: GBP309,000 and GBP1.1m for the full year 2020
-- Number of new contract wins with well-known UK business brands reported for the Group
-- Substantial reduction in fixed overheads
-- Cost synergies realised
-- Successful placing to raise gross proceeds of GBP774,000 to provide:
o further working capital to support the Company's growth;
o investment in targeted marketing initiatives;
o shortening of the Company's anticipated timeline to
profitability and positive cashflow; and
o enhancement of the Company's service offerings.
Commenting on summary and outlook, Andy Hollingworth, CEO at
Toople, added:
"Since early March 2021, trading has returned to more normalised
levels and we are now beginning to see growth return to our sales
leads and conversion rates. We expect this trend to continue and
have increased our sales force head count by over 30% in recent
weeks, as confidence slowly returns to the UK SME market which has
been boosted by the vaccine roll-out and the easing of COVID-19
restrictions. This increased sales effort has been implemented
without any increase in our fixed costs as part of the flexible
agreement we have in place with our outsourced sales operation in
Durban. This team are experiencing increased interest and
opportunities for sales leads and conversions.
"We enjoy a strong relationship with the large carriers and
operators. BT, in particular, is targeting the SME market heavily
with an above the line TV and press campaign. We believe this will
benefit DMSL and will have a material impact on our order volumes
over the summer months."
This announcement contains information which, prior to its
disclosure, was inside information as stipulated under Regulation
11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310
(as amended).
-Ends-
For further information :
Toople PLC Tel: 0800 0499 499
Andy Hollingworth, Chief Executive
Officer
Paul White, Chief Financial
Officer
Novum Securities Limited Tel: 020 7399 9400
David Coffman
Colin Rowbury
Belvedere Communications Tel: 020 3687 2754
John West / Llew Angus
About Toople PLC
Toople PLC is incorporated in the UK and listed on the main
market of the London Stock Exchange. The business currently trades
under four main brands: toople.com ; dmsluk.co.uk ;
broadbandandphones.co.uk ; checkthatcompany.co.uk .
Toople.com provides bespoke telecoms services for its fast
growing target market of UK SMEs with between one and 500
employees. 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 via the Group's
proprietary software platform.
In February 2020, Toople completed the acquisition of DMS
Holding (DMSL) . DMSL commenced trading in 2002 and provides
unified communication services in the UK, ranging from a single
phone line to a multi-site unified comms VoIP platform, delivered
via a network of telecoms and IT carriers and content providers
across the UK including BT Business, BT Global Services, Gamma, EE,
Vonage, TalkTalk Business and O2. DMSL acts as a BT Premier
re-seller for broadband connectivity, mobile and fixed voice and
cloud services and is responsible for over 250,000 BT customers and
over 400,000 Revenue Generating Units.
The acquisition of DMSL has been transformational for Toople, as
it also expanded the Group's reach into the UK residential market,
which is experiencing a period of rapid change, as operational
automation further develops and more people choose to (or are
forced to) work from home.
The Company also owns a telecoms price comparison website and a
service offering company credit reference checking and reports.
These complement the Group's IT and telecoms services.
All the Group brands seek to differentiate themselves by
offering IT, telecoms and broadband solutions, with robust and
reliable packages, that enhance a customers' business and are based
on trust and transparency, with no hidden fees within pricing
policies. This provides customers with a clear understanding of
cost and fixed prices for the duration of their contracts.
Chairman's Statement
COVID-19 has caused great uncertainty for businesses and for the
market in general, but on the whole we have traded satisfactorily
through it, winning new business and reducing costs.
We continued to strengthen our balance sheet and have seen an
increase in both gross profit and gross margin, whilst delivering a
much improved performance at the EBITDA level. We have adopted a
proactive approach to bad debt implementing a number of new
measures last year. As a result, we are reporting no material bad
debts, with only a GBP43,000 charge in the period compared to
GBP309,000 for the same period last year and over GBP1.1m for the
full year 2020.
Connectivity is business critical for small and medium
enterprises who may have only peripherally relied on telecoms
before the pandemic struck. Think, for example, of a bakery that
may have sold mostly to passing customers, but now operates mainly
on click-and-collect or home delivery models - its need for
seamless reliable connectivity has never been greater.
