Abcam plc (Nasdaq: ABCM) (‘Abcam’, the ‘Group’ or the
‘Company’), a global leader in the supply of life science research
tools, today announces its interim results for the six-month period
ended 30 June 2023 (the ‘period’).
FINANCIAL PERFORMANCE
Six months ended
£m, unless stated otherwise
30 June 2023
30 June 2022
Revenue
203.2
185.2
Reported gross profit margin, %
76.2%
74.1%
Adjusted gross profit margin*, %
76.2%
75.6%
Reported operating profit
27.9
9.3
Adjusted operating profit**
54.8
42.6
Adjusted operating profit, %
27.0%
23.0%
Reported diluted earnings per share
7.2p
2.5p
Adjusted diluted earnings per share
16.8p
14.0p
* Excludes the amortisation of the fair value of assets relating
to the inventory acquired in connection with the acquisition of
BioVision at June 30, 2022. ** Adjusted figures exclude system and
process improvement costs, amortisation of fair value adjustments,
strategic review costs, EGM costs, integration and reorganisation
costs, amortisation of acquisition intangible assets and
share-based payments. Such excluded items are described as
“adjusting items”. Further information on these items is shown
below.
Commenting on the performance, Alan Hirzel, Abcam’s Chief
Executive Officer, said: “In the first half of 2023, we
remained focused on supporting our global customers and meeting our
business and corporate objectives. Our strategy has transformed
Abcam to become a scale innovator and important catalyst in the
global life science community.
The proposed acquisition by Danaher demonstrates external
validation of our brand, business model, product quality, and
market platform, while providing certain and significant value for
our shareholders. Danaher’s operating company model allows us to
continue to pursue our strategy, while harnessing the power of the
Danaher Business System to ensure we remain the partner of choice
for our customers.”
FY20231 & FY2024 OUTLOOK Due to the pending
acquisition, financial guidance has been suspended.
Analyst and investor meeting and webcast: Due to the
pending acquisition, the conference call and webcast have been
cancelled.
About Abcam plc As an innovator in reagents and tools,
Abcam's purpose is to serve life science researchers globally to
achieve their mission faster. Providing the research and clinical
communities with tools and scientific support, the Company offers
highly validated antibodies, assays, and other research tools to
address important targets in critical biological pathways.
Already a pioneer in data sharing and ecommerce in the life
sciences, Abcam's ambition is to be the most influential company in
life sciences by helping advance global understanding of biology
and causes of disease, which, in turn, will drive new treatments
and improved health.
Abcam's worldwide customer base of approximately 750,000 life
science researchers’ uses Abcam's antibodies, reagents, biomarkers,
and assays. By actively listening to and collaborating with these
researchers, the Company continuously advances its portfolio to
address their needs. A transparent program of customer reviews and
datasheets, combined with industry-leading validation initiatives,
gives researchers increased confidence in their results.
Founded in 1998 and headquartered in Cambridge, UK, the Company
has served customers in more than 130 countries. Abcam's American
Depositary Shares (ADSs) trade on the Nasdaq Global Select Market
(Nasdaq: ABCM).
____________________ 1 FY23 USD budgeted rate GBP:USD 1.20; H1
2023 average USD reported rates GBP:USD 1.23 (H1 2022, GBP:USD
1.31); July-August 2023 average USD reported rates GBP:USD 1.28 (H2
2022 GBP: USD 1.17).
Forward-Looking Statements This announcement contains
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. In some cases, you can
identify forward-looking statements by the following words: “may,”
“might,” “will,” “could,” “would,” “should,” “expect,” “plan,”
“anticipate,” “intend,” “seek,” “believe,” “estimate,” “predict,”
“potential,” “continue,” “contemplate,” “possible” or the negative
of these terms or other comparable terminology, although not all
forward-looking statements contain these words. They are not
historical facts, nor are they guarantees of future performance.
Any express or implied statements contained in this press release
that are not statements of historical fact may be deemed to be
forward-looking statements, including, without limitation,
statements regarding: Abcam's portfolio, ambitions, market
opportunities, and Danaher’s and Abcam’s ability to complete the
transaction on the proposed terms or on the anticipated timeline,
or at all 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: risks and uncertainties related to securing the
necessary regulatory approvals and Abcam shareholder approval, the
sanction of the High Court of Justice of England and Wales and
satisfaction of other closing conditions to consummate the
transaction; the occurrence of any event, change or other
circumstance that could give rise to the termination of the
definitive transaction agreement relating to the transaction; risks
related to diverting the attention of Danaher’s and Abcam’s
management from ongoing business operations; failure to realize the
expected benefits of the transaction; significant transaction costs
and/or unknown or inestimable liabilities; the risk of shareholder
litigation in connection with the transaction, including resulting
expense or delay; the risk that Abcam’s business will not be
integrated successfully if applicable or that such integration if
applicable may be more difficult, time-consuming or costly than
expected; Danaher’s ability to fund the cash consideration for the
transaction; risks related to future opportunities and plans for
the combined company, including the uncertainty of expected future
regulatory filings, financial performance and results of the
combined company following completion of the acquisition;
disruption from the transaction, making it more difficult to
conduct business as usual or maintain relationships with customers,
employees or suppliers; effects relating to the announcement of the
transaction or any further announcements or the consummation of the
acquisition on the market price of Abcam’s American depositary
shares; regulatory initiatives and changes in tax laws; market
volatility; other risks and uncertainties affecting Danaher and
Abcam; and as a foreign private issuer, we are exempt from a number
of rules under the U.S. securities laws and Nasdaq corporate
governance rules and are permitted to file less information with
the SEC than U.S. companies, which may limit the information
available to holders of our American Depositary Shares (“ADS”); and
the other important factors discussed from time to time under the
caption "Risk Factors" in Abcam's Annual Report on Form 20-F for
the year ended December 31, 2022 (“Annual Report”) and in any
subsequent reports on Form 6-K, each of which is on file with or
furnished to the U.S. Securities and Exchange Commission ("SEC")
and which are available on the SEC website at www.sec.gov, as such
factors may be updated from time to time in Abcam's subsequent
filings or furnishings 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.
