Pig breeding play Sygen, a previous recommendation at 38.5p, is showing shareholders the benefits of its evolving business model. In the year to 30 June, profit before tax fell to £7.1m (£12.7m). Yet profits before amortisation, tax and exceptionals reached £5.7m (£13m), in spite of the severe downturn in the pig cycle, on lower sales of £132.7m (£164.7m). This is significant because during the last downturn in 1999, Sygen fell into a £1.5m loss. The surplus, after tax and exceptionals, was £11.3m, up from £10.8m a year earlier. The core business, PIC, which provides genetically superior pigs for breeding, held up well in the Americas, reduced its losses in Europe and stayed profitable in Asia. During 2000 and 2001, PIC's business model was altered to counter the pig cycle by building-up the proportion of royalty-based sales and by outsourcing production. Elsewhere, aquaculture arm SyAqua - the recently acquired Mexican shrimp breeding business - was profitable in its first year of operations. Sygen is also building a shrimp breeding operation in Thailand, which is the globe's biggest producer of farmed shrimp. Chief executive Phil David flagged up a strong balance sheet, supported by £23.6m of net cash. This will soon increae to £29m, much of which could be earmarked for further acquisitions.Buy/Hold.