Toople PLC Interim Results (6789T)

TIDMTOOP

RNS Number : 6789T

Toople PLC

26 July 2022

Strictly embargoed until: 07.00, 26 July 2022

Toople PLC

("Toople" or the "Company" or the "Group")

Interim results for the six months ended 31 March 2022

Toople PLC (LSE: TOOP), a provider of bespoke telecom services to UK SMEs, today announces interim results for the six months ended 31 March 2022.

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

"We have enjoyed a satisfactory first half with significant new contracts signed with new clients, customer calls and orders increasing; an improvement in gross margins. The Board expects that the business will keep advancing under its new leadership, with the Company's products and services becoming ever more attractive as UK SMEs simply cannot function in today's environment without world-class, superfast connectivity."

Financial and Operational Highlights:

-- Adjusted EBITDA* improvement of 22% from (GBP596,000) to (GBP467,000) driven by 48% decrease in

distribution costs   and continuing tight control over overhead costs 
   --      Gross margin improved by four percentage points to 35% 

-- Group revenue was GBP1.3 million for the six month period (HY2020: GBP1.5 million). Decline in headline

revenues as a   result of: 

o Continuing proactive management of poor/non-paying customers with further focus on eliminating bad debts

o Continuing emphasis on DMSL business due to impact of Covid-19 on traditional Toople customer base

   --      Substantial reduction in bad debt charge: HY22: GBP19,000 compared to HY21: GBP43,000 
   --      Active costs management and control realising a 14% reduction in administrative costs 
   --      Cash at bank was GBP375,000 at period end 

-- Successful fund-raise of GBP300,000 of which GBP225,000 was received in Q1 22 to support search for acquisitions

   --      Appointment of new CEO in May 2022 

-- Commencement of fast-track application for admission to the A QSE Growth Market Access Segment

*Adjusted EBITDA is defined as operating profit, after adjusting for depreciation, amortisation, impairment and exceptional items (ie expenses or credits that are deemed unusual by nature and/or scale and significance).

Commenting on summary and outlook, Greg Bryce, CEO at Toople, added:

"Overall, the Board considers the outlook for Toople to be positive and believes that there will be increased revenue and better gross profit figures in the future due to a number of key initiatives we are undertaking . We are also well positioned to capitalise on new acquisition opportunities that are presenting themselves in light of the more positive business environment."

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).

-Ends-

For further information :

 
 Toople PLC                       Tel: [phone] 
  Greg Bryce, Chief Executive 
  Officer 
  Richard Holden, Interim Chief 
  Financial Officer 
 Novum Securities Limited         Tel: [phone] 
  David Coffman 
  Colin Rowbury 
 Belvedere Communications         Tel: [phone] 
  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.

All the Group brands seek to differentiate themselves by offering IT, telecoms and broadband solutions, with robust and reliable packages, that enhance a customers' business and are based on trust and transparency, with no hidden fees within pricing policies. This provides customers with a clear understanding of cost and fixed prices for the duration of their contracts.

Chairman's Statement

COVID-19, the effects of the conflict in Ukraine, and the dramatic increase in the cost of living continues to present significant challenges, but in focusing on creating a flexible cost base Toople is well placed to benefit from the proliferation of value added services that can be offered over the HM Government driven national expansion of fibre infrastructure.

Despite the challenges we are pleased to report our half year adjusted EBITDA loss of GBP467,000 representing an 22% year on year improvement. We have adopted a proactive approach to bad debt implementing a number of new measures last year. As a result, we are reporting no material bad debts, with only a GBP19,000 charge in the period compared to GBP43,000 for the same period last year and over GBP55,000 for the full year 2021.

Our goal is to be the first choice for UK SMEs, providing easy and simple connectivity with clear, straightforward pricing. Our goal is fuelled by our intelligent and effective digital marketing that increases client calls and requests. As alluded to above, telecoms and communications infrastructure is top of the list for the UK government, and of high importance for virtually all businesses in a Covid-19, or post Covid-19 world. This means that we are operating in the right businesses area.

