TIDMTOOP
RNS Number : 9240C
Toople PLC
28 February 2022
Strictly embargoed until: 07.00, 28 February 2022
Toople PLC
("Toople" or the "Company" or the "Group")
Final results for the year ended 30 September 2021
Toople PLC (LSE: TOOP), a provider of bespoke telecom services
to UK SMEs and a reseller of BT's products and services, today
announces its final audited results for the year ended 30 September
2021.
Commenting on the results, Richard Horsman, Non-executive
Chairman, said:
"FY21 saw another year of financial and operational improvement
for Toople. During the reported period we completed the integration
of DMSL, added well established, new customers in an extremely wide
variety of industries, and took the opportunity to raise funds via
a placing.
"We ended our financial year on a high note; with September 2021
proving to be one of the highest order intake months in FY21. This
has translated into an increased customer base for the Company, to
which we continue to deliver high quality bandwidth and high-speed
internet access taking advantage of the opportunities created for
our business by hybrid working and an acceleration towards online
services from SMEs, our core target market."
Financial and Operational Highlights
-- Adjusted EBITDA* improvement of 32%, from (GBP1,305k) to
(GBP881k) driven by lower distribution costs and overheads and
virtual elimination of bad debt costs (64% improvement year on year
when including impact of bad debt charges)
-- Gross profit increased by 22% to GBP1.06 million
-- Bad debt almost eliminated to just GBP55,000, decline from GBP1.1m in FY20
-- Healthy year on year increase in Gross Margin increased from 25% to 35%
o Active cost management and control
-- administrative costs down by GBP360,000 year on year
o Overall decline in headline revenues by 12% from GBP3.44m to
GBP3.01m, as a result of:
o proactive management of non-paying customers and elimination
of bad debt problem; and
-- emphasis on DMSL business due to impact of Covid-19 on traditional Toople customer base
-- Number of new contract wins with wider array of SMEs, and
expanded out to other organisations such a
local city council
-- Successful placing to raise GBP774,000 with substantial amount from largest investor
Outlook and Current Trading
-- Improved financial performance and outlook inQ1 FY21 when compared to Q4 FY20:
o Revenues increased by 9%
o EBITDA improved by 19%
o Gross Profit increased by 17%
Andy Hollingworth, CEO of Toople, added:
"We continue to see business momentum as the UK learns to live
with Covid-19, with sales leads and conversion rates ramping up.
Hybrid working is now the new normal and the duplication of telecom
services in various places, hot desking, mobile working, 24/7
availability, hub offices and the general increase in digital or
online service offerings across the economy, as opposed to
in-person contact, are all factors which collude to create the
perfect wave for us to ride."
Commenting on current trading and outlook, he added:
"If we look as a comparative at our trading at the end of the
last financial year versus our first quarter trading of this
financial year, we are seeing sales approaching a 9% increase,
increasing gross profit of over 17%, and an improving EBITDA of
19%. This gives the Board a lot of confidence as we see the UK
returning to more normal economic and working conditions.
"The removal of our unprofitable customers and customers that
represented risk, means that we have now successfully completed the
removal of historical bad debt which substantially improves the
quality of our earnings and firmly sets us on the path towards
profitability."
*Adjusted EBITDA is defined as operating profit, after adjusting
for depreciation, amortisation, impairment and exceptional items
(i.e. expenses or credits that are deemed unusual by nature and/or
scale and significance.)
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).
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. The Group's wholly owned subsidiary
DMS Holding (DMSL) 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
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.
Chairman's Statement
Introduction
FY21 saw another year of financial and operational improvement
for Toople. During the reported period we completed the integration
of DMSL, added well established, new customers in an extremely wide
variety of industries, and took the opportunity to raise funds via
a placing. The reorganisation of our four main brands has also paid
off and has greatly simplified our business propositions to our
customers and increased efficiencies and opportunities for cross
selling. We also continue to benefit from the cost savings achieved
through the reorganisation. This, together with lower cash burn, is
providing us with the working capital platform to enable Toople to
progress towards profitability.
We ended our financial year on a high note; with September 2021
proving to be one of the highest order intake months in FY21. This
has translated into an increased customer base for the Company, to
which we continue to deliver high quality bandwidth and high-speed
internet access taking advantage of the opportunities created for
our business by hybrid working and an acceleration towards online
services from SMEs, our core target market.
Near constant business change
We are further bolstered by the fact that we improve
communications and lower the cost for every business we add as a
customer. Today, when businesses are more reliant on superfast
communications, our service offering is business critical for the
vast majority of industries across the economy. In the last two
years, the UK economy has seen massive shutdowns, reluctant
re-openings, and various continuously changing phases of lockdowns,
working from home directives, and other directives affecting the
economy. SMEs are getting used to this. They are aware of the need
to continue growing their businesses no matter the current reality,
and our wide range of partnerships help them to deliver their
communications in a world where change is the only constant.
The transparency of price on our contracts remain one of our
unique selling points and is coveted by our customers. Our
emergence now from the scare caused by the Omicron variant is
causing jubilation from bosses and employees alike. We are prepared
for that and are proud to offer SMEs solutions that allow them to
continue running their businesses as well as possible despite
uncertain future variants, or any other unwelcome events.
DMSL
The integration of the acquisition we had made in the prior
financial year, DMSL, is contributing very positively to the group.
There has been a greater contribution from DMSL to our business,
which has a higher gross margin than the traditional Toople
business. This is due to the effect of Covid-19, which has boosted
DMSL and has made its offering even more popular.
This brand is working excellently alongside its customers to
understand their businesses and to deliver the best and most
appropriate communications solutions. DMSL can deliver
comprehensive communications designs which offer flexibility and
scalability and can ensure that a customer's various sites are
connected to cloud based infrastructure, with telephony at each
site, and high speed, high bandwidth data connectivity that allows
the customer to service their own customers more efficiently. Our
strong relationship with BT continues to massively benefit DMSL,
having a material impact on order volumes.
New business
We continue to win notable new contracts, and contract
extensions, carrying previous momentum forward. Successful and
dynamic customers continue to sign up with the Group, and each is
an endorsement of our brand and service offering. These
well-established, well-known UK brands are turning their backs on
old communications providers to sign up with us. This impetus
continues to bolster our activities, and companies with strong
credit profiles continue to recognise the strength of our service
offering and our competitively priced solutions. In turn this
improves the overall quality of our earnings.
Growth drivers
The main driver of our growth continues to be that seamless
communications are now business critical for most SMEs. On top of
that, the UK Government continues to roll out fibre infrastructure,
to replace copper and to support the switch from 4G to 5G. All our
brands offer communications solutions to help our customers to grow
their businesses.
Placing
Right at the start of our new financial year, in October 2020,
our brokers approached us with an opportunity to raise funds for
the Company by way of a placing. Given the economic uncertainty
caused by Covid-19 at the time, we decided to take the opportunity.
As a result, The Group successfully raised GBP774,000 (before
expenses). The placing was significantly oversubscribed and
utilised all of the share issuance capability of the Company at
that time.
Conclusion
With more economic certainty due to the normalisation of
Covid-19, we look optimistically to Toople's future. Post year end
we have had a successful capital raise, opened a second contact
centre which will greatly enhance our sales efforts, and we expect
trading to continue to progress well. We will also continue to
review potential opportunities to grow the group through the
acquisition of complementary businesses.
We look forward to the future of the Group and we wish all our
staff, customers, shareholders, and suppliers good health and
prosperity in 2022.
Richard Horsman
Non-Executive Chairman
25 February 2022
Chief Executive Officer's Review
Introduction
The emergence of new Covid-19 variants and lockdowns have now so
often been repeated that their occurrences are normalising, and it
is very much the case that SMEs are aware of the general need to be
seamlessly connected, being increasingly unperturbed by transitory
curveballs thrown up by Covid-19.
We continue to see business momentum as the UK learns to live
with Covid-19, with sales leads and conversion rates ramping up.
Hybrid working is now the new normal and the duplication of telecom
services in various places, hot desking, mobile working, 24/7
availability, hub offices and the general increase in digital or
online service offerings across the economy, as opposed to
in-person contact, are all factors which collude to create the
perfect wave for us to ride.
Operational Review
In this year we have truly demonstrated our offering's
incredible versatility, with the sheer number and variety of
different new customers which have added to our business. During
the financial year we announced that among many others we had won
new contracts with notable brands such as Carluccio's and the
largest national UK supplier of poultry. We continue to expand our
service offering to Carluccio's, who have recently added more
mobile contracts and we were delighted to have been chosen to
provide telecoms services to a new joint venture between
Sainsbury's and Carluccio's for a new coffee shop format they are
rolling out.
Another notable contract win was a five year contract with a
specialist engineering firm in the printing, coating, and
converting industries with subsidiaries in Europe and North
America. We provide critical high speed secure data connectivity to
the firm as it supplies equipment for use on many of the world's
most advanced printing machines. Further contracts were signed with
a building merchant with various locations across England. Others
include, inter alia, a specialist motor car business, a publisher,
a hair and beauty chain, a computer services provider, a city
council, a credit union, a firm of solicitors, a leading UK
property company, and a global oil and gas procurement business.
