8th Sep 2009 07:00
|
For immediate release |
8 September 2009 |
ABCAM PLC
('Abcam' or 'the Company')
Preliminary results for the year ended 30 June 2009
Cambridge, UK: Abcam plc (AIM: ABC), the rapidly growing bioscience company that markets antibodies via its own online catalogue, is pleased to announce its preliminary results for the year ended 30 June 2009.
Highlights
Revenue increased by 55.2% to £56.8m (2008: £36.6m) and by 27.8% on a constant currency basis
Pre-tax profits increased by 118.5% to £17.4m (before a non-recurring fixed asset impairment related charge of £1.1m in 2009)
Product range grew by 19.1% to approximately 52,400 antibodies and related products (2008: 44,000)
Office moves in the UK and Japan to accommodate further growth were completed
The North American and Japanese offices continued to trade well and deliver significant growth
Monoclonal manufacturing resource refocused on the development and production of a narrower range of high selling monoclonal antibodies
Net cash and short-term investments at 30 June 2009 of £25.5m (2008: £14.5m)
EPS increased by 106.3% to 34.83p per share (2008: 16.88p)
Recommended final dividend increased by 106.1% to 9.40p per share (2008: 4.56p), giving total increase in dividend for the year of 116.2% to 12.11p (2008: 5.60p)
David Cleevely, Chairman of Abcam, said:
"We are presenting our results for the 2009 financial year against a backdrop of one of the most challenging global economic environments for many years. It therefore gives me particular pleasure to be reporting on an outstanding performance and the excellent progress made during the year.
"The potential impact of the global recession on our business is difficult to assess but trading has begun well in the new financial year, reflecting the robust and defensive nature of our markets."
For further information please contact:
Abcam +44 (0) 1223 696000
Jonathan Milner, Chief Executive Officer
Jeff Iliffe, Chief Financial Officer
www.abcamplc.com
Numis Securities +44 (0) 20 7260 1000
Nominated Adviser Michael Meade / Nick Westlake
Corporate Broking James Black
Buchanan Communications +44 (0) 20 7466 5000
Mark Court / Mary-Jane Johnson / Stasa Filiplic
Notes for editors
About Abcam plc
Abcam is a producer and distributor of research-grade antibodies headquartered in Cambridge, United Kingdom, with offices in Cambridge, Massachusetts, USA and Tokyo, Japan. Abcam was admitted to AIM in November 2005 and trades under the ticker symbol ABC. The Company produces and distributes its own and third-party produced antibodies to academic and commercial users throughout the world. Product ordering is available through the Company's website www.abcam.com, where customers are also able to access up-to-date and detailed technical product data sheets. All the antibodies are sold under the Abcam brand name and the Company's vision is to build the world's largest online resource of high-quality and commercially viable antibodies. Abcam now has an online catalogue of over 52,000 products, most of which are antibodies, from over 250 suppliers and employs 237 staff in its three operating companies.
About antibodies
Antibodies are proteins produced by white blood cells in response to the introduction of a foreign body known as an antigen. Antibodies, which have a wide variety of uses in research, diagnostics and therapeutics, are used by bioscientists in research into disease and into the human genome, where they are used to mark and identify specific cells and other living matter. The number of human antibodies of use in research is potentially greater than one million.
Chairman's Review
We are presenting our results for the 2009 financial year against a backdrop of one of the most challenging global economic environments for many years. It therefore gives me particular pleasure to be reporting on an outstanding performance and the excellent progress made during the year.
Abcam was established eleven years ago to meet the needs of the research scientist for reliable, validated antibodies for protein detection, a central function of life science research. Since then we have been dedicated to assisting global research through investment in the extension of our product catalogue and increased and improved validation of our products across an expanded range of applications. Throughout that time, the central tenets of our business have been to build an infrastructure such that our expansion is controlled and sustainable, and, critically, to stay in close communication with our customer base so that we can better serve them and anticipate their future requirements.
We are proud to have built a global business that is characterised by a rapidly increasing demand for its products, and a strong customer base, located across the world. We have fulfilled over half a million orders since our foundation and have a huge and growing volume of information on our antibodies. This information, much of which is available on our website, is provided from our own in-house facility, from our customers and suppliers, and via articles (which are now running at over 2,000 per quarter) in independent scientific publications. Our strong customer focus extends into the continued development of our e-commerce platform, which provides easy access to detailed information relating to our products, and extensive follow-up technical support, all aimed at improving the experience of, and assisting, the researcher.
Sales in the year increased by 55.2% to £56.8m and we benefited significantly from the weakness of Sterling, which had a positive impact on reported sales. Within that figure, underlying sales growth at constant currency rates was still very strong at 27.8% and we made significant progress in each of our main markets.
Our aim is to deliver sustainable growth through continued investment in the business. This year we have continued to develop the website, to optimise the user experience and, as part of our continued focus on being close to the markets and our customers, we now have our own in-house customer survey capability, which will play an important role in guiding new developments.
Our North American and Japanese offices have both had excellent years and grown significantly. Asia represents an opportunity for us which is as yet relatively untapped. We are therefore in the process of opening a sales and marketing office in Hong Kong to serve the local market and mainland China. As with the opening of our Japanese office in 2006, this will initially be on a small scale, as we look to develop our market penetration and provide improved customer service levels. Elsewhere, our distributor network has been further enhanced with the addition of three new distributors and we now have coverage over several countries in South America.
As indicated in the announcement accompanying our interim results in March, we have taken steps to refocus our monoclonal manufacturing resource towards more targeted production of a narrower range of high selling monoclonal antibodies, which we will supplement with the selective sourcing of monoclonal antibodies from third parties. Our aim is to leverage our excellent market position and knowledge to focus on areas of high demand, as we currently do with our polyclonal production. As a consequence, we are taking an impairment charge of £1.1m in the year, relating to assets which are no longer utilised as a result of the decision to refocus strategy away from the higher-volume production processes.
Our customers are the lifeblood of our business and are central to its operation. I would like to extend thanks to them for their continued support, to our suppliers who serve us so well, and to our shareholders.
Growth at the levels we are reporting requires dedicated and capable staff and I am delighted to say that we have continued to attract people of the highest calibre at all levels across the business. We thank them for their continued commitment, creativity and attention to detail which makes our success possible.
Dividends
The Board's policy for the past two years has been to distribute 33% of post-tax earnings. In light of the continued strong cash flow and success of the Group, the Directors are recommending that the distribution ratio for this year be increased to 35%. An interim dividend of 2.71p per share was paid in April 2009 and the Directors are therefore recommending a final dividend of 9.40p per share, making a total of 12.11p for the year, an increase of 116.2% on that paid last year. Subject to shareholder approval at the Annual General Meeting ('AGM') in November, the final dividend will be paid on 27 November 2009 to shareholders on the register on 6 November 2009.
Outlook
The potential impact of the global recession on our business is difficult to assess but trading has begun well in the new financial year. The robust and defensive nature of our markets, particularly from centrally funded research, has been well demonstrated during the past year. Nevertheless, the current economic circumstances demand a degree of caution.
Since the Company was founded our philosophy has been market led, focusing on the provision of the best quality products in the most relevant and meaningful way for the research scientist. This requires an integrated approach, across all areas of the business, and guides all that we do. Our track record demonstrates the strength of this philosophy, which I am sure will continue to serve the Company well in the future.
I was particularly pleased to welcome Mike Redmond to the Board as Deputy Chairman earlier in the year. As I indicated in the announcement of his appointment, after eleven years it is my intention to step down from the Board and I will be doing so at the AGM in early November. I am very proud of our achievements, the strength of the Company which has been built and the quality of the staff we have been able to attract. I am sure that under Mike Redmond's guidance and leadership as Chairman, Abcam will continue to thrive.
Dr David Cleevely FREng
Chairman
7 September 2009
Chief Executive Officer's Review
It gives me a huge amount of pleasure to report on another very successful year for Abcam. With sales growth of 55.2% to £56.8m (27.8% on a constant currency basis), we continue to validate the strength of our business model and gain market share. Our high quality, highly specified antibodies and breadth of catalogue continue to attract new customers and the high levels of service and support we provide ensure strong levels of customer retention.
It is important that we continue to invest in the business whilst delivering profitable growth and as described below, we have done so again this year. Profit before tax increased by 118.5% from £8.0m to £17.4m (before a £1.1m charge associated with the restructuring at the production facility in the 2009 financial year).
Sales in North America grew by 23.6% to $41.8m (£26.2m) as we continued to gain market share in the biggest, most mature and competitive market in the world. We are extending our opening times in order to improve service levels on the West Coast and continue to target regions where we have lower market penetration.
Our virtual office approach to European markets and targeted marketing initiatives, based out of our Cambridge UK office, but enabling European customers to contact us directly in their own languages, has continued to be successful and sales to Europe grew by 27.7% to €18.9m (£16.3m).
In Japan, the transition away from using our original distributor to dealing exclusively with sub-dealers was completed during the year. This has been a major exercise and means that we are now able to be closer to the customer, which is a key part of our strategy and enables us to trade at improved margins. Sales in Japan grew by 52.4% to ¥704m (£4.6m).
We enjoyed strong growth in the UK as sales grew by 17.7% to £4.9m and, with the expansion of our distributor network, sales in the rest of the world grew by 51.0%.
Included in the rest of the world figure are sales in the Hong Kong and Chinese markets, which together accounted for 3.0% of our sales this year. We believe that we are under-represented in those markets and consequently are in the process of opening a small sales and marketing office in Hong Kong to help capitalise on this opportunity.
We have increased the number of products in the catalogue by 19.1% during the year to approximately 52,400, further extending our product range. New products added during the year contributed £2.7m of sales. As information is gathered on these products we expect sales to increase over time, as is the case with other products in the catalogue.
As our market reach grows we continue to attract new suppliers of quality products in what is still a relatively fragmented market. In addition, we enjoy the benefit of the product development activities of existing suppliers with whom we have more established relationships, and who continue to introduce new products to us. We are also looking to expand the breadth of antibody-related reagents we offer, further to which we made an investment during the year to enable us to ship products on dry ice. This now gives us the capability to extend our range to products which, unlike antibodies, must remain frozen during delivery.
We have completed the restructuring of our production facility following the switch to more targeted monoclonal production. The decision to do this was taken because in the view of the Board the development of the high-volume monoclonal production process had the potential to absorb significant financial and management resources for an uncertain outcome. We will now look to supplement supply on a selective basis from third parties to ensure we have access to high-quality monoclonal antibodies in order to meet market demand. Following the reorganisation, our polyclonal production activities have benefited from the additional development resources made available and are producing at record volumes.
Having identified that a key driver of our growth is the amount of characterisation data available to scientists on the products in our catalogue, I am particularly pleased with the improvement both in throughput and breadth of applications that the characterisation team in our production facility can cover. There has been a significant increase in the amount of information added in the year and we have supplemented this for the first time by bringing a third party into our characterisation programme to help increase the volume and breadth of tests undertaken.
A cornerstone of Abcam's development has been building and retaining a close relationship with our customers. We do this in part by categorising the research market using our Core Focus Areas, which target researchers at the most exciting and cutting-edge frontiers of science. As part of this strategy we also continue to run world-class conferences where ground-breaking discoveries are announced, often with Abcam products as the enabling technology in those discoveries. We organised 17 conferences in the year, including our first in Asia. The recent establishment of our own in-house customer research capability means we are able to build ever closer relationships with the scientific community.
This year has seen an increase in resources applied to our newly formed dedicated e-commerce team, a particular focus of which has been improved and targeted e-mail marketing. We have also improved response times on the website and are attracting traffic to the site at increasing rates.
We look to build our business in a way which is scalable, to accommodate future growth. It is important that as we do this we continue to focus on economies of scale in order to optimise the return from our activities, hence our end-to-end internal system development, which links the public website to our key operating systems. This year we completed a major move of our head office to a new site on the Cambridge Science Park, and also moved offices in Japan following the change in distribution channels. Both moves were undertaken to accommodate further growth and were completed on time, with minimal disruption.
As previously announced, David Cleevely will be stepping down from the Board later this year. David was instrumental in the founding of Abcam in 1998 and I would like to express my thanks to David for all he has done for the Company over that time and the support he has provided to me personally. He has made a huge contribution and without him Abcam would not be the great Company it is today, and perhaps would not have existed at all. We wish him well and are very much looking forward to working with Mike Redmond, who will be replacing David as Chairman.
Abcam has a proven business model, dedicated staff, continuing strong underlying growth and significant potential. We have created a brand that is trusted by our customers through our focus on antibodies, on product quality and on customer service. We intend to continue to grow the number of antibodies in our catalogue and will consider adding related products to assist researchers in their quest to uncover the secrets of the cell. These are exciting times for Abcam, which is at the forefront of enabling life science research.
Jonathan Milner
Chief Executive Officer
7 September 2009
Financial Review
Revenue
Revenue increased in the year by 55.2% to £56.8m, or 27.8% on a constant currency basis (i.e. if foreign currency exchange rates had remained unchanged from 2008). The weighted average exchange rates applied to sales in the year were £1 : $1.595, €1.160, ¥151.880 (2008: £1 : $1.993, €1.355, ¥218.246.)
