ABC.L Regulatory News (ABC)

14 September 2015

For immediate release

ABCAM PLC

("Abcam" or "the Company")

Preliminary Results for the Year Ended 30 June 2015

Another successful year, returning solid top and bottom line growth, whilst investing for the future

Abcam plc (AIM: ABC), a global leader in the supply of life science research tools, is pleased to announce its preliminary results for the year ended 30 June 2015 [1].

FINANCIAL HIGHLIGHTS:

• Constant exchange rate (CER) product revenue increased by 16.6% to £135.4m (2013/14: £118.0m). On a reported basis the increase was 14.7%

• CER total revenue increased by 14.2% (12.6% on a reported basis) to £144.0m (2013/14: £128.0m)

• CER gross margin improved by 50 basis points, offset by currency headwinds, giving a reported margin of 70.5% (2013/14: 70.6%)

• Adjusted operating margin* 34.2% (2013/14: 36.4%), reflecting the expected operational investment in Firefly and other areas to drive future growth and the impact of foreign exchange rate movements. Reported operating margin was 31.7% (2013/14: 33.9%)

• Adjusted diluted earnings per share (EPS)* increased by 9.4% to 19.76 pence (2013/14: 18.06 pence). Reported EPS increased by 9.1% to 18.57 pence (2013/14: 17.02 pence)

• Closing cash and term deposits were £58.7m (30 June 2014: £56.9m)

• Proposed full year dividend increased by 5.9% to 8.21 pence per share (2013/14: 7.75 pence)

OPERATIONAL HIGHLIGHTS:

• Strong progress continues in executing our strategy, with achievements against our specific strategic KPIs at the top end of, or above, our targets

• Appointment of Alan Hirzel as CEO and Murray Hennessy as Chairman

• Acquisition of Firefly and integration of its technology platform progressing well, bringing product diversification and exposure to fast-growing miRNA market

* Excluding £3.1m (2013/14: £3.3m) of acquisition-related intangible amortisation and acquisition and integration costs of £0.4m (2013/14: nil) and, in the case of EPS, the related tax effect. The full effect is shown in the Reconciliation of Consolidated Adjusted Financial Measures and in note 11 in the case of EPS.

Commenting on the preliminary results, Alan Hirzel, Abcam's Chief Executive Officer, said:

"Through the application of our five strategic priorities we have delivered material returns in the year, exceeding our expectations and increasing the momentum behind our growth platforms. Better understanding of our consumers has allowed us to enhance our position in the core antibody market and at the same time, through investment and acquisitions, we see new markets open to us both in terms of products and new applications and by extending our geographic reach. As a consequence we continue to gain market share. The 2015/16 financial year has started well and we are confident that our continued investments will continue to drive above-market sales growth."

Post Period End Events:

Abcam has separately announced today that Jeff Iliffe, Chief Financial Officer, has today served notice of his intention to step down from the Board. Jeff will transition from the business during the next 12 months to ensure there is an orderly handover.

We have also announced today that Mara Aspinall has been appointed to the Board as a Non-Executive Director. Mara's vast expertise in the diagnostics and pharma industries at Roche and Genzyme, and her knowledge of and experience within the US market, will be invaluable as we continue to expand our business and deliver value.

[1] This announcement, including any information included or incorporated by reference in this announcement, may contain forward-looking statements (including words such as "believe", "expect", "estimate", "intend", "anticipate" and words of similar meaning) which are based upon current expectations and assumptions regarding anticipated developments and other factors affecting the Abcam group. All statements other than statements of historical facts may be forward-looking statements and should not be treated as guarantees of future performance. These forward-looking statements involve risks and uncertainties, many of which are beyond the control of the Abcam group, and there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. These forward-looking statements speak only as at the date of this announcement and accordingly undue reliance should not be placed on such statements. The Abcam group does not assume any obligation to, and does not intend to, revise or update these forward-looking statements, except as required pursuant to applicable law.

For further information please contact:

Notes to Editors

About Abcam

Abcam plc is a provider of life science research tools, with a wide range of products and expert technical support, enabling scientists to analyse living cells at the molecular level and improving the understanding of health and disease.

Abcam is committed to providing scientists with an extensive choice of reagents and tools, with the most comprehensive, honest and up-to-date datasheets and customer reviews, fast delivery and helpful customer service & technical support. The Company's catalogue evolves with scientific research trends and is growing each year to provide customers with products to meet their research needs. The range now includes primary and secondary antibodies, proteins, peptides, lysates, biochemicals, immunoassays and other kits. Abcam also supports its customers by hosting a range of global scientific events, forums and webinars, providing opportunities for scientists to get together and present their work.

Headquartered in Cambridge, UK, Abcam has nine global subsidiary offices enabling local services, multi-language support and next-day delivery in over 130 countries. The Company was founded in 1998, and now employs over 820 people. Abcam was admitted to AIM in 2005 (AIM:ABC).

To find out more, please visit www.abcam.com 

CHAIRMAN'S INTRODUCTION

It gives me pleasure to introduce this year's preliminary financial information which sets out the solid progress Abcam has made over the past twelve months. The Company has embarked on a new strategy which is delivering strong results and exceeded our high expectations for the year. Today, the Company is well placed to take full advantage of the significant opportunities that exist in our markets.

Executing our strategy

Alan Hirzel was appointed CEO in September 2014 and we are very pleased with the results we are seeing from the implementation of the strategy we set out at that time. We have achieved double-digit growth across all of our geographic regions and product types, and we intend to accelerate this strategic process over the coming years.

To continue to achieve growth in a managed and careful way, there are several areas of our business in which we need to invest. Focusing on revenue growth alone will not create a truly sustainable and valuable business. Rather, our strategy is to make focused investments to meet our consumers' needs and then capitalise on the growth opportunities that this creates.

Since it was established, Abcam has spent 17 years developing its product expertise. We are now complementing this through building a consumer-centered organisational infrastructure. During the year we have made progress in high-value targeting, identifying and focusing on products and sub sectors which offer both higher value and higher volume sales opportunities. As we do so we add layers of value and innovation to our existing business.

Our strategy is enabling us to strengthen Abcam's position at the heart of life science research. From our roots, providing antibodies in an ice bucket, we are moving to delivering comprehensive solutions and outstanding service levels to our consumers through a consistently improving online offering and geographic coverage. Our rapid progress in China demonstrates how investing in future markets can accelerate revenue growth and lay the foundations for an expanding international business.

Strong financial performance

Reflecting on the past twelve months, it is clear that Abcam has met ambitious targets and delivered results well above the underlying rate in our core markets. In total, after allowing for the adverse impact of exchange rates, our reported revenues grew by 12.6%, a significant acceleration of the 4.7% growth we recorded in the prior year. On a constant exchange rate basis our total revenue growth was 14.2% (2013/14: 8.6%) compared with underlying market growth of around 4%.

