Final Results

RNS Number : 3143L

Coms PLC

29 July 2011

 



29 July 2011

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

Final Results for the year to 31 January 2011

The directors or Coms are pleased to present the audited results for the year ended 31 January 2011.

The full annual report and accounts for the year ended 31 January 2011 together with the notice of annual general meeting to be held on 31^st of August 2011 has today been sent to shareholders and are available at the Company's website at www.coms.com

Period highlights

·      Revenue growth of 8% to £3.52m (2010: £3.25m)

·      Gross profit increased by 4% to £0.881m (2010: £0.842m)

·      Gross margin remains consistent and in excess of 25%

·      Restructuring benefits beginning to impact

·      Repositioning as a Provider of Cloud Telephony

·      Launch of Apple iPhone and iPad voice apps

Chairman's statement

The Board of Coms initiated significant restructuring of the team at VCOMM during the financial year in order to focus our core businesses around the exciting opportunities created by the launch of Microsoft's Lync, a business telephony application for Microsoft Exchange, and the increasing importance of Cloud services.  

The benefits from this repositioning are already clearly visible in the opening months of the current year although, inevitably, such a significant restructuring resulted in some short term disruption and cost in the second half.  Nevertheless, I am pleased to report that revenues increased by 8% to £3.52m and gross profit was up by 4% to £0.88m in the year to 31 January 2011. I am also encouraged that gross margin remained in excess of 25% which is consistent with the margins achieved in previous years.

A significant achievement during the year was the signing of a reseller and distribution agreement with Obsidian Telecoms which provides a mobile phone call savings package for the Group's customers; savings of up to 50 per cent can be achieved.  Essentially Coms will receive a revenue share on all mobile call minutes.  Significantly, given the Group's strategic focus, Obsidian's mobile solution also operates with the Lync communications application and will be part of the Group's pbx service offering to the corporate market. 

Since the year end the Group achieved another significant step in partnering with E-MetroTel to market UC^x under an exclusive distributorship agreement. UC^x is a new innovative Unified Communications system that is designed to enable users of BT-supplied Nortel systems to keep their hardware while gaining all the benefits of using VoIP from service providers such as Coms.

The repositioning of Coms as a Cloud Telephony company will be completed in the autumn.  This will result in a re-launch of the Company's websites and increased marketing programmes to attract new customers.

The Board believes that just as technical advances in mobile telephones and networks in the 80's took business from the traditional fixed telephone networks, the opportunity to provide "voice apps" to user of iPads and other mobile devices over Wi-Fi will take business away from the mobile networks and provide significant opportunities for growth. The Board is committed to ensuring that Coms is a leading European player in providing voice apps on mobile devices. During the financial year we have launched our first Apple iPhone apps and recently announced the launch of our iPad Cloud voice app.  Developments of the service will include the Google Android platform plus innovative new features including Facebook presence and integrated video.

Our industry continues to evolve, and we are seeing particularly strong growth in the US market. Much of this is driven by the launch of Microsoft's Lync and its acquisition of the consumer VoIP service, Skype, for US$8b.

I strongly believe that the UK and European markets will follow the US market. Traditional fixed line and mobile telephone services will be upgraded to Cloud based telephony services, like those provided by Coms, as the economics and increased functionality is compelling for both consumers and businesses. This is the main reason many forecasters continue to predict strong growth in the Internet telephony sector. Our recent launch of the Apple iPhone and iPad app brings the same functionality to individual users. More than 25 million iPads have now been sold and Coms can bring telephony functionality to these products using our Cloud-based service app available from Apple's itunes App store.

We believe the Group is in good shape.  Both Coms and VCOMM continue to win new customers giving a progressively increasing level of recurring income from monthly subscriptions and call usage. Just before the year end Coms raised in excess of £640,000, gross, of new money which, since the year end has been used to further develop the business. However, we are aware that generally, investor sentiment does not currently favour early stage loss making technology companies. Our corporate strategy therefore remains focused on sustainable growth that will lead to 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 2011.

