Horizon Discovery’s (HZD) full-year results have yet to convince us that the group is best off outside of Abcam (ABC) – its larger peer which made an unsolicited equity offer less than a week prior to the announcement of these numbers. True, reported revenues have rocketed, but extract the £9m contribution from Dharmacon – the cell line business Horizon bought off General Electric in August 2017 – and revenues were up 14 per cent to £27.5m; decent enough, but in line with the growth rate reported by Abcam in the first half of its financial year.
More worrying is the fact that gross margins have decreased in two of the three core divisions, while the adjusted cash profits which management forecast this time last year failed to materialise due to a 92 per cent increase in research and development expenditure to £11.9m, together with one-off costs associated with the Dharmacon acquisition and a site closure in Boston. Although the absence of exceptional costs should tip Horizon into an adjusted cash profit position for the 2018 year-end, pre-tax profits are not forecast until the year after and, even then, they’re only expected to hit £4.5m, according to Panmure Gordon.
HORIZON DISCOVERY (HZD) | ||||
ORD PRICE: | 155p | MARKET VALUE: | £231m | |
TOUCH: | 155-160p | 12-MONTH HIGH: | 295p | LOW: 128p |
DIVIDEND YIELD: | nil | PE RATIO: | na | |
NET ASSET VALUE: | 115p* | NET CASH: | £28.1m |
Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2013 | 6.6 | -3.0 | -7.5 | nil |
2014 | 11.9 | -6.1 | -9.2 | nil |
2015 | 20.2 | -10.5 | -11.2 | nil |
2016 | 24.1 | -12.5 | -12.1 | nil |
2017 | 36.5 | -14.3 | -8.4 | nil |
% change | +51 | - | - | - |
Ex-div: | na | |||
Payment: | na | |||
*Includes intangible assets of £127m, or 85p a share |