TIDMINS
RNS Number : 8137O
Instem plc
25 September 2013
25 September 2013
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
2013.
Financial Highlights
-- Revenues increased by 13% to GBP5.5m (H1 2012: GBP4.9m)
o Recurring revenues accounted for 76% of total (H1 2012:
74%)
o Software-as-a-Service (SaaS) revenue rose 16% to GBP0.7m (H1
2012: GBP0.6m)
-- Operating profit* of GBP0.7m (H1 2012: GBP0.3m)
-- Seasonal net operating cash outflow of GBP0.6m (H1 2012:
GBP1.2m)
-- Closing cash balance as at 30 June 2013 of GBP0.9m (H1 2012:
GBP1.8m), reflecting normal seasonality in cash collection and
acquisition related payments totalling GBP0.8m
-- Adjusted** earnings per share of 3.2p (H1 2012: (0.6)p)
o Basic earnings per share of (0.7)p (H1 2012: (0.1)p)
*Operating profit before amortisation, share based payment and
non-recurring items.
**After adjusting earnings for the effect of foreign currency
exchange on the revaluation of inter-company balances included in
finance income/(costs), non-recurring items and amortisation of
intangibles on acquisitions.
Operational Highlights
-- Provantis, our integrated pre-clinical study management suite
enabling automated collection, analysis and sharing of data,
continues to perform strongly, securing new customers and upgrade
orders
-- Provantis 9 awarded a significant, 10-year US$6.2m revenue
contract with the National Institute of Environmental Health
Sciences (NIEHS) a US Government body in February 2013
-- Won the VOLTAGE Technology Innovator Award for its submit(TM)
solution, which implements the FDA Standard for the Exchange of
Nonclinical Data (SEND)
-- Acquisition of Logos Technologies (rebranded "Instem
Clinical") and its ALPHADAS product suite in May 2013
-- SEND contract with major healthcare customer - May 2013
-- Customer retention rate remained strong at 95%
-- Strong pipeline of new business opportunities across all
product sets
-- Instem Clinical Won a major new client, the operating
subsidiary of Retroscreen Virology Group PLC (AIM:RVG
"Retroscreen"), through a contract for the newly acquired ALPHADAS
early clinical software suite, worth high six-figures GBP of
revenue
Phil Reason, CEO of Instem plc, commented: "We are very pleased
with Instem's strategic, operational and financial progress in the
first half of the year. We have continued to broaden our product
range, extend our geographical reach and sign top tier clients
across the breadth of our expanded product set. In addition, Instem
also made an important move into the early phase clinical market
through the acquisition of Logos Technologies, which has already
proven beneficial.
Both the regulatory and fiscal environments continue to be
favourable to Instem, driving demand for all areas of our product
suite. With a strong order intake in the first half, the Board
continues to view the future prospects for the business with
confidence."
For further information, please contact:
Instem plc +44 (0) 1785 825 600
Phil Reason, CEO
Nigel Goldsmith, CFO
N+1 Singer (Nominated
Adviser & Broker) +44 (0) 20 7496 3000
Richard Lindley / Aubrey
Powell
Newgate Threadneedle +44 (0) 20 7653 9850
Fiona Conroy
Caroline Evans-Jones
Jasper Randall
About Instem plc
Instem is a leading supplier of IT applications to the early
development healthcare market delivering compelling solutions for
data collection, management and analysis across the R&D
continuum. Instem applications are used by customers worldwide,
meeting the rapidly expanding needs of life science and healthcare
organisations for data-driven decision making leading to safer,
more effective products.
Instem's portfolio of software solutions increases client
productivity by automating study-related processes while offering
the unique ability to generate new knowledge through the extraction
and harmonisation of actionable scientific information.
Instem supports its clients through full service offices in the
United States, United Kingdom and China with additional locations
in India and a full service distributor based in Japan.
