Genus Regulatory News (GNS)

('Genus' or 'the Company')

Interim Results for the six months ended 31 December 2010

Genus, a leading global animal genetics company, announces its unaudited results for the six months ended 31 December 2010. These results are reported under International Financial Reporting Standards ('IFRS').

FINANCIAL HIGHLIGHTS

* Adjusted operating profit, adjusted profit before tax and adjusted basic earnings per share are before net IAS 41 valuation movements in biological assets, amortisation of acquired intangible assets, share based payment expense and exceptional items.

** Regional operating profit represents adjusted operating profit before research & development costs and central costs.

+ Constant currency percentage movements are calculated by restating 2010 results at the exchange rates applied in 2009.

BUSINESS HIGHLIGHTS

·; Strong growth in sales and profits led by a recovery in leading markets

·; Revenues up 14% to £153.2m (2009: £134.9m):

o Bovine sales volumes 10% higher (2009: 3% higher)

o Increased sales of porcine breeding animals; underlying porcine volumes up 9% and royalty income up 10%

·; Adjusted profit before tax rose 23% to £19.1m (2009: £15.5m):

o Regional operating profit rose 9% to £37.4m (2009: £34.4m)

o Expenditure in research and development rose 8% as planned to £12.4m (8% of sales)

o Interest costs were £0.9m lower at £3.8m reflecting lower pension interest and reduced net debt

·; Cash inflow of £9.4m (2009: £4.2m) reduced net debt to £70.6m (June 2010: £80.0m) despite the normal seasonal working capital increase

·; Good strategic progress achieved in developing markets:

o Regional management strengthened in Far East and Latin America to drive strategic growth in these important developing markets

o Bovine stud acquired in Russia to provide sales of locally produced semen commencing in 2011/12

o Commercial agreement for production and marketing of locally produced semen in India has achieved encouraging initial sales

o Porcine accounts won in China with new ventures involving existing international customers

Richard Wood, Chief Executive, commented:-

"Genus performed well, supported by the diversity of its international business. We delivered an adjusted profit before tax 23% higher than last year, despite the planned increase in research and development expenditure to drive future growth.

Although some markets are recovering only slowly because of rising feed costs, global agricultural markets have improved since the depths of the agricultural recession last year. Therefore Genus expects to continue to make good progress during the second half of the year.

Global population growth and increased urbanisation in developing countries is accelerating demand for protein in diets. This demand increase and pressure on prices, driven by higher feed costs, can only be met by greater efficiency and industrialisation in farming. Genus' market leading genetics are key ingredients in the quest for improved productivity so that Genus will increasingly benefit from this growth trend."

For further information please contact:-

Genus plc Tel: 01256 345970

Richard Wood, Chief Executive

John Worby, Finance Director

Buchanan Communications Tel: 0207 466 5000

Charles Ryland

Suzanne Brocks

Helen Chan

This announcement is available on the Genus website www.genusplc.com

GROUP PERFORMANCE

Genus achieved a strong performance in the six months to 31 December 2010. Revenue rose 14% and adjusted profit before tax increased by 23% to £19.1m. This continued the improved performance seen in the second half of the last financial year. Market recovery was most pronounced in Latin America and the porcine sector of North America.

The major investment programme, started two years ago to increase product development capacity, is now complete so that growth in profits yielded a strong cash inflow for the half year and net debt reduced substantially from £80.0m at June 2010 to £70.6m. This was achieved despite the normal seasonal working capital outflow.

Results

The 14% increase in revenue to £153.2m was driven principally by higher direct sales of porcine genetics as customers returned to updating their herds, following two years of poor customer profitability due to the recession and high feed prices. Bovine sales increased by 8%.

Adjusted operating profit rose to £21.4m (2009: £19.3m). Regional operating profit increased by 9%, with particularly strong improvements in both North America and Latin America. In Europe, operating profit was held back by the phasing of sales, partly because of the early poor winter weather. This delayed deliveries in Western Europe. The order book remains strong. Research and development costs increased by £0.9m to £12.4m (8% of sales) reflecting the planned increase in product development to support the expected future growth in sales.

Adjusted profit before tax of £19.1m rose 23% because of the improved operating profit combined with lower interest costs, resulting from lower pension interest costs and reduced debt levels.

The statutory results, including fair value adjustments on the Group's biological assets, show an even stronger performance with operating profit up 55% to £25.8m (2009: £16.6m) and profits before tax up over 70% to £23.0m (2009: £13.0m). The fair value credit of £7.8m (2009: £0.9m) for biological assets increased as a result of the volume bounce back as post recessionary growth returned and reflects the improving outlook for agriculture. There was also a £0.6m exceptional pension credit following the closure to future accrual of one of the Group's defined benefit pension schemes.

