TIDMINS
RNS Number : 1324U
Instem plc
05 April 2016
Instem plc
("Instem", the "Company" or the "Group")
Unaudited Full Year Results
Instem (AIM: INS.L), a leading provider of IT solutions to the
global early development healthcare market, announces its unaudited
full year results for the 12 months ended 31 December 2015.
Financial Highlights:
-- Revenues increased 22% to GBP16.3m (2014: GBP13.4m)
o Recurring revenues increased 9% to GBP10.0m (2014:
GBP9.2m)
o Software as a Service (SaaS) revenues increased 14% to GBP2.1m
(2014: GBP1.8m)
-- EBITDA* increased 43% to GBP2.5m (2014: GBP1.7m)
-- Adjusted** profit before tax of GBP1.7m (2014: GBP1.1m)
-- Loss before tax of GBP0.4m (2014: profit GBP0.2m)
o After charging GBP1.4m of previously announced deferred
contingent consideration (2014: GBPnil)
-- Adjusted** basic earnings per share of 13.3p (2014: 8.4p)
-- Adjusted** fully diluted earnings per share of 12.9p (2014: 8.3p)
-- Net cash balance as at 31 December 2015 of GBP2.2m (2014: GBP1.7m)
o After paying GBP1.3m of deferred contingent consideration
(2014: GBP0.3m)
*Earnings before interest, tax, depreciation, amortisation and
non-recurring costs.
**After adjusting 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. Profit is adjusted in this way to provide a
clearer measure of underlying operating performance.
Operational Highlights:
-- Final deferred contingent consideration was paid for
Perceptive Instruments and agreed early for Instem Clinical
(formerly Logos Technologies) after both exceeded performance
criteria.
-- Significant ALPHADAS Contract wins included three announced
in May 2015 worth approximately GBP1.4 million.
-- Won the majority of SEND business placed worldwide.
-- Instem Japan incorporated and Tokyo office opened.
Post Balance Sheet Event
In February 2016 the Company announced it had raised GBP5.0
million (before expenses) by way of a placing of 2,500,000 New
Ordinary Shares, at a price of 200 pence per ordinary share, with
certain new and existing investors. The net proceeds are intended
to be used in the near term primarily to fund growth through
acquisition and also for working capital to enhance organic
growth.
Phil Reason, CEO of Instem plc, commented:
"Our core addressable markets continue to grow in terms of the
number of potential customers and the absolute size. Our products
and services recorded significant year-on-year revenue growth
during 2015 and we are pleased to report that we entered the new
financial year with a strong forward order book. Regulatory
requirements and the enlarged drug R&D pipeline are expected to
continue to stimulate demand for Instem's solutions and
services.
The recently strengthened balance sheet provides opportunities
to invest further in our core products and services, accelerate the
development of new offerings such as KnowledgeScan and SEND
submit(TM) and play a significant role in consolidating the
industry in which we operate.
We therefore look forward to the coming year with confidence and
expect to deliver further operational and financial progress."
For further information, please
contact:
Instem plc +44 (0) 1785 825 600
Phil Reason, Chief Executive Officer
Nigel Goldsmith, Chief Financial
Officer
N+1 Singer (Nominated Adviser
& Broker) +44 (0) 207 496 3000
Richard Lindley
Nick Owen
James White
Walbrook Financial PR +44 (0) 207 933 8780
Paul Cornelius
Helen Cresswell
Sam Allen
Paul Whittington
About Instem
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 in use 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 over 450 clients through full service offices in
the United States, the United Kingdom, India, China and Japan, with
additional presence in France.
To learn more about Instem solutions and its mission, please
visit www.instem.com
Chairman's Statement
The positive market dynamics experienced at the end of 2014
continued throughout the year, providing an encouraging backdrop
for the development of the Group. I am, therefore, pleased to be
able to report that all areas of business achieved successful
outcomes for the year.
Consequently, not only has the Group increased revenue and
underlying profits during the year, but we are also increasingly
optimistic about 2016.
We have maintained our pre-eminent position in the preclinical
market whilst also winning the majority of business placed globally
in the early clinical market.
A highlight of the year was the market leadership demonstrated
by our team offering Standard for the Exchange of Non-clinical Data
(SEND) software and services: where we once again secured the
majority of business placed during 2015. This was particularly
important following the announcement from the US Food & Drug
Administration ("FDA") mandating SEND at the end of 2014.
