ClearStar’s revenues for H1 2016 increase by 6%
ClearStar has announced its unaudited results for the six months ended 30th June 2016.
The Company continued to achieve revenue growth with total revenues increasing by 6% for the six months ended 30th June 2016 to $8.0m compared with $7.5m for the six months ended 30th June 2015. All four business units experienced growth.
Gross profit increased by 10% for the six months ended 30th June 2016 to $5.0m, compared with $4.5m for the six months ended 30th June 2015. Gross profit margin improved by 190 basis points to 62.4% from 60.5% for the same period of the previous year. This increase was primarily due to achieving greater purchase economies. Management believes gross margin will continue to improve due to on-going economies of scale being achieved.
Total operating expenses, including depreciation and amortisation, were $6.0m for the six months ended 30th June 2016 compared with $6.4m for the six months ended 30th June 2015. This $400,000 decrease was attributable to cost control initiatives introduced in the second half of 2015 being realised in H1 2016.
Selling and marketing expenses were reduced by approximately $600,000 from $1.3m to $700,000, primarily due to the implementation of operational and technological efficiencies from the integration of the SingleSource acquisition.
Research and development was approximately $700,000 for the six months ended 30th June 2016 compared with $800,000 for the same period of the previous year. This decrease is primarily attributable to lower staff costs in software development. General and administrative expenses increased by approximately $100,000 to $3.9m from $3.8m, primarily due to the costs associated with the strategic review process which was outlined in the announcement dated 24th May 2016, along with greater compliance and internet security costs.
As a result of the increase in revenues and the reduction in operating expenses, EBITDA for H1 2016 improved by $1.0m to $300,000 loss, compared with $1.3m loss for the same period of the prior year. The Company reported a loss before tax of approximately $1.0m in H1 2016 compared with a loss before tax of approximately $1.8m for the same period of the prior year.
As of 30th June 2016, total assets were $11.3m with the largest assets being goodwill and other net intangible assets of $5.3m, net cash of $3.1m, and accounts receivable of $1.9m.
The Company’s total liabilities as of 30 June 2016 were $2.1m, and stockholders’ equity was $9.2m, resulting in a debt-to-equity ratio of 23%.
The Company utilised $110,000 in cash in operating activities compared with $1.7m for the same period of the previous year, mainly due to the aforementioned operational and technological efficiencies as a result of the integration of SingleSource. The Company used $600,000 in investment activities, mostly consisting of $580,000 in capitalised software costs. The Company paid $47,000 in financing activities related to capital lease obligations.
Robert Vale, CEO of ClearStar, commented, “We achieved another period of growth as we added new clients and cross-sold services to existing clients. Our Channel Partner and Consumer Reporting Agency clients continue to account for the majority of sales – whether this is for a background check or a drug screen delivered in the US or abroad. However, we are greatly encouraged by the increasing revenues generated by Direct Services clients, which is our key growth engine. This is a reflection of our enhanced brand recognition as we rapidly transition from a purely indirect service offering to direct; the investment in strengthening our direct sales team; and our technological innovation to develop market-leading solutions.
“Looking ahead, the momentum achieved in the first half of the year has been sustained into the second half of 2016. We are receiving significant interest in our recently-launched ClearID and ClearContact solutions, which are designed to cater for the increasingly casual and transitory nature of the labour market, and we expect Direct Services Division revenues to grow in the second half over the first half. The addition of clinical testing to our WebCCF technology is expected to drive sales in this area and is further testament to our ability to innovate and introduce market-leading solutions. As a result, we continue to believe that the fundamentals of the business are sound and the strength of our offer is increasing. With the growing demand for our services across all of our divisions, the Board remains confident of achieving sustained growth and of delivering value to shareholders.”
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