Toople PLC Final results for the year ended 30 Sept 2018 (7463K)

TIDMTOOP

RNS Number : 7463K

Toople PLC

18 December 2018

Strictly embargoed until: 07.00, 18 December 2018

Toople PLC

("Toople" or the "Company")

Final results for the year ended 30 September 2018

Toople PLC (LSE: TOOP), a provider of bespoke telecom services to UK SMEs, today announces is final audited results for the year ended 30 September 2018.

Commenting on the results Richard Horsman Non-Executive Chairman said:

"The Company has achieved a number of important milestones this year, notably our successful GBP2.2 million placing announced in September 2018 which is expected to deliver cash generation. This over-subscribed fundraise showed continued belief in Toople's management and strategy and will provide important resources to drive business growth."

Financial Highlights:

Revenue, showing significant growth of our business year on year

   --      Group revenue grew by 17.5% to GBP1,505,000 
   --      Broadband revenue grew by 112% 
   --      Hosted revenue grew by 345% 
   --      Mobile revenue grew by 221% 

Other financial metrics also showing growth

   --      Gross profit increased in GBP terms by 28% to GBP203,624 (FY17: GBP159,305) 
   --      Overall gross margin improved by 1.1 percentage points to 13.5% 

-- Retail margin up from 16.5% to 21.7%, driven by improved gross margins on Broadband and Mobile

-- Increase in costs as sales team brought in-house, driving significant increase in lead conversion and

sales, resulting   in lower cost of acquisition per customer 

Operational Highlights:

-- Significantly strengthened management team, focussed on driving growth, innovation and sales

-- Successful and oversubscribed fund raising, showing support for business's management and strategy

   --      Management expects recent placing to deliver cash generation 

-- Number of material new contract wins and partnership agreements validating management decision to bring

sales   function in-house 

-- Strong current trading including record month in October 2018 followed by another record month in November and a healthy new business pipeline

Commenting on current trading and outlook Mr Horsman added:

"There is no better indicator of the strength and growth of the business than our recent October numbers. As reported recently, Toople received the highest number of orders by contract value in one month in its history, making this a record-breaking period for the business. November trading showed further growth over and above October, with more than GBP250,000 of contracted revenue again achieved in the month. This is clear demonstration that the momentum of the business continues."

Andy Hollingworth, CEO at Toople commented:

"Our strategy of top quality customer service, a dedicated sales and marketing team, a refreshed and renewed management team and a bespoke product that gives clients exactly what they need in a simple, easy to use package is our recipe for success and one that is showing phenomenal results. We are the modern telecommunications partner of choice."

-ends-

For further information please visit www.toople.com or contact:

 
 Toople PLC                            Tel: [phone] 
  Andy Hollingworth, Chief Executive 
  Officer 
 Cairn Financial Advisers LLP          Tel: [phone] 
  David Coffman / Richard Nash 
 Novum Securities Limited              Tel: [phone] 
  Colin Rowbury 
 Turner Pope Investments Limited       Tel: [phone] 
  Andy Thacker 
 Belvedere Communications              Tel: [phone] 
  John West / Llew Angus 
 

About Toople PLC

Toople Plc, a company incorporated in the UK provides a range of telecoms services primarily targeted at the UK SME market. 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 through Merlin, the Group's proprietary software platform.

The Group is differentiated by its focus on creating business broadband solutions, with robust and reliable packages that will enhance our customers company's business. In addition, our vision is based on trust and transparency, with no hidden fees within our pricing policy providing customers with a clear understanding of cost.

Toople Plc has a strong and highly experienced Board and management team who are focused on growing the business both organically and by identifying earnings enhancing strategic acquisition opportunities.

Chairman's Statement

A Record Year For Your Company

This has been an exciting year for the Company and I am very pleased to present the latest annual report and accounts.

The Company achieved a number of important milestones this year, notably the successful GBP2.2 million placing announced in September 2018 which is expected to deliver cash generation. This over-subscribed fundraise showed continued belief in Toople's management and strategy and will provide important resources drive business growth.

It has been a year of building success for the future. We ended our financial year strongly, with over 600 small businesses concluding contracts directly with Toople during August and September 2018. An increasing number of orders come from existing customers, demonstrating Toople's ability to grow both by adding new customers as well as selling add-ins to its existing customer base. The wholesale side of the business has been overhauled with a focus on increasing margin and as a result has attracted new growth with nine new agreements signed. We expect this channel to achieve continued growth with well qualified partners.

In August we landed a major contract win with a well-known reseller, for an initial three years with an expected GBP3.5 million in additional revenue over that three year period. Partners selling Toople's services now include specialist telecoms resellers, utility, chip and pin, fuel, energy and mobiles providers to SMEs based all over the country.

