Genus plc Preliminary Results for the Year Ended 30 June 2024

STRUCTURALLY STRENGTHENING GENUS IN A CHALLENGING YEAR

WEBCAST AVAILABLE AT 7:01AM GMT, 2.01 EST

LONDON--(BUSINESS WIRE)--Genus (LSE:GNS), a leading global animal genetics company, today announces its preliminary results for the year ended 30 June 2024. The full report has been made available on the investors section of the Genus plc website. The Company will discuss its corporate, operational and financial highlights in a pre-recorded webcast at 7:01 AM GMT, 2.01 EST.

Commenting on the performance and outlook, Jorgen Kokke, Chief Executive Officer, said:

“Genus made significant progress against its strategic priorities during FY24. I am confident that our decisive actions to structurally strengthen the Group will yield significant benefits in the years to come.

In FY25, we will continue to execute against our strategic priorities and we expect to achieve significant growth in Group adjusted profit before tax in constant currency, in-line with market expectations. However, Sterling has continued to appreciate against key foreign currencies since our trading update on 17 July 2024, and we now expect a currency headwind of approximately £8-9m in FY25, if current exchange rates continue throughout the fiscal year.”

Outlook

• Market conditions stable to slowly improving although we remain cautious, particularly in China
• Solid adjusted operating profit growth expected from PIC in constant currency
• ABS expected to return to adjusted operating profit growth in constant currency, a stronger business with actions from VAP
• Management expects significant growth in FY25 Group adjusted profit before tax in constant currency, in-line with current market expectations
• Currency headwind of approximately £8-9m in FY25 if current exchange rates continue throughout the fiscal year

Results presentation and live Q&A session today

A pre-recorded investors, analysts and bankers briefing to discuss the preliminary results for the year ended 30 June 2024 will be accessible via the following link from 7:01am UK time today:

https://webcasting.buchanan.uk.com/broadcast/66b0dea408f685532e0148c7

This will be followed by at 10.30 UKT time by a live Q&A session by invitation at Peel Hunt, 100 Liverpool Street, EC2M 2AT. Those unable to attend in person can also join via Zoom. Please contact Verity Parker at Buchanan for details: [e-mail]

Results Highlights

	Adjusted results^1				Statutory results
	Actual currency			Constant currency change^2	Actual currency
Year ended 30 June	2024	2023	Change		2024	2023	Change
	£m	£m	%	%	£m	£m	%
Revenue	668.8	689.7	(3)	2	668.8	689.7	(3)
Operating profit	67.0	74.6	(10)	(3)	6.4	40.5	(84)
Operating profit inc JVs	78.1	85.8	(9)	(3)	n/a	n/a	n/a
Profit before tax	59.8	71.5	(16)	(8)	5.5	39.4	(86)
Net cash flows from operating activities	55.1	45.9	20	n/m^5	29.8	50.4	(41)
Free cash flow^6	(3.2)	9.1	n/m^5	n/m^5
Basic earnings per share (pence)	65.5	84.8	(23)	(15)	12.0	50.8	(76)
Dividend per share (pence)					32.0	32.0	-

Strategic progress achieved despite challenging markets

• Management actions limited the impact on adjusted operating profit in a difficult year for volumes:
  • ABS Value Acceleration Programme (“VAP”) initiated to structurally improve Bovine’s margins, cash generation and returns profile; Phase 1 delivered £7.3m of adjusted operating profit benefit in FY24 (£10m annualised benefit); Phase 2 underway and expected to deliver £5m of adjusted operating profit benefit in FY25 (£10m annualised)
  • R&D strategic review completed, resulting in a sharper focus on key workstreams and savings of £2.4m realised in FY24 (£5m of annualised adjusted operating profit benefit in FY25)
  • Exceptional restructuring costs related to management actions of £6.7m in FY24
• Encouraging regulatory progress on the PRRS³ Resistant Pig (“PRP”):
  • Favourable regulatory determinations from Brazil (April 2024) and Colombia (October 2023)
  • Continuing positive engagement with the US FDA⁴, with approval expected in 2025
  • Initial submissions to Canadian and Japanese authorities made, as planned
  • PIC PRPs arriving in China imminently for in-country testing

Financial performance as expected, with structural changes driving stronger performance in the second half

