Starcom shares drop by a fifth after increased loss in 2016

AIM listed wireless solutions company Starcom (LON:STAR) saw shares fall over 20 percent on Wednesday, after full year results saw losses increase to $2.01 million.

Despite planning to increase revenue growth over the course of 2016, Starcom disclosed revenues of $5.13 million for the full year, around equal to the previous year. Gross margin for the year was 28 per cent, down from 40 per cent in 2015.

The net loss for the year after tax but before the adjustments referred to below was $1.36 million, a decrease on 2015’s figure of $1.76 million.

Chairman Michael Rosenberg said the company’s plan to achieve revenue growth in 2016 through a stronger second half was held back for two main reasons:

“Delays experienced in the delivery by a supplier of key product components required for the Watchlock and, secondly, growth in the recurring SAS (Software-as-a-Service) revenues being below expectations as a result of one large client being slow in connecting many of the units it had purchased (and continues to purchase) to our central monitoring system.”

However, he added: “We do believe that this customer will gradually accelerate the connection of units during 2017.”

Progress in North America was also slow, “despite much interest in our products.”

“In the US, it is encouraging to have the approval and support of Amerijet for our Kylos Air system which we anticipate should lead to other airlines also supporting the product by referring their clients to it. Discussions continue with regard to these opportunities”, Rosenberg said.

Shares also fell this month after the company disclosed a number of order delays, losing around a third of their value after the group said it expects to write down the value of its inventory by $450,000 in its full-year results.

Shares in Starcom are currently down 21.89 percent to 1.66 (1012GMT).