Abcam plc Annual Report and Accounts 2011 Delivering continued growth Abcam plc Annual Report and Accounts 2011 Performance highlights > Revenue increased by 17.1% to £83.3m (2010: £71.1m) > Pre-tax profits increased by 25.1% to £32.3m (2010: £25.8m) before costs of £0.2m (2010: £nil) 83.3 associated with the acquisition of MitoSciences Inc Revenue (£m) > Product range grew by 16.9% to 73,652 antibodies and related products (2010: 63,010) > Sales of non-primary antibody products increased by over 50% and represented 8.5% of sales (2010: 6.4%) 32.1 > Completed the acquisition of MitoSciences Inc in May 2011, Profit before tax (£m) a leading provider of mitochondrial research tools, based in Oregon, USA > Strong focus on addition of product characterisation data during the year, with a doubling of images added by the 13.23 in-house production facility or specifically commissioned Earnings per share (pence) from third parties > Net cash and short-term investments at 30 June 2011 of £55.6m (2010: £40.2m) > Basic earnings per share (EPS) increased by 23.0% to 13.23 pence per share (2010: 10.76 pence*) > Recommended final dividend increased by 30.0% to 3.800 pence per share (2010: 2.922 pence*), giving a total increase in dividend for the year of 31.1% to 5.250 pence (2010: 4.006 pence*) * As adjusted for five for one share sub-division which took place on 15 November 2010. Contents Visit us online Overview Financial statements IFC Performance highlights 50 Independent auditor’s report Access our annual 01 The Abcam story 52 Consolidated income statement report microsite: 02 What we've achieved Consolidated statement of 04 What's next comprehensive income 06 Chairman’s report 53 Consolidated statement of changes in equity Business review 54 Consolidated balance sheet 08 We deliver www.abcamplc.com/ 55 Consolidated cash flow statement 10 Chief Executive Officer’s review 56 Company balance sheet reports 18 Financial review 57 Company cash flow statement Governance Company statement of 22 Board of Directors comprehensive income 24 Corporate directory 58 Company statement of changes 25 Directors’ report in equity 32 Corporate governance statement 59 Notes to the consolidated 39 Directors’ remuneration report financial statements 49 Statement of Directors’ responsibilities IBC Our staff Abcam plc Annual Report and Accounts 2011 01 How we’re delivering p08 Overview Abcam was established 13 years ago with the mission to build the largest catalogue of the best antibodies in the world. Business review Our eCommerce platform has revolutionised the buying of antibodies and we are now a market How we’re adding product features leader in this space distributing to more than 88 countries worldwide. Moving forward, we will build on this success as we expand our product range p13 into the broader market of protein research tools. Our customers are research scientists who need high performance products with detailed technical specifications. Our information-rich products, together with expert customer support and fast delivery continues to make us the researcher’s choice. Governance Our focus now is on building on this success as we expand our Financial statements product range into the broader market of protein research tools. Throughout this report Abcam employees explain some of our p14 current key initiatives... How we’re improving 02 Abcam plc Annual Report and Accounts 2011 What we’ve achieved Key Performance Indicators (KPIs) Abcam has become the as at 30 June market leader in research Number of products in catalogue antibodies through its 73,652 73,652 We constantly add new 63,010 commitment to product products from a variety of suppliers as well as 52,400 those developed quality and associated data, in-house, to bring our customers the best products available, constant innovation in its regardless of source. operational efficiency and dedication to customer support. 09 10 11 Nurturing employee excellence has been a key factor in achieving this and we currently boast a team of more than Website response time (seconds) 50 in-house PhDs. 1.81 1.65 1.65 We aim to achieve Our business model relies on the following a website response key elements: time of less than two 1.29 seconds on average across abcam.com globally. The increase high quality products proven eCommerce model this year was due to a recalibration of the secure supply strategy strong brand and calculation in order customer base to better reflect the rapid global delivery end-user experience. www.abcam.com 09 10 11 SUPPORTING THE SCIENTIFIC COMMUNITY Our close links with the scientific community mean we are able to keep in touch with research trends and source products that support these developments. Scientific expertise Enhanced services In addition to our own team of To further our support