Cash Flow and Net Debt

Capital expenditure for the half year of £2.2m (2009: £3.4m) was lower than last year following completion of the major strategic investment in global product development and production capacity in the prior year. Tight management of working capital contained the seasonal outflow to £3.5m (2009: £7.9m). This, combined with the improved profit generated, created a strong cash inflow of £9.4m (2009: £4.2m) so that net debt fell from £80.0m at June 2010 to £70.6m.

Net debt including derivatives relating to borrowings was £78.0m (2009: £89.6m).

Dividend

In line with previous years and the stated Group dividend policy, the Board will not be recommending an interim dividend but expects to recommend a final dividend when the results for the year to 30 June 2011 are announced.

Strategic Progress

We made further progress with our plan to increase sales of domestically produced product in developing markets. A new commercial agreement in India will provide locally produced semen to be sold alongside semen currently imported from the USA. A stud has been acquired in Russia. This will provide housing for Genus bulls progeny tested in the USA but to be transferred from North America to produce semen locally in this growing market. Genus will be the first international company to operate a stud in this fast modernising and extremely large market. In China, bovine sales continued to grow strongly. A further shipment of bulls from Australia is being delivered in March to extend local semen capacity. Progress in the porcine sector in China has been less buoyant than planned because of depressed pig prices and a widespread outbreak of disease throughout China. This has limited our ability to transfer animals between regions and hence to supply customers. Against this difficult background, Genus has won important new business with international companies expanding production in China. Chinese pig prices have improved strongly and the government is beginning to intervene in the pricing of agricultural products to control food inflation. As a result, the prognosis for further growth in this sector is improving.

To increase the focus on the opportunities in all these important and strategic markets, a new regional manager has been appointed to an enlarged Far East region, that now includes Russia, in the light of the strategic growth opportunities in that market. Similarly, a new regional manager has been appointed to oversee operations of the equally important Latin American market, where strong growth has continued this year.

Board

On 11 November 2010, Bob Lawson, currently Chairman of Barratt Developments plc, became Non-Executive Chairman of Genus following the conclusion of the Company's Annual General Meeting and John Hawkins, the previous Chairman, retired from the Board having served ten years as a non-executive director of the Company and six years as Chairman.

Outlook

Global agricultural markets have improved since the depths of the agricultural recession last year. North America and Latin America have led this change. Elsewhere the impact of higher feed prices has resulted in a slower recovery. We expect Europe to produce a solid result for the year as a whole. Far East performance is likely to continue to be affected by the timing of the recovery of the porcine market in China. Overall, Genus expects to continue to make good progress during the second half of the year.

Global population growth and increased urbanisation in developing countries is creating more demand for protein in diets. This, together with higher feed costs, is putting additional pressure on the need for greater efficiency and industrialisation in agriculture. Genus' market leading genetics are key ingredients in the quest to improve livestock productivity so that we will be well placed to benefit from these trends as they evolve over the next few years.

REVIEW OF OPERATIONS

Revenue rose 24% to £53.0m and operating profits increased by 16% to £17.1m. Porcine sales rose strongly as market improvements encouraged customers to return to updating the genetics for their production animals. Bovine sales continued at historical levels.

Pig prices strengthened in response to the supply cutbacks made last year helped by increased export potential. This created a more normal and profitable market opportunity for customers and increased Genus' sales of breeding animals and royalty income. A number of new accounts were won and this has increased the Company's market share in the USA.

In the bovine sector, the dairy market remained relatively weak. Although milk prices have increased, the improvement has only been to a level at which efficient customers' businesses are breaking even. Further milk price recovery is unlikely before the end of 2011 so that the market for Genus' genetics is expected to remain flat for the remainder of the year.

Against this background, the strengthened management team made good progress. Genus' semen sales volumes were stabilised at the same level as last year and average selling prices rose. A further $2.5m in annualised costs savings were implemented during the period. This has re-positioned the business well for the market recovery predicted for next year.

In Latin America, market recovery has been stronger than elsewhere and has enabled revenue to rise by 33% to £23.0m. Our strong Latin American businesses achieved good growth and this resulted in an increase in market share. Operating profit (including joint venture) rose by a third to £8.4m.

Both the beef and dairy semen markets were buoyant. Cattle and milk prices firmed and enabled bovine semen sales to grow by 12% with Argentina and Mexico performing particularly well. A new business unit was opened in Colombia. This is a new market for Genus and is the third largest cattle market in Latin America.

In the porcine sector, sales of breeding animals were strong as customers returned to restocking to update the genetics in their herds. With global demand now increasing, some customers also took the opportunity to expand. Important customer contracts were renewed at improved royalty rates and new business was won. Increasing pig prices in Brazil resulted in strong profit growth for the Brazilian porcine joint venture. In this business, good progress has been made in converting customer royalty contracts from revenue based payments to volume based royalties. This will make future royalty payments from the joint venture more stable than in the past as it has in North America.

Revenues in Europe were marginally down on last year and operating profit was 5% lower.

