REG - Toople PLC - Final Results <Origin Href="QuoteRef">TOOP.L</Origin> - Part 2
31/01/2017 07:06
- Part 2: For the preceding part double click ID:nRSe5238Va
value is considered to be the original invoice
amount, discounted where material, for short-term receivables and payables.
Long term receivables and payables are measured at amortised cost using the
effective interest rate method.
f) Taxation
Current tax
Current tax assets and liabilities for the current and prior periods are
measured at the amount expected to be recovered from or paid to the tax
authorities. The tax rates and the tax laws used to compute the amount are
those that are enacted or substantively enacted by the statement of financial
position date.
Deferred tax
Deferred income tax is recognised on all temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the
financial statements, with the following exceptions:
· deferred income tax assets are recognised only to the extent that it is
probable that taxable profit will be available against which the deductible
temporary differences, carried forward tax credits or tax losses can be
utilised. Deferred income tax assets and liabilities are measured on an
undiscounted basis at the tax rates that are expected to apply when the
related asset is realised or liability is settled, based on tax rates and laws
enacted or substantively enacted at the statement of financial position date.
g) Revenue recognition
Revenue is measured at the fair value of consideration received and receivable
and represents amounts received for services provided in the course of
ordinary activities, net of discounts and sales related taxes.
Services and installation- the Group provides multiple services including the
provision of broadband, mobile phones, telephony calls and minutes and
wholesale services; revenue is recognised as the services are performed with
up front connection fees charges charged at point of installation and a fixed
monthly fee on all services. Calls to certain destinations can be bought by
customers under fixed price bundles which are recognised as monthly fees.
Where calls are made outside these bundles, they are treated as a variable
revenue stream based on a number of minutes multiplied by unit price,
recognised at the point of usage.
h) Segmental reporting
For the purpose of IFRS 8 the chief operating decision maker ("CODM") is the
Board of Directors. The Directors are of the opinion that the business
comprises a single economic activity, being the provision of telephony
services and that currently this activity is undertaken solely in the United
Kingdom. All of the income and non-current assets are derived from the United
Kingdom. The Company has a single customer that, in the reporting period,
amounted to more than 10% of the Company revenue, revenue generated from this
customer amounted to £568,796. At meetings of the Directors, income,
expenditure, cash flows, assets and liabilities are reviewed on a whole Group
basis. Based on the above considerations there is considered to be one
reportable segment only namely telephony services.
Therefore, the financial information of the single segment is the same as that
set out in the consolidated statement of comprehensive income, consolidated
statement of financial position, consolidated statement of changes to equity
and the consolidated statement of cash flows.
i) Share based payments
The cost of equity settled transactions is recognised, together with any
corresponding increase in equity, over the period in which the performance
and/or service conditions are fulfilled, ending on the date when the
individuals become fully entitled to the award ('vesting period'). The
cumulative expense recognised for equity settled transactions at each
reporting date until the vesting date has expired represents the Group's best
estimate of the number of equity instruments and the value which will
ultimately vest. The statement of comprehensive income charge for the period
represents the movement in the cumulative expense recognised at the end of
that period.
The fair value of share based remuneration is determined at the date of grant
and recognised as a expense in the statement of comprehensive income on a
straight line basis over the vesting period taking into account the estimated
number of shares that will vest. Unless otherwise stated the value is
determined by use of a Black-Scholes model.
j) Financial risk management objectives and policies
The Group does not enter into any forward exchange rate contracts.
The main financial risks arising from the Group's activities are cash flow
interest rate risk, liquidity risk, price risk (fair value) and credit risk.
The Board reviews and agrees policies for managing each of these risks and
they are summarised as:
Cash flow interest rate risk - the Group's exposure to the risk of changes in
market interest rates relates primarily to the Group's overdraft accounts with
major banking institutions and on loans from shareholders
Liquidity risk - the Company raises funds as required on the basis of budgeted
expenditure and inflows. When funds are sought, the Company balances the
costs and benefits of equity and debt financing. When funds are received they
are deposited with banks of high standing in order to obtain market interest
rates.
Credit risk - with respect to credit risk arising from other financial assets
of the Group, which comprise cash deposits and accounts receivable, the
Group's exposure to credit risk arises from default of the counterparty, with
a minimum exposure equal to the carrying amount of these instruments. The
credit risk on cash is limited as cash is placed with substantial financial
institutions.
k) Borrowings
Borrowings are recorded in accordance with IAS 32.
l) Equity
Equity instruments issued by the Company are recorded net at proceeds after
direct issue costs.
m) Intangible assets
All intangible assets, are stated at cost less accumulated amortisation and
any accumulated impairment losses. The Group's intangible assets arise from
expenditure relating to website development.
