Genus Regulatory News (GNS)

RNS Number : 6463H

Genus PLC

25 February 2010

 

For Immediate Release

25 February 2010

 

 

 

('Genus' or 'the Company')

Interim Results for the six months ended 31 December 2009

 

Genus, a world leading animal genetics company, announces its results for the six

months ended 31 December 2009. These results are reported under International Financial Reporting Standards ('IFRS').

 

FINANCIAL HIGHLIGHTS

 

Adjusted Results				Movement
				Actual Currency	Constant Currency+
	2009	2008		%	%
Six months ended 31 December	£m	£m
Continuing operations
Revenue	134.9	140.0		(4)	(7)
Regional operating profit**	34.3	32.0		7	3
Operating profit*	19.3	19.0		2	(1)
Profit before tax*	15.5	16.9		(8)	(11)
Earnings per share (p)*	17.2	19.0		(9)
Statutory Results
	2009	2008		%
Six months ended 31 December	£m	£m
Continuing operations
Revenue	134.9	140.0		(4)
Operating profit	16.6	20.0		(17)
Profit before tax	13.0	17.9		(27)
Earnings per share (p)	15.0	19.2		(22)

 

 

 

 

* Adjusted operating profit, adjusted profit before tax and adjusted basic earnings per share are before fair value movements on biological assets, amortisation of acquired intangible assets, share based payments and exceptional items, and exclude other gains and losses.

 

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

 

+ Constant currency percentage movements are calculated by restating 2009 results at the exchange rates applied in 2008.

 

BUSINESS HIGHLIGHTS

 

·; Resilient underlying performance in difficult agricultural markets and economic conditions

 

·; Regional operating profit up 7% to £34.3m (2008: £32.0m)

 

o Bovine volumes up 3% and porcine royalty income up 6%

 

o Costs reduced throughout the Group in line with anticipated reduction in revenues

 

·; Adjusted profit before tax of £15.5m (2008: £16.9m) 8% lower due to:

 

o Increased research and development costs in line with strategy

 

o Lower contribution from 49% owned Brazilian joint venture which operates a less robust royalty model

 

o £0.9m higher interest costs following refinancing in February 2009

 

·; Cash inflow of £4.2m reduced net debt to £85.6m (June 2009: £88.0m) despite normal seasonal working capital increase

 

·; US beef genetics operations expanded through £1.4m acquisition of Powerline Beef Genetics

 

·; Continued success in product development

 

o Dairy sector competitive position improved with 33 bulls now in top 100 US ranking, up from 18 last year

o Rate of genetic improvement in porcine product development increased by a further 10%

 

 

Richard Wood, Chief Executive, commented:-

 

"Genus has weathered the deep global agricultural recession well. Operating profit was slightly ahead of the Board's expectation and was an improvement on last year.

"The early signs of market recovery are now becoming more evident and we remain on course to deliver an improved performance in the second half".

"Looking further ahead, the Group's geographic spread, investment in research and development and improving product portfolio leave Genus well placed to benefit from the recovery in agricultural markets and the return to long term growth expected in the markets in which it operates."

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

Jennie Spivey

 

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

 

 

GROUP PERFORMANCE

 

In a reporting period at the bottom of a deep global agricultural recession, Genus has continued to deliver a resilient underlying performance, slightly ahead of the Board's expectations. Regional operating profit, before research and development and central costs, was 7% higher than in the pre-recessionary first half of last year and 3% higher in constant currency.

Adjusted profit before tax of £15.5m was 8% lower than last year due to the combination of an increase in research and development costs in line with the Group's long-term strategy, a lower contribution from our Brazilian joint venture, which operates a less robust royalty model, and increased interest costs following last year's refinancing.

Tight control of cash held net debt at the half year of £85.6m to a level slightly lower than in June 2009 (£88.0m), despite the normal seasonal working capital outflow in the first half year.

 

Results

 

Revenue of £134.9m was 4% lower than in 2008. The majority of the reduction in revenues arose from porcine customers in the USA deferring the updating of genetics in their herds due to the agricultural recession. Importantly, underlying activity levels held up well and market share generally improved; a testimony to the strength of Genus' products. Bovine volumes rose 3% and porcine royalty income increased by 6% although porcine volumes only rose by 1%.

