TIDMABC
RNS Number : 4934J
ABCAM Plc
12 September 2016
12 September 2016
ABCAM PLC
Strong revenue performance enabling investment for future
growth
Abcam plc ("Abcam" or "the Company", AIM: ABC), a global leader
in the supply of life science research tools, is pleased to
announce its preliminary results for the year ended 30 June 2016
([1] .)
FINANCIAL HIGHLIGHTS
-- Catalogue revenue increased by 17.4% on a reported basis to
GBP159.0m (FY 2015: GBP135.4m). On a constant exchange rate (CER)*
basis the increase was 14.4%
-- Total revenue increased on a reported basis by 19.2% to
GBP171.7m (FY 2015: GBP144.0m). On a CER basis the increase was
15.9%
-- Slight reduction in gross margin at 70.2% due to exchange rates (FY 2015: 70.5%)
-- Reported EBITDA margin was 33.6% (FY 2015: 37.3%. Adjusted
EBITDA margin** was 34.9% (FY 2015: 37.6%), the movement in which
reflects the expected operational investment in Firefly and AxioMx
and the impact of foreign exchange rate movements
-- Reported diluted earnings per share (EPS) was 18.53 pence (FY
2015: 18.57 pence), reflecting previously announced investment in
systems and processes and acquisition and integration costs.
Adjusted EPS** increased by 13.1% to 22.35 pence (FY 2015: 19.76
pence)
-- Closing cash and term deposits were GBP70.7m (30 June 2015: GBP58.7m)
-- Proposed full year dividend increased by 8.5% to 8.91 pence per share (FY 2015: 8.21 pence)
OPERATIONAL HIGHLIGHTS
-- RabMAb(R) primary antibody and non-primary antibody revenues
grew on a CER basis by 29.5% and 30.3% respectively, demonstrating
progress in executing our strategy, delivering at the top end of
our key performance indicator (KPI) targets
-- Acquisition of AxioMx completed and integration of its technology platform progressing well
-- Introduced direct service in Singapore to provide technical
support and customer services, expanding the Group's presence in
the Asia Pacific region
-- Signed a licence and supply agreement with Horizon Discovery
Group plc for knockout cell lines, raising antibody validation
standards to improve quality for researchers
-- Expanded existing facility in Boston, USA, with new
laboratory space and relocated and integrated the Firefly team
-- Relocated the Hangzhou team to a new production facility to increase handling capacity
-- Our step change investment in systems and processes to scale
the business for future sustained growth is underway
Commenting on the preliminary results, Alan Hirzel, Abcam's
Chief Executive Officer, said:
"We continue to move toward our ambition of becoming the most
influential life sciences company for researchers worldwide. It has
been a significant year for Abcam where we have delivered two times
or better market growth in every geography and product category in
which we operate. We see further opportunities for growth and we
are investing in the long term future of the Company."
* CER calculated assuming that exchange rates for the currencies
in which the Group trades had remained unchanged from FY 2015
** Excluding acquisition costs, acquisition integration costs,
the initial incremental costs associated with the investment in
systems and processes and prior year R&D tax credits. In the
case of diluted earnings per share also excluding acquisition
related amortisation, the expense related to the unwinding of the
discount applied on deferred consideration for AxioMx and the
associated tax effects of adjusting items. See the section below
headed Our Financials for more detail.
([1]) This announcement, including any information included or
incorporated by reference in this announcement, may contain
forward-looking statements (including words such as "believe",
"expect", "estimate", "intend", "anticipate" and words of similar
meaning) which are based upon current expectations and assumptions
regarding anticipated developments and other factors affecting the
Abcam group. All statements other than statements of historical
facts may be forward-looking statements and should not be treated
as guarantees of future performance. These forward-looking
statements involve risks and uncertainties, many of which are
beyond the control of the Abcam group, and there are important
factors that could cause actual results to differ materially from
those expressed or implied by these forward-looking statements.
These forward-looking statements speak only as at the date of this
announcement and accordingly undue reliance should not be placed on
such statements. The Abcam group does not assume any obligation to,
and does not intend to, revise or update these forward-looking
statements, except as required pursuant to applicable law.
##Ends##
For further information, please contact:
+ 44 (0) 1223
Abcam 696 000
Alan Hirzel, Chief Executive
Officer
Gavin Wood, Chief Financial Officer
Julia Wilson, Investor Relations
J.P.Morgan Cazenove - Nominated + 44 (0) 20 7742
Advisor & Corporate Broker 4000
James Mitford / Christopher Cargill
+ 44 (0) 20 3727
FTI Consulting 1000
Ben Atwell / Brett Pollard /
Natalie Garland-Collins
Notes for editors:
About Abcam plc
As an innovator in reagents and tools, Abcam's purpose is to
serve life science researchers globally to achieve their mission,
faster. Providing the research and clinical communities with tools
and scientific support, the Company offers highly validated
biological binders and assays to address important targets in
critical biological pathways.
Already a pioneer in data sharing and ecommerce in the life
sciences, Abcam's ambition is to be the most influential company in
life sciences by helping advance global understanding of biology
and causes of disease, which, in turn, will drive new treatments
and improved health. Two-thirds of the world's 750,000 life science
researchers use Abcam's affinity binders, reagents, biomarkers and
assays and the Company's products are mentioned in over 20,000 of
the 56,000 peer-reviewed papers published each year in the life
sciences.
By actively listening to and collaborating with researchers, the
Company continuously advances its portfolio to address their needs.
A transparent programme of customer reviews and datasheets,
combined with an industry-leading validation initiative, gives
researchers increased confidence in their results.
Abcam's twelve locations are located in the world's leading life
science research hubs, enabling local services and multi-language
support. Founded in 1998 and headquartered in Cambridge, UK, the
Company sells to more than 100 countries. Abcam was admitted to AIM
in 2005 (AIM: ABC).
To find out more, please visit www.abcam.com and
www.abcamplc.com
Forward looking statement
This announcement, including any information included or
incorporated by reference in this announcement, may contain
forward-looking statements (including words such as "believe",
"expect", "estimate", "intend", "anticipate" and words of similar
meaning) which are based upon current expectations and assumptions
regarding anticipated developments and other factors affecting the
Abcam Group. All statements other than statements of historical
facts may be forward-looking statements and should not be treated
as guarantees of future performance. These forward-looking
statements involve risks and uncertainties, many of which are
beyond the control of the Abcam Group, and there are important
factors that could cause actual results to differ materially from
those expressed or implied by these forward-looking statements.
These forward-looking statements speak only as at the date of this
announcement and accordingly undue reliance should not be placed on
such statements. The Abcam Group does not assume any obligation to,
and does not intend to, revise or update these forward-looking
statements, except as required pursuant to applicable law.
CHAIRMAN'S INTRODUCTION
Abcam has reported another year of strong revenue growth and the
Board believes the Group is well positioned to continue delivering
sustainable returns as it continues to invest to support the next
chapter of growth.
Reflecting on the performance over the year, I am delighted to
say that the business has performed very well, meeting both its
strategic and financial objectives.
Strategic execution
Over the past three years we have been reshaping our business
and believe the results we report this year show that our strategic
direction is the right one. We have grown in all of our geographic
regions and product categories, whilst continuing progress against
each of our strategic goals.
Abcam is a rapidly growing organisation which places new demands
on our existing systems and processes. We are investing in new
capabilities in order to support continued growth and realise the
opportunities in the markets in which we operate. In particular, we
are investing in scalable and flexible IT systems and have chosen a
cloud-based enterprise resource planning (ERP) platform, as well as
a primary implementation partner.
We believe our strategy is strengthening Abcam's position at the
heart of life science research worldwide. We expect to continue to
grow organically and, where we see technologies and businesses that
fit our business model, through partnering and acquisition. Our
recent acquisition of AxioMx is a good example of where we
identified a company with a new technology that potentially allows
us to add further value to the research, diagnostic and therapeutic
communities. This technology has the potential to produce highly
validated recombinant monoclonal antibodies within weeks - a
significantly shorter timeframe than is possible with current in
vivo technology. The Board is pleased with the progress being made
and the first AxioMx products are already on Abcam's catalogue.
Our strategy is designed to increase revenue growth and improve
the long-term financial performance of the business, in support of
our ambition to become the most influential life sciences company
supporting researchers. Each year we set ourselves challenging
targets and, once again, we have achieved results at the top end of
these targets.
Dividend
The Board is proposing a final dividend of 6.556 pence per share
(FY 2015: 5.92 pence per share). Added to the interim dividend of
2.354 pence per share, this brings the total dividend for the
financial year ended 30 June 2016 to 8.91 pence per share,
representing an increase of 8.5% growth over the previous year. The
dividend will be paid on 2 December 2016 to shareholders on the
register on 11 November 2016. The associated ex-dividend date is 10
November 2016.
Governance
Achieving high standards of governance is fundamental to the
successful growth of our business. The establishment of a Company
Secretariat has enabled additional focus to be given to corporate
governance. Even though it is not a requirement for an AIM-listed
company, we continue to comply in all material respects with the UK
Corporate Governance Code (Code).
As a Board, we have focused on enhancing our effectiveness and
implementing the new requirements of the 2014 edition of the Code,
which apply to us for the first time this year. These include
defining our risk appetite and conducting a broader risk assessment
in the context of assessing our longer-term financial
viability.
We regularly review ways to improve the effectiveness of the
Board and its Committees and a thorough and detailed internal
evaluation was undertaken this year.
Strong leadership and dedicated employees
Our Company has grown significantly over recent years and now
employs over 900 people in twelve locations. During the year we
have made key appointments across the business to broaden our
product development and digital marketing expertise. We also
expanded our legal and diagnostics teams, and appointed a global
head of HR to ensure that we continue to attract and retain the
best talent worldwide.
Our Board has also been strengthened with the addition of Mara
Aspinall, who joined us in September 2015 as a Non-Executive
Director, and she has already made significant contributions to the
business.
During the course of the year our Chief Operating Officer (COO),
Jim Warwick, and our Chief Financial Officer (CFO), Jeff Iliffe,
announced their intention to leave Abcam and step down from the
Board. Both have played a huge role in the Company's success, with
Jim being an integral part of the business for more than 15 years
and Jeff similarly since being appointed CFO in 2007. I would like
to thank them for all their hard work during their time at Abcam
and their continued dedication to the business through an efficient
transition. Jeff has ensured an orderly handover to Gavin Wood, who
joined Abcam as CFO-elect on 18 July 2016, and will become CFO on
12 September. Jim is remaining with Abcam until the end of 2016 to
ensure that the initial build and design phase of our new ERP
programme is completed.
In August 2016, Anthony Martin and Michael Ross advised the
Board of their intention not to seek re-election as Directors at
the forthcoming AGM. I would like to thank them both for the
significant roles they have played during their service on the
Board of Abcam. Their insight and support have been extremely
valuable and we wish them well in their future endeavours.
The successful transformation of our business to date is a
result of the hard work, enthusiasm and dedication of all of our
employees. My thanks to them and to our shareholders, who have
continued to support the business through a period of investment
and growth.
I would also like to thank my Board colleagues for their
guidance and oversight of the business and the Executive Leadership
Team for continuing to deliver strong business performance while
successfully executing on the strategic priorities.
Creating future sources of value
We listen to our consumers and focus on identifying the
biological pathways and targets of greatest interest to them,
whilst working to ensure our products are of the highest quality,
accompanied by relevant supporting data. This approach has resulted
in Abcam remaining the leading primary antibody supplier to the
life science research market. Favourable macroeconomic trends and
our investment strategy combine to support the growth of our
innovative products. While operating in a competitive marketplace,
comprised of both private and public companies, we continue to gain
market share.
We are making good progress against long term strategic
priorities and growth objectives. We have a strong history of
growth through acquisition and our most recent company
acquisitions, Firefly BioWorks and AxioMx, whilst still in an
investment stage, are beginning to deliver results. We will
continue our programme of investment in our systems and processes,
as well as in our facilities, to ensure that we have the
infrastructure to support the growth of the business and we are
confident that we can continue to build significant value for all
of our stakeholders.
Murray Hennessy
Chairman
CHIEF EXECUTIVE OFFICER'S REVIEW: HOW WE DELIVERED VALUE THIS
YEAR
We are building Abcam for success in the life science market of
today and tomorrow by creating a scalable platform that will enable
us to continue to grow over the long term.
The Company has transitioned from being a small high growth
company to being a significant player in our core markets, with
future expansion potential through targeted investment. Abcam is
the market leader in primary antibodies for use in research. It is
our goal to continue to grow the Company and create value for all
of our stakeholders. We have a strong track record of delivering on
our promises and we will continue to focus on understanding our
customers, delivering high quality products, and being the
innovation partner of choice for the researchers we serve
globally.
A clear direction
In 2014 we laid out the strategy that has subsequently seen
Abcam become increasingly successful, bearing testament to the hard
work of all our employees across the Company. Each year we set
ourselves challenging goals and I am pleased to say that in FY 2016
the achievement against our KPI targets was at the top end of the
target range, or above, in each category.
Strategic FY 2016 FY 2016 Importance
KPI target performance
------------------- -------- --------------- ----------------------------------
Abcam is the leading supplier
of recombinant monoclonal
antibodies. RabMAb(R) primary
antibodies are increasing
their market share and are
valuable tools for life
science researchers, who
Growth are looking for more specific
in constant and sensitive antibodies
currency that give repeatable results.
revenue With almost 9,000 RabMAb(R)
from RabMAb(R) primary antibodies in our
primary catalogue, we expect them
antibody to continue to play an important
range 15%-20% 29.5% part in our growth.
------------------- -------- --------------- ----------------------------------
Growth
in constant
currency Driving growth by expanding
revenue into new areas is a focus
from non-primary for our business. Non-primary
antibody antibody products now comprise
products 25%-30% 30.3% over 18% of our total revenue.
------------------- -------- --------------- ----------------------------------
Net Promoter The NPS measures how our
Score (NPS) 22%-28% 26% consumers perceive our brand.
------------------- -------- --------------- ----------------------------------
#1 market #1 primary Market research has confirmed
position antibodies that we remain the #1 brand
in primary for research antibodies
antibodies Gained market and we continue to gain
share across market share across all
Gain market all other other categories.
share in categories
at least
two other
product
categories
------------------- -------- --------------- ----------------------------------
Our strategic priorities
Our strategy is designed to generate sustainable sales and
earnings growth and improved returns to shareholders.
We have five strategic priorities:
-- to grow our core reagents business faster than the market;
-- establish new growth platforms;
-- scale organisation capabilities;
-- sustain attractive economics; and
-- selectively pursue partnerships and acquisitions.
Innovation and future growth
We continue to focus on our broad portfolio of tools to enable
research into the role of signalling and regulatory molecules and
proteins in biological pathways.
We analyse data and research trends to develop products that fit
the requirements of our consumers. We package these products in a
format that suits their needs, making it easier and faster for them
to complete their work. This approach is driving new product
sales.
Our proprietary, high quality RabMAb(R) technology continues to
be an important differentiator for the business. We increased our
ranges of RabMAb(R) antibodies and SimpleStep ELISA(R) assay kits
which contain RabMAb(R) antibodies.
During the year we also launched a suite of matched antibody
pairs in a standalone format. These products provide greater
flexibility to researchers and allow cost-effective drug
discovery.
Expanding the global reach of our products is fundamental to our
organic growth plans. In addition to extending our geographic
outreach in China, during the year we have also introduced a direct
supply model in Singapore.
The diagnostics market is an area where we see an opportunity
for expansion and is one where we have seen success. Abcam's work
with global pharmaceutical and diagnostic companies to develop and
produce companion diagnostic antibodies to targets such as PD-L1,
is a prime example.
PD-L1 is an important target in difficult to treat cancers such
as melanoma and lung cancer and Abcam's RabMAb(R) technology has
played a key role in helping diagnostic companies to offer specific
diagnostic antibodies targeting PD-L1 to the clinic. Abcam worked
on several bespoke projects in partnership with large
pharmaceutical companies to develop highly specific RabMAb(R)
antibodies to the target. In addition to these clinical uses, PD-L1
RabMAb(R) product (clone 28-8) is now also available on our website
for research use and in its first year has become one of the most
cited antibodies of its type.
Creating value through acquisition and partnering
Abcam has a strong track record of delivering growth through
acquisition and partnership deals. The Company actively seeks to
partner with entities that offer complementary products or
capabilities in the life science market.
We have clear criteria when considering opportunities. In
addition to being able to generate an appropriate return on
investment for our shareholders, we look for new innovative growth
platforms and/or new expertise that we can leverage.
The acquisitions of MitoSciences and Epitomics gave us an
enhanced immunoassay portfolio and intellectual property for
RabMAb(R) production capacity respectively, both of which have made
significant contributions to Abcam's growth.
Our more recent acquisitions, whilst both still in an investment
stage, are already beginning to deliver results. We acquired
Firefly BioWorks in January 2015 and, later that year, launched
microRNA (miRNA) assays using the Firefly(R) technology. These
allow measurement of multiple miRNA assays with fewer steps than
conventional assays. This technology is starting to deliver,
largely through our sample testing services, and is also in use in
customers' own laboratories.
We have already seen several publications using the technology,
including a paper describing the development of miRNA biomarkers
for cardiac toxicity in drug development. We are also developing
multiplex immunoassays using the Firefly(R) technology and are beta
testing these products with researchers. The Firefly(R) multiplex
immunoassays, enabling efficient measurement of multiple proteins,
will complement our SimpleStep ELISA(R) and Matched Antibody Pair
product lines, which offer rapid testing and a flexible format
respectively. Our RabMAb(R) antibodies are incorporated in all of
these products and they are developed at our Eugene, Oregon site,
which was added in the MitoSciences acquisition in 2011.
AxioMx, which we acquired in November 2015, offers in vitro
recombinant monoclonal antibody technology which complements
Abcam's existing antibody and immunoassay capabilities by targeting
attractive and growing markets that traditional in vivo antibody
production methods struggle to address. In addition to opening new
markets, AxioMx capabilities have the potential to deliver high
quality antibodies within weeks, which is significantly faster than
is possible using in vivo methods. The team has made good progress
since the acquisition from both a commercial and technical
perspective, with new AxioMx technology-based developments for
SimpleStep ELISA(R) with matched antibody pair and conjugated
product lines all being initiated. The plan for additional products
focusing on new targets is in progress and the first AxioMx
developed products are now on the catalogue.
It is part of our strategy to pursue further acquisitions and
collaborations where they will create additional value for the
business and our stakeholders.
Investing for the future
Abcam is a rapidly growing organisation and it is important that
we have the infrastructure to support this growth both from a
systems and processes perspective. Key to this is the
implementation of a comprehensive ERP system. During the period, we
have gone through an extensive selection process both of the
platform and for an implementation partner. We have chosen Oracle
Fusion as the core cloud-based ERP software provider and have also
appointed our primary implementation partner. The detailed design
phase of the project is nearing completion and we have already
begun to build certain modules in line with a phased approach to
roll-out. We believe the investment will give us multiple
advantages, including allowing us to scale the business without
increasing the headcount by as much as would otherwise be the case;
improving consumer interaction and conversion; better information
for decision making; and a significant improvement in integrating
and delivering value from any future strategic acquisitions or
investments.
Additionally, we have made enhancements to some of our
facilities to fit the needs of our growing organisation. We have
increased handling capacity through our investment in the
relocation of our Hangzhou production facility and have integrated
the Firefly team into the same building as our existing facility in
Boston, USA.
Our headquarters in Cambridge, UK, are currently spread across
three sites. In August 2016, outline planning permission was
obtained for a new building on the Cambridge Biomedical Campus,
which would enable us to consolidate into a single site, with
sufficient space to accommodate our current and future needs.
Markets
The global life science research tools market is estimated to be
$2.7bn and we continue to be the leader in the estimated $900m
primary research antibodies market segment, supported by strong
growth in RabMAb(R) antibodies. We have also been successful in
delivering significant revenue growth from our non-antibody
products.
The table below shows our revenues from a geographical point of
view based on the location of our customers.
Revenue Revenue Increase
FY 2016 FY 2015 in reported CER
GBP000 GBP000 revenue growth
------------------- --------- --------- ------------- --------
The Americas 68,800 58,535 17.5% 10.6%
EMEA 47,686 43,343 10.0% 12.4%
Japan 12,321 11,148 10.5% 7.2%
China 18,844 12,912 45.9% 43.0%
Rest of Asia
Pacific 11,310 9,444 19.8% 16.5%
------------------- --------- --------- ------------- --------
Catalogue revenue 158,961 135,382 17.4% 14.4%
------------------- --------- --------- ------------- --------
Custom products
and licensing(1) 12,712 8,651 46.9% 39.2%
------------------- --------- --------- ------------- --------
Total reported
revenue 171,673 144,033 19.2% 15.9%
------------------- --------- --------- ------------- --------
(1) Custom products and licensing revenues were previously known
as non-product revenues but have been re-named to better reflect
the nature of this income. This includes revenues from custom
services, IVD and licences.
Values and our people
Abcam is a rapidly growing company and key to our success is the
quality of our people and the way we conduct our business. Our
global headcount has increased to over 900 employees and we have
attracted strong talent to the Company and built solid capabilities
which are underpinning the long-term growth of the business.
Outlook
To ensure we are able to capitalise fully on the opportunities
available to us, we continue to work closely with our consumers and
invest in R&D, our employees, our IT and our infrastructure to
provide innovative, trusted and improved solutions.
Supported by a clear purpose and strategy we believe that Abcam
is well positioned to continue delivering long-term value for our
stakeholders.
Alan Hirzel
Chief Executive Officer
OUR STRATEGIC PRIORITIES
Our strategy is designed to increase growth and improve our
long-term financial performance, in support of our ambition to
become the most recommended brand by life science researchers.
