Final Results
22 March 2011
Embargoed for 07:00
Instem Life Science Systems plc
("Instem", the "Company" or the "Group")
Unaudited Final Results
Instem Life Science Systems plc (AIM: INS.L), a leading provider of IT applications to the global early development healthcare market, announces its maiden financial results for the year ended 31 December 2010.
Whilst the Group structure was established at the time of the IPO on 13 October 2010, these results have been prepared as if the structure had been in place throughout the full year.
Financial Highlights
§ Revenues steady at £10.00m (2009: £9.99m)
§ Recurring revenues accounted for 67% of total revenues (2009: 64%)
§ Operating profit before amortisation and non recurring costs increased by 2% to £2.23m (2009: £2.19m)
§ Closing cash balance as at 31 December 2010 of £3.26m (2009: £2.72m)
Operational Highlights
§ Successfully admitted to AIM in October 2010 to facilitate the growth strategy
§ Won the majority of new business placed in the Early Development Safety Assessment (EDSA) market. Notable new customers included:
o US National Institute of Environmental Health Sciences (NIEHS)
o Shin Nippon Biomedical Laboratories USA
o Shanghai Institute of Materia Medica
§ Customer retention rate remained at over 95%
§ Launched new product suite, Centrus™, extending addressable market
§ Completed investment in a new Chinese operation
§ Acquisition of BioWisdom Ltd completed post year end on 3 March 2011, augmenting the Centrus suite
Phil Reason, CEO of Instem Life Science Systems plc, commented:
"2010 has been a year of substantial strategic development for Instem. The achievement of the successful IPO in October on AIM provides the platform to implement our ambitions for the future growth of the business. We have successfully executed on the strategy outlined at the time of our IPO last year and will continue to drive growth through internal investment and complementary acquisitions.
"Importantly we have maintained our leading position in our niche EDSA market, expanded our addressable market through the launch of a new product suite, Centrus, and grown our impressive blue-chip customer base.
"With plans to launch additional products, enhance customer relationships and increase product penetration with existing clients, we look forward to the future with confidence."
For further information, please contact:
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Instem Life Science Systems plc |
+44 (0) 1785 825600 |
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Phil Reason, CEO |
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Jim McLauchlan, CFO |
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Brewin Dolphin - Financial Advisor, Broker & NOMAD |
+44 (0) 845 213 4730 |
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Mark Brady |
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Sean Wyndham-Quin |
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Threadneedle Communications |
+44 (0) 20 7653 9850 |
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Caroline Evans-Jones |
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Fiona Conroy |
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About Instem Life Science Systems plc
Instem (AIM:INS.L) is a leading supplier of IT solutions to the early development healthcare market. Instem's pre-clinical study management solutions accelerate drug and chemical development by increasing productivity, automating processes and enhancing practices that lead to safer and more effective drugs.
Instem has over 130 customers in North America, Europe, China, India and Japan, including sixteen of the top twenty pharmaceutical and biotech companies such as GlaxoSmithKline and AstraZeneca. The Company employs over 110 people in six offices in the U.S, UK, and China; with additional resource locations in India and a full service distributor in Japan. It is estimated that approximately half of the world's pre-clinical drug safety data has been collected over the last 20 years via Instem software.
To learn more about Instem please visit the Company's website, www.instem.com, or its investor centre http://investors.instem.com/.
Chairman's Statement
2010 proved to be a successful year for Instem in what has clearly been a challenging economic climate for many of our customers, prospects and competitors.
The progress we have achieved over recent years enabled us to consider taking the Company public, and in October we successfully raised £9.15m, before issue costs, from new investors and were admitted to trading on AIM, the London Stock Exchange's international market for smaller, growing companies. The transformation into a public company has served to strengthen our position within the Early Development Safety Assessment (EDSA) market, and will enable us to execute our strategy of advancing into the broader Early Development Applications (EDA) market.
Revenues held steady at £10.00m, while operating profit before amortisation and non recurring costs increased 2% to £2.23m.