Adjusted operating profit was £19.3m (2008: £19.0m). Regional operating profit rose 7%, from a particularly strong performance in Europe, more than offsetting the impact of acutely depressed market conditions, particularly in North America. As expected, research & development costs were £2.2m higher than last year, mainly as a result of the increase in costs associated with bringing on stream the new porcine nucleus herd facility in South Dakota. The impact of weaker Sterling on the largely US based costs contributed to the increase.

After higher interest costs, resulting largely from increased interest margins payable following the refinancing in February last year, adjusted profit before tax was 8% lower at £15.5m (2008: £16.9m).

The statutory results include fair value adjustments on the Group's biological assets. When these non-cash items are taken into account, statutory operating profit was lower at £16.6m (2008: £20.0m). The reduction arose principally from a reduced credit in respect of the fair value movement in biological assets of £0.9m (2008: £5.5m). This was mainly due to a slower up-take of genetic updates by Genus' porcine customers; the impact on underlying profits was minimal, due to the resilience of the porcine royalty model. Statutory profit before tax of £13.0m ( 2008: £17.9m) reduced accordingly.

The effective rate of tax on adjusted profit before tax was 33.7% (2008: 34.1%). Adjusted basic earnings per share was 17.2p (2008: 19.0p).

 

Cash Flow and Net Debt

 

Capital expenditure for the half year of £3.7m (2008: £11.4m) was substantially lower than last year as the final stages of the planned research & development investment programme drew to a close. The new nucleus herd facility was completed in October 2009.

Tight working capital management contained the normal seasonal working capital outflows for the first half to £7.9m (2008: £13.0m). As a result of this and the lower level of capital expenditure, a net cash inflow before financing activities (excluding share capital issued) for the half year of £4.2m was achieved, compared to a £8.7m cash outflow in the prior period.

Net debt at the half year was £85.6m (30 June 2009: £88.0m).

 

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 2010 are announced.

REVIEW OF OPERATIONS

 

North America				Movement
	2009 £m	2008 £m		Actual Currency %	Constant Currency %
Revenue	42.9	51.2		(16)	(18)
Adjusted operating profit	14.3	14.6		(2)	(5)
Adjusted operating margin	33%	29%

 

Producers in North America faced particularly difficult market conditions throughout 2009, with weakening demand, oversupply and high feed costs. As a result, the majority of producers became loss-making.

 

Customers reacted in varying ways to these market conditions:-

 

·; In the bovine sector, where the market reversal was particularly sudden and deep, most customers traded down and this reduced average selling prices. On the west coast of the USA, where dairy farms are generally larger and more reliant on purchased feed, customer profitability was hardest hit by the sudden market reversal. These farmers saved money by using on-farm stock instead of making new semen purchases. As a result, semen sales volume was down 4% when compared with the pre-market downturn period last year.

 

·; In the porcine sector, customers had been loss-making for longer than in the bovine sector and saved cash by deferring the updating of the genetics in their herds. As a result, revenue fell with significantly lower sales of breeding animals. However, royalty income was maintained at the same level as last year to produce a robust operating contribution.

 

To mitigate the impact on profitability of lower sales throughout the region, there has been a tight control of costs.

As a result, although revenue fell by 18%, profits were only 5% lower in constant currency.

 

REVIEW OF OPERATIONS (CONTINUTED)

 

Latin America				Movement
	2009 £m	2008 £m		Actual Currency %	Constant Currency %
Revenue	17.3	15.9		9	2
Adjusted operating profit exc. joint venture (JV)	5.4	4.3		26	15
Adjusted operating profit inc. JV	6.3	6.0		5	(2)
Adjusted operating margin exc. JV	31%	27%

 

 

Revenue increased by 9% to £17.3m (2008: £15.9m) and operating profit was up 5% to £6.3m (2008: £6.0m), although profits were down 2% in constant currency.

 

The strong improvement in both bovine and porcine profitability was held back by a disappointing performance from the 49% owned joint venture in Brazil, where low pig prices resulted in reduced profits as a result of a less robust royalty model that is more linked to hog prices than volumes.

 

Bovine semen sales grew strongly, with volume in both dairy and beef semen being up by 10%. Sales volume rose strongly in Brazil and Argentina and the company market share improved.

