Final Results

Genus PLC 22 May 2003 22 May 2003 GENUS plc Preliminary Results for the year ended 31st March 2003 RECORD TRADING RESULTS Genus plc, the international bovine genetics company, announces another strong set of results for the year ended 31st March 2003. Group Highlights 2003 2002 Change Group turnover (excluding discontinued activities) £169.7m £154.4m +10% Underlying* profit before tax £10.6m £8.5m +25% Profit before tax £5.1m £2.9m +76% Underlying* EPS 22.2p 16.5p +35% Basic EPS 8.3p 1.7p +488% Full Year dividend 5.5p 4.75p +16% Net debt £12.2m £15.4m -21% Gearing 26% 32% *On continuing operations before exceptional items and amortisation of goodwill • Bovine Genetics (previously Breeding) - Volume up 4%; revenue up 1.3% in constant currency terms - 16% underlying profit growth in constant currency terms - Market share increased in USA, Brazil and Japan - 35% market share established in Australia through acquisition - World leading bulls at stud include the Holstein Friesians: • Machoman - No.1 in the world • Lookout - No.1 in the UK; and, • Big Ben - No.1 Zebu in Brazil • No. 1 Jerseys in the US and Australia - Level of investment in bioscience being increased by US$1m per year • Other Businesses - Animal Health (previously Distribution); like-for-like turnover increased by £8.0m (15%) and a further £8.8m (17%) through the acquisition of the business of Dunnwood V S Limited (Dunnwoods) - Consultancy; reorganisation in first half returned trading to breakeven - UK Agricultural Consultancy recovered after Foot & Mouth Disease - Development Consultancy underlying profits up 27% before one-off gain of £0.4m - Market Consultancy now discontinued • Head office sold for £3.4m achieving streamlined operations and £0.96m profit gain after all costs, including relocation • Michael Roller succeeded Philip Acton as Group Finance Director, with effect from 17th March 2003. Previously Group Finance Director for IDS Group plc, Michael's experience also includes Money Controls plc (formerly Quadramatic plc), and Cookson Matthey Ceramics plc • Philip Acton was appointed Chief Operating Officer of Animal Health business Commenting on prospects Richard Wood, Chief Executive, said: 'We have achieved another year of strong trading results. We have also made progress with our strategy of extending the diversity and global leadership of our bovine genetics business. The level of fundamental bioscience expenditure has been increased by a further US$1m per year. This is aimed at increasing our competitive edge. We are confident that we can maintain the momentum of past business growth'. Contact: Richard Wood, Chief Executive Tel: 020 7466 5000 today Michael Roller, Finance Director thereafter Genus plc Tel: 01256 347101 Charles Ryland / Catherine Miles Tel: 020 7466 5000 Buchanan Communications Limited OVERVIEW OF THE COMPANY RESULTS Genus has again produced strong trading results in challenging global agricultural markets. Group turnover from continuing operations in the year to 31st March 2003 increased by 10% to £169.7m (including £8.8m of revenue from the Dunnwood acquisition) from £154.4m in 2002. Underlying operating profit from continuing operations increased by 16% to £11.9m (2002: £10.3m) and reflected the expected recoveries in Animal Health (previously Distribution) and areas of the Consultancy business. While reported Bovine Genetics (previously Breeding) revenue fell by 3.8% to £79.0m, in constant currency terms revenue grew by 1.3%. Underlying operating profit in the Bovine Genetics business grew by a healthy 12%, and 16% in constant currency terms (the latter stating 2002/3 results at 2001/2 exchange rates). Animal Health increased its like-for-like turnover by £8.0m (15%) to £61.2m, demonstrating the underlying strength of the business which operates in a highly competitive market. In July 2002, the business moved swiftly to acquire the business of Dunnwood V S Limited (Dunnwoods) in Scotland from the receivers and this added a further £8.8m (17%). As part of the Group's plan to accelerate the development of this business, the management team was strengthened in February by the appointment of Philip Acton, previously the Genus Finance Director, to head the division. The Consultancy Division broke even in the first half, a significant improvement on the losses incurred for the full year in 2001/02. This improvement was helped by the return of normal trading conditions to the UK Agricultural Consultancy business following the Foot & Mouth Disease (FMD) epidemic. However, the small Market