Our strategic What we promised What we achieved Our next priorities
priorities for FY 2016
------------------------ -------------------------- ------------------------- -------------------------
1. Grow our Continue innovating Published directly Continue to drive
core reagents to build portfolios conjugated market share
business faster of products RabMAb(R) primary gain for primary
than the market around high antibodies antibodies (including
Our aim is value targets against high rabbit monoclonal
to generate Make further value targets antibodies)
above market digital marketing Strong performance Retain existing
revenue growth improvements across our consumers and
from our existing to provide digital/eCommerce attract new ones
consumer base, a more personalised platforms and by continuing
as well as consumer experience further investment to improve our
by attracting Continued in our mobile digital and offline
new consumers focus on quality platform, as experiences
to ensure well as content Continue focus
products are marketing and on high quality
always specific, marketing automation products which
selective Delivered improvements are specific,
and reproducible to quality selective, and
in the context by continuing reproducible
for which to implement in the context
our consumers knockout validation for which our
use them of antibodies consumers use
using knockout them
cell lines
------------------------ -------------------------- ------------------------- -------------------------
2. Establish Continue to Continued to Continue to strengthen
new growth strengthen grow the market our position
platforms our position in China in China
Our aim is in China Integration Continue to grow
to deliver Build our and promotion our kits and
enhanced value kits and assays of new kits assays business
by the addition capabilities, and assays further leveraging
of attractive leveraging products such our RabMAb(R)
new product our RabMAb(R) as Firefly(R) and Firefly(R)
ranges or and Firefly(R) MiRNA assays technologies
services in technologies Focused on Continue to increase
either the Continue to less penetrated, share of unpenetrated
same or adjacent increase our high potential segments
segments and share of underpenetrated consumer segments Grow custom product
by extending segments/consumers Continued to and licensing
our geographic Increase number make it easier
penetration of strategically for organisations
important to buy from
accounts with us by increasing
eProcurement the number
punch-out of accounts
capability with eProcurement
punch-out capabilities
------------------------ -------------------------- ------------------------- -------------------------
3. Scale organisation Complete move Relocated the Finalise Executive
capabilities of Hangzhou Hangzhou team Leadership Team
Our aim is production to a new production hires and integrate
to attract facility facility to and align teams
and retain Complete outline increase handling Implement the
the best people, design and capacity Oracle Fusion
empower them begin planning Obtained outline modules successfully
to succeed approval process planning permission and in accordance
and build for new head in August 2016 with the implementation
the capabilities office in for a new head plan
necessary Cambridge, office Progress activities
to deliver UK Expanded existing to consolidate
our strategy Implement facility in our Cambridge
improvements Boston, USA UK facilities
to the Boston, with new laboratory
USA, office space and relocated
and relocate and integrated
Firefly(R) the Firefly
team to integrate team
them into Completed IT
the same building review and
Complete strategic chose Oracle
IT review Fusion as the
and begin core software
implementation for the enterprise-wide
Roll out long-term change to our
leadership systems and
and development processes.
training programme The detailed
for senior design phase
managers of the project
is nearing
completion
and we have
already begun
to building
certain modules
in line with
a phased approach
to roll-out
Appointed new
CFO and Global
Head of HR
New leadership
training programme
rolled out
------------------------ -------------------------- ------------------------- -------------------------
4. Sustain Perform a Restructuring Optimise and
attractive detailed review of finance further improve
economics of the cost function to custom service
Our aim is base to maximise enhance planning role and economics
to ensure operational capabilities Consolidate procurement
operational and capital and drive efficiencies and identify
efficiency spending efficiency Reviewed existing cost savings
and cost effectiveness Establish global distribution Scale-up of AxioMx
to deliver a Singapore agreements production
sustainable, office to and introduced
profitable allow direct direct sales
growth sales in this to Singapore
market Development
Review and of plans to
optimise other transform systems
global distribution and processes
arrangements to underpin
Enhance business growth and
planning and improve efficiency
analysis capabilities
------------------------ -------------------------- ------------------------- -------------------------
5. Selectively Continue to Acquisition Continue to actively
pursue partnerships actively seek of AxioMx which seek out and
and acquisitions out and evaluate has the potential evaluate new
Our aim is new partnerships, capability partnerships,
to supplement acquisitions, to deliver acquisitions,
the other collaborations high quality collaborations
components and investment antibodies and investment
of our strategy opportunities significantly opportunities
by making that support faster than that support
acquisitions our strategy is possible our strategy
of and working and leverage using in vivo and leverage
with partners our competitive methods our competitive
that add to advantage Signed a licence advantage
our competitive Prepare analysis and supply
advantage of markets agreement with
in the life under-represented Horizon Discovery
science market in our current Group plc for
business model knockout cell
and establish lines
prioritisation
plan for exploiting
opportunities
identified
------------------------ -------------------------- ------------------------- -------------------------
OUR KPIs
We measure our performance against a number of KPI targets.
Success against these KPIs forms a component of the Executive
Directors' and senior management's incentives.
RabMAb(R) primary antibodies CER revenue growth
Strategic alignment: 1, 2, 4, 5
29.5%
FY 2017 FY 2016 FY 2016
target target FY 2015 FY 2014 FY 2013
18%-22% 29.5% 15%-20% 24.2% 17.1% 33.5%
How we performed
At a constant exchange rate (CER) growth rate of 29.5%, our
RabMAb(R) revenues have outperformed our high expectations in the
year.
Non-primary antibody products CER revenue growth
Strategic alignment: 2, 5
30.3%
FY 2017 FY 2016 FY 2016
target target FY 2015 FY 2014 FY 2013
20%-25% 30.3% 25%-30% 28.2% 34.3% 32.4%
How we performed
Led by our kits and assays business, non-primary antibody CER
revenue growth was 30.3%, outperforming our high expectations.
Net Promoter Score (NPS)
Strategic alignment: 1, 2
26%
FY 2017 FY 2016 FY 2016
target target FY 2015 FY 2014 FY 2013
24%-30% 26% 22%-28% 24% 18% 19%
How we performed
We conducted several formal consumer surveys during the year to
determine the likelihood of consumers recommending Abcam's products
and services to a colleague. The balance of promoter and detractors
is then computed into an NPS using standard industry methods. Our
NPS improved by two percentage points to 26%. We have moved from
eighth to fifth ranked in market, and remain focused on further
advancement.
Market position
Strategic alignment: 1, 2, 5
#1 in primary research antibodies
Ongoing targets:
-- Maintain #1 position in primary research antibodies
-- Gain share in at least two other product categories
How we performed
Market research has confirmed that we remain the #1 company for
research antibodies and that we continue to gain market share
across all other categories.
OUR FINANCIALS
Reported revenues for the year increased by 19.2% to GBP171.7m.
At constant exchange rates (CER) revenue growth was 15.9%, with
sales from catalogue products 14.4%. Adjusted profit before tax,
which includes the research and development activities of AxioMx,
which was acquired during the period, and Firefly BioWorks,
acquired in November 2015, increased by 8.5% to GBP53.8m (FY 2015:
GBP49.6m). The reported profit before tax for the year fell by 1.5%
to GBP45.4m (FY 2015: GBP46.1m), after costs of the previously
announced investment in systems and processes, acquisition-related
costs and prior year R&D credits. A reconciliation between
these figures is given in the table below.
Revenue growth has continued to benefit from our strategy of
supplying high quality products with clear, supporting data to our
consumer insight to ensure product relevancy. This has been
complemented by further investment to build our capabilities in
regional commercial teams, IT and R&D in pursuit of our
strategy.
The table below shows a reconciliation to IFRS measures for
costs, expenses and profit for the last two years. These have been
adjusted to exclude acquisition-related costs arising on the
acquisitions of Firefly in FY 2015 and AxioMx in FY 2016, the
amortisation of acquisition-related intangible assets across the
Group, the incremental costs associated with the improvement of
systems and processes and R&D tax credits recognised in FY 2016
relating to prior years.
We believe that disclosing such non-IFRS measures enables a
reader to isolate and evaluate the impact of the items detailed
above on the financial performance of the Company. We believe that
this provides valuable additional information and allows for a
fuller understanding of performance from year to year.
Adjusted income statement
FY 2016 FY 2015
-------------------------------------------------------------------------------------------------------------------------------------
Incremental
costs R&D Reported Reported
associated tax IFRS IFRS income
with the credit income statement
Acquisition-related systems relating statement GBP000
Adjusted costs and to GBP000 Adjusted Acquisition-related
income (note processes prior income costs (note
statement 1) improvements year statement 1)
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------- --------- ------------------- -------------- --------- ---------- --------- ------------------- -------------
Revenue 171,673 - - - 171,673 144,033 - 144,033
Cost of sales (51,142) - - - (51,142) (42,507) - (42,507)
--------------- --------- ------------------- -------------- --------- ---------- --------- ------------------- -------------
Gross profit 120,531 - - - 120,531 101,526 - 101,526
--------------- --------- ------------------- -------------- --------- ---------- --------- ------------------- -------------
Administration
and management
expenses (55,231) (2,206) (3,955) - (61,392) (44,076) (1,804) (45,880)
Research and
development
expenses (11,662) (2,467) - 1,308 (12,821) (8,246) (1,673) (9,919)
--------------- --------- ------------------- -------------- --------- ---------- --------- ------------------- -------------
Operating
profit 53,638 (4,673) (3,955) 1,308 46,318 49,204 (3,477) 45,727
Finance income
/ (expense) 144 (1,050) - - (906) 372 - 372
--------------- --------- ------------------- -------------- --------- ---------- --------- ------------------- -------------
Profit before
tax 53,782 (5,723) (3,955) 1,308 45,412 49,576 (3,477) 46,099
Taxation (8,630) 994 791 (1,138) (7,983) (9,799) 1,084 (8,715)
--------------- --------- ------------------- -------------- --------- ---------- --------- ------------------- -------------
Profit after
tax 45,152 (4,729) (3,164) 170 37,429 39,777 (2,393) 37,384
--------------- --------- ------------------- -------------- --------- ---------- --------- ------------------- -------------
Earnings per
share (p)
Basic 22.45 (2.35) (1.57) 0.08 18.61 19.89 (1.20) 18.69
Diluted 22.35 (2.34) (1.56) 0.08 18.53 19.76 (1.19) 18.57
--------------- --------- ------------------- -------------- --------- ---------- --------- ------------------- -------------
Note 1: Acquisition-related costs comprise costs of acquisition,
acquisition-related intangible amortisation, acquisition
integration costs, and in FY 2016, for AxioMx, the expense related
to the unwinding of the discount applied on the deferred
consideration.
Revenue
Reported revenues for the year increased by 19.2% to GBP171.7m.
Overall, Sterling was weaker than last year against the currencies
in which the Group trades. Adjusting for this, CER revenue growth
was 15.9% (FY 2015: 12.6%).
Gross margins
Reported gross margin was down very slightly to 70.2% (FY 2015:
70.5%) due to exchange rate movements over the period.
Administration and management expenses
As indicated last year, FY 2016 has been a period of continued
investment in our capabilities to drive medium and long-term growth
and this has increased our cost base.
The adjusted administration and management expenses increased by
GBP11.2m to GBP55.2m. The notable components of the increase
are:
-- the reported cost increases owing to the relative weakness of
Sterling referred to above, together with net currency losses in
the year including from forward selling contracts, contributed a
GBP2.5m increase in reported costs;
-- strengthening the commercial teams, with particular focus on
under-penetrated consumer segments and local office costs to
support geographic expansion, such as in Shanghai and Singapore
together added GBP2.0m;
-- IT-related costs to support business expansion added GBP1.4m; and
-- the incremental costs from Firefly and AxioMx added a further GBP0.9m.
The remainder of the increase principally relates to supporting
the growth in activity and the full year effect of costs incurred
in FY 2015.
Research and development expenditure
Research and development (R&D) expenditure relates to the
development of new products, as well as costs incurred in
identifying and implementing production process improvements. These
costs do not meet the requirements to be capitalised as an
intangible asset and are therefore expensed through the income
statement.
The reported level of R&D expenditure increased to GBP12.8m
in FY 2016 from GBP9.9m in FY 2015. After adjusting for a credit to
costs from an R&D tax credit election relating to prior years,
and the increase in amortisation charges of acquisition-related
intangible assets, the level of R&D in the adjusted income
statement grew from GBP8.2m in FY 2015 to GBP11.7m in FY 2016.
The main contributor to this GBP3.5m increase was GBP2.9m
additional investment in the technology of AxioMx (acquired in
November 2015), and Firefly BioWorks Inc. (acquired in January
2015). Both of these are relatively early stage businesses with
technologies which we believe have the potential to be significant
contributors to Abcam's growth in future years. The remaining
GBP0.6m includes an increase in costs of product validation chiefly
attributable to investment in enhancing product quality, including
in IVD-related and custom service activities.
Investing in systems and processes
The growth which has been delivered in recent years has placed
new demands on the organisation, systems and processes that support
our business. Consequently, as previously announced, we are
investing in building enhanced capabilities and systems to realise
the opportunities that we see to grow the business. The programme
involves the deployment of enterprise-wide change to our systems
and processes, with Oracle Fusion as the core software, and the
reshaping of some of our internal functions.
In FY 2016, we have incurred capital expenditure of GBP5.5m on
the project and incremental revenue costs of GBP4.0m.
Earnings and tax
The adjusted profit before tax for the year was GBP53.8m, on
which the effective tax rate was 16.0% (FY 2015: GBP49.6m and 19.8%
respectively). The tax charge includes prior year adjustments which
reduced the charge for the year by GBP2.8m and the effective rate
by 5.2%.
After taking into account the acquisition-related costs,
incremental costs associated with the systems and processes
improvements and the treatment of prior year R&D tax credits,
the reported effective tax rate would be 17.6% (FY 2015:
18.9%).
Balance sheet
Goodwill and other intangibles
Goodwill at the year-end was GBP112.5m (FY 2015: GBP85.2m after
restatement following the finalisation of fair values of assets
arising on the acquisition of Firefly). Of the increase, GBP11.8m
arose on the acquisition of AxioMx and GBP15.4m from exchange rate
movements due to the US Dollar being the predominant functional
currency of the acquired companies to which the goodwill
relates.
The acquisition of AxioMx did not give rise to an additional
cash-generating unit (CGU) as acquired businesses are integrated
into the Group operations and product portfolio. The goodwill
resulting from the acquisition has been allocated to the CGU for
the existing Abcam business. Goodwill is not amortised under IFRS
but is subject to impairment review at least on an annual basis.
Consequently, during the year, the Directors performed a review
which involved making various assumptions regarding the future
performance of the business. After considering various scenarios
that could reasonably occur, the Directors concluded that no
impairment was required. For more details, please see note 12 to
the financial statements.
Other intangible assets at 30 June 2016 were GBP70.2m (FY 2015:
GBP44.8m). The increase primarily reflects the value attributed to
patents, technology and know-how held by AxioMx and exchange rate
movements arising because the functional currency of the related
assets is predominately US Dollars.
The amortisation charge on acquisition-related intangible assets
was GBP3.7m (FY 2015: GBP3.1m), the increase being partly because
the functional currency of those assets is also predominantly US
dollar, and from the acquisition of AxioMx during the period. The
amortisation charge on the other intangible assets was GBP3.8m (FY
2015: GBP2.0m), including GBP1.3m of accelerated amortisation of
existing software which is included within the incremental costs of
system and process improvement.
Intangible assets are amortised over their estimated useful
lives from the point at which commercial product is available for
release to a wide customer base. The amortisation of
acquisition-related intangible assets has been added back in
arriving at adjusted profit, as outlined above.
The consideration arising on the acquisition of AxioMx includes
an element of performance based payments, which are carried on the
balance sheet as contingent consideration and fees of GBP10.9m (30
June 2015: GBPnil).
Capital expenditure
Property, plant and equipment and intangible assets increased by
GBP10.1m (FY 2015: GBP7.7m), in addition to the GBP5.5m arising
from the investment in systems and processes referred to above and
the acquisition of AxioMx. This includes the relocation of our
production facility in Hangzhou, China, to a nearby site, and
reflects continued investment in support of our organic growth
strategy, to improve product characterisation and drive quality,
both of which are long-term growth drivers.
As previously announced, we plan to lease a new purpose-built
building on the Biomedical Campus in Cambridge, UK, and the capital
expenditure figure in the year also includes GBP0.6m on the design
and plans for this facility.
Cash flow
Our track record of strong cash generation continued in the year
and the period ended with an increase in net cash and term deposits
of GBP12.0m to GBP70.7m (FY 2015: GBP58.7m) after funding the
acquisition of AxioMx for a cash investment of GBP6.3m and
acquisition fees of GBP0.5m. There was no bank debt (30 June 2015:
GBPnil).
Cash generated by operations was GBP56.8m (FY 2015: GBP48.9m),
after a working capital outflow of GBP3.1m (FY 2015: GBP7.5m) which
includes GBP1.5m paid to settle pre-acquisition liabilities of
AxioMx. Also within this figure was a GBP1.3m reduction in
inventories which was achieved as a follow-on to the initiative,
which began last year, to more closely align inventory levels to
customer demand.
Looking forward
The revenue growth which the business has delivered in recent
years is a measure of the continuing success of our strategy, and
supports the underpinning capital and operational investments being
made in capabilities, systems and process. This investment will
provide the appropriate environment for the delivery of our
strategy and enable operational efficiencies. We are confident that
our strategy will continue to deliver both sustainable growth and
value to our stakeholders.
Jeff Iliffe
Chief Financial Officer
Consolidated income statement
For the year ended 30 June 2016
Year ended Year ended
30 June 2016 30 June 2015
Notes GBP000 GBP000
------------------------------------------ ----- ------------- -------------
Revenue 5 171,673 144,033
Cost of sales (51,142) (42,507)
------------------------------------------ ----- ------------- -------------
Gross profit 120,531 101,526
Administrative and management expenses
before system and process improvement
costs (57,437) (45,880)
System and process improvement costs (3,955) -
========================================== ===== ============= =============
Administration and management expenses (61,392) (45,880)
Research and development expenses 6 (12,821) (9,919)
------------------------------------------ ----- ------------- -------------
Operating profit 46,318 45,727
Finance income 9 146 372
Finance costs 9 (1,052) -
------------------------------------------ ----- ------------- -------------
Profit before tax 45,412 46,099
Taxation 10 (7,983) (8,715)
------------------------------------------ ----- ------------- -------------
Profit for the year attributable to
the owners of the parent 6 37,429 37,384
------------------------------------------ ----- ------------- -------------
Basic earnings per share (pence) 11 18.61p 18.69p
Diluted earnings per share (pence) 11 18.53p 18.57p
------------------------------------------ ----- ------------- -------------
Consolidated statement of comprehensive income
For the year ended 30 June 2016
Year ended Year ended
30 June 2016 30 June 2015
GBP000 GBP000
-------------------------------------------------- ------------- -------------
Profit for the year 37,429 37,384
-------------------------------------------------- ------------- -------------
Other comprehensive (losses)/gains that
may be reclassified to profit or loss in
subsequent years
Movement on cash flow hedges (10,819) 1,068
Movement on net investment hedge 1,677 -
Exchange differences on translation of
foreign operations 23,903 7,583
Tax relating to components of other comprehensive
income 1,995 (203)
-------------------------------------------------- ------------- -------------
Other comprehensive income for the year 16,756 8,448
-------------------------------------------------- ------------- -------------
Total comprehensive income for the year 54,185 45,832
-------------------------------------------------- ------------- -------------
Balance sheets
As at 30 June 2016
Consolidated Company
--------------------------------- ----- -------------------------- ------------------
30 June 2015 30 June 30 June
30 June 2016 GBP000 2016 2015
Notes GBP000 Restated(1) GBP000 GBP000
--------------------------------- ----- ------------ ------------ -------- --------
Non-current assets
Goodwill 12 112,462 85,200 7,658 7,658
Intangible assets 13 70,208 44,815 8,604 5,381
Property, plant and equipment 14 17,623 12,451 8,866 6,728
Investments 15 - - 93,961 88,306
Deferred tax asset 16 9,615 5,098 4,192 898
Loan receivable 19 - - 82,065 60,760
Term deposits - 1,636 - 1,000
Derivative financial instruments 21 - 224 - 224
--------------------------------- ----- ------------ ------------ -------- --------
209,908 149,424 205,346 170,955
--------------------------------- ----- ------------ ------------ -------- --------
Current assets
Inventories 17 19,675 19,803 13,532 17,090
Trade and other receivables 18 28,504 19,727 37,295 21,905
Cash and cash equivalents 68,919 57,059 60,953 49,931
Term deposits 1,748 - 1,000 -
Available-for-sale asset 20 797 678 - -
Derivative financial instruments 21 11 3,255 11 3,255
--------------------------------- ----- ------------ ------------ -------- --------
119,654 100,522 112,791 92,181
--------------------------------- ----- ------------ ------------ -------- --------
Total assets 329,562 249,946 318,137 263,136
--------------------------------- ----- ------------ ------------ -------- --------
Current liabilities
Trade and other payables 22 (20,078) (15,508) (38,486) (18,788)
Current tax liabilities (1,958) (4,813) (498) (5,987)
Contingent consideration
and fees 26 (1,990) - - -
Derivative financial instruments 21 (9,267) (737) (9,267) (737)
Loans payable - - (6,801) (5,780)
(33,293) (21,058) (55,052) (31,292)
--------------------------------- ----- ------------ ------------ -------- --------
Net current assets 86,361 79,464 57,739 60,889
--------------------------------- ----- ------------ ------------ -------- --------
Non-current liabilities
Deferred tax liability 16 (22,938) (14,779) (119) (119)
Contingent consideration
and fees 26 (10,910) - - -
Derivative financial instruments 21 (1,231) (5) (1,231) (5)
--------------------------------- ----- ------------ ------------ -------- --------
(35,079) (14,784) (1,350) (124)
--------------------------------- ----- ------------ ------------ -------- --------
Total liabilities (68,372) (35,842) (56,402) (31,416)
--------------------------------- ----- ------------ ------------ -------- --------
Net assets 261,190 214,104 261,735 231,720
--------------------------------- ----- ------------ ------------ -------- --------
Equity
Share capital 24 405 402 405 402
Share premium account 24 21,549 19,522 21,549 19,522
Merger reserve 24 61,560 56,513 61,560 56,513
Own shares 24 (3,231) (2,812) (3,231) (2,812)
Translation reserve 24 23,857 (1,266) - -
Share-based payments reserve 24 10,738 8,319 9,821 7,860
Hedging reserve 24 (7,066) 1,758 (7,066) 1,758
Tax reserve 24 1,845 585 1,860 562
Retained earnings 151,533 131,083 176,837 147,915
--------------------------------- ----- ------------ ------------ -------- --------
Total equity attributable
to the owners of the parent 261,190 214,104 261,735 231,720
--------------------------------- ----- ------------ ------------ -------- --------
1 See note 3 for details.
The preliminary financial information of Abcam plc, registered
number 3509322, was approved by the Board of Directors and
authorised for issue on 9 September 2016.