This financial performance was achieved through a focus on the delivery of operational targets, whilst investing in a number of initiatives aimed at the continued long term development of Instem. In particular these included the launch of our new product suite, Centrus, and the completion of our investment in a new operation in China.
We were delighted to welcome many new customers during the year, including a division of the US Government and SNBL, one of the largest Contract Research Organisations in the US. We believe that we were successful in winning the majority of new business placed in the EDSA market in the period, pointing to the strength of our product offering and customer support.
Our successful admission to AIM has enabled us to embark upon our M&A programme, which is planned to augment our organic growth. We were delighted to be able to announce, post period end, the acquisition of BioWisdom Limited, which will supplement and strengthen our Centrus product range.
We now have a strong platform from which to achieve growth through entry into complementary markets and regions, as fiscal and regulatory pressures continue to drive the need for Instem's solutions, and customers pursue consolidation of the fragmented EDA supplier base.
I would like to thank Instem's dedicated staff for their tremendous contribution in 2010 and look forward to sharing with them the anticipation and excitement we feel for 2011 and beyond.
David Gare
Chairman
22 March 2011
Operational Review
In these results, our first since our successful IPO last year, we are pleased to report that we have made significant headway in the development of the business. As planned, we have expanded our customer base, grown our market share, entered new geographies and launched new products to support future growth.
Instem continues to win the majority of new business in the EDSA market; winning, we believe, at least two-thirds of that placed.
Customer Wins
We have achieved some significant new customer wins during the year. These included an order for 500 users of Provantis from SNBL USA, one of the leading Contract Research Organisations (CROs) in the United States, replacing a competitor's system. SNBL USA is a wholly-owned subsidiary of Shin Nippon Biomedical Laboratories Ltd, one of the largest CROs in Japan, which has approximately 2,000 team members worldwide.
Provantis was also selected by the US Government to assist in its National Toxicology Program in August 2010.This Software-as-a-Service (SaaS) order from the US National Institute of Environmental Health Sciences (NIEHS) will see Instem's software used instudies to be carried out at contract laboratories at various sites throughout the United States. It is a prestigious contract win for Instem, to be completely funded by the US federal governmentat a value of over £420,000 for an initial two year period.
We were also pleased to record several successes in our new markets of China and Japan:
§ The Shanghai Institute of Materia Medica (SIMM) purchased a subscription to Provantis in October 2010, becoming the first SaaS client in our newly established Shanghai data centre.SIMM, part of the Chinese Academy of Sciences, is highly ranked in China for its drug discovery and development activities with more than 70 drugs having been developed since its establishment.
§ In conjunction with our Japanese distributor we carried out a comprehensive implementation project during 2010 for Mitsubishi Chemical Medience Corporation (MCM), one of Japan's largest CROs, who purchased Provantis in December 2009 following an extensive competitive evaluation. The implementation was for a wide range of Provantis modules for over 200 users across two sites, one in Kashima and one in Kumamoto, ultimately replacing two separate competitor systems. Such a contract with a large and established CRO acts as a great endorsement for Provantis in both Japan and the wider Asia-Pacific region.
§ In June 2010, we secured business from the pharmaceutical organisation Shionogi & Co Limited as a new client.
Recurring Revenues
It is a feature of the regulated market in which we operate that our customers require continuous support of their systems. Consequently the Group has maintained support contracts with all of its ongoing customers, and the customer retention rate remains high at over 95%. The level of renewals strongly underpins revenue expectations in 2011.
The Group has an average client relationship term exceeding 10 years and with customer numbers increasing each year, the level of these recurring revenues is expected to continue to provide an important contribution to our year-on-year performance.
The introduction of the SaaS delivery alternative in 2006 has also increased recurring revenues, adding to the visibility of future business.