Use of Non-IFRS Financial Measures To supplement our
audited financial results prepared in accordance with International
Financial Reporting Standards (“IFRS”) we present Adjusted
Operating Profit, Adjusted Operating Profit Margin, Adjusted EBITDA
Margin, Total Constant Exchange Rate Revenue (“CER revenue”), which
are financial measures not prepared in accordance with IFRS
(“non-IFRS financial measures”). We believe that the presentation
of these non-IFRS financial measures provide useful information
about our operating results and enhances the overall understanding
of our past financial performance and future prospects, allowing
for greater transparency with respect to key measures used by
management in its financial and operational decision making. These
non-IFRS financial measures are supplemental in nature as they
include and/or exclude certain items not included and/or excluded
in the most directly comparable IFRS financial measures and should
not be considered in isolation, or as a substitute for, financial
measures prepared in accordance with IFRS. Further, other companies
may calculate these non-IFRS financial measures differently than we
do, which may limit the usefulness of those measures for
comparative purposes.
Management believes that the presentation of (a) Adjusted
Operating Profit, Adjusted Operating Profit Margin, Adjusted EBITDA
Margin, and Adjusted Diluted Earnings Per Share provide useful
information to investors and others as management regularly reviews
these measures as important indicators of our operating performance
and makes decisions based on them, and (b) CER revenue provides
useful information to investors and others as management regularly
reviews this measure to identify period-on-period or year-on-year
performance of the business and makes decisions based on it.
Please see the following “Non-IFRS Financial Measures” for a
qualitative reconciliation of non-IFRS financial measures presented
in this Trading Update to their most directly comparable IFRS
financial measures. We define:
- Adjusted Gross Profit as gross
profit before taking account exceptional items.
- Adjusted Operating Profit as
profit for the period / year before taking account of finance
income, finance costs, tax, exceptional items, share-based
payments, and amortization of acquisition intangibles. Exceptional
items consist of certain cash and non-cash items that we believe
are not reflective of the normal course of our business; and we
identify and determine items to be exceptional based on their
nature and incidence or by or by their significance (“exceptional
items”). As a result, the composition of exceptional items may vary
from period to period / year to year.
- Adjusted Operating Profit Margin
as adjusted operating profit calculated as a percentage of
revenue.
- Adjusted EBITDA Margin as adjusted
operating profit before depreciation as a percentage of
revenue.
- Adjusted Diluted Earnings Per
Share as adjusted operating profit less net financing
expenses and effective tax payments divided by fully diluted shares
outstanding.
- CER as our total revenue growth
from one fiscal period / year to the next on a constant exchange
rate basis.
Quantitative reconciliations of Adjusted Gross Profit, Adjusted
Operating Profit, Adjusted Operating Profit Margin, Adjusted EBITDA
Margin, Adjusted Diluted Earnings Per Share and CER revenue to
their respective most directly comparable IFRS financial measures
of Operating Profit, Operating Profit Margin, Net Income, Reported
Revenue and Diluted Earnings Per Share, can be found under the
heading “Adjusted Performance Measures”.
Interim management report
Introduction In the
half-year period ended 30 June 2023, revenues of £203.2 million
grew 5.5% CER and 9.7% on a reported basis. Adjusted operating
profits increased 29% to £54.8 million (H1 2022: £42.6 million) and
adjusted diluted earnings per share grew 20% to 16.8p (H1 2022:
14.0p).
The Company has cash of £79.0 million and net debt of £38.7
million (£300 million RCF less £120.0 million borrowed).
Financial review
Six months ended 30
June
Reported revenues
Change in
reported
revenues
%
CER growth
%
2023
£m
2022
£m
Catalogue revenue – regional
split
Americas
85.8
74.6
15%
8%
EMEA
52.4
46.0
14%
10%
China
31.7
30.3
5%
5%
Japan
8.3
10.0
(17%)
(14%)
Rest of Asia Pacific
14.6
13.7
7%
1%
Catalogue revenue
192.8
174.6
10%
6%
CP&L revenue1
10.4
10.6
(2%)
(8%)
Total reported revenue
203.2
185.2
10%
6%
Total revenue – product type
In-house
138.5
123.6
12%
8%
Third party
64.7
61.6
5%
1%
Total reported revenue
203.2
185.2
10%
6%
- Custom Products & Licensing (CP&L) revenue comprises
custom service revenue, revenue from the supply of IVD products and
royalty and licence income.
REVENUE Revenue of £203.2 million (H1 2022: £185.2m)
represents 5.5% CER growth.
