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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Peoples Op | LSE:TPOP | London | Ordinary Share | GB00BSJWQH14 | ORD GBP0.0001 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.005 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMTPOP
RNS Number : 8122I
The People's Operator PLC
22 June 2017
The People's Operator plc
("TPO" or the "Company")
Full Year Results
The People's Operator (AIM: TPOP), the cause-based commercial mobile virtual network operator ("MVNO"), is pleased to announce its full year results for the period ended 31 December 2016.
Financial Highlights
-- Revenue of GBP3.4m (2015:GBP2.1m), representing growth of 63%
-- Loss of GBP8.7m (2015: GBP10.5m), after non-operational and non-cash adjustments for share options and impairment of intangible assets
-- Cash and cash equivalents at year end of GBP2.7m -- US revenue of GBP753k (2015:GBP7.6k)
-- Average revenue per user in the UK of GBP12.50 for PAYM customers and GBP13.22 for PAYG customers
-- Average revenue per user in the US of $22.00 -- Average customer acquisition costs remain low at GBP5.70 in the UK and $22 in the US
Operational Highlights
-- Operational on both the EE and Three networks in the UK -- Successful launch in June on the T-Mobile network in the US -- Operational on both T-Mobile and Sprint in the US -- Successful fund raising in December to bolster balance sheet -- Significant strengthening of Board
Current Trading
-- Improved commercial terms in both the UK and US -- Gross revenues in the US in February (compared to December) increased by 25.6%. -- US ARPU of $20.94 -- Further fundraising in January and in April in response to investor demand
-- Appointment of Julia Simpson, Chief of Staff at IAG plc, as Non-Executive Director, subject to confirmation at the next AGM
Jimmy Wales, Executive Chairman, commented:
"This has been another year of growth for The People's Operator in challenging market conditions. Our successful launch in the US with our partner T-Mobile has greatly increased our reach and appeal across a wider social and geographical demographic. Our costs per acquisition remain far below the industry average in both our markets.
The recent rise in social awareness and responsibility, particularly in the US in the aftermath of the election, chimes precisely with our message of supporting good causes and our strategy of viral growth. I believe that our increased organic growth and strength in marketing will continue to attract new customers and spread the word among our target communities.
I was delighted to welcome Juliet Rosenfeld and Michael Butler to the Board as Non-Executive Directors. As announced previously, I will be stepping down as Chairman at the Annual General Meeting and Michael will be taking my place. I am also very pleased to announce the appointment today of Julia Simpson as a Non-Executive Director (subject to confirmation at the next AGM). Her considerable experience as Chief of Staff at IAG will be of huge value to the Company as we embark on the next stage of our growth."
Julia Simpson, proposed Non-Executive Director, commented:
"I am delighted to join the Board of The People's Operator. This Company is unique - offering customers an opportunity of supporting good causes while using their phone. TPO is a pioneering model of 'crowd giving'. Make a call, make a change. It is a privilege to be part of TPO. I look forward to contributing to the successful development of this brand."
For further information
The People's Operator plc Nick Dashwood Brown, Head of Investor Relations 07710 511259 finnCap Ltd Stuart Andrews / Christopher Raggett / Simon Hicks 020 7220 0500
About The People's Operator
The Company was founded in 2012 and currently offers customers pay monthly ("PAYM") and pay-as-you-go ("PAYG") mobile contracts. These contracts are competitively priced and allow users to direct 10% of their monthly bill to a cause of their choosing at no additional cost to themselves. In addition, The TPO Foundation, a UK registered charity, will receive 25% of the UK trading profits generated by The People's Operator LLP. A similar structure is proposed to be adopted in other countries.
The strategy of the Group is to maintain a low fixed-cost base, small staff numbers and lower levels of advertising and marketing expenditure than its competitors. In addition, as TPO operates as an MVNO, the Group is not expected to be exposed to the high infrastructure costs and large capital investment charges that traditional mobile operators can incur. This strategy is expected to enable the Group to offer customers a highly competitive pricing model with a high quality of service, whilst generating an attractive return to shareholders after donations to causes.
TPO has developed partnerships with community organisations and causes who promote TPO's products to their supporters. Under the direction of Jimmy Wales, the founder of the online encyclopaedia Wikipedia, the Company is also developing an online viral community to expand the global network of mobile phone customers who share in the common belief of supporting causes.
