Final Results
Genus PLC
03 June 2004
FOR IMMEDIATE RELEASE 3rd June 2004
GENUS plc
Preliminary Results for the year ended 31st March 2004
Record Profits
Genus plc, the international bovine genetics company, announces record profits
for the year ended 31st March 2004, despite difficult global market conditions.
The Board is recommending a record 18% increase in dividend to 6.5 pence per
share (5.5 pence per share in 2003).
Highlights 2004 2003 % Change
Group turnover £183.7m £172.8m +6%
Profit before tax £8.1m £5.1m +58%
Profit after tax £5.3m £2.8m +89%
Basic EPS 15.5p 8.3p +87%
Final dividend 6.5p 5.5p +18%
Net debt £7.5m £12.2m -39%
Gearing 15% 26%
• Bovine Genetics - 44% of turnover
- A robust result despite difficult global markets; turnover up 2.1%
- Market share up in USA, Latin America and Australia
- Brazil now strongly profitable
- Prices down through competition from co-ops in USA
- Temporary trade barriers in Japan
- BSE in Canada
- BSE in USA in second half
- Drought in Australia
- Underlying profit contribution marginally down
• Other businesses - 56% of turnover
- Continued recovery in Veterinary Wholesaling
- Animal Health sales up 15% and underlying operating profit up 69%
- Record increase in underlying operating profit of 33% from
Development Consulting, excluding a one-off prior year credit and
discontinued operations.
Commenting on prospects Richard Wood, Chief Executive, said:
'This is an exceptionally strong result in the unusual circumstances of
difficult conditions occurring simultaneously in so many international markets.
It is seldom that so many international markets suffer dramatically at the same
time.'
'Market conditions are now much improved. US prices hardened steadily
throughout our third quarter and all market commentators are predicting an
upturn, although there is still uncertainty in Australia following the drought.
Markets in other areas are normal.'
'We believe that in 2004/5 Bovine Genetics will return to the strong growth
profile historically achieved.'
'The Board has just approved a new five year business strategy which plans to
drive underlying earnings growth at a rate in excess of the strong average
historically achieved. The Board continues to focus on the liquidity of the
shares as a priority.'
Contacts:
Richard Wood, Chief Executive, Genus plc 01256 347101
David Timmins, Group Finance Director, Genus plc 01256 347102
Buchanan Communications 020 7466 5000
Charles Ryland / Catherine Miles
Chairman's Statement
The Group produced record sales of £183.7m, up 6%, with record profit before tax
of £8.1m, up 58% on last year, despite a number of exceptionally adverse events
in world agricultural markets. Group turnover included gains in all businesses:
Bovine Genetics up 2%, Animal Health up 15%, and Development Consulting up 8%
on continuing operations. Underlying operating profit in both Animal Health and
Development Consulting increased strongly, together contributing £2.4m, up 55%
on last year after excluding a one-off prior year credit of £0.4m and
discontinued items. However, the reported agricultural downturn in the first
half of the year extended through several months of the second half because of a
single case of BSE in the USA. This slowed the market recovery in the USA and
suspended exports to a number of markets for three months. Together with other
exceptional market related events in the first half year, as outlined below,
these combined to reduce the underlying operating profit before exceptional
items from the Bovine Genetics business to £10.6m, a small reduction on last
year. (2003: £11.2m).
Operating profit before exceptional charges was £9.2m (2003: £8.6m before
operating exceptional charges of £0.2m). The exceptional charges of £0.5m
related principally to the settlement of a legal claim inherited with the ABS
acquisition in 1999 and the costs associated with an aborted acquisition in the
first half year.
Interest charges of £1.3m were slightly lower than last year due to lower
average debt levels which more than offset the impact of higher interest rates.
Property sales generated exceptional profits of £0.7m, which largely offset
non-recurring charges this year.
The net result was an increase in profit before tax to £8.1m (2003: £5.1m) and
almost to double basic EPS to 15.5p (2003: 8.3p)
Cash Flow & Gearing
Net debt reduced by £4.7m to £7.5m at 31st March 2004 (2003: £12.2m) because of
the continuing strong cash flow from operations generating £10m after £4m of
capital expenditure. There was a small decrease in the working capital
requirement. Approximately £1.1m was generated from property sales. Cash
investments totalling £1.2m were made on an acquisition in Chile, buying out the
minority interest in the French subsidiary and in purchasing the Brazilian stud.
