TIDMINS
RNS Number : 6332B
Instem plc
24 September 2018
Instem plc
("Instem", the "Company" or the "Group")
Half Year Report
Instem plc (AIM: INS.L), a leading provider of IT solutions to
the global life sciences market, announces its unaudited half year
results for the six months ended 30 June 2018.
Financial Highlights
-- Total revenues were GBP10.5m (H1 2017: GBP10.3m), of which
recurring revenues were GBP6.5m (H1 2017: GBP6.5m)
-- EBITDA* of GBP1.4m (H1 2017: GBP0.6m)
-- Adjusted** profit before tax of GBP0.8m (H1 2017: GBP0.1m)
-- Adjusted** basic earnings per share of 4.7p (H1 2017: 0.2p)
-- Reported profit before tax of GBP0.1m (H1 2017: loss of GBP0.6m)
-- Reported basic earnings per share of 0.3p (H1 2017: loss per share of 4.4p)
-- Net operating cash inflow of GBP1.6m (H1 2017: outflow GBP1.4m)
-- Cash balance as at 30 June 2018 of GBP3.7m (H1 2017: GBP1.2m)
*Earnings before interest, tax, depreciation, amortisation and
non-recurring items.
**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 the amortisation of
intangibles on acquisitions. Profit is adjusted in this way to
provide a clearer measure of underlying operating performance.
Operational Highlights
-- Strong performance from our Regulatory Solutions business,
which is winning the majority of S technology and outsourced
services contracts and is increasing market share
o Contract win with a top five global, non-clinical Contract
Research Organisation ("CRO") outsourcing all S data set generation
to Instem, worth in excess of GBP1.7 million over an initial
two-year period
o A top five preclinical CRO extended its 2018 S outsourced
Services contract to over $0.5 million
-- Increased demand for our Software-as-a-Service ("SaaS")
delivery model, supported by accreditation, in the period, to
Information Security Management Standard ISO 27001, ensuring both
internal and external client compliance with EU General Data
Protection Regulation ('GDPR')
-- Contract win with a leading Fortune 500 Company that adopted
Instem's Samarind RMS solution for its worldwide medical products
regulatory tracking system
Phil Reason, CEO of Instem plc, commented:
"We are very pleased with the performance of the business during
H1 2018, with regulatory requirements delivering the expected
significant increase in demand for our technology enabled
outsourced services."
"Growth was also particularly strong in the Asia-Pacific region,
with bookings up over 60% on the prior year, primarily attributable
to the continuing funding of pharmaceutical Research &
Development by the Chinese government."
"With increasing momentum in the business from recent contract
wins and the growing pipeline, we are confident about the outlook
for the Group for the rest of 2018 and beyond."
"While our strategy remains focused on organic revenue growth,
expanding operational gearing and improving positive cashflow,
management will continue to consider complementary acquisition
targets, including transformational opportunities, to further
develop our position as a market leading provider of IT solutions
to the global life sciences market."
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
Rachel Hayes
Walbrook Financial PR +44 (0) 20 7933 8000
Paul Cornelius instem@walbrookpr.com
Nick Rome
Sam Allen
CHAIRMAN'S STATEMENT
I am delighted to report that, following the encouraging
performance in 2017, the Company has maintained its positive
trading momentum in the first half of 2018.
Most importantly, from a financial perspective, our operating
margins improved due to a combination of the sales mix and the
impact of the restructuring of the business that we undertook
during 2017. EBITDA increased by 120% to GBP1.4m and strong
positive cashflow improved our cash balance by GBP2.5m to GBP3.7m
as of the end of the period.
The strategy that we outlined to investors last year, and
implemented at the beginning of the current financial year,
was:
-- To extend our technology leadership through continued
investment in our products and services across our traditional
markets, while further consolidating our fragmented industry
-- To maximise the opportunity as market leaders within the exciting new S services market
-- To make further progress in developing the unique opportunity
presented by our Artificial Intelligence (AI) enabled informatics
business.
