Abcam plc Interim Results for the Six-Month Period Ended 30 June 2023

Abcam plc (Nasdaq: ABCM) (‘Abcam’, the ‘Group’ or the ‘Company’), a global leader in the supply of life science research tools, today announces its interim results for the six-month period ended 30 June 2023 (the ‘period’).

FINANCIAL PERFORMANCE

* Excludes the amortisation of the fair value of assets relating to the inventory acquired in connection with the acquisition of BioVision at June 30, 2022.
** Adjusted figures exclude system and process improvement costs, amortisation of fair value adjustments, strategic review costs, EGM costs, integration and reorganisation costs, amortisation of acquisition intangible assets and share-based payments. Such excluded items are described as “adjusting items”. Further information on these items is shown below.

Commenting on the performance, Alan Hirzel, Abcam’s Chief Executive Officer, said:
“In the first half of 2023, we remained focused on supporting our global customers and meeting our business and corporate objectives. Our strategy has transformed Abcam to become a scale innovator and important catalyst in the global life science community.

The proposed acquisition by Danaher demonstrates external validation of our brand, business model, product quality, and market platform, while providing certain and significant value for our shareholders. Danaher’s operating company model allows us to continue to pursue our strategy, while harnessing the power of the Danaher Business System to ensure we remain the partner of choice for our customers.”

FY2023¹ & FY2024 OUTLOOK
Due to the pending acquisition, financial guidance has been suspended.

Analyst and investor meeting and webcast:
Due to the pending acquisition, the conference call and webcast have been cancelled.

About Abcam plc
As an innovator in reagents and tools, Abcam's purpose is to serve life science researchers globally to achieve their mission faster. Providing the research and clinical communities with tools and scientific support, the Company offers highly validated antibodies, assays, and other research tools to address important targets in critical biological pathways.

Already a pioneer in data sharing and ecommerce in the life sciences, Abcam's ambition is to be the most influential company in life sciences by helping advance global understanding of biology and causes of disease, which, in turn, will drive new treatments and improved health.

Abcam's worldwide customer base of approximately 750,000 life science researchers’ uses Abcam's antibodies, reagents, biomarkers, and assays. By actively listening to and collaborating with these researchers, the Company continuously advances its portfolio to address their needs. A transparent program of customer reviews and datasheets, combined with industry-leading validation initiatives, gives researchers increased confidence in their results.

Founded in 1998 and headquartered in Cambridge, UK, the Company has served customers in more than 130 countries. Abcam's American Depositary Shares (ADSs) trade on the Nasdaq Global Select Market (Nasdaq: ABCM).

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¹ FY23 USD budgeted rate GBP:USD 1.20; H1 2023 average USD reported rates GBP:USD 1.23 (H1 2022, GBP:USD 1.31); July-August 2023 average USD reported rates GBP:USD 1.28 (H2 2022 GBP: USD 1.17).

Forward-Looking Statements
This announcement contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by the following words: “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “seek,” “believe,” “estimate,” “predict,” “potential,” “continue,” “contemplate,” “possible” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. They are not historical facts, nor are they guarantees of future performance. Any express or implied statements contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements, including, without limitation, statements regarding: Abcam's portfolio, ambitions, market opportunities, and Danaher’s and Abcam’s ability to complete the transaction on the proposed terms or on the anticipated timeline, or at all are neither promises nor guarantees, but involve known and unknown risks and uncertainties that could cause actual results to differ materially from those projected, including, without limitation: risks and uncertainties related to securing the necessary regulatory approvals and Abcam shareholder approval, the sanction of the High Court of Justice of England and Wales and satisfaction of other closing conditions to consummate the transaction; the occurrence of any event, change or other circumstance that could give rise to the termination of the definitive transaction agreement relating to the transaction; risks related to diverting the attention of Danaher’s and Abcam’s management from ongoing business operations; failure to realize the expected benefits of the transaction; significant transaction costs and/or unknown or inestimable liabilities; the risk of shareholder litigation in connection with the transaction, including resulting expense or delay; the risk that Abcam’s business will not be integrated successfully if applicable or that such integration if applicable may be more difficult, time-consuming or costly than expected; Danaher’s ability to fund the cash consideration for the transaction; risks related to future opportunities and plans for the combined company, including the uncertainty of expected future regulatory filings, financial performance and results of the combined company following completion of the acquisition; disruption from the transaction, making it more difficult to conduct business as usual or maintain relationships with customers, employees or suppliers; effects relating to the announcement of the transaction or any further announcements or the consummation of the acquisition on the market price of Abcam’s American depositary shares; regulatory initiatives and changes in tax laws; market volatility; other risks and uncertainties affecting Danaher and Abcam; and as a foreign private issuer, we are exempt from a number of rules under the U.S. securities laws and Nasdaq corporate governance rules and are permitted to file less information with the SEC than U.S. companies, which may limit the information available to holders of our American Depositary Shares (“ADS”); and the other important factors discussed from time to time under the caption "Risk Factors" in Abcam's Annual Report on Form 20-F for the year ended December 31, 2022 (“Annual Report”) and in any subsequent reports on Form 6-K, each of which is on file with or furnished to the U.S. Securities and Exchange Commission ("SEC") and which are available on the SEC website at www.sec.gov, as such factors may be updated from time to time in Abcam's subsequent filings or furnishings with the SEC. Any forward-looking statements contained in this announcement speak only as of the date hereof and accordingly undue reliance should not be placed on such statements. Abcam disclaims any obligation or undertaking to update or revise any forward-looking statements contained in this announcement, whether as a result of new information, future events or otherwise, other than to the extent required by applicable law.