Research Consultancy business continued to generate losses in the first half and, accordingly, it was decided to withdraw from this sector in February. Its operations have since been divested for nominal sums. Following the above disposals, the profitable UK Agricultural & Food Consulting businesses have been transferred to the Bovine Genetics business where, we believe, there will be cross-selling opportunities through the common customer base. The net result has been an increase in underlying EPS of 5.7 pence to 22.2 pence, up 35%. Basic EPS is up 6.6p to 8.3p. Cash Flow and Gearing Net debt reduced by £3.2m to £12.2m at 31st March 2003. Cash flow from operations was £7.6m, after investing £6.0m of capital expenditure. The principal items of non operating cash flow were tax payments of £1.6m, dividend payments of £1.6m, proceeds from property sales of £4.7m, principally of the former Head Office in Crewe, and the cost of the Dunnwood and RAB acquisitions totalling £4.9m. Dividend On the basis of these continued good results, and to demonstrate the confidence the Board has in the future, it is recommending an increase in dividend of 16%, resulting in a full year dividend of 5.50 pence per share (2002: 4.75 pence per share). This will be paid on 27th August 2003 to shareholders on the register at the close of business on 1st August 2003 with an ex-dividend date of 30th July 2003. Share Capital Last year, we undertook, when circumstances were appropriate, to buy back small share holdings for cancellation and then to make placings of blocks of shares to meet institutional demand. During the first half of the year, we repurchased 75,000 ordinary shares and allotted 350,000 shares to institutional investors. Given the ongoing cost to the company of maintaining such a large share register, it remains an objective of the Board to assist shareholders with small shareholdings to exit from the register. We will shortly be announcing particulars of a low cost dealing facility to assist small shareholders to sell their shares more cheaply. Company Outlook The Board is concentrating on the development of its world leading core business in Bovine Genetics. This business is operating in an evolving market with growth opportunities in agricultural markets not previously addressed by Genus, including Australasia, Latin America, Eastern Europe and the Far East. The principal short term opportunity for growth, either organic or acquisition driven, is to target these as demonstrated by Genus' penetration of the Australian market. In Genus' major existing markets such as North America, Continental Europe and the UK, production capacity has been in excess of demand for many years and growth is accordingly more difficult to achieve. In the recent past, Genus has demonstrated that it can grow profitably in these major markets and this has brought considerable pressure on less efficient competitors. We believe that there will be opportunities for industry consolidation and that Genus, whose business has easily the largest geographical reach in the market, is well placed to be a beneficiary of this process. In the longer term, scientific innovation will lead to differentiation between the offerings of the principal bovine genetics companies. The timescales in which scientific innovation can impact the financial performance of the business are necessarily long - Genus is now seeing the benefits of initiatives taken five years ago. Initiatives presently being invested in include enhancing output per bull, gene markers, semen sexing, fertility and freezing technology. Against this background, we are confident that we can maintain the momentum of past business growth. BOVINE GENETICS BUSINESS This business strengthened its world leading position in bovine genetics and increased its international reach and diversity by making two acquisitions in Australia. Continued research and development expenditure, now investing at a rate of £8.5m per year, has produced world leading bulls. This research is carefully targeted so as to achieve early practical and competitive advantage. Semen sales volume increased by 4% to 8.5m doses. Prices were held in a globally depressed agricultural market. Worldwide sales of £79.0m were slightly below last year for two principal reasons. First, the business mix moved away from the higher priced 'direct to farmer' sector in the UK market, which is now smaller in size since its recovery from FMD. This reduction was counterbalanced by increased volume elsewhere in the world, where Genus trades