A cornerstone of our global leadership strategy for each of our
product lines is to ensure that we are able to provide sales and
service facilities locally wherever there are substantial groupings
of customers. Consequently, we opened an office in Tokyo, Japan,
complementing existing Instem Asian locations in Pune, India and
Shanghai, China. We expect the Instem Japan facility to start to
contribute to our revenues during 2016.
At a corporate level we were pleased to make the final payment
for the Perceptive Instruments' acquisition as a result of it
exceeding our targets. Further, in December 2015, we announced the
early agreement of the Instem Clinical (formerly Logos
Technologies) earn-out. Given this business had out-performed in
each of its prior earn out years, the Board determined that in
order to maximise its potential it was appropriate to fully align
the objectives of both its shareholders, who include key managers
in the business and the Group.
Following the end of the financial year, in February 2016 the
Company announced it had raised GBP5.0 million (before expenses) by
way of a placing of 2,500,000 New Ordinary Shares with new and
existing investors. The Board intends to use the proceeds of this
placing, along with existing cash resources, to continue the
Group's acquisition strategy and to provide additional working
capital. We believe that having the funding in place will be of
significant benefit for the execution of this strategy, as a result
of providing certainty to potential vendors during the negotiation
of deal terms.
Finally, I would like to take this opportunity once again to
thank all of our staff, customers and partners for their ongoing
support.
David Gare, Non-Executive Chairman
4 April 2016
Chief Executive's Statement
The twelve months to 31 December 2015 represented another year
of significant financial and operational progress across the
Group.
The year began with a record order book and a strengthening
market backdrop. This was converted into revenue through successful
contract execution, supplemented by winning and delivering new
business contracts throughout the year.
Notably in 2015, both our clinical and preclinical products and
services gained traction, as a result of record numbers of
compounds progressing through the early stages of the drug
development pipeline. Our laboratory workflow automation solutions
were selected to deliver efficiencies, replacing "paper" records,
legacy in-house applications or ageing commercial systems. Further,
new regulatory requirements also drove the adoption of Instem's
technology. Once again, there was a blend of perpetual license
sales and operationally effective SaaS deployments, with recurring
revenue growing in absolute terms year-on-year. This provides the
business with increased revenue visibility and long-term
stability.
Importantly for the Group as a whole, the growth experienced in
the preclinical market during 2014 now appears to be flowing
through into increased activity levels within the early clinical
phase of drug development. Consequently, ALPHADAS, the Group's
leading early phase clinical software platform, generated record
levels of new business.
The Group continues to attract some of the most capable people
in the industry, appointing senior new hires within the SEND
business and establishing an office in Tokyo, Japan. This office
will support distributors and customers across the region.
Operational Review
All areas of the Group are now taking advantage of Instem's
global operations with marketing, sales, service delivery and
client support now available through offices in the UK, North
America, China, India and Japan. Although the Group has operated
successfully in Japan through local distributors, establishing an
Instem presence is expected to increase demand, in what is the
second highest spending nation in the world on pharmaceutical
research and development.
The Group's Pune, India operation has moved into much larger
premises to accommodate the further expansion of software
development, back office services and, increasingly, client related
service delivery activities. Pune enjoys a reputation for academic
excellence and is one of India's most attractive cities in which to
live; enabling us to secure both local talent and exceptional
candidates from other areas of the country.
(MORE TO FOLLOW) Dow Jones Newswires
April 05, 2016 02:00 ET (06:00 GMT)
Preclinical - Provantis(R) & Perceptive Instruments
Opportunities for Provantis and Perceptive Instruments solutions
within the preclinical market continued to increase during the year
as study volumes, mostly carried out by Contract Research
Organisations (CROs), accelerated. The Group's "best-of-breed"
products increased their share of the preclinical market as
customers sought to leverage additional modules and new software
features with both new and existing clients increasingly adopting
operationally effective SaaS based deployments.
Provantis, the Group's primary preclinical software suite,
continued to win licence sales across the Group's client base with
continued displacement of legacy in-house systems as new
implementation projects progressed during the year. By the end of
the first half of 2015, all the Group's US-based SaaS customers
were running the latest product versions, enabling us to achieve
higher quality support and increased effectiveness of our delivery
infrastructure.
Perceptive Instruments ("Perceptive") continued to perform
strongly as part of an enlarged business. In particular, Perceptive
had success in up-selling higher value modules, such as AMES study
manager and Cyto Study Manager, into existing Instem clients.
