LONDON (Alliance News) - Starcom PLC said Wednesday it saw pretax profit drop in 2013, despite posting a rise in revenue, as it was hit by the crisis in Ukraine and exchange-rate losses.
The wireless tracking and monitoring products company posted a pretax profit of USD794,000 in 2013, down from USD1.7 million in 2012. Revenue rose to USD9.0 million from USD8.1 million but was offset by one-off costs of USD585,000 and exchange rate losses of USD439,000.
One-off costs included a settlement with Keren Hagshama Ltd, relating to the early repayment of loans, and options granted at the time of the company's initial public offering on AIM in February 2013.
Although revenue was ahead of 2012, the conflict in Ukraine led to a customer being unable to honour a contract, which meant that revenue was USD1 million lower than it would have been.
Starcom improved its gross margins to 56% from 52% in the previous year.
Revenue in the company's vehicle tracking system Helios dropped 34% as the company chose to cease trading with a South American distributor, due to concerns about the customer's financial viability.
Revenues from its high-security padlock Watchlok rose to USD16.6 million from USD5.9 million, as it sold a higher proportion of the product directly rather than through a joint venture partner. The product was launched in the UK in February, with a launch in the US to follow later in 2014. However, a purchase order of 4,000 units was hit by the events in the Ukraine, leading Starcom to cancel the order.
Starcom raised USD2 million in February 2014 through the placing of 13.3 million shares at 15 pence, which it is confident will enable it to grow and increase its levels of support staff
Starcom said it expects further growth in 2014, supported by its larger range of products and stronger relations with distribution and sales partners.
It is focused on replacing lost sales revenue in Ukraine, either via a new customer relationship or a "hopeful return to stability in that country".
As in 2013, the company expects to be second-half weighted in 2014.
Shares in Starcom were trading down 9.7% at 16.25 pence Wednesday morning.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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