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 final results for the 18-month period
ended 31 December 2021 (the ‘period’). The Group’s accounting
reference date changed from 30 June to 31 December during the
year1, therefore these financial statements report on both a 12-
and 18-month period.
SUMMARY
PERFORMANCE
|
£m, unless stated otherwise |
|
12 months ended 31 Dec 2021
(unaudited)(‘CY2021’) |
12 months ended 31 Dec 2020 (unaudited)(‘CY2020’) |
|
18 months ended 31 Dec 2021 (audited) |
|
Revenue |
|
315.4 |
269.3 |
|
462.9 |
|
Adjusted gross profit margin*, % |
|
72.2% |
70.0% |
|
71.8% |
|
Reported operating profit |
|
7.1 |
1.0 |
|
24.4 |
| Adjusted operating
profit** |
|
60.4 |
50.6 |
|
95.5 |
|
Adjusted operating margin, % |
|
19.2% |
18.8% |
|
20.6% |
| Share-based payments related
to pre-CY2021 schemes |
|
(12.9) |
(13.3) |
|
(22.0) |
| Like-for-like adjusted
operating profit (post share-based payments related to pre-CY2021
schemes)*** |
|
47.5 |
37.3 |
|
73.5 |
|
Like-for-like adjusted operating margin***, % |
|
15.1% |
13.9% |
|
15.9% |
|
Net (Debt) / Cash**** |
|
(24.1) |
211.9 |
|
(24.1) |
* Excludes the amortisation of the
fair value of assets relating to the inventory acquired in
connection with the acquisition of BioVision.
** Adjusted figures exclude impairment
of intangible assets, systems and process improvement costs,
acquisition costs, amortisation of fair value adjustments,
integration and reorganisation costs, amortisation of acquisition
intangibles, share-based payments and employer tax contributions
thereon, the tax effect of adjusting items and credits from patent
box claims. Such excluded items are described as ‘adjusting items’.
Further information on these items is shown in note 4 to the
consolidated financial statements.
*** In previous reporting periods,
share-based payments have not been included within adjusting items.
With the approval of the Profitable Growth Incentive Plan (‘PGIP’)
during CY2021, management considers it to be more appropriate and
more consistent with its closest comparable companies to include
all share-based payments in adjusting items. To aid comparison with
our previous presentation of results, we have included the adjusted
operating margin in the table above on a like-for-like basis,
excluding this change (‘Like-for-like’).
**** Net Cash comprises cash and cash
equivalents less borrowings.
CY2021 FINANCIAL
HIGHLIGHTS1,2
- Revenue growth of
+22% (+17% reported) at constant exchange rates, compared to
CY2020, including a 1%pt contribution from the acquisition of
BioVision
- +38% total in-house
CER revenue growth (including Custom Products & Licensing3
and £2.6m of incremental revenue from BioVision) (+32%
reported)
- Revenue from
in-house products and services contributed 61% of total revenue
(including Custom Products & Licensing3 and £2.6m of
incremental revenue from BioVision)
- Adjusted2 gross
margin increased by over 200 basis points to 72.2% (CY2020: 70.0%),
benefiting from the contribution of higher margin in-house products
and volume leverage resulting from the increase in revenue
- Adjusted2 operating
profit of £60.4m (excluding share-based payments), equating to an
adjusted operating margin of 19.2% (CY2020: 18.8%)
- Adjusted2 operating
margin on a like-for-like4 basis improved over 300 basis points to
16.5% in H2 ’21 (Jul-Dec), from 13.3% in H1 ’21 (Jan-Jun)
- Statutory reported
operating profit increased to £7.1m from £1.0m in CY2020
- Net cash inflow from
operating activities increased to £62.9m (CY2020: £58.9m)
BUSINESS
HIGHLIGHTS
-
Focus on serving customers’ needs globally as research activity
levels continued to normalise and demand for Abcam products
increased
-
Positive customer transactional Net Promotor Score ('tNPS') of +56
(CY2021) and product satisfaction rates at all-time highs
-
Completed the acquisition of BioVision, Inc (‘BioVision’), a
leading innovator of biochemical and cell-based assays, in October
2021, for cash consideration of $340m (on a cash free, debt free
basis)
-
High employee engagement, with the business ranked in the Top 5 in
the Glassdoor UK Employees' Choice Awards in January 2022, for the
second year running
-
Strengthened and expanded leadership in commercial and operational
teams with senior hires in Commercial, Brand, China, and Supply
Chain
-
Expanded the Group's global presence, with the opening of new and
enlarged sites in China, the US (Massachusetts, California,
Oregon), Singapore, and Australia
-
Upgraded supply chain systems at three locations, implemented new
data architecture, and began transition to a new e-commerce
platform, with completion of the digital transformation due in
2022
-
Completed the secondary US listing on Nasdaq's Global Market in
October 2020 (supplementing existing listing on AIM on the London
Stock Exchange)
-
Expanded Asia, digital, and life science industry experience on the
Board of Directors, with the appointments of Bessie Lee, Mark
Capone and Sally Crawford, as Non-Executive Directors
SHARE TRADING,
LIQUIDITY AND LISTING
-
Following our listing on Nasdaq in October 2020, the number of
Abcam shares traded as ADSs on Nasdaq has doubled. While only 10%
of our shares trade in the US market, it represents 25% of
liquidity
-
The Board continues to review options to increase share liquidity
and intends to consult with shareholders on these options in due
course
CY2022
GUIDANCE
-
Global lab activity continues to recover, though some uncertainty
remains
-
CY2022 trading performance YTD is in line with our
expectations
-
Expect total CER5 revenue growth of c.20% (including BioVision)
with mid-teens organic CER revenue growth
-
Expect continued adjusted gross margin improvement from the
contribution of higher margin in-house products and full year
impact of the BioVision acquisition
-
Expect total adjusted operating cost growth (including depreciation
and amortisation) at mid-teens percentage, as we slow rate of
investment and leverage recent investments
LONG TERM
GOALS TO CY2024
-
CY2024 revenue goal target range increased by £25m to £450m-£525m,
adjusted to incorporate BioVision6 and current operating
performance
-
Adjusted operating margin and ROCE targets remain unchanged
Commenting on
today’s results, Alan Hirzel, Abcam’s Chief Executive Officer,
said:
“I am grateful to
everyone at Abcam for their dedicated effort through this most
challenging time and thank our customers and partners for their
ongoing trust and support. We have had another successful year
operationally and financially despite the ongoing challenges. As we
look ahead to 2022, we expect to create more innovation and success
out of the past two years of investment as we installed elements of
Abcam’s long term growth strategy. The scientific community remains
our guide and with their support we are becoming a more influential
and trusted brand globally.”
Analyst and investor meeting
and webcast:
Abcam will host a conference call and
webcast for analysts and investors today at 13:00 GMT/ 09:00 EDT.
For details, and to register, please visit
corporate.abcam.com/investors/reports-presentations
A recording of the webcast will be
made available on Abcam’s website,
corporate.abcam.com/investors
Notes:
- On 2 June 2021,
Abcam announced that it had changed its accounting reference date
from 30 June to 31 December. Following this extension, these
financial statements are for the 18-month period ended 31 December
2021. To assist understanding of the company’s underlying
performance, like-for-like financial information for the 12-month
periods ended 31 December 2021 (‘CY2021’) and 31 December 2020
(‘CY2020’) have also been provided.
- These 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 and reconciled
to the most directly comparable measure prepared in accordance with
IFRS in note 4 to the interim financial statements.
- Custom Products
& Licensing (CP&L) revenue comprises custom service
revenue, revenue from the supply of IVD products and royalty and
licence income.
- In previous
reporting periods, share-based payments have not been included
within adjusting items. With the approval of the Profitable Growth
Incentive Plan (‘PGIP’) during CY2021, management considers it to
be more appropriate and more consistent with its closest comparable
companies to include all share-based payments in adjusting items.
To aid comparison with our previous presentation of results, we
also calculate adjusted operating margin on a like-for-like basis,
excluding this change (‘Like-for-like’).
- Average CY2021
exchange rates to GBP as follows: USD: 1.378; EUR: 1.159, RMB:
8.891, JPY: 150.7
- Last 12-month
BioVision recurring revenues of £17.8m at point of acquisition,
adjusted for non-recurring COVID-19 related revenues, and sales to
Abcam during that period.
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
OfficerMichael Baldock, Chief Financial OfficerJames Staveley, Vice
President, Investor Relations |
|
| |
|
| Numis – Nominated
Advisor & Joint Corporate Broker |
+ 44 (0) 20 7260 1000 |
| Garry Levin / Freddie
Barnfield / Duncan Monteith |
|
| |
|
| Morgan Stanley – Joint
Corporate Broker |
+ 44 (0) 207 425 8000 |
| Tom Perry / Luka Kezic |
|
| |
|
| FTI
Consulting |
+ 44 (0) 20 3727
1000 |
| Ben Atwell / Julia
Bradshaw |
|
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 StatementsThis 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 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; we have identified
material weaknesses in our internal control over financial
reporting and failure to comply with requirements to design,
implement and maintain effective internal control over financial
reporting could have a material adverse effect on our business;
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.The Group has changed its year end to
December 31 and, as a result, this year’s results present an
18-month accounting period, which ended on 31 December 2021. The
comparison to the previously reported 12 months ended 30 June 2020
presents substantial period-on-period increases due to the longer
period of account in the current reporting period and provides
little helpful insight into the underlying performance of the
business. To provide more useful commentary, both the CEO and CFO
reviews largely focus on the financial and operating performance of
the business in the 12 months ended 31 December 2021 (‘CY2021’)
compared to the 12 months ended 31 December 2020 (‘CY2020’). The
audited financial statements in the back of this report contain
statutory results for the 18 months ended 31 December 2021 and a
comparison to the year ended 30 June 2020.
CEO Report
Moving forward with courage
and hope
As we continue to grapple with the challenges of our times, I am
convinced that for all of us in the science community, the only way
to move forward is with courage and hope. Over the last several
decades, the positive impact of life science on the human condition
has been profound. For example, across every income level and every
country where there has not been a catastrophe, life expectancy has
increased by nearly 20 years since the 1960s.
Life science, medical discovery and innovation have been central
to this health and social progress. In the last two decades, since
the sequencing of the human genome, research in life sciences has
more than doubled, and with it the potential to make even more
progress. New discoveries can take 10 years or more to make a
tangible difference and I am hopeful that our children will reap
greater benefits in health and lifespan in the years to come.
As I think about these inspiring achievements, alongside the
development of our own business, I am determined to ensure Abcam
continues to innovate and play a key role in helping our customers
reach their scientific and career goals. We remain resolutely
focused on enabling scientists to make breakthroughs faster, with
better quality research tools and a passion for collaboration. It
won’t stop there either. We see a greater role for Abcam to
accelerate the transition of discovery to clinical and social
impact.
I have always believed in the power of collaboration and the
global response to the pandemic has shown the benefits of such
collaboration. With the challenges ahead we will find ways for
researchers, funders, publishers, tools companies, translational
researchers, clinicians, diagnostics companies, pharmaceutical
companies, and regulators to work together in common purpose as
one. Improvements our business has made in product performance and
consistency and our expanding network of commercial relationships
are significantly reducing the time from first discovery to a
better patient outcome. We look to put more effort toward this
collaborative approach as we build our business.
This collaborative spirit is also championed within our teams.
Efforts we have been making to improve inclusion and diversity have
amplified more voices through groups led by our people and outreach
activities in our communities.
Despite everything we faced in 2021, and the disturbing
geopolitical aggression in Europe at the start of 2022, we see this
period as an exciting time for proteomics research. I remain
confident that Abcam is well positioned to influence and improve
the journeys from discovery to impact, while sustaining value
creation for all stakeholders.
Our performance
We achieved the major strategic, operational and financial goals
we set for the business in the period and continued to make
significant operational changes and to implement our growth
strategy. Feedback from our customers was excellent, with a
customer tNPS of +56 (CY2021). Sales of our in-house products grew
strongly as we scaled up our capability here. Because these are
sold at a higher margin, we started to feel the benefits of
increased operational leverage. The business transition to 2024 is
nearly complete and we will soon be able to fully reap the benefits
of what we have been building over recent years.
Indeed, the biggest contributor to Abcam’s growth and value and
the main reason why we are winning more market share is the
portfolio of proprietary products developed and manufactured at
Abcam. This burgeoning in-house library of recombinant antibodies,
immunoassays, conjugation products, proteins, and cell lines is
offering customers the right products, to the right pathways, with
a promise to go the distance from discovery to clinic. Customer
demand for this portfolio drove in-house product revenue to £174m
in CY2021 (CY2020: £129m), equivalent to 41% annual CER growth (36%
excluding BioVision). Our investment of 14% of revenue (own
product) back into R&D (including capitalised product
development) is helping us sustain the growth and higher customer
satisfaction in these areas.