These are amortised over their useful lives which are individually assessed:
Website development - 2 years
3. Loss before taxation
The loss before taxation is stated after charging:
Year ended Year ended
30 Sep 16 30 Sep 15
£ £
Depreciation and amortisation 4,914 8,861
Loss on disposal of intangible fixed assets 2,328 -
Loss on disposal of tangible fixed assets - 35,411
Impairment of trade receivables 15,864
Fees payable to the Company's auditor for the audit of the Company's annual accounts 21,000 1,000
Payments made under operating leases 92,283 8,347
Share based payment charges 21,050 -
Administrative expenses include:
Admission costs* 263,136 -
Marketing costs 342,552 105,504
Wages (including Directors) 322,600 107,796
Social security (including Directors) 30,279 11,661
Customer service 147,193 -
* A commission of £80,000 was payable to the brokers following the Company's
listing on the London Stock Exchange and this has been recognised against the
share premium account.
4. Taxation
Analysis of charge in the year
Year ended30 Sept 2016 Year ended30 Sept 2015
£ £
Current tax:
UK corporation tax on loss for the year - -
Deferred tax release - 21,336
Tax on loss on ordinary activities - 21,336
Loss on ordinary activities before tax (1,733,578) (420,562)
Analysis of charge in the year
Loss on ordinary activities multiplied by small companies rate of corporation tax in the UK of 20% (346,716) (84,112)
Tax effects of:
Non-deductible expenses 810 -
Trading losses carried forward 345,906 84,112
Deferred tax release - 21,336
- 21,336
Current tax charge for the year as above
The Group has accumulated tax losses arising in the UK of approximately
£2,150,000 (2015: £421,000) that are available, under current legislation, to
be carried forward against future profits.
No deferred tax asset has been recognised in respect to these losses due to
the uncertainty of future trading profits.
5. Loss per share
The calculation of loss per share is based on the following loss and number of
shares:
Year ended Year ended
30 Sep 16 30 Sep 15
Loss for the year from continuing operations (1,733,578) (399,225)
Weighted average shares in issue
Basic and diluted number of shares 62,898,630 39,000,000
Basic and diluted loss per share (2.76) (1.02)
As detailed in note 2a, the consolidated financial statements present the
combination as a continuation of the combined financial information of the
Subsidiaries with no goodwill arising on the transaction. Basic loss per share
is calculated by dividing the loss for the year from continuing operations of
the Company by the weighted average number of ordinary shares in issue during
the year.
The Company has in issue warrants at 30 September 2016, these are detailed in
note 9. The inclusion of the warrants in the weighted average number of shares
in issue would be anti dilutive and therefore they have not been included.
6. Intangible assets
Website Development costs Year ended30 Sep 16 Year ended30 Sep 15
£ £
Cost or valuation
Costs brought forward 2,328 -
Additions 17,800 2,328
Disposals (2,328) -
Costs carried forward 17,800 2,328
Accumulated amortisation
Amortisation brought forward - -
Charge for the year 3,254 -
Amortisation carried forward 3,254 -
Net book value 14,546 2,328
Assets are amortised at 50% on a straight- line basis over their expected
useful lives.
7. Trade and other receivables
As at30 Sep 16 As at30 Sep 15
Current £ £
Trade receivables 16,912 44,371
Other receivables 125,312 150,387
Prepayments and accrued income 81,450 -
223,674 194,758
There are no material differences between the fair value of trade and other
receivables and their carrying value at the year end.
At 30 September 2015 no receivables were past due or impaired, at 30 September
2016 management reviewed the trade receivables balance and have recognised an
impairment charge of £15,864 against receivables where there is uncertainty
over recoverability.
8. Cash and cash equivalents
30 Sep 16 30 Sep 15
£ £
Bank current account 743,824 130,853
9. Called up share capital
Ordinary shares of 0.0667 pence per share No Nominal value £
On incorporation 36,000,000 24,012
Shares issued on acquisition of Subsidiaries 39,000,000 26,013
Share placing 25,000,000 16,675
Share capital at 30 September 2016 100,000,000 66,700
On incorporation, the Company had an unlimited authorised share capital and an
issued share capital of 36,000,000 ordinary shares of par value 0.0667 pence
each.
