31st Jul 2007 15:46
Coms PLC31 July 2007 Coms plc Coms plc ('Coms' or 'the Group') Audited results for the year ended 31 January 2007 -------------------------------------------------- Business Highlights------------------- -- September 2006 Admission to AIM -- October 2006 Launched Consumer Internet Telephony Service (COMS.COM) -- December 2006 Acquisition of ExchangeXT Limited Acquisition of Superline Limited -- February 2007 £685,000 placing -- March 2007 Acquisition of VCOMM (UK) Limited Retail Distribution through John Lewis Partnership -- June 2007 Launched Business Internet Telephony Service (COMS.NET) Jason Drummond, Executive Chairman, said: "I am pleased to announce Coms plc'sresults that show that we have made significant progress since our recentadmission to AIM." Enquiries:Coms plc Richard BennettCorporate Development Director+44 (0)20 7148 3148 Holborn PR Trevor Phillips+44 (0)20 7929 5599 HB Corporate Rod Venables+44 (0)20 7510 8618 CHAIRMAN'S STATEMENT-------------------- Overview Our business has progressed significantly since listing, the benefits of whichare not reflected in this financial period. Coms plc ("Coms") was admitted to the AIM Market via a reverse takeover inSeptember 2006 with the stated aim of launching an internet telephony business(selling VoIP or Voice over Internet Protocol products and services) and growingthrough organic growth and acquisition. At the time of admission we adopted theyear-end of the original company, Azman plc, and so these financial statements,our first as Coms plc, contains only 4 months of operating data. In the four months between admission to AIM and this financial year-end of 31January 2007, Coms launched a high-quality business-grade internet telephonyservice and commenced our customer acquisition program. In addition, Coms hasacquired and integrated the businesses, ExchangeXT Limited and SuperlineLimited. These acquisitions have added further revenues, customers and enhancedour technology and telephony platforms. From a standing start, Coms generated a turnover of £106,380 and a gross profitof £27,046 all of which was in the last 2 months of the financial year. Themajority of our revenues are recurring subscription, call and service revenue,and I am confident that we will achieve significant growth in the future bothorganically and through further acquisition of competitors. In February 2007 we completed a share placing of £685,000 to fund theintegration of our completed acquisitions, ExchangeXT Limited and SuperlineLimited. We subsequently acquired the leading specialist VoIP equipmentdistributor, VCOMM UK Limited and established reseller channels including ourrecent retail deal with John Lewis Partnership. The new combined Coms businesshas a comprehensive product and service offering combined with best-in-classcall quality and we are very confident about our prospects for the financialyear ending 31 January 2008, which will be our first full year of trading. Disruptive Technology Much confusion has recently arisen in the internet telephony sector withincidents such as the patent dispute between Vonage and Verizon. Whilst we areencouraged that this dispute is likely to be settled shortly and that leadingforecasters continue to predict high growth for this sector, we anticipate thatthere will be further confusion because the growth of low-cost internettelephony will continue to disrupt and take over the markets of traditionalfixed and mobile phone operators. Coms is vigilant to these risks and remainscommitted to using the industry SIP standard (Session Initiation Protocol) whichboth ensures that the services provided by Coms are compatible with handsetssupplied from leading manufactures as well as insulating Coms from similardisputes. Future Prospects The internet telephony industry continues to be driven by the plethoramainstream manufacturers such as Cisco and Nokia that are introducing GSM/3G/WiFi dual mode mobile, home and business VoIP handsets and IP-PBXs. Coms is wellpositioned to provide the internet telephony service to these handsets anddevices. Coms will continue to pursue an aggressive customer acquisition and top linegrowth strategy; the Company is organised around servicing three principalmarkets: internet telephony for individuals, internet telephony for business andsupplying internet telephony equipment and services through resellers anddistribution channels. This positioning allows Coms to gain immediate revenuesas customers upgrade their PBXs and handsets to VoIP compatible models, andlong-term recurring income from carrying telephone calls across the Internet. Our focus will continue to be to grow the Company via organic growth and byacquisition. Our goal is for our registered trademarked "Coms" brand to becomethe internet telephony service of choice for consumers and businesses in Europe.Our ambition is to substantially exceed current expectations and becomeprofitable during this current financial year. Jason Drummond Executive Chairman CONSOLIDATED INCOME STATEMENTFOR THE YEAR ENDED 31 JANUARY 2007 Year ended Year ended 31 January 31 January 2007 2006 £ £ Revenue 106,380 - Cost of Sales (79,334) - Gross Profit 27,046 - Administrative expenses - Exceptional loss on intangibles written off (125,887) - - Other administrative expenses (573,703) (67,773) Loss from operations (672,544) (67,773)Finance costs (1,594) -Investment income 9,807 -Loss on ordinary activities before tax (664,331) (67,773)Tax - -Loss for the period attributable to