Preliminary Results
Genus PLC
20 September 2006
FOR IMMEDIATE RELEASE 20 September 2006
GENUS plc
Preliminary Results for the fifteen months ended 30 June 2006
Genus plc, the world leading animal genetics company, which has changed its year
end to 30 June, announces its results for the fifteen months to 30 June 2006.
2006 2005
Restated for
FRS17 and FRS21
(15 months) (12 months)
Highlights (Adjusted)*
Operating profit from Continuing £22.3m £10.4m
Operations
Profit before tax from Continuing
Operations £16.4m £7.5m
Earnings (note 6) £11.3m £6.9m
Basic EPS (note 6) 25.0p 19.0p
Highlights (Statutory)
Group turnover £287.2m £183.2m
Operating profit £8.7m £9.2m
Exceptional items, goodwill
amortisation and discontinued
operations losses £15.5m £1.7m
Profit before tax £2.8m £8.1m
Earnings £(0.3)m £5.9m
Basic EPS (0.6)p 16.3p
Dividend per share 8.25p 7.5p
*Before exceptional items and goodwill amortisation
Direct comparisons of the results for the 15 month period to 30 June 2006 with
the prior year are distorted by the extended 15 month reporting period and the
Sygen acquisition part way through the period.
The following unaudited proforma comparison of the 12 month period ended 30 June
2006 is provided.
12 months ended 12 months ended
30 June 2006 30 June 2005
Highlights (proforma)**
Turnover £267.5m £247.0m
Operating profit £24.0m £17.2m
**Continuing operations before shrimp business.
See Finance Director's Review for basis of preparation
• Group
- Operating profit* from continuing operations increased by £11.9m
(114%) to £22.3m (2005: £10.4m)
- £6m annualised synergies achieved from Sygen acquisition in year one
against original expectations of £3m .
- Adjusted basic EPS of 25.0p (2005: 19.0p)
- Net debt reduced to £117m at period end - better than plan
- Dividend increased by 10% to 8.25p reflecting Board's confidence in
the Enlarged Group's prospects.
• Bovine Genetics Division
- Operating profit* increased to £13.0m (2005: £10.3m)
- New Genus bull, called Bolton, ranked No.1 by US Dairy Association.
• Porcine Genetics Division
- Operating profit* was £11.8m compared with £8.1m in the equivalent
prior year period
Commenting on prospects Richard Wood, Chief Executive, said:
'We have achieved a momentous change for Genus and have produced record results
from our continuing operations. The Sygen acquisition has brought together the
market leader in bovine genetics with the market leader in porcine genetics, to
create a multi-species company with a broad international spread of business and
added research opportunities across more species. As a result, Genus is now
firmly positioned as the world's leading animal genetics company.
The integration of Sygen is going well. The synergies being achieved are
exceeding our initial expectations and we are ahead of plan.
The original Genus businesses have produced strong results and we have made good
progress with our business strategy by selling three non-core businesses.
We view the Group's prospects positively. With the new opportunities we have
created for the enlarged group, we are looking forward to the year ahead
optimistically.'
For further information please contact:
Genus plc Tel: 01256 347 100
Richard Wood
Chief Executive
David Timmins
Finance Director
Buchanan Communications Tel: 020 7466 5000
Charles Ryland
Suzanne Brocks
Chairman's Statement
The 15 month period to 30 June 2006 was one of momentous change and strong
financial results for Genus. The successful acquisition of Sygen International
plc ('Sygen') in December 2005 and the strong performance of the historical
Genus businesses has positioned Genus as the world's leading animal genetics
company.
The acquisition of Sygen has brought together the market leader in bovine
genetics with the market leader in porcine genetics to create a multi-species
company, with added research opportunities and a broad international spread
business.
The two businesses are being integrated successfully, ahead of plan and
realising synergies which have exceeded expectations. Similarly, net debt has
been reduced beyond our initial expectations.
The Board has decided to divest the loss making shrimp business and non-core
businesses to concentrate Genus' resources and investment on its core bovine and
porcine businesses. This strategy will also hasten the reduction in net debt and
will drive the opportunity to introduce further species in due course.
Group Performance
It is unusual to be reporting on a 15 month period and direct comparisons with
the prior year are distorted by the extended 15 month reporting period and the
Sygen acquisition within the period. Certain comparisons are therefore given in
this Statement on an unaudited proforma basis.
Group turnover on continuing operations for the period to June 2006 was £244.5m
(year ended 31 March 2005 ('2005' or 'prior year'): £113.9m) with Group
operating profit from continuing operations being, £22.3m before exceptional
items and goodwill amortisation (2005: £10.4m). However, profit before tax was
reduced to £2.8m (2005: £8.1m) due to exceptional items and amortisation of
goodwill arising from the Sygen acquisition in addition to a higher interest
charge of £6.6m. This reflected the increased level of debt required to fund the
acquisition of Sygen and was partially offset by gains on property divestments
of £1.9m.
Adjusted earnings after tax (before exceptional items and amortisation of
goodwill) was £11.3m (2005: £6.9m) resulting in adjusted basic earnings per
share increasing to 25.0p (2005: 19.0p) (note 6). In the three month period
ended 30 June 2006, operating profit from Continuing Operations, including joint
ventures, amounted to £5.7m.
On an unaudited proforma basis for the 12 months ended 30 June 2006, turnover
from continuing operations before shrimp genetics was £267.5m, which was up
£20.5m (8.3%) (12 months ended 30 June 2005: £247.0m). Operating profit from
continuing operations before shrimp genetics also on a proforma basis increased
by £6.8m (39.5%) to £24.0m (2005: £17.2m).
In line with the Board's stated objective of divesting non-core businesses in
order to concentrate resources and investment on the higher growth bovine and
porcine businesses, the Group's businesses in veterinary and dental wholesaling
were sold during the period for a total of £8.1m in cash. In addition, the
Brazilian shrimp business, which was part of the Sygen operation, was sold in
the period for US$6m (£3.25m) in cash.
Exceptional items included within operating profit were £1.8m relating to the
integration and restructuring of Sygen and, as already reported, £0.9m relating
to the restructuring of the UK bovine operation and the closure of non-core
consulting operations.
These exceptional costs, the loss on discontinued operations, asset impairment
and goodwill amortisation, reduced the Group's operating profit by £13.6m, of
which approximately £11m was non-cash, from £22.3m to £8.7m (2005: £9.2m).
Net cash in flow from operating activities before change of control payments
arising on the acquisition of Sygen for the period was £21.8m (2005: £8.7m).
