TIDMTPOP
RNS Number : 8122I
The People's Operator PLC
22 June 2017
The People's Operator plc
("TPO" or the "Company")
Full Year Results
The People's Operator (AIM: TPOP), the cause-based commercial
mobile virtual network operator ("MVNO"), is pleased to announce
its full year results for the period ended 31 December 2016.
Financial Highlights
-- Revenue of GBP3.4m (2015:GBP2.1m), representing growth of 63%
-- Loss of GBP8.7m (2015: GBP10.5m), after non-operational and
non-cash adjustments for share options and impairment of intangible
assets
-- Cash and cash equivalents at year end of GBP2.7m
-- US revenue of GBP753k (2015:GBP7.6k)
-- Average revenue per user in the UK of GBP12.50 for PAYM
customers and GBP13.22 for PAYG customers
-- Average revenue per user in the US of $22.00
-- Average customer acquisition costs remain low at GBP5.70 in the UK and $22 in the US
Operational Highlights
-- Operational on both the EE and Three networks in the UK
-- Successful launch in June on the T-Mobile network in the US
-- Operational on both T-Mobile and Sprint in the US
-- Successful fund raising in December to bolster balance sheet
-- Significant strengthening of Board
Current Trading
-- Improved commercial terms in both the UK and US
-- Gross revenues in the US in February (compared to December) increased by 25.6%.
-- US ARPU of $20.94
-- Further fundraising in January and in April in response to investor demand
-- Appointment of Julia Simpson, Chief of Staff at IAG plc, as
Non-Executive Director, subject to confirmation at the next AGM
Jimmy Wales, Executive Chairman, commented:
"This has been another year of growth for The People's Operator
in challenging market conditions. Our successful launch in the US
with our partner T-Mobile has greatly increased our reach and
appeal across a wider social and geographical demographic. Our
costs per acquisition remain far below the industry average in both
our markets.
The recent rise in social awareness and responsibility,
particularly in the US in the aftermath of the election, chimes
precisely with our message of supporting good causes and our
strategy of viral growth. I believe that our increased organic
growth and strength in marketing will continue to attract new
customers and spread the word among our target communities.
I was delighted to welcome Juliet Rosenfeld and Michael Butler
to the Board as Non-Executive Directors. As announced previously, I
will be stepping down as Chairman at the Annual General Meeting and
Michael will be taking my place. I am also very pleased to announce
the appointment today of Julia Simpson as a Non-Executive Director
(subject to confirmation at the next AGM). Her considerable
experience as Chief of Staff at IAG will be of huge value to the
Company as we embark on the next stage of our growth."
Julia Simpson, proposed Non-Executive Director, commented:
"I am delighted to join the Board of The People's Operator. This
Company is unique - offering customers an opportunity of supporting
good causes while using their phone. TPO is a pioneering model of
'crowd giving'. Make a call, make a change. It is a privilege to be
part of TPO. I look forward to contributing to the successful
development of this brand."
For further information
The People's Operator plc
Nick Dashwood Brown, Head
of Investor Relations 07710 511259
finnCap Ltd
Stuart Andrews / Christopher
Raggett / Simon Hicks 020 7220 0500
About The People's Operator
The Company was founded in 2012 and currently offers customers
pay monthly ("PAYM") and pay-as-you-go ("PAYG") mobile contracts.
These contracts are competitively priced and allow users to direct
10% of their monthly bill to a cause of their choosing at no
additional cost to themselves. In addition, The TPO Foundation, a
UK registered charity, will receive 25% of the UK trading profits
generated by The People's Operator LLP. A similar structure is
proposed to be adopted in other countries.
The strategy of the Group is to maintain a low fixed-cost base,
small staff numbers and lower levels of advertising and marketing
expenditure than its competitors. In addition, as TPO operates as
an MVNO, the Group is not expected to be exposed to the high
infrastructure costs and large capital investment charges that
traditional mobile operators can incur. This strategy is expected
to enable the Group to offer customers a highly competitive pricing
model with a high quality of service, whilst generating an
attractive return to shareholders after donations to causes.