During the year, due to the strong financial performance of
Perceptive for the period to November 2014, the Group paid the
vendors the maximum consideration for the acquisition, in
accordance with the original acquisition agreement.
Perceptive is located in Suffolk, UK, and develops, manufactures
and supplies software and hardware products for in-vitro study
management and data collection in the genetic toxicology,
microbiology and immunology markets. Perceptive is the leading
technology provider within its niche market and there are few
competitors, of any scale, active in the space.
Early Stage Clinical - ALPHADAS(TM)
Our ALPHADAS early phase clinical software solution performed
particularly well during 2015. We added five new clients across
mainland Europe, Canada and the USA and additional sites/users for
existing clients. New releases of ALPHADAS have been widely
implemented by existing customers, delivering important new
capabilities and enticing clients to adopt further modules from the
product suite.
Instem entered the early phase clinical market in 2013 with the
acquisition of Logos Technologies, now Instem Clinical, and its
product suite ALPHADAS. Since the acquisition, ALPHADAS revenues
have grown strongly and it is now a core offering of the Group.
Instem Scientific
The transition of Instem Scientific, from a software products
business to an 'outcome-led' managed service, continued during the
year, with further investment in "KnowledgeScan". KnowledgeScan
allows our specialist investigators to provide rigorous insight
into potential and observed issues during all stages of new
compound development, by combining powerful information technology
with transparent, systematic and comprehensive analytical
workflows. The service leverages the Group's powerful big-data
technology assets and is designed to monitise the Group's expertise
across its extensive scientific content, ontologies and
vocabularies, which have been developed over multiple projects
during the last 10 years.
We believe this outcome-led service fits well with the ongoing
restructuring across the pharmaceutical industry, which has led to
a significant increase in R&D outsourcing. Whilst the financial
benefits of Instem Scientific may not be felt by the wider Group
immediately, pilot KnowledgeScan projects have progressed extremely
well during the year and keep Instem at the leading edge of this
field of development.
Electronic Regulatory Submissions (SEND) - submit(TM)
As highlighted in the half-year statement, the new business
pipeline for both our software solutions and SEND ("Standard for
the Exchange of Non-clinical Data") data set conversion services
continued to increase month-on-month during the year as the new
electronic regulatory submission standard started to become
mandatory in our client community.
Pleasingly, Instem continued to secure the overwhelming majority
of all new business placed in this area, converting some of this
into revenue in 2015 with the balance contributing to the strong
opening order backlog for 2015. We continue to believe that
Instem's submit(TM) software suite offers the most advanced product
to meet the requirements of the SEND standard.
As a direct consequence of the increased demand for SEND, the
Group further strengthened the submit(TM) development, sales and
implementation teams during the year. In particular, two highly
experienced market facing consultants were hired, both of whom have
been key members on the SEND committee for over 10 years. We expect
these consultants to gain further traction for submit(TM) during
2016 and beyond.
Market Overview
Citeline(R), which claims to have the world's most comprehensive
source of real-time R&D intelligence for the pharmaceutical
industry, recently reported that the global drug pipeline had
increased by 11.5% in the past year with an additional 1,418 drugs
added to the pipeline (993 were added in the previous year). The
total number of companies with one or more drugs in the regulatory
stages of development has now risen to 3,687, an increase of 12.2%
on the previous year. This is the biggest increase ever in terms of
numbers of companies and the second largest percentage-wise.
Following the record growth recorded in 2014, 2015 again
represented the largest annual drug pipeline rise on record, in
absolute terms, and there is further evidence that the global
pharmaceutical market is still moving resources from late stage
clinical development into early stage candidates in order to refill
the R&D pipeline.
These drug development activities require specialist services
and technologies, with a particular focus on IT solutions, which
enable organisations to reduce timelines, improve cost efficiencies
and ensure they are able to meet ever-increasing regulatory
demands.
Preclinical market
The 2016 pipeline shows increases at all phases of development,
but the preclinical phase shows the largest rise, with the number
of projects up by 13.2% as shown in the recent Citeline(R)
report.
With increased preclinical study volume helping to create
opportunities with their pharma sponsors, preclinical CROs continue
to report strong demand in North America and increased demand in
Europe and Japan in comparison with 2014. Consequently, numerous
CROs have been adding or looking to add additional capacity
organically or through acquisition. On 7(th) January 2016 Charles
River Laboratories announced its intention to acquire WIL Research
and public announcements have talked of continued growth and
expansion following completion of the transaction. Both of these
large CROs are heavily committed Instem clients and we expect the
impact of the merger on Instem will become clearer during 2016.