To learn more about Instem solutions and its mission, please
visit www.instem.com or its investor centre
http://investors.instem.com/
Chairman's Statement
The achievements in the first half of the year demonstrate
continued progress by the Group as it successfully executes its
strategy of both increasing its market share and extending its
product portfolio. The growth in revenues and operating profit
during the first half of the year, and the recurring element of
these revenues, is particularly encouraging.
Instem has again proven to be the leading supplier in the
pre-clinical marketplace, extending its footprint within existing
clients and across the industry as a whole. Instem has a broad base
of blue chip customers and has been pleased with the continued
uptake of its solutions by the most notable global leaders in the
pharmaceutical market.
Of great importance, and testimony to the quality of our people
and our technology, was the decision of the NIEHS to use Provantis
as the cornerstone IT system for its National Toxicology Program.
The contract is planned to run for 10 years, and is expected to
provide a minimum of $6.2m revenues to Instem over that period.
Further, in May 2013, Instem acquired Logos Technologies and
rebranded the business 'Instem Clinical'. This acquisition allows
Instem to make an important strategic step into the adjacent early
phase clinical market. We were delighted that in June Instem
Clinical secured its first contract win since being acquired by
Instem. This was from Retroscreen, a virology healthcare business
that recently floated on AIM.
The pipeline of opportunities continues to be strong across our
established product set, and our entry into the under-automated
early phase clinical market represents an additional opportunity.
Following the sluggishness of the market in recent years, the US
and Chinese markets in particular are now showing signs of
recovery.
Instem remains well positioned to benefit from the strategic
trends in its end markets towards multi-site, collaborative and
outsourced R&D. The Company has a strong base of recurring
revenues and with excellent renewal rates consistently above 95%,
and the stronger order intake in the first half, the Board is
confident in the prospects for Instem.
David Gare
Chairman
24 September 2013
Operational Review
The business has been developed extensively in the last three
years, building on its leading position in the global early
development healthcare market. During the half year, Instem has
further augmented its strong position to drive growth through a
broadened range of software solutions and extended market
reach.
The global pharmaceutical market, and particularly the Contract
Research Organisations (CROs) that service it, continue to slowly
recover. Importantly, the significant polarisation of new business
orders towards the final quarter of the financial year experienced
in the last two years has this year moderated, with a much improved
level of bookings being received in the first half of the year.
The return to growth of the preclinical and early clinical CROs
that was reflected in Instem's H2 2012 performance has continued.
CROs have provided a significant proportion of new business in the
first half of the year, and are a strong component of the forward
pipeline. Several of Instem's small to medium sized CRO clients and
mid-sized pharma have also added additional user licenses as their
operations have expanded.
In line with market sentiment, we continue to focus the business
model on recurring revenue streams, as illustrated with the NIEHS
contract, rather than on initial licencing of software. This may
have a short-term impact on revenues and profits but will
substantially improve the predictability of future income.
Acquisition of Logos Technologies
The IT supplier marketplace is highly fragmented and Instem's
customer base has indicated its preference to purchase software
from a smaller number of core suppliers, such as Instem. During the
first half of the year, Instem again added to its product
capabilities through the acquisition of London-based Logos
Technologies. The consideration was for an initial cash amount of
GBP0.55 million with an additional consideration of up to GBP4.45
million (in a mixture of cash and shares at the Company's
discretion) depending on the achievement of profit related
performance targets over the next four years.
The early phase clinical market is much less automated in terms
of data capture and analysis than Instem's core pre-clinical
market, with larger clinics typically not yet fully automated and
the majority of smaller clinics still using paper records. Logos'
ALPHADAS(R) software suite is the market leading, e-source data
capture system and site automation software suite for early phase
clinical studies.
This acquisition therefore represents a significant strategic
development, as it both extends Instem's addressable market and
increases cross selling opportunities for our Provantis suite of
study automation and workflow products, as well as for our data
integration and bioinformatics solutions.
