Final Results

RNS Number : 5139G

Coms PLC

07 June 2013

 

7 June 2013

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

Final Results for the year ended 31 January 2013

The board of the Company is pleased to announce that it has posted a notice to shareholders informing them that the Accounts for the year ended 31 January 2013 are available from the Company's website at www.coms.com.

Highlights

·      Revenues on continuing operations increased by 46% to £1.62m (2012: £1.1m)

·      Gross profit on continuing operations increased by 55% to £0.93m (2012: £0.60m)

·      Gross profit margin on continuing operations increased to 57% from 54%

·      Disposal of VCOMM UK Ltd, the Group's equipment distributor

CEO's Statement

Coms made very little traction during the year 2012/13 and the actual financial performance was disappointing.

I was appointed CEO on the 9^th January 2013 after investing my own money and embarked immediately on a turnaround of the business. However with only 3 weeks of the financial year remaining there was no time to make an impact upon the 2012/2013 fiscal year.

However the plans to turn the business around have been put in place, I have strengthened the Board and Management and clearly communicated the new focus and strategy for the business.

Overall, 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 has always traditionally been SME businesses. However this will evolve and expand such that all customers large and small will be catered for within the new strategy. This can be demonstrated with the large contract win recently announced, amongst several other smaller contract wins and the positive activity the Company has announced since I have joined the business.

Following the placing announced on 14 May 2013, the finances of Coms are now on a stable footing and I am extremely excited and proud to be part of the new Coms plc story. I am very confident that the Group is now in good shape and under control. I look forward to working with the refocused Board and Management and to creating significant shareholder value.

David Breith

CEO

 

Operational Review

Introduction

In the last 3 weeks of the financial year the Company implemented a full strategic and organisational review, which included a full analysis of the market, our products, services, target customers and as a result we now have, and are implementing, a comprehensive business plan and strategy, which will see the Company through the next few years and beyond.

Routes to Market

Coms has traditionally sold its core VoIP (Voice over IP) telephony product to small SME customers. Moving forward from February 2013 and in line with the new Company strategy, Coms plans to have 5 clearly defined routes to market with the fifth being added later in the year which will be our residential offering. The routes are:

1.   Direct / Retail sales - Gary Day has been appointed Sales Director for Coms for all new retail customers. Gary has a clearly defined sales and marketing strategy for the next 2 years with proper targets and performance indicators that he and his team need to (and will) achieve.

2.   In-direct sales (wholesale) - Tim Loveday has been appointed Sales Director for Coms for all in-direct sales activity. This will include Dealer / Wholesale and a new model introduced to Coms, the Coms virtual reseller (CVP). This is a hybrid offering where Coms white label all its products and services for its CVP partners. Tim has a clearly defined Sales and Marketing strategy for the next 2 years with proper targets and performance indicators that he and his team need to (and will) achieve.

3.   Government - Coms will re-launch its public sector offering over the coming year and the Company anticipates the full effect will be seen in the 2014/15 financial year.

4.   Acquisitions - Paul Sweetland has been appointed Corporate Development Director for Coms and we are looking to identify a number of suitable target acquisitions over the coming years. We are anticipating making several acquisitions during 2013/14 and more during 2014/15.

Services

Coms products and services offering has been extended to a much wider offering in the communications space and our strapline of the business has been altered to reflect this, "Coms, it's what we do".

Our core product remains the same with our cloud based VoIP services continuing to be our most important offering. However the product portfolio also now encompasses:

·      Hosted internet telephony

·      Mobile

·      Calls

·      Line Rental

·      Broadband

·      Data Networks

·      Numbering / IVR

·      SIP

·      Conferencing

Customer Growth

Coms has now implemented its licensed software "AskMerlin" which is a fully automated bespoke telecom software that will drive scalability into the business and will enforce process both internally and externally with the Company's new portfolio.

Outlook

The Company will look to further extend our portfolio by implementing a 60 rack data centre where all services "Cloud" will be offered. This is due to be launched Q3 of 2013.

