Half Yearly Report

RNS Number : 8397T

Coms PLC

05 October 2010

 



COMS PLC

05 October 2010

 COMS PLC

("Coms", or "the Group")

Coms plc, a provider of internet telephony services to business customers, announces unaudited Interim Results for the six months ended 31 July 2010.

Period Highlights

á      Revenue growth of 29% to £1.99m (H1 2009: £1.55m)

á      Gross profit growth of 18% to £0.47m (H1 2009: £0.40m)

á      Gross margin remains inline with expectation at around 23.7%

á      Significant reduction in overheads - benefits being realised in H2

Post-Period Highlights:

á      Issue of equity to raise £340,000 - subscribed to by management and new investors

á      Launch of first iPhone app for customers to control their Coms account

á      Second iPhone application that enables live calls over the Coms network is being tested by Apple for launch in New Year

Jason Drummond, Chairman of Coms, said: "I am pleased that Coms continues to grow revenues and maintain gross margin. The business has reduced costs and remains focussed on achieving profitability".

 A copy of these interims together with further information on the Company is available on the Company's website: www.coms.com.

Contact:

Coms plc

Richard Bennett                           [phone] 

XCAP Securities Plc (Broker)

John Grant / Karen Kelly              [phone]

Astaire Securities plc (Nominated Adviser and Broker)

Luke Cairns / Rod Venables            [phone]

 
Threadneedle Communications (PR)

Graham Herring                            [phone]

Chairman's Statement

I am pleased to report that Coms continues to make good progress.  In the six months to 31 July 2010 revenue was up by 29 percent to £1.99 million and the gross margin remained inline with expectations at around 23.7%. Gross profit has grown by 18% to £0.47m and the loss before tax was significantly reduced.  Coms implemented a number of cost saving measures during the period including consolidating the products lines offered to customers, and will continue to identify and implement other cost saving measures as appropriate.

Trading started well at the beginning of the year and the company achieved profitability prior to the normal seasonal slowdown in sales over the summer period.  That performance was consistent with expectations and the Board is confident that Coms will demonstrate further progress during the second half of the year. The board is also encouraged that signups to our hosted internet telephony service grew during the period.

Coms internet telephony products and services enable companies to reduce their call costs, as well as increase productivity, a proposition that has an obvious appeal in the current macro economic environment.  Coms continues to see increased sales leads from businesses and public sector organisations that are seeking to cut costs and increase productivity. We expect the conclusion of the public sector spending review to provide fresh impetus to sales as cost cutting measures are implemented throughout the public sector.

The public sector also holds the promise of larger contracts as can be demonstrated by our recent sales win to the Wandsworth Health Authority, that was the company's largest sales order to date. This was the first significant order for our newly created division that supports Microsoft's unified communications products collectively known as Office Communications Server or OCS.

We are now positioned with the right product portfolio and knowledge to capitalise upon Microsoft's plans to relaunch their unified communications server as Lync to the enterprise market at the end of 2010. Lync will be a new Microsoft application that enables its flagship Exchange product to connect to Internet telephony networks.  It brings the benefits of VoIP-based cloud telephony to enterprise desktops. Workers can use presence to see which of their colleagues are online and dial them, or external contacts, directly from their computer, both increasing productivity and saving money on call costs.

As customers go through their software upgrade cycle, they are anticipated to deploy Microsoft Lync. Coms expects to benefit initially from selling enabling technology including handsets, videophones, conferencing equipment and Internet gateways. Long term, the Group expects to profit from the reoccurring income generated from phone calls.

Coms' first iPhone application that enables customers to manage their Coms account has been well received by customers. The knowledge gained has helped Coms to develop its first telecoms iPhone application that is currently being tested by Apple and will be launched in the New Year. This will allow customers to place calls directly from an iPhone over the Coms network, and will reduce mobile phone and roaming charges for our customers.

The Group has performed well in the first half and is on track to achieve our projections for the full year.  I am optimistic that the company is on course to become profitable in the near term.

Jason Drummond

Chairman.