The Directors believe that this strategy is scalable into new markets around the world which offer competitive wholesale mobile network bandwidth prices and where subscriber acquisition and revenue growth can be driven quickly at a low incremental cost once network agreements have been concluded with local network operators.
The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.
Chairman's Statement
2016 was a year of significant revenue growth for The People's Operator plc ('the Company') and subsidiaries ('the Group' or 'TPO'). Revenues grew to GBP3.4m compared with the 2015 figure of GBP2.1m, a rise of 63%. Group loss for the year was GBP8.7m compared to prior year losses of GBP10.5m.
Our Average Revenue Per User (ARPU), statistics remain encouraging. In the UK, Pay As You Go (PAYG) ARPU averaged GBP13.22 throughout 2016 and finished the year at GBP13.74 versus the 2015 average of GBP12. The Pay Monthly (PAYM), excluding offer period customers averaged GBP12.50 for 2016. In the UK, we continue to operate on the EE and Three networks.
In June 2016, TPO successfully launched on the T-Mobile network in the US, which operates alongside our agreement with Sprint.
The Group has always believed that our US ARPU would be higher than that of the UK and this supposition has been consistently upheld since our launch. Our US ARPU, excluding offer period customers for 2016 ran at an average of USD$22.09 and ended the year at USD$21.80. The majority of US customers are signed up to a Prepay system and consequently the Group has no material risk of bad debt in the US.
The Group has benefitted in a small way from the weakness in sterling subsequent to the Brexit vote. The movement in foreign exchange rates will remain relevant to the Group as a significant portion of its revenues are denominated in US dollars.
Our Cost per Acquisition (CPA), which measures the average cost of acquiring a customer, remains extremely low. In the UK the average CPA was GBP5.70 and in the US it was USD$22.00. These numbers relate to the last six months of 2016.
As announced at the interim stage, the Company raised further funds in December 2016. Along with external institutional investors, our major shareholder Juliet Rosenfeld, CEO Mark Epstein and I demonstrated our belief in the Group by committing substantial further investment at that point. I believe that this commitment will prove both appropriate and timely and that TPO will continue to show consistent revenue growth and profitability, while recognising working capital management remaining an important focus for the group too.
During the latter part of the year, James Rosenfeld, son of our founder Andrew Rosenfeld, resigned as a Non-Executive Director. We thank James for his efforts on behalf of the Group. We were delighted subsequently to welcome Mrs Juliet Rosenfeld, Andrew's widow and our largest shareholder, to the Board as a Non-Executive Director. The Group is grateful for her continued support and dedication to the development of the business.
At the beginning of 2017 we were extremely fortunate to welcome Michael Butler to the Board as a Non-Executive Director. Michael has a long and distinguished career in the telecoms industry and brings a wealth of valuable experience to the Board. As announced on 25 January 2017, it is the Company's intention to appoint Michael as Non-Executive Chairman at the Annual General Meeting.
This is my last statement as Chairman. As previously announced I will be stepping down at the Annual General Meeting and offering myself for election as a Non-Executive Director. It remains for me to thank our employees for their continued hard work and dedication to the Group. Without their considerable efforts the Group would not have achieved its notable growth over the past two years and I am grateful to each and every one of them.
J Wales
Chairman
Date: 21 June, 2017
Strategic Report
Principal activity
The principal activity of the Group is the provision of mobile phone services. We believe that subscribers find TPO appealing due to the combination of wide network coverage, competitive pricing, and the opportunity to direct 10% of their bill to a good cause.
The Group has developed, marketed and operates a mobile phone business that provides consumers with an attractive alternative to traditional providers. The Group is financially prudent and operates a low cost model to generate the best return on investment. The Group has the ambition to grow the business into a profitable operation with 2% penetration into the UK and US by 2021.
TPO sells mobile services to consumers; these are delivered in the UK by an operating infrastructure provided by Three and by EE. In the US, similar services are provided by Sprint and by T-Mobile. The business is comprehensively underpinned by a digital platform.
The Group's revenue is reported after donations that are collected on behalf of and passed on to nominated causes as part of our commitment that 10% of the customers' bill will be paid to the cause that the customer has nominated.
Loss for the year was GBP8.7m (2015 - GBP10.5m) and loss per share was GBP0.09 (2015 - GBP0.11) per share.
The Board's review of the performance of the Group is included within this Strategic Report whilst reference is also made to the Chairman's Statement which provides further review and analysis of the performance of the Group.