via exclusive agents, at lower prices, but with lower costs, in the wholesale sector. Secondly, the value of the sales made in foreign currencies suffered translation losses when converted into sterling. In constant currency, sales would have increased by 1.3% to £83.1m. We have restated the historical segmental analysis of the Business so as to include within it the results of the Agricultural and Food Consulting activities, transferred into Bovine Genetics in February 2003. Despite the market issues and the impact on overseas earnings of adverse movements in currency translation of £400,000, operating profit rose to £11.2m, a 12% improvement on last year's exceptional result and 16% in constant currency terms. Significant progress was made in many leading markets. Market share increased by 1% in the USA with a 6% volume increase. We have started to sell pregnancies as opposed to semen among the larger West Coast herds in order to capture the stronger 'direct to farmer' margins available in what is a growing sector of the US market. In Latin America, market share in Brazil increased by 6%, new distributors were added in Columbia and Peru and a distributor was changed in Puerto Rico. These changes are expected to improve local currency sales and profit potential next year. In November, the company acquired the outstanding 70% of the equity in ABSA, its joint venture distributor in Australia, as a vehicle to extending its market position in this important and growing market. In March, Genus acquired RAB, the second largest Australian cattle breeding company. The ABSA and RAB businesses are now being integrated. Together they will have a 35% market share in Australia and will become joint market leader alongside the local company, Genetics Australia. The traditional breeding programme operated by RAB has already produced 'Donor', formerly the No.1 Holstein Friesian bull in Australia. R&D investment in Australia will be enhanced, over the next few years, by the addition of Genus' scientific expertise and this should improve inventiveness and reduce costs. Bovine Genetics Research & Development At the core of the business lies an £8.5m per year research and development programme. Laboratory bioscience is used to target and augment traditional mating and selection programmes, testing 400 new bulls a year. The rolling five year programme aims continuously to improve the genetic make-up of the successive generations of the bulls created. Semen from the bulls selected from this programme for stud is sold for use on customers' herds, to improve the output and stature of their offspring. In the quest to find elite genetics, comparative mapping with gene markers identified in other species has isolated genes for health, fitness and meat quality. These genes are being incorporated into the breeding programmes but the work is, because of its complexity, of a long term nature. Shorter term projects have already raised the semen output from stud bulls to well in excess of that achieved by other cattle genetics companies. Our researchers have developed proprietary freezing techniques that reduce damage by 20% and we have developed a unique feed additive that strengthens sperm membranes, making the semen more robust to the freezing and thawing process. Multiple projects researching novel methods of gender selection were set up in October 2001, following the closure of Gensel. The new projects are aimed at enabling cattle breeders to pre-determine the sex of offspring, so that a dairy farmer can generate a high percentage of females for milking and a beef farmer a high percentage of males for superior meat quality. Other projects include looking for ways to extend the life of sperm inside the cow, so improving the chance of a successful pregnancy and making the timing of insemination less critical. All this bioscience work is being supported by a discovery programme for innovative research in the top 25 research institutions. The impact of the above bioscience programme on the traditional mating programmes, last year lifted the business's inventive rate to 20% ahead of its nearest competitor. Amongst the leading bulls now at stud are: • Machoman, No.1 in the world • Lookout No.1 in the UK • Big Ben No.1 Zebu in Brazil • No. 1 Jerseys in the US & Australia Bovine Genetics Outlook We believe Genus' market leading position and the strength of its Research & Development will ensure that it continues to drive through profitable growth, although developed world agriculture remains depressed. Many new research