ABC.L Regulatory News (ABC)

ABCAM PLC

("Abcam" or "the Company")

Preliminary Results for the Year Ended 30 June 2013

Abcam plc (AIM: ABC), a global leader in the supply of protein research tools, is pleased to announce its preliminary results for the year ended 30 June 2013.

Highlights

· Reported revenue increased by 24.9% to £122.2m (2012: £97.8m), representing 25.8% on a constant currency basis

· Underlying constant currency revenue growth estimated at 11.8%, including the unaudited, pre-acquisition revenues of businesses acquired during the 2012 financial year

· Adjusted operating profit* increased by 20.6% to £46.5m (2012: £38.6m)

· Adjusted diluted EPS* increased by 12.7% to 17.57p (2012: 15.59p)

· Closing cash and term deposits of £38.3m (2012: £17.5m), with no bank debt outstanding

· The integration of the Epitomics International Inc ("Epitomics") business is continuing well and, with the exception of revenue from the former Epitomics business in China, we have now completed our plans to move catalogue sales to the Abcam platform

· Number of products on the catalogue grew by 31.5% to 121,558 (2012: 92,456)

· Proposed 17.0% increase in final dividend to 5.10p (2012: 4.36p) giving a 16.4% increase in the total dividend for the year

· Trading since the year end has been in line with the Board's expectations

* Excluding £3.3m of acquisition-related intangible amortisation costs and £0.4m of one-off charges associated with the integration of Epitomics which was acquired in April 2012 and, in the case of EPS, the related tax effect.

Commenting on the preliminary results, Jonathan Milner, Abcam's Chief Executive Officer, said:

"Despite pressures on research funding, which remain a feature of our marketplace, we are pleased to report another excellent year of growth in sales, profits and dividends. Our business performed well and the commercialisation of the RabMAb® technology which we acquired last year is well underway. The pace of scientific discovery in protein interactions in health and disease is accelerating and the opportunities open to the Company are more abundant than at any time previously.

"We remain committed to our goal of becoming the world's leading supplier of life science research tools."

For further information please contact:

Notes for editors

About Abcam plc

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

Abcam is committed to providing scientists with access to the correct reagents and tools for their research. The Company's catalogue currently comprises almost 125,000 products and is continually evolving to meet customer needs. The range offered includes primary and secondary antibodies, proteins, peptides, lysates, biochemicals, immunoassays and other kits. Abcam products are supported with detailed, up-to-date and unbiased data on our website.

Headquartered in Cambridge, UK, Abcam has eight global subsidiary offices and ships to over 100 countries. The Company was founded in 1998, and now employs over 700 people. Abcam is quoted on the AIM market of the London Stock Exchange (AIM: ABC).

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

Chairman's Statement

We have a strong business model which has been bolstered by the addition of the RabMAb® technology. I am pleased to report on another successful year for Abcam.

The year to 30 June 2013 was a transformational one for Abcam in that it included the first full year contributions from our acquisitions in the 2012 financial year of Epitomics and Ascent Scientific, which contributed to our 24.9% reported revenue growth to £122.2m.

We have frequently cautioned that we expected Western markets to remain challenging during the year as governments address fiscal deficits. That was certainly the case, particularly in the US which represents our largest market. Despite this we achieved underlying constant currency revenue growth (as defined in the CEO review) of an estimated 11.8% and adjusted operating profit of £46.5m, before costs incurred during the year of £3.3m relating to the amortisation of the intangible assets arising on acquisitions, and £0.4m of one-off integration costs.

The breadth and depth of our online catalogue are important business drivers and the enhancement of our product ranges has continued apace. We added a record 29,102 products to our catalogue during the year, which at 30 June 2013 comprised 121,558 products. By volume the main contributor to this growth has been our OEM supplier base but we have also exceeded our targets on new product additions, including RabMAbs®, from our own production facilities.

Our geographical expansion has also continued and we have achieved deeper penetration in Europe, for example through the successful switch to in-house channels of revenues that were previously generated by Epitomics through third party distributors. In China we have seen the full year effect of the benefits from having our bonded warehouse facility in Beijing.

With such an extensive catalogue and diverse customer base our website and e-commerce capabilities become ever more important tools for our business and we have continued our ongoing programme of investment in these areas.