TPO has developed partnerships with community organisations and
causes who promote TPO's products to their supporters. Under the
direction of Jimmy Wales, the founder of the online encyclopaedia
Wikipedia, the Company is also developing an online viral community
to expand the global network of mobile phone customers who share in
the common belief of supporting causes.
The Directors believe that this strategy is scalable into new
markets around the world which offer competitive wholesale mobile
network bandwidth prices and where subscriber acquisition and
revenue growth can be driven quickly at a low incremental cost once
network agreements have been concluded with local network
operators.
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
Chairman's Statement
2016 was a year of significant revenue growth for The People's
Operator plc ('the Company') and subsidiaries ('the Group' or
'TPO'). Revenues grew to GBP3.4m compared with the 2015 figure of
GBP2.1m, a rise of 63%. Group loss for the year was GBP8.7m
compared to prior year losses of GBP10.5m.
Our Average Revenue Per User (ARPU), statistics remain
encouraging. In the UK, Pay As You Go (PAYG) ARPU averaged GBP13.22
throughout 2016 and finished the year at GBP13.74 versus the 2015
average of GBP12. The Pay Monthly (PAYM), excluding offer period
customers averaged GBP12.50 for 2016. In the UK, we continue to
operate on the EE and Three networks.
In June 2016, TPO successfully launched on the T-Mobile network
in the US, which operates alongside our agreement with Sprint.
The Group has always believed that our US ARPU would be higher
than that of the UK and this supposition has been consistently
upheld since our launch. Our US ARPU, excluding offer period
customers for 2016 ran at an average of USD$22.09 and ended the
year at USD$21.80. The majority of US customers are signed up to a
Prepay system and consequently the Group has no material risk of
bad debt in the US.
The Group has benefitted in a small way from the weakness in
sterling subsequent to the Brexit vote. The movement in foreign
exchange rates will remain relevant to the Group as a significant
portion of its revenues are denominated in US dollars.
Our Cost per Acquisition (CPA), which measures the average cost
of acquiring a customer, remains extremely low. In the UK the
average CPA was GBP5.70 and in the US it was USD$22.00. These
numbers relate to the last six months of 2016.
As announced at the interim stage, the Company raised further
funds in December 2016. Along with external institutional
investors, our major shareholder Juliet Rosenfeld, CEO Mark Epstein
and I demonstrated our belief in the Group by committing
substantial further investment at that point. I believe that this
commitment will prove both appropriate and timely and that TPO will
continue to show consistent revenue growth and profitability, while
recognising working capital management remaining an important focus
for the group too.
During the latter part of the year, James Rosenfeld, son of our
founder Andrew Rosenfeld, resigned as a Non-Executive Director. We
thank James for his efforts on behalf of the Group. We were
delighted subsequently to welcome Mrs Juliet Rosenfeld, Andrew's
widow and our largest shareholder, to the Board as a Non-Executive
Director. The Group is grateful for her continued support and
dedication to the development of the business.
At the beginning of 2017 we were extremely fortunate to welcome
Michael Butler to the Board as a Non-Executive Director. Michael
has a long and distinguished career in the telecoms industry and
brings a wealth of valuable experience to the Board. As announced
on 25 January 2017, it is the Company's intention to appoint
Michael as Non-Executive Chairman at the Annual General
Meeting.
This is my last statement as Chairman. As previously announced I
will be stepping down at the Annual General Meeting and offering
myself for election as a Non-Executive Director. It remains for me
to thank our employees for their continued hard work and dedication
to the Group. Without their considerable efforts the Group would
not have achieved its notable growth over the past two years and I
am grateful to each and every one of them.
J Wales
Chairman
Date: 21 June, 2017
Strategic Report
Principal activity
The principal activity of the Group is the provision of mobile
phone services. We believe that subscribers find TPO appealing due
to the combination of wide network coverage, competitive pricing,
and the opportunity to direct 10% of their bill to a good
cause.
