Final Results

Coms PLC 31 July 2007 Coms plc Coms plc ('Coms' or 'the Group') Audited results for the year ended 31 January 2007 -------------------------------------------------- Business Highlights ------------------- -- September 2006 Admission to AIM -- October 2006 Launched Consumer Internet Telephony Service (COMS.COM) -- December 2006 Acquisition of ExchangeXT Limited Acquisition of Superline Limited -- February 2007 £685,000 placing -- March 2007 Acquisition of VCOMM (UK) Limited Retail Distribution through John Lewis Partnership -- June 2007 Launched Business Internet Telephony Service (COMS.NET) Jason Drummond, Executive Chairman, said: "I am pleased to announce Coms plc's results that show that we have made significant progress since our recent admission to AIM." Enquiries: Coms plc Richard Bennett Corporate Development Director +44 (0)20 7148 3148 Holborn PR Trevor Phillips +44 (0)20 7929 5599 HB Corporate Rod Venables +44 (0)20 7510 8618 CHAIRMAN'S STATEMENT -------------------- Overview Our business has progressed significantly since listing, the benefits of which are not reflected in this financial period. Coms plc ("Coms") was admitted to the AIM Market via a reverse takeover in September 2006 with the stated aim of launching an internet telephony business (selling VoIP or Voice over Internet Protocol products and services) and growing through organic growth and acquisition. At the time of admission we adopted the year-end of the original company, Azman plc, and so these financial statements, our first as Coms plc, contains only 4 months of operating data. In the four months between admission to AIM and this financial year-end of 31 January 2007, Coms launched a high-quality business-grade internet telephony service and commenced our customer acquisition program. In addition, Coms has acquired and integrated the businesses, ExchangeXT Limited and Superline Limited. These acquisitions have added further revenues, customers and enhanced our technology and telephony platforms. From a standing start, Coms generated a turnover of £106,380 and a gross profit of £27,046 all of which was in the last 2 months of the financial year. The majority of our revenues are recurring subscription, call and service revenue, and I am confident that we will achieve significant growth in the future both organically and through further acquisition of competitors. In February 2007 we completed a share placing of £685,000 to fund the integration of our completed acquisitions, ExchangeXT Limited and Superline Limited. We subsequently acquired the leading specialist VoIP equipment distributor, VCOMM UK Limited and established reseller channels including our recent retail deal with John Lewis Partnership. The new combined Coms business has a comprehensive product and service offering combined with best-in-class call quality and we are very confident about our prospects for the financial year ending 31 January 2008, which will be our first full year of trading. Disruptive Technology Much confusion has recently arisen in the internet telephony sector with incidents such as the patent dispute between Vonage and Verizon. Whilst we are encouraged that this dispute is likely to be settled shortly and that leading forecasters continue to predict high growth for this sector, we anticipate that there will be further confusion because the growth of low-cost internet telephony will continue to disrupt and take over the markets of traditional fixed and mobile phone operators. Coms is vigilant to these risks and remains committed to using the industry SIP standard (Session Initiation Protocol) which both ensures that the services provided by Coms are compatible with handsets supplied from leading manufactures as well as insulating Coms from similar disputes. Future Prospects The internet telephony industry continues to be driven by the plethora mainstream manufacturers such as Cisco and Nokia that are introducing GSM/3G/ WiFi dual mode mobile, home and business VoIP handsets and IP-PBXs. Coms is well positioned to provide the internet telephony service to these handsets and devices. Coms will continue to pursue an aggressive customer acquisition and top line growth strategy; the Company is organised around servicing three principal markets: internet telephony for individuals, internet telephony for business and supplying internet telephony equipment and services through resellers and distribution channels. This positioning allows Coms to gain immediate revenues as customers upgrade their PBXs and handsets to VoIP compatible models, and long-term recurring income from carrying telephone calls across the Internet. Our focus will continue to be to grow the Company via organic growth and by acquisition. Our goal is for our registered trademarked "Coms" brand to become the internet telephony service of choice for consumers and businesses in Europe. Our ambition is to substantially exceed current expectations and become profitable during this current financial year. Jason Drummond Executive Chairman CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 JANUARY 2007 Year ended Year ended 31 January 31 January 2007 2006 £ £ Revenue 106,380 - Cost of Sales (79,334) - Gross Profit 27,046 - Administrative expenses - Exceptional loss on intangibles written off (125,887) - - Other administrative expenses (573,703) (67,773) Loss from operations (672,544) (67,773) Finance costs (1,594) - Investment income 9,807 - Loss on ordinary activities before tax (664,331) (67,773) Tax - - Loss for the period attributable to Shareholders (664,331) (67,773) LOSS PER SHARE Year ended Year ended 31 January 31 January 2007 2006 £ £ Loss per share from continuing operations Basic 0.17p 0.03p Diluted 0.17p 0.03p CONSOLIDATED BALANCE SHEET AS AT 31 JANUARY 2007 Year ended Year ended 31 January 31 January 2007 2006 ASSETS Non-current assets Goodwill 1,949,734 - Other intangible assets 10,162 50,832 Property, plant and equipment 22,266 - 1,982,162 50,832 Current assets Inventories 4,635 12,314 Trade and other receivables 94,649 5,086 Cash and cash equivalents 178,522 167 277,806 17,567 Total assets 2,259,968 68,399 Current liabilities Trade and other payables (317,632) (97,879) Total liabilities (317,632) (97.879) Net current (liabilities) (39,826) (80,312) Net assets /(liabilities) 1,942,336 (29,480) EQUITY Share Capital 2,686,147 50,000 Accumulated deficit (743,811) (79,480) Equity attributable to equity holders of the Parent Company 1,942,336 (29,480) CONSOLIDATED CASH FLOW INFORMATION SUMMARY CASH FLOW STATEMENT Year ended Year ended 31 January 31 January 2007 2006 OPERATING ACTIVITIES Operating loss (672,544) (67,773) Share based payments 29,850 - Write off of intangibles 125,887 13,57 Depreciation and Amortisation 28,860 - Decrease / (increase) in inventories 7,679 (12,314) Decrease / (increase) in receivables (11,085) 2,832 (Decrease) / Increase in payables 26,808 35,409 NET CASH OUTFLOW FROM OPERATING ACTIVITIES (464,545) (28,273) INVESTING ACTIVITIES Interest paid (1,594) - Interest received 9,807 - Purchases of Intangibles (110,129) (28,405) Purchases of property, plant and equipment (7,128) - Acquisition of ExchangeXT Limited (486,504) - NET CASH USED IN INVESTING ACTIVITIES (595,548 (28,405) FINANCING ACTIVITIES Proceeds from issue of share capital 916,697 49,999 NET CASH FROM FINANCING ACTIVITIES 916,697 49,999 NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (143,396) (6,679) Bank overdraft at end of year - 6,846 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 321,918 - CASH AND CASH EQUIVALENTS AT END OF YEAR 178,522 167 NOTES TO THIS ANNOUNCMENT 1) GENERAL INFORMATION Coms plc is a company incorporated in the United Kingdom under the Companies Act 1985. The address of the registered office is: Finsgate, 5-7 Cranwood Street, London EC1V 9EE. These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the Group operates. There are no foreign operations in the Group. 2) SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) for the first time. The financial statements have been prepared on the historical cost basis. The principal accounting policies adopted are set out below. Basis of Consolidation The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31st January each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. On acquisition, the assets and liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired (i.e. discount on acquisition) is credited to profit and loss in the period of acquisition. The interest of minority shareholders is stated at the minority's proportion of the fair values of the assets and liabilities recognised. Subsequently, any losses applicable to the minority interest in excess of the minority interest are allocated against the interests of the parent. All intra-group transactions, balances, income and expenses are eliminated on consolidation. On 5 September 2006 the shareholders approved the business combination of the Company and Coms.Com Limited, under the AIM rules and IFRS this transaction meets the criteria of a Reverse Takeover. The consolidated accounts have therefore been presented under the Reverse Accounting principles of IFRS 3 and show comparatives for Coms.Com Limited. The consolidated financial statements prepared following the reverse are issued in the name of Coms plc, but they are a continuance of the financial statements of Coms.Com Limited. Therefore the assets and liabilities of Coms.Com Limited have been recognised and measured in these consolidated financial statements at their pre-combination carrying values. The retained earnings and other equity balances recognised in these consolidated financial statements are the retained earnings and other equity balances of Coms.Com Limited immediately before the business combination. The amount recognised as issued equity instruments in these consolidated financial statements has been determined by adding the issued equity of Coms.Com Limited immediately before the business combination to the cost of the consideration. However, the equity structure appearing in these consolidated financial statements (the number and type of equity instruments issued) reflect the equity structure of Coms plc, including equity instruments issued by the Company to effect the consolidation. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group. Goodwill Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group's interest in the fair value of the identifiable assets and liabilities of a subsidiary, associate or jointly controlled entity at the date of acquisition. Goodwill is recognised as an asset and reviewed for impairment at least annually. Any impairment is recognised immediately in profit or loss and is not subsequently reversed. Revenue Recognition Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales related taxes. Sales of goods are recognised when goods are delivered and title has passed. Sales of services are recognised when the service has been performed and invoiced. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount. Loss from Operations Loss from operations is stated before investment income and finance costs. Taxation The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Internally-generated Intangible Assets -Research and Development Expenditure Expenditure on research activities is recognised as an expense in the period in which it is incurred. An internally-generated intangible asset arising from the development of Group's VOIP system, the Company's core technology, is recognised only if all of the following conditions are met: an asset is created that can be identified (such as software and new processes); it is probable that the asset created will generate future economic benefits; and the development cost of the asset can be measured reliably. Internally-generated intangible assets are amortised on a straight-line basis over their useful lives. Where no internally-generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it is incurred. Impairment of tangible and intangible assets excluding goodwill At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. An intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that the asset may be impaired. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a re-valued amount, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. Inventories Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the weighted average method. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution. Financial Instruments Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument. Trade receivables Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts. Trade payables Trade payables are not interest bearing and are stated at their nominal value. Equity instruments Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. Share-based payments The Group has applied the requirements of IFRS 2 Share-based Payments. In accordance with the transitional provisions, IFRS 2 has been applied to all grants of equity instruments that were unvested as of 31 January 2007. The Group issues equity-settled and cash-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest. Fair value is measured by use of a binomial model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations. A liability equal to the portion of the goods or services received is recognised at the current fair value determined at each balance sheet date for cash-settled share-based payments. 3) LOSS PER SHARE Loss per share data is based on the consolidated loss using reverse accounting principals and the weighted average number of shares in issue of the Parent Company. The calculation of the basic and diluted loss per share is based on the following data: Year ended Year ended 31 January 31 January 2007 2006 £ £ Loss for the purposes of basic and diluted loss per share being net loss attributable to equity holders of the parent 664,331 67,773 Number of shares Year ended Year ended 31 January 31 January 2007 2006 £ £ Weighted average number of ordinary shares for the purposes of basic earnings per share 394,284,174 116,075,549 Weighted average number of ordinary shares for the purposes of diluted earnings per share 409,559,517 113,166,458 The share options are anti-dilutive as they decrease the loss per share. The denominators for the purposes of calculating both basic and diluted earnings per share have been adjusted to reflect the issue of shares in September 2006 associated with the acquisition of Coms.Com Limited. 4) OTHER EQUITY MOVEMENTS £ Balance at 1 February 2006 50,000 Share options granted 29,850 Other share issues in the year net of issue costs 916,697 Value of Reverse Acquisition 1,689,600 Balance at 31 January 2007 2,686,147 5) ACCUMULATED DEFICIT £ Balance at 1 February 2006 (79,480) Net loss for the year (664,331) Balance at 31 January 2007 (743,811) 6) REVERSE ACQUISITION OF PARENT On 5 September 2006, control of the Company was acquired by a reverse acquisition by Coms Limited the total cost of the business combination was £1,689,600. Coms Limited is involved in the development and commercialisation of internet telephony services. This transaction has been accounted for by the reverse acquisition method of accounting. Book Fair value Fair value Adjustment value £ £ £ Net assets acquired Trade and other receivables 9,022 - 9,022 Cash and cash equivalents 351,617 - 351,617 Trade and other payables (21,595) - (21,595) Goodwill 1,350,556 - 1,350,556 Total cost of business 1,689,600 - 1,689,600 Combination 7) SUMMARY OF ACCOUNTS The financial information set out above does not constitute the Group's statutory accounts for the years 31 January 2007 or 31 January 2007, but is derived from those accounts. Statutory accounts have been delivered to the Registrar of Companies in England and Wales, and those for 2007 will be delivered shortly. The auditors have reported on the 2007 accounts: their report was unqualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985. 8) ANNUAL REPORT The Report and Accounts have been posted to shareholders and are available from: Finsgate, 5-7 Cranwood Street, London, EC1V 9EE. END This information is provided by RNS The company news service from the London Stock Exchange END FR UAOVRBKRBOAR

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