REG - Genus - Preliminary Results <Origin Href="QuoteRef">GENS.L</Origin> - Part 3
08/09/2015 07:00
- Part 3: For the preceding part double click ID:nRSH3388Yb
Group Income Statement 18.0 10.0
6. DIVIDENDS
Amounts recognised as distributions to equity holders in the year:
2015£m 2014£m
Final dividend
Final dividend for the year ended 30 June 2014 of 12.2 pence per share 7.4 -
Final dividend for the year ended 30 June 2013 of 11.1 pence per share - 6.7
Interim dividend
Interim dividend for the year ended 30 June 2015 of 6.1 pence per share 3.7 -
Interim dividend for the year ended 30 June 2014 of 5.5 pence per share - 3.4
11.1 10.1
The Directors have proposed a final dividend of 13.4 pence per share for 2015. 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.
7. EARNINGS PER SHARE
Basic earnings per share from continuing operations 2015 2014
Basic earnings per share 66.7p 47.7p
The calculation of basic earnings per share from continuing operations for the year ended 30 June 2015 is based on the
profit attributable to ordinary shareholders from continuing operations of £40.5m (2014: £28.9m) and a weighted average
number of ordinary shares outstanding of 60,702,000 (2014: 60,592,000), which is calculated as follows:
Weighted average number of ordinary shares (basic)
2015000s 2014000s
Issued ordinary shares at start of the year 60,919 60,649
Effect of own shares held (239) (239)
Shares issued on exercise of stock options 22 41
Shares issued in relation to employee benefit trust - 141
Weighted average number of ordinary shares in year 60,702 60,592
Diluted earnings per share from continuing operations 2015 2014
Diluted earnings per share 65.9p 47.6p
The calculation of diluted earnings per share from continuing operations for the year ended 30 June 2015 is based on profit
attributable to ordinary shareholders from continuing operations of £40.5m (2014: £28.9m) and a weighted average number of
ordinary shares outstanding, after adjusting for the effects of all potential dilutive ordinary shares of 61,476,000 (2014:
60,713,000), which is calculated as follows:
Weighted average number of ordinary shares (diluted)
2015000s 2014000s
Weighted average number of ordinary shares (basic) 60,702 60,592
Dilutive effect of share options 774 121
Weighted average number of ordinary shares for the purposes of diluted earnings per share 61,476 60,713
Adjusted earnings per share from continuing operations 2015 2014
Adjusted earnings per share 56.8p 46.5p
Diluted adjusted earnings per share 56.1p 46.4p
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 £34.5m (2014: £28.2m), which is calculated as follows:
2015£m 2014£m
Profit before tax from continuing operations 57.8 38.2
Add/(deduct):
Net IAS 41 valuation movement on biological assets (24.9) (7.5)
Amortisation of acquired intangible assets 6.1 5.8
Share-based payment expense 1.4 0.8
Exceptional items (see note 3) 5.1 2.0
Net IAS 41 valuation movement on biological assets in joint ventures and associates 1.0 (0.7)
Tax on joint ventures and associates 0.7 0.7
Attributable to non-controlling interest (0.6) -
Adjusted profit before tax 46.6 39.3
Adjusted tax charge (12.1) (11.1)
Adjusted profit after taxation 34.5 28.2
Effective tax rate on adjusted profit 26.0% 28.2%
8. INTANGIBLE ASSETS
Technology Multiplier contracts Customer relationships Separately identified acquired intangible assets Software Genus sexed semen andother Total Goodwill
