Interim Results

RNS Number : 9157M

Coms PLC

02 September 2013

 



2 September 2013

 COMS PLC

("Coms", or "the Group")

Interim Results for the six months to 31 July 2013

Coms plc, a provider of internet telephony services to business customers, announces unaudited Interim Results for the six months ended 31 July 2013. Where appropriate the results have been presented in a format excluding the discontinued VComm business in order to provide a like-for-like comparison and full transparency.

Period Highlights

·      Revenue growth in the core business division of Cloud Telephony up by 161% to £1.846m (H1 2012: £0.708m) resulting in the core business becoming profitable

·      Total Revenue up by 249% to £2.476m (H1 2012: £0.708m)

·      c.96% of Total Revenues are recurring

·      Gross Profits up by 124% to £1.026m (H1 2012: £0.457m)

·      Gross Margins up to 41.5% from 33.3%

·      Overall Loss for the period £119,000 (H1 2012: £337,000)

·      Net Cash balance £1.026m (H1 2012: £0.1m)

David Breith, CEO of Coms, said:

"My first six months in this business have been a real challenge, but rewarding, and this has been a classic business turnaround. I have had to make tough decisions and rely upon key people. I am, however, pleased and proud to report on our tremendous progress to date and I am really looking forward to more of the same during H2."

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

For further information, please contact:

Coms plc                                                                                  [phone]

David Breith (CEO)                                                                    

Iain Ross (Chairman)

Charles Stanley Securities                                                     [phone]

(Nominated Adviser and Joint Broker)

Karri Vuori / Philip Davies

SI Capital Limited                                                                    [phone]

(Joint Broker)

Andy Thacker / Nick Emerson    

Newgate Threadneedle                                                           [phone]

(PR)

Robyn McConnachie / Graham Herring   

CEO's Statement

The results for the first half of the financial year confirm that under new leadership Coms plc has made significant progress. In the second half of the year we intend to continue the transformation of the Company toward a profitable, growing and sustainable business.

Upon my appointment in early January 2013, I established a discipline and ethos, which was orientated towards making the Company achieve break-even within the first month. This necessitated making tough decisions in terms of organisation and staff in order that the business was 'fit for purpose'. 

As a result a new customer focused strategy was implemented and we immediately set about broadening the "Coms offering" as emphasised by the significant contract wins made during the period and our active and aggressive M&A strategy. Most significantly, the Company signed a contract to sell broadband and lines to MITIE Property Services Limited worth approximately £15m over two years of recurring revenue. The deal represents the largest contract win to date. In addition and as announced throughout the period we have acquired a number of bolt-on businesses, which have not only allowed us to significantly broaden our business offering, but also to refresh our technology base and IT systems that underpin our overall infrastructure. Overall, I am pleased to announce that this strategy was implemented effectively, which positions us well to deliver sustained future growth.

The financial results achieved for the first half-year demonstrate that the new strategy is working in that our revenue has grown (+249%), our gross margins have been significantly increased to 41.5% and that the overall cost base remains under tight control.

The revenue base is growing month-on-month and on the basis of our last billing month our annualised turnover would be c.£10m of which c.96% is recurring. Further strategic growth activity is planned including M&A, which remains a key plank of our strategy to accelerate the growth of this business.

During the period we have considerably strengthened our Board & Management with the appointments of Iain Ross as Chairman, Stephen Foster as Group Sales Director, Sue Alexander as Finance Director and Tim Loveday as Wholesale Sales Director.

In the second half of the year we plan to recruit further high calibre skills and resources to support the growth of the Company. We anticipate signing further large contracts to support accelerated organic growth through our improved supply chain, thereby generating increasing and recurring revenues.

Continued implementation of our growth strategy will necessitate increased investment in terms of further strengthening the Board and Management, building our sales capability and delivering "digital inclusion" through our Coms Enterprise division.

Through further issues of equity since the period end, the Company is now well capitalised to deliver on its ambitious growth plan with cash balances at the end of August of c.£2.8m.

In the first six months we have established a firm platform upon which we can build a very exciting business and I am extremely happy and proud to be part of a growing and prosperous business. I would like to thank the Board, the management and staff for their efforts and the shareholders for their continuing support.

