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REG - Genus - Preliminary Results <Origin Href="QuoteRef">GNS.L</Origin> - Part 3

- Part 3: For the preceding part double click  ID:nRSG0426Qb 

of additional pension liability                        (4.3)           (14.9)          
 Tax relating to components of other comprehensive income           0.4             4.5             
                                                                            (2.4)           (23.8)  
                                                                                                    
                                                                                                    
 OTHER COMPREHENSIVE INCOME FOR THE YEAR                                    0.1             22.0    
                                                                                                    
 TOTAL COMPREHENSIVE INCOME FOR THE YEAR                                    34.4            72.3    
                                                                                                    
                                                                                                    
 ATTRIBUTABLE TO:                                                                                   
 Owners of the Company                                                      33.8            72.1    
 Non-controlling interest                                                   0.6             0.2     
                                                                                                    
                                                                            34.4            72.3    
                                                                                                    
 
 
Group Statement of Changes in Equity                                                                Genus plc 
 
For the year ended 30 June 2017 
 
                                                                                   Note    Called up share capital£m    Share premium account£m    Own shares£m    Trans-lation reserve£m    Hedging reserve£m    Retained earnings£m    Total£m    Non- controlling  interest£m    Total equity£m  
                                                                                                                                                                                                                                                                                                    
 BALANCE AT 30 JUNE 2015                                                                   6.1                          112.2                      (0.1)           (10.1)                    -                    202.7                  310.8      (5.7)                           305.1           
 Foreign exchange translationdifferences, net of tax                                       -                            -                          -               58.2                      -                    -                      58.2       (1.2)                           57.0            
 Fair value movement on net investment hedges, net of tax                                  -                            -                          -               (10.6)                    -                    -                      (10.6)     -                               (10.6)          
 Fair value movement on cash flow hedges, net of tax                                       -                            -                          -               -                         (0.6)                -                      (0.6)      -                               (0.6)           
 Actuarial loss on retirement benefit obligations, net of tax                              -                            -                          -               -                         -                    (11.0)                 (11.0)     -                               (11.0)          
 Movement on pension asset recognition restriction, net of tax                             -                            -                          -               -                         -                    (0.6)                  (0.6)      -                               (0.6)           
 Recognition of additional pension liability, net of tax                                   -                            -                          -               -                         -                    (12.2)                 (12.2)     -                               (12.2)          
                                                                                                                                                                                                                                                                                                    
 Other comprehensive (expense)/income for the year                                         -                            -                          -               47.6                      (0.6)                (23.8)                 23.2       (1.2)                           22.0            
 Profit for the year                                                                       -                            -                          -               -                         -                    49.3                   49.3       1.0                             50.3            
                                                                                                                                                                                                                                                                                                    
 Total comprehensive income for the year                                                   -                            -                          -               47.6                      (0.6)                25.5                   72.5       (0.2)                           72.3            
 Recognition of share-based payments, net of tax                                           -                            -                          -               -                         -                    3.3                    3.3        -                               3.3             
 Adjustment arising from changein non-controlling interest and written put option          -                            -                          -               -                         -                    -                      -          (0.5)                           (0.5)           
 Dividends                                                                         7       -                            -                          -               -                         -                    (12.2)                 (12.2)     -                               (12.2)          
 Issue of ordinary shares                                                                  -                            0.1                        -               -                         -                    -                      0.1        -                               0.1             
                                                                                                                                                                                                                                                                                                    
 BALANCE AT 30 JUNE 2016                                                                   6.1                          112.3                      (0.1)           37.5                      (0.6)                219.3                  374.5      (6.4)                           368.1           
 Foreign exchange translationdifferences, net of tax                                       -                            -                          -               3.9                       -                    -                      3.9        (0.9)                           3.0             
 Fair value movement on net investment hedges, net of tax                                  -                            -                          -               (2.2)                     -                    -                      (2.2)      -                               (2.2)           
 Fair value movement on cash flow hedges, net of tax                                       -                            -                          -               -                         1.7                  -                      1.7        -                               1.7             
 Actuarial gain on retirement benefit obligations, net of tax                              -                            -                          -               -                         -                    1.0                    1.0        -                               1.0             
 Movement on pension asset recognition restriction, net of tax                             -                            -                          -               -                         -                    0.3                    0.3        -                               0.3             
 Recognition of additional pension liability, net of tax                                   -                            -                          -               -                         -                    (3.7)                  (3.7)      -                               (3.7)           
                                                                                                                                                                                                                                                                                                    