£1.3m of cash was generated by the issue of shares to meet institutional
demand, which is explained in more detail below. Gearing at the year end was
15% compared with 26% at the prior year end.
Share Capital
In pursuit of the Board's intention to increase the company's share liquidity,
it has made a number of attempts to restructure the share register over time to
achieve more balance. In this pursuit, the company supported a discounted
dealing facility for small shareholders. Some 840 shareholders took advantage
of the facility and 226,148 shares were acquired and placed with institutions.
In addition, the company raised £1.3m in cash by placing 725,000 shares with
institutional shareholders and, raised a further £1.1m in cash by placing with
institutions 1,072,280 shares issued under the company's share option and share
saving schemes. Altogether, these measures increased the combined holdings of
institutional shareholders to 37%.
Despite this progress, the Board believes further restructuring is needed in
order to attain a register that enables the company to derive the full benefits
of its quoted status. To this end, the Board has obtained expert advice and will
be seeking a Court-approved reorganisation of the share register later in the
year.
Dividend
On the basis of the confidence the Board has in its long-term strategy for
growth, it is recommending a record 18% increase in dividend to 6.5 pence (2003:
5.5 pence). This will be paid on 18th August 2004 to shareholders on the
register at the close of business on 22nd July 2004 with an ex-dividend date of
21st July 2004.
Board
One of the strengths of Genus is the depth and breadth of its management team.
This was demonstrated when, as announced in August 2003, Philip Acton agreed to
deputise as Finance Director until March 2004 when the permanent replacement,
David Timmins, was appointed. Philip did this while keeping a watching brief on
the Animal Health Business for which he was, and still is, Chief Operating
Officer.
We announced in February 2004 that the non-executive director, Tim Yeo MP, would
be resigning at the end of May 2004 following his appointment to two Shadow
Ministries.
I would like to thank both Philip and Tim for their contributions and to welcome
David to the Board.
On a personal note, I have overseen the development of Genus since its formation
as an independent company. In 1996, its first full trading year, Genus was a
small, marginally profitable, UK company owned by 29,000 customer/shareholders
and trading solely in England and Wales. As we report nine years later, Genus
is now a publicly quoted company and the largest Bovine Genetics company in the
world. Against that background, it is with regret but with some pride, that I
announce my intention to retire at the Annual General Meeting (AGM) in August
this year.
I am delighted to announce that, following the AGM, John Hawkins has agreed to
replace me as non-executive Chairman. John has been a non-executive director of
Genus for more than three years, so brings knowledge of the company together
with a wealth of experience in commerce which will be an invaluable asset for
the Group as it moves into its next phase of strategic development. John is
already non-executive Chairman of Salamander, recently awarded a Queen's Award
for Innovation and is a non-executive director of Psion plc.
Recently the Board has developed a new five year corporate strategy for the
Group. This aims to drive underlying earnings at a rate in excess of the strong
average rate historically achieved. We plan to use the Group's cutting edge
biotechnology research to supplement both organic and acquisition growth. The
management will be incentivised with a new remuneration policy which will be
presented to shareholders for approval at the AGM.
John's experience and strong business acumen will be invaluable in overseeing
this strategic plan which will involve the commercialisation of new inventions
and local and international acquisitions.
We have already started the search for a non-executive director to fill the
vacancy created by John's appointment.
Concluding Comments
I wish the Company every success in what promises to be another exciting stage
in its development. I am sure that, under the guidance of John Hawkins, the new
five year corporate strategy will deliver significant shareholder value over the
coming years.
John Beckett, Chairman
Chief Executive's Review
Bovine Genetics - 44% of Group Turnover
This international business uses biotechnology to drive genetic change in beef
and dairy cattle. This year, 9.2 million doses of semen (2003: 8.6 million
doses) were sold from the Group's five bull studs, located in four continents,
to farmers in seventy countries.
The international diversity of the business usually insulates it from country
agricultural cycles but, this year, unprecedented market conditions occurred
simultaneously in several markets. These combined to create conditions which
resulted in uneconomic competitive activity, particularly from co-operatives in
the USA.
The principal exceptional factors were:
• A general downturn in the USA
• The worst drought in history in Australia
• The introduction of trade barriers in Japan
• BSE in Canada throughout the year
• A single case of BSE in the USA which slowed the recovering US
market in the second half year and halted some exports for three months.
• Strong Sterling and a weak US Dollar.