On 15 April 2016, 39,000,000 ordinary shares were issued and allotted to David
Breith in accordance with the terms of the share exchange agreements in
relation to the acquisition of the subsidiaries
On 10 May 2016 following the Company's listing on the London Stock Exchange,
25,000,000 ordinary shares of par value 0.0667 pence each were issued, fully
paid at £0.08 per share. A commission of £80,000 was payable to the brokers
and this has been recognised against the share premium account.
Also on 10 May 2016 following the Company's listing on the London Stock
Exchange, the Company issued warrants over 8,100,000 ordinary shares as
follows:
· 3,000,000 warrants to the Non-Executive Directors to subscribe for one
new ordinary share at £0.08 per share at any time during the period commencing
on the second anniversary of admission ("Vesting Date") and at the second
anniversary of the Vesting Date, a vesting condition of the warrants is that
the holder is a director of the Company on the date of vesting;
· 5,000,000 warrants to the subscribers to the placing to subscribe for
one new ordinary share at £0.16 per share at any time during the period
commencing on admission and expiring at midnight on the second anniversary
thereof save that in the event that the closing price of the ordinary shares
is equal to or in excess of £0.24
pence for 10 consecutive trading days then the Company may serve notice on the
warrant holders requesting that they exercise their warrants within 14 days in
lieu of which they shall lapse; and
· 100,000 warrants to Cairn Financial Advisers to subscribe for one new
ordinary share at £0.08 per share at any time during the period commencing on
admission and expiring at midnight on the second anniversary thereof
The ordinary shares have attached to them full voting, dividend and capital
distribution rights (including on a winding up). The ordinary shares do not
confer any rights of redemption.
The fair value of the 3,000,000 warrants issued to the Non-Executive Directors
and of the 100,000 warrants issued to Cairn Financial Advisers have been
determined using the Black-Scholes option pricing model. The fair value at
the date of grant per warrant was £0.04 for the 3,000,000 tranche and £0.03
for the 100,000 tranche. The fair value of the warrants issued to the
Non-Executive Directors has been charged to the income statement evenly over
the vesting period resulting in a charge in the current period of £21,050. The
fair value of the warrants issued to Cairn Financial Advisers of £3,080 has
been included in the costs of the Company's and placing and therefore debited
to share premium.
The inputs to the Black-Scholes model were as follows:
Warrants granted 3,100,000
Stock price 8p
Exercise price 8p
Risk free rate 1%
Volatility 70%
Time to maturity 4 years/2 years
The Company has recently listed on the main market of the London Stock
Exchange. It is difficult to calculate the expected volatility of its share
price at the year end. Management have therefore considered volatility of
listed entities in similar operating environments to calculate the expected
volatility.
The fair value of the 5,000,000 warrants issued to subscribers to the placing
is considered to comprise a component of the fair value of the ordinary shares
issued in the placing. The Directors do not consider the fair value of the
warrants to be a material component of the fair value of the shares issued in
the placing.
10. Trade and other payables
As at30 Sep 16 As at30 Sep 15
£ £
Trade payables 187,087 69,449
Social security and other taxes 56,606 -
Other payables 10,271 -
Shareholder loan account - 512,141
Accruals and deferred income 131,426 7,000
385,390 588,590
As at As at
30 Sep 16 30 Sep 15
Non - current liabilities
Shareholder loan account 469,140 -
Financial liabilities, with the exception of the shareholder loan included
within trade and other payables are all considered to be repayable within 30
days.
On 3 May 2016, the Company put in place formal documentation relating to the
balance owed to David Breith, the majority shareholder. The balance cannot be
recalled by the shareholder until the third anniversary of the agreement and
after this anniversary only repayable if the Board consider the Company in a
position to service the debt. Therefore, the balance has been classified as
non-current in the financial statements but is shown as current in the
comparative.
The loan is interest free and has a cash value of £606,756, the Directors
consider the market rate of interest that they may be able to obtain for a
similar borrowing from a 3rd party to be 10%. The present value of the loan is
£469,140 and the present value adjustment has been recognised as a capital
contribution within equity. The value of the interest that has been recognised
in the statement of comprehensive income at 30 September 2016 is £19,065.
