Interim Results

For further information please contact:

Starcom plc

Northland Capital

(Nomad)

Northland Capital

(Broking)

Leander (Financial PR)

Michael Rosenberg

Avi Hartmann

Eitan Yanuv

Edward Hutton

Lauren Kettle

John Howes

Alice Lane

Christian Taylor-Wilkinson

Tel: 07785 727595

+972 543070103

+972 36199901

Tel: 020 7382 1100

Tel: 020 7382 1100

Tel: 07795 168 157

Six Months Ended June 30

Year Ended December 31

Note

2014

2013

2013

Unaudited

Unaudited

Audited

Revenues

2,919

3,498

9,016

Cost of sales

(1,408)

(1,513)

(3,952)

Gross profit

1,511

1,985

5,064

Operating expenses:

Research and development, net

(108)

(70)

(152)

Selling and marketing

(396)

(268)

(758)

General and administrative

(1,678)

(1,038)

(2,348)

(2,182)

(1,376)

(3,258)

Operating profit (loss)

(671)

609

1,806

Finance income

-

1

2

Finance expenses

7

(70)

(699)

(1,014)

Net finance costs

(70)

(698)

(1,012)

Profit (loss) before deferred income tax

(741)

(89)

794

Deferred income tax credit/(expense)

184

-

(94)

 Total comprehensive income (loss) for the period

(557)

(89)

700

Attributable to:

Owners of the company

(557)

(86)

703

Non-controlling interest

-

(3)

(3)

Comprehensive income (loss)

(557)

(89)

700

 Earnings per share:

Basic and diluted earnings (loss) per share (in dollars)

5

(0.01)

(0.00)

0.01

 June 30

December 31

Note

2014

2013

2013

Unaudited

Unaudited

Audited

ASSETS

NON-CURRENT ASSETS:

Property, plant and equipment, net

413

296

270

Intangible assets

4

2,193

1,721

2,003

Repurchase option

-

89

-

Long-term bank deposit

-

99

-

Income Tax Authorities

-

42

-

Total Non-Current Assets

2,606

2,247

2,273

CURRENT ASSETS:

Inventories

1,985

1,946

2,146

Trade receivables

6,835

4,798

6,196

Other receivables

417

384

403

Income Tax Authorities

50

-

50

Short-term deposit

110

10

136

Cash and cash equivalents

107

25

49

Total Current Assets

9,504

7,163

8,980

TOTAL ASSETS

12,110

9,410

11,253

LIABILITIES AND EQUITY

EQUITY

Equity attributable to owners of the company

9,120

5,635

6,491

Total Equity

9,120

5,635

6,491

NON-CURRENT LIABILITIES:

Long-term loans from banks

930

424

533

Deferred tax liability

26

128

210

Total Non-current Liabilities

956

552

743

CURRENT LIABILITIES:

Short-term bank credit

129

82

111

Short-term loans and current maturities from banks

271

330

354

Trade payables

1,211

2,433

3,146

Shareholders

6

182

171

159

Other payables

241

207

249

Total Current Liabilities

2,034

3,223

4,019

TOTAL LIABILITIES AND EQUITY

12,110

9,410

11,253

Share

Capital *

Premium on Shares

Capital Reserve

Capital Reserve for Share-based payment

Accumulated Earnings

Total

Non- Controlling interest

Total

(Unaudited)

Balance- January 1, 2014

-

3,121

89

309

2,972

6,491

-

6,491

Proceeds from issued share capital, net of mobilization costs - see Note 3a

-

3,119

-

-

-

3,119

-

3,119

Share based payment -see Note 3b

-

-

-

67

-

67

-

67

Comprehensive loss for the period

-

-

-

-

(557)

(557)

-

(557)

Balance- June 30, 2014

-

6,240

89

376

2,415

9,120

-

9,120

(Unaudited)

Balance- January 1, 2013

-

28

447

-

2,269

2,744

(6)

