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Wednesday 07 November 2018

Starcom raises expectations

LogoThis is turning out to be quite a year for Jersey-based telematics specialist Starcom. By the halway point at the end of June, the company was expecting to turn a FY profit for the first time since 2012 on the back of solid revenue growth (see here). A new breakthrough deal in North Africa should now both boost 2018 sales by c. $1m and lift turnover by over 25% towards the $7m mark. The contract also creates a platform for accelerated expansion in 2019.

The distribution agreement covers the supply of the company’s Helios vehicle tracking equipment and services to a government ministry. An NDA prevents the naming of the client at this stage. The total value of the initial order is approximately $1.1m. Starcom will receive payment for the majority of the order immediately prior to delivery. This is expected to be made before the end of 2018. The arrangement also provides for the supply of further equipment with a potential value of up to $2.5m on similar terms during 2019. To ensure that this and other contracts can be fulfilled as planned over the next six months, the company has conditionally raised £400k through the placing of 20 million new Ordinary Shares.

The North African deal promises to deliver a welcome fillip to the company’s top line, which for the last five years has struggled to break out of the $5m - $6m range. The only negative is that the contract will reverse the decreasing dependence on its low margin Helios products that Starcom had been successfully driving in recent times. The company now anticipates that revenues for 2018 will comfortably exceed the current market expectation of $5.9m and that EBITDA remains on track to land in the region of $485k. A further market update will be made soon after year end.

Posted by Duncan Aitchison at '09:09' - Tagged: contract   placing  

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