We recently announced the appointment of Greg Bryce as Chief Operating Officer and then subsequently as Chief Executive Officer. Greg has enjoyed a successful career as a sales-led business leader in a range of companies from start-ups to multinationals and private equity backed ventures. His experience covers a number of sectors including telecoms and he has extensive M&A credentials. We welcome Greg's appointment which signals a new era for the Company and look forward to his leadership as Toople seeks to capitalise on new opportunities that are presenting themselves in light of a continually more digitally connected UK. We wish outgoing CEO Andy Hollingworth well for the future and thank him for his tenure as CEO.

The Board has historically sought to grow the business through a combination of organic growth as well as seeking to make bolt-on acquisitions when suitable targets have arisen. Further acquisitions will likely require the issue of additional equity and, subject to size this could constitute a reverse take-over under the Listing Rules. Given the recent increase in the minimum market capitalisation required for Main Market companies to GBP30 million, there is a risk that the Company would be ineligible for readmission to the Main Market in the event of a reverse take-over. Given the acquisition opportunities that are currently presenting themselves, the Board has therefore decided to apply for the Company's shares to be admitted to the AQSE Growth Market Access Segment ("Admission") by way of a fast-track application in order the to give the Company more flexibility to pursue its desired growth strategy.

Therefore, pursuant to Listing Rule 5.2.8, the Company announces that the cancellation notice period has now commenced and cancellation is expected to take effect from 8:00 a.m. on or around 23 August 2022. However, as Admission requires regulatory approval from AQSE the intended date of cancellation and Admission may be delayed, in which case the Company will make further regulatory announcements as appropriate.

In summary we have enjoyed a satisfactory first half with significant new contracts signed with new clients, customer calls and orders increasing, an improvement in gross margins and following our recent fundraising a balance sheet with GBP375,000 cash at period end. The Board expects that the business will keep advancing under its new leadership, with the Company's products and services becoming ever more attractive as UK SMEs simply cannot function in today's environment without world-class, superfast connectivity.

Richard Horsman

Non-Executive Chairman

CEO's Review

Overview

We started the half year with an active trading period and we do not foresee much change from our stated aims which are to steadily increase income, to substitute non performing customers with better ones and to continue on the road to achieving profitability. The rationalisation of our business continues to produce operational and financial efficiencies and has resulted in a cost base aligned to supporting our customer requirements.

The Company has four trading brands toople.com, dmsluk.co.uk, broadbandandphones.co.uk; and checkthatcompany.co.uk. Toople.com is a first class vendor of tailormade communications solutions for the large and growing SME market in the United Kingdom; it is complemented by another successful communication solutions business DMSL.

DMSL's services encompass everything from one telephone connection to VoIP rollout for clients across multiple sites, which can rely on an array of communications carriers in the United Kingdom including BT, EE, TalkTalk and O2. It is also a distributor for BT Premier in the area of broadband, cloud access, mobile, and fixed lines and takes care of nearly a [third of a million] BT customers and nearly [half a million] Revenue Generating Units.

Our other two brands are also highly complementary services. Broadbandandphones allows potential customers to compare prices of various providers and Checkthatcompany is a credit reference reporting and inspection business.

Financial Performance

Total revenues declined slightly to GBP1.3 million (HY 2021: GBP1.5 million) despite the global and economic challenges. However, it does also reflect a deliberate and targeted policy of reducing the number of Toople customers to mitigate against bad debt exposure and to replace them with better quality business to business revenues through DMSL.

Despite the revenue headwinds, we were able to improve our gross margins by four percentage points to 35% as we focus on driving higher margin cloud voice revenues and attracting higher ARPU customers with stronger debtor profiles.

In our wholesale business, we continued with our strategy to only sign partnership agreements which are more profitable, as well as renegotiating or terminating unattractive legacy contracts. We made further progress in this regard during the reported period.

Administrative costs reduced by 14%, mainly reflecting the synergies generated following the integration of DMSL. Marketing spend also reduced by 48%, as we focussed on lowering the cost to acquire new customers.

Our loss for the period was GBP655,000 compared with a loss in HY2021 of GBP710,000.

We have rigorous measures in place to continue to improve our bad debt position. Our highly effective procedures comprise new client sign up via thorough vetting, fast and safe online signatures, and trusted credit checking. In line with these procedures, bad debts continues to rapidly decrease, with only a nominal bad debt charge of GBP19,000 against a charge of GBP43,000 for the same period last year and over GBP55,000 for the full year 2021.