 

In porcine, market recovery led to improved underlying volumes and prices in Chile, although sales and profits were held back by delayed shipments to Venezuela due to export restrictions.

 

 

REVIEW OF OPERATIONS (CONTINUED)

 

Europe				Movement
	2009 £m	2008 £m		Actual Currency %	Constant Currency %
Revenue	61.7	59.7		3	1
Adjusted operating profit	11.8	9.9		19	16
Adjusted operating margin	19%	17%

 

Europe performed well despite the difficult market conditions that prevailed throughout the period. Revenue increased by 3% to £61.7m and profits rose 19% to £11.8m.

European milk prices improved gradually from the very low levels experienced in the spring of 2009. However, farmers remained loss-making and were cautious in any purchasing.

Against this background, semen volume grew 6%. Italy, a country where Genus is the clear market leader, performed strongly. Volumes increased in a number of relatively new markets for Genus including Ukraine and Russia. Average prices were maintained and cost reductions contributed to improve profitability.

Pig prices remained depressed throughout Europe, except in the UK where prices benefited from the weakness of Sterling. The UK business continued to perform well. In Germany the business was restructured to reduce cost in response to disappointing sales.

In the strategically important growth countries of Eastern Europe, particularly Russia, Poland and Romania, strong volume growth was achieved.

 

Far East				Movement
	2009 £m	2008 £m		Actual Currency %	Constant Currency %
Revenue	11.1	11.3		(2)	(9)
Adjusted operating profit	2.8	3.2		(13)	(18)
Adjusted operating margin	25%	28%

 

A severe drought in Australia and depressed pig markets throughout Asia, held back both sales and profit. Sales were 2% lower at £11.1m, and profit was 13% lower at £2.8m (2008: £3.2m).

The Australian spring heatwave dramatically reduced semen demand.

The new dairy semen business with Mengniu in China grew strongly, albeit from an embryonic base and a further 21 bulls were transferred from the Australian stud to increase local capacity to meet projected demand.

The market downturn in porcine limited demand. Customers in the Philippines and, to a lesser extent in China, delayed both updating of genetics and expansion plans. In response, Genus re-phased the planned new farm expansions in China to be more in line with the expected market recovery.

 

Research & Development				Movement
	2009 £m	2008 £m		Actual Currency %	Constant Currency %
Research & development costs	11.4	9.2		24	14

 

Research and development costs for the six months increased by £2.2m to £11.4m, an increase of 24%, as the strategic expansion was commissioned. Part of the increase arose from the weakness of Sterling as the majority of the research and development activities are undertaken in the USA. On a constant currency basis, research and development costs were £1.4m higher. The increased costs of the new porcine nucleus herd facility in south Dakota accounted for £1.0m.

 

Bovine Product Development

 

The strength of Genus' bovine product development programme was extended in the latest league tables. Genus leads the internationally important US rankings and now has 33 bulls in the top 100, up from 18 a year ago. This has been achieved from a progeny testing programme of 220 bulls, some 20% of the total of bulls tested in the USA by the industry.

 

During the last year, Genus has largely completed the final stage of a strategic increase in the size of its US progeny test programme to a total of 300 bulls per annum. This increase was designed to create more World class bulls whose semen could be sold internationally. This should improve the Company's competitive edge, as the number of bulls graduating from the programme increases steadily over the next 4 years. The third of the four buildings required to house the increased number of bulls was completed during the half year at a cost of £1m.

 

Porcine Product Development

 

The new nucleus herd facility in South Dakota was completed and became operational in October 2009. This facility replaces the ageing Kentucky facility and will provide additional capacity to support Genus' long term growth. The size of the new facility will also enable Genus fully to replicate the genetic lines housed in its other nucleus facility in Saskatchewan, improving biosecurity and consequently reducing risk.

We continued to make good progress in quantitative genetics and cross bred trials so that the annual rate of increase in porcine genetic merit continued to rise. With the increasing application of the genomics programme, we are confident that further improvements in the rate of genetic progress will add to the company's competitive edge.

 

Fundamental Research

 

Our investment in research has been maintained. In our genomics programme, technological advances and appropriate investment in computing power have enabled us to increase the volume of SNP (units of genetic information) data used in our evaluations to 60,000 SNPs. These are already being used to accelerate genetic selection in the porcine programme and their use has now been extended into the bovine programme.