After increased investment to drive future growth including the integration of Firefly, and the negative impact of foreign exchange rate movements, adjusted operating margin was 34.2% (2013/14: 36.4%).

Innovation and innovators

Our progress is driven by the quality and dedication of our people. Today, Abcam employs over 820 people across ten locations. They are our innovators: across all our divisions and functions employees are collaborating to drive innovation, focusing on our consumers' needs, creating value for our shareholders and delivering the technologies that make a real difference to life science researchers. On behalf of all our stakeholders I would like to thank every employee for their enthusiasm, hard work and commitment over the last year.

The past year has seen significant senior management changes, with the appointment of Yvonne Chien, Chief Digital Officer; Sean Hickey, Chief Information Officer; and, after the period end, Suzanne Smith, Chief Legal Officer and Company Secretary. In addition, Alejandra Solache, Global Head of Reagents Product Development and Manufacturing, who joined the Company in early 2014, was appointed to the Senior Leadership Team in the year. These appointments bring added expertise in key areas.

One culture

Abcam's strong consumer-focused, performance-based culture is grounded in our purpose to provide life science researchers with the tools they need to enable scientific progress. Our 'One Team' approach underlines everything we do and serves as a framework for the success of each employee as well as the whole Company.

Our core One Team behaviours are:

• Focused on success: taking responsibility for business results, being committed and dependable and having a team focus

• Bold: communicating effectively and innovating to provide solutions

• Consumer-centric: being culturally aware and focused on the needs of our consumers

Board changes and governance

This year has been an important one for the governance of the Group; Alan Hirzel succeeded Jonathan Milner as CEO in September 2014, with Jonathan taking up a Deputy Chairman role and I took over as Chairman in November 2014. In addition, Sue Harris joined the Board as Chairman of the Audit and Risk Committee in December 2014. Our effective governance framework at Board level and throughout the organisation has helped support this transition in leadership. However, we recognise that there is always scope for further improvement to support us in achieving the aspirations we have set for the Company. As such, over time the Board will continue to be strengthened as we seek to bring in further expertise in product and geographic areas.

Return to shareholders

The Board regularly reviews its dividend distribution policy and overall financial strategy to strike a balance between the needs of the business in terms of investment and the desire to provide a high level of return to shareholders. As such, we continue to operate a progressive dividend policy to grow the dividend if appropriate each year. This year the Board has recommended a final dividend of 5.92 pence per share, to be paid on 4 December 2015 to shareholders on the register on 13 November 2015. This brings the dividend for the full year to 8.21 pence, an increase of 5.9% over the prior year's dividend of 7.75 pence.

Creating future sources of value

Investment over the past two years, that has seen us deliver on our strategy and exceed our targets, has laid the foundations for growth in 2015/16 and beyond, as well as highlighting numerous new opportunities. To take advantage of these opportunities, investment will continue and gather pace. Better IT infrastructure is required to meet the demands of a global business dependent on gathering and sharing knowledge and data. Continued investment in research and consumer insight will enable us to identify new target products and bring them to market quickly. In the medium-term new premises will be required to provide an environment in which the best in the industry can work efficiently and in close proximity to one another. Judicious partnerships and acquisitions can accelerate this trend and we are pleased that Firefly is already generating revenues. These investments will drive further growth for shareholders over the coming years.

When we embarked on our new strategy in 2013/14 we recognised that we were at the beginning of a multi-year journey. Over time we must continue to balance the desire to generate growth and profits in the short term with the need to invest for longer term growth. As Alan outlines throughout this report, the strands of our strategy are beginning to deliver the growth we expect. This gives us the confidence to continue with, and indeed, reinforce our current path.

Murray Hennessy

Chairman

11 September 2015

CHIEF EXECUTIVE OFFICER'S REVIEW: HOW WE DELIVERED VALUE THIS YEAR

In my first year as CEO, I have been delighted by the results delivered by implementing the strategy we outlined last year. 2014/15 shows what we can achieve by becoming a consumer-centered company. We strengthened our product pipeline and increased the momentum behind our growth platforms. Careful investment has driven growth in revenues and profits and our efforts are creating significant value for all our stakeholders.

Innovation

Independent research conducted by BCC Research and published in January 2015 indicates a high percentage of researchers have unmet reagent needs because they cannot find a commercial supplier for their specific targets, species or applications. This is a significant opportunity for Abcam as we continue to identify untapped sources of growth in markets we already serve, as well as in new areas.

We continue to focus on our broad portfolio of research tools to enable breakthrough research into the role of signaling and regulatory molecules and proteins in biological pathways - ultimately leading to treatments for diseases such as cancer and immune deficiency disorders. Our catalogue range now includes over 137,000 diverse products. 38% of our total revenue is now derived from our in-house manufactured products and innovation.

We take a data-driven, multi-layered approach to evaluate the protein targets of interest to scientists and our pipeline provides a complete solution around each target. This high-value targeting strategy is driving further growth across our business, generating increased returns from each new product: RabMAb products introduced using this approach are selling six times more within the first six months compared with previous volumes, with overall CER revenue growth from RabMAb products of 24.2%, in excess of our full year guidance of 15-20%.

Our proprietary, high quality RabMAb technology continues to be an important differentiator. We increased our range of RabMAb antibodies in the year by 1,811 products, including a range of RabMAb pairs: a capture antibody and a detection antibody which are validated to work together, allowing scientists to focus on productive research rather than optimising antibody components in their experiments. These are performing well in competitive benchmarking. Now 90% of our SingleStep ELISA assay kits contain RabMAb pairs, offering sensitive and accurate quantitation of the target protein in just 90 minutes. Led by CER kits and assays revenue growth of 33.0%, CER revenue from our non-primary antibody products grew at 28.2%, towards the upper limit of our target of 25-30%.

Proteins seldom function in isolation, so researchers often study them in their multi-component state. Without the right set of tools, multi-protein analysis can be extremely difficult, for instance because of cross species reactivity when using indirect detection and challenges in sourcing appropriately labelled primary antibodies. Our exclusive range of over 1,500 directly conjugated RabMAb antibodies with multiple labels is designed to overcome these issues and is already selling well. These have laid the foundation for significant revenues in 2015/16.

We continue to innovate through our digital channels to provide personalised, relevant content that anticipates consumer needs and enhances their experience. We were delighted that our digital marketing strategy was recognised with the Life Science Industry Award in November 2014 for the 'Best Use of Digital Media'. Enhanced cross-selling tools on the public website and new category landing pages to allow grouping of related content further improved the user experience and made ordering more efficient. Cross-category purchasing has also increased, for example, in the purchase of kits by our existing core primary antibody customers.