 Other comprehensive (expense)/income for the year                                         -                            -                          -               1.7                       1.7                  (2.4)                  1.0        (0.9)                           0.1             
 Profit for the year                                                                       -                            -                          -               -                         -                    32.8                   32.8       1.5                             34.3            
                                                                                                                                                                                                                                                                                                    
 Total comprehensive income for the year                                                   -                            -                          -               1.7                       1.7                  30.4                   33.8       0.6                             34.4            
 Recognition of share-based payments, net of tax                                           -                            -                          -               -                         -                    4.0                    4.0        -                               4.0             
 Adjustment arising from change in non-controlling interest                                -                            -                          -               -                         -                    -                      -          8.6                             8.6             
 Dividends                                                                         7       -                            -                          -               -                         -                    (13.5)                 (13.5)     -                               (13.5)          
 Issue of ordinary shares                                                                  -                            0.5                        -               -                         -                    -                      0.5        -                               0.5             
                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                    
 BALANCE AT 30 JUNE 2017                                                                   6.1                          112.8                      (0.1)           39.2                      1.1                  240.2                  399.3      2.8                             402.1           
                                                                                                                                                                                                                                                                                                    
 
 
Group Balance Sheet                                                                               Genus plc 
 
As at 30 June 2017 
 
                                             Note  2017£m    2016    
                                                             £m      
                                                                     
 ASSETS                                                              
 Goodwill                                    8     104.7     86.0    
 Other intangible assets                     8     88.3      78.0    
 Biological assets                           9     279.2     264.6   
 Property, plant and equipment                     67.5      61.8    
 Interests in joint ventures and associates        22.7      24.3    
 Other investments                                 5.5       3.6     
 Derivative financial asset                        0.1       -       
 Deferred tax assets                               3.8       4.7     
                                                                     
 TOTAL NON-CURRENT ASSETS                          571.8     523.0   
                                                                     
 Inventories                                       33.1      35.7    
 Biological assets                           9     73.9      66.4    
 Trade and other receivables                 10    88.8      78.1    
 Cash and cash equivalents                         26.5      34.0    
 Income tax receivable                             1.9       1.0     
 Derivative financial asset                        1.3       0.6     
 Asset held for sale                               0.3       0.3     
                                                                     
 TOTAL CURRENT ASSETS                              225.8     216.1   
                                                                     
 TOTAL ASSETS                                      797.6     739.1   
                                                                     
 LIABILITIES                                                         
 Trade and other payables                          (76.4)    (65.1)  
 Interest-bearing loans and borrowings             (7.7)     (4.6)   
 Provisions                                        (2.7)     (1.2)   
 Obligations under finance leases                  (1.4)     (1.1)   
 Current tax liabilities                           (5.2)     (4.9)   
 Derivative financial liabilities                  (0.6)     (0.5)   
                                                                     
                                                                     
 TOTAL CURRENT LIABILITIES                         (94.0)    (77.4)  
                                                                     
 
 
 Interest-bearing loans and borrowings             (127.2)    (115.3)  
 Retirement benefit obligations                11  (40.9)     (44.5)   
 Provisions                                        (3.7)      -        
 Deferred tax liabilities                          (124.2)    (118.5)  
 Derivative financial liabilities                  (3.7)      (12.6)   
 Obligations under finance leases                  (1.8)      (2.7)    
                                                                       
 TOTAL NON-CURRENT LIABILITIES                     (301.5)    (293.6)  
                                                                       
 TOTAL LIABILITIES                                 (395.5)    (371.0)  
                                                                       
 NET ASSETS                                        402.1      368.1    
                                                                       
                                                   2017£m     2016     
                                                              £m       
                                                                       
 EQUITY                                                                
 Called up share capital                           6.1        6.1      
 Share premium account                             112.8      112.3    
 Own shares                                        (0.1)      (0.1)    
 Translation reserve                               40.0       37.5     
 Hedging reserve                                   1.1        (0.6)    
 Retained earnings                                 239.4      219.3    
                                                                       
 Equity attributable to owners of the Company      399.3      374.5    
                                                                       
 Non-controlling interest                          6.1        5.0      
 Put option over non-controlling interest      15  (3.3)      (11.4)   
                                                                       
 Total non-controlling interest                    2.8        (6.4)    
                                                                       
                                                                       
 Total equity                                      402.1      368.1    
                                                                       
 
 
Group Statement of Cash Flows                                                                      Genus plc 
 