This collection of customers illustrate that Toople can offer
solutions to absolutely any type of SME or similarly sized
organisation.
The integration of DMSL has developed excellently, with more
emphasis placed on DMSL in the year as a result of the impact of
Covid-19 on the traditional Toople base. We also continue to reap
the benefits of our reorganisation that has substantial cost
savings. Our telecoms price comparison website and service offering
company credit reference checking and reports continues to
complement the Group's IT and telecoms services.
As more and more businesses have to offer their services
virtually and can no longer rely only on in person service
offerings, telecoms networks are more critical than ever. Keeping
businesses connected with super-fast broadband is what we do, and
we are proud to offer a business that eliminates any communications
stress or difficulty for our clients to allow them to concentrate
on their own businesses. We also do so at an affordable cost. SMEs,
in particular, are increasingly dissatisfied with a lack of price
transparency, poor service offerings and poor customer service from
the traditional tier one providers. These are all reasons why
existing customers are increasingly extending contracts with us and
we continue to win new customers across a very broad range of
sectors.
Our own operational infrastructure continues to serve us very
well, with our unified communications platform enabling remote
working for all our employees.
Financial performance
In the latter part of the financial year, trading had continued
to demonstrate significant progress as the lockdown measures at the
time had begun to ease, and the economy moved towards a new
post-pandemic period. Our trading since then has also reflected the
fact that our target market, SMEs, are increasingly becoming used
to the emergence of new variants and the practical changes each new
wave of infections entails.
This is our first annual results which includes a full 12 month
contribution from DMSL, which has proven to be a great acquisition
for the Group.
Losses before tax reduced by 53% from GBP2,711k to GBP1,281k
driven by much lower distribution costs and overheads. We did see a
decline in overall revenues by 12%, but this was due to a bigger
emphasis placed on our DMSL business in the year, as a result of
the impact of Covid-19 on the traditional Toople base. Proactive
management of the Toople base and the elimination of non-paying
customers also contributed to this, with the result that the
historic bad debt problem has been all but been eliminated,
delivering a solid base to develop for going forward. The quality
of our earnings has improved substantially.
Despite the decline in revenue, gross profit has increased by
22%. Overall gross margins have increased from 25% to 35%, with a
greater contribution DMSL, which has a higher gross margin than the
traditional Toople business, and also the 12 months of contribution
from DMSL to this year's results as opposed to last year's 7.5
months when we acquired that business. Also contributing to the
increase in gross profit is our active cost control and management
combined with successful renegotiations of the carrier cost base.
The growth in gross profit is also thanks to the cessation of low
margin consumer business, with a re-focus only on B2B business.
As mentioned above, our bad debt charge has almost been
eliminated, falling from GBP1.1m last year to GBP55,000 this year.
Our administrative costs are also down by GBP360,000 year on year,
even though DMSL costs for last year were for 7.5 months.
Contributing to this; benefits achieved from the Furlough Scheme
were realised, staff has been further rationalised, and there was a
significant reduction in marketing costs, given the bigger focus on
DMSL in the year.
Post balance sheet events
In December 2021, new ordinary shares were placed to raise
GBP380,000. The placing was supported by many of the Company's
existing shareholders, including its two largest shareholders, as
well as key members of the Board. The placing was oversubscribed
and utilised all of the existing share issue capability of the
Company. The net proceeds were used to provide further working
capital to support the Company's growth and enhance the Company's
service offerings. We are grateful to existing shareholders for the
support they have shown to the Company and welcome new shareholders
to the register.
The perfect opportunity also presented itself for us to increase
our sales initiative, with a focus on providing ultrafast, live,
and cloud based solutions from BT to new and existing customers. In
January 2022, we announced that we had opened a second contact
centre in South Cheshire. This new facility is supported by BT who
is providing assistance, training, and onboarding for staff
supporting customers around BT's product portfolio. This contact
centre is solely focused on new customer acquisitions for the SME
segment within BT's Enterprise business and is complementary to
Toople's existing centre located in Durban, South Africa, which
manages over 200,000 existing customers for Toople and for DMSL. We
are very excited about the further growth potential this facility
will bring to us.
Current trading and Outlook
If we look as a comparative at our trading at the end of the
last financial year versus our first quarter trading of this
financial year, we are seeing sales approaching a 9% increase,
increasing gross profit of 17%, and an improving EBITDA of 19%,
giving the Board confidence as we see the UK returning to more
normal conditions. The removal of our unprofitable customers and
customers that represented risk, means that we have successfully
completed the removal of historical bad debt, substantially
improving the quality of our earnings which firmly sets us on the
path towards profitability.
The Company has made substantial operational and financial
progress in recent months and we look forward to executing on our
growth strategy.
Andrew Hollingworth
Chief Executive Officer
25 February 2022
A copy of the Annual Report will be posted on the Company's
website: www.toopleplc.co.uk
An electronic version will shortly be available for inspection
at the National Storage Mechanism:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
Notice of the Company's Annual General Meeting will be sent to
shareholders in due course.
Consolidated statement of comprehensive income
NOTE 2021 2020
(Restated)
GBP GBP
----------------------------------- ----- ------------ ------------
Continuing operations
Revenue 3,012,936 3,438,284
Costs of Sales (1,958,149) (2,574,822)
Gross Profit 1,054,787 863,463
Other Income - 127,985
Administrative expenses 4 (1,936,318) (2,295,989)
Depreciation and amortisation 4 (207,957) (146,655)
Exceptional items 4 - (1,162,930)
----------------------------------- ----- ------------ ------------
Operating loss (1,089,489) (2,614,126)
Interest payable and similar
charges (191,774) (97,910)
Interest receivable 313 508
----------------------------------- ----- ------------ ------------
Loss before taxation 4 (1,280,950) (2,711,528)
Taxation 5 62,938 49,710
----------------------------------- ----- ------------ ------------
Loss for the year (1,218,012) (2,661,818)
Other comprehensive negative - -
income for the year
----------------------------------- ----- ------------ ------------
Total comprehensive negative
income for the year attributable
to the equity owners (1,218,012) (2,661,818)
----------------------------------- ----- ------------ ------------
Earnings per share
Basic and diluted earnings
per share 6 (0.03) (0.10)
----------------------------------- ----- ------------ ------------
The notes to the consolidated financial statements form an
integral part of these financial statements.
Consolidated statement of financial position
2020
2021 (Restated)
NOTE GBP GBP
----------------------------------------- ------------ ------------
ASSETS
Non-current assets
Intangible Assets 7 1,302,638 1,324,867
Property, plant and equipment 8 32,339 37,380
Right of use assets 21 138,521 64,173
------------------------------------ --- ------------ ------------
Total Non-current assets 1,473,498 1,426,420
------------------------------------ --- ------------ ------------
Current assets
Trade and other receivables 9 337,159 855,941
Cash and cash equivalents 10 281,592 568,533
------------------------------------ --- ------------ ------------
Total Current assets 618,751 1,424,474
------------------------------------ --- ------------ ------------
Total assets 2,092,249 2,850,894
------------------------------------ --- ------------ ------------
EQUITY and LIABILITIES
Capital and reserves attributable
to equity shareholders
Share capital 11 2,822,451 2,347,874
Share premium 11 6,266,040 6,027,272
Merger reserve (25,813) (25,813)
Share-based payment reserve 116,177 49,843
Accumulated deficit (9,856,690) (8,638,677)
------------------------------------ --- ------------ ------------
Total equity (677,833) (239,501)
------------------------------------ --- ------------ ------------
Current liabilities
Trade and other payables 12 932,808 1,474,903
Lease liabilities 21 39,818 52,517
------------------------------------ --- ------------ ------------
Total current liabilities 972,626 1,527,420
------------------------------------ --- ------------ ------------
Non-current liabilities
Financial liabilities - borrowings 12 1,688,935 1,549,316
Lease liabilities 21 108,521 13,659
------------------------------------ --- ------------ ------------
Total non-current liabilities 1,797,456 1,562,975
------------------------------------ --- ------------ ------------
Total equity and liabilities 2,092,249 2,850,894
------------------------------------ --- ------------ ------------
The notes to the consolidated financial statements form an
integral part of these financial statements.
