Half Yearly Report

 

TIDMGTX 
 
RNS Number : 9556W 
Genetix Group PLC 
06 August 2009 
 

Genetix Group plc interim results for the six months ended 30 June 2009 
 
 
=-H1 revenues up 14% demonstrating strength of balanced portfolio-- 
 
 
New Milton, UK, 6 August 2009 - Genetix Group plc (AIM:GTX) ("Genetix" or the 
"Group"), the cell imaging and analysis company, today announces its unaudited 
interim financial results for the six months ended 30 June 2009. 
 
 
Highlights 
 
· Balanced portfolio proving resilient to current economic conditions 
· Reported revenue up 14% to GBP14.1 million (June 2008: GBP12.4 million) 
· Underlying operating profit* up 24% to GBP1.2 million (June 2008: GBP1.0 
million) 
· Underlying earnings per share* up 6% to 1.60 pence (June 2008: 1.51 pence) 
· Cash from operations GBP2.3 million, up 100% (June 2008: GBP1.2 million) 
· Cash of GBP13.5 million at 30 June 2009 
· SlidePath acquisition showing encouraging early results 
· Interim dividend of 0.22 pence per share up 10% (June 2008: 0.2 pence per 
share) 
 
 
Statutory Financial performance 
 
· Operating profit GBP1.9 million (June 2008: GBP0.8 million), up 142% 
· Profit before tax GBP1.9 million (June 2008: GBP1.1 million), up 74% 
· Earnings per share 2.23 pence (June 2008: 1.30 pence), up 72% 
 
 
* Underlying performance excludes unrealised amounts arising from fair value 
changes on forward foreign exchange contracts and adjustments to acquired 
intangibles and goodwill. Unless specified otherwise, all references to 
underlying gross margins, underlying operating profit, underlying profit before 
tax and underlying earnings per share throughout this announcement excludes 
unrealised amounts arising from fair value changes on forward foreign exchange 
contracts and adjustments to acquired intangibles and goodwill. See note 1. 
 
 
Charles de Rohan, Chief Executive of Genetix, commented: 
 
 
"The Group's business continues to demonstrate its underlying strength by 
delivering robust growth in revenues, profitability & cash generation despite 
challenging market conditions. Careful management of costs and investment 
discipline, combined with the cost and efficiency benefits of our product range, 
have underpinned the resilience of the business in the current economic 
environment and the Board is pleased to increase the interim dividend. 
 
 
"The recent acquisition of SlidePath demonstrates our increasing focus on the 
highly promising Digital Pathology market. The Group's balance sheet remains 
strong, with cash of GBP13.5 million, allowing us to continue to seek other 
suitable acquisition opportunities that enhance our strengths." 
 
 
=-Ends- 
 
 
+------------------------------------+------------------------------------+ 
| Genetix Group plc                  |                                    | 
+------------------------------------+------------------------------------+ 
| Charles de Rohan, Chief Executive  | Tel: [phone]           | 
+------------------------------------+------------------------------------+ 
| Andrew Kellett, Finance Director   |                                    | 
+------------------------------------+------------------------------------+ 
|                                    |                                    | 
+------------------------------------+------------------------------------+ 
| Financial Dynamics                 |                                    | 
+------------------------------------+------------------------------------+ 
| Jonathan Birt / Susan Quigley      | Tel: [phone]          | 
+------------------------------------+------------------------------------+ 
|                                    |                                    | 
+------------------------------------+------------------------------------+ 
| Piper Jaffray Ltd.                 |                                    | 
+------------------------------------+------------------------------------+ 
| James Steel                        | Tel: [phone]          | 
+------------------------------------+------------------------------------+ 
 
 
The release will be available on the Company's website: www.genetix.com 
 
 
 
 
Notes to Editors 
 
 
About Genetix Group plc 
 
 
Headquartered in New Milton, UK, with offices in the UK, US, Germany, Ireland 
and Japan, and quoted on the AIM (GTX: AIM), Genetix provides scientists and 
clinicians with unrivalled solutions for imaging and intelligent image analysis 
in the life science and diagnostic markets. 
 
 
In life sciences, the Group's systems set industry standards for accurate 
screening and selection of mammalian secretory cell lines. Other systems 
evaluate the response of cells to potential therapeutic agents and quantify 
tissue biomarkers. 
 
 
In diagnostics, Genetix holds a leading position in genetic testing with 
thousands of the Group's platforms used in laboratories worldwide. 
 
 
Through its expertise in robotics, cell and molecular biology, image analysis 
and interpretation, supported by a strong IP portfolio, Genetix is committed to 
the continual development of innovative solutions 
 
 
 
 
Chairman's Statement 
 
 
Introduction 
 
 
The first half of 2009 has demonstrated Genetix is resilient and while no 
business is immune from the current economic environment, our international 
footprint and balanced portfolio have given us an excellent platform from which 
to strengthen our position and drive growth in the markets in which we operate. 
 
 
Our business performance has continued to improve from an already solid base. 
Revenue for the first six months of the year was GBP14.1 million, 14% higher 
than the same period last year. Underlying operating profit was GBP1.2 million, 
24% higher than in the six months to June 2008. As expected, interest income 
fell significantly, due mainly to the much lower rates of interest available in 
the markets. As a result, underlying profit before tax was consistent with prior 
year at GBP1.3 million, while underlying earnings per share were up 6% to 1.60 
pence as the Group's tax rate on underlying profits was maintained at full year 
2008 levels of approximately 11%. 
 
 
Strategy 
 
 
Our strategy is founded on our vision of improving healthcare by providing 
scientists and clinicians with intelligent solutions for cell imaging and 
analysis. It is focused on the diagnostics and biopharmaceutical discovery 
markets, and driven by a combination of organic & customer-centred growth built 
around best in class products together with acquisitions of high quality 
businesses that deliver enhanced access in our key markets or provide 
complementary products, skills and technology. 
 
