Summary

  • About £168 million of forecast FY2026 revenue was covered by contracted client orders as of September, subject to revenue performance obligations. That annual coverage is distinct from June’s approximately £193 million backlog and the larger, non-risk-adjusted opportunity pipeline. September interim results.
  • Reported first-half revenue increased 9% to £79.8 million, but gross profit fell to £29.1 million and gross margin declined from 43% to 37%. Adjusted Operating EBITDA improved to a £2.5 million loss after exclusions that included Durham’s pre-revenue costs. Full interim statement.
  • Working capital absorbed £16 million. Net cash used in operating activities was £17.437 million after a tax-credit receipt; OXB’s separately defined net cash outflow was £34.3 million. Durham’s first GMP run establishes an operating milestone, while its contribution to revenue, margin and cash remains the essential second-half test. Full interim statement.

Oxford Biomedica’s cash bridge begins before it earns the revenue. Customer prepayments helped lift contract liabilities and deferred income to £48.7 million at June, while inventory reached £26.5 million in preparation for subsequent manufacturing and to provide strategic safety stocks. Customers had supplied funding against work still to be performed; OXB had committed resources to future delivery. Despite that advance funding, working capital absorbed £16 million during the half. Full interim statement.

This matters because completing prepaid work can produce revenue without producing another receipt for the same amount. Inventory can enter production and become a cost of recognised revenue without releasing cash directly. The commercial and accounting steps may advance while liquidity remains under pressure.

Against that background, approximately £168 million of contracted coverage for forecast FY2026 revenue is substantial evidence of identifiable client work. It does not settle the cost of performing that work, the timing of recognition or the cash left after delivery. The coverage also concerns the full year: it should not be read as £168 million of additional second-half revenue. OXB explicitly makes it subject to revenue performance obligations. September interim results.

What the contracts establish

OXB’s commercial disclosures describe several stages of its contract development and manufacturing business. Their different dates and definitions are economically significant.

Measure Disclosed value and timing What it establishes
Backlog Approximately £193 million at 30 June 2026 Gross CDMO value available for OXB to earn under existing client financial commitments. Change orders, cancellation fees and optional or contingent provisions can still affect the outcome.
Contracted revenue coverage Approximately £168 million as of September Forecast FY2026 revenue supported by contracted client orders, subject to revenue performance obligations. Coverage itself does not establish recognition, invoicing or collection.
Orders signed Approximately £97 million during H1 The total value of client orders signed in the period, without establishing that the same amount became first-half revenue.
Opportunity pipeline Approximately $713 million, or £539 million Potential gross future revenue over multiple years, without risk adjustment. It is not contracted business.

The definitions in the August trading update and the figures in the September results prevent these measures from being treated as interchangeable balances.

Backlog was approximately £204 million at the end of 2025, compared with approximately £193 million at June. That decline does not, by itself, explain how much work was delivered or how contractual changes affected the balance. Nor can September’s annual revenue coverage simply be subtracted from June’s backlog to identify a residual order book. A meaningful reconciliation needs compatible dates, scope and treatment of contractual changes. FY2025 preliminary results.

The pipeline was approximately 30% larger year on year, with more later-stage and commercial-stage programmes. That offers a broader set of potential future work, but its non-risk-adjusted definition supplies neither conversion probabilities nor a reliable cash timetable. The distinction becomes especially consequential when capacity spending precedes firm utilisation. September interim results.

Growth has not yet repaired the gross margin

Reported H1 revenue rose to £79.8 million from £73.2 million, an increase of 9%. Constant-currency revenue was £80.2 million, up 10%. The distinction must carry through any comparison with the full-year outlook, which is expressed at constant currency. September interim results.

The revenue mix comprised £43.1 million of manufacturing services, £27.1 million of development services, £8.4 million of procurement services and £1.2 million of licences, milestones and royalties. Yet the larger aggregate sales figure produced less gross profit: £29.1 million against £31.6 million a year earlier. The reported gross margin fell six percentage points, from 43% to 37%. Full interim statement.

Management attributes the deterioration to several factors: product and customer mix; cancellation revenue in the previous period without corresponding costs; a higher share of lower-margin plasmid revenue; development cost pressure; and reduced high-margin licence, milestone and royalty income. These explanations matter because they imply different routes to recovery. A comparative benefit disappearing is different from costs rising on continuing development work, and neither can be resolved merely by adding sales volume. Full interim statement.

The profit measures require similar care. Operating EBITDA was a £7.8 million loss. Adjusted Operating EBITDA was a £2.5 million loss, improving from a £3.9 million loss a year earlier. The adjusted measure excludes £4.4 million of Durham pre-revenue costs, £1 million of Durham integration costs, £0.7 million of redundancy costs associated with ending GMP manufacturing at Bedford and £0.2 million of one-off corporate costs. Foreign-exchange effects also form part of the adjustment. Full interim statement.