Genus performed better than its competitors in these difficult market
conditions. None of the Genus competitors is a publically quoted company. Two
UK subsidiaries of international competitors have been put on the market. Genus
has announced its intention to acquire one of these, the other has been put into
administration. We believe that many of the larger national co-operatives have
reported losses which may lead to consolidation opportunities.
The Genus business increased its volume by 5% but prices were reduced,
particularly in the USA where co-operative competitors offered unrealistically
low prices in a drive to gain volume in the depressed market. Sales
realisations in the USA increased by 5% but this translated to a decrease of 3%
in Sterling terms. The increased volume improved market share in the USA by 1%
to 23%. This improvement arose from the steady growth and acceptance of the
Group's unique dairy Reproductive Management Service. This system allows large
producers to improve the predictability in producing cattle pregnancies while
driving up milk output.
By contrast, in Latin America, the changes we made to the structure last year
following the collapse of the Argentinian and Brazilian exchange rates have
driven through a strong profit recovery. Market share has been increased by 3%
to 26% and the business has become strongly profitable.
In Australia, all the integration objectives for the acquired business, RAB,
have been met and the new enhanced operation has increased its market share by
5% to 40%, but in a smaller market because of the severe drought conditions
which prevailed during the first half of the year.
In summary, Europe and the UK were on plan but in North America, Australia and
Japan profits were lower than expected for the above exceptional market reasons.
Research & Development
Last year we increased the R&D spend by £0.9m to £9.0m (2003: £8.1m) to hasten
the speed and diversity of the bioscience programme.
The Group commercially targets its research in order to select its portfolio of
fundamental biotech projects. In this way, expenditure is spread across a
number of short and long-term projects, all with a high chance of commercial
success, were a technical solution to be achieved.
Targets fall into clear categories associated with size of the market
opportunity, the extent of the technical difficulty for making a breakthrough
and the timeframe of likely achievement. Leading projects are summarised below:
-
Project Lead Time Impact
Increase semen output per bull Achieved 20-40% extra sales for top bulls, worth
£200-£400k per animal/year
Develop technology for other 2/3 years Will enable pig semen to be frozen
species
Increase semen fertility 3 years Differentiates Genus semen, offers premium
pricing and/or greater market penetration
Sexed Semen 2/3 years Differentiates Genus semen. At least
doubles the price of semen. Offers
(several projects) potential for multi-species applications
Genetics & Gene Markers 5 plus years 1. Increases hit rate for selection
process
2. Allows selection for difficult
traits
3. Biotech source for sexed semen
The first of the projects has already been successful and has increased the
output from top bulls, none of which is now in short supply.
Two simple machines installed sometime ago at the studs in Brazil and in the UK
are being used for the purposes of research into sexed semen. Two leading
technologies under investigation for commercial application of sexed semen are
in early prototype phases.
Animal Health - 44.0% of Group Turnover
This business, which sells licensed veterinary pharmaceuticals and other
products and wholesales veterinary products, increased sales by 15% to £80.4m
and its contribution to underlying operating profit increased by 69% to £1.6m.
Like-for-like, sales in Veterinary Wholesaling increased by 10% to £71.4m.
Margins improved and drove through an increase in profit contribution. However,
due to intense price competition, market share reduced slightly during the
second half of the year.
Some enhanced system features introduced during the year to the Palm hand held
electronic ordering device called 'Genuslynx' increased orders received
electronically doubled to just over 50% by the year-end.
New products and services were introduced to differentiate the Genus service
from that of the competitors. These included the supply of medical gases for
surgeries, veterinary dental equipment and consumables and an intranet service
to enable customers to benchmark their performance.
Licensed product turnover increased by 5% and produced an underlying operating
profit increase of 11% over last year.
In September 2003, an enhanced version of IdENTICHIP was launched. This new
chip enables vets simultaneously to take the temperature of the animal at the
same time it is uniquely identified. This revolutionary new chip is called
Identichip Bio-thermal. Initially sales rose to over 20% of all chip sales but
a temporary manufacturing problem held back growth in the final quarter. An
immediate benefit of this new product will be to differentiate the Genus
identification product range from generic competition, so creating a more stable
premium priced market for Genus.
Progress has also been made in developing a number of new licensed
pharmaceutical products, to add to the Group's intellectual property base and
profit growth potential. Sales from Oticyl and Lax-a-Past, the two 'over the
counter products' launched in the first half of the year, progressed strongly.
Negotiations began for access to prescription products in five other therapeutic
areas.
Development Consulting - 12.0% of Group Turnover
This small business, located in the UK, provides consulting services to the UK
Government, the EU and to overseas aid agencies for projects generally operated
in less developed countries.