Positive cash flow together with cash generated from the divestments and surplus
property disposals reduced net debt to £116.9m at the period end, beating
expectations.
Acquisition of Sygen
Sygen International plc, the porcine and shrimp genetics company, was acquired
in December 2005 for a consideration, excluding fees, of £189m. The acquisition
was financed by new bank borrowing facilities totalling £180m and an
institutional placing of 16.9 million new ordinary shares at 325p per share, to
raise £53m (net of expenses).
The Board is pleased to report that savings anticipated through the integration
of Sygen have been realised and implementation is ahead of plan. Synergy savings
of some £6m on an annualised basis have been attained by the end of the
financial period. This total is expected to rise to £7.5m by the end of the 07/
08 fiscal period from further identified cost savings and efficiency
improvements.
The enlarged group's performance is benefitting from a global presence in
complementary markets and added research opportunities across more species.
Dividend
The Board has continued confidence in its long-term strategy for growth and to
reflect this, the Board is recommending a dividend of 8.25 pence per ordinary
share be payable. This represents a 10% increase on the dividend payable in 2005
and is being recommended notwithstanding the increased number of shares in issue
and the higher gearing resulting from the Sygen acquisition. Subject to
shareholder approval at the Company's AGM to be held on 16 November 2006, this
dividend will be paid on 1 December 2006 to shareholders on the register at the
close of business on 3 November 2006.
Move to the Official List
At the time of the acquisition of Sygen in December 2005, we stated our
intention to move from AIM to the Official List. It remains the Board's
intention to move to the Official List to attract increased levels of
institutional investment and to ensure the strategic growth of the enlarged
group. Whilst the Board believes such a move to be in the best interests of the
Company and that it should be made, the Board has determined that shareholders
should be given the opportunity to consider the proposed move. Accordingly, at
the Annual General Meeting to be held on 16 November 2006 we will be asking for
shareholder approval for Genus to move to the Official List.
Share Capital
The Board will continue its strategy of restructuring the share register to
improve liquidity by operating a further voluntary buyback scheme aimed at
reducing the number of investors with very small shareholdings (ie less than
1,000 shares). Acquired shares will be aggregated, held by the Company in
treasury and then placed with institutional investors. It is hoped that the new
scheme, which is expected to be implemented later in the year, will repeat the
success of a similar scheme implemented in November 2004.
Research & Development - Board Appointment
To reflect the increased size of Genus and its commitment to research and
development investment, which is currently in excess of £12m per annum, we
expect to set up an R&D Steering Group which will comprise leading scientists in
biotechnology and animal genetics from around the world. In addition, we are in
the process of recruiting a new non-executive director who has relevant research
and development experience in order to strengthen the R&D unit within the Group.
Employees
I would like to thank the Sygen staff for their positive co-operation in a
period of considerable change and for their participation in the success of the
Sygen integration. Existing Genus staff have achieved strong results, and I
would like to thank them for their considerable efforts. I look forward to
working with all Genus employees in achieving an even more substantial future
for the enlarged Group.
Outlook
The Sygen acquisition has given Genus the benefits of greater critical mass,
economies of scale, reduced dependency on one animal species, increased
geographical presence with a non-overlapping customer base and combined research
and development programmes. Genus will continue to benefit from the increased
opportunities resulting from the acquisition. Taken with the strong underlying
performance of the original Genus business and the good start to the new
financial year, we view the Group's future positively. The Genus Group is now
materially stronger and more competitive than before.
For the year ahead, our new bulls, continued strength of the porcine lines,
synergy savings and improvements in operational efficiencies, should support
strong profit generation. We also believe the greater emphasis on research will
benefit the Group in the long term.
John Hawkins
Chairman
Chief Executive's Review
The Genus Business
Genus' world class animal genetics are used in the section of the food chain
producing quality foods and are the choice of leading farmers worldwide. These
animal genetics offer the potential to improve profitability for farmer and food
producing customers by enabling them to increase output of consistently high
quality products with higher value. We call this the 'Genus Effect'.
World Agricultural Markets
Market conditions have been stable in the USA for both bovines and porcines.
Milk production was up by 5% on last year as cow numbers rose. Beef prices fell
as farmers put surplus animals to market early in order to protect against
increasing feed prices.
US pig prices were 15% lower than last year but, with prices still between $40
and $50/cwt, due to the presence of foot and mouth disease in Brazil and avian
flu in other parts of the world, most producers remained profitable. The
potential for US farmers to export pig production has bolstered pig prices
during the last 6 months of the reported period and has resulted in continued
buoyant market conditions, compared with the slight decline predicted.
Conditions remained favourable in Latin America for milk producers but the
extensive outbreak of foot and mouth disease in Brazil has severely curtailed
beef and pig exports so that prices fell sharply. There was some pricing
'over-spill' into Argentina.
In Europe, farmer concern over changes in the EU price support mechanism,
introduced in 2005, remains but the response has been less acute than expected
and markets have returned to more normal levels. However, the change in price
support and the established pattern of lower milk prices, prevailing for the
last few years, is driving farmers to increase their operations or opt out of
the business. As a result, cow numbers are falling as smaller farmers leave the
industry. The larger farmers are, of course, the most important for the future
of Genus. Following the announcement of the lifting of the export ban on UK
animals, prices for calves are rising steeply and we are also seeing market
conditions improving in the UK for dairy farmers.
EU pig prices continued to strengthen during the June quarter and this trend is
expected to hold for the next few months as consumption of pork exceeds supply.
Throughout the period, most Far Eastern market prices for pigs remained
significantly below last year. However, China has shown a sustained improvement
over the last two months after a long period of weak market conditions.
The world market for shrimps has continued to be depressed, due to the imbalance
in supply and demand despite various outbreaks of disease last year.
Operating Progress
Following completion of the Sygen acquisition in December 2005, the Sygen Board
left the business. We undertook an extensive communications exercise with all
staff and established a new, integrated business structure with an emphasis on
geographical rather than product spread. This reorganisation was made in order
to focus efforts on positive evolution rather than the defence of old ideas and
business practices.
We have concentrated on the integration of Sygen and resulting synergies from
the acquisition since December 2005 and are pleased to report the potential
synergies have exceeded our initial expectations. We have also sold the
Brazilian operations of the loss making Sygen shrimp business and are actively
pursuing the divestment of the related businesses in Thailand and Mexico.