£m £m £m £m £m £m £m £m
Cost
Balance at 1 July 2013 40.4 3.9 55.3 99.6 6.7 6.7 113.0 67.8
Additions - - - - - 1.5 1.5 -
Acquisition 2.4 - 2.6 5.0 - - 5.0 7.6
Effect of movements in exchange rates (0.1) (0.4) (6.5) (7.0) (0.2) - (7.2) (5.5)
Balance at 30 June 2014 42.7 3.5 51.4 97.6 6.5 8.2 112.3 69.9
Additions - - - - 2.8 2.8 -
Acquisition (see note 14) 3.5 - 4.1 7.6 - - 7.6 5.3
Disposal - - - - - (0.2) (0.2) -
Effect of movements in exchange rates (0.1) - 2.5 2.4 0.1 0.6 3.1 (1.3)
Balance at 30 June 2015 46.1 3.5 58.0 107.6 6.6 11.4 125.6 73.9
Amortisation and impairment losses
Balance at 1 July 2013 15.2 1.7 24.6 41.5 3.2 - 44.7 -
Amortisation for the year 2.3 0.2 3.3 5.8 0.6 - 6.4 -
Effect of movements in exchange rates - (0.2) (3.0) (3.2) - - (3.2) -
Balance at 30 June 2014 17.5 1.7 24.9 44.1 3.8 - 47.9 -
Amortisation for the year 2.3 0.2 3.6 6.1 0.6 - 6.7 -
Effect of movements in exchange rates - - 1.1 1.1 0.1 - 1.2 -
Balance at 30 June 2015 19.8 1.9 29.6 51.3 4.5 - 55.8 -
Carrying amounts
At 30 June 2015 26.3 1.6 28.4 56.3 2.1 11.4 69.8 73.9
At 30 June 2014 25.2 1.8 26.5 53.5 2.7 8.2 64.4 69.9
At 30 June 2013 25.2 2.2 30.7 58.1 3.5 6.7 68.3 67.8
Additions in the year to intangible assets of £2.8m relates to costs capitalised in respect of a Genus Sexed Semen (GSS)
development project.
Included above is £11.1m of capitalised development expenses in respect of GSS, and in addition there is also £5.4m
included within fixed assets relating to GSS.
9. BIOLOGICAL ASSETS
Fair value of biological assets Bovine Porcine Total
£m £m £m
Non-current biological assets 147.0 77.0 224.0
Current biological assets - 40.5 40.5
Balance at 30 June 2013 147.0 117.5 264.5
Increases due to purchases 5.6 102.5 108.1
Decreases attributable to sales - (153.2) (153.2)
Decrease due to harvest (33.3) (11.0) (44.3)
Changes in fair value less estimated sale costs 24.5 75.0 99.5
Acquisition of Génétiporc - 8.9 8.9
Effect of movements in exchange rates (15.2) (15.3) (30.5)
Balance at 30 June 2014 128.6 124.4 253.0
Non-current biological assets 128.6 80.3 208.9
Current biological assets - 44.1 44.1
Balance at 30 June 2014 128.6 124.4 253.0
Increases due to purchases 6.9 119.6 126.5
Decreases attributable to sales - (166.3) (166.3)
Decrease due to harvest (34.8) (16.7) (51.5)
Changes in fair value less estimated sale costs 34.5 78.7 113.2
Effect of movements in exchange rates 9.6 8.4 18.0
Balance at 30 June 2015 144.8 148.1 292.9
Non-current biological assets 144.8 97.9 242.7
Current biological assets - 50.2 50.2
Balance at 30 June 2015 144.8 148.1 292.9
Bovine biological assets include £6.0m (2014: £3.6m) representing the fair value of bulls owned by third parties but
managed by the Group, net of expected future payments to such third parties and are therefore treated as assets held under
finance leases.
There are no movements in the carrying value of the bovine biological assets in respect of sales or other changes during
the year.
The current market determined post-tax rate used to discount expected future net cash flows from the sale of bull semen is
the Group's weighted average cost of capital. This has been assessed as 8.0% (2014: 8.0%).
Decreases due to harvest represent the semen extracted from the biological assets. Inventories of such semen are shown as
biological asset harvest.
