ABC.L Regulatory News (ABC)

ABCAM PLC

("Abcam" or "the Company")

Interim Results for the Six Months Ended 31 December 2014

Abcam plc (AIM: ABC), a global leader in the supply of life science research tools, is pleased to announce its interim results for the six months ended 31 December 2014 [1].

Highlights

· Product revenue increased to £62.7m (H1 2014: £56.8m), representing growth of 16.7% on a constant currency basis and 10.4% on a reported basis

· Total revenue increased to £66.7m (H1 2014: £61.9m), representing growth of 13.8% on a constant currency basis and 7.7% on a reported basis

· Gross margin was 70.4% (H1 2014: 70.9%), reflecting the currency headwind in the period

· After continued investment in the business to deliver strategic objectives and to drive future growth, adjusted operating margin* was 35.4% (H1 2014: 36.8%), and reported operating margin was 32.8% (H1 2014: 34.1%). EBITDA was £25.8m, growth of 5.8% over H1 2014 (£24.4m)

· Adjusted diluted earnings per share (EPS)* increased by 7.3% to 9.38 pence (H1 2014: 8.74 pence). Reported diluted EPS increased by 6.7% to 8.79 pence (H1 2014: 8.24 pence)

· Closing cash and term deposits of £62.5m (30 June 2014: £56.9m)

· Interim dividend increased by 7.5% to 2.29 pence (2014: 2.13 pence)

· Robust progress continues in executing our strategy and achievements against our specific strategic KPIs are at the top end of, or above, our full year targets

· Announced in January 2015, the acquisition of Firefly BioWorks Inc and the partnership with the Institute of Molecular and Cell Biology demonstrate our strategy in action, strengthening our fast-growing kits and assays business

* Excluding £1.7m (H1 2014: £1.7m) of acquisition costs and acquisition-related intangible amortisation and, in the case of EPS, the related tax effect.

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

"I am delighted with the progress our team at Abcam has made in the first half of the year. We've achieved underlying double-digit sales growth in all regions and product categories and are confident we are taking the right actions to achieve our multi-year strategy goals.We remain on track to meet both our financial and strategic targets for the full year 2015."

[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 for editors:

About Abcam plc

Abcam plc is a global leader in the supply 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 and 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 and multi-language support, and sells to over 100 countries. The Company was founded in 1998, and now employs over 800 people. Abcam was admitted to AIM in 2005 (AIM: ABC).

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

Interim Management Report

PERFORMANCE IN THE PERIOD

The first six months of the year have seen the Group deliver a strong performance, both operationally and against our strategic initiatives. On a constant currency (underlying) basis (in which we assume exchange rates had remained unchanged from H1 2014) Abcam delivered significant double-digit product revenue growth of 16.7% and 13.8% growth in overall revenues, when compared to the same period last year. Overall reported revenues increased by 7.7% after the adverse effect of exchange rates.

All product categories and geographic areas are performing at levels above underlying market growth rates. We have achieved double-digit underlying growth in all of our geographic regions and in every product category in our portfolio over H1 2014, as summarised in the table below.

We have seen significant currency headwinds in the period with Sterling strengthening against all of the major currencies which impact our business compared to H1 2014. In particular, the strengthening of Sterling against the Japanese Yen has caused a decline in reported revenues for this region, despite solid underlying growth of 11.0%.

Historically we have delivered revenue growth rates in excess of that of general life science research funding growth, which has had limited impact on the overall performance of our business. Nevertheless, the return of more certain government funding levels around the world is welcome and has provided the liquidity for labs to purchase our products.

Our other revenues consist of three income streams: custom service, royalties/licence fees and in-vitro diagnostics (IVD) immunohistochemistry (IHC) sales. As expected, revenues have declined in the custom service business as we continue to right-size this part of our company. Royalties and licence fees growth was flat in the period; as previously explained, we expect this income stream to decline over time as these legacy agreements do not fit with our current strategy. IVD IHC revenues were also flat in the period following the transition in selling arrangements of IVD products to the ten year marketing agreement signed with Cell Marque, which has been de-stocking whilst we develop co-branded products. We look forward to the co-launch of products later this month, giving us access to Cell Marque's established distribution channels to the global IVD market.