 
Further expansion into the fast growing digital pathology market remains a goal, 
and the acquisition of SlidePath was an important further step towards becoming 
a significant player in that market. 
 
 
Pharmaceutical companies are undergoing a strategic shift towards 
biopharmaceuticals - these are large complex molecules, usually proteins, 
produced by living systems. The increased interest is associated with their 
specificity, often targeting specific sub-systems of cells, thus better 
targeting a particular disease. These drugs typically have a shorter development 
process and offer a quicker way to replenish depleted pipelines. In addition, 
pharmaceutical companies want to become more 'agile and lean' and drive 
efficiencies in their R&D efforts - effectively getting more for less. 
 
 
The healthcare world is moving from a focus on therapies that cure disease and 
relieve pain to one based on early diagnosis and prevention, assisted by the 
expanded use of targeted drugs. In addition, pharmaceutical companies are 
searching for new therapies that more effectively target individuals to their 
responsiveness to treatment. With increasing strain on healthcare budgets 
worldwide, improved diagnostic techniques and better targeting of drugs are seen 
as key factors in helping to manage these budgets. 
 
 
Our product portfolio is focussed on addressing these key market drivers and 
provide compelling value propositions to our customers. 
 
 
Digital Pathology 
 
 
The digital pathology market is a very attractive growth opportunity for 
Genetix: 
 
· Complements our core strengths in imaging and intelligent analysis; 
· Rapidly growing emerging market with multiple applications; 
· Growing appetite for imaging analysis based quantification of tissue samples; 
· Increasing demand for consistent sample diagnosis; 
· IT issues around scanning samples rapidly being overcome; 
· No dominant global player 
 
 
The Group's position in the digital pathology market was established with the 
successful acquisition of Applied Imaging in 2006 which centred principally on 
the quantification of biomarkers in tissue sections for the drug discovery 
market. 
 
 
Digital pathology is the computer enabled management and interpretation of 
pathology information generated from slides. The market has multiple 
applications, including clinical laboratories, clinical trials, drug discovery 
and academia. Digital Pathology allows advances in patient care, 
including: 
 
 
 
· Viewing multiple slides at a time, allowing comparison; 
· Assisting the pathologist in diagnosis through the use of sophisticated 
algorithms; 
· Remote viewing, archiving and re-examining of samples. Sharing information and 
getting a second opinion is made much quicker and easier; 
· Allowing integration with clinics' laboratory information management systems; 
· Data from a digital slide can be matched seamlessly with data from other 
sources, such as blood tests. 
 
 
We believe that the value in digital pathology is driven by intelligent analysis 
- that is where our efforts are targeted. While scanners play a role, the focus 
in the market will not be on which scanner captures an image digitally, but 
rather what analysis can be done with the slide once it has been digitized. 
 
 
Pathology is one of the last remaining areas of clinical medicine to become 
digitized. With adoption already under way in key markets such as the United 
States, Europe, Japan and Australia, Genetix is establishing a strong suite of 
technologies and skills with the primary aim of providing leading edge products 
in this expanding, important market. 
 
 
SlidePath 
 
 
As part of our further expansion into the digital pathology market, we acquired 
SlidePath on 29 April 2009. SlidePath, a Dublin City University spin out, was 
founded in 2003 and has customers in ten countries including the UK, Ireland, 
Germany, France and Australia. It has a strong product offering allowing the 
analysis, management and viewing of tissue and cellular samples via the web and 
in the two years ended 31 December 2008 had grown its revenues at a compound 
annual growth rate of 61%. 
 
 
The combination of SlidePath's leading edge products and technologies and 
Genetix' sales and customer support infrastructure and deep customer 
relationships with diagnostics and pharmaceutical companies will allow us to 
offer a broader mix of products for the digital pathology market as well as 
enhancing functionality of current Genetix products. 
 
 
The integration of SlidePath is progressing well. Our R&D teams are now working 
together to expand the current product offerings with added functionality as 
well as evaluating new product concepts. The commercial teams are utilising the 
Group's extensive customer base to realise cross selling opportunities. We are 
in the process of implementing our Group wide customer relationship management 
system as well as standardising SlidePath on Group accounting systems and 
banking arrangements. 
 
 
Results from SlidePath since acquisition, while not material to the Group's 
results, have been in line with our expectations. 
 
 
Results 
 
 
The first half results demonstrate the resilience of a balanced portfolio in the 
strong underlying growth markets of diagnostics and biopharmaceutical drug 
discovery. Four years ago, Group revenue from genomic-based instruments 
accounted for 70% of our revenues, today it is just 15%. In contrast, our cell 
biology business in the same period has grown at a compound annual growth rate 
of 83% to GBP4.0 million, or 28% of Group revenue in the first six months of 
2009. 
 
 
In the first half of 2009, we saw increased revenue across all our key product 
areas: clinical instruments, cell biology, genomics-based instruments and 
consumables and services. Our clinical instrument business performed well in the 
first six months, with revenues increasing by 12% to GBP4.8 million (June 2008: 
GBP4.3 million). Our cell biology products continued to gain traction with 
revenues up 20% to GBP4.0 million (June 2008: GBP3.3 million). In addition, we 
saw growth in our recurring revenue stream of consumables and services, up 5% to 
GBP3.1 million (June 2008: GBP3.0 million). Our genomics-based instruments 
reversed declines seen in previous years, with revenues up 17% to GBP2.1 million 
(June 2008: GBP1.8 million). The increase was driven by our customers' evolving 
use of applications run on our instruments, with increasing demand for 
production of antibodies, protein evolution and protein interaction experiments. 
 
 
Reported revenue was positively impacted by the strong US dollar estimated to be 
GBP1.7 million at constant exchange rates, although any impact on profitability 
in the period was largely offset by an increase in our US cost base, when 
converted into Sterling, estimated to be GBP1.3 million and realised exchange 
losses on forward currency contracts maturing in the period of GBP0.4 million. 
 
