Full Year 2022 Abcam PLC Earnings Call
are available in the company's press release issued today.
Finally, if you haven't already received them, you can download a copy of the slides used in today's presentation at the company's website, www.corporate.appcam.com forward slash investors forward slash reports dash presentation.
Our agenda is set forth on slide three. Alan will be introducing Afghan before Michael discusses our first half 2022 financials.
We will then move to Q&A.
I'm now pleased to turn the call over to our CEO , Alan Hersl. Alan, please go ahead.
Thank you, Tommy, and welcome to the team at ASCAM.
Good morning and good afternoon, everyone. Welcome to our interim results conference call for the period ended 30 June 2022.
In my prepared remarks today, I will provide a brief overview of the company, review our strategy and talk about our implementation over the past two and a half years.
Once I've done that, I'll hand over to Michael.
Our mission is to enable researchers to achieve their mission faster and ultimately for their work to improve health and sustainability measures for us all.
We are motivated each day to make an impact on discovery researchers who are working in the life science industry trying to understand how biology works, how that might inform our view on disease or some important aspect of healthcare systems or life science systems.
We focus on delighting our customers with highly sensitive
highly specific products of the highest quality.
We enable reproducible results the first time, every time.
We are learning that the improvements that we are enabling for discovery research are also accelerating the pace of translation of these discoveries to clinical outcomes for patients.
Customers believe in ASCAM's mission, too, as you'll see from the quote from this well-known global biopharma customer who's excited to be using one of our products in their biomarker research to stratify patients with narrow to degenerative disease.
Turning to slide 5.
As we think about our purpose, we think about how we can influence research decisions worldwide and our speed and effectiveness within the addressable market, our products and services are helping AFCAM gain market share in an $8 billion market across a wide range of needs dependent on the stage of life science activity.
The history of the company and the core strength of the business has been supporting basic and applied protein and biological discovery as shown on the left.
There are roughly 800,000 researchers around the world, all of whom know AppCam's brand.
Most will have purchased our products in the last year, and we continue to support their discovery needs.
We have also established partnerships with organizations that fund and direct research to eradicate disease or advance understanding in certain therapeutic areas.
One example of this type of partnership is a long-standing relationship we have with the Michael J. Fox Foundation focused on Parkinson's disease.
The Foundation works with us to be sure that their research tools are of a high quality, reproducible results and can scale for broader clinical applications.
This is a common theme underpinning how we win in the market.
As our business has evolved, we have expanded to serve customers further downstream beyond the discovery.
These customers are primarily active in translational biology as they seek to take discoveries to clinical application in markets.
Here, customers are looking to take their early discovery projects and create relevant products for improving human health.
Their needs have encouraged Abcam to build capabilities such as recombinant antibodies.
larger production volumes, and quality management systems to help customers pursue going further downstream into clinical applications.
Finally, we will look to make our content available for in vitro diagnostic applications.
At present, there are more than 100 instances where customers are using ABCCAM products and technology to determine the best course of action for patient care.
Turning to slide six, you can see that
evolution of APKEM. With our foundation as a reseller of primary antibodies into the research end market, we have expanded from that historic core.
As we learn from our customers, we focus on growth through expansion into product adjacencies or extensions of our served markets enabling us to earn a greater share of wallet and drive steady revenue growth.
At our November 2019 Capital Markets Day, I described high growth adjacencies we would pursue over the coming five years.
including conjugation, protein labeling, ELISA kits.
recombinant antibodies, and engineered cell lines.
which are just a few examples where our customers are leading us to growth.
These product areas have largely been developed through a combination of tuck-in acquisitions and building new capabilities from them.
Investments we have made in these capabilities are making it possible for AvCam to serve and expand our addressable market while gaining market share.
As shown on slide 7, AvCam's current products and capabilities allows the business to serve customers further downstream in the Life Science value chain.
