TIDMABC
RNS Number : 5106R
ABCAM PLC
08 March 2021
ABCAM PLC
Interim results
8.3% constant currency revenue growth in H1 as customers
gradually return to labs
8 March 2021, Cambridge, UK - Abcam plc (Nasdaq: ABCM; AIM: ABC)
("Abcam", the "Group" or the "Company"), a global leader in the
supply of life science research tools, today announces its interim
results for the six month period ended 31 December 2020 ("H1
2021").
SUMMARY PERFORMANCE
Reported Adjusted(1)
----------------------------------------- ================ ================
H1 2021 H1 2020 H1 2021 H1 2020
GBPm GBPm GBPm GBPm
========================================= ======= ======= ======= =======
Revenue 147.5 138.2 147.5 138.2
Gross profit margin, % 70.9% 69.7% 70.9% 69.7%
Operating profit 15.5 26.6 23.6 33.4
Profit Before Tax (PBT) 13.8 26.0 21.9 32.8
Diluted earnings per share (EPS) (pence) 5.3p 12.6p 8.1p 13.0p
Net Cash* 211.9 88.5 211.9 88.5
----------------------------------------- ------- ------- ------- -------
* Net Cash comprises cash and cash equivalents less
borrowings.
FINANCIAL HIGHLIGHTS
-- Total revenue growth of 6.7% on a reported basis and 8.3% at
Constant Exchange Rates (CER)(1)
-- Catalogue revenue of GBP139.0m, growth of 7.8% at CER
-- Custom Products & Licensing (CP&L) revenue of GBP8.5m, growth of 15.9% at CER
-- Total in-house product revenue growth of 24.5% at CER
(includes CP&L) (H1 2020: 11.3%)
-- Gross margin increased 120 basis points, benefiting from the
contribution of higher margin in-house products
-- Operating profit of GBP15.5m (H1 2020: GBP26.6m) and
adjusted(1) operating profit of GBP23.6m (H1 2020: GBP33.4m),
equating to an adjusted operating margin of 16.0% (H1 2020: 24.2%)
reflecting planned investments to support the Group's long-term
growth strategy, as well as the impact of COVID-19
-- Reported diluted EPS of 5.3p (H1 2020: 12.6p) and adjusted(1)
diluted EPS of 8.1p (H1 2020: 13.0p) reflecting the decrease in
operating profit and increase in the number of ordinary shares in
issue
-- Net cash inflow from operating activities of GBP33.9m (H1
2020: GBP39.6m), ending the period with a net cash position of
GBP211.9m (H1 2020: GBP88.5m)
STRATEGIC & OPERATIONAL HIGHLIGHTS
-- Customers gradually returned to labs in H1, although
according to industry research, almost 60% of life science labs
were still operating below normal capacity through December
2020
-- Improved customer engagement levels, reflecting our ongoing
focus on supporting customers through the pandemic
-- Average customer transactional Net Promotor Score (tNPS) in
the first six months of +59, up 7% pts year-on-year
-- Employee engagement remains high as we continue to support
the health and wellbeing of our teams
-- Externally recognized by Glassdoor, the employer review
website, as the 3rd best place to work in the UK in 2020 and the
2nd highest rated CEO of a UK business during the pandemic
-- Delivered operational progress across all areas of our
strategic growth plan, including:
-- Innovated and published over 2,500 new in-house recombinant
antibody products and expanded our in-house conjugation,
recombinant proteins and engineered cell line ranges
-- New in-house product introductions significantly up on H1
2020, although certain product development pipelines have slowed
due to reduced lab capacity across our global facilities resulting
from COVID-19 restrictions
-- In-house product contribution increased to approximately 53%
of catalogue revenue (H1 2020: 45%) and 55% of total revenue
(including CP&L) (H1 2020: 48%)
-- Initiated over 40 partnership agreements with biopharma and
diagnostic organizations, with the number of commercialized
antibodies rising to over 560 (FY2020: 479)
-- Further progressed our multi-year program to upgrade the
Group's digital and physical infrastructure
-- Continued to generate value from recent acquisitions, with
overall sales ahead of expectations
-- Completed secondary US listing on Nasdaq (in addition to the
current listing on AIM in the UK), raising net proceeds of
GBP126.5m
-- Published first ESG Impact Report in November 2020, setting
out our sustainability framework
-- Post period end, appointed Bessie Lee and Mark Capone as
Non-Executive Directors to the Board
CHANGE OF FISCAL YEAR
Before the end of this fiscal year, the Board intends to change
the Company's accounting reference date (fiscal year end). The
Board has undertaken a review of the appropriate year end for the
Company and has decided that this year would be the right time to
move the fiscal year end from 30 June to 31 December.
Following this change, the Company's near-term reporting
calendar will be as follows:
-- Unaudited results for the six- and twelve-month periods to 30
June 2021 to be announced in September 2021
-- Audited results for the twelve and 18-month periods to 31
December 2021 to be announced in March 2022
-- Publication of the 2021 annual report and accounts expected
before the end of April 2022
Furthermore, assuming the change in accounting reference date is
implemented as expected, the Company plans to hold future AGMs in
the second calendar quarter of each year, and will hold a general
meeting in the summer to review necessary authorities that would
otherwise expire before the next AGM.
COVID-19 UPDATE AND IMPLICATIONS FOR LONG-TERM GROWTH OUTLOOK TO
2024
-- Fundamental drivers of the life science research market
remain attractive with stable public funding and an increasing
emphasis on proteomics and clinically relevant biologics
-- Implementation of Abcam's strategy remains within the Board's
expectations of timing, costs, and milestones. We remain confident
in realizing growth from these investments and generating an
attractive return on capital employed as we gain operational
leverage, normalize capital investment, and generate more of our
own product at higher gross margins
-- COVID-19 pandemic controls continue to constrain researcher
access to approximately 50% of labs globally. These constraints are
limiting scientific discovery capacity and we observe demand in
those labs well below historic levels
-- With over 15 months of operational experience through the
pandemic, we remain cautious in our assessment of when laboratory
activity and demand will return to full strength
-- We are updating our long-term outlook to reflect a broader
range of potential outcomes than originally outlined in November
2019, with a range of revenue outcomes for the end of calendar 2024
of GBP425 - 500m (at current exchange rates)
-- We expect to provide further information when laboratory
activity and demand return to normal levels
Commenting on the first half performance, Alan Hirzel, Abcam's
Chief Executive Officer, said:
"We delivered over 8% revenue growth at constant exchange rates
in the first half year as we started to see more activity in our
customers' labs. Whilst we haven't yet observed a return to normal
demand, we are encouraged by the 25% growth in our in-house
products and the long-term outlook for Abcam. We remain confident
in our growth strategy and are committed to investing in innovation
and building an increasingly strong and sustainable global
business."
Analyst and investor meeting and webcast:
Abcam will host a conference call and webcast for analysts and
investors today at 14:00 GMT/ 09:00 EST. For details, and to
register, please visit
corporate.abcam.com/investors/reports-presentations
For further details please contact FTI Consulting at
abcam@fticonsulting.com
A recording of the webcast will be made available on Abcam's
website, corporate.abcam.com/investors
Notes :
1. These interim results include discussion of alternative
performance measures which include revenues calculated at Constant
Exchange Rates (CER) and adjusted financial measures. CER results
are calculated by applying prior period's actual exchange rates to
this period's results. Adjusted financial measures are explained in
note 2(c) and reconciled to the most directly comparable measure
prepared in accordance with IFRS in note 4 to the interim financial
statements.
2. Further detail on the Group's financial performance is set
out in the interim financial statements and notes thereto.