Consolidated statement of changes in equity
Share Share Merger Share Accumulated Total
capital premium reserve Based deficit
Payment
reserve
--------------------- ---------- ---------- --------- --------- ------------ ------------
CURRENT YEAR GBP GBP GBP GBP GBP GBP
Brought forward
at 1 October
2020 as previously
reported 2,347,874 6,027,272 (25,813) 49,843 (8,400,239) (1,063)
Impact of
correction
of errors - - - - (238,439) (238,439)
--------------------- ---------- ---------- --------- --------- ------------ ------------
Restated balance
at 1 October
2020 2,347,874 6,027,272 (25,813) 49,843 (8,638,678) (239,502)
Loss for the
year (1,218,012) (1,218,012)
--------------------- ---------- ---------- --------- --------- ------------ ------------
Total comprehensive
loss for the
year - - - (1,218,012) (1,218,012)
Transactions
with owners
Issue of share
capital net
of share costs 474,577 261,188 - - - 735,766
Share-based
payment charge
credited to
equity - (22,420) - 66,334 - 43,914
--------------------- ---------- ---------- --------- --------- ------------ ------------
At 30 September
2021 2,822,451 6,266,040 (25,813) 116,177 (9,856,690) (677,834)
--------------------- ---------- ---------- --------- --------- ------------ ------------
Share Share Merger Share Accumulated Total
capital premium reserve Based deficit
Payment
reserve
--------------------- ---------- ---------- --------- ---------- ------------ ------------
PRIOR PERIOD GBP GBP GBP GBP GBP GBP
Brought forward
at 1 October
2019 762,774 5,412,561 (25,813) 255,099 (6,100,080) 304,541
Loss for the
year (Restated) - - - - (2,661,818) (2,661,818)
Total comprehensive
negative loss
for the year - - - - (2,661,818) (2,661,818)
Transactions
with owners
Issue of share
capital net
of share costs 1,585,100 525,562 - - - 2,110,662
Share-based
payment charge
credited to
equity - (42,730) - 49,843 - 7,113
Share-based
payment adjustment
in respect
of lapsed warrants - 131,879 - (255,099) 123,220 -
--------------------- ---------- ---------- --------- ---------- ------------ ------------
At 30 September
2020 2,347,874 6,027,272 (25,813) 49,843 (8,637,677) (239,502)
--------------------- ---------- ---------- --------- ---------- ------------ ------------
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 and is
described in Note 2b.
Share-based payments reserve represents the cumulative value of
share-based payments recognised through equity.
Accumulated deficit represents the aggregate retained deficit of
the Group.
The notes to the consolidated financial statements form an
integral part of these financial statements.
Consolidated statement of cash flows
NOTE Year ended Year ended
---------------------------------------- -----
30 Sep 2021 30 Sep 2020
(restated)
---------------------------------------- ----- ------------ -------------
GBP GBP
Cash flows from operating activities
Operating loss (1,089,489) (2,614,126)
Depreciation and amortisation 207,958 146,655
Share-based payment charge 43,914 7,113
R&D tax credit 62,938 49,710
Interest paid (37,808) (7,794)
Interest received 313 508
Changes in working capital
Decrease in stock - 2,030
Decrease / (increase) in receivables 518,781 762,197
(Decrease)/ increase in payables (542,096) 79,472
---------------------------------------- ----- ------------ -------------
Net cash outflow from operating
activities (835,487) ((1,574,235)
---------------------------------------- ----- ------------ -------------
Cash flows from financing activities
Proceeds from issues of share
capital (net of issue costs,
see Note 11)* 735,766 934,200
Proceeds from loans - 1,524,995
Loan repayments (14,347) -
Lease payments (48,127) (39,898)
Loan issue costs - (65,795)
---------------------------------------- ----- ------------ -------------
Net cash from financing activities 673,292 2,353,502
Cash flows from investing activities
Acquisition of office equipment (4,108) (10,075)
Acquisition of intangible assets (120,845) (108,405)
Proceeds on sale of fixed assets 207 -
Acquisition of subsidiary undertakings - (467,848)
Net cash acquired with subsidiary
undertaking - (121,806)
---------------------------------------- ----- ------------ -------------
Net cash from investing activities (124,746) (708,134)
---------------------------------------- ----- ------------ -------------
Net increase in cash and cash
equivalents (286,941) 71,133
Cash and cash equivalents at
start of year 568,533 497,400
---------------------------------------- ----- ------------ -------------
Cash and cash equivalents at
end of year 10 281,592 568,533
---------------------------------------- ----- ------------ -------------
The notes) to the consolidated 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 is a public limited company listed on the London
Stock Exchange main market, which was incorporated in England and
Wales on 2 March 2016 and is domiciled in England and Wales. 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). Through the DMSL
business the Group also resells BT's Services and propositions and
where relevant across the SME market.
b) Component undertakings
The undertakings included in the financial statements are as
follows (see also note 5 to the Company financial statements):
Group Company Registered Office
----------------------------------- -------------------------------------
Toople.com Limited Woodside 2, Dunmow Road, Birchanger,
Bishop's Stortford, CM23 5RG
DMS Holding 2017 Limited Woodside 2, Dunmow Road, Birchanger,
Bishop's Stortford, CM23 5RG
Direct Market Services Limited Woodside 2, Dunmow Road, Birchanger,
(DMSL) Bishop's Stortford, CM23 5RG
checkthatcompany.co.uk Limited Woodside 2, Dunmow Road, Birchanger,
Bishop's Stortford, CM23 5RG
Broadbandandphones Limited Woodside 2, Dunmow Road, Birchanger,
Bishop's Stortford, CM23 5RG
Ask Merlin Limited Woodside 2, Dunmow Road, Birchanger,
Bishop's Stortford, CM23 5RG
Toople Finance Limited Woodside 2, Dunmow Road, Birchanger,
Bishop's Stortford, CM23 5RG
Toople Management Services Limited Woodside 2, Dunmow Road, Birchanger,
Bishop's Stortford, CM23 5RG
Ask Merlin Poland SP Zoo* Kobylanka, ZACHODNIOPOMORSKIE,
73-108 Poland
----------------------------------- -------------------------------------
*Owned by Ask Merlin Limited
2. Summary of Significant Accounting Policies
The principal accounting policies applied in the preparation of
these consolidated financial statements are set out below. These
policies have been consistently applied to all the years presented,
unless otherwise stated:
a) Basis of Preparation
The Consolidated Financial statements have been prepared in
accordance with International Accounting standards in conformity
with the requirements of the Companies Act 2006 and International
Financial Reporting Standards adopted pursuant to Regulation (EC)
No 1606/2002 as it applies in the European Union "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,
as modified by the revaluation of certain financial assets and
liabilities at fair value through profit or loss.
The preparation of Consolidated Financial statements in
conformity with International Financial Reporting Standards
("IFRS") requires the use of estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the
Consolidated Financial statements and the reported amounts of
revenues and expenses during the reporting period. Although these
estimates are based on management's best knowledge of the amount,
event or actions, actual results ultimately may differ from those
estimates.
b) Basis of Consolidation
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 merger reserve arose
as a result of this share for share exchange.
The Directors consider the substance of the acquisition of the
Subsidiaries noted above 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 IFRS 3 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.
Subsidiaries are all entities over which the Group has control.
The Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over
the entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are deconsolidated
from the date that control ceases.
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.
Inter-company transactions, balances and unrealised gains on
transactions between group companies are eliminated. Unrealised
losses are also eliminated. When necessary, amounts reported by
subsidiaries have been adjusted to conform to the Group's
accounting policies.
c) 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 Governance Report 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
Financial Statements, medium and long term business plans and
expectations.
At 30 September 2021 the Group had GBP281k of cash and net
liabilities of GBP677k. The Group made a loss in the year of
GBP1,218k (2020: GBP2,662k loss), and had net current liabilities
at the year-end of GBP354k (2020: GBP103k net liabilities), In
addition, subsequent to the year end a further Placing of shares
took place on 22(nd) October 2021 raising a further GBP377k (before
expenses). The Directors, having given due and careful
consideration, are of the opinion that although the Company will
need to raise further funds over the 12 months following approval
of the financial statements in order to execute its strategy and
for working capital, it has the ability to access additional
financing, if required, over the next 12 months. The Directors,
therefore, have made an informed judgement, at the time of
approving the financial statements, that there is a reasonable
expectation that the Company has adequate resources to continue in
operational existence for the foreseeable future. As a result, the
Directors have continued to adopt the going concern basis of
accounting in preparing the annual financial statements in
accordance with Going Concern and Liquidity Risk: Guidance for
Directors of UK Companies 2009.
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. As such management consider the going
concern basis to be appropriate.
The auditors have made reference to going concern by way of a
material uncertainty within their audit report.
d) Leases
Leases are recognised as a right-of-use asset and a
corresponding lease liability at the date at which the asset is
available for use by the Group.
Assets and liabilities arising from a lease are initially
measured on a present value basis.
Lease liabilities include the net present value of the following
lease payments:
o Fixed payments (including in-substance fixed payments), less
any lease incentives receivable;
o Variable lease payments that are based on an index or rate,
initially measured using the index or rate at the commencement
date;
o Amounts expected to be payable by the Group under residual
value guarantees;
o The exercise price of a purchase option if the Group is
reasonably certain to exercise that option; and
o Payments of penalties for terminating the lease, if the lease
term reflects the Group exercising that option.
Lease payments to be made under reasonably certain extension
options are also included in the measurement of the liability.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be readily determined,
the lessee's incremental borrowing rate is used, being the rate
that the individual lessee would have to pay to borrow the funds
necessary to obtain an asset of similar value to the right-of-use
asset in a similar economic environment with similar terms,
security and conditions.
Lease payments are allocated between principal and finance cost.
The finance cost is charged to the Income Statement over the lease
period.