One of the pain points for customers working on drug discovery is the significant time they spend optimizing and changing reagents as they make the transition from early discovery target identification to assay development, screening up to lead optimization, and other applications. Center for Hennessy Services
We are building a portfolio of capabilities, products, and services that make these transitions faster and less costly for the biotech and pharmaceutical industries.
Slide 8 illustrates the significant transformation of our portfolio arising from these changes that I've just described.
From 2012 to 2021, we have seen a dramatic change in product mix.
While the core of our business and most of our revenue growth is still in primary antibodies, we've substantially expanded our portfolio, as I described.
Focused, strategic investments in assays, proteins, sample preparation, and cell engineering are contributing to our growth and market share gain.
The biggest strategic change in the company has been and continues to be our evolution from a supplier of third-party products to a focused product innovator that derives the majority of our revenues and growth from in-house products.
Over 65% of our most recent revenue has come from products designed and manufactured at Out rated kem.
Geographically, we broaden beyond our founding market in the United Kingdom into the United States, China, and Southeast Asia.
PaaS added considerable growth and breadth to the company, and we believe the mix fairly represents global life science activity.
Finally, our investments in innovation and quality have led us to diversify our customer mix.
Our heritage was mostly in small volume sales to academic customers.
But as you see here, the mix now includes significant sales to higher growth biopharma segment customers.
At the end of our 2019 Capital Markets Day, we presented our investment plan to remove constraints in the business and double revenues to nearly 500 million pounds.
On slide 9, you see the broad goals that described what we had to do to make it possible for us to achieve that ambitious target.
We were determined to increase our innovation capabilities and new product development capacity.
improve our proposition to biopharma,
enhance the customer's experience with better IT and e-commerce platforms?
expand our operational footprint, and where we could, acquire to accelerate progress on our strategy.
Looking back over the last two and a half years, we have completed most of the planned investments and achieved milestones as expected.
We've increased our new product development by over 50% in the past three years, resulting in ongoing revenue growth with global manufacturing capacity and footprint beyond the UK and China to the US.
This includes the buildup of our supply chain and logistics infrastructure to support this globally.
We have strategically increased our investment in research and development. We have prudently deployed capital for strategic M&A, thereby increasing our product portfolio and new product development capabilities.
Things have not always gone as smoothly as we might have hoped, and COVID certainly created implementation challenges and changed the phasing we expected in our financial plan from 2019.
But we're confident that these completed investments will enable us to sustain market share gain and durable profitable revenue growth in the future.
AB-CAM continues to expand its leadership in research antibodies as shown in slide 10.
Our share of citations in the SciTAB database has grown by over 800 basis points since 2015.
Our focus on in-house product development has and continues to pay dividends for our key stakeholders.
Our in-house, in other words, made by Abcam, recombinant antibody portfolio is now over 29,000 products.
We control the full supply chain and can deliver higher quality and service levels important to our customers, thereby improving our brand reputation.
Let's move to slide 11. Our expansion from our core into newer growth adjacencies continues to support share gains within our addressable market.
Assays, protein, and cell engineered lines have been key drivers of growth with an annualized compound annual growth rate of over 50% since 2019.
We have strengthened our conjugation chemistry capabilities, and we continue to make progress expanding our catalog.
We are pleased to report that new product introductions over the past three years now account for a rising part of our sales.
To continue this level of growth, we've expanded our operational footprint to remove that as a constraint mentioned earlier.
Whilst there's no single customer or product that contributes materially to AvCam's financial success, we want to share an example of one of the hundreds of thousands of customer stories that are making us successful.
Slide 12 shares one example where AB-CAM is supporting the transition of basic research into clinical success.
The customer is Volition, a multinational epigenetics company primarily focused on human diagnosis and monitoring through their novel approach to detecting nucleosomes in cancer and n GR Emma V
which is the body's natural inflammatory response to an underlying condition.
Volition needed antibodies against these novel biomarkers, and they chose Abcam as a partner.
The antibodies we provided in this case were already available to discover researchers from our catalogue website.
Having immediate access to highly validated antibodies that can accelerate development for clinical products is a real-world advantage to customers like Volition that are on a clinical mission.
