TIDMABC
RNS Number : 3571F
ABCAM PLC
09 March 2020
9 March 2020
ABCAM PLC
Interim results for the six months ended 31 December 2019
Initiated investment across all areas of five-year growth
plan;
Continued innovation drives in-house revenue growth of 14%
Cambridge, UK: Abcam plc ("Abcam" or the "Group"), a global
leader in the supply of life science research tools, today
announces its interim results for the six-month period ended 31
December 2019 (H1 2020).
SUMMARY PERFORMANCE
Reported Adjusted(2)
---------------------------------------- ========================================== ===========================
H1 2020 H1 2019 H1 2020 H1 2019
GBPm GBPm Growth CER(1) growth GBPm GBPm Growth
======================================== ======= ======= ========= ============= ======= ======= ===========
Revenue 138.2 124.7 +10.8 % +8.3 % 138.2 124.7 +10.8 %
Gross profit margin, % 69.7% 70.2% -50 bps 69.7% 70.2% -50 bps
Operating profit 26.6 33.4 (20 .4) % 33.4 40.8 (1 8.1) %
Profit Before Tax (PBT) 26.0 33.7 (22.8) % 32.8 41.1 (20.2) %
Diluted earnings per share (EPS) (pence) 12.6p 13.4p (6.0 )% 13.0p 16.3p (20.2 )%
---------------------------------------- ------- ------- --------- ------------- ------- ------- -----------
FINANCIAL HIGHLIGHTS
-- Total revenue increased 10.8% on a reported basis and 8.3% on
a constant exchange rate (CER) basis(1)
o Total Catalogue revenue growth of 11.6% on a reported basis
(9.1% CER) to GBP130.6m (H1 2019: GBP117.0m)
o In-house Catalogue revenue growth of 16.3% on a reported basis
(13.8% CER) to GBP59.1m (H1 2019: GBP50.8m)
-- Operating profit margin 19.2% (H1 2019: 26.8%) and
adjusted(2) operating margin 24.2% (H1 2019: 32.7%), reflecting
planned investments in-line with five-year strategy and anticipated
step up in non-cash items including depreciation and amortisation
and share-based payments
-- Reported diluted EPS of 12.6 pence (H1 2019: 13.4 pence) and
adjusted(2) diluted EPS of 13.0 pence (H1 2019: 16.3 pence)
-- Net cash inflow from operating activities of GBP39.6m (H1 2019: 36.4m)
-- Interim dividend of 3.55 pence per share (H1 2019: 3.55 pence)
-- The Board is currently reviewing capital allocation
priorities, including the dividend, in view of the significant
investment opportunities available and intends to consult with
shareholders
STRATEGIC & OPERATIONAL HIGHLIGHTS
-- Initiated investment across all areas of our five-year growth
plan set out in September 2019
-- Continued to take market share, with all major regions and
product categories growing above underlying market rates, driven by
in-house innovation
-- Committed approximately GBP120m to acquisitions since 1 July
2019, bringing complementary products, technologies and
capabilities into the business; integrations progressing well:
o Completed Expedeon acquisition on 1 January 2020, adding
portfolio of complementary conjugation products and
capabilities
o Acquired Edigene's cell line portfolio and the gene editing
platform and oncology product portfolio of Applied StemCell (post
period end)
o Strategic investments in BrickBio (antibody-conjugation) and
SomaServe (live cell imaging)
-- Several senior team appointments made, including Michael
Baldock as CFO and Juan Carlos Sacristan as SVP of Data &
Technology
OUTLOOK AND COVID-19 UPDATE
-- Confident in long-term outlook: five-year financial goals and investment plans unchanged
-- c.GBP3m revenue reduction to date due to Covid-19,
predominantly originating from the early spread of the virus in
China
o Operations began reopening on 14 February; supply chain
largely unaffected to date
o Broader China activity returning, albeit still below full
levels prior to outbreak
-- Full financial impact on the business remains uncertain given the evolving global situation
-- Closely monitoring developments and will provide further updates as appropriate
Commenting on the first half performance, Alan Hirzel, Abcam's
Chief Executive Officer, said:
"Abcam is investing in and advancing across all strategic areas
we described earlier this year. Our early progress sets the
business on a course to sustain long term revenue growth from
market share gain and portfolio expansion. In the short term, we
are doing our best to look after our global team and our customers
as we face into Covid-19's impact on family lives, research
activity, and operations. In China, we are starting to see a return
to normal operations, and we will work through this situation as we
confidently invest in our long term growth and being the most
influential company for life science researchers worldwide."
Analyst and investor meeting and webcast :
Abcam will host a presentation for analysts and investors today
at 9.30am at the offices of FTI Consulting, 200 Aldersgate, EC1A
4HD.
A conference call and webcast facility will also be available.
For details of the conference call and webcast, and to register,
please visit www.abcamplc.com/investors/reports-presentations .
For further details please contact FTI Consulting on + 44 (0) 20
3727 1000.
A recording of the webcast will be made available on Abcam's
website, www.abcamplc.com.
Notes:
1. Constant currency results (CER) are calculated by applying
prior period's actual exchange rates to this period's results.
2. Pre-tax adjusted figures exclude system and process
improvement costs, costs associated with the new Group
headquarters, acquisition costs and amortisation of acquired
intangibles. After-tax adjusted figures also exclude a one-off tax
credit for historical periods arising from the initial recognition
of benefit from the lower rate of tax applied to profits on
patented income and the tax effect of adjusting items. Such
excluded items are described as "adjusting items". Further
information on these items is shown in note 4.
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
J.P. Morgan Cazenove - Nominated Advisor & Corporate Broker +44 (0) 20 7742 4000
James Mitford / Hemant Kapoor
Numis - Joint Corporate Broker +44 (0) 20 7260 1000
Garry Levin / Duncan Monteith
FTI Consulting +44 (0) 20 3727 1000
Ben Atwell / 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.
Interim management report
Introduction
It is an important time for the Group as we embark upon the next
chapter of growth, lay the foundations for our long-term future and
work toward our FY2024 revenue goal of GBP450-500m. The investments
we are making now are increasing the rate at which we are able to
convert ideas to innovation and putting in place the building
blocks to allow us to scale up and sustain growth.
We made good progress in the first half as we initiated our
investment plans to drive our five-year goals, including the
commitment of approximately GBP120m to acquisitions. Those
acquisitions, together with new partnerships and the other
strategic investments we are making in products, innovation,
technology, people and enterprise, are providing additional avenues
to grow, new markets we can access, and the capability to scale
more efficiently.