The outlook of the Company is very exciting and, I anticipate considerable growth for the Company over the coming years.

David Breith

CEO

Consolidated Statement of Comprehensive Income for the year ended 31 January 2013

	Year ended	Year ended
Continuing operations	31 January 2013	31 January 2012
	£	£
Revenue	1,621,960	1,104,667
Cost of sales	(692,384)	(504,519)
Gross profit	929,576	599,248
Administrative expenses	(1,863,927)	(1,128,916)
Operating loss	(934,351)	(529,668)
Finance costs	(2,064)	(2,626)
Loss before income tax	(936,415)	(532,294)
Income tax expense	-	-
Loss for the year after tax from continuing operations	(936,415)	(532,294)
Discontinued operations	(291,104)	(62,024)
Total comprehensive income for the year	(1,227,519)	(594,318)
Attributable to:
- Owners of the parent	(1,227,519)	(594,318)
Basic and diluted loss per share
Continuing operations	(0.40p)	(0.56p)
Discontinued operations	(0.12p)	(0.07p)
Total	(0.52p)	(0.63p)

Consolidated Statement of Financial Position as at 31 January 2013

		31 January 2013	31 January 2012
		£	£
ASSETS
Non-current assets
Goodwill		1,951,884	2,317,863
Other intangible assets		169,662	96,297
Property, plant and equipment		30,597	46,467
		2,152,143	2,460,627
Current assets
Inventories		4,791	157,908
Trade and other receivables		392,838	541,808
Cash and cash equivalents		171,962	94,739
		569,591	794,455
Total assets		2,721,734	3,255,082
EQUITY and LIABILITIES
Capital and reserves attributable to equity shareholders
Share capital		2,363,292	2,227,789
Share premium		9,497,234	8,893,662
Reverse acquisition reserve		(4,236,239)	(4,236,239)
Share based payment reserve		43,513	-
Accumulated deficit		(5,596,920)	(4,369,401)
Total equity		2,070,880	2,515,811
Current liabilities
Financial liabilities - borrowings		1,860	3,720
Trade and other payables		648,994	733,691
		650,854	737,411
Non-current liabilities
Financial liabilities - borrowings		-	1,860
		-	1,860
Total equity and liabilities		2,721,734	3,255,082

Consolidated Statement of Cash Flows for the year ending 31 January 2013

		Year ended 31 January 2013	Year ended 31 January 2012
		£	£
Cash flows from operating activities
Loss before taxation		(1,227,519)	(594,318)
Depreciation and amortisation		95,482	70,349
Loss on disposal of subsidiary		257,227	-
Share based payment charge		43,513	-
Finance costs		2,064	10,627
(Increase)/decrease in inventories		(84,047)	84,389
(Increase)/decrease in receivables		(115,331)	154,323
Increase in payables		371,649	72,819
Net cash outflow from operating activities		(656,962)	(201,811)
Cash flows from investing activities
Acquisition of intangible assets		(146,543)	(35,020)
Acquisition of property, plant and equipment		(15,152)	(4,997)
Net proceeds from disposal of subsidiary		158,869	-
Net cash from investing activities		(2,826)	(40,017)
Cash flows from financing activities
Proceeds from issues of share capital		739,075	284,684
Finance costs		(2,064)	(10,627)
Net cash from financing activities		737,011	274,057
Net increase in cash and cash equivalents		77,223	32,229
Cash and cash equivalents at start of year		94,739	62,510
Cash and cash equivalents at end of year		171,962	94,739