Market developments
The worldwide drug development industry accounts for over US$65 billion of annual expenditure and had been growing at 9.1% a year as pharmaceutical companies (a) raced to combat a surge in patent expiration on a number of key drugs over the next two to three years, and (b) sought to cope with increasingly complex regulatory requirements. There is mounting pressure to achieve higher levels of productivity and efficiency along all stages of the drug and chemical development process. 2010 has seen a varied response by pharmaceutical companies, with some reducing and others increasing R&D expenditure in the face of these looming revenue challenges. Most, though, continue to see increased out-sourcing of EDSA studies as the preferred strategic option.
According to studies and management estimates, the life science industry's expenditure on IT solutions is estimated to have reached US$17 billion by the end of 2010 and the EDA market is currently worth approximately US$500 million per annum. Instem's core EDSA subsector is worth approximately US$60 million, giving Instem a market share of approximately 25 per cent.
Expanding Addressable Market
Through the launch of Centrus in October 2010 we have expanded our presence into the adjacent Data Document Management & Reporting market. The Centrus suite of products is an extension of the development work previously carried out for Provantis and whilst the two product suites can be seamlessly integrated, Centrus can also stand alone, integrating with competitor and complementary EDA systems. The successful launch has therefore considerably expanded our potential market.
We believe a key driver for the update of Centrus is the emergence of SEND (Standard for the Exchange of Non-clinical Data). SEND is a US FDA-sponsored initiative seeking to harmonise the presentation of vast amounts of data generated during early development, facilitating the retrieval and utilisation of that data both before and after regulatory submission. Centrus has the ability to add value to existing systems, and aids in the integration and sharing of current and historic data between sponsors and partners in a standardised form.
SEND completed its formal public review in February 2011. We expect the standard to progress onto formal conclusion in the second half of 2011, followed by an indication by regulators that it is their preferred vehicle for electronic regulatory submissions. In anticipation, several pharmaceutical companies are now requesting that SEND data sets are created for current studies, resulting in new orders for Instem's submit™ SEND solution.
Expanding Geographical Reach
We believe that it is strategically important to have a presence in all major markets where early development facilities are located. Traditionally this has been in North America, Europe and Japan. However, increasingly these facilities are being located in emerging economies such as the People's Republic of China (PRC).
China
The pre-clinical development market is growing most rapidly in emerging markets and in particular, in China. Instem is expanding into such markets and during 2010 a localised version of Provantis was developed and a Wholly Foreign Owned Enterprise (WFOE) established in Shanghai. Instem now has a complete full-service local Chinese offering. Instem has recruited local staff; four people in client facing roles providing local sales, sales support, service implementations and customer support. In a relatively short amount of time, this office has had initial success with the securing of the first fully domestic Chinese client, the Shanghai Institute of Materia Medica (SIMM), adding to a number of existing Instem clients in China secured as a consequence of their strong US relationships.
In 2011 the Group will look to leverage the investment made throughout 2010, cement its presence in the region and add to the local client roster.
Japan
Increasingly, Japanese preclinical organisations are performing FDA regulated studies and they are now demanding solutions that meet the required international regulatory standards.
In 2006 Instem established a distributor relationship with CTCLS to capitalise on this market. CTCLS is one of Japan's leading providers of integrated R&D support systems for the life sciences sector and they support Instem solutions through their full service offices in Tokyo and Osaka. During 2010 this relationship proved very successful with the implementation of the major MCM order from late 2009 and the winning of Shionogi & Co Limited.
Software as a Service (SaaS)
All our solutions and services are available via a traditional on-site licensing/support route or via the hosted SaaS model. We believe the SaaS model to be particularly pertinent to the smaller laboratories market, where we have historically had limited presence. In the year we saw the number of users choosing the SaaS subscription model rather than the perpetual licensing model increase considerably. This included 100 users from the NIEHS contract alone.
In the year we strengthened our internal infrastructure so as to bolster our SaaS delivery systems by improving our hosting capabilities and switching providers to DataPipe, whose data center in Summit, New Jersey is much closer to Instem's US headquarters in Pennsylvania.