They were signed on its behalf by:
Jeff Iliffe
Director
Consolidated statement of changes in equity
For the year ended 30 June 2016
Share Share-based
Share premium Merger Own Translation payments Hedging Tax Retained Total
capital account reserve shares reserve(1) reserve(2) reserve(3) reserve(4) earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------- ------- ------- ------- ------- ----------- ----------- ---------- ---------- -------- --------
Balance as at
1 July 2014 401 17,692 56,513 (2,143) (8,718) 6,441 893 (98) 109,919 180,900
--------------- ------- ------- ------- ------- ----------- ----------- ---------- ---------- -------- --------
Profit for the
year - - - - - - - - 37,384 37,384
Other
comprehensive
income:
Exchange
differences
on
translation
of foreign
operations - - - - 7,452 131 - - - 7,583
Movements on
cash flow
Hedges - - - - - - 1,068 - - 1,068
Tax relating
to components
of
other
comprehensive
income - - - - - - (203) - - (203)
--------------- ------- ------- ------- ------- ----------- ----------- ---------- ---------- -------- --------
- - - - 7,452 131 865 - - 8,448
--------------- ------- ------- ------- ------- ----------- ----------- ---------- ---------- -------- --------
Total
comprehensive
income - - - - 7,452 131 865 - 37,384 45,832
--------------- ------- ------- ------- ------- ----------- ----------- ---------- ---------- -------- --------
Issue of share
capital 1 1,830 - (1,001) - - - - - 830
Own shares
disposed
of on release
of shares - - - 332 - - - - (332) -
Credit to
equity
for
share-based
payments - - - - - 1,747 - 683 - 2,430
Payment of
dividends - - - - - - - - (15,888) (15,888)
--------------- ------- ------- ------- ------- ----------- ----------- ---------- ---------- -------- --------
Transactions
with owners
recognised
directly in
equity 1 1,830 - (669) - 1,747 - 683 (16,220) (12,628)
--------------- ------- ------- ------- ------- ----------- ----------- ---------- ---------- -------- --------
Balance as at
1 July 2015 402 19,522 56,513 (2,812) (1,266) 8,319 1,758 585 131,083 214,104
--------------- ------- ------- ------- ------- ----------- ----------- ---------- ---------- -------- --------
Profit for the
year - - - - - - - - 37,429 37,429
Other
comprehensive
income:
Exchange
differences
on
translation
of foreign
operations - - - - 23,446 457 - - - 23,903
Movements on
cash flow
hedges - - - - - - (10,819) - - (10,819)
Movement on
net
investment
hedge - - - - 1,677 - - - - 1,677
Tax relating
to components
of
other
comprehensive
income - - - - - - 1,995 - - 1,995
--------------- ------- ------- ------- ------- ----------- ----------- ---------- ---------- -------- --------
- - - - 25,123 457 (8,824) - - 16,756
--------------- ------- ------- ------- ------- ----------- ----------- ---------- ---------- -------- --------
Total
comprehensive
income - - - - 25,123 457 (8,824) - 37,429 54,185
--------------- ------- ------- ------- ------- ----------- ----------- ---------- ---------- -------- --------
Issue of share
capital 3 2,027 5,047 (658) - - - - - 6,419
Own shares
disposed
of on release
of shares - - - 239 - - - - (239) -
Credit to
equity
for
share-based
payments - - - - - 1,962 - 1,260 - 3,222
Payment of
dividends - - - - - - - - (16,740) (16,740)
--------------- ------- ------- ------- ------- ----------- ----------- ---------- ---------- -------- --------
Transactions
with owners
recognised
directly in
equity 3 2,027 5,047 (419) - 1,962 - 1,260 (16,979) (7,099)
--------------- ------- ------- ------- ------- ----------- ----------- ---------- ---------- -------- --------
Balance as at
30 June 2016 405 21,549 61,560 (3,231) 23,857 10,738 (7,066) 1,845 151,533 261,190
--------------- ------- ------- ------- ------- ----------- ----------- ---------- ---------- -------- --------
1 Exchange differences on translation of overseas operations and net foreign investment hedges.
2 IFRS 2 charge for fair value of equity-settled share-based options and awards.
3 Gains and losses recognised on cash flow hedges.
4 Portion of tax asset arising on outstanding share options and share options exercised.
Company statement of changes in equity
For the year ended 30 June 2016
Share-based
Share Share Merger Own payments Hedging Tax Retained Total
capital premium reserve shares reserve(1) reserve(2) reserve(3) earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------- -------- -------- -------- ------- ----------- ----------- ----------- --------- --------
Balance as at 1
July 2014 401 17,692 56,513 (2,143) 6,113 893 (121) 123,992 203,340
Profit for the
year - - - - - - - 40,372 40,372
Other comprehensive
income:
Movements on cash
flow hedges - - - - - 1,068 - - 1,068
Tax relating to
components of
other
comprehensive
income - - - - - (203) - - (203)
------------------- -------- -------- -------- ------- ----------- ----------- ----------- --------- --------
- - - - - 865 - - 865
------------------- -------- -------- -------- ------- ----------- ----------- ----------- --------- --------
Total comprehensive
income - - - - - 865 - 40,372 41,237
------------------- -------- -------- -------- ------- ----------- ----------- ----------- --------- --------
Issue of share
capital 1 1,830 - (1,001) - - - - 830
Own shares disposed
of on exercise
of share options - - - 332 - - - (332) -
Share-based
payments
charge recognised
on behalf of
subsidiaries - - - - 529 - - - 529
Credit to equity
for
share-based
payments - - - - 1,218 - 683 - 1,901
Arising on transfer
of trade from
subsidiary
(note 30) - - - - - - - (229) (229)
Payment of
dividends - - - - - - - (15,888) (15,888)
------------------- -------- -------- -------- ------- ----------- ----------- ----------- --------- --------
Transactions with
owners recognised
directly in equity 1 1,830 - (669) 1,747 - 683 (16,449) (12,857)
------------------- -------- -------- -------- ------- ----------- ----------- ----------- --------- --------
Balance as at 1
July 2015 402 19,522 56,513 (2,812) 7,860 1,758 562 147,915 231,720
------------------- -------- -------- -------- ------- ----------- ----------- ----------- --------- --------
Profit for the
year - - - - - - - 45,901 45,901
Other comprehensive
income:
Movements on cash
flow hedges - - - - - (10,819) - - (10,819)
Tax relating to
components of
other
comprehensive
income - - - - - 1,995 - - 1,995
------------------- -------- -------- -------- ------- ----------- ----------- ----------- --------- --------
- - - - - (8,824) - - (8,824)
------------------- -------- -------- -------- ------- ----------- ----------- ----------- --------- --------
Total comprehensive
income - - - - - (8,824) - 45,901 37,077
------------------- -------- -------- -------- ------- ----------- ----------- ----------- --------- --------
Issue of share
capital 3 2,027 5,047 (658) - - - - 6,419
Own shares disposed
of on exercise
of share options - - - 239 - - - (239) -
Share-based
payments
charge recognised
on behalf of
subsidiaries - - - - 635 - - - 635
Credit to equity
for
share-based
payments - - - - 1,326 - 1,298 - 2,624
Payment of
dividends - - - - - - - (16,740) (16,740)
------------------- -------- -------- -------- ------- ----------- ----------- ----------- --------- --------
Transactions with
owners recognised
directly in equity 3 2,027 5,047 (419) 1,961 - 1,298 (16,979) (7,062)
------------------- -------- -------- -------- ------- ----------- ----------- ----------- --------- --------
Balance as at 30
June 2016 405 21,549 61,560 (3,231) 9,821 (7,066) 1,860 176,837 261,735
------------------- -------- -------- -------- ------- ----------- ----------- ----------- --------- --------
1 IFRS 2 charge for fair value of equity-settled share-based options and awards.
2 Gains and losses recognised on cash flow hedges.
3 Portion of tax asset arising on outstanding share options and share options exercised.
Cash flow statements
For the year ended 30 June 2016
Consolidated Company
----------------------------------- ----- -------------------------- -----------------------------
30 June 2016 30 June 2015 30 June 2016 30 June 2015(1)
Notes GBP000 GBP000 GBP000 GBP000
----------------------------------- ----- ------------ ------------ ------------ ---------------
Profit before tax 45,412 46,099 50,625 50,349
Finance income (146) (372) (4,832) (4,110)
Finance costs 1,052 - 310 -
----------------------------------- ----- ------------ ------------ ------------ ---------------
Operating profit for the
year 46,318 45,727 46,103 46,239
Adjustments for:
Depreciation of property,
plant and equipment 14 3,879 2,934 2,105 1,312
Amortisation of intangible
assets 13 7,476 5,104 4,092 2,004
Financial instruments at
fair value through profit
or loss 2,404 325 2,404 326
Loss on disposal of property,
plant and equipment 2 - - -
Loss on disposal of intangible
assets 164 - 164 -
Research and development
expenditure credit (1,947) - (1,947) -
Share-based payments charge 27 2,243 1,891 1,326 1,217
Unrealised currency translation
(gains)/losses (631) 375 (10,891) (2,184)
----------------------------------- ----- ------------ ------------ ------------ ---------------
Operating cash flows before
movements in working capital 59,908 56,356 43,356 48,914
Decrease/(increase) in inventories 1,261 (4,071) 3,558 (2,173)
(Increase) in receivables (4,562) (4,646) (15,363) (9,254)
Increase in payables 191 1,249 19,839 5,078
----------------------------------- ----- ------------ ------------ ------------ ---------------
Cash generated from operations 56,798 48,888 51,390 42,565
Income taxes paid (9,477) (8,676) (8,406) (7,999)
Finance costs (7) - (7) -
----------------------------------- ----- ------------ ------------ ------------ ---------------
Net cash inflow from operating
activities 47,314 40,212 42,977 34,566
----------------------------------- ----- ------------ ------------ ------------ ---------------
Investing activities
Investment income 294 202 4,532 4,110
Purchase of property, plant
and equipment (7,974) (6,501) (4,243) (4,070)
Purchase of intangible assets (7,608) (978) (7,479) (948)
Acquisition of subsidiaries,
net of cash and cash equivalents
acquired 29 (6,258) (17,333) - -
Increase in intercompany
lending - - (9,394) (18,738)
Acquisition of trade from
subsidiary, net of cash
acquired - - - 54
Proceeds on disposal of
property, plant and equipment 3 - - -
Net cash outflow from investing
activities (21,543) (24,610) (16,584) (19,592)
----------------------------------- ----- ------------ ------------ ------------ ---------------
Financing activities
Dividends paid 25 (16,740) (15,888) (16,740) (15,888)
Proceeds on issue of shares 1,483 1,832 1,483 1,832
Purchase of own shares (114) - (114) -
Net cash outflow from financing
activities (15,371) (14,056) (15,371) (14,056)
----------------------------------- ----- ------------ ------------ ------------ ---------------
Increase in cash and cash
equivalents 10,400 1,546 11,022 918
----------------------------------- ----- ------------ ------------ ------------ ---------------
Cash and cash equivalents
at beginning of year 57,059 55,278 49,931 49,013
Effect of foreign exchange
rates 1,460 235 - -
----------------------------------- ----- ------------ ------------ ------------ ---------------
Cash and cash equivalents
at end of year 68,919 57,059 60,953 49,931
----------------------------------- ----- ------------ ------------ ------------ ---------------
1 Certain Company cash flow movements have been reallocated in
order to provide consistency with current year presentation;
GBP18,738k being reallocated from cash from operating activities to
investing activities to better reflect the nature of cash
flows.
Cash and term deposits at end of year comprise:
Consolidated Company
-------------------------------- -------------------------- --------------------------
30 June 2016 30 June 2015 30 June 2016 30 June 2015
GBP000 GBP000 GBP000 GBP000
-------------------------------- ------------ ------------ ------------ ------------
Cash and cash equivalents 68,919 57,059 60,953 49,931
Term deposits (current) 1,748 - 1,000 -
Term deposits (non-current) - 1,636 - 1,000
Total cash and cash equivalents
and term deposits 70,667 58,695 61,953 50,931
-------------------------------- ------------ ------------ ------------ ------------
Notes to the Preliminary Financial Information
For the year ended 30 June 2016
1. Presentation of the preliminary financial information
a. General information
Abcam plc (the Company) is incorporated and domiciled in the UK
under the Companies Act 2006. The address of the registered office
is 330 Cambridge Science Park, Milton Road, Cambridge CB4 0FL, UK.
The Company is a public limited company which is listed on the
London Stock Exchange Alternative Investment Market (AIM).
The Company and its subsidiaries (together the Group) produce
and distribute high quality research-grade antibodies and
associated protein research tools. The Group operates through its
ultimate parent company Abcam plc and through a channel of wholly
owned manufacturing and distribution subsidiaries mainly based in
the US and Asia Pacific, which allows it to serve a global customer
base of over 100 countries. A list of all subsidiaries is contained
in note 15.
b. Basis of preparation
The preliminary information of Abcam plc is prepared in
accordance with International Financial Reporting Standards (IFRS)
and IFRS Interpretations Committee (IFRS IC) interpretations as
adopted by the European Union and the Companies Act 2006 applicable
to companies reporting under IFRS, and comply with Article 4 of the
EU IAS Regulation.
The preliminary financial information has been prepared on the
historical cost basis, except for the revaluation of certain
financial instruments. The Group preliminary information is
presented in Sterling and all values are rounded to the nearest
thousand pounds (GBP000) except when otherwise indicated.
The accounting policies adopted in the preparation of the
preliminary financial information are consistent with those
followed in the preparation of the statements for the year ended 30
June 2015 except where disclosed otherwise in this note.
The results shown for the year ended 30 June 2016 and 30 June
2015 are audited. The consolidated financial information contained
in this announcement does not constitute statutory accounts within
the meaning of Section 434 of the Companies Act 2006. Statutory
accounts of the Company in respect of the financial year ended 30
June 2016 were approved by the Board of directors on 9 September
2016 and will be delivered to the Registrar of Companies in due
course. The report of the auditors on those accounts was
unqualified and did not contain an emphasis of matter paragraph nor
any statement under Section 498 of the Companies Act 2006.
c. Fair value adjustment in respect of prior period
acquisition
During the period a study was undertaken to assess the extent to
which pre-acquisition tax losses of Firefly Bioworks Inc can be
carried forward following the purchase of that company by the
Group. Carried forward losses of $7.6m have been deemed available
for future utilisation against the taxable profits of the
consolidated US group with no restriction other than timing,
resulting in a fair value deferred tax asset of GBP1.9m being
recognised. The deferred tax asset has been recognised on the basis
that the Directors are confident that there will be sufficient
temporary differences against which these losses can be utilised.
The deferred tax asset in relation to losses assessed within the
measurement period has been recognised as if this position had been
concluded at the date of acquisition, in line with the IFRS 3
requirements. This has meant a restatement of the Group's balance
sheet at 30 June 2015 to recognise the increase in deferred tax
asset and corresponding decrease in goodwill. See note 29 for the
restated acquired balance sheet.
d. Going concern
The Group meets its day-to-day working capital requirements from
the cash surpluses generated as a result of normal trading. The
Group's forecasts and projections, taking account of reasonably
possible changes in trading performance, show that the Group should
be able to operate within the limits of its available
resources.
Having assessed the principal risks and other matters discussed
in connection with the budget and forecast covering the next five
years, the Directors considered it appropriate to adopt the going
concern basis of accounting in preparing the Group's preliminary
financial information.
2. Changes in accounting policy and disclosures
New standards, amendments and interpretations adopted by the
Group and the Company
In the current year, the Group and the Company have adopted the
following new and revised standards, amendments and interpretations
which have been assessed as having no financial or disclosure
impact on the numbers presented:
IFRS 10 Consolidated Financial Statements (Amendment)
IFRS 12 Disclosure of Interests in Other Entities
(Amendment)
IAS 1 Presentation of Financial Statements (Amendment)
IAS 16 Property, Plant and Equipment (Amendments)
IAS 27 Separate Financial Statements (Amendment)
IAS 28 Investment in Associates and Joint Ventures
(Amendment)
Improvements to IFRSs (September 2014)
New standards, amendments and interpretations not yet
adopted
At the date of authorisation of this preliminary financial
information the following standards and interpretations were in
issue but not yet effective, and have not been applied in preparing
this preliminary financial information:
Effective
for
accounting
periods
beginning
on or after
------------------- -------------------------------------------------------- ------------
Classification and measurement of share-based payment 1 January
IFRS 2 (amendment) transactions 2018
1 January
IFRS 9 Financial Instruments 2018
Sale of contribution of assets between an investor and
IFRS 10 (amendment) its associate or joint venture(1)
IFRS 15 Revenue from Contracts with Customers 1 January
2018
IFRS 15 (amendment) Clarifications to IFRS 15 Revenue from Contracts with 1 January
Customers 2018
1 January
IFRS 16 Leases 2019
1 January
IAS 7 (amendment) Amendment regarding the disclosure initiative 2017
Amendments to the recognition of deferred tax assets for 1 January
IAS 12 (amendment) unrealised losses 2017
IAS 28 (amendment) Investments in Associates and Joint Ventures(1)
------------------- -------------------------------------------------------- ------------
1 In December 2015 the IASB postponed the effective date of
these amendments indefinitely pending the outcome of its research
project on the equity method of accounting.
The standards and interpretations above have not been applied in
preparing this preliminary financial information and the Directors
do not expect that their adoption in future periods will have a
material impact on the preliminary financial information of the
Group, with the exception of the potential impact of IFRS 16 Leases
and IFRS 15 Revenue from Contracts with Customers, which the
Directors are still assessing.
3. Significant accounting policies
Consolidation
The consolidated preliminary financial information incorporates
the preliminary financial information of the Company and entities
controlled by the Company made up to 30 June each year. Control is
achieved when the Company has power over the entity and the ability
to use its power to affect the returns it receives from its
involvement with the entity.
Consolidation of a subsidiary begins when the Group obtains
control over the subsidiary and ceases when the Group loses control
of the subsidiary. Where necessary, adjustments are made to the
preliminary financial information of subsidiaries to bring the
accounting policies in line with those used by the Group. All
intra-group transactions, balances, equity, income and expenses are
eliminated on consolidation.
Business combinations
Business combinations are accounted for using the acquisition
method. On the acquisition of a business, fair values are
attributed to the identifiable assets and liabilities and
contingent liabilities unless the fair value cannot be reliably
measured in which case the value is subsumed into goodwill. The
consideration transferred for the acquisition includes the fair
value of any asset or liability resulting from a contingent
consideration arrangement. Contingent consideration may include
specific research and development or other operational milestones
and/or financial targets. Each element is fair valued at the date
of acquisition using actual and projected data and statistical
techniques. Key inputs include probability of success and
consideration of expected timing. Future internal forecasts may
also be used to help determine any financial targets.
Changes in the fair value of any contingent consideration from
additional information obtained during the measurement period (up
to a year from date of acquisition) about facts and circumstances
that existed at the acquisition date are adjusted retrospectively
against goodwill. Changes in the fair value that do not qualify as
measurement period adjustments are not recognised until settlement
if the contingent consideration was classified as equity at
acquisition or are recognised immediately in profit if it was
classified as an asset or liability on the balance sheet. Unsettled
amounts of consideration are held at fair value within the relevant
category of the balance sheet.
Acquisition-related costs are expensed to the income statement
in the period they are incurred.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination that meet the
recognition criteria under IFRS 3 (2008) are measured at their fair
values at the date of acquisition, except that:
-- deferred tax assets or liabilities and liabilities or assets
related to employee benefit arrangements are recognised and
measured in accordance with IAS 12 Income Taxes and IAS 19 Employee
Benefits respectively;
-- liabilities or equity instruments relating to the replacement
by the Group of an acquiree's share-based payment awards are
measured in accordance with IFRS 2 Share-based Payment; and
-- assets (or disposal groups) that are classified as held for
sale are measured in accordance with IFRS 5 Non-current Assets Held
for Sale and Discontinued Operations.
Investments in subsidiaries are accounted for at cost less
impairment. Where applicable, cost is adjusted to reflect changes
in consideration arising from contingent consideration
amendments.
Goodwill
Goodwill represents the excess of the fair value of the
consideration over the fair value of the net assets acquired. Where
the fair value of the consideration is less than the fair value of
the acquired net assets, the deficit is recognised immediately in
profit or loss as a bargain purchase. Goodwill is capitalised and
subject to an impairment review at least annually and is carried at
cost less accumulated impairment losses. Impairment losses on
goodwill are not reversed in subsequent periods.
For the purpose of impairment testing, goodwill is allocated to
cash-generating units that are expected to benefit from the
synergies of the combination. Cash-generating units to which
goodwill has been allocated are tested for impairment annually, or
more frequently when there is an indication that the carrying value
may not be recoverable. If the recoverable amount of the
cash-generating unit is less than the carrying amount of the unit,
the impairment loss is allocated first to reduce the carrying
amount of any goodwill allocated to the unit and then to the other
assets of the unit pro-rata on the basis of the carrying amount of
each asset in the unit.
In accordance with IAS 21 goodwill arising on the acquisition of
a foreign operation and any fair value adjustments to the carrying
amounts of assets and liabilities arising on the acquisition of
that foreign operation are treated as assets and liabilities of
that foreign operation and as such are translated at the relevant
foreign exchange rate at the balance sheet date. Gains and losses
on the disposal of an entity include the carrying amount of
goodwill relating to the entity sold.
Revenue and income recognition
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable for goods
and services provided in the normal course of business, net of
discounts, VAT and other sales-related taxes.
Sales of goods are recognised when goods are dispatched and
title has passed.
Custom service revenue is recognised proportionately when the
outcome of each discrete stage of the contract can be estimated
reliably and is based on the stage of completion of the contract
activity per agreed milestones set out in the contract. Where the
outcome cannot be estimated reliably, revenue is recognised to the
extent of costs incurred where it is probable these will be
recovered. In instances where it is probable that the costs will be
in excess of the contract revenue, the expected loss is recognised
as an expense immediately.
Licence fee income is recognised on delivery of the licensed
technology where the Group's continued performance or future
research and development services are not required. Payments
received prior to this are recorded as deferred income.
Royalty revenue is recognised on an accruals basis based on the
contractual terms and the substance of the agreements with the
counterparty, provided that the amount can be reliably measured and
it is probable that the economic benefit will flow to the
Group.
Grant income is recognised in the same period as the related
R&D expenses are incurred and is recorded through the
corresponding expense line of the income statement.
Revenue derived from the Company's conferences is recognised
when the conference is held; however, it is not material.
Interest income is accrued on a time basis, by reference to the
principal outstanding and the effective interest rate applicable,
which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset to that
asset's net carrying amount.
Dividend income from investments is recognised when the
shareholders' rights to receive payment have been established.
Leasing
Leases are classified as finance leases whenever the terms of
the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as
operating leases.
Rentals payable under operating leases are charged to the income
statement on a straight-line basis over the term of the relevant
lease. Benefits received and receivable as an incentive to enter
into an operating lease are also spread on a straight-line basis
over the lease term.
Foreign currencies
For the purposes of the consolidated preliminary financial
information, the results and financial position of each Group
company are expressed in Sterling, which is the functional currency
of the Group company and the reporting currency for the
consolidated preliminary financial information.
Foreign currency transactions in the individual companies are
booked in the functional currency of that entity at the exchange
rate ruling at the date of the transaction. Foreign currency
monetary assets and liabilities are retranslated into their
functional currency at the rates ruling at the balance sheet date.
Exchange differences are included in the income statement.
On consolidation, the results and cash flows of overseas
subsidiaries are translated into Sterling using the average
exchange rates during the period, and the balance sheets translated
at the rates ruling at the balance sheet date. Exchange differences
arising on this translation are classified as equity and recognised
in the translation reserve.
Non-monetary items carried at fair value that are denominated in
foreign currencies are translated at the rates prevailing at the
date when the fair value was determined. Non-monetary items that
are measured in terms of historical cost in a foreign currency are
not retranslated.
Exchange differences are recognised in profit or loss in the
period in which they arise except for:
-- differences arising on transactions entered into to hedge
certain foreign currency risks (see below under financial
instruments/hedge accounting) which are recognised through other
comprehensive income.
-- differences arising on foreign currency assets or liabilities
designated as a net investment hedge of the Group's overseas
operations which are recognised in the translation reserve.
Retirement benefit costs
Payments to defined contribution retirement benefit schemes are
charged as an expense as they fall due. Payments made to
state-managed retirement benefit schemes are dealt with as payments
to defined contribution schemes where the nature of the Group's
obligations under the schemes is equivalent to those arising in a
defined contribution retirement benefit scheme. The Group has no
further obligations once the contributions have been paid.
Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
income statement because it excludes some items of income or
expense that are taxable or deductible in other years and it
further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the balance
sheet date.
The benefit of UK research and development is recognised under
the UK's Research and Development Expenditure Credit (RDEC) scheme.