The historical Genus businesses have reported strong results. We have increased
operating profit across Bovine Genetics, Animal Health and Development
Consulting despite variable conditions across international markets. We have
also sold two, non-core operations, namely the veterinary and dental wholesale
businesses.
Integration of Sygen
We have concentrated on five main areas:-
1. Research & Development
•Reset priorities using commercial targeting.
•Overlapping infrastructures have been eliminated by combination and we
have created a fundamental research facility of excellence in Wisconsin
whilst reducing cost.
2. Synergy Cost Savings
•The Sygen operations in Kentucky have been closed and the move of sales
and sales support staff for the porcine business to offices near to
Nashville, Tennessee, took place in September 2006.
•The Sygen offices in Oxford have been closed and the transfer of most of
the UK back office functions to the Genus offices in Nantwich, Cheshire, is
underway. Continuing head office staff have been transferred to the Genus
head office in Basingstoke.
•The merging of back offices in the USA is almost complete with other
regions to follow.
3. Investment in Core Business
• Sanctioned an investment of £1.5m in a nucleus porcine herd and
operations in Russia.
4. SyAqua Strategy
• Strategic decision taken to divest the SyAqua shrimp businesses.
• Secured intellectual property and potentially saleable shrimp parent
lines.
• Brazilian shrimp business sold.
5. Global systems
• Engaged consultants to assist in the implementation of a global system
aimed at improving business processes and harmonising financial reporting.
Cost savings identified at the time of the acquisition have already been
realised and are well ahead of the Board's expectations. In addition, we have
identified further areas of synergy savings which we are now reviewing and
evaluating, such as the possible consolidation of the businesses within Latin
America.
We have made structural changes to the European porcine business which have
resulted in improved and consistent profitability for the first time for
some years. On a proforma basis, European operations made a profit of £1.8m for
the 12 months ended 30 June 2006 which is the best result in a decade.
Bovine Genetics - 49% of Group Turnover from Continuing Operations
In stable market conditions, the increases to the sales force in the USA, Canada
and Europe, both this year and last year, resulted in total sales volume rising
in the period to 12.9 million doses. This equates to 10.3 million doses for a
prorata 12 month period and compares favourably with the 9.5 million doses sold
in the year ended 31 March 2005.
As previously reported, the new high ranking bulls added to the stud, from the
increasingly successful R&D programme, helped increase average prices of semen
for the 12 month period ended 31 March 2006 by 12% in the beef sector and by 10%
in dairy. Further small increases in average selling prices were achieved in the
3 month stub period to 30 June 2006, when compared with the same quarter last
year.
Operating profit before exceptional items and goodwill amortisation was £13.0m
(2005: £10.3m) which is stated after the FRS17 charge of £1.0m (2005: £0.4m).
The three month extended period to 30 June 2006 was impacted by a weakening of
the US dollar and adjustments relating to the prior year amounting in total to
£0.6m. This quarter was also adversely impacted by seasonality. However, we are
pleased to report a strong start to the new financial year relative to the
comparative period.
Notable amongst a number of successes in Europe has been the growth of sales and
profits in Italy. Last year the business introduced the contract 'Reproductive
Management Service' successfully pioneered with large farmers in the USA,
whereby customers sign-up for a contract mating service for their cows. Computer
based mating programmes are used and the service binds the customer to use Genus
semen and insemination services in order to achieve measurable improvements in
fertility for the herd. In its first year of operation in Italy, more than
10,000 cows have been contracted for the service and this has increased sales by
18% to £3.9m (2005: £3.3m).
In Latin America, operating profit was flat because of foot and mouth disease in
Brazil but the Mexican business remained strong and the new Argentinian
operation made a small profit in its first year.
Porcine Genetics - 33% of Group Turnover Continuing Operations
In the 7 months since Genus acquired this business it has performed ahead of
both budget and the same period last year. The main drivers have been the shift
towards more royalty type income from the USA, improving profit generation in
Europe, strong trading in Latin America overall, despite foot and mouth disease
in Brazil, and reduced operating costs in all regions. These have more than
offset a slight softening of pig meat prices in the USA and very low prices in
the Far East. Gross margin has been on an increasing trend, resulting in a gross
margin of 35%, up from 32% in the 12 months ended 2005.
Operating profit before exceptional items and goodwill amortisation for the
period since acquisition was £11.8m, an increase of £3.7m (46%) over the
comparable period prior to Genus' ownership.
The European business has also benefited strongly from lower operating costs and
has been profitable throughout the period, assisted by post acquisition savings,
such as the divestment of the business in Denmark. We are making further
changes, the most significant being the reduction of inhouse production costs
and the generation of further synergy savings. These changes will be made during
the new financial year. With sales at a similar level to the USA, Europe had
been loss-making for many years because of the fragmented nature of the market.
In the growing Latin American market, an outbreak of foot and mouth disease has
temporarily reduced the contribution from the joint venture in Brazil but the
Mexican and Chilean businesses remained strong.
The Far Eastern markets, which are the smallest porcine region, have been
depressed throughout the period, suffering from disease outbreaks, over-supply
and resultant low pig meat prices.
Both the subsidiary and joint venture in China suffered reversals but the
downturns in other markets were less acute. Overall, the business remained
profitable in all its markets, although substantially down on last year.
Nevertheless, the Far East is the area with the highest growth potential in the
long-term because of population density, the increasing level of protein
consumption and the massive number of pigs farmed. However, most of the farms
are small and inefficient and it will take time before the industry
consolidates into the large units similar to those which are the principal
customers in the USA and Europe.
The other area of high growth potential is Eastern Europe. In this market, a
high level of investment is being made in large intensive pig units and we
believe that opportunities exist to grow with that change by investing
selectively in countries as new farms are established. In this regard, we have
invested £1.5m in Russia to set up a nucleus farm to supply two newly
established farm customers. The investment will protect our intellectual
property and reduce transport costs from alternative supply sources in Europe
Poland and, overall, considerably enhance our presence and reputation in that
market.
Shrimp Genetics - 2% of Group Turnover Continuing Operations
Having reviewed the prospects for the business carefully, we have decided that
resource and investments are better directed at achieving the growth and
synergies available in the larger bovine and porcine businesses. The shrimp
market is volatile and customers are not yet prepared to pay for the added-value
potential from expensive research, all of which is of a long-term nature in any
event. Accordingly, we have decided that the business should be divested at the
earliest opportunity. In that regard, we sold the Brazilian operations of the
Sygen shrimp business to an MBO team for US$6m (£3.25m) in cash. A sale of the
loss-making Thailand shrimp business is well advanced and some initial interest
has been received for the Mexican shrimp business.