Early Stage Clinical market
The Citeline(R) report details significant growth in the
clinical stage of drug development, with 2015 posting the largest
increases in this decade in both Phase I (up by 190 drugs/11.4%)
and Phase III (up by 146 drugs/18.1%). The growth rate in Phase II
slowed but is still at record levels (up by 110 drugs/5.1%). The
Phase III figure is particularly encouraging, not just because it
is showing significant growth, but also as these are the drugs
which should be feeding into the new release schedule for 2017 and
2018.
Opportunities continue to exist within the early stage clinical
market for the deployment of Instem's software solutions. These
opportunities are resulting from an increasing recognition of the
need to control data quality and integrity and because levels of
automation within the early stage environment remain relatively
modest.
Send
The regulatory bodies' preference for the electronic capture,
storage and transfer of data for new drug submissions continues to
grow and pharmaceutical organisations are seeking tools that can
help them to prioritise suitable drug candidates utilising vast
volumes of historic data, in addition to managing their compliance
risk with the authorities. SEND was developed to speed up and
enhance the review process for drug applications by developing
electronic tools to analyse and visualise these submissions, and
building data warehouses to rapidly query data across drugs,
companies, and clinical and non-clinical disciplines.
As a result, the US Food & Drug Administration has made it
mandatory to use SEND for all related study submissions, starting
with those run after December 2016 that support the submission of a
new drug application. The Directors believe that the annual total
market spend on technology and services in respect of SEND will
grow to approximately $150 million in 2019 and we are looking to
optimise Instem's offering to all areas of this market.
Government and Academic Research
Funding for Government/Academic institutions undertaking later
stages of life sciences research in North America, China and Europe
continues to grow to cover gaps that are not sufficiently
attractive to commercial enterprises. This enables them to invest
in both study automation solutions and in innovative approaches to
the process of R&D using novel scientific, informatics and big
data approaches, providing another source of revenue for the
majority of Instem's solutions and services.
Financial Review
Instem's revenue model consists of perpetual licence income with
annual support contracts, professional services fees and SaaS
subscriptions. Total revenue for the twelve months to 31 December
2015 increased 22% to GBP16.3m compared with last year. Demand for
our products and services from customers in all territories in
which we operate continued to increase, reflecting increased levels
of pharmaceutical R&D activity.
Revenue growth during the year came from both new and existing
customers and was driven primarily from increases in Provantis and
ALPHADAS related business.
(MORE TO FOLLOW) Dow Jones Newswires
April 05, 2016 02:00 ET (06:00 GMT)
Total recurring revenue, from support contracts and SaaS based
subscriptions, increased 9% during the year to GBP10.0m (2014:
GBP9.2m), representing 62% of total revenue. SaaS based revenue
increased by 14% to GBP2.1m (2014: GBP1.8m).
Earnings before interest, tax, depreciation and amortisation
increased 43% for the year to GBP2.5m. (2014: GBP1.7m). Development
costs incurred during the year were GBP1.9m (2014: GBP1.3m), of
which GBP0.6m (2014: GBP0.3m) was capitalised.
Adjusted profit before tax (i.e. adjusting 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) was GBP1.7m (2014:
GBP1.1m). The non-recurring charge of GBP1.4m, which was previously
announced, arose following the early agreement of the final
deferred contingent consideration payment relating to the 2013
Instem Clinical (formerly Logos Technologies) acquisition after all
profit targets were exceeded. This resulted in a total
consideration payment for the Logos business totalling GBP4.8m, in
a mixture of cash and shares, slightly lower than the potential
maximum payable of GBP5.0m. The total paid up until the end of 2015
was GBP4.1m, with the remaining balance of GBP0.7m to be paid in
cash in two equal instalments in July 2016 and July 2017.
The Group claimed and received research and development tax
credits during the year of GBP0.2m (2014: GBP0.1m).
Basic and fully diluted earnings per share calculated on an
adjusted basis were ahead of the prior year by 58% and 55%
respectively.
Net cash generated from operations was GBP2.5m (2014: GBP0.5m).
The Group had net cash reserves of GBP2.2m at 31 December 2015,
compared with GBP1.7m as at 31 December 2014, after making deferred
contingent consideration cash payments for the 2013 Instem Clinical
acquisition amounting to GBP0.7m and one deferred contingent
consideration payment in respect of the 2013 Perceptive Instruments
acquisition of GBP0.3m. In addition, a cash payment amounting to
GBP0.3m was made to repay a Loan Note associated with the Instem
Clinincal acquisition. In line with 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.