Gross margin
Gross margins reported for the period under review were 65.8%, compared with 60.7% for the previous year. The weakness of Sterling has contributed to this rise through an increase in Sterling-translated average unit selling prices. Whilst a relatively high percentage of the cost of sale is US Dollar denominated, the increase in Sterling-translated cost arising from the impact of exchange rate movements during the year has been mitigated by the impact of sales of products acquired when the Sterling exchange rate was stronger.
On a constant currency basis, gross margins increased by 2.1% through increases in underlying average selling prices, the effective management of costs and improvement in the margins for products sold under Product Line Acquisition agreements.
Administration and management expenses
Administration and management expenses rose from £12.4m to £17.4m in the year, before a non-recurring impairment charge of £1.1m, which is discussed further below. The main increases relate to:
a 29% increase in average headcount, in particular to increase staff resources in the Company's IT and customer support areas and in pursuit of the Company's Core Focus Area strategies;
an increase in profit-related pay to employees, following the substantial increase in profit during the year;
an increase in costs associated with the remaking of previously developed products to meet additional and expected demand;
additional costs arising from the new leases for the larger premises now occupied in Cambridge, UK and Japan, together with the costs of those office moves; and
costs arising from the commencement of an initiative involving the use of a third party to accelerate the rate of addition of characterisation information on products in the catalogue.
The bad debt provision decreased in the year from £0.59m to £0.31m. Previously provided net debts of £0.24m were written off against the provision, £0.04m was charged to reserves to reflect movements in exchange rates, and £0.08m was credited back to profit and loss, since a lower provision was required following the success in cash collection during the year.
Impairment of tangible assets
An impairment charge of £1.1m was taken during the year relating to fixed assets associated with the high-volume production processes which will not now be used in the business.
Research and development expenditure
Research and development ('R&D') expenditure relates to the development of new polyclonal and monoclonal products. R&D expenditure increased by 27.3% to £3.1m, reflecting the increased investment in these areas. Whilst the level of expenditure will not increase at the rate previously planned, following the move away from high throughput monoclonal development, it will rise in line with the introduction of new own manufactured polyclonal antibodies and as the new strategy for monoclonal antibody development is pursued.
Profit
After adding back the impairment charge of £1.1m in the 2009 financial year referred to above and the ongoing share based payments charge, operating profit expressed as a percentage of sales was 30.7% (2008: 20.7%), despite the impact of the additional administrative and R&D costs outlined above.
Investment revenue fell in the year, despite strong cash generation, reflecting the much reduced returns in the market on cash deposits.
Tax
The consolidated tax charge for the year was £4.0m or 24.6% of profit before tax, reflecting the tax credits arising from the increased amount of R&D undertaken and the increase in the R&D tax benefit from 50% to 75% of expenditure since August 2008.
Inventories
The Group has strong inventory management systems which operate at the individual product level and are aimed at maintaining high stock availability for customers whilst minimising the levels of stock held to achieve this. As a result, stock levels have increased slightly less than the growth in sales during the course of the year. Over time, the Company expects the levels of stock to increase relative to sales, since Abcam products developed in house may involve batch sizes larger than are required for immediate sale, and as more stock is built up overseas to enable higher levels of service in local markets.
Debtors
The strong debtor control processes introduced last year have continued to operate effectively and debtor days at the year end were 32.0 (2008: 34.4). The majority of sales continue to be on credit and we would expect some increase in debtor days over time, in line with practice in local markets, as the geographic spread of sales widens.
Creditors
Current liabilities rose from £4.7m to £8.6m. This figure includes deferred income of £1.3m (2008: £0.1m), including £1.0m of the cash incentive of £1.1m received on entering into a new lease for the head office (2008: £nil), which is to be credited to profit and loss over the life of the lease. Excluding this deferred income, trade and other payables increased by 33.1% which is slightly less than the rate of increase in overall costs. Current tax liabilities increased to £1.9m (2008: £0.4m), reflecting the increase in taxable profit during the year.
Cash flow
The Group's cash flow continues to be strong, with cash generated from operating activities of £14.8m (2008: £7.1m), including the receipt of £1.1m in cash referred to above, which is included in deferred income (2008: £nil). Consequently, despite spending £1.8m on property, plant and equipment and £0.3m on acquiring computer software and distribution rights, the Group's cash and short-term investment balances increased during the year by £11.0m.
Accounting Standards
This year is the first following the adoption of IFRIC 13 Customer Loyalty Programmes, which applies to the Abpoints scheme operated by the Company. This has resulted in a reduction in revenue and administration and management expenses of £96,000 in the year ended 30 June 2008. The effect on the comparative balance sheet was to increase trade and other payables by £96,000, with a corresponding decrease in provisions. There is no overall impact on results or net assets.
EPS
The number of shares issued during the year for the exercise of share options and for shares issued into the employee benefit trust, was relatively small at 458,669 (2008: 443,397), meaning that as post-tax profit grew by 108.7% (2008: 45.0%) the growth in basic EPS was 106.3% (2008: 43.8%) and in diluted EPS was 106.3% (2008: 44.9%).
Currency exposure
The Group continues to generate significant amounts of US Dollars, Euros and Japanese Yen in excess of payments in these currencies, and has arrangements in place to reduce the exposure to currency fluctuations. During the year to 30 June 2009 the Group had forward exchange contracts which matured to sell $14.1m and €11.4m at average rates of £1 to $1.760 and £1 to €1.246 respectively. For the year ending 30 June 2010 the Group has forward exchange contracts in place to sell $15.9m, €14.2m and ¥300.0m at average rates of £1 to $1.496, €1.138 and ¥157.09, of which $1.5m and €1.5m were marked to market rates at 30 June 2009, the balance being treated as hedged contracts. The Group also has contracts in place maturing in the year ending 30 June 2011 of $4.2m, €4.2m and ¥75.0m at average rates of £1 : $1.510, €1.138 and ¥156.30 respectively.
Jeff Iliffe
Chief Financial Officer
7 September 2009
Consolidated Income Statement
For the year ended 30 June 2009
|
Year ended |
|||
|
Year ended |
30/06/08 |
||
|
30/06/09 |
restated* |
||
|
Notes |
£000 |
£000 |
|
|
Continuing operations |
|||
|
Revenue |
6 |
56,801 |
36,598 |
|
Cost of sales |
(19,420) |
(14,389) |
|
|
Gross profit |
37,381 |
22,209 |
|
|
Administration and management expenses excluding share based compensation charge |
|||
|
and impairment of property, plant and equipment |
(16,985) |
(12,248) |
|
|
Share based compensation charge |
31 |
(374) |
(173) |
|
Impairment of property, plant and equipment |
18 |
(1,074) |
- |
|
Total administration and management expenses |
(18,433) |
(12,421) |
|
|
Research and development expenses excluding share based compensation charge |
(2,986) |
(2,398) |
|
|
Share based compensation charge |
31 |
(90) |
(19) |
|
Total research and development expenses |
(3,076) |
(2,417) |
|
|
Operating profit |
15,872 |
7,371 |
|
|
Investment revenue |
11 |
431 |
581 |
|
Profit before tax |
16,303 |
7,952 |
|
|
Tax |
14 |
(4,012) |
(2,062) |
|
Profit for the year attributable to shareholders |
8, 29 |
12,291 |
5,890 |
|
Earnings per share from continuing operations |
|||
|
Basic |
16 |
34.83p |
16.88p |
|
Diluted |
16 |
34.17p |
16.56p |
* restated to reflect the adoption of IFRIC 13 as per note 2.
Consolidated Statement of Recognised Income and Expense
For the year ended 30 June 2009
|
Year ended |
Year ended |
|
|
30/06/09 |
30/06/08 |
|
|
£000 |
£000 |
|
|
Gains/(losses) on cash flow hedges |
1,296 |
(168) |
|
Exchange differences on translation of foreign operations |
245 |
3 |
|
Tax on items taken directly to equity |
247 |
502 |
|
Net income recognised directly in equity |
1,788 |
337 |
|
Profit for the year |
12,291 |
5,890 |
|
Total recognised income and expense for the year |
14,079 |
6,227 |
Consolidated Balance Sheet
At 30 June 2009
|
30/06/08 |
|||
|
30/06/09 |
restated* |
||
|
Notes |
£000 |
£000 |
|
|
Non-current assets |
|||
|
Intangible assets |
17 |
793 |
994 |
|
Property, plant and equipment |
18 |
3,541 |
4,204 |
|
Deferred tax asset |
23 |
335 |
- |
|
Derivative financial instruments |
22 |
326 |
- |
|
4,995 |
5,198 |
||
|
Current assets |
|||
|
Inventories |
20 |
6,796 |
4,506 |
|
Trade and other receivables |
21 |
6,486 |
4,860 |
|
Cash and cash equivalents |
21 |
25,501 |
13,473 |
|
Short term deposits |
21 |
- |
1,020 |
|
Derivative financial instruments |
22 |
1,338 |
- |
|
40,121 |
23,859 |
||
|
Total assets |
45,116 |
29,057 |
|
|
Current liabilities |
|||
|
Trade and other payables |
24 |
(6,694) |
(4,169) |
|
Current tax liabilities |
(1,871) |
(382) |
|
|
Derivative financial instruments |
22 |
- |
(197) |
|
(8,565) |
(4,748) |
||
|
Net current assets |
31,556 |
19,111 |
|
|
Non-current liabilities |
|||
|
Deferred tax liabilities |
23 |
- |
(78) |
|
Deferred creditor |
24 |
(83) |
(109) |
|
(83) |
(187) |
||
|
Total liabilities |
(8,648) |
(4,935) |
|
|
Net assets |
36,468 |
24,122 |
|
|
Equity |
|||
|
Share capital |
26 |
355 |
351 |
|
Share premium account |
27 |
11,558 |
10,871 |
|
Own shares |
28 |
(301) |
- |
|
Translation reserve |
29 |
197 |
(33) |
|
Share based compensation reserve |
29 |
962 |
483 |
|
Hedging reserve |
29 |
933 |
- |
|
Deferred tax reserve |
29 |
1,368 |
758 |
|
Retained earnings |
29 |
21,396 |
11,692 |
|
Total equity attributable to shareholders |
36,468 |
24,122 |
* restated to reflect the adoption of IFRIC 13 as per note 2.
The financial statements were approved by the Board of Directors and authorised for issue on 7 September 2009.
They were signed on its behalf by:
Jeff Iliffe
Director
Company Balance Sheet
At 30 June 2009
|
30/06/08 |
|||
|
30/06/09 |
restated* |
||
|
Notes |
£000 |
£000 |
|
|
Non-current assets |
|||
|
Intangible assets |
17 |
792 |
994 |
|
Property, plant and equipment |
18 |
3,054 |
3,976 |
|
Investments |
19 |
105 |
45 |
|
Deferred tax asset |
23 |
159 |
- |
|
Derivative financial instruments |
22 |
326 |
- |
|
4,436 |
5,015 |
||
|
Current assets |
|||
|
Inventories |
20 |
6,783 |
4,501 |
|
Trade and other receivables |
21 |
6,579 |
5,144 |
|
Cash and cash equivalents |
21 |
24,090 |
11,918 |
|
Short term deposits |
21 |
- |
1,020 |
|
Derivative financial instruments |
22 |
1,338 |
- |
|
38,790 |
22,583 |
||
|
Total assets |
43,226 |
27,598 |
|
|
Current liabilities |
|||
|
Trade and other payables |
24 |
(6,193) |
(3,719) |
|
Current tax liabilities |
(1,784) |
(269) |
|
|
Derivative financial instruments |
22 |
- |
(197) |
|
(7,977) |
(4,185) |
||
|
Net current assets |
30,813 |
18,398 |
|
|
Non-current liabilities |
|||
|
Deferred tax liabilities |
23 |
- |
(178) |
|
Deferred creditor |
24 |
(83) |
(109) |
|
(83) |
(287) |
||
|
Total liabilities |
(8,060) |
(4,472) |
|
|
Net assets |
35,166 |
23,126 |
|
|
Equity |
|||
|
Share capital |
26 |
355 |
351 |
|
Share premium account |
27 |
11,558 |
10,871 |
|
Own shares |
28 |
(301) |
- |
|
Share based compensation reserve |
29 |
908 |
444 |
|
Hedging reserve |
29 |
933 |
- |
|
Deferred tax reserve |
29 |
1,196 |
758 |
|
Retained earnings |
29 |
20,517 |
10,702 |
|
Total equity attributable to shareholders |
35,166 |
23,126 |
* restated for the adoption of IFRIC 13 as per note 2.
The financial statements were approved by the Board of Directors and authorised for issue on 7 September 2009.