Review of the business and key performance indicators
2016 was a year of transition in which we launched on two new networks: T-Mobile in the US and Three in the UK. We also undertook an internal review of group's cost base and future value of key tangible and intangible assets and made appropriate changes and impairments where required.
Revenue (after donations) grew from GBP2.1m in 2015 to GBP3.4m in 2016, a factor of 1.6 times. The revenue increase was driven by the growth in the number of subscribers in both the UK and the US. UK Revenues grew from GBP2.1m to GBP2.7m (after donations). The US has seen revenue growth, from an immaterial amount in 2015 to GBP0.7m (US$1m) after donations.
As at 31 December 2016, the Group had cash and cash equivalents of GBP2.7m (2015: GBP8.0m), cash outflows from operating activities of GBP7.9m (2015: net cash outflow of GBP8.9m) and realised a loss for the year of GBP8.7m (2015: a loss of GBP10.5m) and thus a reduction of 17.1%. Total current assets are GBP3.3m (2015: GBP8.8m), with this reduction primarily being driven by an impairment of intangible assets, to re-align the intangible value with the group's business plans.
During the year the company sourced funding from Barclays Bank plc, to support working capital requirements and future business plans. The balance at the year end was GBP1m. At 31 December 2016 there was a technical breach of the EBITDA covenant contained within the Standard Terms of the facility. Since then, management have received confirmation from Barclays confirming the technical breach and confirming they waive the right to take any action.
A combination of the impairment of the legacy intangibles, reduction in cash, the reduction in receivables, increase in borrowing but a reduction in both trade and other payables, saw total net assets reduce to GBP0.6m (2015: GBP7m).
Furthermore, during the year the directors made a provision for impairment against investments in the company's statement of financial position. The investment value is linked to the company's share price at the reporting period end.
We remain confident that the business model and platform are capable of international transposition in-line with our stated strategy, and we continue to investigate markets outside the UK and US for future expansion.
Current Trading
We are pleased to report that solid trading continues in the current financial year. As previously announced in January 2017, discussions with our network providers in the UK have led to considerably improved commercial terms for airtime costs.
Discussions with network providers also took place in the US and once again we will benefit this year from improved commercial terms. The US business has already demonstrated impressive growth. As previously announced on 9 March 2017, gross revenues in the US in February (compared to December) increased by 25.6%. The rate of growth slowed during March and April but the average ARPU for the year to date is $20.94.
We have been able to identify specific demographics and geographical areas within the US which are particularly attuned to the Company's message of social responsibility and charitable giving and we have seen notable activity within the TPO Community in these areas. The concept and potential of social responsibility has received widespread media coverage in the aftermath of the Presidential Election and TPO has enjoyed strengthened customer awareness as a result.
The Company successfully raised further funds in January 2017 for total of GBP0.2m as a response to investor demand and a further GBP1.5m in May 2017. The shares issued to satisfy this demand came with a warrant attached, offering the possibility of a further fund raise dependent on the attainment of certain share price milestones.
The Board believes that TPO is well-placed to continue the revenue and margin growth already seen this year and is confident that the Group will continue to show steady growth towards profitability.
We are delighted to welcome Julia Simpson to the Board as a Non-Executive Director subject to confirmation at the next AGM. Julia is Chief of Staff at International Airlines Group (IAG) with responsibility for, among other things, global communication. She holds Board positions at British Airways and Iberia. Her experience in corporate communications and high-level business relations will be invaluable to the Group.
TPO Projects in operation in 2016
TPO Community
The Community offers members, charities and other non-profit organisations a social network and a fully functional donation platform. This succeeds on three levels: it maximises fundraising opportunities for the cause, it combines this with social sharing to help continue and develop the conversation and it offers an easy to use communication tool to reach a broad and like-minded audience already disposed towards, and familiar with charitable giving.
Fundraising Platform (TPO Giving)
The fundraising platform is live on the TPO website (www.tpo.com/giving). The platform allows people to donate to charities and other good causes without incurring the commission charges imposed by competing organisations. Our only charge for a donation is the fee levied by the banks for processing donations. While other donation websites charge up to 9% in commission, we believe that donors will appreciate the opportunity to have more of their money passing directly to the cause they support.
We are developing tools which help to integrate the donation functionality into the good cause's own website. This will help causes collect donations easily and safely and will also help to build the number of customers joining and nominating them.