A further milestone has been achieved in the sexed semen project. Operational sorting of semen has been accomplished and the project has been elevated from a research to a development project.

 

REVIEW OF OPERATIONS (CONTINUED)

 

Genus products

 

				Movement
	2009 £m	2008 £m		Actual Currency %	Constant Currency %
Revenue
Bovine	70.7	70.1		1	(3)
Porcine	62.3	68.0		(8)	(11)
Research & Development	1.9 134.9	1.9 140.0
Adjusted operating profit
Bovine	10.1	10.4		(3)	(2)
Porcine	14.2	13.9		2	(2)
Unallocated	(5.0) 19.3	(5.3) 19.0

 

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

Bovine volumes grew 3%; average selling prices were slightly lower principally due to lower average prices in the US as customers traded down in response to the difficult market conditions. Prices have stabilised and started to rise in recent months. Profitability was broadly maintained, benefiting from continued tight cost control.

In porcine, the fall in revenues occurred mainly in the US as customers deferred updating their genetics. The impact on profits was protected by the robustness of the royalty model and by cost reductions.

 

ACQUISITION

 

At the end of the period, Genus acquired for £1.4m Powerline Beef Genetics, a business focused on supplying beef genetics to large US customers. Whilst only a small acquisition, it provides an expansion platform for the premium beef genetics market. It will enable Genus to use its products and product development capabilities to grow more quickly in the integrated beef chain.

OUTLOOK

 

Genus has continued to deliver a resilient performance throughout the severe recession in World agricultural markets. Reported profits were held back by the expected increased investment in research and development and higher interest costs, neither of which are expected to be a feature of comparative performance in the second half of the year.

Towards the end of the half year, early market indicators started to turn positive in the USA. Milk prices improved to break even for farmers and the futures market is predicting a return to profitability for porcine producers by the summer. Whilst trading remains difficult in bovine, in porcine we have secured new business wins with existing customers looking to expand their herds as they become more confident in the outlook for improved markets. We have also started to see some early signs of recovery in a number of other markets.

As a result, the Group remains on course to deliver an improved performance in the second half year.

Looking further ahead, the Group's geographic spread, investment in research and development and improving product portfolio leave Genus well placed to benefit from the recovery in agricultural markets and the return to long term growth expected in the markets in which it operates.

 

 

 

PRINCIPAL RISKS & UNCERTAINTIES

 

The Genus plc 2009 Annual Report (a copy of which is available on the Genus website at www.genusplc.com) sets out a number of risks and uncertainties that might impact upon the performance of the Group and these comprise:-

 

Business Risk	Outline
Environmental compliance	Environmental incident e.g. arising from waste disposal
Disease	Disease outbreak in bull studs or porcine nucleus herds and/or surrounding areas
Health & Safety	Health & safety incident, e.g. accident at work
Sales Growth	Changes in demand; interruptions or delay in product supply; expansion into new markets; economic conditions; competitor activity
Profit Growth	Impact of economic conditions on operating costs, e.g. high commodity prices
Business Interruption	Failure of business infrastructure; delay in third party supply of product or services
People	Reliance on key employees
Currency	Foreign exchange risks

 

 

Genus operates a structured risk management process that identifies, evaluates and prioritises risks and uncertainties and actively reviews control and mitigation activities. There has been no change to the principal risks summarised above that might affect the Group in the second half of the financial year.

 

