5th Sep 2006 07:03
ABCAM Plc05 September 2006 For immediate release 5 September 2006 ABCAM PLC ("Abcam" or "the Company") Preliminary Results for the Twelve Months ended 30 June 2006 Cambridge, UK: Abcam plc (AIM: ABC), a rapidly growing bioscience company thatmarkets antibodies via an online catalogue, is pleased to announce its auditedpreliminary results for the twelve months ended 30 June 2006. Highlights - Sales increased 60% to £19.4 million (2005: £12.1 million) - Pre-tax profits increased 65% to £4.9 million (2005: £3.0 million) - EPS increased 34% to 11.53p (2005: 8.6p) - Continued expansion of product range: 23,200 products available on the Abcam website at end June 2006, up 41% from 16,500 products at end June 2005 - Continued geographic expansion o Significant contribution in sales and profits in the year from US office o New office opened in Japan, the world's third largest market for research antibodies - Net cash and short term investments of £11.9 million as at 30 June 2006 - Proposed final dividend of 2.0p per share Commenting on today's announcement, Jonathan Milner, Abcam's Chief ExecutiveOfficer, said: "Abcam has made outstanding progress throughout the financialyear. We have increased our sales and continue to place particular emphasis onour gross margins. We have expanded our efforts in overseas markets,particularly in US and Japan, so as to improve our geographical reach. I wouldlike to thank our staff, shareholders and other stakeholders for their continuedsupport." Also commenting on the announcement, David Cleevely, Abcam's Chairman, said "Weenjoyed an exciting and prosperous financial year in 2005/06, and I am equallypositive about the opportunities and prospects that lie ahead." For further information: Abcam + 44 (0) 1223 696000Jonathan Milner, Chief Executive OfficerEddie Powell, Chief Financial Officer www.abcam.com Buchanan Communications + 44 (0) 20 7466 5000Mark Court, Mary-Jane Johnson Numis Securities Ltd + 44 (0) 20 7776 1500Dickie Hall, James Black Notes for editors About Abcam Abcam is a producer and distributor of research-grade antibodies headquarteredin Cambridge, UK, with a US office located in Cambridge, Massachusetts. Abcamwas admitted to AIM in November 2005 and trades under the ticker symbol ABC.The Company produces and distributes its own and third party produced antibodiesto academic and commercial users throughout the world with product informationprovided and ordering available through the Company's website, www.abcam.com.The antibodies are sold almost entirely under the Abcam brandname. The Company'svision is to build the largest online antibody resource in the world while alsoensuring that the antibodies are of high quality and commercially viable. Abcamnow has an online catalogue of over 23,000 products, most of which areantibodies, from over 200 sources supported by up-to-date and detailed technicaldata sheets, which are created by the Company. Currently the Company employs 100staff. About antibodies Antibodies are proteins produced by white blood cells in response to theintroduction of a foreign body known as an antigen. Antibodies, which have awide variety of uses in research, diagnostics and therapeutics, are used bybioscientists in research into disease and into the human genome, where they areused to mark and identify specific cells and other living matter. The number ofhuman antibodies of use in research is potentially greater than one million. Chairman's Statement I am delighted to present Abcam's first results as a public company. We enjoyedan exciting and prosperous financial year in 2005/06, and I am equally positiveabout the opportunities and prospects that lie ahead. Abcam provides antibody reagents that scientists use to identify proteins.Research into the roles and effects of proteins has grown significantly inrecent years, particularly since the human genome project was completed.Estimates of the number and diversity of proteins that have importantimplications for health and disease continue to increase, and in the future weare likely to witness many more groundbreaking discoveries. As the world'slargest online antibody resource, Abcam is well placed to develop and supply thetools that allow such discoveries to be made, and to contribute to mankind'sprogress in understanding health and disease. I am especially pleased by the contributions made by Abcam's hard-working andloyal employees to the Group's continuing success post flotation. Abcam isfortunate to have a first-class management team and