Full Year Results 2015

Phil Reason, CEO

Nigel Goldsmith, CFO

Presentation Team

Phil Reason, Chief Executive Officer Phil is an experienced chief executive who has developed a number of IT businesses in the life sciences and nuclear industries, both organically and through acquisition. Phil joined the former parent Company, Instem Limited in 1982 and was appointed Managing Director of the Life Sciences division in 1995 and Chief Executive Officer of Instem LSS Limited on the demerger from Instem Limited. Given the importance of the North American market to Instem’s organic and acquisitive growth, Phil relocated from the UK to the US in 2003 and established a new headquarters in the Philadelphia area. Phil previously ran Instem Limited’s Nuclear and Laboratory Information Management Systems integration businesses.

Nigel Goldsmith, Chief Financial Officer Nigel, who joined Instem in November 2011, has a wealth of experience in senior financial roles, at both public and private companies within the pharmaceutical industry. After qualifying as a Chartered Accountant, Nigel spent over nine years at KPMG prior to moving into industry. Nigel was Finance Director for three years at AIM listed, pharmaceutical and medical devices company, IS Pharma plc. He also spent a seven-year tenure as CFO at Almedica International Inc, a privately held supplier of clinical trial materials to the pharmaceutical and biotech industry in Europe and the US and two years as European Controller for the sales and marketing division of laboratory equipment manufacturer, Life Sciences International plc.

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A leading provider of IT solutions & services to life sciences R&D

Helping our clients bring life enhancing products to market faster

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Agrochemicals

Medical Devices Pharmaceuticals

Overview

Provider of IT systems and services that

• Collect, analyse & report complex scientific data

• Comply with FDA, EPA & similar regulatory demands

• Improve quality, consistency, integrity and efficiency

• Generate insights from large volumes of information

Leading global market position

• Prestigious blue chip customer base

• Over 450 clients, includes 19 of top 20 pharma

• Operations in the US, UK, France, China, India and Japan increase growth opportunities

Good revenue visibility and customer renewals

• £10.0m, represents 62% of revenues that recurred in 2015 – an increase of 9% on 2014.

• Increasing recurring revenues from SaaS offering

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A selection of clients:

FY 2015 Agenda

FY15 Highlights

FY15 Financial Review • Financial Headlines

• Global Client and Revenue Distribution

• Recurring Revenue Progression

• FY14 / FY15 Cash Bridge

FY15 Operational Review • Product Overview

Strategic Focus

Summary Outlook

Appendices

5

2015 Highlights

Continued Revenue & Profit Growth

High Operational Gearing

Strong Cash Conversion

Placing Raised £5m (gross)

Strong Balance Sheet

Strategy to Accelerate & Consolidate

Positive Market Dynamics

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FY 2015 Financial Review

7

£000’s FY 15 FY 14 Change Comments

Revenue 16,321 13,429 22% ALPHADAS & Provantis wins

Operating Expenses (13,553) (11,572) 17% £0.4m adverse translational effect due to strengthening US$ during FY15

EBITDA* 2,505 1,749 43% High operational gearing

Adjusted profit before tax** 1,711 1,071 60% Non-recurring costs of £1.4m & Amortisation of acquired intangibles of £0.6m

Adjusted basic eps** 13.3p 8.4p 58%

Net operating cashflow 2,504 482 420% Strong cash conversion ~100%

Investment activities (1,679) (786) 114% Payment of ‘earn outs’

Net increase/(decrease) in cash 530 (304) n/a Strong Balance Sheet

Cash & equivalents 2,183 1,676 30% Headroom for acquisitions

Pension deficit 3,933 3,881 1% Discount rate 3.8%. Fair value assets of £7.8m / Funded obligations £11.7m

Post balance sheet event Raised £5.0m (gross) at 200p to fund organic and acquisitive growth

Financial Headlines

*Earnings before interest, tax, depreciation, amortisation and non-recurring costs. **After adjusting for the effect of foreign currency exchange on the revaluation of inter-company balances included in finance income/(costs), non-recurring items and amortisation of intangibles on acquisitions. Profit is adjusted in this way to provide a clearer measure of underlying operating performance.