Gross margins at the product and geographic levels were broadly flat and in line with our expectations, whilst the reported gross margin decreased slightly to 70.4% (H1 2014: 70.9%), reflecting the impact of exchange rates.

The adjusted operating margin was 35.4% (H1 2014: 36.8%). This reflects our increased investment in product development, eCommerce, marketing and infrastructure, including an increase in the depreciation and amortisation charge to £2.2m (H1 2014: £1.6m). After taking into account acquisition costs and amortisation of acquisition-related intangibles, the reported operating margin was 32.8% (H1 2014: 34.1%). After finance income of £0.2m (H1 2014: £0.1m), adjusted PBT was £23.8m (H1 2014: £22.9m) and £22.1m on a reported basis (H1 2014: £21.2m).

Adjusted diluted EPS increased by 7.3% to 9.38 pence per share (H1 2014: 8.74 pence), reflecting a reduced effective tax rate on adjusted profits of 20.9% (H1 2014: 23.6%) as a result of the reduction in the UK corporation tax rate. Before adjustments, diluted EPS was 8.79 pence per share (H1 2014: 8.24 pence).

Operating cash flows increased to £27.7m (H1 2014: £24.4m) reflecting the strong growth in our business. The working capital outflow was £5.2m (H1 2014: £3.8m) due in part to the receipt of approximately £4.0m of duty and other tax balances included within trade and other receivables in the prior year, offset by a higher than normal increase in inventories of £3.3m. This increase is the result of a project to improve consumer service levels by increasing inventory of products to high-value targets, the stocking of a new range of directly conjugated antibodies and building up a stockholding at our office in Shanghai. After a significant outflow of £11.3m for the final dividend for 2013/14, corporation tax payments of £4.1m, capital investment of £3.1m and the positive impact of foreign exchange of £1.1m, net cash increased to £62.5m (30 June 2014: £56.9m; 31 December 2013: £38.2m).

DIVIDEND

An interim dividend of 2.29 pence per share will be paid on 17 April 2015 to shareholders whose names are on the register at close of business on 20 March 2015. This represents an increase of 7.5% over last year's interim dividend of 2.13 pence per share, in line with the increase in adjusted diluted EPS over the same period.

STRATEGY

In addition to a strong year-on-year increase in underlying revenue growth, our performance in the period against our strategic key performance indicators (KPIs) reflects achievement at the top end of, or above, our full year targets, and we are confident of meeting these targets for the full year. This growth gives us confidence that we are doing the right things to attract and retain consumers to our business.

* NPS was measured via survey in January 2015 using a sample size of 2,175 respondents. We will provide an update in our year-end results based on a larger sample size.

Milestones achieved within our five strategic goals

In September 2014, we made public five strategic goals that underpin actions we are taking to achieve our aspirations at Abcam. We have made progress against each of these over the last six months and, as we do so, performance against our KPIs has improved and we are identifying more growth opportunities. We set out below a brief description of some of the significant milestones achieved in the period.

Grow our core reagents business faster than the market

Our core reagents business has historically focused on primary antibodies for use in research, where we are already the global market leader. In the last few years we have added secondary antibodies, peptides, proteins, and a wide range of biochemicals to that core.

There are significant opportunities for us to continue to drive growth in these segments from our existing consumer base, as well as by attracting new consumers to our products. We continue to gain market share from our competitors by using our database, breadth of product, RabMAb® technology and industry award-winning digital marketing capabilities. Our approach is to use our data and insights to be increasingly consumer-centric, focusing our efforts in the areas of greatest scientific and commercial value.

