TIDMABC
RNS Number : 6113G
ABCAM Plc
05 March 2018
5(th) March 2018
ABCAM PLC
("Abcam" or "the Group")
Interim results for the six months ended 31 December 2017
Continued strong sales growth in H1, ahead of underlying market
rates
- Revenue growth of 9.8% (11.2% constant currency(1)
)
- Full year constant currency revenue growth guidance
increased to c.11%, including the impact of
the Spring Bioscience licence agreement signed
in January 2018
Cambridge, UK: Abcam plc (AIM: ABC) a global leader in the
supply of life science research tools is pleased to announce its
interim results for the six-month period ended 31 December
2017*.
Financial highlights
-- Total revenue growth of 9.8% on a reported basis to GBP112.5m
(H1 2017: GBP102.5m) and 11.2% on a constant currency basis
-- Catalogue revenue growth of 10.0% on a reported basis to
GBP105.2m (H1 2017: GBP95.6m) and 11.5% on a constant currency
basis
o Recombinant antibody revenues grew by 21.1% to GBP22.4m on a
reported basis and by 22.8% on a constant currency basis
o Immunoassay product revenues grew by 20.7% to GBP7.0m on a
reported basis and by 23.4% on a constant currency basis
-- Reported gross margin broadly in line with last year at 69.8% (H1 2017: 69.7%)
-- EBITDA margin was 34.7% (H1 2017: 34.5%). Adjusted EBITDA
margin(2) increased to 38.0% (H1 2017: 35.1%), primarily as a
result of the rolling-off of hedging contracts in the prior
period
-- Profit before tax (PBT) on a reported basis was GBP32.8m (H1
2017: GBP25.1m) and GBP39.3m (H1 2017: GBP32.1m) on an adjusted
basis
-- Reported diluted earnings per share (EPS) increased 61.9% to
15.7 pence (H1 2017: 9.7 pence). Adjusted(2) diluted EPS increased
by 20.2% to 15.5 pence (H1 2017: 12.9 pence)
-- Interim dividend increased by 21.1% to 3.42 pence (H1 2017: 2.825 pence)
Operational highlights
-- Continued commercial and strategic execution in the period,
with all regions growing above underlying market rates and the
achievement of all strategic key performance targets
-- Exclusive licence agreement announced with Roche in January
2018, covering approximately 760 Spring Bioscience products,
including 243 rabbit monoclonal antibodies, in research use only
(RUO) applications
-- FirePlex(R) (formerly Firefly) platform expanded within the
kits/assays range by introducing 47 new antibody pairs and
validated many of these pairs in multiplex immunoassays
-- Further increased our addressable market in custom products
and licensing, with twenty pharmaceutical and diagnostic partners
signed up to 'Abcam Inside' framework agreements over the last 24
months
-- Made continued progress towards full implementation of our
new Oracle Cloud ERP system, although we no longer expect to go
live in this financial year
-- Construction of our new headquarters in Cambridge on plan and
we anticipate moving in early 2019
Commenting on the interim results, Alan Hirzel, Abcam's Chief
Executive Officer, said:
"It has been another good half for Abcam, delivering double
digit revenue growth whilst meeting all of our financial and
strategic targets. Our cash generation and balance sheet strength
underpin continued investment into our teams, our systems and our
facilities to enable us to grow. We remain on track to meet our
strategic goals for the year and we have increased our revenue
guidance for the full year. This momentum positions us well to
deliver on our long-term goals, which we anticipate will continue
to drive sustainable value for our shareholders."
1. Constant currency results are calculated by applying prior
period's actual exchange rates to this period's results.
2. Adjusted results exclude the effects of system and process
improvement costs (including related impairments), contingent
consideration fair value adjustments, acquisition costs, the
amortisation of acquisition related intangible assets, related tax
effects and significant one-off tax items. Such excluded items are
described as "adjusting items". For further details, see note 4 to
the interim financial information.
For further information please contact:
Abcam + 44 (0) 1223 696 000
Alan Hirzel, Chief Executive Officer
Gavin Wood, Chief Financial Officer
James Staveley, Vice President, Investor Relations
J.P. Morgan Cazenove - Nominated Advisor & Corporate Broker + 44 (0) 20 7742 4000
James Mitford / Candelle Chong
FTI Consulting +44 (0) 20 3727 1000
Ben Atwell / Brett Pollard / Natalie Garland-Collins
*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
Abcam. 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 Abcam, 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.
Abcam 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.
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 Group 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 antibodies and affinity binders, reagents,
biomarkers and assays and the Group'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
Group 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 eleven 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
Group 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
Interim management report
Introduction
It has been another period of good progress for Abcam as we have
continued to execute on our long-term growth strategy and gain
further market share worldwide. Customer feedback remains positive
and we have delivered double-digit constant currency revenue growth
in the half, with all geographic areas and main product categories
performing at levels above underlying market growth rates. China
remained our fastest growing major market in the period, with
continued growth in both our core primary and non-primary
businesses.
Our long experience and strength in digital marketing continue
to support our business and we are making increasing use of our
data to enhance our product selection, website and marketing in
order to attract new customers and satisfy more needs of our
existing customers. We have continued to invest in our systems and
processes, our facilities and our people during the half, and
remain focused on ensuring these investments support our long-term
growth aspirations. Underpinning our continued progress is our
solid financial position, which gives us the foundation to grow the
business organically and through selected corporate transactions,
such as the licence agreement recently signed with Roche.
Strategy
In addition to a strong year-on-year increase in constant
currency revenue growth, our performance in the period against our
strategic key performance indicators (KPIs), as listed below,
reflects achievement within the range of our full year target.
H1 2018 FY 2018
Strategic KPIs result Target
-------------------------------------------------------------------- ------- -------
Constant currency growth in revenue from recombinant antibody range 23% 20-25%
Constant currency growth in revenue from immunoassay products 23% 20-25%
Customer engagement: Transactional Net Promoter Score (NPS) 64% 55-65%
-------------------------------------------------------------------- ------- -------
Milestones achieved within our five strategic goals
In September 2017, we refined our five multi-year goals to
reflect the ongoing development of our markets and our business. We
have made further progress in each of these areas over the last six
months and, as we do so, we are identifying more growth
opportunities. Key developments are discussed below.
