INSTEM PLC-Final Results & Investor Presentation

INSTEM PLC-Final Results & Investor Presentation

Audited Results for the Year Ended 31 December 2022 & Investor Presentation

Instem plc (AIM: INS), a leading provider of IT solutions to the global life sciences market, announces its audited results for the year ended 31 December 2022 (the "Period").

Financial Highlights:

·      Total Group revenues increased 28% to £58.9m (2021: £46.0m)

 Software as a Service (SaaS) revenues increased by 41% to £13.7m (2021: £9.7m)

 Recurring revenues (annual support and SaaS) increased 43% to £34.5m (2021: £24.1m), 59% of total revenue (2021: 52%)

 Constant currency revenue growth was 20%

·      Adjusted EBITDA* increased 32% to £10.9m (2021: £8.3m), representing an adjusted EBITDA margin of 18.4% (2021: 17.9%)

·      Reported profit before tax of £5.5m (2021: £3.0m)

·      Adjusted profit before tax** of £8.2m (2021: £5.9m, as restated)

·      Fully diluted earnings per share of 19.8p (2021: 7.4p)

·      Adjusted fully diluted earnings per share** of 31.3p (2021: 20.4p, as restated)

·      Net cash generated from operations of £9.9m (2021: £10.3m)

·      Cash balance as at 31 December 2022 of £14.0m (2021: £15.0m) - after making deferred and contingent payments of £5.4m in 2022 in relation to the acquisitions made during 2021

*Earnings before interest, tax, depreciation, amortisation, impairment of goodwill plus non-recurring items.

**After adjusting for the effect of foreign currency exchange and the unwinding of the finance liability included in finance income/(costs), non-recurring items, impairment of goodwill plus amortisation of intangibles on acquisitions.

Operational Highlights

·      First full-year contributions from the three acquisitions completed during 2021, all successfully integrated and earn-out targets met in full: The Edge Software Consultancy Ltd ("The Edge"), d-Wise Technologies Inc ("d-Wise"), and PDS Pathology Data Systems Ltd ("PDS") (the "Acquisitions")

·      Won largest ever contract with long-term client

 $12m five-year agreement with global CRO, lead client for new Aspire software solution

 Significant future SaaS revenues

·      Contract extension with leading contract research organisation ("CRO") worth c.$1.4m

 For over 900 additional users of the Group's Provantis non-clinical study management platform - reflects strong underlying industry R&D activity

·      Sales price increases successfully fed through to customers to mitigate inflationary cost pressures

·      New banking facility finalised with HSBC of up to £20m, £10m of which is committed

Post Period-End Highlights

·      ToxHub assets acquired and licensed from the eTRANSAFE consortium and launched as part of new solution suite Centrus®, enhancing In Silico revenue streams and reach. Significant planned investment and future growth potential - announced 15 May 2023.

·      Large contract renewal/expansion for the US National Toxicology Program, including incremental long-term SaaS income and In silico technology  - announced 11 May 2023

·      Diversified the Board with the appointment of Mary Dolson as an independent non-executive director and strengthened the Executive team, with the appointment of Eve Leconte, Chief People & Culture Officer and Mark Poggi, Executive Vice President Global Sales.

Phil Reason, CEO of Instem, commented:

 "This was another strong period for the Company with continued growth in routes to market and higher future visibility SaaS revenues. The enlarged Group added a number of contracts from existing and new clients, benefiting from the Acquisitions made during 2021, while the core product suite and strong market backdrop continued to underpin organic growth.  

"New contracts won during the Period provide further validation of our market position while our software suite also provides a firm foundation from which the Group can continue to evolve. The long-term nature of our contracts, combined with our growing range of solutions, underpin the Board's continued confidence in our ability to deliver future success.

"Notwithstanding wider concerns around the funding environment for drug discovery and development, we have seen no evidence of slowdown to date and our focus remains on further broadening our portfolio of products and solutions that are attractive across the spectrum. This will continue to drive value while demonstrating the strength of our proposition.


"Looking forward, we have a strong order book, and the Company is well placed to benefit from industry consolidation as well as continued loyalty from existing clients. We have rationalised the non-core elements of our portfolio and positioned ourselves to benefit from increased cross selling, to win and service customer contracts of all sizes and we look forward to building on the strong start to trading during the current year. The post period-end launch of the Centrus product suite further enhances our In Silico portfolio. This is an integral part of our long-term growth strategy and a significant area of planned investment for us over the next 12 months or so, reflecting broader market trends and growing demand for data insight leveraging computational and artificial intelligence based solutions. We will continue to focus on organic and, where appropriate, acquisitive growth opportunities as we build out high-margin revenue lines while delivering on our commitment to help our clients bring their life enhancing products to market faster."

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