For the year ended 30 June 2017 
 
                                                                    Note  2017£m    2016£m  
                                                                                            
 NET CASH FLOW FROM OPERATING ACTIVITIES                            12    34.6      30.0    
                                                                                            
 CASH FLOWS FROM INVESTING ACTIVITIES                                                       
 Dividends received from joint ventures and associates                    3.8       2.4     
 Joint venture loan repayment                                             3.0       1.0     
 Acquisition of subsidiaries, net of cash acquired                  14    (17.5)    (3.5)   
 Increase in investment in subsidiaries                             14    (12.0)    -       
 Acquisition of investment                                                (0.3)     (3.5)   
 Acquisition of investment in joint venture                               (0.2)     (0.2)   
 Disposal of subsidiary, net of cash disposed                             -         0.1     
 Disposal of joint venture                                                1.5       -       
 Purchase of property, plant and equipment                                (13.4)    (11.8)  
 Purchase of intangible assets                                            (5.5)     (6.8)   
 Proceeds from sale of property, plant and equipment                      1.4       1.8     
 Proceeds from sale of assets held for sale                               -         0.7     
                                                                                            
 NET CASH OUTFLOW FROM INVESTING ACTIVITIES                               (39.2)    (19.8)  
                                                                                            
 CASH FLOWS FROM FINANCING ACTIVITIES                                                       
 Drawdown of borrowings                                                   68.1      53.6    
 Repayment of borrowings                                                  (55.7)    (37.3)  
 Payment of finance lease liabilities                                     (2.0)     (1.9)   
 Equity dividends paid                                                    (13.5)    (12.2)  
 Dividend to non-controlling interest                                     (0.1)     (0.4)   
 Issue of ordinary shares                                                 0.5       0.1     
 Debt issue costs                                                         (0.4)     (1.4)   
                                                                                            
 NET CASH (OUTFLOW)/INFLOW FROM FINANCING ACTIVITIES                      (3.1)     0.5     
                                                                                            
 NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS                     (7.7)     10.7    
                                                                                            
                                                                                            
 Cash and cash equivalents at start of the year                           34.0      21.3    
 Net (decrease)/increase in cash and cash equivalents                     (7.7)     10.7    
 Effect of exchange rate fluctuations on cash and cash equivalents        0.2       2.0     
                                                                                            
 TOTAL CASH AND CASH EQUIVALENTS AT 30 JUNE                               26.5      34.0    
                                                                                            
 
 
Notes to the Preliminary Results                                                       Genus plc 
 
For the year ended 30 June 2017 
 
1.         REPORTING ENTITY 
 
Status of audit 
 
The financial information given does not constitute the Company's statutory accounts for the year ended 30 June 2017 or the
year ended 30 June 2016, but is derived from those accounts. Statutory accounts for the year ended 30 June 2016 have been
delivered to the Registrar of Companies and those for the year ended 30 June 2017 will be delivered following the Company's
annual general meeting. The auditors have reported on those accounts; their reports were unqualified, did not draw
attention to any matters by way of emphasis without qualifying their reports, and did not contain statements under s.
498(2) or (3) Companies Act 2006. 
 
Basis of preparation 
 
The financial information for the year ended 30 June 2017 together with the comparative year has been computed in
accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. 
 
The Group Financial Statements are presented in Sterling, which is the Company's functional and presentation currency. All
financial information presented in Sterling has been rounded to the nearest million at one decimal point. 
 
The principal exchange rates were as follows: 
 
                   Average  Closing  
                   2017     2016     2015   2017   2016   2015   
                                                                 
 US Dollar/£       1.27     1.47     1.57   1.30   1.34   1.57   
 Euro/£            1.16     1.33     1.32   1.14   1.20   1.41   
 Brazilian Real/£  4.11     5.47     4.26   4.30   4.28   4.89   
 Mexican Peso/£    24.61    25.38    22.68  23.51  24.66  24.68  
 
 
While the financial information included in this preliminary announcement has been computed in accordance with IFRSs, this
announcement does not itself contain sufficient information to comply with IFRSs. The Company expects to publish full
financial statements that comply with IFRSs in October 2017. These financial statements have also been prepared in
accordance with the accounting policies set out in the 2016 Annual Report and Financial Statements, as amended by the
following new accounting standards. 
 
New standards and interpretations 
 
The following new standards and interpretations have been adopted in the current period: 
 
· Amendments to IFRS 11 'Accounting for acquisitions of interests in Joint ventures', IAS 27 'Equity method in separate
financial statements', IAS 1 'Disclosure Initiatives'; 
 
· Amendments to IFRS 10, IFRS 12 and IAS 28 'Investment entities: Applying the consolidation exception'; 
 
·Amendments to IAS 16 and IAS 38 'Clarification of acceptable method of depreciation and amortisation'; and 
 
·'Annual Improvements to IFRS 2012 - 2014 cycle'. 
 
