Interim Results

RNS Number : 2472P

Coms PLC

30 September 2011

 



COMS PLC

30 September 2011

 COMS PLC

(''Coms" or "the Group")

Interim Results for the six months to 31 July 2011

Coms plc, a provider of internet telephony services to business customers, announces unaudited Interim Results for the six months ended 31 July 2011.

Period Highlights

á      Revenue of £1.369m (H1 2010: £1.994m)

á      Gross profits of £0.409m (H1 2010: £0.473m)

á      Gross margins up from 23.7% to 29.9%

á      Loss before tax of £0.315m (H1 2010: loss of £0.210m)

á      Revenue growth in our core business division of cloud telephony up by 55.6% to £0.319m (H1 2010: £0.205m)

á      Gross margin in our cloud-telephony division improved to 50.5% (H1 2010: 42.4%)

á      Launch of app that voice enables iPads

Post-Period Highlights:

á      VCOMM business unit returns to profitability

á      VCOMM achieved Microsoft Lync accreditation

Jason Drummond, Chairman of Coms, said: "It was a challenging first half with good growth from our VOIP business offset by reduced equipment and related services revenues due to increased competition. However we are encouraged by new customer subscriptions and the market's reception of our first Apple iPad app - I remain optimistic that Coms can achieve sustainable profitability in the near term."

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] 

Northland Capital Partners

(Nominated Adviser)

Luke Cairns / Rod Venables            [phone]

(Broker)

Katie Shelton                              [phone] 

XCAP Securities Plc

(Broker)

John Grant                                  [phone]

Threadneedle Communications (PR)

Graham Herring                            [phone]

Chairman's Statement

Coms plc has had a mixed first half-year. Overall, total revenues are down on the comparable period which is a result of a difficult trading environment and increased competition in our VCOMM distribution business.  However, I am pleased to report that revenues in our cloud-telephony division, Coms, have increased by 55.6% and, at the same time, gross margin has increased by eight percentage points to an impressive 50.5%. Coms remains the primary focus of the Group as it offers significant potential for growth and delivers long term recurring revenues from monthly subscriptions.

The internet telephony market continues to grow and I am encouraged that we continue to deliver an average 60% cost saving to our customers, whilst we have improved our gross margin to greater than 50%. For me, this confirms the Coms cloud-telephony business model works and, upon achieving a critical mass of subscribers, that we can generate long-term profitability. Current recurring monthly revenues stand at £59,000. We currently have 6,500 subscribers and believe that critical mass will be reached once we hit 8,500 subscribers.

Our core strategy remains to add new subscribers to the Coms cloud-telephony service. We currently sell both through resellers and directly to customers through the newly updated www.coms.com website that is driving new subscriptions on a daily basis.

The Company is working on a number of initiatives to open new routes to market and further drive subscriptions. We are very pleased with our iPad application that was launched during the period and the resulting publicity it achieved. As a result we have made a number of updates to the application to improve the sign up and subscription process and also completed an iPhone application, both of which are currently being tested by Apple and we expect they will be approved for distribution in the iTunes store imminently. 

The benefit of our cloud-based telephony platform is that it allows the company to add new innovative devices such as the iPhone and iPad and also to enhance through new functionality. We have recently introduced a trial cloud-based call recording service which will enable us to offer cloud-telephony services to FSA regulated businesses in the UK.

As we have seen in this period, generating consistent revenues from distribution is very competitive, therefore we have recently become accredited for planning and deployment of Microsoft Lync which will allow VCOMM to generate higher margin recurring fees and revenues from Microsoft resellers. This will also enable us to offer telephony services to enterprise customers through the reseller channel which will add to the recurring revenue stream of this business unit.

We were encouraged by the response to our app to voice enable iPads and continue to believe that this can develop significant customer relationships. Our cloud-telephony platform remains on target to acquire a further 2000 seats and achieve Group profitability. The second half of the year has started well and the cloud-telephony business has acquired around 400 new subscriptions since the start of the period.