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
For further information please contact:
Abcam + 44 (0) 1223 696 000
Alan Hirzel, Chief Executive Officer
Michael Baldock, Chief Financial Officer
James Staveley, Vice President, Investor Relations
Numis - Nominated Advisor & Joint Corporate Broker + 44 (0) 20 7260 1000
Garry Levin / Freddie Barnfield / Duncan Monteith
J.P. Morgan Cazenove - Joint Corporate Broker + 44 (0) 20 7742 4000
James Mitford / Hemant Kapoor
Morgan Stanley - Joint Corporate Broker + 44 (0) 207 425 8000
Tom Perry / Luka Kezic
FTI Consulting + 44 (0) 20 3727 1000
Ben Atwell / Natalie Garland-Collins
This announcement shall not constitute an offer to sell or
solicitation of an offer to buy any securities.
This announcement is not an offer of securities for sale in the
United States, and the securities referred to herein may not be
offered or sold in the United States absent registration except
pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the U.S. Securities Act of 1933,
as amended. Any public offering of such securities to be made in
the United States will be made by means of a prospectus that may be
obtained from the issuer, which would contain detailed information
about the company and management, as well as financial
statements.
Forward Looking Statements
This announcement contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Any express or implied statements contained in this announcement
that are not statements of historical fact may be deemed to be
forward-looking statements, including, without limitation
statements of targets, plans, objectives or goals for future
operations, including those related to Abcam's products, product
research, product development, product introductions and sales
forecasts; statements containing projections of or targets for
revenues, costs, income (or loss), earnings per share, capital
expenditures, dividends, capital structure, net financials and
other financial measures; statements regarding future economic and
financial performance; statements regarding the scheduling and
holding of general meetings and AGMs; statements regarding the
assumptions underlying or relating to such statements; statements
about Abcam's portfolio and ambitions, as well as statements that
include the words "expect," "intend," "plan," "believe," "project,"
"forecast," "estimate," "may," "should," "anticipate" and similar
statements of a future or forward-looking nature. Forward-looking
statements are neither promises nor guarantees, but involve known
and unknown risks and uncertainties that could cause actual results
to differ materially from those projected, including, without
limitation: a regional or global health pandemic, including the
novel coronavirus ("COVID-19"), which has adversely affected
elements of our business, could severely affect our business,
including due to impacts on our operations and supply chains;
challenges in implementing our strategies for revenue growth in
light of competitive challenges; developing new products and
enhancing existing products, adapting to significant technological
change and responding to the introduction of new products by
competitors to remain competitive; failing to successfully identify
or integrate acquired businesses or assets into our operations or
fully recognize the anticipated benefits of businesses or assets
that we acquire; if our customers discontinue or spend less on
research, development, production or other scientific endeavors;
failing to successfully use, access and maintain information
systems and implement new systems to handle our changing needs;
cyber security risks and any failure to maintain the
confidentiality, integrity and availability of our computer
hardware, software and internet applications and related tools and
functions; failing to successfully manage our current and potential
future growth; any significant interruptions in our operations; if
our products fail to satisfy applicable quality criteria,
specifications and performance standards; failing to maintain our
brand and reputation; our dependence upon management and highly
skilled employees and our ability to attract and retain these
highly skilled employees; and the important factors discussed under
the caption "Risk Factors" in Abcam's prospectus pursuant to Rule
424(b) filed with the U.S. Securities and Exchange Commission
("SEC") on 22 October 2020, which is on file with the SEC and is
available on the SEC website at www.sec.gov, as such factors may be
updated from time to time in Abcam's other filings with the SEC.
Any forward-looking statements contained in this announcement speak
only as of the date hereof and accordingly undue reliance should
not be placed on such statements. Abcam disclaims any obligation or
undertaking to update or revise any forward-looking statements
contained in this announcement, whether as a result of new
information, future events or otherwise, other than to the extent
required by applicable law.
Interim management report
Introduction
Since the arrival of COVID-19 over a year ago, our priorities
haven't changed: protect and support our teams; deliver for
customers and support the global scientific effort to understand,
diagnose, prevent, and treat the disease.
Against the backdrop of the pandemic and a market environment
where demand remained well below normal levels, we were pleased to
see the level of growth in the first half, particularly as, due to
ongoing efforts to raise quality standards, we delisted third-party
products which had contributed approximately GBP4m in revenues in
the first half of fiscal 2020. We were also pleased to see the
positive impact of our focus on customers, with customer
transactional Net Promotor Score (tNPS), a strategic performance
indicator of the business, up seven percentage points year-on-year,
to +59 (H1 2020: +52) and customer product satisfaction rates at
all-time highs.
Our core reagents business delivered a solid performance as we
continue to focus on providing an increasing range of products to
biological pathways of the greatest interest to research and
clinical communities. Customer demand for our in-house products was
particularly strong, with constant currency sales growth of
approximately 25% as scientists sought to maximise efficiency in
the lab with high quality and time-saving products including highly
validated recombinant antibodies and immunoassays. Our global
research and development (R&D) activity continues to focus on
driving standards in quality and validation. This differentiates
our products, aligns us with the needs of our customers and allows
us to deliver on our purpose of serving life scientists to achieve
their mission faster.
Our more than 1,600 dedicated colleagues around the world have
continued to look out for and support each other through what
continues to be a challenging period. Our internal employee
engagement data, which we undertake on a regular basis, remains at
multi-year highs and we were delighted to be externally recognized
by Glassdoor as the third highest employee rated employer in the
UK.
In line with our plans, we continued to invest in our innovation
capabilities, systems and processes, facilities, and people during
the half, remaining focused on ensuring these investments support
our long-term growth aspirations. Underpinning our continued
progress is our solid financial position, which was further
strengthened by our US listing and equity raise on Nasdaq in
October 2020, where we raised net proceeds of GBP126.5m, providing
the foundation to further grow the business organically and through
further transactions.
Strategic performance indicators
Alongside a return to revenue growth, performance against our
strategic measures was positive in the period.
Strategic Performance Indicator H1 2021 Result
====================================================== ========================
Catalogue revenue growth from in-house products (CER) +25.6% (H1 2020: +13.8%)
Customer transactional Net Promoter Score (tNPS) +59 (H1 2020: +52)
====================================================== ========================
Executing our long-term growth strategy to 2024
We aim to deliver consistent, durable growth and performance in
a responsible way, with our activities guided by three goals:
1. Sustain and extend antibody and digital leadership
2. Drive continued expansion into complementary market
adjacencies
3. Build organisational scalability and sustain value
creation
We made progress across each of these areas in the first half,
strengthening our position as the partner of choice for our
customers and partners.
Highlights for each are discussed below.
Sustaining and extending antibody and digital leadership
We developed and introduced more than 2,500 new recombinant
antibody products during the first half. Product development
continues to focus on major research areas including
immuno-oncology, neuroscience and epigenetics, as well as products
to support SARS-CoV-2 research. Products included recombinant
RabMAb antibodies, antibody pairs, SimpleStep ELISA kits and new
formulations that enable faster labelling and assay development.
This was significantly more new product introductions in the first
half than during the same period in FY2020, although certain
product development pipelines have slowed due to our own need to
reduce lab capacity across our global facilities as a result of
COVID-19 restrictions. Overall, our portfolio of recombinant
antibody and immunoassay products exceeded 24,000 in the half, with
revenue from these product categories growing by over 30%
(CER).
Our work to improve product quality also continued. Our award
winning CRISPR gene knockout validation program grew to over 3,500
products, and we validated hundreds of antibodies in new
applications to extend their utility for customers. Edigene's cell
line portfolio and Applied Stem Cell's gene-editing platform, both
acquired in FY2020, continue to support these programs and are
leading to higher throughput antibody selection and stronger
validation.
These and other quality initiatives, including the ongoing
removal of products that do not meet our standards, led to the
Group achieving its highest ever product satisfaction rates for
both in-house and third-party products.
Alongside product innovation, we continue to make enhancements
to our digital marketing and eCommerce sites. Our multi-year plans
to upgrade our digital platform achieved notable milestones in the
first half, with the opening of a new digital hub in Amsterdam and
the commencement of beta-testing of the new platform.
