Trading Update

26 July 2012

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

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.

For further information, please contact:

Instem plc www.instem.com
Phil Reason, CEO +44 (0) 1785 825600
Nigel Goldsmith, CFO  
N+1 Singer (Nominated Adviser & Broker) +44 (0) 20 7496 3000
Richard Lindley  
Nick Owen  
James White  
Wallbrook Financial PR Tel: +44 (0) 20 7933 8000
Paul Cornelius or instem@walbrookpr.com
Sam Allen  
Helen Cresswell  
Paul Whittington  

About Instem

Instem is a leading supplier of IT applications to the early development healthcare market delivering compelling solutions for data collection, management and analysis across the R&D continuum. Instem applications are in use by customers worldwide, meeting the rapidlyexpanding needs of life science and healthcare organisations for data-driven decision making leading to safer, more effective products.

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 harmonization of actionable scientific information.

Instem supports over 450 clients through full service offices in the United States, United Kingdom and China with additional locations in Japan and India.

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