Porcine biological assets include £65.2m (2014: £49.5m) relating to the fair value of the retained interest in the genetics
in respect of animals, other than parent gilts, transferred to customers under royalty contracts. Total revenue in the
period includes £94.6m (2014: £80.7m) in respect of these contracts, comprising £17.5m (2014: £13.6m) on initial transfer
of animals to customers and £77.1m (2014: £67.1m) in respect of royalties received. Decreases attributable to sales during
the period of £166.3m (2014: £153.2m) include £37.0m (2014: £32.8m) in respect of the reduction in fair value of the
retained interest in the genetics of animals, other than parent gilts, transferred under royalty contracts.
For pure line porcine herds, the net cash flows from the expected output of the herds are discounted at the Group's
required rate of return adjusted for the greater risk implicit in including output from future generations. This adjusted
rate has been assessed as 11% (2014: 11.0%). The number of future generations which have been taken into account is seven
(2014: seven) and their estimated useful lifespan is 1.3 years (2014: 1.4 years).
Included in increases due to purchases is the aggregate increase arising during the period on initial recognition of
biological assets in respect of multiplier purchases £43.3m (2014: £34.1m).
Year ended 30 June 2015
Bovine Porcine Total
£m £m £m
Net IAS 41 valuation movement on biological assets*
Changes in fair value of biological assets 34.5 78.7 113.2
Inventory transferred to cost of sales at fair value (30.0) (16.7) (46.7)
Biological assets transferred to cost of sales at fair value - (42.2) (42.2)
4.5 19.8 24.3
Fair value movement in related financial derivative - 0.6 0.6
4.5 20.4 24.9
Year ended 30 June 2014
Bovine Porcine Total
£m £m £m
Net IAS 41 valuation movement on biological assets*
Changes in fair value of biological assets 24.5 75.0 99.5
Inventory transferred to cost of sales at fair value (30.7) (11.0) (41.7)
Biological assets transferred to cost of sales at fair value - (50.3) (50.3)
(6.2) 13.7 7.5
*This represents the difference between operating profit prepared under IAS 41 and operating profit prepared under
historical cost accounting, which forms part of the reconciliation to adjusted operating profit.
10. TRADE AND OTHER RECEIVABLES
2015£m 2014£m
Trade receivables 64.4 63.4
Other debtors 4.7 5.2
Prepayments and accrued income 3.3 3.9
Other taxes and social security 2.3 2.6
74.7 75.1
Trade receivables
The average credit period our customers take on the sales of goods is 59 days (2014: 62 days). We do not charge interest on
receivables for the first 30 days from the date of the invoice. We provide for all receivables based upon knowledge of the
customer and historical experience, and estimate irrecoverable amounts by reference to past default experience.
No customer represents more than 5% of the total balance of trade receivables (2014: nil).
At 30 June 2015 £45.0m (2014: £44.9m) of trade receivables were not yet due for payment.
11. RETIREMENT BENEFIT OBLIGATIONS
The Group has a number of defined contribution and defined benefit pension schemes covering many of its employees. The
principal funds are the Milk Pension Fund and Dalgety Pension Fund in the United Kingdom, which are defined benefit
schemes. The assets of these funds are held separately from the assets of the Group and administered by trustees and
managed professionally. These schemes are closed to new members.
The financial position of the defined benefit schemes as recorded in accordance with IAS 19 are aggregated for disclosure
purposes. The liability split by principal scheme is set out below.
2015£m 2014£m
The Milk Pension Fund - Genus's share 54.3 49.5
The Dalgety Pension Fund - -
Other retirement benefit obligations 8.8 8.7
Overall pension liability 63.1 58.2
Overall, we expect to pay £6.8m (2014/15: £6.1m) in contributions to defined benefit plans in the 2015/16 financial year.
