Touchstar warns of revenue below expectations, marginal profits

(Sharecast News) - Touchstar said in an update on Tuesday that it expected full-year revenue to fall below market expectations and profits to be marginal in 2025, as economic softness continued to weigh on customer ordering and the group absorbed restructuring and accounting-related charges. The AIM-traded software and systems provider said revenue for the year ending 31 December was expected to be around £6.7m, with only a small pre-tax trading profit.

Trading was affected by customer hesitancy and difficulty forecasting short-term sales, while results were also impacted by non-trading costs linked to a senior management restructuring and a change in the accounting treatment of software development expenditure from 1 December.

The company said it would take two exceptional charges in the year, including around £0.2m relating to the reorganisation of the senior management team.

It said it would also recognise an impairment charge of £1.25m for software developed prior to December, reflecting a shift in development practices and strategy.

Under the revised accounting policy, future software development costs would be expensed as incurred rather than capitalised and amortised.

Despite the lower profitability, Touchstar said its balance sheet remained healthy and year-end cash was expected to be above £2m.

Chief executive Lynden Jones said the group had completed a comprehensive restructuring under a new leadership team to strengthen the foundations of the business and support sustainable growth.

"Since my appointment I have undertaken a review of the business and have started to implement measures to help build Touchstar into a better and more substantial company over the medium term," he said.

Jones said the near-term outlook remained challenging, with the company budgeting for a weak economic environment to persist through 2026 and expecting only modest revenue growth next year.

He added that the group anticipated an acceleration in growth over the following 12 months, with a more pronounced improvement expected in 2027 and further momentum into 2028, as the repositioned business targets wider depot, warehouse and retail markets.

He said the transformation of the company had been "radical, effective and has given the business new energy and purpose," adding that the restructuring had been completed by year end and that Touchstar now had a clear strategic direction for the years ahead.

At 1240 GMT, shares in Touchstar were down 19.46% at 60p.

Reporting by Josh White for Sharecast.com.