2,738

Proceeds from issued share capital, net of mobilization costs - see Note 3a

-

2,939

-

-

-

2,939

-

2,939

Exchange of Keren Hagshama shares -see Note 3c

-

349

(358)

-

-

(9)

9

-

Share based payment -see note 3b

-

(195)

-

242

-

47

-

47

Comprehensive loss for the period

-

-

-

-

(86)

(86)

(3)

(89)

Balance- June 30, 2013

-

3,121

89

242

2,183

5,635

-

5,635

(Audited)

Balance- January 1, 2013

-

28

447

-

2,269

2,744

(6)

2,738

Proceeds from issued share capital, net of mobilization costs - see Note 3a

-

2,939

-

-

-

2,939

-

2,939

Exchange of Keren Hagshama shares -see Note 3c

-

349

(358)

-

-

(9)

9

-

Share based payment -see Note 3b

-

(195)

-

309

-

114

-

114

Comprehensive income for the year

-

-

-

-

703

703

(3)

700

Balance- December 31, 2013

-

3,121

89

309

2,972

6,491

-

6,491

Six Months Ended

June 30

Year Ended December 31

2014

2013

2013

CASH FLOWS FROM OPERATING ACTIVITIES:

Unaudited

Unaudited

Audited

Comprehensive income (loss)

(557)

(89)

700

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Depreciation and amortization

134

108

234

Interest expense (income) and linkage differences

(18)

237

289

Equity settled option-based payment expense

67

47

114

Deferred income tax expense

(184)

12

78

Expiration of repurchase option

-

-

89

Capital loss

20

-

3

Changes in assets and liabilities:

Decrease (Increase) in inventories

161

 (710)

 (910)

Increase in trade receivables

(639)

(1,037)

(2,442)

Decrease (Increase) in other receivables

(15)

181

152

Increase in Income Tax Authorities

-

(8)

 (12)

Increase in deferred issuance costs

-

(75)

 (72)

Increase (Decrease) in trade payables

(1,934)

(507)

193

Increase in other payables

(7)

45

80

Net cash used in operating activities

(2,972)

(1,796)

(1,504)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

(247)

(44)

 (81)

Proceeds from sales of property, plant and equipment

46

-

23

Increase (Decrease) in short-term deposit

25

-

(69)

Decrease (Increase) in long-term deposits

-

(1)

47

Purchase of intangible assets

(286)

(236)

(607)

Net cash used in investing activities

(462)

(281)

(687)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from (repayment of) short-term bank credit, net

18

2

(97)

Short-term loans from banks

-

(27)

(27)

Long-term loans

737

-

262

Repayment from (proceeds to) shareholders

269

15

(3)

Repayment of long-term loans

(406)

(1,127)

(1,134)

Consideration from issue of shares

2,874

3,121

3,121

Net cash provided by financing activities

3,492

1,984

2,122

Decrease in cash and cash equivalents

58

(93)

(69)

Cash and cash equivalents at the beginning of the period

49

118

118

Cash and cash equivalents at the end of the period

107

25

49

Appendix A - Additional Information

Interest received during the period

-

1

2

Interest paid during the period

(29)

(127)

(112)

NOTE 1 -

GENERAL INFORMATION

a.

The Reporting Entity

Starcom plc ("the Company") was incorporated in Jersey on November 28, 2012. During February 2013 the Company signed an asset purchase agreement with Starcom Systems S.A., a Panamanian company that specializes in easy-to-use practical wireless solutions that combine advanced technology, telecommunications and digital data for the protection and management of people, fleets of vehicles, containers and assets and engages in production, marketing, distribution, research and development of G.P.S systems.

In accordance with the agreement, Starcom Systems S.A. sold to the Company for a nominal consideration its business and assets, including its holdings in Starcom G.P.S. Systems Limited, an Israeli company that engages in the same field.

Subsequent to completion of the transaction, the Company transferred to an additional company in Jersey, Starcom Systems Limited, its entire activity, except for its holdings in Starcom G.P.S Limited, for a nominal consideration. Thus, the Company became a holding company, holding 100% of Starcom Systems Limited and approximately 97% of Starcom G.P.S Limited, where Company operations are conducted.

