SMRT.L Regulatory News (SMRT)

2 September 2013

 COMS PLC

("Coms", or "the Group")

Interim Results for the six months to 31 July 2013

Coms plc, a provider of internet telephony services to business customers, announces unaudited Interim Results for the six months ended 31 July 2013. Where appropriate the results have been presented in a format excluding the discontinued VComm business in order to provide a like-for-like comparison and full transparency.

Period Highlights

· Revenue growth in the core business division of Cloud Telephony up by 161% to £1.846m (H1 2012: £0.708m) resulting in the core business becoming profitable

· Total Revenue up by 249% to £2.476m (H1 2012: £0.708m)

· c.96% of Total Revenues are recurring

· Gross Profits up by 124% to £1.026m (H1 2012: £0.457m)

· Gross Margins up to 41.5% from 33.3%

· Overall Loss for the period £119,000 (H1 2012: £337,000)

· Net Cash balance £1.026m (H1 2012: £0.1m)

David Breith, CEO of Coms, said:

"My first six months in this business have been a real challenge, but rewarding, and this has been a classic business turnaround. I have had to make tough decisions and rely upon key people. I am, however, pleased and proud to report on our tremendous progress to date and I am really looking forward to more of the same during H2."

A copy of these interims together with further information on the Company is available on the Company's website: www.coms.com.

Coms plc +44 (0) 207 148 3000

David Breith (CEO)

Iain Ross (Chairman)

Charles Stanley Securities +44 (0)207 149 6000

(Nominated Adviser and Joint Broker)

Karri Vuori / Philip Davies

SI Capital Limited +44 (0) 1483 413 500

(Joint Broker)

Andy Thacker / Nick Emerson

Newgate Threadneedle +44 (0) 207 653 9858

(PR)

Robyn McConnachie / Graham Herring CEO's Statement

The results for the first half of the financial year confirm that under new leadership Coms plc has made significant progress. In the second half of the year we intend to continue the transformation of the Company toward a profitable, growing and sustainable business.

Upon my appointment in early January 2013, I established a discipline and ethos, which was orientated towards making the Company achieve break-even within the first month. This necessitated making tough decisions in terms of organisation and staff in order that the business was 'fit for purpose'. 

As a result a new customer focused strategy was implemented and we immediately set about broadening the "Coms offering" as emphasised by the significant contract wins made during the period and our active and aggressive M&A strategy. Most significantly, the Company signed a contract to sell broadband and lines to MITIE Property Services Limited worth approximately £15m over two years of recurring revenue. The deal represents the largest contract win to date. In addition and as announced throughout the period we have acquired a number of bolt-on businesses, which have not only allowed us to significantly broaden our business offering, but also to refresh our technology base and IT systems that underpin our overall infrastructure. Overall, I am pleased to announce that this strategy was implemented effectively, which positions us well to deliver sustained future growth.

The financial results achieved for the first half-year demonstrate that the new strategy is working in that our revenue has grown (+249%), our gross margins have been significantly increased to 41.5% and that the overall cost base remains under tight control.

The revenue base is growing month-on-month and on the basis of our last billing month our annualised turnover would be c.£10m of which c.96% is recurring. Further strategic growth activity is planned including M&A, which remains a key plank of our strategy to accelerate the growth of this business.

During the period we have considerably strengthened our Board & Management with the appointments of Iain Ross as Chairman, Stephen Foster as Group Sales Director, Sue Alexander as Finance Director and Tim Loveday as Wholesale Sales Director.

In the second half of the year we plan to recruit further high calibre skills and resources to support the growth of the Company. We anticipate signing further large contracts to support accelerated organic growth through our improved supply chain, thereby generating increasing and recurring revenues.

Continued implementation of our growth strategy will necessitate increased investment in terms of further strengthening the Board and Management, building our sales capability and delivering "digital inclusion" through our Coms Enterprise division.

Through further issues of equity since the period end, the Company is now well capitalised to deliver on its ambitious growth plan with cash balances at the end of August of c.£2.8m.

In the first six months we have established a firm platform upon which we can build a very exciting business and I am extremely happy and proud to be part of a growing and prosperous business. I would like to thank the Board, the management and staff for their efforts and the shareholders for their continuing support.

