TIDMINS
RNS Number : 5728M
Instem plc
19 September 2012
19 September 2012
Embargoed for 07:00
Instem plc
("Instem", the "Company" or the "Group")
Unaudited Interim Results
Instem plc (AIM: INS.L), a leading provider of IT applications
to the global early development healthcare market, announces its
unaudited interim results for the six months ended 30 June
2012.
Financial Highlights
-- Revenues steady at GBP4.9m (H1 2011: GBP4.9m)
o Recurring revenues accounted for 74% of total (H1 2011:
70%)
o Software-as-a-Service (SaaS) revenue up 21% to GBP0.6m (2011:
GBP0.5m)
-- Operating profit before amortisation, share based payment and
non-recurring items GBP0.3m (H1 2011: GBP0.6m)
-- Basic earnings per share (0.1)p (H1 2011: 1.1p)
-- Seasonal operating cash outflow of GBP1.2m (H1 2011:
GBP1.4m)
-- Closing cash balance as at 30 June 2012 of GBP1.8m (H1 2011:
GBP1.3m)
Operational Highlights
-- New contracts include a leading pharma in Japan, Advinus
Therapeutics and Lupin Limited in India, and licence extensions
with several Contract Research Organisations in the US and
Europe
-- Customer retention rate remained strong at over 95%
-- Released Provantis(R) version 9 in July 2012, the final major
release in a multi-year migration of the Provantis suite to the
latest technology platform
-- Strong pipeline of customer opportunities for both
Provantis(R) (pre- and non-clinical studies) and Centrus(TM) (data
access and harmonization)
Phil Reason, CEO of Instem plc, commented:
"Instem has started the second half of the year in line with
management expectations, as reflected in the Company's trading
update issued 26 July 2012, and we are confident of being strongly
cash positive in the second half.
"The breadth of the Company's Provantis and Centrus suites,
combined with its extensive geographical reach, blended SaaS and
traditional licence model continue to be key competitive
differentiators. Instem is currently working on multiple contract
opportunities, from both new and existing customers. These are
predominantly in the US market, but also within the European market
which is starting to show initial signs of recovery following a
difficult 2011 in which several large European research facilities
were closed.
"Overall, while the Board remains cautious regarding the timing
of deal flow, it is optimistic about the medium to long-term
prospects for the business which remains well positioned to benefit
from the trends in its end markets towards multi-site,
collaborative and outsourced R&D."
For further information, please contact:
Instem plc +44 (0) 1785 825 600
Phil Reason, CEO
Nigel Goldsmith, CFO
N+1 Brewin (Nominated Adviser &
Broker) +44 (0) 20 3201 3710
Aubrey Powell
Luke Boyce
Newgate Threadneedle +44 (0) 20 7653 9850
Caroline Evans-Jones
Fiona Conroy
About Instem plc
Instem is a leading supplier of IT solutions to the early
development healthcare market. Instem's pre-clinical study
management solutions accelerate drug and chemical development by
increasing productivity, automating processes and enhancing
practices that lead to safer and more effective drugs.
Instem has over 130 customers in North America, Europe, China,
India and Japan, including 16 of the top 20 pharmaceutical and
biotech companies such as GlaxoSmithKline and AstraZeneca. The
Group employs over 110 people in seven offices in the US, UK, China
and India; and has a full service distributor in Japan. It is
estimated that approximately half of the world's pre-clinical drug
safety data has been collected over the last 20 years via Instem
software, making Instem an ideal partner to help unlock the
scientific/commercial value from these legacy repositories.
To learn more about Instem please visit the Company's website,
www.instem.com, or its investor centre
http://investors.instem.com/.
Chairman's Statement
While the results are lower than management's original
expectations for the half, we believe that this performance has
been in line with the broader pharmaceutical market. Large pharma
in particular continues to go through a period of major structural
change. The uncertainty this creates means that clients and
prospects have tended to defer investment decisions. Nonetheless,
we believe we have continued to win the majority of business placed
in our market and the Board is confident that underlying demand for
Instem's solutions remains strong.
Several large, multi-site prospects are in the pipeline and, in
several instances, selection decisions have already been made in
Instem's favour by prospective customers; but order dates and final
contract size remain subject to additional procurement
processes.