With Felician's further diagnostic validation work, we are both hopeful of achieving clinical success together as Felician moves its products through regulatory pathways.
in Europe , and FDA in the United States.
Slide 13 describes the path we've undertaken to move to a more scalable and innovative digital platform within AppCam.
We are replacing legacy systems that got the business underway as an ecommerce company over 20 years ago.
But we're also establishing a path to bring more innovation to the customer experience and make more of our data.
Most of the transition from legacy systems has now taken place, and we have just recently updated our sales and distribution systems.
What remains is the final step to upgrade our ecommerce platform, and that will take place later this year.
Both of these give us the potential for a better digital experience in the future.
on slide 14.
I'm proud of the business that we've built and continue to approve upon at AppChem.
We have an extraordinary and dedicated team of employees.
We have focused our energy on adding to our capabilities through hiring and retaining the right talent and building and maintaining the right culture for our success.
We are pleased to be recognized once again as a top employer in the United Kingdom by Glassdoor.
Our people are really our secret sauce and they drive AppCam success.
Nowhere was this more true than with our China team during the recent lockdowns in Shanghai.
And I pay special tribute to everyone who worked together as one team throughout those difficult months during the COVID lockdown in China.
We continue to focus on making ABKM an inclusive employer, and we are making progress on our diversity and inclusion agenda.
For example, we've launched seven employee resource groups across key employee areas of interest and we've hired our first head of diversity and inclusion.
Finally, we're pleased that our ESG, Environmental, Social and Governance efforts, highlighted by our first impact report released earlier this year.
Before handing it over to Michael, I want to conclude on slide 15 with a brief review of where Afghan stands today.
We have built a global life sciences company with market-leading innovation capabilities.
This foundation is enabling us to bring high quality products that generate reproducible scientific results the first time, every time.
The outcome of our strategy will enable durable organic growth and strong operating margins.
Finally, in recent weeks, we've spoken to many of our top shareholders about delisting from the AIM market in the UK, leaving us with only our listing on NASDAQ.
Based on their overwhelming support, we plan to call an extraordinary general meeting in November to approve this process.
Thank you for your kind attention today. I'll now pass it over to Michael.
Thank you, Alan. Good morning and good afternoon, everyone.
I'll take you through the key components of our income statement, including in-house revenues and operating expenses, and finally guidance. We'll then move to the Q&A portion of our call.
On slide 17, I want to highlight five key financial metrics that are indicators of the successful implementation of our strategy.
All of my commentary today will compare first-hand results for the period ended 30 June 2022 to its comparable period, the sixth month, ended 30 June 2021.
As a reminder, our fiscal year is now the calendar year ending December 31st.
Total revenues in the first six months were 185.2 million pounds, up approximately 20% on a constant exchange rate basis, and up approximately 23% on a reported basis, with favorable foreign exchange tailwinds accounting for approximately 3% of reported growth, largely as a result of the pound weakening against the US dollar and Chinese renminbi.
Overall, in-house revenues were the key driver of our results, with 37% revenue growth on a constant exchange rate basis.
In-house sales, defined as AB-CAM-produced catalog products, including BioVision, plus custom products and licensing, CP&L, now represent 67% of reported total sales.
The period contained a full six months of revenues from the acquisition of BioVision. Recall, BioVision was a third-party supplier before the acquisition.
and previous sales of BioVision products were accounted for as third-party revenues, but are now included in in-house sales in this app.
We estimate that BioVision sales incrementally benefited reported revenues by mid-single digits, thereby resulting in approximately mid-teen organic sales growth in our core business.
Moving to adjusted gross margins, we experienced a 420 basis point expansion to 75.6% as compared to 71.4% in the period before.
Margins benefited from in-house product mix, the inclusion of BioVisions, and ongoing commercial activities.
Foreign exchange negatively impacted adjusted gross margins by approximately 20 basis points.
