Final Results

RNS Number : 2825Q

Coms PLC

30 July 2010

 



30 July 2010

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

Final Results for the year to 31 January 2010

Coms plc, a provider of internet telephony services to business customers, has today released its final results for the year to 31 January 2010.

·      Revenue growth of 34% to £3.25m (2009: £2.43m)

·      Gross profit increased by 32% to £0.842m (2009: £0.636m)

·      Gross margin remains consistent and in excess of 25%

·      Restructuring benefits beginning to impact

Jason Drummond, Chairman, commented: "Coms has made considerable progress during the last period increasing its top-line revenues by 34% and reducing its losses by 44%. As we stated during the period, we expect this current trend to continue and our aim is to move into profitability in the near term.

"Sales growth for this current financial year has remained consistent with the previous period and I am greatly encouraged that we have just fulfilled our largest order to date,  an OCS order from Wandsworth Health Authority, which exceeded £100,000."

Coms plc

Richard Bennett                       [phone]

Astaire Securities plc (Nominated Adviser)

Luke Cairns / Avi Robinson      [phone]

XCAP Securities Limited (Broker)

John Grant / David Newton      [phone]

Threadneedle Communications (PR)
Graham Herring                       [phone]

A copy of the annual report is available from the Company's web site www.coms.com.

Chairman's Statement

Coms plc sees 34% top-line revenue growth during the last financial year.

Coms has made considerable progress during the last period increasing its top-line revenues by 34% and reducing its losses by 44%. As we stated during the period, we expect this current trend to continue and our aim is to move into profitability in the near term. I am most encouraged that the Company made a profit in the last month of the financial year and that there has been no pressure on   margins, our gross margin remaining consistent with previous years.

The Coms plc group is beginning to see the benefits of the restructuring made during the period. It is now organised around two business lines:

·      Our primary business is Coms (www.coms.com), which remains focused on selling hosted internet telephony to small and medium sized businesses.  This creates long-term recurring income, which is more comparable to a post-pay mobile operator than other VoIP competitors.

·      Secondly, VCOMM (www.vcomm.com), which is organised around selling unified communications solutions to enterprise customers. The main route to market is through resellers who sell our products and services to enterprise customers, particularly those that are upgrading to Microsoft's Exchange product to include Microsoft's Office Communications Server (OCS) and implement unified communications across their organisations. VCOMM mainly earns income from the sale of equipment and, increasingly, recurring income from providing telephony services such as internet telephone lines and other support services.

In both cases, the products and services provided by Coms group companies enable business customers to save money on their telecommunications as well as delivering enhanced functionality, which leads to increased productivity. For example, combining the latest video telephony products from our strategic partners such as Polycom with Microsoft's OCS application brings video conferencing of age - increasing collaboration whilst reducing travel costs.

This cost saving and productivity-enhancing proposition obviously appeals strongly to companies in these difficult market conditions and is the reason many forecasters continue to predict strong growth in the internet telephony sector. We believe that linking through Microsoft Exchange server to the ubiquitous Microsoft Outlook client will give enterprises more confidence to upgrade to internet telephony and video communications over the coming years.

Sales growth for this current financial year has remained consistent with the previous period and I am greatly encouraged that we have just fulfilled our largest order to date,  an OCS order from Wandsworth Health Authority, which exceeded £100,000. However, we are aware that investor sentiment does not currently favour early stage loss making technology companies and our corporate strategy remains focused on sustainable growth that will lead to profitability in the short term.

I remain optimistic about the future of Coms plc.

Jason Drummond

Executive Chairman

Consolidated Statement of Comprehensive Income for the year ended 31 January 2010.

	Year ended	Year ended
	31 January 2010	31 January 2009
	£	£
Revenue	3,245,779	2,429,334
Cost of Sales	(2,403,780)	(1,793,787)
Gross Profit	841,999	635,547
Administrative expenses	(1,385,195)	(1,632,189)
Operating loss	(543,196)	(996,642)
Finance expense	(16,268)	(10,518)
Finance income	-	817
Loss before income tax	(559,464)	(1,006,343)
Income tax expense	-	11,783
Loss for the year	(559,464)	(1,018,126)
Other comprehensive income	-	-
Total comprehensive income for the year	(559,464)	(1,018,126)
Attributable to:
- Owners of the parent	(559,464)	(1,018,126)
Basic and diluted loss per share	(2.4p)	(8.5p)

Consolidated Statement of Financial Position as at 31 January 2010

	31 January 2010	31 January 2009
	£	£
ASSETS
Non-current assets
Goodwill	2,317,863	2,317,863
Other intangible assets	92,892	79,682
Property, plant and equipment	58,437	59,049
	2,469,192	2,456,594
Current assets
Inventories	457,605	252,455
Trade and other receivables	614,029	524,374
Cash and cash equivalents	149,740	57,359
	1,221,374	834,188
Total assets	3,690,566	3,290,782
EQUITY and LIABILITIES
Capital and reserves attributable to equity shareholders
Share capital	1,692,878	1,412,712
Share premium	8,170,380	7,576,534
Reverse acquisition reserve	(4,236,239)	(4,236,239)
Accumulated deficit	(3,121,761)	(2,562,297)
Total equity	2,505,258	2,190,710
Current liabilities
Bank overdrafts	-	-
Bank loans	6,111	36,667
Convertible loan notes	15,000	-
Trade and other payables	1,164,197	1,019,794
	1,185,308	1,056,461
Non-current liabilities
Bank loans	-	6,111
Convertible loan notes	-	37,500
	-	43,611
Total equity and liabilities	3,690,566	3,290,782