Sustain antibody and digital marketing leadership
Across our core reagents business, we continue to focus on
providing scientists with the latest and most effective tools to
advance their research. At the same time, we are building further
on our reputation for providing comprehensive, transparent data,
fast delivery, excellent customer service and expert technical
support. We are constantly looking to improve our customers'
experience of finding, buying and using our products and we are
investing in big data and predictive analytics that enable us to
understand and serve customer needs, faster.
Progress in H1 2018 has included:
- continued focus on adding high-quality products to high-value
targets, particularly where we can apply our proprietary antibody
technologies. We added over 600 new, in-house developed
research-grade antibody products in the period;
- ongoing progress in our validation and quality standards
initiative, with the total number of knockout validated antibodies
now over 1,200 across more than ninety targets; and
- further investment in our digital channels to realise the next
phase of our digital marketing vision; including our content
marketing strategy, marketing automation and improvements to the
user experience across our desktop and mobile sites.
Expand in related growth markets
Beyond our core reagents business, we have identified, and
continue to focus on the following key opportunities where we can
leverage our core capabilities in new growth markets.
- Immunoassays: Immunoassays remain a strategically important
growth opportunity for Abcam and we continue to invest and innovate
to increase the use of our market leading antibodies in these
products as rapidly as possible. In the first half, we added over
100 new products across our matched antibody pairs, singleplex
immunoassays, and multiplex immunoassays using the FirePlex(R)
particle platform. In December 2017, we successfully demonstrated
performance in alpha testing of our new 72-plex human discovery
panel on FirePlex(R) and in February 2018 we announced a strategic
collaboration with Molecular Devices to develop new immunoassay
tools designed to help researchers accelerate their work.
- Abcam Inside (diagnostic and therapeutic use): Beyond our
expertise in the development and sale of research antibodies, we
retain strong capabilities in the custom design and manufacture of
recombinant antibodies and the licensing of these antibodies into
diagnostic and therapeutic applications. We have continued to
strengthen our commercial and development teams in the first half,
further extending our capabilities in this area, and this remains a
priority for the Group. We continue to enter new development
agreements with leading diagnostic and biopharmaceutical companies
to support their diagnostic and clinical programmes and in the
first half we also established supply agreements with three new
instrument partners as we work to ensure that Abcam's
differentiated content is available to scientists across the
broadest range of platforms.
Invest in operating capabilities to double our scale from 2016
to 2023
Abcam is a rapidly growing organisation and as such it is
critical that we have the infrastructure, systems, processes and
people to support our future growth plans.
Progress in H1 2018 has included:
- continued progress on the build, testing and deployment phases
of our new enterprise resource planning (ERP) system (see ERP
update below);
- further investment and progress implementing our global Supply
Chain and Manufacturing function, with distribution improvement
related projects initiated in the UK, US and China;
- ongoing construction of our new, global headquarters on the
Cambridge Biomedical Campus. Work remains on track to complete
construction in calendar 2018, with occupancy expected in the first
half of calendar 2019; and
- continued investment to support employee engagement and
development across our global organisation
Sustain attractive economics
Our goal is to continue generating strong revenue growth at
attractive margins, whilst optimising operational efficiency,
thereby delivering sustainable, profitable growth.
Progress in H1 2018 has included:
- ongoing identification and delivery of operating efficiencies
and productivity gains, including the successful closure and
outsourcing of our Bristol, UK manufacturing operations
- a further increase in the proportion of sales generated from in-house manufactured products
Supplement organic growth through acquisitions and
partnerships
Our dual growth strategy combines organic in-house development
with a track record of successfully completing partnerships and
acquisitions. We remain committed to this strategy and continue to
proactively evaluate the landscape for opportunities which align
with our business objectives and that will provide increased scale.
In January 2018, we announced the signing of an exclusive licence
agreement with Roche, covering a total of approximately 760 unique
Spring Bioscience products, including 243 rabbit monoclonal
antibodies, for research use only (RUO).
Enterprise Resource Planning (ERP) Update
The long-term growth we continue to deliver is placing
increasing demands on our legacy IT systems and business processes.
As a result, we selected Oracle Fusion Cloud as our global ERP
programme solution and the business is already benefitting from
those modules, including Human Resources, that have gone live.
We continue to focus our efforts on system testing, data,
training and organisational readiness, and we remain committed to a
smooth deployment and a quality implementation of the remaining
modules.
Today, nearly all these modules are technically complete,
however, the warehousing module which allows us to put away, pick,
pack and despatch stock has taken longer to complete than we had
anticipated and, therefore, the full global roll out of the
programme is not expected to happen by the end of this financial
year. We are taking action to address this module as well as
assessing its impact on timings and will provide a further update
in due course. We remain fully committed to the Oracle Fusion Cloud
ERP solution.
Board Update
As announced at the time, Murray Hennessey stepped down from his
role as Non-Executive Chairman following the conclusion of our AGM
in November 2017.
The process to identify Murray's replacement is underway and is
being led by Louise Patten, who has taken on the role of Interim
Chairman until a permanent replacement is appointed. Following
Louise's appointment as Interim Chairman, Mara Aspinall has taken
on the role of Senior Non-Executive Director.
Outlook
We are achieving good momentum across the business as we
continue to grow our revenues ahead of the market in every region
we serve. The investments we have made, and that we will continue
to make, are enabling Abcam to sustain this growth and achieve the
targets we have set for ourselves and we believe we are in a strong
position for a successful future.
Overall, we remain on track to meet our strategic goals for the
year and we are increasing our constant currency revenue growth
guidance for FY 2018 to approximately 11%, including the impact of
the Spring Bioscience transaction. We have a strong balance sheet
which enables us to capitalise fully on the further opportunities
available, including acquisitions and partnerships, and we are
investing in our people, R&D, information technology and
infrastructure to enable us to provide innovative, trusted and
improved solutions for consumers.
Supported by a clear purpose and strategy, and thanks to the
significant efforts of all of our employees and partners, we
believe that Abcam is well positioned to continue delivering
long-term value for our shareholders.