Development Consulting increased its turnover by 8% to £22.7m on continuing
operations and produced an underlying operating profit of £0.8m, up 33% on its
underlying performance last year excluding a one-off credit of £0.4m in the
prior year. Amongst the notable projects in progress at the year end were:
1. Reforms to tea production in Sri Lanka for the Asian Development Bank
2. Trade Systems for Ukraine's accession to the WTO for the UK Department of
International Development
3. Creation of a Social Security system for Lithuania for the European
Commission
In a departure from past business emphasis this year, the Division led the group
to win, in May 2004, a large and prestigious contract to provide the UK
Government Department for Environment, Food and Rural Affairs ('Defra') with
emergency veterinary and management resources as a contingency for any future
Foot & Mouth Disease ('FMD') outbreak.
The contract, which is expected to commence in June 2004 is for an initial
period of three years, with a possible extension to five years. In the absence
of a FMD outbreak, Genus will receive fees for the maintenance of a trained and
equipped resource. The Development Consultancy Division will provide the major
contract management and the resources will be led and supplied by other Genus
divisions. The equipment, pharmaceuticals and other consumables to maintain the
operation will be stored and maintained under ISO 9001 and distributed by Genus.
In the event of a FMD outbreak, Genus will receive additional fees for the
delivery of the required FMD management and vaccination services for the
duration of the outbreak.
Company Outlook
There is already clear evidence of an upturn in some major agricultural markets.
In the USA, the Department of Agriculture has recently issued a report
forecasting an upturn in the dairy sector this year. This view is supported by
the leading market indicators we track, including wholesale semen prices which
increased steadily throughout our fourth quarter, after being in decline for the
previous three quarters.
We believe Latin America will continue to be a strong and growing opportunity
for Genus provided that the exchange rate remains stable. The Group's stud in
Brazil is by far the most prestigious in Latin America. The Genus market share
has grown by 3% to 26% and the Group's bulls are consistently top of their
rankings. In the coming year, the growth of the Latin American business will
benefit from the better control now achievable following the acquisition in
March of the business of Genus' exclusive agent in Chile.
We assisted the US State Department in its representations to the Japanese
Agricultural Ministry and this eventually resulted in the removal of the tariff
and trade protection measures introduced by the Japanese Government in the
summer of 2003 with the result that trading is now back to normal.
Elsewhere in the world, prospects remain sound for next year, although there is
still some uncertainty in Australia over the speed at which farmers will be able
to rebuild their herds. As recently announced, the proposed regional
acquisition of Supersires Ltd in the UK will provide synergy benefits from
product substitution after the cost of integration has been absorbed.
Whilst 2003/4 was an exceptionally difficult and unpredictable year, we expect
2004/5 to be more settled and to herald the return of the historically good
progress for the Group's principal business in Bovine Genetics.
We expect both Animal Health and Development Consulting to continue to grow at
historical rates.
Richard Wood, Chief Executive
Finance Director's Review
Results
As is discussed more fully in the Chief Executive's review, 2003/4 was a year in
which the Group delivered sales growth and record profit before tax despite
adverse market conditions. Operating profit before exceptional items and
amortisation of goodwill increased by 5% to £10.9m. The Bovine Genetics
division returned reduced operating profit for the reasons discussed in the
Chief Executive's report, though even in the difficult trading conditions, sales
grew by 2.1%. The Consultancy business increased operating profit before
goodwill amortisation and exceptional items on continuing operations by £0.2m to
£0.8m following the restructuring in March 2003. The Animal Health business
improved operating profit before goodwill amortisation by 69% to £1.6m.
The interest charge of £1.3m was slightly down on the prior year. Net debt has
been substantially reduced by £4.7m to £7.5m at the year end as a result of
strong cash inflow in the second half of the year.
During the year the group sold a number of properties for £1.1m realising a
profit of £0.7m.
Profit before tax increased by £3m to £8.1m (2003: £5.1m).
The tax charge only rose by £0.5m from £2.3m to £2.8m due to a reduction in the
requirement to provide for deferred taxation on timing differences and the
effects of providing for impairments of purchased goodwill in the prior year.
Accordingly, the tax rate on profit before tax was 34% (2003: 45%).
Earnings per Share and Dividends
The basic earnings per share increased by 87% to 15.5 pence (2003: 8.3 pence).
