Investing for long-term growth

2017/18 Year in Review

“It has been a year of progress for Abcam as we have once again delivered on our financial goals. We have delivered over 10% constant currency revenue growth, meeting our full year guidance, while continuing to invest in the long-term future of the Company. We look forward to continuing to expand our business as we move toward our ambition of becoming the most influential life sciences company for the research communities globally.”

Alan Hirzel
CEO

Operational highlights

  • Strong commercial and strategic execution, with the achievement of all strategic key performance targets
  • Continued to drive quality standards through knockout validation, recombinant antibodies, and other quality initiatives, with a further 400+ products knockout validated
  • Acquired the exclusive rights from Roche for a portfolio of Spring Bioscience products for research use only (RUO) applications
  • Entered 28 new agreements with pharmaceutical and diagnostic partners, further increasing our addressable market in Custom Products and Licensing
  • Continued to expand our FirePlex® platform, with the addition of over 150 new validated antibody pairs

Financial highlights

KPI performance

Recombinant antibody CER
revenue growth


22.3%
2017/18 target: 20–25%
2018/19 target: 20%+

Immunoassay CER
revenue growth


25.4%
2017/18 target: 20–25%
2018/19 target: 20%+

Transactional Net Promoter
Score (tNPS)


64%
2017/18 target: 55–65%
2018/19 target: 57-67%

Chairman’s statement

I have recently been appointed as the Chairman of Abcam plc and it gives me great pleasure to introduce my first Annual Report for the Group, which sets out the continued financial and strategic progress the Company has made over the past twelve months.

Abcam’s position as the global leader in the sale of research antibodies and our reputation for providing high- quality products alongside comprehensive scientific data positions us well. We are committed to investing in the Company to build on that position, in order that we remain at the forefront of scientific advances and can take full advantage of the multiple opportunities within our markets.

Peter Allen
Chairman

CEO’s letter to shareholders: Sustaining long-term profitable growth

Abcam started 20 years ago with one big idea: to provide research scientists faster access to antibodies that work. Our company was a pioneer applying e-commerce tools to the life sciences. That disruptive innovation made it possible to offer an extensive antibody range, validation data, and rapid customer service to researchers worldwide. The financial success of the company and support of our shareholders since then has enabled us to increase investment in long-term profitable growth.

If we aren’t breaking things and occasionally falling short of our goals, we aren’t being bold enough. We must keep pushing and investing to build this company to have a greater role in the markets we serve, and that work will continue for many years to come.

Chief Executive Officer
Alan Hirzel

Financial review: Solid financial performance delivered in 2018

Highlights

  • Total revenue increased by 7.4% on a reported basis and 10.7% on aconstant exchange rate (CER) basis
  • Catalogue revenue grew 7.1% on a reported basis to £216.8m (2016/17: £202.4m) and 10.2% CER
  • Custom Product and Licensing (CP&L) revenue grew 11.6% on a reported basis to £16.4m (2016/17: £14.7m) and 17.6% CER
  • EBITDA margin was 35.0% (2016/17: 32.5%) whilst Adjusted EBITDA margin increased to 37.9% (2016/17: 33.8%), primarily due to the rolling-off of hedging contracts in the prior year
  • Reported PBT grew 33.1% to £69.1m and adjusted PBT grew 26.3% to £81.6m
  • Reported diluted EPS grew 45.9% to 30.2p and adjusted diluted EPSgrew 27.1% to 32.4p
  • Strong cash generation continued, with net cash inflow from operating activities of £63.3m (2017/18: £66.4m)
  • Proposed final dividend of 8.58p (2016/17: 7.36p), taking the proposed total annual dividend to 12.00 pence per share, an increase of 17.9%

Abcam delivered another solid financial performance in the year. Our strong financial position and cash generation provide the resources to invest in our long-term strategy to build the platform for a much larger company, sustain our long-term profitable growth and serve the needs of our customers.

Chief Financial Officer
Gavin Wood

Strategy at a glance

Our strategy is designed to generate profitable growth and improve our long-term financial performance, in support of our ambition to serve life scientists to achieve their mission, faster.

An overview of the progress we have made against each of our five multi-year priorities is set out below.