Progress in H1 2015 has included:

· Continued focus on high-value products to high-value targets, particularly where we can apply our proprietary RabMAb technology; we added 6,000 new products in the period;

· Expanded range of products in large and growing applications or fields of science, for example the launch of an exclusive range of highly validated directly conjugated RabMAb antibodies for use in key imaging applications including immunofluorescence, flow cytometry and fluorescent western blotting;

· Established a direct sales channel in Australia and New Zealand, allowing us to build closer relationships with our consumers in these countries and to have a direct influence on revenue growth in this region. These consumers now receive direct technical support and customer service from Abcam and delivery times have been reduced by up to 50%; and

· Added several new features to our public website to make it even easier for consumers to find the content and products they seek. For example we have created dedicated landing pages for some key areas of research interest which aggregate all products and resources of relevance to customers interested in those areas. We were delighted to win the award for 'Best use of digital media' at the Life Science Industry Awards in November 2014, which recognised our commitment to innovating through our digital channels.

Establish new growth platforms

We are constantly seeking growth platforms where we can use our core capabilities in new areas. For the three areas of focus outlined in September 2014, we continue to see results:

· China: our Shanghai office improved our distribution and access to the Chinese market, where we achieved underlying revenue growth of 67.2% in the period. We remain excited about the opportunities to support scientific growth in China where we expect growth levels to moderate as our business becomes more established; in the medium term our expectation is that growth will remain above overall revenue growth;

· Kits and assays: we continued to introduce our high performance RabMAb pairs to our kits and assays portfolio as well as working with our supply partners to bring the most relevant products to our consumer base. These efforts generated underlying revenue growth of 35.6% in kits and assays in the period; and

· Market segments: we added sales capabilities and resource to help us address market segments where our business has not historically focused.

Scale organisation capabilities

It is critical that we attract and retain high-calibre and experienced talent. We have worked hard to assemble a strong and experienced team who have a clear view of our strategy and what their role is in its delivery. In the period we have added particular skills and capacity in eCommerce, IT and sales, including the appointments of Chief Digital and Chief Information Officers, both of whom are senior and highly experienced individuals.

We also need to invest in our core IT systems to enable our growth plans, support our increased focus on consumers and provide the necessary data analysis and reporting tools. This is likely to be a multi-year project.

Sustain attractive economics

By ensuring that we optimise our operational efficiency and cost-effectiveness, we have been able to deliver sustainable, profitable growth. We remain focused on generating strong revenue growth and have delivered on this goal in the period with growth in excess of both underlying markets and that of our listed peers. We have achieved an adjusted operating margin of 35.4% whilst continuing to invest in support of our strategic growth priorities.

Selectively pursue partnerships and acquisitions

Our collaboration with Cell Marque, announced in September 2014 is progressing well. We expect to have co-branded IVD IHC product in the market later this month.

We have also made further progress since the period end, with the signing of a partnership agreement with the Institute of Molecular and Cell Biology (IMCB), a research institute under the Agency for Science, Technology and Research (A*STAR), Singapore, as well as completing the acquisition of Firefly BioWorks Inc (Firefly), announced on 21 January 2015.

Under our agreement with A*STAR, IMCB's biological research expertise will be combined with Abcam's RabMAb technology to enable rapid production of antibody pairs with a high level of affinity, specificity and validation against jointly selected targets. These will be used by both organisations in the development of immunoassays for life scientists working in both research and diagnostics and will include antibody pairs to some of the most important targets in cytokine research and to exciting novel proteins. The first antibody pairs are expected to be completed by August 2015 and to be available to the research market later in the year. This project represents the beginning of a planned multi-year collaboration between IMCB and Abcam.

Firefly is a US-based developer of a new IP-protected multiplex immunoassay platform for the detection of biomarkers and has developed its first product for detection of microRNAs (miRNAs) which will strengthen Abcam's position in kits and assays, expand our market presence in RNA quantitation, and bring in a new technology platform to leverage our RabMAb technology.

miRNA is one of the fastest growing areas of biomarker and scientific research and this type of nucleic acid detection and measurement is rapidly growing in importance to Abcam's life science consumers. We also see further potential to combine Abcam's proprietary RabMAb technology with Firefly's assay capability to provide multiplex protein measurement.