Right-of-use assets are measured at cost which comprises the
following:
o The amount of the initial measurement of the lease
liability;
o Any lease payments made at or before the commencement date
less any lease incentives received;
o Any initial direct costs; and
o Restoration costs
Right-of-use assets are generally depreciated over the shorter
of the asset's useful life and the lease term on a straight-line
basis. If the Group is reasonably certain to exercise a purchase
option, the right-of-use asset is depreciated over the underlying
asset's useful life.
Payments associated with short-term leases (less than 12 months)
and all lease of low-value assets are recognised on a straight-line
basis as an expense in profit or loss. Low-value assets comprise
office equipment and furniture acquired as part of the acquisition
of DMS Holding 2017 Limited.
e) New Standards and Interpretations
At the date of authorisation of these Financial Statements, the
Group and Company have not applied the following new and revised
IFRSs that have been issued but are not yet effective and (in some
cases) have not yet been endorsed by the UK. The Group and Company
intend to adopt these standards, if applicable, when they become
effective.
Standard / Interpretation Title
-------------------------- ------------------------------------------
IAS 1 Presentation of liabilities as current or
non-current
IAS 1 Disclosure of accounting policies
IAS 8 Definition of accounting estimates
-------------------------- ------------------------------------------
The Group and Company are evaluating the impact of the new and
amended standards above.
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.
There are no other IFRSs or IFRIC interpretations that are not
yet effective that would be expected to have a material impact on
the Group.
f) 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.
Financial Assets
The financial assets currently held by the Group and Company are
classified as financial assets held at amortised cost. These assets
are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. They are
initially recognised at fair value plus transaction costs that are
directly attributable to their acquisition or issue, and are
subsequently carried at amortised cost using the effective interest
rate method, less provision for impairment under the expected
credit loss model
The expected credit loss is calculated as a function of the
probability of default (PD), the exposure at default (EAD) and the
loss given default (LGD).
The amount of the expected credit loss is measured as the
difference between all contractual cash flows that are due in
accordance with the contract and all the cash flows that are
expected to be received (i.e. all cash shortfalls), discounted at
the original effective interest rate (EIR).
The carrying amount of the asset is reduced through use of
allowance account and recognition of the loss in the Statement of
Comprehensive Income. Allowances for credit losses on financial
assets are assessed collectively. Collectively assessed impairment
allowances cover credit losses inherent in portfolios of financial
assets with similar credit risk characteristics when there is
objective evidence to suggest that they contain impaired financial
assets, but the individual impaired items cannot yet be
identified.
In assessing collective impairment, the Group uses information
including historical trends in the probability of default (although
this is limited given the relatively short trading history of the
Group), timing of recoveries and the amount of expected loss,
adjusted for management's judgement as to whether current economic
and credit conditions are such that the actual losses are likely to
be greater or less than suggested by historical evidence. Default
rates, loss rates and the expected timing of future recoveries are
regularly benchmarked against actual outcomes to ensure that they
remain appropriate.
IFRS 9 suggests the use of reasonable forward-looking
information to enhance ECL models. The Group incorporates relevant
forward-looking information into the loss provisioning model.
Financial assets at amortised cost comprise trade and other
receivables and cash and cash equivalents in the statement of
financial position
Cash and cash equivalents include cash in hand and amounts held
on short term deposit. Any interest earned is accrued monthly and
classified as finance income. Short term deposits comprise deposits
made for varying periods of between one day and three months.
For the purposes of the statement of cash flows, cash and cash
equivalents consist of cash and cash equivalents as defined
above.
Derecognition of Financial Assets
The Group and Company derecognise a financial asset when the
contractual rights to the cash flows from the asset expire, or it
transfers the asset and substantially all the risk and rewards of
ownership of the asset to another entity.
Financial Liabilities
The Group and Company classify their financial liabilities into
one category, being other financial liabilities measured at
amortised cost.
The Group's accounting policy for the other financial
liabilities category is as follows:
Trade payables and other short-term monetary liabilities are
initially recognised at fair value and subsequently carried at
amortised cost using the effective interest method. All interest
and other borrowing costs incurred in connection with the above are
expensed as incurred and reported as part of financing costs in
profit or loss. The Group and Company derecognise financial
liabilities when, and only when, the obligations are discharged,
cancelled or they expire.
g) Goodwill
Goodwill arises on the acquisition of subsidiaries and
represents the excess of the consideration transferred, the amount
of any non-controlling interest in the acquiree and the
acquisition-date fair value of any previous equity interest in the
acquiree over the fair value of the identifiable net assets
acquired. If the total of consideration transferred,
non-controlling interest recognised and previously held interest
measured at fair value is less than the fair value of the net
assets of the subsidiary acquired, in the case of a bargain
purchase, the difference is recognised directly in the income
statement.
For the purpose of impairment testing, goodwill acquired in a
business combination is allocated to each of the CGUs, or groups of
CGUs, that is expected to benefit from the synergies of the
combination. Each unit or group of units to which the goodwill is
allocated represents the lowest level within the entity at which
the goodwill is monitored for internal management purposes.
Goodwill is monitored at the operating segment level.
Goodwill impairment reviews are undertaken annually or more
frequently if events or changes in circumstances indicate a
potential impairment. The carrying value of the CGU containing the
goodwill is compared to the recoverable amount, which is the higher
of value in use and the fair value less costs of disposal. Any
impairment is recognised immediately as an expense and is not
subsequently reversed.
h) Property, plant and equipment
Property, plant and equipment are shown at historical cost less
accumulated depreciation. Cost includes the original purchase price
of the asset and the costs attributable to bringing the asset to
its working condition for its intended use.
Depreciation is provided at rates calculated to write off the
cost of each asset, on a straight-line basis, over its expected
useful life to its residual value, as follows:
Leasehold improvements 10 years
Office equipment 4 years
Furniture and fittings 4 years
Computer equipment 4 years
i) Other Intangibles
Other intangibles include customer contracts, developed
technology and developments costs. Customer contracts and developed
technology acquired as part of a business combination are
recognised initially at fair value determined in accordance with
appropriate valuation methodologies and subjected to amortisation
and annual impairment reviews. Developments costs are recognised
are initially recognised at their cash cost and subjected to
amortisation and annual impairment reviews:
a. Customer contracts
Customer contracts, acquired as part of a business combination,
are capitalised at their fair value as at the date of acquisition.
They are carried at their fair value less accumulated impairment
losses. Amortisation is calculated using the straight-line method
to allocate the fair value of customer relationships over their
estimated useful life of six years. Customer contracts have been
valued according to discounted incremental operating profit
expected to be generated from them over their useful lives.
b. Developed technology
Developed technology, acquired as part of a business
combination, is capitalised at its fair value as at the date of
acquisition. It is carried at its fair value less accumulated
impairment losses. Amortisation is calculated using the
straight-line method to allocate the fair value of developed
technology over its estimated useful life of five years. Developed
technology has been valued using the Relief from Royalty
Method.
c. Development costs
Expenditure on research (or the research phase of an internal
project) is recognised as an expense in the period in which it is
incurred.
Development costs incurred are capitalised only when all the
following conditions are satisfied:
-- completion of the intangible asset is technically feasible;
-- the Group intends to complete the intangible asset and use or sell it;
-- the intangible asset will generate probable future economic
benefits. Among other things, this requires that there is a market
for the output from the intangible asset or for the intangible
asset itself, or, if it is to be used internally, the asset will be
used in generating such benefits;
-- there are adequate technical, financial and other resources
to complete the development and to use or sell the intangible
asset; and
-- the expenditure attributable to the intangible asset during
its development can be measured reliably.
Directly attributable costs that are capitalised as part of the
Merlin and BTOps platforms development include the software
development employee or contractor cost. Attributable overheads are
not capitalised. Development costs not meeting the criteria for
capitalisation are expensed as incurred.
Amortisation is provided on development costs so as to write off
the cost, less any estimated residual value, over the expected
useful life which has been estimated as being 5 years. Amortisation
commences upon completion of the asset, and is shown separately on
the face of the Statement of Comprehensive Income as part of the
Depreciation and Amortisation charge for the year. Careful
judgement by the Directors is applied when deciding whether the
recognition requirements for development costs have been met. This
is necessary as the economic success of any product development is
uncertain and may be subject to future technical problems at the
time of recognition. Judgements are based on the information
available at each balance sheet date. In addition, all internal
activities related to the research and development of new software
products are continuously monitored by the Directors.
j) Cash and cash equivalents
In the consolidated Statement of Cash Flows, cash and cash
equivalents comprise cash in hand and deposits held at call with
banks.
k) Trade and Other Receivables
Trade and other receivables are stated after impairment under
the expected credit loss model as described in Note 2f).
l) Trade Payables
Trade payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities
if payment is due within one year or less (or in the normal
operating cycle of the business if longer). If not, they are
presented as non-current liabilities.
Trade payables are recognised initially at fair value, and
subsequently measured at amortised cost using the effective
interest method.
m) Borrowings
Borrowings are recognised initially at fair value, net of
transaction costs incurred. Borrowings are subsequently carried at
amortised cost; any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in the
income statement over the period of the borrowings, using the
effective interest method.
n) 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.
o) Earnings per share
Basic loss per share is calculated by dividing the profit
attributable to owners of the company, (excluding any costs of
servicing equity other than ordinary shares), by the weighted
average number of ordinary shares outstanding during the financial
year.