Quality

Antibodies have a vital role in biomedical research and scientific journals are calling for greater reproducibility of data in primary publications. High-quality research antibodies, including high specificity, sensitivity and lot-to-lot consistency, are needed to make critical progress on this issue. At Abcam we are responding with a key focus on improving product quality. This is a fundamental driver of improved NPS and our ambition to become the most recommended brand by life science researchers. We are confident in our strategy, which has seen an increase in NPS from 18% to 24% over the year.

We continue to add value to our consumers using our RabMAb technology which combines the superior antigen recognition of the rabbit immune system with the specificity and consistency of a monoclonal. We have now extended this technology into a number of our other product ranges to ensure consistency of quality across our catalogue.

We also worked closely with our suppliers to gain extra validation data and to investigate and improve any products which did not meet our stringent quality criteria. We continue to build stronger collaborative relationships with suppliers by visiting them, sharing consumer feedback and presenting in-house validation data. One outcome has been significant progress in improving the packaging and consumer acceptance of our cellular assays range.

Service

We are passionate about understanding the needs of our consumers, supporting our aim to provide a customised and optimised service. Our new consumer insights team ran a consumer closeness project during the year, conducting interviews and focus groups in the UK and US to gain a better understanding of the needs of different consumers.

Having appointed 16 global key account managers for strategically important or significant accounts, we have seen twice the level of growth generated in managed accounts compared with those with no dedicated manager.

Other ways in which we have enhanced our services include: extending our custom service capability to Cambridge, UK, building on our established US team and enabling increased service levels for European custom project clients; and adding eProcurement capabilities for two key accounts, allowing consumers to purchase our products through their organisation's own eProcurement applications.

Global expansion

Our strategic investments have yielded CER double-digit growth in all our geographic regions. Indeed, with the exception of Japan, growth over the previous year has accelerated in all regions. Particularly pleasing is China which has benefitted from increased investment in our Shanghai office. Japan was the slowest growing region at 10.4%, due to the uncertainty in funding caused by the challenging macroeconomic situation. We are currently implementing a number of initiatives to get closer to our consumers in Japan, in collaboration with our sub-dealer network, which we hope will yield positive results in 2015/16.

1 Includes custom services, IVD/IHC, royalties and licence income

After relatively modest investments in our Shanghai sales and distribution facility since its establishment in February 2014, CER incremental sales in China in the year were £5.4m, a growth rate of 75.7%. Among the improvements to the way we serve this market, we have: created a focused team of fewer regional distributors, implemented a local stock-holding facility resulting in nearly all of our best-selling items being in stock at the point of order receipt and directly reached 10,000 scientists through training events, exhibitions and presentations in 62 institutions and 18 cities.

We completed the transition to direct sales in Australia and New Zealand, improving margins and expanding direct relationships with consumers and have also begun the process to set up direct sales in Singapore. We expect this to take effect in 2015/16.

Investing in infrastructure

We see many growth opportunities for Abcam in current and new markets and plan to invest in operational infrastructure in order to help deliver on them. We recruited an experienced Chief Information Officer, Sean Hickey, to lead a strategic review of current systems and plan how these map onto our future business needs. The picture this paints is of a set of highly refined bespoke systems that have underpinned the growth and efficiency of our original business model, but are relatively rigid in their scope and flexibility. As our business model continues to evolve we need to adapt to a more flexible componentised set of IT solutions built around a backbone ERP framework. This will both allow us to scale into different aspects of our business as well as facilitating integration and assimilation of any future acquisitions. We are engaging with an experienced external consultancy over the next few months to help us build a detailed map of our future business processes and align this with a plan to deliver a scalable and flexible platform solution. We expect this to result in an investment programme over a two to three year period and will have further updates on the level of investment as part of our regular communication with shareholders as our plans progress.

The other vital area of capital investment is in our global premises. We have commenced construction of our new Hangzhou office, which will provide enlarged and improved manufacturing facilities. We expect to complete the move in Q2 2015/16 at a cost of around £2m. We are also looking to invest in our Cambridge, US, facilities in order to integrate the Firefly team and support the next growth phase.

Our premises in Cambridge are also in need of investment - we are currently spread over three separate buildings on the Cambridge Science Park and need more space as we grow. A new head office in Cambridge, UK, is planned to bring all Cambridge, UK staff together under one roof, providing a more scalable environment. We are in discussions to lease a purpose-built facility on the new Cambridge Biomedical Campus. This is located on the Addenbrooke's Hospital site and is already becoming a centre for world-class biomedical research and patient care as well as having more direct access to clinical researchers. We estimate moving into our new head office in 2018/19 and will update shareholders on this project as it develops.

Firefly

We are pleased with the progress made by our combined teams since the acquisition of Firefly BioWorks in January 2015. Development of the Firefly particle technology platform is being delivered to plan and we are seeing strong consumer interest. In June 2015, the Firefly range of multiplex miRNA profiling assays was launched on our public website in selected regions and our first Firefly kit sale came through this online proposition. We are excited by the potential of extending the application of the Firefly technology into multiplex protein immunoassay kits. The first product launches in this area are planned for 2015/16.

Other strategic partnerships

To support the other components of our strategy, we are actively seeking to partner with companies that offer complementary products or capabilities in the life science market. 

The acquisition of Firefly and the collaborations with Cell Marque in diagnostics and A*STAR in immunoassays are only a few of our existing technology and pipeline collaborations and we continue to work on the development of many more.

In 2015/16 we plan to review market opportunities which are underrepresented in our current business model to ensure we exploit all commercially attractive options available.

Outlook

The 2015/16 year has started well and we have confidence in our ability to achieve the stretching targets we have set for ourselves over the coming year. The carefully balanced investments we have made to date have delivered enhanced profits and have locked-in future growth. To ensure we are enabled to capitalise fully on the further opportunities available to us we continue to work closely with our consumers and invest in R&D, IT, our infrastructure and our people to provide innovative and improved solutions.

Supported by a clear purpose and strategy, we believe that Abcam is well-positioned to deliver the next stage of value for our shareholders.

Alan Hirzel

Chief Executive Officer

11 September 2015

OUR STRATEGIC PRIORITIES

Our strategy is designed to increase growth and improve our long-term financial performance, in support of our ambition to become the most recommended brand by life science researchers. This will be based on scientists across the world trusting our products and knowing that purchasing from us will achieve faster, better quality and more reliable and reproducible results, thereby accelerating scientific breakthrough.

