("Instem", the "Group" or the "Company")
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 2022 (the "Period").
Combined organic and inorganic revenue for the Period is expected to be in the region of £59m (FY2021: £46m), an increase of approximately 28%. In addition, annual recurring revenue (annual support and Software-as-a-Service, "SaaS") grew by approximately 40% to £34m, in the same period. Revenue benefited from full-year contributions from the three acquisitions completed during 2021: The Edge Software Consultancy Ltd, d-Wise Technologies, Inc and PDS Pathology Data Systems Ltd (the "Acquisitions").
While operating profit was impacted by salary inflation during the first half, the Company successfully implemented price increases that positively impacted the H2 performance. Furthermore, the combination of growing levels of higher margin SaaS revenues and significant contract wins resulted in full year profit materially in line with market expectations1.
The Company remains cash generative with a closing cash balance of £13.7m as at 31 December 2022 (FY2021: £15.0m), after making deferred and contingent payments on the Acquisitions of £5.3m.
Further integration of the Acquisitions enhanced the Company's reach, routes to market, cross-selling opportunities and ability to win and service larger contracts. During the second half, the Company announced its largest ever contract win, worth in excess of $12m over five years, which demonstrated the execution of the Company's SaaS strategy and the value of its inorganic growth strategy through the d-Wise acquisition, further expanding Instem's global coverage and end-to-end solutions.
Following the appointment of Mary Dolson as an Independent Non-Executive Director to the Board and Chair of the Audit Committee, effective 9 January 2023, David Sherwin, Non-Executive Director, has announced his intention to step down from the Board effective 31 January 2023.
Change of Auditor
The Board announces that the Company has appointed PKF Littlejohn LLP as Instem's independent auditor. Following this change, the Company expects to report its results for the year ended 31 December 2022 in May 2023.
The re-appointment of PKF Littlejohn LLP will be subject to approval by shareholders at the next Annual General Meeting of the Company to be held later in 2023.
In accordance with Section 519 of the Companies Act 2006, the Company's previous auditor, Grant Thornton UK LLP, has deposited with the Company, a statement confirming that there are no circumstances connected with its resignation which it considers should be brought to the attention of the Company's members or creditors.
The Company has positioned itself to deliver continued growth, both organically and via acquisition. With the industry backdrop remaining favourable and a significantly enhanced platform and product set, demand for the Company's solutions is expected to remain high - ensuring that the Company is well placed to deliver continued growth and margin improvement in the coming years.
Phil Reason, CEO, commented: "Post completion of the Acquisitions, we have proven our ability to scale rapidly and win and service larger contracts. We remain focused on further growing SaaS revenues, resulting in enhanced visibility and a higher margin revenue mix. Looking forward we expect to see further benefit to the enlarged Group as we convert a strong current order book."
"My fellow directors and I would also like to take this opportunity to thank David Sherwin for his contribution to the business over a period now approaching 50 years. David initially joined Instem as a trainee accountant in 1973 and was Finance Director of the previously publicly listed Instem plc from 1984 to 1998. David has been a Non-Executive Director of the Group ever since. He has seen much change over that period, during which his support, guidance and friendship has always been a constant."
1. The Board understands that consensus market expectation adjusted profit before tax is £7.9m
This announcement contains inside information for the purposes of the retained UK version of the EU Market Abuse Regulation (EU) 596/2014 ("UK MAR").
For further information, please contact:
Phil Reason, CEO
Nigel Goldsmith, CFO
Singer Capital Markets (Nominated Adviser & Broker)
+44 (0) 20 7496 3000
Stifel Nicolaus Europe Limited (Joint Broker)
+44 (0) 20 7710 7600
Walbrook Financial PR
+44 (0) 20 7933 8780
Instem is a leading provider of IT solutions & services to the life sciences market delivering compelling solutions for Study Management, Regulatory Submissions, Clinical Trial Acceleration, and Informatics-based Insight Generation.
Instem solutions are in use by over 700 customers worldwide, including all of the largest 25 pharmaceutical companies, enabling 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 products and services address aspects of the entire drug development value chain, from discovery through to market launch. Management estimate that over 50% of all drugs on the market have been through some part of Instem's platform during their development.
To learn more about Instem solutions and its mission, please visit www.instem.com