dedicated staff who all worktogether to deliver the best-quality antibody reagents to our customers. Abcam's culture enables it quickly to recognise changes in the marketplace andcreate opportunities for the Company. I am proud of Abcam's track record inidentifying new products and techniques, and I continue to be impressed by ourteam's ability to innovate and expand in this exciting market. Abcam's goal is to deliver the best antibodies to our customers and to becomethe world's largest research antibody supplier. Abcam is increasingly regardedin the industry as an attractive partner by smaller companies that lack ourgeographical and market penetration, and we continue to interest a growingnumber of companies that do not focus primarily on research antibodies. As aconsequence we have established partnerships and supplier agreements with manyof the world's best sources of antibodies. With our reputation for flexibilityand trustworthiness among suppliers, we have recently been able to close anumber of such deals, including the recently announced acquisition of the rightsto distribute exclusively the range of antibodies developed by Triple PointBiologics Inc. We will continue to develop our relationships with othersuppliers of antibodies, and to look for opportunities to acquire product linesthat we can sell either exclusively or non-exclusively. We also provide new and unique products of the highest quality in the form ofour own antibodies. Currently, these products represent a small fraction of ourcatalogue, but they generate disproportionately high revenue and profits. Wehave been building resources and developing expertise in the identification andproduction of antibodies, and we are now looking to increase investment in ourown manufacturing capability. We are currently investigating the most effectiveway of achieving this. Outlook I am optimistic about Abcam's future: it has great potential to continue toexpand in the medium to longer term. The Group's management is very focused onprofitable growth and I believe that they have put in place the operationalprocesses, product acquisition and marketing and sales strategies to enable thisto happen. Corporate governance The Board intends to follow best practice wherever practical. As a major step inthis direction, I am pleased to welcome Tim Dye and Mark Webster to the Board asNon-Executive Directors from 1 July 2006. Tim Dye is currently Chairman and Chief Executive of William Ransom & Son plc, ahealthcare company quoted on AiM. He brings to the Board a wealth of experiencein mergers and acquisitions and in growing a successful company. Mark Webster is a highly experienced pharmaceutical executive. Most recently hewas at Bayer Healthcare where he was Senior Vice President, Head of GlobalStrategic Marketing and Licensing/ Acquisitions for Bayer Pharmaceuticals. Hisskills and experience in sales and marketing will be of enormous benefit toAbcam in the future. Including Peter Keen, the addition of Tim Dye and Mark Webster brings the numberof independent Non-Executive Directors to three, each of whom contributesvaluable and complementary skills and experience to the Board. Dividend A dividend of 3.25p was paid prior to the listing on AiM. In accordance with theDirectors' stated intention following the floatation of paying dividends fromeach year's profits equal to 25% of that year's profit after tax, an interimdividend of 0.7p for this year was paid in April 2006. The Directors recommenda final dividend of 2.0p per share, making a total of 2.7p since floatation,which equates to paying 25% of the profit after tax for the year ended 30 June2006. Subject to shareholder approval at the annual general meeting in October,all shareholders on the register on 27 October 2006 will receive this dividendon 24 November 2006. I would like to take this opportunity to thank all our staff for their efforts,and our customers, suppliers and shareholders for their support for Abcam. David Cleevely Chairman 4 September 2006 CEO's Report Abcam has made outstanding progress in the last financial year. Sales increasedby 60% to £19.4m (from £12.1m in 2005) and profit before tax increased by 65% to£4.9m (from £3.0m in 2005). It is satisfying to see that operating profit at23.7% of sales is only slightly below the 24.0% achieved in 2005. This isdespite the additional costs of being a publicly listed company and reflects theability of the Company to scale its operations efficiently. Cash balances and short term investments rose over the year by £10.4m to £11.9m.