Animal Health and Development Consulting - 16% of Group Turnover Continuing
Operations
The Animal Health division had a very successful period underpinned by a strong
performance from the licensed pharmaceuticals business. It achieved an operating
profit from continuing operations, before goodwill amortisation, of £2.2m,
despite having divested the veterinary and dental wholesaling businesses. In May
2006, two residual freehold properties were sold for £1.5m, realising a book
profit of £0.8m. Sales in the licensed pharmaceutical business for the 15 month
period amounted to £8.8m, which was £0.4m (5%) ahead of the comparable period
and generated an operating profit of £2.2m. Both sales and profit growth have
arisen from the successful launch of a number of new products together with a
stalwart defence of established products against aggressive competition.
The Development Consulting business generated an operating profit of £1.1m in
the period, £0.1m (10%) higher than for the comparable 15 month period, despite
the disruption arising from the nearby Buncefield Oil Depot explosion on 11
December 2005. The team proved its expertise in project management for which it
earns its overseas consultancy contracts, by operating a virtual office for a
few weeks and then by relocating to new temporary offices while, at the same
time, winning both new contracts and contract extensions. More recently, two
large long term contracts have been won.
Research & Development
On an historical basis, the combined businesses of Genus and Sygen have together
have spent around £12m per year on R&D. The majority of expenditure, in both
cases, has been on the development of elite animals by traditional selection
processes. This has produced a successful and competitive product range in both
bovines and porcines.
In this regard, Boar 380 is making strong in-roads into world markets which,
together with other well established products, will maintain our competitive
edge over the next few years. For Europe and the Far East, it will be important
that new products are developed from the extensive porcine nucleus programmes to
meet niches in the various markets.
The increasing success of the bull selection programme has been reported over
the last two years, following changes to the 5 year development and testing
process made in 2000. These changes have resulted in a further significant
strengthening of the stud this year. In particular, we are pleased to announce
that a new bull, called Bolton, entered the US ranking as number one. Bolton is
very highly rated in a very wide variety of traits and is likely to sell well at
high prices worldwide.
The newly amalgamated R&D programme will continue to invest most of its
expenditure on traditional selection programmes.
In the fundamental research which augments this selection process, Sygen
concentrated most expenditure on genomics whilst Genus spread its investment
across a number of projects, including sexed semen, health, fertility and, most
importantly, semen physiology.
To direct the Genus' strategy for onward research investment, a new Research &
Development Steering Group is in the process of being established. It will
review independently Genus' overall level of research investment and prioritise
the areas of research conducted by the Company. The over-riding objective will
be to achieve an early commercial breakthrough.
We have been in the process of creating a new centre of excellence for this
research in the extensive Genus laboratories in Wisconsin, USA.
Evaluation of Sygen's genomic research has shown that some gene markers have a
particularly positive impact if used in the selection of low heritability
robustness traits. Future genomics research will be concentrated in this area.
Business Process and Information Technology
Consultants have been engaged to support the implementation of an integrated
global system to improve business processes in bovine genetics and to enhance
consolidated financial reporting capabilities for the Company. This new system
will be based on the Oracle eBusiness Suite already deployed in Sygen. The
target date for implementation is September 2007, and it is anticipated that
significant cost savings will be realised from the 2007/08 fiscal year. These
savings will arise in both the IT function and in the businesses as a result of
having one common system worldwide and from creating improved business
efficiencies.
Richard Wood
Chief Executive
Finance Director's Review
The unaudited proforma results of the continuing operations of the Group
excluding the shrimp business for the 12 months ended 30 June 2006 are as
follows:
12 months ended 12 months ended
30 June 2006 30 June 2005
£m £m
Turnover - Continuing operations 267.5 247.0
Operating Profit before goodwill 24.0 17.2
amortisation and exceptional items -
Continuing operations
The reconciliation of unaudited proforma operating profit before goodwill
amortisation and exceptional items figures to statutory accounts is as follows:
For the 12 months ended 30 June 2006
As recorded Less Add results As reported
in proforma pre-acquisition for period for the
table above Porcine 1 April 2005 15 months to
12 months to to 30 June 2006
30 June 2006 30 June 2005 excluding
shrimp
business
£m £m £m £m
Continuing 24.0 (4.2) 2.4 22.2
operations
For the 12 months ended 30 June 2005
As Less Less Add Less As
recorded pre-acquisition results results discontinued reported
in Porcine for period for period activities - for the
proforma 1 April 1 April Animal 12 months
table 2005 to 2004 to Health to
above 30 June 30 June 31 March
12 months 2005 2004 2005
to 30 June
2005
£m £m £m £m £m £m
Continuing 17.2 (6.9) (2.4) 2.7 (0.2) 10.4
operations
Operating Results
Adjusted operating profit was £22.6m after adding £5.3m for the 3 month stub
period to the £16.9.m achieved and reported in the Interim Results for the 12
month period ended 31 March 2006 ('Interim Results') (2005: £10.9m).
The historical Genus businesses had strong results for the 15 month period with
the operating profit from continuing operations before goodwill amortisation and
exceptional items of all businesses ahead of the prior year on a proforma basis.
Following the decision to divest the shrimp business, an exceptional charge of
£2.3m for the impairment of net assets had already been made in the Interim
Results. Other exceptional items of £2.7m in the 15 month period to 30 June
2006, comprised £1.7m relating to the integration and restructuring of the
porcine genetics business, £0.9m relating to the restructuring of the UK bovine
operation and closure of the strategic consulting business and £0.1m relating to
the integration of the shrimp business.
A charge of £2.2m for an exceptional impairment of goodwill was made at 30
September 2005 in the interim results for the six months ended on that date in
relation to the sale of the veterinary wholesale business which was sold in
October 2005.
Group operating profit, including share of joint ventures, amounted to £9.5m
(2005: £9.2m). Profit on disposal of fixed assets of £1.9m comprised mainly
surplus freehold properties including the residual veterinary wholesale
properties, former rearing and lay off sites in bovine UK and a pig farm in
Portugal. This profit largely offset the loss on sale of the wholesale
businesses.
Profit before tax was £2.8m (2005: £8.1m). Loss after tax was £0.3m (2005:
profit £5.9m). Adjusted basic earnings per share was 25.0p (2005: 19.0p) and
basic loss per share was 0.6p (2005: 16.3p profit).