Partner Sales Platform and Distribution Platform
The partner sales platform is the extension and automation of collaboration tools available to TPO partner causes. The tools and programmes are delivered to partners via an online portal linked to the UK and USA store sites.
Platform tools and programmes include: tailored and discounted co-branded mobile airtime, digital collaboration tools including access to the TPO Community, social media, SEO (Search Engine Optimisation), email and SMS.
(Short Message Services) capabilities, access to the TPO giving platform with the option to deploy a TPO Giving widget.
The platform will include a secure login area where partners can monitor their TPO programmes and income.
Member Get Member
Customer relationship management to encourage customer referrals has been part of TPO's acquisition strategy since its inception. For example, historically in the UK 10% of all new TPO Pay Monthly customers joined through an existing customer referral.
TPO's Member Get Member programme builds on this approach by rewarding all existing US and UK customers, as well as the individuals who join TPO as a result of their recommendation, with bonus mobile airtime credits.
The programme is administered online and supported by customised SIM (Subscriber Identity Module) packs with tear-off slips to make it easy for customers to recommend their family and friends to TPO.
TPO's Member Get Member programme will aid the Group in its goal to achieve viral growth while minimising cost per acquisition.
Super Recruiter
TPO's new Super Recruiter programme is another major innovation in customer acquisition, bypassing traditional mobile phone sales channels by going to community influencers.
These community influencers or Super Recruiters are rewarded for each customer joining TPO citing the Super Recruiter's unique reference code.
Super Recruiters act in a variety of communities and use a combination of online promotion, word of mouth and other methods to help TPO acquire customers.
Community (Help and Support)
We continue to build engagement with the community, using regular "Super Users" to contribute to discussions and provide support for mobile customers.
We are developing the Help and Support segment within the community to encourage interaction and self-support. This will allow for better SEO, building authority for TPO and www.tpo.com around mobile search terms and will deliver non-branded organic traffic, with general enquiries about handset functionality and comparison.
Having an active help community where customers effectively support each other allows a lower cost of service, decreased acquisition costs and enhances our ambition of offering a 24-hour service.
These initiatives will underpin subscriber and revenue growth and serve to heighten our profile by viral engagement on social media.
Principal risks and uncertainties
Liquidity Risk
Liquidity risk is the risk that the Group may have difficulty in obtaining funds in order to meet its day-to-day operating requirements.
At the year-end the Group had GBP2.7m of cash and cash equivalents. The Group has a short customer payment cycle. In the US, the payment method for customers is via an automatically recurring pre-payment ("Autopay"), and the UK is scheduled to adopt the same model in due course. Bad debts are routinely monitored and actively pursued. Working capital management remains at the forefront of the Directors' areas of focus.
Cash and cash flow forecasts are reviewed by the Executive Directors on a daily basis and the Group constantly monitors these to ensure, among other scenarios, that the Group meets its liabilities as they fall due. This area is considered further in the report of the directors and the accounting policies under 'Going concern'.
In July 2016, the Group negotiated a GBP1,000,000 loan facility with Barclays Bank plc to help manage liquidity and allow for expansion. This loan and the additional equity funding received of GBP1,700,095 from issuance of subscription shares allow the Group to continue its strategic path to expansion and revenue growth, which has continued in 2017.
The loan facility has a two year term with an interest of 8.5% plus Base Rate.
The Group has undertaken a number of cost-cutting exercises during 2016 and is running a lean operation with resources deployed under ongoing review.
As the Group has a high volume of small outstanding balances, there is a risk of bad debt and a difficulty in collecting amounts. During 2016 the Group has recruited a credit controller to monitor and collect cash.
Foreign Exchange Risk
Expansion into the US market has involved foreign currency transactions, exposing the Group to the risks of unfavourable movements in foreign exchange markets, in particular in relation to intergroup funding and related group balances.
The Executive Directors approve and monitor all transactions settled in foreign currency and regularly assess the need to mitigate foreign exchange risk via hedging solutions, which include ensuring that that as far as is possible, sales and purchases are made in the local currency of each group entity.
Financial Reporting Risk
Financial reporting risk during the current year relates to maintaining appropriate staff levels and procedures.
At the end of the financial year a permanently staffed finance team was in operation providing management with real time financial reporting and planning with comprehensive visibility over group operations.
Management is committed to ensuring there is continuity in the finance team and that there are staffing levels appropriate to Group needs.