DataPipe also offers us a single global provider through its operations in Shanghai. This is increasingly important to Instem due to our growth in the Asia-Pacific region. The Shanghai-based data centre meets the highest standards for reliability, security and redundancy and is managed by experienced staff 365 days a year. This purpose built data centre features state-of-the-art network, power and environmental infrastructure and is ISO 9001 and SunTone™certified.
Technology Partners
We continue to partner with leading technology providers to offer augmented capabilities within our product families.
We have worked closely with SAS® in the year, the leader in business and clinical data analytics software, to more cost effectively license our clients for the SAS® technology embedded within Provantis. This streamlines the deployment of Provantis and reduces the total cost of ownership for Instem clients. Instem continues to build on this relationship, which has had a highly successful first year, exceeding revenue targets under the SAS® alliance agreement. The partnership also provides access to SAS®'s marketing and technical capabilities worldwide, supporting the Company's international growth plans.
Asta Development Limited's Teamplan enterprise project portfolio and resource management solution is also integrated within the Provantis suite as part of our Toxicology Resource Planning module, TRP™. TRP had a strong 2010 with record sales and closed the year with a strong prospect pipeline.
Product Development
Provantis®
Instem continues to invest in Provantis, its market-leading EDSA product suite, to further consolidate its position as the vendor of choice for solutions that support the identification and development of safer drugs.
This year saw advances across the product suite to improve the effectiveness and efficiency of our customers' operations. Of particular note was the delivery of our Chinese product that enables indigenous Chinese product safety organisations to leverage the advantages that have been available in other geographies for a considerable period. As the only international EDSA vendor with a local Chinese office, we have been able to leverage the experience and knowledge of our local personnel to ensure that our translations are accurate and appropriate to support the Chinese user community. We were gratified to see this investment vindicated by the early adoption of the product by local customers.
In other areas of the suite we have advanced our sophisticated reporting capabilities by further extending the range and complexity of analyses that the system can handle. This means that customers have more power to shape the required analyses as they adopt new technologies in the search for new drugs.
Centrus™
The Centrus submit™ product has been further developed to address the requirements of the developing CDISC SEND standard for regulatory submissions to the US FDA. With the approaching publication of the final version of this standard, we believe the product is well-positioned for an anticipated increase in interest from the non-clinical development community.
Since the acquisition of BioWisdom, we have started to incorporate the relevant elements of its product set into the Centrus product suite. Early indications are that Omniviz®, for example, provides an excellent platform for the visualisation of SEND datasets and that other elements of the product set will play a significant role in adding value to our customers as they move into an increasingly electronic submissions and data interchange environment.
Acquisition Strategy
Pharmaceutical companies are acutely focused on productivity and are now looking to consolidate the number of suppliers they use. An important aspect of the AIM flotation was our desire to supplement our organic growth with acquisitions of complementary businesses. Such acquisitions would consolidate the Group's market position, complement its existing products, provide access to adjacent markets and increase efficiencies in the vertical supply chain.
Potential acquisition targets include direct competitors, related EDA providers in the areas of workflow/study management, data acquisition and analysis, modeling/predictive technologies and administrative solutions.
In order to ensure that we are best placed to execute this strategy we have allocated dedicated resources to this activity.
An early realisation of this objective was the acquisition, post period-end, of Cambridge-based BioWisdom Limited for an initial enterprise value of £0.90 million and a maximum total enterprise value of £1.50 million. BioWisdom is a leading provider of software solutions for extracting intelligence from R&D related healthcare data. The acquisition broadens and strengthens the Centrus product suite as well as providing opportunities for both organisations to cross sell solutions into complementary client bases. News of the acquisition has been very well received in the market and early integration of the businesses is progressing well.