Global Customer Wins & Renewals
Instem's ability to provide support for all geographic areas and
offer software via either a 'SaaS' or perpetual licence model
provides the Group with a strong competitive advantage. Due to
this, and the strength of the product set, Instem continues to
outperform in competitive product evaluations.
The Group has an impressive and longstanding customer list of
leading global pharmaceutical, chemical, academic and government
research organisations. During the half year, Instem was pleased to
add several prestigious names, to extend significantly its
relationship with the NIEHS, and to experience an encouraging level
of sales across the enlarged product suite.
Provantis: pre and non-clinical studies
Provantis is the market-leading suite of pre-clinical Study
Management and Data Collection modules and its dominant position
continues to generate significant revenues for the Group.
The strong performance of Provantis version 9, since its launch
in 2012, has continued in the first half of 2013 generating upgrade
and additional module sales from existing clients. Once again it
was the leading solution in the growing Asian market, as
demonstrated by the addition of a Chinese government research
laboratory client during the period.
The Provantis Portal, a new module introduced in 2012, gained
two further clients. The portal enables CROs, their sponsors and
study partners to access and download Provantis study data in near
real-time through commonly used web browsers.
Centrus: data access and harmonisation
The continuing momentum of Centrus, Instem's software suite
aiding enterprise information integration in early drug
development, data management and reporting, has been pleasing. In
particular, modules associated with the US Food and Drug
Administration sponsored SEND are proving increasingly attractive
following the FDA's statement of preference for SEND datasets.
Three additional clients licensed Centrus modules in the period;
including the purchase of the entire Centrus software suite by a
world leading R&D organisation.
During the half year Centrus Submit gained further endorsement
and was recognised for innovation and industry leadership at the
SmartCEO VOLTAGE Awards.
Instem Scientific: translational science capabilities
The acquisition of BioWisdom in 2011 provided sophisticated
technologies to aggregate, analyse and extract knowledge from huge
volumes of disparate internal and external data. This ability
enables considerable additional value to be unlocked from billions
of dollars of prior research investments. These big data and
translational science capabilities are expected to become
increasingly compelling to the evolving pharma industry.
Instem completed the development and launch of the next version
of the SRS Data integration platform (version 8.4) in early July
2013, including advanced searching and matching features, further
enhancing our clients' abilities to identify patterns and trends in
their data, generate new knowledge and scientific insight. Two new
clients for SRS were added in the period, including the first sale
as an integrated part of the Centrus suite.
A new version of Omniviz, an advanced visualisation and data
projection solution, was also released in the period. This
contributed to securing several additional license purchases from
existing customers and a number of new clients.
Trimetra Partnership - Logbook: GLP-compliant paper replacement
application with powerful tools
Logbook is an Electronic Notebook and Data Collection system,
which Instem has partnered with Trimetra to provide. Logbook
replaces a wide variety of GLP (Good Laboratory Practice) and
Non-GLP paper forms that exist in many laboratory environments.
Amongst other benefits, Logbook creates a fully GLP compliant audit
trail, enables electronic archiving of lab records and provides
comprehensive search capabilities. Reflecting these and other user
advantages, Instem continues to see a good level of interest in
Logbook from customers and prospects alike and secured another new
client in the period.
Instem Clinical - ALPHADAS: early phase clinical study
software
Since acquiring Logos Technologies (now branded 'Instem
Clinical') in May 2013, the business has performed well and
continues to do so. The early phase clinical market is relatively
under-automated and there is recognition that IT processes and new
software capabilities represent an opportunity to drive
efficiencies, particularly in the recruitment and screening phases
of trials. The first post-acquisition new client for Instem
Clinical was Retroscreen which took a perpetual licence plus
implementation services, with on-going annual support and
maintenance fees.
Prior to the acquisition, Logos Technologies had developed an
innovative tablet version of parts of its core software, addressing
the market demand for solutions that run on the latest Android
technology. Developed in conjunction with the CRO Inflamax
Research, the solution is now in live use. Earlier this year,
Inflamax authorised work to commence on the next version of this
platform, which is expected to further enhance the potential for
this product in the wider market.