Approved by the board and signed on its behalf
M Epstein
Chief Executive Officer
Date: 21 June, 2017
Consolidated statement of comprehensive income for the year ended 31 December 2016
Hot Features
Premium
Note 2016 2015
GBP GBP
Revenue 3 3,436,028 2,108,629
Cost of sales (3,589,401) (3,935,532)
__________ __________
Gross loss (153,373) (1,826,903)
Administrative expenses (7,526,221) (7,955,269)
Exceptional administrative expenses 4 (857,255) (650,800)
__________ __________
Total administrative expenses (8,383,476) (8,606,069)
__________ __________
Operating loss 5 (8,536,849) (10,432,972)
Finance income 5,287 26,394
Finance expense (39,777) (773)
__________ __________
Loss before tax (8,571,339) (10,407,351)
Taxation 6 (88,887) (46,825)
__________ __________
Loss for the year (8,660,226) (10,454,176)
__________ __________
Other comprehensive income:
Exchange differences on translating 33,784 -
foreign operations
__________ __________
Other comprehensive income for 33,784 -
the year
__________ __________
Total comprehensive loss for the
year (8,626,442) (10,454,176)
__________ __________
Loss for the year attributable
to:
Owners of the parent (7,303,865) (8,528,204)
Non-controlling interest (1,356,361) (1,925,972)
__________ __________
Loss for the year (8,660,226) (10,454,176)
__________ __________
Total comprehensive loss for the
year attributable to:
Owners of the parent (7,270,081) (8,528,204)
Non-controlling interest (1,356,361) (1,925,972)
__________ __________
Total comprehensive loss for the
year (8,626,442) (10,454,176)
__________ __________
Basic and diluted loss per share
attributable to shareholders of
the parent (0.09) (0.11)
__________ __________
Loss per share
The loss per share calculation is based on the group's retained loss attributable to the shareholders of the parent for the year of GBP7,270,081 (2015 - GBP8,528,204) and the weighted average number of shares for the year of 2016 - 78,944,328 (2015 - 77,099,059).
Consolidated statement of financial position at 31 December 2016
2016 2016 2015 2015
GBP GBP GBP GBP
Assets
Non-current assets
Property, plant
and equipment 69,266 83,893
Intangible assets - 1,293,212
__________ __________
Total non-current
assets 69,266 1,377,105
__________ __________
Current assets
Trade and other
receivables 531,840 782,910
Cash and cash equivalents 2,727,177 7,999,330
__________ __________
Total current assets 3,259,017 8,782,240
__________ __________
Total assets 3,328,283 10,159,345
__________ __________
Equity and liabilities
Current liabilities
Trade and other
payables 1,704,527 3,126,257
Borrowings 1,000,000 -
__________ __________
Total Liabilities 2,704,527 3,126,257
__________ __________
Equity
Share capital 56,998 38,550
Share premium 23,626,506 21,821,784
Share based payment 393,940 -
reserve
Foreign exchange 33,784 -
reserve
Retained earnings (19,297,498) (11,993,633)
__________ __________
Total equity attributable
to the parent 4,813,730 9,866,701
Non-controlling
interest (4,189,974) (2,833,613)
__________ __________
Total Equity 623,756 7,033,088
__________ __________
TOTAL EQUITY AND
LIABILITIES 3,328,283 10,159,345
__________ __________
The financial statements were approved and authorised for issue by the Board of Directors on 21 June 2017 and were signed on its behalf by:
M Epstein
Director
Consolidated statement of cash flows for the year ended 31 December 2016
2016 2016 2015 2015
GBP GBP GBP GBP
Cash flows from operating
activities
Loss for the year (8,660,226) (10,454,176)
Adjustments for:
Depreciation of property,
plant and equipment 23,899 13,742
Amortisation of intangible
fixed assets 545,215 246,423
Impairment of intangible
assets 857,255 -
Finance income (5,287) (26,394)
Finance costs 39,777 773
Share based payments
(note 19) 517,015 -
__________ __________
(6,682,352) (10,219,632)
Decrease/(increase)
in trade and other
receivables 251,070 (375,595)
(Decrease)/increase
in trade and other
payables (1,421,730) 1,645,588
__________ __________
Cash used in operations (7,853,012) (8,949,639)
Interest received 5,287 26,394
Interest paid (39,777) (773)
__________ __________
Net cash flows from
operating activities (7,887,502) (8,924,018)
Investing activities
Purchases of property,
plant and equipment (6,822) (87,652)
Purchase of intangibles (97,925) (1,404,236)
__________ __________
Net cash used in investing
activities (104,747) (1,491,888)
Financing activities
Proceeds from the
issuance of share
capital 1,700,095 -
Proceeds from borrowings 1,000,000 -
__________ __________
Net cash from financing
activities 2,700,095 -
__________ __________
Net decrease in cash