The news about a vaccine roll-out in the UK and a roadmap out of
lockdown has given everyone a boost but given the general economic
uncertainty in the UK and with the full economic impact of COVID 19
not yet fully clear, we must remain vigilant on costs.
That said, trading has progressed well in the months since March
2021 and we have won new contracts and contract extensions.
Additionally, we are beginning to see a number of acquisition
opportunities which, with a strengthened balance sheet and the
ability to offer listed shares as part of the consideration mix, we
are well-placed to take advantage of.
Toople aims to become the telecoms supplier of choice for its
target markets in the UK, by delivering instant, easy,
communication solutions with a transparent pricing model. This will
involve further expansion in our direct digital marketing to drive
customer growth, as well as visibility and predictability of
revenues.
The sector we operate in benefits greatly from the priority HM
Government is giving to telecommunications as critical
infrastructure. From a macro point of view, we are in a key growth
sector. The Government remains absolutely committed to the
continuing roll out of fibre infrastructure to replace copper,
which is more good news for Toople. The necessary and ultimately
unavoidable upgrade of the country's network from 4G to 5G creates
further opportunities. Most recently the regulator has relaxed
certain regulation on Openreach, which allows it to invest further
and faster in Fibre to premise rollout, as well as retaining and
extending access to alternative providers to the Openreach
network.
Further to recently announced significant contract wins, monthly
orders are continuing to grow and gross margins are materially
higher than in the pre-pandemic period. This has enabled monthly
cash burn to be reduced when compared with 2020 and this trend is
expected to be sustained, moving the Company towards positive cash
flow. The Directors believe that trading will continue to
demonstrate significant progress as the UK is no longer strictly
locked down and the economy readies itself for the post-, or
late-pandemic period, where companies cannot survive without
connectivity.
In summary, we remain optimistic about the future for Toople,
particularly given HM Government's commitment to telecommunication
infrastructure.
Richard Horsman
Non-Executive Chairman
CEO's Review
Overview
Toople entered the current financial year in a robust
operational and financial position and does not expect a
significant deviation from its previous objectives of growing core
revenue, replacing unprofitable contracts and accelerating towards
cash profitability at the operating level. We remain focussed on
securing growth, as well as building market share, and continue to
make meaningful progress on both fronts.
The integration of DMSL is now complete and the substantial cost
savings identified at the time of the acquisition are now being
realised. We trade under four main brands: www.toople.com ;
www.dmsluk.co.uk ; broadbandandphones.co.uk ; and
www.checkthatcompany.co.uk .
Toople.com continues to provide, as before, bespoke telecoms
services for its fast growing target market of UK SMEs with between
one and 50 employees.
DMSL also provides unified communication services in the UK,
ranging from a single phone line to a multi-site unified comms VoIP
platform, delivered via a network of telecoms and IT carriers and
content providers across the UK including BT Business, BT Global
Services, Gamma, EE, Vonage, TalkTalk Business and O2. DMSL acts as
a BT Premier reseller for broadband connectivity, mobile and fixed
voice and cloud services and is responsible for over 250,000 BT
customers and over 400,000 Revenue Generating Units.
broadbandandphones.co.uk is a telecoms price comparison website
and www.checkthatcompany.co.uk is a service offering company credit
reference checking and reports. These complement the Group's IT and
telecoms services, and although in their infancy, early indications
are that they are growing well.
Financial Performance
Total revenues remained flat at GBP1.5 million (HY 2020: GBP1.5
million). This includes a full six months of contribution from DMSL
against only six weeks in FY20. However, it does also reflect a
deliberate and targeted policy of reducing the number of Toople
customers to mitigate against bad debt exposure and to replace them
with better quality business to business revenues through DMSL.
During the reported period many of our customers were adversely
affected by COVID restrictions, with many forced to either close or
furlough staff and many fighting for survival. We took the decision
to support as many businesses as we could with some given 'service
holidays'. Although this has impacted revenue growth now, we
believe that it will prove to be the right policy over the longer
term and we are already seeing business levels increase
substantially again.
Our sales pipeline for the period was also flat, but it held up
well over the last three months of the period and again we are now
starting to see an upturn in the level of business as lockdown
eases, with the number of enquiries once again increasing.
Despite revenues largely remaining the same, we experienced an
increase in gross profit by 40% to GBP470,000 (HY 2020: GBP335,000)
and an overall gross margin improved by 9 percentage points to 31%.