They were signed on its behalf by:
Jeff Iliffe
Director
Consolidated Cash Flow Statement
For the year ended 30 June 2009
|
Year ended |
Year ended |
||
|
30/06/09 |
30/06/08 |
||
|
Note |
£000 |
£000 |
|
|
Net cash inflow from operating activities |
30 |
14,812 |
7,142 |
|
Investing activities |
|||
|
Investment income |
513 |
581 |
|
|
Proceeds on disposal of property, plant and equipment |
- |
(1) |
|
|
Purchase of property, plant and equipment |
(1,756) |
(2,445) |
|
|
Purchase of intangible assets |
(259) |
(274) |
|
|
Net cash used in investing activities |
(1,502) |
(2,139) |
|
|
Financing activities |
|||
|
Dividends paid |
(2,572) |
(1,481) |
|
|
Proceeds on issue of shares |
691 |
257 |
|
|
Purchase of own shares |
(316) |
- |
|
|
Decrease/(increase) in short term deposits |
1,020 |
(1,020) |
|
|
Net cash used in financing activities |
(1,177) |
(2,244) |
|
|
Net increase in cash and cash equivalents |
12,133 |
2,759 |
|
|
Cash and cash equivalents at beginning of year |
13,473 |
10,709 |
|
|
Effect of foreign exchange rates |
(105) |
5 |
|
|
Cash and cash equivalents at end of year |
25,501 |
13,473 |
Company Cash Flow Statement
For the year ended 30 June 2009
|
Year ended |
Year ended |
||
|
30/06/09 |
30/06/08 |
||
|
Note |
£000 |
£000 |
|
|
Net cash inflow from operating activities |
30 |
13,535 |
5,858 |
|
Investing activities |
|||
|
Investment income |
503 |
561 |
|
|
Proceeds on disposal of property, plant and equipment |
- |
1 |
|
|
Purchases of property, plant and equipment |
(1,349) |
(2,434) |
|
|
Purchases of intangible assets |
(258) |
(251) |
|
|
Investment in subsidiary |
- |
(29) |
|
|
Dividends received |
918 |
401 |
|
|
Net cash used in investing activities |
(186) |
(1,751) |
|
|
Financing activities |
|||
|
Dividends paid |
(2,572) |
(1,481) |
|
|
Proceeds on issue of shares |
691 |
257 |
|
|
Purchase of own shares |
(316) |
- |
|
|
Decrease/(increase) in short term deposits |
1,020 |
(1,020) |
|
|
Net cash used in financing activities |
(1,177) |
(2,244) |
|
|
Net increase in cash and cash equivalents |
12,172 |
1,863 |
|
|
Cash and cash equivalents at beginning of year |
11,918 |
10,055 |
|
|
Cash and cash equivalents at end of year |
24,090 |
11,918 |
Company Statement of Recognised Income and Expense
For the year ended 30 June 2009
|
Year ended |
Year ended |
|
|
30/06/09 |
30/06/08 |
|
|
£000 |
£000 |
|
|
Gains/(losses) on cash flow hedges |
1,296 |
(168) |
|
Share based compensation charge recognised on behalf of subsidiaries |
60 |
29 |
|
Tax on items taken directly to equity |
75 |
502 |
|
Net income recognised directly in equity |
1,431 |
363 |
|
Profit for the year |
11,484 |
5,126 |
|
Total recognised income and expense for the year |
12,915 |
5,489 |
Notes to the Consolidated Financial Statements
For the year ended 30 June 2009
1. General information
Abcam plc (the Company) is incorporated in the United Kingdom under the Companies Act 2006. The address of the registered office is 330 Cambridge Science Park, Milton Road, Cambridge, CB4 0FL, United Kingdom.
The Group's activities consist of the development, marketing and selling of antibodies and related products. The Group sells through the internet to customers in most countries of the world. The Group operates through its parent Company Abcam plc and through its wholly owned subsidiaries Abcam Inc and Abcam KK.
These financial statements are presented in Pounds Sterling because that is the currency of the primary economic environment in which the Group operates. Foreign operations are included in accordance with the policies set out in note 3.
2. Adoption of new and revised Standards
In the current year, three Interpretations issued by the International Financial Reporting Interpretations Committee ('IFRIC') are effective for the current period. These are: IFRIC 11 IFRS 2 - Group and Treasury Share Transactions, IFRIC 13 - Customer Loyalty Programmes and IFRIC 14 IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction. The Group was previously accounting for group and treasury share transactions in accordance with IFRIC 11, so no further changes have been made as a consequence of the adoption of this Interpretation. The adoption of IFRIC 14 has not led to any changes in the Group's accounting policies and had no impact on the Group's financial position and performance. The adoption of IFRIC 13 has resulted in a reduction in revenue and administration and management expenses by £96,000 in the year ended 30 June 2008. The effect on the comparative balance sheet was to increase trade and other payables by £96,000, with a corresponding decrease in provisions. There is no overall impact on results or net assets.
The Group has adopted IFRS 8 Operating Segments in advance of its effective date, with effect from 1 July 2008. IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Executive Officer to allocate resources to the segments and to assess their performance. In contrast, the predecessor Standard (IAS 14 Segment Reporting) required the Group to identify two sets of segments (business and geographical), using a risks and rewards approach, with the Group's system of internal financial reporting to key management personnel serving only as the starting point for the identification of such segments. As a result, following the adoption of IFRS 8, the identification of the Group's reportable segments has changed. There is no effect on reported net income or net assets as a result of applying this Standard.
At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases had not been adopted by the EU):
|
IFRS 1 (amended)/IAS 27 (amended) IFRS 1 (amended) IFRS 2 (amended) IFRS 2 (amended) IFRS 3 (revised 2008) IFRS 7 (amended) IAS 1 (revised 2007) IAS 23 (revised 2007) IAS 27 (revised 2008) IAS 32 (amended)/IAS 1 (amended) IAS 39 (amended) IAS 39 (amended) IAS 39 (amended)/IFRIC 9 (amended) IFRIC 12 IFRIC 15 IFRIC 16 Improvements to IFRSs (May 2008) |
Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate Additional exemptions for first-time adopters Share-based payment - Vesting Conditions and Cancellations Group Cash-Settled Share Based Payment Transactions Business Combinations Improving Disclosures about Financial Instruments Presentation of Financial Statements Borrowing Costs Consolidated and Separate Financial Statements Puttable Financial Instruments and Obligations Arising on Liquidation Financial Instruments: Recognition and Measurement: eligible hedged items Financial Instruments: Reclassification of Financial Assets: Effective date and transition Embedded Derivatives Service Concession Arrangements Agreements for the Construction of Real Estate Hedges of a Net Investment in a Foreign Operation |
The amendment to IFRS 2 restricts the definition of vesting conditions to include only service conditions (requiring a specified period of service to be completed) and performance conditions (requiring the other party to achieve a personal goal or contribute to achieving a corporate target). All other features are not vesting conditions, and whereas failure to achieve such a condition was previously regarded as a forfeiture (giving rise to a reversal of amounts previously charged to profit) it must be reflected in the grant date fair value of the award and treated as a cancellation, which results in either an acceleration of the expected charge, or a continuation over the remaining vesting period, depending on whether the condition is under the control of the entity or counterparty. The Group is currently assessing its impact on the financial statements, although it is not expected to be material.
Whilst the revised IAS 1 will have no impact on the measurement of the Group's results or net assets, it is likely to result in certain changes in the presentation of the Group's financial statements for the forthcoming year.
The Directors anticipate that the adoption of the remaining Standards and Interpretations in future periods will have no material impact on the Group's reported income or net assets in the period of adoption.
3. Significant accounting policies
Basis of accounting
The financial information set out above does not constitute the company's statutory accounts for the years ended 30 June 2009 or 2008, but is derived from those accounts. Statutory accounts for 2008 have been delivered to the Registrar of Companies and those for 2009 will be delivered following the company's AGM. The auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under s498(2) or (3) Companies Act 2006 or equivalent preceding legislation.
After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.
The financial statements have been prepared on the historical cost basis, except for the revaluation of certain financial instruments. The Group financial statements are presented in Sterling and all values are rounded to the nearest thousand Pounds (£000) except when otherwise indicated. The principal accounting policies adopted are set out below.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company made up to 30 June each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales-related taxes.
Sales of goods are recognised when goods are despatched and title has passed.
Sales of goods that result in award credits for customers, under the AbPoints Scheme, are accounted for as multiple element revenue transactions and the fair value of the consideration received or receivable is allocated between the goods supplied and the award credits granted. The consideration allocated to the award credits is measured by reference to their fair value - the amount for which the award credits could be sold separately. Such consideration is not recognised as revenue at the time of the initial sale transaction, but is deferred and recognised as revenue when the award credits are redeemed and the Group's obligations have been fulfilled.
Interest income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.
Dividend income from investments is recognised when the shareholders' rights to receive payment have been established.
Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term.
Assets held under finance leases are recognised as assets of the Group at their fair value or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income.
Foreign currencies
The individual financial statements of each group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purposes of the consolidated financial statements, the results and financial position of each group company are expressed in Sterling, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.
In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing at the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated to the rates prevailing at the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the period in which they arise except for:
exchange differences on transactions entered into to hedge certain foreign currency risks (see below under financial instruments/hedge accounting); and
exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur, which form part of the net investment in a foreign operation, and which are recognised in the foreign currency translation reserve and recognised in profit or loss on disposal of the net investment.
For the purpose of presenting consolidated financial statements, the results of the operations of the Company's overseas subsidiaries, Abcam Inc and Abcam KK, are translated at the monthly average exchange rates during the period and their balance sheets at the rates prevailing at the balance sheet date. Exchange differences arising on the translation of the opening net assets and results of operations are classified as equity and recognised in the Group's foreign currency translation reserve.
Borrowing costs
Borrowing costs are recognised in profit or loss in the period in which they are incurred.
Retirement benefit costs
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due. Payments made to state-managed retirement benefit schemes are dealt with as payments to defined contribution schemes where the nature of the Group's obligations under the schemes is equivalent to those arising in a defined contribution retirement benefit scheme.
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes some items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except where it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss.
Depreciation is charged so as to write off the cost or valuation of assets over their estimated useful lives, using the straight-line method, on the following bases:
|
Office equipment, fixtures and fittings Laboratory equipment Computer equipment Hybridomas |
20% per annum 20% per annum 33% per annum 33% per annum |
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in income.
Intangible assets
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
Expenditure on development activities is recognised as an asset if and only if it meets the recognition criteria set out in IAS 38 - Intangible Assets.
Payments made to acquire software and distribution rights from third parties are capitalised at cost and amortised on a straight line basis over their estimated minimum useful lives. The minimum useful life is determined to be three years in the case of software, and the term of the deal in the case of distribution rights, which can extend up to 10 years.
Impairment of tangible and intangible assets
At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). An intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.
Investments
Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and an attributable portion of production overheads that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the standard cost method. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution. Provision is made for obsolete, slow moving or defective items where appropriate.
Financial instruments
Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.
Trade and other receivables
Trade receivables are measured at initial recognition at fair value. Appropriate allowances for estimated irrecoverable amounts are recognised in the income statement when there is objective evidence that the asset is impaired. When a trade receivable is considered uncollectable, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in the income statement.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below.
Trade payables
Trade payables are measured at amortised cost.
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
Derivative financial instruments
Forward contracts are used by the Group to manage its exposure to the risk associated with the variability in cash flows in relation to both recognised assets or liabilities and forecast transactions.
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each balance sheet date. A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a financial liability. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.
A derivative is presented as a non-current asset or non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.
Hedge accounting
The Group designates certain derivatives as either hedges of the fair value of recognised assets or liabilities or firm commitments (fair value hedges), or hedges of highly probable forecast transactions or hedges of foreign currency risk of firm commitments (cash flow hedges).
At the inception of the hedge relationship, the Group documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging instrument that is used in a hedging relationship is effective in offsetting changes in fair values or cash flows of the hedged item.
Fair value hedges
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised immediately in profit or loss, together with any changes in the fair value of the hedged item that is attributable to the hedged risk. The change in the fair value of the hedging instrument and the change in the hedged item attributable to the hedged risk are recognised in the line of the income statement relating to the hedged item.
Hedge accounting is discontinued when the Group revokes the hedging relationship, the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. The adjustment to the carrying amount of the hedged item arising from the hedged risk is amortised to the income statement from that date.
Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are deferred in equity. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss, and is included in the 'administration and management expenses' line of the income statement.
Amounts deferred in equity are recycled in profit or loss in the periods when the hedged item is recognised in profit or loss, in the same line of the income statement as the recognised hedged item.
Hedge accounting is discontinued when the Group revokes the hedging relationship, the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. Any cumulative gain or loss deferred in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was deferred in equity is recognised immediately in profit or loss.
Share based payments
The Group has applied the requirements of IFRS 2 Share based payment. In accordance with IFRS 1, IFRS 2 has been applied to all grants of equity instruments after 7 November 2002 that were unvested at 1 July 2006.
Incentives in the form of shares are provided to employees under share option, share purchase ('SIP') and long-term incentive plans ('LTIP's). Equity-settled share based payments are measured at fair value (excluding the effect of non market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share based payments is expensed on a straight line basis over the vesting period, based on the Group's estimate of the number of shares that will eventually vest.