The Group's substantial recurring revenue base continues to
grow, now having reached approximately GBP7.4m on an annualised
basis, providing a solid, profitable and cash-generative platform
for the business. Renewal rates have remained high, at over
95%.
The Board believes its core Provantis and Centrus solutions are
ultimately well placed to benefit from the changes to laboratory
working practices, such as the growing prominence of multi-site
working and outsourcing, as well as the adoption of new standards.
Significant customer benefits, enhanced revenue opportunities and
reduced costs resulting from the completion of the last major phase
of the redevelopment of the core Provantis(R) product suite during
2012 are expected to contribute positively to future business
performance.
Overall, while the Board remains cautious regarding the timing
of contract flow, it is confident in the medium to long-term
prospects for Instem, which remains well positioned to benefit from
the strategic trends in its end markets towards multi-site,
collaborative and outsourced R&D.
David Gare
Chairman
19 September 2012
Operational Review
Although results for the period were impacted by the continued
uncertainty and budgetary restraints that are on-going within the
Pharmaceutical market, Instem has continued to make good progress
at an operational level, securing new customers, extending licences
within existing customers and maintaining high renewal rates. We
have already delivered a significantly enhanced release of
Provantis in the second half of the year.
Customer update
We are confident that Instem continues to outperform its
competitors in product evaluations. Instem's ability to provide
support for all geographic areas and offer our software via either
the SaaS or traditional licence model means we are well placed to
tender for current opportunities globally.
Two Indian contracts
The Group's Indian operations were successfully launched in the
first half of the year, providing Instem with the ability and
flexibility to scale-up development resources in the region in
response to demand. This local presence will also be beneficial as
we implement two contracts secured in the first half of 2012:
Advinus Therapeutics, an existing customer, is upgrading and
further extending its use of Provantis, and Lupin Limited selected
Provantis to automate study processes at its Global R&D hub in
Pune.
Japanese customer win
Instem extended its presence in Japan, securing a contract with
one of Japan's leading research-oriented global pharmaceutical
companies, which purchased the Provantis preclinical software
solution for its Osaka R&D facility, following a competitive
evaluation. A comprehensive suite of modules was purchased to
support the areas of General Toxicology, Reproductive Toxicology,
Pathology and Pharmacy.
Customer extensions at CROs
Several of Instem's smaller US and European Contract Research
Organisation (CRO) customers added Provantis user and module
licences during the period. This is a good indicator that the
smaller end of the market may be seeing a sustainable return to
growth.
Instem Scientific
Instem Scientific, our team focused on information solutions for
translational science, enjoyed a high rate of recurring revenue
renewal across all product lines reflecting the strong long-term
partnerships with its life science customers. Post period end,
Instem Scientific added another blue-chip client, DuPont, who
became the latest customer of our large scale data integration
platform SRS(TM).
Instem Scientific's solutions are now being purchased in
conjunction with our other products and we successfully completed
the first integrated project with Instem's Study Management
solutions in the period, through the delivery of the new Provantis
Portal module to The Jackson Laboratory.
Instem Scientific and Apelon, the international informatics
company, extended their partnership to deploy advanced technology
for patient-focused clinical decision support. The two businesses
have worked together in previous partnerships, combining Instem's
suite of taxonomic and semantic products and services with Apelon's
vocabulary creation expertise to deliver unique solutions for
pharmaceutical R&D and the wider healthcare IT market.
This blend of Instem technology and Apelon's scientific
management services will enhance the effectiveness of drug
prescribing by healthcare clinicians, improve patient outcomes and
lower the costs of care. Pharmaceutical organisations will also
benefit from the availability of data which was previously
inaccessible.
Increasing competitive strength of the product set
Instem continued to add to the competitive differentiation of
the Provantis suite during the first half of the year. One such new
development was the release of Provantis Portal, a web portal
predominantly for CROs to deliver Provantis managed study data to
their clients in a secure manner. In addition, a partnership was
secured with Trimetra for its Logbook software; Logbook is an
Electronic Notebook and Data Collection system that can replace GLP
(Good Laboratory Practice) and Non-GLP paper forms. This
partnership will enable Instem's customers to replace the final
extraneous paper forms that may exist in the laboratory
environment, which to date have not had a natural filing location
within Provantis. We are not aware of a similar product on the
market and have seen a good level of interest from customers and
prospective customers alike.