Expanding into adjacent markets
New product lines
We made further progress across each of our focus areas in the
half, including conjugation and labelling, recombinant proteins,
cell lines and lysates, and imaging and multiplexing
consumables.
Our conjugation and labelling business - significantly expanded
through the acquisition of Expedeon last year - is allowing us to
serve the growing need for antibody conjugation and multiplexing
solutions, and continues to perform ahead of plan. We also made
further operational and commercial progress with our FirePlex(R)
multiplex offering, with the addition of several new biopharma
customers and a new high-throughput 1,536 well-plate product
launched in January 2021.
We completed the build out of our protein development team
during the half and are seeing early customer interest in our
initial cohort of high-quality, bioactive proteins. Our operational
capacity for protein development will be further expanded later
this calendar year, with the opening of our Waltham, MA
facility.
We achieved several milestones in our cell lines business,
including opening a new R&D facility in Fremont, California;
publishing the Edigene portfolio acquired in FY2020; and
introducing our first batch of in-house developed cell lines. Early
customer demand for these products is encouraging and includes the
extension of our partnership with the Michael J Fox Foundation to
include knock-out and knock-in cell line development for
Parkinson's research.
Partnering with biopharma and 'Abcam Inside'
Across the translational research and clinical markets, our goal
is to be a trusted partner to organisations looking to access our
antibodies and antibody expertise for their platforms and clinical
development programs.
This area of our business continues to develop rapidly and
generate strong interest from customers, benefiting from the
investments we have made in our innovation capabilities, business
development and commercial teams over the last few years.
We entered into over 40 new agreements during the first half
with new and existing partners, and commercialized almost 100
additional clones through co-development programs, spanning
platform, diagnostic and pathology partners. In all, over 560 of
our antibodies are now validated for commercial use on third-party
platforms or as diagnostic tools, with over 2,000 more undergoing
evaluation by partners.
These programs are enabling more scientists to access our
products whilst also supporting clinical developments that will
result in better diagnosis and treatment for patients.
Building organisational scalability and sustaining value
creation
We continue to invest in our business and build scalability into
our operational infrastructure including our talent and team
capabilities, our manufacturing and logistics footprint, and our IT
backbone and digital capabilities to allow us to deliver on our
growth plans, increase efficiency and sustain value creation.
We continue to benefit from the ERP modules deployed to date,
including finance, HR, customer experience and non-stock
procurement. Preparations for the deployment of the final stage of
our ERP, covering manufacturing and supply chain, remain on track
as we moved from the design phase to user testing during the
period.
We have further invested in building our global footprint. In
December 2020, we opened a 16,000 sq. ft. state-of-the-art facility
in Fremont, CA to support cell line development and production.
Other footprint developments underway include the construction of a
new 100,000 sq. ft site in Waltham, MA and upgrades and expansions
across our operations in California, Oregon and China. Despite
disruption caused by COVID-19, our plans remain on track to
complete these enhancements during calendar 2021.
We have also continued to make process improvements across our
global supply chain, which, together with the automation of manual
systems across customer operations, procurement and finance is
helping to address constraints, increase product availability,
generate efficiencies, and improve customer support levels.
Finally, we remain active in our pursuit of strategic
acquisitions that will strengthen our competitive position in our
core markets and support our expansion into adjacencies.
Financial Performance
Revenue
Total revenue for the first half was GBP147.5m (H1 2020:
GBP138.2m), representing growth of 6.7% on a reported basis and
8.3% on a constant currency basis. Growth was driven by demand for
in-house developed products, with total in-house revenue growth of
24.5% (CER) (including CP&L revenue) to GBP81.8m (H1 2020:
GBP66.7m), representing 55.5% of total revenue (H1 2020:
48.3%).
On a constant currency basis, catalogue revenue, representing
94% of the total, grew 7.8% in the half whilst Custom Products
& Licensing ('CP&L') revenue grew 15.9%. Catalogue revenue
grew mid-single- to double-digits in all regions other than the
Americas, where customer laboratory activity has continued to be
constrained due to COVID-19.
Within CP&L, strong growth in revenue from the supply of
products for IVD use, where the Group had experienced delays to
certain customer orders in FY2020, as well as growth in income from
Royalties and Licenses was partially offset by a decline in revenue
from custom projects, which experienced lower customer activity in
the period due to COVID-19.
Reported revenue
-------------------------
H1 2021 H1 2020
-------------- ---------
H1 2021
GBP'm GBP'm Change in reported revenue CER growth % split
-------------- --------- -----------
Catalogue revenue by region:
The Americas 51.2 52.7 (2.8%) 0.8% 37 %
EMEA 39.2 34.4 14.0% 12.4% 28%
China 27.3 23.7 15.2% 15.1% 20%
Japan 9.9 9.4 5.3% 6.4% 7 %
Rest of Asia Pacific 11.4 10.4 9.6% 12.8% 8%
------------------------------ -------------- --------- -------------------------- ----------- ------------
Catalogue revenue sub-total 139.0 130.6 6.4% 7.8% 100 %
------------------------------ -------------- --------- -------------------------- ----------- ------------
Custom products and services 2.7 3.3 (18.2%) (16.7%) 32%
IVD 2.6 1.4 85.7% 94.2% 31%
Royalties and licenses 3.2 2.9 10.3% 15.6% 37%
------------------------------ -------------- --------- -------------------------- ----------- ------------
Custom Products & Licensing
sub-total 8.5 7.6 11.8% 15.9% 100%
------------------------------ -------------- --------- -------------------------- ----------- ------------
Total reported revenue 147.5 138.2 6.7% 8.3%
------------------------------ -------------- --------- -------------------------- ----------- ------------
Catalogue revenue by product
type:
In-house products 73.3 59.1 24.0% 25.6% 53%
-------------- --------- -------------------------- ----------- ------------
Third-party products 65.7 71.5 (8.1%) (7.0%) 47%
------------------------------ -------------- --------- -------------------------- ----------- ------------
Catalogue revenue sub-total 139.0 130.6 6.4% 7.8% 100%
------------------------------ -------------- --------- -------------------------- ----------- ------------
Gross margin
Gross margin for the first half was 70.9%, 120 basis points
higher than the same period in the prior year (H1 2020: 69.7%)
predominantly benefitting from product mix, with a higher
percentage of Catalogue revenue generated from in-house
products.
Operating Costs and Expenses
Reported Adjusted*
================ ================
H1 2021 H1 2020 H1 2021 H1 2020
GBPm GBPm GBPm GBPm
============================================= ======= ======= ======= =======
Selling, general & administrative expenses
(SG&A) 75.4 60.7 70.5 56.1
Research and development expenses (R&D) 13.7 9.0 10.5 6.8
--------------------------------------------- ------- ------- ------- -------
Total operating costs and expenses 89.1 69.7 81.0 62.9
Non-cash costs
Depreciation and amortisation (16.0) (13.2) (11.0) (9.8)
Share-based compensation (7.3) (5.0) (7.3) (5.0)
--------------------------------------------- ------- ------- ------- -------
Total operating costs and expenses excluding
non-cash costs 65.8 51.5 62.7 48.1
--------------------------------------------- ------- ------- ------- -------
* Details of items excluded from reported costs and expenses are
provided in Adjusting Items below and in note 4 of the interim
financial statements.
On a reported basis, after the impact of the year-on-year
movement in exchange rates, total operating costs and expenses
increased by GBP19.4m or 27.8%, to GBP89.1m (H1 2020: GBP69.7m)
reflecting greater business activity and planned investments made
during the period, predominantly in innovation and our global team.
On an adjusted basis, costs and expenses increased GBP18.1m to
GBP81.0m (H1 2020: GBP62.9m).