Shareholders (664,331) (67,773) LOSS PER SHARE Year ended Year ended 31 January 31 January 2007 2006 £ £Loss per share from continuing operationsBasic 0.17p 0.03pDiluted 0.17p 0.03p CONSOLIDATED BALANCE SHEET AS AT 31 JANUARY 2007 Year ended Year ended 31 January 31 January 2007 2006ASSETS Non-current assetsGoodwill 1,949,734 -Other intangible assets 10,162 50,832Property, plant and equipment 22,266 - 1,982,162 50,832 Current assetsInventories 4,635 12,314Trade and other receivables 94,649 5,086Cash and cash equivalents 178,522 167 277,806 17,567 Total assets 2,259,968 68,399 Current liabilitiesTrade and other payables (317,632) (97,879)Total liabilities (317,632) (97.879) Net current (liabilities) (39,826) (80,312) Net assets /(liabilities) 1,942,336 (29,480) EQUITYShare Capital 2,686,147 50,000Accumulated deficit (743,811) (79,480)Equity attributable to equity holders of the ParentCompany 1,942,336 (29,480) CONSOLIDATED CASH FLOW INFORMATION SUMMARY CASH FLOW STATEMENT Year ended Year ended 31 January 31 January 2007 2006OPERATING ACTIVITIESOperating loss (672,544) (67,773)Share based payments 29,850 -Write off of intangibles 125,887 13,57Depreciation and Amortisation 28,860 -Decrease / (increase) in inventories 7,679 (12,314)Decrease / (increase) in receivables (11,085) 2,832(Decrease) / Increase in payables 26,808 35,409NET CASH OUTFLOW FROM OPERATING ACTIVITIES (464,545) (28,273)INVESTING ACTIVITIESInterest paid (1,594) -Interest received 9,807 -Purchases of Intangibles (110,129) (28,405)Purchases of property, plant and equipment (7,128) -Acquisition of ExchangeXT Limited (486,504) -NET CASH USED IN INVESTING ACTIVITIES (595,548 (28,405) FINANCING ACTIVITIESProceeds from issue of share capital 916,697 49,999NET CASH FROM FINANCING ACTIVITIES 916,697 49,999NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (143,396) (6,679)Bank overdraft at end of year - 6,846CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 321,918 -CASH AND CASH EQUIVALENTS AT END OF YEAR 178,522 167 NOTES TO THIS ANNOUNCMENT 1) GENERAL INFORMATION Coms plc is a company incorporated in the United Kingdom under the Companies Act1985. The address of the registered office is: Finsgate, 5-7 Cranwood Street,London EC1V 9EE. These financial statements are presented in pounds sterling because that is thecurrency of the primary economic environment in which the Group operates. Thereare no foreign operations in the Group. 2) SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The financial statements have been prepared in accordance with InternationalFinancial Reporting Standards (IFRSs) for the first time. The financial statements have been prepared on the historical cost basis. Theprincipal accounting policies adopted are set out below. Basis of Consolidation The consolidated financial statements incorporate the financial statements ofthe Company and entities controlled by the Company (its subsidiaries) made up to31st January each year. Control is achieved where the Company has the power togovern the financial and operating policies of an investee entity so as toobtain benefits from its activities. On acquisition, the assets and liabilities and contingent liabilities of asubsidiary are measured at their fair values at the date of acquisition. Anyexcess of the cost of acquisition over the fair values of the identifiable netassets acquired is recognised as goodwill. Any deficiency of the cost ofacquisition below the fair values of the identifiable net assets acquired (i.e.discount on acquisition) is credited to profit and loss in the period ofacquisition. The interest of minority shareholders is stated at the minority'sproportion of the fair values of the assets and liabilities recognised.Subsequently, any losses applicable to the minority interest in excess of theminority interest are allocated against the interests of the parent. All intra-group transactions, balances, income and expenses are eliminated onconsolidation. On 5 September 2006 the shareholders approved the business combination of theCompany and Coms.Com Limited, under the AIM rules and IFRS this transactionmeets the criteria of a Reverse Takeover. The consolidated accounts havetherefore been presented under the Reverse Accounting principles of IFRS 3 andshow comparatives for Coms.Com Limited. The consolidated financial statements prepared following the reverse are issuedin the name of Coms plc, but they are a continuance of the financial statementsof Coms.Com Limited. Therefore the assets and liabilities of Coms.Com Limitedhave been recognised and measured in these consolidated financial statements attheir pre-combination carrying values. The retained earnings and other equitybalances recognised in these consolidated financial statements are the retainedearnings and other equity balances of Coms.Com Limited immediately before thebusiness combination. The amount recognised as issued equity instruments in these consolidatedfinancial statements has been determined by adding the issued equity of Coms.ComLimited immediately before the business combination to the cost of theconsideration. However, the equity structure appearing in these consolidatedfinancial statements (the number and type of equity instruments issued) reflectthe equity structure of Coms plc, including equity instruments issued by theCompany to effect the consolidation. Where necessary, adjustments are made to the financial statements ofsubsidiaries to bring the accounting policies used into line with those used bythe