Fair value of options issued under the Group's share option schemes is measured by the use of the Monte Carlo Simulation.
Fair value of the awards under the Group's LTIP is measured by the use of the Monte Carlo Simulation for the TSR portion and the Binomial Model for the EPS portion.
Fair value of an equity-settled payment under the SIP is measured as the face value of the award on the date of grant.
The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. Charges made to the income statement in respect of share-based payments are credited to retained earnings.
The Group operates an employee benefit trust as part of its incentive plans for employees. All assets and liabilities of the trust are recorded in the balance sheet as assets and liabilities of the Company until such time as the assets are awarded to the beneficiaries. All income and expenditure of the trust is similarly brought into the results of the Company.
Own shares
Own equity instruments which are acquired are recognised at cost and deducted from equity. No gain or loss is recognised in the income statement on the purchase, sale, issue or cancellation of the Group's own equity instruments. Any difference between the carrying amount and the consideration is recognised in reserves.
4. Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group's accounting policies, which are described in note 3, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities as at the date of reporting the financial statements, and the reported amounts of revenues and expenditure during the year. In preparation of the consolidated financial statements, estimates and assumptions have been made by the Directors concerning the fair value of share options, the estimated useful lives of fixed assets, accruals and provisions required, the carrying value of investments, the recoverability of deferred tax assets, the carrying value of intangible assets and other similar evaluations. Actual amounts may differ from those estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.
Impairment of property, plant and equipment
As a result of a restructuring exercise in the Company's manufacturing activities, certain assets were no longer generating future economic benefits. The Directors have made an assessment of the recoverable amount of these assets, being the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. The recoverable amount of the assets is estimated to be less than their carrying amount, and so the carrying amount of the assets has been reduced to the recoverable amount. An impairment loss of £1.1m has been recognised as an expense immediately.
Impairment of intangibles
Management is in the process of renegotiating a product line acquisition deal. Consequently, it was considered that the carrying value of this intangible was no longer supportable and an impairment loss of £0.2m has been recognised to take account of the recoverable amount of the contract.
Fair value of derivatives and other financial instruments
As described in note 25, the Directors use their judgement in selecting an appropriate valuation technique for financial instruments not quoted in an active market. Valuation techniques commonly used by market practitioners are applied. For derivative financial instruments, assumptions are made based on quoted market rates adjusted for specific features of the instrument. Other financial instruments are valued using a discounted cash flow analysis based on assumptions supported, where possible, by observable market prices or rates.
Valuation of own manufactured inventory
The standard costs used for the valuation of own manufactured inventory require a number of assumptions concerning the allocation of overheads. These assumptions are based primarily on management's estimates of time spent in each relevant area of activity.
Provision for slow moving or defective inventory
The provision for slow moving or defective inventory is based on management's estimation of the commercial life and shelf life of inventory lines and is applied on a prudent basis. In assessing this, management takes in to consideration the sales history of products and the length of time that they have been available for resale.
5. Income statement for the Company
As permitted by section 408 of the Companies Act 2006 the Company has elected not to present its own income statement for the year. Abcam plc reported a profit for the year ended 30 June 2009 of £11,484,000 (2008: £5,126,000).
6. Revenue
An analysis of the Group's revenue, all of which derives from continuing operations, is as follows:
|
Year ended |
|||
|
Year ended |
30/06/08 |
||
|
30/06/09 |
restated* |
||
|
Note |
£000 |
£000 |
|
|
Sales of goods |
56,801 |
36,598 |
|
|
Investment revenue |
11 |
431 |
581 |
|
57,232 |
37,179 |
* restated to reflect the adoption of IFRIC 13 as per note 2.
7. Operating segments
Adoption of IFRS 8, Operating Segments
The Group has adopted IFRS 8 Operating Segments in advance of its effective date, with effect from 1 July 2008. IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker, being the Chief Executive Officer, to allocate resources to the segments and to assess their performance. In contrast, the predecessor Standard (IAS 14 Segment Reporting) required the Group to identify two sets of segments (business and geographical), using a risks and rewards approach, with the Group's system of internal financial reporting to key management personnel serving only as the starting point for the identification of such segments. As a result, following the adoption of IFRS 8, the identification of the Group's reportable segments has changed.
Products and services from which reportable segments derive their revenues
In prior years, segment information reported externally was analysed on the basis of geographical locations. This is because the Directors consider that there are no identifiable business segments that are engaged in providing individual products or services or a group of related products and services that are subject to risks and returns that are different to the core business. The information reported to the Group's Chief Executive Officer 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, which is 'sales of antibodies and related products'. The Group's revenue and results 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 comprises more than ten per cent of its revenues.
Geographical information
The Group's revenue from external customers and information about its non-current segment assets (excluding deferred tax) by geographical location are detailed below:
|
Revenue |
Non-current assets |
||||
|
Year ended |
|||||
|
Year ended |
30/06/08 |
As at |
As at |
||
|
30/06/09 |
restated* |
30/06/09 |
30/06/08 |
||
|
£'000 |
£000 |
£000 |
£000 |
||
|
United States |
24,535 |
15,831 |
435 |
209 |
|
|
United Kingdom (country of domicile) |
4,883 |
4,148 |
4,173 |
4,970 |
|
|
Germany |
4,719 |
2,935 |
- |
- |
|
|
Japan |
4,634 |
2,115 |
52 |
19 |
|
|
Other countries |
18,030 |
11,569 |
- |
- |
|
|
56,801 |
36,598 |
4,660 |
5,198 |
||
* restated to reflect the adoption of IFRIC 13 as per note 2.
Revenues are attributed to countries on the basis of the customer's location. No country included within 'Other countries' contributes more than 5% of the Group's total revenue.
8. Profit for the year
Profit for the year has been arrived at after charging/(crediting):
|
Year ended |
Year ended |
||
|
30/06/09 |
30/06/08 |
||
|
Notes |
£000 |
£000 |
|
|
Net foreign exchange losses |
81 |
136 |
|
|
Research and development expenditure |
3,076 |
2,417 |
|
|
Operating lease rentals - land and buildings |
12 |
822 |
545 |
|
Depreciation of property, plant and equipment |
18 |
1,417 |
1,130 |
|
Impairment loss on property, plant and equipment |
18 |
1,074 |
- |
|
Loss on disposal of property, plant and equipment |
160 |
56 |
|
|
Amortisation of intangible assets included within administration and management expenses |
17 |
261 |
307 |
|
Impairment loss on intangible assets included within administration and management expenses |
17 |
201 |
642 |
|
Cost of inventories recognised as an expense |
18,870 |
13,850 |
|
|
Write-down of inventories recognised as an expense |
550 |
539 |
|
|
Staff costs |
10 |
10,148 |
7,308 |
|
Impairment (gain)/loss recognised on trade receivables |
21 |
(84) |
367 |
|
Legal fees associated with potential offer for Group |
- |
250 |
|
|
Auditors' remuneration |
9 |
102 |
91 |
9. Auditors' remuneration
A detailed analysis of the auditors' remuneration on a worldwide basis is provided below:
|
Year ended |
Year ended |
|
|
30/06/09 |
30/06/08 |
|
|
£000 |
£000 |
|
|
Fees payable to the Company's auditors for the audit of the Company's annual accounts |
62 |
62 |
|
Fees payable to the Company's auditors for other services to the Group |
||
|
- The audit of the Company's subsidiaries pursuant to legislation |
13 |
13 |
|
Total audit fees |
75 |
75 |
|
- Tax services |
24 |
13 |
|
- Recruitment and remuneration services |
- |
3 |
|
- Other services relating to treasury advice |
3 |
- |
|
Total non-audit fees |
27 |
16 |
|
Total auditors' remuneration |
102 |
91 |
10. Staff costs
Group
The average monthly number of employees (including executive directors) was:
|
Group |
Company |
||||
|
Year ended |
Year ended |
Year ended |
Year ended |
||
|
30/06/09 |
30/06/08 |
30/06/09 |
30/06/08 |
||
|
Number |
Number |
Number |
Number |
||
|
Management, administrative, marketing and distribution |
170 |
130 |
111 |
88 |
|
|
Laboratory |
44 |
36 |
44 |
36 |
|
|
214 |
166 |
155 |
124 |
||
|
Their aggregate remuneration comprised: |
|||||
|
Group |
Company |
||||
|
Year ended |
Year ended |
Year ended |
Year ended |
||
|
30/06/09 |
30/06/08 |
30/06/09 |
30/06/08 |
||
|
£000 |
£000 |
£000 |
£000 |
||
|
Wages and salaries |
8,054 |
5,776 |
5,722 |
4,508 |
|
|
Social security costs |
683 |
525 |
418 |
350 |
|
|
Pension costs |
947 |
815 |
867 |
776 |
|
|
Charge in respect of share options granted |
464 |
192 |
404 |
162 |
|
|
10,148 |
7,308 |
7,411 |
5,796 |
||
11. Investment revenue
|
Year ended |
Year ended |
|
|
30/06/09 |
30/06/08 |
|
|
£000 |
£000 |
|
|
Interest revenue on cash and short term deposits |
431 |
581 |
12. Operating lease arrangements
|
Year ended |
Year ended |
|
|
30/06/09 |
30/06/08 |
|
|
£000 |
£000 |
|
|
Minimum lease payments under operating leases recognised as an expense in the year: |
||
|
Land and buildings |
822 |
545 |
At the balance sheet date, the Group and Company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, all of which relate to land and buildings, which fall due as follows:
|
Group |
Company |
||||
|
30/06/09 |
30/06/08 |
30/06/09 |
30/06/08 |
||
|
£000 |
£000 |
£000 |
£000 |
||
|
Within one year |
834 |
651 |
438 |
392 |
|
|
In the second to fifth years inclusive |
2,552 |
1,615 |
2,158 |
996 |
|
|
3,386 |
2,266 |
2,596 |
1,388 |
||
The above table reflects the committed cash payments under operating leases, rather than the expected charge to the income statement in the relevant periods. The effect on the income statement will differ to the above figures to the extent of the amortisation of a £1.1m lease incentive received on signing of a new lease in 2008/09, and also the amortisation of the rent-free period included in the same lease agreement. The expected operating lease charge in 2009/10 is expected to be £778,000 for the Group and £382,000 for the Company.
13. Other gains or losses
|
Year ended |
Year ended |
|
|
30/06/09 |
30/06/08 |
|
|
£000 |
£000 |
|
|
(Gain)/loss in fair value of forward exchange contracts |
||
|
- On contracts used as hedging instruments |
(1,296) |
- |
|
- On other contracts (see accounting policy note for derivative financial instruments) |
(368) |
197 |
|
(1,664) |
197 |
14. Tax
|
Year ended |
Year ended |
|
|
30/06/09 |
30/06/08 |
|
|
£000 |
£000 |
|
|
Current tax |
4,539 |
1,632 |
|
Deferred tax (note 23) |
(527) |
430 |
|
4,012 |
2,062 |
Corporation tax is calculated at 28% (2008: 29.5%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
The charge for the year can be reconciled to the profit per the income statement as follows:
|
Year ended |
Year ended |
Year ended |
Year ended |
|
|
30/06/09 |
30/06/09 |
30/06/08 |
30/06/08 |
|
|
£000 |
% |
£000 |
% |
|
|
Profit before tax |
16,303 |
7,952 |
||
|
Tax at the UK corporation tax rate of 28% (2008: 29.5%) |
4,565 |
28.0% |
2,346 |
29.5% |
|
Effect of different tax rates of subsidiaries operating in different jurisdictions |
175 |
1.0% |
158 |
2.0% |
|
Tax effect of expenses that are not deductible in determining taxable profit |
48 |
0.3% |
75 |
0.9% |
|
R&D tax credit uplift |
(771) |
(4.7)% |
(325) |
(4.1)% |
|
Deduction for exercise for share options |
- |
-% |
(122) |
(1.5)% |
|
Prior year adjustments |
(5) |
(0.0)% |
(70) |
(0.9)% |
|
Tax expense and effective rate for the year |
4,012 |
24.6% |
2,062 |
25.9% |
15. Dividends
|
Year ended |
Year ended |
|
|
30/06/09 |
30/06/08 |
|
|
£000 |
£000 |
|
|
Amounts recognised as distributions to equity holders in the year: |
||
|
Final dividend for the year ended 30 June 2008 of 4.56p (2007: 3.19p) per share |
1,612 |
1,116 |
|
Interim dividend for the year ended 30 June 2009 of 2.71p (2008: 1.04p) per share |
960 |
365 |
|
Total distributions to equity holders in the period |
2,572 |
1,481 |
|
Proposed final dividend for the year ended 30 June 2009 of 9.40p (2008: 4.56p) per share |
3,339 |
1,599 |
The proposed final dividend is subject to approval of the shareholders at the AGM and has not been included as a liability in these financial statements.
16. Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
|
Year ended |
Year ended |
|
|
30/06/09 |
30/06/08 |
|
|
£000 |
£000 |
|
|
Earnings |
||
|
Earnings for the purposes of basic and diluted earnings per share |
||
|
being net profit attributable to equity holders of the parent |
12,291 |
5,890 |
|
Number of shares |
||
|
Weighted average number of ordinary shares for the purposes of basic earnings per share |
35,287,943 |
34,902,538 |
|
Effect of dilutive potential ordinary shares: |
||
|
Share options |
679,385 |
671,614 |
|
Weighted average number of ordinary shares for the purposes of diluted earnings per share |
35,967,328 |
35,574,152 |
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of shares outstanding during the year. Diluted earnings per share is calculated on the same basis as basic earnings per share but with a further adjustment for the weighted average shares in issue to reflect the effect of all dilutive potential ordinary shares. The number of dilutive potential ordinary shares is derived from the number of share options granted to employees where the exercise price is less than the average market price of the Company's ordinary shares during the year.
17. Intangible assets
Group
|
Upfront |
Distribution |
|||
|
licence fees |
rights |
Software |
Total |
|
|
£000 |
£000 |
£000 |
£000 |
|
|
Cost |
||||
|
At 1 July 2007 |
150 |
1,798 |
- |
1,948 |
|
Additions |
15 |
237 |
- |
252 |
|
Disposals |
(1) |
- |
- |
(1) |
|
Revaluation for impairment |
- |
(642) |
- |
(642) |
|
At 1 July 2008 |
164 |
1,393 |
- |
1,557 |
|
Additions |
99 |
- |
162 |
261 |
|
Disposals |
(1) |
- |
- |
(1) |
|
At 30 June 2009 |
262 |
1,393 |
162 |
1,817 |
|
Amortisation and impairment |
||||
|
At 1 July 2007 |
68 |
189 |
- |
257 |
|
Charge for the year |
53 |
254 |
- |
307 |
|
Disposals |
(1) |
- |
- |
(1) |
|
At 1 July 2008 |
120 |
443 |
- |
563 |
|
Charge for the year |
61 |
157 |
43 |
261 |
|
Impairment loss |
- |
201 |
- |
201 |
|
Disposals |
(1) |
- |
- |
(1) |
|
At 30 June 2009 |
180 |
801 |
43 |
1,024 |
|
Carrying amount |
||||
|
At 30 June 2008 |
44 |
950 |
- |
994 |
|
At 30 June 2009 |
82 |
592 |
119 |
793 |
Company
|
Upfront |
Distribution |
|||
|
licence fees |
rights |
Software |
Total |
|
|
£000 |
£000 |
£000 |
£000 |
|
|
Cost |
||||
|
At 1 July 2007 |
150 |
1,798 |
- |
1,948 |
|
Additions |
15 |
237 |
- |
252 |
|
Disposals |
(1) |
- |
- |
(1) |
|
Revaluation for impairment |
- |
(642) |
- |
(642) |
|
At 1 July 2008 |
164 |
1,393 |
- |
1,557 |
|
Additions |
99 |
- |
161 |
260 |
|
Disposals |
(1) |
- |
- |
(1) |
|
At 30 June 2009 |
262 |
1,393 |
161 |
1,816 |
|
Amortisation and impairment |
||||
|
At 1 July 2007 |
68 |
189 |
- |
257 |
|
Charge for the year |
53 |
254 |
- |
307 |
|
Disposals |
(1) |
- |
- |
(1) |
|
At 1 July 2008 |
120 |
443 |
- |
563 |
|
Charge for the year |
61 |
157 |
43 |
261 |
|
Impairment loss |
- |
201 |
- |
201 |
|
Disposals |
(1) |
- |
- |
(1) |
|
At 30 June 2009 |
180 |
801 |
43 |
1,024 |
|
Carrying amount |
||||
|
At 30 June 2008 |
44 |
950 |
- |
994 |
|
At 30 June 2009 |
82 |
592 |
118 |
792 |
The amortisation period for the upfront licence fees and software is three years. The amortisation period for the distribution rights is the term of the deal. The impairment loss is in respect of the reduction in the forecast revenues and profits of one of the distribution rights agreements.
18. Property, plant and equipment
Group
|
Office |
|||||
|
equipment, |
|||||
|
Computer |
Laboratory |
fixtures |
|||
|
equipment |
equipment |
and fittings |
Hybridomas |
Total |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
Cost |
|||||
|
At 1 July 2007 |
454 |
2,531 |
948 |
- |
3,933 |
|
Additions |
158 |
2,168 |
166 |
22 |
2,514 |
|
Exchange differences |
4 |
1 |
2 |
- |
7 |
|
Disposals |
(28) |
(21) |
(5) |
- |
(54) |
|
At 1 July 2008 |
588 |
4,679 |
1,111 |
22 |
6,400 |
|
Additions |
193 |
653 |
1,025 |
66 |
1,937 |
|
Exchange differences |
30 |
53 |
48 |
- |
131 |
|
Disposals |
(68) |
(1) |
(780) |
(35) |
(884) |
|
At 30 June 2009 |
743 |
5,384 |
1,404 |
53 |
7,584 |
|
Accumulated depreciation and impairment |
|||||
|
At 1 July 2007 |
218 |
346 |
537 |
- |
1,101 |
|
Charge for the year |
149 |
709 |
269 |
3 |
1,130 |
|
Exchange differences |
(23) |
(9) |
(5) |
- |
(37) |
|
Eliminated on disposals |
1 |
- |
1 |
- |
2 |
|
At 1 July 2008 |
345 |
1,046 |
802 |
3 |
2,196 |
|
Charge for the year |
165 |
1,032 |
200 |
20 |
1,417 |
|
Impairment loss |
63 |
988 |
9 |
14 |
1,074 |
|
Exchange differences |
17 |
23 |
40 |
- |
80 |
|
Eliminated on disposals |
(63) |
(1) |
(654) |
(6) |
(724) |
|
At 30 June 2009 |
527 |
3,088 |
397 |
31 |
4,043 |
|
Carrying amount |
|||||
|
At 30 June 2008 |
243 |
3,633 |
309 |
19 |
4,204 |
|
At 30 June 2009 |
216 |
2,296 |
1,007 |
22 |
3,541 |
Company
|
Office |
|||||
|
equipment, |
|||||
|
Computer |
Laboratory |
fixtures |
|||
|
equipment |
equipment |
and fittings |
Hybridomas |
Total |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
Cost |
|||||
|
At 1 July 2007 |
344 |
2,286 |
750 |
- |
3,380 |
|
Additions |
143 |
2,161 |
156 |
22 |
2,482 |
|
Disposals |
(26) |
(20) |
(2) |
- |
(48) |
|
At 1 July 2008 |
461 |
4,427 |
904 |
22 |
5,814 |
|
Additions |
138 |
630 |
693 |
66 |
1,527 |
|
Disposals |
(57) |
(1) |
(780) |
(35) |
(873) |
|
At 30 June 2009 |
542 |
5,056 |
817 |
53 |
6,468 |
|
Accumulated depreciation and impairment |
|||||
|
At 1 July 2007 |
180 |
292 |
449 |
- |
921 |
|
Charge for the year |
113 |
660 |
172 |
3 |
948 |
|
Eliminated on disposals |
(21) |
(9) |
(1) |
- |
(31) |
|
At 1 July 2008 |
272 |
943 |
620 |
3 |
1,838 |
|
Charge for the year |
119 |
967 |
118 |
20 |
1,224 |
|
Impairment loss |
62 |
986 |
7 |
14 |
1,069 |
|
Eliminated on disposals |
(56) |
(1) |
(654) |
(6) |
(717) |
|
At 30 June 2009 |
397 |
2,895 |
91 |
31 |
3,414 |
|
Carrying amount |
|||||
|
At 30 June 2008 |
189 |
3,484 |
284 |
19 |
3,976 |
|
At 30 June 2009 |
145 |
2,161 |
726 |
22 |
3,054 |
As a result of the decision to refocus the monoclonal manufacturing resource towards more targeted, lower level production, an impairment loss of £1.1m (2008: £nil) has been recognised in the year relating to tangible assets associated with the higher volume production processes which will not now be implemented.
19. Investments
The Company's subsidiaries at 30 June 2009 and 2008 are:
|
Proportion |
Proportion |
||
|
Country of |
of shares |
of voting |
|
|
incorporation |
held |
power held |
|
|
Abcam Inc |
USA |
100% |
100% |
|
Abcam KK |
Japan |
100% |
100% |
|
Camgene |
UK |
100% |
100% |
Abcam Inc and Abcam KK are involved in the sale and distribution of antibodies and related products. Camgene is dormant.
Analysis of changes in investments:
|
£000 |
|
|
At 1 July 2008 |
45 |
|
Additions |
60 |
|
At 30 June 2009 |
105 |
Investments are held at cost less provision for impairment. All additions represent share based payment charges for share options issued by the Company to employees of the subsidiaries.
20. Inventories
|
Group |
Company |
|||
|
30/06/09 |
30/06/08 |
30/06/09 |
30/06/08 |
|
|
£000 |
£000 |
£000 |
£000 |
|
|
Goods for resale |
6,796 |
4,506 |
6,783 |
4,501 |
21. Financial assets
Trade and other receivables
|
Group |
Company |
|||
|
30/06/09 |
30/06/08 |
30/06/09 |
30/06/08 |
|
|
£000 |
£000 |
£000 |
£000 |
|
|
Amounts receivable for the sale of goods |
5,685 |
4,288 |
2,614 |
2,470 |
|
Allowance for doubtful debts |
(305) |
(591) |
(115) |
(413) |
|
5,380 |
3,697 |
2,499 |
2,057 |
|
|
Amounts owed by subsidiary undertakings |
- |
- |
3,332 |
2,169 |
|
Other debtors |
516 |
499 |
277 |
292 |
|
Prepayments |
590 |
664 |
471 |
626 |
|
6,486 |
4,860 |
6,579 |
5,144 |
|
Trade receivables
The average credit period taken for sales is 32.0 days (2008: 34.4 days). No interest has been charged on the receivables. Trade receivables are provided for based on estimated irrecoverable amounts determined by reference to past default experience. The Group and Company have provided fully for all receivables over 120 days because historical experience is such that receivables that are past due beyond 120 days are generally not recoverable. Trade receivables between 30 days and 120 days are provided for based on estimated irrecoverable amounts from the sale of goods determined by reference to past default experience.
Credit limits for each customer are reviewed on a monthly basis. No customer represents more than 5% of the total balance of trade receivables.
The analysis below shows the balances included in debtors which are past due at the reporting date for which the Group or Company has not provided as there has not been a significant change in credit quality and the amounts are still considered recoverable.
Ageing of past due but not impaired receivables:
|
Group |
Company |
|||
|
30/06/09 |
30/06/08 |
30/06/09 |
30/06/08 |
|
|
£000 |
£000 |
£000 |
£000 |
|
|
0-30 days overdue |
938 |
242 |
434 |
111 |
|
30-60 days overdue |
90 |
48 |
- |
48 |
|
Total |
1,028 |
290 |
434 |
159 |
During the prior year the Group formalised and improved the credit control procedures. This has resulted in a noticeable improvement in the ageing of the debtors of the past two years.
Movement in the allowance for doubtful debts:
|
Group |
Company |
|||
|
30/06/09 |
30/06/08 |
30/06/09 |
30/06/08 |
|
|
£000 |
£000 |
£000 |
£000 |
|
|
Balance at the beginning of the year |
(591) |
(224) |
(413) |
(198) |
|
Impairment gains/(losses) recognised through income statement |
84 |
(367) |
17 |
(215) |
|
Exchange differences on translation of foreign operations |
(39) |
- |
- |
- |
|
Amounts written off as uncollectable |
241 |
- |
281 |
- |
|
Balance at the end of the year |
(305) |
(591) |
(115) |
(413) |
In determining the recoverability of a trade receivable the Group and Company consider any change in the credit quality of the receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly, the Directors believe that there is no further credit provision required in excess of the allowance for doubtful debts.
Included in the allowance for doubtful debts are no individually impaired trade receivables (2008: £289,000) relating to companies in financial difficulties. The impairment recognised in the prior year represents the difference between the carrying amount of these trade receivables and the present value of the expected litigation proceeds. Neither the Group nor the Company holds collateral over these balances. The balances were written off as uncollectable within the year ended 30 June 2009.
Ageing of impaired receivables:
|
30/06/09 |
30/06/08 |
|
|
£000 |
£000 |
|
|
0-30 days overdue |
99 |
- |
|
30-60 days overdue |
155 |
- |
|
60-90 days overdue |
35 |
38 |
|
>90 days overdue |
16 |
553 |
|
Total |
305 |
591 |
The Directors consider that the carrying amount of trade and other receivables approximates their fair value.
Cash and cash equivalents, and short term deposits
|
Group |
Company |
|||
|
30/06/09 |
30/06/08 |
30/06/09 |
30/06/08 |
|
|
£000 |
£000 |
£000 |
£000 |
|
|
Cash and cash equivalents, and short term deposits |
25,501 |
14,493 |
24,090 |
12,938 |
Cash and cash equivalents and short term deposits comprise cash held by the Group or Company and short-term deposits with an original maturity of three months or less. The carrying amount of these assets approximates their fair value.