The Board has recommended an 18% increase in the dividend to 6.5 pence per share
(2003: 5.5 pence per share). This dividend is covered 3 times by underlying
earnings (2002: 4 times). The Board continues to take the view that splitting
the dividend between interim and final payments is inappropriate, owing to the
administrative cost of generating and posting some 28,000 dividend cheques. The
dividend will be paid on 18 August 2004, one week earlier than in previous
years.
Financing and Cash Flow
Net debt reduced from £12.2m to £7.5m during the year, a reduction of £4.7m.
The principal components of this reduction are set out in the table below:
£m
Net Cash Flow from Operations 14.4
Interest Paid (1.3)
Tax Paid (2.5)
Proceeds from disposal of properties 1.1
Dividends Paid (1.9)
Acquisitions (1.2)
Capital Expenditure (net of other asset disposals) (3.6)
Issue of Share Capital 2.4
Foreign Exchange Differences (2.6)
Other Movements (0.1)
Movement in Net Debt 4.7
Treasury
The Group has a centralised treasury function to manage foreign exchange and
interest rate risk following guidelines laid down by the Board. Derivative
instruments are used solely to mitigate these risks.
The Group's borrowings are of three principal types:
• Bank borrowings, provided by Barclays Bank PLC
• Finance Leases and Hire Purchase contracts, which are used to finance the
acquisition of certain fixed assets
• Loan notes, originally issued on the acquisition of VDC plc
The main risks arising from the Group's financial instruments are interest rate
risk, liquidity risk and foreign currency risk. The Board reviews and agrees
policies for managing each of these risks and these policies are summarised
below.
Interest Rate Risk
The Group borrows principally in US Dollars, Australian Dollars and Sterling.
Interest rate swaps may be used to generate the desired interest profile and to
manage exposure to interest rate fluctuations. At the year end, no such swaps
were in place.
Liquidity Risk
The Group's objective is to maintain a balance between continuity of funding and
flexibility through the use of overdrafts, bank loans, loan notes and finance
leases. At the year end, 94% of the group's borrowings excluding overdrafts
were due to mature within one year and 5.7% between one and two years.
During the year, surplus funds were used to pay down all external US Dollar
borrowings.
Short term flexibility is achieved through overdraft facilities, a bank
multi-option facility to cover bank guarantees, borrowings and other items of
£15m and a bank revolving credit facility of £10m which is available until 30th
September 2005. At 31st March 2004, the Group had not drawn on the revolving
credit facility.
Foreign Currency Risk
The Group is exposed to two principal types of foreign exchange risk: -
transaction risk and translation risk. Transactional exposures arise from
operating units selling and/or purchasing goods and services in currencies other
than their reporting currency. Where these exposures are large or other than
short term, they are typically hedged by the use of forward contracts.
Translation exposure arises on the retranslation of overseas subsidiary
companies' profits and net assets into sterling for financial reporting
purposes. Retranslation of overseas profits is not hedged, while retranslation
of overseas net assets may be hedged by borrowings in the currency of those net
assets where the exposure is perceived to be material to the Group's net assets.
At the year end, the Group had borrowings in Australian dollars and US dollars
partially hedging the retranslation of its net investment in those currencies.
Pensions
Genus's largest pension scheme is the Milk Pension Fund, a UK-based defined
benefit scheme which has a number of participating employers. Milk Marque
Limited, the principal employer, has given notice of its intention to withdraw
from the scheme. Negotiations are ongoing between the participating employers
and the Scheme Trustees regarding the basis on which this withdrawal is to be
effected.
Under FRS 17, a snapshot of the value of the scheme's assets and liabilities at
31 March 2004 showed the Genus section of the scheme as having a market value of
£94.8m representing 93% of accrued benefits. The last full actuarial funding
valuation of the Milk Pension Fund was in March 2003, when the actuarial value
of the assets was sufficient to cover 104% of the members' accrued benefits.
Acquisition
In March 2004, the Group acquired the trade and certain assets and liabilities
of Agrotec ABS Ltda, a Chilean company, for a total consideration of £543,000.