Instem successfully delivered Provantis 9, a major new release
of its core Provantis product suite, in July 2012. The release
largely completes a significant, phased multi-year product
redevelopment, which supports the changes to laboratory working
practices brought about by the structural changes in the pharma
market and takes advantage of the latest capabilities of the
underlying Microsoft(R) and Oracle(R) platform technologies. Unique
Provantis capabilities that improve operational efficiency and
reduce study timelines are proving key competitive
differentiators.
Instem's much newer Centrus product suite is building good
momentum, particularly the modules associated with the recently
adopted US Food & Drug Administration sponsored Standard for
the Exchange of Non-clinical Data (SEND). As pharma companies face
increased regulatory scrutiny and deal with expensive drug safety
litigation, there are signs that investments to achieve regulatory
compliance are being prioritized, The Group's leading position in
this developing area was underlined in February 2012, when Instem
was recognised for its outstanding contributions to SEND at the
Interchange North America event organised by CDISC, the Clinical
Data Interchange Standards Consortium.
Opportunities remain to extend Instem's product and services
offerings and to leverage its well established global sales,
marketing and service delivery infrastructure, particularly our
Software-as-a-Service platform. As clients plan their upgrades to
Provantis 9, they frequently take the opportunity to consider the
purchase of additional products and modules that they have not
previously licensed.
Financial Review
The financial results demonstrate a solid performance in the
period with total revenues steady year-on-year at GBP4.9m (H1 2011:
GBP4.9m). Whilst implementation service revenues in the first half
of the year benefited from a solid order book brought forward from
2011, the business as a whole has experienced slippage in expected
new orders with customers deferring investment decisions on some
major projects. The Group generates the majority of its revenue in
US dollars, which are hedged into sterling.
The business continued to expand in developing markets with
revenue from outside North America and Europe increasing to GBP0.6m
(H1 2011: GBP0.4m), representing 12% of total revenue (H1 2011:
9%).
Instem's business model consists of fees for perpetual licences,
annual support, SaaS subscriptions and professional services. In
the period, approximately 74% (H1 2011: 70%) of revenue was of a
recurring nature from annual support fees and SaaS
subscriptions.
Profit from operations before amortisation, share-based payment
and non-recurring costs for the period, was GBP0.3m (H1 2011:
GBP0.6m). Operating expenses increased by GBP0.25m in the half year
over the equivalent period in 2011 due to inflation and there being
a full six months of Instem Scientific costs compared with four
months from the date of acquisition in 2011. Amortisation increased
by GBP0.1m over the equivalent period in 2011 reflecting the
increased investment in intangibles including those assets acquired
through the purchase of Instem Scientific.
Development costs incurred in the period were GBP0.9m (H1 2011:
GBP0.9m), of which GBP0.1m were capitalised (H1 2011: GBP0.1m).
Non-recurring items include a charge of GBP0.11m in respect of
legal and professional fees associated with pursuing acquisition
opportunities, offset by a GBP0.14m write-back of provision for
deferred contingent consideration in respect of Instem
Scientific.
In common with many businesses with a defined benefit pension
scheme, there was an increase in the funding deficit during the
period calculated in accordance with the provisions of IAS19 that
amounted to GBP1.4m (net of deferred tax), which has been
recognised in Other Comprehensive Income/(Expense). This was a
non-cash charge in the period and arose as a result of lower
discount rates used for calculation of the liabilities and lower
expected returns on assets. As part of the scheme's triennial
actuarial valuation as at 5 April 2011, the Company has agreed a
schedule of payments to the scheme with the trustees and the
Pensions Regulator that is designed to eliminate the funding
deficit over an eight year period. This involves a modest increase
of GBP0.09m in the Company's payments to the scheme, rising from
GBP0.3m to GBP0.4m per annum from January 2013. The defined benefit
pension scheme has remained closed to new members since 2000 and to
future accrual since 2008.