The benefit is recorded as income included in profit before tax,
netted against research and development expenses as the RDEC is of
the nature of a government grant.
Where the current tax deduction in respect of share option
exercises exceeds the share option accounting charge for the
period, the excess is recorded in the tax reserve rather than the
income statement.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amount of assets and liabilities
in the preliminary financial information and the corresponding tax
bases used in the computation of taxable profit, and is accounted
for using the balance sheet liability method. Deferred tax
liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against
which deductible temporary differences can be utilised. Such assets
and liabilities are not recognised if the temporary difference
arises from the initial recognition of goodwill or from the initial
recognition of other assets and liabilities in a transaction that
affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries except where the
Group is able to control the reversal of the temporary difference
and it is probable that the temporary difference will not reverse
in the foreseeable future.
A deferred tax asset is recognised for deductible temporary
differences, unused tax losses and unused tax credits to the extent
that it is probable that taxable profit will be available against
which the deductible temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
The Group's liability for deferred tax is calculated using tax
rates that have been enacted or substantively enacted by the
balance sheet date that are expected to apply in the period when
the liability is settled or the asset is realised. Deferred tax is
charged or credited in the income statement, except where it
relates to items charged or credited directly to equity, in which
case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated
depreciation and any recognised impairment loss. Cost includes the
original purchase price of the asset and the costs attributable to
bringing the asset to its working condition for its intended use.
Depreciation is charged so as to write off the cost of assets over
their estimated useful lives, using the straight-line method, on
the following bases:
Office equipment, fixtures and fittings 2 to 5
years
Laboratory equipment 1 to 5
years
Computer equipment 3 years
Hybridomas and assays 3 to 8
years
Motor vehicles 5 years
---------------------------------------- --------
The gain or loss arising on the disposal or retirement of an
asset is determined as the difference between the sales proceeds
and the carrying amount of the asset and is recognised in the
income statement. Residual values of assets and their useful lives
are reviewed, and adjusted if appropriate, at each balance sheet
date. Assets under the course of construction are not
depreciated.
Intangible assets
Payments made to acquire software, distribution rights,
capitalised development work and contract-based intangibles from
third parties are capitalised at cost and amortised on a
straight-line basis over their estimated useful lives. The
principal expected useful lives used for this purpose are as
follows:
Upfront licence fees 3 years
Distribution rights 1 to 10
years
Software 1 to 5
years
Contract based Term of
contract
Customer relationships 7 to 10
years
Patents, technology and know-how 5 to 15
years
Trade names 8 years
--------------------------------- ----------
Patents, technology and know-how assets are only amortised once
the development is complete and meaningful revenue is being derived
from the identified assets; until this point the asset is deemed to
be in progress.
Expenditure on development activities including internally
generated intangible assets is recognised as an asset if and only
if it meets the recognition criteria set out in IAS 38 Intangible
Assets. Expenditure on research activities is recognised as an
expense in the period in which it is incurred. Intangible assets
under construction are not amortised.
Impairment of tangible and intangible assets excluding
goodwill
At each balance sheet date, a review of the carrying amounts of
the Group's and the Company's tangible and intangible assets is
performed to determine whether there is any indication that those
assets have suffered an impairment loss. If such indication exists,
the recoverable amount of the asset is estimated in order to
determine the extent of the impairment loss (if any).
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset is estimated to be less
than its carrying amount, the carrying amount of the asset is
reduced to its recoverable amount. An impairment loss is recognised
as an expense immediately.
Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost comprises direct materials and, where applicable,
direct labour costs and an attributable portion of production
overheads that have been incurred in bringing the inventories to
their present location and condition. Cost is calculated using the
standard cost method. Net realisable value represents the estimated
selling price less all estimated costs of completion and costs to
be incurred in marketing, selling and distribution. Provision is
made for obsolete, slow-moving or defective items where
appropriate.
Financial instruments
Financial assets and financial liabilities are recognised on the
Group's and the Company's balance sheets when the Group or the
Company becomes a party to the contractual provisions of the
instrument.
Available-for-sale financial assets
Where the Group holds an investment in shares which is
classified as an available-for-sale financial asset it is stated at
cost less any provision for impairment and estimated costs
associated with sale, unless the investment is in relation to
shares traded on an active market where a fair valuation for all
the shares can be obtained. Such investments are held at fair
value, taken as the closing market value of the shares except where
the Directors believe there is significant measurement uncertainty
in which case the fair value will be adjusted accordingly. Any
revaluation gain or loss is recorded through equity.
Trade and other receivables
Trade receivables are initially recognised at fair value and
subsequently held at amortised cost, less provision for impairment.
Appropriate allowances for estimated irrecoverable amounts are
recognised in the income statement when there is objective evidence
that the asset is impaired. When a trade receivable is considered
uncollectable, it is written off. Subsequent recoveries of amounts
previously written off are credited to revenue. Changes in the
carrying amount of receivables are recognised in the income
statement.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand
deposits and other short-term, highly liquid investments that are
readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
Term deposits
Term deposits represent bank deposits and a charitable bond all
with an original maturity of over three months.
Financial liabilities and equity
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into. An equity instrument is any contract that evidences a
residual interest in the assets of the Group or the Company after
deducting all of its liabilities. The accounting policies adopted
for specific financial liabilities and equity instruments are set
out below.
Trade payables
Trade payables are not interest bearing and are stated at
amortised cost.
Equity instruments
Equity instruments issued by the Company are recorded at the
proceeds received, net of direct issue costs.
Derivative financial instruments
Forward contracts are used by the Group and the Company to
manage the exposure to foreign exchange rate risk associated with
the variability in foreign currency rates and values in relation to
both recognised assets or liabilities and forecast future
transactions.
Derivatives are initially recognised at fair value at the date a
derivative contract is entered into and are subsequently remeasured
to their fair value at each balance sheet date. A derivative with a
positive fair value is recognised as a financial asset whereas a
derivative with a negative fair value is recognised as a financial
liability. The resulting gain or loss is recognised in the income
statement immediately unless the derivative is designated and
effective as a hedging instrument, in which event the timing of the
recognition in the income statement depends on the nature of the
hedge relationship.
A derivative is presented as a non-current asset or non-current
liability if the remaining maturity of the instrument is more than
twelve months and it is not expected to be realised or settled
within twelve months. Other derivatives are presented as current
assets or current liabilities.
Hedge accounting
The Group and the Company designates certain derivatives as cash
flow hedges of highly probable forecast foreign currency
transactions. The Group and the Company has also designated
contingent consideration payable as a hedge of its net investment
in foreign operations.
At the inception of the hedge relationship, the Group documents
the relationship between the hedging instrument and the hedged
item, along with its risk management objectives and its strategy
for undertaking various hedge transactions. Furthermore, at the
inception of the hedge and on an ongoing basis, the Group documents
whether the hedging instrument that is used in a hedging
relationship is highly effective in offsetting changes in cash
flows or net investment of the hedged item.
Cash flow hedges
The effective portion of changes in the fair value of
derivatives that are designated and qualify as cash flow hedges is
deferred in other comprehensive income. The gain or loss relating
to the ineffective portion is recognised immediately in profit or
loss and is included in the 'administration and management
expenses' line of the income statement.
Amounts deferred in equity are recycled in the income statement
in the periods when the hedged item is recognised in profit or
loss, in the same line of the income statement as the recognised
hedged item.
Hedge accounting is discontinued when the Group revokes the
hedging relationship, the hedging instrument expires or is sold,
terminated or exercised, or it no longer qualifies for hedge
accounting. Any cumulative gain or loss deferred in other
comprehensive income at that time remains in other comprehensive
income and is recognised when the forecast transaction is
ultimately recognised in profit or loss. When a forecast
transaction is no longer expected to occur, the cumulative gain or
loss that was deferred in other comprehensive income is recognised
immediately in profit or loss.
Hedges of net investments in foreign operations
Hedges of net investment in foreign operations are accounted for
similarly to cash flow hedges. Any gain or loss on the hedging
instrument relating to the effective portion of the hedge is
recognised in other comprehensive income and accumulated in the
translation reserve. The gain or loss relating to the ineffective
portion is recognised immediately in profit or loss, and is
included in the 'administration and management expenses' line of
the income statement.
Amounts accumulated in the translation reserve are reclassified
to profit or loss in the same way as exchange differences relating
to the foreign operation.
Share-based payments
The Group has applied the requirements of IFRS 2 Share-based
Payment. In accordance with IFRS 1, IFRS 2 has been applied to all
grants of equity instruments after 7 November 2002 that were
unvested at 1 July 2006.
Incentives in the form of shares are provided to employees under
share option, SIP, LTIP and Deferred Share Award schemes.
Equity-settled share-based payments are measured at fair value
(excluding the effect of non-market-based vesting conditions) at
the date of grant. The fair value determined at the grant date of
the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Group's
estimate of the number of shares that will eventually vest.
The grant date fair value of options issued under the Group's
share option schemes is measured by the use of the Monte Carlo
simulation.
The grant date fair value of the awards under the Group's LTIP
is measured by the use of the Monte Carlo simulation for any market
related performance conditions and the Black Scholes Model for EPS
and strategic performance conditions.
The grant date fair value of an equity-settled payment under the
SIP is measured as the face value of the award on the date of
grant.
The expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations. Charges made
to the income statement in respect of share-based payments are
credited to the share-based payments reserve.
At the end of each reporting period, the Group revises its
estimates of the number of options that are expected to vest based
on the non-market vesting conditions. It recognises the impact of
the revision to original estimates, if any, in the income
statement, with a corresponding adjustment to equity.
A new scheme has been issued during the year to the
Non-Executive Directors of the Group whereby the grant date fair
value of options issued is measured by the use of the Black Scholes
model.
The grant by the Company of options over its equity instruments
to the employees of subsidiary undertakings in the Group is treated
as a capital contribution. The fair value of employee services
received, measured by reference to the grant date fair value, is
recognised over the vesting period as an increase to investment in
subsidiary undertakings, with a corresponding credit to equity in
the parent entity accounts.
When the options are exercised, the Company issues new shares.
The proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and share
premium.
The Group operates an employee share benefit trust as part of
its incentive plans for UK-based employees. All assets and
liabilities of the trust are recorded in the balance sheet as
assets and liabilities of the Company until such time as the assets
are awarded to the beneficiaries. All income and expenditure of the
trust is similarly brought into the results of the Company.
Own shares
Own equity instruments which are acquired are recognised at cost
and deducted from equity. No gain or loss is recognised in the
income statement on the purchase, sale, issue or cancellation of
the Group's own equity instruments. Any difference between the
carrying amount and the consideration is recognised in
reserves.
Dividend distribution
Dividend distribution to the Company's shareholders is
recognised as a liability in the Group's preliminary financial
information in the period in which the dividends are approved by
the Company's shareholders or, in the case of interim dividends,
when paid.
4. Critical accounting judgements and key sources of estimation
uncertainty
In the application of the Group's accounting policies, which are
described in note 3, the Directors are required to make judgements,
estimates and assumptions about the amounts of assets, liabilities,
revenue and expenses reported in the preliminary financial
information. Actual amounts and results may differ from those
estimates.
The Directors regularly evaluate the estimates and judgements.
Any revisions to accounting estimates are recognised in the period
in which the estimate is revised if the revision affects only that
period or prior periods, or in the period of the revision and
future periods if the revision affects both current and future
periods.
The key accounting judgements and estimates included in the
Group's preliminary financial information are discussed below.
a. Critical accounting judgements
Valuation of intangibles
As part of the business combinations the Group has undertaken in
the current and previous years, it has acquired the following types
of intangible assets: software, contract based, licence fees,
customer relationships, patents, trade names, technology and
know-how. The Directors are required to make decisions on the fair
values of the acquired assets, including identification and
valuation of any separately identifiable intangible assets.
The Group obtains a third party valuation for any newly acquired
intangible assets to ascertain the initial fair value and
identifies a suitable useful life with reference to the third party
guidance and the lives attributed to previous similar intangibles.
The valuations include assumptions on future cash flows and
discount rates based on expected contribution of the acquisition to
the Group and are therefore inherently judgemental. The carrying
value of the intangible assets may need to be reviewed if the
expected benefit to the Group cannot be realised.
In addition to the acquired intangibles, the Group capitalises
internal software development costs relating to the enhancement of
the Group's core IT systems architecture and developments, where
the costs meet the recognition criteria of IAS 38. Judgement is
required in applying the capitalisation criteria of IAS 38,
differentiating between enhancements and maintenance, and in
assessing an expected useful life of the resulting enhancement or
development.
During the year GBP5.5m was capitalised, GBP4.3m within assets
under construction and GBP1.2m within software assets, in relation
to the Group's system and process improvement project. The costs
include external consultant costs and incremental staffing costs.
In establishing the principles on which the costs are capitalised,
the Directors have reviewed the nature of work being performed
under the different phases of the project and the nature of the
associated deliverables against the capitalisation criteria of IAS
38 and have identified the activities through the life of the
project where the related costs should be expensed through the
income statement.
Valuation of own manufactured inventory
The costs absorbed into the value of own manufactured inventory
require a number of assumptions concerning the allocation of
materials, labour and overheads. The assumptions have been made
with reference to the requirements of IAS 2. Judgement is used
mainly in the application of materials to products produced and in
selecting the types of overhead and company personnel that are
appropriate to be included in the valuation.
b. Key sources of estimation uncertainty
Goodwill and other intangible asset impairment
Goodwill is deemed to have indefinite life and so is not
amortised. The Group tests whether goodwill is impaired on at least
an annual basis or more frequently when there are indications of
possible impairment. The impairment review requires estimating the
value in use of the Group's cash generating unit which is based on
expected future cash flows and selection of an appropriate discount
rate in order to calculate present value. The assumptions used in
the impairment test are set out in note 12. The valuations indicate
that the Group has sufficient headroom and that a reasonably
possible change to key assumptions is unlikely to result in an
impairment of the related goodwill.
Other intangible assets are amortised. The Group reviews their
carrying amount at each balance sheet date or if events occur which
call into question the carrying values of the assets.
The carrying value of the software asset may be unsupported
where additional development work makes the predecessor development
redundant if the full useful life has not already been reached. Due
to the commencement of the Group's system and process improvement
project, a review of all software assets was conducted during the
year and a revision made to the useful lives of any asset expected
to be replaced. Additional amortisation of GBP1.3m has been
recognised in the current year (2015: GBPnil) to accelerate the
amortisation of these assets.
The assumptions relating to future cash flows, estimated useful
lives and discount rates are based on business forecasts and
therefore include an element of management judgement. Future events
could cause the assumptions used in these impairment tests to
change with a consequent adverse effect on the future results of
the Group and the Company.
Provision for slow-moving or defective inventory
The provision for slow-moving inventory is based on management's
estimation of the future sales of each of the Group's products over
the next five years (or period from the balance sheet date to the
expiry date of the product, whichever is the shorter), taking into
account actual sales of those products in previous years and
applying an assumed growth rate based on historical trends where
available.
If actual unit sales growth rates differ from those estimated by
management, both the level of provision against existing inventory
and the rates of provision applied to inventory in future periods
would need to be revised. An increase or decrease of 5% on the
projected unit sales growth on each product category would impact
the provision required by +0.3% (GBP0.02m) / -0.4% (GBP0.03m).
Applying no growth to all product categories would give a maximum
impact of GBP0.5m increase in the provision.
Taxation
The Group is subject to income taxes in various jurisdictions.
Significant judgement is employed to determine the income tax
provision on a global basis. There are numerous transactions and
calculations for which the ultimate tax determination is uncertain
during the ordinary course of business. The Group recognises
liabilities for anticipated tax audit issues based on estimates of
whether additional taxes will be due. Where the final tax outcome
of these matters differs from amounts initially recorded, such
differences will impact the income tax and deferred tax provisions
in the period in which such determination is made.
The Group has recognised significant deferred tax assets during
the year in relation to tax losses. Third party experts have been
used to assess the value of available losses and recognition of a
deferred tax asset has only been made to the level that it is
probable that future taxable profit will be available in the
relevant jurisdictions to realise them. Future taxable profit is
based on management forecasts and if actual profitability differs
significantly in the future, this could impact the level of losses
that it is possible to utilise.
Contingent consideration and fees
Contingent consideration liabilities are recorded at the fair
value of the future expected payment assessed at the date of
acquisition. The fair value recognised as part of the acquisition
of AxioMx Inc, as detailed in note 26, is based on estimated future
cash flows resulting from probability weighted outcomes of defined
milestones, discounted using appropriate interest rates. The
probabilities are management estimation of the likelihood of
success using available scientific and legal knowledge and relevant
historic trends. Actual amounts to be paid out in future periods
may be different from the estimation and could consequently effect
the future results of the Group where actual success of milestone
achievement is different from the original estimation. The maximum
additional liability if all milestones are met is $3.8m (GBP2.8m at
the balance sheet rate of 1.3368).
5. Operating segments
Products and services from which reportable segments derive
their revenues
The Directors consider that there are no identifiable business
segments that are engaged in providing individual products or
services or a group of related products and services that are
subject to risks and returns that are different to the core
business. The information reported to the Group's Chief Executive
Officer, who is considered the chief operating decision maker, for
the purposes of resource allocation and assessment of performance
is based wholly on the overall activities of the Group. The Group
has therefore determined that it has only one reportable segment
under IFRS 8, which is 'sales of antibodies and related products'.
The Group's revenue and results and assets for this one reportable
segment can be determined by reference to the Group's income
statement and balance sheet.
The Group has no individual product or customer which comprises
more than 10% of its revenues.
Geographical information
The Group's revenue from external customers and information
about its non-current segment assets (excluding deferred tax and
derivative financial instruments) by geographical location is
detailed below:
Revenue Non-current assets
---------------- ---------------------------- ----------------------------
Year ended Year ended As at As at
30 June 2016 30 June 2015 30 June 2016 30 June 2015
GBP000 GBP000 GBP000 GBP000
---------------- ------------- ------------- ------------- -------------
US 76,817 62,332 171,228 122,273
China 18,844 13,077 3,912 1,976
Japan 12,321 11,282 57 55
UK 11,213 10,316 25,049 19,796
Germany 9,294 8,627 - -
Other countries 43,184 38,399 47 2
---------------- ------------- ------------- ------------- -------------
171,673 144,033 200,293 144,102
---------------- ------------- ------------- ------------- -------------
Revenues are attributed to countries on the basis of the
customer's location. No country included within 'Other countries'
contributes more than 5% of the Group's total revenue.
Revenue by type is shown below:
Year ended Year ended
30 June 2016 30 June 2015
GBP000 GBP000
----------------------------------------- ------------- -------------
Catalogue revenue 158,961 135,382
Custom products and licensing revenue(1) 12,712 8,651
----------------------------------------- ------------- -------------
Total reported revenue 171,673 144,033
----------------------------------------- ------------- -------------
1 Includes custom services, IVD/IHC, royalties and licence income.
6. Profit for the year
Profit for the year has been arrived at after
charging/(crediting):
Year ended Year ended
30 June 2016 30 June 2015
Notes GBP000 GBP000
---------------------------------------- ----- ------------- -------------
Cost of inventories recognised as
an expense 41,379 35,175
Write down of inventories recognised
as an expense 1,536 1,262
R&D expenditure (including amortisation
as detailed below) 12,821 9,919
Staff costs 8 41,492 33,410
Operating lease rentals - land and
buildings 23 3,369 2,822
Auditor's remuneration 7 171 229
Impairment loss recognised on trade
receivables 18 29 67
Foreign exchange differences arising
on financial instruments at fair value
through profit or loss 2,404 325
Other net foreign exchange differences (780) (108)
Depreciation of property, plant and
equipment 14 3,879 2,934
Amortisation of intangible assets
included within administration and
management expenses 13 3,749 1,986
Amortisation of acquisition-related
intangible assets included within
administration and management expenses 13 1,260 1,445
Amortisation of acquisition-related
intangible assets included within
R&D expenditure 13 2,467 1,673
Loss on disposal of intangible assets 13 164 -
7. Auditor remuneration
A detailed analysis of the auditor remuneration on a worldwide
basis is provided below:
Year ended Year ended
30 June 2016 30 June 2015
GBP000 GBP000
----------------------------------------------- ------------- -------------
Fees payable to the Company's auditor for
the audit of the parent company and the
consolidation 138 119
----------------------------------------------- ------------- -------------
Total audit fees 138 119
----------------------------------------------- ------------- -------------
- Audit-related assurance services(1) 23 20
- Audit of the Company's subsidiaries pursuant
to legislation 10 10
- Services relating to corporate finance
transactions - 80
Total other services fees 33 110
----------------------------------------------- ------------- -------------
Total auditor remuneration 171 229
----------------------------------------------- ------------- -------------
1 This relates to the interim review.
Details of the Company's policy on the use of the auditor for
non-audit services are set out in the Audit and Risk Committee
Report. No services were provided pursuant to contingent fee
arrangements.
8. Employees and remuneration
The average monthly number of employees (including Executive
Directors) was:
Group
------------------------------------------ ----------------------------
Year ended Year ended
30 June 2016 30 June 2015
Number Number
------------------------------------------ ------------- -------------
Management, administrative, marketing and
distribution 572 492
Laboratory 310 290
------------------------------------------ ------------- -------------
882 782
------------------------------------------ ------------- -------------
Their aggregate remuneration comprised:
Group
--------------------------------------- ----------------------------
Year ended Year ended
30 June 2016 30 June 2015
GBP000 GBP000
--------------------------------------- ------------- -------------
Wages and salaries 35,090 27,018
Social security costs 4,086 3,286
Other pension costs 2,235 1,689
Charge in respect of share options and
awards granted 2,243 1,891
--------------------------------------- ------------- -------------
Total staff costs 43,654 33,884
--------------------------------------- ------------- -------------
Staff costs capitalised(1) (2,162) (474)
--------------------------------------- ------------- -------------
Net staff costs 41,492 33,410
--------------------------------------- ------------- -------------
1 GBP2,162,000 (2015: GBP474,000) relates to Group staff costs
directly attributable to system development, which include the
implementation of a new ERP system, being capitalised as part of
internally generated intangible software assets under IAS 38 (see
note 13).
9. Finance income and costs
Year ended Year ended
30 June 2016 30 June 2015
GBP000 GBP000
-------------------------------------------------- ------------- -------------
Unwinding of discount on contingent consideration
(note 26) (1,050) -
Interest expenses (2) -
Finance costs (1,052) -
Interest income on cash and term deposits 146 372
Finance income 146 372
-------------------------------------------------- ------------- -------------
Net finance (costs) / income (906) 372
-------------------------------------------------- ------------- -------------
10. Taxation
Year ended Year ended
30 June 2016 30 June 2015
Note GBP000 GBP000
------------- ---- ------------- -------------
Current tax 9,266 10,347
Deferred tax 16 (1,283) (1,632)
------------- ---- ------------- -------------
7,983 8,715
------------- ---- ------------- -------------
UK corporation tax is calculated at 20.0% (2015: 20.8%) of the
estimated assessable profit for the year. Taxation for other
jurisdictions is calculated at the rates prevailing in the
respective jurisdictions. The standard rate of UK corporation tax
reduced from 21% to 20% on 1 April 2015. The Finance Act 2015,
which received Royal Assent on 26 March 2015, states that this rate
will not change for financial year 2016. Deferred tax has been
calculated accordingly in this preliminary financial
information.