David Timmins, Group Finance Director
AUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the Year Ended 31 March 2004
Notes Continuing Operations Discontinued Total Total
Before Exceptional Operations 2004 2003
Exceptional
Items Items
£000 £000 £000 £000 £000
TURNOVER
Continuing operations 183,710 - - 183,710 169,749
Discontinued operations - - - - 3,041
2 183,710 - - 183,710 172,790
Underlying operating profit/(loss) 2,3 11,359 (503) (436) 10,420 10,182
Amortisation of goodwill 3 (1,674) - (1,674) (1,805)
OPERATING PROFIT/(LOSS) 2 9,685 (503) (436) 8,746 8,377
Of which:
Continuing operations 9,685 (503) - 9,182 9,971
Discontinued operations - - (436) (436) (1,594)
Continuing operations
Profit on disposal of properties - 711 - 711 1,205
Profit on disposal of investment - - - - 34
Discontinued operations
Loss on disposal of discontinued - - - - (3,179)
operations
Interest receivable and similar income 5 - - 5 62
Interest payable and similar charges (1,319) - - (1,319) (1,357)
PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE
TAXATION
8,371 208 (436) 8,143 5,142
Tax on profit on ordinary activities (3,135) 189 150 (2,796) (2,325)
profit on ordinary activities after taxation
5,236 397 (286) 5,347 2,817
Minority interests - equity (74) - - (74) (63)
PROFIT FOR THE FINANCIAL YEAR 5,162 397 (286) 5,273 2,754
Dividends on equity shares (2,306) (1,846)
RETAINED PROFIT FOR THE YEAR 2,967 908
Earnings per share - underlying 3 19.5p 22.2 p
- basic 3 15.5p 8.3 p
- diluted 3 15.3p 8.1 p
Dividend per share 6.5p 5.5p
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
2004 2003
£000 £000
Profit for the financial year 5,273 2,754
Exchange difference on the re-translation of net assets
of subsidiary undertakings (4,772) (1,633)
Exchange difference on borrowings 607 (889)
Tax on exchange differences - 254
--- ---
Total recognised gains and losses relating to the year 1,108 486
AUDITED CONSOLIDATED BALANCE SHEET
for the Year Ended 31 March 2004
2004 2003
FIXED ASSETS £000 £000
Intangible assets 25,875 28,147
Tangible assets 15,876 16,851
Investments 241 83
----------- -----------
41,992 45,081
----------- -----------
CURRENT ASSETS
Stocks 16,233 17,640
Debtors 32,456 32,177
Cash at bank and in hand 4,330 6,831
----------- -----------
53,019 56,648
CREDITORS: amounts falling due within one year 44,990 47,636
----------- -----------
NET CURRENT ASSETS 8,029 9,012
----------- -----------
TOTAL ASSETS LESS CURRENT LIABILITIES 50,021 54,093
CREDITORS: amounts falling due after more than one year 605 5,759
PROVISIONS FOR LIABILITIES AND CHARGES 681 623
ACCRUALS AND DEFERRED INCOME 30 32
EQUITY MINORITY INTERESTS - 222
----------- -----------
NET ASSETS 48,705 47,457
----------- -----------
CAPITAL AND RESERVES
Called up share capital 3,536 3,357
Share premium account 36,975 34,708
Profit and loss account 8,194 9,392
----------- -----------
EQUITY SHAREHOLDERS' FUNDS 48,705 47,457
----------- -----------
AUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 March 2004
2004 2003
Note £000 £000
NET CASH INFLOW FROM OPERATING ACTIVITIES 4 14,393 13,454
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received and similar income 5 62
Interest paid and similar charges (1,028) (1,180)
Interest element of finance lease and hire purchase rental payments (291) (177)
---------- ----------
NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE (1,314) (1,295)
---------- ----------
TAXATION
Corporation tax paid (1,374) (991)
Overseas tax paid (1,168) (646)
---------- ----------
(2,542) (1,637)
---------- ----------
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Payments to acquire tangible fixed assets (3,986) (6,005)
Payments to acquire investments (158) -
Receipts from sales of tangible fixed assets 1,625 4,693
Receipts from sales of investments - 34
---------- ----------
NET CASH OUTFLOW ON CAPITAL EXPENDITURE (2,519) (1,278)
---------- ----------
ACQUISITIONS AND DISPOSALS
Purchase of subsidiaries and businesses (1,234) (4,838)
Net cash acquired - 42
Receipts from sale of subsidiaries - -
Net cash and bank overdrafts disposed of - -
----- -----
(1,234) (4,796)
----- -----
EQUITY DIVIDENDS PAID (1,853) (1,576)
----- -----
NET CASH INFLOW BEFORE MANAGEMENT OF LIQUID
RESOURCES AND FINANCING 4,931 2,872
----------- ----------
AUDITED CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