The BioVision acquisition in October 2021 added one of our
largest suppliers to the in-house portfolio, with strengths in
biochemical and cell-based assay kits. Business integration is
moving ahead as planned and we expect it to provide further
innovation opportunities within this portfolio.
Risks around the global pandemic remain – as evidenced by the
emergence of the Omicron variant in late 2021 – but data suggests
that overall lab activity increased consistently during 2021 in our
largest markets.
Progress toward our strategic goals
We aim to deliver consistent, durable growth and performance in
a responsible way. Despite the continued disruption of COVID-19, we
have seen sustained progress during the period as we continue to
deliver on the growth strategy announced in November 2019.
Strategic KPI performance (in-house product revenue growth and
customer transactional net promotor score) was positive, feedback
on our products has never been stronger, and we continue to make
market share gains worldwide. At the same time, we are focused on
ensuring the significant investment made in our innovation
capabilities, systems and processes, facilities, and people support
our long-term growth aspirations.
As we seek to further strengthen our position as the partner of
choice for our customers and partners, we have made further
progress against each of the following strategic goals to drive
sustained organic growth set out in 2019:
1. Sustain and extend antibody and digital leadership
2. Drive continued expansion into complementary market
adjacencies
3. Build organisational scalability and sustain value
creation
Innovation and our impact on scientific
progress
Our product portfolio enables breakthrough proteomics discovery
by our customers and partners. They are working to innovate and
discover proteomic mechanisms such as the role of signaling and
regulatory proteins in biological pathways – ultimately leading to
diagnostics and treatments for diseases such as cancer and immune
deficiency disorders. Their success depends on rigorous product
performance and reliability, and it’s these factors that continue
to guide our innovation efforts.
Since 2019, we have put more resources into innovating faster in
antibodies and immunoassays, and we have complemented these areas
with new product categories such as conjugation kits,
proteins/cytokines, engineered cell lines, and now a range of
BioVision cellular and biochemical assays. In total, new products
introduced since 2019 represented approximately 7% of 2021 revenue
(CY2021) and our own-product revenues (including Custom Products
& Licensing) contributed over 60% of total revenue in the last
12 months. We are confident that our customer data insights and our
approach to innovation and marketing underly this strong growth
driver from internal innovation.
In CY2021, our teams developed and launched over 2,500
high-quality antibody products, including recombinant RabMAb
antibodies, antibody pairs, SimpleStep ELISA kits and new
formulations that enable faster labelling and assay development.
These new product introductions combined to meet two objectives for
our new product development: fill unmet needs in research and
increase product quality. As we have developed our high throughput
innovation capability, we have also made bolder moves to delist
third party supplied product that doesn’t meet our customer quality
needs. Together, these actions have substantially improved Abcam’s
quality and our overall brand preference.
According to the most recently available industry data, these
innovations and other initiatives have led Abcam to become the most
cited antibody company. Abcam products were cited more than 70,000
times in scientific journals in 2020 and the business now has a
citation share of over 22%, up approximately two percentage points
on the previous year (source: CiteAb, based on over 300,000
recorded citations for 2020 as of February 2022). Most importantly,
we have seen a continued strengthening of customer feedback during
the period, with product satisfaction rates at all-time highs
(rolling 12-month period to 31 December 2021).
Extending Abcam’s leadership in research antibodies has provided
a strong foundation to expand into adjacent product categories used
in protein research. We took our first adjacent product category
move in 2014 with the introduction of proprietary immunoassays. In
total these (non-primary antibody) product categories now
contribute over 30% of total revenue. In CY2021, total CER revenue
growth from these categories was 32% demonstrating the progress
made developing these capabilities and the growing customer
interest in these high-quality product portfolios. Other, newer
product categories have had less time to develop than either our
antibody or immunoassay portfolio, but we are seeing similar growth
performance and opportunities here.
Extending the impact of our innovation through
partnership and collaboration
Across the translational research, drug discovery and clinical
markets, we are focused on strengthening our position as a leading
discovery partner to organisations looking to access high quality
antibodies and antibody expertise for commercial use within their
products and assays – a philosophy we refer to as ‘Abcam
Inside’.
The period has seen good progress in this regard, with continued
growth in the adoption of our products for use on third party
instrumentation platforms, or by partners for their use in the
development of clinical products.
We established several new platform partnerships during the
period while significantly expanding existing co-development
programmes with current partners, including recently announced
strategic partnerships with Alamar and Nautilus Biotechnology. We
also grew our specialty antibody portfolio – signing 85 new
outbound commercial agreements in CY2021 with organisations that
have the potential to lead to new diagnostic or therapeutic tools
in years to come.
To date, approximately 1,000 of our antibodies are now validated
for commercial use on third party platforms or as diagnostic tools,
with over 3,000 more currently undergoing evaluation by our
partners. We believe both areas remain significant long-term
opportunities for the Group.
Building a scalable enterprise
Over the last two years our teams have been putting ideas,
know-how, and capital to work installing new capabilities as we
build scalability into our operational infrastructure, including
our manufacturing and logistics footprint and IT backbone and
digital capabilities to support our growth.
At the same time, global supply chains have faced significant
challenges primarily as a result of the COVID-19 pandemic. These
additional pressures have been resolved by additional investment in
manufacturing equipment and processes, while also introducing
additional shift patterns in order to achieve better use of our
resources. Further progress is expected as we pursue changes to our
processes, including quality control, kit development and logistics
as well as benefits expected from our integrated business planning
process.
We also completed several important global footprint initiatives
in the period, with site moves or upgrades completed in Boston,
Fremont, and Eugene in the USA; Hangzhou and Shanghai in China;
Adelaide in Australia; Amsterdam in the Netherlands as well as
relocating our Hong Kong operations to Singapore. These initiatives
enable more efficient customer service, manufacturing, supply chain
and logistics processes; create additional capacity needed to meet
our growth objectives; and reduce risks that were identified in our
ongoing risk management process.
Across our IT and digital infrastructure, roll-out of the final
stages of our ERP renewal programme continued, covering
manufacturing and supply chain. Systems have now been successfully
deployed across the Group’s major manufacturing hubs, with final
deployments in other small sites due for completion in 2022. At the
same time, development of the next generation of our
customer-facing digital platform has continued. The new platform is
being designed to enable a step change to the customer experience,
supporting dynamic content, a more personalised experience and
driving enhanced search and traffic. Beta-testing in select markets
was launched during the year and we remain on track to launch the
new site in 2022.
Sustaining social and financial value
creation
Our impact flows from our vision and purpose, which ultimately
lead to a positive impact on the world: helping the scientific
community accelerate breakthroughs in human healthcare. The more
successful we can be as a business, therefore, the greater the
difference we can make in the world. Our vision to be the most
influential life sciences company comes with a commitment to the
highest ethical standards, not just in our own conduct, but across
our value chain.
We have made further progress against each of our four priority
areas (those seen as most important to sustaining value creation,
namely: Products; People; Partners; and Planet) and were pleased to
be ranked first by Sustainalytics, a leading ESG ratings agency,
across its universe of more than 1,000 healthcare companies
globally. Full details of our commitments, performance and progress
will be provided in our 2021 Impact Report to be published in April
and made available on our corporate website
(corporate.abcam.com/sustainability).
Of course, the ability of Abcam and our industry to continue to
thrive will depend on future generations of scientists and so it’s
exciting to see that more young people than ever are taking STEM
subjects. I am proud of Abcam’s support in this area through our
work with In2Science UK and The Henrietta Lacks Foundation.
We have also made significant progress on our diversity and
inclusion during the period. A new D&I strategy was launched
alongside the establishment of multiple Employee Resource Groups,
an enhanced family leave policy, and the introduction of diversity
and inclusion targets that are tied to senior management
compensation. These and other initiatives ensure that we are
building an exceptional workplace for our teams, and it was
pleasing to once again be recognised by Glassdoor as one of the top
5 employers in the UK in 2021.
Attractive outlook
We remain on track to achieve the five-year plan that we set out
in 2019. In 2022, we will complete a few large-scale tasks to help
us scale the business over the next decade. Once those are
complete, the agenda for the year will largely focus on refining
what we have installed, learning from the market, and making
adjustments to drive double digit revenue growth and improve profit
margins.
With the addition of BioVision and adjustments for ongoing
revenue, plus our confidence in the performance of the business, we
have raised our revenue target for 2024 to a range of £450m-£525m,
representing growth rates that are two to three times our
underlying market and reflect the durable growth of Abcam.
None of this attractive outlook could happen without great
energy and effort by everyone involved. I thank our colleagues for
their unwavering dedication, our customers for the trust they place
in us, and our board of directors and our shareholders for their
continued support.
Alan HirzelCEO
CFO Report
The Group has changed its year end to 31
December. As a result, this year’s results will present an 18-month
accounting period, which ended on 31 December 2021. As a result,
the comparison to the previously reported 12 months ended 30 June
2020 presents substantial period-on-period increases due to the
longer period of account in the current reporting period and
provides little helpful insight into the performance of the
business during 2021. In order to provide a more useful comparison,
this review largely focuses on the comparison of the 12 months
ended 31 December 2021 (‘CY2021’) to the 12 months ended 31
December 2020 (‘CY2020’). The audited financial statements in the
back of this report contains the statutory results for the 18
months ended 31 December 2021 and a comparison to the year ended 30
June 2020.
In preparing the CY2020 and CY2021 balances, the
Group has applied consistently its accounting policies as disclosed
within note 1. Although CY2020 and CY2021 are not audited financial
periods within these financial statements, the balances have been
extracted from the Group’s underlying accounting records and
reconciled in line with previously disclosed statements. For
further information on the composition of CY2020 and CY2021, refer
to the ‘Basis of preparation’ section in the back of this
report.
The CFO’s Report and Financial Review includes
discussion of alternative performance measures which are defined
further in the Notes to the Preliminary Financial Information.
These measures include adjusted financial measures, which are
explained in note 1b and reconciled to the most directly comparable
measure prepared in accordance with IFRS in note 4. Further detail
on the Group’s financial performance is set out in the Preliminary
Financial Information and notes thereto.
Constant exchange rates (“CER”) growth is
calculated by applying the applicable prior period average exchange
rate to the Group’s actual performance in the respective
period.
Continued strong
performance
The Group reported revenue for CY2021 of £315.4m (CY2020:
£269.3m), a CER growth rate of 22%. This figure includes a
contribution of approximately one percentage point, or £2.6m, from
BioVision following the acquisition’s completion on 27 October
2021. Growth in revenue from our own, in-house (catalogue) products
was 41% (CER) for CY2021, including a four-percentage point
contribution from BioVision.
While laboratories continued to relax COVID-19 related
restrictions during the period, and data indicates overall lab
activity levels increased through 2021, activity had not fully
returned to pre-COVID levels by the end of the period due to the
emergence of the Omicron variant in late 2021.
Adjusted operating profit (before all share-based payment costs)
for CY2021 was up 19%, to £60.4m (CY2020: £50.6m). This equates to
an adjusted operating profit margin (excluding share-based
payments) of 19.2% (CY2020: 18.8%). After share-based payment
charges related to share incentive schemes in force prior to the
start of the year, of £12.9m, like-for-like adjusted operating
profit was £47.5m, equivalent to an adjusted operating profit
margin of 15.1% (CY2020: 13.9%).
Total revenue and adjusted operating profit for the 18 months
ended 31 December 2021 was £462.9m and £95.5m respectively. The
Group’s statutory results for the 18 months ended 31 December 2021
are covered in more detail in our audited financial statements
contained herein.
Investing in future
growth
Despite the disruption inflicted on our customers and industry
by COVID-19, the long-term opportunities for growth across our
markets continue to strengthen and, consistent with the strategic
plans we set out in November 2019, we have further invested in our
business through the period to capture these opportunities. Our
global team increased to approximately 1,750 colleagues by the end
of 2021 (31 December 2020: 1,600) and, overall, total adjusted
operating costs in CY2021 rose 21% to £167.3m. We also committed a
further £47m in capital expenditure (net of landlord contributions)
during CY2021 to growth and scaling opportunities across the
business, including capitalised product innovation, global
footprint enhancements – including the opening of our flagship US
site in Waltham, Massachusetts – and the implementation of the
final stages of our ERP implementation.
Underpinning our invest-to-grow strategy is our robust balance
sheet and financial position. Net cash generation from operating
activities increased to £62.9m in CY2021 (CY2020: £58.9m) and we
ended the period with a small net debt position of £24.1m.