and cash equivalents (5,292,154) (10,415,906)
Cash and cash equivalents
at beginning of year 7,999,330 18,415,236
__________ __________
Effects of foreign
exchange 20,001 -
Cash and cash equivalents
at end of year 2,727,177 7,999,330
__________ __________
Consolidated statement of changes in equity for the year ended 31 December 2016
Total
attributable Non-
to
Share Share Retained equity controlling Total
holders
capital premium earnings parent interest equity
GBP GBP GBP GBP GBP GBP
At 1 January
2015 38,550 21,821,784 (3,465,429) 18,394,905 (907,641) 17,487,264
Loss and total
comprehensive
loss for the
year - - (8,528,204) (8,528,204) (1,925,972) (10,454,176)
__________ __________ __________ __________ __________ __________
31 December
2015 38,550 21,821,784 (11,993,633) 9,866,701 (2,833,613) 7,033,088
__________ __________ __________ __________ __________ __________
Total
Share Foreign attributable Non-
Share Share based currency Retained to controlling Total
capital premium payment translation earnings equity interest equity
reserve holders
GBP GBP GBP GBP GBP GBP GBP GBP
At 1 January
2016 38,550 21,821,784 - - (11,993,633) 9,866,701 (2,833,613) 7,033,088
Comprehensive
loss for
year
Loss for
the year - - - - (7,303,865) (7,303,865) (1,356,361) (8,660,226)
Effects
of foreign
exchange - - - 33,784 - 33,784 - 33,784
---------------
_________ __________ __________ __________ __________ __________ __________ __________
---------------
Total
comprehensive
loss for
the year - - - 33,784 (7,303,865) (7,270,081) (1,356,361) (8,626,442)
Contributions
by and
distributions
to owners
Share
based
payments
- options
issued - - 393,940 - - 393,940 - 393,940
Share
based
payments
- shares
issued 1,447 121,628 - - - 123,075 - 123,075
Issue
of share
capital 17,001 1,683,094 - - - 1,700,095 - 1,700,095
_________ __________ __________ __________ __________ __________ __________ __________
Total
contributions
and
distributions
to owners 18,448 1,804,722 393,940 - - 2,217,110 - 2,217,110
_________ __________ __________ __________ __________ __________ __________ __________
31 December
2016 56,998 23,626,506 393,940 33,784 (19,297,498) 4,813,730 (4,189,974) 623,756
_________ __________ __________ __________ __________ __________ __________ __________
Notes to the financial information
1 Basis of preparation
The financial information for the year ended 31 December 2016 and the year ended 31 December 2015 contained in these preliminary results does not constitute the company's statutory accounts for those years.
The auditors' reports on the accounts for 31 December 2016 and the year ended 31 December 2015 were unqualified, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006. However, while the year ended 31 December 2015 did not draw attention to any matters by way of emphasis, the audit report for the ended 31(st) December 2016 contained a statement in respect of uncertainly over going concern, further details are included in note 2 below.
The financial information contained in these preliminary results has been prepared using the recognition and measurement requirements of International Financial Reporting Standards (IFRSs) as adopted by the EU. The accounting policies adopted in these preliminary results have been consistently applied to all the years presented and are consistent with the policies used in the preparation of the financial statements for the year ended 31 December 2015. New standards, amendments and interpretations to existing standards, which have been adopted by the Group for the year ended 31 December 2016, have not been listed since they have no material impact on the financial information.
2 Liquidity and Going Concern
These financial statements have been prepared on
the going concern basis. The Directors have reviewed
the Company and Group's going concern position
taking account of its current business activities,
budgeted performance and the factors likely to
affect its future development, which are set out
in this Annual report, and include the Group's
objectives, policies and processes for managing
its capital, its financial risk management objectives
and its exposure to credit and liquidity risks.
The directors have prepared cash flow forecasts
covering a period of at least 12 months from the
date of approval of the financial statements. If
the forecast is achieved, the Group will be able
to operate within its existing facilities. However
the time to close new customers and the value of
each customer, which are deemed high volume and
low value in nature are factors which constrain
the ability to accurately predict revenue performance.
