Abcam reports continued growth from in-house innovation; revenue doubled in past five years

SUMMARY PERFORMANCE

FINANCIAL HIGHLIGHTS

·        Total revenue up 11.4% on a reported basis and 9.2% on a constant exchange rate (CER) basis¹

·        Gross margin up 60 basis points to 70.5%, benefiting from an increasing mix of in-house products

·        EBITDA margin of 32.4% (2017/18: 35.0%), with Adjusted EBITDA margin² of 35.6% (2017/18: 37.9%), reflect planned strategic investments in the business

·        Operating profit margin of 21.6% (2017/18: 29.5%), after a £12.8m non-cash impairment charge relating to historic Enterprise Resource Planning (ERP) development costs. Adjusted operating profit margin² of 32.2% (2017/18: 34.9%)

·        Reported PBT declined to £56.4m (2017/18: £69.1m). Adjusted PBT grew 2.8% to £83.9m

·        Reported diluted EPS was 21.8p whilst adjusted diluted EPS grew 0.6% to 32.6p

·        Net cash inflow from operating activities of £70.2m (2017/18: £63.3m)

·        Proposed final dividend of 8.58p (2017/18: 8.58p), taking the proposed total annual dividend to 12.13 pence per share, an increase of 1.1% 

STRATEGIC & OPERATIONAL HIGHLIGHTS

·        All product categories growing above underlying market rates and all strategic performance targets achieved:

-      Recombinant antibody revenue growth (CER) of +22.4% (vs. target 20%+)

-      Immunoassay product revenue growth (CER) of +21.9% (vs. target 20%+)

-      12-month rolling transactional Net Promotor Score (tNPS) of 59%³ (vs. target 57-67%)

·        Continued in-house innovation, with in-house product revenue growth of 13.6% (CER) and the introduction of the Group’s 18,000^th recombinant antibody

·        Further enhancements made to product quality through knockout validation, recombinant antibodies, and other initiatives to improve quality

·        Ongoing development of our addressable market in Custom Products and Licensing (CP&L), with 57 new agreements entered into with biopharmaceutical and diagnostic partners and over 160 custom projects completed during the year

·        Implemented the financial and non-stock procurement modules of our global ERP system

·        Successfully relocated to our new global headquarters in Cambridge, UK

NEW FIVE-YEAR PLAN AND LONG-TERM OUTLOOK TO 2023/24

·      New five-year plan targeting revenue of £450-500m in 2023/24, with an accelerating growth rate expected over the life of the plan

·      2023/24 Adjusted Operating Profit margin expected to reach low-thirties %, dependent on the phasing of investment in strategic initiatives

·      Plan encompasses a series of further strategic operational and capital investments to remove constraints to growth and realise market opportunities

o  Total capital expenditure over period expected to be £175-225m

• Targeting pre-tax Adjusted Return on Capital Employed (ROCE) of above 18% in 2023/24

2019/20 OUTLOOK⁴

·      Trading performance year to date is in line with the Board’s expectations;

·      Targeting total revenue of £288-294m, equivalent to constant currency revenue growth of 9-11%;

·      Anticipated Adjusted Operating² Profit margin of 25-28%, dependent on the phasing of strategic investments

o  Equivalent Adjusted EBITDA margin of 32-35%

·      Total estimated capital expenditure in the region of £30-50m, including IT transformation

Alan Hirzel, Abcam’s Chief Executive Officer, said: “Our dedication to customer needs, team performance and our long-term investment perspective has helped Abcam to achieve sustained growth and expand its reach and influence over the last five years.  Today, we are in a better position than ever before to pursue opportunities to continue to invest in, build and grow a successful global company.

“We are reassured that there is more to do and excited about the future prospects for our industry and our business.  We are eager to enter a new phase of growth in the coming five years to extend further our impact on research discovery and clinical applications to improve patient lives.”

Notes:

1.      Constant currency results (CER) are calculated by applying prior period's actual exchange rates to this period's results.

2.       These preliminary results include discussion of alternative performance measures which are defined in further detail in note 9. These measures include adjusted financial measures, which are explained in note 1(c) and reconciled to the most directly comparable measure prepared in accordance with IFRS in note 3 to the financial information. Further detail on the Group’s financial performance is set out in the financial information and notes thereto.  

3.       In November 2018, the Company appointed a new tNPS survey partner. As a consequence, the mechanism by which customer feedback is obtained changed and resulted in a tNPS outcome that is approximately 10% lower than under the previous mechanism.

4.       2019/20 outlook based on the following budgeted foreign exchange rates to Pound Sterling: USD: 1.27; EUR: 1.12; RMB: 8.72; JPY: 134.0. All guidance is provided on a post IFRS16 basis

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