What we achieved

  • Delivered primary antibody revenue growth ahead of the global market growth rate
  • Further enhanced our target selection process to increase the success of new products
  • Implemented process improvements to shorten lead times, improving the success rates of product launches
  • Continued to work with suppliers to add validation data as well as delivering improvements in our own range through enhanced antibody validation and production techniques
  • Continued to grow and enhance our digital footprint, driving better engagement and conversion

2018/19 priorities

  • Continue to develop new products focused on high-value areas, based on customers’ research needs
  • Further enhance our product validation and continue to raise product quality standards across the catalogue
  • Implement the next phase of our growth strategy for China

What we achieved

  • Published over 200 new SimpleStep ELISA® immunoassays products on the catalogue
  • Further developed FirePlex® multiplex platform, validating over 150 pairs of antibodies and launching a high throughput product (FirePlex®-HT) to simplify and speed up workflows
  • Further expanded electronic catalogue connections to large-volume customers
  • Continued to expand addressable market in custom products and licensing, with 28 new framework agreements signed and over 150 projects initiated for pharmaceutical and diagnostic development partners

2018/19 priorities

  • Continue to grow our immunoassay business in line with multi-year aspiration
  • Continue to expand the number of Abcam Inside projects and framework agreements
  • Launch teams to develop one to two new capability areas

What we achieved

  • Continued to progress development of our new enterprise resource planning (ERP) system, although at a slower pace than planned
  • Delivered distribution improvement projects in the UK, US and China
  • Continued construction of our new UK headquarters on the Cambridge Biomedical Campus – on track to move in during 2018/19
  • Continued investment to support employee engagement and development across our global organisation

2018/19 priorities

  • Successfully deploy next phases of Oracle Cloud ERP
  • Roll-out equity participation scheme to global employees
  • Successfully move UK team to the new headquarters on the Cambridge Biomedical Campus
  • Continue to fill or enhance our capabilities across supply chain and manufacturing, IT and new growth projects

What we achieved

  • Identified and delivered operating efficiencies and productivity gains, including the successful closure and outsourcing of our Bristol, UK manufacturing operations
  • Delivered further procurement efficiency benefits through the creation of our global procurement function
  • Made preparations to move to direct distribution in more markets

2018/19 priorities

  • Continue to realise productivity gains
  • Move to direct distribution in more markets

What we achieved

  • Signed exclusive licence agreement with Roche covering a portfolio of approximately 760 products, including 243 RabMAb® products.
  • Entered into a number of collaborations with industry partners

2018/19 priorities

  • Continue to strengthen relationships for future deals

Delivering our strategy in 2018: Focus on customers

Anticipating and serving customer needs, faster

Our collaboration with Abcam has been extremely successful. Abcam’s custom products team developed new antibodies for challenging targets. The antibodies are not only high-quality, but Abcam’s team has managed to significantly reduce the lead time of development, helping to speed up our research. Indeed, without our collaboration with Abcam, our work would have taken at least six months longer.

Dr Feng Shao
National Institute of Biological Sciences, Beijing, China
A relentless focus on improving quality

As with all protein research, our work in epigenetics requires highly sensitive and specific antibodies to ensure consistent and clear signals. We have worked with Abcam’s recombinant RabMab® antibodies in the past and value their best-in-class quality and performance, which provides confidence in our research.

Professor Jinzhong Qin
Nanjing University, Nanjing, China
Innovating in immunoassays

Abcam enabled us to further research into cancer which could see patients get earlier treatment. Abcam’s FirePlex® microRNA platform has been a vital part of our research. Not only have I been able to speed up my research and reduce the use of precious sample requirements, but we have managed to identify a key cancer biomarker.

Jordan L Plieskatt
Department of Microbiology, Immunology, and Tropical Medicine, The George Washington University, USA
Extending our services for diagnostic and therapeutic antibody customers

We have been working closely with Abcam for several years now to help develop antibodies for our assays. Critical to our partnership is the trust we place in Abcam to provide us with high-precision antibodies suitable for the stringent standards required in clinical use.

Koen Dewaele
CEO, ADx NeuroSciences, Belgium

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