Financial Performance in the Period
Overall reported revenues increased by 9.8% in H1 2018. On a
constant currency basis (in which we assume exchange rates remain
unchanged from H1 2017), total revenue grew by 11.2%, with
Catalogue and Customer Product & Licensing (CP&L) revenues
up by 11.5% and 7.8% respectively, when compared to the same period
last year.
For Catalogue products, all geographic areas and main product
categories are performing at levels above underlying market growth
rates, with China continuing to be our fastest growing major
market.
CP&L revenue continues to remain an area of increased focus
for the Group and, in line with our expectations, this area
returned to growth in the half.
Reported revenue
-------------------------------------- ------------------ --------------------- ---------
H1 H1
2018 2017
--------------------------------------
GBP'm GBP'm Constant
Increase / (Decrease) currency
in reported growth
revenue rate
-------------------------------------- -------- -------- --------------------- ---------
Geographic split
The Americas 42.5 40.0 6.3% 8.2%
EMEA 29.9 26.8 11.6% 9.7%
China 16.5 13.5 22.2% 24.5%
Japan 7.9 8.0 (1.3%) 8.5%
Rest of Asia Pacific 8.4 7.3 15.1% 15.1%
-------------------------------------- -------- -------- --------------------- ---------
Catalogue revenue 105.2 95.6 10.0% 11.5%
CP&L revenue(*) 7.3 6.9 5.8% 7.8%
-------------------------------------- -------- -------- --------------------- ---------
Total reported revenue 112.5 102.5 9.8% 11.2%
-------------------------------------- -------- -------- --------------------- ---------
Catalogue product split
Primary and secondary antibodies 85.2 78.7 8.3% 9.6%
o/w Recombinant primary antibodies 22.4 18.5 21.1% 22.8%
Other products(**) 20.0 16.9 18.3% 20.1%
o/w Immunoassay products 7.0 5.8 20.7% 23.4%
-------------------------------------- -------- -------- --------------------- ---------
Catalogue revenue 105.2 95.6 10.0% 11.5%
-------------------------------------- -------- -------- --------------------- ---------
*Includes royalty income, custom products and licensing
revenue
** Includes kits and assays, proteins, peptides, lysates and
AAAI products
Gross margins were broadly in line with last year at to 69.8%
(H1 2017: 69.7%).
Earnings before Interest, Taxation, Depreciation and
Amortisation (EBITDA) was GBP39.0m (H1 2017: GBP35.5m). Adjusted
EBITDA rose 18.9% to GBP42.7m (H1 2017: GBP35.9m), giving an
adjusted EBITDA margin of 38.0% (H1 2017: 35.1%), benefitting from
the rolling-off of hedging contracts in the prior year period. Note
4 gives a detailed reconciliation between operating profit, EBITDA
and adjusted EBITDA.
Profit Before Tax (PBT) on a reported basis was GBP32.8m (H1
2017: GBP25.1m). Adjusted PBT was GBP39.3m (H1 2017: GBP32.1m),
giving an adjusted PBT margin of 34.9% (H1 2017: 31.4%). Please
refer to note 4 for a detailed reconciliation between reported and
adjusted PBT.
Due to the one-off impacts relating to the introduction of the
US Tax Cuts and Jobs Act in the first half of our financial year,
the Group's reported rate for the H1 is 1.5% (H1 2017: 21.1%). For
the full year, the effective tax rate on reported earnings is
expected to be approximately 12% (year ended 30 June 2017: 18.3%).
Further details are shown in note 5 to the interim financial
information.
Turning to adjusted profits, after the on-going net benefits of
rate reductions arising from the US tax reforms, the effective rate
for the full year is expected to be approximately 19% before
one-off items (year ended 30 June 2017: 19.5%) with this rate being
broadly maintained in the medium term.
Diluted Earnings Per Share (EPS) was 15.7 pence per share (H1
2017: 9.7 pence). Adjusted diluted EPS increased by 20.2% to 15.5
pence per share (H1 2017: 12.9 pence). Please refer to note 6 for a
detailed reconciliation between reported and adjusted EPS.
Cash generation remains strong, with cash generated from
operations of GBP36.4m (H1 2017: GBP40.0m). Capital expenditure
increased by GBP0.7m in the period to GBP11.2m (H1 2017: GBP10.5m).
Capital expenditure predominantly related to investment in new
systems and processes, which totalled GBP5.9m (H1 2017: GBP5.2m),
as well as a further GBP2.2m invested on our new Cambridge
headquarters and GBP1.1m on improvements to laboratory facilities
and equipment across the Group. After further outflows of GBP15.1m
in the period relating to the FY 2017 final dividend payment (H1
2017: GBP13.3m), closing cash at the end of the period was GBP91.6m
(H1 2017: GBP76.4m).
Dividend
The board have approved an interim dividend of 3.42 pence per
share, an increase of 21.1% on the same period in 2017. The interim
dividend will be paid on 12 April 2018 to shareholders whose names
are on the register at close of business on 16 March 2018. The
associated ex-dividend date will be 15 March 2018.
Louise Patten
Interim Chairman
Alan Hirzel
Chief Executive Officer
2 March 2018
Responsibility statement
We confirm to the best of our knowledge:
-- the interim financial information has been prepared in
accordance with IAS 34, as adopted by the European Union;
-- the Financial and Operational highlights, Interim Management
Report and Interim Financial Information include a fair review of
the information required by the Financial Statements Disclosure and
Transparency Rules (DTR) 4.2.7R, being an indication of important
events that have occurred during the first six months of the
financial year and a description of the principal risks and
uncertainties for the remaining six months of the year; and
-- the Financial and Operational highlights and Interim
Management Report include a fair review of the information required
by DTR 4.2.8R, being related party transactions that have taken
place in the first six months of the current financial year and
that have materially affected the financial position or performance
of the entity during the period and also any changes in the related
party transactions described in the last Annual Report that could
do so.
At the date of this statement, the Directors are those listed in
the Group's 2016/17 Annual Report and Accounts except for the
following change:
Resignation
---------------- -----------------
Murray Hennessy 14 November 2017
---------------- -----------------
By order of the Board
Alan Hirzel
Chief Executive Officer
Gavin Wood
Chief Financial Officer
2 March 2018
Independent review report to Abcam plc
Report on the condensed consolidated interim financial
information
Our conclusion
We have reviewed Abcam plc's condensed consolidated interim
financial information (the "interim financial statements") in the
interim report of Abcam plc for the 6-month period ended 31
December 2017. Based on our review, nothing has come to our
attention that causes us to believe that the interim financial
statements are not prepared, in all material respects, in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the AIM
Rules for Companies.