The Group's legacy defined benefit pension scheme closed to new
members in 2000 and to future accrual in 2008. It experienced an
increase in the funding deficit during the year calculated in
accordance with the provisions of IAS19 that amounted to GBP0.3m
(net of deferred tax). This is a non-cash charge and was recognised
in Other Comprehensive Income/(Expense). The overall deficit at the
year-end stood at GBP3.9m, represented by a fair value of assets of
GBP7.8m and a present value of funded obligations of GBP11.7m. As
part of the scheme's triennial actuarial valuation as at 5 April
2014, the Group agreed in June 2015 a schedule of payments to the
scheme designed to eliminate the funding deficit by November 2023.
This involves an increase of GBP0.1m in the Group's current
payments to the scheme rising from GBP0.4m to approximately GBP0.5m
per annum from April 2016.
Post Balance Sheet Event
As described in the Chairman's statement, following the post
year-end fund raising exercise, the Company received GBP5.0m before
expenses to support organic growth and acquisition opportunities.
The impact of the net funds received will be reported with the 2016
interim results.
Principal risks and uncertainties
The principal risks and uncertainties remain unchanged from
those described in our 2014 Annual Report.
Outlook
Our core addressable markets continue to grow in terms of the
number of potential customers and the absolute size. Our products
and services recorded significant year-on-year revenue growth
during 2015 and we are pleased to report that we entered the new
financial year with a strong forward order book. Regulatory
requirements and the enlarged drug R&D pipeline are expected to
continue to stimulate demand for Instem's solutions and
services.
The recently strengthened balance sheet provides opportunities
to invest further in our core products and services, accelerate the
development of new offerings such as KnowledgeScan and SEND
submit(TM) and play a significant role in consolidating the
industry in which we operate.
We therefore look forward to the coming year with confidence and
expect to deliver further operational and financial progress.
Phil Reason
Chief Executive
4 April 2016
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2015
Note Unaudited Audited
Year ended Year ended
Continuing Operations 31 December 2015 31 December 2014
GBP000 GBP000
REVENUE 2 16,321 13,429
Operating expenses (13,553) (11,572)
Share based payment (263) (108)
EARNINGS BEFORE INTEREST, TAXATION, DEPRECIATION, AMORTISATION AND
NON-RECURRING COSTS ('EBITDA') 2,505 1,749
Depreciation (156) (127)
Amortisation of intangibles arising on acquisition (640) (640)
Amortisation of internally generated intangibles (376) (297)
PROFIT BEFORE NON-RECURRING COSTS 1,333 685
Non-recurring costs 4 (1,426) (123)
(LOSS)/PROFIT FROM OPERATIONS (93) 562
Finance income 4 9
Finance costs (272) (359)
(LOSS)/PROFIT BEFORE TAXATION (361) 212
Taxation 3 (67) (62)
(LOSS)/PROFIT FOR THE YEAR (428) 150
OTHER COMPREHENSIVE (EXPENSE)/INCOME
Items that will not be reclassified to profit and loss account
Actuarial loss on retirement benefit obligations (339) (621)
Deferred tax on actuarial loss 61 124
(278) (497)
Items that may be reclassified to profit and loss account
Exchange differences on translating foreign operations (24) 34
OTHER COMPREHENSIVE EXPENSE FOR THE YEAR (302) (463)
TOTAL COMPREHENSIVE EXPENSE FOR THE YEAR (730) (313)
(LOSS)/PROFIT ATTRIBUTABLE TO OWNERS OF THE PARENT COMPANY (428) 150
TOTAL COMPREHENSIVE EXPENSE ATTRIBUTABLE TO OWNERS OF THE PARENT
COMPANY (730) (313)
Earnings per share from continuing operations
Basic 5 (3.5)p 1.2p
Diluted 5 (3.5)p 1.2p
Consolidated Statement of Financial Position
As at 31 December 2015
Unaudited Audited
31 December 2015 31 December 2014
ASSETS GBP000 GBP000 GBP000 GBP000
NON-CURRENT ASSETS
Intangible assets 12,035 12,439
Property, plant and equipment 376 263
Deferred tax assets 663 574
TOTAL NON-CURRENT ASSETS 13,074 13,276
CURRENT ASSETS