Dave Breith

CEO

Consolidated Statement of Comprehensive Income

For the Six months ended 31 July 2013

				Six months to 31 July 2013		Six months to 31 July 2012		Year ended 31 January 2013
				Unaudited		Unaudited		Audited
				£'000s		£'000s		£'000s
Revenue
VOIP and service charges				2,312		608		1,379
PSTN				59		69		131
				2,371		677		1,510
Equipment and related services				105		31		112
Discontinued Operations				-		1,124		-
Total revenue				2,476		1,832		1,622
Cost of Sales				(1,449)		(251)		(692)
Cost of Sales Discontinued Operations				-		(977)		-
Gross Profit				1,026		457		-
Gross Profit Discontinued Operations				-		147		930
Administrative expenses				(1,115)		(935)		(1,864)
Operating Loss				(89)		(331)		(934)
Finance costs				0		(6)		(2)
Loss before tax				(89)		(337)		(1,228)
Income tax expense/Exceptionals				(30)		-		-
Profit / loss from continuing operations before group costs				32		(135)		(786)
Profit / loss group costs				(151)		(202)		(442)
Other comprehensive income				-		-		-
Total comprehensive income for the period				(119)		(337)		(1,228)
Attributable to:
- Owners of the parent				(119)		(337)		(1,228)
Loss per share
From continuing operations:
Basic and diluted				(0.0p)		(0.2p)		(0.5p)

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

Consolidated Statement of Financial Position as at 31 July 2013

				As at 31 July 2013		As at 31 July 2012		As at 31 January 2013
				Unaudited		Unaudited		Audited
				£'000s		£'000s		£'000s
Assets
Non-current assets
Goodwill				1,603		2,318		1,952
Other intangibles				3,410		221		169
Property, plant and equipment				163		38		31
				5,176		2,577		2,152
Current assets
Inventories				13		158		5
Trade and other receivables				1,561		610		392
Cash and cash equivalents				1,126		102		172
				2,700		870		569
Total assets				7,876		3,447		2,722
Equity and liabilities
Capital and reserves
Share capital				2,580		2,272		2,363
Share premium				13,780		9,186		9,497
Reverse acquisition reserve				(4,236)		(4,236)		(4,236)
Accumulated deficit				(5,716)		(4,707)		(5,596)
Share Based payment Reserve				61				43
Total equity				6,470		2,515		2,071
Current liabilities
Financial liabilities - borrowings				0		4		2
Trade and other payables				1,406		928		649
				1,406		932		651
Non-current liabilities
Financial liabilities - borrowings				-		-		0
				-		-		0
Total equity and liabilities				7,876		3,447		2,722

Consolidated Statement of Cash Flows

For the Six months ended 31 July 2013

		Six months to 31 July 2013		Six months to 31 July 2012		Year ended 31 January 2013
		Unaudited		Unaudited		Audited
	Note	£'000s		£'000s		£'000s
Operating activities	5	(522)		(156)		(657)
Investing activities
Purchase of other intangibles		(3,240)		(161)		(146)
Purchases of plant and equipment		(132)		(6)		(15)
Net proceeds disposal of subsidiary						159
Purchase of Goodwill		348
Financing activities
Proceeds from issue of shares		4,500		336		739
Finance costs		-		(6)		(2)
Net cash outflow		954		7		78
Cash and cash equivalents at the beginning of the period		172		95		94
Bank balances and cash		1,126		102		172

Consolidated Statement of Changes in Equity

		As at 31 July 2013		As at 31 July 2012		As at 31 January 2013
		£'000s		£'000s		£'000s
As at beginning of period		2,071		2,516		2,516
Deficit for the period		(118)		(337)		(1,227)
Issue of share capital net of expenses		4,482		336		782
As at end of period		6,435		2,515		2,071

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 2013 and expected to be used for the year ended 31 January 2014.

This interim report for the six months to 31 July 2013 which complies with IAS 34 'Interim Financial Reporting' was approved by the Board on 30 August 2013.

2.     Significant Accounting Policies

         The accounting policies and methods of computation applied are consistent with those of the annual financial statements for the year ended 31 January 2013, as described in those annual financial statements.

Changes in accounting policies and disclosures

The Group has adopted the following new and amended IFRS and IFRIC interpretations as of 1 February 2012:

·      IFRS7 (amendment) "Financial Instruments: Disclosures" - additional disclosures re transfers of financial assets,  effective for reporting periods beginning after 1 July 2011.

The impact of adopting the above amendments had no material impact on the financial statements of the Group.