Financial Review
The financial results demonstrate a good performance in the
period with total revenues increasing by 13% year-on-year to
GBP5.5m (H1 2012: GBP4.9m). Instem's core business, excluding
revenue from the recently acquired Instem Clinical, increased by 4%
compared with 2012 to GBP5.1m.
The business continued to expand in developing markets with
revenue from outside North America and Europe, primarily
Asia-Pacific, increasing to GBP0.7m (H1 2012: GBP0.6m),
representing 12% of total revenue (H1 2012: 12%).
Instem's business model consists of fees for perpetual licences,
annual support & maintenance, SaaS subscriptions and
professional services. In the period, approximately 76% (H1 2012:
74%) of revenue, excluding Instem Clinical, (70% including Instem
Clinical) was of a recurring nature from annual support &
maintenance fees and SaaS subscriptions. SaaS revenue was up 16% to
GBP0.7m (H1 2012: GBP0.6m). The Group generates the majority of its
revenue in US dollars and there are hedging policies in place to
protect the sterling values.
Profit from operations before amortisation, share-based payment
and non-recurring costs for the period, amounted to GBP0.7m (H1
2012: GBP0.3m). Operating expenses increased by GBP0.2m in the half
year compared with the equivalent period in 2012 including the
acquired Instem Clinical cost base. Amortisation of internally
developed intangibles remained constant at GBP0.2m.
Development costs incurred in the period were GBP0.8m (H1 2012:
GBP0.9m), of which GBP0.1m was capitalised (H1 2012: GBP0.1m).
Non-recurring items include a charge of GBP0.1m in respect of
legal and professional fees associated with the acquisition of
Instem Clinical (H1 2012: nil).
Finance income/(costs) include a loss of GBP0.2m arising from
the revaluation of inter-company balances at the period end using
an exchange rate of $1.52 (H1 2012: gain GBP0.1m). If the
revaluation had been carried out using exchange rates applicable at
the date of this announcement the loss would be largely
eliminated.
The increase in the funding deficit of the Company's defined
benefit pension scheme during the period was GBP0.2m (net of
deferred tax). The defined benefit pension scheme is calculated in
accordance with the provisions of IAS19 and has been recognised in
Other Comprehensive Expense. This non-cash charge arose in the
period due to a combination of lower discount rates and a higher
rate of inflation used for calculation of the liabilities that
exceeded the gains in asset values.
Instem's cash flow is seasonal, with cash inflow being weighted
to the second half of the year, resulting from the annual fee
renewals occurring at the year-end. As a result of the normal
working capital cycle, cash at the end of June 2013 was GBP0.9m (H1
2012: GBP1.8m) compared with GBP2.4m at December 2012. A final
scheduled debt repayment of GBP0.25m was made in the period leaving
the Company debt free. The first half cash position also reflects
the initial outlay for the Instem Clinical acquisition of GBP0.58m,
including stamp duty, funded from internal cash reserves.
In line with previous periods 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 2012 Annual Report, available at
www.instem.com.
Outlook
The Company has continued to maintain its leading position in
the pre-clinical market and during the period has made important
strategic progress including expansion of its product sets and
entry into the early phase clinical market. The Board will continue
to evaluate additional internal development and acquisition
opportunities to extend Instem's product portfolio and market reach
as appropriate.
The Company is seeing positive signs of growth within the
pre-clinical and early clinical CROs. Indeed, Instem sees this as a
lead indicator that the broader global pharmaceutical market is
continuing to recover slowly. In addition, the industry's
regulatory and fiscal pressures continue to work in Instem's
favour, driving demand for all areas of our product suite.