After an initial period of modest investment, Firefly is expected to generate attractive returns in the longer term.

BOARD APPOINTMENTS

We have recently made a number of changes to Abcam's Board, which were outlined in detail in our 2014 Annual Report. In addition, in December 2014 we were delighted to welcome Sue Harris to the Board as a Non-Executive Director and Chair of the Audit Committee. Sue brings a wealth of finance and commercial skills, which, combined with her broad corporate experience and scientific background, make her an ideal person to further strengthen our Board.

On behalf of everyone at Abcam, we would like to thank Mike Redmond and Peter Keen, who both stepped down from the Board at the AGM in November, for their considerable contributions to the Company's development and success over the years they served.

OUTLOOK

Abcam began in 1998, offering researchers online access to primary antibodies and their associated validation data and quickly created a valuable proposition by adding products and data faster than our competitors. Since then, this philosophy has remained at the core of what we do. In 2010 we began to add in earnest new product categories to the catalogue, such as immunoassays, secondary antibodies, proteins and biochemicals and to acquire manufacturing know-how such as RabMAb technology, as well as continuing with our core capability to add more products and data online. As we set out in September 2014, the next phase of our story is to utilise our assets and platform to make investments targeted at addressing unmet consumer needs in life science research, whilst continuing to build our online product and associated data portfolio. We have begun to execute this new and exciting phase of growth and, having seen a continuation of the positive trends into the second half of our financial year, we are pleased with the results we have seen so far.

We remain on track to meet both our financial and our four strategic goals for the full year: RabMAb primary products growth of 15-20%, non-primary antibody products growth of 25-30%, a Net Promoter Score of 20-22% and maintaining our position as the market leader in research antibodies whilst improving our strategic position in at least two other key markets.

Murray Hennessy

Chairman

Alan Hirzel

Chief Executive Officer

6 March 2015

Responsibility statement

We confirm to the best of our knowledge:

· the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting;

· the Interim Management Report includes a fair review of the information required by the Financial Statements Disclosure and Transparency Rules (DTR) 4.2.7R, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements and a description of the principal risks and uncertainties for the remaining six months of the year; and

· the Interim Management Report includes a fair review of the information required by DTR 4.2.8R, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during the period and also any changes in the related party transactions described in the last Annual Report that could do so.

At the date of this statement the Directors are those listed in the Group's 2013/14 Annual Report except for the following changes:

Mike Redmond resigned from the role of Chairman and the Board on 3 November 2014 and is replaced as Chairman by Murray Hennessy from that date.

Peter Keen resigned from his position of Non-Executive and Senior Independent Director on 3 November 2014. Louise Patten was appointed to the role of Senior Independent Director on the same date.

Sue Harris was appointed to the Board on 12 December 2014 as a Non-Executive Director. Sue also takes on the role of Chair of the Audit Committee.

By order of the Board

Alan Hirzel Jeff Iliffe

Chief Executive Officer Chief Financial Officer

6 March 2015

Independent review report to the members of Abcam plc

for the six months ended 31 December 2014

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2014, which comprises the Condensed consolidated income statement, the Condensed consolidated statement of comprehensive income, the Reconciliation of adjusted financial measures, the Condensed consolidated balance sheet, the Condensed consolidated statement of changes in equity, the Condensed consolidated cash flow statement and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the AIM Rules for Companies which require that the financial information must be presented and prepared in a form consistent with that which will be adopted in the Company's annual financial statements.

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the Company for the purpose of the AIM Rules for Companies and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2014 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the AIM Rules for Companies.