GROSS MARGIN Reported and adjusted gross profit of £154.9
million (H1 2022: £137.3m) equates to a reported gross margin of
76.2% (H1 2022: 74.1%). Adjusted gross profit in the prior
comparable period differs from reported gross profit by £2.7
million impacted by the amortisation of the fair value of assets
relating to the inventory acquired in the acquisition of
BioVision.
OPERATING COSTS
Six months ended 30
June
Reported
Adjusted
2023
£m
2022
£m
2023
£m
2022
£m
Selling, general & administrative
expenses (‘SG&A’)
107.4
108.9
90.3
87.3
Research & development expenses
(‘R&D’)
19.6
19.1
9.8
10.1
Total operating costs and
expenses
127.0
128.0
100.1
97.4
Adjusted operating costs of £100.1 million (H1 2022: £97.4m)
represents approximately 2% growth excluding depreciation.
On a reported basis, total reported costs were £127.0 million
(H1 2022: £128.0m), a decrease of £1.0 million.
ADJUSTING ITEMS Total reported expenses include the
following adjusting items:
- £11.3 million from acquisition, integration, and reorganisation
charges (H1 2022: £6.0m)
- £7.9 million relating to the amortisation of acquired
intangibles (H1 2022: £8.9m)
- £7.7 million in charges for share-based payments (H1 2022:
£13.0m)
Costs relating to the Oracle Cloud ERP project of £2.6 million
were incurred in the prior period adjusting items.
Further details on adjusting items and a reconciliation between
reported and adjusted profit measures are provided below.
NET PROFIT Adjusted net profit was £39.1 million (H1
2022: £32.2m). Reported net profit was £16.8 million (H1 2022:
£5.8m).
CASH Cash of £79.0 million (period ended 31 December
2022: £89.0m).
On 7 March 2023, the Group replaced its existing Revolving
Credit Facility (‘RCF’) with a new four-year RCF for an amount of
£300 million. Outstanding borrowings net of fees was £117.7
million. We ended the period with net debt of £38.7 million.
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 period to period. 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
below.
The following table presents reconciliation of profit for the
period, the most directly comparable IFRS measure, to adjusted
operating profit and includes the calculation of the adjusted
operating profit margin for the periods indicated:
Six months ended
30 June 2023
(unaudited)
£m
Six months ended
30 June 2022
(unaudited)
£m
Profit for the period
16.8
5.8
Tax charge
6.6
1.6
Finance income
(0.7)
(0.1)
Finance costs
5.2
2.0
Amortisation of fair value adjustments
(i)
—
2.7
System and process improvement costs
(ii)
—
2.6
Integration and reorganisation costs
(iii)
9.1
6.0
EGM costs
(iv)
2.0
—
Strategic review costs
(v)
0.2
—
Amortisation of acquisition
intangibles
(vi)
7.9
9.0
Share-base payment charges
(vii)
7.7
13.0
Adjusted operating profit
54.8
42.6
Revenue
203.2
185.2
Adjusted operating profit margin
27.0%
23.0%
The following table represents a reconciliation of profit for
the period, the most directly comparable IFRS financial measure, to
adjusted profit for the periods indicated, which is used in the
calculation of adjusted diluted earnings per share:
Six months ended
30 June 2023
(unaudited)
£m
Six months ended
30 June 2022
(unaudited)
£m
Profit for the period
16.8
5.8
Weighted average ordinary shares for the
purpose of diluted earnings per share
232.7
230.6
Diluted earnings per share
7.2p
2.5p
Profit for the period
16.8
5.8
Amortisation of fair value adjustments
(i)
—
2.7
System and process improvement costs
(ii)
—
2.6
Integration and reorganisation costs
(iii)
9.1
6.0
EGM costs
(iv)
2.0
—
Strategic review costs
(v)
0.2
—
Amortisation of acquisition
intangibles
(vi)
7.9
9.0
Share-base payment charges
(vii)
7.7
13.0
Tax effects of items (i) to (vii)
(4.6)
(6.9)
Adjusted profit for the period
39.1
32.2
Weighted average ordinary shares for the
purpose of diluted earnings per share
232.7
230.6
Adjusted diluted earnings per share
16.8p
14.0p
(i)
Six months ended 30 June 2023: no
such costs incurred. Six months ended 30 June 2022: comprises
amortisation of fair value adjustments relating to the acquisition
of BioVision. Following the acquisition, the Group recognised a
fair value uplift of £6.0m to inventory carried on the Group's
balance sheet. This adjustment was amortised over 4 months from
November 2021 and is now fully amortised. Such costs are included
within cost of sales.
(ii)
Six months ended 30 June 2023: no
such costs incurred. Six months ended 30 June 2022: comprises costs
of the strategic ERP implementation which do not qualify for
capitalisation. Such costs are included within selling, general and
administrative expenses.
(iii)
Six months ended 30 June 2023:
integration and reorganisation costs relate primarily to
incremental costs associated with the cost refinement actions
announced in May 2023, which includes the consolidation of our
global footprint, streamlining organisational structures and
eliminating redundant processes. Further costs included here are
those associated with the finalisation of the integration of
BioVision. These costs are included in selling, general and
administrative expenses (£8.0m) and research and development
expenses (£1.1m). Six months ended 30 June 2022: integration and
reorganisation costs relate primarily to the integration of
BioVision (comprising mainly retention and severance costs,
employee backfill costs for those involved in the integration,
settlement costs and professional fees) and footprint costs. Such
costs are included within selling, general and administrative
expenses.