Financial Review
Revenue
The financial results demonstrate a year of solid performance. Total revenues were steady at £10.00m (2009: £9.99m) The business continued to expand in our developing markets with revenue from outside North America and Europe increasing to 6% of revenues (2009: 3%) with significant wins in Japan and China. In Instem's more traditional markets 58% of revenues were derived in North America (2009: 61%), 36% in Europe (2009: 36%).
Instem's business model consists of license fees, annual support fees, SaaS subscription fees and professional services fees. Our sales mix has gradually changed in recent years. In 2009 approximately 64% of revenue was of a recurring nature, principally from annual renewal fees and hosting fees via SaaS and a small proportion of professional fees.
This has increased yet further in 2010, to 67%, enhancing our level of visibility over future revenue and allowing us to invest confidently in future business initiatives.
The renewal of the annual support contracts was strong in 2010 with customer renewal rates in excess of 95%; this includes a significant multi-year deal with one of our major customers, reflecting their commitment to Instem and its existing and future products.
Operating costs
As a software solutions business, the majority of our costs are employee related and typically represent approximately two thirds of total operating costs. In 2010 employee related costs were £5.16m of total costs of £7.77m. In 2009 these were £5.22m and £7.80m respectively.
There was an increase in our average employee number to 103 in 2010 (2009: 90), reflecting our investment in Centrus and the opening of our Shanghai office. We ended 2010 with 110 employees. Consequently we would expect an increase in our overall costs in 2011 as we continue to invest in these areas.
Profit from Operations
In 2010, profit from operations before amortisation and non recurring costs was £2.23m (2009: £2.19m) an increase of 2%.
During 2010 our profit from operations was impacted by start up costs, including management time, of £0.24m associated with the establishment of our operation in China. Excluding these costs would result in an adjusted EBITA, before float costs, of £2.43m, a 11.5% increase over 2009. £0.04m of the costs associated with the establishment of our operation in China are included in the non-recurring costs of £0.39m.
After taking these non-recurring costs into account, Group profit from operations was £1.81m (2009: £2.14m).
The business continues to generate more than 58% of its revenue in US dollars and therefore we continue to closely monitor the exchange rate. In 2010 we have not seen a significant impact through exchange rate movements with the average exchange rate in the year of $1.5474 (2009: $1.5647).
Pension scheme
There was an increase in the in the defined benefits pension scheme liability as calculated under IAs 19 to £1.48m (2009: £1.08m)..
Cash flow
During the year the Group generated £0.72m (2009: £3.8m) from its operations. In addition, the Company raised £3.44m net of expenses of new money and repayment of loan notes through the issue of new shares at the IPO. In March 2010 the Group repaid its outstanding loan note of £2.55m to Alchemy Partners.
As a result, the Group had net cash reserves of £3.26m as at 31 December 2010, compared with £2.72m at 31 December 2009.
The Board has not recommended the payment of a dividend.
Admission to AIM
Instem was admitted to AIM on 13 October 2010, following the raising of £9.15m (prior to expenses) through a placing by Brewin Dolphin of 5,228,376 new Ordinary Shares at the placing price of 175p per share. The funds raised have been utilised to repay loan notes of £4.89m to existing shareholders and the balance will be used to facilitate future strategic acquisitions.
Share capital and reserves
The total issued share capital amounted to £1.17m (2009: £0.65m) representing 11,714,286 million shares of 10p nominal value (2009: Nil) and the share premium account has increased to £7.81m (2009: £ Nil ) as a result of the issue of the shares during the year.
Outlook
2010 has been a year of substantial strategic development for Instem. The achievement of the successful AIM IPO in October provides the platform to implement our ambitions for the future growth of the business. We have successfully executed on the strategy outlined at the time of our IPO last year and will continue to drive growth through internal investment and complementary acquisitions.
Importantly, we have maintained our leading position in our niche EDSA market, expanded our addressable market through the launch of a new product suite, Centrus, and grown our impressive blue-chip customer base.
With plans to launch additional products, enhance customer relationships and increase product penetration with existing clients, we look forward to the future with confidence.