With rising milk prices across Europe, Genus' dairy semen revenue increased and volumes rose by 5%. In the highest margin market, France, volume and profit both rose strongly. However, bovine profitability for the region as a whole was held back by the impact of delays to sales caused mainly by the difficult weather and by high distribution costs in the UK, as fuel prices rose steeply. The order book remains strong so we expect the second half of the year to show an improvement over the first half.

In the porcine sector, European pig prices improved steadily but not sufficiently to offset increased feed costs. As a result, the larger customers were only marginally profitable. Against this background, the markets for breeding animals remained relatively subdued and sales were at a similar level to last year. However, operating profit improved, with the UK business performing particularly well. Germany also increased profits, following last year's restructuring to reduce costs, but progress may be held back by the recent Dioxin scare in animal feed.

Following a change in management responsibility to reflect the strategic importance of this fast changing business region, reporting for the Far East region now includes Russia.

Performance for the region was held back by lower profits in the porcine business in China. In addition, the phasing of porcine deliveries reduced sales and profit contribution from Russia. However, good progress was made in implementing the region's overall business development strategy:-

·; Strong growth was achieved in the bovine sector, with semen volumes rising by 17%. In China, semen volumes doubled. This increase included the first sales of locally produced semen from our Chinese partner's newly constructed bull stud.

·; A commercial agreement in India has established a bull stud in the South West, for the first time enabling the marketing of locally produced semen alongside imported semen from the USA. Initial sales, mainly of locally produced semen, have been encouraging.

·; In Australia, performance improved as the business recovered from last year's drought.

In China, depressed pig prices and the impact of widespread disease resulted in lower profits. The disease and widespread slaughter in customer herds led to rising pig prices towards the end of the half year; this has improved business potential. New business has also been won with major producers in China, involving existing international customers.

Elsewhere in the region, sales and profits improved in line with expectations.

Costs for the six months increased by 8% or £0.9m to £12.4m. The increase related to higher bovine product development costs to operate the increased size of the bull development programme necessary to provide capacity for anticipated future growth. There was also a small increase in porcine development costs as the use of genomics was further extended in the development programme. The impact of higher feed prices on porcine development costs has been offset by improved realisations from slaughter animals and the majority of the remaining exposure to the commodity cycles in the current year has been hedged.

Bovine Product Development

The strength of Genus' research and development programme has continued to be well demonstrated by the strong position of its bovine products in the industry league tables. Genus remains the leading producer with 28 bulls in the top 100 of the internationally important US rankings. We also have 5 bulls in the top 20 of the much smaller Jersey bull rankings for the USA.

Now that local semen production has begun in a number of new country markets, focus is also being placed on selecting bulls to be shipped for local supply to the new studs opened in the emerging markets. There are 10 bulls awaiting shipment to Russia and a further 16 bulls to be shipped shortly to China. This is not a new approach to marketing for Genus but one successfully pioneered in Latin America some years ago to create the successful and growing business we have there today.

Porcine Product Development

Independent porcine product trials continued to demonstrate the market leadership of Genus' porcine genetics. The new genetic nucleus farm in South Dakota is fully operational and, as a result, the number of sows in our product development programme increased from 4,500 to 6,000. The enlarged herd will increase selection pressure and thereby further improve the rate of genetic progress. In addition, the extended use of genomics, together with our extensive 'PIC Track' database, is improving selection accuracy. The combination of increased selection pressure and improved selection accuracy should ensure that Genus' genetics will remain world market leaders in the porcine sector. In addition, it provides capacity to produce custom lines for leading producers.

Research

We have established a number of new external research collaborations. Activities have been refocused on a number of key projects expected to have an increasing importance as world agriculture adapts to the demand challenges of increased population, wealth and climate changes.

Good progress has continued to be made with the sexed semen project. The first major milestone was met on time in November 2010 and good progress is being achieved towards meeting the next milestone.

Genus Products

Genus manages its global operations on a regional basis and monitors product performance globally.

Sales of bovine products increased. Volumes grew by 10% with 6% being related to increased supply from global studs and the remainder attributable to growth in business from the new local studs. Average selling prices were slightly lower than last year, principally because of the mix effect of adding strong growth from locally supplied semen. This locally supplied product does not carry any 'on cost' of a progeny test programme but cannot command the same price as is achieved in developed markets like Western Europe.

Profitability in bovine was held back by increased development costs associated with the growth in the bull development programme to support forward sales forecast, the phasing of sales due to the early bad winter weather and higher costs in the UK.

Porcine revenues grew strongly driven by higher sales of breeding animals to update genetics in customers' herds following the slow-down experienced during the global recession. Royalty revenues grew steadily throughout the period. Underlying volume growth was 9%. Costs remained well controlled and profitability improved as a result of the strong sales growth.

*see note 2 for details of restatement applied to 2009 balance sheet.