Group. Goodwill Goodwill arising on consolidation represents the excess of the cost ofacquisition over the Group's interest in the fair value of the identifiableassets and liabilities of a subsidiary, associate or jointly controlled entityat the date of acquisition. Goodwill is recognised as an asset and reviewed for impairment at leastannually. Any impairment is recognised immediately in profit or loss and is notsubsequently reversed. Revenue Recognition Revenue is measured at the fair value of the consideration received orreceivable and represents amounts receivable for goods and services provided inthe normal course of business, net of discounts, VAT and other sales relatedtaxes. Sales of goods are recognised when goods are delivered and title has passed.Sales of services are recognised when the service has been performed andinvoiced. Interest income is accrued on a time basis, by reference to the principaloutstanding and at the effective interest rate applicable, which is the ratethat exactly discounts estimated future cash receipts through the expected lifeof the financial asset to that asset's net carrying amount. Loss from Operations Loss from operations is stated before investment income and finance costs. Taxation The tax expense represents the sum of the tax currently payable and deferredtax. The tax currently payable is based on taxable profit for the year. Taxableprofit differs from net profit as reported in the income statement because itexcludes items of income or expense that are taxable or deductible in otheryears and it further excludes items that are never taxable or deductible. TheGroup's liability for current tax is calculated using tax rates that have beenenacted or substantively enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differencesbetween the carrying amounts of assets and liabilities in the financialstatements and the corresponding tax bases used in the computation of taxableprofit, and is accounted for using the balance sheet liability method. Deferredtax liabilities are generally recognised for all taxable temporary differencesand deferred tax assets are recognised to the extent that it is probable thattaxable profits will be available against which deductible temporary differencescan be utilised. Such assets and liabilities are not recognised if the temporarydifference arises from goodwill or from the initial recognition (other than in abusiness combination) of other assets and liabilities in a transaction thataffects neither the tax profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differencesarising on investments in subsidiaries and associates, and interests in jointventures, except where the Group is able to control the reversal of thetemporary difference and it is probable that the temporary difference will notreverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each balance sheetdate and reduced to the extent that it is no longer probable that sufficienttaxable profits will be available to allow all or part of the asset to berecovered. Deferred tax is calculated at the tax rates that are expected to apply in theperiod when the liability is settled or the asset is realised. Deferred tax ischarged or credited in the income statement, except when it relates to itemscharged or credited directly to equity, in which case the deferred tax is alsodealt with in equity. Internally-generated Intangible Assets -Research and Development Expenditure Expenditure on research activities is recognised as an expense in the period inwhich it is incurred. An internally-generated intangible asset arising from the development of Group'sVOIP system, the Company's core technology, is recognised only if all of thefollowing conditions are met: an asset is created that can be identified (suchas software and new processes); it is probable that the asset created willgenerate future economic benefits; and the development cost of the asset can bemeasured reliably. Internally-generated intangible assets are amortised on a straight-line basisover their useful lives. Where no internally-generated intangible asset can berecognised, development expenditure is recognised as an expense in the period inwhich it is incurred. Impairment of tangible and intangible assets excluding goodwill At each balance sheet date, the Group reviews the carrying amounts of itstangible and intangible assets to determine whether there is any indication thatthose assets have suffered an impairment loss. If any such indication exists,the recoverable amount of the asset is estimated in order to determine theextent of the impairment loss (if any). Where the asset does not generate cashflows that are independent from other assets, the Group estimates therecoverable amount of the cash-generating unit to which the asset belongs. Anintangible asset with an indefinite useful life is tested for impairmentannually and whenever there is an indication that the asset may be impaired. Recoverable amount is the higher of fair value less costs to sell and value inuse. In assessing value in use, the estimated future cash flows are discountedto their present value using a pre-tax discount rate that reflects currentmarket assessments of the time value of money and the risks specific to theasset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated tobe less than its carrying amount, the carrying amount of the asset(cash-generating unit) is reduced to its recoverable amount. An impairment lossis recognised as an expense immediately, unless