Dividends

Whilst we continue to look for opportunities to increase shareholder value through external investments, we are committed to sharing the benefits of our strong cash flow directly with shareholders through the distribution of annual dividends. Our policy is to distribute an annual dividend of 40% of adjusted post-tax profit, after adding back costs of acquisition and amortisation of acquisition-related intangibles and one off integration costs.

Consequently, after an interim dividend of 1.94 pence per share which was paid in April 2013, the Directors are recommending a 17.0% increase in the final dividend to 5.10 pence per share. This would make an annual total of 7.04 pence, which is an increase of 16.4% on that paid last year. Subject to shareholder approval at the Annual General Meeting (AGM) in November 2013, the final dividend will be paid on 29 November 2013 to shareholders on the register on 8 November 2013.

Governance and the Board

The composition of our Board is kept under regular review since it is important that its members bring the appropriate skills required to improve the Company's effectiveness and performance. The Board also needs to provide clear leadership and demonstrate the values for which the Company stands.

I am pleased to report that the Board has functioned well in all respects during the year. It has provided knowledgeable and robust challenge and support to the Executive Directors, which has helped ensure that the Company's business strategy is appropriately developed and well delivered.

There was one change to the Board early in the financial year when Professor Tony Kouzarides, a co-founder of the Company, retired at the AGM in October 2012. This was after 14 years of tremendous service during which he played a vital contribution to Abcam's success and for which we again offer him our sincerest thanks.

Looking ahead

We have cautioned for several years that pressures on research funding levels, particularly in our Western markets, are a concern and could impact on our growth. We have also pointed out the strengths of our business which help mitigate this challenge. The success we have achieved in our 2012/13 results demonstrates the importance of our commitment to listening and responding to our customers' needs, and builds on the excellent work done in the business since it started 15 years ago.

Looking ahead we expect market conditions to remain challenging but we remain confident that we have the capabilities and plans in place for continued success. Trading since the year end has been in line with the Board's expectations.

Abcam's staff command widespread recognition for their knowledge and commitment. It is a privilege to be part of such a team and our thanks go to them once again for another great year.

Mike Redmond

Chairman

9 September 2013

Chief Executive Officer's Review

In 2012/13, Abcam has again performed well in a tough environment, with impressive growth in sales and profits. Our success is a reflection of our continued commitment to provide an outstanding value-added service to our customers.

The original idea for Abcam came to me when as a research scientist I began to appreciate how much the effectiveness and productivity of the work I was doing could be improved if I could access highly validated, relevant antibodies, with top quality customer support. In the early days we experimented with a number of business models but relatively quickly the strategy we are still pursuing 15 years later began to take shape. It continues to evolve but key to our success has been the single-minded pursuit of its core features which are to:-

· Drive hard the addition of relevant information on our products from as many sources as possible so that customers can validate them against their requirements;

· Build strong relationships with the best OEM suppliers of the most relevant products;

· Ensure we are supplying high quality products with world-class service and scientific support to help customers be more successful in their research;

· Complement the addition of products to the catalogue with our own in-house manufacturing capabilities;

· Build the industry leading website through which researchers have easy access to relevant products and associated data, which is gathered and presented in the most innovative and creative ways;

· Identify scientific areas which are of particular interest to our customer base and through the dedicated gathering and presentation of information and the hosting of conferences, seminars and webinars, to provide access to an unparalleled depth of data and the work of key opinion leaders in these areas;

· Add new product ranges which are attractive to our existing customer base, either in the same or adjacent segments in which we operate;

· Focus on understanding customer needs to help guide our product selection and presentation; and

· Extend geographic penetration where possible so that more users have access to our products.

This approach and the continued development of new and innovative ways to improve in each of these areas has served us well and has created a world-class business. The 2012/13 year was no different in that regard and it is very pleasing to see how well our team has executed on our plans and the positive customer reaction we have received.

Geographic market review

The following table outlines our revenues in each geographic region, along with estimated underlying growth rates:

* Calculated by taking into account the unaudited, pre-acquisition revenues of businesses acquired during the 2012 financial year and comparing 2012/13 revenues to 2011/12 revenues, in both periods using the exchange rates from 2011/12 for the currencies in which the Group sells.