projects have been established in-house, with institutions and universities. This new work is being aimed at improving the efficacy of the existing genetic improvement programmes, reducing production costs, increasing semen output and, in particular, improving fertility. All these projects are aimed at creating short and medium term competitive advantage through innovation. The Genus studs, now located in four continents, provide biosecurity and unrivalled genetic diversity. Not all these advantages are yet fully exploited worldwide. For instance, the new Australian grassland genetics, recently acquired, will be sold in Ireland, Denmark and Holland, while tropical animals developed in the Latin American studs will now also be sold in the Far East through the new Australian business. OTHER GENUS BUSINESSES Animal Health Business This business markets both licenced veterinary pharmaceuticals and other products under the Animalcare brand and wholesales veterinary products to vets under the Genusxpress brand. The business recovery began last year and accelerated this year. Sales rose 31% to a total of £70.0m, £8.8m of sales coming from the Dunnwood acquisition. The underlying operating profit, net of £0.2m of one-off costs, was up 20% on the prior year. Organic sales growth was achieved by winning a total of 31 new accounts in the year and by growth in the market as a whole. The acquisition of Dunnwoods, from the receiver, was made towards the end of the first half of the year. It has been integrated and began to contribute to the Genusxpress business in the second half. Two new licenced 'over the counter' pharmaceutical products were launched during the year, and the product pipeline for prescription only pharmaceuticals was enhanced by the submission of a number of licence applications, due to be registered in 2003/4. The market leading identichip range continued to command a premium price in the market place, despite price pressure from the competition. This has been partly achieved by the introduction during the year of a client service database product, called Locate. This enhancement to the registration process helps clients to retrieve their lost animals more easily. The new temperature sensing chip, announced last year, will help differentiate the product range in the coming year. The 'palm pilot' based hand held electronic ordering device, Genuslynx, continued to be welcomed by the market. Enhanced system features will be launched in 2003/4. Animal Health Outlook During the year, the Animal Health business was set up as a wholly separate operation. Its management has been strengthened by the transfer, in February 2003, of Philip Acton, previously Genus' Finance Director, to become Chief Operating Officer. Also, a new head of the Animalcare business has been recruited. Following the Secretary of State for Trade & Industry's approval of the Competition Commission's recommendations in April 2003, veterinary prescriptions will also be able to be dispensed by retail pharmacies. Genus will be able to service pharmacies, as well as vets, with a same day service rather than the next day service offered by all competitors. This will mean that pharmacies will receive the same good service they already receive from human pharmaceutical wholesalers and will not need to carry large stocks of veterinary medicines, for the relatively small market demand for veterinary products. Development Consultancy Business This small business provides consulting services to the UK Government, the EU and overseas aid agencies Sales increased by 9.4% to £20.9m and operating profit by an underlying 27% to £576,000, prior to taking account of the recovery of a £0.4m debt, for which there was a provision. The business won 80 assignments in 42 countries. The largest were: UK Department for International Development • Three year policy studies for the UK Rural Livelihoods Department • Institutional reform of South African Forestry programme European Union • Financial disciplines in Lithuanian Enterprises • DTI nuclear non-proliferation programme, redeployment studies for Russian Closed Nuclear cities Asian Development Bank • Central region poverty reduction programme Development Consultancy Outlook Continued growth in sales and operating profit is expected. CONSOLIDATED PROFIT & LOSS ACCOUNT For the year ended 31 March 2003 Notes Continuing Operations Before Exceptional Items Exceptional Discontinued Total Total Items Operations 2003 2002 £000 £000 £000 £000 £000 TURNOVER Continuing operations - ongoing 160,972 - - 160,972 