Our adjusted operating profit margin increased by 540 basis points to 23%, as we benefited from strong gross margin expansion and approximately 120 basis points of operating leverage driven by slower cost growth when compared to the second half of 2021.
Looking at foreign exchange, we experienced a modest favorable impact of approximately 20 basis points driven by our considerable UK operating costs as compared to the US and China currencies mentioned earlier.
Adjusted Earnings per share was 14 pence per share, up 97% from last year, despite a higher effective tax rate of approximately 21%.
Finally, as our margins improve, so has our return on capital employed to 8.8%.
This estimate is calculated on a rolling 12-month basis, and I'd like to note that BioVision's investment is fully included in the base, but returns are for the 8 months, reducing the Meggers return on capital employed for the period.
Let's move to slide 18 to review catalog revenues.
Catalog sales exclude revenue from custom products and licensing.
It includes both in-house and third-party sales.
The Americas, representing approximately 43% of catalog sales, grew 31% at constant exchange rates.
Revenues in EMEA, which represent 26% of catalog sales, grew 13% at constant exchange rates.
China, which represents 17% of sales, reported growth of 11% on a constant exchange rate basis.
In the period we reclass sales from Hong Kong into China, excluding the Hong Kong reclass, high sales growth would have been high single digits impacted by COVID lockdowns.
From a product perspective, overall antibody sales represent nearly two-thirds of our catalog revenue and continue to benefit from a broad customer base with increasing demand by biopharma customers for carrier-free formulations and a growing product portfolio.
Assay sales, representing approximately 25% of catalog sales, were driven by strong demand for our in-house assay technology, largely from biopharma customers.
Customers evaluate suppliers based on ease of use, quick, consistent results, and easy scale-up for their workflows.
These are common themes that enable AppCam to win in the market.
Our protein portfolio represents approximately 14% of catalog sales.
Here, our products are focused on cytokines.
small proteins secreted to simulate and communicate between cells, and growth factors used to grow and maintain cells and culture.
On slide 19.
You can see that in-house catalog revenues were a 109.5 million pounds, up 40% on a constant exchange rate basis.
Our results continue to benefit from favorable trends as we expand into adjacent products, as well as the inclusion of BioVision.
Recombinant antibodies continue to benefit from demand across all customer segments enabled by our batch-to-batch consistency, validation data, and coverage across thousands of relevant targets.
Assay sales were driven by our Simple Step ELISA kits and the inclusion of BioVision.
We win by serving our customers with our extensive and growing portfolio of in-house products, offering high quality, ease of use and consistent supply.
Life science research, in particular bioharma's investment into cell and gene therapies, have been a key driver of our protein cytokine use from the bench to the clinic, especially in cell-based therapies.
As our rate of investment has slowed, our cost growth in our base business has moderated compared to the second half of 2021's. Comparable growth is seen on slide 20.
In the interim period, we increased the build-out in manufacturing and supply chain.
In addition, we had higher IT costs,
completing our digital roadmap, and experience higher travel costs as compared to the lull in travel we experienced during COVID.
Looking at 2023, we currently anticipate higher than typical personnel costs, but expect ongoing leverage as we look to deliver on our five-year commitment by 2024.
Let's move to slide 21.
We are reiterating our full year revenue growth and organic revenue growth guidance as presented earlier this year.
We delivered on our first half revenue and adjusted operating margin expansion commitments despite challenges from the China COVID lockdowns that reduced sales.
The situation is dynamic and recent headlines have gotten worse, but we continue to be positive about the outcome for the full year 2022.
Looking at the impact from foreign exchange rates, GBP vs. USD and Chinese Renminbi, we expect revenue tailwinds, a nominal negative impact on gross margins, but modest adjusted operating profit tailwinds consistent with the first half of 2022.
We are reiterating our longer-term targets for the calendar year 2024.
This concludes our prepared remarks. I'd like to turn the call back over to the operator to begin our question and answer session. Is this going to take an neuroscience lecture first at our operator?
Thank you.
As a reminder, if you would like to ask a question, please press star then 1 on your telephone keypad.