Inventories 822 506
Trade and other receivables 4,745 4,432
Cash and cash equivalents 2,183 1,676
TOTAL CURRENT ASSETS 7,750 6,614
TOTAL ASSETS 20,824 19,890
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 1,797 1,364
Deferred income 7,107 6,811
Current tax payable 541 231
Financial liabilities 385 1,903
TOTAL CURRENT LIABILITIES 9,830 10,309
NON-CURRENT LIABILITIES
Financial liabilities 448 281
Retirement benefit obligations 3,933 3,881
TOTAL NON-CURRENT LIABILITIES 4,381 4,162
(MORE TO FOLLOW) Dow Jones Newswires
April 05, 2016 02:00 ET (06:00 GMT)
TOTAL LIABILITIES 14,211 14,471
EQUITY
Share capital 1,304 1,221
Share premium 7,903 7,892
Merger reserve 1,241 (326)
Shares to be issued 641 378
Translation reserve 204 228
Retained earnings (4,680) (3,974)
TOTAL EQUITY ATTRIBUTABLE TO
OWNERS OF THE PARENT 6,613 5,419
TOTAL EQUITY AND LIABILITIES 20,824 19,890
Consolidated Statement of Cashflows
For the year ended 31 December 2015
Unaudited Audited
Year ended Year ended
31 December 2015 31 December 2014
GBP000 GBP000 GBP000 GBP000
CASH FLOWS FROM OPERATING ACTIVITIES
(Loss)/Profit before taxation (361) 212
Adjustments for:
Depreciation 156 127
Amortisation of intangibles 1,016 937
Share based payments 263 108
Retirement benefit obligations (427) (398)
Finance income (4) (9)
Finance costs 272 359
Increase in deferred contingent 1,361 -
consideration
2,276 1,336
CASH FLOWS FROM OPERATIONS BEFORE
MOVEMENTS IN WORKING CAPITAL
Movements in working capital:
Increase in inventories (313) (196)
Increase in trade and other receivables (71) (1,436)
Increase in trade and other payables
and deferred income 493 109 743 (889)
CASH GENERATED FROM OPERATIONS 2,385 447
Finance costs (86) (65)
Income taxes 205 119 100 35
NET CASH GENERATED FROM OPERATING
ACTIVITIES 2,504 482
CASH FLOWS FROM INVESTING ACTIVITIES
Finance income received 4 9
Purchase of intangible assets (612) (369)
Purchase of property, plant and
equipment (113) (124)
Payment of deferred contingent
consideration (950) (302)
Repayment of capital from finance (8) -
leases
NET CASH USED IN INVESTING ACTIVITIES (1,679) (786)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of share 12 -
capital
Loan note repaid (303) -
Finance lease interest (4) -
NET CASH USED IN FINANCING ACTIVITIES (295) -
NET INCREASE/(DECREASE) IN CASH AND
CASH EQUIVALENTS 530 (304)
Cash and cash equivalents at
start of year 1,676 2,053
Effects of exchange rate changes
on the balance of cash held in
foreign currencies (23) (73)
CASH AND CASH EQUIVALENTS AT
END OF YEAR 2,183 1,676
Consolidated Statement of Changes in Equity
Called Share Merger Shares Translation Retained Total
up share premium reserve to be reserve earnings equity
capital issued
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance as
at
1 January 2014 1,176 7,892 (932) 270 194 (3,627) 4,973
Profit for
the year - - - - - 150 150
Other comprehensive
expense for
the year - - - - 34 (497) (463)
Total comprehensive
income/(expense) - - - - 34 (347) (313)
Shares issued 45 - 606 - - - 651
Share based
payment - - - 108 - - 108
Balance at
31 December
2014 1,221 7,892 (326) 378 228 (3,974) 5,419
Loss for the
year - - - - - (428) (428)
Other comprehensive
expense for
the year - - - - (24) (278) (302)
Total comprehensive
expense - - - - (24) (706) (730)
Shares issued 83 11 1,567 - - - 1,661
Share based
payment - - - 263 - - 263
Balance as
at 31 December
2015 1,304 7,903 1,241 641 204 (4,680) 6,613
Notes to the Financial Statements
1. Basis of Preparation
FINANCIAL INFORMATION
The preliminary financial information does not constitute
statutory accounts within the meaning of section 434 of the
Companies Act 2006 but is derived from accounts for the years ended
31 December 2015 and 31 December 2014. The figures for the year
ended 31 December 2014 were audited. The preliminary financial
information is prepared on the same basis as will be set out in the
statutory accounts for the year ended 31 December 2015. The figures
for the year ended 31 December 2015 are unaudited.
