Serving scientists, sustaining growth.

2018/19 Year in Review

"I am proud of what we have accomplished in 2019. Together, we successfully implemented our growth strategy to become a stronger partner for our customers. For our team, we continued to enhance our culture to be an even better place to work. For our shareholders, we delivered a solid financial performance, positioning our Company for an exciting future."

Alan Hirzel
CEO

Our Purpose: Empowering scientists to their next breakthrough

Our purpose – to serve life scientists to help them achieve their mission, faster – drives everything we do.

By providing life scientists with critical biological tools and reagents needed for research, drug discovery and diagnostics, we are helping advance scientific discovery, resulting in better health outcomes and improving lives. We recognise that we succeed only because we help our customers achieve their goals, faster. We are committed to increasing and improving the ways in which we are able to support life scientists and achieving this in a way that benefits our shareholders and our other stakeholders.

As we continue to execute our strategy to deliver sustainable performance and growth, our culture will help drive success.

We will – continue to dedicate ourselves to our customers, anticipating and responding to their needs in order to deliver an exceptional experience; be audacious in our approach to innovation and in finding solutions to existing and new biological questions; and earn trust by delivering quality products and services with agility and speed, executing on our plans and, at all times, acting responsibly and with integrity.

Dedicated to excellence

How Abcam’s scientists are helping the research community move closer to a cure for Parkinson’s disease.

Audacious innovation

How an audacious approach to innovation is helping advance research in rare disease areas with high unmet medical need.

Embracing agility

How an agile approach to new product development is helping increase our knowledge of epigenetics.

Operational and strategic highlights

  • All product categories growing above underlying market rates and all strategic performance targets achieved
  • Continued in-house innovation, with in-house product revenue growth of 13.6% (CER) and the introduction of the Group’s 18,000th recombinant antibody
  • Further enhancements to product quality through knockout validation, recombinant antibodies, and other quality initiatives
  • Ongoing development of our addressable market in custom products and licensing, with 57 new agreements entered into with biopharmaceutical and diagnostic partners and over 160 custom projects completed during the year
  • Implemented the financial and non-stock procurement modules of the Oracle Cloud ERP IT system
  • Successfully relocated to our new global headquarters
  • Acquisition of Calico Biolabs, expanding expertise in recombinant rabbit monoclonal antibody development

Financial highlights

Note:

Certain financial measures in this Annual Report and Accounts, including adjusted results above, are not defined under IFRS and are alternative performance measures as described on page 141. All adjusted measures are reconciled to the most directly comparable measure prepared in accordance with IFRS in note 7 to the consolidated financial statements

KPI performance

Recombinant antibody CER
revenue growth


22%
2018/19 target: 20%+

Immunoassay CER
revenue growth


22%
2018/19 target: 20%+

Transactional Net Promoter
Score (tNPS)


59%
2018/19 target: 57-67%

A global leader in the supply of life science research tools

Chairman’s statement

It is my pleasure to introduce Abcam’s 2019 Annual Report, which sets out the continued financial and strategic progress made by the company over the past 12 months, as well as our plans and priorities for the future.

Abcam has made good progress, both financially and strategically, over the past 12 months. We have continued to successfully implement our growth strategy whilst strengthening the organisation’s underlying capabilities to deliver further growth in the future.

Peter Allen
Chairman

CEO’s review: Sustaining long-term profitable growth

The life science industry is vibrant, with increased research funding and capital investment supporting collaborative and global discovery networks.

Those research discovery networks – spanning genomics, epigenetics, proteomics and metabolomics – are converting physical biology into data at an unprecedented rate at a time when we are approaching unconstrained computing power. The insights from this data are not fully realised, and yet this progress is already producing rapid advances in scientific discovery and improving patient lives. Indeed, we expect the impact of the endeavours of researchers today to redefine how we will be treated in the future.