**Includes custom service, IVD/IHC, royalties and licence income.

The Americas

The US is our largest market and has been our most challenging during the year. After a succession of budget extensions and much political debate, sequestration was finally passed into law on 1 March 2013, to take effect for the period through to 30 September 2013. Under these arrangements the budget for the National Institutes of Health ("NIH"), which is the largest funding body for our US customers, was reduced by 5.5% to $29.2 billion.

In reality the uncertainty caused by the political discussions about potential cuts has slowed down our growth for some time and the NIH had begun cutting grants earlier in the year. At this point however it is too soon to say what impact sequestration will have over the longer term, nor whether the current discussions about the 2013/14 budget which will be effective from 1 October 2013 will lead to more uncertainty or indeed further cuts. Taken together, we think this means that funding uncertainties look like being a feature of the US market for some time to come.

Elsewhere within The Americas region, the introduction of French language support, dedicated phone-lines and local currency invoicing for Canadian customers has been very successful, as has our change of distribution arrangements in Brazil.

Europe, Middle East & Africa (EMEA)

The German, UK and French markets are the largest within our EMEA region. In each of these markets, and several smaller ones, relationships with former Epitomics distributors were terminated during the year or not renewed, and additional marketing successfully helped drive revenue and margin growth as customers began to order directly from Abcam.

Growth in our main markets was pleasing, whilst we saw the impact of funding pressures in some of the smaller Southern Europe markets, with low or no growth in Italy and Spain. Elsewhere growth was good overall, with notably strong performances in The Netherlands, following the change in distributor we mentioned last year.

Japan

The estimated underlying growth rate (as defined in the table above) for our Japanese business was 14.2% in the year. This was a good performance particularly considering that the comparators were challenging after a very strong performance in the previous year. The Japanese government announced a significant stimulus package in January 2013 that will invest USD11bn into science and technology, including USD240m specifically for stem cell research, although the timescale for this additional expenditure is not yet clear.

The switch from the former Epitomics distributor was also very successfully implemented in Japan.

Asia Pacific

Given the strong funding in the region, particularly in China, Asia Pacific continues to be a market of significant potential for us. We saw strong growth in China which was driven in part by the improvements in delivery times from having our bonded warehouse in Beijing. Looking forward we plan further improvements in customer service and to combine the Abcam and the ex-Epitomics distribution arrangements in China, which are currently operating separately.

Elsewhere in the region growth was also good, notably in Singapore and South Korea.

Other lines of revenue

Our custom services business leverages our proprietary RabMAb® technology to provide custom antibody solutions to meet customers' specific requirements. Revenue growth over the period was driven by demand from our established customers and an increasing international presence.

The royalties and licence income comes from certain royalty payments and licence deals with life science tools companies that use aspects of Epitomics's patented RabMAb® technology in the development and manufacture of their own antibodies. These arrangements, which generated revenue of £3.2m in the year, were put in place prior to the acquisition of Epitomics and are not core to our strategy. Consequently growth has been modest in the year and we expect revenue levels from these activities to reduce over time.

The small in vitro diagnostics immunohistochemistry (IVD IHC) arm of the business showed good growth. It uses the RabMAb® technology to generate high quality antibodies for anatomical pathology. During the year our facility in Burlingame, California, received GMP (Good Manufacturing Practice) certification which enables us to manufacture products directly for sale and take full control of the process. The end user market for these products is dominated by the suppliers of the analytical machines several of whom are now customers and are a focus for our business development efforts.

Acquisition integration

A major focus for us during the year has been the integration of the two companies acquired during the 2011/12 financial year.

Ascent Scientific Limited (Ascent, now known as Abcam Bristol) supplies biochemicals to our existing customer base which are complementary to Abcam's catalogue of other protein research tools. During the year the integration initiatives saw further IT development on the website to make biochemical products more accessible for customers and to facilitate the extension of Abcam's OEM strategy to this product range. In the past few months the range has expanded significantly and at 30 June 2013 there was a total of 2,766 biochemical products on the catalogue, which represents growth of over 300% on the figure at the start of the year.

The focus for the integration of the Epitomics business has been initially around the transfer of revenues to the Abcam platform, which involved the transfer of orders previously fulfilled directly by Epitomics and also products previously sold via distributors within Europe. Other initiatives have seen the successful increase in production to 1,450 RabMAbs® in the year, coordination between the teams on new target selection and some exciting work on the new product development, such as working with Abcam Eugene to introduce new kits incorporating RabMAbs®. The commercialisation of the RabMAb® technology is still at an early stage and we have many initiatives planned, targeted on revenue growth, which have the technology at their core.