154,424 - acquisitions 8,777 - - 8,777 - Discontinued operations - - 3,041 3,041 5,997 ______________________________________________________________ 1 169,749 - 3,041 172,790 160,421 ______________________________________________________________ Underlying operating profit/(loss) 1 11,854 (247) (1,425) 10,182 9,198 Amortisation of goodwill (1,636) - (169) (1,805) (1,894) OPERATING PROFIT/(LOSS) 1 10,218 (247) (1,594) 8,377 7,304 Of which: ______________________________________________________________ Continuing operations - ongoing 10,309 (247) - 10,062 8,572 - acquisitions (91) - - (91) - Discontinued operations - - (1,594) (1,594) (1,268) ______________________________________________________________ Loss on disposal of discontinued operations - - (3,179) (3,179) (1,181) Profit on disposal of properties - 1,205 - 1,205 458 Profit on disposal of investment 34 - 34 - Write-down of investment - - - - (1,809) Interest receivable and similar 62 - - 62 66 income Interest payable and similar charges (1,357) - - (1,357) (1,890) ______________________________________________________________ PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION 8,923 992 (4,773) 5,142 2,948 Tax on profit on ordinary activities (2,887) 74 488 (2,325) (2,349) ______________________________________________________________ profit/(LOSS) on ordinary activities after taxation 6,036 1,066 (4,285) 2,817 599 Minority interests - equity (63) - - (63) (34) ______________________________________________________________ PROFIT/(LOSS) FOR THE FINANCIAL YEAR 5,973 1,066 (4,285) 2,754 565 _______________________________________ Dividends on equity shares (1,846) (1,580) ___________________ RETAINED PROFIT/(LOSS) FOR THE YEAR 908 (1,015) ___________________ Earnings per share - underlying 2 22.2p 16.5p - basic 2 8.3p 1.7p - diluted 2 8.1p 1.7p Dividend per share 5.5p 4.75p STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 2003 2002 £000 £000 Profit for the financial year 2,754 565 Exchange difference on the re-translation of net assets (2,522) (164) of subsidiary undertakings Tax on exchange differences 254 102 ________ ________ Total recognised gains and losses relating to the year 486 50 ________ ________ CONSOLIDATED BALANCE SHEET at 31 March 2003 2003 2002 £000 £000 Fixed assets Intangible assets 28,147 31,298 Tangible assets 16,851 16,602 Investments 83 76 ________ ________ 45,081 47,976 ________ ________ CURRENT ASSETS Stocks 17,640 14,726 Debtors 32,177 29,511 Cash at bank and in hand 6,831 2,703 ________ ________ 56,648 46,940 CREDITORS: amounts falling due within one year 47,636 37,620 ________ ________ NET CURRENT ASSETS 9,012 9,320 ________ ________ TOTAL ASSETS LESS CURRENT LIABILITIES 54,093 57,296 CREDITORS: amounts falling due after more than one year 5,759 8,026 PROVISIONS FOR LIABILITIES AND CHARGES 623 711 ACCRUALS AND DEFERRED INCOME 32 33 EQUITY MINORITY INTERESTS 222 194 ________ ________ NET ASSETS 47,457 48,332 ________ ________ CAPITAL AND RESERVES Called up share capital 3,357 3,325 Share premium account 34,708 34,138 Profit and loss account 9,392 10,869 ________ ________ EQUITY SHAREHOLDERS' FUNDS 47,457 48,332 ________ ________ CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31 March 2003 2003 2002 Note £000 £000 NET CASH INFLOW FROM OPERATING ACTIVITIES 3 13,562 12,099 Returns on investments and servicing of finance Interest received and similar income 62 66 Interest paid and similar charges (1,180) (1,686) Interest element of finance lease and hire purchase rental payments (177) (131) Dividends received from investments - 47 ________ ________ NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS AND SERVICING OF FINANCE (1,295) (1,704) ________ ________ Taxation Corporation tax paid (991) (568) Overseas tax paid (646) (1,147) ________ ________ (1,637) (1,715) ________ ________ CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Payments to acquire tangible fixed assets (6,005) (3,445) Payments to acquire investments - (120) Receipts from sales of tangible fixed assets 4,693 1,185 Receipts from sales of investments 34 - ________ ________ Net cash outflow on capital expenditure (1,278) (2,380) ________ ________ ACQUISITIONS AND DISPOSALS Purchase of subsidiaries and businesses (4,946) (19) Net cash acquired 42 - Receipts from sale of subsidiaries - 167 Net cash and bank overdrafts disposed of - 13 ----- ----- (4,904) 161 ________ ________ EQUITY DIVIDENDS PAID (1,576) (1,481) ________ ________ NET CASH INFLOW BEFORE MANAGEMENT OF LIQUID RESOURCES AND FINANCING 2,872 4,980 ________ ________ CONSOLIDATED STATEMENT OF CASH FLOWS (continued) For the year ended 31 March 2003 2003 2002 Note £000 £000 NET CASH INFLOW BEFORE MANAGEMENT OF LIQUID RESOURCES AND FINANCING 2,872 4,980 MANAGEMENT OF LIQUID RESOURCES Decrease in short term deposits - 700 ________ ________ 2,872 5,680 ________ ________ FINANCING Repayment of loan notes (835) (989) Repayment of bank loans (3,541) (2,545) Finance leases 2,382 297 Repayments of capital element of finance lease and hire purchase rental payments (920) (630) Issue of ordinary share capital 602 173 ________ ________ NET CASH OUTFLOW FROM FINANCING (2,312) (3,694) ________ ________ INCREASE/(DECREASE) IN CASH 4 560 1,986 ________ ________ ANALYSIS OF CHANGES IN NET DEBT DURING THE YEAR Reconciliation of net cash flow to movement in net debt: 2003 2002 Note £000 £000 Increase/(decrease) in cash in year 560 1,986 Cash inflow from short term deposits - (700) ________ ________ - 560 1,286 Repayment of loan notes 835 989 Repayment of bank loans 3,541 2,545 New finance leases (2,382) (297) Repayment of capital element of finance lease contracts 920 630 ________ ________ - Change in net debt resulting from cash flows 3,474 5,153 Exchange differences (24) (71) Other (219) (73) ________ ________ - Movement in net debt 3,231 5,009 Net debt at 1 April (15,427) (20,436) ________ ________ Net debt at 31 March 4 (12,196) (15,427) ________ ________ 1. TURNOVER AND SEGMENTAL ANALYSIS The prior year comparative data have been restated to show the results of the continuing agricultural consulting business within the Bovine Genetics business segment. This reflects the revised management arrangements to focus these activities on the same customer base. Turnover, which is stated net of value added tax and overseas sales taxes, represents amounts invoiced to third parties. Underlying Turnover operating profit* Net assets 2003 2002 2003 2002 2003 2002 £000 £000 £000 £000 £000 £000 Area of activity Bovine Genetics 79,002 82,088 11,198 9,984 38,000 39,458 Consultancy 23,930 25,138 (442) (645) 6,554 7,825 Animal Health 69,955 53,218 962 805 18,329 20,118 ________ ________ ________ ________ ________ ________ 172,887 160,444 11,718 10,144 62,883 67,401 Inter-segmental sales (97) (23) - - - - Unallocated - - (1,536) (946) (15,426) (19,069) ________ ________ ________ ________ ________ ________ 172,790 160,421 10,182 9,198 47,457 48,332 ________ ________ ________ ________ ________ ________ *before amortisation of goodwill Operating profit 2003 2002 £000 £000 Area of activity Bovine Genetics 10,317 9,014 Consultancy (642) (845) Animal Health 238 81 ________ ________ 9,913 8,250 Unallocated (1,536) (946) ________ ________ 8,377 7,304 Non-operating exceptional items Bovine Genetics 1,266 458 Consultancy (3,179) (1,181) Animal Health (61) - Unallocated 34 (1,809) Net interest (1,295) (1,824) ________ ________ Profit on ordinary activities before taxation 5,142 2,948 ________ ________ Unallocated costs within operating profit are common corporate costs. Unallocated net liabilities comprise: 2003 2002 £000 £000 Fixed assets and investments 533 - Debtors 961 652 Creditors (577) (931) Net Debt (12,196) (15,427) Taxation (2,079) (1,593) Proposed dividends (1,846) (1,576) Minority interest (222) (194) ________ ________ (15,426) (19,069) ________ ________ 1. TURNOVER AND SEGMENTAL ANALYSIS (continued) Geographical region of origin Turnover Operating profit Net assets 2003 2002 2003 2002 2003 2002 £000 £000 £000 £000 £000 £000 United Kingdom 131,421 116,542 4,099 2,626 40,820 52,442 Europe 6,231 6,063 1,196 992 1,854 2,195 North America 37,128 39,380 3,947 4,079 15,793 9,567 Rest of the World 6,552 7,017 671 553 4,416 3,197 ________ ________ ________ ________ ________ ________ 181,332 169,002 9,913 8,250 62,883 67,401 Inter-segment sales (8,542) (8,581) Unallocated - - (1,536) (946) (15,426) (19,069) ________ ________ ________ ________ ________ ________ 172,790 160,421 8,377 7,304 47,457 48,332 ________ ________ ________ ________ Non-operating (1,940) (2,532) exceptional items Net interest (1,295) (1,824) ________ ________ Profit on ordinary activities before taxation 5,142 2,948 ________ ________ Geographical region of destination Turnover 2003 2002 £000 £000 United Kingdom 107,217 96,637 Europe 17,077 14,496 North America 25,248 26,438 Rest of the World 23,248 22,850 ________ ________ 172,790 160,421 ________ ________ The segmental analysis includes the following results from discontinued activities: Geographical region of origin Region of destination Turnover Operating loss