Cash at bank was over GBP375,000 at period end and total assets were GBP2.1 million (HY2021: Cash at bank was over GBP990,000 and total assets were GBP2.7 million). Earnings per share was a loss 0.01 pence compared to an earnings per share loss of 0.02 pence in HY2021.

Operating Performance

We are encouraged by the fact that SMEs up and down the country are constantly looking to better their online connectivity, which now usually directly encompasses voice calling too. Whilst they look for seamless communications, they are also looking at the best possible payment terms and amounts. We deliver on both these objectives.

Our client base encompasses an extremely wide range of industries, with both trailblazing new businesses as well as traditional and established companies utilising us to access cloud telephony as well as system failure backup infrastructure in their various locations. These systems enable our customers to enjoy the best possible connection and the ability to quickly and easily reestablish access in the case of an accident or malfunction.

It is no secret in the industry that even the big corporates are in the process of, en masse, cutting ties with legacy and household name telco companies, and looking to other players, including Toople. What we can offer is reverberating around boardrooms across the country, particularly also with strong, established companies who, like everyone else, are looking to maintain or introduce the best possible connection and the best possible price. DMSL's march of success continues unabated, and it continues to sign up new customers, also in an incredibly wide array of different lines of work.

Furthermore, we are experiencing a material increase in Toople's high bandwidth leased line orders. These orders have significantly higher values and greater margins than our core broadband orders. This is significant as it gives us better visibility on our revenue given that 50% of the initial revenue consideration is received upfront and 50% paid on customer installation completion. Often customers require civil engineering work to complete installation and in some instances, this can give a lead time of three to six months for completion.

Importantly we are growing the business whilst lowering our cost of customer acquisition and our fixed operating costs. Our sales support function in Durban South Africa, is now back to working in the office following the easing of Covid restrictions, and that is translating into higher productivity and sales figures. We are also achieving increased customer contact rates compared to those achieved in the past 18 months.

The impacts of supply chain shortages, labour shortages, and the ensuing cost of living crisis remains high on our radar, both in light of our challenges, and those faced by our clients. As ever, the fact that we offer a business critical service to our clients, the vast majority of whom cannot function, or cannot function competitively, without these services will continue to anchor us. In addition, where businesses are switching over to only remote working, we become their conduit to clients, business, customers, or orders. We are further bolstered by the fact that the UK continues to invest in, and allocate funds towards, bringing about gigabit broadband connectivity also to the most remote parts of the Union.

Summary and Outlook

Our services are built around the proposition of maximum choice for our clients and potential clients. Solutions are tailor made for each business's unique requirements. We remain neutral when it comes to their choice of carrier and allowing a level playing field so that customers can have full confidence that they are making the best decision to meet their needs and varying priorities.

We continuously receive feedback and thanks from our customers, echoing that during difficult and unstable business conditions, this service is vital to them and our transparency is invaluable. Our offering makes us an innovative and ambitious company that SMEs want to partner with and major carriers seek to strengthen their ties with. On both sides of the proposition we are continuously improving our relationships with customers and tier one carriers alike, with the latter seeing us as an attractive partner for the SME market.

Overall, the Board considers the outlook for Toople to be positive and believes that there will be increased revenue and better gross profit figures in the future due to a number of key initiatives we are undertaking. We are also well positioned to capitalise on acquisition opportunities that are presenting themselves in light of the more positive business environment.

Greg Bryce

Chief Executive Officer

Principal risks and uncertainties relating to the Company's business strategy

The Group operates in an uncertain environment and is subject to a number of risk factors.

The Directors have carried out a robust assessment of the principal risks facing the group, including those that would threaten its business model, future performance, solvency or liquidity, and consider that the following risk factors are of particular relevance to the Group's activities, although it should be noted that the list is not exhaustive and that other risk factors not presently known or currently deemed immaterial may apply.