 COMS PLC

Consolidated Comprehensive Income Statement

For the Six months ended 31 July 2010

				Six months to 31 July 2010 Unaudited		Six months 31 July 2009 Unaudited		Year ended 31 January 2010 Audited
				£'000s		£'000s		£'000s
Revenue				1,994		1,545		3,246
Cost of Sales				(1,521)		(1,145)		(2,404)
Gross Profit				473		400		842
Administrative expenses				(683)		(752)		(1,385)
Operating Loss				(210)		(352)		(543)
Finance costs				(9)		(8)		(16)
Loss before tax				(219)		(360)		(559)
Income tax charges				-		-		-
Loss for the period				(219)		(360)		(559)
Other comprehensive income				-		-		-
Total comprehensive income for the period				(219)		(360)		(559)
Attributable to:
- Owners of the parent				(219)		(360)		(559)
Loss per share
From continuing operations:
Basic and diluted				(0.5p)		(2.6p)		(2.4p)

The Company's turnover and operating loss arose from continuing operations.

There were no recognised gains or losses other than those recognised in the income statement above.

                                                            COMS PLC

Consolidated Statement of Financial Position as at 31 July 2010

				As at 31 July 2010 Unaudited		As at 31 July 2009 Unaudited		As at 31 January 2010 Audited
				£'000s		£'000s		£'000s
Assets
Non-current assets
Goodwill				2,318		2,318		2,318
Other intangibles				104		85		93
Property, plant and equipment				53		61		58
				2,475		2,464		2,469
Current assets
Inventories				416		242		457
Trade and other receivables				737		588		614
Cash and cash equivalents				40		18		150
				1,193		848		1,221
Total assets				3,668		3,312		3,690
Equity and liabilities
Capital and reserves
Share capital				1,705		1,413		1,693
Share premium				8,196		7,576		8,170
Reverse acquisition reserve				(4,236)		(4,236)		(4,236)
Accumulated deficit				(3,341)		(2,922)		(3,122)
Total equity				2,324		1,831		2,505
Current liabilities
Trade and other payables				1,344		1,205		1,164
Convertible loan notes				-		-		15
Bank loans				-		24		6
				1,344		1,229		1,185
Non current liabilities
Bank loans				-		-		-
Convertible loan notes				-		252		-
				-		252		-
Total equity and liabilities				3,668		3,312		3,690

 COMS PLC

Consolidated Statement of Cash Flows

For the Six months ended 31 July 2010

		Six months to 31 July 2010 Unaudited		Six months to 31 July 2009 Unaudited		Year ended 31 January 2010 Audited
	Note	£'000s		£'000s		£'000s
Operating activities	5	(84)		(197)		(645)
Investing activities
Purchase of other intangibles		(28)		(18)		(20)
Purchases of plant and equipment		(6)		(12)		(40)
Financing activities
Proceeds from issue of shares		38		-		874
Proceeds from issue/(conversions) of convertible loan notes		(15)		215		(23)
Repayment of bank loans		(6)		(19)		(37)
Finance expense		(9)		(8)		(16)
Net cash inflow/(outflow)		(110)		(39)		93
Cash and cash equivalents at the beginning of the period		150		57		57
Bank balances and cash		40		18		150

Consolidated Statement of Changes in Equity

		As at 31 July 2010		As at 31 July 2009		As at 31 January 2010
		£'000s		£'000s		£'000s
As at beginning of period		2,505		2,191		2,191
Deficit for the period		(219)		(360)		(559)
Issue of share capital net of expenses		38		-		873
As at end of period		2,324		1,831		2,505

 COMS PLC

Notes to the Interim Financial Information

1.       Basis of preparation

         The consolidated interim financial information have been prepared in accordance with International Financial Reporting Standards and on the historical cost basis, using generally recognised accounting principles consistent with those used in the annual report and accounts for the year ended 31 January 2010 and expected to be used for the year ended 31 January 2011.

This interim report for the six months to 31 July 2010 which complies with IAS 34 'Interim Financial Reporting' was approved by the Board on 01 October 2010.

2.       Significant Accounting Policies

Except as described below, the accounting policies applied are consistent with those of the annual Þnancial statements for the year ended 31 January 2010, as described in those annual financial statements.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 January 2010 but are not relevant to the Group.

.      IFRS 3 (revised), 'Business combinations', and consequential amendments to IAS 27, 'Consolidated and separate financial statements', IAS 28, 'Investments in associates', and IAS 31, 'Interests in joint ventures', are effective prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 July 2009.

.      IFRIC 17, 'Distributions of non-cash assets to owners', effective for annual periods beginning on or after 1 July 2009. This is not currently applicable to the Group, as it has not made any non-cash distributions.