8

Global Client and Revenue Distribution 9

Geographical Footprint 2015 Revenue

01,0002,0003,0004,0005,0006,0007,0008,0009,000

10,000

USA & CAD Rest ofEurope

UK RoW

£000

's

2013 2014 2015

0.0

0.5

1.0

1.5

2.0

2.5

FY11 FY12 FY13 FY14 FY15

£m

FY 2015 Recurring Revenue Progression 10

Total Revenue by Type SaaS Revenue

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

FY11 FY12 FY13 FY14 FY15

£m

Recurring Revenue Licence fees Professional Services

FY14 / FY15 Cash Bridge 11

FY 2015 Operational Review

12

The R&D Lifecycle

• On average it takes 121 years and costs $2.56Bn2 to bring a new drug from patent registration to marketing approval

• Revenue loss the year after drug patent expiry is frequently >50%3

• Each day earlier to market yields >$2m additional patent protected revenue for a >$750m / year revenue drug

1 http://www.ca-biomed.org/pdf/media-kit/fact-sheets/CBRADrugDevelop.pdf 2 http://csdd.tufts.edu/news/complete_story/pr_tufts_csdd_2014_cost_study

3 http://www.thesmartcube.com/insights/financial-services/item/patent-cliffs-2014-2015

Synthesis, Examination & Screening

Preclinical Testing

Clinical Testing

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 - 30

Indicative Timeline (Years)

Discovery Development Post Marketing

Product Surveillance

Pre-trial Phase I Phase II Phase III Phase IV

Regulatory Review & Approval

Study Management & Data Collection

Data Management & Electronic Submission

Big Data Analysis / Translational Science

ALPHADAS®

Provantis®

Perceptive

submit™

Instem Scientific™

Our Products & Markets

13

Drug Development Pipeline

Early drug development activity displaying consistent/accelerating growth

14

Source: Citeline Pharma R&D Annual Review 2016

7,737

9,605 9,713 10,479 11,307

12,300 13,718

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Mo

lecu

les Total R&D Pipeline Size

1,769 1,965 2,084 2,207

2,387 2,705 2,745

2,984 3,286

3,687

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Co

mp

anie

s Companies With Active R&D Pipelines

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Preclin Phase I Phase II Phase III

Pipeline by Development Phase

2012 2013 2014 2015 2016

Mo

lecu

les

Perceptive Mkt $3-5m1, Instem c.$1.5m

Provantis Mkt c.$40m1, Instem c.$15m

ALPHADAS Mkt c.$20m1, Instem c.$4m

Image analysis and data management solutions for in vitro preclinical market

Growing customer base includes 9 of the top 10 pharma

Over 400 clients in 49 countries

Opportunities

Replace dominant AMES solution from bankrupt competitor in Japan

Cross-selling to Provantis clients

New Cyto Study Manager solutions for existing and new clients

Add SEND related capabilities

Market leader in the in vivo preclinical safety assessment market

Significant recurring revenues from sticky clients

Pre-clinical study volumes increasing

Opportunities

Penetrate clients with complete suite of Provantis modules

Convert clients to SaaS deployments

Increase range of support services

Leverage/extend SEND related capabilities

Data capture & site automation software suite for early phase clinical research

Significant orders in 2015 and strong new business pipeline

Particularly strong presence in Europe

Opportunities

Relatively low levels of site automation but increasing demand

Sell integrated pharma sponsor capabilities linked to existing and new clinical CRO sites

Leverage Instem’s international presence

Reach into niche sectors of the larger later phase clinical market

Study Management & Data Collection 15

1. Management estimates

Big Data Analysis & Translational Science/Services

Instem Scientific Mkt >$20m1 (growth potential), Instem c.$1m

2015 revenue largely recurring product support from existing clients

Aggregate large volumes of structured and unstructured ‘Big Data’ and make it amenable to exploitation

Sophisticated tools & highly efficient services provide comprehensive and rigorous scientific insight

Restructuring in ‘Big Pharma’ has reduced internal capabilities, increasing service opportunity

Opportunities

Growing interest in KnowledgeScan, an informatics-based service for investigating safety concerns in drug development

‘Big Data’ analysis seen as a siginificant opportunity to radically increase the efficiency and effectiveness of pharma R&D

Accelerate product development times and reduce the need for animal (and human) based experimentation

Significant public and private grant funding available

Productised services supporting specific R&D processes, initially in Instem’s dominant preclinical safety assessment market

Scientific engagement with data from our collection and submission solutions

16

1. Management estimates

Data Management & Electronic Submission

Submit™

Mkt $5-10m1 (2019 >$100m), Instem c.$2.5m

Submit™ tools enable aggregation, analysis and sharing of data, with a particular focus on the FDA mandated Standard for the Exchange of Non-clinical Data (SEND)

FDA prefers to receive new drug submissions using SEND, this becomes mandatory for all studies starting with those studies run after December 2016 that support the submission of a New Drug Application (NDA)

Submit™ integrates tightly with Provantis but readily connects with competitive/complementary data collection solutions

Instem and submit™ have dominated the SEND market to date

Opportunities

Invest in sales, marketing, service delivery and development staff to maximise chance of continued market dominance

Leverage our depth/breadth in non-clinical data collection to create seamless study workflows from initiation to regulatory submission

Extend submit™ to cover the equivalent clinical Study Data Tabulation Method (SDTM), which is similarly mandated by the FDA – could double the size of the market opportunity