With specific reference to the above, our technology leadership
was demonstrated during the period by the increase in demand for
our Software-as-a-Service delivery model and a leading Fortune 500
Company selecting our Samarind RMS solution. Our market leadership
in the emerging S market was demonstrated by significant revenue
growth from our technology-enabled S outsourced services, with 75
orders received during the first six months of the current
financial year compared to 23 in the corresponding period in 2017.
We believe that Instem secured the majority of S related contracts
awarded during the period.
In summary, I am therefore pleased to report that in the six
months to 30 June 2018 we made great progress in delivering our
stated strategy and the business is well positioned to continue
this success throughout the remainder of the current financial
year.
Over recent years, based on our comprehensive product portfolio,
the Company has established a scalable operating and geographical
platform, enabling it to compete on the global stage. The Board has
conducted a comprehensive review to establish the future strategy.
We will continue our current acquisition strategy, including
seeking larger, more transformational opportunities. This would
enable Instem to develop from an important niche player to a major
business, operating at the centre of the increasing demand for data
driven solutions across the global life sciences industry.
David Gare
Non-Executive Chairman
23 September 2018
CHIEF EXECUTIVE'S REPORT
Strategic Development
During the period under review Instem has benefited from the
restructuring undertaken in 2017 with the central Operations Team
now providing services across almost all areas of the business,
allowing flexibility to allocate resources to areas of greatest
demand.
Outsourced services contract wins secured in H1 2018 will
increasingly benefit revenues in H2 2018 and beyond.
We have invested heavily in our technology and resources to
enable the Company to secure a leading share of the FDA's (Food and
Drug Administration) mandated S (Standard for Exchange of
Nonclinical Data) market and to cost effectively deliver
high-quality results using a blend of resources in the UK, US and
India.
The recent emphasis on SaaS deployments is already building
momentum for both new client implementations and existing client
upgrades and, whilst still a modest proportion of total, new
business SaaS bookings have grown 98% year on year, further
enhanced by the S mandate, which was significantly extended in
December 2017.
Market Review
The customer markets in which Instem operates remained strong in
H1 2018 with record numbers of drugs in the earlier stages of the
R&D lifecycle. This underpins robust recurring SaaS and
software maintenance contract renewal rates as well as bolstering
the pipeline for new business revenue.
During the period, Instem continued to win the majority of new
business placed in non-clinical, our largest revenue contributor,
particularly in S technology and related services.
Growth was also particularly strong in the Asia-Pacific region
with bookings up over 60%, significantly helped by the continuing
substantial funding of pharmaceutical Research & Development by
the Chinese government.
Study Management and Data Collection
As anticipated, there were no individually sizable new deals in
this area in H1 2018, but there was a generally solid order volume,
particularly for Provantis, our market leading preclinical software
suite for organisations engaged in non-clinical evaluation studies,
where additional users, modules and upgrade projects had good
momentum.
This area contributes the majority of our annual recurring
income and renewal rates remained very high. It also provides the
greatest opportunity for conversion of existing clients from
on-premise to SaaS deployment, and the internal project to
accelerate this transition is building momentum. The move of one of
the top chemical companies, a long-standing on-premise client, to
SaaS deployment alongside an upgrade to Provantis version 10,
provides further evidence of the market appetite for this
transition.
Provantis has once again dominated the Chinese market with
existing clients expanding and adding more users and more
modules.
Investment in Instem's early phase clinical product, Alphadas,
was increased in the period with a focus on current client needs
and recognising that these enhancements will have wider market
appeal going forward.
Informatics
New business orders for KnowledgeScan, which can reduce the
traditional cost of Target Safety Assessment (TSA) development by
up to 50%, increased by 15% year-on-year, mainly from repeat
customers, which is demonstrative of a strong and recurring revenue
stream.
By outsourcing all, or augmenting some, of a customer's TSA
projects to Instem, clients are able to conduct more evaluations
without increasing resources or costs. Driven by leading stage
technology including well proven artificial intelligence, Instem's
KnowledgeScan TSA service offers consistent, systematic and
efficient processes that produce high quality reliable results.
