Half Year Report
27 September 2022
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 2022.
Financial Highlights
- Total Group revenues increased by 39% to £27.6m (H1 2021: £19.8m)
- Recurring revenue (annual support and SaaS) increased 62% to £16.0m (H1 2021: £9.9m) with SaaS increasing 29% to £6.3m (H1 2021: £4.9m)
- Constant currency revenue growth was 34%
- Annual Recurring Revenue (“ARR”) of £32.0m at 1 July 2022
- Adjusted EBITDA* increased 8% to £4.5m (H1 2021: £4.2m), representing 16.3% (H1 2021: 21.0%) of revenue
- Profit before tax of £1.9m (H1 2021: £1.2m)
- Adjusted profit before tax** of £3.2m (H1 2021: £3.2m, as restated)
- Basic and diluted earnings per share of 5.7p (H1 2021: 4.8p) and 5.5p (H1 2021: 4.6p)
- Adjusted basic and diluted earnings per share** of 11.3p (H1 2021: 14.3p, as restated) and 10.8p (H1 2021: 13.6p, as restated)
- Net cash generated from operations of £1.8m (H1 2021 £4.1m)
- Gross cash balance as at 30 June 2022 of £10.3m (H1 2021: £17.9m)
*Earnings before interest, tax, depreciation, amortisation and non-recurring items (non recurring items are legal costs and increased settlement provision relating to an historical contract dispute plus acquisition costs, exceptional share based payment charge and US government loan forgiveness)
**After adjusting for the effect of foreign currency exchange and the unwinding of the finance liability included in finance income/(costs), non-recurring items and amortisation of intangibles on acquisitions
Operational Highlights
- First reporting period with full contribution from The Edge Software Consultancy Ltd ("The Edge"), d-Wise Technologies, Inc ("d-Wise") and PDS Pathology Data Systems Ltd (“PDS”) (the “Acquisitions”), with integration almost finalised
- Increasing recurring revenues and visibility
- Strengthening relationships with clients
- Increasing routes to market and cross selling opportunities
- Earn-outs met in full for d-Wise and The Edge (PDS has no earn out provision)
- New banking facility finalised with HSBC of up to £20m, £10m of which is committed and none currently utilised
Post-period end Highlights
- Won largest ever contract
- $12m five-year agreement with global CRO, lead client for new Aspire software solution
- Significant future SaaS revenues with long-term client
- Further expands the Group’s global coverage and end-to-end solutions
- Full and final settlement of historical contractual licence dispute
- No impact on current operations; dispute arose in 2017
- Settled at €1.48m (£1.3m), offset by insurance contribution of €450k (£400k), net £0.9m
- Settlement provision increased by £0.65m during H1 2022 to£0.9m as a non-recurring charge
- Cash payment of £0.9m due in October 2022
Outlook
- Our ability to increase revenue per client, add new clients as well as service larger contracts underpins management’s growth expectations in the current period and beyond
- The market backdrop remains favourable, and we continue to see high demand for our products and solutions
Phil Reason, CEO, commented: “The combination of continued underlying growth and the contribution of the Acquisitions meant that this was another strong period for the Company.
“Our ability to increase revenues per client, add new clients as well as to increase recurring revenues underpins management’s growth expectations in the current period and beyond. The market backdrop remains favourable and we continue to see high demand for our products and solutions. While, as previously flagged, essential salary inflation created a lag in H1 operating profit growth, this will be less pronounced in H2 as the price rises we have implemented take effect. Slower than expected consulting and service revenue growth is expected to be offset by stronger growth in higher margin software business, resulting in full year profit performance in line with market expectations1.
The Acquisitions are now substantially integrated and we expect to see further benefit to the enlarged Group as we convert our order backlog. We will continue to focus on organic and acquisitive growth opportunities with a view to further leveraging our business model and strong industry standing.”
1. The Board understands that consensus market expectation adjusted profit before tax is £7.8m
Analyst Presentation: 11:30 today
Management will be hosting a presentation via web conference today at 11:30. Analysts wishing to join should register their interest by emailing instem@walbrookpr.com or by telephoning 020 7933 8780.
Investor Presentation: 16:30 today
Management will be providing a presentation and hosting an Investor Q&A session on the results and future prospects today at 16:30, through the digital platform Investor Meet Company. Investors can sign up for free and add to attend the presentation via the following link https://www.investormeetcompany.com/instem-plc/register-investor. Questions can be submitted pre-event and at any time during the live presentation via the Investor Meet Company Platform.
Download the full report:
For further information, please contact:
| Instem plc | Via Walbrook |
| Phil Reason, CEO | |
| Nigel Goldsmith, CFO | |
| Singer Capital Markets (Nominated Adviser & Joint Broker) | +44 (0) 20 7496 3000 |
| Peter Steel | |
| Alex Bond | |
| Rachel Hayes | |
| Stifel Nicolaus Europe Limited (Joint Broker) | +44 (0) 20 7710 7600 |
| Richard Short | |
| Ben Maddison | |
| Alex Price | |
| Wallbrook Financial PR | Tel: +44 (0) 20 7933 8780 |
| Tom Cooper | instem@walbrookpr.com |
| Nick Rome | |
| Joseph Walker |
About Instem
Instem is a leading provider of IT solutions & services to the life sciences market delivering compelling solutions for Study Management and Data Collection; Regulatory Solutions for Submissions and Compliance; and Informatics-based Insight Generation.
Instem solutions are in use by over 700 customers worldwide, including all the largest 25 pharmaceutical companies, enabling clients to bring life enhancing products to market faster. 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 products and services address aspects of the entire drug development value chain, from discovery through to market launch. Management estimate that over 50% of all drugs on the market have been through some part of Instem's platform at some stage of their development.
To learn more about Instem solutions and its mission, please visit instem.com.