At the same time, we have continued to focus on customers and
delivered above market revenue growth. Our core reagents business
delivered a solid performance as we focus on providing an
increasing range of products to molecules with the greatest
interest to research and clinical communities. Catalogue revenue
increased by 11.6% on a reported basis (9.1% CER) compared with the
first half last year. This growth was primarily driven by the
continued market penetration of our growing portfolio of in-house
products, in particular our range of proprietary recombinant
antibodies and immunoassays which grew at a combined rate of 24%
(CER) in the half.
Importantly, all of this activity continues to drive standards
in quality and validation. This continues to differentiate 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.
Executing our five-year growth strategy to 2023/24
In September 2019 we set out wide-ranging plans to increase the
rate of investment in areas including research and development,
digital marketing and eCommerce, technology and global operations,
in order to drive an acceleration in the implementation of
strategic initiatives that will allow us to seize more
opportunities for growth over the medium and long term . Those
plans are underway, and we made good progress across a broad range
of areas in the first half of the year, details of which are set
out below.
Our people and culture continue to drive the success of the
investment in these initiatives. We are pleased to report that we
have made several key recruits during the period into strategically
critical positions across our business, including CFO, SVP of Data
& Technology, VP of Global Sales, Senior Directors of sales for
Americas and EMEA, VP of Cell Lines and VP of Integrated
Marketing.
Strategic Performance Targets
Alongside the delivery of above market growth in the period, we
are on track to achieve our strategic performance targets for the
year. The Group's tNPS score in the first half was impacted by
technical issues regarding the way customer feedback was collected.
Following actions taken to rectify these issues we achieved our
highest global tNPS score for over 12 months in January 2020. Year
to date (to the end of February 2020) our tNPS score is 54%.
FY 2020 H1 2020
Strategic Performance Indicator Target Result
============================================================= =============== =======
Catalogue revenue growth from in-house products (CER(1) ) 12-15% 14%
Customer engagement: Transactional Net Promoter Score (tNPS) 54-60% 52%
============================================================= =============== =======
Progress against our strategic priorities to sustain growth
The Group has three priorities to drive its five-year growth
plans. Progress against each is detailed below.
1. Sustain and extend antibody and digital leadership
Innovation and quality
Our goal is to accelerate the rate at which we can innovate the
most sensitive, specific and consistent antibodies to high value
targets, and then make those tools available to life scientists
across as many platforms as possible. Progress in the first half
included:
- exceeded new recombinant RabMAb(R) development targets in the
half, with over 250 new antibodies launched;
o in-house recombinant antibody revenue increased 20% CER
- in-licensed over 100 monoclonal antibodies from third parties,
providing greater levels of control over quality and supply;
- implemented a new high-throughput screening process in our
Hangzhou, China facility, enhancing and expanding antibody
validation capabilities;
- initiated an antibody lyophilization project to support
increased demand, reduce costs, and improve delivery speed;
- extended our award-winning knockout validation initiative to
more than 2,500 products and completed the acquisition of Edigene's
portfolio of 2,800 knockout cell lines, enabling the continued
expansion of this initiative;
- recorded our highest ever product satisfaction rates for both
in-house and OEM portfolios as our quality standards continue to
improve; and
- expanded our co-development programme with multiple platform
partners, with over 100 antibody clones now validated for use, and
hundreds more undergoing evaluation.
Customer engagement, eCommerce and digital
Our aim is to improve the customer experience and enhance our
competitive position over the next five years by transforming our
website, improving our digital capabilities and increasing our
levels of service across all consumer segments. Progress in the
first half included:
- ongoing enhancements made to existing digital channels,
content marketing strategy and marketing automation, helping drive
15% growth in data sheet views year-on-year;
- completed the global digital design phase to reinvent the customer experience;
- implemented multiple IT upgrades and other enhancements to
support a better online customer experience;
- continued to increase the size and activity of our data
science team to enable us to better understand and serve the needs
of customers, allowing us to focus on those products with greatest
scientific interest and commercial impact;
- initiated the build out of commercial sales team for biopharma and complex solutions; and
- further invested in our Chinese offering to support enhanced
customer service levels in the territory.
2. Drive continued expansion into complementary market
adjacencies
Proteomic research reagents
Building on the successful development of our immunoassay
portfolio, our goal now is to further extend our proprietary
offering into adjacent life science reagents where doing so will
also strengthen our antibody development capabilities. Areas of
focus include recombinant proteins, cell lines and lysates, and
imaging and multiplexing consumables. Progress in the first half
included:
- immunoassay CER revenue growth of over 19%, with in-house growth of c.60%;
o 125 new SimpleStep(R) ELISAs published, expanding range to
over 1,000 products
- good operational and commercial progress for our FirePlex(R)
multiplexing offer, including the creation of several new
panels;
- acquisition of Expedeon's proteomics and immunology businesses
(closed 1 January 2020), significantly enhancing
protein-conjugation capabilities;
- published first in-house developed biologically active proteins;
- launched range of over 2,800 knockout cell lysates and over
500 knockout cell lines following the acquisition of Edigene
portfolio in July 2019; acquired cell engineering technology from
Applied StemCell in January 2020, bringing cell-editing
capabilities in-house; and
- progressed launch plans for live-cell imaging tools.
Beyond research use
Across the diagnostic, drug discovery and therapeutic markets,
our goal is to be a trusted partner to biopharma organisations
looking to leverage our antibody expertise for their clinical
development programmes. P rogress in the first half include d :
- signed up multiple recombinant companion diagnostic (cDx)
antibody programmes with biotech and pharma customers;
- out-licensed multiple clones into diagnostics after converting them to recombinant format;
- completed over 70 custom antibody projects; started late stage
approvals with a major biopharma customer; and
- continued to invest in the commercial team, with the
appointment of a new global head of sales as well as sales
directors for the Americas and EMEA regions.
3. Build organisational scalability and sustain value
creation
Our goal is to enhance our organisational capabilities whilst
realising operational efficiencies. Priorities include replacing
the remaining parts of our legacy IT systems, automating at process
bottlenecks, simplifying our global facilities footprint and
enhancing our talent across the business. Progress toward these
aims in the first half includes:
- completed the global IT design in collaboration between digital and supply chain teams;
- signed lease on new Boston facility, providing approximately
twice the space of our existing facility on improved terms;
- continued to embed and realise benefits from existing ERP modules;
- initiated multiple projects across the business to drive
operating efficiencies; next wave of automation under evaluation;
and
- continued to invest in company-wide training, development,
performance and engagement programmes for our teams
Financial performance in the period
Overall reported revenue increased by 10.8% in the first half to
GBP138.2m (H1 2019: GBP124.7m). On a constant currency basis (in
which exchange rates are assumed to remain unchanged from H1 2019),
total revenue grew by 8.3%.