Standards, interpretations and amendments to published standards that are not yet effective

The following standards, amendments and interpretations applicable to the Group are in issue but are not yet effective and have not been early adopted in these financial statements. They may result in consequential changes to the accounting policies and other note disclosures. We do not expect the impact of such changes on the financial statements to be material. These are outlined in the table below:

Reference	Title	Summary	Application date of standard	Application date of Group
Amendments to IAS 34, IAS 32, IAS 16, IAS 1, IFRS 1	Amendments resulting from Annual Improvements 2009-2011 Cycle	Amendments resulting from Annual Improvements 2009-2011 Cycle	Annual periods beginning on or after 1 January 2013	1 January 2013
Amendments to IFRS 7	Amendments related to the offsetting of assets and liabilities	Guidance on offsetting of financial assets and financial liabilities	Annual periods beginning on or after 1 January 2013	1 January 2013
IFRS 9	Financial Instruments	Revised standard for accounting for financial instruments	Periods commencing on or after 1 January 2015	1 January 2015
IFRS 10	Consolidated Financial Statements	Replaces IAS 27 section that addressed accounting for consolidated financial statements. Establishes a single control model applicable to all entities	Periods commencing on or after 1 January 2013	1 January 2013
IFRS 11	Joint Arrangements	Replaces IAS 31 Interests in Joint Ventures. Requires a party to a joint arrangement to determine the type of joint arrangement in which it is involved by assessing its rights and obligations.	Periods commencing on or after 1 January 2013	1 January 2013
IFRS 12	Disclosure of Interests in Other Entities	Increases disclosure requirements in relation to an entity's interests in subsidiaries, joint arrangements, associates and structured entities	Periods commencing on or after 1 January 2013	1 January 2013
IFRS 13	Fair Value Measurement	Guidance on how to measure fair value when fair value is required or permitted	Periods commencing on or after 1 January 2013	1 January 2013
Amendments to IAS 1	Presentation of Financial Statements	Presentation of items within other comprehensive income	Periods commencing on or after 1 July 2012	1 January 2013
Amendments to IAS 19	Employee Benefits	Revised standard for accounting for employee benefits	Periods commencing on or after 1 January 2013	1 January 2013
IAS 27 (revised)	Separate Financial Statements	Revised standard following issuance of IFRS 10 and IFRS 12	Periods commencing on or after 1 January 2013	1 January 2013
IAS 28 (revised)	Investments in Associates and Joint Ventures	Sets out the requirements for the application of the equity method when accounting for investments in associates and joint ventures.	Periods commencing on or after 1 January 2013	1 January 2013
IFRIC 20	Stripping Costs in the Production Phase of a Surface Mine	Clarifies the requirements for accounting for stripping costs associated with waste removal in surface mining.	Periods commencing on or after 1 January 2013	1 January 2013

The Directors anticipate that the adoption of these standards and the interpretations in future periods will have no material impact on the financial statements of the Group.

COMS PLC

Notes to the Interim Financial Information

3.       Segmental Analysis

In the opinion of the directors the Group's core activities comprise five material business segments which reflect the profiles of the risks, rewards and internal reporting structures within the Group. These are as follows:

- Provision of VOIP telephony

- Provision of PSTN services

- Provision of DATA 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	Six months to 31 July 2013	Six months to 31 July 2012	Year ended 31 January 2013
	£'000s	£'000s	£'000s
Telephony services:
- VOIP and service charges - external	1,833	608	1,379
- PSTN	59	69	131
- DATA	221	-	-
IP telephony and video services	2,113	677	1,510
	350	1,155	112
Equipment and Service charges - external
IP telephony/equipment and related services - internal	13	27	-
Elimination of intragroup sales	(13)	(27)	-
Consolidated	2,462	1,832	1,622

Notes to the Interim Financial Information

3.       Segmental Analysis (continued)

Profit / (Loss)	Six months to 31 July 2012	Six months to 31 July 2012	Year ended 31 January 2012
	£'000s	£'000s	£'000s
IP telephony	31	(131)	(310)
Group Activities	(150)	(200)	(624)
Finance costs	-	(6)	(2)
Discontinued operations	-	-	(291)
Consolidated	(119)	(337)	(1,227)

Assets

				As at 31 July 2013		As at 31 July 2012		As at 31 January 2013
								Audited
				£'000s		£'000s		£'000s
IP telephony/PSTN, Data & related services				5,403		2,352		2,374
IP telephony equipment and related services				-		841		-
Group Activities				924		254		348
				6,327		3,447		2,721

Liabilities

			As at 31 July 2013		As at 31 July 2012		As at 31 January 2013
							Audited
			£'000s		£'000s		£'000s
IP telephony/PSTN, Data & related services			(1,346)		(356)		(493)
IP telephony equipment and related services			-		(358)		-
Group Activities			(114)		(218)		(158)
			(1,460)		(932)		(651)