-- The Company will be dependent on the ability of the Directors to identify suitable investment opportunities and to implement the Company's strategy. There is no assurance that the Company's business strategy will ultimately be successfully developed

-- As the Group has a limited trading history, actual performance may differ materially from expectations and the Group may generate sustained losses. The Group's success is dependent on significant growth in customer numbers and orders

-- The Group anticipates being able to sell multiple products to customers in a competitive market. The marketing investment estimated to be required by the Group may not be sufficient to attract the number of customers that the Group intends to target

-- The loss of, or inability to attract key personnel could adversely affect the business of the Group

-- The technology upon which the Group's products and services are based may become obsolete; in particular, the Group is reliant on the technical robustness of its software platform

-- The Group may require additional capital in the medium to long term and no assurance can be given that such capital will be available on terms acceptable to the Group, or at all

-- By the very nature of the Group's business, it is expected that from time to time the Group will be

subject to                 complaints or claims in the normal course of business 

-- The Company is exposed to the risk that third parties that owe the Group money, securities or other assets may not fulfil their obligations. These parties may default on their obligations due to bankruptcy, lack of liquidity, operational failure or other reasons. In particular, by the nature of the SME market in which the Group operates, it is exposed to potential bad debt issues from its customers. These risks are more fully disclosed in Note 3 to the financial statements

-- The Group's performance could be adversely affected by poor economic conditions in the UK and

increased                      competition in the SME market 
   --          The Group's infrastructure and systems could be targeted by cyber attacks 

-- The pricing environment in the telecoms industry could become more difficult than anticipated

-- The UK telecoms market is subject to high incidence of fraud and bad debt risk and therefore to regulation by Ofcom

-- COVID-19 - The Board is monitoring the global health crisis and is considering the associated risks and impact on the position of the Group from both an operational and financial perspective. With the extreme restrictions in force as a result of COVID-19 and is implications, means that there can be no assurance that the Group will be able to perform its intended workflows, achieve its stated aims or raise additional finance if required. The Board continues to monitor the effect of COVID-19 on an on-going basis.

The Directors seek to mitigate these risks by applying their considerable experience of operating businesses in the sector and by devising trading and operating strategies designed to seek out and exploit profitable trading opportunities whilst seeking to protect the business from downside risks.

Responsibility Statement

The Directors are responsible for preparing the Interim Report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority ('DTR') and with International Accounting Standard 34 on Interim Financial Reporting (IAS 34).

The Directors confirm that the interim financial statements have been prepared in accordance with IAS 34 and that as required by DTR 4.2.7 and DTR 4.2.8, the Interim Report includes a fair review of:

   --      important events that have occurred during the first six months of the year; 
   --      the impact of those events on the financial statements; 

-- a description of the principal risks and uncertainties for the remaining six months of the financial year;

-- details of any related party transactions that have materially affected the Company's financial position

or                   performance in the six months ended 31 March 2021; and 

-- any changes in the related parties transactions described in the last annual report that could have a material effect on the financial position or performance of the enterprise in the first six months of the current financial year.

The Directors who served during the period and up to the date of signing the interim financial statements were:

Richard Horsman

Greg Bryce

Kevin Lawrence

Paul White

Company Secretary:

WKH Company Secretary Services

By Order of the Board

Greg Bryce

Chief Executive Officer

26 June 2022

Condensed Consolidated Statement of Comprehensive Income

The condensed consolidated statement of comprehensive income of the Group for the six month period from 1 October 2021 to 31 March 2022 is set out below.

 
                                  NOTE 
                                           Period Ended     Period Ended 
                                            31 Mar 2022     31 Mar 2021 
                                                    GBP        GBP 
-------------------------------  -----  ---------------  --------------- 
 Continuing operations 
 
 Revenue                                      1,309,900     1,518,352 
 Cost of Sales                                (857,168)    (1,048,600) 
-------------------------------  -----  ---------------  --------------- 
 Gross Profit                                   452,732      469,752 
 
 Administrative expenses                      (919,612)    (1,065,287) 
 Depreciation and amortisation                 (94,179)         (99,523) 
                                        ---------------  --------------- 
 Operating loss                               (561,060)     (695,058) 
 Interest payable and similar 
  charges                                      (93,874)      (78,531) 
 Interest receivable                                150        157 
-------------------------------  -----  ---------------  --------------- 
 Loss before taxation                         (654,784)     (773,432) 
 
 Taxation                                          (67)       62,938 
-------------------------------  -----  ---------------  --------------- 
 Loss for the period                          (654,851)     (710,494) 
 
 Other comprehensive loss for                         -         - 
  the period 
-------------------------------  -----  ---------------  --------------- 
 Total comprehensive loss 
  for the period attributable 
  to the equity owners                        (654,851)     (710,494) 
-------------------------------  -----  ---------------  --------------- 
 