Operational leverage and
increased profitability
As expected, over the last two years
the Group’s profit margins have been suppressed by the effects of
both COVID-19 and the implementation of the Group’s five-year
growth plan. Many of our major investment plans are now
substantially complete, and as we look forward, we expect to see
the rate of investment reduce and the resultant delivery of
operational leverage as the value of our investments are realised.
We are pleased with the progress made over the most recent
six-month period, where our adjusted operating margin (excluding
share-based payments) was 20.3% as compared to 17.8% for the first
six months of CY2021 (or 16.5% in H2 compared to 13.3% in H1 on a
‘like-for-like’ basis, including share-based payments relating to
pre-2021 share plans).
As we look forward, we expect this
operating leverage to continue to levels consistent with those
levels laid out in our five-year growth plan, with a goal to reach
over 30% in CY2024.
Acquisition of
BioVision
In July 2021, we announced the signing
of an agreement to acquire BioVision for $340m on a cash-free,
debt-free basis. The purchase closed in October 2021, and we are
now working on the integration, building on our combined expertise,
and enhancing our presence in cell based and metabolic assays. To
support the financing of the acquisition, we drew down
approximately £120m on our revolving credit facility in October
2021.
US Nasdaq listing
The Group successfully added a
secondary US listing on Nasdaq in October 2020, supplementing its
existing admission to trading on the London Stock Exchange’s AIM
market whilst raising approximately £127m ($180m). The listing
supports the Group’s plans to enhance liquidity in our shares,
attract a greater number of US-based life science and growth
investors and provide the Group with an acquisition currency in the
US market. We were pleased with the demand for the offering from
long-term, life science investors. Interest has grown since, with
the number of American Depository Receipts (ADRs) in issue
doubling.
The board continues to review options
to increase share liquidity and to ensure investor demand is met,
and intends to consult with shareholders on these options in
due course.
Outlook, 2022 guidance and
long-term goals to 2024
We have made good progress in many
areas during the year and our top line performance has seen good
momentum coming out of the pandemic. Whilst short-term returns on
our core business have inevitably been reduced by COVID-19 and our
investments, I am confident in a continuation of the trajectory we
have seen over the last six months, and the potential return our
organic and inorganic investments will generate over the medium-
and long-term.
CY2022 Guidance
Global lab activity continues to recover, though some uncertainty
remains, with trading performance in the first two months of CY2022
in line with our expectations.
For CY2022 overall, we currently
estimate total reported revenue to increase by approximately 20% on
a constant exchange rate basis, including the impact from the
acquisition of BioVision, with organic CER growth of mid-teens. We
expect continued adjusted gross margin improvement through CY2022,
due to the contribution of higher margin in-house products and the
full year effect of BioVision transaction. Total adjusted operating
costs (including depreciation and amortisation) are expected to
grow at a mid-teens percentage rate, as we slow the rate of
investment and leverage our recent investments.
Long-term goals to
CY2024The Group expects to deliver improving operating
leverage as the pace of investment graduates. We are increasing our
2024 revenue goal by £25m to £450m-£525m, adjusting to incorporate
BioVision and our current operating performance. Our adjusted
operating margin and ROCE targets remain unchanged.
This commentary represents
management’s current estimates and is subject to change. See the
Cautionary statement regarding forward-looking statements on page 3
of this release.
Summary
Performance
|
|
Reported Results |
|
Adjusted Results |
|
|
18 months ended 31 Dec 2021 (audited)£m |
12 months ended 30 June 2020 (audited, restated) £m |
12 months ended 31Dec
2021(unaudited)£m |
12 months ended 31Dec 2020
(unaudited)£m |
|
18 months ended 31 Dec 2021 (audited)£m |
12 months ended 30 June 2020 (audited, restated) £m |
12 months ended 31Dec 2021
(unaudited)£m |
12 months ended 31Dec 2020 (unaudited)
£m |
|
Revenue |
462.9 |
260.0 |
315.4 |
269.3 |
|
462.9 |
260.0 |
315.4 |
269.3 |
| |
|
|
|
|
|
|
|
|
|
| Gross
profit |
329.2 |
180.2 |
224.6 |
188.5 |
|
332.3 |
180.2 |
227.7 |
188.5 |
| Gross profit margin (%) |
71.1% |
69.3% |
71.2% |
70.0% |
|
71.8% |
69.3% |
72.2% |
70.0% |
| |
|
|
|
|
|
|
|
|
|
| Operating
profit |
24.4 |
10.4 |
7.1 |
1.0 |
|
95.5 |
54.0 |
60.4 |
50.6 |
| Operating profit margin (%) |
5.3% |
4.0% |
2.3% |
0.4% |
|
20.6% |
20.8% |
19.2% |
18.8% |
|
|
|
|
|
|
|
|
|
|
|
| Earnings per
share |
|
|
|
|
|
|
|
|
|
| Basic earnings / (loss) per
share |
7.7p |
6.0p |
1.9p |
(0.4)p |
|
33.2p |
20.5p |
20.8p |
18.0p |
| Diluted earnings / (loss) per
share |
7.6p |
6.0p |
1.9p |
(0.4)p |
|
32.9p |
20.3p |
20.6p |
17.8p |
| |
|
|
|
|
|
|
|
|
|
|
Net (debt)/cash at end of the
year1 |
(24.1) |
80.9 |
(24.1) |
211.9 |
|
(24.1) |
80.9 |
(24.1) |
211.9 |
|
Return on Capital Employed |
3.1% |
1.6% |
0.9% |
0.1% |
|
12.0% |
8.3% |
7.6% |
6.6% |
1. Excludes lease
liabilities
Calendar Year
Results
The Group has prepared
the following Calendar Year results to enable a more consistent
like-for-like review of the trading performance of the business.
The Calendar Year results are an Alternative Performance Measure
and cover the trading period for the 12 months ended 31 December
2021 (CY2021) compared with the 12 months ended 31 December 2020
(CY2020). The basis of preparation applied to the Calendar Year
results together with a reconciliation to the Group's Statutory
IFRS Results are provided at the end of this report.
Consolidated
statement of profit and loss for the 12 months ended 31
December
| |
CY2021(unaudited) |
|
CY2020(unaudited) |
|
£m |
Adjusted |
Adjusting items |
Reported |
|
Adjusted |
Adjusting items |
Reported |
|
Revenue |
315.4 |
- |
315.4 |
|
269.3 |
- |
269.3 |
| Cost of
sales |
(87.7) |
(3.1) |
(90.8) |
|
(80.8) |
- |
(80.8) |
|
Gross profit |
227.7 |
(3.1) |
224.6 |
|
188.5 |
- |
188.5 |
| Selling, general and
administrative expenses |
(150.6) |
(39.1) |
(189.7) |
|
(120.6) |
(23.9) |
(144.5) |
|
Research and development expenses |
(16.7) |
(11.1) |
(27.8) |
|
(17.3) |
(25.7) |
(43.0) |
|
Operating profit |
60.4 |
(53.3) |
7.1 |
|
50.6 |
(49.6) |
1.0 |
| Finance income |
0.3 |
- |
0.3 |
|
0.4 |
- |
0.4 |
| Finance
costs |
(2.7) |
- |
(2.7) |
|
(3.6) |
- |
(3.6) |
|
Profit / (loss) before tax |
58.0 |
(53.3) |
4.7 |
|
47.4 |
(49.6) |
(2.2) |
| Tax
credit / (charge) |
(10.8) |
10.5 |
(0.3) |
|
(8.8) |
10.1 |
1.3 |
|
Profit / (loss) for the financial period |
47.2 |
(42.8) |
4.4 |
|
38.6 |
(39.5) |
(0.9) |
Consolidated
cashflow statement for the 12 months ended 31 December
| £m |
CY2021(unaudited) |
CY2020(unaudited) |
|
Operating cash flows before working capital |
68.2 |
63.0 |
| Change
in working capital |
4.0 |
(7.8) |
|
Cash generated from operations |
72.2 |
55.2 |
|
Income taxes paid |
(9.3) |
3.7 |
|
Net cash inflow from operating activities |
62.9 |
58.9 |
|
Net cash inflow / (outflow) from investing activities |
(291.5) |
(153.7) |
|
Net cash inflow from financing activities |
111.4 |
116.0 |
|
Net (decrease) / increase in cash and cash
equivalents |
(117.2) |
21.2 |
|
Cash and cash equivalents at beginning of
period |
211.9 |
189.9 |
| Effect
of foreign exchange rates |
0.4 |
0.8 |
|
Cash and cash equivalents at end of the
period |
95.1 |
211.9 |
|
|
|
|
|
Free Cash Flow * |
6.0 |
5.6 |
* Free Cash Flow
comprises net cash generated from operating activities less net
capital expenditure, cash flows relating to committed capital
expenditure and outflows in respect of lease obligations
Financial
review
Revenue
|
|
18 months ended 31 Dec 2021
(audited)£m |
12 months ended 30 Jun 2020 (audited) £m |
|
12 months ended 31 Dec 2021
(unaudited)£m |
12 months ended 31 Dec 2020 (unaudited)£m |
12 month % Change CER |
CY2021 % Split** |
|
Catalogue revenue by region |
|
|
|
|
|
|
|
| The Americas |
163.7 |
96.8 |
|
112.4 |
95.3 |
26% |
38% |
| EMEA |
121.5 |
68.4 |
|
82.3 |
73.2 |
15% |
28% |
| China |
84.4 |
39.1 |
|
57.1 |
42.7 |
34% |
19% |
| Japan |
28.4 |
18.8 |
|
18.6 |
19.3 |
5% |
6% |
|
Rest of Asia Pacific |
34.8 |
20.0 |
|
23.4 |
21.0 |
17% |
8% |
|
Catalogue revenue sub-total* |
432.8 |
243.1 |
|
293.8 |
251.5 |
22% |
100% |
| In-house catalogue revenue* |
245.0 |
114.4 |
|
171.5 |
128.8 |
39% |
58% |
|
Third party catalogue revenue |
187.8 |
128.7 |
|
122.3 |
122.7 |
4% |
42% |
|
|
|
|
|
|
|
|
|
|
Custom products and services |
8.4 |
6.3 |
|
5.7 |
5.7 |
6% |
30% |
| IVD |
8.9 |
4.7 |
|
6.3 |
5.9 |
15% |
33% |
|
Royalties and licenses |
10.2 |
5.9 |
|
7.0 |
6.2 |
20% |
37% |
|
Custom Products & Licensing (CP&L)
sub-total |
27.5 |
16.9 |
|
19.0 |
17.8 |
14% |
100% |
|
|
|
|
|
|
|
|
|
|
BioVision |
2.6 |
- |
|
2.6 |
- |
|
|
|
Total reported revenue |
462.9 |
260.0 |
|
315.4 |
269.3 |
22% |
|
* Includes BioVision
product sales sold through Abcam channels post closing of the
transaction on 26 October 2021 but excludes incremental BioVision
sales sold through non-Abcam channels of £2.6m.
** Numbers may not add
up due to rounding
In the 18-month
statutory reporting period ended 31 December 2021, the Group
generated revenue of £462.9m, which represents an increase of 78%
on the results for the 12 months ended 30 June 2020, reflecting the
extended accounting period.
The Directors believe underlying business
performance is better understood by comparing the performance for
the 12 months ended 31 December 2021 (CY2021) and the 12 months
ended 31 December 2020 (CY2020). In CY2021 revenue was £315.4m,
representing CER growth of 22% and reported growth of 17%, after a
5%pt headwind from foreign currency exchange. The acquisition of
BioVision added approximately 1%pt to revenue growth.
Revenue growth continues to be driven by a
recovery in laboratory activity from the depressed levels
experienced in 2020 due to the COVID-19 pandemic, and by increasing
demand for our growing portfolio of in-house products.
Catalogue revenue grew 23% CER in CY2021
compared with CY2020 (18% reported), with revenue growth from our
in-house products of 41% CER including BioVision (35% reported) or
36% CER excluding BioVision. Except for Japan, which suffered
greater COVID-19 related disruption, all major territories grew at
double digit rates, with China, which now accounts for 19.4% of
revenue, the fastest growing region with CER growth of 34%.
Custom Products & Licensing (‘CP&L’)
revenue, rose 14% on a CER basis (7% reported). Within CP&L,
IVD and royalty and license sales grew double digit on a CER basis
as the number of out-licensed products and commercial deals
continues to grow, whilst custom projects returned to growth as
customer activity levels improved following a more muted period of
activity due to COVID-19.
