Final Results

RNS Number : 0612H

Coms PLC

06 July 2012

 

6 July 2012

Coms plc ("Coms", the "Company" or the "Group")

Final Results for the year ended 31 January 2012

The board of the Company is pleased to announce that it has today posted its report and accounts for the year ended 31 January 2012 ('Accounts') together with notice of the Company's annual general meeting ('AGM') to shareholders. The Accounts for the year ended 31 January 2012 are available from the Company's website at www.coms.com.

Highlights

·      Gross profit increased by 3% to £0.905m (2011: £0.881m)

·      Gross margin increased to 30.5%

·      Strong progress from VoIP activities - 45% revenue increase

·      Lower equipment sales from distribution activities

·      Overall revenue of £2.97m (2011: £3.52m)

·      2012 Enterprise Division launched and making strong progress

Chairman's Statement

Coms continues to make good progress in acquiring new customers for its VoIP internet telephony service. Revenue from our primary UK business, Coms.com Limited, has continued to rise, as has the gross margin. However, due to decreased sales of equipment in our distribution subsidiary VCOMM UK Limited, revenue overall has fallen. Coms is accelerating its migration away from the increasingly competitive and less profitable distribution business to concentrate on our core VoIP telephony services that deliver recurring income and high margins. Our objective remains to acquire a critical mass of customers and sustainable profitability.

The market for hosted VoIP services continues to expand as customers seek alternative lower cost solutions to traditional fixed line carriers. The main market for Coms is SME businesses where our online services can substantially reduce costs and increase functionality. Most new business accounts are based in the UK, but a number of account wins, such as a G4S subsidiary based in Baghdad and a Glencore business unit in Cameroon, demonstrate the resilience, flexibility and international potential of the service.

Coms is gaining additional traction in the enterprise market with the launch of its Enterprise Division and the implementation of a number of Microsoft Lync solutions, including Havant Academy. In the not too distant future, we expect the Microsoft Lync application to mature and be an important area of growth for the Company.

In December 2011, Coms completed a placing that saw MXC Capital take a strategic 23.3% stake in the Company. MXC is a leading M&A specialist in the telecoms sector and behind companies such as Redstone. As part of the transaction, it was agreed that MXC would nominate a new Non-Executive Director to the company to assist with implementing an M&A strategy and also that they would cornerstone future transactions.

In March this year, Coms' first transaction with MXC was to set-up a wholly owned new subsidiary named Coms Enterprise Limited to sell to larger enterprises and government accounts. We won a contract from Obsidian to outsource the operations of its mobile gateways to Coms. We hired their key team members with the intention to migrate the Obsidian business onto the Coms platform over the next 24 months. This was funded by a small placing that included MXC Capital. I am pleased to report that the Enterprise subsidiary is making strong progress and has recently become profitable after winning five business enterprises accounts including South Tees NHS.

We are confident that the Group is in good shape. Coms continues to win new customers, generating a progressively increasing level of recurring income from monthly subscriptions and call usage. At January 2012 we had approximately 7,000 subscribers and this has grown significantly to more than 8,000 today.  On our current cost base this puts us very close to the point where we can achieve sustainable profitability for our VoIP telephony services.

Our corporate strategy remains focused on sustainable growth that will lead to group profitability in the short term. Once we have reached a critical mass of customers, the monthly subscriptions will ensure healthy, sustainable profitability.

I remain very optimistic about the future of Coms plc.

Jason Drummond

Executive Chairman

Consolidated Statement of Comprehensive Income for the year ended 31 January 2012.

	Year ended	Year ended
Continuing operations	31 January 2012	31 January 2011
	£	£
Revenue	2,968,949	3,518,918
Cost of sales	(2,063,922)	(2,638,622)
Gross profit	905,027	880,296
Administrative expenses	(1,488,718)	(1,497,511)
Operating loss	(583,691)	(617,215)
Finance costs	(10,627)	(17,658)
Loss before income tax	(594,318)	(634,873)
Income tax expense	-	(18,449)
Loss for the year	(594,318)	(653,322)
Other comprehensive income	-	-
Total comprehensive income for the year	(594,318)	(653,322)
Attributable to:
- Owners of the parent	(594,318)	(653,322)
Basic and diluted loss per share	(0.6p)	(1.3p)

Consolidated Statement of Financial Position as at 31 January 2012

		31 January 2012	31 January 2011
		£	£
ASSETS
Non-current assets
Goodwill		2,317,863	2,317,863
Other intangible assets		96,297	104,022
Property, plant and equipment		46,467	69,074
		2,460,627	2,490,959
Current assets
Inventories		157,908	242,297
Trade and other receivables		541,808	696,131
Cash and cash equivalents		94,739	62,510
		794,455	1,000,938
Total assets		3,255,082	3,491,897
EQUITY and LIABILITIES
Capital and reserves attributable to equity shareholders
Share capital		2,227,789	2,127,789
Share premium		8,893,662	8,708,978
Reverse acquisition reserve		(4,236,239)	(4,236,239)
Accumulated deficit		(4,369,401)	(3,775,083)
Total equity		2,515,811	2,825,445
Current liabilities
Financial liabilities - borrowings		3,720	3,720
Trade and other payables		733,691	657,151
		737,411	660,871
Non-current liabilities
Financial liabilities - borrowings		1,860	5,581
		1,860	5,581
Total equity and liabilities		3,255,082	3,491,897