 Earnings per share 
 Basic and diluted earnings 
  per share                          5           (0.01)       (0.02) 
-------------------------------  -----  ---------------  --------------- 
 

Condensed Consolidated Statement of Financial Position

The condensed consolidated statement of financial position as at 31 March 2022 is set out below:

 
                                           31 Mar 2022    30 Sept 2021 
                                               GBP            GBP 
------------------------------------      -------------  ------------- 
 ASSETS 
 
 Non-current assets 
 Intangible Assets                            1,257,965      1,302,638 
 Tangible Assets                                 27,947         32,399 
 Right of use assets                            127,866        138,521 
------------------------------------      -------------  ------------- 
 Total Non-current assets                     1,413,778      1,473,498 
------------------------------------      -------------  ------------- 
 Current assets 
 Trade and other receivables                    233,756        337,159 
 Cash and cash equivalents                      374,885        281,592 
------------------------------------      -------------  ------------- 
  Total Current assets                          608,641        618,751 
------------------------------------      -------------  ------------- 
 
 Total assets                                 2,022,419      2,092,249 
------------------------------------      -------------  ------------- 
 
 EQUITY and LIABILITIES 
 Capital and reserves attributable 
  to equity shareholders 
 Share capital                         6      2,906,333      2,822,451 
 Share premium                                6,528,250      6,266,040 
 Merger reserve                                (25,813)       (25,813) 
 Other Reserves                                 166,984        116,177 
 Accumulated deficit                       (10,511,540)    (9,856,690) 
------------------------------------      -------------  ------------- 
 Total equity                                 (935,786)      (677,833) 
------------------------------------      -------------  ------------- 
 
 Current liabilities 
 Trade and other payables              7      2,572,059        932,808 
 Lease liabilities                               18,956         39,818 
------------------------------------      -------------  ------------- 
 Total Current liabilities                    2,591,015        972,626 
------------------------------------      -------------  ------------- 
 
 Non-current liabilities 
 Financial liabilities - borrowings    7        251,206      1,688,935 
 Lease liabilities                              115,984        108,521 
------------------------------------      -------------  ------------- 
 Total non-current liabilities                  367,190      1,797,456 
------------------------------------      -------------  ------------- 
 
 Total equity and liabilities                 2,022,419      2,092,249 
------------------------------------      -------------  ------------- 
 

Condensed Consolidated Statement of Changes in Equity

The unaudited condensed consolidated statement of changes in equity of the Group for the period to 31 March 2022 is set out below:

 
                            Share       Share     Merger       Other    Accumulated         Total 
                          capital     premium    reserve    Reserves        deficit 
---------------------  ----------  ----------  ---------  ----------  -------------  ------------ 
 CURRENT YEAR                 GBP         GBP        GBP         GBP            GBP           GBP 
 Brought forward 
  at 1 October 
  2021                  2,822,451   6,266,040   (25,813)     116,177    (9,856,690)     (677,834) 
 Loss for the 
  period                        -           -          -           -      (654,851)     (654,851) 
---------------------  ----------  ----------  ---------  ----------  -------------  ------------ 
 
 Total comprehensive 
  loss for the 
  period                2,822,451   6,266,040   (25,813)     116,177   (10,511,540)   (1,332,685) 
 Transactions 
  with owners 
 Convertible 
  Loan Equity 
  reserve                                                      1,738                        1,738 
 Share-based 
  payment charge                -           -          -      49,068              -        49,068 
 Issue of share 
  capital net 
  of issue costs           83,882     262,210          -           -              -       346,092 
 At 31 March 
  2022                  2,906,333   6,528,250   (25,813)     166,984   (10,511,540)     (935,786) 
---------------------  ----------  ----------  ---------  ----------  -------------  ------------ 
 
 
                            Share       Share     Merger       Other   Accumulated       Total 
                          capital     premium    reserve    Reserves       deficit 
---------------------  ----------  ----------  ---------  ----------  ------------  ---------- 
 PRIOR PERIOD                 GBP         GBP        GBP         GBP           GBP         GBP 
 Brought forward 
  at 1 October 
  2020*                 2,347,874   6,027,272   (25,813)      49,843   (8,638,678)   (239,502) 
 Loss for the 
  period                        -           -          -           -     (710,493)   (710,493) 
---------------------  ----------  ----------  ---------  ----------  ------------  ---------- 
 
 Total comprehensive 
  loss for the 
  period                2,347,874   6,027,272   (25,813)      49,843   (9,349,171)   (949,996) 
 Transactions 
  with owners 
 Share-based 
  payment charge                -           -          -       5,691             -       5,691 
 Issue of share 
  capital net 
  of issue costs          474,577     261,188          -           -             -     735,766 
 At 31 March 
  2021                  2,822,451   6,288,460   (25,813)      55,534   (9,349,171)   (208,539) 
---------------------  ----------  ----------  ---------  ----------  ------------  ---------- 
 

* As restated in the September 2021 full year financial statements.