What we have reviewed
The interim financial statements comprise:
-- the consolidated balance sheet as at 31 December 2017;
-- the consolidated income statement and consolidated statement
of comprehensive income for the period then ended;
-- the consolidated cash flow statement for the period then ended;
-- the consolidated statement of changes in equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the interim report
have been prepared in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', as adopted by the
European Union and the AIM Rules for Companies.
As disclosed in note 2 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The interim report, including the interim financial statements,
is the responsibility of, and has been approved by, the directors.
The directors are responsible for preparing the interim report in
accordance with the AIM Rules for Companies which require that the
financial information must be presented and prepared in a form
consistent with that which will be adopted in the company's annual
financial statements.
Our responsibility is to express a conclusion on the interim
financial statements in the interim report based on our review.
This report, including the conclusion, has been prepared for and
only for the company for the purpose of complying with the AIM
Rules for Companies and for no other purpose. We do not, in giving
this conclusion, accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or into
whose hands it may come save where expressly agreed by our prior
consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the interim
report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
Cambridge
2 March 2018
a) The maintenance and integrity of the Abcam plc website is the
responsibility of the directors; the work carried out by the
auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred to the interim financial statements since
they were initially presented on the website.
b) Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
Consolidated income statement
For the six-month period ended 31 December 2017
(Unaudited) (Unaudited)
six months six months
ended ended
31 Dec 2017 31 Dec 2016
Notes GBPm GBPm
------------------------------------------------------------------------- ------ ------------- -------------
Revenue 112.5 102.5
Cost of sales (34.0) (31.0)
------------------------------------------------------------------------- ------ ------------- -------------
Gross profit 78.5 71.5
Administration and management expenses (35.5) (33.4)
Research and development expenses (10.3) (9.8)
------------------------------------------------------------------------- ------ ------------- -------------
Operating profit 32.7 28.3
Finance income 0.1 0.1
Finance costs - (3.3)
------------------------------------------------------------------------- ------ ------------- -------------
Profit before tax 32.8 25.1
Tax 5 (0.5) (5.3)
------------------------------------------------------------------------- ------ ------------- -------------
Profit for the period attributable to equity shareholders of the parent 32.3 19.8
------------------------------------------------------------------------- ------ ------------- -------------
Earnings per share
Basic 6 15.8p 9.8p
Diluted 6 15.7p 9.7p
------------------------------------------------------------------------- ------ ------------- -------------
Consolidated statement of comprehensive income
For the six-month period ended 31 December 2017
(Unaudited) (Unaudited)
six months six months
ended ended
31 Dec 2017 31 Dec 2016
GBPm GBPm
---------------------------------------------------------------------------- ------------- -------------
Profit for the period attributable to equity shareholders of the parent 32.3 19.8
---------------------------------------------------------------------------- ------------- -------------
Items that may be reclassified to the income statement in subsequent years
Movements on cash flow hedges 1.5 4.2
Exchange differences on translation of foreign operations (7.3) 13.7
Movement in fair value of investment 0.1 -
Tax relating to components of other comprehensive income (0.2) (0.8)
---------------------------------------------------------------------------- ------------- -------------
Other comprehensive (expense) / income for the period (5.9) 17.1
---------------------------------------------------------------------------- ------------- -------------
Total comprehensive income for the period 26.4 36.9
---------------------------------------------------------------------------- ------------- -------------
Consolidated balance sheet
As at 31 December 2017
(Unaudited) (Audited) (Unaudited)
as at as at as at
31 Dec 2017 30 Jun 2017 31 Dec 2016
Notes GBPm GBPm GBPm
----------------------------------------------------------------- ------ ------------- ------------- -------------
Non-current assets
Goodwill 111.2 115.5 121.1
Intangible assets 75.9 73.6 75.5
Property, plant and equipment 25.6 22.3 21.1
Deferred tax asset 7.0 6.6 11.0
Derivative financial instruments 8 0.2 0.2 0.2
----------------------------------------------------------------- ------ ------------- ------------- -------------
219.9 218.2 228.9
----------------------------------------------------------------- ------ ------------- ------------- -------------
Current assets
Inventories 22.4 21.8 21.1
Trade and other receivables 30.2 34.6 25.6
Investment 8 1.1 1.0 0.9
Derivative financial instruments 8 2.3 1.3 0.4
Cash and cash equivalents 91.6 84.8 76.4
147.6 143.5 124.4
----------------------------------------------------------------- ------ ------------- ------------- -------------
Total assets 367.5 361.7 353.3
----------------------------------------------------------------- ------ ------------- ------------- -------------
Current liabilities
Trade and other payables (26.4) (29.3) (21.9)
Current tax liabilities (4.4) (1.2) (3.2)
Contingent consideration and fees - - (4.0)
Derivative financial instruments 8 (0.5) (2.1) (6.8)
----------------------------------------------------------------- ------ ------------- ------------- -------------
(31.3) (32.6) (35.9)
----------------------------------------------------------------- ------ ------------- ------------- -------------
Net current assets 116.3 110.9 88.5
----------------------------------------------------------------- ------ ------------- ------------- -------------
Non-current liabilities
Deferred tax liability (15.3) (21.9) (26.0)
Derivative financial instruments 8 - (0.1) (0.1)
----------------------------------------------------------------- ------ ------------- ------------- -------------
(15.3) (22.0) (26.1)
----------------------------------------------------------------- ------ ------------- ------------- -------------
Total liabilities (46.6) (54.6) (62.0)
----------------------------------------------------------------- ------ ------------- ------------- -------------
Net assets 320.9 307.1 291.3
----------------------------------------------------------------- ------ ------------- ------------- -------------
Equity
Share capital 0.4 0.4 0.4
Share premium account 24.9 23.9 23.1
Merger reserve 68.1 68.1 66.4
Own shares (3.5) (3.6) (3.9)
Translation reserve 21.0 28.1 37.3
Hedging reserve 1.2 (0.1) (3.7)
Retained earnings 208.8 190.3 171.7
----------------------------------------------------------------- ------ ------------- ------------- -------------
Total equity attributable to the equity shareholders of the
parent 320.9 307.1 291.3
----------------------------------------------------------------- ------ ------------- ------------- -------------
Approved by the Board of directors and authorised for issue on 2
March 2018.