£9.3m of this increase came from the net proceeds of the AiM listing in November2005, but the business itself continues to be very cash generative. Our 60% growth in sales has been driven in part by the number of productspublished on the website. This grew by 41%, up from 16,500 at the end of June2005 to 23,200 at the end of June 2006. Products that we have published tend to sell more per month or per year thelonger they have been available. We are therefore continuing not only to publishmore products but also to provide more information about the antibodies, so asto exploit this dynamic. Growth in sales has also been the result of bettermarket penetration, brand recognition and improved distribution. The Company pays considerable attention to gross margins. A high priority is toincrease significantly the number of products that are owned or exclusivelydistributed by Abcam in the medium term. Profitability is also affected by cost,and we continue to strive for greater operational efficiency. Abcam is fortunate to have such enthusiastic, high-quality staff. Through ourrecruitment programme, we have attracted some very able and experiencedindividuals and we have 28 biochemist PhD staff, many with valuable years ofpost-doctoral research experience. We are committed to further enhancing theteam through a new programme of staff training and development. Abcam at a glance: - Highly cash-generative business - Double digit rate of growth in sales and profits - High rate of new product addition - Established brand - Rapid penetration of geographic markets - Concentration on gross margins and efficiency equals outstanding profitability - Highly scalable operations - Talented and enthusiastic staff - Commitment to staff training and development Jonathan Milner CEO 4 September 2006 Managing Director's Report Abcam continually seeks to improve its business processes and systems in orderthat we can scale effectively. Central to this strategy is our in-house IT andweb-development capability, which we have steadily expanded to ensure that wecan continue to make such efficient and scalable progress in the future. As an example of how our IT systems integrate with our despatch operations, wehave introduced a robotic stock-storage and retrieval system in the UK thatgreatly increases our stock-storage density and enables us to process anddeliver orders to our customers faster and more reliably. Once this system isfully implemented we will implement a second system in the US office. We see a big opportunity to increase sales by extending our geographical reach,boosting our market penetration and raising our brand awareness. Our US officein Cambridge, Massachusetts, has recently lengthened its operating hours inorder to service customers on the West Coast, and this has proved veryeffective. We have also introduced Saturday working in the USA so that ordersplaced on a Friday will reach customers on Monday morning. Japan is probably the third most important market for antibodies after the USAand the EU, and so we are keen to improve our market penetration there.Implementation of our plan to have a functional sales-generating Japanese officeis now well underway. We now have a subsidiary company incorporated withpremises in the country, and are in the process of recruiting operational staff.We recognise, through our existing relationships with distributors, that Japanis a challenging market and that building our presence in it may take some time,but the long-term potential in the region for increased sales and margins viaour own operation is very good. We will also be putting in place IT systems-architecture changes that allow theJapanese office to operate on an entirely standalone IT platform. This willperiodically be consolidated with the central UK systems, improving the localperformance of the website (via local servers in Japan), as well as allowing usto develop additional regional offices more efficiently in the future. We place considerable emphasis on responsibility for and communication with ouremployees. We keep all employees informed of what is happening in the group withweekly update meetings. These are supplemented with presentations given everyquarter by each head of department. Finally, group strategy is agreed each yearas part of the annual budget and planning cycle with all department heads, andthey then ensure that employees in their department understand that department'sobjectives and targets. Jim Warwick Managing Director 4 September 2006 Financial