Catalogue revenue, which contributed approximately 95% of total
revenue in the half, grew 9.1% on a constant currency basis when
compared to the same period last year. For products sold via the
Catalogue, all major product categories and regions are performing
above underlying market growth rates. Regionally, China was once
again the fastest growing major market and whilst the underlying
market dynamics in Japan have not changed, improved execution in
the region delivered a stronger performance in the first half.
Custom Products & Licensing (CP&L), comprising royalty
income as well as revenue from in vitro diagnostic (IVD) products
and the custom service business, accounted for 5% of revenue.
CP&L revenue declined 1.3% on a reported basis to GBP7.6m
(-5.2% CER), lower than expected due to the phasing of certain IVD
customer orders. The phasing of this revenue line is expected to
remain uneven as it continues to mature.
Reported revenue
------------------------ ------------------ ------------------ ---------
H1 H1
2020 2019
------------------------
GBP'm GBP'm Constant
currency
Change in reported growth
revenue rate
------------------------ -------- -------- ------------------ ---------
Geographic split
The Americas 52.7 47.6 10.7% 6.5%
EMEA 34.4 32.1 7.2% 7.5%
China 23.7 20.1 17.9% 17.4%
Japan 9.4 7.9 19.0% 10.1%
Rest of Asia Pacific 10.4 9.3 11.8% 9.7%
------------------------ -------- -------- ------------------ ---------
Catalogue revenue 130.6 117.0 11.6% 9.1%
CP&L revenue(*) 7.6 7.7 (1.3%) (5.2%)
------------------------ -------- -------- ------------------ ---------
Total reported revenue 138.2 124.7 10.8% 8.3%
------------------------ -------- -------- ------------------ ---------
Catalogue product split
In-house 59.1 50.8 16.3% 13.8%
Third-party 71.5 66.2 8.0% 5.4%
Catalogue revenue 130.6 117.0 11.6% 9.1%
------------------------ -------- -------- ------------------ ---------
*Includes royalty income, IVD supply, custom products and
licensing revenue
Gross margin for the first half was broadly level with the prior
year period at 69.7% (H1 2019: 70.2%). The modest decline was
predominantly a result of foreign currency headwinds, geographic
mix and lower CP&L revenue, partially offset by favourable
product mix on the catalogue.
Reported operating expenses rose by GBP15.5m to GBP69.7m (H1
2019: GBP54.2m). The increase comprises:
-- GBP7.0m in respect of investments in the business, comprising
mainly employee costs and software costs as new systems came
online;
-- a GBP3.3m rise in depreciation and amortisation costs
(excluding depreciation of right-of-use assets, arising due to the
introduction of IFRS 16 in FY20) following the deployment of new
modules of the ERP system in April 2019 and completion of the new
UK headquarters in February 2019;
-- a GBP2.6m increase in non-cash share-based payments,
predominantly relating to the Group's all-employee share plan,
which was launched in November 2018;
-- a GBP1.2m charge relating to foreign exchange movements (H1
2019: nil) as a result of the stronger sterling in comparison to 30
June 2019;
-- a GBP1.4m increase in other costs.
Adjusting Items
Total reported expenses of GBP69.7m for the half includes
GBP6.8m (H1 2019: GBP7.4m) of costs which are excluded from
adjusted expenses. These costs comprise:
-- GBP2.1m relating to the Oracle Cloud ERP project (H1 2019: GBP2.0m)
-- GBP1.3m of acquisition related charges (H1 2019: nil); and
-- GBP3.4m relating to the amortisation of acquired intangibles (H1 2019: GBP3.3m)
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. In addition, the Group expects to
incur a further GBP2m - GBP3m of acquisition related costs
associated with previously announced acquisitions. Note 4 to the
interim financial information sets out a reconciliation between
reported and adjusted profit measures.
Earnings and Tax
Reported operating profit for the period was GBP26.6m (H1 2019:
GBP33.4m) and adjusted operating profit GBP33.4m (H1 2019:
GBP40.8m), equating to an adjusted operating margin of 24.2% (H1
2019: 32.7%). reflecting the strategic investments being made in
the business. Earnings before interest, taxation, depreciation and
amortisation (EBITDA) were GBP39.8m (H1 2019: GBP40.3m). Adjusted
EBITDA declined 2.7% to GBP43.2m (H1 2019: GBP44.4m). Further
details are shown in note 4 to the interim financial
information.
After net interest expense of GBP0.6m, profit before tax (PBT)
on a reported basis was GBP26.0m (H1 2019: GBP33.7m). Adjusted PBT
was GBP32.8m (H1 2019: GBP41.1m).
The Group's effective rate on reported tax for the first half
was (0.4%) (H1 2019: 17.8%), mainly due to a one-off credit of
GBP4.7m in respect of historical periods arising from the initial
recognition of benefit from the lower rate of tax applied to
profits on patented income. The adjusted tax rate for the first
half was 17.7% (H1 2019: 18.2%). The effective rate on adjusted
profits for the full year ending 30 June 2020 is expected to be
approximately 18% (year ended 30 June 2019: 19.7%). Further details
are shown in note 5 to the interim financial information.
Diluted earnings per share (EPS) was 12.6 pence per share (H1
2019: 13.4 pence). Adjusted diluted EPS decreased by 20.2% to 13.0
pence per share (H1 2019: 16.3 pence). Note 6 sets out a
reconciliation between reported and adjusted EPS.
Cash flow and Net Cash
Cash generated from operating activities increased to GBP39.6m
(H1 2019: GBP36.4m). Capital expenditure decreased by GBP2.5m in
the period to GBP17.1m (H1 2019: GBP19.6m). Capital expenditure of
GBP4.2m was incurred in relation to our new ERP systems and
processes (H1 2019: GBP5.9m), GBP3.3m on capitalised R&D (H1
2019: GBP 3.9m ), GBP3.7m on cell lines (H1 2019: GBPnil) and
GBP2.9m on improvements to laboratory facilities and equipment (H1
2019: GBP 2.0m ). After outflows of GBP17.7m relating to the FY2019
final dividend payment (H1 2019: GBP17.6m), the Group ended the
period with cash and cash equivalents of GBP189.9m (H1 2019:
GBP83.2m) having drawn down GBP103.4m (EUR120m) on the revolving
credit facility in the period in anticipation of payment of EUR120m
(GBP102m) to Expedeon AG, which was paid on 1 January 2020
following the completion of the transaction.
