Sale of VCOMM and Issue of Equity

RNS Number : 0915U

Coms PLC

21 December 2012

 



Coms Plc ('Coms' or the 'Company')

Sale of VCOMM and Issue of Equity

The Company is pleased to announce that is has sold VCOMM (UK) Limited ('VCOMM'), the Company's wholly owned subsidiary focussed on the distribution of telecoms equipment, for a total consideration (subject to adjustment) of £250,000 in cash.

In addition the Company has raised £237,825 through the subscription for 63,240,000 new ordinary shares of 0.1 pence each in the Company ('Ordinary Shares')(the 'Subscription') at the closing mid-market price on 20 December 2012 of 0.375p per share.

Sale of VCOMM

As previously announced, the Company's core focus has for some time been on its internet telephony services that have recurring income and higher margins.  Specifically, as announced in the Company's interim results to 31 July 2012, VCOMM has seen a reduction in its gross margin and was utilising a disproportionate amount of the Company's working capital for the returns generated. With this in mind, the board has taken the decision to sell VCOMM to Siphon Networks Limited for a total cash consideration of up to £250,000 payable as follows:

·     £100,000 payable on completion;

·     £50,000 no later than six months from completion;

·     £50,000 no later than twelve months from completion; and

·     £50,000 no later than eighteen months from completion.

In the event that when VCOMM's completion accounts are complete the net assets are less than £84,544 the total consideration receivable by the Company shall be decreased by any such shortfall.

In the year ended 31 January 2012 VCOMM had sales of £2m and profits of £3k. For the six months ended 31 July 2012 it had sales of £1.15m and made a loss of £19k.

As a result of the sale the Company will focus all of its energies and resources on its internet telephony services and its Coms Enterprise division as it continues its pursuit of a critical mass of recurring revenues and sustainable profitability.

The proceeds from the sale will be used for general working capital for the remaining parts of the group and, together with the Subscription proceeds detailed below, be used to explore synergistic acquisition opportunities.

The Subscription

The Company is pleased to announce the subscription by David Breith for 63,420,000 new Ordinary Shares at a price of 0.375p per share raising £237,825. David has considerable experience in the telecoms sector having founded and built the O-Bit Telecom Limited business, which was recently sold to Daisy Group Plc.

Application will be made for the Subscription shares to be admitted to trading on AIM and it is expected that Admission will be effective and that dealings will commence on 31 December 2012.

The Company's enlarged issued ordinary share capital immediately following the Subscription will be  321,138,227 Ordinary Shares. This figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in interest in, the share capital of the Company under the Disclosure and Transparency Rules.

Following the Subscription, David Breith will own 65,220,000 Ordinary Shares representing 20.3% of the total issued share capital of the Company.

Richard Bennett, CEO, commented: "We are delighted to have successfully sold VCOMM which will enable management to focus on our core business growth area of cloud telephony whilst making considerable cost savings through the departure of VCOMM. In addition the Subscription, together with the consideration for VCOMM, greatly strengthens our balance sheet and puts us in a much stronger position moving into the new year."

Further Information

Coms plc

Richard Bennett                                               [phone]

Northland Capital Partners (Nominated Adviser and Joint Broker)

Luke Cairns/William Vandyk                      [phone]

XCAP Securities Plc (Joint Broker)

Jon Belliss                                                           [phone]

Threadneedle Communications (PR)

Graham Herring                                                 [phone]

 

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