In the budget of 8 July 2015, the Chancellor of the Exchequer
announced tax rate changes, which will have an effect on the
Company's future tax position. These additional changes will reduce
the standard rate of UK corporation tax from 20% to 19% from 1
April 2017, and 18% from 1 April 2020. These proposed changes were
substantively enacted in the Finance Bill 2015 on 26 October
2015.
The above changes to the rate of corporation tax will impact the
amount of future cash tax payments to be made by the Company and
also the future valuation of any deferred tax liabilities or
assets.
The charge for the year can be reconciled to the profit per the
income statement as follows:
Year Year
ended ended Year ended Year ended
30 June 30 June
2016 2016 30 June 2015 30 June 2015
GBP000 % GBP000 %
--------------------------------------- -------- -------- ------------- -------------
Profit before tax 45,412 46,099
--------------------------------------- -------- -------- ------------- -------------
Tax at the UK corporation tax
rate of 20.0% (2015: 20.8%) 9,082 20.0 9,566 20.8
Adjusted in respect of foreign
tax rates 1,618 3.6 891 1.9
Tax effect of expenses that are
not deductible in determining
taxable profit 697 1.5 262 0.6
Additional relief in relation
to overseas entities (1,390) (3.1) (1,266) (2.8)
R&D tax credit uplift (416) (0.9) (383) (0.8)
Recognition of deferred tax previously
unrecognised (204) (0.4) - -
Adjustments in respect of prior
year(1) (1,666) (3.7) (324) (0.7)
Effect of difference between
closing deferred tax rate and
current tax rate 262 0.6 (31) (0.1)
--------------------------------------- -------- -------- ------------- -------------
Tax expense and effective rate
for the year 7,983 17.6 8,715 18.9
--------------------------------------- -------- -------- ------------- -------------
1 Adjustment includes an additional tax charge in relation to
the Company's election to move to the above the line research and
development expenditure credit in relation to the years ended 30
June 2015 and 30 June 2014, a tax credit in relation to the usual
two year claim and elections made in the resubmission of the UK tax
return for the year ended 30 June 2014, and credits related to
changes in estimates of the prior year tax charges following
receipt of refunds
11. Earnings per share
The calculation of the basic and diluted EPS, shown below the
income statement, is based on the following data:
Year Year
ended ended
30 June 30 June
2016 2015
GBP000 GBP000
----------------------------------------------- -------- --------
Earnings
Earnings for the purposes of basic and diluted
EPS, being net profit attributable to owners
of the parent 37,429 37,384
----------------------------------------------- -------- --------
Number Number
---------------------------------------------- ----------- -----------
Number of shares
Weighted average number of ordinary shares
for the purposes of basic EPS 201,147,931 199,978,991
Effect of dilutive potential ordinary shares:
- Share options 854,936 1,298,477
---------------------------------------------- ----------- -----------
Weighted average number of ordinary shares
for the purposes of diluted EPS 202,002,867 201,277,468
---------------------------------------------- ----------- -----------
Basic EPS is calculated by dividing the earnings attributable to
the owners of the parent by the weighted average number of shares
outstanding during the year. Diluted EPS is calculated on the same
basis as basic EPS but with a further adjustment for the weighted
average shares in issue to reflect the effect of all dilutive
potential ordinary shares. The number of dilutive potential
ordinary shares is derived from the number of share-based options
and awards granted to employees where the exercise price is less
than the average market price of the Company's ordinary shares
during the year and where it is considered performance conditions
will be met.
Adjusted earnings per share
The calculation of adjusted EPS is based on adjusted profit
after tax of:
Year ended Year ended
30 June 2016 30 June 2015
GBP000 GBP000
----------------------------------------------- ------------- -------------
Earnings for the purposes of basic and
diluted EPS, being net profit attributable
to the owners of the parent 37,429 37,384
Acquisition costs 466 335
Integration costs 480 24
Non-recurring ERP system implementation
costs 3,955 -
Unwinding of discount factor on contingent
consideration and fees 1,050 -
Amortisation of acquisition-related intangible
assets 3,727 3,118
Prior years' R&D tax credit (1,308) -
Tax effect of adjusting items (647) (1,084)
----------------------------------------------- ------------- -------------
Adjusted profit after tax 45,152 39,777
----------------------------------------------- ------------- -------------
The adjusted EPS information is provided to allow a clear method
for year-on-year comparison. The denominators used are the same as
those detailed above for both basic and diluted earnings per
share.
Year ended Year ended
30 June 2016 30 June 2015
--------------------- ------------- -------------
Basic EPS 18.61p 18.69p
Diluted EPS 18.53p 18.57p
Adjusted basic EPS 22.45p 19.89p
Adjusted diluted EPS 22.35p 19.76p
--------------------- ------------- -------------
12. Goodwill
Group Company
GBP000 GBP000
------------------------------------------------- ------- -------
Cost
At 1 July 2014 73,549 -
Acquired on acquisition of subsidiary (restated) 6,131 -
Acquired on transfer of trade from subsidiary
(note 30) - 7,658
Exchange differences 5,520 -
------------------------------------------------- ------- -------
At 1 July 2015 (restated) 85,200 7,658
Acquired on acquisition of subsidiary (note
29) 11,837 -
Exchange differences 15,425 -
------------------------------------------------- ------- -------
At 30 June 2016 112,462 7,658
------------------------------------------------- ------- -------
Accumulated impairment losses
At 1 July 2014, 1 July 2015 and 30 June
2016 - -
------------------------------------------------- ------- -------
Carrying amount
At 30 June 2014 73,549 -
At 30 June 2015 85,200 7,658
------------------------------------------------- ------- -------
At 30 June 2016 112,462 7,658
------------------------------------------------- ------- -------
Goodwill is converted at the exchange rate on the date of
acquisition and retranslated at the balance sheet date.
Group goodwill acquired in the year relates to the acquisition
of AxioMx Inc on 11 November 2015. Note 29 contains further details
of the transaction and resulting financial impact on the Group.
Goodwill acquired in a business combination is allocated, at
acquisition, to the cash-generating units (CGUs) that are expected
to benefit from that business combination. The Directors consider
there to be one CGU as acquisitions are integrated into the Group's
operations and product portfolio; see note 5. Any discrete
financial information which is available for an individual entity
does not reflect the true substance of the performance of that
entity or its value in use within the Group. There have been no
changes to the Group organisation during the period which would
require a reallocation of the goodwill balance.
The Abcam Group CGU is tested for impairment on a Group-wide
basis using the future forecast cash flows arising from the Abcam
business as a whole.
The Group performs an annual test for goodwill impairment or
more frequently if there are any indications that goodwill might be
impaired.
The recoverable amount of the CGU is determined from value in
use calculations. The key assumptions considered most sensitive for
the value in use calculations are those regarding the discount
rates and growth rates after five years.
Management has projected cash flows based on financial forecasts
over a period of five years. A growth rate of 2.1% has been used in
the extrapolation of cash flows beyond the five years based on
expected inflationary increases of the economies in which the Group
predominantly trades. A pre-tax discount rate of 8.2% has been
estimated using pre-tax rates that reflect current market
assessments of the time value of money and the risks specific to
the CGU.
Management has performed sensitivity analysis on the key
assumptions mentioned above. Based on the results of this analysis,
management is satisfied that the recoverable amount of goodwill
exceeds its carrying amount. As such, no impairment of goodwill has
been recognised at the balance sheet date.
Due to the headroom which exists between the recoverable amount
and the carrying value there is currently no reasonable possible
change in any of these key assumptions which would cause the CGU's
carrying amount to exceed its recoverable amount.
Company goodwill
The Company goodwill is tested for impairment on an annual basis
or more frequently if there are any indications that the goodwill
might be impaired. The forecast cash flows arising in the Company
have been projected using the same key assumptions as used for the
Group testing.
Management has performed sensitivity analysis on the key
assumptions and, based on the results of this analysis, management
is satisfied that the recoverable amount of goodwill exceeds its
carrying amount. As such, no impairment of goodwill has been
recognised at the balance sheet date.
13. Intangible assets
Group
Patents,
Upfront Assets technology
licence Distribution Contract under Customer and Trade
fees rights Software based construction relationships know-how names Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------- ------- ------------ -------- -------- ------------ ------------- ---------- ------- -------
Cost
At 1 July 2014 525 1,093 7,192 3,252 200 4,634 21,559 1,901 40,356
Additions 2 4 85 - 890 - - - 981
Transfer to
asset in use - - 887 - (887) - - - -
Acquisition
of subsidiary
(note 29) - - 615 - - - 17,089 - 17,704
Exchange
differences - - (20) 280 - 371 977 167 1,775
-------------- ------- ------------ -------- -------- ------------ ------------- ---------- ------- -------
At 1 July 2015 527 1,097 8,759 3,532 203 5,005 39,625 2,068 60,816
Additions 30 259 566 - 6,753 - - - 7,608
Transfer to
asset in use - - 2,653 - (2,653) - - - -
Reallocations - 209 132 - - - - - 341
Acquisition
of subsidiary
(note 29) - - - 485 - - 15,928 - 16,413
Disposals in
year - - (231) - - - - - (231)
Exchange
differences 1 - 132 685 - 800 9,023 365 11,006
-------------- ------- ------------ -------- -------- ------------ ------------- ---------- ------- -------
At 30 June
2016 558 1,565 12,011 4,702 4,303 5,805 64,576 2,433 95,953
-------------- ------- ------------ -------- -------- ------------ ------------- ---------- ------- -------
Accumulated
amortisation
At 1 July 2014 474 625 1,913 1,712 - 1,076 3,860 520 10,180
Charge for the
year 40 384 1,806 462 - 482 1,673 257 5,104
Exchange
differences - - - 187 - 116 367 47 717
-------------- ------- ------------ -------- -------- ------------ ------------- ---------- ------- -------
At 1 July 2015 514 1,009 3,719 2,361 - 1,674 5,900 824 16,001
Charge for the
year 13 149 3,781 248 - 544 2,468 273 7,476
Reallocations - 209 132 - - - - - 341
Disposals in
year - - (67) - - - - - (67)
Exchange
differences - - 49 433 - 308 1,028 176 1,994
-------------- ------- ------------ -------- -------- ------------ ------------- ---------- ------- -------
At 30 June
2016 527 1,367 7,614 3,042 - 2,526 9,396 1,273 25,745
-------------- ------- ------------ -------- -------- ------------ ------------- ---------- ------- -------
Carrying
amount
At 30 June
2015 13 88 5,040 1,171 203 3,331 33,725 1,244 44,815
-------------- ------- ------------ -------- -------- ------------ ------------- ---------- ------- -------
At 30 June
2016 31 198 4,397 1,660 4,303 3,279 55,180 1,160 70,208
-------------- ------- ------------ -------- -------- ------------ ------------- ---------- ------- -------
Company
Patents,
Upfront Assets technology
licence Distribution under Customer and
fees rights Software construction relationships know-how Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------- -------- ------------ -------- ------------- -------------- ----------- -------
Cost
At 1 July 2014 525 1,488 7,103 200 - - 9,316
Additions 1 1 55 890 - - 947
Acquired on trade transfer
from subsidiary (note
30) - - - - 190 412 602
Transfer to asset in
use - - 887 (887) - - -
--------------------------- -------- ------------ -------- ------------- -------------- ----------- -------
At 1 July 2015 526 1,489 8,045 203 190 412 10,865
Additions 1 259 466 6,753 - - 7,479
Disposals in year - - (218) - - - (218)
Reallocations - 209 132 - - - 341
Transfer to asset in
use - - 2,653 (2,653) - - -
--------------------------- -------- ------------ -------- ------------- -------------- ----------- -------
At 30 June 2016 527 1,957 11,078 4,303 190 412 18,467
--------------------------- -------- ------------ -------- ------------- -------------- ----------- -------
Accumulated amortisation
and impairment
At 1 July 2014 472 1,130 1,878 - - - 3,480
Charge for the year 40 270 1,694 - - - 2,004
--------------------------- -------- ------------ -------- ------------- -------------- ----------- -------
At 1 July 2015 512 1,400 3,572 - - - 5,484
Reallocations - 209 132 - - - 341
Charge for the year 13 149 3,517 - 60 353 4,092
Disposals in year - - (54) - - - (54)
At 30 June 2016 525 1,758 7,167 - 60 353 9,863
--------------------------- -------- ------------ -------- ------------- -------------- ----------- -------
Carrying amount
At 30 June 2015 14 89 4,473 203 190 412 5,381
--------------------------- -------- ------------ -------- ------------- -------------- ----------- -------
At 30 June 2016 2 199 3,911 4,303 130 59 8,604
--------------------------- -------- ------------ -------- ------------- -------------- ----------- -------
The amortisation period for the upfront licence fees, software
and distribution rights is referred to in note 3.
Contract-based intangibles relates to:
-- an agreement with the University of Oregon, under which the
university supplies monoclonal antibodies to MitoSciences Inc,
which has full rights and entitlement to commercially exploit these
materials in exchange for an ongoing fee. The remaining
amortisation period is eight years, being the remaining term of the
agreement; and
-- a support agreement with a third party acquired during the
year as part of the AxioMx acquisition that had a remaining term of
three years at acquisition which has been adopted as the asset's
useful life. The remaining amortisation period is two years and
four months.
Assets under construction are software related. The costs
capitalised relate to the development of the core IT systems
architecture, including the build of the new ERP system. These are
not amortised until available for use in the business.
Customer relationships mainly relates to access to new customers
as part of the Epitomics acquisition, namely in the reagents and
services business. The remaining amortisation period is six years
in line with the history of the business. Customer relationships in
the Company balance sheet have been acquired as part of the trade
transfer of Ascent Scientific Ltd (Ascent) and represent access to
new customers in the biochemical industry. The remaining
amortisation period is one year.
Patents, technology and know-how relates to acquired technology
as part of the Group's acquisitions:
-- RabMAb(R) technology as part of the Epitomics business with a
remaining amortisation period of eleven years, being the remaining
term of the primary patent;
-- multiplex and complex assay technology acquired as part of
the Firefly BioWorks business. This has been held as in-progress
R&D during the year and therefore not amortised. Development
continued on the acquired platform during the year whilst
continuing the sample testing services for customers, with the
first wide-scale launch of products at the end of the year.
Consequently amortisation will commence in July 2016. The
amortisation period will be the remaining term on the primary
patent, which is 14 years; and
-- in-vitro monoclonal antibody production technology was
acquired during the year with the acquisition of AxioMx Inc. The
useful life was set in line with the remaining life on the patents
existing at acquisition. The remaining amortisation period is 17
years.
The technology asset in the Company balance sheet was acquired
as part of the trade transfer of Ascent and represents the cost to
recreate unique production processes that was assessed during the
original acquisition of Ascent by the Group. The remaining
amortisation period is two months.
Trade names relate to RabMAb(R) and Epitomics. The remaining
amortisation period is four years.
14. Property, plant and equipment
Group
Office
equipment,
fixtures Hybridomas Hybridomas
Computer Laboratory and and under Motor
equipment equipment fittings assays construction vehicles Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------- ---------- ---------- ----------- ---------- ------------- --------- -------
Cost
At 1 July 2014 1,865 9,367 3,004 4,313 944 138 19,631
Additions 643 2,049 1,077 2,148 759 - 6,676
Transfer to asset in
use - - - 325 (325) - -
Disposals (109) (65) (6) - - - (180)
Exchange differences 30 210 102 99 - 12 453
-------------------------- ---------- ---------- ----------- ---------- ------------- --------- -------
At 1 July 2015 2,429 11,561 4,177 6,885 1,378 150 26,580
Additions 995 1,370 3,230 862 1,517 - 7,974
Acquisition of subsidiary
(note 29) 1 109 5 - - - 115
Transfer to asset in
use - - - 1,584 (1,584) - -
Transfers - (1,725) 1,745 539 - - 559
Disposals (41) (190) (1) - - - (232)
Exchange differences 133 562 624 621 12 13 1,965
-------------------------- ---------- ---------- ----------- ---------- ------------- --------- -------
At 30 June 2016 3,517 11,687 9,780 10,491 1,323 163 36,961
-------------------------- ---------- ---------- ----------- ---------- ------------- --------- -------
Accumulated depreciation
At 1 July 2014 1,381 6,922 2,049 743 - 34 11,129
Charge for the year 385 1,192 481 860 - 16 2,934
Disposals (109) (63) (6) - - - (178)
Exchange differences 15 98 73 54 - 4 244
-------------------------- ---------- ---------- ----------- ---------- ------------- --------- -------
At 1 July 2015 1,672 8,149 2,597 1,657 - 54 14,129
Charge for the year 561 1,314 691 1,297 - 16 3,879
Transfers - (1,588) 1,608 539 - - 559
Disposals (40) (186) (1) - - - (227)
Exchange differences 103 331 298 260 - 6 998
-------------------------- ---------- ---------- ----------- ---------- ------------- --------- -------
At 30 June 2016 2,296 8,020 5,193 3,753 - 76 19,338
-------------------------- ---------- ---------- ----------- ---------- ------------- --------- -------
Carrying amount
At 30 June 2015 757 3,412 1,580 5,228 1,378 96 12,451
-------------------------- ---------- ---------- ----------- ---------- ------------- --------- -------
At 30 June 2016 1,221 3,667 4,587 6,738 1,323 87 17,623
-------------------------- ---------- ---------- ----------- ---------- ------------- --------- -------
Company
Office
equipment,
fixtures Hybridomas Hybridomas
Computer Laboratory and and under Motor
equipment equipment fittings assays construction vehicles Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------- ---------- ---------- ----------- ---------- ------------- --------- -------
Cost
At 1 July 2014 1,328 6,686 1,338 1,526 945 6 11,829
Additions 394 1,090 90 1,905 592 - 4,071
Transfer to asset in
use - - - 291 (291) - -
Acquired on trade transfer
from subsidiary (note
30) 8 111 15 - - - 134
Disposals (71) (1) - - - - (72)
--------------------------- ---------- ---------- ----------- ---------- ------------- --------- -------
At 1 July 2015 1,659 7,886 1,443 3,722 1,246 6 15,962
Additions 665 429 970 861 1,318 - 4,243
Transfer to asset in
use - - - 1,426 (1,426) - -
Transfers - (1,725) 1,745 539 - - 559
Disposals (22) - - - - - (22)
--------------------------- ---------- ---------- ----------- ---------- ------------- --------- -------
At 30 June 2016 2,302 6,590 4,158 6,548 1,138 6 20,742
--------------------------- ---------- ---------- ----------- ---------- ------------- --------- -------
Accumulated depreciation
At 1 July 2014 1,017 5,644 1,014 318 - 1 7,994
Charge for the year 250 561 141 358 - 2 1,312
Disposals (71) (1) - - - - (72)
--------------------------- ---------- ---------- ----------- ---------- ------------- --------- -------
At 1 July 2015 1,196 6,204 1,155 676 - 3 9,234
Charge for the year 380 617 254 852 - 2 2,105
Transfers - (1,588) 1,608 539 - - 559
Disposals (22) - - - - - (22)
--------------------------- ---------- ---------- ----------- ---------- ------------- --------- -------
At 30 June 2016 1,554 5,233 3,017 2,067 - 5 11,876
--------------------------- ---------- ---------- ----------- ---------- ------------- --------- -------
Carrying amount
At 30 June 2015 463 1,682 288 3,046 1,246 3 6,728
--------------------------- ---------- ---------- ----------- ---------- ------------- --------- -------
At 30 June 2016 748 1,357 1,141 4,481 1,138 1 8,866
--------------------------- ---------- ---------- ----------- ---------- ------------- --------- -------
15. Investments
The subsidiaries of the Group at 30 June 2016 are represented
below. The equity share capital of these entities is wholly owned
by the Group unless shown otherwise. Those entities that are
directly owned by the Company are also disclosed.
Principal Country of Company
Activity incorporation ownership
---------------------------------- --------------------- -------------- ----------
Sales and
Abcam Australia Pty Limited distribution Australia Direct
Sales and
Abcam Inc distribution US Indirect
Sales and
Abcam KK distribution Japan Direct
Sales and
Abcam (Hong Kong) Limited distribution Hong Kong Direct
Abcam Epitomics Holdings, Inc Holding company US Indirect
Abcam LLC Holding company US Direct
Abcam Trading (Shanghai) Co., Sales and
Limited distribution China Indirect
Financing
Abcam (US) Limited and investing UK Indirect
Financing
Abcam US Group Holdings Inc and investing US Direct
Ascent Scientific Limited Dormant UK Direct
Camgene Limited Dormant UK Direct
Epitomics Inc R&D and manufacturing US Indirect
Epitomics (Hangzhou) Biotechnology R&D and manufacturing
Co., Limited China Indirect
Firefly BioWorks Inc R&D and manufacturing US Indirect
MitoSciences Inc R&D and manufacturing US Indirect
Sales and
Abcam Singapore Pte. Ltd distribution Singapore Direct
AxioMx Inc R&D and manufacturing US Indirect
The Abcam Employee Share Benefit Employee benefit
Trust Limited trust UK Direct
---------------------------------- --------------------- -------------- ----------
Analysis of changes in investments - Company
GBP000
--------------------------------------------- -------
At 1 July 2014 96,147
Capital contribution(1) 529
Reduction of investment value on transfer of
trade to parent (note 30) (8,370)
--------------------------------------------- -------
At 30 June 2015 88,306
Capital contribution(1) 5,684
Reduction of investment value on transfer of
trade to parent (29)
--------------------------------------------- -------
At 30 June 2016 93,961
--------------------------------------------- -------
1 The capital contribution represents share-based payment
charges for share options issued by the Company to employees of its
subsidiaries and, in the year ended 30 June 2016, shares issued on
behalf of subsidiaries as part of the consideration payable on
acquisition.
On 12 November 2015, the Company launched its direct service in
Singapore. The cost of the investment was GBP48. This was the
nominal value of the issued share capital.
16. Deferred tax assets and liabilities
The following are the deferred tax liabilities and assets
recognised by the Group and the Company and movements thereon
during the current and prior reporting years.
Group
Accelerated Cash Acquired Losses Other
tax flow Share-based intangible GBP000 temporary
depreciation hedges payment assets differences Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------- ------------- ------- ----------- ----------- --------- ------------ --------
At 30 June 2014 (613) (238) 897 (8,841) - 2,212 (6,583)
(Charge)/credit
to income (608) - 62 1,079 - 1,099 1,632
Acquisition of
subsidiary (restated)(1) - - - (6,607) 1,882 - (4,725)
(Charge)/credit
to equity - (203) 623 - - - 420
Exchange differences (56) - - (410) (84) 125 (425)
-------------------------- ------------- ------- ----------- ----------- --------- ------------ --------
At 30 June 2015
(restated)(1) (1,277) (441) 1,582 (14,779) 1,798 3,436 (9,681)
Credit/(charge)
to income 112 336 406 898 (738) 269 1,283
Acquisition of
subsidiary - - - (6,306) 1,173 - (5,133)
Credit/(charge)
to equity - 1,995 613 - - (173) 2,435
Exchange differences (142) - - (2,751) 406 260 (2,227)
-------------------------- ------------- ------- ----------- ----------- --------- ------------ --------
At 30 June 2016 (1,307) 1,890 2,601 (22,938) 2,639 3,792 (13,323)
-------------------------- ------------- ------- ----------- ----------- --------- ------------ --------
1 The prior year restatement relates to recognition of carried
forward loses in relation to the Firefly Bioworks Inc acquisition.