Instem's cash flow is seasonal, with cash inflow being weighted
to the second half of the year resulting from the number of annual
fee renewals occurring at the year end. As a result of the normal
working capital cycle, assisted by sales receipts in the first
quarter from the orders received late in 2011, cash at the end of
June 2012 was GBP1.8m (H1 2011: GBP1.3m) compared with GBP3.4m at
December 2011. A scheduled debt repayment of GBP0.25m was made in
the period together with a payment of GBP0.08m as contingent
consideration relating to the performance of Instem Scientific in
2011.
In line with previous periods, and our current policy of
retaining cash within the business to capitalise on the available
growth opportunities, the Board has not recommended the payment of
a dividend.
Principal risks and uncertainties
The principal risks and uncertainties remain unchanged from
those described in our 2011 Annual Report.
Outlook
Instem has started the second half of the year in line with
management's expectations, as reflected in the Company's trading
update issued on 26 July 2012. The tentative signs of recovery in
our global markets have been sustained and, although the Board
continues to be cautious about the timing of contract flow, our
pipeline remains healthy. Instem has seen growing evidence of
demand for its products internationally, notwithstanding the
ongoing customer delays to implementation of investment
decisions.
Due to the significant levels of recurring revenue and the
profile of our annual licencerenewals, we are confident that the
business will be strongly cash positive in the second half which
will provide sufficient flexibility to support the growth of the
business both through organic investment and selective acquisition
opportunities.
The breadth of the Company's Provantis and Centrus suites
continues to be a key competitive differentiator as does Instem's
ability to offer a blended SaaS and traditional licence model.
Instem is committed to continued product innovation and is
confident of its leading position within the early development
market, which is further bolstered by its extensive geographical
reach. The Company therefore remains well positioned to benefit
from the trends in its end markets towards multi-site,
collaborative and outsourced R&D and the Board is confident in
the future for Instem.
Phil Reason
Chief Executive
19 September 2012
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2012
Unaudited Unaudited Audited
Six months ended Six months ended Year
30 June 30 June ended 31 December
2012 2011 2011
GBP000 GBP000 GBP000
Note
REVENUE 4,869 4,893 10,793
Operating expenses (4,560) (4,306) (8,791)
------------------ ----------------- ----------------------
PROFIT FROM OPERATIONS BEFORE AMORTISATION,
SHARE BASED PAYMENT AND NON RECURRING
INCOME/(COSTS) 309 587 2,002
Amortisation of intangibles (245) (154) (347)
Share based payment (54) (53) (88)
------------------ ----------------- ----------------------
PROFIT BEFORE NON RECURRING INCOME/(COSTS) 10 380 1,567
Non-recurring income/(costs) 4 27 (106) (21)
------------------ ----------------- ----------------------
PROFIT FROM OPERATIONS 37 274 1,546
Finance income 286 265 422
Finance costs (214) (245) (456)
------------------ ----------------- ----------------------
PROFIT BEFORE TAXATION 109 294 1,512
Income tax expense 5 (125) (170) (506)
------------------ ----------------- ----------------------
(LOSS)/PROFIT FOR THE PERIOD/YEAR (16) 124 1,006
------------------ ----------------- ----------------------
OTHER COMPREHENSIVE INCOME/(EXPENSE)
Actuarial loss on retirement benefit
obligations (1,781) (27) (392)
Deferred tax on actuarial loss 428 7 68
Exchange differences on translating foreign
operations (113) 39 96
------------------ ----------------- ----------------------
OTHER COMPREHENSIVE (EXPENSE)/INCOME FOR THE
PERIOD/YEAR (1,466) 19 (228)
------------------ ----------------- ----------------------
TOTAL COMPREHENSIVE (EXPENSE)/INCOME FOR
THE PERIOD/YEAR (1,482) 143 778
================== ================= ======================
(LOSS)/PROFIT ATTRIBUTABLE TO EQUITY
HOLDERS OF THE PARENT COMPANY (16) 124 1,006
================== ================= ======================
TOTAL COMPREHENSIVE (EXPENSE)/INCOME
ATTRIBUTABLE TO EQUITY HOLDERS OF THE
PARENT COMPANY (1,482) 143 778
