24th Sep 2014 07:58
LONDON (Alliance News) - Instem PLC Wednesday warned that if it is unable to secure contracts by the year end it may have a "material impact" on its full-year results, as its first half operating profit was hampered by a step up in operating costs.
Instem provides software and services to the healthcare market.
Instem said that whilst it has "sufficient well-qualified contract opportunities" in its fourth quarter to meet full-year expectations, there is some uncertainty around the anticipated receipt of a small number of high value contracts, which could hit results.
"If these contracts are not received by the year-end this could have a material impact on the results for the full year," the company said.
Instem noted that the level of new business placed during the half year had been lower than expected, blaming large merger and acquisition activity in the pharmaceutical sector over the last few months, compounded by the weakness of the US dollar.
However, the company said that recent market activity has improved, and it expects this to continue for the remainder of the year.
Instem posted a net loss of GBP567,000 in the half year, widened from GBP78,000 a year before.
Instem posted an operating profit before amortisation, share based payment and non recurring costs of GBP48,000, down from GBP682,000 despite seeing a rise in revenue to GBP5.7 million from GBP5.5 million, due to a jump up in operating expenses to GBP5.7 million from GBP4.8 million.
The company said that the jump up in operating costs was as a result of the integration of costs from two acquisitions made in 2013. The company acquired Logos Technologies in May last year, and Perceptive Instruments last November. Perceptive is now fully integrated, the company said, and trading in line with expectations.
Shares in Instem were trading down 17% at 135.00 pence, one of the biggest fallers on AIM.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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