Jason Drummond

Chairman

 COMS PLC

Consolidated Statement of Comprehensive Income

For the Six months ended 31 July 2011

				Six months to 31 July 2011 Unaudited		Six months to 31 July 2010 Unaudited		Year ended 31 January 2011 Audited
				£'000s		£'000s		£'000s
Revenue
VOIP				319		203		538
PSTN				98		148		261
				417		351		799
Equipment and related services				952		1,643		2,720
Total revenue				1,369		1,994		3,519
Cost of Sales				(960)		(1,521)		(2,639)
Gross Profit				409		473		880
Administrative expenses				(720)		(683)		(1,497)
Operating Loss				(311)		(210)		(617)
Finance costs				(4)		(9)		(18)
Loss before tax				(315)		(219)		(635)
Income tax expense				-		-		(18)
Loss for the period				(315)		(219)		(653)
Other comprehensive income				-		-		-
Total comprehensive income for the period				(315)		(219)		(653)
Attributable to:
- Owners of the parent				(315)		(219)		(653)
Loss per share
From continuing operations:
Basic and diluted				(0.4p)		(0.5p)		(1.3p)

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 2011

				As at 31 July 2011 Unaudited		As at 31 July 2010 Unaudited		As at 31 January 2011 Audited
				£'000s		£'000s		£'000s
Assets
Non-current assets
Goodwill				2,318		2,318		2,318
Other intangibles				104		104		104
Property, plant and equipment				57		53		69
				2,479		2,475		2,491
Current assets
Inventories				185		416		242
Trade and other receivables				494		737		696
Cash and cash equivalents				26		40		63
				705		1,193		1,001
Total assets				3,184		3,668		3,492
Equity and liabilities
Capital and reserves
Share capital				2,127		1,705		2,127
Share premium				8,709		8,196		8,709
Reverse acquisition reserve				(4,236)		(4,236)		(4,236)
Accumulated deficit				(4,090)		(3,341)		(3,775)
Total equity				2,510		2,324		2,825
Current liabilities
Financial liabilities - borrowings				4		-		4
Trade and other payables				667		1,344		657
				671		1,344		661
Non current liabilities
Financial liabilities - borrowings				3		-		6
				3		-		6
Total equity and liabilities				3,184		3,668		3,492

 COMS PLC

Consolidated Statement of Cash Flows

For the Six months ended 31 July 2011

		Six months to 31 July 2011 Unaudited		Six months to 31 July 2010 Unaudited		Year ended 31 January 2011 Audited
	Note	£'000s		£'000s		£'000s
Operating activities	5	(11)		(84)		(938)
Investing activities
Purchase of other intangibles		(20)		(28)		(46)
Purchases of plant and equipment		(2)		(6)		(37)
Financing activities
Proceeds from issue of shares		-		38		973
Proceeds from conversions of convertible loan notes		-		(15)		(15)
Repayment of bank loans		-		(6)		(6)
Finance costs		(4)		(9)		(18)
Net cash outflow		(37)		(110)		(87)
Cash and cash equivalents at the beginning of the period		63		150		150
Bank balances and cash		26		40		63

Consolidated Statement of Changes in Equity

		As at 31 July 2011		As at 31 July 2010		As at 31 January 2011
		£'000s		£'000s		£'000s
As at beginning of period		2,825		2,505		2,505
Deficit for the period		(315)		(219)		(653)
Issue of share capital net of expenses		-		38		973
As at end of period		2,510		2,324		2,825

 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 2011 and expected to be used for the year ended 31 January 2012.

This interim report for the six months to 31 July 2011 which complies with IAS 34 'Interim Financial Reporting' was approved by the Board on 29 September 2011.

2.       Significant Accounting Policies

Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 31 January 2011, as described in those annual Þnancial statements.

Except as described below, the accounting policies and methods of computation applied are consistent with those of the annual financial statements for the year ended 31 January 2011, 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 group has adopted the following new and amended IFRSs as of 1 February 2011:

á      IAS 24 (Amendment), 'Related party transactions'. The amended standard is effective for annual periods beginning on or after 1 January 2011. It clarified definition of a related party to simplify the identification of such relationships and to eliminate inconsistencies in its application. The revised standard introduces a partial exemption of disclosure requirements for government-related entities. The company does not expect any impact on its financial position or performance.