the relevant asset is carried ata re-valued amount, in which case the impairment loss is treated as arevaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset(cash-generating unit) is increased to the revised estimate of its recoverableamount, but so that the increased carrying amount does not exceed the carryingamount that would have been determined had no impairment loss been recognisedfor the asset (cash-generating unit) in prior years. A reversal of an impairmentloss is recognised as income immediately, unless the relevant asset is carriedat a revalued amount, in which case the reversal of the impairment loss istreated as a revaluation increase. Inventories Inventories are stated at the lower of cost and net realisable value. Costcomprises direct materials and, where applicable, direct labour costs and thoseoverheads that have been incurred in bringing the inventories to their presentlocation and condition. Cost is calculated using the weighted average method.Net realisable value represents the estimated selling price less all estimatedcosts of completion and costs to be incurred in marketing, selling anddistribution. Financial Instruments Financial assets and financial liabilities are recognised on the Group's balancesheet when the Group becomes a party to the contractual provisions of theinstrument. Trade receivables Trade receivables do not carry any interest and are stated at their nominalvalue as reduced by appropriate allowances for estimated irrecoverable amounts. Trade payables Trade payables are not interest bearing and are stated at their nominal value. Equity instruments Equity instruments issued by the Company are recorded at the proceeds received,net of direct issue costs. Share-based payments The Group has applied the requirements of IFRS 2 Share-based Payments. Inaccordance with the transitional provisions, IFRS 2 has been applied to allgrants of equity instruments that were unvested as of 31 January 2007. The Group issues equity-settled and cash-settled share-based payments to certainemployees. Equity-settled share-based payments are measured at fair value at thedate of grant. The fair value determined at the grant date of the equity-settledshare-based payments is expensed on a straight-line basis over the vestingperiod, based on the Group's estimate of shares that will eventually vest. Fair value is measured by use of a binomial model. The expected life used in themodel has been adjusted, based on management's best estimate, for the effects ofnon-transferability, exercise restrictions, and behavioural considerations. A liability equal to the portion of the goods or services received is recognisedat the current fair value determined at each balance sheet date for cash-settledshare-based payments. 3) LOSS PER SHARE Loss per share data is based on the consolidated loss using reverse accountingprincipals and the weighted average number of shares in issue of the ParentCompany. The calculation of the basic and diluted loss per share is based on thefollowing data: Year ended Year ended 31 January 31 January 2007 2006 £ £Loss for the purposes of basic and diluted loss pershare being net loss attributable to equity holdersof the parent 664,331 67,773 Number of shares Year ended Year ended 31 January 31 January 2007 2006 £ £Weighted average number of ordinary shares for thepurposes of basic earnings per share 394,284,174 116,075,549Weighted average number of ordinary shares for thepurposes of diluted earnings per share 409,559,517 113,166,458 The share options are anti-dilutive as they decrease the loss per share. The denominators for the purposes of calculating both basic and diluted earningsper share have been adjusted to reflect the issue of shares in September 2006associated with the acquisition of Coms.Com Limited. 4) OTHER EQUITY MOVEMENTS £Balance at 1 February 2006 50,000Share options granted 29,850Other share issues in the year net of issue costs 916,697Value of Reverse Acquisition 1,689,600Balance at 31 January 2007 2,686,147 5) ACCUMULATED DEFICIT £Balance at 1 February 2006 (79,480)Net loss for the year (664,331)Balance at 31 January 2007 (743,811) 6) REVERSE ACQUISITION OF PARENT On 5 September 2006, control of the Company was acquired by a reverseacquisition by Coms Limited the total cost of the business combination was£1,689,600. Coms Limited is involved in the development and commercialisation ofinternet telephony services. This transaction has been accounted for by thereverse acquisition method of accounting. Book Fair value Fair value Adjustment value £ £ £Net assets acquiredTrade and other receivables 9,022 - 9,022Cash and cash equivalents 351,617 - 351,617Trade and other payables (21,595) - (21,595)Goodwill 1,350,556 - 1,350,556Total cost of business 1,689,600 - 1,689,600Combination 7) SUMMARY OF ACCOUNTS The financial information set out above does not constitute the Group's statutory accounts for the years 31 January 2007 or 31 January 2007, but isderived from those accounts. Statutory accounts have been delivered to theRegistrar of Companies in England and Wales, and those for 2007 will be delivered shortly. The auditors have reported on the 2007 accounts: their reportwas unqualified and did not contain statements under section 237(2) or (3) ofthe Companies Act 1985. 8) ANNUAL REPORT The Report and Accounts have been posted to shareholders and are available from:Finsgate, 5-7 Cranwood Street, London, EC1V 9EE. END This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
SMRT.L