Global antibody supplier Abcam reported underwhelming full year numbers for the period ended 30 June with revenues up 11.4% to £259.9m and adjusted profit before tax up just 2% to £83.9m, which whacked the shares 9% lower to £11.28.

There was a non-cash impairment charge of £12.8m relating to historic enterprise resource planning development costs, but even excluding these charges the adjusted operating margin shrank to 32.3% from 34.9% last year.

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

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The company has guided for revenue growth of 9% to 11% next year with an operating margin in the 25% to 28% range, impacted by increased spending to upgrade its information technology systems.

NEW FIVE YEAR PLAN

In order to maximise future growth opportunities the company has conducted an in-depth review of the business, and its new goals include revenue growth of 11.6% to 14% per year and an operating margin in the low-thirties percentage.

If successful, meeting these goals will see the company sustain its global leadership in antibody innovation, drive expansion into adjacent complimentary market opportunities and build an automated, scalable platform.

However, in order to deliver £450m to £500m of revenues in five years’ time the company expects to spend £175m to £225m of incremental capital.

A higher level of spending to generate a lower level of growth may not be what the market was looking for, adding to the selling pressure.

The company is recommending a dividend of 8.58 pence, which takes the full year payout to 12.13 pence, representing a 1.1% increase.

 

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Issue Date: 09 Sep 2019