	Year ended	Year ended
Continuing operations	31 January 2011	31 January 2010
	£	£
Revenue	3,518,918	3,245,779
Cost of Sales	(2,638,622)	(2,403,780)
Gross Profit	880,296	841,999
Administrative expenses	(1,497,511)	(1,385,195)
Operating loss	(617,215)	(543,196)
Finance costs	(17,658)	(16,268)
Loss before income tax	(634,873)	(559,464)
Income tax expense	(18,449)	-
Loss for the year	(653,322)	(559,464)
Other comprehensive income	-	-
Total comprehensive income for the year	(653,322)	(559,464)
Attributable to:
- Owners of the parent	(653,322)	(559,464)
Basic and diluted loss per share	(1.3p)	(2.4p)

Consolidated Statement of Financial Position as at 31 January 2011

		31 January 2011	31 January 2010
		£	£
ASSETS
Non-current assets
Goodwill		2,317,863	2,317,863
Other intangible assets		104,022	92,892
Property, plant and equipment		69,074	58,437
		2,490,959	2,469,192
Current assets
Inventories		242,297	457,605
Trade and other receivables		696,131	614,029
Cash and cash equivalents		62,510	149,740
		1,000,938	1,221,374
Total assets		3,491,897	3,690,566
EQUITY and LIABILITIES
Capital and reserves attributable to equity shareholders
Share capital		2,127,789	1,692,878
Share premium		8,708,978	8,170,380
Reverse acquisition reserve		(4,236,239)	(4,236,239)
Accumulated deficit		(3,775,083)	(3,121,761)
Total equity		2,825,445	2,505,258
Current liabilities
Financial liabilities - borrowings		3,720	21,111
Trade and other payables		657,151	1,164,197
		660,871	1,185,308
Non-current liabilities
Financial liabilities - borrowings		5,581	-
		5,581	-
Total equity and liabilities		3,491,897	3,690,566

Consolidated Statement of Cash Flows for the year ending 31 January 2011

		Year ended 31 January 2011	Year ended 31 January  2010
		£	£
Cash flows from operating activities
Loss before taxation		(634,873)	(559,464)
Depreciation and amortisation		59,754	47,691
Loss on sale of fixed assets		1,951	-
Finance costs		17,658	16,268
Decrease/(increase) in inventories		215,308	(205,150)
(Increase) in receivables		(100,551)	(89,655)
(Decrease)/increase in payables		(497,745)	144,403
Net cash outflow from operating activities		(938,498)	(645,907)
Cash flows from investing activities
Acquisition of intangible assets		(46,009)	(39,846)
Acquisition of property, plant and equipment		(37,463)	(20,443)
Net cash from investing activities		(83,472)	(60,289)
Cash flows from financing activities
Proceeds from issues of share capital		973,509	874,012
Conversion of convertible loan notes		(15,000)	(22,500)
Repayment of bank loans		(6,111)	(36,667)
Finance costs		(17,658)	(16,268)
Net cash from financing activities		934,740	798,577
Net increase/(decrease) in cash and cash equivalents		(87,230)	37,389
Cash and cash equivalents at start of year		149,740	57,359
Cash and cash equivalents at end of year		62,510	149,740

Consolidated Statement of Changes in Equity For the year ended 31 January 2011

		Attributable to equity shareholders of the Company
		Share capital	Share premium	Reverse acquisition reserve	Accumulated deficit	Total
		£	£	£	£	£
At 1 February 2009		1,412,712	7,576,534	(4,236,239)	(2,562,297)	2,190,710
Loss for the year		-	-	-	(559,464)	(559,464)
Total comprehensive income for the year		-	-	-	(559,464)	(559,464)
Transactions with owners
Proceeds from shares issued		280,166	624,833	-	-	904,999
Share issue costs		-	(30,987)	-	-	(30,987)
At 31 January 2010		1,692,878	8,170,380	(4,236,239)	(3,121,761)	2,505,258
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

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 for the years ended 31 January 2011 and 2010 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 2011 was approved by the board of directors on 27 July 2011.