for the year ended 31 March 2004
2004 2003
Note £000 £000
NET CASH INFLOW BEFORE MANAGEMENT OF LIQUID
RESOURCES AND FINANCING 4,931 2,872
----- ------
FINANCING
Repayment of loan notes (979) (835)
New bank loans 378 -
Repayment of bank loans (6,133) (3,541)
Finance leases 160 2,382
Repayments of capital element of finance leases and
hire purchase rental payments (997) (920)
Issue of ordinary share capital 2,446 602
---------- -----------
-
NET CASH OUTFLOW FROM FINANCING (5,125) (2,312)
---------- -----------
-
(DECREASE)/INCREASE IN CASH 5 (194) 560
---------- -----------
-
ANALYSIS OF CHANGES IN NET DEBT DURING THE YEAR
Reconciliation of net cash flow to movement in net debt:
2004 2003
Note £000 £000
(Decrease)/increase in cash in year (194) 560
Cash inflow from short term deposits - -
---------- -----------
-
(194) 560
Repayment of loan notes 979 835
New long term loans (378) -
Repayment of bank loans 6,133 3,541
New finance leases (160) (2,382)
Repayment of capital element of finance lease contracts 997 920
---------- -----------
-
Change in net debt resulting from cash flows 7,377 3,474
Exchange differences (2,639) (24)
Other - (219)
---------- -----------
-
Movement in net debt 4,738 3,231
Net debt at 1 April 2003 (12,196) (15,427)
---------- -----------
-
Net debt at 31 March 2004 5 (7,458) (12,196)
---------- -----------
-
1. BASIS OF PREPARATION
The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 March 2004 or 2003 (but is derived
from those accounts). Statutory accounts for 2003 have been delivered to the
registrar of companies, and those for 2004 will be delivered following the
company's Annual General Meeting. The auditors have reported on those accounts;
their reports were unqualified and did not contain statements under section
237 (2) or (3) of the Companies Act 1985. The Annual Report and Notice of Annual
General Meeting will be posted to the shareholders by the end of June 2004. This
preliminary announcement was approved by the Board on 3 June 2004.
2. TURNOVER AND SEGMENTAL ANALYSIS
Turnover, which is stated net of value added tax and overseas sales taxes,
represents amounts invoiced to third parties.
Underlying
Turnover operating profit* Net assets
2004 2003 2004 2003 2004 2003
£000 £000 £000 £000 £000 £000
Area of activity
Bovine Genetics 80,650 79,002 10,064 11,198 42,648 38,000
Consultancy 22,657 23,930 328 (442) 127 6,554
Animal Health 80,438 69,955 1,624 962 17,770 18,329
------ ------ ------ ------ ------ ------
183,745 172,887 12,016 11,718 60,545 62,883
Inter-segmental sales (43) (97) - - - -
Unallocated 8 - (1,596) (1,536) (11,840) (15,426)
---- ---- ---- ---- ---- ----
183,710 172,790 10,420 10,182 48,705 47,457
---- ---- ---- ---- ---- ----
*before amortisation of goodwill
The results of the discontinued businesses in the year, included above, are
tabulated separately below.
Operating profit
2004 2003
£000 £000
Area of activity
Bovine Genetics 9,145 10,317
Consultancy 297 (642)
Animal Health 900 238
---- ----
10,342 9,913
Unallocated (1,596) (1,536)
---- ----
8,746 8,377
Non-operating exceptional items
Bovine Genetics 711 1,266
Consultancy - (3,179)
Animal Health - (61)
Unallocated - 34
Net interest (1,314) (1,295)
---- ----
Profit on ordinary activities before taxation 8,143 5,142
------ ------
TURNOVER AND SEGMENTAL ANALYSIS (CONTINUED)
Geographical region of origin
Turnover Operating profit Net assets
2004 2003 2004 2003 2004 2003
£000 £000 £000 £000 £000 £000
United Kingdom 141,308 131,421 5,593 4,099 41,481 40,820
Europe 6,687 6,231 1,019 1,196 2,742 1,854
North America 34,749 37,128 3,126 3,947 13,408 15,793
Rest of the World 10,026 6,552 604 671 2,914 4,416
------ ------ ------ ------ ------ ------
192,770 181,332 10,342 9,913 60,545 62,883
Inter-segment sales (9,060) (8,542)
Unallocated - - (1,596) (1,536) (11,840) (15,426)
------ ------ ------ ------ ------ ------
183,710 172,790 8,746 8,377 48,705 47,457
------ ------ ------ ----
Non-operating
exceptional items 711 (1,940)
Net interest (1,314) (1,295)
---- ----
Profit on ordinary activities
before taxation 8,143 5,142
---- ----
Geographical region of destination
Turnover
2004 2003
£000 £000
United Kingdom 116,473 107,217
Europe 19,953 17,077
North America 22,721 25,248
Rest of the World 24,563 23,248
---- ----
183,710 172,790
---- ----
Unallocated costs within operating profit are common corporate costs.
