5th Mar 2007 07:04
Genus PLC05 March 2007 FOR IMMEDIATE RELEASE 5 March 2007 GENUS plc ('Genus' or 'the Company') Adoption of International Financial Reporting Standards ("IFRS") As announced on 9 January 2007, Genus will be preparing its consolidatedfinancial statements for the year ending 30 June 2007 under IFRS, in progressingtowards the Company's move from AIM to the Official List later this year. Theinterim financial information for the six months ended 31 December 2006 due tobe announced on 13 March 2007 will also be prepared under IFRS. To assist investors in their understanding of the impact of IFRS on the Company,Genus has today posted to the Company website (www.genusplc.co.uk) a TransitionDocument setting out the Company's IFRS accounting policies and restatedfinancial information for the previously published fifteen month period ended 30June 2006, together with a reconciliation from UK Generally Accepted AccountingPrinciples ("UK GAAP") to IFRS. The financial information presented in theTransition Document has been prepared on the basis of all IFRS that are expectedto be applicable for the Company's 2007 reporting. This information is subjectto ongoing review and possible amendment as set out in the Transition Document. Adoption of IFRS as a basis of accounting does not alter the underlyingoperational performance or cash flows of the Company, or the Company'sdistributable reserves. The main changes, when compared with the Company's financial results for the 15months ended 30 June 2006 prepared under UK GAAP, are: • Operating profit from continuing operations increases from £10.8m to £20.1m. • Net assets at 30 June 2006 increase by £47.8m to £149.2m. • Basic EPS for continuing operations increases from 6.8p to 24.5p. • Adjusted EPS* for continuing operations becomes 19.7p due to the exclusion of EPS of 5.3p relating to businesses classified under IFRS 5 as discontinued. Adjusted EPS of 25.4p under UK GAAP includes businesses classified under IFRS as both continuing and discontinued. * (earnings before the fair value component of the movement in biological assets, amortisation of intangible assets, share based payments expense and exceptional items). The changes listed above arise principally from the application of InternationalAccounting Standard ("IAS") 41 Biological Assets, IFRS 3 Business Combinationsand IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. Whilst a more detailed description can be found in the Transition Document, asummary of the impacts of adopting these standards on the Company's profits andnet assets is as follows: Treatment of Bovine and Porcine Biological Assets (IAS 41) The animals comprising porcine breeding stock and the bovine bull stud, aredefined as 'Biological Assets' under IAS 41. The inventory of bovine and porcinesemen is defined as 'Agricultural Produce' under IAS 41 and is transferred toinventory at fair value at point of harvest. Biological Assets and Agricultural Produce are recognised and measured at fairvalue at each balance sheet date. As a result of the adoption of IAS 41, the higher value of Biological Assets andAgricultural Produce increased the Company's total assets by £90.0m (beforetaking into account deferred tax) and increased operating profit for the fifteenmonths ended 30 June 2006 by £7.0m. Recognition of goodwill and intangible assets on business combinations (IFRS 3) Under IFRS 3, goodwill is no longer amortised but is subject to annualimpairment reviews. Additionally goodwill and intangible assets are treated asbeing denominated in the functional currency of the operating unit to which theyrelate. Intangibles are amortised over their useful economic life. As a result of the adoption of IFRS 3, the Company's total assets have beenincreased by £35.1m (before taking into account deferred tax), and operatingprofit for the fifteen months ended 30 June 2006 has increased by £3.5m,principally due to the elimination of goodwill amortisation. Discontinued Operations (IFRS 5) In accordance with IFRS 5, the assets and liabilities of the DevelopmentConsulting, Animal Health and Shrimp Genetics businesses at 30 June 2006 havebeen reclassified as assets and liabilities held for sale and their resultsreclassified in the income statement as discontinued operations. Income Taxes The adoption of IFRS as a basis for accounting has been solely for the Company'sconsolidated group financial statements. Current taxation is calculated withreference to the performance of the individual legal entities that form theCompany's group. The impact of the transition to IFRS at 30 June 2006 has been to increase thedeferred tax asset of £9.5m to £10.8m and to record a deferred tax liability of£80.2m. The latter increase arises primarily as a result of the recognition of adeferred tax liability associated with the fair value of Biological Assetsrecorded in accordance with IAS 41 and the increase in intangible assetsrecorded in accordance with IFRS 3. Other Impacts on IFRS Adoption There are no other material impacts on the Company's financial statementsarising from the adoption of IFRS adoption. Non-material impacts relate tofinancial instruments, share based payments, finance leases, post employmentmedical and retirement benefits and short term employee benefits, and aredetailed in the Transition Document. Summary Profit and Loss Impact The table below sets out a reconciliation of operating profit for continuingoperations for the fifteen month period ended 30 June 2006 under UK GAAP andIFRS. £mOperating profit as reported under UK GAAP (audited) 10.8 IAS 41 Biological Assets 7.0IFRS 3 Business Combinations 3.5IFRS 5 Discontinued Operations (1.1)Other (0.1)Operating profit restated under IFRS (audited) 20.1 A more detailed analysis of the adjustments made to the profit and loss accountfor the fifteen month period ended 30 June 2006 can be found in the TransitionDocument. Summary Balance Sheet Impact The table below sets out a reconciliation of net assets under UK GAAP and underIFRS at 30 June 2006. Gross Recorded against Total Deferred Tax on Net Movement Sygen Goodwill Assets Gross Movement Assets £m £m £m £m £m Net Assetsat30th June 2006under UKGAAP 101.4 Uplift ofBiologicalAssets andAgriculturalProduce tofair value 135.5 (45.5) 90.0 (48.2) 41.8 RecognitionofSygenintangible assets 89.1 (54.0) 35.1 (30.3) 4.8 224.6 (99.5) 125.1 (78.5) 148.0 Other Impacts 1.2 Net Assetsat 30 June 2006under IFRS (audited) 149.2 A more detailed analysis of the adjustments made to the balance sheet at 1 April2005 and 30 June 2006 can be found in the Transition Document. The potential of short term volatility of the Company's income and net assetswill be greater under IFRS, principally arising from fair value adjustmentsunder IAS 41. However, the adoption of IFRS will have no impact on the Company'scash flows. In order to assist in the understanding of the Company's performance, the Boardbelieves it is also important to show profits before the fair value adjustmentsarising under IAS 41. As a result, the income statement shows separately thefair value adjustments and adjusted operating profits, defined as operatingprofit from continuing operations before fair value adjustments arising onbiological transformation, amortisation of intangibles, share based paymentsexpense and exceptional expenses. _____________________________________________________________________ For further information please contact: Genus plcDavid TimminsGroup Finance Director Tel: 01256 347100 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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