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

Chief Executive Officer
Alan Hirzel

CFO’s review: Double-digit revenue growth delivered; continue to prioritise investment in long-term growth

Highlights

  • Total revenue increased by 11.4% on a reported basis and 9.2% on a constant exchange rate (CER) basis
  • Gross margin increased by 60 basis points to 70.5%
  • EBITDA margin of 32.4% (2017/18: 35.0%) and Adjusted EBITDA margin of 35.6% (2017/18: 37.9%), reflecting planned strategic investments made during the year
  • Reported operating profit margin of 21.6% (2017/18: 29.5%), after impact of non-cash impairment charge, and Adjusted operating margin of 32.2% (2017/18: 34.1%)
  • Reported diluted EPS decreased by 27.8% to 21.8p as a result of the non-cash impairment charge and adjusted diluted EPS grew 0.6% to 32.6p
  • Strong cash generation continued, with net cash inflow from operating activities of £69.3m (2018/19: £63.3m)
  • Proposed final dividend of 8.58 pence (2017/18: 8.58 pence), taking the proposed total annual dividend to 12.13 pence per share, an increase of 1.1%
  • £200m Revolving Credit Facility secured, providing additional flexibility for future corporate transactions

The Group delivered another solid financial performance in 2019, underpinning our continued investment in long-term growth

Chief Financial Officer
Gavin Wood

Strategy at a glance

Our strategy is designed to increase growth and improve our long-term financial performance.

An overview of the strategic and operational milestones reached in 2018/19 and our future priorities are provided in the following tables:


2018/19 priorities

  • Develop new products focused on high-value areas, based on customers’ research needs
  • Enhance our product validation and raise product quality standards across the catalogue
  • Implement the next phase of our China growth strategy

What we achieved

  • Delivered primary antibody revenue growth ahead of the global market growth rate
  • Published over 7,000 high-performance recombinant antibodies, including new formulations, increasing our range to over 18,000
  • Further enhanced our target selection process to increase the success of new products
  • 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
  • Further expanded electronic catalogue connections to large-volume customers

2018/19 priorities

  • Grow our immunoassay business in line with multi-year aspiration
  • Expand the number of CP&L ‘Abcam Inside’ projects and framework
    agreements
  • Launch teams to develop one to two new capability areas

What we achieved

  • Published over 250 new SimpleStep ELISA® immunoassay products on the catalogue
  • Further developed FirePlex® multiplex platform, validating over 170 pairs of antibodies and launching a high throughput product (Fireplex®-HT) to simplify and speed up workflows
  • Continued to expand addressable market in custom products & licensing, including completing over 160 projects and executing over 50 agreements with pharmaceutical and diagnostic development partners
  • Launched protein science team to expand our recombinant protein production capability

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

  • Successfully transitioned the financial and non-stock procurement modules of the Group’s Oracle ERP system
  • Successfully launched a global employee share ownership scheme, with strong employee take up of 88%
  • Completed the construction of our global headquarters on the Cambridge Biomedical Campus on budget
  • Further investment in our global teams, including corporate development, product development, digital marketing and global supply chain and manufacturing functions – including new SVPs of Corporate Development and Supply Chain and Manufacturing

2018/19 priorities

  • Continue to realise productivity gains
  • Move to direct distribution in at least one more market

What we achieved

  • Identified and delivered operating efficiencies and productivity gains
  • Continued to increase sales of higher margin products, supporting an increase in gross product margin of 0.6%, to 70.5%
  • Delivered our new global headquarters in the UK on budget
  • Executed contingency plans to ensure customer disruption is minimised in the event the UK leaves the EU without a withdrawal agreement

2018/19 priorities

  • Continue to strengthen relationships for future deals

What we achieved

  • Appointed new SVP Corporate Development to lead delivery of acquisition strategy
  • Completed the tuck-in acquisition of Calico Biolabs
  • Entered £200m RCF, providing additional financial flexibility for future corporate transactions
  • Continued to strengthen relationships and expand the opportunity set across the industry

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