.      IFRIC 18, 'Transfers of assets from customers', effective for transfer of assets received on or after 1 July 2009. This is not relevant to the Group, as it has not received any assets from customers.

.      'Additional exemptions for first-time adopters' (Amendment to IFRS 1) was issued in July 2009. The amendments are required to be applied for annual periods beginning on or after 1 January 2010. This is not relevant to the Group, as it is an existing IFRS preparer.

.      Improvements to International Financial Reporting Standards 2009 were issued in April 2009. The effective dates vary standard by standard but most are effective 1 January 2010.

The following new standards, new interpretations and amendments to standards and interpretations have been issued but are not effective for the financial year beginning 1 January 2010 and have not been early adopted:

.      IFRS 9, 'Financial instruments', issued in December 2009. This addresses the classification and measurement of financial assets. The Group is assessing whether there will be any impact on the accounting for its financial assets. The standard is not applicable until 1 January 2013 but is available for early adoption.

COMS PLC

Notes to the Interim Financial Information

2.   Significant Accounting Policies (continued)

.      Revised IAS 24, 'Related party disclosures', issued in November 2009. It supersedes IAS 24, 'Related party disclosures', issued in 2003. The revised IAS 24 is required to be applied from 1 January 2011. Earlier application, in whole or in part, is permitted.

.      'Classification of rights issues' (Amendment to IAS 32), issued in October 2009. The amendment should be applied for annual periods beginning on or after 1 February 2010. Earlier application is permitted.

.      'Prepayments of a minimum funding requirement' (Amendments to IFRIC 14), issued in November 2009 is effective for annual periods beginning 1 January 2011. Earlier application is permitted. The standard is not applicable to the group as there is no defined benefit pension scheme.

.      IFRIC 19, 'Extinguishing financial liabilities with equity instruments'. This clarifies the requirements of IFRSs when an entity renegotiates the terms of a financial liability with its creditor and the creditor agrees to accept the entity's shares or other equity instruments to settle the financial liability fully or partially. The interpretation is effective for annual periods beginning on or after 1 July 2010. Earlier application is permitted.

.      Improvements to International Financial Reporting Standards 2010 were issued in May 2010. The effective dates vary standard by standard but most are effective 1 January 2010.

3.       Segmental Analysis

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

- Supply and distribution of telephony equipment and related services.

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

Revenue	Six months to 31 July 2010	Six months to 31 July 2009	Year ended 31 January 2010
	£'000s	£'000s	£'000s
Telephony services:
- VOIP - external	203	162	349
- VOIP - internal	3	1	2
- PSTN	148	175	335
IP telephony and video services	354	338	686
IP telephony equipment and related services - external	1,643	1,208	2,562
IP telephony equipment and related services - internal	36	16	68
Elimination of intragroup sales	(39)	(17)	(70)
Consolidated	1,994	1,545	3,246

COMS PLC

Notes to the Interim Financial Information

Segmental Analysis (continued)

Profit / (Loss)	Six months to 31 July 2010	Six months to 31 July 2009	Year ended 31 January 2010
	£'000s	£'000s	£'000s
IP telephony and video services	(199)	(247)	(401)
IP telephony equipment and related services	81	(23)	60
Group Activities	(92)	(82)	(202)
Finance income	-	-	-
Finance costs	(9)	(8)	(16)
Consolidated	(219)	(360)	(559)

Assets

				As at 31 July 2010	As at 31 July 2009	As at 31 January 2010 Audited
				£'000s	£'000s	£'000s
IP telephony and video services				2,233	2,253	2,249
IP telephony equipment and related services				1,385	1,041	1,286
Group Activities				50	18	155
				3,668	3,312	3,690

Liabilities

				As at 31 July 2010	As at 31 July 2009	As at 31 January 2010 Audited
				£'000s	£'000s	£'000s
IP telephony and video services				(198)	(300)	(219)
IP telephony equipment and related services				(1,076)	(761)	(866)
Group Activities				(70)	(420)	(100)
				(1,344)	(1,481)	(1,185)

COMS PLC

Notes to the Interim Financial Information

Capital additions

				As at 31 July 2010	As at 31 July 2009	As at 31 January 2010 Audited
				£'000s	£'000s	£'000s
IP telephony and video services				26	24	50
IP telephony equipment and related services				8	6	10
Group Activities				-	-	-
				34	30	60