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1. Management estimates

SEND in the Drug Development Lifecycle

NDA2 SEND Studies

Dec 2016 Mandate

IND1 SEND Studies

Dec 2017 Mandate

Synthesis, Examination & Screening

Non-Clinical Testing

Clinical Testing

5,000-10,000 compounds

250 compounds 5 compounds 1 compound

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Indicative Timeline (Years)

Discovery Development Registration

Product Surveillance

Pre-trial Phase I Phase II Phase III Phase IV

Regulatory Review & Approval

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Instem’s SEND Products & Services

Submit™

• Creates SEND datasets from any electronic source

• Uniquely manages SEND dataset workflow from creation through storage, checking and onward to submission

• Protects regulatory status of experimental data

SENDView

• Enables users to see their SEND datasets in a familiar form

• Supports dataset verification

SEND Conversion Service

• Performs SEND creation for customers

• Majority of SEND related market expenditure will be in this area by 2019

SEND Consultancy

• Providing guidance and planning services

19

Management estimates of SEND Study Volume & Market Spend 20

Volume of SEND Data sets:

Created internally by larger

pharma & CROs

Outsourced by pharma

Outsourced by CROs

Study types in future SEND

versions (post version 3.0)

Total Market Spend:

SEND creation

SEND technology

$0k

$20,000k

$40,000k

$60,000k

$80,000k

$100,000k

$120,000k

$140,000k

$160,000k

0

2,000

4,000

6,000

8,000

10,000

12,000

2016 2017 2018 2019

SEND Volume Mkt Spend

Successful equity fund raising announced

Oversubscribed fund raising announced 3rd Feb 2016, issue of 2.5m new shares approved at General Meeting 23rd Feb 2016:

• £4.4m additional acquisition funds

• £0.3m additional working capital

• £0.3m fees

Non-executive founders sold 800,000 shares to help satisfy investor demand

Follow on investments from highly supportive existing institutional investors

Several additional, high quality institutional investors added to the share register

Ability to add to the three acquisitions completed since IPO in 2010

21

Acquisitions in the Early Development market

Consolidate the highly fragmented pharma

software supplier market, emphasising:

• Niche regulatory Study Management

solutions

• Electronic regulatory data submissions

• Knowledge / Predictive / Modelling

solutions (Translational Informatics)

Supplier consolidation encouraged by

customer base

• Reduce cost of supplier management

• Increase efficiency and effectiveness of

their business processes

Early Development

Safety Assessment

Safety Pharmacology

DMPK / ADME

Electronic data

submission

Translational Informatics

Early

Phase Clinical

22

Companies in Overlapping/Adjacent Market Segments (Examples not explicit targets at this time)

Strategic Focus

Organic growth through:

Further market penetration for existing product suites and services

Cross-selling of products across extended client base

Introduction of new solutions through product development

Expanded service offering leveraging our leading technology solutions

Potential bolt-on acquisitions/partnerships to:

Provide access to adjacent markets

Extend product suite through investment and M&A

Arrange exclusive third party product licensing arrangements

Focus will be on:

Client retention

Increasing recurring revenues

Profitable and Cash generative revenue growth

Market share for SEND and ALPHADAS solutions

Margin enhancement through: - Increased SaaS deployment - Blended on-shore / off-shore

resourcing

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Summary & Outlook

Another strong financial performance

Investments made to date should deliver financial rewards in FY16/17

Remain well positioned to benefit from ‘Big Pharma’ restructuring and market growth

Placing to consolidate fragmented industry and accelerate profitable growth

H1 16 has started strongly increasing FY16 visibility further

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Appendices

2015 Consolidated Statement of Comprehensive Income 26

Continuing Operations

Year ended

31 December 2015

£000

Year ended

31 December 2014

£000

REVENUE 16,321 13,429

Operating expenses (13,553) (11,572)

Share based payment (263) (108)

EARNINGS BEFORE INTEREST, TAXATION, DEPRECIATION, AMORTISATION AND NON-RECURRING COSTS 2,505 1,749

Depreciation (156) (127)

Amortisation of intangibles arising on acquisition (640) (640)

Amortisation of internally generated intangibles (376) (297)

PROFIT BEFORE NON-RECURRING COSTS 1,333 685

Non-recurring costs (1,426) (123)

(LOSS)/PROFIT FROM OPERATIONS (93) 562

Finance income 4 9

Finance costs (272) (359)

(LOSS)/PROFIT BEFORE TAXATION (361) 212

Taxation (67) (62)

(LOSS)/PROFIT FOR THE YEAR (428) 150

OTHER COMPREHENSIVE EXPENSE

Items that will not be reclassified to profit and loss account

Actuarial loss on retirement benefit obligations (339) (621)

Deferred tax on actuarial loss 61 124

(278) (497)