PricewaterhouseCoopers LLP

Chartered Accountants

Cambridge

6 March 2015

Notes:

 (a) The maintenance and integrity of the Abcam plc website (www.abcamplc.com) is the responsibility of the Directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

(b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Condensed consolidated income statement

for the six months ended 31 December 2014

Condensed consolidated statement of comprehensive income

for the six months ended 31 December 2014

Reconciliation of adjusted financial measures

for the six months ended 31 December 2014

Condensed consolidated balance sheet

at 31 December 2014

Condensed consolidated statement of changes in equity

for the six months ended 31 December 2014

1 Exchange differences on translation of overseas operations.

2 IFRS 2 charge for fair value of share options.

3 Gains and losses recognised on cash flow hedges.

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

Condensed consolidated statement of changes in equity

for the six months ended 31 December 2013

1 Exchange differences on translation of overseas operations.

2 IFRS 2 charge for fair value of share options.

3 Gains and losses recognised on cash flow hedges.

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

Condensed consolidated cash flow statement

for the six months ended 31 December 2014

Notes to the interim financial information

for the six months ended 31 December 2014

1. General information

This condensed consolidated interim financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 30 June 2014 were approved by the Board of Directors on 8 September 2014 and have been delivered to the Registrar of Companies. The audit report on those accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain any statement under section 498(2) or (3) of the Companies Act 2006.

This consolidated interim financial information has been reviewed, not audited.

2. Accounting policies

Basis of preparation

The annual financial statements of Abcam plc are prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) as adopted by the European Union and the Companies Act 2006 applicable to companies reporting under IFRS. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union.

The accounting policies, estimates and judgements adopted in the preparation of the condensed consolidated interim information are consistent with those followed in the preparation of the Group's financial statements for the year ended 30 June 2014 except where disclosed otherwise in this note.

Risks and uncertainties

Like every business, the Group faces risks in the undertaking of its day-to-day operations and in pursuit of its longer-term objectives. An outline of the key risks and uncertainties faced by the Group was described on pages 25-28 of the 2014 Annual Report and Accounts. Information on financial risk management was also given on pages 105-107 of the Annual Report, a copy of which is available on the Company's website www.abcamplc.com. The key risks and risk profile of the Group have not changed over the interim period and are not expected to change over the next six months, these remain as:

Going concern

The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, support the conclusion that there is a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future, a period of not less than twelve months from the date of this report. Accordingly, the going concern basis has been adopted in preparing the half-yearly financial statements.

New standards, amendments and interpretations

The Group has adopted a number of new standards and interpretations, which have been assessed as having no financial impact or disclosure requirements at the interim.

There are no new standards that have been issued but are not yet effective for the financial year commencing 1 July 2014 that are expected to have a material impact on the Group.

3. Operating segments

The Group has only one reportable segment, which is 'sales of antibodies and related products'. There has been no change in the basis of segmentation or the basis of measurement of segment profit or loss since the last annual financial statements. The Group's revenue and assets for its 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. Sales of antibodies and related products are traditionally more heavily weighted towards the second half of the year.

4. Income tax

The major components of income tax expense in the income statement are as follows:

Corporation tax for the six month period is charged at 20.0% (six months ended 31 December 2013: 22.3%; year ended 30 June 2014: 21.8%), representing management's best estimate of the average annual effective tax rate expected for the full year, applied to the pre-tax income of the six month period. This effective tax rate reflects the receipt of R&D tax credits that result in a tax deduction for the Company.

Tax rates quoted above are the Group's reported tax rates. The adjusted tax rate is 20.9% (six months ended 31 December 2013: 23.6%; year ended 30 June 2014: 22.8%).

The UK government announced a reduction in the standard rate of UK corporation tax to 20%, effective 1 April 2015, which was substantively enacted in July 2014 and therefore has been reflected in this interim financial information.

5. Earnings per share

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

Basic EPS is calculated by dividing the earnings attributable to ordinary owners of the parent by the weighted average number of shares outstanding during the period. Own shares held by the Abcam Employee Share Benefit Trust are eliminated from the weighted average number of ordinary shares.