There has been no significant impact on the results or disclosures for the current period from the adoption of these new
standards and interpretations. 
 
New standards and interpretations not yet adopted 
 
At the date of authorisation of these Group Financial Statements, the following standards and interpretations were in issue
but not yet effective (and in some cases had not yet been adopted by the EU). These standards and interpretations have not
been applied in preparing these Group Financial Statements: 
 
· 'Annual improvement 2014-2016 cycle'; 
 
· IFRIC 22 'Foreign currency transaction and advance consideration'; 
 
·IAS 7 (amendments) 'Disclosure Initiative'; 
 
·IAS 12 'Recognition of deferred tax assets for unrealised losses'; 
 
· IFRS 2 (amendments) 'Classification and Measurement of Share-based Payment Transactions'; 
 
· IFRS 9 'Financial Instruments'; 
 
· IFRS 10 and IAS 28 (amendments) 'Sale or Contribution of Assets between an Investor and its Associate or Joint venture'; 
 
· IFRS 15 'Revenue from Contracts with Customers'; and 
 
· IFRS 16 'Leases'. 
 
The Group is currently assessing the impact of the new pronouncements on its results, financial position and cash flows. It
is not practicable to provide a reasonable estimate of the effect of these standards until a detailed review has been
completed. 
 
Going concern 
 
After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue its
operational existence for the foreseeable future and for a period of at least twelve months from the date of this report.
Accordingly, the Directors continue to adopt and consider appropriate the going concern basis in preparing the Annual
Report and Accounts. 
 
Alternative performance measures 
 
In reporting financial information, the Group presents alternative performance measures, ('APMs'), which are not  defined or 
specified under  the  requirements of  IFRS. 
 
The Group believes that these APMs, which are not considered to be a substitute for or superior to IFRS measures, provide
stakeholders with additional helpful information on the performance of the business. The APMs are consistent with how the
business performance is planned and reported within the internal management reporting to the Board and the executive
leadership committee. Some of these measures are also used for the purpose of setting remuneration targets. 
 
The key APMs that the Group uses include: adjusted operating profit, adjusted profit before tax from continuing operations,
adjusted earnings per share, adjusted EBITDA and net debt. 
 
The Group reports some financial measures, on both a reported and constant currency basis.  The constant currency basis,
which is an APM, retranslates the previous year results at the average actual periodic exchange rates used in the current
financial year. This measure is presented as a means of eliminating the effects of exchange rate fluctuations on the
year-on-year reported results. 
 
The Group makes certain adjustments to the statutory profit measures in order to derive many of these APMs. The Group's
policy is to exclude items that are considered to be significant in both nature and/or quantum and where treatment as an
adjusted item provides stakeholders with additional useful information to assess the year-on-year trading performance of
the Group.  On this basis, the following were included within adjusted items for the year ended 30 June 2017: 
 
·                      net IAS 41 valuation movements on biological assets - movements can be materially volatile and do
not directly correlate to the underlying trading performance in the period. Furthermore, the movement is non-cash related
and many assumptions used in the valuation model are based on future projections rather than current trading; 
 
·                      amortisation of acquired intangible assets - by excluding it helps the comparability between
acquired operations and organically grown operations, as the latter are not able to recognise internally generated
intangible assets. Adjusting for amortisation provides a more consistent basis for comparison between the two; 
 
·                      share based payments - this expense is considered to be relatively volatile and is not fully
reflective of the current period trading as the performance criteria are based on EPS performance over a three year period
and include estimates of future period performance; and 
 
·                      exceptional items - are items which either due to their size or their nature are excluded to improve
the understanding of the Company's underlying performance, see note 3 for further details. 
 
The reconciliation between operating profit from continuing operations and adjusted operating profit from continuing
operations is shown on the face of the Group Income Statement. All other reconciliations are included within the Financial
Review section. 
 
This preliminary announcement was approved by the Board on 6 September 2017. 
 
2.         SEGMENTAL INFORMATION 
 
IFRS 8 'Operating Segments' requires operating segments to be identified on the basis of internal reports about components
of the Group that are regularly reviewed by the Group Chief Executive and the Board to allocate resources to the segments
and to assess their performance.  For management purposes effective from 1 July 2016, the Group's operating and reporting
structure comprises three operating segments: Genus PIC, Genus ABS and Research and Development. 
 
These segments are the basis on which the Group reports its segmental information. The principal activities of each segment
are as follows: 
 
Genus PIC - our global porcine sales business; 
 
Genus ABS - our global bovine sales business and 
 
Research and Development - our global spend on research and development. 
 