Consolidated Statement of Changes in Equity For the year ended 31 January 2013

		Attributable to equity shareholders of the Company
		Share capital	Share premium	Reverse acquisition reserve	Share based payment reserve	Accumulated deficit	Total
		£	£	£	£	£	£
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
At 1 February 2012		2,227,789	8,893,662	(4,236,239)	-	(4,369,401)	2,515,811
Loss for the year		-	-	-	-	(1,227,519)	(1,227,519)
Total comprehensive income for the year		-	-	-	-	(1,227,519)	(1,227,519)
Transactions with Owners
Proceeds from shares issued		135,503	617,322	-	-	-	752,825
Share issue costs		-	(13,750)	-	-	-	(13,750)
Share based payments		-	-	-	43,513	-	43,513
At 31 January 2013		2,363,292	9,497,234	(4,236,239)	43,513	(5,596,920)	2,070,880

Notes to the Financial Statements

1.  GENERAL INFORMATION

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

The financial information is a preliminary announcement of the results for the year ended 31 January 2013 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 2013 was approved by the board of directors on 6 June 2013.

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) 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, this announcement does not in itself contain sufficient information to comply with IFRS.

2.  BUSINESS AND GEOGRAPHICAL SEGMENTS

In the opinion of the directors the Group's core activities comprise two 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

·      Provision of management services for the Group

During the year, the Group sold it's subsidiary engaged in the supply and distribution of telephony equipment which had previously been treated as a separate segment and is disclosed as a discontinued operation in these financial statements.

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 2013	Year ended 31 January 2012
	Continuing operations	Continuing operations
	£	£
Telephony services:
- General VOIP telephony services	1,379,268	778,696
- PSTN	131,085	178,258
- Equipment	111,607	147,713
	1,621,960	1,104,667
Loss for the year	Year ended 31 January 2013	Year ended 31 January 2012
	£	£
Telephony services	(310,462)	(228,886)
Group management services	(623,889)	(300,782)
Finance costs	(2,064)	(2,626)
Income tax charge	-	-
Discontinued operations	(291,104)	(62,024)
	(1,227,519)	(594,318)

Balance sheet analysis of business segments

	31 January 2013		31 January 2012
	Assets £	Liabilities £	Assets £	Liabilities £
Telephony services	2,373,811	(493,061)	2,279,508	(278,760)
Group management services	347,923	(157,793)	157,327	(103,322)
Telephony equipment and related services (discontinued operation)	-	-	818,247	(357,189)
	2,721,734	(650,854)	3,255,082	(739,271)

Capital additions, depreciation and amortisation by business segment

		31 January 2013		31 January 2012
		Capital additions £	Depreciation & amortisation £	Capital additions £	Depreciation & amortisation £
Telephony services		161,695	85,240	35,962	58,148
Telephony equipment and related services (discontinued operation)		483	10,242	4,055	12,201
		162,178	95,482	70,349	59,754

3.  OPERATING LOSS FOR THE YEAR

Operating loss from continuing operations is arrived at after charging:

	Year ended	Year ended
	31 January 2013	31 January 2012
	£	£
Amortisation of intangibles	69,969	38,740
Depreciation of property, plant and equipment	15,371	19,408
Staff costs	899,836	571,824
(Profit)/loss on foreign exchange	122	-
Rentals under operating leases	42,000	42,000
Auditors' remuneration for audit services	17,900	19,000
Auditors' remuneration for other services	6,900	6,309

4.  DISCONTINUED OPERATIONS

The group disposed of it's 100% subsidiary, VCOMM UK Limited, on 20 December 2012 for a cash consideration of £169,000.

		Year ended	Year ended
		31 January 2013	31 January 2012
		£	£
Revenue		1,980,959	1,952,394
Cost of Sales		(1,699,599)	(1,645,394)
Gross Profit		281,360	307,000
Administrative expenses		(307,175)	(361,023)
Operating loss (see below)		(25,815)	(54,023)
Finance costs		(8,062)	(8,001)
Loss on disposal of subsidiary		(257,227)	-
Loss before income tax		(291,104)	(62,024)
Income tax expense		-	-
Loss for the year after tax for discontinued operations		(291,104)	(62,024)

4.  DISCONTINUED OPERATIONS (continued)

Operating loss from discontinued operations is arrived at after charging:

		Year ended	Year ended
		31 January 2013	31 January 2012
		£	£
Amortisation of intangibles		3,507	4,005
Depreciation of property, plant and equipment		6,735	8,196
Staff costs		165,423	203,903
(Profit)/loss on foreign exchange		(1,951)	(416)
Rentals under operating leases		13,708	14,304
Auditors' remuneration for audit services		4,500	6,000
Auditors' remuneration for other services		2,208	1,500

5.  TAXATION

As a result of accumulated tax losses there is no tax charge for the year (2012: £Nil) for both continuing and discontinued operations.  There is also no year end tax liability (2012: £Nil).