Diluted EPS is calculated on the same basis as basic EPS but with a further adjustment to the weighted average shares in issue to reflect the effect of all potentially dilutive share options. The number of potentially dilutive share options is derived from the number of share 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 period.

Adjusted earnings per share

The calculation of adjusted EPS excluding acquisition costs and amortisation of associated intangible assets is based on earnings of:

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

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

The adjusted EPS information is considered to provide a fairer representation of the Group's trading performance.

6. Goodwill

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 carrying amount of goodwill has been allocated as follows:

* Goodwill is converted at the exchange rate on the date of acquisition and retranslated at the balance sheet rate.

Following a reorganisation in 2013, the goodwill arising from acquisitions was allocated to a single CGU, which more accurately reflected the business structure and use of centralised support functions. There have been no changes to the Group organisation during the interim period which would require a reallocation.

This 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.

Based on the positive performance and cash generation of the Group during the period, an interim impairment test is not considered required at this reporting date.

7. Share capital

Share capital as at 31 December 2014 amounted to £401,731. During the period, the Group issued 419,179 shares as a result of the exercise of share options. This increased the number of shares in issue from 200,446,300 to 200,865,479.

8. Dividends

The proposed interim dividend of 2.29 pence per share was approved by the Board on 6 March 2015 and has not been recognised as a liability as at 31 December 2014. It will be recognised in equity attributable to owners of the parent in the year ended 30 June 2015.

9. Foreign currency

The Group continues to generate significant amounts of US Dollars, Euros and Japanese Yen in excess of payments in these currencies and has hedging arrangements in place to reduce its exposure to currency fluctuations.

The following table details the forward exchange contracts outstanding as at the period end:

An analysis of the foreign currency components of revenue and cost of sales together with average exchange rates used in the period is given in the table below:

The exchange rates reported for sales in the second half of last year were £1: $1.669, €1.215, ¥171.260.

10. Financial risk management and financial instruments

The Group's activities expose it to a variety of financial risks that include currency risk, interest rate risk, credit risk and liquidity risk.

The condensed interim financial statements do not include all financial risk management information and disclosures required in the annual financial statements; they should be read in conjunction with the Group's financial statements as at 30 June 2014. There have been no changes to the risk management policies since the year ended 30 June 2014.

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

· Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

· Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

· Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable market inputs).

The following table presents the Group's assets and liabilities carried at fair value by valuation method.

There were no transfers between levels during the period.

Level 2 derivative financial instruments comprise forward foreign exchange contracts. These forward foreign exchange contracts have been fair valued using forward exchange rates that are quoted in an active market.

The Level 3 available-for-sale asset is an unlisted equity instrument stated at cost less any provision for impairment. The Directors believe that no reasonably foreseeable changes to key assumptions would result in a significant change in fair value.

The Group's finance department performs the valuations of financial assets and liabilities required for financial reporting purposes, including Level 3 fair values. It reports directly to the Chief Financial Officer (CFO). Discussions of valuation processes and results are held between the CFO and the finance team at least once every six months, in line with the Group's reporting dates.

11. Post Balance Sheet Event

Following a period of due diligence, and subsequent to the balance sheet date, the Group made a cash offer of $28m (£18.8m) on a debt-free basis for 100% equity of Firefly Bioworks Inc, a private company incorporated in the United States specialising in novel assay technologies. The acquisition completed on 23 January 2015.

Firefly is not expected to provide a significant impact on the Group's results in the 2014/15 financial year.

Acquisition costs of £0.15m out of an expected total of £0.40m have been reflected in these accounts, being the costs incurred as at the balance sheet date.

12. Date of approval of interim financial statements

The interim financial statements cover the period 1 July 2014 to 31 December 2014 and were approved by the Board on 6 March 2015.

Further copies of the interim financial statements are available from the Company's registered office, 330 Cambridge Science Park, Cambridge CB4 0FL, and can be accessed on the Abcam plc investor relations website, www.abcamplc.com.