Running what is now a truly global business brings exciting new challenges and I am delighted with the way in which our teams across the organisation are working together. We work hard on cross-communication, with regular visits from senior staff and global video-conferencing linking each office. This will remain a key priority going forward.

Improvements in our customer service

We continually strive to improve the service we offer customers. The best way to do this is through regular contact and creating as many opportunities as possible to receive feedback on our performance.

In addition to our quarterly customer satisfaction surveys, which give us a broad view of customer experience, in February this year we introduced an online "transactional" feedback facility. This is a way of getting very quick feedback at every interaction point with the customer - taking only a couple of seconds or just one click to do so. This allows us to build a much more granular and immediate feedback mechanism which, in turn, allows us to respond faster and with greater flexibility to customer experiences.

For the transactional feedback, users are invited to rate a particular interaction on a five-point ranking with the option to add some explanatory text. We are receiving over 400 responses a month through this system with around 82% of our customers rating their experience as good or excellent. This method also allows us to give immediate follow up where a customer has had a problem, as well as to give our support staff individual feedback on how they are performing.

Our IT team has also been involved in a number of projects during the year to enable our systems to scale up for growth and improve our visitor experience on the website. Our customers have seen a significant improvement in the search facility on the site which has been redeveloped to enable products to be located more easily and quickly, and our product datasheets have been redesigned for easy access to key information.

With improved customer feedback facilities and more initiatives in the pipeline, we are confident we can build on our already strong position and improve further the levels of service we offer.

Enhancements to our product range

We added over 29,000 products to our on-line catalogue in the year as we broadened our product offering and deepened our coverage in existing areas. Of these products 10,748 were non-RabMAb® primary antibodies as we continue to drive the extension of what is still by far our largest revenue contributing range. In addition the number of RabMAb® branded products passed through the 5,000 product mark, some of which are sourced from our OEM suppliers. We also continued the strategy of significantly increasing our range of protein, peptides and kits, which grew by 87% in number and through the introduction of our OEM strategy to the biochemical field, hugely increased the range of products on offer.

We manufacture many of our own products at our various production facilities. Each of our facilities has met or exceeded its launch targets for the year and together our own produced products now account for 33% of our product revenue (2011/12: 23%). The remainder come from our OEM suppliers and it is through their efforts and our own investment in new IT systems to improve our speed and efficiency in uploading products that we have been able to set new records for the rate of product additions.

We have broken records in the amount of data added to the website and have also made enhancements to our Abreview® system so that researchers can leave reviews of our non-antibody products alongside customer Q&A; all displayed with filter and sort functionality on each product datasheet.

Investment for growth

In my review last year I said that our strategic priorities are to build on our core business, to capitalise on the opportunities from the acquisitions already made, identify new areas to expand into and, if appropriate, pursue further M&A activities. I'm pleased to say these priorities are serving us well.

During the year we have undertaken a great deal of analysis to identify where we see the opportunities for our core business, which we now regard as including the acquisitions we have made. This has identified new areas for organic growth which, for a modest level of investment, have the potential to boost our revenues in the medium and longer term. In particular we see the opportunity to:-

· Enhance the way in which we select protein targets on which to source products;

· Improve customer engagement with a focus on both current and potential new customers; and

· Improve our marketing by making it more targeted and relevant.

These organic growth initiatives may be supplemented by our M&A and in-licensing strategy where they can create the opportunity to accelerate growth further.

So as to fully capitalise on these opportunities, it is our intention to step up our annual expenditure in areas such as marketing, e-commerce and operational infrastructure, by £3m to £4m per annum. We believe that the returns and higher growth will more than justify the investment made.

Board changes

One of my fellow co-founders of the Company, Professor Tony Kouzarides, retired from the Board at the AGM in October 2012. Everyone at Abcam is enormously grateful to Tony for the tremendous contribution he made during 14 years as a director and we greatly value the support he continues to provide from his laboratory in Cambridge. Without him Abcam would not be the successful company it is today. Thank you Tony.

