TIDMCLST TIDMCLSU
RNS Number : 6787A
ClearStar,Inc.
28 March 2017
28 March 2017
ClearStar, Inc.
("ClearStar" or the "Company")
Preliminary Results
ClearStar (AIM: CLSU and CLST), a leading technology and service
provider to the background check industry, announces its unaudited
results for the year ended 31 December 2016.
Financial Highlights
-- Revenue increased by 3% to $16.0 million (2015: $15.5 million)
-- Gross margin maintained at 61.3% (2015: 61.2%)
-- General and administrative expenses reduced by 7.8% to $7.5 million (2015: $8.2 million)
-- EBITDA improved by $290,000 to a $666,000 loss (2015: $956,000 loss)
-- As of 31 December 2016, the Company had net cash of $2.4
million (30 June 2016: $3.1 million; 31 December 2015: $3.9
million)
Operational Highlights
Direct Services
-- Significant progress in direct services resulting in organic
revenue growth of approximately 77% to $1.9 million (2015: $1.1
million)
-- Successful in targeting larger, higher-volume direct clients, with particular demand in the transportation industry
-- Benefitted from the strengthening direct services sales team
and introduction of the new ClearID and ClearContact solutions
-- Strong organic growth mitigated the contraction in revenue
due to the attrition of clients gained through the SingleSource
acquisition, with total Direct Services Division revenues slightly
above the previous year at $3.80 million (2015: $3.77 million)
Channel Partner and Consumer Reporting Agencies ("CRAs")
-- Channel Partner and Consumer Reporting Agency revenue grew by
4% to $12.2 million (2015: $11.7 million) with increased demand for
ClearStar's technologically-differentiated suite of products and
solutions
-- Largest service offering by revenue was medical information
services, which accounted for 39% of division sales
-- Ongoing improvement to offering, including adding new
integration points, product development in areas of data
distribution and improvements to user interface
Technology and Product Advancement
-- Gained initial traction from the development of its global
platform to satisfy interface, compliance and architectural demands
outside the US
-- The Company's clinical testing service was made available via
ClearStar's proprietary WebCCF technology and number of collection
sites increased to over 15,000
Post period
-- As announced today, ClearStar has been awarded a contract by
IntelliCentrics, a global leader in vendor credentialing in the
healthcare industry, to provide its medical information services to
streamline the drug and titer testing process
Robert Vale, CEO of ClearStar, commented: "These results
demonstrate that ClearStar's underlying businesses are robust and
continue to deliver revenue growth. 2016 was a significant year for
us as we streamlined our business, strengthened our direct sales
team and launched our global platform. ClearStar now provides a
suite of advanced services, directly and indirectly through our
Channel Partner and CRA customers, on a global basis.
As a result, we entered 2017 well positioned with a stronger
client base and more comprehensive service offering compared with
the previous year. The fluidity of the labour market continues to
expand thereby increasing the demand for our direct services and
providing new opportunities for revenue generation. Our global
platform, Sphere, is gaining traction, with the strong initial
client response, strengthening our belief that we can generate
meaningful global revenue in 2017. Consequently, we are confident
of delivering continued growth and shareholder value, and we look
forward to updating the market as the year progresses."
Enquiries:
ClearStar, Inc.
---------------------------------- -----------------
Robert Vale, Chief Executive
Officer
David Pattillo, Chief Financial
Officer +1 770 416 1900
---------------------------------- -----------------
finnCap Ltd.
---------------------------------- -----------------
Jonny Franklin-Adams, Simon
Hicks - Corporate Finance
Christian Hobart, Abigail
Wayne - Corporate Broking +44 20 7220 0500
---------------------------------- -----------------
Luther Pendragon Ltd.
---------------------------------- -----------------
Harry Chathli, Claire Norbury +44 20 7618 9100
---------------------------------- -----------------
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
About ClearStar
ClearStar, Inc. is a leading and trusted background check
technology, strategic services and decision-making information
provider to employers and background screening companies.
A seven-time Inc. 5000 honouree and founding member of the
National Association of Professional Background Screeners,
ClearStar has provided innovative technology solutions to
businesses in the human capital management industry from its
corporate offices in Alpharetta, Georgia since 1995. For more
information about ClearStar, please visit: www.clearstar.net.
Operational Review
During the twelve months ended 31 December 2016, the Company
achieved 3% revenue growth to $16.0 million (2015: $15.5 million).