Excluding non-cash costs, comprising depreciation and
amortisation and share-based compensation, total reported costs
increased by 27.8% to GBP65.8m.
On a reported basis, SG&A expenses rose GBP14.7m or 24.2% to
GBP75.4m (H1 2020: GBP60.7m) and R&D expenditure, which relates
to the development of new products, as well as costs incurred in
identifying and implementing production process improvements,
increased by GBP4.7m or 52.2%, to GBP13.7m net of an R&D tax
credit of GBP0.6m (H1 2020: GBP0.9m).
Increases in reported costs include the following key items:
- A GBP16.9m increase in salaries and salary-related costs,
predominantly due to increased headcount as well as increased
untaken vacation accrual which arises from the impact of COVID-19.
The figure also includes an increase in share-based compensation
costs of GBP2.3m;
- An increase of GBP2.2m in general administrative costs, to
GBP8.8m which includes an incremental additional GBP0.8m in respect
of insurance costs arising from the Nasdaq listing. The incremental
insurance charge for H2 is expected to be GBP2.0m;
- An increase in depreciation and amortisation charges of
GBP2.8m, to GBP16.0m. This includes a GBP1.0m increase in
amortisation of acquired intangibles (included within adjusting
items) reflecting the intangible assets acquired with Expedeon in
H1 2020, offset by reduced amortisation following the impairment of
intangible assets relating to AxioMx in Vitro monoclonal antibody
production technology in H2 2020. There was also a GBP0.8m increase
of depreciation on leased assets, following the upgrades and
expansion of our geographic footprint; and
- A total increase of GBP0.6m across other costs including
integration and reorganisation costs and acquisition costs to
GBP1.9m (H1 2020: GBP1.3m), which are treated as adjusting
items.
Adjusting Items
Total reported expenses of GBP89.1m for the half includes
GBP8.1m (H1 2020: GBP6.8m) of costs which are excluded from
adjusted expenses. These costs comprise:
-- GBP1.8m relating to the Oracle Cloud ERP project (H1 2020: GBP2.1m)
-- GBP1.9m of integration and reorganisation charges (H1 2020: nil); and
-- GBP4.4m relating to the amortisation of acquired intangibles (H1 2020: GBP3.4m)
Costs relating to the Oracle Cloud ERP project and amortisation
of acquired intangibles are expected to remain at a similar level
in the second half of the year. The Group also expects to incur
further reorganisation costs associated with the upgrades and
expansion of the Group's geographic footprint in the second half.
Note 4 to the interim financial statements sets out a
reconciliation between reported and adjusted profit measures.
Earnings, Interest and Tax
Reported operating profit for the period was GBP15.5m (H1 2020:
GBP26.6m). Adjusted operating profit was GBP23.6m (H1 2020:
GBP33.4m), representing an adjusted operating profit margin of
16.0% (H1 2020: 24.2%) reflecting planned investment, the impact of
COVID-19, and the step up in non-cash items including depreciation
and amortisation and share-based payments.
After net finance costs of GBP1.7m (H1 2020: GBP0.6m), profit
before tax on a reported basis was GBP13.8m (H1 2020:
GBP26.0m).
The Group reported tax of GBP2.1m (H1 2020: credit GBP0.1m),
equating to an effective rate on reported profits for the first
half of 15.2% (H1 2020: -0.4%). Tax on adjusting items totalled
GBP1.8m, resulting in an effective tax rate on adjusted profits of
17.8% (H1 2020: 17.7%). The Group continues to expect that its
effective tax will remain around 18% in the near term, although the
recently announced proposed increase of the UK corporation tax rate
to 25%, commencing 1 April 2023, will impact this. The Group's
effective tax rate remains subject to further changes to the UK
corporate tax rate, as well as any changes that may occur in other
jurisdictions in which the Group operates.
The weighted average number of basic ordinary shares in issue
increased by 14.3m in comparison to H1 2020, to 219.6m shares,
predominantly due to the placing of new shares in April 2020 and
October 2020. Accordingly, basic earnings per share (EPS) for the
year was 5.3p (H1 2020: 12.7p), with adjusted basic EPS of 8.2p (H1
2020: 13.2p). Diluted EPS was 5.3p (H1 2020: 12.6p) and adjusted
diluted EPS was 8.1p (H1 2020: 13.0p).
Note 6 sets out a reconciliation between reported and adjusted
EPS.
Cash Flow and Net Cash
The Group remains highly cash generative at the operating level,
although the decline in operating profit meant that cash inflows
from operating activities declined to GBP33.9m (H1 2020: GBP39.6m).
After taxes paid and an increase in net capital expenditure
(including cash flows relating to committed capital expenditure),
Free Cash Flow was GBP6.6m (H1 2020: GBP20.0m).
Cash outflows on investing activities were GBP22.8m (H1 2020:
GBP18.8m), predominantly comprising capital expenditure of GBP25.1m
(H1 2020: GBP17.1m). Major areas of capital expenditure included
GBP8.5m in respect of global footprint developments (H1 2020:
GBPnil), and GBP13.6m on intangible assets (H1 2020: GBP9.2m).
Intangible assets included GBP7.2m in respect of our ERP
implementation project and GBP4.5m of internally developed
technology relating to new in-house products.
Cash inflows from financing activities totalled GBP15.0m (H1
2020: GBP83.6m). This figure was driven by the receipt of net
proceeds of GBP127.0m from issuing new shares, including the
placing of 10.3m American Depository Shares in October 2020,
partially offset by the repayment of GBP107.0m of the Group's
revolving credit facility together with other outflows of GBP5.0m
(H1 2020: GBP2.9m).
The Group ended the year with a net cash position of GBP211.9m
(H1 2020: GBP88.5m).
COVID-19 Update and Implications for Long-Term Growth Outlook To
2024
The fundamental drivers of the life science research market
remain attractive with stable public funding and an increasing
emphasis on proteomics and clinically relevant biologics. In
markets and labs where working in the lab is unconstrained, Abcam
is seeing high growth in demand, highlighting the long-term and
durable growth prospects for the business.
Implementation of Abcam's strategy remains within the Board's
expectations of timing, costs, and milestones. We remain confident
in realising growth from these investments and generating an
attractive return on capital employed as we gain operational
leverage, normalise capital investment, and generate more of our
own product at high gross margins.
However, COVID-19 pandemic controls are constraining researcher
access to approximately 50% of labs globally. These constraints are
limiting scientific discovery capacity and we observe demand in
those labs well below historic levels. This dynamic is particularly
true within academic labs in the US, Abcam's largest market.
With over 15 months of operational experience throughout the
pandemic, we have learned to be more cautious in our assessment of
when laboratory activity and demand will return to full strength.
As we look ahead to the remainder of 2021, we are optimistic that
vaccination and pandemic controls will gradually lead to a return
to full activity in labs. However, we cannot predict how long this
may take to achieve, and therefore believe that the rate of demand
growth will remain uncertain throughout this calendar year.
With this in mind, we believe the long-term outlook to 2024 for
Abcam has a broader range of potential outcomes than we outlined
when we announced our five year growth aspirations in November
2019. Our latest view of the range of revenue that could be
generated by the business by the end of calendar 2024, is GBP425 -
500m (at current exchange rates). When laboratory activity and
demand return to normal levels, we expect to provide additional
information.