Our medium-term aspirations

Our strategy is to deliver sustainable, profitable, long-term growth. Within 3-5 years we aspire to have:

• Created significant additional value for shareholders

• An increased base of loyal consumers making more frequent, higher volume purchases - measured by a market-leading NPS

• A product portfolio which provides researchers working on important protein targets with complete solutions

• Superior, reliable quality products giving reproducible results - for recognised market leadership in premium products

• Built a presence in new markets with significant potential

• A scalable and flexible IT platform, enabling efficiencies within the existing business and providing a platform for further growth. and

• A world class workforce attracting great talent

Our strategic investments throughout the organisation will give us the capability to succeed. The following table maps our progress against the priorities set out in last year's annual report and summarises the next steps.

OUR KPIs

We measure our performance against a number of key performance indicators. Success against these KPIs forms a component of the Board and senior management's incentives.

RabMAb primary antibodies CER revenue growth

24.2%

How we performed

At a CER growth rate of 24.2%, our RabMAb revenues have outperformed our high expectations in the year as a result of the many initiatives we have undertaken and investments made, including the introduction of a range of directly conjugated primary antibodies.

Why it's important

We see our proprietary RabMAb technology, which offers greater specificity and lot-to-lot consistency benefits to our consumers, as a fundamental contributor to Abcam's growth strategy.

Non-primary antibody products CER revenue growth

28.2%

How we performed

Led by our kits and assays business, non-primary antibody CER revenue growth was 28.2%, towards the upper limit of our goal for the year.

Why it's important

Sales of non-primary antibody products will form part of our successful strategic execution as we seek to attain levels of market penetration similar to those we have in the primary antibody market.

Net Promoter Score (NPS)

24%

How we performed

Our NPS improved by 6 percentage points to 24%, above the ambitious target we set at the start of year. Whilst we have progressed further ahead of the industry average, the market-leading competitor NPS also increased, and we remain focused on further advancement.

Why it's important

Our vision is to be the brand most recommended by life science researchers. It is increasingly important that we focus on our consumers and listen to their feedback. We conduct several formal consumer surveys during the year to determine their likelihood of recommending Abcam's products and services to a colleague. The balance of detractors and promoters is then computed into an NPS using standard industry methods. As we seek to measure success against our vision, our NPS will be an important metric.

Market position

#1 in primary research antibodies

On-going targets:

· Maintain #1 position in primary research antibodies

· Gain share in at least two other product categories

How we performed

Market research has confirmed that we remain the #1 brand for research antibodies - and gained around 4 points market share - and that we continue to gain market share across all other categories in our product range, demonstrated by CER growth of over five times that of the underlying market in all product categories.

Why it's important

A focus for Abcam is to expand our product ranges to provide a complete solution of research reagents to support our consumers. Market position in each of our product ranges will give a critical measurement of our progress in this area.

OUR FINANCIALS

Reported revenues for the year increased by 12.6% to £144.0m. The relative strengthening of Sterling during the year means that the constant exchange rate (CER) performance was stronger, with revenue growth from sales of products in our catalogue of 16.6%, and 14.2% overall. After increased investment in the business, including the research and development activities of Firefly BioWorks which was acquired during the period, adjusted profit before tax was £49.6m, an increase of 5.9% (2013/14: £46.8m).

As outlined in last year's report, our growth strategy demands that we listen to our consumers and that we use the insights gained to shape our business. We have done this successfully during the year, which has been one of further investment in our capabilities. In practical terms this has meant increased headcount, including at the senior level, new product development activities and investment in our eCommerce capabilities.

The table below shows revenues, costs and expenses for the year, which have been adjusted to aid comparison by separately identifying the acquisition and integration costs arising on the acquisition of Firefly, and the amortisation of acquisition-related intangible assets across the Group. The net contribution to operating profit from Firefly in the post-acquisition period is a net loss of £991k.

Adjusted income statement

Revenue

The net strengthening of Sterling during the year against the other currencies in which the Group trades has partly offset the underlying growth in revenues, particularly in the first half of the year. Consequently, while on a CER basis product revenues grew by 16.6% and overall revenues by 14.2%, the reported revenue for the year of £144.1m represents 12.6% growth on the prior year.

Gross margins

Reported gross margin was down very slightly to 70.5% in 2014/15 (2013/14: 70.6%) as the positive impact on margins from product mix and pricing initiatives, which would have taken the margin to 71.0%, were offset by the impact of exchange rates. Whilst the proportion of revenue denominated in US Dollars is significant (50.6%), the proportion of US Dollar denominated costs of sale is higher (60.9%) meaning that the weakening of Sterling against the US Dollar in the period has a negative impact on gross margins. We also saw the same impact from the strengthening of Sterling against the Euro and Japanese Yen since the proportions of revenues from each (21.5% and 7.8% respectively) significantly outweigh the proportion of cost of sale denominated in those currencies (5.5% and 1.0%).

Administration and management expenses

As foreshadowed last year, in 2014/15 we have continued to invest in our capabilities to drive medium and long-term growth, which has increased the cost base. The table below identifies the main cost movements.

Like-for-like administration and management expenses, as defined in the table above, increased by 13.0%, which is below the growth in revenues. This includes some specific areas of incremental cost in the year: Firefly administrative expenses for the six months since acquisition of £0.5m (which excludes Firefly's share-based payments charge, as this is already included in the £1.4m Group charge disclosed above), the incremental year-on-year spend to support the operation of the Shanghai office of £0.8m and our additional strategic investment in our SLT, sales, marketing, IT and eCommerce teams of £1.6m. The remaining general and inflationary cost increases of £1.9m are in line with business growth, contributing an increase of 5.0% over the prior year total reported administration and management expenses.

Research and development expenditure

Research and development (R&D) expenditure relates to the development of new products, as well as costs incurred in searching for and developing production process improvements. These costs do not meet the requirements to be capitalised as an intangible asset and are therefore expensed through the income statement as incurred.

The reported level of R&D expenditure decreased slightly to £9.9m (2013/14: £10.1m). This reduction comes after we began to classify costs amounting to £1.2m as administration and management expenses, having previously categorised them as R&D. These are support costs of an innovation and manufacturing site and are now classified consistently with similar costs incurred in other Group production facilities. What would otherwise have been an increase in costs in the year reflects increased investment in new product development as part of our organic growth strategy, for example increasing our SimpleStep ELISA (SSE) portfolio and developing the first RabMAb SSE kits, as well as significantly expanding the range of directly conjugated antibodies and investing in additional product enhancements and quality testing. Firefly's activities contributed £0.5m of the increase.

Earnings and tax

The adjusted profit before tax was £49.6m, on which the effective tax rate was 19.8%. This is lower than the 22.8% reported last year primarily due to a reduction in the UK corporation tax rate, the Firefly acquisition and R&D tax credits. After taking into account the deferred tax impact of acquisition-related intangible amortisation, the reported effective tax rate was 18.9% (2013/14: 21.8%).