 
The US continues to be our largest market, representing 42% of Group revenue. 
Reported revenue in the US in the first half rose 8%. Revenue in Europe 
(including the UK), representing 35% of Group revenue, grew by 2% off an already 
strong comparator, while revenue in the rest of the world, representing 23% of 
Group revenue, were 59% higher, driven by growth in Asia and the Middle East. 
 
 
At a constant US dollar, revenue in the US declined by 17% and revenue in the 
rest of world increased by 40%. 
 
 
The decline in US constant currency revenue was driven mainly by a reduction in 
drug discovery and service revenue. While the US drug discovery business 
continues to operate below our expectations, due in part to the current 
challenging economic climate, we are confident that the actions we took at the 
beginning of 2009 and continue to take, to refocus and reconfigure the sales 
organisation will lead to a gradual improvement in performance. Some of our 
customers are not renewing their service contracts or choosing lower level 
cover, driven by the economic situation. In the short term, we believe this 
trend will continue and we are currently evaluating options to help stabilise 
this while also continuing to give our customers ongoing support. 
 
 
The Group's underlying reported gross margin at 58.4% (June 2008: 61%) was below 
last year due to exchange effects. Using a constant US dollar and excluding the 
realised exchange gains and losses, underlying gross margin improved by 2 
percentage points to 62% from 60% in 2008. 
 
 
Underlying operating profit was up 24% to GBP1.2 million (June 2008: GBP1.0 
million). 
 
 
Net interest income at GBP0.1 million was 78% lower than the prior year due to 
significantly lower interest rates available in the market, and as a result 
underlying profit before tax was consistent with last year at GBP1.3 million 
(June 2008: GBP1.3 million). 
 
 
The Group's effective tax rate on underlying profits was 11.1%, consistent with 
full year 2008 as the Group continued to benefit from the UK Government's R&D 
tax credit scheme and utilisation of taxation losses from Applied Imaging in the 
United States. 
 
 
Cash flow 
 
 
The Group has a strong cash position and is cash generative. Net cash from 
operations was GBP2.3 million for the half year (June 2008: GBP1.2 million), an 
increase of 100%. 
 
 
During the period, the Group paid tax of GBP0.1 million (June 2008: GBP0.3 
million). Capital expenditure was GBP0.6 million (June 2008: GBP0.7 million). 
Dividend payments were GBP0.3 million (June 2008: GBP0.4 million). 
 
 
The Group paid GBP2.0 million in cash to acquire SlidePath, comprising the up 
front payment plus costs of the acquisition. 
 
 
The Group had cash of GBP13.5 million at end of June 2009 (December 2008: 
GBP15.2 million). 
 
 
Underlying performance 
 
 
The Group continues to manage its foreign exchange risk by utilising forward 
currency contracts. At 30 June 2009, the Group was committed to US$8 million of 
forward contracts at average rates of US$1.65 all maturing before the end of 
2010. Where hedge accounting is not adopted, IAS 39 requires that these 
contracts be valued at fair value at the Balance Sheet date with the gains or 
losses arising recognised immediately in the income statement. At 30 June 2009, 
the unrealised loss arising from these fair value changes was GBP30,000 (31 
December 2008: GBP876,000 loss), and accordingly a credit of GBP846,000 for the 
movement in the period is recorded in the Income Statement. The unrealised 
foreign exchange gains and losses are excluded from underlying performance 
because they hedge cash flows forecast to occur in future periods. 
 
 
Adjustments to acquired intangibles and goodwill was GBP0.2 million (June 2008: 
GBP0.2 million). This charge has no cash effect and is excluded from underlying 
performance because it relates to an investment rather than an operating 
activity. 
 
 
Interim Dividend 
 
 
The Board has declared an interim dividend of 0.22 pence per share (June 2008: 
0.2 pence) an increase of 10%, which will be paid on 11 September 2009 to 
shareholders on the register on 14 August 2009. The Board's policy is to grow 
the dividend steadily and progressively in line with the Group's earnings 
growth, after taking into account the financing requirements of future 
initiatives and opportunities which offer attractive shareholder returns. 
 
 
Outlook 
 
 
Genetix continues to be financially strong and well positioned for continued 
robust growth. We have a clear, successful, well executed strategy, coupled with 
a broad geographical footprint in all the major markets and a growing portfolio 
of products which help our customers to work faster and more efficiently and 
reduce their costs. 
 
 
While there undoubtedly are challenges as a result of the current economic 
climate, we are managing our business prudently and believe that our strengths 
will enable us to continue to take advantage of the opportunities to develop the 
business further in these exciting markets. 
 
 
Dr James Hill 
Chairman 
6 August 2009 
 
 
 