The 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 2011	Year ended 31 January 2010
	£	£
Telephony services:
- VOIP - external	537,903	348,567
- VOIP - internal	3,687	1,986
- PSTN	260,599	335,318
	802,189	685,871
Telephony equipment and related services - external	2,720,416	2,561,894
Telephony equipment and related services - internal	53,568	68,047
Elimination of intragroup sales	(57,255)	(70,033)
Consolidated	3,518,918	3,245,779
Loss for the year	Year ended 31 January 2011	Year ended 31 January 2010
	£	£
Telephony services	(383,880)	(401,561)
Telephony equipment and related services	32,782	60,427
Group management services	(266,117)	(202,061)
Finance costs	(17,658)	(16,269)
Income tax charge	(18,449)	-
Consolidated	(653,322)	(559,464)

Balance sheet analysis of business segments

			31 January 2011		31 January 2010
			Assets £	Liabilities £	Assets £	Liabilities £
Telephony services			2,255,558	(278,504)	2,249,642	(218,977)
Telephony equipment and related services			878,793	(313,180)	1,285,794	(866,195)
Group management services			357,546	(74,768)	155,130	(100,136)
			3,491,897	(666,452)	3,690,566	(1,185,308)

Capital additions, depreciation and amortisation by business segment

			31 January 2011		31 January 2010
			Capital additions £	Depreciation & amortisation £	Capital additions £	Depreciation & amortisation £
Telephony services			59,635	46,321	50,032	38,701
Telephony equipment and related services			23,837	13,433	10,257	8,990
			83,472	59,754	60,289	47,691

3.  OPERATING LOSS FOR THE YEAR

Operating Loss from operations is arrived at after charging:

	Year ended	Year ended
	31 January 2011	31 January 2010
	£	£
Amortisation of intangibles	34,723	26,636
Depreciation of property, plant and equipment	25,031	21,055
Staff costs	847,592	879,465
Loss on foreign exchange	5,115	1,292
Rentals under operating leases	47,655	66,174
Auditors' remuneration for audit services	24,700	27,700
Auditors' remuneration for other services	8,200	9,045

4.  TAXATION

	Year ended	Year ended
	31 January 2011	31 January 2010
	£	£
Current tax:
UK corporation tax charge / (credit)	-	-
Deferred tax charge	18,449	-
Current year charge	18,449	-

	31 January 2011	31 January 2010
	£	£
Deferred tax asset:
Current
At 1 February	18,449	18,449
Recognised in statement of comprehensive income	(18,449)	-
At 31 January	-	18,449

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

	Year ended	Year ended
	31 January 2011	31 January 2010
	£	£
Loss before taxation	653,322	559,464
Tax at the UK corporation tax rate of 21% (2009: 21%)	(137,198)	(117,487)
Depreciation and amortisation	12,548	9,252
Expenses	507	(4,683)
Losses carried forward	124,143	112,918
Tax credit	-	-

The applicable tax rate has changed to 21% due to a change in the UK corporation tax rate.

At 31 January 2011 the Group had estimated tax losses of £4,143,448 (2010: £3,552,331) to carry forward against future profits. There is a deferred tax asset arising from certain of these losses of which £Nil (2010: £18,449) has been provided in the financial statements.

At 31 January 2011 the Group had estimated tax losses of £4,143,000 (2010: £3,459,000) to carry forward against future profits. The potential deferred tax asset calculated at 21% arising from these losses of £870,000 (2010: £726,000) 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 2011	31 January 2010
Basic and diluted loss per share	(1.3p)	(2.4p)
Loss for the purposes of basic and diluted loss per share	£(653,322)	£(559,464)

Number of shares	No.	No.
Weighted average number of ordinary shares for the purposes of basic earnings/loss per share	50,331,733	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 years ended 31 January 2011 and 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 potentially dilutive shares for the year ended 31 January 2011 was 2,274,689 (2010: 5,222,366).

6.  AVAILABILITY OF THIS ANNOUNCEMENT

The annual report and accounts for the year ended 31 January 2011 together with the notice of annual general meeting to be held at 11:00 on 31 August 2011 has today been sent to shareholders and are available at the Company's website at www.coms.com

Coms plc

Richard Bennett                                                    [phone] 

Northland Corporate Finance plc (Nominated Adviser and Broker)

Luke Cairns / Rod Venables                                    [phone]

XCAP Securities (Broker)

Jon Belliss / Parimal Kumar  / John Grant                  [phone]

Threadneedle Communications (PR)

Graham Herring                                                      [phone]

 

END

 

 

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