Review Equity On 3 November 2005, the Company was admitted to the AiM. In the process,5,988,024 1p ordinary shares were issued at a price of 167p per share, raising£10.0m gross (£9.2m after expenses). Additionally, during the year 6,789 4p ordinary shares (equivalent to 271,560 1pordinary shares) and 400,280 1p ordinary shares were also issued pursuant to theexercise of share options raising £118,000. Full details are set out in note 3to the accounts. Sales Sales in the year increased to £19.4m, from £12.1m in the previous year. Salesincreases in the main territories in which the Company operates over theprevious year were as follows: USA and Canada 65%UK 36%EU (excluding UK) 39%Japan 60%Rest of World 58% The increase was particularly high in the USA where the Company's subsidiary,which was established in 2003, has successfully taken advantage of its presencein the country. Gross margins The Company's gross margins, at 61.3%, remained broadly at the same level as theprevious year's 61.5%. While there were some price rises from suppliers, thesewere quite modest and were largely offset by reductions in shipping rates andother costs. Administrative expenses Although administrative expenses, which includes marketing and distributioncosts, increased from £4.0m to £6.1m they decreased as a percentage of salesfrom 32.7% in the previous year to 31.5% this year despite the additional costsincurred as a result of Abcam being a public company. Research and development expenses R & D expenditure increased significantly from 4.8% of sales to 6.3%. This isdue to the Company's increasing drive to develop new products. Profits Operating profits increased from £2.9m in the year ended June 2005 to £4.6m,although they fell slightly as a percentage of sales from 24.0% to 23.7% becauseof the increased R & D effort. Interest income rose due to investment of the money raised at the IPO. Tax The consolidated tax charge of £0.7m in the year ended 30 June 2005, which was23.4% of profits before tax, rose to £1.2m, which is 24.9% of profits before taxfor the year ended 30 June 2006. The main reason for the increased percentage isthe higher proportion of the Group's profits being earned in the US, where taxeson profits are higher than in the UK. Inventories Inventory levels rose more rapidly than sales due predominantly to an increaseof Abcam own-produced inventories. This is because the production of antibodiesinvolves batch sizes which are larger than the quantities required for immediatesale. Consequently the levels of inventories for these products is higher thanwould be the case for bought-in products. Debtors Although a proportion of the Group's customers pay by credit card, the majorityof sales are on credit, and so credit control is important to the management ofworking capital. Debtors are monitored by measuring the number of debtor days,and these improved slightly during the year, improving from 47 in the previousyear to just over 45. Creditors Creditors rose from £2.1m to £3.0m, an increase of 41%. This percentage increaseis less than the overall increase of 60% of sales due to a lower level ofpurchases just before the end of the year together with a relatively lower levelof accrued expenses at 30 June 2006 compared to the previous year. Currency exposure The Group generates significant amounts of surplus dollars and euros. The policyfor dealing with these is to sell forward at the start of each financial year80% of the forecast surpluses month by month in order to minimise variationsfrom budget due to exchange rates. In order therefore to hedge the exposureduring the year commencing 1 July 2006 the Company had forward exchangecontracts in place to sell $9.6m and €3.6m. These contracts are essentially atrates of £1 to $1.79 and £1 to €1.47. Eddie Powell Finance Director 4 September 2006 ABCAM PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT Year ended 30 June 2006 Audited Audited Year to Year to 30.6.06 30.6.05 Note £'000 £'000 £'000 £'000 TURNOVER 19,362 12,135Cost of sales (7,485) (4,678)GROSS PROFIT 11,877 7,457 Administrative expenses (6,106) (3,972)Research and development expenses (1,226) (582) (7,332) (4,554) 4,545 2,903Other operating income 42 15OPERATING PROFIT 4,587 2,918 Interest receivable and similar income 313 59PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 4,900 2,977 Tax on profit on ordinary activities (1,221) (696) PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 3,679 2,281 EARNINGS PER SHARE Basic earnings per share 2 11.53p 8.59p Fully