================== ================= ======================
Earnings per Share from continuing operations
- Basic 3 (0.1)p 1.1p 8.6p
-
Diluted 3 (0.1)p 1.1p 8.5p
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2012
Unaudited Unaudited Audited
30 30 31 December
June June 2011
Note 2012 2011
GBP000 GBP000 GBP000
ASSETS
NON-CURRENT ASSETS
Intangible assets 7,993 8,122 8,103
Property, plant and equipment 230 142 188
Deferred tax assets 636 322 279
---------- ---------- ------------
TOTAL NON-CURRENT ASSETS 8,859 8,586 8,570
CURRENT ASSETS
Inventories 163 166 93
Trade and other receivables 2,238 2,275 3,029
Current tax assets 170 180 64
Cash and cash equivalents 1,848 1,332 3,368
---------- ---------- ------------
TOTAL CURRENT ASSETS 4,419 3,953 6,554
TOTAL ASSETS 13,278 12,539 15,124
========== ========== ============
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 5,636 5,253 7,594
Derivative financial instrument 25 - -
Current tax liabilities 123 - -
Financial liabilities 250 1,020 250
---------- ---------- ------------
TOTAL CURRENT LIABILITIES 6,034 6,273 7,844
NON-CURRENT LIABILITIES
Financial liabilities - 241 250
Retirement benefit obligations 6 3,172 1,281 1,616
---------- ---------- ------------
TOTAL NON-CURRENT LIABILITIES 3,172 1,522 1,866
TOTAL LIABILITIES 9,206 7,795 9,710
---------- ---------- ------------
EQUITY
Share capital 1,177 1,171 1,171
Share premium 7,893 7,813 7,813
Merger reserve (932) (932) (932)
Shares to be issued 142 53 88
Translation reserve 360 416 473
Retained earnings (4,568) (3,777) (3,199)
---------- ---------- ------------
TOTAL EQUITY ATTRIBUTABLE TO
EQUITY HOLDERS OF THE PARENT 4,072 4,744 5,414
TOTAL EQUITY AND LIABILITIES 13,278 12,539 15,124
========== ========== ============
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2012
Unaudited Unaudited Audited
Six months ended Six months ended Year
30 June 30 June ended 31 December 2011
2012 2011 GBP000
GBP000 GBP000
CASH FLOWS FROM OPERATING ACTIVITIES
Result before taxation 109 294 1,512
Adjustments for:
Depreciation 28 36 116
Amortisation of intangibles 245 154 347
Profit on disposal of property, plant and equipment - - (14)
Adjustment to consideration (141) - (80)
Share based payments and shares to be issued 54 53 88
Retirement benefit obligations (265) (251) (245)
Net foreign exchange gains - - 88
Finance income (286) (265) (422)
Finance costs 214 245 456
Forward contract valuation movement 25 12 -
------------------ ----------------- ------------------------
CASH FLOWS FROM OPERATIONS BEFORE MOVEMENTS IN
WORKING CAPITAL (17) 278 1,846
Changes in working capital:
(Increase)/decrease in inventories (70) (29) 47
Decrease/(increase) in trade and other receivables 573 (549) (1,230)
(Decrease)/increase in trade and other payables (1,639) (1,082) 679
------------------ ----------------- ------------------------
CASH (USED IN)/GENERATED FROM OPERATIONS (1,153) (1,382) 1,342
Finance costs (174) (211) (362)
Income tax paid (37) (207) (478)
------------------ ----------------- ------------------------
NET CASH (USED IN)/GENERATED FROM OPERATING
ACTIVITIES (1,364) (1,800) 502
CASH FLOWS FROM INVESTING ACTIVITIES
Finance income received 286 265 300
Income tax paid - (153) -
Purchase of intangible assets (25) (117) (291)
Purchase of property, plant and equipment (70) (11) (152)
Acquisition - cash consideration (82) - -
Disposal of property, plant and equipment - - 30
Acquisition of subsidiary - (200) (200)
Cash acquired with subsidiary - 141 141
------------------ ----------------- ------------------------
NET CASH GENERATED BY/(USED IN) INVESTING
ACTIVITIES 109 (75) (172)
CASH FLOWS FROM FINANCING ACTIVITIES
Series "A" Loan notes repaid - (44) (253)
Loan repayments (250) - -
Payment of finance lease liabilities - (3) -
------------------ ----------------- ------------------------
NET CASH USED IN FINANCING ACTIVITIES (250) (47) (253)
------------------ ----------------- ------------------------
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (1,505) (1,922) 77
Cash and cash equivalents at start of year 3,368 3,263 3,263
Effect of exchange rate changes on the balance of
cash held in foreign currencies (15) (9) 28
------------------ ----------------- ------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD/YEAR 1,848 1,332 3,368
================== ================= ========================