á      IFRIC 19, 'Extinguishing financial liabilities with equity instruments', is effective for annual periods beginning on or after 1 July 2010. The interpretation clarifies that equity instruments issued to a creditor to extinguish a financial liability qualify as consideration paid. The equity instruments issued are measured at their fair value. In case that this cannot be reliably measured, the instruments are measured at the fair value of the liability extinguished. Any gain or loss is recognised in profit or loss. The adoption of this interpretation will have no effect on the financial statements of the company.

á      Improvements to IFRS (issued in May 2010). The IASB issued improvement to IFRSs, an omnibus of amendments to its IFRS standards. The amendments listed below:

-       IFRS 3 Business combinations

-       IFRS 7 Financial instruments: disclosures

-       IAS 1 Presentation of financial statements

-       IAS 27 Consolidated and separate financial statements

The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 February 2011 but are not relevant to the Group:

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

á    IFRS 3 - 'Business Combinations' improvements (effective from 1 July 2010), transition requirements for contingent consideration from a business combination that occurred before the effective date of the revised IFRS, measurement of non-controlling interests (NCI), un-replaced and voluntarily replaced share-based payment awards.

COMS PLC

Notes to the Interim Financial Information

2.         Significant Accounting Policies (continued)

á    IAS 27 - 'Consolidated and Separate Financial Statements' improvements (effective from 1 July 2010), transition requirements for amendments made as a result of IAS 27 Consolidated and Separate Financial Statements.

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 February 2011 and have not been early adopted:

á    IFRS 1 First-time Adoption of International Financial Reporting Standards (Amendment) -  Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters (effective from 1 July 2011.)

á    IFRS 7 Financial Instruments: Disclosures (Amendment) (effective from 1 July 2011).

á      IFRS 9, 'Financial instruments: classification and measurement', as issued reflects the first phase of the IASB work on the replacement of IAS 39 and applies to classification and measurement of financial assets as defined in IAS 39. The standard is effective for annual periods beginning on or after 1 January 2013. In subsequent phases, the IASB will address classification and measurement of financial liabilities, hedge accounting and derecognition. The completion of this project is expected in early 2011. The adoption of the first phase of IFRS 9 might have an effect on the classification and measurement of the company's assets. At this juncture it is difficult for the company to comprehend the impact on its financial position and performance.

á    IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 12 Disclosures of Interests with Other Entities along with related amendments to IAS 27 Separate Financial Statements and IAS 28 Investments in Associates and Joint Ventures will have an effective date of 1 January 2013. Early adoption of these standards is permitted, but only if all five are early adopted together.

á    IAS 12 Income Taxes (Amendment) Ð  Deferred Taxes: Recovery of Underlying Assets (effective from 1 January 2012).

á    IFRS 13 - Fair value measurement (effective from 1 January 2013).

COMS PLC

Notes to the Interim Financial Information

3.       Segmental Analysis

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	Six months to 31 July 2011	Six months to 31 July 2010	Year ended 31 January 2011
	£'000s	£'000s	£'000s
Telephony services:
- VOIP - external	319	203	538
- VOIP - internal	1	3	4
- PSTN	98	148	261
IP telephony and video services	418	354	803
IP telephony equipment and related services - external	952	1,643	2,720
IP telephony equipment and related services - internal	38	36	53
Elimination of intragroup sales	(39)	(39)	(57)
Consolidated	1,369	1,994	3,519

Profit / (Loss)	Six months to 31 July 2011	Six months to 31 July 2010	Year ended 31 January 2011
	£'000s	£'000s	£'000s
IP telephony and video services	(180)	(199)	(384)
IP telephony equipment and related services	4	81	33
Group Activities	(135)	(92)	(266)
Finance costs	(4)	(9)	(18)
Income tax charge	-	-	(18)
Consolidated	(315)	(219)	(653)