During 2013, the Company acquired the remaining 3% of Starcom G.P.S. Limited.

On February 27, 2013 the Company's shares were admitted to trading on London's Stock Exchange Alternative Investment Market ("AIM") following a successful Initial Public Offering ("IPO") raising £ 2.72 ($ 4.09) million before expenses, reflecting a Company valuation of £ 14.2 ($ 27.53) million.

On February 3, 2014 the Company raised £ 2 million before expenses. For additional detail in regard to the infusion of capital see Note 3.

b.

Definitions in these financial statements

1.

The Company - Starcom Plc

2.

Starcom Israel - Starcom G.P.S. Systems Ltd.

3.

Starcom Jersey - Starcom GPS Limited

4.

The Group - Starcom Plc and its subsidiaries

NOTE 2 -

BASIS OF PREPARATION AND CHANGE IN THE GROUP'S ACCOUNTING POLICIES

 a.

Basis of preparation

The interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles for the preparation of financial statements for interim periods, as prescribed in International Accounting Standard No. 34 ("Interim Financial Reporting").

The interim consolidated financial information should be read in conjunction with the annual financial statements as of 31 December, 2013 and for the year ended on that date and with the notes thereto,

The significant accounting policies applied in the annual financial statements of the Company as of December 31, 2013 are applied consistently in these interim consolidated financial statements, except adoption of new standards and interpretations effective as of 1 January 2014, as detailed in Note 2c below.

b.

Use of estimates and judgments

The preparation of financial statements in conformity with IFRS requires management of make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

The judgment of management, when implementing the Group accounting policies and the basic assumptions utilized in the estimates that are bound up in uncertainties are consistent with those that were utilized to prepare the annual financial statements.

c.

Changes in the accounting policies

The Group applies, for the first time, certain standards and amendments as detailed below. As required by IAS 34, the nature and the effect of these changes are disclosed below.

IFRS 15 Revenues from Contracts with Clients

This Standard changes the existing guidelines in regard to recognition of revenues and presents a new module for revenue recognition from contracts with clients. The Standard determines that there are two approaches to revenue recognition: At one point or over a period of time. The module includes five stages for analysis of transactions in order to determine the timing of revenue recognition and its amount. Concurrently, the Standard determines new disclosure requirements that are broader than those currently in existence.

The Standard will be implemented for annual periods commencing with January 1, 2017, with the possibility of early adoption. The Standard includes various alternatives for the transfer period, so that companies may choose one of the following alternatives at the time of initial implementation: full retrospective implementation, full retrospective implementation including practical reliefs; or implementation of the Standard commencing with its initial implementation date, while amending the balance of surplus at that date in regard to transactions that are as yet not completed.

The Group has not as yet examined the implication of implementation of the Standard on the financial statements.

IFRS 9 (2014) Financial Instruments

In accordance with the Standard, there are three main categories for measurement of financial instruments: depreciated cost, fair value through the statement of operations and fair value through other comprehensive income. The basis of classification for receivable instruments is based on the transaction module of the entity for management of financial instruments and the characteristics of the forecasted cash flows of the financial instrument. Investment in capital instruments will be measured by fair value through the statement of operations (unless the company chose, upon initial recognition, to present the changes in fair value in other comprehensive income).

The Standard will be implemented at annual periods commencing January 1, 2018, with the possibility of early adoption. The Standard may be implemented retroactively, except for some reliefs.

The Group has not as yet examined the implication of implementation of the Standard on the financial statements.

d. Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits with maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value, and are used by the Group in the management of its short-term commitments.

NOTE 3 -

SIGNIFICANT EVENTS DURING THE REPORTED PERIOD

a.

Issue of Shares and Mobilization of Capital

On February 3, 2014, the Company issued 13,333,333 Ordinary Shares raising £ 2 million before expenses.

b.