Alan Hirzel
Chief Executive Officer
Michael S Baldock
Chief Financial Officer
8 March 2021
Forward Looking Statements
This report contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Any express or implied statements contained in this announcement
that are not statements of historical fact may be deemed to be
forward-looking statements, including, without limitation
statements of targets, plans, objectives or goals for future
operations, including those related to Abcam's products, product
research, product development, product introductions and sales
forecasts; statements containing projections of or targets for
revenues, costs, income (or loss), earnings per share, capital
expenditures, dividends, capital structure, net financials and
other financial measures; statements regarding future economic and
financial performance; statements regarding the scheduling and
holding of general meetings and AGMs; statements regarding the
assumptions underlying or relating to such statements; statements
about Abcam's portfolio and ambitions, as well as statements that
include the words "expect," "intend," "plan," "believe," "project,"
"forecast," "estimate," "may," "should," "anticipate" and similar
statements of a future or forward-looking nature. Forward-looking
statements are neither promises nor guarantees, but involve known
and unknown risks and uncertainties that could cause actual results
to differ materially from those projected, including, without
limitation: a regional or global health pandemic, including the
novel coronavirus ("COVID-19"), which has adversely affected
elements of our business, could severely affect our business,
including due to impacts on our operations and supply chains;
challenges in implementing our strategies for revenue growth in
light of competitive challenges; developing new products and
enhancing existing products, adapting to significant technological
change and responding to the introduction of new products by
competitors to remain competitive; failing to successfully identify
or integrate acquired businesses or assets into our operations or
fully recognize the anticipated benefits of businesses or assets
that we acquire; if our customers discontinue or spend less on
research, development, production or other scientific endeavours;
failing to successfully use, access and maintain information
systems and implement new systems to handle our changing needs;
cyber security risks and any failure to maintain the
confidentiality, integrity and availability of our computer
hardware, software and internet applications and related tools and
functions; failing to successfully manage our current and potential
future growth; any significant interruptions in our operations; if
our products fail to satisfy applicable quality criteria,
specifications and performance standards; failing to maintain our
brand and reputation; our dependence upon management and highly
skilled employees and our ability to attract and retain these
highly skilled employees; and the important factors discussed under
the caption "Risk Factors" in Abcam's prospectus pursuant to Rule
424(b) filed with the U.S. Securities and Exchange Commission
("SEC") on 22 October 2020, which is on file with the SEC and is
available on the SEC website at www.sec.gov, as such factors may be
updated from time to time in Abcam's other filings with the SEC.
Any forward-looking statements contained in this announcement speak
only as of the date hereof and accordingly undue reliance should
not be placed on such statements. Abcam disclaims any obligation or
undertaking to update or revise any forward-looking statements
contained in this announcement, whether as a result of new
information, future events or otherwise, other than to the extent
required by applicable law.
Responsibility statement
We confirm to the best of our knowledge:
-- the interim financial statements have been prepared in
accordance with IAS 34, as adopted by the European Union;
-- the Financial and Operational highlights, Interim Management
Report and Interim Financial statements 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 2019/20 Annual Report and Accounts except for the
following changes.
Appointed
------------ ----------------
Bessie Lee 28 January 2021
Mark Capone 28 January 2021
------------ ----------------
By order of the Board
Alan Hirzel
Chief Executive Officer
Michael S Baldock
Chief Financial Officer
8 March 2021
Independent review report to Abcam plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Abcam plc's consolidated interim financial
statements (the "interim financial statements") in the interim
report of Abcam plc for the 6 month period ended 31 December 2020
(the "period").
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 2020;
-- 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
of Abcam plc 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
8 March 2021
Consolidated income statement
Six months ended 31 December 2020
Six months ended 31 Dec 2020 (unaudited) Six months ended 31 Dec 2019 (unaudited)
------------------------------------------- --------------------------------------------
Adjusted* Adjusting items* Total Adjusted* Adjusting items* Total
Note GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ----- ------------ ----------------- ---------- ------------ ----------------- -----------
Revenue 147.5 - 147.5 138.2 - 138.2
Cost of sales (42.9) - ( 42.9) (41.9) - (41.9)
------------------ ----- ------------ ----------------- ---------- ------------ ----------------- -----------
Gross profit 104.6 - 104.6 96.3 - 96.3
Selling, general
and
administrative
expenses (70.5) (4.9) (75.4) (56.1) (4.6) (60.7)
Research and
development
expenses (10.5) (3.2) (13.7) (6.8) (2.2) (9.0)
------------------ ----- ------------ ----------------- ---------- ------------ ----------------- -----------
Operating profit 23.6 (8.1) 15.5 33.4 (6.8) 26.6
Finance income 0.2 - 0.2 0.5 - 0.5
Finance costs (1.9) - (1.9) (1.1) - (1.1)
Profit before tax 21.9 (8.1) 13.8 32.8 (6.8) 26.0
Tax 5 (3.9) 1.8 (2.1) (5.8) 5.9 0.1
------------------ ----- ------------ ----------------- ---------- ------------ ----------------- -----------
Profit for the
period
attributable to
equity
shareholders of
the parent 18.0 (6.3) 11.7 27.0 (0.9) 26.1
------------------ ----- ------------ ----------------- ---------- ------------ ----------------- -----------
Earnings per
share
Basic 6 8.2p 5.3p 13.2p 12.7p
Diluted 6 8.1p 5.3p 13.0p 12.6p
------------------ ----- ------------ ----------------- ---------- ------------ ----------------- -----------
* Adjusted figures exclude system and process improvement costs,
acquisition costs, integration and reorganisation costs,
amortisation of acquisition related intangible assets, the tax
effect of adjusting items and certain individually significant tax
items. Such excluded items are described as "adjusting items".
Further information on these items is shown in note 4.
Consolidated statement of comprehensive income
Six months ended 31 December 2020
Six months Six months
ended ended
31 Dec 2020 (unaudited) 31 Dec 2019 (unaudited)
GBPm GBPm
---------------------------------------------------------------- ------------------------- -------------------------
Profit for the period attributable to equity shareholders of
the parent 11.7 26.1
---------------------------------------------------------------- ------------------------- -------------------------
Items that may be reclassified to the income statement in
subsequent years
Movement on cash flow hedges 1.1 3.3
Exchange differences on translation of foreign operations (17.5) (7.9)
Movement in fair value of investment (3.1) 0.2
Tax relating to components of other comprehensive income 0.6 (0.6)
---------------------------------------------------------------- ------------------------- -------------------------
Other comprehensive expense for the period (18.9) (5.0)
---------------------------------------------------------------- ------------------------- -------------------------
Total comprehensive (expense) / income for the period (7.2) 21.1
---------------------------------------------------------------- ------------------------- -------------------------
Consolidated balance sheet
As at 31 December 2020
As at As at As at
31 Dec 2020 (unaudited) 30 Jun 2020 (audited) 31 Dec 2019 (unaudited)
Notes GBPm GBPm GBPm
----------------------------- ------ ------------------------- ------------------------ --------------------------
Non-current assets
Goodwill 184.3 192.8 116.7
Intangible assets 154.5 154.4 108.9
Property, plant and
equipment 48.7 43.3 41.0
Right-of-use assets 108.8 121.4 67.2
Investment 10 3.4 7.0 3.1
Deferred tax asset 15.6 13.7 8.1
515.3 532.6 345.0
----------------------------- ------ ------------------------- ------------------------ --------------------------
Current assets
Inventories 43.4 40.7 39.5
Trade and other receivables 47.3 44.4 33.9
Current tax receivable 4.6 6.4 12.0
Derivative financial
instruments 10 0 . 3 - 2.1
Cash and cash equivalents 211.9 187.3 189.9
307.5 278.8 277.4
----------------------------- ------ ------------------------- ------------------------ --------------------------
Total assets 822.8 811.4 622.4
----------------------------- ------ ------------------------- ------------------------ --------------------------
Current liabilities
Trade and other payables (46.5) (43.8) (39.6)
Derivative financial
instruments 10 ( 0.1) (1.2) (0.1)
Borrowings 10 - (106.4) (101.4)
Lease liabilities ( 7.1) (7.3) (6.5)
Current tax liabilities (1.4) (0.9) (1.1)
(55.1) (159.6) (148.7)
----------------------------- ------ ------------------------- ------------------------ --------------------------
Net current assets 252.4 119.2 128.7
----------------------------- ------ ------------------------- ------------------------ --------------------------
Non-current liabilities
Deferred tax liability (28.1) (28.7) (16.4)
Lease liabilities (109.9) (120.5) (67.5)
(138.0) (149.2) (83.9)
----------------------------- ------ ------------------------- ------------------------ --------------------------
Total liabilities ( 193.1) (308.8) (232.6)
----------------------------- ------ ------------------------- ------------------------ --------------------------
Net assets 629.7 502.6 389.8
----------------------------- ------ ------------------------- ------------------------ --------------------------
Equity
Share capital 0 .5 0.4 0.4
Share premium account 265.1 138.2 27.8
Merger reserve 68.6 68.6 68.1
Own shares (2.4) (2.5) (2.6)
Translation reserve 25.4 42.9 25.4
Hedging reserve 0.2 (0.7) 1.4
Retained earnings 272.3 255.7 269.3
----------------------------- ------ ------------------------- ------------------------ --------------------------
Total equity attributable to
the equity shareholders of
the parent 629.7 502.6 389.8
----------------------------- ------ ------------------------- ------------------------ --------------------------
Approved by the Board of directors and authorised for issue on 8
March 2021.