A segment analysis of revenue, operating profit, depreciation, amortisation and non-current asset additions and segment
assets and liabilities are detailed below. We do not include our adjusting items in the segments, as we believe these do
not reflect the underlying progress of the segments. The accounting policies of the reportable segments are the same as the
Group's accounting policies, as described in the Financial Statements. 
 
 Revenue                      2017   2016   
                              £m     £m     
                                            
 Genus PIC                    249.5  207.5  
 Genus ABS                    195.9  172.8  
 Research and Development                   
 Research                     -      -      
 Porcine Product Development  10.7   8.0    
 Bovine Product Development   3.0    -      
                              13.7   8.0    
                              459.1  388.3  
 
 
Operating profit by segment is set out below and reconciled to the Group's adjusted operating profit. A reconciliation of
adjusted operating profit to profit for the year is shown on the Group Income Statement. 
 
 Adjusted operating profit          2017    2016    
                                    £m      £m      
                                                    
 Genus PIC                          87.7    71.7    
 Genus ABS                          22.3    23.3    
 Research and Development                           
 Research                           (11.9)  (8.0)   
 Porcine Product Development        (16.6)  (13.5)  
 Bovine Product Development         (14.2)  (12.9)  
                                    (42.7)  (34.4)  
 Adjusted segment operating profit  67.3    60.6    
 Central                            (12.2)  (11.3)  
 Adjusted operating profit          55.1    49.3    
 
 
Our business is not highly seasonal and our customer base is diversified, with no individual customer generating more than
2% of revenue. 
 
Other segment information 
 
                              Depreciation    Amortisation    Additions to non-current assets  
                              2017£m          2016£m          2017£m                             2016£m    2017£m    2016£m  
                                                                                                                             
 Genus PIC                    0.8             0.8             6.0                                5.9       1.1       1.4     
 Genus ABS                    2.1             1.7             2.1                                1.1       3.4       2.6     
 Research and Development                                                                                                    
 Research                     0.3             -               0.9                                -         2.5       3.6     
 Porcine Product Development  1.9             1.8             -                                  -         2.6       1.7     
 Bovine Product Development   1.4             1.4             2.2                                -         5.6       7.3     
                              3.6             3.2             3.1                                -         10.7      12.6    
                                                                                                                             
 Segment total                6.5             5.7             11.2                               7.0       15.2      16.6    
 Central                      2.3             2.2             -                                  -         5.0       4.3     
                                                                                                                             
 Total                        8.8             7.9             11.2                               7.0       20.2      20.9    
 
 
                              Segment assets    Segment liabilities  
                              2017£m            2016£m                 2017£m     2016£m   
                                                                                           
 Genus PIC                    258.3             233.5                  (60.1)     (50.3)   
 Genus ABS                    132.8             144.4                  (41.1)     (47.7)   
 Research and Development                                                                  
 Research                     5.9               3.7                    (1.4)      (0.4)    
 Porcine Product Development  182.4             146.7                  (72.0)     (59.6)   
 Bovine Product Development   202.7             203.1                  (52.6)     (51.2)   
                              391.0             353.5                  (126.0)    (111.2)  
                                                                                           
 Segment total                782.1             731.4                  (227.2)    (209.2)  
 Central                      15.5              7.7                    (168.3)    (161.8)  
                                                                                           
 Total                        797.6             739.1                  (395.5)    (371.0)  
 
 
Exceptional items of £2.5m expense (2016: £36.3m credit), relate to Genus ABS (£6.9m expense), Genus PIC (£2.1m expense)
and our central segment (£6.5m credit). Note 3 provides details of these exceptional items. 
 
We consider share-based payment expenses on a Group-wide basis and do not allocate them to reportable segments. 
 
Geographical information 
 
The analysis of revenue by geographical area is stated on the basis of where the legal entity is incorporated and therefore
in the country the revenue will be reported.  The Group's revenue by geographical segment is analysed below: 
 
 Revenue                                               
                                         2017   2016   
                                         £m     £m     
                                                       
 North America                           214.5  178.7  
 Latin America                           71.4   58.6   
 Rest of Europe, Middle East and Africa  48.5   40.7   
 UK                                      70.0   65.2   
 Asia                                    54.7   45.1   
                                                       
                                         459.1  388.3  
 
 
Non-current assets (excluding deferred taxation and financial instruments) 
 
                                         2017£m  2016£m  
                                                         
 North America                           407.9   376.0   
 Latin America                           47.2    43.2    
 Rest of Europe, Middle East and Africa  37.1    22.0    
 UK                                      60.9    59.6    
 Asia                                    14.8    17.5    
                                                         