If you change your mind at any time, please press star 2.
As a reminder please ask one question and then one follow up.
Our first question on the phone line comes from Tejas Savant of Morgan Stanley . Your line is open.
Thank you for taking the time. This has been Mark Pitejos. Just two quick ones from me. On China, you noted the conditions were forming in line, but the incremental headwind seemed to be coming out a little bit stronger with the news coming out in the region. So I was just wondering, can you kind of tell us what you're seeing in China and if you're seeing any sort of bifurcation between the country between academic and biobama? And what are your expectations for the rest of the year and heading into 23?
Thanks for the question on China. It's a pretty fluid environment as long as they have the zero tolerance policy in place.
Our expectation is that any province or any city could go into lockdown at any time because
That's just the nature of how the policy will meet the realities, and that's what we've seen so far.
you know, for us, the...
The most important thing that we had going for us throughout the first half was
Our logistics manufacturing operations were in Hangzhou, and Hangzhou was able to operate throughout. So we were able to carry on and support life science researchers in both academic and biopharmaceutical settings in China through that period in the regions that weren't locked down, and that continues to be true today.
But our expectation is to remain prepared for the uncertainties of how China unfolds until there's a different policy.
Thank you for that, Alan. And then in terms of your expectations for academic funding for the remainder of the year, specifically in the EU, are there any concerns for academic research funding being crowded out as governments prioritize substantially energy costs? And what could that mean for your business? You are basically Transformation $10,000 into your budget, but you really are the only part
And again, good question on Horizon funding, which is the primary source of EU funding. I don't think we know. The dynamics of macro economies of Europe are tricky. I think it's fair to say it's very difficult for funding to move and shift in this fiscal year for us to have any material impact. So I'm less worried about that kind of short-term issue.
And then longer term, I think, as we've talked about in the past.
And then longer term, I think, as we've talked about in the past, reagents are relatively
more stable and resistant to changes in funding than perhaps other elements of the life science.
And even for that, as long as people are employed and doing work in labs, there's a certain kind of base level of consumption that they'll do at reagents.
and that's pretty resistant to shocks to funding to a point. So I think we have to wait and see what happens for 23, 24 funding, but at the moment, we're not overly concerned about.
funding support, in fact, to date.
funding looks very strong worldwide and we see pretty healthy demand in the academic sector.
Thank you very much. Thank you.
Thank you.
We have our next question from Charles Weston of RBC. Please go ahead when you're ready.
Hello, my main question is on funding dynamics, maybe just moving on from academia and looking at the other two main categories that you highlight in your chart, research institutes and biopharma, could you just touch on what you're seeing there and what you're anticipating over the next year perhaps? And my follow-up if I can was just highlighting one of the numbers that you pointed to which is that third-party sales were down 5%.
Can you just touch on the reasons for that, please? Sure, hi Charles. On the funding support for biopharma research institutes, again, the underlying demand and activity there is pretty strong. I think everyone's pointed to some questions around will small biopharma companies be able to continue to attract the funding to generate demand. On the tail end, some companies.
have obviously
to get the funding they wanted to burn out, but because we have so little customer concentration in any one of those companies and that that on the margin is pretty small impact on AFKEM, it's not giving us any concerns. We had a really strong performance in that sector over the period, and I think we feel pretty good about biopharma. The research institutes track a little bit more like academics. A lot of their funding will be coming from.
NIH were from major kind of translational clinical systems, and here too, not seeing any concerns. So yeah.
On the third party, the simple answer is just a little bit of math here going as we move.
of third party into in-house and the mechanics of how that works, I'll leave to Michael, but that's the simple answer, is there's just some movement there. When you talk to into your vehicle, the next normally, you you'll get in there as opposed
Charles, we saw low single digit growth in third party products if you actually take into account the switch of Biovision from third party to now.
Perfect, thank you.
Thank you.
The next question comes from Puneet Sudha of SBV Securities. Please go ahead when you are ready.