Consolidated Statement of Cash Flows for the year ending 31 January 2010

	Year ended 31 January 2010	Year ended 31 January 2009
	£	£
Cash flows from operating activities
Loss before taxation	(559,464)	(1,006,343)
Depreciation and amortisation	47,691	33,965
Finance income	-	(817)
Finance expense	16,268	10,518
Increase in inventories	(205,150)	(65,144)
(Increase)/decrease in receivables	(89,655)	221,734
Increase in payables	144,403	367,441
Net cash outflow from operating activities	(645,907)	(438,646)
Cash flows from investing activities
Acquisition of intangible assets	(39,846)	(49,495)
Acquisition of property, plant and equipment	(20,443)	(40,262)
Net cash from investing activities	(60,289)	(89,757)
Cash flows from financing activities
Proceeds from issues of share capital	874,012	574,660
Proceeds from (conversion)/issues of convertible loan notes	(22,500)	37,500
Repayment of bank loans	(36,667)	(36,667)
Finance income	-	817
Finance expense	(16,268)	(10,518)
Net cash from financing activities	798,577	565,792
Net increase in cash and cash equivalents	92,381	37,389
Cash and cash equivalents at start of year	57,359	19,970
Cash and cash equivalents at end of year	149,740	57,359

Consolidated Statement of Changes in Equity For the year ended 31 January 2010

	Attributable to equity shareholders of the Company
	Share capital	Share premium	Reverse acquisition reserve	Accumulated deficit	Total
	£	£	£	£	£
At 1 February 2008	1,056,378	7,347,958	(4,236,239)	(1,544,171)	2,623,926
Loss for the year	-	-	-	(1,018,126)	(1,018,126)
Total comprehensive income for the year	-	-	-	(1,018,126)	(1,018,126)
Transactions with owners
Proceeds from shares issued	356,334	324,167	-	-	680,501
Share issue costs	-	(95,591)	-	-	(95,591)
At 31 January 2009	1,412,712	7,576,534	(4,236,239)	(2,562,297)	2,190,710
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

Notes to the Financial Statements

1.  GENERAL INFORMATION

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

These 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.

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

·      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	2010	2009
	£	£
Telephony services:
- VOIP - external	348,567	224,963
- VOIP - internal	1,986	2,256
- PSTN	335,318	432,304
	685,871	659,523
Telephony equipment and related services - external	2,561,894	1,772,067
Telephony equipment and related services - internal	68,047	39,524
Elimination of intragroup sales	(70,033)	(41,780)
Consolidated	3,245,779	2,429,334
Profit / (Loss) for the year	2010	2009
	£	£
Telephony services	(401,561)	(617,643)
Telephony equipment and related services	60,427	(186,615)
Group Activities	(202,061)	(192,384)
Finance income	-	817
Finance costs	(16,269)	(10,518)
Income tax (charge)/ credit	-	(11,783)
Consolidated	(559,464)	(1,018,126)

Balance sheet analysis of business segments

	2010		2009
	Assets £	Liabilities £	Assets £	Liabilities £
Telephony services	2,249,642	(218,977)	2,237,193	(250,334)
Telephony equipment and related services	1,285,794	(866,195)	1,029,040	(750,312)
Group Activities	155,130	(100,136)	24,549	(99,426)
	3,690,566	(1,185,308)	3,290,782	(1,100,072)

Capital additions, depreciation and amortisation by business segment

	2010		2009
	Capital additions £	Depreciation & amortisation £	Capital additions £	Depreciation & amortisation £
Telephony services	50,032	38,701	72,764	27,818
Telephony equipment and related services	10,257	8,990	16,992	6,147
	60,289	47,691	89,756	33,965

3.  OPERATING LOSS FOR THE YEAR

Operating Loss from operations is arrived at after charging:

	Year ended	Year ended
	31 January 2010	31 January 2009
	£	£
Amortisation of intangibles	26,636	15,403
Depreciation of property, plant and equipment	21,055	18,562
Stock write downs	17,223	42,838
Exceptional item - Impairment provision against investment in and amounts due from subsidiary companies	-	-
Staff costs (see note 6)	879,465	989,391
(Profit)/loss on foreign exchange	1,292	20,286
Rentals under operating leases	66,174	59,223
Auditors' remuneration for audit services	27,700	25,200
Auditors' remuneration for other services	9,045	3,365

4.  TAXATION

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

	Year ended	Year ended
	31 January 2010	31 January 2009
	£	£
Loss before taxation	559,464	1,006,343
Tax at the UK corporation tax rate of 21% (2009: 21%)	(117,487)	(211,332)
Depreciation and amortisation	9,252	3,898
Expenses	(4,683)	971
Deferred tax	-	11,783
Impairment provision against investment in and accounts due from subsidiary companies	-	-
Losses carried forward	112,918	206,463
Tax credit	-	11,783

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

At 31 January 2010 the Group had estimated tax losses of £3,552,331 (2009: £3,014,627) to carry forward against future profits. There is a deferred tax asset arising from certain of these losses of £23,665 of which £18,449 (2009: £18,449) has been provided in theses financial statements (see note 15).

At 31 January 2010 the Group had estimated tax losses of £3,459,000 (2009: £2,954,000) to carry forward against future profits. The potential deferred tax asset calculated at 21% arising from these losses of £726,000 (2009: £620,000) 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 2010	31 January 2009
Basic and diluted loss per share	(2.4p)	(8.5p)
Loss for the purposes of basic and diluted loss per share	£(559,464)	£(1,018,126)

Number of shares	No.	No.
Weighted average number of ordinary shares for the purposes of basic earnings per share	23,664,970	11,909,522

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 2010 and 2009 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 2010 was 5,222,366 (2009: 846,973)

6.  AVAILABILITY OF THIS ANNOUNCEMENT

The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 423 of the Companies Act 006.

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

 

END

 

 

FR URSORRBABOAR