COMS PLC

Notes to the Interim Financial Information

3. Segmental Analysis (continued)

Assets

				As at 31 July 2011	As at 31 July 2010	As at 31 January 2011 Audited
				£'000s	£'000s	£'000s
IP telephony and video services				2,294	2,233	2,255
IP telephony equipment and related services				808	1,385	879
Group Activities				82	50	358
				3,184	3,668	3,492

Liabilities

				As at 31 July 2011	As at 31 July 2010	As at 31 January 2011 Audited
				£'000s	£'000s	£'000s
IP telephony and video services				(310)	(198)	(279)
IP telephony equipment and related services				(294)	(1,076)	(313)
Group Activities				(70)	(70)	(75)
				(674)	(1,344)	(667)

Capital additions

				As at 31 July 2011	As at 31 July 2010	As at 31 January 2011 Audited
				£'000s	£'000s	£'000s
IP telephony and video services				21	26	59
IP telephony equipment and related services				1	8	24
Group Activities				-	-	-
				22	34	83

Depreciation and amortisation

				As at 31 July 2011	As at 31 July 2010	As at 31 January 2011 Audited
				£'000s	£'000s	£'000s
IP telephony and video services				28	22	46
IP telephony equipment and related services				6	6	14
Group Activities				-	-	-
				34	28	60

COMS PLC

Notes to the Interim Financial Information

4.        Loss per Share

	Six months to 31 July 2011		Six months to 31  July 2010		Year ended 31 January 2011
Earnings per ordinary shares
Basic and diluted	(0.4p)		(0.5p)		(1.3p)

          The loss per ordinary share is based on the Group's loss for the period of £315,283 (31 July 2010 - £219,484; 31 January 2011 - £653,322) and a basic weighted average number of shares of 85,634,894 (31 July 2010 - 43,006,544; 31 January 2011 - 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 periods ended 31 July 2011, 2010 and 31 January 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 potential dilutive shares for the period ended 31 July 2011 was 2,274,689 (31 July 2010 - 8,765,610; 31 January 2011 - 2,274,689)

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

		Six months to 31 July 2011		Six months to 31 July 2010		Year ended 31 January 2011
		£Õ000s		£Õ000s		£Õ000s
Loss for the period		(315)		(219)		(635)
Adjustments for :
Finance costs		4		9		18
Depreciation and amortisation		34		28		60
Loss on sale of fixed assets		-		-		2
Decrease in inventories		57		41		215
Decrease/(Increase) in receivables		202		(123)		(100)
Increase/(Decrease) in payables		7		180		(498)
Net cash from operating activities		(11)		(84)		(938)

COMS PLC

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 2011		Six months to 31 July 2010		Year ended 31 January 2011
	£		£		£
J K Drummond	25,000		-		50,000
R A Bennett	45,000		40,000		85,000
A N Branson	38,770		34,395		73,165
J P Drummond	7,500		7,500		15,000
Total	116,270		77,490		223,165

Directors' transactions

 

At 31 July 2011 there were the following amounts owing by Directors of the Group:

J K Drummond - £Nil (31 July 2010: £8,400; 31 January 2011: £65,650) payable to the Group in respect of unpaid share subscriptions.

During the year sales and purchases were 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 2011	Six months to 31 July 2010	Year ended 31 January 2011
	£	£	£
Goods and services supplied by the Group	2,222	2,594	6,305
Goods and services purchased by the Group	10,160	-	6,220

At the period end, a balance of £2,361 was payable by the Group (31 July 2010: receivable £3,048; 31 January 2011: receivable £2,178).

7.       Called up Share Capital

          The issued share capital as at 31 July 2011 was 85,634,894 Ordinary Shares of 1p each (31 July 2010 - 43,423,782; 31 January 2011 - 85,634,894).

COMS PLC

Notes to the Interim Financial Information

8.       Events subsequent to 31 July 2011

          There have been no post balance sheet events.

9.       The unaudited results for period ended 31 July 2011 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 2011 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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