The Group has developed, marketed and operates a mobile phone
business that provides consumers with an attractive alternative to
traditional providers. The Group is financially prudent and
operates a low cost model to generate the best return on
investment. The Group has the ambition to grow the business into a
profitable operation with 2% penetration into the UK and US by
2021.
TPO sells mobile services to consumers; these are delivered in
the UK by an operating infrastructure provided by Three and by EE.
In the US, similar services are provided by Sprint and by T-Mobile.
The business is comprehensively underpinned by a digital
platform.
The Group's revenue is reported after donations that are
collected on behalf of and passed on to nominated causes as part of
our commitment that 10% of the customers' bill will be paid to the
cause that the customer has nominated.
Loss for the year was GBP8.7m (2015 - GBP10.5m) and loss per
share was GBP0.09 (2015 - GBP0.11) per share.
The Board's review of the performance of the Group is included
within this Strategic Report whilst reference is also made to the
Chairman's Statement which provides further review and analysis of
the performance of the Group.
Review of the business and key performance indicators
2016 was a year of transition in which we launched on two new
networks: T-Mobile in the US and Three in the UK. We also undertook
an internal review of group's cost base and future value of key
tangible and intangible assets and made appropriate changes and
impairments where required.
Revenue (after donations) grew from GBP2.1m in 2015 to GBP3.4m
in 2016, a factor of 1.6 times. The revenue increase was driven by
the growth in the number of subscribers in both the UK and the US.
UK Revenues grew from GBP2.1m to GBP2.7m (after donations). The US
has seen revenue growth, from an immaterial amount in 2015 to
GBP0.7m (US$1m) after donations.
As at 31 December 2016, the Group had cash and cash equivalents
of GBP2.7m (2015: GBP8.0m), cash outflows from operating activities
of GBP7.9m (2015: net cash outflow of GBP8.9m) and realised a loss
for the year of GBP8.7m (2015: a loss of GBP10.5m) and thus a
reduction of 17.1%. Total current assets are GBP3.3m (2015:
GBP8.8m), with this reduction primarily being driven by an
impairment of intangible assets, to re-align the intangible value
with the group's business plans.
During the year the company sourced funding from Barclays Bank
plc, to support working capital requirements and future business
plans. The balance at the year end was GBP1m. At 31 December 2016
there was a technical breach of the EBITDA covenant contained
within the Standard Terms of the facility. Since then, management
have received confirmation from Barclays confirming the technical
breach and confirming they waive the right to take any action.
A combination of the impairment of the legacy intangibles,
reduction in cash, the reduction in receivables, increase in
borrowing but a reduction in both trade and other payables, saw
total net assets reduce to GBP0.6m (2015: GBP7m).
Furthermore, during the year the directors made a provision for
impairment against investments in the company's statement of
financial position. The investment value is linked to the company's
share price at the reporting period end.
We remain confident that the business model and platform are
capable of international transposition in-line with our stated
strategy, and we continue to investigate markets outside the UK and
US for future expansion.
Current Trading
We are pleased to report that solid trading continues in the
current financial year. As previously announced in January 2017,
discussions with our network providers in the UK have led to
considerably improved commercial terms for airtime costs.
Discussions with network providers also took place in the US and
once again we will benefit this year from improved commercial
terms. The US business has already demonstrated impressive growth.
As previously announced on 9 March 2017, gross revenues in the US
in February (compared to December) increased by 25.6%. The rate of
growth slowed during March and April but the average ARPU for the
year to date is $20.94.
We have been able to identify specific demographics and
geographical areas within the US which are particularly attuned to
the Company's message of social responsibility and charitable
giving and we have seen notable activity within the TPO Community
in these areas. The concept and potential of social responsibility
has received widespread media coverage in the aftermath of the
Presidential Election and TPO has enjoyed strengthened customer
awareness as a result.
