REG - Genus - Preliminary Results <Origin Href="QuoteRef">GENS.L</Origin> - Part 3
08/09/2016 07:05
- Part 3: For the preceding part double click ID:nRSH2474Jb
Asia 45.1 41.4
388.3 398.5
Non-current assets (excluding deferred taxation and financial instruments)
2016£m 2015£m
North America 347.5 306.3
Latin America 56.3 51.2
Europe, Middle East and Africa 98.2 85.0
Asia 16.3 14.0
518.3 456.5
Revenue by type
2016£m 2015£m
Sale of animals, semen, embryos and associated products and services 283.5 307.9
Royalties - animal and semen 97.8 83.6
Consulting services 7.0 7.0
388.3 398.5
Interest income (see note 4) 0.1 0.2
388.4 398.7
3. EXCEPTIONAL ITEMS
Operating income/(expenses): 2016£m 2015£m
Pension related 44.2 0.4
Litigation (6.9) (2.8)
Acquisition and integration (0.2) (1.4)
Other (including restructuring) (0.8) (1.3)
36.3 (5.1)
Pension related
During the 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. See note
11.
Litigation
Litigation includes legal fees of £5.4m (2015: £2.8m) related to the action by ABS Global, Inc. against Inguran, LLC (aka
Sexing Technologies) and £1.5m ($2m) for up-front damages related to patent infringement and confidential information.
On 14 July 2014, ABS, a wholly owned subsidiary of the Company, 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 contractual provisions and
the repeated acquisition of exclusive patent rights related to semen processing. The legal action aimed to remove these
barriers and allow free and fair competition in the sexed bovine semen processing market ('ABS Action'). On the same date,
ABS also filed an Inter-Partes Review application ('IPR') challenging the validity of one of ST's group patents, US Patent
No. 7,195,920 (the '920 patent') before the US Patent Office. Subsequently, ABS also filed IPRs challenging the validity of
ST's group patents 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 filed an Answer and Counterclaim to the ABS Action, denying any anticompetitive activities, and
alleging, among other matters, (i) that ABS fraudulently induced ST to enter into the parties' semen sorting agreement,
(ii) that the Company and ABS repudiated and breached the agreement, and (iii) that the Company and ABS have infringed the
'920, '425, '987 and '092 patents.
On 29 April 2015, the 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. 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 of the PTAB on whether a hearing will be instituted on the validity of the '092 patent.
On 21 July 2016, the Court issued its Summary Judgment decision which, among other things, confirmed that ST's fraudulent
inducement claim failed as a matter of law.
On 1 August 2016, the litigation commenced in the US District Court for the Western District of Wisconsin. On 10 August
2016, the jury determined that ABS and Genus had proved that ST had wilfully maintained monopoly power in the market for
sexed bovine semen processing in the US since July 2012, but that Genus had not proved that it had suffered injury to date
as a result. On 11 August 2016, the jury also determined that (i) ST's '987 and '092 patents were valid and infringed and
(ii) that ABS had materially breached the confidentiality obligations under the 2012 semen sorting agreement between the
parties. On 12 August 2016, the jury determined that (i) Genus should pay ST an up-front payment of $750,000 and an
on-going royalty of $1.25 per straw on commercialisation of the GSS technology for the use of ST's '987 patent; (ii) Genus
should pay ST an up-front payment of $500,000 up-front and anon-going royalty of $0.50 per straw for the use of ST's '092
patent; and (iii) ABS had materially breached the confidentiality obligations under the 2012 semen sorting agreement
between the parties and damages were determined to be $750,000.
In response to the verdicts reached Genus has sought an injunction from the Court to allow, among other things, ABS to
terminate the 2012 semen sorting agreement and to provide relief from the restrictive provisions under that agreement. The
parties have also commenced the Court briefing on post-trial motions. Genus has sought, among other things, judgement as a
matter of law that the '987 patent is invalid and that the '092 patent is not infringed, or alternatively a new trial on
the patent claims. Genus plans to commercialise its GSS technology in the US and globally and introduce competition into
the market.
Acquisitions and integration
During the year, £0.2m of expenses were incurred in relation to acquisition and integration, principally £0.1m in relation
to In Vitro Brasil S.A. and £0.1m for St Jacobs Animal Breeding Corp. See note 14.
