Starcom (AIM: STAR) reported an excess of $2m in revenue for the six months ended 30 June 2020 despite the impact of COVID-19 and half-year results below original expectations.
In a half-year report, the Internet-Of-Things (IoT) based solutions specialist reported a 25% revenue decrease over the period to $2.3m from $3.1m in the comparative 2019 period.
The results for the period reflect the impact of COVID-19 on the business, Starcom told investors, with EBITDA showing a loss of $167,000 (H1 2019: profit of $75,000) and gross margins decreasing to 33% predominantly due to higher logistics and shipment costs.
Starcom said it had hoped to comfortably beat 2019's results, ‘based on a strong pipeline of firm and prospective orders that had been built and the launch of the new product, Lokies.’
However, it said positive early momentum was halted due to COVID-19 and consequently due to the nationwide lockdown customers were unable to place orders as expected.
The group took cost reduction measures to ensure that its costs were aligned with the lower level of activity and to maintain a stable cash position. After the period end, it secured an enlarged bank facility, enabling the company to withdraw up to NIS 5m ($1.4m).
Shares in Starcom were trading at 0.975p during Thursday morning trading.
The company highlighted that the facility had granted ‘sufficient headroom and confidence during this difficult period and enabled the Company to come out of it ready for the future.’
Starcom said its main focus for the period has been maintaining customer relationships, with the majority of customer projects being placed on hold as opposed to being cancelled.
Non-Executive Chairman, Michael Rosenberg, said SaaS revenues increased 16% from 2019 which he said was a testament to the company’s strong relationships with its customers.
As at the period end, Starcom held cash and cash equivalents of $0.27m (30 June 2019: $0.41m). It said it remains confident that it is in a stable financial position and well placed to return to growth once restrictions are eased and trading conditions return to normal levels.
"Although these results are below our original expectations, we are pleased to have been able to deliver in excess of $2 million of revenues in a period when the impact of COVID-19 created an unprecedented situation from March onwards, with many of our clients in complete shutdown,” said Avi Hartmann, CEO of Starcom.
“We have managed to stabilise the business by maintaining engagement with customers, ensuring that we are able to support both existing customers, and are prepared to respond to both new opportunities and projects that recommence, as and when business conditions improve."
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