Turnover 2003 2002 2003 2002 2003 2002 £000 £000 £000 £000 £000 £000 United Kingdom 2,430 4,416 (1,498) (1,137) 1237 2,348 Europe - 193 - (27) 160 1,155 North America 611 1,388 (96) (104) 1,116 2,001 Rest of the World - - - - 528 493 ________ ________ ________ ________ ________ ________ 3,041 5,997 (1,594) (1,268) 3,041 5,997 ________ ________ ________ ________ ________ ________ 1. TURNOVER AND SEGMENTAL ANALYSIS (continued) Area of Activity Turnover Operating loss 2003 2002 2003 2002 £000 £000 £000 £000 Consultancy 3,041 5,997 (1,594) (1,268) ________ ________ ________ ________ The segmental analysis includes the following results from acquisitions: Turnover Operating Profit 2003 2003 £000 £000 Animal Health 8,777 (91) ________ ________ The acquired activities took place in the UK and all sales were made to destinations within the UK. 2. EARNINGS PER SHARE The basic earnings per share of 8.3p (2002: 1.7p) is based on the profit for the financial year of £2,754,000 (2002: £565,000) and the weighted average number of ordinary shares in issue of 33,322,000 (2002: 32,894,000). The underlying earnings per share of 22.2p (2002: 16.5p) is based on the earnings of continuing operations before amortisation of goodwill, acquisition and float costs and exceptional items as set out below: 2003 2002 £000 £000 Profit for the financial year 2,754 565 Add: Amortisation of goodwill 1,805 1,894 Exceptional operating items 247 - Write down of investment - 1,809 Profit on disposal of investment (34) - Loss on disposal of properties and businesses 1,974 723 Loss on discontinued operations 1,425 1,099 ________ ________ 8,171 6,090 Less: Associated taxation on adjustments (775) (674) ________ ________ Underlying earnings 7,396 5,416 ________ ________ The directors consider that underlying earnings per share as calculated is an appropriate and consistent measure of the Group's performance. The diluted earnings per share of 8.1p (2002: 1.7p) is based on profit for the financial year of £2,754,000 (2002: £565,000) and on 34,175,000 (2002: 33,170,000) diluted ordinary shares as set out below: 2003 2002 000's 000's Basic weighted average number of shares 33,322 32,894 Dilutive potential ordinary shares: Employee share options 853 276 ________ ________ 34,175 33,170 ________ ________ 3. RECONCILIATION OF OPERATING PROFIT TO NET CASH FLOW FROM OPERATING ACTIVITIES 2003 2002 £000 £000 Operating profit 8,377 7,304 Depreciation 3,435 3,984 Amortisation of milk quota 7 8 Amortisation of goodwill 1,805 1,894 (Profit)/loss on disposal of fixed assets (304) 222 Deferred government grants (1) (1) (Increase) in stocks (2,850) (298) (Increase)/Decrease in debtors (2,555) 558 Increase/(decrease) in creditors 5,648 (1,572) ________ ________ Net cash inflow from operating activities 13,562 12,099 ________ ________ 4. ANALYSIS OF CHANGES IN NET DEBT DURING THE YEAR At At 1 April Cash 31 March 2002 flows Other 2003 £000 £000 £000 £000 Cash at bank and in hand 2,703 6,831 Bank overdrafts (2,396) (5,908) ________ ________ ________ ________ Cash 307 560 56 923 Bank loans 11,699) 3,541 -- (8,158) Loan notes (3,451) 835 (2,616) Obligations under finance leases and hire purchase contracts (584) (1,462) (299) (2,345) ________ ________ ________ ________ (15,427) 3,474 (243) (12,196) ________ ________ ________ ________ 5. FINANCIAL STATEMENTS This preliminary statement of results was approved by the Board on 21 May 2003. The figures for the year ended 31 March 2003 are unaudited and do not constitute full accounts within the meaning of Section 240 of the Companies Act 1985. The figures for the year ended 31 March 2002 have been extracted from the accounts for 2002, which have been delivered to the Registrar of Companies. The auditors have reported on these accounts; their report was unqualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985. Statutory accounts for the year ending 31 March 2003 will be delivered to the Registrar of Companies following the Annual General Meeting. The preliminary statement of results should be read in conjunction with the Annual Report 2002. It has been prepared on the basis of accounting policies which are in accordance with the accounting principles generally accepted in the United Kingdom and have been applied on a basis consistent with those applied in 2002. 6. The Annual Report and Notice of Annual General Meeting will be posted to shareholders during July 2003. This information is provided by RNS The company news service from the London Stock Exchange

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