 
+---------------------------------+--------------+---------+-----------+-----------+----------+ 
| Unaudited consolidated income   |   Underlying |   Other | Unaudited | Unaudited |  Audited | 
| statement                       | performance* |  items* |     first |     first |     full | 
| for the six months ended 30     |         2009 |    2009 |      half |      half |     year | 
| June 2009                       |      GBP'000 | GBP'000 |      2009 |      2008 |     2008 | 
|                                 |              |         |   GBP'000 |   GBP'000 |  GBP'000 | 
+---------------------------------+--------------+---------+-----------+-----------+----------+ 
|                                 |              |         |           |           |          | 
+---------------------------------+--------------+---------+-----------+-----------+----------+ 
| Continuing operations           |              |         |           |           |          | 
+---------------------------------+--------------+---------+-----------+-----------+----------+ 
| Revenue                         |       14,135 |       - |    14,135 |    12,374 |   26,222 | 
+---------------------------------+--------------+---------+-----------+-----------+----------+ 
| Cost of sales                   |      (5,881) |     846 |   (5,035) |   (4,829) | (10,753) | 
+---------------------------------+--------------+---------+-----------+-----------+----------+ 
| Gross profit                    |        8,254 |     846 |     9,100 |     7,545 |   15,469 | 
+---------------------------------+--------------+---------+-----------+-----------+----------+ 
| Research & development          |        (820) |       - |     (820) |     (866) |  (1,898) | 
+---------------------------------+--------------+---------+-----------+-----------+----------+ 
| Sales & administrative expenses |      (6,209) |       - |   (6,209) |   (5,696) | (10,803) | 
|                                 |              |         |           |           |          | 
+---------------------------------+--------------+---------+-----------+-----------+----------+ 
| Adjustments to acquired         |            - |   (216) |     (216) |     (216) |  (1,320) | 
| intangibles and goodwill        |              |         |           |           |          | 
+---------------------------------+--------------+---------+-----------+-----------+----------+ 
| Total administrative expenses   |      (7,029) |   (216) |   (7,245) |   (6,778) | (14,021) | 
+---------------------------------+--------------+---------+-----------+-----------+----------+ 
| Operating profit                |        1,225 |     630 |     1,855 |       767 |    1,448 | 
+---------------------------------+--------------+---------+-----------+-----------+----------+ 
| Interest income                 |           75 |       - |        75 |       341 |      642 | 
+---------------------------------+--------------+---------+-----------+-----------+----------+ 
| Profit before taxation          |        1,300 |     630 |     1,930 |     1,108 |    2,090 | 
+---------------------------------+--------------+---------+-----------+-----------+----------+ 
| Tax                             |        (144) |   (176) |     (320) |     (178) |    (127) | 
+---------------------------------+--------------+---------+-----------+-----------+----------+ 
| Profit for the period           |        1,156 |     454 |     1,610 |       930 |    1,963 | 
+---------------------------------+--------------+---------+-----------+-----------+----------+ 
| Attributed to:                  |              |         |           |           |          | 
+---------------------------------+--------------+---------+-----------+-----------+----------+ 
| Equity holders of the parent    |        1,156 |     454 |     1,610 |       930 |    1,963 | 
+---------------------------------+--------------+---------+-----------+-----------+----------+ 
|                                 |              |         |           |           |          | 
+---------------------------------+--------------+---------+-----------+-----------+----------+ 
| Earnings per share              |              |         |           |           |          | 
+---------------------------------+--------------+---------+-----------+-----------+----------+ 
| Basic                           |        1.60p |   0.63p |     2.23p |     1.30p |    2.73p | 
+---------------------------------+--------------+---------+-----------+-----------+----------+ 
| Diluted                         |        1.60p |   0.63p |     2.23p |     1.30p |    2.73p | 
+---------------------------------+--------------+---------+-----------+-----------+----------+ 
 
 
*'Other items' relate to unrealised amounts arising from fair value changes on 
forward foreign exchange contracts and adjustments to acquired intangibles and 
goodwill. 'Other items' have been disclosed separately in order to give an 
indication of the underlying performance of the Group. Further information is 
provided in note 1. 
 
 
 
 
Unaudited consolidated statement of comprehensive income (IFRS) 
for the six months ended 30 June 2009 
 
 
+--------------------------------------------------+-----------+-----------+----------+ 
|                                                  | Unaudited | Unaudited |  Audited | 
|                                                  |     first |     first |     full | 
|                                                  |      half |      half |     year | 
|                                                  |      2009 |      2008 |     2008 | 
|                                                  |   GBP'000 |   GBP'000 |  GBP'000 | 
+--------------------------------------------------+-----------+-----------+----------+ 
|                                                  |           |           |          | 
+--------------------------------------------------+-----------+-----------+----------+ 
| Exchange differences on translation of foreign   |     (686) |         5 |    1,071 | 
| operations                                       |           |           |          | 
+--------------------------------------------------+-----------+-----------+----------+ 
| Net expense recognised directly in equity        |     (686) |         5 |    1,071 | 
+--------------------------------------------------+-----------+-----------+----------+ 
| Profit for the period                            |     1,610 |       930 |    1,963 | 
+--------------------------------------------------+-----------+-----------+----------+ 
| Total recognised income for the period           |       924 |       935 |    3,034 | 
+--------------------------------------------------+-----------+-----------+----------+ 
 
 
 
 
Unaudited statement of changes in equity 
for the six months ended 30 June 2009 
 
 
+-----------------------+---------+---------+------------+----------+----------+----------+---------+ 
|                       |   Share |   Share |    Capital |          |          |          |         | 
|                       |         |         |            |          |          |          |         | 
+-----------------------+---------+---------+------------+----------+----------+----------+---------+ 
|                       | capital | premium | redemption |   Merger |    Other | Retained |         | 
+-----------------------+---------+---------+------------+----------+----------+----------+---------+ 
|                       | account | account |    reserve |  reserve | reserves | earnings |   Total | 
+-----------------------+---------+---------+------------+----------+----------+----------+---------+ 
| Group                 |  GBP000 |  GBP000 |     GBP000 |   GBP000 |   GBP000 |   GBP000 |  GBP000 | 
+-----------------------+---------+---------+------------+----------+----------+----------+---------+ 
| At 1 January 2009     |  35,889 |  16,376 |      2,925 | (29,686) |    1,252 |   14,936 |  41,692 | 
+-----------------------+---------+---------+------------+----------+----------+----------+---------+ 
| Share capital         |     412 |       - |          - |        - |        - |        - |     412 | 
+-----------------------+---------+---------+------------+----------+----------+----------+---------+ 
| Retained profit for   |       - |       - |          - |        - |        - |    1,610 |   1,610 | 
| the period            |         |         |            |          |          |          |         | 
+-----------------------+---------+---------+------------+----------+----------+----------+---------+ 
| Share-based payment   |       - |       - |          - |        - |       25 |        - |      25 | 
| charge                |         |         |            |          |          |          |         | 
+-----------------------+---------+---------+------------+----------+----------+----------+---------+ 
| Dividends paid        |       - |       - |          - |        - |        - |    (290) |   (290) | 
+-----------------------+---------+---------+------------+----------+----------+----------+---------+ 
| Currency translation  |       - |       - |          - |        - |    (686) |        - |   (686) | 
| differences           |         |         |            |          |          |          |         | 
+-----------------------+---------+---------+------------+----------+----------+----------+---------+ 
| At 30 June 2009       |  36,301 |  16,376 |      2,925 | (29,686) |      591 |   16,256 |  42,763 | 
+-----------------------+---------+---------+------------+----------+----------+----------+---------+ 
 