Consolidated statement of changes in equity
For the six-month period ended 31 December 2017
Share
Share premium Merger Own Translation Hedging Retained
capital account reserve shares reserve(1) reserve(2) earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------- --------- --------- --------- -------- ------------------- ------------ ---------- -------
At 1 July 2017 0.4 23.9 68.1 (3.6) 28.1 (0.1) 190.3 307.1
------------------- --------- --------- --------- -------- ------------------- ------------ ---------- -------
Profit for the
period - - - - - - 32.3 32.3
Other
comprehensive
(expense)/ income - - - - (7.1) 1.3 (0.1) (5.9)
------------------- --------- --------- --------- -------- ------------------- ------------ ---------- -------
Total
comprehensive
(expense) /
income for the
period - - - - (7.1) 1.3 32.2 26.4
------------------- --------- --------- --------- -------- ------------------- ------------ ---------- -------
Issue of share
capital 0.0 1.0 - (0.1) - - - 0.9
Own shares
disposed of on
release of shares - - - 0.2 - - (0.2) -
Credit to equity
for share-based
payments - - - - - - 1.7 1.7
Purchase of own
shares - - - - - - (0.1) (0.1)
Equity dividends - - - - - - (15.1) (15.1)
------------------- --------- --------- --------- -------- ------------------- ------------ ---------- -------
Transactions with
owners,
recognised
directly in
equity 0.0 1.0 - 0.1 - - (13.7) (12.6)
------------------- --------- --------- --------- -------- ------------------- ------------ ---------- -------
At 31 December
2017 (unaudited) 0.4 24.9 68.1 (3.5) 21.0 1.2 208.8 320.9
------------------- --------- --------- --------- -------- ------------------- ------------ ---------- -------
For the six-month period ended 31 December 2016
Share
Share premium Merger Own Translation Hedging Retained
capital account reserve shares reserve(1) reserve(2) earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------- --------- --------- --------- -------- ------------ ------------ ---------- -------
At 1 July 2016 0.4 21.5 61.6 (3.2) 23.9 (7.1) 164.1 261.2
-------------------------- --------- --------- --------- -------- ------------ ------------ ---------- -------
Profit for the period - - - - - - 19.8 19.8
Other comprehensive
income - - - - 13.4 3.4 0.3 17.1
-------------------------- --------- --------- --------- -------- ------------ ------------ ---------- -------
Total comprehensive
income for the period - - - - 13.4 3.4 20.1 36.9
-------------------------- --------- --------- --------- -------- ------------ ------------ ---------- -------
Issue of share capital 0.0 1.6 4.8 (0.9) - - - 5.5
Own shares disposed of on
release of shares - - - 0.2 - - (0.2) -
Credit to equity for
share-based payments - - - - - - 1.0 1.0
Equity dividends - - - - - - (13.3) (13.3)
-------------------------- --------- --------- --------- -------- ------------ ------------ ---------- -------
Transactions with owners,
recognised directly in
equity 0.0 1.6 4.8 (0.7) - - (12.5) (6.8)
-------------------------- --------- --------- --------- -------- ------------ ------------ ---------- -------
At 31 December 2016
(unaudited) 0.4 23.1 66.4 (3.9) 37.3 (3.7) 171.7 291.3
-------------------------- --------- --------- --------- -------- ------------ ------------ ---------- -------
For the twelve months ended 30 June 2017
Share
Share premium Merger Own Translation Hedging Retained
capital account reserve shares reserve(1) reserve(2) earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------- --------- --------- --------- -------- ------------ ------------ ---------- -------
At 1 July 2016 0.4 21.5 61.6 (3.2) 23.9 (7.1) 164.1 261.2
-------------------------- --------- --------- --------- -------- ------------ ------------ ---------- -------
Profit for the period - - - - - - 42.4 42.4
Other comprehensive
income - - - - 4.2 7.0 0.2 11.4
-------------------------- --------- --------- --------- -------- ------------ ------------ ---------- -------
Total comprehensive
income for the period - - - - 4.2 7.0 42.6 53.8
-------------------------- --------- --------- --------- -------- ------------ ------------ ---------- -------
Issue of share capital 0.0 2.4 6.5 (0.9) - - - 8.0
Own shares disposed of on
release of shares - - - 0.5 - - (0.5) -
Credit to equity for
share-based payments - - - - - - 3.3 3.3
Purchase of own shares - - - - - - (0.1) (0.1)
Equity dividends - - - - - - (19.1) (19.1)
-------------------------- --------- --------- --------- -------- ------------ ------------ ---------- -------
Transactions with owners,
recognised directly in
equity 0.0 2.4 6.5 (0.4) - - (16.4) (7.9)
-------------------------- --------- --------- --------- -------- ------------ ------------ ---------- -------
At 30 June 2017 (audited) 0.4 23.9 68.1 (3.6) 28.1 (0.1) 190.3 307.1
-------------------------- --------- --------- --------- -------- ------------ ------------ ---------- -------
1 Exchange differences on translation of overseas operations and
net investment hedge instrument.