Regulatory Solutions
Regulatory Information Management
In June, we announced that a leading Fortune 500 Company had
adopted Instem's Samarind RMS solution for its worldwide medical
products regulatory tracking system. The contract is worth
approximately US$750,000, incorporating both perpetual license and
SaaS revenue streams, with c. 80% of the contract being recognised
in 2018 and annual recurring revenue of US$169,000.
Samarind RMS provides medical device and pharmaceutical
companies with a smarter way to manage their Product Information,
facilitating initial marketing authorisation and supporting ongoing
regulatory compliance. The product is optimised to enable these
companies to register and track their regulated products worldwide
by maintaining a single integrated database of all relevant
information, which is then used to update regulators as products
change over time. The comprehensive functionality provided by
Samarind RMS enables customers to systematically define and execute
complex regulatory activities across a globally dispersed workforce
whilst providing a single place to find, analyse and act on a
wealth of product and regulatory information.
Standard for the Exchange of Nonclinical Data ("S")
The Regulatory Solutions business performed particularly
strongly during the period following the latest FDA mandate of the
Standard for the Exchange of Non-clinical Data. As previously
stated in our trading update of July, S contract value in H1 2018
exceeded that for the entire FY 2017 and this momentum continues
apace and the Group has a strong S new business pipeline for both
technology and service related sales.
To help manage this additional workflow effectively Instem has
recruited an additional 27 staff to its outsourced services team in
H1 2018; 19 in India, four in the US and four in the UK, making 45
in total globally. While expansion is continuing, the rate of
recruitment is moderating as the existing team becomes fully
billable and our technology platform and processes are optimised to
increase study throughput.
Outlook
We are very pleased with the performance of the business during
H1 2018 with regulatory requirements delivering the expected
significant increase in demand for our technology enabled
outsourced services.
Growth was also particularly strong in the Asia-Pacific region,
with bookings up over 60% on the prior year, primarily attributable
to the continuing funding of pharmaceutical Research &
Development by the Chinese government.
With increasing momentum in the business from recent contract
wins and the growing pipeline, we are confident about the outlook
for the Group for the rest of 2018 and beyond.
While our strategy remains focused on Instem's strong organic
revenue growth, expanding operational gearing and improving
positive cashflow, management will continue to consider
complementary acquisition targets, including transformational
opportunities, to further develop our position as a market leading
provider of IT solutions to the global life sciences market.
Phil Reason
Chief Executive Officer
23 September 2018
FINANCIAL REVIEW
Instem's revenue model consists of fees for perpetual licences,
support and maintenance, SaaS subscriptions and professional
services. We are experiencing significant growth in our outsourced
services business and S in particular.
Total revenues increased 2% from GBP10.3m to GBP10.5m in the
period. Recurring revenue, derived primarily from support &
maintenance fees and SaaS subscriptions, remained consistent at
GBP6.5m (H1 2017: GBP6.5m) representing 62% (H1 2017: 63%) of total
revenue while revenue from outsourced services increased to GBP1.1m
(H1 2017: GBP0.3m).
Operating expenses decreased from GBP9.6m in 2017 to GBP9.0m
representing a 7% reduction. The decrease reflects a full six-month
impact of the reorganisation exercise completed at the end of June
2017.
Development expenditure in the period was GBP1.6m (H1 2017:
GBP1.7m), of which GBP0.7m was capitalised (H1 2017: GBP0.9m). A
significant proportion of the development costs relates to
investment in our Clinical product offering along with continued
investment in our Study Management and Data Collection
software.
Earnings from operations before interest, tax, depreciation,
amortisation and non-recurring items ('EBITDA') for the period,
were GBP1.4m (H1 2017: GBP0.6m), representing an EBITDA/Revenue
margin of 13% (H1 2017: 6%).
Non-recurring costs include GBP0.3m of professional fees.