22. Derivative financial instruments
Group and Company
|
30/06/09 |
30/06/08 |
|
|
£000 |
£000 |
|
|
Derivatives which mature within one year: |
||
|
Derivatives that are designated and effective as hedging instruments carried at fair value |
||
|
Forward exchange contracts |
970 |
- |
|
Derivatives carried at fair value through profit and loss |
||
|
Forward exchange contracts that are not designated in hedge accounting relationships |
368 |
(197) |
|
1,338 |
(197) |
|
|
Derivatives which mature after more than one year: |
||
|
Derivatives that are designated and effective as hedging instruments carried at fair value |
||
|
Forward exchange contracts |
326 |
- |
|
1,664 |
(197) |
Further details of derivative financial instruments are provided in note 25.
23. Deferred tax
The following are the major deferred tax liabilities and assets recognised by the Group and Company and movements thereon during the current and prior reporting period.
Group
|
Accelerated |
Share |
Other |
|||
|
tax |
Cash flow |
based |
timing |
||
|
depreciation |
hedges |
payment |
differences |
Total |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
At 1 July 2007 |
(549) |
- |
306 |
55 |
(188) |
|
(Charge)/credit to income |
(332) |
- |
(224) |
126 |
(430) |
|
Credit to equity |
- |
- |
540 |
- |
540 |
|
At 30 June 2008 |
(881) |
- |
622 |
181 |
(78) |
|
Credit/(charge) to income |
481 |
- |
135 |
(89) |
527 |
|
(Charge)/credit to equity |
(1) |
(363) |
222 |
28 |
(114) |
|
At 30 June 2009 |
(401) |
(363) |
979 |
120 |
335 |
Company
|
Accelerated |
Share |
Other |
|||
|
tax |
Cash flow |
based |
timing |
||
|
depreciation |
hedges |
payment |
differences |
Total |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
At 1 July 2007 |
(549) |
- |
306 |
55 |
(188) |
|
(Charge)/credit to income |
(338) |
- |
54 |
54 |
(230) |
|
Credit to equity |
- |
- |
240 |
- |
240 |
|
At 30 June 2008 |
(887) |
- |
600 |
109 |
(178) |
|
Credit/(charge) to income |
534 |
- |
113 |
(119) |
528 |
|
(Charge)/credit to equity |
- |
(363) |
172 |
- |
(191) |
|
At 30 June 2009 |
(353) |
(363) |
885 |
(10) |
159 |
At the balance sheet date, the aggregate amount of temporary differences associated with undistributable earnings of subsidiaries for which a deferred tax liability has not been recognised is £1,210,000 (2008: £1,028,000). No liability has been recognised in respect of these differences because the Group is in a position to control the timing of the reversal of temporary differences and it is probable that such differences will not reverse in the foreseeable future.
24. Other financial liabilities
Trade and other payables
|
Group |
Company |
|||
|
30/06/08 |
30/06/08 |
|||
|
30/06/09 |
restated* |
30/06/09 |
restated* |
|
|
£000 |
£000 |
£000 |
£000 |
|
|
Amounts falling due within one year |
||||
|
Trade payables |
1,703 |
1,992 |
1,502 |
1,783 |
|
Amounts owed to subsidiary undertakings |
- |
- |
218 |
95 |
|
Accruals and deferred income |
4,603 |
1,742 |
4,128 |
1,439 |
|
Deferred creditor |
57 |
86 |
57 |
86 |
|
Other taxes and social security |
241 |
160 |
226 |
159 |
|
Other creditors |
90 |
189 |
62 |
157 |
|
6,694 |
4,169 |
6,193 |
3,719 |
|
|
Amounts falling due after more than one year |
||||
|
Deferred creditor |
83 |
109 |
83 |
109 |
|
6,777 |
4,278 |
6,276 |
3,828 |
|
* restated for the adoption of IFRIC 13 as per note 2.
Trade creditors and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade purchases is 19 days (2008: 17 days). Most suppliers do not charge interest for the first 60 days of the invoice. The Group has financial risk management policies in place to ensure that all payables are paid within the credit time frame. The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
The deferred creditor represents the earn-out payable on sales of products under a distribution agreement.
25. Financial instruments
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns whilst maximising the return to stakeholders. The capital structure of the Group consists of cash and cash equivalents and equity attributable to the equity holders of the parent, comprising issued capital, reserves and retained earnings.
Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 3. Foreign exchange contracts are measured using quoted forward exchange rates and the yield curves derived from quoted interest rates matching maturities of these contracts.
Categories of financial instruments
|
Group carrying value |
Company carrying value |
|||
|
30/06/09 |
30/06/08 |
30/06/09 |
30/06/08 |
|
|
£000 |
£000 |
£000 |
£000 |
|
|
Financial assets |
||||
|
Loans and receivables |
||||
|
Amounts owed by subsidiary undertakings |
- |
- |
3,332 |
2,033 |
|
Trade receivables |
5,380 |
3,697 |
2,499 |
2,057 |
|
VAT recoverable (included in other debtors) |
290 |
234 |
224 |
234 |
|
5,670 |
3,931 |
6,055 |
4,324 |
|
|
Cash and cash equivalents |
||||
|
Cash and cash equivalents and short-term deposits |
25,501 |
14,493 |
24,090 |
12,938 |
|
Loans and receivables (including cash and cash equivalents) |
31,171 |
18,424 |
30,145 |
17,262 |
|
Financial liabilities |
||||
|
Other financial liabilities at amortised cost |
||||
|
Trade and other payables |
(6,694) |
(4,169) |
(6,193) |
(3,719) |
|
Current tax liabilities |
(1,871) |
(382) |
(1,784) |
(269) |
|
Non-current deferred creditor |
(83) |
(109) |
(83) |
(109) |
|
Amortised cost |
(8,648) |
(4,660) |
(8,060) |
(4,097) |
The Directors consider there to be no material difference between the book value and the fair value of the Group's financial assets and liabilities at the balance sheet date. This is because most of the financial assets and liabilities are short term.
Risk in relation to the use of financial instruments
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group or the Company. Trade receivables consist of a large number of customers spread across diverse geographical areas. The Group does not have a significant credit risk exposure to any single counterparty. Ongoing credit evaluation is performed on the financial condition of accounts receivable and consideration is given as to whether there is any impairment in the value of any amounts owing.
The standard payment terms for receivables other than intragroup balances are 30 days. Any variation in these terms requires authorisation by senior management. Year end debtor days are 32.0 days (2008: 34.4 days). All overdue debts are provided for where collectability is considered doubtful or the value of the debt is impaired. Objective evidence of impairment could include the Group's past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of 32.0 days, as well as observable changes in international or local economic conditions.
The standard payment terms for intragroup receivables are 45 days. There is not considered to be any risk of impairment of these receivables unless the financial assets of the entity holding the corresponding liability are impaired.
The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. Funds are split between at least two institutions.
Market risk
The Group's activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Group enters into forward exchange contracts to hedge the exchange rate risk arising on the sales of goods and services denominated in Dollars and Euros.
Foreign currency risk management
The Group undertakes certain transactions denominated in foreign currencies. The Group's policy is to maintain natural hedges where possible, by matching foreign currency revenue and expenditure. Exchange rate exposures are managed within approved policy parameters utilising forward exchange contracts.
The carrying amounts of the Group's foreign currency denominated monetary assets and liabilities at the reporting date are as follows:
|
Liabilities |
Assets |
|||
|
30/06/09 |
30/06/08 |
30/06/09 |
30/06/08 |
|
|
£000 |
£000 |
£000 |
£000 |
|
|
Euros |
(211) |
(79) |
1,882 |
1,655 |
|
Dollars |
(1,459) |
(821) |
3,447 |
3,886 |
|
Yen |
(39) |
(17) |
490 |
539 |
|
(1,709) |
(917) |
5,819 |
6,080 |
|
Foreign currency sensitivity analysis
The Group's principal functional currency is Sterling. The Group is mainly exposed to Dollars and Euros but has an increasing exposure to Japanese Yen. The following table demonstrates the Group's sensitivity to an 8% increase and decrease in the Sterling exchange rate against the relevant foreign currencies on the Group's profit before tax and equity (due to the fair value of monetary assets, liabilities and forward exchange contracts outstanding as at 30 June 2009). 8% is considered by management to be a reasonably possible change in foreign exchange rates after giving consideration to changes in exchange rates over the last 12 months. A positive number indicates an increase in profit or equity.
|
Yen currency impact |
Euro currency impact |
Dollar currency impact |
||||
|
2009 |
2008 |
2009 |
2008 |
2009 |
2008 |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
Effect of an 8% strengthening in relevant exchange rate on: |
||||||
|
Profit or loss |
- |
(39) |
94 |
323 |
68 |
(73) |
|
Other equity |
176 |
- |
1,163 |
- |
907 |
- |
|
Effect of an 8% weakening in relevant exchange rate on: |
||||||
|
Profit or loss |
- |
45 |
(111) |
65 |
(80) |
70 |
|
Other equity |
(167) |
- |
(1,365) |
- |
(1,064) |
- |
In management's opinion, the sensitivity analysis is representative of the inherent foreign exchange risk at year end.
Forward exchange contracts
It is the policy of the Group to enter into forward exchange contracts to manage the risk associated with anticipated sales transactions out to 15 months within 30% to 80% of the exposure generated. Upon maturity of a forward exchange contract, the Group may enter into a new contract designated as a separate hedging relationship.
Foreign currency forward contracts are measured using quoted forward exchange rates and the yield curves derived from quoted interest rates matching maturities of the contracts.
The following table details the forward exchange contracts outstanding as at the year end:
|
Foreign |
Contract |
Fair |
||
|
Average |
currency |
value |
value |
|
|
Outstanding contracts |
rate |
30/06/09 |
30/06/09 |
30/06/09 |
|
30/06/09 |
000 |
£000 |
£000 |
|
|
Sell Dollars |
||||
|
Less than 3 months |
1.49 |
$2,600 |
1,749 |
168 |
|
3 to 6 months |
1.49 |
$5,300 |
3,558 |
333 |
|
7 to 12 months |
1.50 |
$8,000 |
5,324 |
451 |
|
13 to 15 months |
1.51 |
$4,200 |
2,781 |
220 |
|
1.50 |
$20,100 |
13,412 |
1,172 |
|
|
Sell Euros |
||||
|
Less than 3 months |
1.14 |
€2,200 |
1,932 |
58 |
|
3 to 6 months |
1.14 |
€4,200 |
3,687 |
107 |
|
7 to 12 months |
1.14 |
€7,800 |
6,862 |
209 |
|
13 to 15 months |
1.14 |
€4,200 |
3,692 |
104 |
|
1.14 |
€18,400 |
16,173 |
478 |
|
|
Sell Yen |
||||
|
Less than 3 months |
157.47 |
¥50,000 |
318 |
2 |
|
3 to 6 months |
157.28 |
¥100,000 |
636 |
4 |
|
7 to 12 months |
156.84 |
¥150,000 |
956 |
6 |
|
13 to 15 months |
156.30 |
¥75,000 |
480 |
2 |
|
156.93 |
¥375,000 |
2,390 |
14 |
|
|
Total of outstanding forward contracts |
31,975 |
1,664 |
|
Foreign |
Contract |
Fair |
||
|
Average |
currency |
value |
value |
|
|
Outstanding contracts |
rate |
30/06/08 |
30/06/08 |
30/06/08 |
|
30/06/08 |
000 |
£000 |
£000 |
|
|
Sell Dollars |
||||
|
Less than 3 months |
1.97 |
$1,200 |
608 |
3 |
|
3 to 6 months |
1.96 |
$2,400 |
1,222 |
2 |
|
7 to 12 months |
1.94 |
$600 |
309 |
2 |
|
1.96 |
$4,200 |
2,139 |
7 |
|
|
Sell Euros |
||||
|
Less than 3 months |
1.33 |
€1,700 |
1,278 |
(70) |
|
3 to 6 months |
1.34 |
€2,800 |
2,088 |
(134) |
|
1.34 |
€4,500 |
3,366 |
(204) |
|
|
Total of outstanding forward contracts |
5,505 |
(197) |
At 30 June 2009, the fair value of contracts held as cash flow hedges is £1,296,000. The remaining contracts are not held as cash flow hedges. At 30 June 2008, none of the contracts were held as cash flow hedges.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity risk management framework for the management of the Group's short-, medium- and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves and banking facilities by continuously monitoring cash flows and matching the maturity profiles of financial assets and liabilities.
The Group and Company hold cash deposits at call or with a maturity of up to 12 months. At 30 June 2009, the average maturity of balances was 47 days (2008: 35 days) of fixed rate deposits not sensitive to changes in interest rates. All funds are readily available to the Company to meet operational requirements.
The amount owing from subsidiaries is payable on demand and is classified as being payable within 1 month. Trade payables are normally payable within 30 days of invoice.