Balance sheet

Goodwill and other intangibles

Goodwill at the year end was £87.0m (2013/14: £73.5m). Of the increase, £8.0m arose on the acquisition of Firefly and £5.5m from exchange rate movements due to the US Dollar being the predominant functional currency of the acquired companies to which the goodwill relates.

The acquisition of Firefly did not give rise to an additional cash-generating unit (CGU) and the goodwill resulting from the acquisition has been allocated to the CGU for the existing Abcam business. Goodwill is not amortised under IFRS but is subject to impairment review at least on an annual basis. Consequently, during the year, the Directors performed a review which involved making various assumptions regarding the future performance of the business. After considering various scenarios that could reasonably occur, the Directors concluded that no impairment was required. For more details, please see note 29.

Other intangible assets at 30 June 2015 were £44.7m (2013/14: £30.2m). This movement primarily reflects the value attributed to patents and know-how held by Firefly and exchange rate movements arising because the functional currency of the related assets is predominately US Dollars. The intangible assets amortisation charge was £5.1m (2013/14: £4.8m). No amortisation was charged in relation to the Firefly assets which will be amortised from the point at which commercial product is available for release to a wider customer base, thereby generating meaningful revenues. Other intangible assets are amortised over their estimated useful lives, and the amortisation of acquisition-related intangible assets has been added back in arriving at adjusted profit, as outlined above.

Capital expenditure

Additions of property, plant and equipment and intangible assets arising other than through the acquisition of Firefly totaled £7.7m (2013/14: £7.4m). This reflects continued investment in support of our organic growth strategy. The major items include:

· investment in laboratory equipment of £2.1m which is focused on improving the quality of product data in the catalogue;

· development of new hybridomas and assays of £2.1m, with a further £0.8m expenditure on hybridomas under construction;

· office and computer equipment expenditure of £1.7m. This is an increase of £0.6m over the prior year, mainly due to replacement of IT equipment to support ongoing growth and the fit out of additional office space; and

· continuation of the core IT investment to support the next stage of Abcam's growth. A total of £1.0m was capitalised in the year, including £0.5m of internal salary cost.

Cash flow

Our track record of strong cash control continued in the year and the period ended with an increase in net cash and term deposits of £1.9m to £58.7m (2013/14: £56.9m) after funding the acquisition of Firefly for a cash consideration of £17.6m, and no bank debt (30 June 2014: £nil).

Cash generated by operations was £48.9m (2013/14: £51.2m). This was after a working capital outflow in the period of £7.5m of which £4.1m came from an increase in inventories, reflecting a strategic decision to carry more of our high-selling product lines, a build-up of inventory to support the roll-out of our conjugated primary antibody range, and the effect of the relative strengthening of Sterling for US Dollar denominated purchases. Non-trade receivables have grown by £0.8m due to increased recoverable VAT and new building deposits.

Looking forward

The notable increase in revenue growth is an encouraging indication of the success of our strategy. Underpinned by strong revenue growth, we will continue capital and operational investment to make targeted improvements. Over the next few years we expect to upgrade our IT capabilities to build a more flexible and scalable platform, improve our facilities to increase efficiencies, and will continue to ensure we have the right people and capabilities to deliver the next stage of growth.

We also plan to sustain attractive economics through our continued focus on tight cost management and effective financial control.

Jeff Iliffe

Chief Financial Officer

11 September 2015

Consolidated income statement

For the year ended 30 June 2015

Consolidated statement of comprehensive income

For the year ended 30 June 2015

RECONCILIATION OF CONSOLIDATED ADJUSTED FINANCIAL MEASURES

For the year ended 30 June 2015

1 Adjusted operating margin is adjusted operating profit divided by revenue

Balance sheets

At 30 June 2015

The preliminary financial information of Abcam plc, registered number 3509322, were approved by the Board of Directors and authorised for issue on 11 September 2015.

They were signed on its behalf by:

Jeff Iliffe

Director

Consolidated statement of changes in equity

For the year ended 30 June 2015

1 Exchange differences on translation of overseas operations.

2 IFRS 2 charge for fair value of equity settled share-based options and awards.

3 Gains and losses recognised on cash flow hedges.

4 Portion of tax asset arising on outstanding share options and share options exercised.

Company statement of changes in equity

For the year ended 30 June 2015

1 IFRS 2 charge for fair value of equity settled share-based options and awards.

2 Gains and losses recognised on cash flow hedges.

3 Portion of tax asset arising on outstanding share options and share options exercised.

Cash flow statements

For the year ended 30 June 2015

Reconciliation to total cash and cash equivalents and term deposits

Notes to the PRELIMINARY FINANCIAL INFORMATION

For the year ended 30 June 2015

1. General information

Abcam plc (the Company) is incorporated and domiciled in the UK under the Companies Act 2006. The address of the registered office is 330 Cambridge Science Park, Milton Road, Cambridge CB4 0FL, UK. The Company is a public limited company which is listed on the London Stock Exchange Alternative Investment Market.

The Company and its subsidiaries (together 'the Group'), produce and distribute high-quality research-grade antibodies and associated protein research tools. The Group operates through its ultimate parent company Abcam plc and through a channel of wholly owned manufacturing and distribution subsidiaries mainly based in the US and Asia-Pacific which allows it to serve a global customer base of over 100 countries. A list of all subsidiaries is contained in note 15.

2. Changes in accounting policy and disclosures

New standards, amendments and interpretations adopted by the Group

In the current year, the Group has adopted the following new and revised Standards, amendments and Interpretations which have been assessed as having no financial or disclosure impact on the numbers presented:

IFRS 10 Consolidated Financial Statements and IAS 27 Separate Financial Statements (as revised in 2011)

IFRS 11 Joint Arrangements and IAS 28 Investment in Associates and Joint Ventures (as revised in 2011)

IFRS 12 Disclosure of Interests in Other Entities

IAS 19 Employee benefits: Defined benefit plans (Amendment)

IAS 32 Offsetting Financial Assets and Financial Liabilities (Amendment)

IAS 36 Impairment of assets (Amendment)

IAS 39 Novation of Derivatives and Continuation of Hedge Accounting (Amendment)

IFRIC 21 Levies (Interpretation on IAS 37 'Provisions, contingent liabilities and contingent assets' recognition criteria)

New standards, amendments and interpretations not yet adopted

At the date of authorisation of this preliminary financial information the following Standards and Interpretations were in issue but not yet effective, and have not been applied in preparing this preliminary financial information.

The Standards and Interpretations above have not been applied in preparing this preliminary financial information and the Directors do not expect that their adoption in future periods will have a material impact on the preliminary financial information of the Group.