(iv)
Six months ended 30 June 2023:
professional fees associated with the calling of an extraordinary
general meeting ('EGM') for July 2023. These costs are included in
selling, general and administrative expenses. Six months ended 30
June 2022: no such costs incurred.
(v)
Six months ended 30 June 2023:
professional fees associated with the ongoing strategic review
initiated in June 2023. These costs are included in selling,
general and administrative expenses. Six months ended 30 June 2022:
no such costs incurred.
(vi)
For the six-month period ended 30
June 2023, £7.2m (30 June 2022: £7.6m) of amortisation of
acquisition intangibles is included in research and development
expenses, with the remaining £0.7m (30 June 2022: £1.4m) included
in selling, general and administrative expenses.
(vii)
Comprises share-based payment
charges and employer’s tax contributions thereon for all the
Group’s equity- and cash-settled schemes. Charges of £1.5m (30 June
2022: £1.4m) are included in research and development expenses,
with the remaining £6.2m (30 June 2022: £11.6m) included within
selling, general and administrative expenses.
Looking forward On 28 August 2023, Abcam announced that
it has entered into a definitive agreement pursuant to which
Danaher Corporation to acquire all of the outstanding shares for
$24.00 per share in cash.
Alan Hirzel Chief Executive Officer
Michael S Baldock Chief Financial Officer
31 August 2023
Forward-Looking Statements This announcement contains
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. In some cases, you can
identify forward-looking statements by the following words: “may,”
“might,” “will,” “could,” “would,” “should,” “expect,” “plan,”
“anticipate,” “intend,” “seek,” “believe,” “estimate,” “predict,”
“potential,” “continue,” “contemplate,” “possible” or the negative
of these terms or other comparable terminology, although not all
forward-looking statements contain these words. They are not
historical facts, nor are they guarantees of future performance.
Any express or implied statements contained in this press release
that are not statements of historical fact may be deemed to be
forward-looking statements, including, without limitation,
statements regarding: Abcam's portfolio, ambitions, market
opportunities, and Danaher’s and Abcam’s ability to complete the
transaction on the proposed terms or on the anticipated timeline,
or at all 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: risks and uncertainties related to securing the
necessary regulatory approvals and Abcam shareholder approval, the
sanction of the High Court of Justice of England and Wales and
satisfaction of other closing conditions to consummate the
transaction; the occurrence of any event, change or other
circumstance that could give rise to the termination of the
definitive transaction agreement relating to the transaction; risks
related to diverting the attention of Danaher’s and Abcam’s
management from ongoing business operations; failure to realize the
expected benefits of the transaction; significant transaction costs
and/or unknown or inestimable liabilities; the risk of shareholder
litigation in connection with the transaction, including resulting
expense or delay; the risk that Abcam’s business will not be
integrated successfully if applicable or that such integration if
applicable may be more difficult, time-consuming or costly than
expected; Danaher’s ability to fund the cash consideration for the
transaction; risks related to future opportunities and plans for
the combined company, including the uncertainty of expected future
regulatory filings, financial performance and results of the
combined company following completion of the acquisition;
disruption from the transaction, making it more difficult to
conduct business as usual or maintain relationships with customers,
employees or suppliers; effects relating to the announcement of the
transaction or any further announcements or the consummation of the
acquisition on the market price of Abcam’s American depositary
shares; regulatory initiatives and changes in tax laws; market
volatility; other risks and uncertainties affecting Danaher and
Abcam; and as a foreign private issuer, we are exempt from a number
of rules under the U.S. securities laws and Nasdaq corporate
governance rules and are permitted to file less information with
the SEC than U.S. companies, which may limit the information
available to holders of our American Depositary Shares (“ADS”); and
the other important factors discussed from time to time under the
caption "Risk Factors" in Abcam's Annual Report on Form 20-F for
the year ended December 31, 2022 (“Annual Report”) and in any
subsequent reports on Form 6-K, each of which is on file with or
furnished to the U.S. Securities and Exchange Commission ("SEC")
and which are available on the SEC website at www.sec.gov, as such
factors may be updated from time to time in Abcam's subsequent
filings or furnishings with the SEC. Any forward-looking statements
contained in this announcement speak only as of the date hereof and
accordingly undue reliance should not be placed on such statements.
Abcam disclaims any obligation or undertaking to update or revise
any forward-looking statements contained in this announcement,
whether as a result of new information, future events or otherwise,
other than to the extent required by applicable law.
Responsibility statement
We confirm to the best of our knowledge:
- the interim financial statements have been prepared in
accordance with IAS 34
At the date of this statement, the Directors are those listed in
the Annual Report and Accounts 2022 and there were no further
changes.