2 Gains and losses recognised on cash flow hedges and related deferred tax.
Consolidated cash flow statement
For the six-month period ended 31 December 2017
(Unaudited) (Unaudited)
six months six months
ended ended
31 Dec 2017 31 Dec 2016
Notes GBPm GBPm
---------------------------------------------------------------------- ------ ------------- -------------
Profit before tax 32.8 25.1
Finance income (0.1) (0.1)
Finance costs - 3.3
---------------------------------------------------------------------- ------ ------------- -------------
Operating profit for the period 32.7 28.3
Adjustments for:
Depreciation of property, plant and equipment 2.7 2.4
Amortisation of intangible assets 3.6 4.8
Financial instruments at fair value through profit or loss (1.1) (0.1)
Research and development expenditure credit (0.4) (0.3)
Share-based payments charge 1.8 1.4
Contingent consideration in fair value change - (1.0)
Unrealised currency translation losses 0.2 0.4
---------------------------------------------------------------------- ------ ------------- -------------
Operating cash flows before movements in working capital 39.5 35.9
Increase in inventories (0.9) (0.7)
Decrease in receivables 3.7 3.7
(Decrease) / Increase in payables (5.9) 1.1
---------------------------------------------------------------------- ------ ------------- -------------
Cash generated from operations 36.4 40.0
Income taxes paid (4.3) (4.6)
Income taxes received 0.8 -
Net cash inflow from operating activities * 32.9 35.4
---------------------------------------------------------------------- ------ ------------- -------------
Investing activities
Investment income 0.1 0.1
Purchase of property, plant and equipment * (5.3) (5.3)
Purchase of intangible assets * (5.9) (5.2)
Acquisition of subsidiary, net of cash and cash equivalents acquired - (7.4)
Decrease in term deposits - 1.8
---------------------------------------------------------------------- ------ ------------- -------------
Net cash outflow from investing activities (11.1) (16.0)
---------------------------------------------------------------------- ------ ------------- -------------
Financing activities
Dividends paid 7 (15.1) (13.3)
Proceeds on issue of shares 0.9 0.6
Purchase of own shares (0.1) -
---------------------------------------------------------------------- ------ ------------- -------------
Net cash outflow from financing activities (14.3) (12.7)
---------------------------------------------------------------------- ------ ------------- -------------
Net increase in cash and cash equivalents 7.5 6.7
---------------------------------------------------------------------- ------ ------------- -------------
Cash and cash equivalents at beginning of period 84.8 68.9
Effect of foreign exchange rates (0.7) 0.8
---------------------------------------------------------------------- ------ ------------- -------------
Cash and cash equivalents at end of period 91.6 76.4
---------------------------------------------------------------------- ------ ------------- -------------
Free Cash Flow (i) 21.7 24.9
---------------------------------------------------------------------- ------ ------------- -------------
(i) Free Cash Flow comprises those items marked * and comprises
net cash generated from operating activities less net capital
expenditure.
Notes to the interim financial information
For the six-month period ended 31 December 2017
1. General information
This condensed consolidated interim financial information for
the six months ended 31 December 2017 is unaudited and does not
comprise statutory accounts within the meaning of section 434 of
the Companies Act 2006, but has been reviewed by the auditor. The
financial information for the year ended 30 June 2017 does not
constitute the Company's statutory accounts for that period, but
has been extracted from those accounts, which were approved by the
Board of Directors on 8 September 2017 and have been delivered to
the Registrar of Companies. The auditor has reported on those
accounts, their opinion was unqualified, did not draw attention to
any matters by way of emphasis and did not contain any statement
under section 498(2) or (3) of the Companies Act 2006.
Further copies of the interim financial statements are available
from the Company's registered office, 330 Cambridge Science Park,
Milton Road, Cambridge CB4 0FL, and can be accessed on the Abcam
plc investor relations website, www.abcamplc.com.
2. Basis of preparation
The condensed set of financial statements for the six months
ended 31 December 2017 included in this interim financial report
has been prepared in accordance with IAS 34 'Interim Financial
Reporting' (IAS 34) as adopted by the European Union and has been
prepared on a going concern basis as described further below.
a Accounting policies
The accounting policies adopted in the preparation of the
condensed consolidated interim financial information are those as
set out in the Group's financial statements for the year ended 30
June 2017. In addition, tax on income in the interim period is
calculated as described in note 5.
New accounting standards and interpretations
New accounting standards, amendments to standards and IFRIC
interpretations which became applicable during the period were
either not relevant or had no impact on the Group's net results or
net assets.
b Going concern
The directors have prepared the interim financial information on
a going concern basis. In considering the going concern basis, the
directors have considered the principal risks and uncertainties set
out at the end of this report. The Group's forecasts and
projections, taking account of reasonably possible changes in
trading performance, support the conclusion that there is a
reasonable expectation that the Company and the Group have adequate
resources to continue in operational existence for the foreseeable
future and a period of not less than twelve months from the date of
this report. Accordingly, the going concern basis has been adopted
in preparing the interim financial report.
c Adjusted financial measures
Adjusted financial measures are used by management in its review
of the business and exclude certain cash and non-cash items which
management believes are not reflective of the normal course of
business of the Group. Management believe that disclosing such
non-IFRS measures enables a reader to isolate and evaluate the
impact of such items on results and allows for fuller understanding
of performance from year to year. A detailed reconciliation between
reported and adjusted measures is presented in note 4.
3. Operating segments
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 Operating Segments, which is 'sales of antibodies and
related products'. The Group's revenue 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
contributes more than 10% of its revenues.
