Toople (TOOP ) said continued growth in the year to 30 September 2021 has informed a strong FY21 performance and outlook as EBITDA and profit increased, respectively.
In FY21, Toople completed its integration of DMSL, added ‘well established’ new customers across a wide variety of industries, and successfully raised £0.774m in a placing, it stated.
In particular, the company’s integration of DMSL which it had acquired in the prior financial year, DMSL, has continued to contribute “very positively” to the group, it highlighted today.
It explained: ’’There has been a greater contribution from DMSL to our business, which has a higher gross margin than the traditional Toople business due to the effect of Covid-19, which has boosted DMSL and has made its offering even more popular.’ It added that it continues to win ‘notable new contracts, and contract extensions,’ carrying previous momentum forward.
In its final year results for the period ended 30 September 2021, the telecom service provider reported an adjusted EBITDA improvement of 32% from £1,305k to £0.881m, a move driven by lower distribution costs and overheads and virtual elimination of bad debt costs, it noted.
Pre tax losses declined by 53% from £2,711k to £1,281k, driven by much lower distribution costs and overheads. Whilst overall revenues declined by 12% due to a bigger emphasis placed on Toople’s DMSL business, gross profit still increased by 22% to £1.06 million.
In FY21, September 2021 proved to be one of the highest order intake months in FY21.
Non-executive Chairman, Richard Horsman, said this has translated into “an increased customer base, to which we continue to deliver high quality bandwidth and high-speed internet access taking advantage of the opportunities created for our business by hybrid working and an acceleration towards online services from SMEs, our core target market.”
Commenting on new business, Toople said ‘successful and dynamic customers’ continue to sign up with the Group, with each being an endorsement of its brand and service offering.
‘These well-established, well-known UK brands are turning their backs on old communications providers to sign up with us. This impetus continues to bolster our activities, and companies with strong credit profiles continue to recognise the strength of our service offering and our competitively priced solutions. In turn this improves the overall quality of our earnings,’ it said.
It outlined that seamless communications are business critical for most SMEs, and acknowledged that this continues to be the main driver of growth for the business.
CEO of Toople, Andy Hollingworth said Toople also continues to see business momentum as the UK learns to live with Covid-19, “with sales leads and conversion rates ramping up.”
He commented: “Hybrid working is now the new normal and the duplication of telecom services in various places, hot desking, mobile working, 24/7 availability, hub offices and the general increase in digital or online service offerings across the economy, as opposed to in-person contact, are all factors which collude to create the perfect wave for us to ride.”
Commenting on Toople’s current trading and outlook, Hollingworth added: “If we look as a comparative at our trading at the end of the last financial year versus our first quarter trading of this financial year, we are seeing sales approaching a 9% increase, increasing gross profit of over 17%, and an improving EBITDA of 19%.” He said this gives the Board “a lot of confidence as we see the UK returning to more normal economic and working conditions.”
“The removal of our unprofitable customers and customers that represented risk, means that we have now successfully completed the removal of historical bad debt which substantially improves the quality of our earnings and firmly sets us on the path towards profitability.”
Last month, Toople, which provides telecom services to UK SMEs, noted that it had started the new year with “a positive frame of mind” following its first contract win of 2022 by its subsidiary firm DMSL to supply 46 hosted voice seats to the UK’s leading horse feed supplier.
In recent weeks, Toople announced that it had also won a second new contract of 2022.
The second contract win will be for a period of 36 months, the company highlighted, with an unnamed City of London-based family office which has a network of international advisers.
Addressing shareholders, Hollingworth said it was “clear” that hybrid working is “here to stay,” and that the world is likely “at the beginning of a new wave of globalisation where employees in the service industry will be required, or are able to request, to largely work remotely.”
“Keeping employees connected, wherever they may be, was central to the requirements of our new customer, and we expect this to grow in importance in our service offering,” he said.
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