Other (including restructuring)
Included within 'other' is a £1.4m provision for prior year receivables from Venezuelan customers due to government
restrictions on foreign exchange and a £0.8m provision for restructuring the European ABS business, partially offset by
income of £1.4m from an historical insurance reclaim.
4. NET FINANCE COSTS
2016£m 2015£m
Interest payable on bank loans and overdrafts (1.7) (1.8)
Amortisation of debt issue costs (0.5) (0.4)
Other interest payable (0.1) (0.1)
Net interest cost in respect of pension scheme liabilities (2.2) (2.3)
Net interest cost on derivative financial instruments (0.2) (0.2)
Total interest expense (4.7) (4.8)
Interest income on bank deposits 0.1 0.2
Total interest income 0.1 0.2
Net finance costs (4.6) (4.6)
5. INCOME TAX EXPENSE
Income tax expense 2016£m 2015£m
Current tax expense
Current period 10.4 13.0
Adjustment for prior periods (1.4) (0.4)
Total current tax expense in the Group Income Statement 9.0 12.6
Deferred tax expense/(income)
Origination and reversal of temporary differences 0.7 5.1
Adjustment for prior periods 0.9 (0.4)
Total deferred tax expense in the Group Income Statement 1.6 4.7
Total income tax expense excluding share of income tax of equity accounted investees 10.6 17.3
Share of income tax of equity accounted investees 1.4 0.7
Total income tax expense in the Group Income Statement 12.0 18.0
6. EARNINGS PER SHARE
Basic earnings per share is the amount of 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 2016 2015
Basic earnings per share 81.1p 65.7p
The calculation of basic earnings per share from continuing operations for the year ended 30 June 2016 is based on the net
profit attributable to owners of the Company from continuing operations of £49.3m (2015: £39.9m) and a weighted average
number of ordinary shares outstanding of 60,814,000 (2015: 60,702,000), which is calculated as follows:
Weighted average number of ordinary shares (basic)
2016000s 2015000s
Issued ordinary shares at start of the year 60,968 60,919
Effect of own shares held (177) (239)
Shares issued on exercise of stock options 23 22
Weighted average number of ordinary shares in year 60,814 60,702
Diluted earnings per share from continuing operations 2016 2015
Diluted earnings per share 80.3p 64.9p
The calculation of diluted earnings per share from continuing operations for the year ended 30 June 2016 is based on the
net profit attributable to owners of the Company from continuing operations of £49.3m (2015: £39.9m) and a weighted average
number of ordinary shares outstanding, after adjusting for the effects of all potential dilutive ordinary shares, of
61,387,000 (2015: 61,476,000), which is calculated as follows:
Weighted average number of ordinary shares (diluted)
2016000s 2015000s
Weighted average number of ordinary shares (basic) 60,814 60,702
Dilutive effect of share options 573 774
Weighted average number of ordinary shares for the purposes of diluted earnings per share 61,387 61,476
Adjusted earnings per share from continuing operations 2016 2015
Adjusted earnings per share 60.7p 56.8p
Diluted adjusted earnings per share 60.1p 56.1p
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 £36.9m (2015: £34.5m), which is calculated as follows:
2016£m 2015£m
Profit before tax from continuing operations 60.9 57.8
Add/(deduct):
Net IAS 41 valuation movement on biological assets 17.1 (24.9)
Amortisation of acquired intangible assets 6.1 6.1
Share-based payment expense 3.8 1.4
Exceptional items (see note 3) (36.3) 5.1
Net IAS 41 valuation movement on biological assets in joint ventures (1.9) 1.0
Tax on joint ventures and associates 1.4 0.7
Attributable to non-controlling interest (1.4) (0.6)
Adjusted profit before tax 49.7 46.6
Adjusted tax charge (12.8) (12.1)
Adjusted profit after taxation 36.9 34.5
Effective tax rate on adjusted profit 25.8% 26.0%
7. DIVIDENDS
Amounts recognised as distributions to equity holders in the year:
2016£m 2015£m
Final dividend
Final dividend for the year ended 30 June 2015 of 13.4 pence per share 8.1
Final dividend for the year ended 30 June 2014 of 12.2 pence per share - 7.4
Interim dividend
Interim dividend for the year ended 30 June 2016 of 6.7 pence per share 4.1 -
Interim dividend for the year ended 30 June 2015 of 6.1 pence per share - 3.7