diluted earnings per share 9.12p 7.59p Dividends paid per share 5.95p 4.79p All activities derive from continuing operations. The statement of movements on reserves is shown in note 4. CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Year ended 30 June 2006 Audited Audited Year to Year to 30.6.06 30.6.05 £'000 £'000Profit for the financial year 3,679 2,281Foreign exchange differences (23) 11 Total recognised gains and losses since the last annual report 3,656 2,292 ABCAM PLC CONSOLIDATED BALANCE SHEET 30 June 2006 Audited Audited 30.6.06 30.6.05 £'000 £'000 NoteFIXED ASSETSIntangible assets 77 -Tangible assets 1,094 835 1,171 835CURRENT ASSETSStocks 2,358 1,187Debtors 2,762 1,912Short term investments 11,000 1,000Cash at bank and in hand 884 510 17,004 4,609CREDITORS: amounts falling duewithin one year (3,023) (2,149) NET CURRENT ASSETS 13,981 2,460 TOTAL ASSETS LESS CURRENT LIABILITIES 15,152 3,295 PROVISIONS FOR LIABILITIES AND CHARGES (112) (80) NET ASSETS 15,040 3,215 CAPITAL AND RESERVESCalled up share capital 3 345 28Share premium account 4 10,573 1,568Other reserves 4 335 335Foreign exchange reserve 4 (8) 15Profit and loss account 4 3,795 1,269 TOTAL EQUITY SHAREHOLDERS' FUNDS 5 15,040 3,215 These financial statements were approved by the Board of Directors on 4 September 2006 Dr E W Powell4 September 2006 ABCAM PLC CONSOLIDATED CASH FLOW STATEMENT Year ended 30 June 2006 Audited Audited Year to Year to 30.6.06 30.6.05 £'000 £'000 £'000 £'000 Net cash inflow from operating activities 3,547 2,571 Returns on investments and servicing of finance Interest received 313 59 Net cash inflow from returns on investments and 313 59servicing of finance Taxation Corporation tax paid (954) (700) Tax paid (954) (700) Capital expenditure and financial investment Payments to acquire tangible fixed assets (597) (847) Payments to acquire intangible fixed assets (100) - Receipts from sales of tangible fixed assets 6 22 Net cash outflow from capital expenditure and (691) (825)financial investment Equity dividends paid (1,153) (1,317) Net cash outflow before management of liquid resources 1,062 (212)and financing Management of liquid resourcesIncrease in short term deposits (10,000) (150) Net cash outflow from management of liquid resources (10,000) (150) Financing Issue of ordinary share capital 9,322 570 Net cash inflow from financing 9,322 570 Increase in cash 384 208 ABCAM PLC NOTES TO THE ACCOUNTS Year ended 30 June 2006 1. ACCOUNTING POLICIES The financial statements are prepared in accordance with applicable UnitedKingdom accounting standards. The particular accounting policies have beenapplied consistently throughout the period. Accounting convention The financial statements are prepared under the historical cost convention. Basis of consolidation The group financial statements consolidate the financial statements of thecompany and its subsidiary undertakings Abcam Inc., Abcam KK and Camgene Ltd. The financial information set out in the announcement does not constitute thecompany's statutory accounts within the meaning of Section 240 of the CompaniesAct 1985. The financial information for the years ended 30 June 2005 and 2006has been extracted from, and is consistent with, that in the Group's auditedfinancial statements. The auditors reported on those accounts; their reportswere unqualified and did not contain statements under section 237 (2) or (3) ofCompanies Act 1985. The statutory accounts for 30 June 2005 have been filed withthe Registrar of Companies. The statutory accounts for 30 June 2006 will bedelivered to the Registrar of Companies following the Company's Annual GeneralMeeting. 2. EARNINGS PER SHARE The calculation of the basic and diluted earnings per share is based on thefollowing data: Audited Audited 2006 2005 £'000 £'000 Profit for the financial year 3,679 2,281 Number Number of shares of sharesWeighted average number of shares:Basic earnings per share 31,914,845 26,538,889Assumed exercise of share options 845,725 353,907Fully diluted earnings per share 33,050,430 26,932,877 3. CALLED UP SHARE CAPITAL Audited Audited 30.6.06 30.6.05 £'000 £'000Authorised100,000,000 (2005 - 4,000,000) ordinary shares of 1p each (2005 - 4p) 1,000 160 Called up, allotted and fully paid34,464,584 (2005 - 695,118) ordinary shares of 1p each (2005 - 4p) 345 28 Under the Company's Enterprise Management Incentive Scheme employees of Abcamplc held options at 30 June 2006 for 728,480 unissued 1p ordinary shares (2005 -23,788 4p ordinary shares). During the year options for 