Again, this was principally due to a shift in our business mix to
better performing clients with stronger debtor profiles.
In our wholesale business, we continued with our strategy to
only sign partnership agreements which are more profitable, as well
as renegotiating or terminating historic unattractive contracts. We
made further progress in this regard during the reported
period.
Admin costs reduced by 24%, mainly reflecting the synergies
generated following the integration of DMSL. Marketing spend also
reduced by 16%, commensurate with the market conditions in the
reporting period.
Our operating loss was GBP695,000 compared with a loss in HY2020
of GBP1.04 million, but this includes exceptional one off
restructuring costs of GBP79,000.
Following the integration of DMSL we introduced new procedures
to ensure a reduction in future bad exposure which include ensuring
all new customer onboarding is done via online document signature
and each customer has successfully passed our credit checking
process. We have also ceased verbal and voice recorded contracts.
As a result of these measures, the position is substantially
improved and out of term customers are within provisions. As a
result of these measures, the position is substantially improved
and out of term customers are within provisions, with only a
nominal bad debt charge of GBP43,000 against a charge of GBP309,000
for the same period last year and over GBP1.1m for the full year
2020.
In October 2020, we took advantage of an opportunity to raise
additional funds for the Company by way of an equity Placing. We
successfully raised GBP774,000 (before expenses). The Placing was
significantly oversubscribed and we are grateful to existing
shareholders for the support they have shown, and welcome new
shareholders to the register. The Company now has a healthier
balance sheet and is well capitalised to pursue its growth
strategy. At the end of the period the outstanding loan with Cloud
Telephones, acquired through the acquisition, was recovered in full
(GBP470,000).
Cash at bank was over GBP990,000 at period end and total assets
were GBP2.8 million (HY2020: Cash at bank was over GBP568,000 and
total assets were GBP2.9 million). Earnings per share was a loss
0.02 pence compared to an earnings per share loss of 0.06 pence in
HY2020.
Operating Performance
More and more businesses are being forced to review their
existing telecoms services and many are seeking new solutions which
provide enhanced quality at an affordable price.
We continue to add new business across a variety of sectors and
are increasingly being selected by well-known and respected brands
to roll out cloud telephony, as well disaster 4G backup recovery
systems, across multiple locations. These ensure that clients
continue to have exceptional internet connectivity and full access
to their business critical systems in the event of any outage.
We are also seeing a pattern develop where well-established and
well-known UK based brands and businesses, who are also market
leaders and/or specialists in their own sectors, are turning their
backs on their old communications providers, and looking to partner
with Toople. Our brand and our service offerings are resonating
among blue chip organisations with strong credit profiles, who
appreciate the strength of our services as well as our price
competitivity.
DMSL continues to perform solidly and since acquisition has won
a number of notable new contracts in the retail, NGO and local
government sectors. We were particularly pleased with the recent
Sainsbury's and Carluccio's contract trial win.
The Board remains acutely aware of the impact of COVID-19 on the
wider business environment; its true impact cannot be
underestimated by any business. However, we are confident that our
core offering of a cloud telephony platform will ensure business
continuity and can act as a solution for other businesses who are
increasingly seeing remote working environments as the norm.
Furthermore, the Government has earmarked GBP5 billion towards
rolling out gigabit broadband in the most difficult-to-reach 20 per
cent of the country. We welcome this move and consider it to be a
boost to Toople and to consumers and businesses who will gain
access to higher speeds and larger bandwidth connectivity over the
next five years. Toople is well placed to take advantage of these
market drivers.
Summary and Outlook
All our brand propositions are geared towards offering our
customers choice. We provide them with the best bespoke solutions
for their individual needs. We continue to demonstrate to our
customers that we are carrier -agnostic and focussed on providing
them with the best service at the best price and with transparency
and certainty of costs over the term of their contract. At this
particularly difficult time, businesses and consumers have welcomed
this. Our propositions continue to be disruptive and competitive in
the market. Whether business confidence grows or shrinks,
businesses need to remain connected, and we offer industry
disruptive telecommunications technology and services at a fixed
price that will always remain attractive against sluggish
incumbents.
Since early March 2021, trading has returned to more normalised
levels and we are now beginning to see growth return to our sales
leads and conversion rates. We expect this trend to continue and
have increased our sales force head count by over 30% in recent
weeks, as confidence slowly returns to the UK SME market, boosted
by the vaccine roll-out and the easing of COVID-19 restrictions.