The IAS19 funding deficit on Instem's defined benefit pension
scheme decreased by GBP2.3m, from GBP3.8m at December 2017 to
GBP1.5m at June 2018. The June calculation incorporated the results
of the 2017 triennial valuation that was concluded during the
period, combined with a change in revaluation of deferred members'
benefits following a move from RPI to CPI. The decrease in the
pension scheme deficit resulted in a GBP0.3m release of deferred
tax asset.
The period saw strong net cash generation resulting in a cash
inflow on operating activities of GBP1.6m (H1 2017: outflow of
GBP1.4m) largely due to cash inflow from key contracts, outsourced
services and an R&D tax credit in respect of 2016. In May the
final balance of the deferred consideration relating to the
acquisition of Samarind Limited was settled, reducing the
consideration due in respect of prior year acquisitions to GBPnil
(H1 2017: GBP0.2m). Cash balances at the end of June 2018 totalled
GBP3.7m (H1 2017 GBP1.2m).
The movements in share capital, share premium and shares to be
issued accounts reflect the respective exercise and granting of
share options during the period.
In line with previous periods and given our policy of retaining
cash within the business to capitalise on available growth
opportunities, the Board has not recommended the payment of a
dividend.
Principal risks and uncertainties
The principal risks and uncertainties within the business remain
unchanged from those described in our 2017 Annual Report.
Nigel Goldsmith,
Chief Financial Officer
23 September 2018
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2018
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended 31
30 June 30 June December 2017
2018 2017 GBP000
Notes GBP000 GBP000
REVENUE 10,475 10,278 21,668
Operating expenses (8,953) (9,644) (18,549)
Share based payment (143) (46) (157)
EARNINGS BEFORE INTEREST, TAXATION, DEPRECIATION,
AMORTISATION AND NON-RECURRING ITEMS ("EBITDA") 1,379 588 2,962
Depreciation (73) (97) (186)
Amortisation of intangibles arising on acquisition (446) (466) (931)
Amortisation of internally generated intangibles (320) (225) (473)
--------------- ----------------- --------------
PROFIT/(LOSS) BEFORE NON-RECURRING COSTS 540 (200) 1,372
Non-recurring costs 4 (373) (426) (443)
--------------- ----------------- --------------
PROFIT/(LOSS) AFTER NON-RECURRING COSTS AND BEFORE
FINANCE COSTS 167 (626) 929
Finance income 5 74 167 186
Finance costs 6 (160) (168) (318)
--------------- ----------------- --------------
PROFIT/(LOSS) BEFORE TAXATION 81 (627) 797
Taxation (41) (73) 297
--------------- ----------------- --------------
PROFIT/(LOSS) FOR THE PERIOD 40 (700) 1,094
--------------- ----------------- --------------
OTHER COMPREHENSIVE INCOME/(EXPENSE)
Items that will not be reclassified to profit and loss
account
Actuarial gain on retirement benefit obligations 2,085 333 664
Deferred tax on actuarial gain (354) (57) (113)
--------------- ----------------- --------------
1,731 276 551
Items that may be reclassified to profit and loss
account
Exchange differences on translating foreign operations (272) (480) (565)
--------------- ----------------- --------------
OTHER COMPREHENSIVE INCOME/(EXPENSE) FOR THE PERIOD 1,459 (204) (14)
--------------- ----------------- --------------
TOTAL COMPREHENSIVE INCOME/(EXPENSE) FOR THE PERIOD 1,499 (904) 1,080
=============== ================= ==============
PROFIT/(LOSS) ATTRIBUTABLE TO OWNERS OF THE PARENT
COMPANY 40 (700) 1,094
=============== ================= ==============
TOTAL COMPREHENSIVE INCOME/(EXPENSE) ATTRIBUTABLE TO
OWNERS OF THE PARENT COMPANY 1,499 (904) 1,080
Earnings per share from continuing operations
attributable to owners of the parent
- Basic 3 0.3p (4.4p) 6.9p
-
Diluted 3 0.2p (4.4p) 6.8p
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2018
Unaudited Unaudited Audited
30 June 30 June 31 December
2018 2017 2017
Notes GBP000 GBP000 GBP000
ASSETS
NON-CURRENT ASSETS
Intangible assets 17,350 17,996 17,440