 
+-----------------------+---------+---------+------------+----------+----------+----------+--------+ 
|                       |   Share |   Share |    Capital |          |          |          |        | 
|                       |         |         |            |          |          |          |        | 
+-----------------------+---------+---------+------------+----------+----------+----------+--------+ 
|                       | capital | premium | redemption |   Merger |    Other | Retained |        | 
+-----------------------+---------+---------+------------+----------+----------+----------+--------+ 
|                       | account | account |    reserve |  reserve | reserves | earnings |  Total | 
+-----------------------+---------+---------+------------+----------+----------+----------+--------+ 
| Group                 |  GBP000 |  GBP000 |     GBP000 |   GBP000 |   GBP000 |   GBP000 | GBP000 | 
+-----------------------+---------+---------+------------+----------+----------+----------+--------+ 
| At 1 January 2008     |  35,889 |  16,376 |      2,925 | (29,686) |      117 |   13,475 | 39,096 | 
+-----------------------+---------+---------+------------+----------+----------+----------+--------+ 
| Retained profit for   |       - |       - |          - |        - |        - |      930 |    930 | 
| the period            |         |         |            |          |          |          |        | 
+-----------------------+---------+---------+------------+----------+----------+----------+--------+ 
| Share-based payment   |       - |       - |          - |        - |       43 |        - |     43 | 
| charge                |         |         |            |          |          |          |        | 
+-----------------------+---------+---------+------------+----------+----------+----------+--------+ 
| Dividends paid        |       - |       - |          - |        - |        - |    (359) |  (359) | 
+-----------------------+---------+---------+------------+----------+----------+----------+--------+ 
| Currency translation  |       - |       - |          - |        - |        5 |        - |      5 | 
| differences           |         |         |            |          |          |          |        | 
+-----------------------+---------+---------+------------+----------+----------+----------+--------+ 
| At 30 June 2008       |  35,889 |  16,376 |      2,925 | (29,686) |      165 |   14,046 | 39,715 | 
+-----------------------+---------+---------+------------+----------+----------+----------+--------+ 
 
 
+-----------------------+---------+---------+------------+----------+----------+----------+--------+ 
|                       |   Share |   Share |    Capital |          |          |          |        | 
|                       |         |         |            |          |          |          |        | 
+-----------------------+---------+---------+------------+----------+----------+----------+--------+ 
|                       | capital | premium | redemption |   Merger |    Other | Retained |        | 
+-----------------------+---------+---------+------------+----------+----------+----------+--------+ 
|                       | account | account |    reserve |  reserve | reserves | earnings |  Total | 
+-----------------------+---------+---------+------------+----------+----------+----------+--------+ 
| Group                 |  GBP000 |  GBP000 |     GBP000 |   GBP000 |   GBP000 |   GBP000 | GBP000 | 
+-----------------------+---------+---------+------------+----------+----------+----------+--------+ 
| At 1 January 2008     |  35,889 |  16,376 |      2,925 | (29,686) |      117 |   13,475 | 39,096 | 
+-----------------------+---------+---------+------------+----------+----------+----------+--------+ 
| Retained profit for   |       - |       - |          - |        - |        - |    1,963 |  1,963 | 
| the period            |         |         |            |          |          |          |        | 
+-----------------------+---------+---------+------------+----------+----------+----------+--------+ 
| Share-based payment   |       - |       - |          - |        - |       64 |        - |     64 | 
| charge                |         |         |            |          |          |          |        | 
+-----------------------+---------+---------+------------+----------+----------+----------+--------+ 
| Dividends paid        |       - |       - |          - |        - |        - |    (502) |  (502) | 
+-----------------------+---------+---------+------------+----------+----------+----------+--------+ 
| Currency translation  |       - |       - |          - |        - |    1,071 |        - |  1,071 | 
| differences           |         |         |            |          |          |          |        | 
+-----------------------+---------+---------+------------+----------+----------+----------+--------+ 
| At 31 December 2008   |  35,889 |  16,376 |      2,925 | (29,686) |    1,252 |   14,936 | 41,692 | 
+-----------------------+---------+---------+------------+----------+----------+----------+--------+ 
 
 
 