The expense/(income) is recognised in the following line items in the income statement
2015£m 2014£m
Administrative expenses 0.6 0.4
Settlement gain in exceptional expenses (0.4) -
Finance charge 2.3 2.9
2.5 3.3
Actuarial assumptions and sensitivity analysis
Principal actuarial assumptions at the reporting date (expressed as weighted averages):
2015 2014
Discount rate 3.8% 4.2%
Expected return on plan assets 6.3% 6.6%
Medical cost trend rate 7.1% 7.2%
Future pension increases and inflation 3.1% 3.2%
The mortality assumptions used are consistent with those recommended by the schemes' actuaries and reflect the latest
available tables, adjusted for the experience of the scheme where appropriate. For 2015 and 2014, the mortality tables used
are 90% of the SN1A tables, with birth year and 2011 CMI projections, with mortality rates increased by 25% at all ages.
12. NOTES TO THE CASH FLOW STATEMENT
2015£m 2014£m
Profit for the year 40.5 28.9
Adjustment for:
Net IAS 41valuation movement on biological assets (24.9) (7.5)
Amortisation of acquired intangible assets 6.1 5.8
Share-based payment expense 1.4 0.8
Share of profit of joint ventures and associates (2.9) (1.9)
Finance costs (net) 4.6 5.5
Income tax expense 17.3 9.3
Other exceptional items 5.1 2.0
Adjusted operating profit from continuing operations 47.2 42.9
Depreciation of property, plant and equipment 6.3 5.1
Loss on disposal of plant and equipment 0.4 0.2
Impairment on asset held for sale 0.3 -
Amortisation of intangible assets 0.6 0.6
Earnings before interest, tax, depreciation and amortisation 54.8 48.8
Exceptional item cash (4.7) (2.0)
Other movements in biological assets and harvested produce 1.9 (3.0)
Increase in provisions 1.0 0.2
Additional pension contributions in excess of pension charge (6.1) (5.6)
Other (0.4) (0.3)
Operating cash flows before movement in working capital 46.5 38.1
(Increase)/decrease in inventories (0.6) 1.5
Decrease in receivables 0.6 1.1
Increase in payables 4.2 3.6
Cash generated by operations 50.7 44.3
Interest received 0.2 0.2
Interest and other finance costs paid (2.2) (1.8)
Cash flow from derivative financial instruments (1.2) (0.5)
Income taxes paid (12.7) (9.9)
Net cash from operating activities 34.8 32.3
Analysis of net debt
At 1 July 2014£m Net cash flows£m Foreign exchange£m Non-cash movements £m At 30 June 2015£m
Cash and cash equivalents 22.8 (2.3) (0.7) 1.5 21.3
Interest bearing loans - current (13.0) 8.6 (1.0) (6.8) (12.2)
Obligation under finance leases - Current (1.1) 1.5 (0.1) (1.4) (1.1)
(14.1) 10.1 (1.1) (8.2) (13.3)
Interest bearing loans - non-current (71.1) (7.4) (5.3) 6.4 (77.4)
Obligation under finance lease - non- Current (1.5) - (0.1) (0.8) (2.4)
(72.6) (7.4) (5.4) 5.6 (79.8)
Net debt (63.9) 0.4 (7.2) (1.1) (71.8)
Included within non-cash movements is £2.2m in relation to new finance leases.
13. CONTINGENCIES
The retirement benefit obligations referred to in note 11 include obligations relating to the Milk Pension defined benefit
scheme. Genus, together with other participating employers, is joint and severally liable for the scheme's obligations.
Genus has accounted for its section and its share of any orphan assets and liabilities, collectively representing
approximately 75% of the Milk Pension Fund. As a result of the joint and several liability, Genus has a contingent
liability for the scheme's obligations that it has not accounted for.
14. ACQUISITION OF SUBSIDIARIES
Birchwood Genetics, Inc
On 1 September 2014 the Group acquired 100% of the share capital of Birchwood Genetics, Inc. a porcine distribution company
with three sites located in Ohio, Michigan and Kentucky in North America. Birchwood has been a PIC partner for over 14
years. It focuses on providing male PIC genetics in a "service-and-product package" that generates consistent, valuable
results helping to build and sustain the success of the mid- and small-sized customers it serves. This acquisition helps
secure PIC's long-term distribution of proprietary boar genetics to customers in North America.
