News blog

Instem

• BY: Andrew Hore |
• POSTED: 23/09/2012 |

Healthcare development IT supplier Instem had already warned that trading is tough this year and its interim figures show that budgetary restraints of customers are making it difficult to grow revenues.

Most of the customers are being retained and new software products could help to loosen the purse strings at clients. The new Indian operations have already won two clients. Asia Pacific is a key growth market. The product range is being widened with newly written software and modules licensed from third parties.

Interim revenues were flat at £4.87m, while pre-amortisation and exceptional profit fell from £607,000 to £381,000. Nearly three-quarters of revenues are recurring.

Net cash was £1.6m at the end of June 2012.

Since the recent trading statement N+1 Brewin has downgraded its profit expectations from £2.2m to £1.1m – based on flat revenues of £10.8m.  Revenue visibility is poor but the recurring revenues provide a base for the forecast. The fourth quarter will determine the outcome for the year. The shares are trading on more than 23 times prospective 2012 earnings.

There are plans to convert large clients to the SaaS model and offer products to smaller labs using the same model.

Instem is keen to make acquisitions that complement existing software, can be sold via existing global distribution network or take the company into new areas.

At 141p a share, Instem is valued at £16.6m.

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