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2012
Called up Share premium Merger Shares to be Translation Retained Total
share capital reserve issued reserve earnings Equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance as at 1
January 2011 1,171 7,813 (932) - 377 (3,881) 4,548
Profit for the
period - - - - - 124 124
Other
comprehensive
income/(expense) - - - - 39 (20) 19
Share based
payment - - - 53 - - 53
-------------- -------------- --------- -------------- ------------ --------------- --------
Balance as at
30 June 2011 1,171 7,813 (932) 53 416 (3,777) 4,744
Profit for the
period - - - - - 882 882
Other
comprehensive
income/(expense) - - - - 57 (304) (247)
Share based
payment - - - 35 - - 35
-------------- -------------- --------- -------------- ------------ --------------- --------
Balance as at
31 December
2011 1,171 7,813 (932) 88 473 (3,199) 5,414
Transactions with
owners in their
capacity as
owners:-
Share issue 6 80 - - - - 86
-------------- -------------- --------- -------------- ------------ --------------- --------
6 80 - - - - 86
Loss for the
period - - - - - (16) (16)
Other
comprehensive
expense - - - - (113) (1,353) (1,466)
Share based
payment - - - 54 - - 54
-------------- -------------- --------- -------------- ------------ --------------- --------
Balance as at
30 June 2012 1,177 7,893 (932) 142 360 (4,568) 4,072
============== ============== ========= ============== ============ =============== ========
NOTES TO THE FINANCIAL INFORMATION
For the six months ended 30 June 2012
GENERAL INFORMATION
The principal activity of Instem plc and subsidiaries is the
provision of world class information solutions for life sciences
research and development.
Notes to the accounts
1. Basis of preparation and accounting policies
Basis of preparation
The Group's half-yearly financial information, which is
unaudited, consolidates the results of Instem plc and its
subsidiary undertakings made up to 30 June 2012. The Group's
accounting reference date is 31 December.
The company is a public limited liability company incorporated
and domiciled in England & Wales. The consolidated financial
information is presented in Pounds Sterling (GBP) which is also the
functional currency of the parent.
The financial information contained in this half-yearly
financial report does not constitute statutory accounts as defined
in section 434 of the Companies Act 2006. It does not therefore
include all of the information and disclosures required in the
annual financial statements.
The financial information for the six months ended 30 June 2011
is also unaudited.
Instem plc's consolidated statutory accounts for the year ended
31 December 2011, prepared under IFRS, have been delivered to the
Registrar of Companies. The report of the auditors on these
accounts was unqualified and did not contain a statement under
Section 498 (2) or (3) of the Companies Act 2006.
Significant accounting policies
The accounting policies used in the preparation of the financial
information for the six months ended 30 June 2012 are in accordance
with the recognition and measurement criteria of International
Financial Reporting Standards ('IFRS') as adopted by the European
Union and are consistent with those which will be adopted in the
annual statutory financial statements for the year ending 31
December 2012.
While the financial information included has been prepared in
accordance with the recognition and measurement criteria of
International Financial Reporting Standards (IFRS), as adopted by
the European Union (EU), these financial statements do not contain
sufficient information to comply with IFRSs.
Instem plc has not applied IAS 34, Interim Financial Reporting,
which is not mandatory for UK AIM listed groups, in the preparation
of this half-yearly financial report.
Cash and cash equivalents
Cash and cash equivalents for the purposes of the Statement of
Cash Flows comprise the net of cash and overdraft balances that are
shown on the Statement of Financial Position in Cash and Cash
Equivalents and Current Financial Liabilities.
2. Segmental Information
The Directors consider that the Group operates in one business
segment, being IT applications to the global healthcare market, and
that therefore there are no additional segmental disclosures to be
made in this financial information.