Summing up

The pace of scientific discovery in protein interactions and their role in health and disease is accelerating. Since Abcam was founded in 1998 and the decoding of the human genome in 2000 there has been a huge increase in scientific knowledge in this area. Abcam has played a central role in contributing to this tremendous gift to humanity, and to the health of future generations. In this golden age of biology our role at the centre of this quest for knowledge is stronger and more important than ever. We are therefore in the fortunate position of having an abundance of growth opportunities to pursue.

Our success would not be possible without the continued and loyal support of all our stakeholders, including investors, suppliers, customers and scientific collaborators. Especially I would like to thank our staff whose dedication, through the provision of high quality tools and support, is unparalleled. Thank you for your contribution to our common purpose and to another successful Abcam year.

Jonathan Milner

Chief Executive Officer

9 September 2013

Financial Review

Revenues of £122.2m were 24.9% ahead of last year and adjusted profit before tax was £46.6m, an increase of 19.4%. Adjusted diluted earnings per share were up by 12.7% to 17.57p.

A focus for the year has been the further integration of the two acquisitions made in 2011/12 and positioning them for future growth.

The acquisitions of Epitomics and Ascent were of different magnitudes with net consideration paid of US$150.0m and £9.8m respectively, but our approach to the integration of each has been similar. In both cases this involves the transitioning of their catalogue sales to the Abcam platform, using Abcam's extensive market data to select attractive products for their in-house production, scaling up the output of their production facilities and adding relevant data to their products.

Elsewhere in the Group we have continued the programme of investment in our core IT systems, which has made them more robust and has helped drive efficiencies. We have also undertaken a product and market review which has identified many areas which we believe are attractive for further revenue growth.

Strong growth in profitability and cash generation continues to underpin our policy to distribute dividends amounting to 40% of adjusted post tax profits. Consequently the Directors have recommended payment of a total dividend of 7.04 pence per share in respect of 2012/13, representing a 16.4% year-on-year increase.

The following table shows revenues, costs and expenses for the year, which have been adjusted to aid comparison by separately identifying the amortisation of acquisition related intangible assets other than goodwill, other related charges arising from the recent acquisitions and the one-off costs incurred in their integration.

Revenue

Reported revenue for the year was £122.2m, representing growth of 24.9% over the prior year, which is 25.8% growth on a constant currency basis (assuming exchange rates for the currencies in which the Group sells had remained unchanged from 2011/12). This includes a full year contribution from Epitomics and Abcam Bristol. Taking into account the unaudited revenues of these businesses for the same period last year, we estimate that this represents underlying constant currency growth of approximately 11.8%.

Gross Margin

Gross margin increased to 71.0%, compared with 69.0% in the prior year. 1.8% of the uplift came from the reagents business due to a combination of higher selling prices, product mix and effective cost control. A further 0.5% arose in the Epitomics business and a negative 0.3% from the impact of less favourable exchange rates compared to the prior year.

Administration and management expenses

The acquisition of Abcam Bristol was completed on 12 September 2011 and that of Epitomics on 19 April 2012. For comparison purposes the table below shows the like-for-like analysis of costs excluding the direct expenses from these businesses in both years, and separately identifies the impact of foreign exchange gains and losses, the amortisation of acquisition-related intangibles and one-off integration costs incurred in the year. This shows that like-for-like costs grew by 17.9%, the main movements being:-

· An increase in staff and related expenditure of 10% (£1.4m);

· A market and product review was undertaken in support of Abcam's growth strategy (£1.3m); and

· Marketing costs increased by 18.4% (£0.3m).

There was also an increase of £0.5m in the amount credited back to profit and loss from production related activities.

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.

Overall R&D expenditure increased by 88.6% in the year to £7.9m (2011/12: £4.2m) reflecting the first full year of ownership of Abcam Bristol and Epitomics. £4.8m was incurred in our acquired entities, Abcam Eugene, Abcam Bristol and Epitomics, reflecting our strategy to invest in these businesses and in particular in new product development. In Cambridge UK, R&D costs were £1.3m. The amortisation of the acquisition-related intangibles attributed to patents and technological know-how are also classified as R&D expenditure, amounting to £1.8m in the year (2011/12 £0.5m).

The output of this investment is reflected in the number of new product launches which saw a 14% increase from own manufactured products from Abcam Bristol and a 62% increase in new RabMAbs® from Epitomics in China. The work in Cambridge UK contributed to the first new conjugated secondary antibody product range, whilst a significant portion of the output of Abcam Eugene was dedicated to the development of a new Elisa kit range due for launch later this year.