Interest Payable
Net interest payable increased to £6.6m from £1.4m as a result of the debt
financing element of the purchase consideration for Sygen. Interest payable,
excluding similar charges such as amortisation of debt issue costs, amounted to
£6.2m and was 3.6 times covered by operating profit from Continuing Operations
before exceptional items and goodwill amortisation (2005: 9.7 times).
Taxation
The effective tax rate on adjusted earnings was 32.5% compared to 28.0% in the
prior year. This was due to the expected higher rate of tax for the Sygen
business and a first time credit in the prior year for research and development
claims. The future effective tax rate on adjusted earnings is expected to be
around 35%.
Earnings Per Share and Dividend
For the extended 3 month period ended 30 June 2006, which is seasonally a low
trading quarter, the adjusted earnings per share of 4.2p to add to the 20.8p
achieved for the 12 months ended 31 March 2006 (2005: 19.0p) to give 25.0p
earnings per share for the reported 15 months period ended 30 June 2006. This
increase was achieved after the first time adoption of FRS 17, Accounting for
Retirement Benefits, which reduced after tax earnings by £0.7m (2005 restated:
£0.4m) equivalent to 1.5p per share (2005 restated: 1.3p per share). Adjusted
earnings is also stated after the non-cash expense for the Long Term Incentive
Plan ('LTIP'), which has increased by £0.8m to £0.9m (2005: £0.1m) primarily
reflecting the more favourable outlook of the Group following the successful
acquisition of Sygen.
The Board is recommending a dividend of 8.25p per share (2005: 7.5p). On a
higher number of shares due to the share placing for the Sygen acquisition, the
proposed dividend payment will increase by £1.8m to £4.6m (2005: £2.8m), which
is 2.5 times covered by adjusted earnings (2005: 2.9 times).
Financing and Cash Flow
To finance the consideration for the acquisition of Sygen and to provide ongoing
working capital and financing facilities, the Company secured bank credit
facilities of £180m in October 2005 and raised net proceeds of £53m in December
2005 by a placing of 16.9 million new ordinary shares at 325p per share.
The Company's secured bank credit facilities comprise 3 and 5 year term loans of
£35m and £75m respectively, and a 5 year £70m multi-currency revolving credit
facility. £15m of the term loans have already been repaid and net debt had
reduced from a peak of £130m to £116.9m by the period end, which was better than
plan.
During the period, the veterinary and dental wholesaling business and the
Brazilian shrimp business were sold for a total of £11.35m. Sale proceeds of
surplus properties in veterinary wholesale, bovine and porcine during the period
amounted to £4.0m, generating a book profit of £1.9m.
Net cash inflow from operating activities before change of control payments for
the period was £21.8m (2005: £8.7m). Reported net cash inflow from operating
activities was £16.2m (2005: £8.7m).
Balance Sheet and Shareholder Funds
Shareholder funds increased to £101.4m (2005 restated: £51.3m), largely
reflecting the placing of 16.9m shares at £3.25 per share in connection with the
acquisition of Sygen, less the retained loss of £3.1m. The increase in gearing
at 30 June 2006 to 54% (2005: 13%) was due to the Sygen acquisition financing.
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 at the end of the year were materially comprised of bank
borrowings, provided by Barclays Bank plc
The main risks arising from the Group's financial instruments are interest rate
risk, foreign currency risk and liquidity 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 sterling, US dollars and Australian dollars.
Interest rate swaps are used to generate the desired interest profile and to
manage exposure to interest rate fluctuations. At the year end, the Company had
the following interest rate hedges in place:
(i) 5 year fixed rate of 4.74% on £95m of sterling borrowings
(ii) 5 year fixed rate of 5.05% on US dollar borrowings, swapped
for sterling borrowings, on US$ equivalent of £35m.
(iii) Fixed interest loans of Australian dollars of £4.5m equivalent.
As at 30th June 2006, 90% of borrowings had fixed rates.
• Foreign Currency Risk
The Group is exposed to two principal types of foreign currency 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 hedged by the use of forward contracts. The Group operates
a policy to settle inter-company trading balances on a monthly basis to minimise
foreign currency exposure.
Translational exposure arises on the re-translation of overseas subsidiary
companies' profits and net assets into sterling for financial reporting
purposes. Overseas trading is mainly US$ linked. The policy is to hedge material
exposure to overseas net assets to minimise risk to fluctuations in the Group's
net assets from translation. In January 2006, following the acquisition of Sygen
the Company entered into a currency swap by effectively exchanging £35m of debt
for US$60m debt for a 5 year term. The fair value of this instrument at 30 June
2006, yields a favourable position of £1.1m, which has been credited as a
currency translation difference in the Consolidated Statement of Total
Recognised Gains and Losses.
• Liquidity Risk
The Group's objective is to maintain a balance between continuity of funding and
flexibility through the use of bank loans and a multi-option revolving credit
facility. At the period end, only 10% of the Group's borrowings were repayable
within one year. Short term flexibility is achieved through a Sygen £70m
multi-option currency facility. At 30 June 2006, the Group had undrawn committed
facilities of £22.1m and £22.9m cash.
Acquisitions
On 2 December 2005, the Group acquired the entire issued share capital of Sygen
International plc for a total cash consideration of £193.2m (including £4.2m by
way of fees). The consideration was financed by a placing of 15.9 million shares
at £3.25, and new bank borrowings. From the date of acquisition to 30 June 2006,
Sygen contributed £86.7m to turnover and £11.8m to profit before interest,
exceptional items and goodwill amortisation.
As part of the retail acquisition strategy for the bovine business in Australia,
four small acquisitions were completed in the period for a total consideration
of £5.2m.
Adoption Of International Financial Reporting Standards
For Genus plc, an AIM listed company, the effective date for adoption of IFRS is
for the financial year commencing on or after 1 January 2007.
The Group has established a project team to plan for and achieve a smooth
transition to IFRS. The project team is looking at all implementation aspects,
including changes to accounting policies, systems impacts and the wider business
issues that may arise.
The Group has not yet determined the full effects of adopting IFRS. Our
preliminary view is that the major differences between our current accounting
practice and IFRS will be in respect of accounting for business combinations,
agricultural assets, deferred tax, research and development costs and
share-based payments.