Instem's well-established study automation and workflow product,
Provantis, continues to dominate its market and is anticipated to
deliver the majority of revenues to the Group in the short to
medium term. However, growing interest in Centrus, the newer
translational science solutions and the recently acquired ALPHADAS
suite, offer additional revenue streams for the future and
represent important entry points for winning new business.
Instem is a robust business, with net cash and a valuable
blue-chip customer base delivering high levels of recurring
revenue. We believe Instem has bolstered its already strong
position, and is well placed to take advantage of the structural
changes in the processes of drug development that are currently
taking place, which should drive further growth in global demand
across our expanded product set.
Phil Reason
Chief Executive
24 September 2013
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2013
Unaudited Unaudited Audited
Six months ended Six months ended Year
30 June 30 June ended 31 December
2013 2012 2012
GBP000 GBP000 GBP000
Note
REVENUE 5,484 4,869 10,661
Operating expenses (4,802) (4,560) (9,157)
------------------ ----------------- ----------------------
PROFIT FROM OPERATIONS BEFORE AMORTISATION,
SHARE BASED PAYMENT AND NON RECURRING
(COSTS)/INCOME 682 309 1,504
Amortisation of intangibles (233) (245) (397)
Share based payment (53) (54) (86)
------------------ ----------------- ----------------------
PROFIT BEFORE NON RECURRING (COSTS)/INCOME 396 10 1,021
Non-recurring (costs)/income 4 (110) 27 137
------------------ ----------------- ----------------------
PROFIT FROM OPERATIONS 286 37 1,158
Finance income 4 286 238
Finance costs (290) (214) (144)
------------------ ----------------- ----------------------
PROFIT BEFORE TAXATION - 109 1,252
Income tax expense 5 (78) (125) (208)
------------------ ----------------- ----------------------
(LOSS)/PROFIT FOR THE PERIOD/YEAR (78) (16) 1,044
------------------ ----------------- ----------------------
OTHER COMPREHENSIVE INCOME/(EXPENSE)
Actuarial loss on retirement benefit
obligations (297) (1,781) (1,833)
Deferred tax on actuarial loss 68 428 389
Exchange differences on translating foreign
operations 111 (113) (189)
------------------ ----------------- ----------------------
OTHER COMPREHENSIVE EXPENSE FOR THE
PERIOD/YEAR (118) (1,466) (1,633)
------------------ ----------------- ----------------------
TOTAL COMPREHENSIVE EXPENSE FOR THE
PERIOD/YEAR (196) (1,482) (589)
================== ================= ======================
(LOSS)/PROFIT ATTRIBUTABLE TO EQUITY
HOLDERS OF THE PARENT COMPANY (78) (16) 1,044
================== ================= ======================
TOTAL COMPREHENSIVE EXPENSE ATTRIBUTABLE TO
EQUITY HOLDERS OF THE PARENT COMPANY (196) (1,482) (589)
================== ================= ======================
Earnings per Share from continuing operations
- Basic 3 (0.7)p (0.1)p 8.9p
-
Diluted 3 (0.7)p (0.1)p 8.9p
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2013
Unaudited Unaudited Audited
30 30 31 December
June June 2012
2013 2012
GBP000 GBP000 GBP000
ASSETS
NON-CURRENT ASSETS
Intangible assets 11,439 7,993 8,034
Property, plant and
equipment 229 230 187
Deferred tax assets 654 636 732
---------- ---------- ------------
TOTAL NON-CURRENT ASSETS 12,322 8,859 8,953
CURRENT ASSETS
Inventories 267 163 90
Trade and other receivables 3,760 2,238 3,750
Current tax assets 132 170 235
Cash and cash equivalents 926 1,848 2,450
---------- ---------- ------------
TOTAL CURRENT ASSETS 5,085 4,419 6,525
TOTAL ASSETS 17,407 13,278 15,478
========== ========== ============
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 7,738 5,638 7,037
Derivative financial
instrument 17 25 -
Current tax liabilities - 123 -
Financial liabilities - 250 250
---------- ---------- ------------
TOTAL CURRENT LIABILITIES 7,755 6,036 7,287
NON-CURRENT LIABILITIES
Trade and other payables 1,563 - -
Retirement benefit obligations 3,237 3,172 3,196
---------- ---------- ------------
TOTAL NON-CURRENT LIABILITIES 4,800 3,172 3,196
TOTAL LIABILITIES 12,555 9,208 10,483