Condensed Consolidated Statement of Cash Flows

The condensed consolidated cash flow statement of the Group from 1 October 2021 to 31 March 2022 is set out below:

 
                                                    Period ended   Period ended 
-------------------------------------------  ---- 
                                                    31 Mar 2022    31 Mar 2021 
-------------------------------------------   ---  -------------  ------------- 
                                                        GBP            GBP 
 Cash flows from operating 
  activities 
 Operating loss                                      (561,060)        (695,058) 
 Depreciation and amortisation                         94,179            95,459 
 Share-based payment charge                            49,068             5,691 
 R&D tax credit                                         (67)             62,938 
 Interest paid                                        (11,878)          (3,110) 
 Interest received                                      150                 157 
 Changes in working capital 
 (Increase) in receivables                            103,403          (16,759) 
 (Decrease) / Increase in payables                    (79,289)        (184,367) 
-------------------------------------------------  -------------  ------------- 
 Net cash outflow from operating 
  activities                                         (405,494)        (735,050) 
-------------------------------------------------  -------------  ------------- 
 
 Cash flows from financing 
  activities 
 Proceeds from issues of share 
  capital (net of issue costs)                        346,092           735,766 
 Proceeds from loans                                  225,000           470,000 
 Loan repayments                                      (24,447)                - 
 Lease payments                                       (13,339)         (25,057) 
 Net cash from financing activities                   533,247         1,180,708 
-------------------------------------------------  -------------  ------------- 
 
 Cash flows from investing 
  activities 
 Acquisition of office equipment                       (167)                  - 
 Acquisition of intangible assets                     (34,293)         (23,895) 
 Proceeds on sale of fixed assets                        -                    - 
 Net cash from investing activities                   (34,460)         (23,895) 
-------------------------------------------------  -------------  ------------- 
 
 
 Net increase in cash and cash equivalents             93,293           421,795 
 Cash and cash equivalents at 
  start of period                                     281,592           568,533 
-------------------------------------------------  -------------  ------------- 
 Cash and cash equivalents 
  at end of period                                    374,885           990,298 
-------------------------------------------------  -------------  ------------- 
 

Notes to the Condensed Consolidated Interim Report

   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:

 
 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.         BASIS OF PREPARATION 

The interim, condensed, unaudited financial statements for the period ended 31 March 2022 have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual consolidated financial statements as at the year ended 30 September 2021. The results for the period ended 31 March 2022 are unaudited.

The condensed unaudited consolidated financial statements for the period ended 31 March 2022 have adopted accounting policies consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 30 September 2021.

The Group is not subject to seasonal fluctuations in operations.

   3.         CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS 

The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgment in applying the group's accounting policies.

An overview of the areas that involved a higher degree of judgment or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be wrong was included in the annual report for the year ended 30(th) September 2021. There has been no change in these critical accounting estimates and judgements .

   4.         Business Segments 

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.

   5.         EARNINGS PER SHARE 

The calculation of earnings per share is based on the following loss and number of shares:

 
                                                      Period          Period 
                                                      Ended 31        Ended 31 
                                                      Mar 2022        Mar 2021 
                                                        GBP             GBP 
  ----------------------------------------------  --------------  -------------- 
 Loss for the year from continuing operations        (654,851)       (710,494) 
 
 Weighted average number of shares in issue        4,784,624,397   4,075,277,666 
 
 Basic and diluted earnings per share                 (0.01p)         (0.02p) 
------------------------------------------------  --------------  -------------- 
 

As detailed in note 1, the consolidated financial statements present the combination as a continuation of the combined financial information of the Subsidiaries. Basic loss per share is calculated by dividing the loss for the period from continuing operations of the Company by the weighted average number of ordinary shares in issue during the period.