By order of the Board
Alan Hirzel Chief Executive Officer
Michael S Baldock Chief Financial Officer
31 August 2023
Condensed consolidated income
statement
For the six month period ended 30 June
2023
Note
Six months
ended
30 June 2023
(unaudited)
£m
Six months
ended
30 June 2022
(unaudited)
£m
Revenue
203.2
185.2
Cost of Sales
(48.3)
(47.9)
Gross profit
154.9
137.3
Selling, general and administrative
expenses
(107.4)
(108.9)
Research and development expenses
(19.6)
(19.1)
Operating profit
27.9
9.3
Finance income
0.7
0.1
Finance costs
(5.2)
(2.0)
Profit before tax
23.4
7.4
Tax
4
(6.6)
(1.6)
Profit for the period attributable to
equity shareholders of the parent
16.8
5.8
Earnings per share
Basic earnings per share
5
7.3p
2.5p
Diluted earnings per share
5
7.2p
2.5p
Condensed consolidated statement of
comprehensive income
For the six month period ended 30 June
2023
Six months
ended
30 June 2023
(unaudited)
£m
Six months
ended
30 June 2022
(unaudited)
£m
Profit for the period attributable to
equity shareholders of the parent
16.8
5.8
Items that may be reclassified to the
income statement in subsequent periods
Movement on cash flow hedges
1.2
(0.7)
Exchange differences on translation of
foreign operations
(34.5)
56.5
Tax relating to these items
(0.3)
0.1
Items that will not be reclassified to
the income statement in subsequent periods
Movement in fair value of investments
0.3
(0.3)
Tax relating to these items
—
0.1
Other comprehensive (expense) / income
for the period
(33.3)
55.7
Total comprehensive (expense) / income
for the period
(16.5)
61.5
Condensed consolidated balance sheet
As at 30 June 2023
Note
As at
30 June
2023
(unaudited)
£m
As at
31 December
2022
(audited)
£m
Non-current assets
Goodwill
379.6
398.3
Intangible assets
219.4
227.9
Property, plant and equipment
81.5
80.5
Right-of-use assets
76.0
79.2
Investments
7
3.5
3.2
Deferred tax asset
11.3
12.1
771.3
801.2
Current assets
Inventories
66.3
68.0
Trade and other receivables
92.3
84.0
Current tax receivable
16.3
13.9
Derivative financial instruments
7
1.9
0.5
Cash and cash equivalents
79.0
89.0
255.8
255.4
Total assets
1,027.1
1,056.6
Current liabilities
Trade and other payables
(61.4)
(67.8)
Derivative financial instruments
7
—
(0.8)
Lease liabilities
(9.8)
(8.5)
Borrowings
(117.7)
(119.6)
Current tax liabilities
—
(5.1)
(188.9)
(201.8)
Net current assets
66.9
53.6
Non-current liabilities
Deferred tax liability
(29.5)
(32.1)
Lease liabilities
(89.5)
(95.8)
(119.0)
(127.9)
Total liabilities
(307.9)
(329.7)
Net assets
719.2
726.9
Equity
Share capital
0.5
0.5
Share premium account
269.4
269.4
Merger reserve
68.6
68.6
Own shares
(1.7)
(1.9)
Translation reserve
55.2
89.7
Hedging reserve
0.8
(0.1)
Retained earnings
326.4
300.7
Total equity attributable to the equity
shareholders of the parent
719.2
726.9
Approved by the Board of directors and authorised for issue on
31 August 2023.
Condensed consolidated statement of
changes in equity
For the six month period ended 30 June
2023 (unaudited)
Share
capital
£m
Share
premium
account
£m
Merger
reserve
£m
Own
shares
£m
Translation
Reserve
£m
Hedging
reserve
£m
Retained
earnings
£m
Total equity
£m
Balance as at 1 January 2023
0.5
269.4
68.6
(1.9)
89.7
(0.1)
300.7
726.9
Profit for the period
—
—
—
—
—
—
16.8
16.8
Other comprehensive (loss) / income
—
—
—
—
(34.5)
0.9
0.3
(33.3)
Total comprehensive (loss) / income for
the period
—
—
—
—
(34.5)
0.9
17.1
(16.5)
Own shares disposed of on exercise of
share options
—
—
—
0.2
—
—
0.2
0.4
Share-based payments inclusive of deferred
tax
—
—
—
—
—
—
8.4
8.4
Balance as at 30 June 2023
0.5
269.4
68.6
(1.7)
55.2
0.8
326.4
719.2
For the six month period ended 30 June
2022 (unaudited)
Share
capital
£m
Share
premium
account
£m
Merger
reserve
£m
Own
shares
£m
Translation
reserve
£m
Hedging
reserve
£m
Retained
earnings
£m
Total
£m
Balance as at 1 January 2022
0.5
268.3
68.6
(2.2)
31.1
0.2
289.6
656.1
Profit for the period
—
—
—
—
—
—
5.8
5.8
Other comprehensive income / (loss)
—
—
—
—
56.5
(0.6)
(0.2)
55.7
Total comprehensive income / (loss) for
the period
—
—
—
—
56.5
(0.6)
5.6
61.5
Issue of ordinary shares, net of share
issue costs
—
0.6
—
—
—
—
—
0.6
Own shares disposed of on exercise of
share options
—
—
—
0.2
—
—
(0.2)
—
Share-based payments inclusive of deferred
tax
—
—
—
—
—
—
9.6
9.6
Purchase of own shares
—
—
—
—
—
—
(0.2)
(0.2)
Balance as at 30 June 2022
0.5
268.9
68.6
(2.0)
87.6
(0.4)
304.4
727.6
Condensed consolidated cash flow
statement
For the six month period ended 30 June
2023
Note
Six months
ended
30 June 2023
(unaudited)
£m
Six months
ended
30 June 2022
(unaudited)
£m
Cash generated from operations
6
37.4
33.3
Net income taxes paid
(10.1)
(3.5)
Net cash inflow from operating
activities
27.3
29.8
Investing activities
Interest income
0.7
0.1
Purchase of property, plant and
equipment
(9.7)
(4.5)
Purchase of intangible assets
(12.0)
(11.0)
Transfer of cash from escrow in respect of
future capital expenditure
—
0.3
Net cash inflow arising from
acquisitions
—
1.2
Net cash outflow from investing
activities
(21.0)
(13.9)
Financing activities
Principal element of lease obligations
(5.4)
(5.7)
Interest element of lease obligations
(1.2)
(0.9)
Interest paid
(2.9)
(1.1)
Proceeds on issue of shares, net of issue
costs
0.4
0.6
Facility arrangement fees
9
(2.6)
—
Utilisation of revolving credit
facility
9
120.0
—
Repayment of revolving credit facility
9
(120.0)
—
Purchase of own shares
(0.1)
(0.2)
Net cash outflow from financing
activities
(11.8)
(7.3)
Net (decrease) / increase cash and cash
equivalents
(5.5)
8.6
Cash and cash equivalents at beginning of
period
89.0
95.1
Effect of foreign exchange rates
(4.5)
5.9
Cash and cash equivalents at end of
period
79.0
109.6
Free cash flow
(i)
(1.0)
8.0
(i)
Free cash flow comprises net cash
generated from operating activities less net capital expenditure,
and the principal and interest elements of lease obligations.