Dividend
The Board has approved an interim dividend of 3.55 pence per
share (H1 2019: 3.55). The interim dividend will be paid on 17
April 2020 to shareholders whose names are on the register at close
of business on 20 March 2020. The associated ex-dividend date will
be 19 March 2020.
As evidenced by the significant investment made in the period,
the Board has conviction in the opportunities for further
profitable growth and attractive returns on investment, consistent
with the five-year growth plan, and believes that value creation
can be maximised by ensuring the flexibility to invest in these
opportunities as they arise.
Accordingly, the Board is evaluating its future capital
allocation priorities with respect to maximising the long-term
interests of the business and shareholders, including the
appropriate distribution of future dividends, and intends to
consult with its shareholders in due course.
Board appointment
On 14 January 2020 it was announced that Michael Baldock was to
be appointed to the board as Chief Financial Officer. Michael, who
has over 30 years of relevant business and leadership experience,
joined Abcam on 3 February 2020.
Michael replaces Gavin Wood who had previously announced his
decision to step down once a replacement was identified. The board
would like to take this opportunity to thank Gavin for his service
and commitment to Abcam over the last three and a half years.
Covid-19 update
The Covid-19 outbreak is a difficult, evolving situation; our
priority remains on doing everything we can to look after our
global team and our customers.
We have seen a reduction in revenue and impact on our supply
chain since the outbreak began, with the majority originating from
the early spread of the virus in China. To date, the estimated
revenue impact has been c.GBP3m, with around 10 days out of work
across the supply chain due to site closures. There is evidence
that China is now getting back to work and we are starting to see
more demand and activity, albeit not yet at full levels prior to
the outbreak. The majority of our own workforce in China have now
returned to work, either on-site or remotely as appropriate.
Given the temporary nature of site closures in China, disruption
to our supply chain to date has been very marginal and limited to
just a small number of products.
Globally the situation is still evolving and given the
uncertainties of the spread of the virus and policy choices made in
each market, we are currently not in a position to update our
expectations for the full year financial impact.
We will provide further updates as we have more clarity,
including opportunities as part of our usual reporting cycle in
July and September, as appropriate.
Summary and outlook
We are pleased with the progress made in the first half and
remain confident in our future prospects. Notwithstanding the
short-term impact of Covid-19 discussed above, the fundamentals of
our business are strong and the long-term dynamics of the markets
we serve remain attractive. These are exciting times at Abcam as we
continue to evolve and invest in order to deliver profitable,
long-term revenue growth and build towards our five-year financial
and strategic goals.
Alan Hirzel
Chief Executive Officer
Michael Baldock
Chief Financial Officer
6 March 2020
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 2018/19 Annual Report and Accounts except for the
following change:
Resigned Appointed
---------------- ----------------- -----------
Sue Harris 13 November 2019
Gavin Wood 3 February 2020
3 February
Michael Baldock 2020
---------------- ----------------- -----------
By order of the Board
Alan Hirzel
Chief Executive Officer
Michael Baldock
Chief Financial Officer
6 March 2020
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 six month period ended 31
December 2019. 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 2019;
-- 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
has 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 information,
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
6 March 2020
Consolidated income statement
Six months ended 31 December 2019
Six months ended 31 Dec 2019 (unaudited) Six months ended 31 Dec 2018 (unaudited)
------------------------------------------ -------------------------------------------
Adjusting Adjusting
Adjusted* items* Total Adjusted* items* Total
Note GBPm GBPm GBPm GBPm GBPm GBPm
---------------- ----- ------------ --------------- ----------- ------------ --------------- ----------
Revenue 138.2 - 138.2 124.7 - 124.7
Cost of sales (41.9) - (41.9) (37.1) - (37.1)
---------------- ----- ------------ --------------- ----------- ------------ --------------- ------------
Gross profit 96.3 - 96.3 87.6 - 87.6
Selling,
general and
administrative
expenses (56.1) (4.6) (60.7) (40.9) (5.3) (46.2)
Research and
development
expenses (6.8) (2.2) (9.0) (5.9) (2.1) (8.0)
---------------- ----- ------------ --------------- ----------- ------------ --------------- ------------
Operating
profit 33.4 (6.8) 26.6 40.8 (7.4) 33.4
Finance income 0.5 - 0.5 0.3 - 0.3
Finance costs (1.1) - (1.1) - - -
Profit before
tax 32.8 (6.8) 26.0 41.1 (7.4) 33.7
Tax 5 (5.8) 5.9 0.1 (7.5) 1.5 (6.0)
---------------- ----- ------------ --------------- ----------- ------------ --------------- ------------
Profit for the
period
attributable
to equity
shareholders
of the parent 27.0 (0.9) 26 .1 33.6 (5.9) 27.7
---------------- ----- ------------ --------------- ----------- ------------ --------------- ------------
Earnings per
share
Basic 6 13.2p 12.7p 16.4p 13.5p
Diluted 6 13.0p 12.6p 16.3p 13.4p
---------------- ----- ------------ --------------- ----------- ------------ --------------- ------------
* Adjusted figures exclude system and process improvement costs,
costs associated with the new Group headquarters, acquisition
costs, amortisation of acquired intangibles, a one-off tax credit
for historical periods arising from the initial recognition of
benefit from the lower rate of tax applied to profits on patented
income and the tax effect of adjusting 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 2019
Six months Six months
ended ended
31 Dec 2019 (Unaudited) 31 Dec 2018 (unaudited)
GBPm GBPm
---------------------------------------------------------------- ------------------------- -------------------------
Profit for the period attributable to equity shareholders of
the parent 26 .1 27.7
---------------------------------------------------------------- ------------------------- -------------------------
Items that may be reclassified to the income statement in
subsequent years
Movements on cash flow hedges 3.3 (1.7)
Exchange differences on translation of foreign operations (7.9) 4.8
Movement in fair value of investment 0.2 (0.2)
Tax relating to components of other comprehensive income (0.6) 0.4
---------------------------------------------------------------- ------------------------- -------------------------
Other comprehensive ( expense) / income for the period (5.0) 3.3
---------------------------------------------------------------- ------------------------- -------------------------
Total comprehensive income for the period 21.1 31.0
---------------------------------------------------------------- ------------------------- -------------------------
Consolidated balance sheet
As at 31 December 2019
As at As at As at
31 Dec 2019 (unaudited) 30 Jun 2019 (audited) 31 Dec 2018 (Unaudited)
Notes GBPm GBPm GBPm
----------------------------- ------ ------------------------- ------------------------ --------------------------
Non-current assets
Goodwill 116.7 120.9 117.2
Intangible assets 108.9 106.7 113.4
Property, plant and
equipment 41.0 37.1 32.7
Right-of-use assets 67.2 - -
Investment 8 3.1 0.8 0.7
Deferred tax asset 8.1 9.4 7.9
345.0 274.9 271.9
----------------------------- ------ ------------------------- ------------------------ --------------------------