The Company has in issue 1,520,061,351 warrants at 31 March 2022. No warrants were issued in the period. The inclusion of the warrants in the number of shares in issue would be anti-dilutive and therefore they have not been included.

   6.         SHARE CAPITAL 
 
                                          31 Mar 2022                           30 Sept 2021 
                                               No.             GBP             No.           GBP 
---------------------  ----------------  --------------  --------------  --------------  ---------- 
 Allotted and fully 
  paid 
 Ordinary shares 
  of 0.0667p each                               -               -         4,231,561,361   2,822,451 
 New Ordinary shares 
  of 0.01p each                           5,070,373,633      507,037            -             - 
 Deferred Ordinary 
  shares of 0.0567p 
  each                                    4,231,561,361     2,399,296           -             - 
---------------------  ----------------  --------------  --------------  --------------  ---------- 
 At 31 March 2022                         9,301,934,994     2,906,333     4,231,561,361   2,822,451 
---------------------  ----------------  --------------  --------------  --------------  ---------- 
 
                           Ordinary       New Ordinary      Deferred          Share         Share 
                             shares           shares          shares         Capital       Premium 
                              No.              No.             No.             GBP           GBP 
---------------------  ----------------  --------------  --------------  --------------  ---------- 
 Share capital 
 
 At 1 October 2021       4,231,561,361          -               -           2,822,451     6,266,040 
 Share split            (4,231,561,361)   4,231,561,361   4,231,561,361         -             - 
 Share issue                   -           838,812,272          -            83,882        351,467 
 Share issue costs             -                -               -               -         (89,257) 
 At 31 March 2022                     -   5,070,373,633   4,231,561,361       2,906,333   6,528,250 
---------------------  ----------------  --------------  --------------  --------------  ---------- 
 

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.

   7.         TRADE AND OTHER PAYABLES 
 
                                    31 Mar 2022   30 Sept 2021 
                                            GBP            GBP 
---------------------------------  ------------  ------------- 
 Trade payables                         391,785        515,286 
 Social Security and other taxes        142,017        155,034 
 Other payables                           5,605         20,607 
 Accruals and deferred income           314,111        241,882 
 Right of use lease liabilities          18,957         39,818 
 Borrowings                           1,718,540              - 
---------------------------------  ------------  ------------- 
                                      2,591,015        972,626 
---------------------------------  ------------  ------------- 
 
                                    31 Mar 2022   30 Sept 2021 
                                            GBP            GBP 
 Non - current liabilities 
 Lease liabilities                      115,983        108,521 
 
   Borrowings                           251,206      1,688,935 
---------------------------------  ------------  ------------- 
                                        367,190      1,797,456 
---------------------------------  ------------  ------------- 
 

Financial liabilities, with the exception of the borrowings and lease liabilities, are all considered to be repayable within 30 days.

On 28 March 2022 the Company enter into a Convertible Loan agreement for GBP225,000 with a maturity date of 31 January 2023. The loan contains 10% interest rate payable on maturity

   8.          RELATED PARTY TRANSACTIONS 
 
                                              6 months   6 months to 
                                                    to     31 Mar 21 
                                             31 Mar 22 
                                                   GBP           GBP 
-----------------------------------------  -----------  ------------ 
 Goods/services purchased from Dotfusion 
  Limited                                            0        24,000 
 Goods/services purchased from Highlees 
  Consulting Limited                            16,000        16,000 
 Goods/services purchased from KBL 
  Consulting Limited                            12,600        12,600 
 Goods/services supplied to Richard 
  Horsman                                            0         1,853 
 Goods/services supplied to Andrew 
  Hollingworth                                       0           511 
                                                28,600        54,964 
-----------------------------------------  -----------  ------------ 
 

Mr Richard Horsman is the owner of Highlees Consulting Limited and is a shareholder in Toople Plc and non-executive Chairman.

Mr Kevin Lawrence is the owner of KBL Consulting Limited and is a shareholder in Toople Plc and a non-executive Director.

   9.          DIVIDENDS 

No dividends were declared in the period.

   10.        SUBSEQUENT EVENTS 

The Board does not believe there are any subsequent events requiring further disclosure or comment.

-ends-

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July 26, 2022 02:00 ET (06:00 GMT)