Consolidated statement of changes in equity
Six months ended 31 December 2020 (unaudited)
Share
Share premium Merger Own Translation Hedging Retained
capital account reserve shares Reserve reserve Earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
Balance as at 1 July 2020 0.4 138.2 68.6 (2.5) 42.9 (0.7) 255.7 502.6
----------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
Profit for the period - - - - - - 11.7 11.7
Other comprehensive
(expense) / income - - - - (17.5) 0.9 (2.3) (18.9)
----------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
Total comprehensive expense
for the period - - - - (17.5) 0.9 9.4 (7.2)
----------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
Issue of ordinary shares,
net of share issue costs 0.1 126.9 - 0.1 - - (0.1) 127.0
Share-based payments
inclusive of deferred tax - - - - - - 7.4 7.4
Purchase of own shares - - - - - - (0.1) (0.1)
Balance as at 31 December
2020 (unaudited) 0.5 265.1 68.6 (2.4) 25.4 0.2 272.3 629.7
----------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
Six months ended 31 December 2019 (unaudited)
Share
Share premium Merger Own Translation Hedging Retained
capital account reserve shares reserve reserve earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
Balance as at 30 June 2019,
as previously reported 0.4 27.0 68.1 (2.8) 33.3 (1.3) 260.1 384.8
----------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
I mplementation of IFRS16 * - - - - - - (2.2) (2.2)
----------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
Balance as at 1 July 2019,
as
adjusted 0.4 27.0 68.1 (2.8) 33.3 (1.3) 257.9 382.6
----------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
Profit for the period - - - - - - 26.1 26.1
Other comprehensive income /
(expense) - - - - (7.9) 2.7 0.2 (5.0)
----------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
Total comprehensive income
for the period - - - - (7.9) 2.7 26.3 21.1
----------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
Issue of ordinary shares - 0.8 - 0.2 - - (0.2) 0.8
Share-based payments
inclusive of deferred tax - - - - - - 3.1 3.1
Purchase of own shares - - - - - - (0.1) (0.1)
Equity dividends - - - - - - (17.7) (17.7)
----------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
Balance as at 31 December
2019 (unaudited) 0.4 27.8 68.1 (2.6) 25.4 1.4 269.3 389.8
----------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
Year ended 30 June 2020
Share
Share premium Merger Own Translation Hedging Retained
capital account reserve shares reserve reserve earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
Balance as at 30 June
2019, as previously
reported 0.4 27.0 68.1 (2.8) 33.3 (1.3) 260.1 384.8
--------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
Implementation of IFRS16 * - - - - - - (1.5) (1.5)
--------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
Balance as at 1 July 2019,
as adjusted 0.4 27.0 68.1 (2.8) 33.3 (1.3) 258.6 383.3
--------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
Profit for the period - - - - - - 12.5 12.5
Other comprehensive income
/ (expense) - - - - 9.6 0.6 2.6 12.8
--------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
Total comprehensive income
for the period - - - - 9.6 0.6 15.1 25.3
--------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
Issue of ordinary shares - 111.2 0.5 0.3 - - (0.3) 111.7
Share-based payments
inclusive of deferred tax - - - - - - 7.4 7.4
Purchase of own shares - - - - - - (0.1) (0.1)
Equity dividends - - - - - - (25.0) (25.0)
--------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
Balance as at 30 June 202
0 (audited) 0.4 138.2 68.6 (2.5) 42.9 (0.7) 255.7 502.6
--------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
* Subsequent to the disclosure of the effect of implementation
of IFRS 16 which was made in the interim financial statements for
the six months ended 31 December 2019, an amendment was made to
reduce the transition adjustment to GBP1.5m. The results to 31
December 2019 have not been restated to reflect this change.
Consolidated cash flow statement
Six months ended 31 December 2020
Six months
Six months ended
ended 31 Dec 2019
31 Dec 2020 (unaudited) (unaudited)
Notes GBPm GBPm
----------------------------------------------------------- ------ ------ ------------------------- --------------
Cash generated from operations 8 33.7 45.5
Net income taxes received / (paid) 0.2 (5.9)
------------------------------------------------------------------- ------ ------------------------- --------------
Net cash inflow from operating activities * 33.9 39.6
----------------------------------------------------------- ------ ------ ------------------------- --------------
Investing activities
Investment income 0.2 0.5
Purchase of property, plant and equipment * (11.5) (7.9)
Purchase of intangible assets * (13.6) (9.2)
Transfer of cash from escrow in respect of future capital
expenditure * 0.4 0.1
Reimbursement of leasehold improvement costs * 1.7 -
Purchase of investments - (2.2)
Net cash outflow arising from acquisitions - (0.1)
Net cash outflow from investing activities (22.8) (18.8)
------------------------------------------------------------------- ------ ------------------------- --------------
Financing activities
Dividends paid 9 - (17.7)
Principal element of lease obligations * (3.8) (2.2)
Interest element of lease obligations * (0.5) (0.4)
Interest paid (0.6) (0.2)
Proceeds on issue of shares, net of issue costs 127.0 0.8
Utilisation of revolving credit facility - 103.4
Repayment of revolving credit facility 10 (107.0) -
Purchase of own shares (0.1) (0.1)
------------------------------------------------------------------- ------ ------------------------- --------------
Net cash inflow from financing activities 15.0 83.6
------------------------------------------------------------------- ------ ------------------------- --------------
Net increase cash and cash equivalents 26.1 104.4
------------------------------------------------------------------- ------ ------------------------- --------------
Cash and cash equivalents at beginning of period 187.3 87.1
Effect of foreign exchange rates (1.5) (1.6)
------------------------------------------------------------------- ------ ------------------------- --------------
Cash and cash equivalents at end of period (i) 211.9 189.9
----------------------------------------------------------- ------ ------ ------------------------- --------------
Free Cash Flow (ii) 6.6 20.0
----------------------------------------------------------- ------ ------ ------------------------- --------------
(i) Within cash and cash equivalents is GBP1.3m (H1 2020:
GBP0.6m) of cash relating to employee contributions to the Group's
share scheme 'AbShare', which is reserved for the purpose of
purchasing shares upon vesting.
(ii) Free Cash Flow comprises those items marked * and comprises
net cash generated from operating activities less net capital
expenditure and decrease in obligations under leases.
Notes to the interim financial statements
For the six-month period ended 31 December 2020
1.General information
This condensed consolidated interim financial statements for the
six months ended 31 December 2020 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 2020 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 12 September 2020 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.
2. Basis of preparation
The condensed interim financial statements for the six months
ended 31 December 2020 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 statements are those as
set out in the Group's financial statements for the year ended 30
June 2020. In addition, tax on income in the interim period is
calculated as described in note 5.