David Timmins
Group Finance Director
Consolidated Profit and Loss Account
For the 15 month period ended 30 June 2006
Continuing Operations Discontinued
Before Exceptional Operations 15 Year
exceptional items and months ended
items and goodwill ended
goodwill amortisation
amortisation 30 June 31 March
2006 2005
restated
£000 £000 £000 £000 £000
Turnover
Continuing operations 159,183 - - 159,183 113,904
Acquisitions 92,569 - - 92,569 -
251,752 - - 251,752 113,904
Discontinued operations (note - - 42,771 42,771 69,345
4)
Group and share of joint 251,752 - 42,771 294,523 183,249
ventures
Less share of joint ventures (7,288) - - (7,288) -
Group turnover 244,464 - 42,771 287,235 183,249
Adjusted operating profit 22,262 - 343 22,605 10,931
Amortisation of goodwill - (6,481) (166) (6,647) (1,747)
Exceptional impairment of - - (2,239) (2,239) -
goodwill
Exceptional impairment of net - (2,342) - (2,342) -
assets (note 3)
Other exceptional items (note - (2,655) - (2,655) -
3)
Operating profit 22,262 (11,478) (2,062) 8,722 9,184
Of which :
- Continuing operations 11,951 (2,656) - 9,295 8,850
- Acquisitions 10,311 (8,822) - 1,489 -
22,262 (11,478) - 10,784 8,850
- Discontinued operations - - (2,062) (2,062) 334
(note 4)
Group operating profit 22,262 (11,478) (2,062) 8,722 9,184
Share of operating profit of 732 - - 732 -
joint ventures
Total operating profit: 22,994 (11,478) (2,062) 9,454 9,184
Group and share of joint
ventures
Loss on sale of discontinued (1,959) -
operations (note 4)
Profit on disposal of 1,923 298
properties
Net interest payable and (6,591) (1,386)
similar charges
Profit on ordinary activities 2,827 8,096
before taxation
Tax on profit on ordinary (3,092) (2,193)
activities (note 5)
(Loss)/profit for the (265) 5,903
financial period
Dividend (2,811) (2,299)
Retained (loss)/ profit for (3,076) 3,604
the financial period
Earnings/(loss) per share - adjusted basic (note 6) 25.0p 19.0p
- adjusted diluted (note 6) 24.4p 18.7p
- basic (note 6) (0.6)p 16.3p
- diluted (note 6) (0.6)p 16.1p
Consolidated Statement of Total Recognised Gains and Losses
For the 15 month period ended 30 June 2006
15 months Year
ended ended
30 June 31 March
2006 2005
restated
£000 £000
(Loss)/profit for the financial period (265) 5,903
Currency translation difference on the
re-translation of net assets of
subsidiary undertakings - 4,266 3,502 (458)
Currency translation difference on (3,811) 282
borrowings
Gain on currency swap 1,092 -
Deferred tax on currency swap (328) -
Actuarial loss relating to pension (2,202) (982)
schemes
Total recognised gains and losses relating to (2,012) 4,745
the period
Prior year adjustment - impact of FRS17 adoption (6,643)
Total recognised gains and losses since last (8,655)
annual report
Notes
30 June 2006 31 March
2005
restated
£000 £000
Fixed assets
Intangible assets 174,535 26,062
Tangible assets 35,075 16,697
Investments:
- Joint ventures 2,279 -
- Other 755 269
212,644 43,028
Current assets
Stocks 20,594 17,396
Debtors 54,562 37,334
Cash at bank and in hand 22,936 6,843
98,092 61,573
Creditors: Amounts falling due within one (63,643) (45,463)
year
Net current assets 34,449 16,110
Total assets less current liabilities 247,093 59,138
Creditors: Amounts falling due after more (125,312) (282)
than one year
Provisions for liabilities and charges (6,451) (923)
Net assets excluding pension liabilities 115,330 57,933
Pension liabilities (13,889) (6,643)
Net assets 101,441 51,290
Capital and reserves
Called up share capital 5,524 3,726
Share premium account 7 92,187 39,899
Treasury shares 7 (186) (128)
Profit and loss account 7 3,916 7,793
Equity shareholders' funds 8 101,441 51,290
Notes 15 months Year
ended ended
30 June 31 March
2006 2005
restated
£000 £000
Net cash inflow from operating activities 9 16,174 8,687
Dividends received from joint ventures 2,264 -
Returns on investments and servicing of
finance
Interest received and similar income 267 17
Interest paid and similar charges (5,202) (1,093)
Interest element of finance lease and hire (16) (43)
purchase rental payments
Net cash outflow from returns on (4,951) (1,119)
investments and servicing of finance
Taxation (4,517) (2,823)
Capital expenditure and financial
investment
Payments to acquire intangible fixed assets (102) (117)
Payments to acquire tangible fixed assets (11,317) (4,725)
Payments to acquire investments - (13)
Receipts from sales of tangible assets 13,811 759
Net cash inflow/(outflow) on capital 2,392 (4,096)
expenditure
Acquisitions and disposals
Purchase of subsidiaries and businesses (198,398) (2,225)
Net cash acquired with subsidiaries and 17,312 -
businesses
Receipts from sale of subsidiaries and 4 9,128 -
businesses
Net cash outflow from acquisitions and (171,958) (2,225)
disposals
(2,811) (2,299)
Equity dividends paid
(163,407) (3,875)
Net cash outflow before financing
15 months Year
ended ended
30 June 2006 31 March
2005
restated
£000 £000
Net cash outflow before financing (163,407) (3,875)
Financing
Repayment of loan notes (1,568) (1,637)
New bank loans 147,928 437
Debt issue costs (2,243) -
Repayment of bank loans (22,914) (1,395)
New finance leases 273 154
Repayments of capital element of finance (691) (1,103)
leases and hire purchase rental payments
Share buyback in respect of Share register - (196)
rationalisation
Issue of new ordinary shares 54,086 3,134
Net cash inflow/(outflow) from financing 174,871 (606)
Increase/(decrease) in cash 11,464 (4,481)
Analysis of changes in net debt during the period
Notes 15 months Year
ended ended
30 June 31 March
2006 2005
restated
£000 £000
Increase/(decrease) in cash in the period 11,464 (4,481)
Repayment of loan notes 1,568 1,637
New long term loans (147,928) (437)
Repayment of bank loans 22,914 1,395
Debt issue costs 2,243 -
New finance leases (273) (154)
Repayment of capital element of finance 691 1,103
lease contracts
Change in net debt resulting from cash (109,321) (937)
flows
Exchange differences and other non-cash 621 211
movements
Movement in net debt in the period (108,700) (726)
Net debt at 1 April 10 (8,184) (7,458)
Net debt at 30 June 10 (116,884) (8,184)
1. Basis of preparation
The financial information set out above does not constitute the company's
statutory accounts for the 15 months ended 30 June 2006 or the year ended 31
March 2005, but is derived from those accounts. Statutory accounts for 2005 have
been delivered to the Registrar of Companies and those for 2006 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 s237(2) or (3) Companies Act 1985.