The Company successfully raised further funds in January 2017
for total of GBP0.2m as a response to investor demand and a further
GBP1.5m in May 2017. The shares issued to satisfy this demand came
with a warrant attached, offering the possibility of a further fund
raise dependent on the attainment of certain share price
milestones.
The Board believes that TPO is well-placed to continue the
revenue and margin growth already seen this year and is confident
that the Group will continue to show steady growth towards
profitability.
We are delighted to welcome Julia Simpson to the Board as a
Non-Executive Director subject to confirmation at the next AGM.
Julia is Chief of Staff at International Airlines Group (IAG) with
responsibility for, among other things, global communication. She
holds Board positions at British Airways and Iberia. Her experience
in corporate communications and high-level business relations will
be invaluable to the Group.
TPO Projects in operation in 2016
TPO Community
The Community offers members, charities and other non-profit
organisations a social network and a fully functional donation
platform. This succeeds on three levels: it maximises fundraising
opportunities for the cause, it combines this with social sharing
to help continue and develop the conversation and it offers an easy
to use communication tool to reach a broad and like-minded audience
already disposed towards, and familiar with charitable giving.
Fundraising Platform (TPO Giving)
The fundraising platform is live on the TPO website
(www.tpo.com/giving). The platform allows people to donate to
charities and other good causes without incurring the commission
charges imposed by competing organisations. Our only charge for a
donation is the fee levied by the banks for processing donations.
While other donation websites charge up to 9% in commission, we
believe that donors will appreciate the opportunity to have more of
their money passing directly to the cause they support.
We are developing tools which help to integrate the donation
functionality into the good cause's own website. This will help
causes collect donations easily and safely and will also help to
build the number of customers joining and nominating them.
Partner Sales Platform and Distribution Platform
The partner sales platform is the extension and automation of
collaboration tools available to TPO partner causes. The tools and
programmes are delivered to partners via an online portal linked to
the UK and USA store sites.
Platform tools and programmes include: tailored and discounted
co-branded mobile airtime, digital collaboration tools including
access to the TPO Community, social media, SEO (Search Engine
Optimisation), email and SMS.
(Short Message Services) capabilities, access to the TPO giving
platform with the option to deploy a TPO Giving widget.
The platform will include a secure login area where partners can
monitor their TPO programmes and income.
Member Get Member
Customer relationship management to encourage customer referrals
has been part of TPO's acquisition strategy since its inception.
For example, historically in the UK 10% of all new TPO Pay Monthly
customers joined through an existing customer referral.
TPO's Member Get Member programme builds on this approach by
rewarding all existing US and UK customers, as well as the
individuals who join TPO as a result of their recommendation, with
bonus mobile airtime credits.
The programme is administered online and supported by customised
SIM (Subscriber Identity Module) packs with tear-off slips to make
it easy for customers to recommend their family and friends to
TPO.
TPO's Member Get Member programme will aid the Group in its goal
to achieve viral growth while minimising cost per acquisition.
Super Recruiter
TPO's new Super Recruiter programme is another major innovation
in customer acquisition, bypassing traditional mobile phone sales
channels by going to community influencers.
These community influencers or Super Recruiters are rewarded for
each customer joining TPO citing the Super Recruiter's unique
reference code.
Super Recruiters act in a variety of communities and use a
combination of online promotion, word of mouth and other methods to
help TPO acquire customers.
Community (Help and Support)
We continue to build engagement with the community, using
regular "Super Users" to contribute to discussions and provide
support for mobile customers.
We are developing the Help and Support segment within the
community to encourage interaction and self-support. This will
allow for better SEO, building authority for TPO and www.tpo.com
around mobile search terms and will deliver non-branded organic
traffic, with general enquiries about handset functionality and
comparison.
Having an active help community where customers effectively
support each other allows a lower cost of service, decreased
acquisition costs and enhances our ambition of offering a 24-hour
service.
These initiatives will underpin subscriber and revenue growth
and serve to heighten our profile by viral engagement on social
media.