3. Earnings per Share
(a) Basic
Six months
ended Six months Year ended
30 June ended 31 December
2012 30 June 2011
Unaudited 2011 Unaudited Audited
(Loss)/Profit after tax (GBP000) (16) 124 1,006
----------- ---------------- -------------
Weighted average number of
shares ('000s) 11,745 11,714 11,714
----------- ---------------- -------------
Basic earnings per share (p
per share) (0.1) 1.1 8.6
=========== ================ =============
(b) Diluted
Six months
ended Six months Year ended
30 June ended 31 December
2012 30 June 2011
Unaudited 2011 Unaudited Audited
(Loss)/Profit after tax (GBP000) (16) 124 1,006
----------- ---------------- -------------
Weighted average number of
shares ('000s) 11,745 11,714 11,714
Adjustments for share options
('000s) - 7 134
Adjusted weighted average
number of shares ('000s) 11,745 11,721 11,848
----------- ---------------- -------------
Diluted earnings per share
(p per share) (0.1) 1.1 8.5
=========== ================ =============
4. Non recurring income/(costs)
Non recurring costs of GBP0.11m represent professional fees and
other costs incurred in relation to the identification and
assessment of acquisition targets (2011: acquisition of Instem
Scientific GBP0.11m).
These costs have been offset by the release of GBP0.14m surplus
provision for deferred consideration in respect of Instem
Scientific.
5. Taxation on ordinary activities
Six months
ended Six months Year ended
30 June ended 31 December
2012 30 June 2011
Unaudited 2011 Unaudited Audited
GBP000 GBP000 GBP000
Current tax:
Corporation tax - 83 167
Foreign tax 55 68 162
----------- ---------------- -------------
Total current tax 55 151 329
----------- ---------------- -------------
Deferred tax:
----------- ---------------- -------------
Total deferred tax 70 19 177
----------- ---------------- -------------
Income tax expense 125 170 506
=========== ================ =============
6. Retirement benefit obligations
The latest full triennial actuarial valuation of the defined
benefit scheme, the Instem LSS Pension Scheme, was carried out as
at 5 April 2011 and was finalised on 5 July 2012. The Scheme data
was used by a qualified independent actuary to determine the
valuation for accounts purposes as at 30 June 2012 in accordance
with the provisions of IAS19. The 2011 comparative numbers were
based on the prior triennial actuarial valuation at 5 April 2008
updated at 30 June 2011 and at 31 December 2011. The value of
assets held by the Scheme was calculated by reference to monthly
statements from the Scheme asset management company. The
liabilities at 30 June 2012 were calculated by the actuary on a
basis consistent with the valuations carried out at 30 June 2011
and 31 December 2011.
The expected return on plan assets was determined by considering
the expected returns available on the assets underlying the current
investment portfolio. Expected yields on bonds are based on gross
redemption yields at the reporting date whilst the expected returns
on the equity and property investments reflect the long-term real
rates of return experienced in the respective markets.
30 June 30 June 31 Dec
2012 2011 2011
% % %
Discount rate 4.6 5.9 5.4
Expected return on plan
assets 5.1 6.5 5.3
Inflation 2.9 3.7 3.1
Rate of increase in salaries N/A N/A N/A
Rate of increase in pensions
in 2.9 3.7 3.1
payment
Rate of increase in pensions
in 2.9 3.7 3.1
deferment
Life Expectancy assumptions
Male currently aged 45 24.4 24.3 24.4
Female currently aged 45 26.8 26.7 26.8
Male currently aged 65 22.5 22.4 22.5
Female currently aged 65 24.9 24.8 24.9
======== ======== =======
6 Retirement benefit obligations (continued)
ANALYSIS OF AMOUNT CHARGED TO 30 June 2012 30 June 2011 31 Dec 2011
OTHER FINANCE COSTS GBP000 GBP000 GBP000
Expected returns on pension scheme assets 144 168 334
Interest on pension scheme liabilities (184) (196) (394)
------------- ------------- ------------
Net finance charge (40) (28) (60)
============= ============= ============
ANALYSIS OF AMOUNT RECOGNISED IN 30 June 2012 30 June 2011 31 Dec 2011
OTHER COMPREHENSIVE INCOME GBP000 GBP000 GBP000
Actual return less expected return on pension
scheme assets (15) (40) (480)
Experience losses arising on scheme liabilities - - -
Changes in assumptions underlying the present
value of the scheme liabilities (1,766) 13 88
------------- ------------- ------------
Actuarial loss recognised in other comprehensive
income (1,781) (27) (392)
============= ============= ============
CHANGES IN THE PRESENT VALUE OF THE DEFINED BENEFIT OBLIGATION 30 June 2012 30 June 2011 31 Dec 2011