Options issued

During February 2014 the Company issued to Northland Capital Partners 492,533 Options for purchase of Company shares at the exercise price of £ 0.15 per share.

NOTE 4 -

INTANGIBLE ASSETS

a. Composition:

Cost of

Materials (including

overhead costs)

Direct Labour

Total

Cost:

Balance as of January 1 2014

1,502

819

2,321

Additions during the year

145

141

286

Balance as of June 30 2014

1,647

960

2,607

Accumulated Depreciation:

Balance as of January 1 2014

224

94

318

Depreciation during the year

46

50

96

Balance as of June 30 2014

270

144

414

Net book value as of June 30 2014

1,377

816

2,193

Cost of Materials (including

overhead costs)

Direct Labour

Total

Cost:

Balance as of January 1 2013

1,097

617

1,714

Additions during the year

122

114

236

Balance as of June 30 2013

1,219

731

1,950

Accumulated Depreciation:

Balance as of January 1 2013

127

 27

154

Depreciation during the year

27

48

75

Balance as of June 30 2013

154

75

229

Net book value as of June 30 2013

1,065

656

1,721

Cost of Materials (including

overhead costs)

Direct Labour

Total

Cost:

Balance as of January 1 2013

1,097

617

1,714

Additions during the year

405

202

607

Balance as of December 31 2013

1,502

819

2,321

Accumulated Depreciation:

Balance as of January 1 2013

127

27

154

Depreciation during the year

97

67

164

Balance as of December 31 2012

224

94

318

Net book value as of December 31 2013

1,278

725

2,003

NOTE 5 -

SHARE CAPITAL

a.

Composition - as of June 30 2014 common stock of no par value, authorized 118,500,000 shares; issued and outstanding - 84,433,333.

b.

A Company share grants to its holder voting rights, rights to receive dividends and rights to net assets upon dissolution.

c.

See Note 3.

NOTE 6 -

RELATED PARTIES

a.

Related parties that own the controlling shares in the Group are:

Mr. Avraham Hartman (22.6%), Mr. Uri Hartman (22.6%), Mr. Doron Kedem (22.6%).

b.

Balances:

June 30

December 31

2014

2013

2013

Current balance

(182)

(171)

(159)

c.

Transactions:

Six Months Ended

June 30

Year Ended

December 31

2014

2013

2013

Total salaries, services rendered and related expenses for shareholders

523

147

171

NOTE 7 -

FINANCE INCOME (EXPENSES)

Six Months Ended

June 30

Year Ended December 31

2014

2013

2013

Interest from bank

-

1

2

Interest to non-controlling interest

-

338

338

Interest to banks and others

29

32

56

Exchange rate differences

10

285

439

Bank charges

30

27

53

Interest to suppliers

1

17

39

Update of sale Options

-

-

89

(70)

(699)

(1,014)

Net finance costs

(70)

(698)

(1,012)

NOTE 8 -

FINANCIAL INSTRUMENTS

In the opinion of directors and management, the book value of financial assets and liabilities that are not measured at fair value closely resembles their fair value.

NOTE 9 -

SEGMENTATION REPORTING

Segment information regarding the reported segments:

Sets

Web

Accessory

Other

Total

Period Ended 30.06.2014:

Segment revenues

2,080

685

21

133

2,912

Cost of sales

(1,255)

(136)

(13)

(4)

(1,408)

Gross profit

825

549

8

129

1,511

Operating expenses

(2,182)

Operating profit

(671)

Period Ended 30.06.2013:

Segment revenues

2,637

679

37

145

3,498

Cost of sales

(1,364)

(23)

(18)

(108)

(1,513)

Gross profit

1,273

 656

19

37

1,985

Operating expenses

(1,376)

Operating profit

609

Year Ended 31.12.2013:

Segment revenues

7,217

1,478

131

190

9,016

Cost of sales

(3,407)

(184)

(170)

(191)

(3,952)

Gross profit (loss)

3,810

1,294

(39)

(1)

5,064

Operating expenses

(864)

(46)

-

-

(910)

Operating profit

4,154