Use of Non-IFRS Financial Measures
To supplement our audited financial results prepared in accordance with International Financial Reporting Standards (“IFRS”) we present Adjusted Operating Profit, Adjusted Operating Profit Margin, Adjusted EBITDA Margin, Total Constant Exchange Rate Revenue (“CER revenue”), which are financial measures not prepared in accordance with IFRS (“non-IFRS financial measures”). We believe that the presentation of these non-IFRS financial measures provide useful information about our operating results and enhances the overall understanding of our past financial performance and future prospects, allowing for greater transparency with respect to key measures used by management in its financial and operational decision making. These non-IFRS financial measures are supplemental in nature as they include and/or exclude certain items not included and/or excluded in the most directly comparable IFRS financial measures and should not be considered in isolation, or as a substitute for, financial measures prepared in accordance with IFRS. Further, other companies may calculate these non-IFRS financial measures differently than we do, which may limit the usefulness of those measures for comparative purposes.

Management believes that the presentation of (a) Adjusted Operating Profit, Adjusted Operating Profit Margin, Adjusted EBITDA Margin, and Adjusted Diluted Earnings Per Share provide useful information to investors and others as management regularly reviews these measures as important indicators of our operating performance and makes decisions based on them, and (b) CER revenue provides useful information to investors and others as management regularly reviews this measure to identify period-on-period or year-on-year performance of the business and makes decisions based on it.

Please see the following “Non-IFRS Financial Measures” for a qualitative reconciliation of non-IFRS financial measures presented in this Trading Update to their most directly comparable IFRS financial measures. We define:

• Adjusted Gross Profit as gross profit before taking account exceptional items.
• Adjusted Operating Profit as profit for the period / year before taking account of finance income, finance costs, tax, exceptional items, share-based payments, and amortization of acquisition intangibles. Exceptional items consist of certain cash and non-cash items that we believe are not reflective of the normal course of our business; and we identify and determine items to be exceptional based on their nature and incidence or by or by their significance (“exceptional items”). As a result, the composition of exceptional items may vary from period to period / year to year.
• Adjusted Operating Profit Margin as adjusted operating profit calculated as a percentage of revenue.
• Adjusted EBITDA Margin as adjusted operating profit before depreciation as a percentage of revenue.
• Adjusted Diluted Earnings Per Share as adjusted operating profit less net financing expenses and effective tax payments divided by fully diluted shares outstanding.
• CER as our total revenue growth from one fiscal period / year to the next on a constant exchange rate basis.

Quantitative reconciliations of Adjusted Gross Profit, Adjusted Operating Profit, Adjusted Operating Profit Margin, Adjusted EBITDA Margin, Adjusted Diluted Earnings Per Share and CER revenue to their respective most directly comparable IFRS financial measures of Operating Profit, Operating Profit Margin, Net Income, Reported Revenue and Diluted Earnings Per Share, can be found under the heading “Adjusted Performance Measures”.

Interim management report

Introduction
In the half-year period ended 30 June 2023, revenues of £203.2 million grew 5.5% CER and 9.7% on a reported basis. Adjusted operating profits increased 29% to £54.8 million (H1 2022: £42.6 million) and adjusted diluted earnings per share grew 20% to 16.8p (H1 2022: 14.0p).

The Company has cash of £79.0 million and net debt of £38.7 million (£300 million RCF less £120.0 million borrowed).

Financial review

1. Custom Products & Licensing (CP&L) revenue comprises custom service revenue, revenue from the supply of IVD products and royalty and licence income.

REVENUE
Revenue of £203.2 million (H1 2022: £185.2m) represents 5.5% CER growth.