For diluted loss per share, the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all
dilutive potential ordinary shares that have satisfied the
appropriate vesting or performance criteria as at the end of the
financial year
p) Exceptional items
Exceptional items are disclosed separately in the financial
statements where it is necessary to do so to provide further
understanding of the financial performance of the Group. They are
material items of income or expense that have been shown separately
due to the significance of their nature or amount.
q) 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.
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.
r) Revenue recognition
The process of revenue recognition described by IFRS 15 is based
on the core principle "that an entity recognises revenue to depict
the transfer of promised goods or services to customers in an
amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services." Each
promise or performance obligation is accounted for separately.
Revenue is recognised in accordance with that core principle and
applying the following 5 step process:
1. Identify the contract(s) with a customer;
2. Identify the performance obligations in the contract -
includes an assessment of whether a contract includes multiple
promises for goods and services (performance obligations) that are
distinct and separately identifiable;
3. Determine the transaction price - based on the consideration
in a contract to which an entity expects to be entitled in exchange
for transferring promised goods or services to a customer;
4. Allocate the transaction price to the performance obligations
in the contract - either based on the observed or estimated
stand-alone selling price for each performance obligation; and
5. Recognise revenue when (or as) the entity satisfies a
performance obligation - this may be determined as being satisfied
at a point in time or satisfied over time.
Contracts with customers are structured to ensure clarity of the
definitions, timing and amounts relating to the delivery of
performance obligations. Within the Toople Group, the Group earns
revenue from the sale of telecommunication services to customers.
This revenue is recognised in the accounting period when the
services are rendered at an amount that reflects the consideration
to which the entity expects to be entitled in exchange for
fulfilling its performance obligations to customers. Where the
Group is acting as a reseller on behalf of another
telecommunications provider, the Group earns commissions based on
the total sales order value of the contract sold to the end
customer. This revenue is recognised in the accounting period in
which the underlying customer contract is accepted by the
telecommunications provider. The following types of income are
typically derived and recognised on the following basis:
Revenue Type Revenue Description Recognition
Basis
A. Telecommunication The Group provides multiple services Point in
Services including the provision of broadband, Time - Recognised
telephony calls and minutes and wholesale as the services
services. For these services, a fixed are performed
monthly fee is charged for the duration and consumed
of the customer contract period. The by the customer
monthly transaction price is fixed on a monthly
at the outset of the contract period basis. When
for all bundled services and this acting as
is deemed to be the transaction price. a reseller,
at the point
Calls to certain destinations can the contract
be bought by customers under fixed is accepted
price bundles which are recognised by the provider.
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,
billed to the customer on a monthly
basis and recognised at the point
of usage. These charges are not part
of the fixed monthly fee and are based
on the customer's actual usage.
Where the Group is acting as a reseller
on behalf of another telecommunications
provider, revenue is recognised at
the point the underlying customer
contract is accepted by the telecommunications
provider
------------------------------------------------ -------------------
B. Connection Connection fees are chargeable to Point in
fees customers for certain services and time - Recognised
revenues are recognised at the time at point
of installation and go-live. of installation
------------------------------------------------ -------------------
s) Furlough scheme
Toople PLC has accounted for government furlough grant
receivables under IAS 20 and recognised a credit to match employee
costs as and when they are received. Under IAS 20, it is
permissible to present the grant and the expenses on either a gross
or net basis. However, any related balance sheet items (i.e a grant
receivable and amounts payable to employees) cannot be netted off.
Any decision to top up the furlough payments to employees (eg. by
choosing to pay more than the government guaranteed 80% of salary
up to a maximum of 2,500 per month) is a voluntary decision and
should not be provided for in advance. This is because there is no
obligation to make these additional payments and to do so would
constitute providing for future costs. At year end all furlough
payments have been received and no staff are on furlough
t) 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 an 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.
u) 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.
v) Equity
Equity instruments issued by the Company are recorded at the
value of net proceeds after direct issue costs.
3. Significant accounting judgements, estimates and assumptions
Management consider the significant accounting judgements,
estimates and assumptions used within the financial statements to
be:
Valuation and asset lives of separately identifiable intangible
assets
In order to determine the value of the separately identifiable
intangible assets on a business combination, management are
required to make estimates when utilising the Group's valuation
methodologies. These methodologies include the use of discounted
cash flows, revenue and gross profit multiples. The carrying value
of identified assets at 30 September 2021 was GBP302,000. Asset
lives are estimated based on the nature of the intangible asset
acquired and range between 5 and 6 years.
Valuation of acquired assets at fair value
Management have made a number of assumptions with regards to the
models used to value acquired assets at their fair value at the
date of acquisition. Valuation techniques commonly used by market
practitioners are applied.
Impairment of goodwill and other intangible assets
There are a number of assumptions management have considered in
performing impairment reviews of goodwill and intangible assets, as
determining whether goodwill is impaired requires an estimation of
the value in use of the cash generating units to which goodwill has
been allocated. The value in use calculation requires the Directors
to estimate the future cash flows expected to arise from the
cash-generating unit and a suitable discount rate in order to
calculate present value. The carrying amount of goodwill at 30
September was GBP751,399, and of other intangibles was GBP551,239
(see Note 7).
Capitalisation of development costs
Included within Intangible Assets are costs capitalised in
connection with the Group's Merlin platform. These costs are based
on management's view of the development team's time spent on the
projects and considering the requirements of IAS 38 "Intangible
Assets". Development costs are amortised over the life of the
project once it has been released to the commercial environment.
Management base a project's commerciality on when revenues can be
generated from the platform's internally generated software. The
projected useful lives of intangible assets are based on management
estimates of the period that the asset will be able to generate
revenue. The carrying value is tested for impairment when there is
an indication that the value of the assets might be impaired.
Impairment tests are based upon future cash flow forecasts and
involve management's judgement in relation to the software. Future
events could cause the assumptions to change and therefore could
impact the future results of the Group.
The key estimates involved are surrounding the total man hours
per development project, the standard cost per hour calculated, the
projected revenues and profitability expected to arise as a result
of the developments to the platform resulting in economic benefit,
and the useful lives of the add-ons (see Note 7).
Provision for bad and doubtful debts
During the course of last year and the early part of this year,
despite stringent credit checks and approval processes being in
place, as customer numbers and orders increased exponentially, we
also experienced a sharp increase in non-paying customers during
the period. This was not completely unexpected given the micro-SME
market within which the Group operates. The Board has taken a
comprehensive review of the outstanding debts as at 30 September
2021 to assess the recoverability of the debt and any provisions
that may be required however judgement is needed in making these
assessments. In performing this review, the Board has taken into
account the following matters when performing this estimate:
-- Any cash receipts from customers post year end
-- Age of debt
-- Segmentation of the customer base between B2B and B2C
customers to assess degree of recoverability and payment trends on
the two segments
-- Discussions with the Group's third-party professional debt
collection agents to assess underlying reasons for non-payment,
contact rate with customers, payment plans made with customers,
their overall view on the recoverability of the debtor book and
over what time frame and the expected realisable value if the
debtor book were sold to a third party, given its segmentation and
ageing profile.
Taking into account the above factors, the impairment provisions
made cover balances outstanding longer than 60 days (after
adjusting for recoverable VAT and known recoverable amounts). The
estimates and assumptions used to determine the level of provision
will continue to be reviewed periodically and could lead to changes
in the impairment provision methodology which would impact the
income statement in future years (see Note 9).
4. Loss before taxation
The loss before taxation is stated after charging/
(crediting):
2021 2020
GBP GBP
---------------------------------------- -------- ----------
Depreciation of tangible assets 9,107 8,018
Depreciation of Right of Use assets 55,883 47,593
Amortisation of intangible assets 142,969 91,043
Impairment of trade receivables 55,462 -
Exceptional items
Impairment of trade receivable - 1,054,870
Restructuring costs* - 108,060
Fees payable to the Company's auditor
for the audit of the Company's annual
accounts 30,000 28,000
Share-based payment charges 43,914 7,113
---------------------------------------- -------- ----------
* Restructuring costs relate to the closure of the Burnham head
office on the consolidation of operations in Bishops Stortford
following the acquisition of DMSL
Administrative expenses include:
Marketing costs 210,276 429,277
Wages (including Directors)* 788,393 789,905
Social Security (including
Directors) 98,631 94,040
------------------------------ -------- --------
*Excludes consulting fees payable to certain Directors of
GBP57,700 (2020: GBP115,097).
In addition to the above in the year ended 30 September 2021
transaction costs totalling GBP33,646 (2020: GBP265,800) were
payable to the Company's brokers and professional advisers at the
time following the Placing of new shares to the Official List in
October 2020 and this has been recognised against the share premium
account.