Principal risks and uncertainties
Liquidity Risk
Liquidity risk is the risk that the Group may have difficulty in
obtaining funds in order to meet its day-to-day operating
requirements.
At the year-end the Group had GBP2.7m of cash and cash
equivalents. The Group has a short customer payment cycle. In the
US, the payment method for customers is via an automatically
recurring pre-payment ("Autopay"), and the UK is scheduled to adopt
the same model in due course. Bad debts are routinely monitored and
actively pursued. Working capital management remains at the
forefront of the Directors' areas of focus.
Cash and cash flow forecasts are reviewed by the Executive
Directors on a daily basis and the Group constantly monitors these
to ensure, among other scenarios, that the Group meets its
liabilities as they fall due. This area is considered further in
the report of the directors and the accounting policies under
'Going concern'.
In July 2016, the Group negotiated a GBP1,000,000 loan facility
with Barclays Bank plc to help manage liquidity and allow for
expansion. This loan and the additional equity funding received of
GBP1,700,095 from issuance of subscription shares allow the Group
to continue its strategic path to expansion and revenue growth,
which has continued in 2017.
The loan facility has a two year term with an interest of 8.5%
plus Base Rate.
The Group has undertaken a number of cost-cutting exercises
during 2016 and is running a lean operation with resources deployed
under ongoing review.
As the Group has a high volume of small outstanding balances,
there is a risk of bad debt and a difficulty in collecting amounts.
During 2016 the Group has recruited a credit controller to monitor
and collect cash.
Foreign Exchange Risk
Expansion into the US market has involved foreign currency
transactions, exposing the Group to the risks of unfavourable
movements in foreign exchange markets, in particular in relation to
intergroup funding and related group balances.
The Executive Directors approve and monitor all transactions
settled in foreign currency and regularly assess the need to
mitigate foreign exchange risk via hedging solutions, which include
ensuring that that as far as is possible, sales and purchases are
made in the local currency of each group entity.
Financial Reporting Risk
Financial reporting risk during the current year relates to
maintaining appropriate staff levels and procedures.
At the end of the financial year a permanently staffed finance
team was in operation providing management with real time financial
reporting and planning with comprehensive visibility over group
operations.
Management is committed to ensuring there is continuity in the
finance team and that there are staffing levels appropriate to
Group needs.
Approved by the board and signed on its behalf
M Epstein
Chief Executive Officer
Date: 21 June, 2017
Consolidated statement of comprehensive income for the year
ended 31 December 2016
Note 2016 2015
GBP GBP
Revenue 3 3,436,028 2,108,629
Cost of sales (3,589,401) (3,935,532)
__________ __________
Gross loss (153,373) (1,826,903)
Administrative expenses (7,526,221) (7,955,269)
Exceptional administrative expenses 4 (857,255) (650,800)
__________ __________
Total administrative expenses (8,383,476) (8,606,069)
__________ __________
Operating loss 5 (8,536,849) (10,432,972)
Finance income 5,287 26,394
Finance expense (39,777) (773)
__________ __________
Loss before tax (8,571,339) (10,407,351)
Taxation 6 (88,887) (46,825)
__________ __________
Loss for the year (8,660,226) (10,454,176)
__________ __________
Other comprehensive income:
Exchange differences on translating 33,784 -
foreign operations
__________ __________
Other comprehensive income for 33,784 -
the year
__________ __________
Total comprehensive loss for the
year (8,626,442) (10,454,176)
__________ __________
Loss for the year attributable
to:
Owners of the parent (7,303,865) (8,528,204)
Non-controlling interest (1,356,361) (1,925,972)
__________ __________
Loss for the year (8,660,226) (10,454,176)
__________ __________
Total comprehensive loss for the
year attributable to:
Owners of the parent (7,270,081) (8,528,204)
Non-controlling interest (1,356,361) (1,925,972)
__________ __________
Total comprehensive loss for the
year (8,626,442) (10,454,176)
__________ __________
Basic and diluted loss per share
attributable to shareholders of
the parent (0.09) (0.11)
__________ __________
Loss per share
The loss per share calculation is based on the group's retained
loss attributable to the shareholders of the parent for the year of
GBP7,270,081 (2015 - GBP8,528,204) and the weighted average number
of shares for the year of 2016 - 78,944,328 (2015 -
77,099,059).