This increased sales effort has been implemented without any
increase in our fixed costs as part of the flexible agreement we
have in place with our outsourced sales operation in Durban. This
team are experiencing increased interest and opportunities for
sales leads and conversions. We enjoy a strong relationship with
the large carriers and operators and BT, in particular, is
targeting the SME market heavily with an above the line TV and
press campaign. We believe this will benefit DMSL and will have a
material impact on our order volumes over the summer months.
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, September 2018 and
January 2020 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 May 2018. The Group relies on assurances from its data suppliers
that such data is compliant.
-- COVID-19 - The Board is monitoring the global health crisis
and is considering the associated risks and impact on the position
of the Group from both an operational and financial perspective.
With the extreme restrictions in force as a result of COVID-19 and
is implications, means that there can be no assurance that the
Group will be able to perform its intended workflows, achieve its
stated aims or raise additional finance if required. The Board
continues to monitor the effect of COVID-19 on an on-going
basis.
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 2020; 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
Andrew Hollingworth
Kevin Lawrence
Paul White
Company Secretary:
WKH Company Secretary Services
By Order of the Board
Andrew Hollingworth
Chief Executive Officer
17 June 2021
Condensed Consolidated Statement of Comprehensive Income
The condensed consolidated statement of comprehensive income of
the Group for the six month period from 1 October 2020 to 31 March
2021 is set out below.
NOTE
Period Ended Period Ended
31 Mar 2021 31 Mar 2020
GBP GBP
------------------------------- ----- --------------- ---------------
Continuing operations
Revenue 1,518,352 1,510,883
Cost of Sales (1,048,600) (1,176,044)
------------------------------- ----- --------------- ---------------
Gross Profit 469,752 334,839
Other Income - 91,864
Administrative expenses (1,065,287) (1,369,861)
Depreciation and amortisation (99,523) (17,873)
Exceptional restructuring
costs - (78,986)
------------------------------- ----- --------------- ---------------
Operating loss (695,058) (1,040,017)
Interest payable and similar
charges (78,531) (17,672)
Interest receivable 157 336
------------------------------- ----- --------------- ---------------
Loss before taxation (773,432) (1,057,353)
Taxation 62,938 -
------------------------------- ----- --------------- ---------------
Loss for the period (710,494) (1,057,353)
Other comprehensive loss for - -
the period
------------------------------- ----- --------------- ---------------
Total comprehensive loss for
the period attributable to
the equity owners (710,494) (1,057,353)
------------------------------- ----- --------------- ---------------
Earnings per share
Basic and diluted earnings
per share 5 (0.02) (0.06)
------------------------------- ----- --------------- ---------------
Condensed Consolidated Statement of Financial Position
The condensed consolidated statement of financial position as at
31 March 2021 is set out below:
31 Mar 2021 30 Sept 2020
NOTE GBP GBP
---------------------------------------- ------------ -------------
ASSETS
Non-current assets
Intangible Assets 1,281,727 1,324,867
Tangible Assets 36,899 37,380
Right of use assets 36,232 64,173
------------------------------------ ------------ -------------
Total Non-current assets 1,354,858 1,426,420
------------------------------------ ------------ -------------
Current assets
Trade and other receivables 401,040 855,941
Cash and cash equivalents 990,298 568,533
------------------------------------ ------------ -------------
Total Current assets 1,391,338 1,424,474
------------------------------------ ------------ -------------
Total assets 2,746,196 2,850,894
------------------------------------ ------------ -------------
EQUITY and LIABILITIES
Capital and reserves attributable
to equity shareholders
Share capital 6 2,822,452 2,347,874
Share premium 6,288,460 6,027,272
Merger reserve (25,813) (25,813)
Share-based payment reserve 55,534 49,843
Accumulated deficit (9,110,733) (8,400,239)
------------------------------------ ------------ -------------
Total equity 29,900 (1,063)
------------------------------------ ------------ -------------
Current liabilities
Trade and other payables 7 1,050,439 1,236,465
Lease liabilities 41,119 52,517
------------------------------------ ------------ -------------
Total Current liabilities 1,091,558 1,288,982
------------------------------------ ------------ -------------
Non-current liabilities
Financial liabilities - borrowings 7 1,624,738 1,549,316