 
Unaudited consolidated balance sheet (IFRS) 
at 30 June 2009 
 
 
+--------------------------------------------------+-----------+-----------+----------+--+ 
|                                                  | Unaudited | Unaudited |     Audited | 
|                                                  |   30 June |   30 June |          31 | 
|                                                  |      2009 |      2008 |    December | 
|                                                  |   GBP'000 |   GBP'000 |        2008 | 
|                                                  |           |           |     GBP'000 | 
+--------------------------------------------------+-----------+-----------+-------------+ 
|                                                  |           |           |             | 
+--------------------------------------------------+-----------+-----------+-------------+ 
| Non-current assets                               |           |           |             | 
+--------------------------------------------------+-----------+-----------+-------------+ 
| Goodwill                                         |    18,613 |    16,756 |      15,868 | 
+--------------------------------------------------+-----------+-----------+-------------+ 
| Other intangible assets                          |     7,361 |     7,764 |       7,512 | 
+--------------------------------------------------+-----------+-----------+-------------+ 
| Property, plant and equipment                    |     2,944 |     2,675 |       2,833 | 
+--------------------------------------------------+-----------+-----------+-------------+ 
| Available-for-sale investments                   |         - |         1 |           - | 
+--------------------------------------------------+-----------+-----------+-------------+ 
|                                                  |    28,918 |    27,196 |      26,213 | 
+--------------------------------------------------+-----------+-----------+-------------+ 
| Current assets                                   |           |           |             | 
+--------------------------------------------------+-----------+-----------+-------------+ 
| Inventories                                      |     2,493 |     2,596 |       3,261 | 
+--------------------------------------------------+-----------+-----------+-------------+ 
| Trade and other receivables                      |     7,457 |     6,250 |       7,330 | 
+--------------------------------------------------+-----------+-----------+-------------+ 
| Cash and cash equivalents                        |    13,512 |    13,033 |      15,243 | 
+--------------------------------------------------+-----------+-----------+-------------+ 
|                                                  |    23,462 |    21,879 |      25,834 | 
+--------------------------------------------------+-----------+-----------+-------------+ 
| Total assets                                     |    52,380 |    49,075 |      52,047 | 
+--------------------------------------------------+-----------+-----------+-------------+ 
| Current liabilities                              |           |           |             | 
+--------------------------------------------------+-----------+-----------+-------------+ 
| Trade and other payables                         |   (6,499) |   (5,890) |     (7,211) | 
+--------------------------------------------------+-----------+-----------+-------------+ 
| Current tax liabilities                          |     (401) |     (572) |       (169) | 
+--------------------------------------------------+-----------+-----------+-------------+ 
| Provisions                                       |     (202) |     (189) |       (245) | 
+--------------------------------------------------+-----------+-----------+-------------+ 
|                                                  |   (7,102) |   (6,651) |     (7,625) | 
+--------------------------------------------------+-----------+-----------+-------------+ 
| Net current assets                               |    16,360 |    15,228 |      18,209 | 
+--------------------------------------------------+-----------+-----------+-------------+ 
| Non-current liabilities                          |           |           |             | 
+--------------------------------------------------+-----------+-----------+-------------+ 
| Deferred service income                          |     (554) |     (559) |       (769) | 
+--------------------------------------------------+-----------+-----------+-------------+ 
| Deferred tax liabilities                         |   (1,961) |   (2,150) |     (1,961) | 
+--------------------------------------------------+-----------+-----------+-------------+ 
| Total liabilities                                |   (9,617) |   (9,360) |    (10,355) | 
+--------------------------------------------------+-----------+-----------+-------------+ 
| Net assets                                       |    42,763 |    39,715 |      41,692 | 
+--------------------------------------------------+-----------+-----------+-------------+ 
|                                                  |           |           |             | 
+--------------------------------------------------+-----------+-----------+-------------+ 
| Equity                                           |           |           |             | 
+--------------------------------------------------+-----------+-----------+-------------+ 
| Share capital                                    |    36,301 |    35,889 |   35,889 | 
+--------------------------------------------------+-----------+-----------+----------+ 
| Share premium account                            |    16,376 |    16,376 |   16,376 | 
+--------------------------------------------------+-----------+-----------+----------+ 
| Capital redemption reserve                       |     2,925 |     2,925 |    2,925 | 
+--------------------------------------------------+-----------+-----------+----------+ 
| Merger reserve                                   |  (29,686) |  (29,686) | (29,686) | 
+--------------------------------------------------+-----------+-----------+----------+ 
| Other reserves                                   |       591 |       165 |    1,252 | 
+--------------------------------------------------+-----------+-----------+----------+ 
| Retained earnings                                |    16,256 |    14,046 |   14,936 | 
+--------------------------------------------------+-----------+-----------+----------+ 
| Total equity attributable to equity              |    42,763 |    39,715 |   41,692 | 
| shareholders                                     |           |           |          | 
+--------------------------------------------------+-----------+-----------+----------+--+ 
 
 
 
 
Unaudited consolidated statement of cash flows (IFRS) 
for the six months ended 30 June 2009 
 
+--------------------------------------------------+-----------+-----------+---------+ 
|                                                  | Unaudited | Unaudited | Audited | 
|                                                  |     first |     first |    full | 
|                                                  |      half |      half |    year | 
|                                                  |      2009 |      2008 |    2008 | 
|                                                  |   GBP'000 |   GBP'000 | GBP'000 | 
+--------------------------------------------------+-----------+-----------+---------+ 
|                                                  |           |           |         | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Operating activities                             |           |           |         | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Cash generated by operations                     |     2,402 |     1,425 |   3,600 | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Tax paid                                         |      (89) |     (269) |   (755) | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Net cash inflow from operating activities        |     2,313 |     1,156 |   2,845 | 
+--------------------------------------------------+-----------+-----------+---------+ 
|                                                  |           |           |         | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Investing activities                             |           |           |         | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Purchases of property, plant and equipment       |     (300) |     (220) |   (570) | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Expenditure on patents                           |      (90) |      (93) |   (213) | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Expenditure on product development               |     (258) |     (399) |   (584) | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Interest received                                |        75 |       296 |     636 | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Acquisition of subsidiary (net of cash acquired) |   (1,977) |         - |       - | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Net cash outflow from investing activities       |   (2,550) |     (416) |   (731) | 
+--------------------------------------------------+-----------+-----------+---------+ 
|                                                  |           |           |         | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Financing activities                             |           |           |         | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Dividends paid                                   |     (290) |     (359) |   (502) | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Net cash outflow from financing activities       |     (290) |     (359) |   (502) | 
+--------------------------------------------------+-----------+-----------+---------+ 
|                                                  |           |           |         | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Net (decrease)/increase in cash and cash         |     (527) |       381 |   1,612 | 
| equivalents                                      |           |           |         | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Cash and cash equivalents at beginning of period |    15,243 |    12,647 |  12,647 | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Effect of foreign exchange rate changes          |   (1,204) |         5 |     984 | 
+--------------------------------------------------+-----------+-----------+---------+ 
| Cash and cash equivalents at end of period       |    13,512 |    13,033 |  15,243 | 
+--------------------------------------------------+-----------+-----------+---------+ 
 
 
 
 
Notes to the unaudited interim results 
 
1.    Underlying Performance 
 
 
Underlying performance is presented to assist investors in their understanding 
of the underlying performance and trends of the Group. Underlying performance 
measures are not defined terms under IFRS and may not be comparable with 
similarly titled measures reported by other companies. 
 