The Group and Company tax charge for the year can be reconciled to the loss as disclosed in the statement of comprehensive income as follows:

	Year ended	Year ended
	31 January 2013	31 January 2012
	£	£
Loss before taxation	1,227.519	594,318
Tax at the UK corporation tax rate of 20% (2012: 20%)	(254,504)	(118,864)
Depreciation and amortisation	18,475	6,322
Expenses	1,285	753
Losses carried forward	225,744	111,789
Tax credit	-	-

At 31 January 2013 the Group had estimated tax losses of £4,973,000 (2012: £4,702,000) to carry forward against future profits. The potential deferred tax asset calculated at 20% arising from these losses of £995,000 (2012: £940,000) has not been provided in the accounts due to the uncertainty of recovery.

6.  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 31 January 2013			Year ended 31 January 2012
	Continuing operations	Discontinued operations	Total	Continuing operations	Discontinued operations	Total
Basic and diluted loss per share	(0.40p)	(0.12p)	(0.52p)	(0.56p)	(0.07p)	(0.63p)
Loss for the purposes of basic and diluted loss per share	£(936,415)	£(291,104)	£(1,227,519)	£(532,294)	£(62,024)	£(594,318)

Number of shares	No.	No.
Weighted average number of ordinary shares for the purposes of basic earnings per share	235,690,291	94,402,017

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 2013 and 2012 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 2013 was 19,210,929 (2012: 2,274,689).

7.  POST BALANCE SHEET EVENTS

On 8 March 2013 the Company issued 8,232,375 new ordinary shares to a former director at a price of 0.8p per share in settlement of a liability arising as part of his arrangement at the time of his departure.

On 11 March 2013 the Company issued 5,000,000 new ordinary shares at a price of 1p per share to acquire the database and customers of World Telecom from a company owned by D Breith, a director of the Company. At the same time, the Company entered into a software licence with AskMerlin Limited for an initial six month period at a price of £63,000 satisfied by the issue of 6,300,000 new ordinary shares at a price of 1p per share.

On 2 May 2013 the Company acquired the trading assets and customers of So Purple Tech Limited trading as 'ADSL24" for a total consideration of £800,000 satisfied by £50,000 in cash and the issue 41,666,667 new ordinary shares at a price of 1.8p per share. As part of the same transaction, the Company issued a further 2,777,778 new ordinary shares at a price of 1.8p per share for cash to Gavin Wheeldon a director of So Purple Tech Limited.

On 14 May 2013 the Company issued, by way of a cash placing 81,081,081 new ordinary shares to Novum Securities Limited at a price of 1.85p per share raising £1,500,000 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. Under the terms of the agreement each new ordinary share has a warrant attached with an exercise price of 3.7p per share. The warrants can be exercised at any time up to 24 months from the date of the agreement or at the Company's election if the Company's share price achieves and remains at greater than 4.8p for a period of 10 working days.

8.  AVAILABILITY OF THIS ANNOUNCEMENT

The accounts for the year ended 31 January 2013 are available from the Company's website at www.coms.com

Contact:

Coms plc

David Breith                                                     [phone]

Grant Thornton (Nominated Adviser)

Colin Aaronson/Jen Clarke                               [phone]

Simple Investments (Broker)

Andy Thacker/Nick Emerson                             [phone]

Newgate Threadneedle (PR)

Graham Herring                                               [phone]

 

END

 

 

FR UNVNRONANRAR