Abcam reports 8.3% constant currency revenue growth in H1 as customers gradually return to labs

SUMMARY PERFORMANCE

* Net Cash comprises cash and cash equivalents less borrowings.

FINANCIAL HIGHLIGHTS

• Total revenue growth of 6.7% on a reported basis and 8.3% at Constant Exchange Rates (CER)¹

  • Catalogue revenue of £139.0m, growth of 7.8% at CER

  • Custom Products & Licensing (CP&L) revenue of £8.5m, growth of 15.9% at CER

  • Total in-house product revenue growth of 24.5% at CER (includes CP&L) (H1 2020: 11.3%)

• Gross margin increased 120 basis points, benefiting from the contribution of higher margin in-house products

• Operating profit of £15.5m (H1 2020: £26.6m) and adjusted¹ operating profit of £23.6m (H1 2020: £33.4m), equating to an adjusted operating margin of 16.0% (H1 2020: 24.2%) reflecting planned investments to support the Group’s long-term growth strategy, as well as the impact of COVID-19

• Reported diluted EPS of 5.3p (H1 2020: 12.6p) and adjusted¹ diluted EPS of 8.1p (H1 2020: 13.0p) reflecting the decrease in operating profit and increase in the number of ordinary shares in issue

• Net cash inflow from operating activities of £33.9m (H1 2020: £39.6m), ending the period with a net cash position of £211.9m (H1 2020: £88.5m)

STRATEGIC & OPERATIONAL HIGHLIGHTS

• Customers gradually returned to labs in H1, although according to industry research, almost 60% of life science labs were still operating below normal capacity through December 2020

• Improved customer engagement levels, reflecting our ongoing focus on supporting customers through the pandemic

  • Average customer transactional Net Promotor Score (tNPS) in the first six months of +59, up 7% pts year-on-year

• Employee engagement remains high as we continue to support the health and wellbeing of our teams

  • Externally recognized by Glassdoor, the employer review website, as the 3rd best place to work in the UK in 2020 and the 2nd highest rated CEO of a UK business during the pandemic

• Delivered operational progress across all areas of our strategic growth plan, including:

  • Innovated and published over 2,500 new in-house recombinant antibody products and expanded our in-house conjugation, recombinant proteins and engineered cell line ranges

  • New in-house product introductions significantly up on H1 2020, although certain product development pipelines have slowed due to reduced lab capacity across our global facilities resulting from COVID-19 restrictions

  • In-house product contribution increased to approximately 53% of catalogue revenue (H1 2020: 45%) and 55% of total revenue (including CP&L) (H1 2020: 48%)

  • Initiated over 40 partnership agreements with biopharma and diagnostic organizations, with the number of commercialized antibodies rising to over 560 (FY2020: 479)

  • Further progressed our multi-year program to upgrade the Group’s digital and physical infrastructure

• Continued to generate value from recent acquisitions, with overall sales ahead of expectations

• Completed secondary US listing on Nasdaq (in addition to the current listing on AIM in the UK), raising net proceeds of £126.5m

• Published first ESG Impact Report in November 2020, setting out our sustainability framework

• Post period end, appointed Bessie Lee and Mark Capone as Non-Executive Directors to the Board

CHANGE OF FISCAL YEAR END

Before the end of this fiscal year, the Board intends to change the Company’s accounting reference date (fiscal year end). The Board has undertaken a review of the appropriate year end for the Company and has decided that this year would be the right time to move the fiscal year end from 30 June to 31 December.

Following this change, the Company’s near-term reporting calendar will be as follows:

• Unaudited results for the six- and twelve-month periods to 30 June 2021 to be announced in September 2021

• Audited results for the twelve and 18-month periods to 31 December 2021 to be announced in March 2022

• Publication of the 2021 annual report and accounts expected before the end of April 2022

Furthermore, assuming the change in accounting reference date is implemented as expected, the Company plans to hold future AGMs in the second calendar quarter of each year, and will hold a general meeting in the summer to review necessary authorities that would otherwise expire before the next AGM.

COVID-19 UPDATE AND IMPLICATIONS FOR LONG-TERM GROWTH OUTLOOK TO 2024

• Fundamental drivers of the life science research market remain attractive with stable public funding and an increasing emphasis on proteomics and clinically relevant biologics

• Implementation of Abcam’s strategy remains within the Board’s expectations of timing, costs, and milestones. We remain confident in realizing growth from these investments and generating an attractive return on capital employed as we gain operational leverage, normalize capital investment, and generate more of our own product at higher gross margins

• COVID-19 pandemic controls continue to constrain researcher access to approximately 50% of labs globally. These constraints are limiting scientific discovery capacity and we observe demand in those labs well below historic levels

• With over 15 months of operational experience through the pandemic, we remain cautious in our assessment of when laboratory activity and demand will return to full strength

• We are updating our long-term outlook to reflect a broader range of potential outcomes than originally outlined in November 2019, with a range of revenue outcomes for the end of calendar 2024 of £425 – 500m (at current exchange rates)

• We expect to provide further information when laboratory activity and demand return to normal levels

Commenting on the first half performance, Alan Hirzel, Abcam’s Chief Executive Officer, said: “We delivered over 8% revenue growth at constant exchange rates in the first half year as we started to see more activity in our customers’ labs. Whilst we haven’t yet observed a return to normal demand, we are encouraged by the 25% growth in our in-house products and the long-term outlook for Abcam. We remain confident in our growth strategy and are committed to investing in innovation and building an increasingly strong and sustainable global business.”

Notes:

1.                  These interim results include discussion of alternative performance measures which include revenues calculated at Constant Exchange Rates (CER) and adjusted financial measures. CER results are calculated by applying prior period's actual exchange rates to this period's results.  Adjusted financial measures are explained in note 2(c) and reconciled to the most directly comparable measure prepared in accordance with IFRS in note 4 to the interim financial statements.

2.                  Further detail on the Group's financial performance is set out in the interim financial statements and notes thereto.

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.