The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are set out in the table
below.
£m
l Intangible assets
l - Customer relationship 3.6
l
l Property, plant and equipment 0.5
l Financial assets 0.5
l Financial liabilities (1.9)
l
l Total identifiable assets 2.7
l Goodwill 3.1
l
l Total consideration 5.8
l
l Satisfied by:
l Net cash outflow arising on acquisition of subsidiary 5.8
l
The goodwill of £3.1m arising from the acquisition consists largely of future growth and synergies expected from combining
the acquired operations with existing Genus operations. None of the goodwill recognised is expected to be deductible for
income tax purposes.
The fair value of the financial assets includes trade receivables with a fair value of £0.5m and a gross contractual value
of £0.7m. The best estimate at acquisition date of the cash flows unlikely to be collected is £0.2m.
Acquisition and integration related costs included within exceptional items amount to £0.3m.
Birchwood Genetics, Inc. contributed £7.8m revenue and £1.0m profit to the Group for the period between date of acquisition
and the balance sheet date.
If the acquisition of Birchwood Genetics, Inc. had been completed on the first day of the financial period, Group revenues
and Group profit would have been £9.0m and £1.2m, respectively.
In Vitro Brasil S.A.
On 31 March 2015 the Group acquired 51% of the share capital of In Vitro Brasil S.A. ('IVB') for a total investment
consideration of BRL 20m (£4.5m). Genus also expects to acquire the remaining 49% of IVB's share capital in the first half
of 2018 by exercising a call option. The consideration is subject to certain performance conditions and is to be capped at
a maximum of BRL 49m (£10.0m). The selling shareholders also have a matching put option.
IVB is a leading biotechnology company focused on the production of bovine embryos through in-vitro fertilisation and the
provision of associated services. IVB is based in Brazil and also operates in a number of countries including the US,
Colombia and Uruguay.
The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are set out in the table
below.
£m
l Intangible assets identified
l - Technology 3.5
l - Customer relationship and trade name 0.5
l
l Property, plant and equipment 0.6
l Financial assets 3.6
l Financial liabilities (2.1)
l
l Total identifiable assets 6.1
l Attributable to non-controlling interest (3.8)
l
l Share of identifiable assets 2.3
l Goodwill 2.2
l
l Total consideration 4.5
l
l Satisfied by:
l Net cash outflow arising on acquisition of subsidiary 4.5
l
The goodwill of £2.2m arising from the acquisition consists largely of future growth and synergies expected from combining
the acquired operations with existing Genus operations. None of the goodwill recognised is expected to be deductible for
income tax purposes.
The fair value of the financial assets includes trade receivables with a fair value of £1.1m and a gross contractual value
of £1.3m. The best estimate at acquisition date of the cash flows unlikely to be collected is £0.2m.
Acquisition and integration related costs included within exceptional items amount to £0.9m.
IVB contributed £2.3m revenue and £0.8m profit after tax to the Group for the period between date of acquisition and the
balance sheet date, which includes £0.5m attributable to non-controlling interest.
Due to the transaction's nature, it is impracticable to obtain the information required to disclose what the Group's
revenues and profit would have been, if the acquisition of IVB had been completed on the first day of the financial
period.
15. NON-CONTROLLING INTEREST
2015£m
Non-controlling interest 4.3
Put option over non-controlling interest (see note 14) (10.0)
Total non-controlling interest (5.7)
Summarised financial information in respect of each of the Group's subsidiaries that has material non-controlling interest
is set out below. The summarised financial information below represents amounts before intragroup eliminations.
In Vitro Brasil S.A. Group 2015£m
Current assets 3.9
Non-current assets 4.4
Current liabilities (2.5)
Non-current liabilities -
Net assets 5.8
Equity attributable to owners of the Company 1.7
Non-controlling interest for In Vitro Basil S.A. Group 4.1
Other non controlling interests 0.2
Non-controlling interest 4.3
No dividends were paid to non-controlling interests.
This information is provided by RNS
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