5. Taxation
Analysis of charge in the year
2021 2020 (Restated)
GBP GBP
---------------------------------------- ------------ ----------------
Current tax
UK corporation tax credit 62,938 49,710
Loss on ordinary activities before tax (1,280,951) (2,711,528)
Analysis of charge in the year
Loss on ordinary activities multiplied
by standard rate of corporation tax
in the UK of 19% (2019: 19%) (243,381) (515,190)
Tax effects of:
Non-deductible expenses 8,793 32,631
R&D tax credits 62,938 49,710
Trading losses carried forward 234,588 482,559
---------------------------------------- ------------ ----------------
Tax credit for the year 62,938 49,710
---------------------------------------- ------------ ----------------
The Group has accumulated tax losses arising in the UK of
approximately GBP9,715,139 (2020: GBP8,480,467) 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.
6. Earnings per share
The calculation of earnings per share is calculated by dividing
the profit attributable to equity holders of the Company by the
weighted average number of ordinary shares in issue during the
year:
2021 2020
(Restated)
GBP GBP
----------------------------------- -------------- --------------
Loss for the year from continuing
operations (1,218,012) (2,661,817)
Weighted average number of shares
in issue 4,173,912,687 2,608,531,587
Basic and diluted loss per share (0.03p) (0.10p)
----------------------------------- -------------- --------------
The Company has in issue warrants and share options at 30
September 2021, these are detailed in note 11. 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.
7. Intangible assets
Website
Developed Development Development Customer
Goodwill technology costs costs Contracts Total
GBP GBP GBP GBP GBP GBP
---------------- -------- ----------- ----------- ------------ ---------- ---------
Cost
At 1 October
2020 751,399 240,000 254.850 17,905 192,000 1,456,154
Additions - - 120,845 - - 120,845
Disposals - - - (105) - (105)
At 30 September
2021 751,399 240,000 375,695 17,800 192,000 1,576,894
---------------- -------- ----------- ----------- ------------ ---------- ---------
Amortisation
and impairment
At 1 October
2020 - 30,000 63,487 17,800 20,000 131,287
Charge for
period - 48,000 62,969 - 32,000 142,969
At 30 September
2021 - 78,000 126,456 17,800 52,000 274,256
---------------- -------- ----------- ----------- ------------ ---------- ---------
Net book amount
At 30 September
2021 751,399 162,000 249,239 - 140,000 1,302,638
---------------- -------- ----------- ----------- ------------ ---------- ---------
At 30 September
2020 751,399 210,000 191,363 105 172,000 1,324,867
---------------- -------- ----------- ----------- ------------ ---------- ---------
The goodwill has been allocated to the Cash Generating Unit
("CGU") of DMSL that was acquired by the Company in February 2020,
as follows:
Group DMSL
GBP
---------------------- --------
At 30 September 2021 751,399
At 30 September 2020 751,399
---------------------- --------
Impairment test for goodwill
Management reviews the business performance of DMSL. Budgeted
revenue as based on expected levels of activity given results to
date, together with expected economic and market conditions, taking
into account the easing of Covid restrictions and management's
assessment of how this would affect future performance of the
business. Budgeted operating profit was calculated based upon
management's expectation of operating costs appropriate to the
business as reflected in the business plan.
The 30 September 2021 forecasts are based on a detailed 2 year
plan to 30 September 2023 and cash flows beyond this date are
extrapolated using an estimated 2% year on year growth rate. The
cash flows were discounted using a pre-tax discount rate of 18.45%
which management believes equates to the weighted average cost of
capital for the Group which management believes is appropriate. For
the DMSL CGU, the recoverable amount based on value in use exceeded
the carrying value by GBP322,000.
8. Tangible assets
Leasehold Office Equipment Furniture Computer
Improvements and Fittings Equipment Total
GBP GBP GBP GBP GBP
------------------ ------------- ---------------- ------------- ---------- ------
Cost or valuation
At 1 October
2020 29,839 11,977 5,138 17,904 64,858
Additions - 918 3,249 - 4,167
Disposals - (399) - (104) (503)
At 30 September
2021 29,839 12,496 8,387 17,800 68,522
Depreciation
At 1 October
2020 6,520 2,729 427 17,802 27,478
Disposals - (399) - (2) (401)
Charge for
year 3,128 4,809 1,169 - 9,106
At 30 September
2021 9,648 7,139 1,596 17,800 36,183
Net book value
At 30 September
2021 20,191 5,358 6,790 - 32,339
------------------ ------------- ---------------- ------------- ---------- ------
At 30 September
2020 23,319 9,248 4,711 102 37,380
------------------ ------------- ---------------- ------------- ---------- ------
9. Trade and other receivables
2021 2020
GBP GBP
--------------------------------------- -------- --------
Current
Trade receivables 26,853 111,091
Other receivables including taxes and
social security costs 80,816 588,292
Prepayments and accrued income 229,490 156,558
--------------------------------------- -------- --------
337,159 855,941
--------------------------------------- -------- --------
At 30 September 2021 management reviewed the trade receivables
balance and have recognised a provision of GBP29,013 (2020:
GBP109,124) against receivables where there is uncertainty over
recoverability. The Group's exposure to credit and market risks,
including impairments and allowances for credit losses, relating to
trade and other receivables is disclosed in note 3 to the financial
statements.
There are no material differences between the fair value of
trade and other receivables and their carrying value at the year
end.
The Group's trade receivables are all denominated in UK Sterling
and the ageing of gross trade receivables is as follows:
2021 2020
GBP GBP
--------------- ------- --------
0-2 months 21,180 101,933
2-3 months 3,037 22,737
Over 3 months 31,650 95,545
--------------- ------- --------
55,867 220,215
--------------- ------- --------
The ageing of the expected credit losses of trade receivables is
as follows:
2021 2020
GBP GBP
--------------- ------- --------
0-2 months - -
2-3 months 2,530 20,977
Over 3 months 26,483 88,147
--------------- ------- --------
29,013 109,124
--------------- ------- --------
10. Cash and cash equivalents
2021 2020
GBP GBP
-------------------------------------------- -------- --------
Bank current accounts (HSBC and Barclays)* 281,592 568,533
-------------------------------------------- -------- --------
* HSBC has a credit rating of Aa3 and Barclays has a credit
rating of A1(Moody's)
11. Share capital and warrants
2021 2020
No. GBP No. GBP
---------------------- -------------- -------------- -------------- --------------
Authorised, allotted
and fully paid
Ordinary shares of
0.0667p each 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
Proceeds from share
issues 711,510,226 474,577 307,334
Issue costs - - (68,566)
---------------------- -------------- -------------- -------------- --------------
At 30 September 2021 4,231,561,361 2,822,451 6,266,040
---------------------- -------------- -------------- -------------- --------------
*Transaction costs accounted for as a deduction from equity of
GBP46,146 (2020: GBP265,800).
On 26(th) October 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.
Warrants
On 18 February 2020 the Company issued warrants over
1,492,360,840 ordinary shares as follows:
-- 63,230,840 warrants to the two Non-Executive Directors and
one executive Director to subscribe for one new ordinary share at
GBP0.001 per share at any time during the period commencing on 18
February 2020 and expiring at midnight on the third anniversary
thereof; and
-- 600,000,000 warrants to the subscribers to the placing to
subscribe for one new ordinary share at GBP0.001 per share at any
time during the period commencing on 18 February 2020 and expiring
at midnight on the third anniversary; and
-- 5,000,000 warrants to Cairn Financial Advisers to subscribe
for one new ordinary share at GBP0.001 per share at any time during
the period commencing on 18 February 2020 and expiring at midnight
on the third anniversary thereof; and
-- 74,130,000 warrants to the Company's brokers to subscribe for
one new ordinary share at GBP0.001 per share at any time during the
period commencing on 18 February 2020 and expiring at midnight on
the third anniversary thereof; and
-- 750,000,000 warrants to the Company's loan note providers to
subscribe for one new ordinary share at GBP0.001 per share at any
time during the period commencing on 18 February 2020 and expiring
at midnight on the third anniversary thereof.
The inputs to the Black-Scholes model were as follows:
Warrants granted 1,492,360,840
Stock price 0.1p
Exercise price 0.1p
Risk free rate 0.5%
Volatility 101%
Time to maturity 3 years
------------------ --------------
Assumptions on expected volatility have been made on the basis
of historical data, wherever available, corresponding with the
vesting of the warrant. The fair value of the warrants issued to
Cairn Financial Advisers, the Company's brokers and the Company's
loan note providers amounting to GBP42,730 was recognised in share
premium in the prior year on the basis they were issued for
services relating to the placing. The fair value of the services
received cannot be accurately measured and therefore the warrants
issued in relation to these services are recoded at the estimated
fair value of the warrants. The fair value of the warrants issued
to the Directors has been charged to the income statement evenly
over the vesting period resulting in a charge in the current period
of GBP11,382 (2020: GBP7,113).
On 26(th) October 2020 the Company issued warrants over
35,200,511 ordinary shares to the Company's brokers to subscribe
for one new ordinary share at 0.11p per share at any time during
the period commencing 26 October 2020 and expiring at midnight on
the third anniversary thereof.