For the six-month period ended 31 December 2017
4. Consolidated adjusted financial measures
The calculation of the Group's key adjusted measures is
presented below:
(Unaudited) (Unaudited)
six months ended 31 Dec 2017 six months ended 31 Dec 2016
------------------------------------- ----- ----------------------------------- -----------------------------------
Adjusted Adjusting items Total Adjusted Adjusting items Total
Note GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------- ----- --------- ---------------- ------ --------- ---------------- ------
EBITDA(1) 42.7 (3.7) 39.0 35.9 (0.4) 35.5
Margin% 38.0% 34.7% 35.1% 34.5%
Depreciation and amortisation (3.5) (2.8) (6.3) (3.9) (3.3) (7.2)
------------------------------------- ----- --------- ---------------- ------ --------- ---------------- ------
Operating profit 39.2 (6.5) 32.7 32.0 (3.7) 28.3
Margin% 34.8% 29.1% 31.2% 27.6%
Finance income 0.1 - 0.1 0.1 - 0.1
Finance costs - - - - (3.3) (3.3)
------------------------------------- ----- --------- ---------------- ------ --------- ---------------- ------
Profit before tax 39.3 (6.5) 32.8 32.1 (7.0) 25.1
Margin% 34.9% 29.2% 31.4% 24.5%
Tax 5 (7.4) 6.9 (0.5) (5.9) 0.6 (5.3)
------------------------------------- ----- --------- ---------------- ------ --------- ---------------- ------
Profit for the period attributable
to owners of the parent 31.9 0.4 32.3 26.2 (6.4) 19.8
------------------------------------- ----- --------- ---------------- ------ --------- ---------------- ------
(1 EBITDA = Earnings before interest, tax, depreciation and
amortisation)
(Unaudited) (Unaudited)
six months ended 31 Dec 2017 six months ended 31 Dec 2016
GBPm GBPm
--------------------------------------------------- ------------------------------ ------------------------------
Analysis of adjusting items
Affecting operating profit
System and process improvement costs - Other (3.7) (1.5)
Contingent consideration fair value adjustment - 1.0
Acquisition costs - 0.1
Amortisation of acquisition related intangible
assets (2.8) (3.0)
System and process improvement costs - Impairment - (0.3)
(6.5) (3.7)
Affecting finance costs
Unwinding of discount factor on contingent
consideration and fees - (3.3)
(6.5) (7.0)
Affecting tax
Tax effect of adjusting items 1.4 0.6
One-off tax arising from new US tax legislation 5.5 -
Total adjusting items 0.4 (6.4)
---------------------------------------------------- ------------------------------ ------------------------------
For the six-month period ended 31 December 2017
5. Income tax
The major components of the income tax expense in the income
statement are as follows:
(Unaudited) (Unaudited)
six months six months
ended ended
31 Dec 2017 31 Dec 2016
GBPm GBPm
-------------- ------------- -------------
Current tax 7.0 5.9
Deferred tax (6.5) (0.6)
-------------- ------------- -------------
0.5 5.3
-------------- ------------- -------------
The UK corporation tax rate for the six months ended 31 December
2017 was 19.0% (six months ended 31 December 2016: 20.0%).
Effective tax rates represent management's best estimate of the
average annual effective tax rate on reported or adjusted profits
with these rates being applied to half year results.
An effective rate of 1.5% is recorded in the half year results
and is due mainly to one-off impacts of the US reform (in
particular the revaluation of deferred tax balances as set out in
note 4, which have been recognised in the period in order to
reflect the period in which the rate change was enacted) and which
fall discretely into the half year results.
The effective rate of tax on reported profits for the full year
ending 30 June 2018 is approximately 12%, again affected mainly by
the one-off impacts of the US tax reforms (year ended 30 June 2017
18.3%).
The effective rate on adjusted half year profits (which also
excludes the one-off items in respect of US tax reform) is 18.8%
and for the full year ending 30 June 2018 is approximately 19%
(year ended 30 June 2017: 19.5%).
6. Earnings per share
The calculation of earnings per ordinary share (EPS) and
adjusted earnings per ordinary share (adjusted EPS) are based on
profit after tax, and adjusted profit after tax, attributable to
owners of the parent and the weighted number of shares in issue
during the six-month period.
Adjusted EPS figures have been calculated based on earnings
before adjusting items which are considered significant in nature
or value and which are described in note 4.
(Unaudited) (Unaudited)
six months six months
ended ended
31 Dec 2017 31 Dec 2016
GBPm GBPm
---------------------------------------------------------------------------- ------------- -------------
Profit attributable to equity shareholders of the parent - adjusted 31.9 26.2
Adjusting items 0.4 (6.4)
---------------------------------------------------------------------------- ------------- -------------
Profit attributable to equity shareholders of the parent - total reported 32.3 19.8
---------------------------------------------------------------------------- ------------- -------------
Million Million
Weighted average number of ordinary shares in issue 204.7 203.0
Less ordinary shares held by Equiniti Share Plan Trustees Limited (0.7) (0.8)
---------------------------------------------------------------------------- ------------- -------------
Weighted average number of ordinary shares for the purposes of basic EPS 204.0 202.2
Effect of potentially dilutive ordinary shares: - share options and awards 1.6 1.6
Weighted average number of ordinary shares for the purposes of diluted EPS 205.6 203.8
---------------------------------------------------------------------------- ------------- -------------
Diluted EPS and adjusted diluted EPS are calculated by adjusting
the weighted average number of ordinary shares outstanding to
assume conversion of all potentially dilutive ordinary shares. Such
potentially dilutive ordinary shares comprise share 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 period and any unvested shares which have met, or are expected
to meet, the performance conditions at the end of the reporting
period.
(Unaudited) (Unaudited)
six months six months
ended ended
31 Dec 2017 31 Dec 2016
---------------------- ------------- -------------
Basic EPS 15.8p 9.8p
Diluted EPS 15.7p 9.7p
Adjusted basic EPS 15.6p 13.0p
Adjusted diluted EPS 15.5p 12.9p
---------------------- ------------- -------------
For the six-month period ended 31 December 2017
7. Dividends
(Unaudited) (Unaudited)
six months six months
ended ended
31 Dec 2017 31 Dec 2016
GBPm GBPm
--------------------------------------------------------------------------- ------------- -------------
Amounts recognised as distributions to equity shareholders in the period:
Final dividend for the year ended 30 June 2016 of 6.556 pence per share - 13.3
Final dividend for the year ended 30 June 2017 of 7.355 pence per share 15.1 -
Total distributions to owners of the parent in the period 15.1 13.3
--------------------------------------------------------------------------- ------------- -------------
Proposed interim dividend of 3.42 pence (2017: 2.825 pence) per share 7.0 5.8
--------------------------------------------------------------------------- ------------- -------------
The proposed interim dividend was approved by the Board on 2
March 2018 and has not been recognised as a liability as at 31
December 2017, but will be recognised in equity attributable to
owners of the parent in the year ending 30 June 2018.
8. Financial instruments and risk management
The Group's activities expose it to a variety of financial risks
that include currency risk, interest rate risk, credit risk and
liquidity risk.
The condensed interim financial statements do not include all
financial risk management information and disclosures required in
the annual financial statements; they should be read in conjunction
with the Group's financial statements as at 30 June 2017. There
have been no changes to the risk management policies since the year
ended 30 June 2017.