Unallocated net liabilities comprise:
2004 2003
£000 £000
Fixed assets and investments 241 533
Debtors 185 961
Creditors (240) (577)
Net Debt (7,458) (12,196)
Taxation (2,269) (2,079)
Proposed dividends (2,299) (1,846)
Minority interest - (222)
---- ----
(11,840) (15,426)
---- ----
TURNOVER AND SEGMENTAL ANALYSIS (CONTINUED)
The segmental analysis includes the following results from discontinued
activities:
Geographical region of origin Region of destination
Turnover Operating loss Turnover
2004 2003 2004 2003 2004 2003
£000 £000 £000 £000 £000 £000
United Kingdom - 2,430 (436) (1,498) - 1,237
Europe - - - - - 160
North America - 611 - (96) - 1,116
Rest of the World - - - - - 528
---- ---- ---- ---- ---- -----
- 3,041 (436) (1,594) - 3,041
---- ---- ---- ---- ---- -----
Operating loss for 2003 includes amortisation of goodwill of £169,000.
Area of Activity
Turnover Operating loss
2004 2003 2004 2003
£000 £000 £000 £000
Consultancy - 3,041 (436) (1,594)
---- ---- ---- ---
No significant turnover or profits arose from the business acquired in Chile on
24 March 2004.
3. EARNINGS PER SHARE
The basic earnings per share of 15.5p (2003: 8.3p) is based on the profit for
the financial year of £5,273,000 (2003: £2,754,000) and the weighted average
number of ordinary shares in issue of 34,051,042 (2003: 33,322,000).
The underlying earnings per share of 19.5p (2003: 22.2p) is based on the
earnings of continuing operations before amortisation of goodwill and
exceptional items as set out below:
2004 2003
£000 £000
Profit for the financial year 5,273 2,754
Add: Amortisation of goodwill 1,674 1,805
Exceptional operating items 503 247
(Profit) on disposal of investment - (34)
Loss/(profit) on disposal of properties and businesses (711) 1,974
Loss on discontinued operations 436 1,425
---- ----
7,175 8,171
Less: Associated taxation on adjustments (539) (775)
---- ----
Underlying earnings 6,636 7,396
---- ----
The directors consider that underlying earnings per share as calculated is an
appropriate and consistent measure of the Group's performance.
The diluted earnings per share of 15.3p (2003: 8.1p) is based on profit for the
financial year of £5,273,000 (2003: £2,754,000) and on 34,488,843 (2003:
34,175,000) diluted ordinary shares as set out below:
2004 2003
000's 000's
Basic weighted average number of shares 34,051 33,322
Dilutive potential ordinary shares:
Employee share options 438 853
---- ----
34,489 34,175
---- ----
4. RECONCILIATION OF OPERATING PROFIT TO NET CASH FLOW FROM OPERATING ACTIVITIES
2004 2003
£000 £000
Operating profit 8,746 8,377
Depreciation 3,636 3,435
Amortisation of milk quota 8 7
Amortisation of goodwill 1,674 1,805
Loss/(profit) on disposal of fixed assets 183 (304)
Deferred government grants (2) (1)
Decrease/(increase) in stocks 1,558 (2,850)
(Increase) in debtors (33) (2,555)
(Decrease)/increase in creditors (1,377) 5,540
----------- -----------
14,393 13,454
Net cash inflow from operating activities ----------- -----------
5. ANALYSIS OF CHANGES IN NET DEBT DURING THE YEAR
At At
1 April Cash Foreign 31 March
2003 flows exchange 2004
£000 £000 £000 £000
Cash at bank and in hand 6,831 (1,542) (959) 4,330
Bank overdrafts (5,908) 1,348 (1,680) (6,240)
------ ------ ------ ------
Cash 923 (194) (2,639) (1,910)
Bank loans (8,158) 5,755 - (2,403)
Loan notes (2,616) 979 - (1,637)
Obligations under finance leases and
hire purchase contracts (2,345) 837 - (1,508)
---- ----- ----- -----
(12,196) 7,377 (2,639) (7,458)
---- ----- ----- -----
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 22nd November 2024
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