6,789 4p ordinaryshares and 229,760 1p ordinary shares were exercised. Options for 7,308 4p ordinary shares were granted and options for 178 4pordinary shares and 6,920 1p ordinary shares lapsed. The options outstanding atthe end of the year were as follows: Date of grant Number of 1p shares Option price per share Date of Vesting Apr-03 8,280 12.5p Apr-05 Jun-03 100,000 25.0p to 50.0p Jun-05 to Jun-06 Jul-04 121,920 25.0p Jul-06 Dec-04 220,000 25.0p 2 years after a listing Jul-05 218,280 62.5p Jul-07 Sep-05 60,000 62.5p Sep-07 Employees of Abcam plc also held options under an unapproved scheme at 30 June2006 for 261,360 unissued ordinary shares (2005 - 4,263 4p ordinary shares) atexercise prices of 62.5p to 150.0p per share. 170,520 options for 1p ordinaryshares were exercised during the year, and 6,534 options for 4p ordinary shareswere granted. The options vest over the period January 2006 to July 2007. Employees of Abcam Inc also held options under an unapproved scheme at 30 June2006 for 55,320 unissued ordinary shares (2005 - nil) at an exercise price of$1.125. An option for 40,000 (2005 - 1,000 4p ordinary shares) 1p ordinary shares hasbeen granted to a scientific advisor at an exercise price of 25.0p per share.The option vested in May 2005. Reconciliation of 1p ordinary shares to 4p ordinary shares On 20 October 2005 a bonus issue of one 4p ordinary share for each 4p ordinaryshare took place. On 3 November 2005 each 4p ordinary share was split into four1p ordinary shares. This was then immediately followed by a bonus issue of four1p ordinary shares for each 1p ordinary share. The cumulative effect of thesesteps was that one 4p ordinary share before 20 October 2005 became forty 1pordinary shares on or shortly before 3 November 2005. During the period from 1 July 2005 to 2 November 2005 the company issuedordinary 4p shares as follows: Date Number Exercise Total issued of shares price paid £ £ 4/7/05 3,913 5.00 19,565 6/9/05 100 5.00 500 22/9/05 270 5.00 1,350 23/9/05 70 10.00 700 28/9/05 255 5.00 1,275 29/9/05 975 5.00 4,875 29/9/05 935 10.00 9,350 3/10/05 68 5.00 340 7/10/05 203 5.00 1,015 6,789 38,970 During the period from 3 November 2005 to 30 June 2006 the company issuedordinary 1p shares as follows: Date Number Exercise Totalissued of shares price paid £ £ 3/11/05 5,988,024 1.67 10,000,0003/11/05 146,120 0.125 18,2653/11/05 217,280 0.25 54,32026/4/06 1,400 0.25 35031/5/06 7,680 0.25 1,92012/6/06 20,000 0.125 2,50027/6/06 7,800 0.25 1,950 6,388,304 10,079,305 4. STATEMENT OF MOVEMENTS ON RESERVES Audited Audited Audited Audited Share Foreign Profit premium Other exchange and loss account reserves reserve account £'000 £'000 £'000 £'000GROUP As at 1 July 2005 1,568 335 15 1,269Retained profit for the year - - - 3,679Dividends paid - - - (1,153)Bonus issues of shares (253) - -Premium on shares issued 10,056 - -Expenses of share issues (798)Currency translation difference - - - on foreign currency net - - (23) -investmentsAt 30 June 2006 10,573 335 (8) 3,795 Audited Audited Audited Share Profit premium Other and lossCOMPANY account reserves account £'000 £'000 £'000As at 1 July 2005 1,568 335 1,138Retained profit for the year - - 3,284Dividends paid - - (1,153)Bonus issues of shares (253) - -Premium on shares issued 10,056 - -Expenses of share issues (798) -At 30 June 2006 10,573 335 3,269 5. RECONCILIATION OF MOVEMENTS IN GROUP SHAREHOLDERS' FUNDS Audited Audited 2006 2005 £'000 £'000 Profit for the year 3,679 2,281Other recognised gains and losses relating to the year (net) (23) 11Add back: charge in respect of share options - 17 3,656 2,309Dividends paid (1,153) (1,317)Issue of shares net of issuing costs 9,322 570Net addition to shareholders' funds 11,825 1,562Opening shareholders' funds 3,215 1,653Closing shareholders' funds 15,040 3,215 6. POST BALANCE SHEET EVENTS On 11 August 2006 the Company entered into an agreement with Triple PointBiologics Inc. Under the terms of the deal, Abcam will acquire the exclusiveworldwide distribution rights to distribute that company's complete range ofproducts for a period of ten years for an initial payment of $2m plus anearn-out payment based on a percentage of sales achieved during the first fouryears, subject to a cap of $8m. Based on current estimates of future sales thedirectors expect the provision for the earn-out payment will amount toapproximately $1.4m. In addition Abcam will pay a royalty based on a percentageof sales for the entire ten year term. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
ABC.L