Liquidity and interest risk tables - financial liabilities
All balances are capital and do not include accrued interest.
|
Weighted |
|||||
|
average |
|||||
|
interest |
On demand |
1 to 3 |
3 months |
||
|
rate |
1 month |
months |
to 1 year |
Total |
|
|
% |
£000 |
£000 |
£000 |
£000 |
|
|
Group |
|||||
|
2009 |
|||||
|
Trade payables |
- |
(1,604) |
(82) |
(17) |
(1,703) |
|
Accruals and deferred income |
- |
(3,725) |
(196) |
(682) |
(4,603) |
|
(5,329) |
(278) |
(699) |
(6,306) |
||
|
Company |
|||||
|
2009 |
|||||
|
Trade payables |
- |
(1,403) |
(82) |
(17) |
(1,502) |
|
Accruals and deferred income |
- |
(3,367) |
(133) |
(628) |
(4,128) |
|
(4,770) |
(215) |
(645) |
(5,630) |
|
Weighted |
|||||
|
average |
|||||
|
interest |
On demand |
1 to 3 |
3 months |
||
|
rate |
1 month |
months |
to 1 year |
Total |
|
|
% |
£000 |
£000 |
£000 |
£000 |
|
|
Group |
|||||
|
2008 |
|||||
|
Trade payables |
- |
(1,961) |
(25) |
(6) |
(1,992) |
|
Accruals and deferred income |
- |
(1,268) |
- |
(474) |
(1,742) |
|
(3,229) |
(25) |
(480) |
(3,734) |
||
|
Company |
|||||
|
2008 |
|||||
|
Trade payables |
- |
(1,758) |
(25) |
- |
(1,783) |
|
Accruals and deferred income |
- |
(1,021) |
- |
(418) |
(1,439) |
|
(2,779) |
(25) |
(418) |
(3,222) |
Interest rate risk sensitivity analysis
An increase of 1% in the average interest rate during the year would have resulted in an increase in interest received by the Group of £376,000 (2008: £113,000) and by the Company of £369,000 (2008: £103,000). A decrease of 1% in the average interest rate during the year would have resulted in a reduction in interest received by the Group of £136,000 (2008: £113,000) and by the Company of £113,000 (2008: £103,000). There would have been no effect on equity reserves.
The closing cash balance at the year end has been used as the basis for the calculations. A 1% increase or decrease in interest rates represents management's assessment of the reasonably possible change in interest rates.
26. Share Capital
Group and Company
|
30/06/09 |
30/06/08 |
|
|
£000 |
£000 |
|
|
Authorised: |
||
|
100,000,000 ordinary shares of 1p each |
1,000 |
1,000 |
|
Issued and fully paid: |
||
|
35,525,450 (2008: 35,066,781) ordinary shares of 1p each |
355 |
351 |
The movement during the year on the Company's issued and fully paid shares was as follows:
|
2009 |
2009 |
2008 |
|
|
Number |
£000 |
£000 |
|
|
Balance at beginning of year |
35,066,781 |
351 |
346 |
|
Issue of share capital |
458,669 |
4 |
5 |
|
Balance at end of year |
35,525,450 |
355 |
351 |
The Company has one class of ordinary shares which carry no right to fixed income.
During the year the Company issued 1p ordinary shares as follows:
|
Exercise |
Total |
||
|
Number |
price |
paid |
|
|
Date issued |
of shares |
p |
£ |
|
July 2008 |
2,382 |
224.00 |
5,336 |
|
September 2008 |
60,800 |
25.00 |
15,200 |
|
September 2008 |
32,000 |
50.00 |
16,000 |
|
September 2008 |
10,280 |
62.50 |
6,425 |
|
October 2008 |
1,200 |
12.50 |
150 |
|
October 2008 |
80,000 |
25.00 |
20,000 |
|
October 2008 |
28,440 |
62.50 |
17,775 |
|
October 2008 |
545 |
224.00 |
1,121 |
|
October 2008 |
6,525* |
451.00 |
29,428 |
|
November 2008 |
59,410* |
462.00 |
274,474 |
|
November 2008 |
1,344* |
485.00 |
6,518 |
|
November 2008 |
42,500 |
62.50 |
26,563 |
|
November 2008 |
40,000 |
125.00 |
50,000 |
|
January 2009 |
440* |
470.00 |
2,068 |
|
February 2009 |
407* |
492.00 |
2,002 |
|
March 2009 |
348* |
570.00 |
1,984 |
|
April 2009 |
10,000 |
25.00 |
2,500 |
|
April 2009 |
16,320 |
62.50 |
10,200 |
|
April 2009 |
615 |
280.00 |
1,722 |
|
April 2009 |
6,100 |
312.00 |
19,032 |
|
April 2009 |
150 |
462.00 |
693 |
|
May 2009 |
3,020 |
62.50 |
1,888 |
|
May 2008 |
15,996 |
280.00 |
44,789 |
|
May 2008 |
28,180 |
312.00 |
87,922 |
|
May 2008 |
8,550 |
462.00 |
39,501 |
|
June 2008 |
1,465 |
224.00 |
3,282 |
|
June 2008 |
902 |
280.00 |
2,526 |
|
June 2008 |
750 |
312.00 |
2,340 |
|
458,669 |
691,439 |
*new shares issued and held by the Employee Benefit Trust to satisfy the Company's obligations under the Free Shares and Matching Shares elements of the SIP.
Further details of the Company's share option schemes are provided in note 31.
27. Share premium
Group and Company
|
£000 |
|
|
Balance at 1 July 2007 |
10,619 |
|
Premium arising on issue of equity shares |
252 |
|
Balance at 1 July 2008 |
10,871 |
|
Premium arising on issue of equity shares |
687 |
|
Balance at 30 June 2009 |
11,558 |
There were no costs of issue incurred during the year or the previous year.
28. Own shares
Group and Company
|
£000 |
|
|
Balance at 1 July 2007 and 1 July 2008 |
- |
|
Acquired in the period |
(316) |
|
Disposed of on exercise of options |
15 |
|
Balance at 30 June 2009 |
(301) |
This balance represents the cost of 65,094 shares in Abcam plc (2008: nil) which were issued by the Company at market value and held by the Abcam Employee Share Benefit Trust. These shares have been purchased in order to satisfy the Free Shares and Matching Shares elements of the various share based compensation plans. See note 31 for further details of these schemes.
29. Retained earnings and other reserves
Group
|
Share-based |
||||||
|
Translation |
compensation |
Hedging |
Deferred tax |
Retained |
||
|
reserve1 |
reserve2 |
reserve3 |
reserve4 |
earnings |
Total |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
Balance as at 1 July 2007 |
(36) |
251 |
168 |
256 |
7,283 |
7,922 |
|
Exchange differences |
||||||
|
on translation of foreign operations |
3 |
- |
- |
- |
- |
3 |
|
Share based compensation charge |
- |
232 |
- |
- |
- |
232 |
|
Deferred tax asset recognised |
- |
- |
- |
502 |
- |
502 |
|
Profit for the year |
- |
- |
- |
- |
5,890 |
5,890 |
|
Utilisation of derivative instruments |
- |
- |
(168) |
- |
- |
(168) |
|
Payment of dividends (note 15) |
- |
- |
- |
- |
(1,481) |
(1,481) |
|
Balance as at 1 July 2008 |
(33) |
483 |
- |
758 |
11,692 |
12,900 |
|
Exchange differences |
||||||
|
on translation of foreign operations |
230 |
15 |
- |
- |
- |
245 |
|
Share based compensation charge |
- |
464 |
- |
- |
- |
464 |
|
Deferred tax (liability)/asset recognised |
- |
- |
(363) |
610 |
- |
247 |
|
Profit for the year |
- |
- |
- |
- |
12,291 |
12,291 |
|
Own shares disposed of on exercise of options |
- |
- |
- |
- |
(15) |
(15) |
|
Increase in fair value of hedging derivatives |
- |
- |
1,296 |
- |
- |
1,296 |
|
Payment of dividends (note 15) |
- |
- |
- |
- |
(2,572) |
(2,572) |
|
Balance as at 30 June 2009 |
197 |
962 |
933 |
1,368 |
21,396 |
24,856 |
Company
|
Share-based |
|||||
|
compensation |
Hedging |
Deferred tax |
Retained |
||
|
reserve1 |
reserve2 |
reserve3 |
earnings |
Total |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
Balance as at 1 July 2007 |
251 |
168 |
256 |
6,654 |
7,329 |
|
Share based compensation charge |
164 |
- |
- |
- |
164 |
|
Share based compensation charge recognised on behalf of subsidiaries |
29 |
- |
- |
- |
29 |
|
Deferred tax asset recognised |
- |
- |
502 |
- |
502 |
|
Profit for the year |
- |
- |
- |
5,126 |
5,126 |
|
Utilisation of derivative instruments |
- |
(168) |
- |
- |
(168) |
|
Payment of dividends (note 15) |
- |
- |
- |
(1,481) |
(1,481) |
|
Receipt of dividends |
- |
- |
- |
403 |
403 |
|
Balance as at 1 July 2008 |
444 |
- |
758 |
10,702 |
11,904 |
|
Share based compensation charge |
404 |
- |
- |
- |
404 |
|
Share based compensation charge recognised on behalf of subsidiaries |
60 |
- |
- |
- |
60 |
|
Deferred tax (liability)/asset recognised |
- |
(363) |
438 |
- |
75 |
|
Profit for the year |
- |
- |
- |
11,484 |
11,484 |
|
Own shares disposed of on exercise of options |
- |
- |
- |
(15) |
(15) |
|
Increase in fair value of hedging derivatives |
- |
1,296 |
- |
- |
1,296 |
|
Payment of dividends (note 15) |
- |
- |
- |
(2,572) |
(2,572) |
|
Receipt of dividends |
- |
- |
- |
918 |
918 |
|
Balance as at 30 June 2009 |
908 |
933 |
1,196 |
20,517 |
23,554 |
30. Notes to the cash flow statement
|
Group |
Company |
|||
|
30/06/09 |
30/06/08 |
30/06/09 |
30/06/08 |
|
|
£000 |
£000 |
£000 |
£000 |
|
|
Operating profit for the year |
15,872 |
7,371 |
14,514 |
6,113 |
|
Adjustments for: |
||||
|
Depreciation of property, plant and equipment |
1,417 |
1,092 |
1,224 |
917 |
|
Impairment losses on property, plant and equipment |
1,074 |
- |
1,069 |
- |
|
Loss on disposal of property, plant and equipment |
160 |
- |
156 |
- |
|
Amortisation of intangible assets |
261 |
309 |
261 |
306 |
|
Impairment losses on intangible assets |
201 |
642 |
201 |
642 |
|
Change in fair value of derivatives outstanding at year end |
(565) |
197 |
(565) |
197 |
|
Share based compensation charge |
464 |
232 |
404 |
192 |
|
Operating cash flows before movements in working capital |
18,884 |
9,843 |
17,264 |
8,367 |
|
Increase in inventories |
(2,289) |
(1,405) |
(2,282) |
(1,412) |
|
Increase in receivables |
(1,263) |
(533) |
(1,393) |
(572) |
|
Increase in payables |
2,1821 |
772 |
2,1441 |
503 |
|
Cash generated by operations |
17,514 |
8,677 |
15,733 |
6,886 |
|
Income taxes paid |
(2,702) |
(1,535) |
(2,198) |
(1,028) |
|
Net cash inflow from operating activities |
14,812 |
7,142 |
13,535 |
5,858 |
31. Share based payments
Equity-settled share option scheme
The Company operates a number of share option schemes for certain employees of the Group. The share based compensation charge is made up from option awards from the EMI plan, Unapproved share option plan, the US employees share option plan, the Abcam 2005 Share Option scheme, the SAYE scheme, the Long Term Incentive Plan ('LTIP') and the Share Incentive Plan ('SIP'). Option grants under each scheme have been aggregated.
Some grants under the SAYE scheme vest from one to five years. Those options with performance criteria vest when the criteria are met. The vesting period for all other options is from one to three years. If the options remain unexercised after a period of ten years from the date of grant the options expire. Options are forfeited if the employee leaves the Group before the options vest.
The volatility of the options is based on the long term average volatility in the share price of five quoted companies that are considered to have a reasonable comparability with Abcam plc. The dividend yield is based on Abcam's actual dividend yield in the past.
The risk free rate is the yield on UK Government Gilts at each date of grant. The employee exercise multiple is based on published statistics for a portfolio of companies. The employee exit rate is based on management's expectations and, in accordance with IFRS 2, is applied after vesting.
The Group recorded a total share based expense of £464,000 in the year (2008: £192,000), of which £374,000 (2008: £173,000) was included within administration and management expenses and £90,000 (2008: £19,000) was included within research and development expenses.