Hi, Michael. Thanks for taking the question. Good luck.
Just on gross margin, given the mix shift ongoing towards in-house products, antibodies, and contributions from BioVision, FX, I mean, sort of how should we think about gross margin and puts and takes to that as you sort of reach your 20 to 24 targets?
Hi Puneet. Well, as I think I said at the end of the full year last year, you know, we're getting to levels now certainly at 75.6 where, if you remember that most of our cost of goods sold is labor, that, you know, I'd encourage you to not get too much more aggressive than that. I mean, that's a pretty high gross margin, and I think we've picked up most of the benefit that we've gotten out of the switch from Biovision and the Biovision product, and you're probably picking up a little more over the period, but that's been a strong driver of our operating margin.
continues to be and we continue to do things to drive that forward, but I wouldn't get too much more aggressive on it.
Okay, got it. That's helpful. And then can you talk a little bit – I mean, assay sales were obviously strong. Maybe can you talk a little bit about sustainability of that growth? How much of that is sort of locked in or recurring versus trials that could turn on and off? Obviously given the sort of macroeconomic climate right now, I also wanted to get to your thoughts on –
Thanks for that.
On the assays,
Both immunoassays, activity assays.
symptomatic, SAE cell health SAEs. We've got a pretty broad portfolio now with cloud vision and everything we've been doing in our lives is in air development.
There's still quite a lot of what we're doing that's in the discovery smaller volume. Perhaps not as much as this kind of locked in large.
order dynamic that you might be hinting towards. And then the other thing that's going on there is we're still doing a lot of innovation.
and product development there because we came from a history of not having our own antibody pairs for immunoassays and we're still building that out. So we've got a lot of opportunities still to gain market share from making the right pairs in the right configurations.
We're certainly seeing, as we've talked about many times, you and I before, that the demand from the
platform companies that are doing amino assays on
as they push towards proteomics, there's a lot of need there for more new product development innovation. So in general, I'm less worried about the kind of dynamics of small biotech or translational biology at scale having an impact there. We're very much in build it out innovation scale mode.
Super. And then if I could just squeeze in the last one on, from Michael, maybe on just M&A and sort of capital deployment, just wondering, I wanted to get a sense of your sort of appetite there and the leverage that you can reach in order to, given the current valuations in the market, maybe just give us a sense of what you're seeing in proteomics and other adjacent areas.
given some of these evaluations that finally come down. And now with BioVision integrating well, just wondering your updated thoughts on M&A. Thank you.
We're continuing to look at stuff and we like to acquire things, but as you also know, we've been pretty disciplined about it. And I think that even though you've seen
share prices come down in the public market, they're still relatively high if you think about what they're trading on from a multiple perspective. And we also haven't seen those prices translated to what people are willing to sell private companies for yet. So I'd say we're looking at a lot of companies, but we're continuing to exercise a fair amount of discipline. On the capital structure side, as you know, we've got a fair amount of leeway on our balance sheet between our access to equity capital markets on simple private investing, and theship funds, and some of the pieces in our custom associated banks as well as the sales, debris, assets, assets, things like those resources. So I think that's a quick payment in the digital manufacturers sense that the Indigenous track and bending in all the long term? You know, there's still a lot of new
and our access to debt markets and our relatively unlevered balance sheet to be pretty flexible, I think, is size of acquisition we could do if we find something really attractive. We just haven't yet found additional opportunities that we think are good values.
And if you look at the last two deals we did both, Biovision and Expedient, they were complicated transactions but fit really well with our current ambitions on the product line side and in particular being large providers to us gave us a leg up I think in getting them done. But we keep looking at things and if we find something we'll be very aggressive in getting the right deal done.
Yeah, super helpful. Thanks for that.
Thank you, Pini. We now have the next question from Matt Laro of William Blair.
Your line is open.
Bye, Matt.