The inputs to the Black-Scholes model were as follows:
Warrants granted 35,200,511
Stock price 0.12p
Exercise price 0.11p
Risk free rate (0.07%)
Volatility 79.72%
Time to maturity 3 years
------------------ -----------
Assumptions on expected volatility have been made on the basis
of historical data, wherever available, corresponding with the
vesting of the warrant. The fair value of the warrants issued to
the Company's brokers amounting to GBP22,420 has been recognised in
share premium on the basis they were issued for services relating
to the placing.
At 30 September 2021, warrants for 1,520,061,351 new Ordinary
Shares in the Company were in issue as follows:
2021 2020
No. of warrants Weighted No. of warrants Weighted
average average
exercise exercise
price (p) price(p)
-------------------- ---------------- ----------- ---------------- ----------
As at 1 October 1,492,360,840 0.1 40,997,291 0.4
Granted during the
year 35,200,511 0.11 1,492,360,840 0.1
Exercised in the
year (7,500,000) (0.1) -
Lapsed during the
year - (40,997,291) (0.4)
-------------------- ---------------- ----------- ---------------- ----------
At 30 September 1,520,061,351 0.1 1,492,360,840 0.1
-------------------- ---------------- ----------- ---------------- ----------
The outstanding warrants are exercisable as follows:
Exercise
Warrants Issued No. of warrants price (p) Exercisable
------------------ ---------------- ----------- -----------------------------
Exercisable from 18 February
2020 and expiring on
18 February 2020 1,492,360,840 0.1p 17 February 2023
Exercisable from 26 October
2020 and expiring on
26 October 2020 35,200,511 0.11p 25 October 2023
At 30 September
2020 1,520, 061,351
------------------ ---------------- ----------- -----------------------------
The warrants outstanding at 30 September 2021 had a weighted
average remaining contractual life of 1 year and 146 days (2020: 2
years, 141 days).
Share options
On 13(th) May 2021 the Company introduced a new Long Term
Incentive Plan ("LTIP") designed to incentivise the Group's
Executive Directors, Non-executive Directors and key employees. The
LTIP is comprised of an Approved EMI Share Option scheme for the
benefit of the Executive Directors and key employees and an
Unapproved Share Option Scheme for the benefit of the Non-Executive
Directors. On this date, options over 338,000,000 ordinary shares
of 0.0667p were granted under the EMI Share Option Scheme and
options over 126,000,000 ordinary shares of 0.0667p were granted
under the Unapproved Share Option Scheme. All options granted under
the LTIP have an exercise price of 0.07p per share, being the
market value at the time the options were granted. The vesting
period for options under the LTIP is three years with an exercise
period of 10 years, starting from the date of grant.
The inputs to the Black-Scholes model were as follows:
Warrants granted 464,000,000
Stock price 0.07p
Exercise price 0.07p
Risk free rate 0.86%
Volatility 79.72%
Time to maturity 3 years
------------------ ------------
Assumptions on expected volatility have been made on the basis
of historical data, wherever available, corresponding with the
vesting of the option. The fair value of the options granted to the
Directors and Key Employees has been charged to the income
statement evenly over the life of the option resulting in a charge
to the current period of GBP32,533.
At 30 September 2021, Share options for 464,000,000 new Ordinary
Shares in the Company were in issue as follows:
2021 2020
No. of options Weighted No. of options Weighted
average average
exercise exercise
price (p) price(p)
-------------------- --------------- ----------- --------------- ----------
As at 1 October - - - -
Granted during the
year 464,000,000 0.07 - -
At 30 September 464,000,000 0.07 -
-------------------- --------------- ----------- --------------- ----------
The outstanding options are exercisable as follows:
Exercise
Options No. of warrants price (p) Exercisable
------------- ---------------- ----------- ---------------------------
Exercisable from 13 May
2022 and expiring on
12 May 2031 with 3 year
vesting period commencing
13 May 2021 464,000,000 0.07p 13 May 2021
------------- ---------------- ----------- ---------------------------
The options outstanding at 30 September 2021 had a weighted
average remaining contractual life of 9 years and 226 days (2020:
nil).
12. Trade and other payables
2021 2020
(Restated)
GBP GBP
--------------------------------- ---------- ------------
Trade payables 515,286 851,003
Social Security and other taxes 155,034 149,165
Other payables 20,607 72,273
Accruals and deferred income 241,882 402,462
Lease liabilities 39,818 52,517
--------------------------------- ---------- ------------
972,626 1,527,420
--------------------------------- ---------- ------------
2021 2020
GBP GBP
--------------------------------- ---------- ------------
Non - current liabilities
Lease liabilities 108,521 13,659
Borrowings 1,688,935 1,549,316
--------------------------------- ---------- ------------
1,797,456 1,562,975
--------------------------------- ---------- ------------
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 18 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 GBP 65,795 are being amortised over the life of
the loan note.
In July 2020, the Group took out a Coronovirus Business
Interruption Loan for GBP240,000 at an interest rate of 3.39%.
There are no repayments in the first 12 months of the loan
following which 60 monthly capital repayments of GBP4,000 will be
made.
13. Acquisition of DMS Holdings 2017 Limited
On 18(th) February 2020, the Company acquired 100 percent of the
shares in DMS Holding 2017 Limited. DMS Holding 2017 Limited is a
holding company for Direct Market Services Limited which is a
telecoms provider to the business market.
The consideration for the Acquisition was GBP1.5 million,
satisfied by cash, the issue of 1,050,000,000 new Ordinary Shares
in Toople (the "Consideration Shares") at the Placing Price, and
the issue of Options to acquire up to 800,000,000 new Ordinary
Shares subject to the achievement of earn out considerations over
the next three years. The primary reason for the purchase was to
improve cash flows due to DMSL's previous profitability, and to
lead the group toward profitability sooner.
The table below summarises the recognised amounts of assets and
liabilities assumed at the date of acquisition.:
GBP
---------------------------------------- ----------
Intangible assets 432,000
Tangible assets 147,094
Deferred tax assets 53,906
Trade and other receivables 713,799
Prepayments and accrued income 188,929
Cash and cash equivalents 1,404
Trade and other payables (368,164)
Accruals and deferred income (173,236)
Lease liabilities (106,074)
Short term borrowings and loans (123,210)
---------------------------------------- ------------
Total identifiable net assets acquired 766,448
Consideration:
Issue of shares 1,050,000
Cash 427,847
1,517,847
Goodwill (751,399)
---------------------------------------- ------------
766,448
---------------------------------------- ------------
An adjustment has been made to reflect the initial accounting
for the acquisition of DMS Holding 2017 Limited, by the Company,
being the elimination of the investment in DMS Holding 2017 Limited
against the non-monetary assets acquired and recognition of
goodwill. The Company has made a preliminary assessment of the fair
value of net assets acquired pursuant to the acquisition of DMS
Holding 2017 Limited, via a Purchase Price Allocation ("PPA")
exercise. The PPA's determined a decrease of GBP432,000 of goodwill
in DMS Holding 2017 Limited with the corresponding movement to be
recognised as customer contracts and developed technology. The
amortisation period for customer contracts and developed technology
has been assessed as 6 years and 5 years respectively. Amortisation
of intangible assets is included in administrative expenses in the
Income Statement.
The revenue included in the Group Statement of Comprehensive
Income for the prior period from 18 February 2020 to 30 September
2020 contributed by DMS Holding 2017 Limited was GBP1,207,392. DMS
Holding 2017 Limited also contributed a loss of GBP232,675 over the
same period in the prior year.
Had DMS Holding 2017 Limited been consolidated from 1 October
2019, the Group Statement of Comprehensive Income would show
revenue of GBP2,225,186 and a loss of GBP414,421 in the prior
year.
14. Related party disclosures
2021 2020
GBP GBP
----------------------------------------- -------- --------
Goods/services purchased from Dotfusion
Limited 40,500 72,000
Goods/services purchased from High
Lees Consulting 32,004 57,004
Goods/services purchased from KBL
Consulting Limited 25,200 95,525
Goods/services supplied to High Lees
Consulting 2,601 1,853
100,305 226,382
----------------------------------------- -------- --------
Mr Piotr Kwiatkowski is the owner of Dotfusion and is a
shareholder in Toople Plc. There was no balance outstanding at 30
September 2021.
Mr Richard Horsman is the owner of High Lees Consulting and is a
shareholder in Toople Plc and non-executive Chairman. There was a
balance of GBP5,332 (2020: GBPnil) owing to High Lees Consulting at
the end of the period.
Mr Kevin Lawrence is the owner of KBL Consulting Limited and is
a shareholder in Toople Plc and a Non- Executive Director. There
was a balance owing at the end of the period of GBP51,230 (2020
GBP72,670).
During the year to 30 September 2021 Toople Plc recharged
certain administrative expenses to its subsidiaries through a
management fee. The total amount charged was GBP773,479 (2020:
GBP518,103). At 30 September 2021 Toople Plc was owed GBP8,870,948
(2020: GBP7,752,182) from its subsidiaries.
15. Directors, key management and employees
Details of the Directors and key management personnel are set
out on pages 14 to 15. Key management personnel are considered to
be the Directors. Relevant related party transactions are disclosed
in Note 14.
Details of Directors' remuneration are set out in the
Remuneration Committee Report on page 31 to 37.