See Note 3 for details.
Deferred tax assets and liabilities are offset where the Group
has a legally enforceable right to do so. The following is the
analysis of the deferred tax balances (after offset) for financial
reporting purposes:
30 June 2016 30 June 2015
GBP000 GBP000
------------------------- ------------ ------------
Deferred tax assets 9,615 5,098
Deferred tax liabilities (22,938) (14,779)
------------------------- ------------ ------------
(13,323) (9,681)
------------------------- ------------ ------------
The deferred tax liability of GBP22,938,000 (2015:
GBP14,779,000) has been recognised in relation to the acquired
intangible assets as a result of the acquisitions. Amounts released
from this liability during the year were GBP898,000 (2015:
GBP1,079,000), representing the decrease of the deferred tax
liability in line with amortisation charged against the carrying
value of the associated intangible assets.
Company
Accelerated Acquired
tax Cash flow Share-based intangible Other temporary
depreciation hedges payment assets differences Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------- ------------- --------- ----------- ----------- --------------- -------
At 30 June 2014 (28) (238) 863 - (112) 485
(Charge)/credit to income (259) - 95 - 157 (7)
Acquisition (note 30) - - - (119) - (119)
(Charge)/credit to equity - (203) 623 - - 420
-------------------------- ------------- --------- ----------- ----------- --------------- -------
At 30 June 2015 (287) (441) 1,581 (119) 45 779
(Charge)/credit to income (177) 336 407 - 120 686
Credit to equity - 1,995 613 - - 2,608
-------------------------- ------------- --------- ----------- ----------- --------------- -------
At 30 June 2016 (464) 1,890 2,601 (119) 165 4,073
-------------------------- ------------- --------- ----------- ----------- --------------- -------
At the balance sheet date, there are no aggregate temporary
differences associated with undistributed earnings of subsidiaries
for which a deferred tax liability has not been recognised (2015:
GBPnil). No temporary differences exist in the current year as a
result of a change to the UK tax legislation which largely exempts
dividends from UK tax if received on or after 1 July 2009. The
Directors believe that all dividends to be paid by the Company's
subsidiaries will meet the criteria for exemption from UK tax.
17. Inventories
Group Company
----------------- -------------------------- --------------------------
30 June 2016 30 June 2015 30 June 2016 30 June 2015
GBP000 GBP000 GBP000 GBP000
----------------- ------------ ------------ ------------ ------------
Raw materials 3,075 1,487 557 -
Work in progress 2,221 1,845 413 -
Finished goods 14,379 16,471 12,562 17,090
----------------- ------------ ------------ ------------ ------------
19,675 19,803 13,532 17,090
----------------- ------------ ------------ ------------ ------------
18. Financial assets
Trade and other receivables
Group Company
----------------------------- -------------------------- --------------------------
30 June 2016 30 June 2015 30 June 2016 30 June 2015
GBP000 GBP000 GBP000 GBP000
----------------------------- ------------ ------------ ------------ ------------
Amounts receivable for the
sale of goods 20,292 13,791 5,027 3,964
Allowance for doubtful debts (698) (565) (104) (137)
----------------------------- ------------ ------------ ------------ ------------
19,594 13,226 4,923 3,827
Amounts owed by subsidiary
undertakings - - 27,824 14,466
Other debtors 6,255 4,119 3,295 2,399
Prepayments 2,655 2,382 1,253 1,213
----------------------------- ------------ ------------ ------------ ------------
28,504 19,727 37,295 21,905
----------------------------- ------------ ------------ ------------ ------------
Trade receivables
The average credit period taken for sales is 36.5 days (2015:
32.5 days). No interest has been charged on the receivables. Trade
receivables are provided for based on estimated irrecoverable
amounts determined by reference to past default experience. The
Group and the Company have provided fully for all receivables over
90 days past due because historical experience is such that
receivables that are past due beyond 90 days are generally not
recoverable. Trade receivables between 30 days and 90 days are
provided for based on estimated irrecoverable amounts from the sale
of goods determined by reference to past default experience.
Credit limits for each customer are reviewed on a monthly basis.
No customer represents more than 5% of the total balance of trade
receivables.
The analysis below shows the balances included in debtors which
are past due at the reporting date for which the Group or the
Company has not provided as there has not been a significant change
in credit quality and the amounts are still considered recoverable.
Neither the Group nor the Company holds any collateral or other
credit enhancements over these balances, nor do they have a legal
right to offset against any amounts owed to the counterparty.
Ageing of past due but not impaired receivables
Group Company
---------------------- -------------------------- --------------------------
30 June 2016 30 June 2015 30 June 2016 30 June 2015
GBP000 GBP000 GBP000 GBP000
---------------------- ------------ ------------ ------------ ------------
0 to 30 days overdue 3,417 2,689 486 599
30 to 60 days overdue 825 524 112 52
---------------------- ------------ ------------ ------------ ------------
4,242 3,213 598 651
---------------------- ------------ ------------ ------------ ------------
Any receivables past 60 days past due are fully provided
for.
Movement in the allowance for doubtful debts
Group Company
--------------------------------------- -------------------------- --------------------------
30 June 2016 30 June 2015 30 June 2016 30 June 2015
GBP000 GBP000 GBP000 GBP000
--------------------------------------- ------------ ------------ ------------ ------------
Balance at the beginning of
the year (565) (479) (137) (196)
Impairment (losses)/gains recognised
in the income statement (29) (82) 28 61
Receivables written off during
the year as (uncollectible)/recovered (23) 15 5 (2)
Exchange differences on translation
of foreign operations (81) (19) - -
--------------------------------------- ------------ ------------ ------------ ------------
Balance at the end of the year (698) (565) (104) (137)
--------------------------------------- ------------ ------------ ------------ ------------
In determining the recoverability of a trade receivable the
Group and the Company consider any change in the credit quality of
the receivable from the date credit was initially granted up to the
reporting date. The concentration of credit risk is limited due to
the customer base being large and unrelated. Accordingly, the
Directors believe that there is no further credit provision
required in excess of the allowance for doubtful debts.
Ageing of impaired receivables
Group Company
-------------------------- -------------------------- --------------------------
30 June 2016 30 June 2015 30 June 2016 30 June 2015
GBP000 GBP000 GBP000 GBP000
-------------------------- ------------ ------------ ------------ ------------
0 to 30 days overdue 307 265 97 79
30 to 60 days overdue 66 16 2 1
60 to 90 days overdue 34 186 5 14
More than 90 days overdue 291 98 - 43
-------------------------- ------------ ------------ ------------ ------------
698 565 104 137
-------------------------- ------------ ------------ ------------ ------------
The Directors consider that the carrying amount of trade and
other receivables approximates their fair value.
19. Loan receivable
Group Company
--------------------------------------- -------------------------- --------------------------
30 June 2016 30 June 2015 30 June 2016 30 June 2015
GBP000 GBP000 GBP000 GBP000
--------------------------------------- ------------ ------------ ------------ ------------
Amount owed by subsidiary undertakings - - 82,065 60,760
--------------------------------------- ------------ ------------ ------------ ------------
The amount owed to the Company represents interest-bearing loans
due from subsidiary undertakings, with terms as follows:
Book value
------------ --------- -------------- -------- ----------------
Borrower 30 June 30 June
Principal Repayment Interest 2016 2015
$000 date rate GBP000 GBP000
------------ --------------- --------- -------------- -------- ------- -------
Term loan Abcam US Group 20 December
1 Holdings 33,000 2019 7.34% 24,686 20,983
Term loan Abcam US Group 20 December
2 Holdings 34,000 2019 8.69% 25,434 21,619
Bridging Abcam US Group
loan Holdings 28,153 Not applicable 7.30% - 17,901
Term loan Abcam US Group 1 October
3 Holdings 28,153 2020 3.50% 21,060 -
Term loan Abcam US Group 11 November
4 Holdings 11,468 2020 3.50% 8,579 -
Term loan 11 November
5 AxioMx Inc 2,417 2020 3.50% 1,808 -
Other Loans Various Various Various 498 257
------------ --------------- --------- -------------- -------- ------- -------
82,065 60,760
---------------------------- --------- -------------- -------- ------- -------
All of the loans are unsecured. During the year the bridging
loan was formalised into term loan 3. Term loans 4 and 5 were
issued during the year. Any other changes in the book values of
each loan are due to foreign exchange movements.
Interest accrued for term loans 3 and 4 are GBP0.9m and GBP0.2m
respectively. These amounts are included within the trade and other
receivables of the Company balance sheet.
Other loans represent the start-up funding for new entities
within the Group. As at 30 June 2016, amounts consisted of funding
to MitoSciences Inc, Abcam Singapore, and Abcam Australia.
20. Available-for-sale financial asset
30 June 2016 30 June 2015
GBP000 GBP000
------- ------------ ------------
Shares 797 678
------- ------------ ------------
The Group holds a 3.92% interest in Plexbio Co. Limited
(Plexbio), a biotechnology company headquartered in Taiwan. Plexbio
was established to research, develop and manufacture in-vitro
diagnostic (IVD) kits. The movement in the year is due to foreign
exchange. See note 26 for further details.
21. Derivative financial instruments
Group and Company: 30 June 2016
Current Non-current
----------------------------------- ------------------ ------------------ --------
Asset Liability Asset Liability Total
GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------------- ------- --------- ------- --------- --------
Derivatives carried at
fair value through profit
and loss (FVTPL)
Forward exchange contracts
that are not designated
in hedge accounting relationships 6 (1,856) - - (1,850)
Derivatives that are designated
and effective as hedging
instruments carried at
fair value
Forward exchange contracts 5 (7,411) - (1,231) (8,637)
----------------------------------- ------- --------- ------- --------- --------
11 (9,267) - (1,231) (10,487)
----------------------------------- ------- --------- ------- --------- --------
Group and Company: 30 June 2015
Current Non-current
----------------------------------- ------------------ ------------------ -------
Asset Liability Asset Liability Total
GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------------- ------- --------- ------- --------- -------
Derivatives carried at
fair value through profit
and loss (FVTPL)
Forward exchange contracts
that are not designated
in hedge accounting relationships 784 (247) - - 537
Derivatives that are designated
and effective as hedging
instruments carried at
fair value
Forward exchange contracts 2,471 (490) 224 (5) 2,200
----------------------------------- ------- --------- ------- --------- -------
3,255 (737) 224 (5) 2,737
----------------------------------- ------- --------- ------- --------- -------
Further details of derivative financial instruments are provided
in note 26.
22. Trade and other payables
Group Company
-------------------------------- -------------------------- --------------------------
30 June 2016 30 June 2015 30 June 2016 30 June 2015
GBP000 GBP000 GBP000 GBP000
-------------------------------- ------------ ------------ ------------ ------------
Amounts falling due within
one year
Trade payables 4,241 4,669 4,190 3,638
Amounts owed to subsidiary
undertakings - - 21,495 6,803
Accruals 14,067 8,699 10,597 6,655
Other taxes and social security 743 615 667 549
Other payables 1,027 1,525 1,537 1,143
-------------------------------- ------------ ------------ ------------ ------------
20,078 15,508 38,486 18,788
-------------------------------- ------------ ------------ ------------ ------------
Trade payables and accruals principally comprise amounts
outstanding for trade purchases and ongoing costs. At 30 June 2016,
the Group had an average of 22.8 days of purchases (2015: 39.3
days) outstanding in trade payables (excluding accruals and
deferred income). Most suppliers do not charge interest for the
first 60 days of the invoice. The Group has financial risk
management policies in place to ensure that all payables are paid
within the credit timetable. The Directors consider that the
carrying amount of trade and other payables approximates to their
fair value.
23. Commitments
Year ended Year ended
30 June 2016 30 June 2015
GBP000 GBP000
------------------------------------------------- ------------- -------------
Lease payments under operating leases recognised
as an expense in the year:
- Land and buildings 3,369 2,822
------------------------------------------------- ------------- -------------
At the balance sheet date, the Group and the Company had
outstanding commitments for future minimum lease payments under
non-cancellable operating leases, all of which relate to land and
buildings, which fall due as follows:
Group Company
----------------------------- -------------------------- --------------------------
30 June 2016 30 June 2015 30 June 2016 30 June 2015
GBP000 GBP000 GBP000 GBP000
----------------------------- ------------ ------------ ------------ ------------
Within one year 3,855 2,853 925 959
In the second to fifth years
inclusive 12,592 4,052 1,346 1,855
After five years 650 528 - -
----------------------------- ------------ ------------ ------------ ------------
17,097 7,433 2,271 2,814
----------------------------- ------------ ------------ ------------ ------------
The above table reflects the committed cash payments under
operating leases, rather than the expected charge to the income
statement in the relevant periods. The charge in 2016/17 on these
operating leases is expected to be GBP3.9m for the Group and
GBP0.9m for the Company. At the year end the Group had additional
commitments of GBP0.8m relating to the acquisition of property,
plant and equipment and intangible assets (2015: GBP1.0m).
24. Capital and reserves
Share capital
Group and Company
30 June 2016 30 June 2015
GBP000 GBP000
----------------------------------------- ------------ ------------
Issued and fully paid:
202,601,452 (2015: 201,052,039) ordinary
shares of 0.2 pence each 405 402
----------------------------------------- ------------ ------------
The movement during the year on the Company's issued and fully
paid shares was as follows:
2016 2016 2015
Number GBP000 GBP000
----------------------------- ----------- ------- -------
Balance at beginning of year 201,052,039 402 401
Issue of share capital 1,549,413 3 1
----------------------------- ----------- ------- -------
Balance at end of year 202,601,452 405 402
----------------------------- ----------- ------- -------
The Company has one class of ordinary shares which carry no
right to fixed income. The share capital issued during the year
arose from the settlement of the equity consideration in relation
to the AxioMx Inc acquisition and from the exercise of share
options.
Share premium
Group and Company
GBP000
------------------------------------------ ------
Balance at 1 July 2014 17,692
Premium arising on issue of equity shares 1,830
------------------------------------------ ------
Balance at 1 July 2015 19,522
Premium arising on issue of equity shares 2,027
------------------------------------------ ------
Balance at 30 June 2016 21,549
------------------------------------------ ------
There were no costs of issue incurred during the year or the
previous year.
Own shares
Group and Company
GBP000
----------------------------------- -------
Balance at 1 July 2014 (2,143)
Issued/acquired in the year (1,001)
Disposed of on exercise of options 332
----------------------------------- -------
Balance at 30 June 2015 (2,812)
Issued/acquired in the year (658)
Disposed of on exercise of options 239
----------------------------------- -------
Balance at 30 June 2016 (3,231)
----------------------------------- -------
This balance represents the cost of 772,936 shares with a
nominal value of GBP1,546 in Abcam plc (2015: 794,549 shares with a
nominal value of GBP1,589) which were issued/acquired by the
Company at market value and held by the Abcam Employee Share
Benefit Trust. These shares are held in order to satisfy the Free
Share and Matching Share elements of the SIP. See note 27 for
further details of this scheme.
Reserves
Translation reserve
The translation reserve comprises foreign currency differences
from the translation of the financial statements of foreign
operations.
Share-based payment reserve
The share-based payment reserve comprises the IFRS 2 charge for
the fair value of share-based options and awards.
Hedging reserve
The hedging reserve comprises gains and losses recognised on
cash flow hedges and the associated deferred tax assets and
liabilities created.
Tax reserve
In accordance with IAS 12 the tax reserve comprises the portion
of the deferred tax arising on outstanding share options not taken
to the income statement and the portion of current tax on exercised
share options not taken to the income statement.
Merger reserve
The merger reserve comprises the premium issued on shares
allotted as consideration for acquisitions where conditions for
merger relief are satisfied.
25. Dividends
Year ended Year ended
30 June 2016 30 June 2015
GBP000 GBP000
--------------------------------------------- ------------- -------------
Amounts recognised as distributions to
the owners of the parent in the year:
Final dividend for the year ended 30 June
2015 of 5.92 pence (2014: 5.62 pence) per
share 11,975 11,287
Interim dividend for the year ended 30
June 2016 of 2.354 pence (2015: 2.29 pence)
per share 4,765 4,601
--------------------------------------------- ------------- -------------
Total distributions to owners of the parent
in the period 16,740 15,888
--------------------------------------------- ------------- -------------
Proposed final dividend for the year ended
30 June 2016 of 6.556 pence (2015: 5.92
pence) per share 13,297 11,902
--------------------------------------------- ------------- -------------
The proposed final dividend is subject to approval of the
shareholders at the AGM and has not been included as a liability in
this preliminary financial information.
26. Financial instruments
Capital risk management
The Group manages its capital to ensure that entities in the
Group will be able to continue as a going concern whilst maximising
the return to stakeholders. The capital structure of the Group
consists of cash and cash equivalents and equity attributable to
the owners of the parent, comprising issued capital, reserves and
retained earnings.
Significant accounting policies
Details of the significant accounting policies and methods
adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are
recognised in respect of each class of financial asset, financial
liability and equity instrument are disclosed in note 3. Foreign
exchange contracts are measured using quoted forward exchange rates
and the yield curves derived from quoted interest rates matching
maturities of these contracts.
Categories of financial instruments for items held at amortised
cost
Group carrying value Company carrying value
------------------------------ -------------------------- --------------------------
30 June 2016 30 June 2015 30 June 2016 30 June 2015
GBP000 GBP000 GBP000 GBP000
------------------------------ ------------ ------------ ------------ ------------
Financial assets
Loans and receivables
Amounts owed by subsidiary
undertakings - - 109,889 75,226
Trade receivables 19,594 13,226 4,923 3,827
Other receivables 3,573 1,126 597 -
Cash and cash equivalents and
term deposits 70,667 58,695 61,953 50,931
------------------------------ ------------ ------------ ------------ ------------
Total financial assets 93,834 73,047 177,362 129,984
------------------------------ ------------ ------------ ------------ ------------
Financial liabilities
Other financial liabilities
at amortised cost
Trade and other payables(1) (19,335) (14,893) (16,324) (11,436)
Amounts owed to subsidiary
undertakings - - (28,296) (12,583)
------------------------------ ------------ ------------ ------------ ------------
Total financial liabilities (19,335) (14,893) (44,620) (24,019)
------------------------------ ------------ ------------ ------------ ------------
1 Financial liabilities at amortised cost within trade and other
payables consist of trade payables, accruals, and other
payables.
The Directors consider there to be no material difference
between the book value and the fair value of the Group's financial
assets and liabilities at the balance sheet date due to their
short-term nature.
Fair value measurements recognised in the balance sheet
Financial instruments that are measured subsequent to initial
recognition at fair value have been classified using a fair value
hierarchy that reflects the significance of the inputs used in
measuring the fair value of those instruments. The fair value
hierarchy has the following levels:
-- Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or
liabilities;
-- Level 2 fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
-- Level 3 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable market
inputs).
The following table presents the Group's assets and liabilities
carried at fair value by valuation method.
Level 1 Level 2 Level 3 Total
30 June 2016 GBP000 GBP000 GBP000 GBP000
--------------------------------- ------- -------- -------- --------
Assets
Derivative financial instruments - 11 - 11
Available-for-sale asset - - 797 797
--------------------------------- ------- -------- -------- --------
Total assets - 11 797 808
--------------------------------- ------- -------- -------- --------
Liabilities
Derivative financial instruments - (10,498) - (10,498)
Contingent consideration and
fees - - (12,900) (12,900)
--------------------------------- ------- -------- -------- --------
Total liabilities - (10,498) (12,900) (23,398)
--------------------------------- ------- -------- -------- --------
Level 1 Level 2 Level 3 Total
30 June 2015 GBP000 GBP000 GBP000 GBP000
--------------------------------- ------- ------- ------- -------
Assets
Derivative financial instruments - 3,479 - 3,479
Available-for-sale asset - - 678 678
--------------------------------- ------- ------- ------- -------
Total assets - 3,479 678 4,157
--------------------------------- ------- ------- ------- -------
Liabilities
Derivative financial instruments - (742) - (742)
--------------------------------- ------- ------- ------- -------
Total liabilities - (742) - (742)
--------------------------------- ------- ------- ------- -------
There were no transfers between levels during the year.
Level 2 derivative financial instruments comprise forward
foreign exchange contracts. These forward foreign exchange
contracts have been fair valued using forward exchange rates that
are quoted in an active market.
The Level 3 available-for-sale asset is an equity instrument
which has been admitted to the Taiwan Emerging Stock Board (TESB)
during the year. This is the first stage of the listing process for
the Taiwanese Stock Exchange. The Directors consider that the
conditions for an active market have not been met and have
therefore determined the fair value of the equity investment to be
in line with original cost less any provision for impairment. Had
the fair value been based on the traded price at the year end an
immaterial uplift would have arisen.
The Level 3 contingent consideration and fees payable were
recognised as part of the AxioMx acquisition in November 2015. As
part of the total consideration the Group has agreed to pay the
selling shareholders additional consideration of up to $23.5m and
related legal fees of up to $1.5m if predetermined milestones are
met. The milestones are based on further intellectual property and
technology development targets. The achievement of milestones will
be assessed quarterly and some or all of the consideration payable
may fall due at any of the assessment dates up to the final
maturity dates, ranging from November 2017 to November 2020. The
consideration payable will be settled in the same ratio as the
initial consideration, 60% in cash and 40% in equity.
The fair value is calculated based on management's best estimate
of the likely achievement of each milestone and the expected
achievement timing. The post tax discount rate used in assessing
the fair value was 15%. It is most sensitive to changes in the
estimated probability of performance. The effect of a 5%
decrease/increase in the probability profile for each milestone
would result in a change in liability of -$0.8m/+$0.7m.
The movement in the fair value in the period is shown below:
Total
GBP000
----------------------------------------------------- -------
At 1 July 2015 -
Created on acquisition (note 29) 10,173
Unwinding of discount 1,050
Exchange differences 1,677
----------------------------------------------------- -------
At 30 June 2016 12,900
Payable within six months(1) 1,990
Payable between six to 12 months -
Payable between 12 months and five years contingent
on achievement 10,910
----------------------------------------------------- -------
12,900
----------------------------------------------------- -------
1 At 30 June 2016, as part of the quarterly assessment, two
targets were deemed achieved, meaning a total of $2.7m (GBP2.0m)
will be due for payment in the quarter ending 30 September 2016.
This amount has been disclosed within current liabilities on the
balance sheet.
See note 29 for more information in relation to the contingent
consideration liability arising from the business combination.
The Group's finance department performs the valuations of
financial assets required for financial reporting purposes,
including Level 3 fair values. It reports directly to the Chief
Financial Officer (CFO). Discussions of valuation processes and
results are held between the CFO and the valuation team at least
once every six months, in line with the Group's reporting
dates.
Risk management in relation to financial instruments
Credit risk
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to the
Group or the Company. Trade receivables consist of a large number
of customers spread across diverse geographical areas. The Group
does not have a significant credit risk exposure to any single
counterparty. Ongoing credit evaluation is performed on the
financial condition of trade receivables and consideration is given
as to whether there is any impairment in the value of any amounts
owing.