Operating profit and expenses

As a consequence of the additional investment made in the year the adjusted operating margin reduced slightly to 38.1% (2011/12: 39.4%).

Earnings and tax

The adjusted profit before tax in 2012/13 was £46.6m, the effective tax rate on which was 24.6% (2011/12: 24.7%), reflecting the benefit of announced changes to the UK corporation tax rate and tax efficiencies arising from a Group reorganisation, which were offset by the impact of higher foreign tax rates and a reduction in R&D tax credits due to the Group now being treated by the UK tax authorities as a large company rather than an SME.

After taking into account the deferred tax impact of acquisition-related intangible amortisation and one-off integration costs of £0.4m, the reported effective tax rate was 23.9% (2011/12: 26.7%).

Adjusted basic earnings per share (EPS) increased by 11.8% to 17.76 pence per share and adjusted diluted EPS by 12.7% to 17.57 pence. The basic weighted average number of shares in issue during the period was 197.7m (2011/12: 185.1m), reflecting the full year effect of shares issued on the acquisitions made during 2011/12 and shares issued on the exercise of share options.

Balance sheet and cash flow

Goodwill and intangibles

Goodwill at 30 June 2013was£82.0m compared with £82.4m at 30 June 2012. The decrease in goodwill is due to a credit of £1.4m resulting from fair value adjustments made to the assets acquired in the Epitomics and Ascent acquisitions, which was offset by a foreign exchange adjustment of £1.0m. Following the acquisitions of Mitosciences, Ascent and Epitomics there has been considerable change in the way these entities are structured and integrated within the group. These changes have resulted in discrete information available for an individual entity not reflecting the true substance of the performance of that entity and the value being added. Therefore it is not possible to accurately assess the fair value in use of the acquired entities as separate identifiable cash-generating units (CGUs) as such the goodwill has been reallocated to a single CGU, being the Abcam group. Goodwill is not amortised under IFRS but is subject toimpairment review on at least an annual basis. During the year the Directors performed the review which involvedmaking various assumptions regarding the future performance of the business. After considering various scenarios that could reasonably occur, the Directorsconcluded that no impairment wasrequired. For more details, please see note 12 to the preliminary financial information.

Other intangible assets at 30 June 2013 were £33.1m, compared with £34.3m at 30 June 2012. The movement primarily reflects amortisation of the intangible assets and the additions to capitalised software costs from the project to invest in our core IT systems which is described in more detail below. Fair value adjustments totalling £1.0m were also made during the year in respect of intangible assets from the Epitomics acquisition. Further analysis can be found in note 13 to the preliminary financial information. Other intangible assets are amortised through the income statement 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 tangible and intangible assets amounted to £7.3m (2011/12: £3.0m) reflecting major items as follows:

· Further stages of an investment in our core IT systems and website (£3.2m). This investment supports the delivery of Abcam's next stage of growth and includes the capitalisation of internal salary costs of £0.4m;

· During the year £3.8m was transferred from assets under construction to software costs reflecting the roll out of completed phases of the project;

· Development of new hybridomas by Epitomics (£1.3m), with a further £0.4m having been incurred on hybridomas under construction; and

· Investment in laboratory equipment (£1.3m).

Cash flow

We maintained strong cash generation in the year. Cash generated by operations was £51.8m, or 42.4% of Group revenue (2011/12: £37.7m, 38.5% of revenue).

Following a high working capital outflow in the previous year, the inflow in 2012/13 mainly reflects payables increasing by £3.6m due to an unusually high level of creditors and accruals at the year-end, offset by an increase in inventories of £1.3m and receivable balances increasing by 9% reflecting increased sales activity and a marginal increase in debtor days to 34.5 (2011/12: 34.0).

Overall, including foreign exchange movements, the Group reported a net cash inflow of £20.8m (2011/12: outflow of £38.1m). The main reason for the change is due to there being no cash outflows on acquisitions in 2012/13 compared with the £51m net outflow on acquisitions in 2011/12. Higher outflows on capital expenditure, taxation and dividends reflect the increase in the size of the business.

Net cash and term deposits at the year-end totalled £38.3m compared with £17.5m at the end of 2011/12 and there is no bank debt on the balance sheet.