12.2 11.1
The Directors have proposed a final dividend of 14.7 pence per share for 2016. 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, license and other Total Goodwill
£m £m £m £m £m £m £m £m
Cost
Balance at 1 July 2014 42.7 54.9 97.6 6.5 7.7 0.5 112.3 69.9
Additions - - - - 2.8 - 2.8 -
Acquisition 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 61.5 107.6 6.6 11.1 0.3 125.6 73.9
Additions - - - - 4.6 2.2 6.8 -
Acquisition (see note 14) - 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
Amortisation and impairment losses
Balance at 1 July 2014 17.5 26.6 44.1 3.8 - - 47.9 -
Amortisation for the year 2.3 3.8 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 31.5 51.3 4.5 - - 55.8 -
Amortisation for the year 2.3 3.8 6.1 0.7 - 0.2 7.0 -
Effect of movements in exchange rates - 5.6 5.6 0.2 - - 5.8 -
Balance at 30 June 2016 22.1 40.9 63.0 5.4 - 0.2 68.6 -
Carrying amounts
At 30 June 2016 24.5 31.8 56.3 1.5 17.8 2.4 78.0 86.0
At 30 June 2015 26.3 30.0 56.3 2.1 11.1 0.3 69.8 73.9
At 30 June 2014 25.2 28.3 53.5 2.7 7.7 0.5 64.4 69.9
Additions in the year to intangible assets of £4.6m relates to costs capitalised in respect of the GSS development project.
Included above is £17.8m of capitalised development expenses in respect of GSS, and in addition there is also £7.7m
included within fixed assets relating to GSS.
During the year, we acquired a world-wide licence to use Caribou Biosciences, Inc.'s leading CRISPR-Cas9 gene editing
technology platform.
9. BIOLOGICAL ASSETS
Fair value of biological assets Bovine Porcine Total
£m £m £m
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
Increases due to purchases 7.7 112.9 120.6
Decreases attributable to sales - (152.0) (152.0)
Decrease due to harvest (31.6) (18.0) (49.6)
Changes in fair value less estimated sale costs 2.1 67.7 69.8
Acquisition 1.9 - 1.9
Effect of movements in exchange rates 21.4 26.0 47.4
Balance at 30 June 2016 146.3 184.7 331.0
Non-current biological assets 146.3 118.3 264.6
Current biological assets - 66.4 66.4
Balance at 30 June 2016 146.3 184.7 331.0
Bovine biological assets include £7.8m (2015: £6.0m) 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% (2015: 8.0%).
Decreases due to harvest represent the semen extracted from the biological assets. Inventories of such semen are shown as
biological asset harvest.
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, other than parent gilts, of £49.4m (2015: £43.3m).
Decreases attributable to sales during the period of £152.0m (2015: £166.3m) include £49.6m (2015: £37.0m) 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.
Porcine biological assets include £69.3m (2015: £65.2m) relating to the fair value of the retained interest in the genetics
in respect of animals, other than parent gilts, to customers under royalty contracts.
Total revenue in the period, including parent gilts, includes £127.2m (2015: £114.5m) in respect of these contracts,
comprising £38.1m (2015: £37.4m) on initial transfer of animals to customers and £89.1m (2015: £77.1m) in respect of
royalties received.
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% (2015: 11.0%). The number of future generations which have been taken into account is seven
(2015: seven) and their estimated useful lifespan is 1.3 years (2015: 1.3 years).
Year ended 30 June 2016
Bovine Porcine Total
£m £m £m
Net IAS 41 valuation movement on biological assets*
Changes in fair value of biological assets (2.9) 67.7 64.8
Inventory transferred to cost of sales at fair value (23.6) (18.0) (41.6)
Biological assets transferred to cost of sales at fair value - (39.7) (39.7)
(26.5) 10.0 (16.5)
Fair value movement in related financial derivative - (0.6) (0.6)
(26.5) 9.4 (17.1)
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
*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
2016£m 2015£m
Trade receivables 65.0 64.4
Other debtors 5.5 4.7
Prepayments and accrued income 5.3 3.3
Other taxes and social security 2.3 2.3
78.1 74.7
Trade receivables
The average credit period our customers take on the sales of goods is 61 days (2015: 59 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 (2015: nil).
At 30 June 2016, £50.5m (2015: £45.0m) of trade receivables were not yet due for payment.