Property, plant and equipment 276 376 299
Deferred tax assets - 506 300
---------- ---------- ------------
TOTAL NON-CURRENT ASSETS 17,626 18,878 18,039
---------- ---------- ------------
CURRENT ASSETS
Inventories 14 62 29
Trade and other receivables 7,820 6,698 9,470
Current tax receivable 536 - 1,267
Cash and cash equivalents 7 3,739 1,165 3,064
---------- ---------- ------------
TOTAL CURRENT ASSETS 12,109 7,925 13,830
TOTAL ASSETS 29,735 26,803 31,869
========== ========== ============
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 2,437 3,206 2,777
Deferred income 9,558 6,598 10,370
Current tax payable - 19 226
Financial liabilities 33 389 220
Deferred tax liabilities 54 - -
---------- ---------- ------------
TOTAL CURRENT LIABILITIES 12,082 10,212 13,593
---------- ---------- ------------
NON-CURRENT LIABILITIES
Financial liabilities 35 69 51
Retirement benefit obligations 1,461 4,166 3,750
Provision for liabilities and
charges 8 250 250 250
---------- ---------- ------------
TOTAL NON-CURRENT LIABILITIES 1,746 4,485 4,051
---------- ---------- ------------
TOTAL LIABILITIES 13,823 14,697 17,644
========== ========== ============
EQUITY
Share capital 1,591 1,587 1,589
Share premium 12,531 12,466 12,488
Merger reserve 1,598 1,598 1,598
Shares to be issued 937 910 794
Translation reserve 211 568 483
Retained earnings (956) (5,023) (2,727)
---------- ---------- ------------
TOTAL EQUITY ATTRIBUTABLE TO
OWNERS OF THE PARENT 15,912 12,106 14,225
---------- ---------- ------------
TOTAL EQUITY AND LIABILITIES 29,735 26,803 31,869
========== ========== ============
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2018
Unaudited Unaudited Audited
Six months ended 30 June Six months ended 30 June Year ended 31 December
2018 2017 2017
GBP000 GBP000 GBP000
CASH FLOWS FROM OPERATING
ACTIVITIES
Profit/(Loss) before taxation 81 (627) 797
Adjustments for:
Depreciation 73 97 186
Amortisation of intangibles 766 691 1,404
Share based payment 143 46 157
Retirement benefit obligations (328) (312) (461)
Finance income (74) (167) (186)
Finance costs 160 168 318
Decrease in deferred contingent
consideration - (148) (148)
------------------------- ------------------------- -----------------------
CASH FLOWS FROM OPERATIONS BEFORE
MOVEMENTS IN WORKING CAPITAL 821 (252) 2,067
Movements in working capital:
Decrease in inventories 17 678 700
Decrease / (Increase) in trade and
other receivables 1,510 (310) (3,043)
(Decrease)/increase in trade, other
payables and deferred income (1,266) (1,796) 1,808
Increase in provisions - 250 -
------------------------- ------------------------- -----------------------
CASH GENERATED FROM/(USED IN)
OPERATIONS 1,082 (1,430) 1,532
Finance income 74 167 186
Finance costs (21) (44) (112)
Income taxes 477 (102) (214)
------------------------- ------------------------- -----------------------
NET CASH GENERATED FROM/(USED IN)
OPERATING ACTIVITIES 1,612 (1,409) 1,392
------------------------- ------------------------- -----------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of intangible assets (672) (921) (1,517)
Purchase of property, plant and equipment (30) (103) (117)
Payment of deferred and contingent consideration (200) (496) (687)
Repayment of capital from finance leases (16) (15) (30)
Purchase of subsidiary undertakings (net of cash acquired) - - -
------ --------- --------
NET CASH USED IN INVESTING ACTIVITIES (918) (1,535) (2,351)
------ --------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of share capital 45 5 29
Finance lease interest (2) (4) (6)
------ --------- --------
NET CASH GENERATED FROM FINANCING ACTIVITIES 43 1 23
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 737 (2,943) (936)
Cash and cash equivalents at start of period 3,064 4,189 4,189
Effect of exchange rate changes on the balance of cash held in foreign currencies (62) (81) (189)
------ --------- --------
CASH AND CASH EQUIVALENTS AT OF PERIOD 3,739 1,165 3,064
====== ========= ========
