Coms' losses top £15m in 'exceedingly difficult year'

Chairman admits VAR was not able to realise expected cost savings from the telecom business

A £10m impairment charge relating to the telecoms arm it has since jettisoned dragged Coms to a £15.1m loss for its fiscal year ending 31 Jaunary.

The ugly results cap a tumultuous period for the cabling and comms VAR, with it having parted ways with chief executive David Breith on 1 March. Breith has told the firm he is planning on making an employment claim against it.

His departure followed a management reshuffle which saw head of IT recruitment firm InterQuest, Mark Braund, appointed as the new chief executive, and former Redstone and MXC Capital man Spencer Dredge chosen as the new chief financial officer, earlier this month.

In a letter to shareholders, Frank Beechinor, chairman of the firm, said: "This past year has proved to be an exceedingly difficult year for the group.

"Having seen rapid change through the previous year and into 2014/15, through a number of acquisitions, the expectations for the business were high, however, over the course of the year, and despite several attempts to integrate the telecoms assets which the company had acquired, the management team was not able to secure the necessary anticipated savings."

In order to allay losses of the telecoms operations, which, "continued until the end of May", Coms offloaded the division to comms service provider Timico for £2.5m in May. Then, to gain further capital, the firm managed to raise £1.08m through offering new shares to its shareholders.

Despite these measures, the firm said the hole left by the telecoms operations means it expects to "report an operating loss for the first half of the current financial year".

But the board did add that it expects "trading will improve thereafter".

Beechinor said the firm will focus on its managed services business going forward.

"Following the disposals of the telecoms assets, the group now comprises Redstone's infrastructure business and Darkside Studios. It is the board's intention to focus our efforts on growing our core infrastructure business, Redstone, by developing our leading smart buildings product offering and expanding further our successful managed services business," he said.

For the year ending 31 January, Redstone's profit was £246,000 on revenues of £29.5m, within the Coms group, but it "suffered from the uncertainty created by the poor trading in the telephony services division".

"Reflecting acquisitions and a full year of contribution from Redstone", Coms overall revenues were £46m for the year ending 31 January, up 228 per cent.

"With additional capital injected into the business, the disposal of all of the group's loss-making businesses and the appointment of a new management team, my board colleagues and I are confident that the group is now better placed to embark on a more successful period of stability and growth," Beechinor added.