---------- ---------- ------------
EQUITY
Share capital 1,176 1,176 1,176
Share premium 7,892 7,892 7,892
Merger Reserve (932) (932) (932)
Shares to be issued 227 142 174
Translation reserve 395 360 284
Retained earnings (3,906) (4,568) (3,599)
---------- ---------- ------------
TOTAL EQUITY ATTRIBUTABLE
TO EQUITY HOLDERS OF
THE PARENT 4,852 4,070 4,995
TOTAL EQUITY AND LIABILITIES 17,407 13,278 15,478
========== ========== ============
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2013
Unaudited Unaudited Audited
Six months ended Six months ended Year
30 June 30 June ended 31 December 2012
2013 2012 GBP000
GBP000 GBP000
CASH FLOWS FROM OPERATING ACTIVITIES
Result before taxation - 109 1,252
Adjustments for:
Depreciation 64 28 158
Amortisation of intangibles 233 245 397
Adjustment to consideration - (141) (241)
Share based payments and shares to be issued 53 54 86
Retirement benefit obligations (322) (265) (337)
Net foreign exchange (gains)/losses (89) - 219
Finance income (4) (286) (238)
Finance costs 290 214 144
Forward contract valuation movement 17 25 -
------------------ ----------------- ------------------------
CASH FLOWS FROM OPERATIONS BEFORE MOVEMENTS IN
WORKING CAPITAL 242 (17) 1,440
Changes in working capital:
(Increase)/decrease in inventories (169) (70) -
Decrease/(increase) in trade and other receivables 271 573 (953)
Decrease in trade and other payables (963) (1,639) (64)
------------------ ----------------- ------------------------
CASH (USED IN)/GENERATED FROM OPERATIONS (619) (1,153) 423
Finance costs (24) (174) (60)
Income tax received/(paid) 60 (37) (442)
------------------ ----------------- ------------------------
NET CASH USED IN OPERATING ACTIVITIES (583) (1,364) (79)
CASH FLOWS FROM INVESTING ACTIVITIES
Finance income received 4 286 19
Purchase of intangible assets (149) (25) (328)
Purchase of property, plant and equipment (105) (70) (158)
Acquisition of subsidiary (575) (82) (85)
Cash acquired with subsidiary 22 - -
------------------ ----------------- ------------------------
NET CASH (USED IN)/GENERATED FROM INVESTING
ACTIVITIES (803) 109 (552)
CASH FLOWS FROM FINANCING ACTIVITIES
Loan repayments (250) (250) (250)
NET CASH USED IN FINANCING ACTIVITIES (250) (250) (250)
------------------ ----------------- ------------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,636) (1,505) (881)
Cash and cash equivalents at start of year 2,450 3,368 3,368
Effect of exchange rate changes on the balance of
cash held in foreign currencies 112 (15) (37)
------------------ ----------------- ------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD/YEAR 926 1,848 2,450
================== ================= ========================
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2013
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 2012 1,171 7,813 (932) 88 473 (3,199) 5,414
Share Issue 5 79 - - - - 84
Loss for the
period - - - - - (16) (16)
Other
comprehensive
income/(expense) - - - - (113) (1,353) (1,466)
Share based
payment - - - 54 - - 54
-------------- -------------- --------- -------------- ------------ --------------- --------
Balance as at
30 June 2012 1,176 7,892 (932) 142 360 (4,568) 4,070
Profit for the
period - - - - - 1,060 1,060
Other
comprehensive
income/(expense) - - - - (76) (91) (167)
Share based
payment - - - 32 - - 32
-------------- -------------- --------- -------------- ------------ --------------- --------
Balance as at
31 December
2012 1,176 7,892 (932) 174 284 (3,599) 4,995
Share Issue - - - - - - -
Loss for the
period - - - - - (78) (78)
Other
comprehensive
income/(expense) - - - - 111 (229) (118)
Share based
payment - - - 53 - - 53
-------------- -------------- --------- -------------- ------------ --------------- --------
Balance as at
30 June 2013 1,176 7,892 (932) 227 395 (3,906) 4,852
============== ============== ========= ============== ============ =============== ========
NOTES TO THE FINANCIAL INFORMATION
For the six months ended 30 June 2013
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 2013. 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 2012
is also unaudited.