Current assets
Inventories 39.5 36.0 32.1
Trade and other receivables 33.9 43.1 30.7
Current tax receivable 12.0 5.4 -
Derivative financial
instruments 8 2.1 0.2 0.1
Cash and cash equivalents 189.9 87.1 83.2
277.4 171.8 146.1
----------------------------- ------ ------------------------- ------------------------ --------------------------
Total assets 622.4 446.7 418.0
----------------------------- ------ ------------------------- ------------------------ --------------------------
Current liabilities
Trade and other payables (39.6) (41.8) (33.3)
Lease liabilities (6.5) - -
Derivative financial
instruments 8 (0.1) (2.0) (1.9)
Current tax liabilities (1.1) (1.5) (1.2)
Borrowings 8 (101.4) - -
(148.7) (45.3) (36.4)
----------------------------- ------ ------------------------- ------------------------ --------------------------
Net current assets 128 .7 126.5 109.7
----------------------------- ------ ------------------------- ------------------------ --------------------------
Non-current liabilities
Lease liabilities (67.5) - -
Deferred tax liability (16.4) (16.5) (14.1)
Derivative financial
instruments 8 - (0.1) (0.2)
----------------------------- ------ ------------------------- ------------------------ --------------------------
(83.9) (16.6) (14.3)
----------------------------- ------ ------------------------- ------------------------ --------------------------
Total liabilities (232.6) (61.9) (50.7)
----------------------------- ------ ------------------------- ------------------------ --------------------------
Net assets 389 .8 384.8 367.3
----------------------------- ------ ------------------------- ------------------------ --------------------------
Equity
Share capital 0.4 0.4 0.4
Share premium account 27.8 27.0 26.2
Merger reserve 68.1 68.1 68.1
Own shares (2.6) (2.8) (3.0)
Translation reserve 25.4 33.3 31.1
Hedging reserve 1.4 (1.3) (1.3)
Retained earnings 269 .3 260.1 245.8
----------------------------- ------ ------------------------- ------------------------ --------------------------
Total equity attributable to
the equity shareholders of
the parent 389 .8 384.8 367.3
----------------------------- ------ ------------------------- ------------------------ --------------------------
Approved by the Board of directors and authorised for issue on 6
March 2020.
Consolidated statement of changes in equity
Six months ended 31 December 2019
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 2019,
as previously reported 0.4 27.0 68.1 (2.8) 33.3 (1.3) 260.1 384.8
----------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
Implementation of IFRS 16 - - - - - - (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
(expense) / income - - - - (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
----------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
Six months ended 31 December 2018
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 2018 0.4 25.6 68.1 (3.2) 26.3 0.1 234.4 351.7
----------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
Profit for the period - - - - - - 27.7 27.7
Other comprehensive income /
(expense) - - - - 4.8 (1.4) (0.1) 3.3
----------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
Total comprehensive income
for the period - - - - 4.8 (1.4) 27.6 31.0
----------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
Issue of ordinary shares - 0.6 - 0.2 - - (0.2) 0.6
Share-based payments
inclusive of deferred tax - - - - - - 1.8 1.8
Purchase of own shares - - - - - - (0.2) (0.2)
Equity dividends - - - - - - (17.6) (17.6)
----------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
Balance as at 31 December
2018 (unaudited) 0.4 26.2 68.1 (3.0) 31.1 (1.3) 245.8 367.3
----------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
Year ended 30 June 2019
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 2018 0.4 25.6 68.1 (3.2) 26.3 0.1 234.4 351.7
----------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
Profit for the period - - - - - - 45.0 45.0
Other comprehensive income /
(expense) - - - - 7.0 (1.4) (0.1) 5.5
----------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
Total comprehensive income
for the period - - - - 7.0 (1.4) 44.9 50.5
----------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
Issue of ordinary shares - 1.4 - 0.4 - - (0.4) 1.4
Share-based payments
inclusive of deferred tax - - - - - - 6.3 6.3
Purchase of own shares - - - - - - (0.2) (0.2)
Equity dividends - - - - - - (24.9) (24.9)
----------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
Balance as at 30 June 2019
(audited) 0.4 27.0 68.1 (2.8) 33.3 (1.3) 260.1 384.8
----------------------------- --------- --------- --------- -------- ------------ --------- ---------- -------
Consolidated cash flow statement
Six months ended 31 December 2019
Six months
Six months ended
ended 31 Dec 2018
31 Dec 2019 (unaudited) (unaudited)
Notes GBPm GBPm
------------------------------------------------------------------- ------ ------------------------- --------------
Operating profit for the period 26.6 33.4
Adjustments for:
Depreciation of property, plant and equipment 3.4 2.0
Depreciation of right-of-use assets 3.0 -
Amortisation of intangible assets 6.8 4.9
Derivative financial instruments at fair value through profit or
loss (0.7) 0.4
Research and development expenditure credit (0.9) (1.5)
Share-based payments charge 5.0 2.4
Unrealised currency translation gains (1.9) (0.6)
------------------------------------------------------------------- ------ ------------------------- --------------
Operating cash flows before movements in working capital 41.3 41.0
Increase in inventories (4.6) (2.5)
Decrease in receivables 7.1 5.0
Increase / (Decrease) in payables 1.7 (1.3)
------------------------------------------------------------------- ------ ------------------------- --------------
Cash generated from operations 45.5 42.2
Net income taxes paid (5.9) (5.8)
Net cash inflow from operating activities * 39.6 36.4
------------------------------------------------------------------- ------ ------------------------- --------------
Investing activities
Investment income 0.5 0.3
Purchase of property, plant and equipment * (7.9) (9.8)
Purchase of intangible assets * (9.2) (9.8)
Transfer of cash from escrow in respect of future capital
expenditure * 0.1 4.2
Net cash outflow arising from acquisitions (0.1) (11.9)
Purchase of investments (2.2) -
Net cash outflow from investing activities (18.8) (27.0)
------------------------------------------------------------------- ------ ------------------------- --------------
Financing activities
Dividends paid 7 (17.7) (17.6)
Decrease in obligations under leases * (2.2) -
Interest paid (0.6) -
Utilisation of revolving credit facility 8 103.4 -
Proceeds on issue of shares 0.8 0.6
Purchase of own shares (0.1) (0.2)
------------------------------------------------------------------- ------ ------------------------- --------------
Net cash inflow / (outflow) from financing activities 83.6 (17.2)
------------------------------------------------------------------- ------ ------------------------- --------------
Net increase / (decrease) cash and cash equivalents 104.4 (7.8)
------------------------------------------------------------------- ------ ------------------------- --------------
Cash and cash equivalents at beginning of period 87.1 90.2
Effect of foreign exchange rates (1.6) 0.8
------------------------------------------------------------------- ------ ------------------------- --------------
Cash and cash equivalents at end of period 189.9 83.2
------------------------------------------------------------------- ------ ------------------------- --------------
Free Cash Flow (i) 20.4 21.0
------------------------------------------------------------------- ------ ------------------------- --------------
(i) 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.