Phil Reason
Chief Executive
22 March 2011
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the 52 week period ended 31 December 2010
|
|
|
52 week period ended 31 December 2010 £000 |
|
52 week period ended 1 January 2010 (as restated) £000 |
|
|
|
|
|
|
|
REVENUE |
|
10,001 |
|
9,989 |
|
Operating expenses |
|
(7,768) |
|
(7,802) |
|
|
|
|
|
|
|
PROFIT FROM OPERATIONS BEFORE AMORTISATION AND NON RECURRING COSTS |
|
2,233 |
|
2,187 |
|
Amortisation of intangibles |
|
(34) |
|
(47) |
|
|
|
|
|
|
|
PROFIT BEFORE NON RECURRING COSTS |
|
2,199 |
|
2,140 |
|
|
|
|
|
|
|
Non-recurring costs |
|
(388) |
|
- |
|
|
|
|
|
|
|
PROFIT FROM OPERATIONS |
|
1,811 |
|
2,140 |
|
Flotation costs |
|
(295) |
|
- |
|
Finance income |
|
263 |
|
735 |
|
Finance costs |
|
(364) |
|
(407) |
|
|
|
|
|
|
|
PROFIT BEFORE TAXATION |
|
1,415 |
|
2,468 |
|
Income tax expense |
|
(514) |
|
(762) |
|
|
|
|
|
|
|
PROFIT FOR THE FINANCIAL PERIOD |
|
901 |
|
1,706 |
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE INCOME/(EXPENSE) |
|
|
|
|
|
Actuarial gain/(loss) on retirement benefit obligations |
|
(576) |
|
(158) |
|
Deferred tax on actuarial gain/(loss) |
|
147 |
|
44 |
|
Currency translation differences on foreign currency net investment |
|
18 |
|
(266) |
|
|
|
|
|
|
|
OTHER COMPREHENSIVE INCOME |
|
(411) |
|
(380) |
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD |
|
490 |
|
1,326 |
|
|
|
|
|
|
|
|
|
|
|
|
|
PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT COMPANY |
|
901 |
|
1,706 |
|
|
|
|
|
|
|
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT COMPANY |
|
490 |
|
1,326 |
|
|
|
|
|
|
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
At 31 December 2010
|
Attributable to equity holders of the parent: |
Called up share capital |
Share Premium
|
Merger reserve |
Translation reserve |
Retained earnings |
Total Equity |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
|
|
|
|
|
|
|
Balance as at 31 December 2008 |
649 |
- |
4,218 |
625 |
(5,966) |
(474) |
|
Profit for the year |
- |
- |
- |
- |
1,706 |
1,706 |
|
Other comprehensive income/(expense) |
- |
- |
- |
(266) |
(114) |
(380) |
|
Share based payments |
- |
- |
- |
- |
- |
- |
|
Balance as at 1 January 2010 |
649 |
- |
4,218 |
359 |
(4,374) |
852 |
|
|
|
|
|
|
|
|
|
New share capital |
522 |
8,628 |
- |
- |
- |
9,150 |
|
Costs of issue |
- |
(815) |
- |
- |
- |
(815) |
|
Loan notes issued on acquisition |
- |
- |
(5,150) |
- |
- |
(5,150) |
|
Profit for the year |
- |
- |
- |
- |
901 |
901 |
|
Other comprehensive income |
- |
- |
- |
18 |
(429) |
(411) |
|
Share based payments |
- |
- |
- |
- |
21 |
21 |
|
Balance as at 31 December 2010 |
1,171 |
7,813 |
(932) |
377 |
(3,881) |
4,548 |
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 December 2010
|
|
|
31 December 2010 |
|
1 January 2010 (as restated) |
|
ASSETS |
|
£000 |
|
£000 |
|
NON-CURRENT ASSETS |
|
|
|
|
|
Intangible assets |
|
6,417 |
|
6,090 |
|
Property, plant and equipment |
|
166 |
|
127 |
|
Deferred taxation |
|
399 |
|
297 |
|
|
|
|
|
|
|
TOTAL NON-CURRENT ASSETS |
|
6,982 |
|
6,514 |
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
Inventories |
|
137 |
|
62 |
|
Trade and other receivables |
|
1,595 |
|
1,832 |
|
Cash and cash equivalents |
|
3,263 |
|
2,716 |
|
|
|
|
|
|
|
TOTAL CURRENT ASSETS |
|
4,995 |
|
4,610 |
|
TOTAL ASSETS |
|
11,977 |
|
11,124 |
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
Trade and other payables |
|
5,536 |
|
6,310 |
|
Current taxation |