Furthermore investment in winning customers, via
marketing expenditure, remains an important function
of the forecasts too. As such, there is a risk
that the group's available working capital may
prove insufficient to cover both operating activities
and the repayment of its debt facility. In such
circumstances, the group would be obliged to seek
additional funding through a placement of shares
or source other funding. The directors have had
a history of raising financing from similar transactions.
Furthermore, those investors who participated in
the fundraising of April 2017 received warrants
attached to their new shares, giving them the right
to a further subscription for new shares subject
to the attainment of a specific share price metric.
The directors have concluded that the circumstances
set forth above represent a material uncertainty,
which may cast significant doubt about the Company
and Group's ability to continue as going concerns.
However they believe that taken as a whole, the
factors described above enable the Company and
Group to continue as a going concern for the foreseeable
future. The financial statements do not include
the adjustments that would be required if the Company
and the Group were unable to continue as a going
concern.
3 Revenue and segmental information
The Group supplies communication services and products to the UK and the US markets through a mobile virtual network. This is considered to be a single group of services and products provided by a single supplier, and one operating segment. The Group has focused on managing the services provided through this network in a unitary manner.
2016 2015
GBP GBP
Gross income from UK market 2,837,200 2,179,758
Gross income from US market 753,109 7,550
__________ __________
3,590,309 2,187,308
__________ __________
For customers who choose to nominate a charity or cause, below we break out the relevant 10% of their billings that is passed on by TPO.
2016 2015
GBP GBP
Gross income 3,590,309 2,187,308
Amounts to nominated causes (154,281) (78,679)
__________ __________
Revenue 3,436,028 2,108,629
__________ __________
4 Exceptional administration expenses
2016 2015
GBP GBP
US launch costs - (650,800)
Impairment of Intangibles (857,255) -
__________ __________
The directors have reviewed the forecasted performance of the intangible assets held by the Group and have deemed there to be uncertainty in respect of the ability of the assets to generate positive cash flows over their economic life. Accordingly the assets are deemed to be fully impaired at the year-end 31 December 2016 and an exceptional expense has been recognised for the impairment charge..
The exceptional expenses incurred in the prior year related to legal and professional service expenses associated with entry into the USA market. Specifically the legal costs related to advice for trading licences, group restructuring, taxation and customer contractual requirements.
5 Operating loss
The following items have been included in arriving at the operating loss.
2016 2015
GBP GBP
Depreciation of property, plant
and equipment 23,899 13,742
Amortisation of intangible assets 545,215 246,423
Impairment of intangible assets 857,255 -
Auditors remuneration:
- Tax compliance 9,738 12,500
- Audit of company 126,163 53,000
- Interim review fees 2,500 2,500
__________ __________
6 Taxation
Analysis of tax expense
No liability to UK corporation tax arose on ordinary activities for the year ended 31 December 2016 (2015 - GBPNil).
Factors affecting the tax expense
2016 2015
GBP GBP
Loss on ordinary activities before
tax (8,571,339) (10,407,351)
__________ __________
Loss on ordinary activities at the
standard rate
of corporation tax in the UK of
2016 - 20% (2015 - 20%) (1,714,268) (2,081,470)
Effects of:
Net disallowed expenditure 235,942 68,220
Losses available to carry forward 1,533,534 2,022,615
Differences in overseas tax rates 5,176 18,264
Other differences 28,503 19,196
__________ __________
Tax expense 88,887 46,825
__________ __________
The Group incurred tax losses of approximately GBP8,571,339 during the year (2015 - GBP10,407,351) so has an estimated potential deferred tax asset of GBP4,236,326 (2015 - GBP2,758,001). This has not been recognised as there is uncertainty as to the timing of future profits that will arise in future accounting periods against which these losses could be offset. The losses are available for use against profit from the same trade.
7 Cautionary Statement
The People's Operator has made forward-looking statements in this press release, including statements about the market for and benefits of its products and services; financial results; product development plans; the potential benefits of business relationships with third parties and business strategies. These statements about future events are subject to risks and uncertainties that could cause The People's Operator's actual results to differ materially from those that might be inferred from the forward-looking statements, The People's Operator can make no assurance that any forward-looking statements will prove correct.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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(END) Dow Jones Newswires
June 22, 2017 02:00 ET (06:00 GMT)
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