 
Underlying performance excludes unrealised amounts arising from revaluing 
forward foreign exchange contracts required by IAS 39 and adjustments to 
acquired intangibles and goodwill. 
 
 
A reconciliation of underlying gross profit, operating profit, profit before tax 
and earnings per share measures to IFRS measures is set out below. 
 
 
+-----------------------------------------------------+-----------+-----------+---------+ 
|                                                     | Unaudited | Unaudited | Audited | 
|                                                     |     first |     first |    full | 
|                                                     |      half |      half |    year | 
|                                                     |      2009 |      2008 |    2008 | 
|                                                     |   GBP'000 |   GBP'000 | GBP'000 | 
|                                                     |           |           |         | 
+-----------------------------------------------------+-----------+-----------+---------+ 
|                                                     |           |           |         | 
+-----------------------------------------------------+-----------+-----------+---------+ 
| Underlying gross profit                             |     8,254 |     7,547 |  16,311 | 
+-----------------------------------------------------+-----------+-----------+---------+ 
| Unrealised amounts arising from revaluing forward   |       846 |       (2) |   (842) | 
| exchange contracts                                  |           |           |         | 
+-----------------------------------------------------+-----------+-----------+---------+ 
| Statutory gross profit                              |     9,100 |     7,545 |  15,469 | 
+-----------------------------------------------------+-----------+-----------+---------+ 
|                                                     |           |           |         | 
+-----------------------------------------------------+-----------+-----------+---------+ 
| Underlying operating profit                         |     1,225 |       985 |   3,610 | 
+-----------------------------------------------------+-----------+-----------+---------+ 
| Unrealised amounts arising from revaluing forward   |       846 |       (2) |   (842) | 
| exchange contracts                                  |           |           |         | 
+-----------------------------------------------------+-----------+-----------+---------+ 
| Adjustments to acquired intangibles and goodwill    |     (216) |     (216) | (1,320) | 
+-----------------------------------------------------+-----------+-----------+---------+ 
| Statutory IFRS operating profit                     |     1,855 |       767 |   1,448 | 
+-----------------------------------------------------+-----------+-----------+---------+ 
|                                                     |           |           |         | 
+-----------------------------------------------------+-----------+-----------+---------+ 
| Underlying profit before tax                        |     1,300 |     1,326 |   4,252 | 
+-----------------------------------------------------+-----------+-----------+---------+ 
| Unrealised amounts arising from revaluing forward   |       846 |       (2) |   (842) | 
| exchange contracts                                  |           |           |         | 
+-----------------------------------------------------+-----------+-----------+---------+ 
| Adjustments to acquired intangibles and goodwill    |     (216) |     (216) | (1,320) | 
+-----------------------------------------------------+-----------+-----------+---------+ 
| Statutory IFRS profit before tax                    |     1,930 |     1,108 |   2,090 | 
+-----------------------------------------------------+-----------+-----------+---------+ 
|                                                     |           |           |         | 
+-----------------------------------------------------+-----------+-----------+---------+ 
| Underlying earnings per share                       |     1.60p |     1.51p |   5.25p | 
+-----------------------------------------------------+-----------+-----------+---------+ 
| Unrealised amounts arising from revaluing forward   |     0.84p |         - | (0.85p) | 
| exchange contracts                                  |           |           |         | 
+-----------------------------------------------------+-----------+-----------+---------+ 
| Adjustments to acquired intangibles and goodwill    |   (0.21p) |   (0.21p) | (1.67p) | 
+-----------------------------------------------------+-----------+-----------+---------+ 
| Statutory IFRS earnings per share                   |     2.23p |     1.30p |   2.73p | 
+-----------------------------------------------------+-----------+-----------+---------+ 
 
 
The Group continues to manage its foreign exchange risk by utilising forward 
currency contracts. At 30 June 2009, the Group was committed to US$8 million of 
forward contracts at average rates of US$1.65 all maturing before 31 December 
2010. IAS 39 requires that these contracts be valued at fair value at the 
balance sheet date with the gains or losses arising recognised immediately in 
the Income Statement. As at 30 June 2009, the unrealised loss arising from these 
fair value changes was GBP30,000 (31 December 2008: GBP876,000 loss), and 
accordingly a credit of GBP846,000 for the movement in the period is recorded in 
the Income Statement. 
 
 
Adjustments to acquired intangibles and goodwill were GBP0.2 million (2008: 
GBP0.2 million). These charges have no cash effect. 
 
2.    Basis of preparation of interim report 
 
 
The information for the period ended 30 June 2009 does not constitute statutory 
accounts as defined in section 240 of the Companies Act 1985. It has been 
prepared in accordance with the accounting policies set out in, and is 
consistent with, the audited financial statements for the year ended 31 December 
2008. A copy of the statutory accounts for that year has been delivered to the 
Registrar of Companies. The auditors' report on those accounts was unqualified 
and did not contain statements under Section 237(2) or (3) of the Companies Act 
1985. 
 
 
The interim financial report has been prepared using accounting policies 
consistent with International Financial Reporting Standards. The financial 
statements have been prepared under the historical cost basis, except for the 
revaluation of financial instruments, which are valued at fair value. 
 
3.    Tax on profit on ordinary activities 
 
 
The tax charge on underlying profits for the period is based upon the estimated 
effective rate for the year of 11.1% (December 2008: 11.4%). 
 
