Touchstar PLC FY25 Trading Update: Revenue Miss, Restructuring Done, Cash Intact
Touchstar has issued a candid FY25 trading update and it is a mixed bag. Revenue is now expected to land around £6.7m, below market expectations, with only a small pre-tax trading profit. The shortfall is pinned on a soft economy, order hesitancy and poor visibility on the timing of short-cycle sales.
Alongside that, the Group is taking some decisive medicine: a hefty accounting clean-up on software development and a reshaped senior team under a new CEO. Despite the hit to reported profit, year-end cash is set to remain over £2m, which helps steady the nerves.
Key Numbers at a Glance
| FY25 revenue (expected) | Around £6.7m |
| FY25 pre-tax trading profit | Small positive (exact figure not disclosed) |
| Exceptional cost – senior management reorganisation | Approximately £0.2m |
| Software impairment charge (pre 1 Dec 2025) | £1.25m |
| Accounting policy for software development | From 1 Dec 2025, costs expensed as incurred (previously capitalised and amortised over 48 months) |
| Year-end cash | Over £2m |
| 2026 revenue outlook | Modest growth expected |
Why Revenue Fell Short and Why It Matters
Management flagged a soft economy at the half year and that headwind persisted through H2. Customers have been slow to commit and the timing of smaller, short-term deals has been hard to forecast. The consequence is clear: FY25 revenue is now expected at around £6.7m, coming in below market expectations.
The company still expects a small pre-tax trading profit, which is a relief given the trading backdrop. But do not miss the subtext: visibility has been poor and sales momentum needs rebuilding for 2026.
Big Accounting Shift on Software: Expensing From 1 December 2025
Touchstar is changing how it accounts for software development. Historically, costs were capitalised and amortised over 48 months. From 1 December 2025, new development spend will be expensed as incurred, which typically depresses reported profits versus capitalising, but is common among global software peers.
There is also a clean-up charge on the existing software asset base. The company expects to take a £1.25m impairment for the period prior to 1 December 2025, reflecting shorter development cycles and the new strategic direction. On top, there is about £0.2m of exceptional reorganisation costs related to the senior team changes.
How to read these charges
These are described as non-trading exceptional items, so they sit outside the underlying trading performance. The policy change should make earnings quality clearer over time, at the cost of lower reported profits in periods of heavy development investment. It also aligns Touchstar with practices seen across comparable software businesses.
Cash Still Over £2m: A Comfort in a Tight Year
Despite the lower profitability and exceptional charges, the balance sheet remains described as healthy. Year-end cash should be over £2m. That gives Touchstar some room to execute on its plan without reaching for fresh capital, assuming trading conditions do not deteriorate materially.
In a market where customers are hesitating, liquidity matters. The stated cash position helps underpin confidence while the new strategy beds in.
Strategic Reset Under New CEO: Foundations Laid, Focus on Growth
2025 has been about restructuring the business to improve efficiency, collaboration and accountability. Management says that underpinning work is now completed, and the company has a clear brand ambition to “Secure the Logistics of People and Product”. The plan is to reposition Touchstar to serve the wider depot, warehouse and retail markets.
2026 priorities the market should track
- Complete the transition to the next-generation management team.
- Finish the organisational restructure and invest to support stronger organic growth and integrate future acquisitions.
- Reposition the business for broader depot, warehouse and retail coverage.
- Enhance digital presence, communications and marketing.
- Finalise improvements in sales capability.
- Conduct a detailed review of acquisition opportunities.
- Define the next-generation product set aligned with the brand promise.
Outlook: Modest 2026, Targeting a Step Change in 2027
CEO Lynden Jones is realistic about the macro. The company is budgeting for a faltering economy through 2026 and has reset expectations accordingly. For 2026, Touchstar now expects only modest revenue growth.
The more ambitious tone comes beyond that. Management anticipates some acceleration in the rate of revenue growth over the next 12 months, setting up a step change in 2027 and further acceleration into 2028. Delivery will depend on executing the sales uplift, product roadmap and any inorganic moves.
My Take: The Good, The Bad, and The To-Do
Positives
- Balance sheet described as healthy with cash over £2m, offering breathing room.
- Restructuring completed, with a tighter focus and clearer brand positioning.
- Accounting policy shift should improve transparency and comparability with software peers.
- Clear operational priorities for 2026 and a growth narrative into 2027 and 2028.
Negatives
- Revenue is below market expectations at around £6.7m, reflecting weak demand and sales timing issues.
- Only a small pre-tax trading profit in FY25, plus exceptional charges of £0.2m and a £1.25m impairment.
- Expensing development from December will weigh on reported profits in investment-heavy periods.
- Management itself expects the weak economy to persist through 2026, so near-term upgrades look unlikely.
What to Watch Next
- Final FY25 results detail and cash flow disclosure (timing not disclosed).
- Evidence of improved order intake and sales conversion as the restructured team beds in.
- Updates on the next-generation product set and how it supports the “Secure the Logistics of People and Product” strategy.
- Any movement on the acquisition review and how such deals could be integrated with the new structure.
- Progress in broadening into depot, warehouse and retail markets, supported by a stronger digital and marketing presence.
Bottom Line
This update resets expectations for FY25 and 2026 but also clears the decks for a more transparent, execution-focused Touchstar. The numbers will not thrill the market in the short term, yet the combination of a healthy cash position, completed restructuring and a tighter strategic lens gives the company a platform to push for that 2027 step change.
If you are following the story, the next checkpoint is delivery: sales momentum, product execution and whether modest 2026 growth can be the springboard management is targeting. For company information, visit touchstarplc.com.