The adjusted improvement therefore answers a bounded question about performance under that definition. It does not show that the excluded activities ceased consuming resources, and it is not operating cash flow. For Durham, the economic improvement will come when client activity generates enough contribution to carry the site’s costs. A change in whether expenditure is labelled pre-revenue cannot establish that result.

The cash burden extends beyond the income statement

The first-half working-capital movement shows why a better profit measure can coexist with substantial cash consumption. Trade and other receivables had a £2.4 million adverse working-capital impact. A reduction in trade and other payables absorbed £9.6 million. Inventory increased by £9.2 million, while contract liabilities and deferred income increased by £5.3 million, reflecting customer prepayments for second-half deliverables. These were the main components of the approximately £16 million adverse movement. Full interim statement.

The £48.7 million contract-liability and deferred-income balance represents obligations associated with money received before the relevant manufacturing, development and other performance was complete. It is not profit. Likewise, the £26.5 million inventory balance is a resource for future activity, with cash consequences that depend on purchasing, supplier payments, production and customer collections.

A second-half reduction in these balances would need interpretation. Consuming inventory could indicate manufacturing progress. Releasing contract liabilities could indicate that prepaid obligations had been fulfilled and revenue recognised. Neither movement, in isolation, demonstrates a new cash inflow. The prepayment benefit has already occurred; subsequent liquidity depends on the remaining cost of delivery and the next cycle of receipts and payments.

The cash-flow statement records £23.750 million of cash used in operations. Receipt of a £6.313 million UK RDEC tax credit reduced net cash used in operating activities to £17.437 million. That receipt improved cash flow, but it was not a customer collection. Separately, OXB reported £34.3 million of company-defined net cash outflow, described as net cash consumed from operations plus net interest and capital expenditure. These labels should remain distinct. Full interim statement.

June cash was £75.3 million, against £96.9 million at December. Reported net cash was £21.4 million, against £55.4 million. By the end of August, cash was £66.8 million. The balance movements are different measures from the company-defined outflow, and the later cash observation does not establish a recurring monthly consumption rate. September interim results; FY2025 preliminary results.

Investment adds another demand. H1 capital expenditure was approximately £6.9 million, while management’s aggregate capex guidance for 2026 and 2027 is approximately £50 million. The latter is a combined two-year figure, not a remaining 2026 obligation. Sustainable cash generation must accommodate working capital, interest, leases and investment as well as the operating result. Full interim statement.

Durham must turn capability into contribution

Durham’s GMP implementation had been delayed by six months. At the interim results, remedial actions were complete, GMP manufacturing capabilities were online and the first GMP run had been completed. Management expected client activity to ramp during the second half. September interim results.

The site supports a new client’s Phase III programme and the AAV manufacturing agreement signed with Plowshare Therapies during the period. Bedford is being focused on process and analytical development. Together, these developments make the allocation of work across the US footprint central to the group’s execution economics. September interim results.

The milestones establish progress in capability. They do not establish full utilisation, recognised revenue from particular batches, positive gross contribution or stable cash generation. Given the exclusion of Durham’s pre-revenue and integration costs from adjusted Operating EBITDA, the next substantive evidence must concern the economics of client activity.

The wider accounting evidence also needs restraint. OXB US and OXB France performed below budget in H1. France recorded a £7.6 million impairment, while OXB US recorded no further impairment. Neither the French charge nor the absence of an additional US charge supplies an operating verdict on Durham. Full interim statement.

The annual targets require a different second half

Management’s FY2026 guidance is £180 million–£200 million of constant-currency revenue, a mid-single-digit EBITDA margin excluding one-off costs and a low-single-digit margin on a reported basis. “Mid-single-digit” should retain its stated breadth; assigning it an exact 5% would manufacture precision. For FY2027, management expects revenue growth of 25%–30% and an EBITDA margin of at least double digits. September interim results.

Earlier second-half weighting provides context in the 2025 Annual Report and Accounts, alongside the existing site, capacity and investment base. That history does not establish that the current delivery schedule will produce the required margin or cash release.

The longer horizon is more ambitious: management targets approximately £500 million of revenue in 2030 and a long-term EBITDA margin approaching 30%. The June capital-markets event set out that operating-leverage framework without providing new current trading information. Those ambitions describe the intended return from the platform; they do not guarantee its trajectory.

Contracted coverage reduces uncertainty about the work behind the revenue plan. The financial test is the return from fulfilling it after production, working capital and investment have taken their share. OXB’s first-half results make that conversion the central issue for the rest of 2026.

Sources