The table below analyses financial instruments carried at fair
value by valuation method. The different levels have been defined
as follows:
-- 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
31 December 2017 GBPm GBPm GBPm GBPm
---------------------------------- -------- -------- -------- ------
Assets
Derivative financial instruments - 2.5 - 2.5
Available for sale asset 1.1 - - 1.1
---------------------------------- -------- -------- -------- ------
Total assets 1.1 2.5 - 3.6
---------------------------------- -------- -------- -------- ------
Liabilities
Derivative financial instruments - (0.5) - (0.5)
Total liabilities - (0.5) - (0.5)
---------------------------------- -------- -------- -------- ------
Level 1 Level 2 Level 3 Total
30 June 2017 GBPm GBPm GBPm GBPm
---------------------------------- -------- -------- -------- ------
Assets
Derivative financial instruments - 1.5 - 1.5
Available-for-sale asset 1.0 - - 1.0
---------------------------------- -------- -------- -------- ------
Total assets 1.0 1.5 - 2.5
---------------------------------- -------- -------- -------- ------
Liabilities
Derivative financial instruments - (2.2) - (2.2)
Total liabilities - (2.2) - (2.2)
---------------------------------- -------- -------- -------- ------
For the six-month period ended 31 December 2017
8. Financial instruments and risk management continued
There were no transfers between levels during the period.
The Group's Level 2 financial instruments consist of forward
foreign exchange contracts fair valued using forward exchange rates
that are quoted in an active market.
The Group continues to generate significant amounts of US
Dollars, Euros, Japanese Yen and Chinese Yuan in excess of payments
in these currencies and has hedging arrangements in place to reduce
its exposure to currency fluctuations.
The following table details the forward exchange contracts
outstanding as at the period end:
US Dollars Euros Japanese Yen Chinese Yuan
--------------------- --------------- ----------------- --------------------- -----------------
Sell Average Sell Average Average Sell Average
Maturing in $'m rate EUR'm rate Sell Yen'm rate Yen'm rate
--------------------- ----- -------- ------- -------- ----------- -------- ------- --------
Period ending 30
June 2018 16.7 1.28 20.8 1.14 981 138.6 26.7 8.95
Year ending 30 June
2019 18.8 1.32 28.5 1.11 1,167 144.3 - -
--------------------- ----- -------- ------- -------- ----------- -------- ------- --------
9. Capital commitments
As at 31 December 2017, the Group had commitments of GBP6.8m (31
December 2016: GBP0.1m) relating to the acquisition of property,
plant and equipment and intangible assets, most of which relates to
the construction of the Group's new global headquarters at the
Cambridge Biomedical campus.
10. Related party transactions
During the period, the Group made purchases of GBP0.1m (six
months ended 31 December 2016: GBP0.1m) and sales of less than
GBP0.1m (six months ended 31 December 2016: less than GBP0.1m) from
companies of which Jonathan Milner is either a director or
significant investor. The majority of transactions were with
Horizon Discovery Group Plc, of which Jonathan Milner is a
non-executive director.
11. Post balance sheet events
On 22 January 2018, the Group announced that it had entered into
a definitive license agreement with Roche for consideration of
$17.6m (approximately GBP13.0m).
Under the terms of the agreement, the Group will obtain the
exclusive rights to the product portfolio of Spring Bioscience
Corporation ("Spring"), in the research use only (RUO) field of
use, as well as the exclusive RUO rights for all future products
developed by Spring, that Roche requests to be commercialised in
the RUO field of use for an initial period of 10 years. As part of
the agreement existing amounts of inventory will also transfer to
the Group.
Risks and uncertainties
The principal risks and uncertainties which the Group faces in
the undertaking of its day-to-day operations and in pursuit of its
longer-term objectives are set out in the Annual Report and
Accounts 2017 on pages 15 to 19 and in note 4 to the consolidated
financial statements. Information on financial risk management is
set out on pages 87 to 91. A copy of the Annual Report and Accounts
is available on the Group's website
www.abcamplc.com/investors/reports-presentations/.
The principal risks and risk profile of the Group have not
changed over the interim period and are not expected to change over
the next six months. As noted in the Annual Report and Accounts
2017, the Group continues to monitor developments in respect of
Brexit and the consequences of how these might affect the
business.
The principal risks remain as:
Principal risk Causes and impacts
----------------------------------------------------- ---------------------------------------------------------------
Inadequate integration or leverage of acquired
businesses * If Abcam does not integrate acquisitions in an
efficient and timely manner, this could affect
existing operations.
* If Abcam does not leverage acquired businesses
effectively post-acquisition, this could reduce the
return on investment.
----------------------------------------------------- ---------------------------------------------------------------
Increased competition
* Strengthening of Abcam's competitors or the
introduction of new technologies or workarounds could
affect demand for Abcam products.
----------------------------------------------------- ---------------------------------------------------------------
Identification, valuation and pursuit of
acquisitions and investments * Unidentified risks in acquired businesses could
reduce the return on investment.
* Abcam may miss opportunities to acquire businesses
which could have added value.
Reputational risk
* Not meeting Abcam's own high standards of quality and
ethical business practice could affect reputation and
brand.
Cyber security risks including loss of data and
website inaccessibility * A security breach of internal systems by a third
party could affect operations, reputation or
financial performance.
Loss of output at any Group manufacturing or
logistics facility * An environmental or health and safety issue at a key
facility, or interruption in service from key
suppliers could disrupt operations.
Business growth is constrained by not having
appropriate people, resources and infrastructure * Lack of adequate facilities and infrastructure, or
in place failure to retain key personnel and attract high
calibre staff could impact Abcam's ability to grow.
ERP project/IT infrastructure
* A significant delay in delivery of Abcam's ERP
project could lead to additional direct and indirect
costs.
* Difficulties in transition to the new system may slow
down operations.
Significant exchange rate movements
* Unfavorable foreign exchange movements could affect
profitability and ability to meet financial targets.
----------------------------------------------------- ---------------------------------------------------------------
Availability of research funding
* A substantial reduction in funding for life sciences
research in a significant territory could affect
demand for Abcam products.
----------------------------------------------------- ---------------------------------------------------------------
Non-compliance with laws and regulations
* Not fully evaluating and complying with legislation
in the markets and countries in which Abcam operates
could lead to fines or reputational damage.
----------------------------------------------------- ---------------------------------------------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR DMGGFDDNGRZM
(END) Dow Jones Newswires
March 05, 2018 02:00 ET (07:00 GMT)
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