The financial information is prepared under the accounting policies of Genus plc
as at 31 March 2005 with the exception of the adoption of FRS 17 'Accounting for
Retirement Benefits' and FRS 21 'Post Balance Sheet Events'.
2. Turnover and Segmental Analysis
Turnover Operating profit before
goodwill amortisation
and exceptional items
15 months Year 15 months Year
ended ended ended ended
30 June 31 March 30 June 31 March
2006 2005 2006 2005
restated
£000 £000 £000 £000
Area of activity
Group and share of joint
ventures:
Bovine Genetics 120,021 83,575 12,999 10,261
Porcine Genetics 88,809 - 11,757 -
Development Consulting 29,582 23,954 1,119 792
Animal Health 9,889 6,850 2,233 1,354
Unallocated costs excluding LTIP - - (4,967) (1,946)
LTIP - - (946) (102)
Less: Share of joint ventures (7,288) - - -
(Porcine Genetics)
Continuing operations before 241,013 114,379 22,195 10,359
Shrimp Genetics
Shrimp Genetics 3,760 - 67 -
Continuing operations 244,773 114,379 22,262 10,359
Inter-segmental sales (309) (475) - -
Discontinued operations 42,771 69,345 343 572
Total 287,235 183,249 22,605 10,931
2. Turnover and Segmental Analysis (continued)
Results for the acquired Porcine Genetics and Shrimp Genetics businesses relate
to acquisitions made during the period.
Operating Net assets
profit
15 months Year
ended ended
30 June 31 March 30 June 31 March 2005
2006 2005 2006
restated restated
£000 £000 £000 £000
Area of activity
Group and share of joint
ventures:
Bovine Genetics 10,925 9,268 55,766 39,715
Porcine Genetics 6,124 - 40,439 -
Development Consulting 1,081 762 2,717 1,246
Animal Health 1,689 868 1,783 19,137
Unallocated costs excluding LTIP (4,967) (1,946) - -
Unallocated - - 4,820 (8,808)
LTIP (946) (102) - -
Less: Share of joint ventures (732) - - -
(Porcine Genetics)
Continuing operations before 13,174 8,850 105,525 51,290
Shrimp Genetics
Shrimp Genetics (2,390) - (4,084) -
Continuing operations 10,784 8,850 101,441 51,290
Discontinued operations (2,062) 334 - -
Total 8,722 9,184 101,441 51,290
Discontinued operations relate to the divestment of non-core veterinary and
dental product wholesale businesses and non core Syaqua shrimp genetics business
in Brazil.
Turnover Operating profit
15 months Year 15 months Year
ended ended ended ended
30 June 31 March 30 June 31 March
2006 2005 2006 2005
restated
Geographical region of origin £000 £000 £000 £000
Group and share of joint
ventures:
United Kingdom 85,301 68,677 7,577 6,182
Europe 44,338 5,063 2,779 1,632
North America 87,839 32,373 3,065 332
Rest of the world 34,583 8,266 4,008 2,752
Unallocated costs excluding LTIP - - (4,967) (1,946)
LTIP (946) (102)
Less: Share of joint ventures (7,288) - (732) -
(Porcine Genetics)
Continuing operations 244,773 114,379 10,784 8,850
Inter-segmental sales (309) (475) - -
Discontinued operations 42,771 69,345 (2,062) 334
Total 287,235 183,249 8,722 9,184
2. Turnover and Segmental Analysis (continued)
Discontinued turnover and operating profit derives from the veterinary product
and dental wholesale distribution businesses (formerly part of the Animal Health
division), which originates in the United Kingdom and from the shrimp genetics
business in Brazil, which originates in the Rest of the world.
Turnover Net assets
15 months Year
ended ended
30 June 31 March 30 June 31 March
2006 2005 2006 2005
restated
£000 £000 £000 £000
Geographical region of
destination
United Kingdom 53,709 43,552 7,290 39,503
Europe 60,305 19,652 6,730 2,172
North America 73,592 24,522 64,149 14,137
Rest of the world 56,858 26,178 18,452 4,286
Unallocated costs - - 4,820 (8,808)
Continuing operations 244,464 113,904 101,441 51,290
Discontinued operations 42,771 69,345 - -
Total 287,235 183,249 101,441 51,290
Discontinued turnover was made to customers in the United Kingdom and in the
Rest of the world.
3. Other ExceptionaI Items
Other exceptional items of £2,655,000 in the period to 30 June 2006 comprise
£1,664,000 relating to the integration and restructuring of the Porcine Genetics
business, £406,000 relating to costs associated with the closure of the
Strategic Consulting business, £470,000 relating to the restructuring of the
Group's UK Bovine operation and £115,000 relating to integration of Shrimp
Genetics.
Following the decision to divest the Shrimp Genetics business, an exceptional
impairment of net assets of £2,342,000 has been recognised in operating profit
in the period, to write down the carrying value of the net assets of this
business segment to its estimated recoverable amount, excluding any future
operating losses and costs of disposal.
4. Discontinued Operations
On 28 October 2005, the Group completed the divestment of its non-core
veterinary product wholesale business for a total consideration of £7.1 million
in cash. For the year ended 31 March 2005, the business employed 125 staff and
generated turnover of £66 million and an operating profit of £0.4 million before
allocation of central costs, on net assets of £6 million. The loss on disposal
of this business after write off of goodwill amounts to £2,056,000.
On 22 February 2006, the Group completed the divestment of its non-core dental
product wholesale business for a total of £1m in cash. For the year ended 31
March 2005, the business employed 16 staff and generated turnover of
approximately £3.0m and an operating profit of £0.1m before allocation of
central costs, on net assets of £0.8m. The loss on disposal of this business
after write off of goodwill amounts to £532,000.
On 7 June 2006, the Group announced its intention to withdraw from Shrimp
Genetics business and on 12 June 2006 the Group completed the divestment of its
non-core Shrimp Genetics business in Brazil for a total of $6.0 million (£3.25
million) in cash. For the year ended 30 June 2005, the business employed 179
staff and generated turnover of £2.1 million and an operating profit of £0.25
million before allocation of central costs on net assets of £3.6 million. The
profit on disposal of this business after write back of impairment provisions
amounts to £629,000.