Consolidated statement of financial position at 31 December
2016
2016 2016 2015 2015
GBP GBP GBP GBP
Assets
Non-current assets
Property, plant
and equipment 69,266 83,893
Intangible assets - 1,293,212
__________ __________
Total non-current
assets 69,266 1,377,105
__________ __________
Current assets
Trade and other
receivables 531,840 782,910
Cash and cash equivalents 2,727,177 7,999,330
__________ __________
Total current assets 3,259,017 8,782,240
__________ __________
Total assets 3,328,283 10,159,345
__________ __________
Equity and liabilities
Current liabilities
Trade and other
payables 1,704,527 3,126,257
Borrowings 1,000,000 -
__________ __________
Total Liabilities 2,704,527 3,126,257
__________ __________
Equity
Share capital 56,998 38,550
Share premium 23,626,506 21,821,784
Share based payment 393,940 -
reserve
Foreign exchange 33,784 -
reserve
Retained earnings (19,297,498) (11,993,633)
__________ __________
Total equity attributable
to the parent 4,813,730 9,866,701
Non-controlling
interest (4,189,974) (2,833,613)
__________ __________
Total Equity 623,756 7,033,088
__________ __________
TOTAL EQUITY AND
LIABILITIES 3,328,283 10,159,345
__________ __________
The financial statements were approved and authorised for issue
by the Board of Directors on 21 June 2017 and were signed on its
behalf by:
M Epstein
Director
Consolidated statement of cash flows for the year ended 31
December 2016
2016 2016 2015 2015
GBP GBP GBP GBP
Cash flows from operating
activities
Loss for the year (8,660,226) (10,454,176)
Adjustments for:
Depreciation of property,
plant and equipment 23,899 13,742
Amortisation of intangible
fixed assets 545,215 246,423
Impairment of intangible
assets 857,255 -
Finance income (5,287) (26,394)
Finance costs 39,777 773
Share based payments
(note 19) 517,015 -
__________ __________
(6,682,352) (10,219,632)
Decrease/(increase)
in trade and other
receivables 251,070 (375,595)
(Decrease)/increase
in trade and other
payables (1,421,730) 1,645,588
__________ __________
Cash used in operations (7,853,012) (8,949,639)
Interest received 5,287 26,394
Interest paid (39,777) (773)
__________ __________
Net cash flows from
operating activities (7,887,502) (8,924,018)
Investing activities
Purchases of property,
plant and equipment (6,822) (87,652)
Purchase of intangibles (97,925) (1,404,236)
__________ __________
Net cash used in investing
activities (104,747) (1,491,888)
Financing activities
Proceeds from the
issuance of share
capital 1,700,095 -
Proceeds from borrowings 1,000,000 -
__________ __________
Net cash from financing
activities 2,700,095 -
__________ __________
Net decrease in cash
and cash equivalents (5,292,154) (10,415,906)
Cash and cash equivalents
at beginning of year 7,999,330 18,415,236
__________ __________
Effects of foreign
exchange 20,001 -
Cash and cash equivalents
at end of year 2,727,177 7,999,330
__________ __________
Consolidated statement of changes in equity for the year ended
31 December 2016
Total
attributable Non-
to
Share Share Retained equity controlling Total
holders
capital premium earnings parent interest equity
GBP GBP GBP GBP GBP GBP
At 1 January
2015 38,550 21,821,784 (3,465,429) 18,394,905 (907,641) 17,487,264
Loss and total
comprehensive
loss for the
year - - (8,528,204) (8,528,204) (1,925,972) (10,454,176)
__________ __________ __________ __________ __________ __________
31 December
2015 38,550 21,821,784 (11,993,633) 9,866,701 (2,833,613) 7,033,088
__________ __________ __________ __________ __________ __________
Total
Share Foreign attributable Non-
Share Share based currency Retained to controlling Total
capital premium payment translation earnings equity interest equity
reserve holders
GBP GBP GBP GBP GBP GBP GBP GBP
At 1 January
2016 38,550 21,821,784 - - (11,993,633) 9,866,701 (2,833,613) 7,033,088
Comprehensive
loss for
year
Loss for
the year - - - - (7,303,865) (7,303,865) (1,356,361) (8,660,226)
Effects
of foreign
exchange - - - 33,784 - 33,784 - 33,784
---------------