                                         567.9   518.3   
 
 
Revenue by type 
 
                                                                       2017£m    2016£m  
                                                                                         
 Sale of animals, semen, embryos and associated products and services  335.7     283.5   
 Royalties - animal and semen                                          116.1     97.8    
 Consulting services                                                   7.3       7.0     
                                                                                         
                                                                       459.1     388.3   
 Interest income (see note 4)                                          0.8       0.1     
                                                                                         
                                                                       459.9     388.4   
                                                                                         
 
 
3.         EXCEPTIONAL ITEMS 
 
 Operating (expense)/income:      2017£m    2016£m  
                                                    
 Pension related                  5.7       44.2    
 Litigation                       (5.3)     (6.9)   
 Acquisition and integration      (0.6)     (0.2)   
 Other (including restructuring)  (2.3)     (0.8)   
                                                    
                                  (2.5)     36.3    
                                                    
 
 
Pension related 
 
On 23 June 2017, National Milk Records plc ('NMR') withdrew from the MPF under a Flexible Apportionment Arrangement between
NMR, Genus and the Trustees of the MPF. In return for the right to withdraw from the MPF, NMR made a one-off, lump sum cash
payment of £10.1m to the MPF, equivalent to the undiscounted value of all NMR's future payments under the existing MPF
recovery plan which extends to March 2026; and NMR also made a payment to Genus of £4.7m, with £1.4m being satisfied by the
issue NMR shares. 
 
As a result of the NMR withdrawal, Genus has recognised £5.7m as an exceptional credit, with £4.5m (£4.7m payment net of
fees) being received directly from NMR, and £1.2m from the MPF pension scheme reflecting the impact of NMR paying
undiscounted amounts into the scheme. See note 11 for further details. 
 
During the prior year, a gain of £43.9m arose as a result of changing the index used for pensions and deferred pension
increases in the Milk Pension Fund from RPI to CPI, and a £0.3m settlement gain arose from members leaving the same
scheme. 
 
Litigation 
 
Litigation includes legal fees of £5.3m (2016: £5.4m) related to the action by ABS Global, Inc. ('ABS') against Inguran,
LLC (aka Sexing Technologies ('ST')) and £nil (2016: £1.5m (US$2m)) for up-front damages related to patent infringement and
confidential information. 
 
On 14 July 2014, ABS launched a legal action against ST in the US District Court for the Western District of Wisconsin
alleging, among other matters, that ST: (i) has a monopoly in the processing of sexed bovine semen in the US; and (ii)
unlawfully maintains this monopoly through anticompetitive conduct.  The legal action aimed to remove these barriers and
allow free and fair competition in the sexed bovine semen processing market ('ABS Action').  In parallel with the ABS
Action, ABS also filed Inter-Partes Review applications ('IPR') before the US Patent Office challenging the validity of
several of ST's group patents, including US Patent No. 7,195,920 (the ''920 patent'), US Patent No. 7,820,425 (the ''425
patent'), US Patent No. 8,206,987 (the ''987 patent') and US Patent No. 8,198,092 (the ''092 patent'). 
 
ST and its subsidiary XY Inc. filed an Answer and Counterclaim to the ABS Action, denying any anticompetitive activities,
and alleging, among other matters, that the Company and ABS infringed the '920, '425, '987 and '092 patents. 
 
On 29 April 2015, the Patent Trial and Appeal Board ('PTAB') ruled that ABS had not demonstrated a reasonable likelihood of
prevailing on its assertion that relevant claims of the '987 patent were invalid and declined to order the institution of a
trial. However, trials were instituted for the other three patents.  On 11 January and 15 April 2016, the PTAB ruled that
the '920 and '425 patents were unpatentable. ST has appealed these decisions. The parties await a decision from the PTAB on
whether the '092 patent is unpatentable. 
 
On 1 August 2016, the trial of the ABS Action commenced and lasted for approximately two weeks.  Following the jury
verdicts, both sides filed post-trial motions.  On 31 March 2017, the Court entered a judgment which confirmed: (i) the
Company and ABS had proved that ST had wilfully maintained a monopoly in the market for sexed bovine semen processing in
the US since July 2012, and awarded a permanent injunction against ST which, among other matters, relieved ABS of certain
research, marketing and other non-compete restrictions contained in the 2012 semen sorting agreement between the parties;
(ii) ST's '987 and '092 patents were valid and infringed; and (iii) that ABS had materially breached the confidentiality
obligations under the 2012 semen sorting agreement.  The Court also confirmed that: (i) the Company and ABS should pay ST
an up-front amount of US$750,000 and an on-going royalty of US$1.25 per straw on commercialisation of the Genus Sexed Semen
technology for the use of ST's '987 patent in the US; (ii) the Company and ABS should pay ST an up-front payment of
US$500,000 and an on-going royalty of US$0.50 per straw for the use of ST's '092 patent in the US; and (iii) ABS should pay
ST damages of US$750,000 for having breached the confidentiality obligations under the 2012 semen sorting agreement.  Both
parties have appealed the Court's decision. 
 