Dave Breith

CEO

Consolidated Statement of Comprehensive Income

For the Six months ended 31 July 2013

There were no recognised gains or losses other than those recognised in the income statement above.

Consolidated Statement of Financial Position as at 31 July 2013

Consolidated Statement of Cash Flows

For the Six months ended 31 July 2013

Consolidated Statement of Changes in Equity

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 2013 and expected to be used for the year ended 31 January 2014.

This interim report for the six months to 31 July 2013 which complies with IAS 34 'Interim Financial Reporting' was approved by the Board on 30 August 2013.

2. Significant Accounting Policies

The accounting policies and methods of computation applied are consistent with those of the annual financial statements for the year ended 31 January 2013, as described in those annual financial statements.

Changes in accounting policies and disclosures

The Group has adopted the following new and amended IFRS and IFRIC interpretations as of 1 February 2012:

· IFRS7 (amendment) "Financial Instruments: Disclosures" - additional disclosures re transfers of financial assets, effective for reporting periods beginning after 1 July 2011.

The impact of adopting the above amendments had no material impact on the financial statements of the Group.

Standards, interpretations and amendments to published standards that are not yet effective

The following standards, amendments and interpretations applicable to the Group are in issue but are not yet effective and have not been early adopted in these financial statements. They may result in consequential changes to the accounting policies and other note disclosures. We do not expect the impact of such changes on the financial statements to be material. These are outlined in the table below:

The Directors anticipate that the adoption of these standards and the interpretations in future periods will have no material impact on the financial statements of the Group.

COMS PLC

Notes to the Interim Financial Information

3. Segmental Analysis

In the opinion of the directors the Group's core activities comprise five material business segments which reflect the profiles of the risks, rewards and internal reporting structures within the Group. These are as follows:

- Provision of VOIP telephony

- Provision of PSTN services

- Provision of DATA 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.

Notes to the Interim Financial Information

3. Segmental Analysis (continued)

Assets

Liabilities

Notes to the Interim Financial Information

3. Segmental Analysis (continued)

Capital additions

Depreciation and amortisation

4. Loss per Share

The loss per ordinary share is based on the Group's loss for the period of £118,645 (31 July 2013 - £327,617; 31 January 2013 - £1,227,519) and a basic weighted average number of shares of 414,635,793 (31 July 2012 - 207,872,463; 31 January 2013 - 235,711,094).

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 2013, 2012 and 31 January 2013 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 2013 was 62,557,222 (31 July 2012 - 13,597,392; 31 January 2013 - 19,363,591)

Notes to the Interim Financial Information

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

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

Directors' transactions

The director's fees payable to J K Drummond shown above were paid to My6 Limited, a company of which J K Drummond is a director. The director's fees payable to I Ross shown above were paid to Gladstone Consultancy Partnership, a company of which I Ross is a director. The director's fees payable to S Foster (NED) shown above were paid to Iridian Consulting Services Partnership, a company of which S Foster is a director.

I Ross - £10,000 (31 July 2012: £Nil;)

S Foster - £2,750 (31 July 2012: £Nil;)

During the period there were no sales and purchases made with the Media Corp plc, a group, a company in which J K Drummond and J P Drummond are directors as follows:

At the period end, there was no balance payable by the Group (31 July 2012: £4,029)

During the year purchases of goods and services were made from companies in which D Breith is a director as follows:

Notes to the Interim Financial Information

6. Related-party transactions (continued)

 At the end of the period, a balance of £455 to Blabbermouth and £483 to Vitrix, was payable by the Group (31 January 2013; £3,708 due to Vitrix)

7. Called up Share Capital

The issued share capital as at 31 July 2013 was 538,640,571 Ordinary Shares of 0.1p each (31 July 2012 - 229,384,894 of 1p each; 31 January 2013 321,138,227 of 0.1p each).

8. Events subsequent to 31 July 2013

On the 13th August a warrant was exercised of 47,085,181 ordinary shares at 3.7 pence per share. The additional cash that was received into the Company's bank account means that the company is now holding just over £2.8m in cash.

On the 28th August 2013 the company advised that it has appointed Charles Stanley as its Nominated Advisor and joint Broker.

9. The unaudited results for period ended 31 July 2013 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 2013 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