Looking ahead

It is pleasing that the Group reported good growth in 2012/13 whilst going through a period of significant change as we worked on the integration of the former Epitomics and Ascent businesses.

The review of our business which we undertook this year has identified several new opportunities to boost our growth. These organic initiatives require investment in areas such as marketing, e-commerce and operational infrastructure which will begin this year. We expect to see the benefits from this investment in increases in revenues in the medium to longer term and believe that the returns will more than justify the investment made.

We will of course continue to manage the Group on a prudent basis, control our costs tightly, maintain sound financial controls and ensure we have scalable systems to support our growth.

Jeff Iliffe

Chief Financial Officer

9 September 2013

The preliminary financial information of Abcam plc, registered number 3509322, were approved by the Board of Directors and authorised for issue on 9 September 2013.

They were signed on its behalf by:

Jeff Iliffe

Director

1 Exchange differences on translation of overseas operations.2 IFRS 2 charge for fair value of share-based options and awards.3 Gains and losses recognised on cash flow hedges.4 Portion of deferred tax asset arising on outstanding share options and share options exercised and not taken to profit and loss in accordance with IAS 12.

*Profit for the year includes £13,973,000 of non-distributable earnings relating to the gain on disposal resulting from an intra-group transfer of a subsidiary undertaking (see note 15 for further details).

1 IFRS 2 charge for fair value of share-based options and awards.2 Gains and losses recognised on cash flow hedges.3 Portion of deferred tax asset arising on outstanding share options and share options exercised and not taken to profit and loss in accordance with IAS 12.

Notes to the preliminary financial informationFor the year ended 30 June 2013

1. General information

Abcam plc (the Company) is incorporated 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 Group is a producer and distributor of high-quality research‑grade antibodies and associated protein research tools. The Group operates through its ultimate parent company Abcam plc and through its wholly owned subsidiaries Abcam Inc, Abcam KK, Abcam (Hong Kong) Limited, Ascent Scientific Limited, Epitomics Inc, Epitomics (Hangzhou) Biotechnology Co., Limited and MitoSciences Inc, allowing it to serve a global customer base of over 100 countries.

2. Adoption of new and revised standards

In the current year, the following new and revised Standards and Interpretations have been adopted and have affected the amounts reported in this preliminary financial information:

Standards affecting the preliminary financial information

Amendments to IAS 1 Presentation of financial statements

The amendment increases the required level of disclosure within the statement of comprehensive income.

Standards not affecting the reported results nor the financial position

At the date of authorisation of this preliminary financial information, the following Standards and Interpretations which have not been applied in this preliminary financial information were in issue but not yet effective (and in some cases had not yet been adopted by the EU):

The Directors do not expect that the adoption of these Standards and Interpretations in future periods will have a material impact on the preliminary financial information of the Group.

3. Significant accounting policies

Basis of accounting

The preliminary financial information has been prepared in accordance with IFRSs adopted by the European Union and therefore the Group preliminary financial information comply with Article 4 of the EU IAS Regulation.

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 the preliminary financial information.

The preliminary financial information have 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 principal accounting policies adopted are set out in the next few pages.

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 de‑consolidated 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 values at the date of exchange of the assets transferred, the liabilities incurred and the equity interests issued by the Group. 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. Cost also includes direct attributable costs of investment.

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 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 discreet stage of the contract can be estimated reliably and is then based on the stage of completion of the contract activity at the balance sheet date. 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 revenue.

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 are 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); and

· exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur, which form part of the net investment in a foreign operation, and which are recognised in the foreign currency translation reserve and recognised in profit or loss on disposal of the net investment.

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.

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.

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 and associates, and interests in joint ventures, 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.

Deferred tax is calculated at the tax rates 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.

Depreciation is charged so as to write off the cost or valuation of assets over their estimated useful lives, using the straight‑line method, on the following bases:

Office equipment, fixtures and fittings 20% per annum

Laboratory equipment 20% per annum

Computer equipment 33% per annum

Hybridomas 12.5% per annum

Motor vehicles 20% per annum

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.

Intangible assets

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

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.

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 minimum useful life is determined to be between three years and five years for software, the term of the deal in the case of distribution rights and the length of the contract for contract‑based intangibles.

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). An intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that the asset may be impaired.

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.

Investments

Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment.

