TIDMTPOP
RNS Number : 0785O
The People's Operator PLC
15 May 2018
The People's Operator plc
("TPO", the "Company" or the "Group")
Trading Update
The People's Operator (AIM: TPOP), the cause-based commercial
mobile virtual network operator, provides the following update on
its trading and operations.
Current Trading
Subscriber numbers during Q1 benefited from renewed marketing
activity following the hiatus in marketing spend during December
2017. The UK business has been in growth mode since February but a
net decline in US subscriber numbers has led to overall performance
during the period being marginally down.
Margins for Q1 2018 are better than expected.
The Company continues to engage with several affiliates.
Subscriber numbers from these avenues have been encouraging.
Average Revenue per User (ARPU) has remained broadly unchanged
over the November to April period. Churn has continued to decline
in percentage terms in both the UK and the US.
Overall, however, the Board has now concluded that the new
subscriber additions will not achieve the anticipated levels upon
which the current marketing plan is based and that therefore an
alternative strategy is required.
Financial Outlook
In its statement of 7 December 2018 regarding the raising of
funds via subscription, the Company stated that "in the absence of
securing any additional funding or funds received as a result of
the exercise of the Warrants it is possible that the Company will
need to seek further funding in H2 2018". The current share price
indicates that there is little likelihood of the Warrants being
exercised and the performance of the business as set out above is
such that further funds will be required. Consequently the Board
has been examining other financing options.
The Board has reviewed the relative positions of the UK and US
entities and has concluded that the Company should concentrate its
effort on the UK market, which enjoys the larger number of
subscribers, has been allocated the larger marketing budget and
offers better growth prospects in the short and medium term.
Potential divestment of US Subscribers
The Board is negotiating final terms with a third party to
migrate its US customer base to the purchaser's platform.
Shareholders and investors should note that no definitive documents
have been signed at this stage and there is no guarantee that the
deal will complete.
It is envisaged that the deal will comprise a cash payment in
respect of each customer successfully transferred and completion
will also release the various sums held as deposits and assurances
by the Company's US counterparties, which will revert to the
Company.
Although the Company will retain its licence to operate in the
US, the remainder of the US operation, including the small office
in New York, the outsourced customer service operation and the
outsourced legal and compliance functions will be closed. This will
result in considerable cost savings, with overall monthly cash burn
reducing by approximately 35 per cent. The business will be left
focused exclusively in the UK and the target overall number of
customers required to reach profitability at the net level will
fall significantly.
The Company has been in discussion with Barclays plc, its sole
secured creditor, regarding the use of proceeds from the migration
and the extent to which such proceeds will be required to repay
amounts outstanding to them, which currently stand at GBP1,020,000.
The extent to which funds received from the potential divestment
are not required to be used to repay facilities will dictate the
overall strategy of the Company. The Company currently retains
GBP647,000 of free cash outside of amounts that are held on deposit
to support its current operations both in the UK and the US. If
Barclays requires full repayment from the proceeds of the proposed
US divestment then the Board will need to consider alternative
financing for the UK operation.
The Company's overall tax-deductible trading losses since
flotation will remain wholly within TPO plc, as will its UK
customer base and existing wholesale agreements with Three.
Marketing Update
The Company continues to work closely with 360i on its digital
marketing strategy. In addition, a range of major social media
initiatives are in operation.
Online Parenting
TO is working with an online parenting association, engaging
with a number of volunteer subscribers from within the
association's online community. These volunteers have been provided
with TPO subscriptions and will evaluate the key attraction of
associated charitable donations as well as the general performance
of the network. The product test group includes those parents
debating the best approach to furnishing their children with their
first mobile phone.
Online Social Influencers
The Company is in discussions with other online influencers
regarding the provision of content and targeted audience tests are
ongoing.
Fairphone
The Company announced on 10 April 2018 that it had entered into
an association with Fairphone for the provision of ethical
smartphones and sales of these have already commenced. As part of
its ambition to create a network of ethically responsible
providers, the Company is in advanced discussions around a similar
agreement with other niche providers.
Charity Partnerships
The Company continues to communicate with the charities
supported by its subscribers to ensure that both subscriber and
charity are aware of the contributions being made and the
significant value to each charity of support from groups of
supporters as well as individuals. Consequently, both charity and
supporter are encouraged to spread awareness of the TPO brand both
online and by word of mouth.
2017 Results
The Company expects to release its results for the Financial
Year to 31 December 2017 before the end of May 2018.
Further announcements will be made in due course.
For further details, please contact:
The People's Operator plc
Nick Dashwood Brown, Head of Investor
Relations 07710 511259
finnCap Ltd 020 7220
Stuart Andrews / Simon Hicks 0500
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
This information is provided by RNS
The company news service from the London Stock Exchange
END
TSTLIFEEETIELIT
(END) Dow Jones Newswires
May 15, 2018 02:01 ET (06:01 GMT)
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