This was based on processing approximately 7.8 million screening
services (2015: 7.2 million) on over 2.3 million people (2015: 2.2
million) that were provided to over 28,000 end-users (2015:
28,000).
Direct Services Division
During the period, ClearStar strengthened and expanded its
direct sales and services team to capitalise on attractive market
opportunities within the growing US screening market. In
particular, the Company recruited employees with significant
experience and expertise in engaging with large companies, which is
ClearStar's primary target market. As a result, Direct Services
Division organic revenues increased by 77% to $1.9 million (2015:
$1.1 million), and the Company was successful in 'upscaling' its
client base by targeting larger, higher-volume direct clients, with
particular demand in the transportation industry. In addition, the
Company is continuing to benefit from the changing demands of the
ever-increasing 'gig economy' and casual and transitory nature of
the labour market.
ClearStar commenced the on-boarding process for the three-year
contract, signed at the end of 2015, with a leading global
relocation and specialised logistics solutions provider, which
includes the maiden deployment of the Company's biometric
recognition software and electronic address book solution that were
also launched during the period as ClearID and ClearContact. The
Company is receiving increasing interest in these mobile-centric
solutions from employers that rely on remote hiring or where large
numbers of temporary workers are employed on a sustained basis, and
commenced several trials with potential clients. Significantly,
this customer is also making an initial deployment of the Company's
global platform, Sphere, as described below.
Within direct services, the sales of direct medical information
services increased by 56% to $745,000 (2015: $478,000), and is now
serving around 600 clients.
As previously announced, the Company experienced attrition among
its acquired SingleSource client base as a result of a large
proportion of the smaller clients choosing not to invest in
upgrading their compliance standards to meet ClearStar's
requirements. However, this was largely mitigated by the growth in
organic sales resulting in total Direct Services Division revenues
of $3.80 million (2015: $3.77 million).
Post period, as announced today, ClearStar has been awarded a
contract by IntelliCentrics, the healthcare industry leader with
over 10,000 distinct installations of vendor credentialing across
the US, Canada and the UK. ClearStar's automated titer and drug
screening solution, made available via the Company's proprietary
WebCCF technology, will be integrated into IntelliCentrics' SEC(3)
URE program for hospitals and healthcare organisations. The SEC(3)
URE healthcare experience is designed to allow hospitals to control
access by healthcare industry representatives by ensuring only
those that comply with the hospital's specific policies gain access
to patient sensitive or restricted areas. The Company's automated
order placement, registration and automatic transmission solution
will eliminate the traditional paper-intensive forms and
inefficient way of collating data for titer and drug screening
tests.
Channel Partners and Consumer Reporting Agencies ("CRAs")
Division
In this division, ClearStar provides white labelling technology.
Data logistics services are provided to Channel Partners and CRAs
who use the Company's technology to perform background checks on
job applicants and to provide services to organisations for the
purpose of medical testing, mainly for employees.
The division continued to be the largest contributor to overall
revenues. Sales for 2016 increased by 4% to $12.2 million (2015:
$11.8 million). This was primarily as a result of increased
business from some of the Company's largest clients. The primary
services contributor to revenues was medical information services,
which consisted mostly of drug testing but also clinical testing
and occupational testing, which accounted for $4.9 million (2015:
$4.8 million) of the division's sales. The Company increased the
number of employers that it provides its medical testing and
results review services to over 14,500.
Technology and Product Advancement
During the period, the Company launched its global platform,
Sphere, which was developed to satisfy interface, compliance and
architectural demands outside the US. The Company has begun
processing international records on Sphere, including initial
records for its largest direct sales customer. The Company is
receiving increasing interest in its global solutions from US-based
organisations that have global operations or that require access to
the global records of prospective employees as well as businesses
based outside of the US. Management is confident of more widespread
usage of Sphere in 2017 and expects meaningful revenue contribution
from its global customers.
ClearStar achieved certification from the U.S. Department of
Commerce under the EU-U.S. Privacy Shield for the transfer of
personally identifiable information (PII) from the European Union
to the United States. The EU-U.S. Privacy Shield Framework was
designed by the U.S. Department of Commerce and the European
Commission to provide companies on both sides of the Atlantic with
a mechanism to comply with EU data protection requirements when
transferring personal data from the EU to the US. The certification
represents a further testament to the strength of ClearStar's
privacy and compliance standards as well as differentiating the
Company from its competitors.