11. Related party disclosures
12 months to 30 Sep 2016 12 months to 30 Sep 2015
Goods/services purchased from Vitrx Limited 4,362 6,000
Goods/services purchased from Blabbermouth Marketing Limited - 15,767
Goods/services purchased from Diffrenet Limited 8,368
Goods/services purchased from Dotfusion Limited 60,000 -
Goods/services supplied to Vitrx Limited 74,510 21,790
Goods/services supplied to Diffrenet Limited 546
The above companies are disclosed as related parties due to the nature of the
business relationship with Mr David Breith, a major shareholder of Toople PLC.
Mr David Breith is a Director or co-owner of the above companies, excluding
Dotfusion.
Mr Piotr Kwiatowski is the owner of Dotfusion and is a shareholder in Toople
PLC, there were no balances outstanding between the parties at 30 September
2016.
There were no balances outstanding between the parties at 30 September 2016.
During the year to 30 September 2016 Toople Plc recharged certain
administrative expenses to its subsidiaries through a management fee. The
total amount charged was £501,375. At 30 September 2016 Toople Plc was owed
£1,400,175 from its subsidiaries.
12. Directors, key management and employees
Details of the Directors and key management personnel are set out on pages 7
to 8.
Details of Directors' remuneration are set out in the Remuneration Committee
Report on page 20 to 25.
The total remuneration of the directors and key management personnel is
£141,383, as set out below in aggregate for each of the categories specified
in IAS24:
Directors 2016£ 2015£
Short term benefits - Salaries and fees 120,333 -
Share based payments 21,050 -
Total 141,383 -
The average number of persons employed by the Group (excluding Directors)
during the year was 14 (2015: 4), analysed by category as follows:
30 Sept2016 30 Sept2015
Management and Finance 1 0
Sales and Marketing 1 1
Administration 1 1
Operations 11 2
Total 14 4
13. Financial instruments
The Group's principal financial instruments comprise cash balances, accounts
payable and accounts receivable arising in the normal course of its
operations.
The financial instruments of the Group at year-end were:
30 Sept 30 Sept
2016 2015
£ £
Loans and receivables - Cash and cash equivalents 743,824 130,853
Loans and receivables - Trade and other receivables 142,224 194,758
Financial liabilities
Financial liabilities measured at amortised cost - Cash and cash equivalents - -
Financial liabilities measured at amortised cost - Trade and other payables 854,530 588,590
a) Interest rate risk
The Group has floating rate financial assets in the form of deposit accounts
with major banking institutions; however, it is not currently subjected to any
other interest rate risk.
Based on cash balances at the statement of financial position date, a rise in
interest rates of 1% would not have a material impact on the profit and loss
of the Group.
b) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its
financial obligations as they fall due. The Group's exposure to liquidity risk
arises primarily from mismatches of the maturities of financial assets and
liabilities.
The Group maintains a level of cash and cash equivalents and bank facilities
deemed adequate by management to ensure, as far as possible, that it will have
sufficient liquidity to meet its liabilities when they fall due. All current
liabilities are considered to be repayable on demand.
c) Credit risk
The Group had receivables of £223,674 at 30 September 2016. Receivables at
the year-end were not past due, and the Directors consider there to be no
significant credit risk arising from these receivables. At 30 September 2016,
the directors management reviewed all trade and other receivables that were
greater than 60 days old and included a provision for impairment of £15,864.
d) Capital risk management
The Group defines capital as the total equity of the Company and its
subsidiaries. The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to provide returns
for shareholders of the Company and benefits for other stakeholders and to
maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company may adjust
the amount of dividends paid to shareholders, return capital to shareholders,
issue new shares or sell assets to reduce debt.
e) Fair value of financial assets and liabilities
There are no material differences between the fair value of the Group's
financial assets and liabilities and their carrying values in the financial
information.
14. Pension Commitments
The Group had no pension commitments outstanding at the year end.
15. Dividends
No dividends have been proposed or paid for either the current or previous
reporting periods.
16. Ultimate Controlling Party
The Directors have determined that there is no controlling party as no
individual shareholder holds a controlling interest in the Company.
17. Subsequent events
There were no subsequent events.
18. Operating leases
The amounts of minimum lease payments under non-cancellable operating leases
are as follows:
Operating leases which are due: 30 Sept 2016 30 Sept 2015
Within one year 92,283 92,283
In the second to fifth years inclusive 207,212 299,495
Over five years - -
The Company has entered into operating leases on its premises and certain computer equipment and fixtures and fittings. Lease terms are between three and five years.
19. Copies of the Annual Report
Copies of the annual report will be available on the Company's website at
www.toople.com and from the Company's registered office.
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