Lease liabilities - 13,659
------------------------------------ ------------ -------------
Total non-current liabilities 1,624,738 1,562,975
------------------------------------ ------------ -------------
Total equity and liabilities 2,746,196 2,850,894
------------------------------------ ------------ -------------
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 2021 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
2020 2,347,874 6,027,272 (25,813) 49,843 - (8,400,239) (1,063)
Loss for the
period - - - - - (710,494) (710,494)
--------------------- ---------- ---------- --------- --------- -------------- ------------ ----------
Total comprehensive
loss for the
period - - - - - (710,494) (710,494)
Transactions
with owners
Share-based
payment charge - - - 5,691 - 5,691
Issue of share
capital net
of issue costs 474,577 261,188 - - 735,766
At 31 March
2020 2,822,451 6,288,460 (25,813) 55,534 - (9,110,733) 29,900
--------------------- ---------- ---------- --------- --------- -------------- ------------ ----------
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
2019 762,774 5,412,561 (25,813) 255,099 - (6,100,079) 304,542
Loss for the
period - - - - - (1,057,353) (1,057,353)
--------------------- ---------- ---------- --------- --------- -------------- ------------ ------------
Total comprehensive
loss for the
period - - - - - (1,057,353) (1,057,353)
Transactions
with owners
Share-based
payment charge - (643,109) - 644,887 - 1,778
Issue of share
capital net
of issue costs 1,585,100 525,562 - - - 2,110,662
At 31 March
2020 2,347,874 5,295,014 (25,813) 899,986 - (7,157,432) 1,359,629
--------------------- ---------- ---------- --------- --------- -------------- ------------ ------------
Condensed Consolidated Statement of Cash Flows
The condensed consolidated cash flow statement of the Group from
1 October 2020 to 31 March 2021 is set out below:
Period ended Period ended
------------------------------------------- ----
31 Mar 2021 31 Mar 2020
------------------------------------------- --- ------------- -------------
GBP GBP
Cash flows from operating activities
Operating loss (695,058) (1,040,017)
Depreciation and amortisation 95,459 30,790
Share-based payment charge 5,691 1,778
Changes in working capital
(Increase) in receivables (16,759) (128,444)
(Decrease) / Increase in payables (184,367) 211,758
------------------------------------------------- ------------- -------------
Net cash outflow from operating
activities (795,034) (924,135)
------------------------------------------------- ------------- -------------
Cash flows from financing activities
Proceeds from issues of share
capital (net of issue costs) 735,766 934,200
Proceeds from loans - 1,234,995
Finance costs from loans - (65,795)
Lease payments (25,057) -
------------------------------------------- ---- ------------- -------------
Net cash from financing activities 710,709 2,103,400
------------------------------------------------- ------------- -------------
Cash flows from investing activities
Purchase of subsidiary undertaking - (503,000)
Net cash acquired with subsidiary
undertaking - (115,436)
Acquisition of intangible and
tangible assets (23,895) (58,145)
Interest received 157 336
Interest paid (3,110) -
R&D tax credits 62,938 -
Loans repaid 470,000 -
Net cash from investing activities 506,090 (676,245)
------------------------------------------------- ------------- -------------
Net increase in cash and cash equivalents 421,765 503,020
Cash and cash equivalents at
start of period 568,533 497,400
------------------------------------------------- ------------- -------------
Cash and cash equivalents at
end of period 990,298 1,000,420
------------------------------------------------- ------------- -------------
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.
Subsequent to the initial establishment of the Group the
acquisition method of accounting is used to account for the
acquisition of subsidiaries by the Group. The cost of an
acquisition is measured as the fair value of the assets given,
equity instruments issued, liabilities incurred or assumed at the
date of exchange, plus costs directly attributable to the
acquisition. Identifiable assets acquired, and liabilities and
contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date,
irrespective of the extent of any non-controlling interest. The
excess of the cost of acquisition over the fair value of the
Group's share of the identifiable net assets acquired is recorded
as goodwill.
2. BASIS OF PREPARATION
The interim, condensed, unaudited financial statements for the
period ended 31 March 2021 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 2020. The results for the period
ended 31 March 2021 are unaudited.
The condensed unaudited consolidated financial statements for
the period ended 31 March 2021 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 2020.