Items that may be reclassified to profit and loss account

Exchange differences on translating foreign operations (24) 34

OTHER COMPREHENSIVE EXPENSE FOR THE YEAR (302) (463)

TOTAL COMPREHENSIVE EXPENSE FOR THE YEAR (730) (313)

(LOSS)/PROFIT ATTRIBUTABLE TO OWNERS OF THE PARENT COMPANY (428) 150

TOTAL COMPREHENSIVE EXPENSE ATTRIBUTABLE TO OWNERS OF THE PARENT COMPANY (730) (313)

Earnings per share from continuing operations

Basic (3.5p) 1.2p

Diluted (3.5p) 1.2p

2015 Consolidated Statement of Financial Position 27

31 December 2015 31 December 2014

ASSETS £000 £000 £000 £000

NON-CURRENT ASSETS Intangible assets 12,035 12,439 Property, plant and equipment 376 263 Deferred tax assets 663 574 TOTAL NON-CURRENT ASSETS 13,074 13,276

CURRENT ASSETS Inventories 822 506 Trade and other receivables 4,745 4,432 Cash and cash equivalents 2,183 1,676 TOTAL CURRENT ASSETS 7,750 6,614

TOTAL ASSETS 20,824 19,890

LIABILITIES CURRENT LIABILITIES Trade and other payables 1,797 1,364 Deferred income 7,107 6,811

Current tax payable 541 231 Financial liabilities 385 1,903 TOTAL CURRENT LIABILITIES 9,830 10,309

NON-CURRENT LIABILITIES Financial liabilities 448 281 Retirement benefit obligations 3,933 3,881 TOTAL NON-CURRENT LIABILITIES 4,381 4,162

TOTAL LIABILITIES 14,211 14,471

H1 2015 Consolidated Statement of Financial Position 28

31 December 2015 31 December 2014

£000 £000 £000 £000

EQUITY

Share capital 1,304 1,221 Share premium 7,903 7,892 Merger reserve 1,241 (326) Shares to be issued 641 378 Translation reserve 204 228 Retained earnings (4,680) (3,974) TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 6,613 5,419

TOTAL EQUITY AND LIABILITIES 20,824 19,890

2015 Consolidated Statement of Cash Flows From Operating

Activities

29

Year ended

31 December 2015

Year ended

31 December 2014

£000 £000 £000 £000

CASH FLOWS FROM OPERATING ACTIVITIES

(Loss)/Profit before taxation (361) 212

Adjustments for:

Depreciation 156 127

Amortisation of intangibles 1,016 937

Share based payments and shares to be issued 263 108

Retirement benefit obligations (427) (398)

Finance income (4) (9)

Finance costs 272 359

Increase in deferred contingent consideration 1,361 -

2,276 1,336

2015 Consolidated Statement of Cash Flows 30

Year ended

31 December 2015

Year ended

31 December 2014

CASH FLOWS FROM OPERATIONS BEFORE MOVEMENTS IN WORKING CAPITAL 2,276 1,336

Movements in working capital: Increase in inventories (313) (196) Increase in trade and other receivables (71) (1,436) Increase in trade and other payables 493 743

109 (889)

CASH GENERATED FROM OPERATIONS 2,385 447 Finance costs (86) (65) Income taxes 205 100

NET CASH GENERATED FROM OPERATING ACTIVITIES 2,504 482

CASH FLOWS FROM INVESTING ACTIVITIES Finance income received 4 9 Purchase of intangible assets (612) (369) Purchase of property, plant and equipment (113) (124) Payment of deferred contingent consideration (950) (302) Repayment of capital from finance leases (8) -

NET CASH USED IN INVESTING ACTIVITIES (1,679) (786)

CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of share capital 12

Loan notes repaid (303) - Finance lease interest (4)

NET CASH USED IN FINANCING ACTIVITIES (295) - NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 530 (304)

Cash and cash equivalents at start of year 1,676 2,053

Effects of exchange rate changes on the balance of cash held in foreign

currencies

(23) (73)

CASH AND CASH EQUIVALENTS AT END OF YEAR 2,183 1,676

Share Information 31

Share Price (p) 216.5

Market AIM

Ticker INS

Market Cap. (£m) 32.3

Ord. shares in issue 15,550,217

Director Holding %

David Gare 1,418,000 9.1

David Sherwin 1,380,000 8.9

Phil Reason 665,000 4.3

Mike McGoun 37,000 0.2

Major Shareholders Holding %

Henderson 1,951,000 12.5

Liontrust 1,426,000 9.2

Giles Wilson 947,000 6.1

Hargreave Hale 873,000 5.6

Adrian Gare 834,000 5.4

Deborah Walker 834,000 5.4

Alto Invest 824,000 5.3

Close 636,000 4.1

Legal & General 618,000 4.0

Artemis 571,000 3.7

Unicorn 563,000 3.6

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