Toople PLC (LON:TOOP), a provider of bespoke telecom services to UK SMEs, has provided the following market update.
Trading and cost savings
Following the acquisition of DMSL earlier this year the management team undertook a review of the entire business and implemented abrands: www.toople.com; www.dmsluk.co.uk; broadbandandphones.co.uk; and www.checkthatcompany.co.uk. As part of this review, a number of initiatives were put in place to deliver cost savings and synergies to deliver in excess of £600,000 per annum. The Board subsequently updated shareholders that cost savings and synergies would deliver over £960,000 per annum. These have now been achieved.
The Company is pleased to confirm the integration and review of the combined group is now complete and the outcome of this activity has delivered an upgraded £1.6m of annualised synergies and savings, expected to be delivered from 1 October 2020.
This is expected to transform the company’s cash position over time as DMSL in particular has a history of being cash generative, considerably accelerating the Company’s anticipated timeline to achieve profitability and positive cash generation. In the short term, investors should expect a decline in headline revenues as the Company moves to focus on margin enhancing customers and seeks to transform its cash position over the course of the coming twelve months. The Group looks forward to updating shareholders in greater detail on these achievements in its Final Results for the year ended September 2020, expected to be announced during December 2020.
Overall, the wider trading environment remains somewhat subdued for the moment, as it does for most businesses dealing with the economic effects of Covid-19. The Board continues to monitor developments and will respond accordingly, as the Government introduces new measures relating to Covid-19. Despite this, the Group and its various brands continue to perform satisfactorily and trading in August 2020 returned to more normal conditions in the B2B market as more businesses emerged from lockdown and reviewed critical expenditure such as for IT and telecoms. Trading within the DMSL business demonstrated a 14% growth on orders on a like for like basis against August 2019 and September has also seen growth in order volumes compared with September 2019.
The macro drivers which are expected to precipitate substantial growth for the Group also remain in place, namely: HM Government’s commitment to the rolling out of fibre telecommunication infrastructure to replace copper and the necessary and ultimately unavoidable upgrade of the country’s network from 4G to 5G. The Board remains optimistic about the Company’s future prospects.
Board Change
The Company also announces today that Kevin Lawrence, who has been acting as interim part time CFO, will now become a Non-Executive Director of the Company from 1st October 2020. Kevin will chair the audit and remuneration committees. Paul White, Toople’s Financial Controller, who has been with the Company since June 2020 will take over as Company CFO and will commence the new role on 1st October 2020. Paul, has been shadowing Kevin for the last three months and has an excellent knowledge of the Group’s operating subsidiaries, financial processes and systems.
New PLC website
Following the reorganisation of the business, Toople has extended its offering and to reflect these changes and to improve communications for all investors the Group has recently launched a new investor website, which can be found at https://toople.com/investors-site/. We would encourage investors to pay it a visit.
Andy Hollingworth, CEO commented:
“Our initial guidance was that the acquisition of DMSL would deliver £50,000 a month of synergy and cost savings as a combined group, we are therefore delighted with the results of the integration and other initiatives delivering over £130,000 per month. The business is steadily moving forward and remains excellently placed for rapid expansion as the UK’s telecommunication infrastructure is upgraded.
“Another key driver for Toople is the move towards at home working by small businesses and their employees. Despite the outbreak of Covid-19 and the resultant decrease in economic activity, the conditions in which Toople is set to thrive remains unaffected – and in some ways the outlook is even more positive as many people make a more permanent switch to working from home and need reliable telecommunications infrastructure. Indeed, even now the Government is tightening restrictions regarding Covid-19 and whilst this remains a challenging time for our country and many the wider business community, working from home is a key strategy that all our products and propositions support. We remain vigilant and cautious of the wider economic impact of Covid-19 while also keeping abreast of the new telecommunications possibilities that will exist in a post Covid-19 world.”
Commenting on the appointment of Paul White as Group CFO, Richard Horsman, Chairman said:
“Kevin has played an instrumental role in implementing our plan to develop new revenue streams, both organically and acquisitively, and we are extremely grateful for his continued contributions. Kevin has a wealth of skills and practical knowledge relevant to scaling businesses. He has proven these skills in his role as CFO of Toople and we look forward to his continued guidance and advice in his new role as Non-Executive Director of the Company. His excellent execution capability in acquisitions and understanding of the plc environment will continue to prove invaluable.
“It is very important that we appoint a new full time CFO that has complementary skills, market knowledge and proven experience in our line of work and our strategy. Our current Financial Controller, Paul White, is that person and it is a major advantage that he already knows the business intimately. We are extremely pleased to announce that he will be the next CFO of Toople as he knows and shares our vision and ambition.”