The Group is not subject to seasonal fluctuations in
operations.
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.
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 was included in the annual report for the year ended
30(th) September 2020. There has been no change in these critical
accounting estimates and judgements .
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.
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
Period Ended Ended 31
31 Mar 2021 Mar 2020
GBP GBP
---------------------------------------------- ------------- --------------
Loss for the year from continuing operations (710,494) (1,057,353)
Weighted average number of shares in issue 4,075,666 1,701,993,019
Basic and diluted earnings per share (0.02p) (0.06p)
------------------------------------------------ ------------- --------------
As detailed in note 1, the consolidated financial statements
present the combination as a continuation of the combined financial
information of the Subsidiaries. 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 2,333,358,131 warrants at 31 March
2021. No warrants were issued in the period. 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
31 Mar 2021 30 Sept 2020
No. GBP No. GBP
---------------------------- -------------- -------------- -------------- --------------
Allotted and fully paid
Ordinary shares 4,231,561,361 2,822,451 3,520,051,135 2,347,874
---------------------------- -------------- -------------- -------------- --------------
Ordinary
shares Share Capital Share Premium
No. GBP GBP
---------------------------- -------------- -------------- -------------- --------------
Share capital
At 1 October 2020 3,520,051,135 2,347,874 6,027,272
Share issue 711,510,226 474,577 307,334
Share issue costs - - (46,146)
Share based payment
charge on warrants issued
charged to share premium
---------------------------- -------------- -------------- -------------- --------------
At 31 March 2021 4,231,561,361 2,822,451 6,288,460
---------------------------- -------------- -------------- -------------- --------------
On 9 November 2020 the Company placed 704,010,226 ordinary
0.0667p shares at a subscription price of 0.11p per share.
Commissions of GBP38,721 were payable to the brokers at the time
and this has been recognised against share premium in addition to
other share issue related costs amounting to GBP7.425.
On 21 January 2021 7,500,000 warrants were exercised at a price
of 0.11p per share resulting in the issue of 7,500,000 new ordinary
0.0667p shares on the same date.
7. TRADE AND OTHER PAYABLES
31 Mar 2021 30 Sept 20
GBP GBP
--------------------------------- ------------ -----------
Trade payables 720,775 851,003
Social Security and other taxes 198,419 149,165
Other payables 15,126 72,273
Accruals and deferred income 116,119 164,024
Right of use lease liabilities 41,119 52,517
--------------------------------- ------------ -----------
1,091,558 1,288,982
--------------------------------- ------------ -----------
2021 2020
GBP GBP
Non - current liabilities
Lease liabilities - 13,659
Borrowings 1,624,738 1,549,316
--------------------------------- ------------ -----------
1,624,738 1,562,975
--------------------------------- ------------ -----------
Financial liabilities, with the exception of the borrowings and
lease liabilities, are all considered to be repayable within 30
days.
On 19 February 2020 the Company issued a loan note instrument
constituting zero coupon secured loan notes for a face value of
GBP1,625,000 with a maturity date of 31 December 2022. The Loan
Note Instrument contains customary warranties, financial and other
covenants and events of default. The Loan Note Instrument also
contains information rights and board observer rights for the
noteholders. The loan notes constituted under the Loan Note
Instrument are repayable on the maturity date or in the event of
the occurrence of an event of default. The loan notes constituted
under the Loan Note Instrument are secured by a debenture over the
assets of the Group. Costs associated with the issue of the loan
note amounting to GBP65,795 are being amortised over the life of
the loan note.
8. RELATED PARTY TRANSACTIONS
6 months 6 months to
to 31 Mar 20
31 Mar 21
GBP GBP
----------------------------------------- ----------- ------------
Goods/services purchased from Dotfusion
Limited 24,000 36,000
Goods/services purchased from Highlees
Consulting Limited 16,000 13,333
Goods/services purchased from KBL
Consulting Limited 12,600 28,252
Goods/services supplied to Richard
Horsman 1,853 603
Goods/services supplied to Andrew
Hollingworth 511 283
54,964 78,471
----------------------------------------- ----------- ------------
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 a non-executive Director.
9. DIVIDENDS
No dividends were declared in the period.
10. SUBSEQUENT EVENTS
The Board does not believe there are any subsequent events
requiring further disclosure or comment.
-ends-
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