Australia Markets closed

Why shares in this ASX small cap are dropping lower today

Phil Harpur
People using Slack in office

The People Infrastructure Ltd (ASX: PPE) share price is dropping lower today following the release of the company’s half-year FY20 results. At the time of writing, People Infrastructure shares are sitting 6.41% lower at $3.65 per share.

What does People Infrastructure do?

People Infrastructure is a leader in workforce management and is focused on four key sectors: Health and Community Services, Information Technology, General Staffing, and Specialist Services.

Established in 1996, the company has grown to currently operate from 18 locations across Australia and New Zealand, servicing over 3,000 clients.

What did People Infrastructure announce?

For the half-year to 31 December 2019, People Infrastructure announced normalised earnings before interest, tax, depreciation and amortisation (EBITDA) of $13 million. This was 54.4% higher than the prior corresponding period (pcp).

Additionally, the H1 FY20 normalised EBITDA margin came in at 6.6%, up from the 6.3% result in H1 FY19.

Normalised net profit after tax and amortisation (NPATA) came in at $9 million, up by 49.0% on the pcp, while normalised NPATA per share was 12.5 cents, up by 32.4%.

People Infrastructure declared a fully franked interim dividend of 4 cents per share which is consistent with the interim dividend declared for FY19 H1.

Strategic update

In today’s announcement, the company said that it continues to experience strong organic growth throughout the business. This has been underpinned by leading customer service, strong sales focus and attractive industry fundamentals in the various sectors in which it operates.

In particular, People Infrastructure is experiencing strong organic growth in Health and Community Services and Information Technology. Casual employment was noted as a strong aspect of these sectors.

The company’s acquisition strategy was stated to be on target and performing well, expediting its growth into key sectors or regions. As per the announcement, all acquisitions have performed in line with, or ahead of, expectations and each business has performed better under People Infrastructure’s guidance.

During the first half of FY20, the company successfully integrated its most recent acquisitions into the broader People Infrastructure business. These acquisitions were of First Choice Care and Carestaff in the health sector, and Halcyon Knights in the information technology sector.

People Infrastructure commented that it will continue to focus on driving growth in niches where it can demonstrate a clear point of difference in its product and services offering.

Outlook

According to today’s release, People Infrastructure’s outlook continues to be positive with continued organic growth anticipated across its business, as well as further strategic acquisition opportunities that are currently under due diligence.

Declan Sherman, People Infrastructure’s Managing Director, said: “People Infrastructure is pleased to announce a strong performance for the first half of FY20 with the Company continuing to grow significantly throughout the first half of the year and delivering a significant increase in earnings to shareholders. The Company continues to deliver on its long-term strategy of being a leading provider of workforce solutions. By continuing to deliver innovative and efficient workforce management services, we have been able to grow both our current and new client base.”

The post Why shares in this ASX small cap are dropping lower today appeared first on Motley Fool Australia.

If you're searching for growth to add to your portfolio, look no further than the 5 ASX growth shares in the free report below.

NEW. The Motley Fool AU Releases Five Cheap and Good Stocks to Buy for 2020 and beyond!….

Our experts here at The Motley Fool Australia have just released a fantastic report, detailing 5 dirt cheap shares that you can buy in 2020.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.7% fully franked yield...

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.

CLICK HERE FOR YOUR FREE REPORT!

More reading

Motley Fool contributor Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia has recommended People Infrastructure Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020