|
85 |
|
300 |
|
Financial liabilities |
|
253 |
|
2,552 |
|
|
|
|
|
|
|
TOTAL CURRENT LIABILITIES |
|
5,874 |
|
9,162 |
|
|
|
|
|
|
|
NON-CURRENT LIABILITIES |
|
|
|
|
|
Trade and other payables |
|
- |
|
29 |
|
Financial liabilities |
|
- |
|
- |
|
Retirement benefit obligations |
|
1,477 |
|
1,081 |
|
Deferred taxation |
|
78 |
|
- |
|
|
|
|
|
|
|
TOTAL NON-CURRENT LIABILITIES |
|
1,555 |
|
1,110 |
|
TOTAL LIABILITIES |
|
7,429 |
|
10,272 |
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
Share capital |
|
1,171 |
|
649 |
|
Share premium |
|
7,813 |
|
- |
|
Merger reserve |
|
(932) |
|
4,218 |
|
Translation reserve |
|
377 |
|
359 |
|
Retained earnings |
|
(3,881) |
|
(4,374) |
|
TOTAL EQUITY |
|
4,548 |
|
852 |
|
|
|
|
|
|
|
TOTAL EQUITY AND LIABILITIES |
|
11,977 |
|
11,124 |
|
|
|
|
|
|
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
For the 52 week period ended 31 December 2010
|
|
|
31 December 2010
|
|
1 January 2010 (as restated) |
|
|
|
£000 |
|
£000 |
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
Result before taxation |
|
1,415 |
|
2,468 |
Adjustments for: |
|
|
|
|
|
Depreciation |
|
75 |
|
66 |
|
Amortisation of intangibles |
|
34 |
|
47 |
|
Share based payments |
|
21 |
|
- |
|
Retirement benefit obligations |
|
(206) |
|
(316) |
|
Finance income |
|
(263) |
|
(735) |
|
Finance costs |
|
364 |
|
407 |
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATIONS BEFORE CHANGES IN WORKING CAPITAL |
|
1,440 |
|
1,937 |
|
Changes in working capital: |
|
|
|
|
|
(Increase) in inventories |
|
(75) |
|
(1) |
|
(Increase)/decrease in trade and other receivables |
266 |
|
1,090 |
|
|
Increase/(decrease) in trade and other payables |
(915) |
|
790 |
|
|
|
|
|
|
|
|
CASH GENERATED FROM OPERATIONS |
|
716 |
|
3,816 |
|
Finance costs |
|
(296) |
|
(317) |
|
Income tax paid |
|
(510) |
|
(103) |
|
|
|
|
|
|
|
NET CASH (USED IN)/GENERATED FROM OPERATING ACTIVITIES |
|
(90) |
|
3,396 |
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
Finance income received |
|
263 |
|
322 |
|
Income tax paid |
|
(95) |
|
(237) |
|
Purchase of intangible assets |
|
(361) |
|
(65) |
|
Purchase of property, plant and equipment |
|
(111) |
|
(47) |
|
|
|
|
|
|
|
NET CASH USED IN INVESTING ACTIVITIES |
|
(304) |
|
(27) |
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
Share issue proceeds |
|
9,150 |
|
- |
|
Share issue costs |
|
(732) |
|
- |
|
Stamp duty |
|
(83) |
|
- |
|
Series A loan notes repaid |
|
(4,897) |
|
- |
|
Payment of finance lease liabilities |
|
(3) |
|
(9) |
|
Loan note repayment |
|
(2,549) |
|
- |
|
|
|
|
|
|
|
NET CASH GENERATED FROM/(USED IN) FINANCING ACTIVITIES |
886 |
|
(9) |
|
|
|
|
|
|
|
|
NET INCREASE IN CASH AND CASH EQUIVALENTS |
492 |
|
3,360 |
|
|
Cash and cash equivalents at start of period |
|
2,716 |
|
(549) |
|
Effect of exchange rates on cash and cash equivalents |
|
55 |
|
(95) |
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
|
3,263 |
|
2,716 |
Notes to the Financial Statements
FINANCIAL INFORMATION
The preliminary financial information does not constitute full accounts within the meaning of section 434 of the Companies Act 2006 but is derived from accounts for the years ended 31 December 2010 and 31 December 2009. The figures for the year ended 1 January 2010, prepared under UK GAAP, were audited. These figures have been restated following the transition to IFRS and the adjustments are summarised below. In addition, an adjustment of £174k has been made to increase revenues and operating costs to gross up expenses recovered by the Group where the Group itself takes the risk of non recovery, and inventories have been increased by £34k, with a corresponding reduction in prepayments, to reflect hosting costs as part of work in progress rather than prepayments.