The Company grew its network of collection sites for its medical
information services to over 15,000 and made its clinical testing
service available via its proprietary WebCCF technology. WebCCF is
ClearStar's online laboratory registration and electronic custody
and control form technology with mobile wallet-integration to
enable a completely paperless screening process, which expedites
the on-boarding of new hires and efficiently manages the ongoing
compliance testing of the workforce. The Company believes that the
ease-of-use of this solution is a market differentiator for
ClearStar and that sales in clinical testing will increase as
result of its availability via WebCCF.
Financial Review
The Company continued to achieve revenue growth with total
revenues increasing by 3% for the year ended 31 December 2016 to
$16.0 million compared with $15.5 million for the year ended 31
December 2015.
Gross profit increased by 4% to $9.8 million (2015: $9.5
million) and gross profit margin was maintained at 61.3% (2015:
61.2%). This increase was primarily due to achieving greater
purchase economies.
Total operating expenses, including depreciation and
amortisation, increased by approximately $194,000, or 1.7%, to
$11.9 million for 2016 compared with $11.7 million for 2015.
General and administrative expenses decreased by approximately
$636,000, or 7.8%, to $7.5 million for 2016 compared with $8.2
million for the prior year, primarily due to better operating
efficiencies achieved from the integration of the SingleSource
acquisition.
Selling and marketing expenses were reduced by approximately
$175,000, or 11.9%, to $1.3 million (2015: $1.5 million), primarily
due to the consolidation of the SingleSource sales and marketing
team.
Research and development increased by approximately $863,000, or
107%, to $1.7 million for 2016 compared with $808,000 for 2015.
This was primarily due to more products going into production,
including Sphere, which changes the accounting treatment of much of
the software development costs from being capitalised to being
expensed.
Depreciation and amortisation increased by approximately
$142,000, or 11%, to $1.4 million (2015: $1.3 million), primarily
due to more products going into production, including Sphere, and
thereby commencing amortising on the capitalised asset.
EBITDA for 2016 improved by $290,000 to a $666,000 loss,
compared with $956,000 loss for the prior year. The Company
reported a loss before tax of approximately $2.1 million in 2016
compared with a loss before tax of approximately $2.3 million for
2015.
As of 31 December 2016, total assets were $9.7 million with the
largest assets being goodwill and other intangible assets of $5.0
million, net cash of $2.4 million, and accounts receivable of $1.4
million. For 2016, the Company utilised $1.5 million in cash
compared with $2.6 million in the prior year, a 43% improvement in
cash utilisation.
The Company's total liabilities as of 31 December 2016 were $1.6
million, and stockholders' equity was $8.1 million, resulting in a
debt-to-equity ratio of 20%.
The Company utilised $460,000 in cash in operating activities
compared with $1.0 million for the previous year, mainly due to
improvement in working capital accounts. The Company used $0.9
million in investment activities compared with $1.5 million for the
previous year. This reduction is primarily the result of lower
capitalised software development costs as more products were
brought into production during the course of the year. The Company
paid $96,000 in financing activities related to capital lease
obligations.
Outlook
2016 was a significant year for ClearStar as the Company
streamlined its business, strengthened the direct sales team and
launched its global platform. ClearStar now provides a suite of
advanced services, directly and indirectly through our Channel
Partner and CRA customers, on a global basis.
As a result, the Company entered 2017 well positioned with a
stronger client base and a more comprehensive service offering
compared with the previous year.
The fluidity of the labour market continues to expand thereby
increasing the demand for ClearStar's direct services and providing
new opportunities for revenue generation. The Company's global
platform, Sphere, is gaining traction, with the strong initial
client response strengthening management's belief in generating
meaningful global revenue in 2017. Consequently, the Board is
confident of delivering continued growth and shareholder value, and
looks forward to updating the market as the year progresses.
CLEARSTAR, INC.
Consolidated Statements of Operations
(USD, in thousands)
Year Ended Year Ended
31 December 31 December
2016 2015
(Unaudited)
$ $
Net revenue 16,032 15,516
Cost of revenue 6,197 6,023
-------------- -----------------------------
Gross profit 9,835 9,493
-------------- -----------------------------
Operating expenses
Selling and marketing 1,299 1,474
Research and development 1,671 808
Depreciation and amortisation 1,429 1,287
General and administrative 7,531 8,167
-------------- -----------------------------
Total operating expenses 11,930 11,736
Loss from operations (2,095) (2,243)
-------------- -----------------------------
Other expense
Interest expense (16) (22)
-------------- -----------------------------
Total other expense (16) (22)
-------------- -----------------------------
Net loss before taxes (2,111) (2,265)
Provision for income taxes 61 53
Net loss (2,172) (2,318)
============== =============================
CLEARSTAR, INC.
