INS.L Regulatory News (INS)

Instem plc ("Instem" or the "Company")

Trading Update

Instem (AIM: INS.L), a leading provider of IT applications to the global early development healthcare market, today gives an update on current trading.

As stated in the 2011 interim results and the full year results released in March 2012, license income is becoming increasingly second-half weighted and this trend is expected to continue in the current year, with first half revenue marginally below that of the comparable period in 2011. Despite opening 2012 with a strong order book and a good pipeline of new opportunities, the Company is continuing to experience timing delays in new order placement and, following a detailed review, the Board believes the revenue and profitability for the full year ending 31 December 2012 are likely to be materially lower than current market expectations.

The pharmaceutical market, particularly large pharma, is still going through a period of major structural changes and, with the uncertainty this creates, clients and prospects are deferring investment decisions. Despite this, underlying demand for Instem solutions remains strong with several large, multi-site prospects in the pipeline. In several instances, selection decisions have already been made in Instem's favour by prospective customers but order dates and final contract size remain subject to additional procurement processes.

 The fundamentals of the business remain strong and Instem continues to:

·; increase its substantial annual recurring revenues;

·; remain solidly profitable and cash generative, with £1.84m net cash as at 30 June 2012 (£1.33m at 30 June 2011);

·; win the majority of new business placed in its core early development safety assessment market; and

·; benefit from high barriers to entry for competitors.

Enhanced revenue opportunities and reduced costs resulting from the completion of the last major phase of the redevelopment of its core Provantis® product suite during 2012 are expected to contribute positively to future business performance.

Overall, while the Board remains cautious regarding the timing of deal flow, it is confident in the medium to long-term prospects for the business, which remains well positioned to benefit from the trends in its end markets towards multi-site, collaborative and outsourced R&D.

Notice of Results

The Company expects to report interim results for the 6 months ended 30 June 2012 on 19 September 2012.

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About Instem 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 Group employs over 110 people in seven offices in the US, UK, China and 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/.