Gross
margin
|
|
18 months ended 31 Dec 2021
(audited)% |
12 months ended 30 Jun 2020 (audited)% |
|
12 months ended 31 Dec 2021
(unaudited)% |
12 months ended 31 Dec 2020 (unaudited)% |
|
Reported Gross Margin |
71.1 |
69.3 |
|
71.2 |
70.0 |
|
Amortisation of fair value adjustments |
0.7 |
- |
|
1.0 |
- |
|
Adjusted Gross Margin |
71.8 |
69.3 |
|
72.2 |
70.0 |
Reported gross margin for the 18 months ended 31
December 2021 was 71.1%. Reported gross margin for the period was
impacted by the fair value adjustment of BioVision inventory
following the acquisition, totaling £6.0m. Approximately half, or
£3.1m, of this cost was amortised in the period, with the balance
of £2.9m to be amortised in CY2022. Before this impact, adjusted
gross margin for CY2021 increased by just over 2 percentage points
to 72.2% (CY2020: 70.0%), reflecting a favourable movement in
product mix towards high margin in-house products, as well as
volume leverage resulting from the increase in revenue. In-house
product sales (including CP&L revenue) contributed 61% of total
revenue in CY2021 (CY2020: 54%).
Operating
profit
Operating profit for
CY2021 increased to £7.1m (CY2020: £1.0m). Adjusted operating
profit for the same 12-month period increased to £60.4m (CY2020:
£50.6m), representing an adjusted operating profit margin of 19.2%
(CY2020: 18.8%) reflecting the Group’s planned investment, the
impact of COVID-19, and the step up in depreciation and
amortisation. The calculation of adjusted operating profit has been
updated to exclude share-based payments of £20.0m and £13.3m in
CY2021 and CY2020 respectively. A reconciliation between reported
and adjusted operating profit is provided in note 4 to the
financial statements.
Reported operating
profit for the 18 months ended 31 December 2021 was £24.4m (12
months to 30 June 2020: £10.4m).
Operating
costs and expenses
|
|
Reported |
|
Adjusted* |
|
|
18 months ended 31 Dec 2021
(audited)£m |
12 months ended 30 June 2020 (audited, restated) £m |
12 months ended 31 Dec 2021 (unaudited)
£m |
12 months ended 31 Dec 2020 (unaudited)£m |
|
18 months ended 31 Dec 2021
(audited)£m |
12 months ended 30 June 2020 (audited, restated)£m |
12 months ended 31 Dec 2021
(unaudited)£m |
12 months ended 31 Dec 2020 (unaudited)£m |
|
Selling, general & administrative |
(263.3) |
(131.5) |
(189.7) |
(144.5) |
|
(211.5) |
(111.5) |
(150.6) |
(120.6) |
|
Research and development |
(41.5) |
(38.3) |
(27.8) |
(43.0) |
|
(25.3) |
(14.7) |
(16.7) |
(17.3) |
|
Total operating costs and expenses |
(304.8) |
(169.8) |
(217.5) |
(187.5) |
|
(236.8) |
(126.2) |
(167.3) |
(137.9) |
| Depreciation and
amortisation |
(57.0) |
(29.7) |
(41.0) |
(32.5) |
|
(42.9) |
(20.7) |
(31.9) |
(22.0) |
|
Total operating costs and expenses excl. Depreciation and
amortisation |
(247.8) |
(140.1) |
(176.5) |
(155.0) |
|
(193.9) |
(105.5) |
(135.4) |
(115.9) |
|
of which share-based payments |
(29.0) |
(9.3) |
(20.0) |
(13.3) |
|
- |
- |
- |
- |
* Details of items
excluded from reported costs and expenses are provided in Adjusting
Items below and in note 4 of the financial information.
CY2021 vs. CY2020
Planned investments
made during the period in our platform and team to support the
Company’s growth saw total reported operating costs and expenses
increase by £30.0m, or 16%, to £217.5m. On an adjusted basis, total
costs and expenses increased by £29.4m or 21%, to £167.3m (CY2020:
£137.9m). Within this, adjusted SG&A expenses, increased by 25%
and adjusted R&D expenses decreased by 3.5%, representing 48%
and 5% of revenue, respectively.
Adjusted depreciation
and amortisation charges increased in line with guidance provided
in September 2021, to £31.9m, reflecting increased amortisation
charges following the implementation of additional Oracle Cloud ERP
modules. Reported depreciation and amortisation charges included an
additional £9.1m related to the amortisation of acquired
intangibles (CY2020: £9.6m). Total adjusted depreciation and
amortisation charges (excluding the amortisation of acquired
intangibles) are expected to rise by approximately £5m in CY2022,
as a result of the final Oracle ERP deployments and planned
investments in our global supply chain. This is around £5m lower
than previously expected, due to the change in the assessment of
the useful economic life of the Oracle ERP system implemented
during the year (see note 1 to the financial statements for further
information).
18 months ended 31
December 2021 vs. 12 months ended 30 June 2020
On a reported basis,
total operating costs and expenses for the 18 months ended 31
December 2021 were £304.8m. On an adjusted basis, costs and
expenses increased £110.6m from £126.2m to £236.8m, reflecting the
longer accounting period and investments made in the business.
Adjusting
Items
|
|
|
|
|
|
18 months ended 31 Dec 2021
(audited)£m |
12 months ended 30 June 2020 (audited, restated) £m |
12 months ended 31 Dec 2021 (unaudited) £m |
12 months ended 31 Dec 2020 (unaudited) £m |
|
Amortisation of fair value adjustments |
(3.1) |
- |
(3.1) |
- |
|
Impairment of intangible assets |
(1.1) |
(14.9) |
(1.1) |
(14.9) |
|
System and process improvement costs |
(9.5) |
(4.6) |
(7.0) |
(5.0) |
|
Acquisition costs |
(8.3) |
(4.1) |
(8.3) |
(2.8) |
|
Integration and reorganisation costs |
(6.6) |
(2.1) |
(4.7) |
(4.0) |
|
Amortisation of acquisition intangibles |
(13.5) |
(8.6) |
(9.1) |
(9.6) |
|
Share-based payments* |
(29.0) |
(9.3) |
(20.0) |
(13.3) |
|
Total adjusting items affecting operating profit before
tax |
(71.1) |
(43.6) |
(53.3) |
(49.6) |
*Share-based payments,
which are non-cash items, are now included as an adjusted item as
management believes it is more useful to exclude share-based
compensation expenses from adjusted profit measures to better
understand the long-term performance of the core business.
In the 18 months ended
31 December 2021, adjusting items totalled £71.1m with £53.3m
incurred in CY2021. Major adjusting items in CY2021 included £7.0m
of system and process improvement costs resulting from the
implementation of the Oracle ERP system, due to complete in the
CY2022; £8.3m of acquisition costs predominantly related to
BioVision; £4.7m of integration and reorganisation costs related to
the upgrading of our global footprint and the integration of
BioVision; £9.1m related to the amortisation of acquired
intangibles; and a charge of £20.0m related to share-based
compensation. In previous reporting periods share-based payments
have not been included within adjusting items. With the launch of
the Profitable Growth Incentive Plan (‘PGIP’) in October 2021,
management considers it to be more appropriate and more consistent
with the Group’s closest comparable companies to include
share-based payments in adjusting items. A breakdown of the
share-based compensation charges is as follows:
|
Share-based payment charges |
18 months ended 31 Dec 2021
(audited)£m |
12 months ended 30 June 2020 (audited, restated) £m |
12 months ended 31 Dec 2021 (unaudited) £m |
12 months ended 31 Dec 2020 (unaudited) £m |
|
Schemes approved prior to CY2021 |
(21.9) |
(9.3) |
(12.9) |
(13.3) |
|
2021 approved schemes, including PGIP |
(7.1) |
- |
(7.1) |
- |
|
Total share-based payments |
(29.0) |
(9.3) |
(20.0) |
(13.3) |
Following the launch
of the new share-based incentive schemes aligned to the Group’s
2024 growth strategy (comprising the Profitable Growth Incentive
Plan (PGIP) for senior leaders and Abcam Growth Plan for all other
employees globally), it is estimated that total share-based payment
charges of approximately £30m will be incurred in CY2022, rising to
approximately £45m by CY2024.
Interest and
tax
In the 18 months ended
31 December 2021, net finance costs totalled £4.1m with £2.4m
incurred in CY2021, a reduction of £0.8m on CY2020 following the
repayment of the Group’s revolving credit facility (‘RCF’) in
November 2020. The Group subsequently redrew £120m on the RCF in
October 2021 following the acquisition of BioVision.
The reported tax rate
for CY2021 was 6.4% and the adjusted tax rate was 18.6%. The Group
was required to restate its deferred tax balances during the period
following the UK government’s decision to increase the UK
Corporation Tax rate to 25% (from 19%) in 2023. The Group also
benefited from ‘patent box’ relief in the UK in the period (where a
lower rate of tax is applied to certain profits on patented income
than the standard UK Corporation Tax rate).
The Group currently
estimates an adjusted tax rate of 19% in CY2022, before rising in
CY2023 following the increase in the UK Corporation Tax rate to 25%
from 1 April 2023.
In the 18 months ended
31 December 2021 the Group reported a net tax charge of £3.1m on
reported profits and £16.9m on adjusted profits, equivalent to an
effective tax rate on adjusted profits of 18.5%.
Cash flow and
net cash
|
|
18 months ended 31 Dec 2021
(audited)£m |
12 months ended 30 June 2020 (audited, restated) £m |
|
12 months ended 31 Dec 2021 (unaudited) £m |
12 months ended 31 Dec 2020 (unaudited) £m |
|
Operating cash flows before working capital |
108.9 |
61.4 |
|
68.2 |
63.0 |
|
Change in working capital |
(3.6) |
4.0 |
|
4.0 |
(7.8) |
|
Cash generated from operations |
105.3 |
65.4 |
|
72.2 |
55.2 |
|
Income taxes paid |
(9.1) |
(2.4) |
|
(9.3) |
3.7 |
|
Net cash inflow from operating activities |
96.2 |
63.0 |
|
62.9 |
58.9 |
|
Cash outflow from investing activities |
(313.7) |
(148.1) |
|
(291.5) |
(153.7) |
|
Cash inflow from financing activities |
126.4 |
184.6 |
|
111.4 |
116.0 |
|
(Decrease) / increase in cash and cash
equivalents |
(91.1) |
99.5 |
|
(117.2) |
21.2 |
|
Cash and cash equivalents at beginning of period |
187.3 |
87.1 |
|
211.9 |
189.9 |
|
Effect of foreign exchange rates |
(1.1) |
0.7 |
|
0.4 |
0.8 |
|
Cash and cash equivalents at end of the
period |
95.1 |
187.3 |
|
95.1 |
211.9 |
|
|
|
|
|
|
|
|
Free Cash Flow * |
12.6 |
19.0 |
|
6.0 |
5.6 |
* Free Cash Flow
comprises net cash generated from operating activities less net
capital expenditure, cash flows relating to committed capital
expenditure and outflows in respect of lease obligations
The Group remains
highly cash generative at the operating level, with cash inflows
from operating activities in the CY2021 of £62.9m (CY2020: £58.9m).
After an increase in net capital expenditure (including cash flows
relating to committed capital expenditure and capital repayments on
leases), Free Cash Flow was £6.0m (CY2020: £5.6m).
Cash outflows on
investing activities were £291.5m. This sum includes the
acquisition of BioVision for £244.9m as well as net tangible and
intangible capital expenditures of £46.6m (CY2020: £43.6m). Net
capital expenditure is after a landlord reimbursement of £13.2m
relating to leasehold improvement costs, primarily for the new
Waltham site. Major areas of capital expenditure included £21.3m in
respect of global footprint developments (net of landlord
contributions) and £25.3m on intangible assets (CY2020: £29.0m).
Intangible assets included £8.3m in respect of the Oracle ERP
project, £8.5m in respect of other software developments relating
to the Group’s digital transformation and £7.5m of internally
developed technology relating to new in-house products (CY2020:
£10.4m).
Following the drawdown
of £120m on the RCF in October 2021 to partially fund the
acquisition of BioVision, cash inflows from financing activities
totalled £111.4m, resulting in a net debt position (excluding lease
liabilities) as of 31 December 2021 of £24.1m (CY2020: net cash of
£211.9m). As at 1 January 2022, the combined interest rate on
drawdowns from the RCF amounted to 0.9715%.
Balance
sheetKey elements of change in the balance sheet during
the 18 month period comprised the following:
Goodwill and
Intangibles
Goodwill increased to
£364.8m (30 June 2020: £195.0m), predominantly as a result of the
BioVision acquisition which added £177.0m.