The total net proceeds from the sale of businesses in the period amounted to
£11,350,000, net proceeds amounted to £9,128,000.
5 Taxation
Tax on profit on ordinary activities
The taxation charge for the period is made up as follows:
15 months Restated
ended
30 June 2006 2005
£000 £000
UK corporation tax (433) 1,223
Adjustment in respect of previous periods
- UK corporation tax (1,135) (32)
----------- -----------
Total UK tax (1,568) 1,191
----------- -----------
Overseas tax 5,182 847
Adjustment in respect of previous periods
- Overseas tax 452 (234)
----------- -----------
Total Overseas tax 5,634 613
----------- -----------
Total current tax 4,066 1,804
----------- -----------
Deferred tax - origination and reversal
of timing differences (532) 627
- adjustment in respect of previous periods (442) (238)
----------- -----------
Group deferred tax (974) 389
----------- -----------
Tax on profit on ordinary activities 3,092 2,193
----------- -----------
The tax effect of disposals of properties, investments and businesses amounted
to £nil (2005: £nil).
Overseas tax includes £116,000 in respect of joint ventures.
6 Earnings per Share
The basic earnings per share is based on a loss after tax for the period of
£265,000 (2005: profit of £5,903,000) and the weighted average number of
ordinary shares in issue of 45,331,452 (2005: 36,208,931).
The adjusted earnings per share of 25.0p (2005: 19.0p) is based on adjusted
earnings as set out below and the weighted average number of ordinary shares in
issue.
15 months Year
ended ended
30 June 31 March
2006 2005
restated
£000 £000
Profit before tax 2,827 8,096
Add: Exceptional impairment of goodwill 2,239 -
Exceptional impairment of Syaqua assets 2,342 -
Other exceptional items 2,655 -
Amortisation of goodwill 6,647 1,747
Loss on sale of discontinued operations 1,959 -
Profit on disposal of properties (1,923) (298)
Less: taxation (3,092) (2,193)
13,654 7,352
Less: Associated taxation on adjustments (1,679) (179)
Tax credits relating to prior years (635) (300)
Adjusted earnings 11,340 6,873
The diluted earnings per share is based on a loss for the period of £265,000
(2005: profit of £5,903,000) and on 46,415,578 (2005: 36,755,735) diluted
weighted average ordinary shares, calculated as follows:
15 months Year
ended ended
30 June 31 March
2006 2005
restated
Number Number
000's 000's
Basic weighted average number of 45,331 36,209
shares
Dilutive potential ordinary
shares:
Employee share options 1,085 547
46,416 36,756
7. Reserves
Treasury Share Profit
shares premium and loss
account account
restated
£000 £000 £000
Group
At 31 March 2005, as previously reported (128) 39,899 11,520
Prior year adjustment - FRS 17 - - (6,515)
FRS 21 - - 2,788
------ ------ ------
Reserves at 31 March, restated (128) 39,899 7,793
Profit for the financial period - - (265)
Dividend paid - - (2,811)
Premium on shares issued - 52,288 -
Adjustment in respect of employee share schemes (58) - -
2004 Performance Share Plan - - 946
Actuarial loss recognised in pension schemes - - (2,202)
Currency translation difference on the re-translation
of net assets of subsidiary undertakings - - 3,502
Gain on currency swap - - 1,092
Deferred tax on currency swap - - (328)
Currency translation difference on borrowings - - (3,811)
------ ------ ------
At 30 June 2006 (186) 92,187 3,916
------ ------ ------
8. Reconciliation of Shareholders' Funds
2006 2005
£000 £000
restated restated
Group
Shareholders' funds at 1 April,
as previously reported 51,290 48,705
Prior year adjustment - FRS 17 - (5,200)
FRS 21 - 2,299
------ ------
Shareholders' funds at 1 April, restated 51,290 45,804
Retained (loss)/profit for the year (3,076) 3,604
New share capital subscribed 54,086 3,134
Treasury shares (58) -
Other recognised gains and losses (1,747) (1,158)
2004 Performance Share Plan 946 102
Share register rationalisation
sale of shares - 4,015
purchase of shares - (4,126)
associated costs - (85)
---------- ----------
Shareholders' funds at 30 June 101,441 51,290
----------- -----------
In accordance with FRS 21 'Post balance Sheet Events', dividends declared after
the balance sheet date should not be recognised as a liability because the
liability does not represent a present obligation.
Instead, dividends are recognised in the period in which they are declared and
approved. This has the effect of increasing net assets at 1 April 2004 by
£2,299,000 and at 1 April 2005 by £2,788,000.
The share registration in 2005 related to the purchase of 1,589,974 shares from
smaller shareholders at an average price of £2.595 per share. These shares were
placed with institutional investors at £2.525 per share.
9. Reconciliation of Operating Profit to Net Cash Flow from Operating Activities
15 months Year
ended ended
restated
30 June 2006 31 March 2005
£000 £000
Operating profit 8,722 9,184
Long term incentive plan expense 946 102
Depreciation 7,570 3,549
Profit on sale of fixed assets 564 -
Amortisation of milk quota 7 8
Amortisation of goodwill 6,647 1,747
Adjustment for pension funding (1,050) (458)
Exceptional impairment of net 2,342 -
assets
Exceptional impairment of goodwill 2,239 -
Increase in stocks (2,655) (1,262)
Decrease/(increase) in debtors 5,781 (4,008)
Decrease in creditors (7,902) (175)
Decrease in provisions (1,414) -
Net cash inflow from operating 21,797 8,687
activities before
change of control payments
Change of control payments made to
former Sygen International plc
management (5,623) -
Net cash inflow before operating
activities 16,174 8,687
10. Analysis of Changes in Net Debt
At 1 Acquisitions Cash Foreign Non Cash At 30
April and Flows Exchange Movements June 2006
2005 disposals
£000 £000 £000 £000 £000 £000
Cash at bank and in 6,843 17,186 (1,714) 621 - 22,936
hand
Debt due within one (14,311) - (1,204) - 774 (14,741)
year
(7,468) 17,186 (2,918) 621 774 8,195
Debt due after one (157) (282) (122,891) - - (123,330)
year
Obligations under
finance leases and
hire purchase
contracts (559) - 145 - 273 (141)
Net debt (8,184) 16,904 (125,664) 621 1,047 (115,276)
Issue costs - - (1,926) - 318 (1,608)
(8,184) 16,904 (127,590) 621 1,365 (116,884)
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