On 7 June 2017, ST, XY LLC and Cytonome/ST, LLC filed proceedings against ABS Global, Inc., the Company and Premium
Genetics (UK) Limited ('PG') in the United States District Court for the Western District of Wisconsin ("New Litigation"). 
The New Litigation alleges that ABS and the Company infringe seven patents and asserts trade secret and breach of contract
claims.  ABS, the Company and PG have filed a Motion to dismiss the trade secret and breach of contract claims.  The
Company and ABS intend to vigorously defend the patent infringement claims. 
 
Acquisitions and integration 
 
During the period, £0.6m of expenses were incurred, with £1.6m of expenses in relation to acquisitions and integration,
principally of De Novo Genetics and Hermitage Genetics, being partially offset by a gain on cancellation of the IVB put
option. 
 
Other (including restructuring) 
 
Included within 'other' of £2.3m is £1.8m restructuring costs primarily relating to ABS operating business, especially
supply chain. 
 
4.         NET FINANCE COSTS 
 
                                                             2017£m    2016£m  
                                                                               
 Interest payable on bank loans and overdrafts               (2.7)     (1.7)   
 Amortisation of debt issue costs                            (0.4)     (0.5)   
 Other interest payable                                      (0.1)     (0.1)   
 Net interest cost in respect of pension scheme liabilities  (1.2)     (2.2)   
 Net interest cost on derivative financial instruments       (0.1)     (0.2)   
                                                                               
 Total interest expense                                      (4.5)     (4.7)   
 Interest income on bank deposits                            0.8       0.1     
                                                                               
 Total interest income                                       0.8       0.1     
                                                                               
 Net finance costs                                           (3.7)     (4.6)   
                                                                               
 
 
5.         INCOME TAX EXPENSE 
 
 Income tax expense                                                                   2017£m    2016£m  
 Current tax expense                                                                                    
 Current period                                                                       9.9       10.4    
 Adjustment for prior periods                                                         0.4       (1.4)   
                                                                                                        
 Total current tax expense in the Group Income Statement                              10.3      9.0     
                                                                                                        
 Deferred tax expense                                                                                   
 Origination and reversal of temporary differences                                    (2.6)     0.7     
 Adjustment for prior periods                                                         (1.3)     0.9     
                                                                                                        
 Total deferred tax expense in the Group Income Statement                             (3.9)     1.6     
                                                                                                        
 Total income tax expense excluding share of income tax ofequity accounted investees  6.4       10.6    
                                                                                                        
 Share of income tax of equity accounted investees                                    1.4       1.4     
                                                                                                        
 Total income tax expense in the Group Income Statement                               7.8       12.0    
                                                                                                        
 
 
6.      EARNINGS PER SHARE 
 
Basic earnings per share is the profit generated for the financial year attributable to equity shareholders divided by the
weighted average number of shares in issue during the year. 
 
 Basic earnings per share from continuing operations  2017     2016   
 Basic earnings per share                             53.8p    81.1p  
                                                                      
 
 
The calculation of basic earnings per share from continuing operations for the year ended 30 June 2017 is based on the net
profit attributable to owners of the Company from continuing operations of £32.8m (2016: £49.3m) and a weighted average
number of ordinary shares outstanding of 60,944,000 (2016: 60,814,000), which is calculated as follows: 
 
 Weighted average number of ordinary shares (basic)     2017000s    2016000s    
                                                                                
 Issued ordinary shares at the start of the year        61,013      60,968      
 Effect of own shares held                              (163)       (177)       
 Shares issued on exercise of stock options             47          23          
 Shares issued in relation to Employee Benefit Trust    47          -           
                                                                                
 Weighted average number of ordinary shares in year     60,944      60,814      
                                                                                
 Diluted earnings per share from continuing operations  2017        2016      
 Diluted earnings per share                             53.0p       80.3p     
                                                                              
 
 
The calculation of diluted earnings per share from continuing operations for the year ended 30 June 2017 is based on the
net profit attributable to owners of the Company from continuing operations of £32.8m (2016: £49.3m) and a weighted average
number of ordinary shares outstanding, after adjusting for the effects of all potential dilutive ordinary shares, of
61,833,000 (2016: 61,387,000), which is calculated as follows: 
 