The presentation of the Consolidated Statement of Comprehensive
Income has changed from the previous audited financial statements.
The change includes the depreciation charge being presented on the
face of the Consolidated Statement of Comprehensive Income rather
than being included in operating expenses. The change has been made
to provide clarity in the calculation of earnings before interest,
taxation, depreciation and non-recurring costs (EBITDA).
The presentation of the Consolidated Statement of Financial
Position has changed from the previous audited financial
statements. The change is to show deferred income on the face of
the Consolidated Statement of Financial Position rather than being
included in trade and other payables.
It is the opinion of the directors that the above changes are
considered more appropriate to the readers and users to better
understand the performance and position of the Group.
The preliminary financial information was approved for issue by
the Board of Directors on 4 April 2016.
The statutory accounts for the year ended 31 December 2015 will
be delivered to the Registrar of Companies following the Company's
Annual General Meeting. Statutory accounts for the year ended 31
December 2014 have been filed with the Registrar of Companies. The
auditor's report on those 2014 accounts was unqualified and did not
contain any statement under Section 498 (2) or (3) of the Companies
Act 2006.
GENERAL INFORMATION
The principal activity of the Group is the provision of world
class information solutions for Life Sciences research and
development in the early phase drug development market. Instem plc
is a company incorporated in England and Wales under the Companies
Act 2006 and domiciled in the UK. The registered office is Diamond
Way, Stone Business Park, Stone, Staffordshire, ST15 0SD, UK.
BASIS OF ACCOUNTING
While the financial information included in this preliminary
announcement has been prepared in accordance with the recognition
and measurement criteria of International Financial Reporting
Standards (IFRS), as adopted by the European Union (EU), this
announcement does not in itself contain sufficient information to
comply with IFRSs.
The Group's accounting reference date is 31 December.
GOING CONCERN
Having made appropriate enquiries, the directors consider that
the Group has adequate resources to enable it to continue in
operation for the foreseeable future. The Group has a significant
proportion of recurring revenue from a well-established global
customer base, supported by a largely fixed cost base.
The financial position of the Group, its cash flows and
liquidity position are set out in the primary statements of this
financial information. Detailed projections have been made for the
12 months following the approval of the financial statements and
sensitivity analysis undertaken. This work gives the directors
confidence as to the future trading performance.
Accordingly, the directors continue to adopt the going concern
basis for the preparation of the financial statements.
2. Segmental Reporting
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For management purposes, the Group is currently organised into
one operating segment - Global Life Sciences.
Segment results, assets and liabilities include items directly
attributable to a segment as well as those that can be allocated on
a reasonable basis.
2015 2014
GBP000 GBP000
INFORMATION BY PRODUCT TYPE
Licence fees 4,612 2,734
Annual support fees 7,383 6,984
SaaS subscription fees 2,076 1,822
Professional services 2,042 1,763
Funded development initiatives 208 126
-------- --------
16,321 13,429
======== ========
2015 2014
GBP000 GBP000
INFORMATION BY GEOGRAPHICAL LOCATION
UK 2,004 2,141
Rest of Europe 3,592 2,699
USA and Canada 9,429 7,583
Rest of World 1,296 1,006
-------- --------
16,321 13,429
======== ========
NON-CURRENT ASSETS EXCLUDING DEFERRED TAXATION
2015 2014
GBP000 GBP000
INFORMATION BY GEOGRAPHICAL LOCATION
UK 12,331 12,664
USA and Canada 39 16
Rest of World 41 22
------------------------ -----------------------
12,411 12,702
======================== =======================
MAJOR CUSTOMERS
No single customer generated more than 10% of the Group revenue
(2014: Nil).