11. RETIREMENT BENEFIT OBLIGATIONS
The Group operates 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 UK, which are defined benefit schemes. The
assets of these funds are held separately from the assets of the Group and are 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 and IFRIC 14, are aggregated
for disclosure purposes. The liability split by principal scheme is set out below.
2016£m 2015£m
The Milk Pension Fund - Genus's share 34.3 54.3
The Dalgety Pension Fund - -
Other retirement benefit obligations and other unfunded schemes 10.2 8.8
Overall net pension liability 44.5 63.1
Overall, we expect to pay £7.1m (2016: £6.7m) in contributions to defined benefit plans in the 2017 financial year.
Summary of movements in Group deficit during the year
2016£m 2015£m
Deficit in schemes at the start of the year (63.1) (58.2)
Administration expenses (0.7) (0.6)
Gains on curtailments and settlements 0.3 0.4
Change from RPI to CPI for benefit increases in the MPF 43.9 -
Contributions paid into the plans 6.7 6.1
Net pension finance cost (2.2) (2.3)
Actuarial loss recognised during the year (12.8) (6.8)
Movement in restriction of assets (0.6) (1.2)
Recognition of additional liability (14.9) -
Exchange rate adjustment (1.1) (0.5)
Deficit in schemes at the end of the year (44.5) (63.1)
The (income)/expense is recognised in the following line items in the income statement
2016£m 2015£m
Administrative expenses 0.7 0.6
Settlement gain in exceptional items (0.3) (0.4)
Change from RPI to CPI for benefit increases in the MPF in exceptional items (43.9) -
Net Finance charge 2.2 2.3
(41.3) 2.5
Actuarial assumptions and sensitivity analysis
Principal actuarial assumptions at the reporting date (expressed as weighted averages):
2016 2015
Discount rate 2.8% 3.8%
Consumer Price Index (CPI) 1.6% 2.0%
Retail Price Index (RPI) 2.7% 3.1%
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 2016, the mortality tables used are 97%
of the SN2A tables, with birth year and 2014 CMI projections, subject to a long-term rate of improvement of 1.25% for males
and females (2015: the mortality tables used are 90% of the SN1A tables, with birth year and 2011 CMI projections, subject
to a long-term rate of improvement of 1.25% for males and females).
12. NOTES TO THE CASH FLOW STATEMENT
2016£m 2015£m
Profit for the year 50.3 40.5
Adjustment for:
Net IAS 41valuation movement on biological assets 17.1 (24.9)
Amortisation of acquired intangible assets 6.1 6.1
Share-based payment expense 3.8 1.4
Share of profit of joint ventures and associates (6.9) (2.9)
Finance costs (net) 4.6 4.6
Income tax expense 10.6 17.3
Exceptional items (36.3) 5.1
Adjusted operating profit from continuing operations 49.3 47.2
Depreciation of property, plant and equipment 7.9 6.3
(Gain)/loss on disposal of plant and equipment (0.2) 0.4
(Gain)/impairment on asset held for sale (0.2) 0.3
Amortisation of intangible assets 0.9 0.6
Earnings before interest, tax, depreciation and amortisation 57.7 54.8
Exceptional item cash (4.7) (4.7)
Other movements in biological assets and harvested produce (3.8) 1.9
(Decrease)/increase in provisions (1.2) 1.0
Additional pension contributions in excess of pension charge (6.1) (6.1)
Other 0.3 (0.4)
Operating cash flows before movement in working capital 42.2 46.5
Increase in inventories (0.7) (0.6)
Decrease in receivables 2.6 0.6
(Decrease)/increase in payables (0.8) 4.2
Cash generated by operations 43.3 50.7
Interest received 0.1 0.2
Interest and other finance costs paid (1.6) (2.2)
Cash flow from derivative financial instruments 0.1 (1.2)
Income taxes paid (11.9) (12.7)
Net cash from operating activities 30.0 34.8
Analysis of net debt
At 1 July 2015£m Net cash flows£m Foreign exchange£m Non-cash movements£m At 30 June 2016£m
Cash and cash equivalents 21.3 10.7 2.0 - 34.0
Interest bearing loans - current (12.2) 8.6 (2.0) 1.0 (4.6)
Obligation under finance leases - current (1.1) 1.9 (0.3) (1.6) (1.1)
(13.3) 10.5 (2.3) (0.6) (5.7)
Interest bearing loans - non-current (77.4) (24.9) (13.0) - (115.3)
Obligation under finance lease - non- current (2.4) - (0.3) - (2.7)
(79.8) (24.9) (13.3) - (118.0)
Net debt (71.8) (3.7) (13.6) (0.6) (89.7)
Included within non-cash movements is £1.6m in relation to new finance leases.
