VCT Industry Report 2015-16

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82
2005, 1st Investment (£1.5m)
Pharmaceuticals
Cambridge
820
Abcam PLC produces and distributes research-grade
antibodies via an online catalogue. The Company’s customers
include universities, research institutes, and pharmaceutical
and biotechnology companies in countries around the world.
The company’s focus is on protein research tools. It has built
the most effective antibody distribution platform worldwide,
twinning in-house production and OEM sourcing from
over 400 suppliers with an e-commerce platform, efficient
fulfilment and good customer service.
RATIONALE FOR INVESTMENT: Abcam has a strong track
record of delivering earnings growth and is one of the few AIM
companies which has consistently delivered earnings growth
in each of the last five financial years.
Market share is still relatively low (c. 20%) providing strong
growth opportunities – a strong balance sheet with net cash of
over £58m and strong free cash generation will enable Abcam
to invest in future growth both organically and via acquisition.
GROWTH IN REVENUE AND EMPLOYMENT: Product
revenues continue to grow at more than 15% per annum
providing opportunities to expand the team.
Abcam now employs over 820 people, has 9 global subsidiary
offices and sells into over 130 countries worldwide.
2007, 1st Investment (£700k)
Pharmaceuticals
York (UK)
60
Animalcare Group PLC markets and sells a wide range of
pharmaceutical and other premium products and services
to vets and vet wholesalers. Animalcare is a leading supplier
of generic veterinary medicines and animal identification
products to companion animal veterinary markets. It develops
and sells goods and services to veterinary professionals
principally for use in companion animals; operating through
UK wholesalers and distribution and development partners in
key markets in Western Europe.
RATIONALE FOR INVESTMENT: Animalcare is a dividend
paying, cash generative business that offers defensive growth
and is in the early stages of an investment phase to shift
towards a greater proportion of revenues from internally
developed veterinary pharmaceuticals.
The group has a strong balance sheet with cash balances of over
£5m which provides for continued investment in the business
together with sustainable dividend payments. Dividend
payments are well covered by earnings at almost 2x in FY14 and
is forecast to remain the case in FY15.
Continuing investment in new product R&D means that the
group’s earnings multiple over the next three years will remain
high reflecting the significant potential for earnings growth to
be generated in future years. Developing ‘enhanced generic’
drugs is expensive but offers the potential for greater returns
over the long term.
GROWTH IN REVENUE AND EMPLOYMENT: Animalcare
continues to perform well with its FY15 trading update
showing a 5.1% rise in group revenues to £13.54m, driven by
an 8.8% increase in Licensed Veterinary Medicines to £8.58m.
Animalcare reports its revenues and gross profit under three
operating segments; Licensed Veterinary (61% of revenue),
Animal Identification (19% of revenue) and Animal Welfare (20%
of revenue). The group consistently generates an operating
profit margin of c. 20% which is forecast to increase over the
next three years as the benefits of investment in new product
research and development are realised.
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