Notes to the condensed consolidated interim financial
statements
For the six month period ended 30 June 2023
1. General information The condensed consolidated interim
financial statements for the six month period ended 30 June 2023
are unaudited and do not comprise statutory accounts within the
meaning of section 434 of the Companies Act 2006. They do not
include all of the information required in annual financial
statements in accordance with IFRS, and should be read in
conjunction with the consolidated financial statements for the year
ended 31 December 2022. The financial information for the year
ended 31 December 2022 does not constitute the Company’s statutory
accounts for that period, but has been extracted from those
accounts, which were approved by the Board of Directors on 20 March
2023 and have been delivered to the Registrar of Companies. The
auditor has reported on those accounts, their opinion was
unqualified, did not draw attention to any matters by way of
emphasis and did not contain any statement under section 498(2) or
(3) of the Companies Act 2006.
2. Basis of preparation The interim financial statements
for the six month period ended 30 June 2023 included in this
interim financial report have been prepared in accordance with UK
adopted International Accounting Standard 34, ‘Interim Financial
Reporting’, and have been prepared on a going concern basis as
described further below.
a. Accounting policies The accounting policies adopted in
the preparation of the condensed consolidated interim financial
statements are those as set out in the Group’s financial statements
for the year ended 31 December 2022, except for the following:
Tax Taxes on income in the interim periods are accrued using the
tax rate that would be applicable to the expected total annual
profit. This is described in note 4.
New accounting standards and interpretations There have not been
any new standards or interpretations adopted in the period which
would have a material financial impact on, or disclosure
requirement for, the Group’s interim report.
b. Critical accounting judgements and sources of estimation
uncertainty Judgements and estimates are the same as those as
set out in the Group’s financial statements for the year ended 31
December 2022, except for the key estimation uncertainty for the
impairment of assets held for sale. These assets were fully
impaired in the year ended 31 December 2022 and there have not been
any further assets held for sale in the six months ended 30 June
2023.
c. Going concern On 28 August 2023, the Group announced
that it had entered into a definitive agreement pursuant to which
Danaher Corporation ‘Danaher’ will acquire all of the outstanding
shares of Abcam for $24.00 per share in cash, subject to
shareholder approval. The Directors unanimously recommend the offer
to shareholders and believe the Group is well positioned for future
continued success under Danaher ownership. On 28 August 2023,
Danaher also publicly announced its intent to continue to operate
Abcam as a standalone operating company and brand within Danaher’s
Life Sciences segment. The Directors recognise that
unavoidable uncertainties exist regarding the future plans and
funding requirements for the business under the new ownership.
Notwithstanding any uncertainty regarding post consummation
operations (assuming the acquisition is consummated) and Danaher’s
plans with respect thereto, the directors have considered the
Group’s forecasts and projections without taking account of whether
the contemplated acquisition will or will not ultimately be
consummated, taking account of reasonably possible changes in the
Group’s trading performance. These show that the Group is expected
to operate within the limits of its available resources and would
continue as a going concern.
The Directors have a reasonable expectation that the Group has
adequate resources to continue in operation for the foreseeable
future and a period of not less than twelve months from the date of
this report and are therefore satisfied that the going concern
basis remains appropriate for the preparation of the financial
statements. Accordingly, the going concern basis has been applied
in preparing the interim financial report and the interim financial
statements do not include the adjustments that would result if the
Group was no longer considered a going concern.
Notes to the condensed consolidated interim financial statements
(continued)
For the six month period ended 30 June 2023
3. Operating segments The Directors consider that there
is only one core business activity and there are no separately
identifiable business segments which are engaged in providing
individual products or services or a group of related products and
services which are subject to separate risks and returns. The
information reported to the Group’s Chief Executive Officer, who is
considered the chief operating decision maker, for the purposes of
resource allocation and assessment of performance, is based wholly
on the overall activities of the Group. The Group has therefore
determined that it has only one reportable segment under IFRS 8
Operating Segments, which is ‘sales of antibodies and related
products’. The Group’s revenue and assets for this one reportable
segment can be determined by reference to the Group’s income
statement and balance sheet.
