LONDON (Alliance News) - Shares in Coms PLC plunged Wednesday after it said it will report a "substantial loss" for the financial year that just ended, and as Chief Executive Officer Dave Breith requisitioned a general meeting to consider removing two board members including Non-Executive Chairman Frank Beechinor, and appoint others to the board.
Breith is proposing a meeting to consider the removal of Beechinor and Non-Executive Diana Dyer Bartlett, and the appointment of Neil Taylor and Brendan Loughrey. Although a statement from Coms Wednesday morning said Breith was also suggesting the appointment of former Chairman Iain Ross, it later clarified that this proposal was withdrawn by Breith Tuesday night.
The cloud-based telephony services provider said it expects to report a substantial loss for the financial year ended 31 January 2015 of at least several million pounds, citing lower gross margins in the second half of the year than in the first half after it failed to achieved the level of cost savings from its recent restructuring process than it had hoped for.
Revenue increased further in the second half of the year, and as a result it expects to report full year revenue in line with market expectations, it said.
"The restructuring process referred to in the interim results continued during the second half of the year but the anticipated re-alignment of costs has not been achieved," the company said.
"In light of this very disappointing financial performance, the board is reviewing the company's strategy with the aim of ensuring that improved returns will be delivered across the businesses and to shareholders," it added.
Coms said that it needs to strengthen its executive management team as soon as possible and it is currently in discussions with potential candidates. It also said that Dyer Bartlett has taken on the responsibilities of the finance function, pending the appointment of a finance director.
Previous Finance Director Sue Alexander stepped down last July, and Ross resigned for personal reasons, as the company reviewed its audit function after it was forced to issue corrections to its full-year results for the year to end-January 2014.
Last June the cloud-based telephony company issued a correction to its earnings before interest, tax, depreciation and amortisation figure for the year after consulting with its auditors, reducing it to GBP827,348 from the GBP1.5 million it had originally stated. It didn't give a reason for the restatement.
The company has had a difficult few months. In the wake of the profit restatement in June and the departure of the chairman and CFO in July, Coms put out a trading statement in October that said it was confident of meeting market expectations for the current financial year thanks to new contract wins and the results of its restructuring.
Just weeks later it said its pretax loss widened in the first half of the year due to the restructuring costs and because a recent acquisition, CloudXL, was running at a loss. However, revenue increased significantly due to acquisitions it has made and the new contract wins. It has now issued a profit warning.
Coms is required to convene a general meeting to consider Breith's proposals by March 13, and said it will issue a further announcement detailing the background of the requisition and the board's response in "due course."
In another twist, the company also said Wednesday that its board was notified a week ago that Breith had bought 20,000 shares in the company last July. It said it has sought clarification on the details of the dealing, including why no prior permission to deal was sought from the board, and said no clarification has been forthcoming to date.
Breith was not immediately available for comment.
Coms shares are trading down 57% at 0.990 pence Wednesday afternoon.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty; additional reporting by Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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