Depreciation and amortisation

				As at 31 July 2010	As at 31 July 2009	As at 31 January 2010 Audited
				£'000s	£'000s	£'000s
IP telephony and video services				22	18	39
IP telephony equipment and related services				6	5	9
Group Activities				-	-	-
				28	23	48

4.        Loss per Share

	Six months to 31 July 2010		Six months 31 July 2009		Year ended 31 January 2010
Earnings per ordinary shares
Basic and diluted	(0.5p)		(2.6p)		(2.4p)

          The loss per ordinary share is based on the Company's loss for the period of £219,484 (31 July 2009 - £360,179; 31 January 2010 - £559,464) and a basic weighted average number of shares of 43,006,544 (31 July 2009 - 14,127,116; 31 January 2010 - 23,664,970).

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 periods ended 31 July 2010, 2009 and 31 January 2010 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 potential dilutive shares for the period ended 31 July 2010 was 8,765,610 (31 July 2009  - 2,620,000; 31 January 2010 - 5,222,366)

COMS PLC

Notes to the Interim Financial Information

5.          Reconciliation of operating loss to net cash outflow from operating activities.

		Six months to 31 July 2010		Six months 31 July 2009		Year ended 31 January 2010
		£'000s		£'000s		£'000s
Loss for the period		(219)		(360)		(559)
Adjustments for :
Finance income		-		-		-
Finance expense		9		8		16
Depreciation and amortisation		28		23		48
Decrease/(Increase) in inventories		41		11		(205)
(Increase)/Decrease in receivables		(123)		(64)		(90)
(Decrease)/Increase in payables		180		185		145
Net cash from operating activities		(84)		(197)		(645)

6.       Related-party transactions

Transactions between the company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

Remuneration of key management personnel

	Six months to 31 July 2010		Six months 31 July 2009		Year ended 31 January 2010
	£'000s		£'000s		£'000s
J K Drummond	-		-		50,000
R A Bennett	40,000		21,000		49,538
A N Branson	34,395		25,240		51,202
J P Drummond	7,500		-		-
T Martin	-		31,250		31,250
J C Cole	-		-		-
Total	81,895		77,490		181,990

 

COMS PLC

Notes to the Interim Financial Information

6.       Related-party transactions (continued)

Directors' transactions

 

During the period, J P Drummond was paid £nil (P/E 31 July 2009 - £nil; Y/E 31 January 2010 Ð £5,000) in respect of commission in connection with a placing of shares on 14 September 2009.

In addition J P Drummond was paid £nil (P/E 31 July 2009 - £nil; Y/E 31 January 2010 - £15,000) in respect of non-executive director's fees for the year ended 31 January 2011. An amount of £7,500 (31 July 2009 - £nil; 31 January 2010 - £15,000) is included in the accounts as a prepayment.

At 31 July 2010 there were the following amounts owing to/by Directors of the Group:

J K Drummond - £8,400 (31 July 2009 - £nil; 31 January 2010 - £nil) payable to the Group

During the period sales were made to Media Corp plc, a company in which J K Drummond and J P Drummond are directors for £2,594 (P/E 31 July 2009 - £2,610; Y/E 31 January 2010 - £5,009) relating to goods and services supplied. At the period end, a balance of £3,048 was receivable by the Group (31 July 2009 - £3,406; 31 January 2010 - £1,903).

7.       Called up Share Capital

          The issued share capital as at 31 July 2010 was 43,423,782 Ordinary Shares of 1p each (31 July 2009 - 14,127,116; 31 January 2010 Ð 42,143,782).

8.       Events subsequent to 31 July 2010

          On 12 August 2010 the Company issued 13,600,000 new ordinary shares of 1p each representing approximately 23.85 per cent. of the enlarged issued share capital of the Company at a price of 2.5p per share raising £340,000 (before expenses). The net placing proceeds will be used for additional working capital purposes.

9.       The unaudited results for period ended 31 July 2010 do not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. The comparative figures for the year ended 31 January 2010 are extracted from the statutory financial statements which have been filed with the Registrar of Companies and which contain an unqualified audit report and did not contain statements under Section 498 to 502 of the Companies Act 2006.

10.      Copies of this interim statement are available from the Company at its registered office at 5-7  Cranwood Street, London, EC1V 9EE. The interim statement will also be available on the company website www.coms.com/governance_policy.html

 

END

 

 

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