Intangible assets
increased by £84.1m to £234.2m (30 June 2020: £150.1m) where again
the impact of the BioVision acquisition, of £80.6m, was responsible
for most of the increase. A further £24.5m related to software
development, of which £14.8m was in respect of the Oracle Cloud ERP
system and a further £12.0m related to the additions from internal
development of the Group’s product range, reflective of the cash
flows described above. These additions were offset by amortisation
charges of £28.8m, impairment charges of £3.8m and small exchange
rate movements.
Property, plant and
equipment Property, plant and equipment additions of £45.5m were
made in the 18-month period, including £28.9m on global footprint
developments. Included within the 18-month additions was spend of
£7.9m on laboratory equipment across our sites in the UK, the US
and China. The Group invested an additional £2.9m on edited cell
lines.
Leases: Right of use
assets During the period overall leases reduced £33.2m,
predominantly as a result of landlord leasehold incentives received
in the US, resulting in a net book value at 31 December 2021 of
£88.2m. As at 31 December 2021, the outstanding balance sheet
liability in respect of the right of use assets was £110.5m.
BorrowingsThe Group’s
three-year revolving credit facility, which was re-signed in
December 2020, was drawn down by £120m in October 2021 in order to
fund the acquisition of BioVision. As of 31 December 2021, the
drawn down amount remained £120m, leaving £80m undrawn, as well as
an accordion option of up to £100m.
Return on
capital employed (‘ROCE’)
|
£m unless otherwise stated |
12 months ended December
2021£m |
12 months ended 31 December 2020£m |
|
Current assets |
211.5 |
306.2 |
|
Non-current assets |
774.6 |
512.4 |
|
Total assets |
986.1 |
818.6 |
|
Less: Current liabilities |
(187.2) |
(52.0] |
|
Capital employed |
798.9 |
766.6 |
|
Adjusted operating profit |
60.4 |
50.6 |
|
Return on Capital Employed, % |
7.6% |
6.6% |
Capital employed by
the Group rose by £32.3m during the year, to £798.9m, resulting in
a modest improvement in ROCE for the period, which increased 1
percentage point, to 7.6%, reflecting the increased profitability
of the Group.
As expected, over the
last two years the Group’s ROCE has been suppressed by the effects
of both COVID-19 and the implementation of the Group’s 2024 growth
plan. Many of our major investment plans are now substantially
complete, and as we look forward, we expect to see the rate of
investment reduce and the resultant delivery of operational
leverage and subsequent rise in ROCE from current levels as the
value of our investments are realised.
Alan Hirzel Chief
Executive Officer
Michael S
BaldockChief Financial Officer
14 March 2022
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; we have identified
material weaknesses in our internal control over financial
reporting and failure to comply with requirements to design,
implement and maintain effective internal control over financial
reporting could have a material adverse effect on our business;
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.
Consolidated income statementFor the 18
month period ended 31 December 2021
|
|
|
18 month period ended 31 December 2021 |
Year ended 30 June 2020 (restated*) |
|
|
Note |
Adjusted£m |
Adjusting items£m |
Total£m |
Adjusted£m |
Adjusting items£m |
Total£m |
|
Revenue |
3 |
462.9 |
— |
462.9 |
260.0 |
— |
260.0 |
|
Cost of sales |
|
(130.6) |
(3.1) |
(133.7) |
(79.8) |
— |
(79.8) |
|
Gross profit |
|
332.3 |
(3.1) |
329.2 |
180.2 |
— |
180.2 |
| Selling, general and
administrative expenses ** |
|
(211.5) |
(51.8) |
(263.3) |
(111.5) |
(20.0) |
(131.5) |
|
Research and development expenses ** |
|
(25.3) |
(16.2) |
(41.5) |
(14.7) |
(23.6) |
(38.3) |
|
Operating profit |
|
95.5 |
(71.1) |
24.4 |
54.0 |
(43.6) |
10.4 |
| Finance income |
5 |
0.5 |
— |
0.5 |
0.7 |
— |
0.7 |
| Finance costs |
5 |
(4.6) |
— |
(4.6) |
(2.8) |
— |
(2.8) |
|
Profit before tax |
|
91.4 |
(71.1) |
20.3 |
51.9 |
(43.6) |
8.3 |
|
Tax |
6 |
(16.9) |
13.8 |
(3.1) |
(9.4) |
13.6 |
4.2 |
|
Profit for the period / year attributable to equity
shareholders of the parent |
|
74.5 |
(57.3) |
17.2 |
42.5 |
(30.0) |
12.5 |
|
|
|
|
|
|
|
|
|
| Earnings per
share |
|
|
|
|
|
|
|
| Basic |
7 |
33.2p |
|
7.7p |
20.5p |
|
6.0p |
|
Diluted |
7 |
32.9p |
|
7.6p |
20.3p |
|
6.0p |
* See note 2 for details of the prior period restatement.
** During the period ended 31 December 2021, share-based payment
charges and employer tax contributions thereon have been included
in adjusting items. The comparative period has been re-presented.
Further information is shown in note 4.
Adjusted figures exclude impairment of intangible assets,
systems and process improvement costs, acquisition costs,
amortisation of fair value adjustments, integration and
reorganisation costs, amortisation of acquisition intangibles,
share-based payment charges and employer tax contributions thereon,
the tax effect of adjusting items and credits from patent box
claims. Such excluded items are described as ‘adjusting items’.
Further information on these items is shown in note 4.
Consolidated statement of comprehensive
incomeFor the 18 month period ended 31 December
2021
|
|
18 monthsended31 December
2021£m |
Yearended30 June 2020(restated*)£m |
|
Profit for the period / year attributable to equity
shareholders of the parent |
17.2 |
12.5 |
|
|
|
|
| Items that may be
reclassified to the income statement in subsequent
years |
|
|
| Movement on cash flow hedges |
1.0 |
0.7 |
| Exchange differences on
translation of foreign operations |
(11.8) |
9.6 |
| Movement in fair value of
investment |
(3.2) |
4.0 |
|
Tax relating to components of other comprehensive income |
1.1 |
(1.5) |
|
Other comprehensive (expense) / income for the
period |
(12.9) |
12.8 |
|
|
|
|
|
Total comprehensive income for the period /
year |
4.3 |
25.3 |
* See note 2 for details of the prior period restatement.
Consolidated balance sheetAs at 31
December 2021
|
|
|
As at31 December
2021£m |
As at30 June 2020(restated*) £m |
As at30 June 2019(restated*)£m |
|
Non-current assets |
|
|
|
|
| Goodwill |
|
364.8 |
195.0 |
120.9 |
| Intangible assets |
|
234.2 |
150.1 |
104.6 |
| Property, plant and
equipment |
|
73.5 |
43.3 |
37.1 |
| Right-of-use assets |
|
88.2 |
121.4 |
— |
| Investments |
|
3.5 |
7.0 |
0.8 |
| Deferred tax asset |
|
10.4 |
13.7 |
9.4 |
|
|
|
774.6 |
530.5 |
272.8 |
|
Current assets |
|
|
|
|
| Inventories |
|
58.2 |
40.7 |
36.0 |
| Trade and other
receivables |
|
47.2 |
44.4 |
43.1 |
| Current tax receivable |
|
10.5 |
6.4 |
5.4 |
| Derivative financial
instruments |
|
0.5 |
— |
0.2 |
| Cash and cash equivalents |
|
95.1 |
187.3 |
87.1 |
|
|
|
211.5 |
278.8 |
171.8 |
|
Total assets |
|
986.1 |
809.3 |
444.6 |
|
Current liabilities |
|
|
|
|
| Trade and other payables |
|
(54.2) |
(43.8) |
(41.8) |
| Derivative financial
instruments |
|
(0.2) |
(1.2) |
(2.0) |
| Lease liabilities |
|
(9.2) |
(7.3) |
— |
| Borrowings |
|
(119.2) |
(106.4) |
— |
| Current tax liabilities |
|
(4.4) |
(0.9) |
(1.5) |
|
|
|
(187.2) |
(159.6) |
(45.3) |
|
Net current assets |
|
24.3 |
119.2 |
126.5 |
|
Non-current liabilities |
|
|
|
|
| Deferred tax liability |
|
(41.5) |
(28.3) |
(16.1) |
| Lease liabilities |
|
(101.3) |
(120.5) |
— |
| Derivative financial
instruments |
|
— |
— |
(0.1) |
|
|
|
(142.8) |
(148.8) |
(16.2) |
|
Total liabilities |
|
(330.0) |
(308.4) |
(61.5) |
|
Net assets |
|
656.1 |
500.9 |
383.1 |
|
|
|
|
|
|
| Equity |
|
|
|
|
| Share capital |
|
0.5 |
0.4 |
0.4 |
| Share premium account |
|
268.3 |
138.2 |
27.0 |
| Merger reserve |
|
68.6 |
68.6 |
68.1 |
| Own shares |
|
(2.2) |
(2.5) |
(2.8) |
| Translation reserve |
|
31.1 |
42.9 |
33.3 |
| Hedging reserve |
|
0.2 |
(0.7) |
(1.3) |
|
Retained earnings |
|
289.6 |
254.0 |
258.4 |
|
Total equity attributable to the equity shareholders of the
parent |
|
656.1 |
500.9 |
383.1 |
* See note 2 for details of the prior periods’ restatement.
Approved by the Board of directors and
authorised for issue on 14 March 2022.
Consolidated statement of changes in
equityFor the 18 month period ended 31 December
2021
|
|
Sharecapital£m |
Sharepremiumaccount£m |
Mergerreserve£m |
Ownshares£m |
Translationreserve£m |
Hedgingreserve£m |
Retainedearnings£m |
Total£m |
|
Balance as at 1 July 2019 (as reported) |
0.4 |
27.0 |
68.1 |
(2.8) |
33.3 |
(1.3) |
258.6 |
383.3 |
|
Prior period restatement* |
— |
— |
— |
— |
— |
— |
(1.7) |
(1.7) |
|
Balance as at 1 July 2019 (restated*) |
0.4 |
27.0 |
68.1 |
(2.8) |
33.3 |
(1.3) |
256.9 |
381.6 |
| Profit
for the year (restated*) |
— |
— |
— |
— |
— |
— |
12.5 |
12.5 |
|
Other comprehensive income |
— |
— |
— |
— |
9.6 |
0.6 |
2.6 |
12.8 |
|
Total comprehensive income |
— |
— |
— |
— |
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 2020 (restated*) |
0.4 |
138.2 |
68.6 |
(2.5) |
42.9 |
(0.7) |
254.0 |
500.9 |
| Profit
for the year (restated*) |
— |
— |
— |
— |
— |
— |
17.2 |
17.2 |
|
Other comprehensive (expense)/income |
— |
— |
— |
— |
(11.8) |
0.9 |
(2.0) |
(12.9) |
|
Total comprehensive (expense)/income |
— |
— |
— |
— |
(11.8) |
0.9 |
15.2 |
4.3 |
|
Issue of ordinary shares, net of use costs |
0.1 |
130.1 |
— |
— |
— |
— |
— |
130.2 |
| Own
shares disposed of on exercise of share options |
— |
— |
— |
0.3 |
— |
— |
(0.3) |
— |
|
Share-based payments inclusive of deferred tax |
— |
— |
— |
— |
— |
— |
20.8 |
20.8 |
|
Purchase of own shares |
— |
— |
— |
— |
— |
— |
(0.1) |
(0.1) |
|
Balance as at 31 December 2021 |
0.5 |
268.3 |
68.6 |
(2.2) |
31.1 |
0.2 |
289.6 |
656.1 |
* See note 2 for details of the prior periods’ restatement.