New accounting standards and interpretations
There have not been any new standards or interpretations adopted
in the period which would have a material financial impact on, or
disclosure requirement for, the Group's interim report.
b. Going concern
The directors have prepared the interim financial statements on
a going concern basis. In considering going concern, the directors
have considered the Group's forecasts and projections, taking
account of reasonably possible changes in trading performance,
including the possible effects of COVID-19. These show that the
Group should be able to operate within the limits of its available
resources.
Accordingly, the directors have a reasonable expectation that
the Group has adequate resources to continue in operation 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 performance measures
Adjusted performance measures are used by the Directors and
management to monitor business performance internally and exclude
certain cash and non-cash items which they believe are not
reflective of the normal day-to-day operating activities of the
Group. The Directors believe that disclosing such non-IFRS measures
enables a reader to isolate and evaluate the impact of such items
on results and allows for a fuller understanding of performance
from year to year. Adjusted performance measures may not be
directly comparable with other similarly titled measures used by
other companies. A detailed reconciliation between reported and
adjusted measures is presented in note 4.
Notes to the interim financial statements (continued)
For the six-month period ended 31 December 2020
3. Operating segments
The Directors consider that there is only one core business
activity and there are no separately identifiable business segments
which are engaged in providing individual products or services or a
group of related products and services which are subject to
separate risks and returns. 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.
Geographical information
Revenues are attributed to regions based primarily on customers'
location. The Group's revenue from external customers is set out
below:
Six months ended Six months ended
31 Dec 2020 31 Dec 2019
GBP'm GBP'm
-------------- ----- ----------------- -----------------
The Americas 58.6 59.7
EMEA (i) 40.2 34.9
China 27.4 23.8
Japan 9.9 9.4
Rest of Asia (i) 11.4 10.4
147.5 138.2
-------------------- ----------------- -----------------
(i) Revenues for the sub-region of Central Asia have been
reclassified from EMEA to Rest of Asia for the six months ended 31
December 2020. This is to better align our data reporting to sales
performance and geographical location. The value attributable to
Central Asia for the six months ended 31 December 2020 is GBP0.6m
(2019: GBP0.8m) and the comparatives presented have not been
updated for this change.
Revenue by type is shown below:
Six months ended Six months ended
31 Dec 2020 31 Dec 2019
GBP'm GBP'm
------------------------------- ----------------- -----------------
Catalogue revenue 139.0 130.6
Custom products and services 2.7 3.3
IVD 2.6 1.4
Royalties and licenses 3.2 2.9
------------------------------- ----------------- -----------------
Custom products and licensing 8.5 7.6
------------------------------- ----------------- -----------------
Total reported revenue 147.5 138.2
------------------------------- ----------------- -----------------
Notes to the interim financial statements (continued)
For the six-month period ended 31 December 2020
4. Adjusted performance measures
A reconciliation of the Group's adjusted performance measures to
reported IFRS measures is presented below:
Six months ended 31 Dec 2020 Six months ended 31 Dec 2019
(unaudited) (unaudited)
----------------------- ----- ----------------------------------- -----------------------------------
Adjusted Adjusting items Total Adjusted Adjusting items Total
Note GBPm GBPm GBPm GBPm GBPm GBPm
----------------------- ----- --------- ---------------- ------ --------- ---------------- ------
Operating profit 23.6 (8.1) 15.5 33.4 (6.8) 26.6
Finance income 0.2 - 0.2 0.5 - 0.5
Finance costs (1.9) - (1.9) (1.1) - (1.1)
Profit before tax 21.9 (8.1) 13.8 32.8 (6.8) 26.0
Tax 5 (3.9) 1.8 (2.1) (5.8) 5.9 0.1
----------------------- ----- --------- ---------------- ------ --------- ---------------- ------
Profit for the period 18.0 (6.3) 11.7 27.0 (0.9) 26.1
----------------------- ----- --------- ---------------- ------ --------- ---------------- ------
Six months ended
Six months ended 31 Dec 2020 31 Dec 2019
(unaudited) (unaudited)
GBPm GBPm
-------------------------------------------------------- ------- ----------------------------- -----------------
Analysis of adjusting items
System and process improvement costs (i) (1.8) (2.1)
Acquisition costs (ii) - (1.3)
Integration and reorganisation costs (iii) (1.9) -
Amortisation of acquisition related intangible assets (iv) (4.4) (3.4)
Affecting operating profit and profit before tax (8.1) (6.8)
Affecting tax
Tax effect of adjusting items 1.8 1.2
Credit arising from patent box claims (v) - 4.7
1.8 5.9
Total adjusting items (6.3) (0.9)
----------------------------------------------------------------- ----------------------------- -----------------
(i) Comprises costs of the ERP implementation which do not
qualify for capitalisation. Such costs are included within selling,
general and administrative expenses.
(ii) Comprises legal and other professional fees associated with
the acquisition of the Expedeon business. Such costs are included
within selling, general and administrative expenses.
(iii) Integration and reorganisation costs relate partly to the
integration of the acquired Expedeon business (comprising mainly
retention and severance costs as well as employee backfill costs
for those involved in the integration and consultancy costs)and
reorganisation costs in respect of alignment of the Group's
operational structure and geographical footprint to its strategic
goals. Included within these costs are GBP0.6m of depreciation
costs. Such costs are included within selling, general and
administrative expenses.
(iv) GBP3.2m (2019: GBP2.2m) of amortisation of acquisition
intangibles is included within research and development expenses,
with the remaining GBP1.2m (2019: GBP1.2m) included within selling,
general and administrative expenses.
(v) Comprises a one-off credit for historical periods in respect
of the initial recognition of benefit from the lower rate of tax
applied to profits on patented income under HMRC's 'patent box'
regime following successful registration of patents during the
period.
Notes to the interim financial statements (continued)
For the six-month period ended 31 December 2020
5. Income tax
The major components of the income tax (credit) / expense in the
income statement are as follows:
Six months Six months
ended ended
31 Dec 2020 31 Dec 2019
(unaudited) (unaudited)
GBPm GBPm
------------------------------------ ------------- -------------
Current tax 3.3 -
Deferred tax (1.2) (0.1)
------------------------------------ ------------- -------------
Total income tax charge / (credit) 2.1 (0.1)
------------------------------------ ------------- -------------
Adjusted income tax charge* 3.9 5.8
------------------------------------ ------------- -------------
* Adjusted income tax charge excludes the tax effects of
adjusting items as set out in note 4.
The UK corporation tax rate for the six months ended 31 December
2020 was 19.0% (six months ended 31 December 2019: 19.0%).
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.
The estimated effective rate of tax on reported profits for the
full year ending 30 June 2021 is approximately 15.4% (year ended 30
June 2020 48.8%), representing management's best estimate of the
average annual effective tax rate on profits expected for the full
year.
The effective rate on adjusted half year profits is 17.8% and
for the full year ending 30 June 2021 is expected to be
approximately 18.0% (year ended 30 June 2020: 18.0%).
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, respectively,
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 earnings before
adjusting items which are considered significant in nature or value
and which are described in note 4.
Six months Six months
ended ended
31 Dec 2020 31 Dec 2019
(unaudited) (unaudited)
GBPm GBPm
---------------------------------------------------------------------------- ------------- --------------
Profit attributable to equity shareholders of the parent - adjusted 18.0 27.0
Adjusting items (6.3) (0.9)
---------------------------------------------------------------------------- ------------- --------------
Profit attributable to equity shareholders of the parent - total reported 11.7 26.1
---------------------------------------------------------------------------- ------------- --------------
Million Million
Weighted average number of ordinary shares in issue 220.0 205.8
Less ordinary shares held by Equiniti Share Plan Trustees Limited (0.4) (0.5)
---------------------------------------------------------------------------- ------------- --------------
Weighted average number of ordinary shares for the purposes of basic EPS 219.6 205.3
Effect of potentially dilutive ordinary shares: - share options and awards 2.4 1.9
Weighted average number of ordinary shares for the purposes of diluted EPS 222.0 207.2
---------------------------------------------------------------------------- ------------- --------------
Notes to the interim financial statements (continued)
For the six-month period ended 31 December 2020
6. Earnings per share (continued)
Basic EPS and adjusted EPS are calculated by dividing the
earnings attributable to the equity shareholders of the parent by
the weighted average number of shares outstanding during the year.