Geographical information
Revenues are attributed to regions based
primarily on customers’ location. The Group’s revenue from external
customers is set out below:
Six months ended
30 June 2023
(unaudited)
£m
Six months ended
30 June 2022
(unaudited)
£m
The Americas
91.7
82.2
EMEA
55.4
47.2
China
33.0
31.6
Japan
8.4
10.3
Rest of Asia
14.7
13.9
203.2
185.2
Revenue by type is shown below:
Six months ended
30 June 2023
(unaudited)
£m
Six months ended
30 June 2022
(unaudited)
£m
Catalogue revenue
192.8
174.6
Custom products and services
2.7
2.8
IVD
3.3
3.4
Royalties and licenses
4.4
4.4
Custom products and licensing
10.4
10.6
Total reported revenue
203.2
185.2
Notes to the condensed consolidated interim financial statements
(continued)
For the six month period ended 30 June 2023
4. Income tax The major components of the income tax
charge in the income statement are as follows:
Six months
ended
30 June 2023
(unaudited)
£m
Six months
ended
30 June 2022
(unaudited)
£m
Current tax
Current income tax charge
4.5
9.3
Adjustment in respect of prior years
—
—
4.5
9.3
Deferred tax
Origination and reversal of temporary
differences
1.5
(7.7)
Adjustment in respect of prior years
0.6
—
2.1
(7.7)
Total income tax charge
6.6
1.6
Reclassifications: certain amounts in the prior year financial
statements have been reclassified to conform to the current year
presentation.
The Group reported a net tax charge of £6.6m (30 June 2022:
£1.6m).
With effect from 1 April 2023, the UK Corporation Tax rate
increased to 25% (30 June 2022: 19%). Taxation for other
jurisdictions is calculated at the rate prevailing in the relevant
jurisdictions.
Effective tax rates represent management’s best estimate of the
average annual effective tax rate on reported or adjusted profits
with these rates being applied to the six months results.
The estimated effective rate of tax on the reported profit for
the six months ended 30 June 2023 is approximately 28.2% (30 June
2022: 21.6%), which represents management’s best estimate of the
average annual effective tax rate on profits expected for the six
month period.
Notes to the condensed consolidated interim financial statements
(continued)
For the six month period ended 30 June 2023
5. Earnings per share The calculation of earnings per
ordinary share (EPS) is based on profit after tax attributable to
owners of the parent and the weighted number of shares in issue
during the period.
Six months
ended
30 June 2023
(unaudited)
£m
Six months
ended
30 June 2022
(unaudited)
£m
Profit attributable to equity
shareholders of the parent
16.8
5.8
Million
Million
Weighted average number of ordinary shares
in issue
229.4
228.9
Less ordinary shares held by Equiniti
Share Plan Trustees Limited
(0.2)
(0.3)
Weighted average number of ordinary
shares for the purposes of basic EPS
229.2
228.6
Effect of potentially dilutive ordinary
shares – share options and awards
3.5
2.0
Weighted average number of ordinary
shares for the purposes of diluted EPS
232.7
230.6
Basic EPS is calculated by dividing the earnings attributable to
the equity shareholders of the parent by the weighted average
number of shares outstanding during the period. Diluted EPS is
calculated by adjusting the weighted average number of ordinary
shares outstanding to assume conversion of all potentially dilutive
ordinary shares. Such potentially dilutive ordinary shares comprise
share options and awards granted to employees where the exercise
price is less than the average market price of the Company’s
ordinary shares during the period and any unvested shares which
have met, or are expected to meet, the performance conditions at
the end of the reporting period.
Six months
ended
30 June 2023
(unaudited)
Six months
ended
30 June 2022
(unaudited)
Basic EPS
7.3p
2.5p
Diluted EPS
7.2p
2.5p
6. Notes to the cash flow statement
Six months
ended
30 June 2023
(unaudited)
£m
Six months
ended
30 June 2022
(unaudited)
£m
Operating profit for the period
27.9
9.3
Adjustments for:
Depreciation of property, plant and
equipment
7.9
6.9
Depreciation of right-of-use assets
4.4
4.8
Amortisation of intangible assets
13.4
13.7
(Gain) / loss on disposal of right of use
assets
(0.2)
0.6
Impairment of non-current assets
2.1
—
Derivative financial instruments at fair
value through profit or loss
(0.9)
0.2
Research and development expenditure
credit
(1.2)
(0.9)
Share-based payments charge
6.0
12.0
Unrealised currency translation losses /
(gains)
1.1
(0.8)
Operating cash flows before movements
in working capital
60.5
45.8
(Increase) / decrease in inventories
(2.1)
2.9
Increase in receivables
(12.5)
(12.5)
Decrease in payables
(8.5)
(2.9)
Cash generated from operations
37.4
33.3
Notes to the condensed consolidated interim financial statements
(continued)
For the six month period ended 30 June 2023
7. Financial instruments and risk management The Group’s
activities expose it to a variety of financial risks that include
currency risk, interest rate risk, credit risk and liquidity
risk.
The condensed interim financial statements do not include all
financial risk management information and disclosures required in
the annual financial statements; accordingly, they should be read
in conjunction with the Group’s financial statements for the year
ended 31 December 2022. There have been no changes to the risk
management policies since the year ended 31 December 2022.