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2018
Attributable to owners of the parent
Called up Share Merger Shares to be Translation Retained Total
share premium reserve issued reserve earnings equity
capital
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance as at 1
January 2017
(audited) 1,577 12,462 1,432 864 1,048 (4,599) 12,784
Loss for the
period - - - - - (700) (700)
Other
comprehensive
(expense)/income - - - - (480) 276 (204)
---------- ---------- --------- -------------- ------------ ---------- --------
Total
comprehensive
(expense)/income - - - - (480) (424) (904)
Shares issued 10 4 166 - - - 180
Share based
payment - - - 46 - - 46
---------- ---------- --------- -------------- ------------ ---------- --------
Balance as at 30
June 2017
(unaudited) 1,587 12,466 1,598 910 568 (5,023) 12,106
Profit for the
period - - - - - 1,794 1,794
Other
comprehensive
income/(expense) - - - - (85) 275 190
---------- ---------- --------- -------------- ------------ ---------- --------
Total
comprehensive
income - - - - (85) 2,069 1,984
Shares issued 2 22 - - - - 24
Share based
payment - - - 111 - - 111
Reserve transfer
on lapse of
share options - - - (227) - 227 -
---------- ---------- --------- -------------- ------------ ---------- --------
Balance as at 31
December 2017
(audited) 1,589 12,488 1,598 794 483 (2,727) 14,225
Profit for the
period - - - - - 40 40
Other
comprehensive
(expense)/income - - - - (272) 1,731 1,459
---------- ---------- --------- -------------- ------------ ---------- --------
Total
comprehensive
(expense)/income - - - - (272) 1,771 1,499
Shares issued 2 43 - - - - 45
Share based
payment - - - 143 - - 143
---------- ---------- --------- -------------- ------------ ---------- --------
Balance as at 30
June 2018
(unaudited) 1,591 12,531 1,598 937 211 (956) 15,912
========== ========== ========= ============== ============ ========== ========
NOTES TO THE FINANCIAL INFORMATION
For the six months ended 30 June 2018
GENERAL INFORMATION
The principal activity and nature of operations of the Group is
the provision of world class IT solutions to the early development
healthcare market. Instem's solutions for data collection,
management and analysis are used by customers worldwide, to meet
the needs of life science and healthcare organisations for
data-driven decision making leading to safer, more effective
products. Instem plc is a public limited company, listed on AIM,
and incorporated in England and Wales under the Companies Act 2006
and domiciled in England and Wales. The registered office is
Diamond Way, Stone Business Park, Stone, Staffordshire ST15 0SD,
UK.
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 2018. The Group's
accounting reference date is 31 December.
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 2017
and 30 June 2018 is unaudited.
Instem plc's consolidated statutory accounts for the year ended
31 December 2017, 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 2018 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 2018. This is the first set of financial statements where
IFRS15 Revenue from Contracts with Customers has been applied,
which is effective for periods commencing 1 January 2018.
IFRS15 is based on the principle that revenue is recognised when
control of goods or services is transferred to the customer and
provides a single, principle based, five-step model to be applied
to all sales contracts. The Board believes it has applied the
provisions of the standard correctly in all material respects.
Consequently, no changes to the timing of revenue recognition are
deemed to be required.
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.
2. Segmental Information
The Directors consider that the Group operates in one business
segment - Global Life Sciences, and therefore there are no
additional segmental disclosures to be made in these financial
statements.
3. Earnings per share
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.