CONDENSED CONSOLIDATED INCOME STATEMENT For the six months ended 31 December 2009
		Six months ended 31 December 2009		Six months ended 31 December 2008		Year ended 30 June 2009
	Note		£m		£m			£m
					(*restated)
Revenue from continuing operations	4		134.9		140.0			280.4
Adjusted operating profit from continuing operations			19.3		19.0			38.1
Net IAS 41 valuation movements on biological assets	9		0.9		5.5			2.7
Amortisation of acquired intangible assets			(2.6)		(2.8)			(5.2)
Share based payments			(1.0)		(1.1)			(2.0)
Exceptional items:			16.6		20.6			33.6
- Environmental liabilities settlement			-		(0.6)			(0.6)
Operating profit from continuing operations			16.6		20.0			33.0
Share of profit of joint ventures and associates	10		1.1		1.7			1.8
Other gains and losses			-		-			0.4
Net finance costs before exceptional items	6		(4.7)		(3.8)			(8.2)
Write off of unamortised arrangement fees			-		-			(0.8)
Net finance costs			(4.7)		(3.8)			(9.0)
Profit before tax from continuing operations			13.0		17.9			26.2
Taxation	7		(4.1)		(6.6)			(8.3)
Profit for the period from continuing operations			8.9		11.3			17.9
Earnings per share from continuing and total operations
Basic earnings per share	12		15.0p		19.2p			30.4p
Diluted earnings per share	12		14.8p		18.9p			29.9p
Non statutory measure of profit
Adjusted operating profit from continuing operations			19.3		19.0		38.1
Pre tax share of profits from joint venture and associates excluding net IAS 41 valuation movements			0.9		1.7		2.1
Net finance costs before exceptional items			(4.7)		(3.8)		(8.2)
Adjusted profit before taxation from continuing operations			15.5		16.9		32.0
Adjusted earnings per share from continuing operations
Basic earnings per share	12		17.2p		19.0p		36.1p
Diluted earnings per share	12		17.0p		18.8p		35.6p

*see note 2

 

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the six months ended 31 December 2009
		Six months ended 31 December 2009		Six months ended 31 December 2008		Year ended 30 June 2009
		£m	£m	£m	£m	£m	£m
Profit for the period			8.9		11.3		17.9
Foreign exchange translation differences		14.9		75.3		44.1
Fair value movement on net investment hedge		(2.1)		(11.1)		(11.7)
Fair value movement on cash flow hedges		-		(3.2)		(3.0)
Actuarial gains on defined employee benefit schemes		3.3		0.1		(13.6)
Tax relating to components of other comprehensive income		(3.2)		(23.0)		(9.5)
Other comprehensive income for the period			12.9		38.1		6.3
Total comprehensive income for the period			21.8		49.4		24.2
Attributable to:
Owners of the Company			21.8		49.4		24.2
Minority interests			-		-		-
			21.8		49.4		24.2

 

 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 31 December 2009

	Note	Called up share capital	Share premium account	Treasury  shares	Transl-ation reserve	Hedging reserve	Retained earnings	Total	Minority interest	Total equity
		£m	£m	£m	£m	£m	£m	£m	£m	£m
Balance at 1 July 2008		5.9	111.7	(0.1)	(7.9)	0.7	74.8	185.1	-	185.1
Foreign exchange translation differences		-	-	-	26.9	-	-	26.9	-	26.9
Fair value movement on net investment hedge, net of tax		-	-	-	(8.6)	-	-	(8.6)	-	(8.6)
Fair value movement on cash flow hedges, net of tax		-	-	-	-	(2.1)	-	(2.1)	-	(2.1)
Actuarial losses on defined employee benefit schemes, net of tax		-	-	-	-	-	(9.9)	(9.9)	-	(9.9)
Net income and expense recognised directly in equity		-	-	-	18.3	(2.1)	(9.9)	6.3	-	6.3
Profit for the period		-	-	-	-	-	17.9	17.9	-	17.9
Total recognised income and expense for the period		-	-	-	18.3	(2.1)	8.0	24.2	-	24.2
Recognition of share based payments, net of tax		-	-	-	-	-	1.1	1.1	-	1.1
Issue of ordinary shares		0.1	-	-	-	-	-	0.1	-	0.1
Dividends	8	-	-	-	-	-	(5.9)	(5.9)	-	(5.9)
Balance at 30 June 2009		6.0	111.7	(0.1)	10.4	(1.4)	78.0	204.6	-	204.6
Foreign exchange translation differences		-	-	-	12.0	-	-	12.0	-	12.0
Fair value movement on net investment hedge, net of tax		-	-	-	(1.5)	-	-	(1.5)	-	(1.5)
Fair value movement on cash flow hedges, net of tax		-	-	-	-	-	-	-	-	-
Actuarial gains on defined employee benefit schemes, net of tax		-	-	-	-	-	2.4	2.4	-	2.4
Net income and expense recognised directly in equity		-	-	-	10.5	-	2.4	12.9	-	12.9
Profit for the period		-	-	-	-	-	8.9	8.9	-	8.9
Total recognised income and expense for the period		-	-	-	10.5	-	11.3	21.8	-	21.8
Recognition of share based payments, net of tax		-	-	-	-	-	1.2	1.2	-	1.2
Issue of ordinary shares		-	0.3	-	-	-	-	0.3	-	0.3
Minority interest on acquistion		-	-	-	-	-	-	-	0.3	0.3
Dividends	8	-	-	-	-	-	(6.5)	(6.5)	-	(6.5)
Balance at 31 December 2009		6.0	112.0	(0.1)	20.9	(1.4)	84.0	221.4	0.3	221.7