 Weighted average number of ordinary shares (diluted)                                       2017000s    2016000s  
 Weighted average number of ordinary shares (basic)                                         60,944      60,814    
 Dilutive effect of share options                                                           889         573       
                                                                                                                  
 Weighted average number of ordinary shares for the purposes of diluted earnings per share  61,833      61,387    
                                                                                                                  
 Adjusted earnings per share from continuing operations                                     2017        2016      
 Adjusted earnings per share                                                                69.4p       60.7p     
 Diluted adjusted earnings per share                                                        68.4p       60.1p     
                                                                                                                  
 
 
Adjusted earnings per share is calculated on profit before net IAS 41 valuation movement on biological assets, amortisation
of acquired intangible assets, share-based payment expense and exceptional items, after charging taxation associated with
those profits, of £42.3m (2016: £36.9m), which is calculated as follows: 
 
                                                                              2017£m    2016£m  
                                                                                                
 Profit before tax from continuing operations                                 40.7      60.9    
 Add/(deduct):                                                                                  
 Net IAS 41 valuation movement on biological assets                           1.1       17.1    
 Amortisation of acquired intangible assets                                   8.7       6.1     
 Share-based payment expense                                                  4.6       3.8     
 Exceptional items (see note 3)                                               2.5       (36.3)  
 Net IAS 41 valuation movement on biological assets in joint        ventures  (0.5)     (1.9)   
 Tax on joint ventures and associates                                         1.4       1.4     
 Attributable to non-controlling interest                                     (2.1)     (1.4)   
                                                                                                
 Adjusted profit before tax                                                   56.4      49.7    
                                                                                                
 Adjusted tax charge                                                          (14.1)    (12.8)  
                                                                                                
 Adjusted profit after tax                                                    42.3      36.9    
                                                                                                
 Effective tax rate on adjusted profit                                        25.0%     25.8%   
                                                                                                
 
 
7.         DIVIDENDS 
 
Amounts recognised as distributions to equity holders in the year 
 
                                                                         2017£m    2016£m  
 Final dividend                                                                            
 Final dividend for the year ended 30 June 2016 of 14.7 pence pershare   9.0       -       
 Final dividend for the year ended 30 June 2015 of 13.4 pence pershare   -         8.1     
                                                                                           
 Interim dividend                                                                          
 Interim dividend for the year ended 30 June 2017 of 7.4 penceper share  4.5       -       
 Interim dividend for the year ended 30 June 2016 of 6.7 penceper share  -         4.1     
                                                                                           
                                                                         13.5      12.2    
                                                                                           
 
 
The Directors have proposed a final dividend of 16.2 pence per share for 2017.  This is subject to shareholders' approval
at the Annual General Meeting and we have therefore not included it as a liability in these financial statements. 
 
8.   INTANGIBLE ASSETS 
 
                                            Technology    Brand, multiplier contracts and customer relationships    Separately identified acquired intangible assets    Software    Genus Sexed Semen    Patents, licence and other    Total    Goodwill  
                                            £m            £m                                                        £m                                                  £m          £m                   £m                            £m       £m        
 Cost                                                                                                                                                                                                                                                     
 Balance at 1 July 2015                     46.1          61.5                                                      107.6                                               6.6         11.1                 0.3                           125.6    73.9      
 Additions                                  -             -                                                         -                                                   -           4.6                  2.2                           6.8      -         
 Acquisition                                -             0.7                                                       0.7                                                 -           -                    -                             0.7      1.9       
 Effect of movements in exchange rates      0.5           10.5                                                      11.0                                                0.3         2.1                  0.1                           13.5     10.2      
                                                                                                                                                                                                                                                          
 Balance at 30 June 2016                    46.6          72.7                                                      119.3                                               6.9         17.8                 2.6                           146.6    86.0      
                                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                                          
 Additions                                  -             -                                                         -                                                   0.9         3.1                  1.5                           5.5      -         
 Acquisition (see note 14)                  6.7           7.4                                                       14.1                                                -           -                    -                             14.1     16.2      
 Reclassified from tangible fixed assets    -             -                                                         -                                                   1.0         -                    -                             1.0      -         
 Effect of movements in exchange rates      0.1           2.2                                                       2.3                                                 -           0.4                  -                             2.7      2.5       
                                                                                                                                                                                                                                                          
 Balance at 30 June 2017                    53.4          82.3                                                      135.7                                               8.8         21.3                 4.1                           169.9    104.7     
 Amortisation and impairment losses                                                                                                                                                                                                                       


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