Consolidated cash flow statementFor the
18 month period ended 31 December 2021
|
|
|
Note |
18 month periodended31
December 2021£m |
Yearended30 June 2020 (restated*)£m |
| Cash generated from
operations |
|
9 |
105.3 |
65.4 |
|
Net income taxes paid |
|
|
(9.1) |
(2.4) |
|
Net cash inflow from operating activities |
(iii) |
|
96.2 |
63.0 |
|
Investing activities |
|
|
|
|
| Investment income |
|
|
0.5 |
0.7 |
| Purchase of property, plant and
equipment |
(iii) |
|
(46.0) |
(12.7) |
| Purchase of intangible
assets |
(iii) |
|
(38.3) |
(23.0) |
| Transfer of cash from / (to)
escrow in respect of future capital expenditure |
(iii) |
|
0.4 |
(0.6) |
| Purchase of investments |
|
|
(0.1) |
(2.2) |
| Reimbursement of leasehold
improvement costs |
(iii) |
|
14.9 |
— |
| Net cash outflow arising from
acquisitions |
|
10 |
(245.1) |
(110.3) |
|
Net cash outflow from investing activities |
|
|
(313.7) |
(148.1) |
|
Financing activities |
|
|
|
|
| Dividends paid |
|
8 |
— |
(25.0) |
| Principal element of lease
obligations |
(iii) |
|
(12.6) |
(6.8) |
| Interest element of lease
obligations |
(iii) |
|
(2.0) |
(0.9) |
| Interest paid |
|
|
(1.3) |
(0.8) |
| Proceeds on issue of shares, net
of issue costs |
|
|
130.2 |
111.2 |
| Facility arrangement fees |
|
|
(0.8) |
— |
| Utilisation of revolving credit
facility |
(i) |
|
120.0 |
127.0 |
| Repayment of revolving credit
facility |
(i) |
|
(107.0) |
(20.0) |
|
Purchase of own shares |
|
|
(0.1) |
(0.1) |
|
Net cash inflow from financing activities |
|
|
126.4 |
184.6 |
|
|
|
|
|
|
|
Net (decrease) / increase cash and cash
equivalents |
|
|
(91.1) |
99.5 |
|
|
|
|
|
|
| Cash and cash equivalents at
beginning of period / year |
|
|
187.3 |
87.1 |
|
Effect of foreign exchange rates |
|
|
(1.1) |
0.7 |
|
Cash and cash equivalents at end of period /
year |
(ii) |
|
95.1 |
187.3 |
| |
|
|
|
|
|
Free cash flow |
(iii) |
|
12.6 |
19.0 |
*
See note 2 for
details of the prior period restatement.
(i) During the period ended
31 December 2021, the Group repaid in full the sum of £107.0m which
was drawn under the RCF up until that point. Subsequently, the
Group drew £120.0m to fund the purchase of BioVision, Inc. (as set
out in note 10). During the year ended 30 June 2020, drawings on
the RCF comprised an initial amount of €120.0m (£103.4m) to fund
the purchase of Expedeon. In February 2020, a partial repayment
amounting to £20.0m was made and the remaining borrowings
redenominated into Sterling, leaving an outstanding balance of
£82.0m. In March 2020, a subsequent drawing of £25.0m was made in
order to provide operational flexibility in light of the COVID-19
pandemic bringing amounts drawn to £107.0m. The maximum amount
drawn under the RCF during the year was £107.0m
(ii) Within cash and cash
equivalents is £nil (30 June 2020: £0.9m) of cash relating to
employee contributions to the Group’s share scheme ‘AbShare’, which
is reserved for the purpose of purchasing shares upon vesting.
(iii) Free cash flow
comprises net cash generated from operating activities less net
capital expenditure, reimbursement of leasehold improvement costs,
transfer of cash from/(to) escrow in respect of future capital
expenditure, and the principal and interest elements of lease
obligations.
Notes to the consolidated financial
statementsFor the 18 month period ended 31
December 2021
1. Presentation of the
financial statements
a) Basis of
preparation
The financial
information, which comprises the consolidated income statement,
consolidated statement of comprehensive income, consolidated
balance sheet, consolidated statement of changes in equity,
consolidated cash flow statement and extracts from the notes to the
financial statements for the 18 month period ended 31 December 2021
has been prepared in accordance with International Accounting
Standards, in conformity with the Companies Act 2006. The financial
statements incorporate the results of the Company and the entities
under its control (together the ‘Group’).
The preliminary
financial information has been presented in Sterling and on the
historical cost basis, except for the revaluation of certain
financial instruments.
The financial
information does not constitute statutory accounts within the
meaning of Sections 434 to 436 of the Companies Act 2006, but are
derived from those accounts. Statutory accounts for the financial
year ended 30 June 2020 have been filed with the Registrar of
Companies and those for the 18 month period ended 31 December 2021
were approved by the Board of Directors on 14 March 2022 and will
be delivered in due course. The auditor has reported on those
accounts, their report was unqualified and did not contain
statements under Section 498 (2) or (3) of the Companies Act
2006.
b) 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.
For the period ended
31 December 2021, charges associated with share-based payment
schemes have been included as adjusting items. The income statement
for the year ended 30 June 2020 has been re-presented to reflect
these charges within adjusting items. Although share-based
compensation is an important aspect of the compensation of our
employees and executives, management believes it is useful to
exclude share-based compensation expenses from adjusted profit
measures to better understand the long-term performance of our core
business. Share-based compensation expenses are non-cash charges
and are determined using several factors, including expectations
surrounding future performance, employee forfeiture rates and, for
employee payroll-related tax items, the share price. These factors
are beyond the Group’s direct control and generally unrelated to
operational decisions and performance in any particular period.
Further, share-based compensation expenses are not reflective of
the value ultimately received by the recipients of the awards.
c) Going concern
The Group meets its
day-to-day working capital requirements from the cash surpluses
generated as a result of normal trading. In considering going
concern, the Directors have reviewed the Group’s forecasts and
projections, taking account of reasonably possible changes in
trading performance. 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
at least one year from the date of approval of the financial
statements. For this reason, they continue to adopt the going
concern basis in preparing its consolidated financial
statements.
d) Change in useful
economic life of software assets
During the period
ended 31 December 2021, the Group revised its estimate of the
useful economic life of its software intangible assets from 3 to 5
years to 3 to 10 years. This was based on an assessment of the
enhanced functionality available to the Group from its ERP software
following implementation of certain key modules in the period. This
change in estimate has been accounted for prospectively in line
with IAS 8, ‘Accounting Policies, changes in accounting estimates
and errors’ and has led to a reduction in the monthly impairment
charge of £0.5m and is expected to lead to an average annual
reduction of £3.9m in the amortisation charge for the years 2022 to
2026.
Notes to the consolidated financial
statementsFor the 18 month period ended 31
December 2021
2. Change in accounting policy
– Software as a Service (‘SaaS’) arrangements
In March 2021, the IFRS
Interpretations Committee (‘IFRIC’) published an agenda decision on
how an entity should account for costs of configuring or
customising application software in a Cloud Computing or Software
as a Service (‘SaaS’) arrangement.
Previously, internal and external
costs incurred in connection with the various phases of the Group’s
ERP implementation and other projects, have been capitalised as an
intangible asset in line with IAS 38 ‘Intangible Assets’.
Following an internal review of the
impact of adoption of the IFRIC, for those arrangements where the
Group does not have control of the developed software, to the
extent that the services were performed by third parties, the Group
has derecognised the intangible asset previously
capitalised. This change in accounting policy has led to
adjustments amounting to a £2.1m reduction in the intangible assets
recognised in the 30 June 2020 and 30 June 2019 balance sheets, and
to a £0.1m and £0.8m increase in selling, general and
administrative expenses in those respective periods.
Notes to the consolidated financial
statementsFor the 18 month period ended 31
December 2021
2. Change in accounting policy
– Software as a Service (‘SaaS’) arrangements
(continued)
The following tables show the impact
of the change in accounting policy on previously reported financial
results:
Year ended 30 June 2020:
|
|
As previously reported*£’m |
Adjustment£’m |
As restated£’m |
|
Impact on income statement |
|
|
|
| Adjusted selling, general and
administrative expenses |
(111.7) |
0.2 |
(111.5) |
|
Adjusting items |
(19.7) |
(0.3) |
(20.0) |
|
Selling, general and administrative expenses |
(131.4) |
(0.1) |
(131.5) |
| |
|
|
|
| Adjusted operating profit |
53.8 |
0.2 |
54.0 |
|
Adjusting items |
(43.3) |
(0.3) |
(43.6) |
|
Operating profit |
10.5 |
(0.1) |
10.4 |
| |
|
|
|
| Adjusted profit before tax |
51.7 |
0.2 |
51.9 |
|
Adjusting items |
(43.3) |
(0.3) |
(43.6) |
|
Profit before tax |
8.4 |
(0.1) |
8.3 |
| |
|
|
|
| Adjusted tax |
(9.4) |
— |
(9.4) |
|
Adjusting items |
13.5 |
0.1 |
13.6 |
|
Tax |
4.1 |
0.1 |
4.2 |
| |
|
|
|
| Adjusted profit for the year |
42.3 |
0.2 |
42.5 |
|
Adjusting items |
(29.8) |
(0.2) |
(30.0) |
|
Profit for the year |
12.5 |
— |
12.5 |
|
|
|
|
|
|
Impact on statement of comprehensive income |
|
|
|
|
Total comprehensive income |
25.3 |
— |
25.3 |
|
|
|
|
|
|
Earnings per share |
|
|
|
| Basic |
6.0p |
— |
6.0p |
|
Diluted |
6.0p |
— |
6.0p |
|
Adjusted earnings per share |
|
|
|
| Basic |
16.7p |
3.8 |
20.5p |
|
Diluted |
16.6p |
3.7 |
20.3p |
|
|
|
|
|
|
Impact on balance sheet |
|
|
|
| Intangible assets |
154.4 |
(2.1) |
152.3 |
| Total non-current assets |
532.6 |
(2.1) |
530.5 |
| |
|
|
|
| Deferred tax liability |
(28.7) |
0.4 |
(28.3) |
| Total non-current assets |
(149.2) |
0.4 |
(148.8) |
| |
|
|
|
| Net assets |
502.6 |
(1.7) |
500.9 |
| |
|
|
|
| Retained earnings |
255.7 |
(1.7) |
254.0 |
|
Total equity |
502.6 |
(1.7) |
500.9 |
|
|
|
|
|
|
Impact on cash flow statement |
|
|
|
| Cash generated from
operations |
65.4 |
— |
65.4 |
| Net cash inflow from operating
activities |
63.0 |
— |
63.0 |
| |
|
|
|
| Purchase of intangible
assets |
(23.0) |
— |
(23.0) |
| Net cash outflow from investing
activities |
(148.1) |
— |
(148.1) |
|
|
|
|
|
* Previously reported results include the re-presentation to
share-based payment charges now included within adjusting items.
See note 4 for further details.
Notes to the consolidated financial
statementsFor the 18 month period ended 31
December 2021
3. Operating
segments
Products and services
from which reportable segments derive their revenues
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,
which is ‘sales of antibodies and related products’. The Group’s
revenue and assets for this one reportable segment can be
determined by reference to the Group’s income statement and balance
sheet.
The Group has no
individual product or customer which contributes more than 10% of
its revenues.
Geographical
information
Revenues are
attributed to regions based primarily on customers’ location. The
Group’s revenue from external customers and information about its
non-current segment assets (excluding deferred tax) is set out
below:
|
|
Revenue |
Non-current assets |
|
|
18 months ended 31 December
2021£m |
Year ended 30 June 2020£m |
As at31 December
2021£m |
As at30 June 2020 (restated*)£m |
| The
Americas |
189.0 |
112.4 |
464.3 |
224.8 |
| EMEA |
124.5 |
69.3 |
231.8 |
222.3 |
| China |
85.6 |
39.5 |
8.6 |
7.4 |
| Japan |
28.6 |
18.8 |
0.2 |
0.6 |
| Rest of Asia Pacific |
35.2 |
20.0 |
59.3 |
61.7 |
|
|
462.9 |
260.0 |
764.2 |
516.8 |
* See note 2 for details of the prior
period restatement.
(i) Revenues for the sub-region of
Central Asia have been reclassified from EMEA to Asia Pacific for
the period ended 31 December 2021. This is to better align our data
reporting to sales performance and geographical location. The value
attributable to Central Asia is £2.2m (year ended 30 June 2020:
£1.5m). The comparatives presented for 30 June 2020 have not been
updated for this change.
Revenue by type is shown below:
|
|
18 months ended 31 December
2021£m |
Year ended 30 June 2020£m |
|
Catalogue revenue |
435.4 |
243.1 |
| |
|
|
| Custom products and services |
8.4 |
6.3 |
| IVD |
8.9 |
4.7 |
|
Custom products and licensing |
10.2 |
5.9 |
|
|
27.5 |
16.9 |
|
|
|
|
|
Total reported revenue |
462.9 |
260.0 |
Notes to the consolidated financial
statementsFor the 18 month period ended 31
December 2021
4. Adjusted performance
measures
A reconciliation of the Group’s
adjusted performance measures to the reported IFRS measures is
presented below:
|
|
18 months ended 31 December 2021 |
Year ended 30 June 2020 (restated*) |
|
|
Adjusted£m |
Adjusting items £m |
Total£m |
Adjusted£m |
Adjusting items £m |
Total£m |
|
|
|
|
|
|
|
|
| Cost of
sales |
(130.6) |
(3.1) |
(133.7) |
(79.8) |
— |
(79.8) |
|
Gross profit |
332.3 |
(3.1) |
329.2 |
180.2 |
— |
180.2 |
|
|
|
|
|
|
|
|
| Selling,
general and administrative expenses |
(211.5) |
(51.8) |
(263.3) |
(111.5) |
(20.0) |
(131.5) |
|
Research and development expenses |
(25.3) |
(16.2) |
(41.5) |
(14.7) |
(23.6) |
(38.3) |
|
Operating profit |
95.5 |
(71.1) |
24.4 |
54.0 |
(43.6) |
10.4 |
| Finance
income |
0.5 |
— |
0.5 |
0.7 |
— |
0.7 |
|
Finance costs |
(4.6) |
— |
(4.6) |
(2.8) |
— |
(2.8) |
|
Profit before tax |
91.4 |
(71.1) |
20.3 |
51.9 |
(43.6) |
8.3 |
|
Tax |
(16.9) |
13.8 |
(3.1) |
(9.4) |
13.6 |
4.2 |
|
Profit for the period/year attributable to equity
shareholders |
74.5 |
(57.3) |
17.2 |
42.5 |
(30.0) |
12.5 |
* See note 2 for details of the prior period restatement.