(a) Basic
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2017
2018 2017 Audited
Unaudited Unaudited
Profit/(Loss) after tax (GBP000) 40 (700) 1,094
----------- ----------- -------------
Weighted average number of
shares (000's) 15,912 15,785 15,831
----------- ----------- -------------
Basic earnings/(loss) per
share 0.3p (4.4p) 6.9p
=========== =========== =============
(b) Diluted
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2018 2017 2017
Unaudited Unaudited Audited
Profit/(Loss) after tax (GBP000) 40 (700) 1,094
----------- ----------- -------------
Weighted average number of
shares (000's) 15,912 15,785 15,831
Potentially dilutive shares
(000's) 860 -* 328
Adjusted weighted average
number of shares (000's) 16,772 15,785 16,159
----------- ----------- -------------
Diluted earnings/(loss) per
share 0.2p (4.4p) 6.8p
=========== =========== =============
*Share options have been excluded from the calculations in
accordance with IAS33 - 'Earnings per share' as they are only
included where the impact is dilutive.
(c) 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.
Six months
ended Six months Year ended
30 June ended 31 December
2018 30 June 2017
Unaudited 2017 Unaudited Audited
Profit/(Loss) after tax (GBP000) 40 (700) 1,094
Non-recurring costs/(income)
(GBP000) 373 426 443
Amortisation of acquired
intangibles (GBP000) 446 466 931
Foreign exchange differences
on revaluation of intergroup
balances (GBP000) (110) (159) (234)
------- ------- -------
Adjusted profit after tax
(GBP000) 749 33 2,234
------- ------- -------
Weighted average number of
shares (000's) 15,912 15,785 15,831
Potentially dilutive shares
(000's) 860 201 328
------- ------- -------
Adjusted weighted average
number of shares (000's) 16,772 15,986 16,159
------- ------- -------
Adjusted basic earnings per
share 4.7p 0.2p 14.1p
======= ======= =======
Adjusted diluted earnings
per share 4.5p 0.2p 13.8p
======= ======= =======
4. Non-recurring costs
Six months
ended Six months Year ended
30 June ended 31 December
2018 30 June 2017
Unaudited 2017 Unaudited Audited
GBP000 GBP000 GBP000
Cost provision relating to
historical contract disputes - (250) (250)
Professional fees (338) - -
Restructuring costs (35) (324) (341)
Amendment to contingent consideration
post acquisition - 148 148
----------- ---------------- -------------
(373) (426) (443)
----------- ---------------- -------------
5. Finance income
Six months
ended Six months Year ended
30 June ended 31 December
2018 30 June 2017
Unaudited 2017 Unaudited Audited
GBP000 GBP000 GBP000
Foreign exchange gains 72 167 184
Other interest 2 - 2
----------- ---------------- -------------
74 167 186
=========== ================ =============
6. Finance costs
Six months
ended Six months Year ended
30 June ended 31 December
2018 30 June 2017
Unaudited 2017 Unaudited Audited
GBP000 GBP000 GBP000
Bank loans and overdrafts 21 44 112
Unwinding discount on deferred
consideration 12 56 71
Net interest on pension scheme 125 64 129
Finance lease interest 2 4 6
----------- ---------------- -------------
160 168 318
=========== ================ =============
7. Cash and cash equivalents
30 June 31 December
2018 30 June 2017
Unaudited 2017 Unaudited Audited
GBP000 GBP000 GBP000
Cash at bank 12,737 10,163 12,062
Bank overdraft (8,998) (8,998) (8,998)
3,739 1,165 3,064
=========== ================ ============
8. Provision for liabilities and charges
30 June 31 December
2018 30 June 2017
Unaudited 2017 Unaudited Audited
GBP000 GBP000 GBP000
At beginning of the period 250 - -
Increase in provisions - 250 250
At end of period 250 250 250
=========== ================ ============
The provision relates to potential costs arising from historical
contract disputes (see note 4).
9. Availability of this Interim Announcement
Copies of the Interim Report will be available to download from
the Group's website (www.instem.com) or available to order from the
registered office of the Group.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR DGGDCBUDBGIX
(END) Dow Jones Newswires
September 24, 2018 02:01 ET (06:01 GMT)
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