Cash and cash equivalents include GBP0.6m (2018: GBP0.1m) in
respect of funds contributed by employees for the purpose of
purchasing shares under the Abcam Abshare Scheme upon vesting.
Notes to the interim financial information
For the six-month period ended 31 December 2019
1. General information
This condensed consolidated interim financial information for
the six months ended 31 December 2019 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 2019 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 6 September 2019 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 information for the six months
ended 31 December 2019 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 2019 save as outlined below. In addition, tax on income in the
interim period is calculated as described in note 5.
New accounting standards and interpretations
The Group adopted IFRS 16 on 1 July 2019 and this is the first
financial information prepared under this standard. Analyses of the
impacts of this new standard are set out below and the remaining
accounting policies in this financial information have been applied
consistently with the Group's financial statements for the year
ended 30 June 2019.
IFRS 16 'Leases'
IFRS 16 supersedes IAS 17 'Leases' and has been endorsed by the
European Union. The most significant changes are in relation to
lessee accounting. Under IFRS 16 the lessee recognises a
right-of-use asset and a lease liability for all leases currently
accounted for as operating leases, with the exception of leases for
a short period (less than 12 months) where recognition exemption
applies or where the underlying asset value is low.
Right-of-use assets are measured at cost, less any accumulated
depreciation and lease incentives received. Unless the Group is
reasonably certain to obtain ownership of the leased assets at the
end of the lease term, the recognised right-of-use assets are
depreciated over the shorter of its estimated useful life and lease
term. Right-of-use assets are also subject to impairment
testing.
At the commencement of a lease, the Group recognises lease
liabilities at the present value of lease payments to be made over
the lease term. The lease payments include fixed payments less any
lease incentives receivable and variable lease payments that depend
on an index or a rate. Variable lease payments that do not depend
on an index or a rate are recognised as expense in the period over
which the event or condition that triggers the payment occurs. In
calculating the present value of lease payments, the Group uses the
incremental borrowing rate at the transition date (or lease
commencement date if later) if the interest rate implicit in the
lease is not readily determinable. After the transition or
commencement date, the amount of lease liabilities is increased to
reflect the accretion of interest and reduced for lease payments
made. In addition, the carrying amount of lease liabilities is
remeasured if there is a modification or a change in the lease
term.
Before the adoption of IFRS 16, the Group classified each of its
leases at the inception date as either a finance lease or an
operating lease. A lease was classified as a finance lease if it
transferred substantially all of the risks and rewards incidental
to ownership of the leased asset to the Group; otherwise it was
classified as an operating lease. Historically, all of the Group's
leases have been classified as operating leases whereby the leased
asset was not capitalised, and the lease payments were recognised
as rent expense in the income statement on a straight-line basis
over the lease term. Any prepaid rent and accrued rent were
recognised under Prepayments and Trade and other payables,
respectively.
Notes to the interim financial information (continued)
For the six-month period ended 31 December 2019
2. Basis of preparation (continued)
The Group has taken advantage of the modified retrospective
transition method whereby on transition, a lease liability is
recognised as the present value of future payments and an asset is
recognised as the present value of the total lease payments at the
lease inception and then depreciated on a straight-line basis from
this transition date. The income statement and balance sheet for
prior periods have not been restated. A transition adjustment of
GBP2.2m is generated due to the difference between the value of the
asset and liability.
The Group's income statement is impacted by the change in
accounting standard as the fixed rental expense is replaced by a
depreciation charge and an interest expense. For the year ended 30
June 2020, there is expected to be an increase of approximately
GBP1.0m in operating profit comprising an increase in depreciation
of GBP6.0m offset by the reduction in rent expense of GBP7.0m
relating to the previous treatment as operating leases. Finance
costs are expected to increase by GBP1.1m relating to the
additional lease liabilities recognised, resulting in an overall
decrease in profit before tax of GBP0.1m.
The long-term impact to the Group's reported profit after tax is
expected to be immaterial with a net decrease in the initial years
after transition which will reverse in later years as the leases in
existence at transition come closer to ending.
On transition the weighted average incremental borrowing rate
was 1.6%, which in turn takes advantage of the practical expedient
on transition to apply a single discount rate to groups of leases
with similar risk profiles. As such a single discount rate has been
applied to leases in each country in which the Group operates.
The impact of transitioning to IFRS 16 on the 1 July 2019 to
each balance sheet line item is as follows:
30 June 2019 as previously
reported IFRS 16 adjustments 1 July 2019 as adjusted
GBPm GBPm GBPm
---------------------------------- ---------------------------------- -------------------- ------------------------
Right of use assets - 70.2 70.2
Trade and other receivables 43.1 0.3 43.4
Current Lease liabilities - (6.5) (6.5)
Trade and other payables (41.8) 3.6 (38.2)
Non-current Lease liabilities - (69.8) (69.8)
---------------------------------- ---------------------------------- -------------------- ------------------------
Retained earnings 260.1 (2.2) 257.9
---------------------------------- ---------------------------------- -------------------- ------------------------
Total attributable to equity
shareholders of the parent 384.8 (2.2) 382.6
---------------------------------- ---------------------------------- -------------------- ------------------------
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 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 performance measures
Adjusted performance 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.
Notes to the interim financial information (continued)
For the six-month period ended 31 December 2019
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 table in the 'financial performance in the period' section
of the Interim Management Report above sets out an analysis of the
Group's revenue.