3. Income Taxes
2015 2014
Income taxes recognised in profit GBP000 GBP000
or loss
Current tax:
UK corporation tax on result for 98 -
the year
Foreign tax 411 272
Foreign tax in respect of previous
years (302) 239
Adjustments in respect of previous
years 61 (171)
Adjustments in respect of R&D tax
credit (173) (92)
-------- ----------
Total current tax 95 248
-------- ----------
Deferred tax:
Current year credit (315) (30)
Adjustment in respect of previous
years 157 (103)
Retirement benefit obligation 130 (53)
-------- ----------
Total deferred tax (28) (186)
-------- ----------
Total income tax expense recognised
in the current year 67 62
======== ==========
2015 2014
GBP000 GBP000
The income tax expense can be reconciled
to the accounting result as follows:
(Loss)/Profit before tax (361) 212
(Loss)/Profit before tax multiplied
by standard rate of corporation
tax in the UK 20.25% (2014: 21.50%) (73) 46
Effects of:
Expenses not deductible for tax
purposes 367 33
Fixed asset timing differences 17 (9)
Differences in overseas tax rates 165 109
Adjustments in respect of prior
years (84) (35)
Adjustment in respect of R&D tax (173) -
credit
Other timing differences (152) -
Tax losses utilised - (82)
Total income tax expense recognised
in profit or loss 67 62
======== ==========
4. Non-recurring costs
The 2015 non-recurring charge of GBP1.4m arose following the
early agreement of the final deferred contingent consideration
relating to the 2013 acquisition of Instem Clinical (formerly Logos
Technologies) after all profit targets were exceeded.
The 2014 non-recurring charge included a net charge of GBP0.06m
relating to a trade dispute, net of insurance proceeds of GBP0.09m,
and GBP0.07m of professional fees associated with the Perceptive
Instruments acquisition in 2013.
5. Earnings per share
Basic and fully diluted
Basic earnings per share are calculated by dividing the
profit/(loss) attributable to ordinary shareholders by the weighted
average number of ordinary shares in issue during the year. Diluted
earnings per share is calculated by adjusting the weighted number
of ordinary shares outstanding to assume conversion of all dilutive
potential shares arising from the share option scheme. The dilutive
impact of the share options is calculated by determining the number
of shares that could have been acquired at fair value (determined
as the average market share price of the Company's shares) based on
the monetary value of the subscription rights attached to the
outstanding share options.
2015 2014
Profit after Weighted Earnings per Profit after Weighted Earnings per
tax average number share tax average number share
of shares of shares
'000 '000
GBP000 Pence GBP000 Pence
Earnings per
share - Basic (428) 12,398 (3.5) 150 12,063 1.2
Potentially - -* - - 155 -
dilutive shares
--------------- --------------- --------------- --------------- --------------- ---------------
Earnings per
share -
Diluted (428) 12,398 (3.5) 150 12,218 1.2
=============== =============== =============== =============== =============== ===============
*Dilutive share options have been excluded from the calculation
as in accordance with IAS 33, 'Earnings per share', as they are
only included where the impact is dilutive.
Adjusted
Adjusted earnings per share is calculated after adjusting 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. Diluted adjusted earnings per share is calculated by
adjusting the weighted number of ordinary shares outstanding to
assume conversion of all dilutive potential shares arising from the
share option scheme. The dilutive impact of the share options is
calculated by determining the number of shares that could have been
acquired at fair value (determined as the average market share
price of the Company's shares) based on the monetary value of the
subscription rights attached to the outstanding share options.
2015 2014
Adjusted Weighted Adjusted Adjusted Weighted Adjusted
Profit after average number Earnings per Profit after average number Earnings per
tax of shares share tax of shares share
'000 '000
GBP000 Pence GBP000 Pence
Earnings per
share - Basic 1,644 12,398 13.3 1,009 12,063 8.4
Potentially
dilutive
shares - 337 - - 155 -
--------------- --------------- --------------- --------------- --------------- ---------------
Earnings per
share -
Diluted 1,644 12,735 12.9 1,009 12,218 8.3
=============== =============== =============== =============== =============== ===============
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Reconciliation of reported (loss)/profit after 2015 2014
tax to adjusted profit after tax: GBP'000 GBP'000
Reported (loss)/profit after tax (428) 150
Non-recurring costs 1,426 123
Amortisation of acquired intangibles 640 640
Foreign exchange differences on revaluation of
inter-co balances 6 96
Adjusted profit after tax 1,644 1,009
========= =========
6. Post balance sheet event
Following the end of the financial year, in February 2016 the
Company announced it had raised GBP5.0 million (before expenses) by
way of a placing of 2,500,000 New Ordinary Shares with new and
existing investors. The Board intends to use the proceeds of this
placing, along with existing cash resources, to continue the
Group's acquisition strategy and to provide additional working
capital.
7. Annual report and accounts
Copies of the Annual Report and Accounts will be posted to the
Company's shareholders and will be available, along with this
announcement, on Instem's website at
http://investors.instem.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SSFFWLFMSEDL
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