INS.L Regulatory News (INS)

Instem plc

("Instem", the "Company" or the "Group")

Trading Update

All business areas performing well with total order value for SEND services up 500% year-on-year

Instem plc (AIM: INS), a leading provider of IT solutions to the global life sciences market, announces a trading update for the year ended 31 December 2018 (the "Period").

Financial Highlights

All three key areas of the business contributed positively during the Period, with strengthening margins and underlying EBITDA1 in line with management's expectations.

Net cash at 31 December 2018 was approximately £3.6m and will increase early in the current year as delayed payments from a small number of large pharma customers are received, returning the Company to more normal working capital cycles.

Operational Highlights

The three areas of the business, Data Collection, Regulatory Solutions and Informatics, all made a positive contribution to the full-year performance, with a continuing and steady transition of new and existing clients moving away from perpetual software licenses to recurring Software-as-a-Service ("SaaS") subscriptions.

In addition to several new client wins, many existing clients upgraded and extended their use of Instem's products and services. The Company also experienced a strong year for SEND (Standard for the Exchange of Nonclinical Data) related services, with the total order value received during the Period showing an increase of more than 500% compared to 2017.

To manage this additional workflow, as planned, Instem has recruited more staff to its outsourced SEND services team in 2018 across the UK, the US and India. The latest version of SEND, as mandated by the US FDA, becomes mandatory for studies starting after 15 March 2019. Instem has released an updated version of its software, which is already being implemented by our SEND Services team, as well as product customers, to enable them to meet early demand for this version of the SEND standard.

Our KnowledgeScan Target Safety Assessment service continues to build good momentum with strong repeat business and further new client wins. The launch of an additional "core data" service has generated increased interest from the larger pharmaceutical companies, who often have the in-house resources to apply their own scientific interpretation to the high-quality data available from our augmented intelligence technology platform.

Update on historic contract dispute

As highlighted in the preliminary results announcement for the year ended 31 December 2017, released on 26 March 2018, the Company made a cost provision related to historical contract disputes.

A dispute, which does not affect ongoing operations of the Company, will now be heard by the German courts, with the initial hearing on 22 January 2019. Instem has taken legal advice and is defending the action. The Company strongly believes that the claim should be dismissed. Notwithstanding this, the cost provision made in 2017 will be maintained in the 2018 accounts.

Further announcements will be made as and when appropriate.

Phil Reason, CEO of Instem plc, commented:

"Instem has invested significantly in the business in recent years and these results further illustrate such investment converting into profitable growth. In addition to a host of new client wins, many existing clients have extended their use of Instem's products and services and, importantly, have transitioned to our SaaS solutions. The Company looks forward to building on this momentum, particularly for SEND related services, where order backlog and future revenue visibility is continually improving."

1. Earnings before interest, taxation, depreciation and amortisation.

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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 customers worldwide and enable our 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 supports over 500 clients through offices in the United States, United Kingdom, France, Japan, China and India.

To learn more about Instem solutions and its mission, please visit instem.com.