GBP000 GBP000 GBP000
Opening defined benefit obligation 6,946 6,956 6,956
Interest cost 184 196 394
Actuarial loss/(gain) 1,766 (13) (88)
Benefits paid (59) (182) (316)
------------- ------------- ------------
Closing defined benefit obligation 8,837 6,957 6,946
============= ============= ============
CHANGES IN THE FAIR VALUE OF PLAN ASSETS 30 June 2012 30 June 2011 31 Dec 2011
GBP000 GBP000 GBP000
Opening plan assets 5,330 5,479 5,479
Expected return 144 168 334
Actuarial loss (15) (40) (480)
Contributions by employer 265 251 313
Benefits paid (59) (182) (316)
------------- ------------- ------------
Closing plan assets 5,665 5,676 5,330
============= ============= ============
6 Retirement benefit obligations (continued)
30 June 2012 30 June 2011 31 Dec
GBP000 GBP000 2011
GBP000
Present value of funded obligations (8,837) (6,957) (6,946)
Fair value of plan assets 5,665 5,676 5,330
------------- ------------- --------
Deficit (3,172) (1,281) (1,616)
Related deferred tax asset 761 346 404
------------- ------------- --------
Net pension liability (2,411) (935) (1,212)
============= ============= ========
ANALYSIS OF CUMULATIVE AMOUNT RECOGNISED IN OTHER COMPREHENSIVE INCOME Cumulative Cumulative Cumulative
30 June 2012 30 June 2011 31 Dec
GBP000 GBP000 2011
GBP000
Actual return less expected return on pension scheme assets (66) (91) (51)
Experience gains and losses arising on scheme liabilities (910) (910) (910)
Changes in assumptions underlying the present value of the scheme
liabilities (1,176) 603 590
-------------- -------------- -----------
Cumulative actuarial loss recognised in other comprehensive income (2,152) (398) (371)
============== ============== ===========
The Group expects to contribute GBP0.34m to its defined benefit
plans in this financial year (2011: GBP0.31m).
7. Availability of this Interim Announcement
Copies of this announcement are available on the Company's
website, www.instem.com. Copies of the Interim Report will be
downloadable from the Company's website and available from the
registered office of the Company shortly.
INDEPENDENT REVIEW REPORT TO INSTEM PLC
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the interim financial report for the six
months ended 30 June 2012 which comprises the Consolidated
Statement of Comprehensive Income, Consolidated Statement of
Financial Position, Consolidated Statement of Cash Flows,
Consolidated Statement of Changes in Equity and the related notes.
We have read the other information contained in the interim
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the Company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"'Review of Interim Financial Information performed by the
Independent Auditor of the Entity" issued by the Auditing Practices
Board. Our review work has been undertaken so that we might state
to the Company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company, for our review work, for this
report, or for the conclusions we have formed.
Directors' Responsibilities
The interim financial report is the responsibility of, and has
been approved by, the directors. The directors are responsible for
preparing and presenting the interim financial report in accordance
with the AIM Rules of the London Stock Exchange.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with International Financial
Reporting Standards and International Financial Reporting
Interpretations Committee pronouncements as adopted by the European
Union. The condensed set of financial statements included in this
interim financial report has been prepared in accordance with the
presentation, recognition and measurement criteria of International
Financial Reporting Standards and International Financial Reporting
Interpretations Committee pronouncements, as adopted by the
European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the interim financial
report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the interim financial report for the six months ended 30 June
2012 is not prepared, in all material respects, in accordance with
the presentation, recognition and measurement criteria of
International Financial Reporting Standards and International
Financial Reporting Interpretations Committee pronouncements as
adopted by the European Union, and the AIM Rules of the London
Stock Exchange.
Baker Tilly UK Audit LLP
Chartered Accountants
3 Hardman Street
Manchester M3 3HF
19 September 2012
This information is provided by RNS
The company news service from the London Stock Exchange
END
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