The standard payment terms for receivables other than
intra-group balances are 30 days. Any variation in these terms
requires authorisation by senior management. Year-end debtor days
are 36.5 days (2015: 32.5 days). All overdue debts are provided for
where collectability is considered doubtful or the value of the
debt is impaired. Objective evidence of impairment could include
the Group's past experience of collecting payments, an increase in
the number of delayed payments in the portfolio past the average
credit period of 30 days, as well as observable changes in
international or local economic conditions.
The standard payment term for intra-group receivables is 45
days. There is not considered to be any risk of impairment of these
receivables unless the financial assets of the entity holding the
corresponding liability are impaired.
The credit risk on the Group's liquid funds and derivative
financial instruments is limited. The counterparties are major
financial institutions and funds and transactions are spread across
a number of these to help reduce any single exposure. The Group
monitors the credit rating of the major institutions on a quarterly
basis to identify any indicators that may lead to future
difficulties. The carrying amount best represents the maximum
exposure to credit risk.
Market risk
The Group's activities expose it primarily to the financial
risks of changes in foreign currency exchange rates and interest
rates. The Group enters into forward exchange contracts to hedge
the exchange rate risk arising on the sales of goods and services
denominated in US Dollars, Euros, Japanese Yen and Chinese
Renminbi.
Currency risk
Currency risk is the risk that a change in currency rates causes
an adverse impact on the Group's performance or financial
position.
The Group undertakes transactions denominated in foreign
currencies and therefore has exposure to both the transactional and
translational risks associated with currency fluctuations. The
Group's policy is to maintain natural hedges, where possible, by
matching foreign currency revenue and receivables against
expenditure and payables of the same currency. Any remaining net
exposure is identified and managed within approved policy
parameters using forward exchange contracts.
The carrying amounts of the Group's foreign currency denominated
monetary assets and liabilities at the reporting date, not
denominated in the local functional currency, are as follows:
Liabilities Assets
------------------- -------------------------- --------------------------
30 June 2016 30 June 2015 30 June 2016 30 June 2015
GBP000 GBP000 GBP000 GBP000
------------------- ------------ ------------ ------------ ------------
Euros (255) (241) 4,856 7,172
US Dollars (29,427) (12,969) 24,064 10,954
Canadian Dollars (459) - 861 -
Japanese Yen (39) (21) 1,379 3,724
Chinese Renminbi (2,067) - 5,040 4,347
Australian Dollars (2) - 640 816
Hong Kong Dollars - - 482 139
------------------- ------------ ------------ ------------ ------------
(32,249) (13,231) 37,322 27,152
------------------- ------------ ------------ ------------ ------------
Currency risk sensitivity analysis
The Group's principal functional currency is Sterling. The Group
is mainly exposed to fluctuations in US Dollars, Euros, Japanese
Yen and Chinese Renminbi (RMB) exchange rates.
The following table details the Group's sensitivity to a 15%
increase and decrease in the Sterling exchange rate against the
relevant foreign currencies on the Group's profit before tax and
equity. 15% represents management's assessment of the reasonable
possible change in foreign exchange rates, an increase from prior
year as a result of the recent volatility experienced in relation
to the Brexit decision. The sensitivity analysis includes only
outstanding foreign currency denominated monetary items and forward
exchange contracts in the balance sheet at the end of the relevant
accounting period and adjusts their translation at the period end
for a 15% change in foreign currency rates. It does not represent
the overall impact on Group profitability if the exchange rate
sensitivity had been applied through the reporting period. A
positive number indicates an increase in profit or other
comprehensive income.
US Dollar currency Euro currency Yen currency RMB currency
impact impact impact impact
---------------------- -------------------- ---------------- ---------------- ----------------
2016 2015 2016 2015 2016 2015 2016 2015
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------- --------- --------- ------- ------- ------- ------- ------- -------
Effect of a 15%
strengthening of
GBP against the
relevant currency:
Income statement 623 436 688 516 322 277 439 332
Other comprehensive
income 3,140 1,973 4,494 1,875 1,628 520 66 -
Effect of a 15%
weakening of GBP
against the relevant
currency:
Income statement (843) (512) (931) (606) (435) (325) (583) (390)
Other comprehensive
income (3,330) (2,315) (6,080) (2,202) (2,202) (611) (84) -
---------------------- --------- --------- ------- ------- ------- ------- ------- -------
In management's opinion, the sensitivity analysis is
unrepresentative of the inherent foreign exchange risk since it is
limited to the year-end exposure and does not reflect the exposure
during the year.
Currency risk management
Forward exchange contracts
It is the policy of the Group to enter into forward exchange
contracts to manage the risk associated with sales transactions
expected to occur up to 18 months ahead. The Group uses a layered
contract approach to build between 30% to 95% coverage of the
exposure generated.
Foreign currency forward contracts are valued using quoted
forward exchange rates and the yield curves derived from quoted
interest rates matching maturities of the contracts.
The following table details the maturity profile of the forward
exchange contracts outstanding as at the year end:
Foreign Contract
Average currency value Fair value
rate 30 June 2016 30 June 2016 30 June 2016
Outstanding contracts 30 June 2016 000 GBP000 GBP000
----------------------------- ------------- ------------- ------------- -------------
Sell US Dollars
Less than 3 months 1.53 $10,122 6,627 (940)
3 to 6 months 1.52 $7,625 5,002 (698)
7 to 12 months 1.48 $15,094 10,194 (1,050)
13 to 18 months 1.47 $5,863 3,994 (349)
----------------------------- ------------- ------------- ------------- -------------
1.50 $38,704 25,817 (3,037)
----------------------------- ------------- ------------- ------------- -------------
Sell Euros
Less than 3 months 1.37 EUR9,427 6,859 (1,030)
3 to 6 months 1.36 EUR10,929 8,043 (1,157)
7 to 12 months 1.32 EUR18,885 14,310 (1,639)
13 to 18 months 1.28 EUR7,904 6,151 (542)
----------------------------- ------------- ------------- ------------- -------------
1.33 EUR47,145 35,363 (4,368)
----------------------------- ------------- ------------- ------------- -------------
Sell Yen
Less than 3 months 182.13 Yen337,224 1,852 (614)
3 to 6 months 175.49 Yen552,379 3,148 (910)
7 to 12 months 168.97 Yen841,098 4,977 (1,229)
13 to 18 months 158.90 Yen297,713 1,874 (340)
----------------------------- ------------- ------------- ------------- -------------
171.16 Yen2,028,414 11,851 (3,093)
----------------------------- ------------- ------------- ------------- -------------
Sell Chinese Renminbi
Less than 3 months 8.88 Yen4,400 495 6
3 to 6 months 8.94 Yen3,300 369 5
----------------------------- ------------- ------------- ------------- -------------
8.91 Yen7,700 864 11
----------------------------- ------------- ------------- ------------- -------------
Total of outstanding forward
contracts 73,895 (10,487)
----------------------------- ------------- ------------- ------------- -------------
Foreign Contract
Average currency value Fair value
rate 30 June 2015 30 June 2015 30 June 2015
Outstanding contracts 30 June 2015 000 GBP000 GBP000
----------------------------- ------------- ------------- ------------- -------------
Sell US Dollars
Less than 3 months 1.63 $12,600 7,707 (307)
3 to 6 months 1.63 $11,037 6,762 (260)
7 to 12 months 1.56 $18,289 11,738 95
13 to 18 months 1.54 $9,181 5,976 131
----------------------------- ------------- ------------- ------------- -------------
1.59 $51,107 32,183 (341)
----------------------------- ------------- ------------- ------------- -------------
Sell Euros
Less than 3 months 1.23 EUR7,502 6,100 773
3 to 6 months 1.25 EUR9,646 7,721 857
7 to 12 months 1.31 EUR16,197 12,399 761
13 to 18 months 1.36 EUR6,908 5,094 62
----------------------------- ------------- ------------- ------------- -------------
1.29 EUR40,253 31,314 2,453
----------------------------- ------------- ------------- ------------- -------------
Sell Yen
Less than 3 months 171.36 Yen344,314 2,009 217
3 to 6 months 174.53 Yen339,272 1,944 174
7 to 12 months 181.24 Yen750,555 4,141 208
13 to 18 months 185.98 Yen250,274 1,346 26
----------------------------- ------------- ------------- ------------- -------------
178.43 Yen1,684,415 9,440 625
----------------------------- ------------- ------------- ------------- -------------
Total of outstanding forward
contracts 72,937 2,737
----------------------------- ------------- ------------- ------------- -------------
At 30 June 2016, the fair value of contracts held as cash flow
hedges is a liability of GBP8.6m (2015: asset of GBP2.2m). The
remaining contracts are not held as cash flow hedges. The loss on
the financial instruments at fair value through the profit and loss
account was GBP2.4m (2015: GBP0.3m). The loss of GBP10.8m (2015:
gain of GBP1.1m) recognised through other comprehensive income is
the combination of fair value losses in the year of GBP8.6m (2015:
gains of GBP2.1m) and transfers to the income statement of GBP2.2m
(2015: GBP1.1m).
Hedge of net investment in foreign entities
The Group's US Dollar denominated contingent consideration
amounting to $17.2m (2015: $nil) is designated as a hedge of the
net investment in the Group's US subsidiaries. The foreign currency
gain of GBP1.7m (2015: GBPnil) on translation of the contingent
consideration to Sterling at the year end is recognised in other
comprehensive income to match the hedged portion of the translation
loss of the US subsidiary results.
Liquidity risk
Liquidity risk is the risk that the Group will have insufficient
funds available in the required currency and location to settle its
obligations as they fall due.
The Group manages liquidity risk by maintaining adequate levels
of easily accessible cash reserves and banking facilities,
regularly monitoring cash flows and matching the maturity profiles
and currencies of financial assets and liabilities where
possible.
The Group and the Company may hold fixed term deposits with a
maturity of up to five years, which is the maximum maturity for the
Group's investment decisions. At 30 June 2016, fixed term deposits
represented 2.5% of total funds and had an average maturity of 67
days (2015: 430 days).
Ultimate responsibility for liquidity risk management rests with
the Board of Directors, which has built an appropriate liquidity
risk management framework for the management of the Group's short,
medium and long-term funding and liquidity management
requirements.
Outstanding obligations
All trade and other payable balances include any accrued
interest that will become due for payment. The maturity profile of
the Group's and the Company's financial liabilities is shown
below.
Between
Less than six months
six months and one year Total
GBP000 GBP000 GBP000
----------------------------------------- ----------- ------------- --------
Group
2016
Trade and other payables (18,052) (1,283) (19,335)
----------------------------------------- ----------- ------------- --------
(18,052) (1,283) (19,335)
----------------------------------------- ----------- ------------- --------
Company
2016
Trade and other payables (15,579) (745) (16,324)
Trade and other payables owed to
subsidiary undertakings (21,495) - (21,495)
Loans payable to subsidiary undertakings (6,801) - (6,801)
----------------------------------------- ----------- ------------- --------
(43,875) (745) (44,620)
----------------------------------------- ----------- ------------- --------
Between
Less than six months
six months and one year Total
GBP000 GBP000 GBP000
----------------------------------------- ----------- ------------- --------
Group
2015
Trade and other payables (14,345) (548) (14,893)
----------------------------------------- ----------- ------------- --------
(14,345) (548) (14,893)
----------------------------------------- ----------- ------------- --------
Company
2015
Trade and other payables (10,957) (479) (11,436)
Trade payables owed to subsidiary
undertakings (5,938) (865) (6,803)
Loans payable to subsidiary undertakings - (5,780) (5,780)
----------------------------------------- ----------- ------------- --------
(16,895) (7,124) (24,019)
----------------------------------------- ----------- ------------- --------
Trade payables are normally payable within 30 days of invoice
and the standard payment terms for intra-group receivables are 45
days. Sufficient funds are readily available to the Company to meet
operational requirements.
Interest rate risk
Interest rate risk is the risk that a change in interest rates
adversely affects the Group's or the Company's performance or
ability to settle financial obligations.
As the Group and the Company do not hold any external debt,
exposure to interest rate risk is minimal. In addition, the Group
is not dependent on income from investment returns to settle
operational obligations.
The Group requires flexible access to funds; therefore, the
majority are held in variable rate instant access deposit accounts
with a small percentage held in fixed rate deposits. Market yields
are currently low and therefore the negative impact of an interest
rate reduction in the Group's income statement is limited. The
fixed rate deposits are not sensitive to interest rate changes.
Interest rate risk sensitivity analysis
An increase of 0.25% in the average interest rate during the
year would have resulted in an increase in interest received by the
Group of GBP158,000 (2015: GBP144,000) and by the Company of
GBP139,000 (2015: GBP126,000). A decrease of 0.25% in the average
interest rate during the year would have resulted in a reduction in
interest received by the Group of GBP158,000 (2015: GBP144,000) and
by the Company of GBP139,000 (2015: GBP126,000). There would have
been no effect on equity reserves.
The average cash and term deposits balance throughout the year
has been used as the basis for the calculations. A 0.25% increase
or decrease in interest rates represents management's assessment of
the reasonable possible change in interest rates likely in the
preceding financial year.
27. Share-based payments
Equity-settled share option scheme
The Company operates a number of share option schemes for
certain employees of the Group. The share-based payments charge
relates to option awards from the Enterprise Management Incentive
(EMI) scheme, the Unapproved Share Option Plan, the Abcam Inc share
scheme, the Abcam 2005 Share Option Scheme, the Abcam Company Share
Option Plan (CSOP), the Long Term Incentive Plan (LTIP), the Share
Incentive Plan (SIP) and the NED share award. Option or conditional
share grants under each scheme have been aggregated.
The vesting period ranges from one to four years. If the options
remain unexercised after a period of ten years from the date of
grant the options expire. Options are forfeited if the employee
leaves the Group before the options vest.
The volatility of the options is based on the average of
standard deviations of daily continuous returns on Abcam plc
shares. The dividend yield is based on Abcam's actual dividend
yield in the past.
The risk-free rate is the yield on UK government gilts at each
date of grant. The employee exercise multiple is based on published
statistics for a portfolio of companies. The employee exit rate is
based on management's expectations and, in accordance with IFRS 2,
is applied after vesting.
The Group recorded a total equity-settled share-based payments
expense of GBP1,962,000 in the year (2015: GBP1,747,000), of which
GBP1,627,000 (2015: GBP1,251,000) was included within
administration and management expenses and GBP301,000 (2015:
GBP496,000) was included within R&D expenses.
Summary of all schemes, excluding SIP, LTIP and deferred share
awards
Options outstanding as at 30 June 2016 had an exercise price of
between 62 pence and 598 pence (2015: 56 pence and 464 pence). The
weighted average remaining contractual life is 7.09 years (2015:
7.28 years). The weighted average fair value of the options
outstanding at the end of the year was 90.78 pence (2015: 87.28
pence). The Group recorded a total share-based payments expense of
GBP151,500 (2015: GBP309,000) in the year relating to all schemes
excluding the SIP, LTIP and deferred share awards.
2016 2015
------------------------- ---------------------------------- ----------------------------------
Weighted Weighted
Weighted average Weighted average
average share price average share price
Number of exercise at date of Number of exercise at date of
share price exercise share price exercise
options pence pence options pence pence
------------------------- --------- --------- ------------ --------- --------- ------------
Outstanding at beginning
of year 2,145,081 364.6 - 2,035,466 331.8 -
Granted during year 423,706 598.0 - 569,094 406.0 -
Forfeited during
year (396,119) 473.0 - (95,525) 411.5 -
Exercised during
year (442,861) 325.4 605.4 (363,954) 244.8 448.5
------------------------- --------- --------- ------------ --------- --------- ------------
Outstanding at end
of year 1,729,807 407.3 - 2,145,081 364.6 -
------------------------- --------- --------- ------------ --------- --------- ------------
Exercisable at end
of year 431,614 250.2 - 741,511 250.3 -
------------------------- --------- --------- ------------ --------- --------- ------------
Enterprise Management Incentive (EMI) scheme
2016 2015
------------------------- ---------------------------------- ----------------------------------
Weighted Weighted
Weighted average Weighted average
average share price average share price
Number of exercise at date of Number of exercise at date of
share price exercise share price exercise
options pence pence options pence pence
------------------------- --------- --------- ------------ --------- --------- ------------
Outstanding at beginning
of year 38,920 60.4 - 147,495 58.9 -
Forfeited during
year (2,850) 62.4 - - - -
Exercised during
year (36,070) 60.3 656.2 (108,575) 58.3 422.7
------------------------- --------- --------- ------------ --------- --------- ------------
Outstanding at end
of year - - - 38,920 60.4 -
------------------------- --------- --------- ------------ --------- --------- ------------
Exercisable at end
of year - - - 38,920 60.4 -
------------------------- --------- --------- ------------ --------- --------- ------------
The size of the Group means that since 2009 it is no longer able
to grant awards under the EMI scheme.
All outstanding vested options have now been exercised or
forfeited. No further options remain outstanding under this
scheme.
Unapproved Share Option Plan
2016 2015
------------------------- ---------------------------------- ----------------------------------
Weighted Weighted
Weighted average Weighted average
average share price average share price
Number of exercise at date of Number of exercise at date of
share price exercise share price exercise
options pence pence options pence pence
------------------------- --------- --------- ------------ --------- --------- ------------
Outstanding at beginning
of year 170,460 62.4 - 170,460 62.4 -
Exercised during
year - - - - - -
------------------------- --------- --------- ------------ --------- --------- ------------
Outstanding at end
of year 170,460 62.4 - 170,460 62.4 -
------------------------- --------- --------- ------------ --------- --------- ------------
Exercisable at end
of year 170,460 62.4 - 170,460 62.4 -
------------------------- --------- --------- ------------ --------- --------- ------------
Any new grants of unapproved options are now being made under
the Abcam 2005 Share Option Scheme and included in the disclosure
for that scheme.
The vesting dates and expected cash receivable on exercise
relating to the options outstanding are detailed in the table
below.
2016 2015
----------- ---------------- --------------------------------------- ---------------------------------------
Number of Exercise Cash receivable Number of Exercise Cash receivable
Vesting options price on exercise options price on exercise
date Expiry date outstanding pence GBP000 outstanding pence GBP000
----------- ---------------- ------------ -------- --------------- ------------ -------- ---------------
8 November
2010 8 November 2017 170,460 62.4 106 170,460 62.4 106
----------- ---------------- ------------ -------- --------------- ------------ -------- ---------------
Total 170,460 106 170,460 106
----------------------------- ------------ -------- --------------- ------------ -------- ---------------
The Abcam 2005 Share Option Scheme
2016 2015
------------------------- ---------------------------------- ----------------------------------
Weighted Weighted
Weighted average Weighted average
average share price average share price
Number of exercise at date of Number of exercise at date of
share price exercise share price exercise
options pence pence options pence pence
------------------------- --------- --------- ------------ --------- --------- ------------
Outstanding at beginning
of year 1,474,458 403.2 - 1,188,908 395.5 -
Granted during year 408,141 598.0 - 489,700 406.0 -
Forfeited during
year (340,322) 482.1 - (56,319) 418.6 -
Exercised during
year (281,418) 357.1 602.4 (147,831) 344.7 478.8
------------------------- --------- --------- ------------ --------- --------- ------------
Outstanding at end
of year 1,260,859 455.2 - 1,474,458 403.2 -
------------------------- --------- --------- ------------ --------- --------- ------------
Exercisable at end
of year 179,550 383.6 - 352,435 330.4 -
------------------------- --------- --------- ------------ --------- --------- ------------
The vesting dates and expected cash receivable on exercise
(subject to performance conditions being met for options yet to
vest) relating to the options outstanding are detailed in the table
below.
2016 2015
------------ ----------------- --------------------------------------- ---------------------------------------
Number of Exercise Cash receivable Number of Exercise Cash receivable
Vesting options price on exercise options price on exercise
date Expiry date outstanding pence GBP000 outstanding pence GBP000
------------ ----------------- ------------ -------- --------------- ------------ -------- ---------------
6 November
2011 6 November 2018 21,550 92.4 20 34,200 92.4 32
9 November
2012 9 November 2019 - - - 25,875 180.8 47
2 December
2013 2 December 2020 12,391 345.0 43 52,788 345.0 182
1 November
2014 1 November 2021 56,983 370.0 211 122,452 370.0 453
1 November
2014 1 November 2022 34,244 385.0 132 117,120 385.0 451
1 November
2015 1 November 2022 54,382 385.0 209 118,998 385.0 458
1 November
2016 1 November 2022 53,780 464.0 250 72,295 385.0 278
25 November
2015 25 November 2023 92,110 385.0 355 204,626 464.0 949
25 November
2016 25 November 2023 112,279 464.0 521 149,517 464.0 694
25 November
2017 25 November 2023 66,549 460.0 270 102,377 464.0 475
4 November
2016 4 November 2024 171,674 464.0 797 221,856 406.0 901
4 November
2017 4 November 2024 123,774 406.0 503 141,357 406.0 574
4 November
2018 4 November 2024 85,893 406.0 349 110,997 406.0 451
26 October
2017 26 October 2025 187,160 598.0 1,119 - - -
26 October
2018 26 October 2025 94,420 598.0 565 - - -
26 October
2019 26 October 2025 93,670 598.0 560 - - -
------------ ----------------- ------------ -------- --------------- ------------ -------- ---------------
Total 1,260,859 5,904 1,474,458 5,945
------------------------------- ------------ -------- --------------- ------------ -------- ---------------
The Abcam CSOP
2016 2015
------------------------- ----------------------------------- ----------------------------------
Weighted Weighted
Weighted average Weighted average
average share price average share price
Number of exercise at date of Number of exercise at date of
share price exercise share price exercise
options pence pence options pence pence
------------------------- --------- ---------- ------------ --------- --------- ------------
Outstanding at beginning
of year 461,243 378.7 - 528,603 359.4 -
Granted during year 15,565 598.0 - 79,394 406.0 -
Forfeited during
year (52,947) 437.2 - (39,206) 401.3 -
Exercised during
year (125,373) 330.6 597.5 (107,548) 295.8 432.9
------------------------- --------- ---------- ------------ --------- --------- ------------
Outstanding at end
of year 298,488 402.1 - 461,243 378.7 -
------------------------- --------- ---------- ------------ --------- --------- ------------
Exercisable at end
of year 81,604 349.1 - 179,696 312.7 -
------------------------- --------- ---------- ------------ --------- --------- ------------
The vesting dates and expected cash receivable on exercise
(subject to performance conditions being met for options yet to
vest) relating to the options outstanding are detailed in the table
below.