3. Significant accounting policies

Basis of preparation

The preliminary financial information of Abcam plc is prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) interpretations as adopted by the European Union and the Companies Act 2006 applicable to companies reporting under IFRS and comply with Article 4 of the EU IAS Regulation.

The preliminary financial information has been prepared on the historical cost basis, except for the revaluation of certain financial instruments. The Group preliminary financial information is presented in Sterling and all values are rounded to the nearest thousand pounds (£000) except when otherwise indicated.

The accounting policies adopted in the preparation of the preliminary financial information are consistent with those followed in the preparation of the statements for the year ended 30 June 2014 except where disclosed otherwise in this note.

Going concern

The Group meets its day-to-day working capital requirements from the cash surpluses generated as a result of normal trading. The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the limits of its available resources.

After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing its preliminary financial information.

Basis of consolidation

The consolidated preliminary financial information incorporates the preliminary financial information of the Company and entities controlled by the Company made up to 30 June each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Where necessary, adjustments are made to the preliminary financial information of subsidiaries to bring the accounting policies in line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Business combinations

Business combinations are accounted for using the acquisition method. The consideration transferred for the acquisition of a subsidiary is the fair value at the date of exchange of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination that meet the recognition criteria under IFRS 3 (2008) are measured at their fair values at the date of acquisition, except that:

• deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively;

• liabilities or equity instruments relating to the replacement by the Group of an acquiree's share-based payment awards are measured in accordance with IFRS 2 Share-based Payment; and

• assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations are measured as per that Standard.

Investments in subsidiaries are accounted for at cost less impairment. Where applicable, cost is adjusted to reflect changes in consideration arising from contingent consideration amendments.

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill is reviewed and tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed in subsequent periods. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

In accordance with IAS 21 goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of that foreign operation are treated as assets and liabilities of that foreign operation and as such are translated at the relevant foreign exchange rate at the balance sheet date.

Revenue and income recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales-related taxes.

Sales of goods are recognised when goods are despatched and title has passed.

Custom service revenue is recognised proportionately when the outcome of each discrete stage of the contract can be estimated reliably and is based on the stage of completion of the contract activity per agreed milestones set out in the contract. Where the outcome cannot be estimated reliably, revenue is recognised to the extent of costs incurred where it is probable these will be recovered. In instances where it is probable that the costs will be in excess of the contract revenue, the expected loss is recognised as an expense immediately.

Licence fee income is recognised on delivery of the licensed technology where the Group's continued performance or future research and development services are not required. Payments received prior to this are recorded as deferred income.

Royalty revenue is recognised based on the contractual terms and the substance of the agreements with the counterparty.

Interest income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.

Dividend income from investments is recognised when the shareholders' rights to receive payment have been established.

Revenue derived from the Company's conferences is recognised when the conference is held; however, it is not material.

Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term.

Foreign currencies

The individual preliminary financial information of each Group company is presented in the currency of the primary economic environment in which it operates (its functional currency). For the purposes of the consolidated preliminary financial information, the results and financial position of each Group company are expressed in Sterling, which is the functional currency of the Company and the presentation currency for the consolidated preliminary financial information.

In preparing the preliminary financial information of the individual companies, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing at the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated to the rates prevailing at the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences are recognised in profit or loss in the period in which they arise except for:

• exchange differences on transactions entered into to hedge certain foreign currency risks (see below under financial instruments/hedge accounting)

For the purpose of presenting consolidated preliminary financial information, the results of the operations of the Company's overseas subsidiaries are translated at the monthly exchange rates during the period and their balance sheets at the rates prevailing at the balance sheet date. Exchange differences arising on the translation of the opening net assets and results of operations are classified as equity and recognised in the Group's foreign currency translation reserve.

Retirement benefit costs

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due. Payments made to state-managed retirement benefit schemes are dealt with as payments to defined contribution schemes where the nature of the Group's obligations under the schemes is equivalent to those arising in a defined contribution retirement benefit scheme. The Group has no further obligations once the contributions have been paid.

Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes some items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Where the current tax deduction in respect of share option exercises exceeds the share option accounting charge for the period, the excess is recorded in the tax reserve rather than the income statement.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the preliminary financial information and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

The Group's liability for deferred tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except where it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use. Depreciation is charged so as to write off the cost of assets over their estimated useful lives, using the straight-line method, on the following bases:

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in income. Residual values of assets and their useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

Intangible assets

Payments made to acquire software, distribution rights, capitalised development work and contract-based intangibles from third parties are capitalised at cost and amortised on a straight-line basis over their estimated minimum useful lives. The principal economic lives used for this purpose are as follows:

Patents, technology and know-how assets are only amortised once the development is complete and meaningful revenue is being derived from identified assets, until this point the asset is deemed to be in-progress.

Expenditure on development activities including internally generated intangible assets is recognised as an asset if and only if it meets the recognition criteria set out in IAS 38 Intangible Assets. Expenditure on research activities is recognised as an expense in the period in which it is incurred.

Impairment of tangible and intangible assets excluding goodwill

At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and an attributable portion of production overheads that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the standard cost method. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution. Provision is made for obsolete, slow moving or defective items where appropriate.

Financial instruments

Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.

Available-for-sale financial assets

The Group has an investment in unlisted shares which is not traded in an active market but is classified as an available-for-sale financial asset and stated at cost less any provision for impairment.

Trade and other receivables

Trade receivables are initially recognised at fair value and subsequently held at amortised cost, less provision for impairment. Appropriate allowances for estimated irrecoverable amounts are recognised in the income statement when there is objective evidence that the asset is impaired. When a trade receivable is considered uncollectable, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in the income statement.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Term deposits

Term deposits represent bank deposits and a charitable bond all with an original maturity of over three months.

Financial liabilities and equity

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below.

Trade payables

Trade payables are initially recognised at fair value and subsequently held at amortised cost.

Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

Derivative financial instruments

Forward contracts are used by the Group to manage its exposure to the risk associated with the variability in cash flows in relation to both recognised assets or liabilities and forecast transactions.

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each balance sheet date. A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a financial liability. The resulting gain or loss is recognised in the income statement immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in the income statement depends on the nature of the hedge relationship.

A derivative is presented as a non-current asset or non-current liability if the remaining maturity of the instrument is more than twelve months and it is not expected to be realised or settled within twelve months. Other derivatives are presented as current assets or current liabilities.

Hedge accounting

The Group designates certain derivatives as either hedges of highly probable forecast transactions or hedges of foreign currency risk of firm commitments (cash flow hedges).

At the inception of the hedge relationship, the Group documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging instrument that is used in a hedging relationship is effective in offsetting changes in fair values or cash flows of the hedged item.