4. Consolidated adjusted financial measures
A reconciliation of the Group's adjusted performance measures to
reported IFRS measures is presented below:
Six months ended 31 Dec 2019 Six months ended 31 Dec 2018
(unaudited) (unaudited)
------------------------------- ----- ------------------------------------ -----------------------------------
Adjusted Adjusting items Total Adjusted Adjusting items Total
Note GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------- ----- --------- ---------------- ------- --------- ---------------- ------
EBITDA(1) 43.2 (3.4) 39.8 44.4 (4.1) 40.3
Depreciation and amortisation (9.8) (3.4) (13.2) (3.6) (3.3) (6.9)
------------------------------- ----- --------- ---------------- ------- --------- ---------------- ------
Operating profit 33.4 (6.8) 26.6 40.8 (7.4) 33.4
Finance income 0.5 - 0.5 0.3 - 0.3
Finance costs (1.1) - (1.1) - - -
Profit before tax 32.8 (6.8) 26.0 41.1 (7.4) 33.7
Tax 5 (5.8) 5.9 0.1 (7.5) 1.5 (6.0)
------------------------------- ----- --------- ---------------- ------- --------- ---------------- ------
Profit for the period 27.0 (0.9) 26 .1 33.6 (5.9) 27.7
------------------------------- ----- --------- ---------------- ------- --------- ---------------- ------
(1 EBITDA = Earnings before interest, tax, depreciation and
amortisation)
Six months ended 31 Dec 2019 Six months ended 31 Dec 2018
(unaudited) (unaudited)
GBPm GBPm
----------------------------------------------- ------- ----------------------------- -----------------------------
Analysis of adjusting items
Affecting EBITDA
System and process improvement costs (i) (2.1) (2.0)
Acquisition costs (ii) (1.3) -
Costs associated with new Group headquarters - (2.1)
(3.4) (4.1)
Affecting depreciation and amortisation
Amortisation of acquisition related
intangible assets (iii) (3.4) (3.3)
(3.4) (3.3)
Affecting profit before tax (6.8) (7.4)
Affecting tax
Tax effect of adjusting items 1.2 1.5
One off tax credit arising from patent box (iv) 4.7 -
claims
5.9 -
Total adjusting items (0.9) (5.9)
-------------------------------------------------------- ----------------------------- -----------------------------
(i) Comprises costs of the ERP implementation which do not qualify for capitalisation
(ii) Comprises legal and other professional fees associated with the acquisition of Expedeon.
(iii) GBP2.2m (2018: GBP2.1m) of amortisation of acquisition
intangibles is included within research and development expenses,
with the remaining GBP1.2m (2018: GBP1.2m) included within selling,
general and administrative expenses.
(iv) 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 information (continued )
For the six-month period ended 31 December 2019
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 2019 31 Dec 2018
(unaudited) (unaudited)
GBPm GBPm
------------------------------------- ------------- -------------
Current tax - 6.1
Deferred tax (0.1) (0.1)
------------------------------------- ------------- -------------
Total income tax (credit) / expense (0.1) 6.0
------------------------------------- ------------- -------------
Adjusted income tax charge* 5.8 7.5
------------------------------------- ------------- -------------
*Adjusted income tax charge excludes the tax effects of
adjusting items and one-off credit for historical periods arising
from the applicability of patent box relief, as set out in note
4.
The UK corporation tax rate for the six months ended 31 December
2019 was 19.0% (six months ended 31 December 2018: 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 effective rate on reported profits of (0.4%) is low due
mainly to a GBP4.7 million 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. The estimated effective rate of tax on reported profits for
the full year ending 30 June 2020 is approximately 9.8% (year ended
30 June 2019 20.2%), 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 17.7% and
for the full year ending 30 June 2020 is expected to be
approximately 18% (year ended 30 June 2019: 19.7%).
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 on adjusted
earnings which are set out and described in note 4.
Six months Six months
ended ended
31 Dec 2019 31 Dec 2018
(unaudited) (unaudited)
GBPm GBPm
---------------------------------------------------------------------------- ------------- --------------
Profit attributable to equity shareholders of the parent - adjusted 27.0 33.6
Adjusting items (0.9) (5.9)
---------------------------------------------------------------------------- ------------- --------------
Profit attributable to equity shareholders of the parent - total reported 26.1 27.7
---------------------------------------------------------------------------- ------------- --------------
Million Million
Weighted average number of ordinary shares in issue 205.8 205.2
Less ordinary shares held by Equiniti Share Plan Trustees Limited (0.5) (0.5)
---------------------------------------------------------------------------- ------------- --------------
Weighted average number of ordinary shares for the purposes of basic EPS 205.3 204.7
Effect of potentially dilutive ordinary shares: - share options and awards 1.9 1.7
Weighted average number of ordinary shares for the purposes of diluted EPS 207.2 206.4
---------------------------------------------------------------------------- ------------- --------------
Notes to the interim financial information (continued )
For the six-month period ended 31 December 2019
6. Earnings per share (continued)
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 2019 31 Dec 2018
(unaudited) (unaudited)
---------------------- ------------- -------------
Basic EPS 12.7p 13.5p
Diluted EPS 12.6p 13.4p
Adjusted basic EPS 13.2p 16.4p
Adjusted diluted EPS 13.0p 16.3p
---------------------- ------------- -------------
7. Dividends
Six months Six months
ended ended
31 Dec 2019 31 Dec 2018
(unaudited) (unaudited)
GBPm GBPm
--------------------------------------------------------------------------- ------------- -------------
Amounts recognised as distributions to equity shareholders in the period:
Final dividend for the year ended 30 June 2018 of 8.580 pence per share - 17.6
Final dividend for the year ended 30 June 2019 of 8.580 pence per share 17.7 -
Total distributions to owners of the parent in the period 17.7 17.6
--------------------------------------------------------------------------- ------------- -------------
Proposed interim dividend of 3.55 pence (H1 2019: 3.55 pence) per share 7.3 7.3
--------------------------------------------------------------------------- ------------- -------------
The proposed interim dividend was approved by the Board on 6
March 2020 and has not been included as a liability in these
financial statements.
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 information does 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 2019. There have been no changes to the risk
management policies since the year ended 30 June 2019.
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).