2016 2015
------------ ----------------- --------------------------------------- ---------------------------------------
Number of Exercise Cash receivable Number of Exercise Cash receivable
Vesting options price on exercise options price on exercise
date Expiry date outstanding pence GBP000 outstanding pence GBP000
------------ ----------------- ------------ -------- --------------- ------------ -------- ---------------
9 November
2012 9 November 2019 17,300 180.8 31 45,560 180.8 82
2 December
2013 2 December 2020 25,847 345.0 89 67,308 345.0 232
1 November
2014 1 November 2021 38,457 370.0 142 66,828 370.0 247
1 November
2015 1 November 2022 61,501 385.0 237 103,352 385.0 398
25 November
2016 25 November 2023 95,365 464.0 442 109,349 464.0 507
4 November
2017 4 November 2024 52,396 406.0 213 68,846 406.0 280
26 October
2018 26 October 2025 7,622 598.0 46 - - -
Total 298,488 1,200 461,243 1,746
------------------------------- ------------ -------- --------------- ------------ -------- ---------------
Option fair values
The Abcam 2005 Share Option Scheme and Abcam CSOP
The fair value of options issued with market-based performance
criteria is calculated using the Monte Carlo model. The inputs into
the Monte Carlo model for options issued during the current and
prior years were as follows:
The Abcam 2005 Share Option Scheme
4 November 4 November 4 November 26 October 26 October 26 October
Grant date 2014 2014 2014 2015 2015 2015
----------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Share price at grant (pence) 406.0 406.0 406.0 595.5 595.5 595.5
Fair value at valuation date
(pence) 66.0 75.0 97.0 110.0 114.0 125.0
Exercise price (pence) 406.0 406.0 406.0 595.5 595.5 595.5
Expected volatility 25% 25% 30% 26% 24% 25%
Expected life (years) 5 6 7 5 6 7
Expected dividend yield 1.91% 1.91% 1.91% 1.38% 1.38% 1.38%
Risk-free rate 0.78% 1.10% 1.37% 0.52% 0.75% 0.98%
Employee exercise multiple 2 2 2 2 2 2
Employee exit rate 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
----------------------------- ---------- ---------- ---------- ---------- ---------- ----------
The Abcam CSOP
4 November 26 October
Grant date 2014 2015
------------------------------------- ---------- ----------
Share price at grant (pence) 406.0 595.5
Fair value at valuation date (pence) 77.0 116.0
Exercise price (pence) 406.0 595.5
Expected volatility 25% 24%
Expected life (years) 6 6
Expected dividend yield 1.91% 1.38%
Risk-free rate 1.10% 0.75%
Employee exercise multiple 2 2
Employee exit rate 0.00% 0.00%
------------------------------------- ---------- ----------
Share Incentive Plan
All UK-based employees are eligible to participate in the SIP
whereby employees buy shares in the Company. These shares are
called Partnership Shares and are held in trust on behalf of the
employee. For every Partnership Share bought by the employee up to
a limit of GBP1,800 per tax year the Company will give the employee
one share free of charge (Matching Shares), provided the employee
remains employed by the Company for a period of at least three
years. The employees must take their shares out of the plan on
leaving the Company and will not be entitled to the Matching Shares
if they leave within three years of buying the Partnership Shares.
In addition, the Company can also award employees up to a maximum
of the HMRC approval limit, which during the year was GBP3,600 of
shares (Free Shares) per tax year. There are no vesting conditions
attached to the Free Shares, other than being continuously employed
by the Company for three years from the date of grant.
Number of Matching
Number of Free Shares Shares
---------------------------- ----------------------- --------------------
2016 2015 2016 2015
---------------------------- ----------- ---------- --------- ---------
Outstanding at beginning of
year 571,679 576,230 156,065 159,230
Granted during year 141,374 165,318 34,303 42,025
Forfeited during year (40,041) (40,497) (38,767) (11,365)
Released during year (101,512) (129,372) - (33,825)
---------------------------- ----------- ---------- --------- ---------
Outstanding at end of year 571,500 571,679 151,601 156,065
---------------------------- ----------- ---------- --------- ---------
Exercisable at end of year 239,141 240,245 42,488 64,662
---------------------------- ----------- ---------- --------- ---------
For the purposes of IFRS 2 the fair value of these Matching
Shares and Free Shares is determined as the market value of the
shares at the date of grant. No valuation model is required to
calculate the fair value of awards under the SIP. The fair value of
an equity-based payment under the SIP is the face value of the
award on the date of grant because the participants are entitled to
receive the full value of the shares and there are no market-based
performance conditions attached to the awards.
The Group recognised a total expense of GBP641,800 (2015:
GBP586,000) in the year relating to Matching and Free Share
awards.
Long Term Incentive Plan
The Company approved a new LTIP in 2008. Full details of the
performance conditions are outlined in the Directors' Remuneration
Report. All awards are nil-cost options or conditional shares which
vest, subject to achievement of the relevant performance
conditions, after three years and can be exercised over the
following seven years. Save as permitted in the LTIP rules, awards
lapse on an employee leaving the Company.
Details of performance share awards outstanding during the year
are as follows:
Year ended Year ended
30 June 2016 30 June 2015
--------------------------------- ------------- -------------
Outstanding at beginning of year 941,309 1,168,872
Granted during year 384,565 150,333
Forfeited during year (193,301) (307,592)
Exercised during year(1) (81,969) (70,304)
--------------------------------- ------------- -------------
Outstanding at end of year 1,050,604 941,309
--------------------------------- ------------- -------------
Exercisable at end of year 261,106 451,934
--------------------------------- ------------- -------------
1 The weighted average sales price for exercises in the year was
580 pence (2015: 402 pence). Of the 81,969 options exercised during
the year 5,008 were exercised in exchange for cash (2015: 304).
The aggregates of the fair values of the awards made in the year
were GBP95,621, GBP260,904, GBP100,663, GBP947,449, GBP181,198 and
GBP554,306, granted on 6 July 2015, 3 August 2015, 6 November 2015,
10 November 2015, 25 January 2016 and 21 March 2016 respectively
(2015: GBP538,837).
Fair values of the awards with a performance condition based on
EPS are calculated using the Black Scholes model. The inputs into
the models for awards granted in the current year were as
follows:
6 July 25 21
2015 3 August 6 November 10 November January March
Grant date 2015 2015 2015 2016 2016
------------------------ ------ -------- -------------------------- ----------- -------- ------
Expected volatility 24% 24% 24% 25% 29% 29% 24% 25% 25%
Expected life (years) 3 3 3 4 5 6 2 3 3
Expected dividend yield 1.57% 1.34% 1.37% 1.37% 1.37% 1.37% 1.43% 1.28% 1.41%
Risk-free rate 0.96% 0.95% 0.98% 1.21% 1.42% 1.59% 0.49% 0.67% 0.53%
------------------------ ------ -------- ----- ----- ----- ----- ----------- -------- ------
The Group recognised an expense of GBP695,800 (2015: GBP166,000)
in the year related to performance share awards under the LTIP.
Annual Bonus Plan - deferred share award
The Company approved a new component to the Annual Bonus Plan in
2013 whereby a portion of the annual amount awarded to certain
senior management would be deferred in shares. The number of
deferred shares granted is dependent on certain performance
criteria, consisting of a one-year profit target, and achievement
of strategic and personal objectives. There is a further two-year
compulsory deferral period, at the end of which the deferred share
awards will become exercisable subject to continued employment. All
awards are nil-cost options or conditional shares.
Details of performance share awards outstanding during the year
are as follows:
Year ended Year ended
30 June 2016 30 June 2015
--------------------------------- ------------- -------------
Outstanding at beginning of year 185,855 68,886
Granted during year 83,541 118,229
Forfeited during year (17,690) (1,260)
Exercised during year (14,761) -
--------------------------------- ------------- -------------
Outstanding at end of year 236,945 185,855
--------------------------------- ------------- -------------
Exercisable at end of year 54,039 -
--------------------------------- ------------- -------------
The aggregate of the fair values of the awards granted on 26
October 2015 was GBP342,800 (2015: GBP509,600).
Fair values of the awards are calculated using the Black Scholes
model due to the grants having performance conditions based on
non-market conditions. The inputs into the model for awards granted
in the current and prior years were as follows:
8 September 10 October
Grant date 2014 2015
------------------------ ----------- ----------
Expected volatility 32% 24%
Expected life (years) 3 3
Expected dividend yield 1.71% 1.91%
Risk-free rate 0.87% 1.10%
------------------------ ----------- ----------
The Group recognised an expense of GBP338,000 (2015: GBP500,800)
in the year related to deferred share awards under the Annual Bonus
Plan.
Non-Executive Directors - share award
During the year the Company approved a new component to the
Non-Executive Directors' remuneration, whereby a portion of the
annual fees agreed would be deferred in shares. The number of
deferred shares granted will be settled in the open period
following the completion of the one year vesting period. The Group
recognised an expense of GBP135,300 (2015: GBPnil) in the year
related to these share awards under the Non-Executive Directors'
share plan.
Cash-settled share option scheme
In addition to the equity-settled schemes the Group operates a
cash-settled scheme for certain overseas employees. The total
charge for the year was GBP281,000 (2015: GBP144,000).
28. Retirement benefit schemes
Defined contribution schemes
The UK-based employees of the Company have the option to be
members of a defined contribution pension scheme managed by a third
party pension provider. For each employee who is a member of the
scheme the Company will contribute a fixed percentage of each
employee's salary to the scheme. The only obligation of the Group
with respect to this scheme is to make the specified
contributions.
Employees of the Group's subsidiaries in the US, Japan, China
and Hong Kong are members of state-managed retirement benefit
schemes operated by the governments of the US, Japan, China and
Hong Kong respectively. Depending on location, the subsidiaries are
required to contribute a specified percentage of payroll costs to
the retirement benefit schemes to fund the benefits. The only
obligation of the Group with respect to the retirement benefit
schemes is to make the specified contributions as required by
law.
The total cost charged to the income statement in respect of
these schemes during the year ended 30 June 2016 was GBP2,235,000
(2015: GBP1,689,000). As at 30 June 2016 contributions of
GBP181,000 (2015: GBP156,000) due in respect of the current
reporting period had not been paid over to the schemes.
29. Business combinations
On 11 November 2015 the Group completed the acquisition of 100%
of the issued share capital of a private Delaware corporation,
AxioMx Inc. Upfront consideration, including payments for working
capital, of $19.3m was exchanged on the acquisition date with a
payment of $2.4m made after the acquisition to settle pre-existing
liabilities to largely offset the $2.0m cash and cash equivalents
acquired. Further consideration payments of up to $23.5m and
related fees up to $1.5m will be payable on successful completion
of future development and technology milestones. As a result of the
acquisition, Abcam now has access to AxioMx's technology, which
potentially provides scalable capabilities to produce highly
validated recombinant monoclonal antibodies within weeks
(significantly faster than in vivo methods).
The goodwill of $18.5m (GBP12.1m) arising from the acquisition
consists largely of the production opportunities derived from the
acquired technology and the value of the highly knowledgeable and
skilled workforce. The tax benefit recognised within goodwill in
relation to the acquired AxioMx losses has been concluded by a
section 382 loss analysis.
The following table summarises the consideration transferred and
the provisional fair value for the assets and liabilities
recognised at the date of acquisition.
Provisional
Recognised amounts of identifiable assets acquired fair value
and liabilities assumed GBP000
--------------------------------------------------- -----------
Non-current assets
Intangible assets 16,413
Property, plant and equipment 115
Deferred tax asset 1,173
Other long-term assets 3
Current assets
Cash and cash equivalents 1,326
Trade and other receivables 167
Current liabilities
Trade and other payables (1,924)
Non-current liabilities
Contingent fees (594)
Deferred tax liability (6,306)
--------------------------------------------------- -----------
Total identifiable assets acquired 10,373
Goodwill 11,837
--------------------------------------------------- -----------
Total consideration 22,210
--------------------------------------------------- -----------
Consideration at 11 November 2015 GBP000
---------------------------------------- -------
Cash 7,584
Equity 5,047
Contingent consideration - cash 5,747
Contingent consideration - equity 3,832
---------------------------------------- -------
Total consideration 22,210
---------------------------------------- -------
Cash consideration 7,584
Cash and cash equivalents acquired (1,326)
Net cash outflow arising on acquisition 6,258
---------------------------------------- -------
Acquisition-related expenses totalling GBP0.5m are included
within administrative expenses in the consolidated income statement
for the period ended 30 June 2016.
The fair value of the acquired identifiable intangible assets
consists of GBP15.9m attributable to technology and GBP0.5m
attributable to license support agreements. The values have been
assessed by an independent third party valuation company. A related
deferred tax liability of GBP6.3m has also been recognised.
The fair value of the equity consideration was determined using
the mid-market close price on the date of the acquisition.
The Group recognised a contingent consideration liability of
GBP9.6m in relation to the acquisition, which represents the total
calculated present value of expected payments due upon achievement
of predetermined development milestones. This value was also
assessed as part of the independent third party valuation. The
total contingent consideration and fees recognised by the Group at
acquisition was GBP10.2m.
During the period from the date of acquisition to the balance
sheet date, AxioMx contributed GBP0.4m to the Group's revenue from
sales to third parties and a loss before tax of GBP1.7m over the
same period.
Had AxioMx Inc been consolidated from 1 July 2015, the
consolidated income statement for the year ended 30 June 2016 would
show a Group pro-forma revenue of GBP172.0m and profit before tax
of GBP44.4m.
Details of prior year acquisition
Firefly BioWorks Inc - restated
On 23 January 2015 the Group acquired 100% of the share capital
of Firefly BioWorks Inc (Firefly), a private company incorporated
in the United States specialising in novel assay technologies, for
$26.4m. A further payment of $1.6m was made after the acquisition
to settle pre-existing liabilities. As a result of the acquisition,
the Group has an extended product portfolio covering microRNA
research products. In addition to sample testing services income,
the first significant sales of these products were recorded towards
the end of the year. In addition the Group is expecting to leverage
the acquired technology to produce a new series of protein
immunoassays.
As stated in note 3, during the year the Group finalised the
fair values arising on the acquisition. The resulting adjustment
relates to recognition of a deferred tax asset and is reflected in
the table below.
The goodwill of $9.2m (GBP6.1m) arising from the acquisition
consists largely of the product pipeline opportunities and
alternative future uses to be derived from the acquired technology
and the value of the highly knowledgeable and skilled workforce.
None of the goodwill recognised is expected to be deductible for
corporation tax purposes.
The following table summarises the consideration paid for
Firefly and the fair value of the assets acquired and liabilities
assumed at the acquisition date:
Fair Measurement Fair
value period value
Recognised amounts of identifiable assets GBP000 adjustment GBP000
acquired and liabilities assumed Provisional GBP000 Restated
------------------------------------------ ------------- ----------- ---------
Non-current assets
Intangible assets (note 13) 17,704 - 17,704
Deferred tax asset - 1,882 1,882
Current assets
Cash and cash equivalents 224 - 224
Trade and other receivables 21 - 21
Current liabilities
Trade and other payables (1,323) - (1,323)
Non-current liabilities
Deferred tax liability (7,082) - (7,082)
------------------------------------------ ------------- ----------- ---------
Total identifiable assets acquired 9,544 1,882 11,426
Goodwill 8,013 (1,882) 6,131
------------------------------------------ ------------- ----------- ---------
Total consideration 17,557 - 17,557
------------------------------------------ ------------- ----------- ---------
Consideration at 23 January 2015 GBP000
----------------------------------------- ------
Cash 17,557
----------------------------------------- ------
Total consideration transferred 17,557
----------------------------------------- ------
Cash and cash equivalents acquired (224)
---------------------------------------- --------
Net cash outflow arising on acquisition 17,333
---------------------------------------- --------
Acquisition-related expenses totalling GBP0.3m are included
within administrative expenses in the consolidated income statement
for the year ended 30 June 2015.
The fair value of the acquired identifiable intangible assets
consists of GBP17.1m of in-progress R&D and GBP0.6m of
software. The values have been formally assessed by a third party
valuation expert. A related deferred tax liability of GBP7.1m has
also been recognised. The book value has been deemed by the
Directors to equate to the fair value for the remaining balance
sheet accounts.
During the period from the date of acquisition to 30 June 2015,
Firefly contributed GBP0.2m to the Group's revenue from sales to
third parties and a loss before tax of GBP1.0m over the same
period.
Had Firefly been consolidated from 1 July 2014, the consolidated
income statement for the year ended 30 June 2015 would show
pro-forma revenue of GBP144.1m and profit before tax of
GBP43.6m.
30. Related party transactions
Remuneration of key management personnel
The remuneration of the key management personnel of the Group is
set out below in aggregate for each of the categories in IAS 24
Related Party Disclosures.
The key management team for the prior year comprised the
Non-Executive Directors, the Executive Directors and the Senior
Leadership Team. In April 2016 the key management team was
restructured and the Senior Leadership Team replaced by the
Executive Leadership Team. The current year figures therefore
represent pro-rated amounts for the change in structure.
The Non-Executive Directors' fees for the year ended 30 June
2016 represent amounts received in cash and an element receivable
in shares. Further information about the remuneration of individual
Directors is provided in the audited section of the Directors'
Remuneration Report.
30 June 30 June
2016 2015
Group and Company GBP000 GBP000
-------------------------------------- ------- -------
Short-term employee benefits and fees 4,204 3,778
Post-employment benefits 84 64
Share-based payments charge 458 190
-------------------------------------- ------- -------
4,746 4,032
-------------------------------------- ------- -------
Directors' transactions
Dividends totalling GBP2,203,000 were paid in the year in
respect of ordinary shares held by the Company's Executive and
Non-Executive Directors.
During the year the Group entered into a licence and supply
agreement for access to knock-out cell lines with Horizon Discovery
Group plc, of which Jonathan Milner is a non-executive director. A
total of GBP220,000 (2015: GBPnil) has been paid during the year
under the terms of the agreement with additional product related
fees of GBP4,700 (2015: GBP7,200). Total sales of GBP53,000 have
been made during the year to companies of which Jonathan is the
Chairman or a significant investor.
The Group has also made a software subscription purchase from
Dynamic Action for GBP35,000 (2015: GBP60,000), of which Michael
Ross is a director, and a payment of GBP6,000 (2015: GBPnil) to
Mara Aspinall for consultancy services in addition to her
Non-Executive Directorship fee.
Company transactions with its subsidiaries
The Company provided goods for resale to, purchased goods from,
received dividends from, and was charged management fees by its
subsidiaries in the current and prior years as summarised in the
following table:
30 June 30 June
2016 2015
GBP000 GBP000
------------------------------------ -------- --------
Sales of goods 98,737 76,308
Purchase of goods (6,525) (11,887)
Fees related to intra-group trading (15,545) (1,004)
------------------------------------ -------- --------
76,667 63,417
------------------------------------ -------- --------
Amounts remaining outstanding at the year end can be seen in the
notes to the Company balance sheet.
Company transactions with its subsidiaries in relation to the
prior year
Ascent Scientific Ltd intra-group trade transfer
During the year ended 30 June 2015 the decision was made to
hive-up the trade of Ascent Scientific Ltd (Ascent) into Abcam plc.
Consequently on 30 June 2015 the trade and net assets of Ascent
were transferred to the Company at their book value.
The cost of the Company's investment in that subsidiary
undertaking reflected the fair value of net assets and goodwill
assessed at the time of acquisition to the Abcam Group (12
September 2011). As a result of the transfer, the value of the
Company's investment in Ascent fell below the amount at which it
was stated in the Company's balance sheet.
Schedule 1 to the Companies Act 2006 The Large and Medium-sized
Companies and Groups (Accounts and Reports) Regulations 2008 (SI
2008 No. 410) requires that the investment be written down
accordingly and that the amount be charged as a loss in the
Company's profit and loss account. However, the Directors consider
that, as there has been no overall economic loss to the Company, it
would fail to give a true and fair view to charge that diminution
to the profit and loss account for the year and it should instead
follow predecessor accounting, reallocating the cost to goodwill
and the identifiable fair value of net assets transferred. The
allocation between assets acquired has been taken with reference to
the original values assessed formally at the date Ascent was
acquired by the Abcam Group.
The following table summarises the impact of adopting
predecessor accounting for the trade transfer on the Company
balance sheet:
Fair value
recognised
GBP000
------------------------------------------ -----------
Non-current assets
Intangible assets 602
Property, plant and equipment 134
Current assets
Cash and cash equivalents 54
Inventories 1,596
Trade and other receivables 96
Current liabilities
Trade and other payables (82)
Non-current liabilities
Deferred tax (119)
------------------------------------------ -----------
Total identifiable assets recognised 2,281
------------------------------------------ -----------
Cash consideration 1,798
Reduction in carrying value of investment 8,370
Recognised directly in equity(1) (229)
------------------------------------------ -----------
Total consideration 9,939
------------------------------------------ -----------
Goodwill recognised 7,658
------------------------------------------ -----------
1 Amounts recognised directly to equity represent the change in
the net assets of Ascent since acquisition on 12 September
2011.
The Group financial statements for the year ended 30 June 2015
were not affected by this transfer.
31. Income statement for the Company
As permitted by section 408 of the Companies Act 2006 the
Company has elected not to present its own income statement for the
year. Abcam plc reported a profit for the year ended 30 June 2016
of GBP45.9m (2015: GBP40.4m).
32. Consolidated adjusted financial measures
Year ended Year ended
30 June 2016 30 June 2015
GBP000 GBP000
----------------------------------------------- ------------- -------------
Profit before tax 45,412 46,099
Acquisition costs 466 335
Integration costs 480 24
System and process improvement costs 3,955 -
Unwinding of discount factor on contingent
consideration and fees 1,050 -
Prior year R&D tax credit (1,308) -
Amortisation of acquisition-related intangible
assets 3,727 3,118
----------------------------------------------- ------------- -------------
Adjusted profit before tax 53,782 49,576
----------------------------------------------- ------------- -------------
Year % Year %
ended ended
30 June 30 June
2016 2015
GBP000 GBP000
-------------------------------------- -------- ---- -------- ----
Operating profit / margin 46,318 27.0 45,727 31.7
Acquisition costs 466 335
Integration costs 480 24
System and process improvement costs 3,955 -
Prior year R&D tax credit (1,308) -
Amortisation of acquisition-related
intangible assets 3,727 3,118
-------------------------------------- -------- ---- -------- ----
Adjusted operating profit / margin(1) 53,638 31.2 49,204 34.2
-------------------------------------- -------- ---- -------- ----
1 Adjusted operating margin is adjusted operating profit divided by revenue.
Year % Year %
ended ended
30 June 30 June
2016 2015
GBP000 GBP000
------------------------------------- -------- ---- -------- ----
Operating profit 46,318 45,727
Depreciation and amortisation 11,355 8,038
------------------------------------- -------- ---- -------- ----
EBITDA / margin(2) 57,673 33.6 53,765 37.3
Acquisition costs 466 335
Integration costs 480 24
System and process improvement costs 2,645 -
Prior year R&D tax credit (1,308) -
------------------------------------- -------- ---- -------- ----
Adjusted EBITDA / margin(3) 59,956 34.9 54,124 37.6
------------------------------------- -------- ---- -------- ----
2 EBITDA is earnings before interest, tax, depreciation and
amortisation. EBITDA margin is EBITDA divided by revenue.
3 Adjusted EBITDA margin is adjusted EBITDA divided by revenue.
The reconciliation of adjusted EPS is included in note 11.
33. Post balance sheet event
Subsequent to the year end, a further milestone was successfully
achieved in relation to the contingent consideration recognised as
part of the AxioMx Inc acquisition. An additional $2.5m of the
consideration has therefore become due (60% cash, 40% equity)
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GGURGBUPQPUG
(END) Dow Jones Newswires
September 12, 2016 02:01 ET (06:01 GMT)
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