4.Earnings per share from continuing operations 
 
 
The calculation of the basic and diluted earnings per share is based on the 
following data: 
 
 
+------------------------------------------------------+-----------+-----------+---------+ 
|                                                      | Unaudited | Unaudited | Audited | 
|                                                      |     first |     first |    full | 
|                                                      |      half |      half |    year | 
|                                                      |      2009 |      2008 |    2008 | 
|                                                      |   GBP'000 |   GBP'000 | GBP'000 | 
+------------------------------------------------------+-----------+-----------+---------+ 
|                                                      |           |           |         | 
+------------------------------------------------------+-----------+-----------+---------+ 
| Earnings                                             |           |           |         | 
+------------------------------------------------------+-----------+-----------+---------+ 
| Earnings before unrealised fair value changes on     |     1,156 |     1,088 |   3,769 | 
| forward currency contracts and adjustments to        |           |           |         | 
| acquired intangibles & goodwill for the purpose of   |           |           |         | 
| basic earnings per share                             |           |           |         | 
+------------------------------------------------------+-----------+-----------+---------+ 
| Earnings for the purpose of basic earnings per share |     1,610 |       930 |   1,963 | 
| being net profit attributable to equity holders of   |           |           |         | 
| the parent                                           |           |           |         | 
+------------------------------------------------------+-----------+-----------+---------+ 
| Number of shares                                     |   No. 000 |   No. 000 | No. 000 | 
+------------------------------------------------------+-----------+-----------+---------+ 
| Weighted average number of ordinary shares for the   |    72,050 |    71,779 |  71,779 | 
| purpose of basic earnings per share                  |           |           |         | 
+------------------------------------------------------+-----------+-----------+---------+ 
| Effect of dilutive potential ordinary shares:        |         4 |        19 |       3 | 
| Share options                                        |           |           |         | 
+------------------------------------------------------+-----------+-----------+---------+ 
| Weighted average number of ordinary shares for the   |    72,054 |    71,798 |  71,782 | 
| purposes of diluted earnings per share               |           |           |         | 
+------------------------------------------------------+-----------+-----------+---------+ 
 
5.    Note to the consolidated cash flow statement 
 
 
+------------------------------------------------------+-----------+-----------+---------+ 
|                                                      | Unaudited | Unaudited | Audited | 
|                                                      |     first |     first |    full | 
|                                                      |      half |      half |    year | 
|                                                      |      2009 |      2008 |    2008 | 
|                                                      |   GBP'000 |   GBP'000 | GBP'000 | 
|                                                      |           |           |         | 
+------------------------------------------------------+-----------+-----------+---------+ 
|                                                      |           |           |         | 
+------------------------------------------------------+-----------+-----------+---------+ 
| Operating profit                                     |     1,855 |       767 |   1,448 | 
+------------------------------------------------------+-----------+-----------+---------+ 
| Adjustments for:                                     |           |           |         | 
+------------------------------------------------------+-----------+-----------+---------+ 
| Depreciation of property, plant and equipment        |       351 |       313 |     501 | 
+------------------------------------------------------+-----------+-----------+---------+ 
| Amortisation of intangible assets                    |       499 |       521 |   1,076 | 
+------------------------------------------------------+-----------+-----------+---------+ 
| Adjustments to carrying value of goodwill            |         - |         - |     888 | 
+------------------------------------------------------+-----------+-----------+---------+ 
| Other non-cash items                                 |        25 |        43 |      64 | 
+------------------------------------------------------+-----------+-----------+---------+ 
| Operating cash flows before movements in working     |     2,730 |     1,644 |   3,977 | 
| capital                                              |           |           |         | 
+------------------------------------------------------+-----------+-----------+---------+ 
| Decrease /(increase) in inventories                  |       768 |     (605) | (1,270) | 
+------------------------------------------------------+-----------+-----------+---------+ 
| Increase in receivables                              |     (127) |     (287) | (1,367) | 
+------------------------------------------------------+-----------+-----------+---------+ 
| (Decrease)/increase in payables                      |     (969) |       673 |   2,260 | 
+------------------------------------------------------+-----------+-----------+---------+ 
| Cash generated by operations                         |     2,402 |     1,425 |   3,600 | 
+------------------------------------------------------+-----------+-----------+---------+ 
 
6.Acquisition of subsidiary 
 
 
On 29 April 2009 the Group acquired 100% of the issued share capital of 
SlidePath limited for cash and share consideration of up to GBP3.3 million. The 
acquisition of SlidePath was structured with an initial payment of EUR2.5 million 
(GBP2.2 million). The initial consideration was satisfied by the payment of EUR2.0 
million (GBP1.8 million) in cash and the issue of 785,520 new ordinary shares in 
Genetix ("Consideration Shares"). The share consideration was equivalent to EUR0.5 
million (GBP0.4 million) based on the closing price of Genetix' ordinary shares 
on 29 April 2009. The transaction has been accounted for by the acquisition 
method of accounting. 
 
 
Dependent on the achievement of EBIT targets in the years ending 31 December 
2009 and 2010 further consideration of up to a maximum of EUR1.2 million (GBP1.1 
million) (comprised of a combination of cash and shares) may be payable to the 
vendors of SlidePath. EUR0.5 million (GBP0.5 million) of any additional 
consideration is payable in the event that a breakeven target is achieved in 
2009 and the balance of EUR0.7 million (GBP0.6 million) is payable in the event 
that the 2010 EBIT target of EUR0.5 million (GBP0.5 million) is achieved, subject 
to a reduction of up to EUR0.2 million (GBP0.2 million) if losses in 2009 exceed 
EUR0.2 million (GBP0.2 million). A catch up mechanism is included where the 
aggregate results for the two years deliver a profit of EUR0.4 million (GBP0.4 
million) or more. 
 
 
In light of the short period between the date of acquisition of SlidePath and 
the period end, the directors believe that it would be impractical to determine 
whether the additional consideration will be payable. 
 
 
The goodwill arising on the acquisition of SlidePath is attributable to the 
anticipated profitability of selling the company's products into new and 
existing markets and the anticipated future synergies from the combination. The 
Group has yet to undertake an exercise under IFRS 3 Business Combinations in 
respect of fair value adjustments to inventories, receivables, property, plant 
and equipment and in assessing for intangible assets. This exercise will be 
completed before the end of 2009. 
 
 
SlidePath's results since acquisition have been in line with our expectations; 
since acquisition to 30th June 2009 SlidePath has delivered revenue of GBP0.1 
million and a GBP0.1 million operating loss. 
 
 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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