We added a significant number of new contract wins over the financial year, showing the strength of both our business offering and our sales and marketing strategy. We are excited about the momentum we are building in our new business pipeline and we hope that as customers experience our world class services and see our outstanding TrustPilot reviews that even more UK SMEs will continue to add to our already expanding pool of clients.

This momentum has showed in our financial results too, with broadband, hosted and mobile revenue all showing growth over the 100% mark, a benchmark we are proud of building over the past year.

The strength and growth of the business has continued into the new financial year. As reported recently, in October 2018 Toople received the highest number of orders by contract value in one month in its history with the contract value of signed customers equating to revenue in excess of GBP250,000 for the Company over a 24 month period and the largest monthly number of directly contracted small businesses joining Toople which represented a 40% increase compared to prior months. Additionally the November results have showed further growth over and above October, with in excess of another GBP250,000 of contracted revenue again achieved in the month.

I would like to take this opportunity to thank our partners, customers, employees, Board and of course our shareholders for their support over the past year.

Richard Horsman

Non-Executive Chairman

17 December 2018

Chief Executive Officer's Review

Expect Growth and Expansion to Continue in the Future

I am very pleased to update our shareholders on our record year of performance, as our reach across the small business market rockets from a low base, whilst setting a trajectory that will allow Toople to become the telecommunications partner of choice to UK SMEs.

As a whole, the small business market is robust and growing, as big corporates struggle in an unstable economic climate. There are approximately 5.4 million SMEs in the UK, over five million of which have less than 50 employees. 73% of the UK's SMEs with five or more employees are expected to grow over the next two years.

As the market grows, so do we, and as a result this year we have realised a number of large, impressive milestones:

-- Our small business customers base grew by over 100% and is currently growing at over 450 small business joining every month

   --      Successful GBP2.2 million fundraising 
   --      9 new partner agreements signed. 

With existing customers providing an increasing number of orders, we are seeing a lower cost of acquisition per customer. This also proves that Toople offers a great customer experience. Following a review of our wholesale business, we have also seen 9 new partners sign contracts to take white labelled services at the right margin.

The digital marketing campaign, one of the central tenets of our growth strategy, is generating an increasing level of enquiries from potential customers and a growing conversion rate. This campaign has been structured to generate the best possible returns on capital employed, which together with efficient operating procedures has further reduced the cost of new customer acquisition and is generating new incremental business for the Company.

Our ability to continue to sell products to existing customers is underpinned by Toople's excellent Trust Pilot scores which are consistently the highest in the market for a B2B telecoms company.

Importantly, the growth is reflected in the financial results with revenue and margins increasing, illustrating that our strategy is coming to fruition. In addition, during the year the Group elected to change its accounting policy to capitalise certain development costs associated with its Merlin platform as an intangible asset the costs for which historically have been expensed as incurred.

Overall group revenue grew by 17.5% to GBP1.5 million (FY 2017: GBP1.28 million) with Broadband revenue growing by 112%, hosted revenue by 345% and mobile revenue grew by 221%. Gross profit increased by 28% to GBP203,624 (FY17: GBP159,305) and overall gross margin improved by 1.1 percentage points to 13.5%. The retail margin improved from 16.5% to 21.7%, driven principally by improved gross margins on Broadband and Mobile.

We took the strategic decision to invest in our sales and marketing function, taking this in-house which led to an expected short term increase in costs and a slight increase in the overall loss. We expect that this decision will drive significantly better future sales performance and we are already seeing stronger new business pipelines, as evidenced by the October and November trading performances.

Our management team was further strengthened this year with the appointment of Kevin Lawrence in June 2018 as CFO. He is a welcome addition to the senior team and he has significant experience in building companies like our own through organic and acquisitive growth.

Going forward, we will continue to grow and scale the business as an increasing number of SMEs look for a one-stop easy-to-use telecoms provider that can tailor a package to their exact business needs.

Our strategy of top quality customer service, a dedicated sales and marketing team, a refreshed and renewed management team and a bespoke product that gives clients exactly what they need in a simple, easy to use package is our recipe for success and one that is showing phenomenal results.

We are the modern telecommunications partner of choice. From our launch, all our propositions have been built on next generation technology and have been future proofed to take advantage of modern developments, such as the phasing out of copper.

We look forward to continuing to building Toople in 2019 and creating value for our shareholders.

Andrew Hollingworth

Chief Executive Officer

17 December 2018

A copy of the Annual Report will be posted on the Company's website: www.toople.com.

An electronic version has been submitted to the National Storage Mechanism which will shortly be available for inspection at http://www.morningstar.co.uk/uk/NSM.

Notice of the Company's Annual General Meeting will be sent to shareholders in due course.

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December 18, 2018 02:00 ET (07:00 GMT)