Cash flow hedges

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are deferred in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss and is included in the 'administration and management expenses' line of the income statement.

Amounts deferred in equity are recycled in the income statement in the periods when the hedged item is recognised in profit or loss, in the same line of the income statement as the recognised hedged item.

Hedge accounting is discontinued when the Group revokes the hedging relationship, the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. Any cumulative gain or loss deferred in other comprehensive income at that time remains in other comprehensive income and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was deferred in other comprehensive income is recognised immediately in profit or loss.

Share-based payments

The Group has applied the requirements of IFRS 2 Share-based Payment. In accordance with IFRS 1, IFRS 2 has been applied to all grants of equity instruments after 7 November 2002 that were unvested at 1 July 2006.

Incentives in the form of shares are provided to employees under share option, SIP and LTIP schemes. Equity-settled share-based payments are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of the number of shares that will eventually vest.

The grant date fair value of options issued under the Group's share option schemes is measured by the use of the Monte Carlo Simulation.

The grant date fair value of the awards under the Group's LTIP is measured by the use of the Monte Carlo Simulation for the TSR portion and the Black Scholes Model for the EPS portion.

The grant date fair value of an equity-settled payment under the SIP is measured as the face value of the award on the date of grant.

The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. Charges made to the income statement in respect of share-based payments are credited to the share-based payments reserve.

At the end of each reporting period, the Group revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.

The grant by the Company of options over its equity instruments to the employees of subsidiary undertakings in the Group is treated as a capital contribution. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity in the parent entity accounts.

When the options are exercised, the company issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium.

The Group operates an employee share benefit trust as part of its incentive plans for UK-based employees. All assets and liabilities of the trust are recorded in the balance sheet as assets and liabilities of the Company until such time as the assets are awarded to the beneficiaries. All income and expenditure of the trust is similarly brought into the results of the Company.

Own shares

Own equity instruments which are acquired are recognised at cost and deducted from equity. No gain or loss is recognised in the income statement on the purchase, sale, issue or cancellation of the Group's own equity instruments. Any difference between the carrying amount and the consideration is recognised in reserves.

4. Critical accounting judgements and key sources of estimation uncertainty

In the application of the Group's accounting policies, which are described in note 3, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities as at the date of reporting the preliminary financial information, and the reported amounts of revenues and expenditure during the year. These estimates and judgements are continually evaluated and based on historical experiences and other factors, including expectations of future events that are believed to be reasonable under the circumstances prevailing at that time. In preparation of the consolidated preliminary financial information, estimates and assumptions have been made by the Directors concerning the fair value of share options, the estimated useful lives of fixed assets, accruals and provisions required, the carrying value of investments, the recoverability of deferred tax assets, the initial valuation of intangibles acquired as part of a business combination, the carrying value of goodwill and other intangible assets, and other similar evaluations. Actual amounts may differ from those estimates.

Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Key sources of estimation uncertainty

The key assumptions concerning the future, and other sources of estimation uncertainty at the balance sheet date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

Valuation and impairment of intangibles

As part of the business combinations the Group has undertaken in the current and previous years, it has acquired the following types of intangible assets: licence fees, customer relationships, patents, trade names, technology and know-how. The Group obtains a third party valuation for any newly acquired intangible assets to ascertain the initial fair value and identifies a suitable useful life with reference to the third party guidance and the lives attributed to previous similar intangibles. In addition to the acquired intangibles, the Group capitalises IT development costs relating to the rebuilding of the Group's IT core systems, since these costs meet the recognition criteria of IAS 38. The Group reviews the carrying amount of all intangible assets held at each balance sheet date and considers these in line with the remaining usefulness to the Group. No impairments have been deemed necessary in the current year on any of the asset classifications (2014: £454,000).

Impairment of goodwill and determination of cash generating units

The Group determines whether goodwill is impaired on at least an annual basis or more frequently when there are indications of possible impairment. The impairment review requires a value in use calculation of the cash-generating units to which the goodwill is allocated. It has been determined that the Group has one cash generating unit, there have been no organisational or operational changes in the current year that would indicate additional cash generating units should be recognised. In estimating the value in use, management is required to make an estimate of the expected future cash flows attributable to the cash-generating unit and to choose an appropriate discount rate to calculate the present value of those cash flows. The carrying amount of goodwill at 30 June 2015 was £86,998,000 (2014: £73,549,000). Further details are given in note 12.

Property, plant and equipment and intangible assets carrying value

Property, plant and equipment and intangible assets (excluding goodwill) represent 22.9% (2014: 18.7%) of the Group's total assets; estimates and assumptions made may have a material impact on their carrying value and related depreciation and amortisation charge. See note 13 'Intangible assets' and note 14 'Property, plant and equipment' for further details.

Valuation of own manufactured inventory

The standard costs used for the valuation of own manufactured inventory require a number of assumptions concerning the allocation of overheads. These assumptions are based primarily on management's estimates of time spent in each relevant area of activity and normal levels of activity.

Provision for slow moving or defective inventory

The provision for slow moving inventory is based on management's estimation of the future sales of each of the Group's products over the next five years (or period from the balance sheet date to the expiry date of the product, whichever is the shorter), taking into account actual sales of those products in previous years and applying an assumed growth rate based on historical trends where available.

Should forecast sales (incorporating the projected growth rates) differ from those estimated by management, both the level of provision against existing inventory and the rates of provision applied to inventory in future periods would need to be revised. If the projected unit sales growth on each product category increased by 5% the provision required would reduce by less than 0.2%. If the projected unit sales growth on each product category decreased by 5% the provision required would increase by less than 0.3%. If no growth was factored in across all product categories, the maximum impact that would result would be a £0.2m increase in the provision.

Provisions for income taxes

The Group is subject to income taxes in various jurisdictions. Significant judgement is employed to determine the income tax provision on a global basis. There are numerous transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters differs from amounts initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

5. Operating segments

Products and services from which reportable segments derive their revenues

The Directors consider that there are no identifiable business segments that are engaged in providing individual products or services or a group of related products and services that are subject to risks and returns that are different to the core business. The information reported to the Group's Chief Executive Officer, who is considered the chief operating decision maker, for the purposes of resource allocation and assessment of performance is based wholly on the overall activities of the Group. The Group has therefore determined that it has only one reportable segment under IFRS 8, which is 'sales of antibodies and related products'. The Group's revenue and results and assets for this one reportable segment can be determined by reference to the Group's income statement and balance sheet.

The Group has no individual product or customer which comprises more than 10% of its revenues.

Geographical information

The Group's revenue from external customers and information about its non-current segment assets (excluding deferred tax and derivative financial instruments) by geographical location is detailed below:

Revenues are attributed to countries on the basis of the customer's location. No country included within 'Other countries' contributes more than 5% of the Group's total revenue.

