ClearStar (AIM: CLSU ) reported final results for 2019 to be ahead of forecasts after it saw double-digit revenue growth across its client base and Medical Information Services business.
The AIM-listed firm saw a year-on-year sales growth of 14% at $23.0m from $20.1m in 2018, whilst gross profit grew by 9% $11.3m to $12.4m for the period ending 31 December 2019.
Both direct sales and the group’s medical division were core drivers for strong revenue growth for the period, which, in aggregate, accounted for 72% of total revenue up from 65% in 2018.
Direct sales were driven up 32% by a successful upscaling of the group’s direct tier 1 client base whilst the group’s medical screening unit saw continued growth with sales up by 23%.
The firm’s upscaled client base has included some major client wins during the year and post period, including a contract with a major shipyard specialising in vessels for the U.S. Navy.
EBITDA, which excluded certain non-recurring expenses, saw a further push into profitability and doubled to $0.4m from $0.2m in 2018, while losses before tax remained flat at $1.4m.
Shares in ClearStar were trading 5.13% higher at 41p on Wednesday morning.
“Our success is reflected in our revenue growth for the year and our contract wins, which included some high-calibre organisations,” said Robert Vale, CEO, adding that the group had entered the 2020 financial year with its highest record order book yet.
Having entered 2020 with a record orderbook and healthy pipeline, the Covid-19 hiring freeze has seen significant volume reduction and delays, noted broker, finnCap this morning.
“There has been no degradation in our quality standards and we have not lost any customers, however, volumes have been significantly reduced,” commented Vale.
Consequently, revenue for the year-to-date is 16% lower than for the same period in 2019, with the current run rate around 50% below the same point last year.
In a morning research note, analysts said they had withdrawn their forecasts after the group said it remained too early to assess the full financial impact for the year ahead.
It noted the hit to the US labour market as a result of Covid-19 but added that there was likely to be an “unprecedented wave of hiring” ahead as the US looks to re-open its economy.
The broker concluded that ClearStar is “well-positioned” to benefit from the likely surge in US recruitment after having sharply reduced its cost base and $3.8m gross cash in hand.
“We have acted decisively to cut our costs to support our liquidity during this period and I am proud of the response of our employees to this crisis,” added Vale.
Follow News & Updates from ClearStar here: