Genus Regulatory News (GNS)

13 Nov 2008 07:00



For Immediate Release  13 November 2008

Genus plc

("Genus" or "the Company")

Annual General Meeting & Interim Management Statement

At the Annual General Meeting of Genus plc ("Genus") to be held today at 2.30pm, the Chairman, John Hawkins, will make the following interim management statement:

Strategy

In recent years Genus has been transformed into a world class business. The integration of the PIC businesses that were acquired with Sygen International plc in December 2005 is now complete and the strength of Genus' business model has been proven particularly in the Company's last financial year, with adjusted profit before tax rising by 40% in variable market conditions. 

Genus is about to embark on its next stage of growth that will concentrate on the emerging markets whilst maintaining its leading status in the developed world. The opportunities for business growth in Eastern Europe, the Far East, Latin America and India are particularly exciting.

Trading Performance

Trading to 12 November 2008 has been ahead of the Board's expectations reflecting a combination of the benefits of the US Dollar and the Euro strengthening and the Company delivering operational performance close to plan despite macro economic market conditions across the business continuing to be variable.

The Americas region had a strong first quarter including a very good porcine performance in Latin America. The Asian businesses performed in line with expectations but market conditions have been difficult in Western Europe for both our porcine and bovine customers. Most pig producers remained loss-making in Western Europe during the first quarter, although sentiment is now improving as pig futures have begun to rise and as grain prices have started to fall. The bovine business also slowed slightly in Western Europe as customers delayed expanding herds as financing became more difficult. 

Research and product development costs of the Company were higher than last year but lower than expected because of forward hedging of feed.

Genus' geographic diversity and its multi-species product range assist in protecting the business from market volatility and are helping to ensure that Genus can deliver results in line with expectations.

Financial Position

Genus expects a seasonal increase in working capital and, as planned, has also begun to invest in increased capacity to pursue the business opportunities identified in developing countries. These factors, when combined with the fall in the value of sterling, have led to a rise in the level of net debt to £94m at actual exchange rates as at 30 September 2008. 

Since the quarter end, on 15 October 2008 the Company entered into an agreement to settle all existing and future environmental liabilities in respect of the sale of Oklahoma porcine properties by Sygen International plc to Seaboard Foods prior to the acquisition of Sygen by Genus plc. Under the agreement a payment of $3.5m was made by the Company to Seaboard Foods and £0.6m will be treated as an exceptional cost to the Company. 

There have been no other significant changes in the financial position of the Company since the publication of the Annual Report and Financial Statements for the year to 30 June 2008.

Board

During the year, we have strengthened the Board so that it is fully equipped to drive the continued growth of the business as we pursue our development strategy. 

Nigel Turner, who was previously Chairman of Numis Securities, was appointed as senior independent non-executive director in January 2008 and brings with him considerable experience of corporate finance and corporate governance having been a partner in Lazard for 15 years and Vice Chairman of ABN AMRO's Wholesale and Investment Bank before joining Numis.

In October 2008 it was announced that Richard Wood had accepted the Board's proposal that he would continue to lead the Company. Under Richard Wood's leadership Genus has changed immeasurably and the Board believes that his contract extension will ensure operational stability for the Company's challenge of delivering planned growth, particularly in the emerging markets.

Outlook

With world agricultural capacity now falling short of demand and the credit crunch limiting the availability of funds for expansion, farmers and food producers are facing the financial challenge of ensuring that their existing assets deliver increased outputs.  Improved animal genetics will be a key part of this process. Genus' added value products provide the potential to achieve greater output at reduced costs from existing facilities.

The Board therefore continues to view the long term market prognosis as being increasingly favourable and is confident that the Company's prospects remain in line with expectations for the remainder of the financial year.

Genus is scheduled to make an interim results announcement in February 2009.

For further information please contact:

Genus plc Tel: 01256 345 970

Richard Wood, Chief Executive

Martin Boden, Finance Director

Buchanan Communications Tel: 020 7466 5000

Charles Ryland

Isabel Podda

Jennie Spivey

About Genus:

Genus creates advances to animal breeding through biotechnology and sells added value products for livestock farming and food producers. Its non-genetically modified organism technology is applicable across all livestock species but is only commercialised by Genus in the bovine and porcine farming sectors.

Genus' worldwide sales are made in seventy countries under the trade marks "ABS" (dairy and beef cattle) and "PIC" (pigs) and comprise semen and breeding animals with superior genetics to those animals currently in production. Customers' animals produce offspring with greater production efficiency, milk and meat output and quality and use these to supply the global dairy and meat supply chain.

The Group's competitive edge has been created from the ownership and control of proprietary lines of breeding animals, the biotechnology used to improve them and its global production and distribution network.

Headquartered in Basingstoke, England, Genus companies operate in 30 countries on six continents, with research laboratories located in Madison, Wisconsin, USA