Coms (LSE: COMS), a leading provider of telecommunications and infrastructure equipment, issued a trading update this morning, ahead of the company’s annual general meeting.
The company revealed that trading over the last six months was in line with forecasts issued at the beginning of the year. Management believes that the company is on track to meet market expectations for the current financial year.
Still, management remains confident that the majority of these one-off reorganisation costs will be limited to the first half. As a result, according to the company, the second half of the year will see a significant improvement in profitability.
Housekeeping
Coms’ board also revealed today that they were taking action to ensure that the, “technical difficulties” surrounding the release of the company’s annual results earlier this year were not repeated.
Technical difficulties is an interesting way of putting things, as Coms’ results were in fact completely wrong, a fault the company blamed on the auditor. Indeed, Coms had to restate its full-year results, only a few days after the initial release was issued.
Specifically, EBITDA for the period ended 31 January 2014 should have been stated as £827,348, compared to the previously reported £1.5m. Meanwhile, basic earnings per share were upped from the previously reported 0.22p to 0.24p.
To ensure that this mistake does not happen again, Coms’ management is undertaking a “review of the Company’s audit function“. However, it was revealed today that Sue Alexander, Coms’ Finance Director, has assumed some of the responsibility for the mistake and has stepped down with immediate effect.
Management exodus
Unfortunately, Sue Alexander’s exit was not the only departure Coms announced today. Indeed, the company also announced that Chairman Iain Ross has resigned his post with immediate effect.
There’s no denying that this is a worrying development. For Coms to lose two members of its management team in such a short space of time implies that something could be wrong.
With this in mind, it’s key that Coms fills these now vacant management positions as soon as possible, to appease shareholder concerns.
Plenty of support
Nevertheless, Coms’ growth story remains intact and the company revealed today that there have been “further significant increases in revenue compared to the second half and final quarter of last year”.
So, it would appear that Coms is on target to meet City expectations for this year. The City expects the company to reveal full-year revenues of £47m, pre-tax profit of £2.6m and earnings per share of 0.27p, putting the company on a forward P/E of 15.3.
A forward P/E of 15.3 looks cheap considering Coms’ rapid growth. Earnings per share are expected to expand 23% this year.