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 2010.
The preliminary financial information was approved for issue by the Board of Directors on 22 March 2011.
The statutory accounts for the year ended 31 December 2010 will be delivered to the Registrar of Companies following the Company's Annual General Meeting. Statutory accounts for the year ended 31 December 2009 for Instem LSS Group Limited, the predecessor business, have been filed with the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain any statement under Section498 (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. Instem Life Science Systems 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.
BASIS OF ACCOUNTING
The financial information have been prepared in accordance with International Financial Reporting Standards and IFRIC interpretations as endorsed by the EU ("IFRS") and the requirements of the Companies Act applicable to companies reporting under IFRS.
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.
The acquisition of the Instem LSS Group does not qualify as a business combination under IFRS 3 'Business Combinations' as Instem Life Science Systems Plc does not meet the definition of a business within that standard. As a consequence the transaction is being treated as a capital reorganisation to reflect the substance of the transaction.
Under the capital reorganization method the legal shares and share premium of Instem Life Science Systems Plc are shown in the current year and comparative year as if they had existed throughout the periods shown. The comparative trading results and retained earnings, together with the full year trade to 31 December 2010, are those of the Instem LSS Group as if that trade had continued throughout. A merger reserve has been created to reflect the difference between the consideration given on the acquisition and the net assets of the Instem LSS Group at that date taking into account merger relief taken in respect of shares issued in exchange for those in the Instem LSS Group..
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.
TRANSITION TO IFRS
The preliminary financial information is presented in accordance with International Financial Reporting Standards and IFRIC interpretations as endorsed by the EU ("IFRS") and the requirements of the Companies Act applicable to companies reporting under IFRS. The principal changes to the previously reported results for the period ended 1 January 2010 are:
|
|
£000s |
|
Profit for the year as previously reported |
576 |
|
Capitalisation of software development costs |
1,259 |
|
Amortisation of software development costs |
(1,235) |
|
Reversal of goodwill amortisation for the period |
1,116 |
|
Tax effects of adjustments |
(5) |
|
Other minor adjustments |
(5) |
|
Profit restated under IFRS |
1,706 |
|
|
|
|
|
|
|
Equity as previously reported |
(2,603) |
|
Holiday pay adjustment |
(23) |
|
Revised UK GAAP equity |
(2,626) |
|
Capitalisation of software development |
181 |
|
Goodwill amortisation |
3,348 |
|
Tax effects |
(50) |
|
Other minor adjustments |
(1) |
|
Equity as reported under IFRS |
852 |
|
|
|
This information is provided by RNS