13. CONTINGENCIES
Contingent liabilities are potential future cash outflows, where the likelihood of payments is considered more than remote
but is not considered probable or cannot be measured reliably.
The retirement benefit obligations referred to in note 11 include obligations relating to the Milk Pension Fund 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
On 31 March 2016 the Group acquired 100% of the share capital of St Jacobs Animal Breeding Corp. (St Jacobs), a bovine
breeding company based in Vermont, USA. St Jacobs core capabilities are around the ability to identify and source genetics
that target the Type or show cattle orientated segment of the dairy market.
The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are set out in the table
below.
£m
Intangible assets identified
- Trade name 0.7
Biological assets 1.9
Inventory 0.1
Financial liabilities (1.1)
Total identifiable assets 1.6
Goodwill (note 8) 1.9
Total consideration 3.5
Satisfied by:
Net cash outflow arising on acquisition of subsidiary 3.5
The goodwill of £1.9m 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.
Acquisition and integration related costs included within exceptional items amount to £0.1m.
St Jacobs contributed no revenue and £0.1m profit to the Group for the period between the date of acquisition and the
balance sheet date.
If the acquisition of St Jacobs had been completed on the first day of the financial period, Group revenues and Group
profit would have been no increase and £0.7m, respectively.
15. NON-CONTROLLING INTEREST
2016£m 2015£m
Non-controlling interest 5.0 4.3
Put option over non-controlling interest (11.4) (10.0)
Total non-controlling interest (6.4) (5.7)
Summarised financial information in respect of each of the Group's subsidiaries that has a material non-controlling
interest is set out below. The summarised financial information below represents amounts before intra-Group eliminations.
IVB Group 2016£m 2015£m
Current assets 4.6 3.9
Non-current assets 5.4 4.4
Current liabilities (2.1) (2.5)
Net assets 7.9 5.8
Equity attributable to owners of the Company (3.2) (1.7)
Non-controlling interest for IVB Group 4.7 4.1
Other non-controlling interest 0.3 0.2
Non-controlling interest 5.0 4.3
£0.4m of dividends were paid to non-controlling interests (2015: £nil).
16. POST BALANCE SHEET EVENTS
On 1 August 2016, the litigation commenced against Inguran, LLC (aka Sexing Technologies ('ST')). See note 3. On 10
August 2016, the jury determined that ABS and Genus had proved that ST had wilfully maintained monopoly power in the market
for sexed bovine semen processing in the US since July 2012, but that Genus had not proved that it had suffered injury to
date as a result. On 11 August 2016, the jury also determined that (i) ST's '987 and '092 patents were valid and infringed
and (ii) that ABS had materially breached the confidentiality obligations under the 2012 semen sorting agreement between
the parties. On 12 August 2016, the jury determined that (i) Genus should pay ST an up-front payment of $750,000 and an
on-going royalty of $1.25 per straw on commercialisation of the GSS technology for the use of ST's '987 patent; (ii) Genus
should pay ST an up-front payment of $500,000 up-front and on-going royalty of $0.50 per straw for the use of ST's '092
patent; and (iii) ABS had materially breached the confidentiality obligations under the 2012 semen sorting agreement
between the parties and damages were determined to be $750,000.
In response to the verdicts reached Genus has sought an injunction from the Court to allow, among other things, ABS to
terminate the 2012 semen sorting agreement and to provide relief from the restrictive provisions under that agreement. The
parties have also commenced the Court briefing on post-trial motions. Genus has sought, among other things, judgement as a
matter of law that the '987 patent is invalid and that the '092 patent is not infringed, or alternatively a new trial on
the patent claims. Genus plans to commercialise its GSS technology in the US and globally and introduce competition into
the market.
On 1 September 2016, we formed De Novo Genetics, a 51% majority-owned Holstein breeding strategic partnership, with De-Su,
the world's leading independent Holstein breeder. De Novo will further accelerate the proportion of bulls Genus produces
internally by combining ABS's and De-Su's elite Holstein breeding programmes. This will gives us greater control of the
genetics we need in order to create differentiated solutions that help commercial dairy farmers increase profitability
through improved herd productivity, health and efficiency.
This information is provided by RNS
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