Thanks for taking the question. You called on one area, sort of additional investment here on the e-commerce side, additional upgrades. Are there other pointed areas we should be thinking about for go-forward investments and then obviously you alluded to moderate investment elsewhere. What should we think about now this new base of OPEX growing at go-forward? Atceda.org
Well, if you again look at our long-term guidance, what we've said is that we're very comfortable at the top end of our revenue range. We'll have adjusted operating margins in excess of 30 percent. We continue to stand by that guidance. And I think if you go back to what we again said at the end of the year, if you look at our current increases now with a 23 percent adjusted operating margin for the first half, that we continue to see a continuing trajectory leading up to that 30 percent plus adjusted operating margin at the top end of our revenue guidance range.
So I think you can, if you draw a straight line, plus or minus, you'll be there.
All right, fair enough. And then you commented earlier this year, I think some internal surveys, you had maybe 85% of academic labs back to normal by January . It seems like that's continued to improve. I'm just curious what sort of your internal data points are telling you about broader academic lab activity.
Hi Matt, it's Alan, thanks for that. We actually stopped doing the survey just because it's back to normal, with the exception of pockets where there's shutdowns in China.
there's no longer any data that gets us concerned about bubbles of academic or other lab activity.
Okay, good to hear.
Thank you. We now have Michael Reisgen of Bank of America. Your line is open Michael.
Great. Thanks for taking the question. First, I kind of want to follow up on the last point, Abe, and then just tweak it a little bit. I mean, you're still guiding to mid-teens organic and 20% CER for the year, and that's despite the lockdowns in China and some of the things going on in Europe . So I'm just wondering, you know, any chance you can quantify some of those headwinds just to give us a sense for what?
would have been otherwise. Just, is it that these headwinds are negligible or are you offsetting them elsewhere with growth in the Americas or something like that? Just trying to get a sense for the moving pieces this year and what it implies for going forward.
Sure, I mean, I think the US was really strong. You saw really strong growth in the US and that certainly helped offset things. We think the headwinds from China were about 3 million pounds.
So, I guess you can add that we think the US is going to continue to be a strong grower, and we're hopeful that China recovers and doesn't continue to lock down, but it's hard to be any more precise in that light.
Okay, and then the follow-up would be on the A&B listings, something you talked about in the past, but I just want to make sure we have all the details right. Could you walk us through the process, what that's going to mean going forward in terms of reporting, in terms of updates? Are there going to be any additional op-ecs or any one-time costs associated with that as you go through it? Can you remind us how that's going to take place later this year?
Yeah, I mean I think if you look at the footnotes to the adjustments we made to operating profit, there are some one-off costs in there for the process this year, and there'll probably be some slight one-off costs next year. On the flip side, we'll also be alleviating some of our filing
and compliance burdens by right now having to comply with requirements on two exchanges. So on the cost side, probably net out over the next year or so, but we hope to see benefits from it. On the process side, we will be putting out more information shortly and you can be guided by it, but just kind of conceptually, we will be having an extraordinary general meeting in I think early November . We'll be mailing circulars in October and that circular will contain all of the instructions.
It's a pretty easy process and will require shareholders to just make an opt-in having their shares exchanged for ADSs. But the details will all be laid out in the offerings circular that will be mailed out later this quarter.
And then that we hope that much.
Assuming that is approved by shareholders, that we would begin the desisting process early December and finish it by year end.
Okay, thank you. Perfect.
Thank you. I would like to now hand it back to Alan for some closing remarks.
Thank you, and thanks everyone for joining us today and for the questions.
We're really pleased with how the business is performing. And we've got some other good news today. We've welcomed Luba Greenwood to the board of directors. Luba brings a unique combination of experience in life sciences, pharmaceuticals, digital, e-commerce, and just fantastic to have her joining the board. And later this week, we're gonna be at the Morgan Stanley Healthcare Conference in New York, and we'll be meeting with many of our shareholders and special.
as your oldest analyst there. So it's an exciting week, an exciting time to be at AFCAM. I appreciate you all taking the time today to be with us. Thank you. Thank you.
Thank you all for joining, that does conclude today's call. You may now disconnect your line.