Analysis of adjusting items:
|
|
|
18 months ended31 December
2021£m |
Year ended 30 June 2020 (restated*) £m |
|
Amortisation of fair value adjustments |
(i) |
(3.1) |
— |
|
Affecting gross profit |
|
(3.1) |
— |
| |
|
|
|
|
Impairment of intangible assets |
(ii) |
(1.1) |
(14.9) |
|
System and process improvement costs |
(iii) |
(9.5) |
(4.6) |
|
Acquisition costs |
(iv) |
(8.3) |
(4.1) |
|
Integration and reorganisation costs |
(v) |
(6.6) |
(2.1) |
|
Amortisation of acquisition intangibles |
(vi) |
(13.5) |
(8.6) |
|
Share-based payment charges ** |
(vii) |
(29.0) |
(9.3) |
|
Affecting operating profit and profit before
tax |
|
(71.1) |
(43.6) |
|
|
|
|
|
|
Tax effect of adjusting items |
|
13.8 |
9.0 |
|
Credit arising from patent box claims |
(viii) |
— |
4.6 |
|
Affecting tax |
|
13.8 |
13.6 |
|
|
|
|
|
|
Total adjusting items |
|
(57.3) |
(30.0) |
* See note 2 for details of the prior period restatement.
** During the period ended 31 December 2021, share-based payment
charges and employer tax contributions thereon have been included
in adjusting items. The comparative period has been re-presented.
See (vii) below.
Notes to the consolidated financial
statementsFor the 18 month period ended 31
December 2021
|
(i) |
|
Comprises
amortisation of fair value adjustments relating to the acquisition
of BioVision as detailed in note 10. Following the acquisition, the
Group recognised a fair value uplift of £6.0m to inventory carried
on the Group’s balance sheet. This adjustment is being amortised
over 4 months from November 2021. Such costs are included within
cost of sales. |
|
(ii) |
|
Comprises an impairment of internally developed technology
assets relating to AxioMx, following an assessment of the work
performed and costs capitalised to date. Following the review, it
was concluded that as a result of changes in the scope and nature
of the project to which the costs related, and the corresponding
usability of historical work performed, £1.1m of internally
developed technology assets were impaired. The impairment charge is
included within research and development expenses. Year ended 30
June 2020: Comprises the full impairment of the acquisition
intangible in respect of AxioMx in Vitro monoclonal antibody
production technology and subsequent post acquisition expenditure
capitalised. This has arisen following an appraisal of the ability
to utilise at scale this technology whereby although technical
feasibility remains valid, the challenges to realise material
commercial returns have resulted in the conclusion not to pursue
further active development and substantive utilisation of this
technology. The impairment charge is included within research and
development expenses. |
|
(iii) |
|
Comprises costs of the strategic ERP implementation which do
not qualify for capitalization and, for the period ended 31
December 2021, impairment charges of £2.1m, as a result of a
software asset developed as part of the ERP project that was no
longer required. Such costs are included within selling, general
and administrative expenses. Included in the period ended 31
December 2021 is £1.3m (year ended 30 June 2020: £0.3m) relating to
costs associated with the implementation of the SaaS IFRIC as
described in note 2. |
|
(iv) |
|
Comprises legal and other professional fees associated with the
acquisition of BioVision and other aborted acquisitons. Year ended
30 June 2020: Comprises legal and other professional fees
associated with the acquisition of Expedeon as well as agreed
settlements of Expedeon employee incentive schemes. Such costs are
included within selling, general and administrative expenses. |
|
(v) |
|
Integration and reorganisation costs relate to the integration
of the acquired BioVision business as described in note 10
(comprising mainly legal and professional fees) of £1.0m,
integration costs relating to Expedeon of £0.7m, and costs in the
US and Asia Pacific, relating to the ongoing reorganisation of the
Group’s property portfolio of £4.0m. Year ended 30 June 2020:
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. |
|
(vi) |
|
Amortisation of £10.1m (year ended 30 June 2020: £6.0m) is
included within research and development expenses, with the
remaining £3.4m (year ended 30 June 2020: £2.6m) included within
selling, general and administrative expenses. |
|
(vii) |
|
Comprises share-based payment charges of £25.2m and employer’s
tax contributions of £3.8m thereon for all the Group’s equity- and
cash-settled schemes, which have been re-presented within adjusting
items. Comparative periods have been re-presented. Charges of £5.1m
(year ended 30 June 2020: £2.7m) are included in research and
development expenses, with the remaining £23.9m (year ended 30 June
2020: £6.6m) included within selling, general and administrative
expenses. |
|
(viii) |
|
Comprises a 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 prior
period. |
|
|
|
|
5. Finance income and costs
|
|
18 months ended 31 December
2021£m |
Year ended 30 June 2020£m |
|
Interest receivable |
0.5 |
0.7 |
|
Finance income |
0.5 |
0.7 |
| |
|
|
| Interest expense on lease
liabilities |
(2.7) |
(1.5) |
|
Borrowing costs |
(1.9) |
(1.3) |
|
Finance costs |
(4.6) |
(2.8) |
|
|
|
|
|
Net finance costs |
(4.1) |
(2.1) |
Notes to the consolidated financial
statementsFor the 18 month period ended 31
December 2021
6. Tax
|
|
|
18 months ended 31 December
2021£m |
Year ended 30 June 2020 (restated*)£m |
|
Current tax |
|
12.7 |
3.9 |
|
Deferred tax |
|
(9.6) |
(8.1) |
|
Total income tax charge / (credit) |
|
3.1 |
(4.2) |
|
|
|
|
|
|
Adjusted income tax charge
** |
(i) |
16.9 |
9.4 |
* See note 2 for details of the prior
period restatement.
** During the
period ended 31 December 2021, share-based payment charges and
employer tax contributions thereon have been included in adjusting
items. The comparatives have been re-presented.
(i) Adjusted income tax charge
excludes the tax effects of adjusting items and, for the year ended
30 June 2020, a credit arising from historical patent box claims,
which are set out in note 4.
The Group reported a net tax charge of £3.1m (year ended 30 June
2020: credit of £4.2m). The net tax charge is reduced below the
standard rate of UK corporation tax due to the credit from the
‘patent box’ benefit in the UK, where a lower rate of tax is
applied to profits on patented income. The effective tax rate on
adjusted profits is 14.9% (year ended 30 June 2020: 18.0%). The tax
credit for the year ended 30 June 2020 contained a historic element
in respect of a patent box claim covering prior years 2016 to 2019
amounting to £4.6m.
The UK corporation tax rate for the year was 19.0% (30 June
2020: 19.0%). Taxation for other jurisdictions is calculated at the
rates prevailing in the respective jurisdictions.
The Finance Act 2021 increased the UK corporation tax rate to
25% with effect from 1 April 2023. This 25% rate has been applied
in the deferred tax valuations based on the expected timing of when
such assets and liabilities will be recovered.
7. Earnings per
share
The calculations of
basic and diluted EPS, shown below the income statement, is based
on the following data:
|
|
18 months ended 31 December
2021£m |
Year ended 30 June 2020(restated*)£m |
| Earnings |
|
|
| Profit attributable to
equity shareholders of the parent – adjusted |
74.5 |
42.5 |
|
Adjusting items (note 4) |
(57.3) |
(30.0) |
|
Profit attributable to equity shareholders of the parent –
reported |
17.2 |
12.5 |
* See note 2 for details of the prior period restatement.
| |
Million |
Million |
| Number of
shares |
|
|
| Weighted average number of
ordinary shares in issue |
224.7 |
208.0 |
|
Less ordinary shares held by Equiniti Share Plan Trustees
Limited |
(0.4) |
(0.4) |
|
Weighted average number of ordinary shares for the purposes
of basic EPS |
224.3 |
207.6 |
|
Effect of potentially dilutive ordinary shares: Share options and
awards |
2.0 |
2.0 |
|
Weighted average number of ordinary shares for the purposes
of diluted EPS |
226.3 |
209.6 |
Basic EPS and adjusted
basic 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 period / year. Diluted EPS
and adjusted diluted EPS are calculated on the same basis as basic
EPS but with a further adjustment to the weighted average number of
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 / year and any unvested shares
which have met, or are expected to meet, the performance conditions
at the end of the period / year.
Notes to the consolidated financial
statementsFor the 18 month period ended 31
December 2021
7. Earnings per share
(continued)
|
|
18 months ended 31 December 2021 |
Year ended 30 June 2020(restated*) |
|
Basic EPS |
7.7p |
6.0p |
| Diluted EPS |
7.6p |
6.0p |
| Adjusted basic EPS |
33.2p |
20.5p |
|
Adjusted diluted EPS |
32.9p |
20.3p |
* See note 2 for details of the prior period restatement.
8. Dividends
|
|
18 months ended 31 December
2021£m |
Year ended 30 June 2020£m |
|
Amounts recognised as distributions to the equity shareholders in
the year: |
|
|
|
Final dividend for the year ended 30 June 2019 of 8.58 pence per
share |
— |
17.7 |
|
Interim dividend for the year ended 30 June 2020 of 3.55 pence per
share |
— |
7.3 |
|
Total distributions to owners of the parent in the period /
year |
— |
25.0 |
9. Note to the cash flow
statement
|
|
|
18 months ended 31 December
2021£m |
Year ended 30 June 2020 (restated*)£m |
|
Operating profit for the year |
|
24.4 |
10.4 |
|
Adjustments for: |
|
|
|
|
Depreciation of property, plant and equipment |
|
15.3 |
7.3 |
|
Depreciation of right of use assets |
|
12.9 |
6.7 |
|
Amortisation of intangible assets |
|
28.8 |
15.7 |
|
Impairment of intangible assets |
|
3.8 |
14.9 |
|
Gain on disposal of property, plant and equipment |
|
0.7 |
— |
|
Derivative financial instruments at fair value through profit or
loss |
|
(0.4) |
— |
|
Research and development expenditure credit |
|
(3.2) |
(1.5) |
|
Share-based payments charge |
|
25.2 |
9.3 |
|
Unrealised currency translation losses / (gains) |
|
1.4 |
(1.4) |
|
Operating cash flows before movements in working
capital |
|
108.9 |
61.4 |
|
Increase in inventories |
|
(9.7) |
(1.1) |
|
(Increase) / decrease in receivables |
|
(3.7) |
2.7 |
|
Increase in payables |
|
9.8 |
2.4 |
|
Cash generated from operations |
|
105.3 |
65.4 |
* See note 2 for details of the prior
period restatement.
10. Business combinations
On 26 October 2021, Abcam US Group Holdings Inc,
a subsidiary of Abcam Plc, acquired 100% of the issued share
capital of NKY Biotech US, Inc from Boai NKY Biotech Co. Ltd for
total cash consideration of $349.9m (£253.8m) and acquisition
expenses of £7.8m. NKY Biotech US, Inc has one wholly owned
subsidiary, BioVision, Inc (collectively ‘BioVision’).
BioVision is a leading provider of biochemical and cell-based
assays for biological research. It also develops, produces, and
sells a wide portfolio of other products including recombinant
proteins, antibodies, enzymes, and biochemical compounds.
The acquisition
accelerates Abcam’s strategic ambitions within the adjacent
biochemical and cellular assay market and aligns with existing
areas of research focus including oncology, immuno-oncology,
neuroscience, and epigenetics.