Summary of all schemes, excluding SIP and LTIP
Options outstanding as at 30 June 2009 had an exercise price of between 12.50p and 462.00p (2008: 10.00p and 413.00p). The weighted average remaining contractual life is 7.46 years (2008: 8.12 years). The weighted average fair value of the options outstanding at the end of the year was 65.56p (2008: 65.24p). The Group recorded total share based expenses of £272,000 (2008: £192,000) relating to all schemes excluding the SIP and LTIP.
|
2009 |
Weighted |
2008 |
Weighted |
|
|
No. of |
average |
No. of |
average |
|
|
share |
exercise price |
share |
exercise price |
|
|
options |
p |
options |
p |
|
|
Outstanding at beginning of year |
1,389,012 |
219.99 |
1,568,335 |
156.03 |
|
Granted during the year |
181,021 |
462.00 |
544,875 |
316.10 |
|
Forfeited during the year |
(46,936) |
340.70 |
(280,801) |
233.24 |
|
Exercised during the year |
(390,195) |
97.65 |
(443,397) |
57.96 |
|
Outstanding at the end of the year |
1,132,902 |
232.31 |
1,389,012 |
219.99 |
|
Exercisable at end of year |
150,080 |
109.16 |
302,640 |
43.07 |
Enterprise management incentive ('EMI') scheme
|
2009 |
Weighted |
2008 |
Weighted |
|
|
No. of |
average |
No. of |
average |
|
|
share |
exercise price |
share |
exercise price |
|
|
options |
p |
options |
p |
|
|
Outstanding at beginning of year |
833,528 |
206.94 |
966,191 |
131.51 |
|
Granted during the year |
- |
- |
284,851 |
312.00 |
|
Forfeited during the year |
(27,274) |
298.69 |
(90,177) |
161.41 |
|
Exercised during the year |
(290,706) |
81.20 |
(327,337) |
53.80 |
|
Outstanding at the end of the year |
515,548 |
272.78 |
833,528 |
206.94 |
|
Exercisable at end of year |
50,080 |
47.59 |
262,640 |
40.11 |
The growth in the net assets of the Group means that the Group has exceeded the limits set by HMRC for the tax incentives available under the EMI scheme so no further grants can be made under this scheme.
Unapproved share option scheme
|
2009 |
Weighted |
2008 |
Weighted |
|
|
No. of |
average |
No. of |
average |
|
|
share |
exercise price |
share |
exercise price |
|
|
options |
p |
options |
p |
|
|
Outstanding at beginning of year |
354,909 |
223.66 |
427,504 |
194.71 |
|
Granted during the year |
- |
- |
148,338 |
340.30 |
|
Forfeited during the year |
- |
- |
(137,375) |
288.34 |
|
Exercised during the year |
(86,397) |
109.91 |
(83,558) |
71.76 |
|
Outstanding at the end of the year |
268,512 |
260.26 |
354,909 |
223.66 |
|
Exercisable at end of year |
100,000 |
140.00 |
40,000 |
62.50 |
Abcam Inc share scheme
|
2009 |
Weighted |
2008 |
Weighted |
|
|
No. of |
average |
No. of |
average |
|
|
share |
exercise price |
share |
exercise price |
|
|
options |
p |
options |
p |
|
|
Outstanding at beginning of year |
121,712 |
291.47 |
104,207 |
185.56 |
|
Granted during the year |
- |
- |
81,160 |
312.00 |
|
Forfeited during the year |
(3,921) |
593.65 |
(32,735) |
312.00 |
|
Exercised during the year |
- |
- |
(30,920) |
56.33 |
|
Outstanding at the end of the year |
117,791 |
315.15 |
121,712 |
291.47 |
|
Exercisable at end of year |
- |
- |
- |
- |
SAYE scheme
|
2009 |
Weighted |
2008 |
Weighted |
|
|
No. of |
average |
No. of |
average |
|
|
share |
exercise price |
share |
exercise price |
|
|
options |
p |
options |
p |
|
|
Outstanding at beginning of year |
78,863 |
231.11 |
70,433 |
224.00 |
|
Granted during the year |
- |
- |
30,526 |
249.00 |
|
Forfeited during the year |
(7,465) |
226.84 |
(20,514) |
233.86 |
|
Exercised during the year |
(4,392) |
224.00 |
(1,582) |
224.00 |
|
Outstanding at the end of the year |
67,006 |
232.05 |
78,863 |
231.11 |
|
Exercisable at end of year |
- |
- |
- |
- |
The Abcam 2005 share option scheme
|
2009 |
Weighted |
|
|
No. of |
average |
|
|
share |
exercise price |
|
|
options |
p |
|
|
Outstanding at beginning of year |
- |
- |
|
Granted during the year |
181,021 |
462.00 |
|
Forfeited during the year |
(8,276) |
462.00 |
|
Exercised during the year |
(8,700) |
462.00 |
|
Outstanding at the end of the year |
164,045 |
462.00 |
|
Exercisable at end of year |
- |
- |
Fair value calculation
The fair value of the option schemes, other than those options with market based performance criteria, has been calculated using the Trinomial method. The inputs into the Trinomial model are as follows:
EMI scheme
|
Grant date |
16/06/03 |
16/06/03 |
05/07/04 |
17/12/04 |
27/05/05 |
05/09/05 |
|
Share price at grant-pence |
10 |
10 |
25 |
30 |
62.5 |
62.5 |
|
Fair value at valuation date-pence |
2.6 |
2.6 |
8.5 |
12.3 |
19.2 |
19.1 |
|
Exercise price-pence |
25 |
37.5 |
25 |
25 |
62.5 |
62.5 |
|
Expected volatility |
40% |
40% |
35% |
35% |
30% |
30% |
|
Expected life-years |
3 |
3.08 |
2 |
2.88 |
2 |
2 |
|
Expected dividend yield |
1.1 |
1.1 |
1.1 |
1.1 |
1.1 |
1.1 |
|
Risk free rate |
3.97% |
3.97% |
5.08% |
4.49% |
4.31% |
4.15% |
|
Employee exercise multiple |
2 |
2 |
2 |
2 |
2 |
2 |
|
Employee exit rate |
10.00% |
10.00% |
10.00% |
10.00% |
10.00% |
10.00% |
Unapproved scheme
|
Grant date |
20/12/04 |
20/12/04 |
30/09/05 |
30/09/05 |
27/10/05 |
|
Share price at grant-pence |
30 |
30 |
62.5 |
62.5 |
167 |
|
Fair value at valuation date-pence |
11.2 |
11.6 |
18.9 |
10.2 |
55.77 |
|
Exercise price-pence |
25 |
25 |
62.5 |
125 |
150 |
|
Expected volatility |
35% |
35% |
30% |
30% |
30% |
|
Expected life-years |
1.54 |
2 |
1.82 |
1.82 |
1.635 |
|
Expected dividend yield |
1.1 |
1.1 |
1.1 |
1.1 |
1.1 |
|
Risk free rate |
4.46% |
4.46% |
4.29% |
4.29% |
4.40% |
|
Employee exercise multiple |
2 |
2 |
2 |
2 |
2 |
|
Employee exit rate |
10.00% |
10.00% |
10.00% |
10.00% |
10.00% |
SAYE scheme
|
Grant date |
02/10/06 |
02/10/06 |
08/11/07 |
08/11/07 |
|
Share price at grant-pence |
280 |
280 |
312 |
312 |
|
Fair value at valuation date-pence |
104 |
113 |
106 |
122 |
|
Exercise price-pence |
224 |
224 |
249 |
249 |
|
Expected volatility |
30% |
30% |
30% |
30% |
|
Expected life-years |
3 |
5 |
3 |
5 |
|
Expected dividend yield |
1.1% |
1.1% |
1.5% |
1.5% |
|
Risk free rate |
4.54% |
4.54% |
4.80% |
4.80% |
|
Employee exercise multiple |
2 |
2 |
2 |
2 |
|
Employee exit rate |
10.00% |
10.00% |
12.00% |
12.00% |
The fair value of options issued after September 2006, with market based performance criteria, are calculated using the Monte Carlo model. The inputs into the Monte Carlo model are as follows:
|
Grant date |
07/09/06 |
08/11/07 |
07/05/08 |
06/11/08 |
|
Share price at grant-pence |
280 |
312 |
413 |
462.5 |
|
Fair value at valuation date-pence |
84 |
89 |
123 |
115 |
|
Exercise price-pence |
280 |
312 |
413 |
462 |
|
Expected volatility |
30% |
30% |
30% |
24% |
|
Expected life-years |
3 |
3.01 |
3 |
3 |
|
Expected dividend yield |
1.1% |
1.5% |
1.5% |
0.87% |
|
Risk free rate |
4.57% |
4.80% |
4.79% |
3.90% |
|
Employee exercise multiple |
2 |
2 |
2 |
2 |
|
Employee exit rate |
9.53% |
12.00% |
12.00% |
0.00% |
Share Incentive Plan
All UK based employees are eligible to participate in the SIP whereby employees buy shares in the Company. These shares are called Partnership Shares and are held in trust on behalf of the employee. For every Partnership Share bought by the employee the Company will give the employee one share free of charge (Matching Shares), provided the employee remains employed by the Company for a period of at least three years. The employees must take their shares out of the plan on leaving the Company and will not be entitled to the Matching Shares if they leave within three years of buying the Partnership Shares. In addition, the Company can also award employees the right to acquire up to a maximum of £3,000 of shares (Free Shares). There are no vesting conditions attached to the Free Shares, other than being continuously employed by the Company for three years from the date of grant.
|
SIP Free |
SIP Matching |
|
|
Shares |
Shares |
|
|
Outstanding at beginning of year |
- |
- |
|
Granted during the year |
59,410 |
10,271 |
|
Forfeited during the year |
(2,244) |
- |
|
Exercised during the year |
(2,982) |
(398) |
|
Outstanding at the end of the year |
54,184 |
9,873 |
|
Exercisable at end of year |
- |
- |
For the purposes of IFRS 2 the fair value of these Matching Shares and Free Shares is determined as the market value of the shares at the date of grant. No valuation model is required to calculate the fair value of awards under the SIP. The fair value of an equity based payment under the SIP is the face value of the award on the date of grant because the participants are entitled to receive the full value of the shares and there are no market based performance conditions attached to the awards.
The Group recognised a total expense of £68,000 (2008: £nil) related to Matching and Free Share awards in the year.
Long Term Incentive Plan
In 2008 the Company approved a new LTIP. Vesting of performance share awards made under this scheme is conditional upon achievement of two separate performance conditions. Full details of the performance conditions are shown in the Directors' Remuneration Report. All awards made under this scheme have a fixed term of three years. Save as permitted in the LTIP rules, awards lapse on an employee leaving the Company.
Details of performance share awards outstanding during the year are as follows:
|
LTIP awards |
|
|
2009 |
|
|
Granted during the year and outstanding at the end of the year |
154,545 |
|
Exercisable at end of year |
- |
These performance share awards were made on 6 November 2008. The aggregate of the fair values of the awards made on that date is £573,000. The estimated fair values were calculated using a stochastic (Monte Carlo binomial) model. The inputs to the model for awards granted in the year were as follows:
|
Grant date |
06/11/08 |
|
Weighted average exercise price (pence) |
- |
|
Expected volatility |
24% |
|
Expected life |
3 years |
|
Expected dividend yield |
0.87% |
|
Risk free rate |
3.41% |
The Group recognised a total expense of £124,000 (2008: £nil) related to performance share awards under the LTIP in the year.
32. Retirement benefit schemes
Defined contribution schemes
The UK-based employees of the Company have the option to be members of a defined contribution pension scheme managed by a third party pension provider. For each employee who is a member of the scheme the Company will contribute a fixed percentage of each employee's salary to the scheme. The only obligation of the Group with respect to this scheme is to make the specified contributions.
The employees of the Group's subsidiaries in the USA and Japan are members of state-managed retirement benefit schemes operated by the governments of the USA and Japan respectively. The subsidiaries are required to contribute a specified percentage of payroll costs to the retirement benefit schemes to fund the benefits. The only obligation of the Group with respect to the retirement benefit schemes is to make the specified contributions.
The total cost charged to the income statement in respect of these schemes during the year ended 30 June 2009 was £947,000 (2008: £815,000). As at 30 June 2009 contributions of £75,000 (2008: £65,000) due in respect of the current reporting period had not been paid over to the schemes.
33. Related party transactions
Under a new product development agreement with a laboratory associated with Tony Kouzarides (a non-executive director of the Company), Abcam provided products from its catalogue free of charge, with a resale value of £24,018 (2008: £16,714) and paid £41,166 in royalties (2008: £36,148). £5,889 relating to these royalties was outstanding at the year end (2008: £6,632).
Abcam Plc purchased services with a value of £51,050 (2008: £6,000) from Cambridge Network Limited and its subsidiaries, which are non-profit making entities of which David Cleevely (Chairman of the Company) is chairman. £7,912 was prepaid at the end of the year (2008: £nil). These services were purchased at the market value.
Remuneration of key personnel
The remuneration of the executive directors, who are the key management personnel of the Group, is set out below in aggregate for each of the categories specified in IAS 24 - Related Party Disclosures.
Group and Company
|
30/06/09 |
30/06/08 |
|
|
£000 |
£000 |
|
|
Short term employee benefits and fees |
1,078 |
1,033 |
|
Share based payment |
153 |
50 |
|
1,231 |
1,083 |
Related Shares:
ABC.L