 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED) For the six months ended 31 December 2009
	Note	Called up share capital	Share premium account	Treasury shares	Transl-ation reserve	Hedging reserve	Retained earnings	Total
		£m	£m	£m	£m	£m	£m	£m
Balance at 1 July 2008		5.9	111.7	(0.1)	(7.9)	0.7	74.8	185.1
Foreign exchange translation differences		-	-	-	48.3	-	-	48.3
Fair value movement on net investment hedge, net of tax		-	-	-	(8.0)	-	-	(8.0)
Fair value movement on cash flow hedges, net of tax		-	-	-	-	(2.3)	-	(2.3)
Actuarial losses on defined employee benefit schemes, net of tax		-	-	-	-	-	0.1	0.1
Net income and expense recognised directly in equity		-	-	-	40.3	(2.3)	0.1	38.1
Profit for the period		-	-	-	-	-	11.3	11.3
Total recognised income and expense for the period		-	-	-	40.3	(2.3)	11.4	49.4
Recognition of share based payments, net of tax		-	-	-	-	-	1.1	1.1
Dividends	8	-	-	-	-	-	(5.9)	(5.9)
Balance at 31 December 2008		5.9	111.7	(0.1)	32.4	(1.6)	81.4	229.7

 

CONDENSED CONSOLIDATED BALANCE SHEET 31 December 2009
	Note	31 December 2009	31 December 2008	30 June 2009
		£m	£m	£m
Assets
Goodwill		74.8	76.0	70.5
Other intangible assets		79.7	91.4	81.1
Biological assets	9	158.4	169.4	153.9
Property, plant and equipment		42.1	42.9	39.3
Interests in joint ventures and associates	10	6.7	5.1	5.3
Available for sale investments		0.4	0.4	0.3
Derivative financial assets		1.4	-	1.7
Deferred tax assets		16.1	16.4	16.7
Total non-current assets		379.6	401.6	368.8
Inventories		28.5	32.5	28.0
Biological assets	9	30.9	32.4	28.0
Trade and other receivables		60.0	61.5	53.7
Cash and cash equivalents		27.8	20.0	20.6
Income tax receivable		1.2	1.7	1.4
Derivative financial assets		-	0.3	-
Asset held for sale		0.3	-	-
Total current assets		148.7	148.4	131.7
Total assets		528.3	550.0	500.5
Liabilities
Trade and other payables		(37.4)	(40.2)	(39.0)
Dividends payable		(6.5)	(5.8)	-
Interest-bearing loans and borrowings		(6.8)	(23.0)	(2.5)
Provisions		(0.3)	(0.8)	(0.2)
Obligations under finance leases		(0.9)	(0.9)	(0.9)
Current tax liabilities		(6.2)	(10.3)	(4.8)
Total current liabilities		(58.1)	(81.0)	(47.4)

 

 

CONDENSED CONSOLIDATED BALANCE SHEET 31 December 2009
	Note	31 December 2009	31 December 2008	30 June 2009
		£m	£m	£m
Interest-bearing loans and borrowings		(104.8)	(93.5)	(104.2)
Pension deficit	14	(32.2)	(22.5)	(35.4)
Provisions		(1.6)	(1.8)	(1.8)
Deferred tax liabilities		(98.8)	(105.8)	(96.3)
Derivative financial liabilities		(10.2)	(13.9)	(9.8)
Obligations under finance leases		(0.9)	(1.8)	(1.0)
Total non-current liabilities		(248.5)	(239.3)	(248.5)
Total liabilities		(306.6)	(320.3)	(295.9)
Net assets		221.7	229.7	204.6
Equity
Called up share capital		6.0	5.9	6.0
Share premium account		112.0	111.7	111.7
Treasury shares		(0.1)	(0.1)	(0.1)
Translation reserve		20.9	32.4	10.4
Hedging reserve		(1.4)	(1.6)	(1.4)
Retained earnings		84.0	81.4	78.0
Equity attributable to owners of the Company		221.4	229.7	204.6
Minority interest		0.3	-	-
Total equity		221.7	229.7	204.6