The table below analyses financial instruments carried at fair
value by valuation method. The different levels have been defined
as follows:
- Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or
liabilities;
- Level 2 fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
- Level 3 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable market
inputs).
The following table presents the Group’s assets and liabilities
carried at fair value by valuation method.
30 June 2023
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
Assets
Derivative financial instruments
—
1.9
—
1.9
Investments
0.9
—
2.6
3.5
Total assets
0.9
1.9
2.6
5.4
30 June 2022
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
Assets
Derivative financial instruments
—
0.3
—
0.3
Investments
0.8
—
2.5
3.3
Total assets
0.8
0.3
2.5
3.6
Liabilities
Derivative financial instruments
—
(0.9)
—
(0.9)
Total liabilities
—
(0.9)
—
(0.9)
There were no transfers between levels during the period.
The Group’s Level 2 financial instruments consist of forward
foreign exchange contracts fair valued using forward exchange rates
that are quoted in an active market.
The Group continues to generate significant amounts of US
Dollars, Euros, Japanese Yen and Chinese Renminbi in excess of
payments in these currencies and has hedging arrangements in place
to reduce its exposure to currency fluctuations.
The Group’s Level 3 financial instruments consist of unlisted
equity shares.
The fair value of the unquoted equity shares can be determined
as management monitors the ongoing performance of the
investment.
Notes to the condensed consolidated interim financial statements
(continued)
For the six month period ended 30 June 2023
7. Financial instruments and risk management (continued)
The following table details the forward contracts outstanding as at
the period end:
Maturing in
US Dollars
Euros
Japanese Yen
Chinese Renminbi
Sell $m
Average
rate
Sell €m
Average
rate
Sell ¥m
Average
rate
Sell ¥m
Average
rate
Year ending 31 December 2023
15.0
1.22
18.3
1.13
773
160.1
34.8
8.33
Year ending 31 December 2024
0.9
1.26
2.1
1.13
116
165.8
7.9
8.79
8. Capital commitments As at 30 June 2023, the Group had
capital commitments of £10.5m (30 June 2022: £7.9m) relating to the
acquisition of property, plant and equipment and intangible
assets.
9. Borrowings On 7 March 2023, the Group replaced its
existing Revolving Credit Facility (‘RCF’) which was due to expire
on January 31 2024 with a new RCF for an amount of £300m. The
amount of £120m drawn down on the previous RCF was rolled forward
into the new facility.
The new RCF has a term of 4 years, with the option to extend for
one further year, for an amount of £300m and with no accordion
option. Borrowings under the new facility are unsecured but are
guaranteed by certain of our material subsidiary companies.
Arrangement fees incurred in securing the new facility, which were
£2.6m, have been capitalised and the associated borrowings have
been presented net of these. Arrangement fees are amortised through
finance costs over the term of the facility.
10. Subsequent events On 28 August 2023, Abcam announced
that it has entered into a definitive agreement pursuant to which
Danaher Corporation will acquire all of the outstanding shares of
Abcam for $24.00 per share in cash, subject to shareholder
approval.
Risks and uncertainties
The principal risks and uncertainties which the Group faces in
the undertaking of its day-to-day operations and in pursuit of its
longer-term objectives are set out in the Annual Report and
Accounts 2022 on page 30 and in note 4 to the consolidated
financial statements. Information on financial risk management is
set out in note 26 to the consolidated financial statements. A copy
of the Annual Report and Accounts is available on the Group's
website www.abcamplc.com/investors/reports-presentations/.
The principal risks and risk profile of the Group have not
changed over the interim period and are not expected to change over
the next six months.
The principal risks and uncertainties remain as:
- Challenges in implementing our strategies for revenue growth in
light of competitive challenges;
- The development of new products or the enhancement of existing
products, and the need to adapt to significant technological
changes or respond to the introduction of new products by
competitors to remain competitive;
- Our customers discontinuing or spending less on research,
development, production or other scientific endeavours;
- 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;
- The ongoing COVID 19 pandemic, including variants, continues to
affect our business, including impacts on our operations and supply
chains;
- Failing to successfully use, access and maintain information
systems and implement new systems to handle our changing
needs;
- Cyber security risks and any failure to maintain the
confidentiality, integrity and availability of our computer
hardware, software and internet applications and related tools and
functions;
- Failing to successfully manage our current and potential future
growth;
- Any significant interruptions in our operations;
- Our products fail to satisfy applicable quality criteria,
specifications and performance standards;
- Failing to maintain and enhance our brand and reputation;
- Ability to react to unfavourable geopolitical or economic
changes that affect life science funding;
- Failing to deliver on transformational growth projects;
- Our dependence upon management and highly skilled employees and
our ability to attract and retain these highly skilled employees;
and
- As a foreign private issuer, we are exempt from a number of
rules under the U.S. securities laws and Nasdaq corporate
governance rules and are permitted to file less information with
the SEC than U.S. companies, which may limit the information
available to holders of our American Depositary Shares
(“ADS”).
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230831501793/en/
For further information please contact: Abcam Alan
Hirzel, Chief Executive Officer Michael Baldock, Chief Financial
Officer Tommy Thomas, Vice President, Investor Relations + 44 (0)
1223 696 000
FTI Consulting (media enquiries) Ben Atwell / Pat Tucker
Abcam@fticonsulting.com
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