Starcom warns of FY loss, lower revenues amid Watchlock Pro delays

Shares in Starcom dived a third after it warned of a pre-tax loss for full-year 2016, with revenue for the 12-month period coming in broadly flat thanks to Watchlock Pro order delays.

The specialist in developing wireless solutions said pre-tax loss would be about $1.5m, from a loss of $1.76m, after inventory write-downs of $450,000, but before provisions.

"The anticipated loss before tax is before any additional provisions which may be made in respect of receivables," the company cautioned.

In addition, Starcom's directors anticipated the company would shorten the amortisation period in respect of research and development costs to more properly reflect the speed of technology changes, resulting in a higher charge than would otherwise be the case.

Turnover was seen at $5.2m, from $5.1m.

"The growth in revenues from the new Watchlock Pro has been held back due to delays in deliveries by Mul-T-Lok," said Starcom.

An order of $200,000, originally planned for delivery in 2016, would now be shipped and recognised in the 2017 financial year. Starcom had now addressed this problem to ensure it could meet the demand in a timely manner.

The company added that SAS revenues were expected to increase to $1.7m during 2016, compared with $1.6m in 2015.

"This growth was below plan due to one customer, who has so far connected only 1,500 Helios units out of over 10,000 ordered units by that customer. The customer continues to purchase further units and it is hoped more will be connected during this year."

Looking ahead, Starcom expected its results for full-year 2017 would show an improvement on 2016.

At 10:44 GMT, shares in AIM-quoted Starcom were down 33.33% to 2p each.