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS For the six months ended 31 December 2009
	Note	Six months ended 31 December 2009	Six months ended 31 December 2008	Year ended 30 June 2009
		£m	£m (*restated)	£m
Net cash flow from operating activities	13	7.3	1.1	14.1
Cash flows from investing activities
Dividend received from joint venture and associates		-	1.1	2.1
Purchase of property, plant and equipment		(3.7)	(11.1)	(15.2)
Proceeds from disposal of businesses		-	-	0.3
Purchase of intangible assets		-	(0.3)	(0.3)
Proceeds from sale of property, plant and equipment		0.3	0.5	1.0
Net cash outflow from investing activities		(3.4)	(9.8)	(12.1)
Cash flows from financing activities
Drawdown of borrowings		-	3.6	14.7
Repayment of borrowings		(1.7)	-	(11.3)
Payment of capital element of finance lease liabilities		(0.5)	(0.7)	(0.8)
Equity dividends paid		-	-	(5.9)
New share capital issued		0.3	-	0.1
Increase in bank overdrafts		4.6	3.4	1.2
Net cash inflow/(outflow) from financing activities		2.7	6.3	(2.0)
Net increase/(decrease) in cash and cash equivalents - continuing operations		6.6	(2.4)	(0.3)
Net increase in cash and cash equivalents - discontinued operations		-	-	0.3
Net increase/(decrease) in cash and cash equivalents		6.6	(2.4)	-
Cash and cash equivalents at beginning of period		20.6	19.3	19.3
Net increase/(decrease) in cash and cash equivalents		6.6	(2.4)	-
Effect of exchange rate fluctuations on cash held		0.6	3.1	1.3
Total cash and cash equivalents at end of period		27.8	20.0	20.6

 

*Interest paid and interest received has been restated to be included within net cash flow from operating activities.

ANALYSIS OF NET DEBT 31 December 2009
	At 1 July 2009	Cash flows	Foreign exchange	Non-cash movements	At 31 December 2009
	£m	£m	£m	£m	£m
Cash and cash equivalents	20.6	6.6	0.6	-	27.8
Interest-bearing loans - current	(2.5)	(4.2)	(0.1)	-	(6.8)
Obligation under finance leases - current	(0.9)	0.5	-	(0.5)	(0.9)
	(3.4)	(3.7)	(0.1)	(0.5)	(7.7)
Interest-bearing loans - non-current	(104.2)	1.3	(1.1)	(0.8)	(104.8)
Obligation under finance lease - non-current	(1.0)	-	-	0.1	(0.9)
	(105.2)	1.3	(1.1)	(0.7)	(105.7)
Net debt	(88.0)	4.2	(0.6)	(1.2)	(85.6)

 Cash and interest bearing loans current at 31 December 2009 include UK treasury cash- pooling balances of £8.0m which are shown gross (31 December 2008: £5.6m).

 

	At 1 July 2008	Cash flows	Foreign exchange	Non-cash movements	At 31 December 2008
	£m	£m	£m	£m	£m
Cash and cash equivalents	19.3	(2.4)	3.1	-	20.0
Interest-bearing loans - current	(17.6)	2.1	-	(7.5)	(23.0)
Obligation under finance leases - current	(1.0)	0.7	(0.2)	(0.4)	(0.9)
	(18.6)	2.8	(0.2)	(7.9)	(23.9)
Interest-bearing loans - non-current	(77.0)	(9.5)	(14.5)	7.5	(93.5)
Obligation under finance lease - non-current	(1.2)	-	(0.3)	(0.3)	(1.8)
	(78.2)	(9.5)	(14.8)	7.2	(95.3)
Net debt	(77.5)	(9.1)	(11.9)	(0.7)	(99.2)

 

 

Net debt is defined as the total of cash and cash equivalents, interest bearing loans, unamortised debt issue costs and obligations under finance leases.