The provisional fair
value of identifiable net assets acquired was as follows:
|
|
£'m |
| Non-current
assets |
|
| Intangible assets |
80.6 |
| Property, plant and
equipment |
0.8 |
| Right-of-use assets |
1.9 |
| Deferred tax asset |
0.3 |
| Current
assets |
|
| Inventory |
8.1 |
| Trade and other
receivables |
3.3 |
| Cash and cash equivalents |
10.0 |
| Current
liabilities |
|
| Trade and other payables |
(2.3) |
| Lease liabilities |
(1.7) |
| Non-current
liabilities |
|
| Deferred tax liabilities |
(23.6) |
| Lease
liabilities |
(0.6) |
| Total identifiable net
assets acquired |
76.8 |
| Goodwill |
177.0 |
|
Total consideration |
253.8 |
| |
|
|
|
£'m |
|
Consideration |
|
| Total consideration |
253.8 |
| Adjustment for settlement of
pre-existing relationship |
1.4 |
|
Adjustment for working capital claim |
1.1 |
|
Consideration paid in cash |
256.3 |
|
|
|
|
|
£'m |
| Net cash outflow on
acquisition |
|
|
Consideration paid in cash |
256.3 |
| Adjustment for settlement of
pre-existing relationship |
(1.4) |
| Acquired cash and cash
equivalents |
(10.0) |
|
Net cash outflow on acquisition |
244.9 |
Prior to acquisition,
BioVision was a supplier of products to Abcam and there was a
trading balance of £1.4m outstanding at the acquisition. As such,
the consideration and total identifiable net assets acquired have
been adjusted to reflect this pre-existing relationship, which was
effectively settled upon acquisition.
The consideration has
also been adjusted by £1.1m for a claim lodged with the seller
subsequent to the close date. Consideration for the issued share
capital of NKY was adjustable for certain net working capital
balances, for which an estimate was provided on the close date.
Subsequent to completing the acquisition it was noted that the
actual net working capital balance fell short of the estimated
balance and so the consideration has been adjusted downward by
£1.1m accordingly. The cash inflow arising from this arrangement
had not been received as at 31 December 2021 and so a receivable
for £1.1m has been recognised on the Group’s consolidated balance
sheet.
Notes to the consolidated financial
statementsFor the 18 month period ended 31
December 2021
10. Business combinations (continued)
The goodwill
recognised is attributable to the expertise of the assembled
workforce, potential new technology and products and leveraging
Abcam's global channels to market.
Since the date of
acquisition to 31 December 2021 the acquisition contributed £2.6m
to the Group’s revenue and a loss before tax of £2.6m. The effect
on adjusted profit before tax was £1.4m which is before taking into
account the effects of the amortisation of acquisition intangibles
and amortisation of fair value adjustments.
Had BioVision been
acquired on 1 July 2020, the Group revenue would have been £490.4m,
the profit before tax would have been £29.3m and the adjusted
profit before tax would have been £110.4m.
11. Alternative performance measures
The Group’s performance is assessed using a
number of financial measures which are not defined under IFRS and
are therefore non-GAAP (or alternative) performance measures. These
are set out as follows:
- Constant
Exchange Rates (‘CER’) is a measure which allows management to
identify the relative year-on-year performance of the business by
removing the impact of currency movements which are outside of
management’s control.
- Margin
percentages (which are calculated by dividing the relevant profit
figure by revenue) for each of the relevant profit metrics provide
management with an insight into relative year on year
performance.
- Adjusted profit
measures, as described in note 1(b) to the financial information,
are believed by the Directors to enable a reader to obtain a fuller
understanding of underlying performance since they exclude items
which are not reflective of the normal course of business.
Furthermore, such measures are reflective of how performance is
measured internally including targets against which compensation is
determined. Adjusted profit measures are derived and reconciled to
their reported IFRS equivalent on the face of the consolidated
income statement as well as in note 4 to the financial information.
The key adjusted profit measure is adjusted operating profit.
Adjusting items (which are excluded to arrive at adjusted
performance measures) are also described on the face of the income
statement and in note 4 to the financial information.
- Adjusted
earnings per share measures are derived from adjusted profit before
tax with the rationale for their use being the same as for adjusted
profit metrics and are reconciled to their IFRS equivalent in note
7 to the financial information.
- Free cash flow
is defined on the face of the consolidated cash flow statement and
provides management with an indication of the amount of cash
available for discretionary investing or financing after removing
capital related items.
Basis of preparationThe basis of preparation
for the Group's Statutory IFRS Results is set out in note 1. The
Calendar Year results have been determined as follows:
Calendar Year results for the 12 months ended 31 December
2021 (CY2021) The CY2021 results for the 12 months ended
31 December 2021 have been derived from the statutory IFRS results
for the 18 months ended 31 December 2021, less the results for the
six months ended 31 December 2020.Calendar Year results for
the 12 months ended 31 December 2020 (CY2020) The CY2020
results for the 12 months ended 31 December 2020 have been derived
from the statutory IFRS results for the 12 months ended 30 June
2020, less the results for the six months ended 31 December 2019,
and adding back the results for the six months ended 31 December
2020.
Reconciliation of the consolidated statement of profit
and loss between the 18-month period ending 31 December 2021 and
the 12-month period ending 31 December 2021
| |
18 months ended 31 December 2021 |
|
6 months ended 31 December 2020 (restated) |
|
12 months ended 31 December 2021 (CY2021) |
|
|
Adjusted |
Adjusting items |
Total |
|
Adjusted |
Adjusting items |
Total |
|
Adjusted |
Adjusting items |
Total |
|
Revenue |
462.9 |
- |
462.9 |
|
147.5 |
- |
147.5 |
|
315.4 |
- |
315.4 |
| Cost of
sales |
(130.6) |
(3.1) |
(133.7) |
|
(42.9) |
- |
(42.9) |
|
(87.7) |
(3.1) |
(90.8) |
|
Gross profit |
332.3 |
(3.1) |
329.2 |
|
104.6 |
- |
104.6 |
|
227.7 |
(3.1) |
224.6 |
|
Selling, general and administrative expenses |
(211.5) |
(51.8) |
(263.3) |
|
(60.9) |
(12.7) |
(73.6) |
|
(150.6) |
(39.1) |
(189.7) |
|
Research and development expenses |
(25.3) |
(16.2) |
(41.5) |
|
(8.6) |
(5.1) |
(13.7) |
|
(16.7) |
(11.1) |
(27.8) |
|
Operating profit |
95.5 |
(71.1) |
24.4 |
|
35.1 |
(17.8) |
17.3 |
|
60.4 |
(53.3) |
7.1 |
|
Finance income |
0.5 |
- |
0.5 |
|
0.2 |
- |
0.2 |
|
0.3 |
- |
0.3 |
| Finance
costs |
(4.6) |
- |
(4.6) |
|
(1.9) |
- |
(1.9) |
|
(2.7) |
- |
(2.7) |
|
Profit before tax |
91.4 |
(71.1) |
20.3 |
|
33.4 |
(17.8) |
15.6 |
|
58.0 |
(53.3) |
4.7 |
|
Tax credit / (charge) |
(16.9) |
13.8 |
(3.1) |
|
(6.1) |
3.3 |
(2.8) |
|
(10.8) |
10.5 |
(0.3) |
|
Profit for the period |
74.5 |
(57.3) |
17.2 |
|
27.3 |
(14.5) |
12.8 |
|
47.2 |
(42.8) |
4.4 |
Reconciliation of the consolidated statement of profit
and loss between the 12-month period ending 30 June 2020 and the
12-month period ending 31 December 2020
| |
6 months ended 31 December 2020 (restated) |
Year ended 30 June 2020 (restated) |
6 months ended 31 December 2019 (restated) |
12 months ended 31 December
2020 |
|
|
Adjusted |
Adjusting items |
Total |
Adjusted |
Adjusting items |
Total |
Adjusted |
Adjusting items |
Total |
Adjusted |
Adjusting items |
Total |
| Revenue |
147.5 |
- |
147.5 |
260.0 |
- |
260.0 |
138.2 |
- |
138.2 |
269.3 |
- |
269.3 |
| Cost of
sales |
(42.9) |
- |
(42.9) |
(79.8) |
- |
(79.8) |
(41.9) |
- |
(41.9) |
(80.8) |
- |
(80.8) |
|
Gross profit |
104.6 |
- |
104.6 |
180.2 |
- |
180.2 |
96.3 |
- |
96.3 |
188.5 |
- |
188.5 |
| Selling, general and
administrative expenses |
(60.9) |
(12.7) |
(73.6) |
(111.5) |
(20.0) |
(131.5) |
(51.8) |
(8.8) |
(60.6) |
(120.6) |
(23.9) |
(144.5) |
|
Research and development expenses |
(8.6) |
(5.1) |
(13.7) |
(14.7) |
(23.6) |
(38.3) |
(6.0) |
(3.0) |
(9.0) |
(17.3) |
(25.7) |
(43.0) |
|
Operating profit |
35.1 |
(17.8) |
17.3 |
54.0 |
(43.6) |
10.4 |
38.5 |
(11.8) |
26.7 |
50.6 |
(49.6) |
1.0 |
| Finance income |
0.2 |
- |
0.2 |
0.7 |
- |
0.7 |
0.5 |
- |
0.5 |
0.4 |
- |
0.4 |
| Finance
costs |
(1.9) |
- |
(1.9) |
(2.8) |
- |
(2.8) |
(1.1) |
- |
(1.1) |
(3.6) |
- |
(3.6) |
|
Profit before tax |
33.4 |
(17.8) |
15.6 |
51.9 |
(43.6) |
8.3 |
37.9 |
(11.8) |
26.1 |
47.4 |
(49.6) |
(2.2) |
| Tax
credit / (charge) |
(6.1) |
3.3 |
(2.8) |
(9.4) |
13.6 |
4.2 |
(6.7) |
6.8 |
0.1 |
(8.8) |
10.1 |
1.3 |
|
Profit for the period |
27.3 |
(14.5) |
12.8 |
42.5 |
(30.0) |
12.5 |
31.2 |
(5.0) |
26.2 |
38.6 |
(39.5) |
(0.9) |
Reconciliation
of the consolidated cashflow statement between the 18-month period
ending 31 December 2021 and the 12-month period ending 31 December
2021
|
|
18 months ended 31 Dec 2021 |
6 months ended 31 Dec 2020 (restated) |
CY2021 |
| Operating cash flows
before working capital |
108.9 |
40.7 |
68.2 |
| Change
in working capital |
(3.6) |
(7.6) |
4.0 |
|
Cash generated from operations |
105.3 |
33.1 |
72.2 |
| Income
taxes paid |
(9.1) |
0.2 |
(9.3) |
|
Net cash inflow from operating activities |
96.2 |
33.3 |
62.9 |
| Net cash inflow / (outflow)
from investing activities |
(313.7) |
(22.2) |
(291.5) |
| Net
cash inflow from financing activities |
126.4 |
15.0 |
111.4 |
|
Net (decrease) / increase in cash and cash
equivalents |
(91.1) |
26.1 |
(117.2) |
|
Cash and cash equivalents at beginning of
period |
187.3 |
187.3 |
211.9 |
| Effect
of foreign exchange rates |
(1.1) |
(1.5) |
0.4 |
|
Cash and cash equivalents at end of the
period |
95.1 |
211.9 |
95.1 |
|
|
|
|
|
|
Free Cash Flow * |
12.6 |
6.6 |
6.0 |
Reconciliation
of the consolidated cashflow statement between the 12-month period
ending 30 June 2020 and the 12-month period ending 31 December
2020
|
|
6 months ended 31 Dec 2020 |
Year ended 30 June 2020 |
6 months ended 31 Dec 2019 |
|
CY2020 |
| Operating cash flows
before working capital |
40.7 |
61.4 |
39.1 |
|
63.0 |
| Change
in working capital |
(7.6) |
4.0 |
4.2 |
|
(7.8) |
|
Cash generated from operations |
33.1 |
65.4 |
43.3 |
|
55.2 |
| Income
taxes paid |
0.2 |
(2.4) |
(5.9) |
|
3.7 |
|
Net cash inflow from operating activities |
33.3 |
63.0 |
37.4 |
|
58.9 |
| Net cash inflow / (outflow)
from investing activities |
(22.2) |
(148.1) |
(16.6) |
|
(153.7) |
| Net
cash inflow from financing activities |
15.0 |
184.6 |
83.6 |
|
116.0 |
|
Net (decrease) / increase in cash and cash
equivalents |
26.1 |
99.5 |
104.4 |
|
21.2 |
|
Cash and cash equivalents at beginning of
period |
187.3 |
87.1 |
87.1 |
|
189.9 |
| Effect
of foreign exchange rates |
(1.5) |
0.7 |
(1.6) |
|
0.8 |
|
Cash and cash equivalents at end of the
period |
211.9 |
187.3 |
189.9 |
|
211.9 |
|
|
|
|
|
|
|
|
Free Cash Flow * |
6.6 |
19.0 |
20.0 |
|
5.6 |
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