Consolidated Statement of Cash Flows for the year ending 31 January 2012

		Year ended 31 January 2012	Year ended 31 January 2011
		£	£
Cash flows from operating activities
Loss before taxation		(594,318)	(634,873)
Depreciation and amortisation		70,349	59,754
Loss on sale of fixed assets		-	1,951
Finance costs		10,627	17,658
Decrease in inventories		84,389	215,308
Decrease/(increase) in receivables		154,323	(100,551)
Increase/(decrease) in payables		72,819	(497,745)
Net cash outflow from operating activities		(201,811)	(938,498)
Cash flows from investing activities
Acquisition of intangible assets		(35,020)	(46,009)
Acquisition of property, plant and equipment		(4,997)	(37,463)
Net cash from investing activities		(40,017)	(83,472)
Cash flows from financing activities
Proceeds from issues of share capital		284,684	973,509
Conversion of convertible loan notes		-	(15,000)
Repayment of bank loans		-	(6,111)
Finance costs		(10,627)	(17,658)
Net cash from financing activities		274,057	934,740
Net increase/(decrease) in cash and cash equivalents		32,229	(87,230)
Cash and cash equivalents at start of year		62,510	149,740
Cash and cash equivalents at end of year		94,739	62,510

Consolidated Statement of Changes in Equity For the year ended 31 January 2012

		Attributable to equity shareholders of the Company
		Share capital	Share premium	Reverse acquisition reserve	Accumulated deficit	Total
		£	£	£	£	£
At 1 February 2010		1,692,878	8,170,380	(4,236,239)	(3,121,761)	2,505,258
Loss for the year		-	-	-	(653,322)	(653,322)
Total comprehensive income for the year		-	-	-	(653,322)	(653,322)
Transactions with Owners
Proceeds from shares issued		434,911	587,239	-	-	1,022,150
Share issue costs		-	(48,641)	-	-	(48,641)
At 31 January 2011		2,127,789	8,708,978	(4,236,239)	(3,775,083)	2,825,445
At 1 February 2011		2,127,789	8,708,978	(4,236,239)	(3,775,083)	2,825,445
Loss for the year		-	-	-	(594,318)	(594,318)
Total comprehensive income for the year		-	-	-	(594,318)	(594,318)
Transactions with Owners
Proceeds from shares issued		100,000	200,000	-	-	300,000
Share issue costs		-	(15,316)	-	-	(15,316)
At 31 January 2012		2,227,789	8,893,662	(4,236,239)	(4,369,401)	2,515,811

Notes to the Financial Statements

1.  GENERAL INFORMATION

Coms plc is a company incorporated in England and Wales and quoted on the Alternative Investment Market of the London Stock Exchange.

The financial information is a preliminary announcement for the years ended 31 January 2012 and 2011 and does not comprise statutory accounts for the purposes of Section 434 of Companies Act 2006.

The preliminary announcement of the results for the year ended 31 January 2012 was approved by the board of directors on 5 July 2012.

These financial statements have been prepared in accordance with International Financial Reporting Standards and IFRIC interpretations issued by the International Accounting Standards Board (IASB) as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention.

Whilst the information in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of IFRS's, this announcement does not in itself contain sufficient information to comply with IFRS's.

2.  BUSINESS AND GEOGRAPHICAL SEGMENTS

In the opinion of the directors the Group's core activities comprise three material business segments which reflect the profiles of the risks, rewards and internal reporting structures within the Group.

These are as follows:

·      Provision of telephony services

·      Supply and distribution of telephony equipment and related services

·      Provision of management services for the Group

All activities were conducted within the United Kingdom and it is the opinion of the directors that this represents one geographical segment.

Revenue	Year ended 31 January 2012	Year ended 31 January 2011
	£	£
Telephony services:
- VOIP - external	777,475	537,903
- VOIP - internal	1,221	3,687
- PSTN	178,258	260,599
	956,954	802,189
Telephony equipment and related services - external	2,013,216	2,720,416
Telephony equipment and related services - internal	86,891	53,568
Elimination of intragroup sales	(88,112)	(57,255)
	2,968,949	3,518,918
Loss for the year	Year ended 31 January 2012	Year ended 31 January 2011
	£	£
Telephony services	(286,319)	(383,880)
Telephony equipment and related services	3,410	32,782
Group management services	(300,782)	(266,117)
Finance costs	(10,627)	(17,658)
Income tax charge	-	(18,449)
	(594,318)	(653,322)

Balance sheet analysis of business segments

			31 January 2012		31 January 2011
			Assets £	Liabilities £	Assets £	Liabilities £
Telephony services			2,279,508	(278,760)	2,255,558	(278,504)
Telephony equipment and related services			818,247	(357,189)	878,793	(313,180)
Group management services			157,327	(103,322)	357,546	(74,768)
			3,255,082	(739,271)	3,491,897	(666,452)

Capital additions, depreciation and amortisation by business segment

			31 January 2012		31 January 2011
			Capital additions £	Depreciation & amortisation £	Capital additions £	Depreciation & amortisation £
Telephony services			35,962	58,148	59,635	46,321
Telephony equipment and related services			4,055	12,201	23,837	13,433
			40,017	70,349	83,472	59,754

3.  OPERATING LOSS FOR THE YEAR

Operating Loss from operations is arrived at after charging:

	Year ended	Year ended
	31 January 2012	31 January 2011
	£	£
Amortisation of intangibles	42,745	34,723
Depreciation of property, plant and equipment	27,604	25,031
Staff costs	841,377	847,592
(Profit)/loss on foreign exchange	(416)	5,115
Rentals under operating leases	56,304	47,655
Auditors' remuneration for audit services	25,000	24,700
Auditors' remuneration for other services	7,809	8,200

4.  TAXATION

	Year ended	Year ended
	31 January 2012	31 January 2011
	£	£
Current tax:
UK corporation tax charge / (credit)	-	-
Deferred tax charge	-	18,449
Current year charge	-	18,449

	31 January 2012	31 January 2011
	£	£
Deferred tax asset:
Current
At 1 February	-	18,449
Recognised in statement of comprehensive income	-	(18,449)
At 31 January	-	-

The tax credit on the loss for the year was as follows:

	Year ended	Year ended
	31 January 2012	31 January 2011
	£	£
Loss before taxation	594,318	653,322
Tax at the UK corporation tax rate of 20% (2011: 21%)	(118,864)	(137,198)
Depreciation and amortisation	6,322	6,332
Expenses	753	5,969
Losses carried forward	111,789	124,897
Tax credit	-	-

At 31 January 2012 the Group had estimated tax losses of £4,702,393 (2011: £4,143,448) to carry forward against future profits.

At 31 January 2012 the Group had estimated tax losses of £4,702,000 (2011: £4,143,000) to carry forward against future profits. The potential deferred tax asset calculated at 20% arising from these losses of £940,000 (2011: £870,000) has not been provided in the accounts due to the uncertainty of recovery.

5.  LOSS PER SHARE

Loss per share data is based on the Group loss for the year and the weighted average number of shares in issue.

	Year ended	Year ended
	31 January 2012	31 January 2011
Basic and diluted loss per share	(0.6p)	(1.3p)
Loss for the purposes of basic and diluted loss per share	£(594,318)	£(653,322)

Number of shares	No.	No.
Weighted average number of ordinary shares for the purposes of basic earnings per share	94,402,017	50,331,733

In order to calculate diluted earnings per share, the weighted average number of ordinary shares in issue would be adjusted to assume conversion of all dilutive potential ordinary shares according to IAS 33. In each of the years ended 31 January 2012 and 2011 the Group has made a loss after taxation and the effect of the potential ordinary shares is anti-dilutive and therefore the diluted earnings per share is the same as basic earnings per share. The weighted average number of potentially dilutive shares for the year ended 31 January 2012 was 2,274,689 (2011: 2,274,689).

6.  POST BALANCE SHEET EVENTS

On 1 May 2012 the Group entered into an outsource agreement with Obsidian Support Services Limited (Obsidian) using a newly formed wholly owned subsidiary, Coms Enterprise Limited. Under the agreement Coms Enterprise Limited recruited a sales and management team and will provide a range of new telephony services to the customers of Obsidian and to new customers in the corporate and public sectors.

At the same time, Coms plc issued a total of 22,276,180 EMI options to certain employees of Coms Enterprise Limited. The options were granted at the price of 1p and are conditional upon Coms Enterprise Limited achieving certain profit targets over a 2 year period.

On 1 May 2012 Coms plc also issued a share placing of 43,750,000 new ordinary shares of 0.1p pence each to new and existing investors at a price of 0.8p per share raising £350,000 before expenses. The net proceeds of the placing will be used by the Group to provide working capital for the development of the Group's enlarged operations.

7.  AVAILABILITY OF THIS ANNOUNCEMENT

The accounts for the year ended 31 January 2012 are available from the Company's website at www.coms.com

Contact:

Coms plc

Richard Bennett [phone]

Northland plc (Nominated Adviser and Broker)

Luke Cairns /Rod Venables [phone]

XCAP Securities Limited (Broker)

Karen Kelly / John Belliss [phone]

Newgate Threadneedle (PR)

Graham Herring [phone]

 

END

 

 

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