GROSS MARGIN
Reported and adjusted gross profit of £154.9 million (H1 2022: £137.3m) equates to a reported gross margin of 76.2% (H1 2022: 74.1%). Adjusted gross profit in the prior comparable period differs from reported gross profit by £2.7 million impacted by the amortisation of the fair value of assets relating to the inventory acquired in the acquisition of BioVision.

OPERATING COSTS

Adjusted operating costs of £100.1 million (H1 2022: £97.4m) represents approximately 2% growth excluding depreciation.

On a reported basis, total reported costs were £127.0 million (H1 2022: £128.0m), a decrease of £1.0 million.

ADJUSTING ITEMS
Total reported expenses include the following adjusting items:

• £11.3 million from acquisition, integration, and reorganisation charges (H1 2022: £6.0m)
• £7.9 million relating to the amortisation of acquired intangibles (H1 2022: £8.9m)
• £7.7 million in charges for share-based payments (H1 2022: £13.0m)

Costs relating to the Oracle Cloud ERP project of £2.6 million were incurred in the prior period adjusting items.

Further details on adjusting items and a reconciliation between reported and adjusted profit measures are provided below.

NET PROFIT
Adjusted net profit was £39.1 million (H1 2022: £32.2m). Reported net profit was £16.8 million (H1 2022: £5.8m).

CASH
Cash of £79.0 million (period ended 31 December 2022: £89.0m).

On 7 March 2023, the Group replaced its existing Revolving Credit Facility (‘RCF’) with a new four-year RCF for an amount of £300 million. Outstanding borrowings net of fees was £117.7 million. We ended the period with net debt of £38.7 million.

ADJUSTED PERFORMANCE MEASURES
Adjusted performance measures are used by the Directors and management to monitor business performance internally and exclude certain cash and non-cash items which they believe are not reflective of the normal day-to-day operating activities of the Group. The Directors believe that disclosing such non-IFRS measures enables a reader to isolate and evaluate the impact of such items on results and allows for a fuller understanding of performance from period to period. Adjusted performance measures may not be directly comparable with other similarly titled measures used by other companies. A detailed reconciliation between reported and adjusted measures is presented below.

The following table presents reconciliation of profit for the period, the most directly comparable IFRS measure, to adjusted operating profit and includes the calculation of the adjusted operating profit margin for the periods indicated:

The following table represents a reconciliation of profit for the period, the most directly comparable IFRS financial measure, to adjusted profit for the periods indicated, which is used in the calculation of adjusted diluted earnings per share:

Looking forward
On 28 August 2023, Abcam announced that it has entered into a definitive agreement pursuant to which Danaher Corporation to acquire all of the outstanding shares for $24.00 per share in cash.

Alan Hirzel
Chief Executive Officer

Michael S Baldock
Chief Financial Officer

31 August 2023

Forward-Looking Statements
This announcement contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by the following words: “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “seek,” “believe,” “estimate,” “predict,” “potential,” “continue,” “contemplate,” “possible” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. They are not historical facts, nor are they guarantees of future performance. Any express or implied statements contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements, including, without limitation, statements regarding: Abcam's portfolio, ambitions, market opportunities, and Danaher’s and Abcam’s ability to complete the transaction on the proposed terms or on the anticipated timeline, or at all are neither promises nor guarantees, but involve known and unknown risks and uncertainties that could cause actual results to differ materially from those projected, including, without limitation: risks and uncertainties related to securing the necessary regulatory approvals and Abcam shareholder approval, the sanction of the High Court of Justice of England and Wales and satisfaction of other closing conditions to consummate the transaction; the occurrence of any event, change or other circumstance that could give rise to the termination of the definitive transaction agreement relating to the transaction; risks related to diverting the attention of Danaher’s and Abcam’s management from ongoing business operations; failure to realize the expected benefits of the transaction; significant transaction costs and/or unknown or inestimable liabilities; the risk of shareholder litigation in connection with the transaction, including resulting expense or delay; the risk that Abcam’s business will not be integrated successfully if applicable or that such integration if applicable may be more difficult, time-consuming or costly than expected; Danaher’s ability to fund the cash consideration for the transaction; risks related to future opportunities and plans for the combined company, including the uncertainty of expected future regulatory filings, financial performance and results of the combined company following completion of the acquisition; disruption from the transaction, making it more difficult to conduct business as usual or maintain relationships with customers, employees or suppliers; effects relating to the announcement of the transaction or any further announcements or the consummation of the acquisition on the market price of Abcam’s American depositary shares; regulatory initiatives and changes in tax laws; market volatility; other risks and un