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.
Six months Six months
ended ended
31 Dec 2020 31 Dec 2019
(unaudited) (unaudited)
---------------------- ------------- -------------
Basic EPS 5.3p 12.7p
Diluted EPS 5.3p 12.6p
Adjusted basic EPS 8.2p 13.2p
Adjusted diluted EPS 8.1p 13.0p
---------------------- ------------- -------------
7. Issue of share capital
On 26 October 2020, the Group closed its offering of an
aggregate of 10,287,000 American Depositary Shares ("ADSs")
representing 10,287,000 ordinary shares at a price of $17.50 per
ADS, following the Group's secondary listing on Nasdaq. The net
proceeds from this offering, net of issue costs of GBP2.1m, were
GBP126.5m. In addition, GBP0.5m of proceeds from the issuance of
share options and awards to employees were received during the
period.
8. Notes to the cash flow statement
Six months
Six months ended
ended 31 Dec 2019
31 Dec 2020 (unaudited) (unaudited)
GBPm GBPm
---------------------------------------------------------------------- --- ------------------------- --------------
Operating profit for the period 15.5 26.6
Adjustments for:
Depreciation of property, plant and equipment 4.3 3.4
Depreciation of right-of-use assets 3.8 3.0
Amortisation of intangible assets 7.9 6.8
Loss on disposal of property, plant and equipment 0.2 -
Derivative financial instruments at fair value through profit or loss (0.4) (0.7)
Research and development expenditure credit (0.7) (0.9)
Share-based payments charge 7.3 5.0
Unrealised currency translation gains 1.0 (1.9)
--------------------------------------------------------------------------- ------------------------- --------------
Operating cash flows before movements in working capital 38.9 41.3
Increase in inventories (4.0) (4.6)
(Increase) / decrease in receivables (7.7) 7.1
Increase in payables 6.5 1.7
--------------------------------------------------------------------------- ------------------------- --------------
Cash generated from operations 33.7 45.5
--------------------------------------------------------------------------- ------------------------- --------------
9. Dividend
Six months
Six months ended
ended 31 Dec 2019
31 Dec 2020 (unaudited) (unaudited)
GBPm GBPm
-------------------------------------------------------------------------- -------------------------- --------------
Amounts recognised as distributions to equity shareholders in the period:
Final dividend for the year ended 30 June 2019 - 17.7
-------------------------------------------------------------------------- -------------------------- --------------
Notes to the interim financial statements (continued)
For the six-month period ended 31 December 2020
10.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; accordingly, they should be read
in conjunction with the Group's financial statements for the year
ended 30 June 2020. There have been no changes to the risk
management policies since the year ended 30 June 2020.
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 2020 GBPm GBPm GBPm GBPm
---------------------------------- -------- -------- -------- ------
Assets
Derivative financial instruments - 0.3 - 0.3
Investment 1.2 - 1.9 3.1
---------------------------------- -------- -------- -------- ------
Total assets 1.2 0.3 1.9 3.4
---------------------------------- -------- -------- -------- ------
Liabilities
Derivative financial instruments - (0.1) - (0.1)
Total liabilities - (0.1) - (0.1)
---------------------------------- -------- -------- -------- ------
Level 1 Level 2 Level 3 Total
30 June 2020 GBPm GBPm GBPm GBPm
---------------------------------- -------- -------- -------- ------
Assets
Derivative financial instruments - - - -
Investment 4.8 - 1.9 6.7
---------------------------------- -------- -------- -------- ------
Total assets 4.8 - 1.9 6.7
---------------------------------- -------- -------- -------- ------
Liabilities
Derivative financial instruments - (1.2) - (1.2)
Total liabilities - (1.2) - (1.2)
---------------------------------- -------- -------- -------- ------
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 Renminbi in excess of
payments in these currencies and has hedging arrangements in place
to reduce its exposure to currency fluctuations.
Notes to the interim financial statements (continued)
For the six-month period ended 31 December 2020
10. Financial instruments and risk management (continued)
The following table details the forward exchange contracts
outstanding as at the period end:
US Dollars Euros Japanese Yen Chinese Renminbi
----------------
Sell Average Sell Average Average Sell Average
Maturing in $m rate EURm rate Sell Yenm rate Yenm rate
----- -------- ------ -------- ---------- -------- -------- ---------
Period ending 30
June 2021 1.0 1.30 9.2 1.11 520.0 136.5 28.0 9.0
Year ending 30 June
2022 0.2 1.30 4.3 1.10 204.0 137.3 12.0 9.0
--------------------- ----- -------- ------ -------- ---------- -------- -------- ---------
The Group's Level 3 financial instruments consist of unlisted
equity shares.
The fair value of the unquoted equity shares can be determined
as management monitors the ongoing performance of the
investment.
Borrowings
On 23 November 2020, the Group repaid in full the sum of
GBP107.0m which was drawn under its Revolving Credit Facility
(RCF).
11. Capital commitments
As at 31 December 2020, the Group had capital commitments of
GBP8.9m (31 December 2019: GBP1.7m) relating to the acquisition of
property, plant and equipment and intangible assets.
12. Post balance sheet event
On 7 January 2021, the Company received approval from all
syndicate banks for a two year extension to its Revolving Credit
Facility (RCF) following the exercise of an extension option on 17
December 2020. This extends the expiry of the facility to 31
January 2024. All other terms of the facility remain unchanged.
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 2020 on pages 52 to 57 and in note 4 to the consolidated
financial statements. Information on financial risk management is
set out in note 26 to the consolidated financial statements. 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
2020, the Group continues to monitor developments in respect of the
UK's withdrawal from the EU and the consequences of how these might
affect the business.
The principal risks remain as:
Principal risk Description and relevance
--------------------------------------------------------- -----------------------------------------------------------
1. Competition and customer The risk of competitors introducing new technologies,
channels or workarounds, strengthening
product offerings and routes to market.
--------------------------------------------------------- -----------------------------------------------------------
2. Acquisitions and integrations Risks include overvaluation of targets, failing to
identify issues or risks in due diligence
or failing to integrate acquired operations or
technologies effectively in order to realise
the benefits. There is also a risk of failure to identify
and acquire businesses which could
bring added value.
--------------------------------------------------------- -----------------------------------------------------------
3. People and resources The risk of failure to recruit and develop people at the
right rate to support Abcam's strategy,
failing to maintain an engaged and motivated workforce or
to provide the tools and resources
for employees to do their work effectively.
4. Transformation projects The risk of failure to deliver on Abcam's transformational
growth projects, including our
ongoing ERP implementation and reinvention of the digital
channel.
5. Cyber security and IT infrastructure The risk that Abcam fails to operate IT systems, software
and hardware that are sufficiently
effective, reliable and robust to support the business in
its operations, or that Abcam's
critical IT infrastructure is compromised or subject to
cyber attack.
6. Geopolitical/economic disruption and research funding The risk of unfavourable geopolitical or economic changes,
including the risk of a substantial
reduction in funding for life sciences research in one of
Abcam's significant territories
7. Business continuity The risk that a disruptive event or disaster occurs at a
key facility, impacting our ability
to serve customers.
8. Laws, regulations, legislation and compliance Failure to comply with legislation and regulation in the
markets and countries in which Abcam
operates.
9. Ethical business and CSR The risk of not meeting high standards of quality and
ethical business practice.
--------------------------------------------------------- -----------------------------------------------------------
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