Notes to the interim financial information (continued)
For the six-month period ended 31 December 2019
8. Financial instruments and risk management (continued)
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 2019 GBPm GBPm GBPm GBPm
---------------------------------- -------- -------- -------- ------
Assets
Derivative financial instruments - 2.1 - 2.1
Investment 0.9 - 1.9 2.8
---------------------------------- -------- -------- -------- ------
Total assets 0.9 2.1 1.9 4.9
---------------------------------- -------- -------- -------- ------
Liabilities
Derivative financial instruments - (0.1) - (0.1)
Total liabilities - (0.1) - (0.1)
---------------------------------- -------- -------- -------- ------
Level 1 Level 2 Level 3 Total
30 June 2019 GBPm GBPm GBPm GBPm
---------------------------------- -------- -------- -------- ------
Assets
Derivative financial instruments - 0.2 - 0.2
Investment 0.8 - - 0.8
---------------------------------- -------- -------- -------- ------
Total assets 0.8 0.2 - 1.0
---------------------------------- -------- -------- -------- ------
Liabilities
Derivative financial instruments - (2.1) - (2.1)
Total liabilities - (2.1) - (2.1)
---------------------------------- -------- -------- -------- ------
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.
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 EUR'm rate Sell Yen'm rate Yen'm rate
----- -------- ------- -------- ----------- -------- -------- ---------
Period ending 30
June 2020 16.4 1.29 20.9 1.12 1,048 140.6 84.8 9.0
Year ending 30 June
2021 3.1 1.29 7.7 1.14 466 139.0 19.1 9.2
--------------------- ----- -------- ------- -------- ----------- -------- -------- ---------
The Group's Level 3 financial instruments consist of unlisted
equity shares acquired during the six-month period.
The fair value of the unquoted equity shares can be determined
as management monitors the ongoing performance of the investment
and due to the recent nature of the purchase by the Group.
Borrowings
During the year ended 30 June 2019, the Group entered into a
Revolving Credit Facility (RCF) of GBP200m (with a GBP100m
additional accordion option), with an initial term of three years.
On 17 November 2019, EUR120.0m (GBP103.4m) was drawn down in order
to fund the acquisition of the Expedeon business (see note 10)
which completed on 1 January 2020. The initial interest rate on
these borrowings was 0.8%.
9. Capital commitments
As at 31 December 2019, the Group had capital commitments of
GBP1.7m (31 December 2018: GBP3.9m) relating to the acquisition of
property, plant and equipment and intangible assets.
Notes to the interim financial information (continued)
For the six-month period ended 31 December 2019
10. Post balance sheet events
a) Expedeon
On 1 January 2020, the Group completed the acquisition of
Expedeon's Proteomics and Immunology business, which includes
Innova and TGR BioSciences (together known as 'Expedeon') from
Expedeon AG for a cash consideration of EUR120 million (GBP102
million) which was funded from the Group's borrowing facility.
The acquisition includes leading protein conjugation
technologies and products with well-known industry brands,
including Lightening-Link(R) and CaptSure(TM) . The acquisition is
complementary to the Group's existing antibody and multiplex growth
strategy and represents a compelling strategic fit which
accelerates ambitions within the complementary antibody conjugation
and labelling market, where there is high customer overlap.
Expansion of the addressable market is enabled by the leveraging of
technologies in conjugation with Abcam's deep expertise and
experience in customer service, digital marketing and sales and
provides opportunities to combine both companies' technologies to
create new value-added products to support customer needs.
b) Gene editing platform and oncology product portfolio
On 30 January 2020, the Group announced the purchase of the gene
editing platform and oncology product portfolio of Applied
StemCell, Inc. (ASC) for life science research and diagnostic
markets for approximately $10 million (GBP7 million).
The transaction includes a portfolio of cell lines and the well
regarded AccuRef reference materials product line ( www.accuref.com
). Abcam intends to expand the ASC platform to become its discovery
engine for developing novel edited cell lines, building Abcam's
existing portfolio of knock-out (KO) cell lines. Ready-made KO cell
lines play a significant role in the study and understanding of
biological pathways and disease models.
c) Partial repayment of borrowings
On 17 February 2020, the Group made a partial repayment of
amounts borrowed under the RCF and redenominated the remaining
borrowings into Sterling, leaving an outstanding balance of
GBP82.0m . The current interest rate is 1.5 % .
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 2019 on pages 38 to 44 and in note 4 to the consolidated
financial statements. Information on financial risk management is
set out in note 23 to the consolidated financial statements . A
copy of the Annual Report and Accounts is available on the Group's
website w ww.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
2019, 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. Increased competition: specifically pinpointed to The risk of competitors introducing new technologies,
disruptive developments channels or workarounds, strengthening
product offerings and routes to market.
---------------------------------------------------------- ----------------------------------------------------------
2. Identification, valuation and pursuit of The risk that Abcam fails to acquire businesses which
acquisitions and investments could bring added value or does not
fully identify risks within acquisition targets which
would affect the valuation or acquisition
rationale.
---------------------------------------------------------- ----------------------------------------------------------
3. Availability of research funding The risk of a substantial reduction in funding for life
sciences research in one of Abcam's
significant territories.
4. ERP project/IT infrastructure The risk that Abcam does not continue to develop its
external facing and internal IT infrastructure.
5. Cyber security risks including loss of data and The risk that Abcam's critical IT infrastructure is
website inaccessibility compromised or subject to cyber attack.
6. Loss of output at any Group manufacturing or logistics The risk that a disruptive event or disaster occurs at a
facility key facility.
7. Business growth is constrained by not having The risk of failure to attract and retain high calibre
appropriate people, resources and infrastructure personnel, or to maintain operational
in place and IT infrastructure that is sufficiently robust,
efficient and scalable.
8. Inadequate integration or leverage of acquired The risk of misjudging key elements of an acquisition or
businesses failing to integrate the acquired
business in an efficient and timely manner.
9. Reputational risk The risk of not meeting internal high standards of
quality and ethical business practice.
---------------------------------------------------------- ----------------------------------------------------------
10. Significant exchange rate movements The risk of significant unfavourable foreign exchange
movements.
---------------------------------------------------------- ----------------------------------------------------------
11. Non-compliance with laws and regulations The risk of insufficient evaluation and non-compliance
with legislation and regulation in
the markets and countries in which Abcam operates.
---------------------------------------------------------- ----------------------------------------------------------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR VVLFBBXLEBBB
(END) Dow Jones Newswires
March 09, 2020 03:00 ET (07:00 GMT)
Abcam (LSE:ABC)
Historical Stock Chart
From Apr 2024 to May 2024
Abcam (LSE:ABC)
Historical Stock Chart
From May 2023 to May 2024