Instem plc's consolidated statutory accounts for the year ended
31 December 2012, 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 2013 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 2013.
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 IFRS's.
Instem plc and its subsidiaries have 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 these financial statements.
3. Earnings per Share
(a) Basic
Six months
ended Six months Year ended
30 June ended 31 December
2013 30 June 2012
Unaudited 2012 Unaudited Audited
(Loss)/Profit after
tax (GBP000) (78) (16) 1,044
----------- ---------------- -------------
Weighted average number
of shares (000's) 11,765 11,745 11,755
----------- ---------------- -------------
Basic earnings per share
(p per share) (0.7) (0.1) 8.9
=========== ================ =============
(b) Diluted
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2013 2012 2012
Unaudited Unaudited Audited
(Loss)/Profit after
tax (GBP000) (78) (16) 1,044
----------- ----------- -------------
Weighted average number
of shares (000's) 11,765 11,745 11,755
Adjustments for share
options (000's) - - -
Adjusted weighted average
number of shares (000's) 11,765 11,745 11,755
----------- ----------- -------------
Diluted earnings per
share (p per share) (0.7) (0.1) 8.9
=========== =========== =============
The loss for the period and the weighted average number of
ordinary shares for calculating the diluted loss per share for the
period ended 30 June 2013 are identical to those for the basic loss
per share. This is because the outstanding share options would have
the effect of reducing the loss per ordinary share and would
therefore not be dilutive under the terms of International
Accounting Standard ("IAS") No 33.
4. Non recurring costs
Non recurring costs of GBP0.1m represent professional fees and
other costs incurred in relation to the acquisition of Logos
Technologies Limited.
5. Taxation on ordinary activities
Six months Year
ended Six months ended
30 June ended 31 December
2013 30 June 2012
Unaudited 2012 Unaudited Audited
GBP000 GBP000 GBP000
Current tax:
Corporation tax 30 0 179
Foreign tax 21 55 142
R&D tax credit (44) - (50)
----------- ---------------- -------------
Total current tax 7 55 271
----------- ---------------- -------------
Deferred tax:
----------- ---------------- -------------
Total deferred tax 71 70 (63)
----------- ---------------- -------------
Income tax expense 78 125 208
=========== ================ =============
6. Acquisition of Logos Technologies Limited (now Instem Clinical)
On 10 May 2013 the Company acquired the whole share capital of
Logos Technologies Limited using an initial cash consideration and
a deferred element, based upon defined EBIT performance, of cash
and shares. Initial cash consideration paid was GBP0.55m plus stamp
duty, and contingent consideration amounting to GBP2.89m is
expected to become payable in a mix of cash and shares, based on
the directors' assessment of the EBIT generated by Logos during the
earn out period. Provisional fair values have been ascribed to the
assets and liabilities acquired.
7. Availability of this Interim Announcement
Copies of this announcement are available to download from the
Company's website, www.instem.com as well as being available from
the Company's registered office at Diamond Way, Stone Business
Park, Stone, Staffordshire ST15 0SD, UK.
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 2013 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
2013 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
24 September 2013
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PGUCUBUPWPGC
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