The total remuneration of the directors and key management
personnel is GBP344,010 (2020: GBP317,546), as set out below in
aggregate for each of the categories specified in IAS 24:
Directors 2021 2020
GBP GBP
----------------------------------------- -------- ----------
Short term benefits - Salaries and fees 309,000 312,329
Long Term Benefits - -
Share-based payments 35,010 5,217
----------------------------------------- -------- ----------
Total 344,010 317,546
----------------------------------------- -------- ----------
The average number of persons employed by the Group (excluding
Directors) during the year was 20 (2020: 17), analysed by category
as follows:
2021 2020
No. No.
------------------------ ----- -----
Management and Finance 3 3
Sales and Marketing 13 9
Operations & IT 4 5
------------------------ ----- -----
Total 20 17
------------------------ ----- -----
Staff costs during the year (including Directors salaries and
fees) were as follows:
2021 2020
No. No.
----------------------------------------- ---------- ----------
Wages and salaries (including Directors
salaries and fees) 1,029,421 905,002
Furlough scheme (183,331) -
Social security costs 98,631 94,040
Pension costs 20,350 14,783
----------------------------------------- ---------- ----------
Total 965,071 1,013,825
----------------------------------------- ---------- ----------
16. 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:
2021 2020
GBP GBP
------------------------------------ ---------- ----------
Financial Assets at amortised cost
Cash and cash equivalents 281,592 568,533
Trade and other receivables 282,877 782,258
Financial liabilities at amortised
cost
Trade and other payables 777,775 1,325,738
Borrowings 1,688,935 1,549,316
------------------------------------ ---------- ----------
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
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations, and arises principally from the
Group's receivables from customers. The allowance account for trade
receivables is used to record impairment losses unless the Group
has no reasonable expectations of recovery; at that point the
amounts considered irrecoverable are written off against the trade
receivables directly. The Group provides for impairment losses
based on expected credit losses. For trade receivables, the Group
applies the IFRS 9 simplified approach, which requires expected
lifetime losses to be recognised from initial recognition of the
receivables. The Group had trade receivables of GBP26,854 at 30
September 2021 (2020: GBP111,091), net of bad debt provisions. The
methodology adopted for determining the bad debt provision is
detailed in Note 3 to the financial statements.
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.
17. Pension Commitments
The Group had no pension commitments outstanding at the year
end.
18. Dividends
No dividends have been proposed or paid for either the current
or previous reporting periods.
19. Ultimate Controlling Party
The Directors have determined that there is no controlling party
as no individual shareholder is considered to hold a controlling
interest in the Company.
20. Subsequent events
On 20 December 2021 the Company completed a reorganisation,
where each existing ordinary share of 0.0667 pence was subdivided
into one new ordinary share of 0.01 pence ("New Ordinary Share")
and one deferred share of 0.0567 pence per share. In addition, a
placing of 838,812,272 new ordinary shares in the Company (the
"Placing Shares") with institutional and other investors at 0.045p
per share (the "Placing Price") to raise GBP0.38m was completed
with admission to trading for these new shares taking place on 22
December 2021. The net proceeds of the Placing will be used to
provide further working capital to support the Company's growth and
enhance the Company's service offerings.
21. Right of Use assets
The Group has adopted IFRS 16 using the modified retrospective
approach with the effect of applying this standard at the date of
initial recognition of 18 February 2020, being the date DMSL was
acquired into the group, resulting in the only lease within the
group being applicable under IFRS 16.
The Group recognises a right-of-use asset and corresponding
liability at the date at which a lease asset is made available for
use by the Group, except short term leases (defined as leases with
a lease term of 12 months or less) and leases of low-value assets.
Lease liabilities are initially measured at the present value of
lease payments that are due over the lease term, discounted using
the groups incremental borrowing rate of 10%. This is the rate the
Group are likely to have to pay for a loan of a similar term and
with similar security to obtain an asset of similar value.
In the year to 30 September 2020, the Group recognised the
right-of-use asset and associated lease liability for the remaining
period of the lease for the offices of DMSL. During the current
year, the lease was renegotiated for a longer term and a reduced
quarterly rental
Property Total
GBP GBP
--------------------- -------- -------
Cost or valuation
At 1 October 2020 111,766 111,766
Additions 130,231 130,231
At 30 September 2021 241,997 241,997
Depreciation
At 1 October 2020 47,593 47,593
Charge for year 55,883 55,883
At 30 September 2021 103,476 103,476
Net book value
At 30 September 2021 138,521 138,521
--------------------- -------- -------
At 30 September 2020 64,173 64,173
--------------------- -------- -------
The key impacts on the Statement of Comprehensive Income and the
Statement of Financial Position are as follows:
Prepayments Lease liability Property Income
GBP statement
GBP GBP GBP
--------------------------- ------------ ---------------- --------- -----------
Balance on transition 5,692 - - -
Recognised on adoption
of IFRS 16* (5,692) (106,074) 111,766 -
Depreciation - - (47,593) (47,593)
Interest - (7,794) - (7, 794)
Lease payments - 47,692 - -
------------ ---------------- --------- -----------
Carrying value at 30
September 2020 - (66,176) 64,173 (55,387)
Recognised on recognition
of renegotiated lease
contract - (130,231) 130,231 -
Depreciation - - (55,883) (55,883)
Interest - (7,873) - (7,873)
Lease payments - 55,941 - -
--------------------------- ------------ ---------------- --------- -----------
Carrying value at 30
September 2021 - (148,339) 138,521 (63,756)
--------------------------- ------------ ---------------- --------- -----------
* As at 18 February 2020 the lease liability recognised
GBP106,074 relating to the leasehold buildings used by DMS Holding
2017 Limited.
Under such arrangements, the licence terminates immediately at
any time should the licensor cease to be in occupation of the
premises.
The maturity analysis of the lease liability is as follows:
2021 2020
GBP GBP
--------------------------------------- -------- -------
Lease liability less than one year 23,144 52,517
Lease liability greater than one year
and less than 5 years 98,861 13,659
Lease liability greater than 5 years 26,334 -
--------------------------------------- -------- -------
Total liability 148,339 66,176
--------------------------------------- -------- -------
Maturity analysis of contracted undiscounted cashflows is as
follows:
2021 2020
GBP GBP
--------------------------------------- --------- --------
Lease liability less than one year 35,000 56,000
Lease liability greater than one year
and less than 5 years 112,000 14,000
Lease liability greater than 5 years 63,000 -
--------------------------------------- --------- --------
Total liability 210,000 70,000
Finance charges included above (61,661) (3,824)
--------------------------------------- --------- --------
148,339 66,176
--------------------------------------- --------- --------
22. Prior period adjustments
The effect on Earnings per share at 30 September 2020 was a
reduction from (0.09p) to (0.10p)
Consolidated statement of financial position (restated)
2020 Restatement 2020
As previously Restated
reported GBP
GBP GBP
------------------------------------ -------------- ------------ ------------
ASSETS
Non-current assets
Intangible Assets 1,324,867 - 1,324,867
Tangible assets 37,380 - 37,380
Right of use assets 64,173 - 64,173
------------------------------------ -------------- ------------ ------------
Total Non-current assets 1,426,420 - 1,426,420
------------------------------------ -------------- ------------ ------------
Current assets
Trade and other receivables 855,941 - 855,941
Cash and cash equivalents 568,533 - 568,533
------------------------------------ -------------- ------------ ------------
Total Current assets 1,424,474 - 1,424,474
------------------------------------ -------------- ------------ ------------
Total assets 2,850,894 - 2,850,894
------------------------------------ -------------- ------------ ------------
EQUITY and LIABILITIES
Capital and reserves attributable
to equity shareholders
Share capital 2,347,874 - 2,347,874
Share premium 6,027,272 - 6,027,272
Merger reserve (25,813) - (25,813)
Share-based payment reserve 49,843 - 49,843
Accumulated deficit (8,400,239) (238,439) (8,638,678)
------------------------------------ -------------- ------------ ------------
Total equity (1,063) (238.439) (239,502)
------------------------------------ -------------- ------------ ------------
Current liabilities
Trade and other payables 1,236,465 238,439 1,474,904
Lease liabilities 52,517 - 52,517
------------------------------------ -------------- ------------ ------------
Total current liabilities 1,288,982 238,439 1,527,421
------------------------------------ -------------- ------------ ------------
Non-current liabilities
Financial liabilities
- borrowings 1,549,316 - 1,549,316
Lease liabilities 13,659 - 13,659
------------------------------------ -------------- ------------ ------------
Total non-current liabilities 1,562,975 - 1,562,975
------------------------------------ -------------- ------------ ------------
Total equity and liabilities 2,850,894 - 2,850,894
------------------------------------ -------------- ------------ ------------
The company balance sheet at 30 September 2020 was not
restated.
The prior year adjustment relates to the correction of an error
in relation to the calculation of reseller commissions payable as
at the end of the financial year resulting in the year end accrual
balance being under accrued.
23. 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.
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END
FR TAMFTMTITBRT
(END) Dow Jones Newswires
February 28, 2022 02:00 ET (07:00 GMT)
Toople (LSE:TOOP)
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Toople (LSE:TOOP)
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