Revenue by type is shown below:

1 Includes custom services, IVD/IHC, royalties and license income 

6. Profit for the year

Profit for the year has been arrived at after charging/(crediting):

7. Auditor remuneration

A detailed analysis of the auditor remuneration on a worldwide basis is provided below:

1 This relates to the interim review.

Details of the Company's policy on the use of the auditor for non-audit services are set out in the Audit and Risk Committee Report. During the year the auditor was used for due diligence work as this was considered beneficial to the Group due to the auditor's established knowledge and experience of the Group's activities. No services were provided pursuant to contingent fee arrangements.

8. Employees and remuneration

The average monthly number of employees (including Executive Directors) was:

Their aggregate remuneration comprised:

1 £474,000 (2014: £784,000) relates to Group staff costs directly attributable to the rebuild of the IT core systems being capitalised as part of an internally generated intangible asset under IAS 38 (see note 13).

9. Finance income

10. Taxation

UK corporation tax is calculated at 20.75% (2014: 22.5%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. The standard rate of UK Corporation Tax reduced from 21% to 20% on 1 April 2015. The Finance Act 2015, which received Royal Assent on 26 March 2015, states that this rate will not change for financial year 2016. Deferred tax has been calculated accordingly in this preliminary financial information.

In the budget of 8 July 2015, the Chancellor of the Exchequer announced tax rate changes, which, if enacted in the proposed manner, will have an effect on the company's future tax position. These additional changes will reduce the standard rate of UK corporation tax from 20% to 19% from 1 April 2017, and 18% from 1 April 2020. These proposed changes had not been substantively enacted at the balance sheet date and consequently their effects are not included in this preliminary financial information. The effect of these announced reductions is not likely to be material.

The above changes to the rate of corporation tax will impact the amount of future cash tax payments to be made by the Company.

The charge for the year can be reconciled to the profit per the income statement as follows:

11. Earnings per share

The calculation of the basic and diluted EPS is based on the following data:

Basic EPS is calculated by dividing the earnings attributable to the owners of the parent by the weighted average number of shares outstanding during the year. Diluted EPS is calculated on the same basis as basic EPS but with a further adjustment for the weighted average shares in issue to reflect the effect of all dilutive potential ordinary shares. The number of dilutive potential ordinary shares is derived from the number of share-based options and awards granted to employees where the exercise price is less than the average market price of the Company's ordinary shares during the year and where it is considered performance conditions will be met.

Adjusted earnings per share

The calculation of adjusted EPS excluding acquisition costs, integration costs and amortisation of acquisition-related intangible assets is based on earnings of:

The denominators used are the same as those detailed above for both basic and diluted earnings per share.

Adjusted EPS after adding back acquisition costs and amortisation of associated intangible assets:

The adjusted EPS information is provided to allow a clear method for year on year comparison.

12. Goodwill

Group goodwill acquired in the year relates to the acquisition of Firefly BioWorks Inc on 23 January 2015. Note 29 contains further details of the transaction and resulting financial impact on the Group.

Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating units (CGUs) that are expected to benefit from that business combination. The Directors consider there to be one CGU. Acquisitions are immediately integrated into the group's operations and product portfolio, therefore any discrete financial information which is available for an individual entity within the Group does not reflect the true substance of the performance of that entity and the value being added which has meant it is not possible to accurately assess the value in use of acquired entities. There have been no changes to the Group organisation during the interim period which would require a reallocation of the goodwill balance.

The Abcam group CGU is tested for impairment on a Group-wide basis using the future forecast cash flows arising from the Abcam business as a whole.

The Group performs an annual test for goodwill impairment or more frequently if there are any indications that goodwill might be impaired.

The recoverable amount of the CGU is determined from value in use calculations. The key assumptions considered most sensitive for the value in use calculations are those regarding the discount rates, growth rates and anticipated movements in selling prices and direct costs during the period.

Management has projected cash flows based on financial forecasts over a period of five years. No growth rate has been used in the extrapolation of cash flows beyond the five years. A discount rate of 7.5% has been estimated using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGU.

Management has performed sensitivity analysis on the key assumptions mentioned above. Based on the results of this analysis, management is satisfied that the recoverable amount of goodwill exceeds its carrying amount. As such, no impairment of goodwill has been recognised at the balance sheet date.

Due to the headroom which exists between the recoverable amount and the carrying value there is currently no reasonable possible change in any of these key assumptions which would cause the CGU's carrying amount to exceed its recoverable amount.

Company Goodwill

The goodwill acquired in the year on the Company balance sheet has arisen from the transfer of trade and assets from Ascent Scientific Ltd, a subsidiary undertaking. Note 30 contains further details of the transaction.

The Company goodwill is tested for impairment on an annual basis or more frequently if there are any indications that the goodwill might be impaired. The forecast cash flows arising in the Company have been projected using the same key assumptions as used for the Group testing.

Management has performed sensitivity analysis on the key assumptions and based on the results of this analysis, management is satisfied that the recoverable amount of goodwill exceeds its carrying amount. As such, no impairment of goodwill has been recognised at the balance sheet date.

13. Intangible assets

Group

Company

The amortisation period for the upfront licence fees is three years and software is between one and five years. The amortisation period for the distribution rights is the term of the agreement.

Contract-based intangibles predominately relates to two agreements: an agreement with the University of Oregon, under which the university supplies monoclonal antibodies to MitoSciences Inc, which has full rights and entitlement to commercially exploit these materials in exchange for an ongoing fee. The remaining amortisation period is nine years, being the remaining term of the agreement; and an agreement between Epitomics and Loyola University Chicago for access to a patent, this was fully amortised in the current year in February 2015, the expiry date of the agreement.

Assets under construction relate to the development of the core IT systems architecture. These are not amortised until being available for use in the business.

Customer relationships mainly relates to access to new customers as part of the Epitomics acquisition, namely in the reagents and services business. The remaining amortisation period is seven years in line with the history of the business. Customer relationships in the Company balance sheet have been acquired as part of the trade transfer of Ascent Bioscience and represent access to new customers in the biochemical industry. The remaining amortisation period is two years.

Patents, technology and know-how relates to acquired technology as part of the Group's acquisitions: RabMAb® technology as part of the Epitomics business with a remaining amortisation period of 12 years, being the remaining term of the primary patent, and multiplex and complex assay technology as part of the newly acquired Firefly Bioworks business. This is currently held as in-progress research and development and consequently amortisation will not begin until a fully marketable product utilising the technology is established. The amortisation period will then be the remaining term on the primary patent, which is currently 15 years.

Trade names relate to RabMAb® and Epitomics. The remaining amortisation period is five years.

14. Property, plant and equipment

Group