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 measured at initial recognition at fair value. 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 measured 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 equity. 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 equity at that time remains in equity 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 equity 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. 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.

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

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.

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 retained earnings.

The Group operates an employee 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. 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 carrying value of goodwill and other intangible assets and other similar evaluations. Actual amounts may differ from those estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. 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.

Impairment of intangibles

As part of the business combinations the Group acquired the following intangible assets: licence fees, customer relationships, patents, trade names, technology and know‑how. Further to this 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 no impairment was considered necessary for these assets.

Impairment of goodwill

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. 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 2013 was £81,954,000 (2012: £82,356,000). Further details are given in note 12.

Fair value of derivatives and other financial instruments

As described in note 27, the Directors use their judgement in selecting an appropriate valuation technique for financial instruments not quoted in an active market. Valuation techniques commonly used by market practitioners are applied. For derivative financial instruments, assumptions are made based on quoted market rates adjusted for specific features of the instrument. Other financial instruments are valued using a discounted cash flow analysis based on assumptions supported, where possible, by observable market prices or rates.

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 or defective inventory is based on management's estimation of the commercial life and shelf life of inventory lines. In assessing this, management takes into consideration the sales history of products and the length of time that they have been available for resale.

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.

6. Profit for the year

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

7. Auditor's remuneration

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

\* This relates to the interim review.

Details on the Company's policy on the use of the auditor for non‑audit services are set out in the Audit Committee Report. During the prior year, the auditor was used for due diligence work as this was considered most beneficial to the Group due to the auditor's established knowledge and experience of the Group's activities. The auditor's independence and objectivity was safeguarded through the use of separate engagement teams. No services were provided pursuant to contingent fee arrangements.

The Company purchased services to the value of £35,000 (2012: £26,000) provided by Cambridge Network Limited and its subsidiaries, a not-for-profit organisation. This is disclosed due to the audit partner also being a director of the Cambridge Network Limited. Consistent with the not-for-profit status, neither the audit partner nor Deloitte receives any remuneration in relation to this arrangement.

8. Employees and remuneration

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

Their aggregate remuneration comprised:

* £434,000 (2012: £65,000) 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. Net finance income

10. Taxation

UK corporation tax is calculated at 23.75% (2012: 25.5%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

The Finance Act 2012 which provided for a reduction in the main rate of UK corporation tax to 23% effective from 1 April 2013 was substantively enacted in July 2012. This rate reduction has been reflected in the calculation of deferred tax at the balance sheet date.

The UK Government also announced a further reduction in the main rate of corporation tax to 21% effective 1 April 2014 and has proposed a further reduction of 1% by 1 April 2015. These further tax rate reductions had not been substantively enacted at the balance sheet date and therefore have not been reflected in this preliminary financial information.

The effect of these tax rate reductions on the deferred tax balance will be accounted for in the period in which the tax rate reductions are substantively enacted.

The impact of the rate reduction to 21%, which will be reflected in the next reporting period, is estimated to reduce the UK deferred tax asset and liability provided at 30 June 2013 by £232,000 and £29,000 respectively.

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 ordinary shareholders 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 or where it is considered non‑market performance conditions will not be met resulting in the options not vesting.

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 earnings per share.

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.

12. 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 to the balance sheet rate.

Following the acquisitions of Mitosciences, Ascent and Epitomics there has been considerable change in the way these entities are structured and integrated within the Abcam group. These changes include redirecting sales through the Abcam platform and the centralisation of the marketing, technical and operational support. Consequently the discrete financial information which is available for an individual entity does not reflect the true substance of the performance of that entity and the value being added. This means it is not possible to accurately assess the fair value in use of the acquired entities which formerly constituted the separately identifiable CGUs to determine whether or not there is an indication of goodwill impairment.

IAS 36 requires that following a reorganisation in the business which results in a change in the composition of CGUs, goodwill should be reallocated to the units affected. Considering the changes above, it is appropriate to reallocate the goodwill arising from the acquisitions to a single CGU, which would reflect the reorganised business structure. 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.

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 four years. No growth rate has been used in the extrapolation of cash flows beyond the four years. A discount rate of 11% 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 carrying amount of goodwill exceeds its recoverable 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 reasonably possible change in any of these key assumptions which would cause the CGU's carrying amount to exceed its recoverable amount.

13. Intangible assets

Group