offering, this scientists, we work with a range of year we increased the length of our industry-leading scientific partners product guarantee from 120 days to six to offer an unrivalled set of data and months, improved order cut-off times multi-media technical resources, and extended technical support hours including a yearly programme of in key regions giving greater flexibility world-class conferences. to customers globally. Abcam plc Annual Report and Accounts 2011 03 Sales of non-primary antibody Number of publications products as a % of total sales referencing Abcam products1 Website uptime 8.5% 17,417 99.97% 99.94% 8.5% 17,417 99.94% 99.92% Overview We are seeing a Supporting data such as Downtime in 2011 good take-up of references, images and amounted to 285 minutes, 6.4% our growing range of 6.0% reviews are crucial for of which 233 minutes non-primary antibody our customers to find occurred in one ISP 10,825 products, such as the right product, so we outage. The disaster secondary antibodies, actively seek publication recovery website has kits, proteins, peptides references and add these 8,224 been isolated from the and lysates. to our product data sheets. main public website so that future loss of connectivity of our web host is less likely to result in website downtime. 1 Source: PubMed Central 09 10 11 (www.ncbi.nlm.nih.gov/pmc). 09 10 11 09 10 11 Orders fulfilled directly Business review Operating profit to revenue Number of debtor days at year end from stock (average for year) 38.1% 35 79.0% 76.5% 36.1% 33 74.3% 38.1% 35 32 79.0% Continued tight We expect debtor days Having units in stock management of costs to increase gradually available for immediate 2 has enabled us to 27.9% over time in line with shipment is a key further improve practice in local markets component in our operating margins. as the geographic spread objective to improve of sales widens, whilst delivery times maintaining our tight for customers. credit control processes. 2 Including £1.1m impairment of tangible assets associated with the higher volume production processes which will not be implemented. 09 10 11 09 10 11 09 10 11 Governance DISTRIBUTING INTERNATIONALLY The speed with which we are able to bring products to market and deliver them to customers is one of our core strengths. Our customers Our suppliers Our offices Financial statements We have developed an international We manufacture our own products Our five regional offices and distributor customer base and ship to over 88 in two specialist facilities, as well as network mean we have global reach countries. We continue to explore sourcing from over 300 partners. and can provide a localised service distribution channels to attract new This way we are able to offer scientists offering. Abcam is headquartered in customers and extend our global reach. the newest and best research tools Cambridge (UK) with US offices in Our operational model allows us to offer available globally regardless of source. Cambridge (MA) and Eugene (OR) and next day delivery in most regions. Far East offices in Tokyo and Hong Kong. 04 Abcam plc Annual Report and Accounts 2011 What’s next Abcam’s mission is to become the leading provider of protein research tools. The next phase of growth will come from our continued focus on core markets and customers, expanding our product offering and strengthening our geographic penetration. Our key objectives are to: We will achieve these through: > Continue to add new and high quality primary antibodies to > Proven supplier management the catalogue strategy with effective cost control > Increase our range of non-primary > Sound market intelligence to antibody products such as proteins, make informed decisions on peptides, immunoassays and kits new product opportunities > Use our eCommerce model > Developing the Abcam brand and distributor network to expand beyond antibodies market reach in key regions Turn to the Business p08 Review to find out more Some near-term activities... Support Efficiency Information Increasing localised customer support Continued investment in the operational Modernising the website to reflect our through virtual and regional offices. model to support non-primary product offering beyond antibodies. antibody products. Abcam plc Annual Report and Accounts 2011 05 Geographic markets in focus Percentage of sales in 2010 Percentage of sales in 2011 The Americas £31.8m Japan £6.8m The Americas £36.9m Japan £9.0m A focus on China Europe £19.8m HK/China £2.8m Europe £21.8m HK/China £3.9m Overview UK £5.6m Rest of the World £4.3m UK £6.3m Rest of the World £5.4m China has seen strong growth since a local office was established in 2009. The number of sub-dealers has increased to 16 who now support 12 provinces, giving better geographical coverage in key regions.