Notes to the Interim Financial Information

3.       Segmental Analysis (continued)

Capital additions

		As at 31 July 2013	As at 31 July 2012	As at 31 January 2013
				Audited
		£'000s	£'000s	£'000s
IP telephony/PSTN, Data & related services		3,378	11	161
IP telephony equipment and related services		-	1	1
Group Activities		-	155	-
		3,373	167	162

Depreciation and amortisation

			As at 31 July 2013	As at 31 July 2012	As at 31 January 2013
					Audited
			£'000s	£'000s	£'000s
IP telephony/PSTN, Data & related services			120	31	85
IP telephony equipment and related services			-	6	10
Group Activities			-	13	-
			120	50	95

4.       Loss per Share

			Six months to 31 July 2013		Six months to 31  July 2012		Year ended  31 January 2013
	Earnings per ordinary shares
	Basic and diluted		(0.0p)		(0.2p)		(0.5p)

          The loss per ordinary share is based on the Group's loss for the period of £118,645 (31 July 2013 - £327,617; 31 January 2013 - £1,227,519) and a basic weighted average number of shares of 414,635,793 (31 July 2012 - 207,872,463; 31 January 2013 - 235,711,094).

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 2013, 2012 and 31 January 2013 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 2013 was 62,557,222 (31 July 2012 - 13,597,392; 31 January 2013 - 19,363,591)

Notes to the Interim Financial Information

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

		Six months to 31 July 2013		Six months to 31 July 2012		Year ended 31 January 2013
		£'000s		£'000s		£'000s
Loss for the period		(118)		(337)		(1,227)
Adjustments for :
Finance costs		-		6		2
Depreciation and amortisation		120		50		95
Loss on sale of subsidiary		-		-		257
Share Based Payments		18				43
Decrease in inventories		(8)		-		(84)
Decrease/(Increase) in receivables		(1,169)		(68)		(115)
Increase/(Decrease) in payables		756		193		371
Net cash from operating activities		(401)		(156)		(658)

Notes to the Interim Financial Information

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 2013		Six months to 31 July 2012		Year ended 31 January 2013
		£		£		£
	D Breith	80,769		-		10,000
	J K Drummond	-		32,500		180,859
	R A Bennett	-		45,000		112,346
	A N Branson	28,077		39,090		76,665
	J P Drummond	-		7,500		8,750
	P Cook	-		8,333		3,500
	I Ross	10,000
	S Foster	2,750
	Total	121,596		132,423		392,120

Directors' transactions

 

   The director's fees payable to J K Drummond shown above were paid to My6 Limited, a company of which J K Drummond is a director. The director's fees payable to I Ross shown above were paid to Gladstone Consultancy Partnership, a company of which I Ross is a director. The director's fees payable to S Foster (NED) shown above were paid to Iridian Consulting Services  Partnership, a company of which S Foster is a director.

I Ross - £10,000 (31 July 2012: £Nil;)

S Foster - £2,750 (31 July 2012: £Nil;)

During the period there were no sales and purchases made with the Media Corp plc, a group, a company in which J K Drummond and J P Drummond are directors as follows:

			Six months to 31 July 2013	Six months to 31 July 2012	Year ended 31 January 2013
			£	£	£
	Goods and services supplied by the Group		-	2,163	375
	Goods and services purchased by the Group		-	1,170	840

At the period end, there was no balance payable by the Group (31 July 2012: £4,029)

During the year purchases of goods and services were made from companies in which D Breith is a director as follows:

Notes to the Interim Financial Information

6.       Related-party transactions (continued)

		Six months to 31 July 2013	Six months to 31 July 2012	Year ended 31 January 2013
		£	£	£
	Goods and services supplied to Vitrix	47,759	-	-
	Goods and services purchased from Vitrix	60,089	-
	Goods and services purchased from Blabbermouth	29,213	-	3,000

 At the end of the period, a balance of £455 to Blabbermouth and £483 to Vitrix, was payable by   the Group (31 January 2013; £3,708 due to Vitrix)

7.       Called up Share Capital

          The issued share capital as at 31 July 2013 was 538,640,571 Ordinary Shares of 0.1p each (31 July 2012 - 229,384,894 of 1p each; 31 January 2013 321,138,227 of 0.1p each).

8.       Events subsequent to 31 July 2013

          On the 13^th August a warrant was exercised of 47,085,181 ordinary shares at 3.7 pence per share. The additional cash that was received into the Company's bank account means that the company is now holding just over £2.8m in cash.

          On the 28^th August 2013 the company advised that it has appointed Charles Stanley as its Nominated Advisor and joint Broker.

9.       The unaudited results for period ended 31 July 2013 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 2013 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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