_________ __________ __________ __________ __________ __________ __________ __________
---------------
Total
comprehensive
loss for
the year - - - 33,784 (7,303,865) (7,270,081) (1,356,361) (8,626,442)
Contributions
by and
distributions
to owners
Share
based
payments
- options
issued - - 393,940 - - 393,940 - 393,940
Share
based
payments
- shares
issued 1,447 121,628 - - - 123,075 - 123,075
Issue
of share
capital 17,001 1,683,094 - - - 1,700,095 - 1,700,095
_________ __________ __________ __________ __________ __________ __________ __________
Total
contributions
and
distributions
to owners 18,448 1,804,722 393,940 - - 2,217,110 - 2,217,110
_________ __________ __________ __________ __________ __________ __________ __________
31 December
2016 56,998 23,626,506 393,940 33,784 (19,297,498) 4,813,730 (4,189,974) 623,756
_________ __________ __________ __________ __________ __________ __________ __________
Notes to the financial information
1 Basis of preparation
The financial information for the year ended 31 December 2016
and the year ended 31 December 2015 contained in these preliminary
results does not constitute the company's statutory accounts for
those years.
The auditors' reports on the accounts for 31 December 2016 and
the year ended 31 December 2015 were unqualified, and did not
contain a statement under 498(2) or 498(3) of the Companies Act
2006. However, while the year ended 31 December 2015 did not draw
attention to any matters by way of emphasis, the audit report for
the ended 31(st) December 2016 contained a statement in respect of
uncertainly over going concern, further details are included in
note 2 below.
The financial information contained in these preliminary results
has been prepared using the recognition and measurement
requirements of International Financial Reporting Standards (IFRSs)
as adopted by the EU. The accounting policies adopted in these
preliminary results have been consistently applied to all the years
presented and are consistent with the policies used in the
preparation of the financial statements for the year ended 31
December 2015. New standards, amendments and interpretations to
existing standards, which have been adopted by the Group for the
year ended 31 December 2016, have not been listed since they have
no material impact on the financial information.
2 Liquidity and Going Concern
These financial statements have been prepared on
the going concern basis. The Directors have reviewed
the Company and Group's going concern position
taking account of its current business activities,
budgeted performance and the factors likely to
affect its future development, which are set out
in this Annual report, and include the Group's
objectives, policies and processes for managing
its capital, its financial risk management objectives
and its exposure to credit and liquidity risks.
The directors have prepared cash flow forecasts
covering a period of at least 12 months from the
date of approval of the financial statements. If
the forecast is achieved, the Group will be able
to operate within its existing facilities. However
the time to close new customers and the value of
each customer, which are deemed high volume and
low value in nature are factors which constrain
the ability to accurately predict revenue performance.
Furthermore investment in winning customers, via
marketing expenditure, remains an important function
of the forecasts too. As such, there is a risk
that the group's available working capital may
prove insufficient to cover both operating activities
and the repayment of its debt facility. In such
circumstances, the group would be obliged to seek
additional funding through a placement of shares
or source other funding. The directors have had
a history of raising financing from similar transactions.
Furthermore, those investors who participated in
the fundraising of April 2017 received warrants
attached to their new shares, giving them the right
to a further subscription for new shares subject
to the attainment of a specific share price metric.