Consolidated Balance Sheets
(USD, in thousands)
As of As of
31 December 31 December
2016 2015
(Unaudited)
$ $
ASSETS
Current assets
Cash 2,420 3,893
Accounts receivable -- trade, net 1,442 1,609
Research and development tax credits 138 82
Prepaid expenses 257 291
-------------- --------------
Total current assets 4,257 5,875
-------------- --------------
Property and equipment, at cost
Computer equipment 687 749
Furniture and fixtures 277 279
Leasehold improvements 62 72
Less accumulated depreciation (560) (412)
-------------- --------------
Total property and equipment, net 466 688
-------------- --------------
Other assets
Goodwill and other intangible assets 4,976 5,268
Deposits 11 11
-------------- --------------
Total other assets 4,987 5,279
-------------- --------------
Total assets 9,710 11,842
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable 1,130 1,203
Accrued liabilities 119 82
Deferred revenue 54 54
State income taxes 5 7
Current portion of obligations under
capital lease 99 92
-------------- --------------
Total current liabilities 1,407 1,438
-------------- --------------
Long-term liabilities
Accrued liabilities 46 50
Deferred income taxes 99 45
Obligations under capital lease, net
of current portion 68 171
-------------- --------------
Total long--term liabilities 213 266
-------------- --------------
Stockholders' equity
Common stock, $0.0001 par value; 100,000,000
shares authorised; 36,302,900 shares
issued and outstanding 4 4
Additional paid--in capital 13,602 13,478
Accumulated deficit (5,516) (3,344)
-------------- --------------
Stockholders' equity 8,090 10,138
-------------- --------------
Total liabilities and stockholders'
equity 9,710 11,842
============== ==============
CLEARSTAR, INC.
Consolidated Statements of Changes in Stockholders' Equity
(USD, in thousands, except no. of shares)
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit Total
No. $ $ $ $
Balances at 1
January
2015 36,302,900 4 13,346 (1,026) 12,324
Non-cash
stock
compensation - - 132 - 132
Net loss - - - (2,318) (2,318)
Balances at
31 December
2015 36,302,900 4 13,478 (3,344) 10,138
Non-cash
stock
compensation - - 124 - 124
Net loss - - - (2,172) (2,172)
Balances at
31 December
2016
(unaudited) 36,302,900 4 13,602 (5,516) 8,090
===================== ====================== ===================== ===================== ===================
CLEARSTAR, INC.
Consolidated Statements of Cash Flows
(USD, in thousands)
Year Ended Year Ended
31 December 31 December
2016 2015
(Unaudited)
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss (2,172) (2,318)
Adjustments to reconcile net loss
to net cash used for operating activities:
Change in allowance for doubtful accounts 13 5
Depreciation and amortisation 1,429 1,287
Deferred income taxes 54 45
Non-cash stock compensation 124 132
Loss on disposal of property and equipment 2 -
Change in operating assets and liabilities:
Accounts receivable 154 (518)
Research and development tax credits (56) (55)
Prepaid expenses 34 (79)
Deposits 0 2
Accounts payable (73) 629
Accrued liabilities 33 (87)
Deferred revenue - (48)
State income taxes (2) 3
Total adjustments 1,712 1,316
-------------- --------------------------------
Net cash used for operating activities (460) (1,002)
-------------- --------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment (32) (96)
Proceeds from disposition of property
and equipment 1 -
Capitalised software development costs (886) (1,396)
Net cash used for investing activities (917) (1,492)
-------------- --------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on capital lease
obligations (96) (90)
-------------- --------------------------------
Net cash provided used for financing
activities (96) (90)
-------------- --------------------------------
Net cash decrease for year (1,473) (2,584)
Cash at beginning of year 3,893 6,477
Cash at end of year 2,420 3,893
============== ================================
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UBVKRBOAOUAR
(END) Dow Jones Newswires
March 28, 2017 02:01 ET (06:01 GMT)
Clrstar (DI/S) (LSE:CLST)
Historical Stock Chart
From Jul 2024 to Aug 2024
Clrstar (DI/S) (LSE:CLST)
Historical Stock Chart
From Aug 2023 to Aug 2024