The directors have concluded that the circumstances
set forth above represent a material uncertainty,
which may cast significant doubt about the Company
and Group's ability to continue as going concerns.
However they believe that taken as a whole, the
factors described above enable the Company and
Group to continue as a going concern for the foreseeable
future. The financial statements do not include
the adjustments that would be required if the Company
and the Group were unable to continue as a going
concern.
3 Revenue and segmental information
The Group supplies communication services and products to the UK
and the US markets through a mobile virtual network. This is
considered to be a single group of services and products provided
by a single supplier, and one operating segment. The Group has
focused on managing the services provided through this network in a
unitary manner.
2016 2015
GBP GBP
Gross income from UK market 2,837,200 2,179,758
Gross income from US market 753,109 7,550
__________ __________
3,590,309 2,187,308
__________ __________
For customers who choose to nominate a charity or cause, below
we break out the relevant 10% of their billings that is passed on
by TPO.
2016 2015
GBP GBP
Gross income 3,590,309 2,187,308
Amounts to nominated causes (154,281) (78,679)
__________ __________
Revenue 3,436,028 2,108,629
__________ __________
4 Exceptional administration expenses
2016 2015
GBP GBP
US launch costs - (650,800)
Impairment of Intangibles (857,255) -
__________ __________
The directors have reviewed the forecasted performance of the
intangible assets held by the Group and have deemed there to be
uncertainty in respect of the ability of the assets to generate
positive cash flows over their economic life. Accordingly the
assets are deemed to be fully impaired at the year-end 31 December
2016 and an exceptional expense has been recognised for the
impairment charge..
The exceptional expenses incurred in the prior year related to
legal and professional service expenses associated with entry into
the USA market. Specifically the legal costs related to advice for
trading licences, group restructuring, taxation and customer
contractual requirements.
5 Operating loss
The following items have been included in arriving at the
operating loss.
2016 2015
GBP GBP
Depreciation of property, plant
and equipment 23,899 13,742
Amortisation of intangible assets 545,215 246,423
Impairment of intangible assets 857,255 -
Auditors remuneration:
- Tax compliance 9,738 12,500
- Audit of company 126,163 53,000
- Interim review fees 2,500 2,500
__________ __________
6 Taxation
Analysis of tax expense
No liability to UK corporation tax arose on ordinary activities
for the year ended 31 December 2016 (2015 - GBPNil).
Factors affecting the tax expense
2016 2015
GBP GBP
Loss on ordinary activities before
tax (8,571,339) (10,407,351)
__________ __________
Loss on ordinary activities at the
standard rate
of corporation tax in the UK of
2016 - 20% (2015 - 20%) (1,714,268) (2,081,470)
Effects of:
Net disallowed expenditure 235,942 68,220
Losses available to carry forward 1,533,534 2,022,615
Differences in overseas tax rates 5,176 18,264
Other differences 28,503 19,196
__________ __________
Tax expense 88,887 46,825
__________ __________
The Group incurred tax losses of approximately GBP8,571,339
during the year (2015 - GBP10,407,351) so has an estimated
potential deferred tax asset of GBP4,236,326 (2015 - GBP2,758,001).
This has not been recognised as there is uncertainty as to the
timing of future profits that will arise in future accounting
periods against which these losses could be offset. The losses are
available for use against profit from the same trade.
7 Cautionary Statement
The People's Operator has made forward-looking statements in
this press release, including statements about the market for and
benefits of its products and services; financial results; product
development plans; the potential benefits of business relationships
with third parties and business strategies. These statements about
future events are subject to risks and uncertainties that could
cause The People's Operator's actual results to differ materially
from those that might be inferred from the forward-looking
statements, The People's Operator can make no assurance that any
forward-looking statements will prove correct.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SEIFAFFWSEIM
(END) Dow Jones Newswires
June 22, 2017 02:00 ET (06:00 GMT)
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