• Second half adjusted operating profit including JVs of £40.0m, 15% higher year on year in constant currency, with £9.4m of benefit from management actions. Compares with first half adjusted operating profit including JVs of £38.1m, 17% lower year on year in constant currency
• Adjusted operating profit including JVs 3%² lower in constant currency (9% lower in actual currency). Good PIC ex-China growth and the realisation of benefits across ABS and R&D were offset by poor China performances and ABS volume trends
• Adjusted profit before tax (PBT) of £59.8m, 8%² lower in constant currency (16% lower in actual currency). Statutory PBT of £5.5m, 86% lower in actual currency, primarily due to a £8.6m decrease in the non-cash fair value IAS41 valuation of Group biological assets (including JV’s) and net exceptional expenses of £24.6m⁸ (2023: £3.5m net expense)
• New cash conversion¹ metric introduced which includes investments in biological assets, capital expenditure, lease repayments and cash received from JVs; 71% achieved in FY24 (2023: 53%)
• Net Debt¹ increased to £248.7m with a net debt to adjusted EBITDA¹ ratio of 2.0x, as expected, within our target range of 1.0x to 2.0x

Divisional headlines⁷

• PIC – Resilient growth ex-China, in a difficult market PIC China doubled its royalty customer numbers:
  • Continued genetic improvement, delivering $4.39/pig of genetic profit gain (2023: $3.74/pig)
  • PIC volumes increased 3%, revenue decreased 1%² and strategically important royalty revenue increased 4%², in constant currency
  • PIC trading regions ex-China adjusted operating profit increased 4%² in constant currency
  • PIC China adjusted operating profit decreased 60%² in constant currency due to the challenging market environment and planned supply chain investments; good commercial progress – 13 new royalty customers won since June 2023

• ABS – Challenging markets, particularly China; VAP delivering structural improvements and significant cost efficiencies:
  • Volumes decreased 6% (ABS ex-China volumes decreased 1%) with sexed volumes up 3%, beef volumes decreased 6%
  • Revenue increased 4%² in constant currency as price actions, mix and IntelliGen growth offset volume declines
  • Adjusted operating profit decreased 3%² in constant currency mitigated by VAP actions
  • VAP Phase 1 achieved £10m run-rate of annualised adjusted operating profit improvement by the end of FY24; Phase 2 underway and expected to deliver £5m of savings in FY25 (£10m annualised)

^1 Adjusted results are the Alternative Performance Measures (‘APMs’) used by the Board to monitor underlying performance at a Group and operating segment level, which are applied consistently throughout. These APMs should be considered in addition to statutory measures, and not as a substitute for or as superior to them.

^2 Constant currency percentage movements are calculated by representing the results for the year ended 30 June 2024 at the average exchange rates applied to adjusted operating profit for the year ended 30 June 2023

^3 Porcine Reproductive and Respiratory Syndrome

^4 United States Food and Drug Administration

^5 n/m = not meaningful

^6 Free cash flow definition has changed this year to include lease repayments, the 2023 comparative has also been restated

^7 Prior year period restated.

^8 Net exceptional expenses of £24.6m predominantly comprised £10.4m related to ST litigation and settlements, £6.7m related to restructuring activity and £7.4m related to a number of potential corporate transactions which are no longer active

About Genus

Genus advances animal breeding and genetic improvement by applying biotechnology and sells added value products for livestock farming and food producers. Its technology is applicable across livestock species and is currently commercialised by Genus in the dairy, beef and pork food production sectors.

Genus's worldwide sales are made in over 80 countries under the trademarks 'ABS' (dairy and beef cattle) and 'PIC' (pigs) and comprise semen, embryos and breeding animals with superior genetics to those animals currently in farms. Genus's customers' animals produce offspring with greater production efficiency and quality, and our customers use them to supply the global dairy and meat supply chains. Genus thereby enables its customers to produce greater volumes of high quality animal protein whilst using fewer inputs such as feed, water and land. This is both good for the environment and the sustainability of our customers’ operations.

Genus’s competitive edge comes from the ownership and control of proprietary lines of breeding animals, the biotechnology used to improve them and its global supply chain, technical service and sales and distribution network.

Headquartered in Basingstoke, United Kingdom, Genus companies operate in over 24 countries on six continents, with research laboratories located in Madison, Wisconsin, USA.

Forward-looking Statements

This Announcement may contain, and the Company may make verbal statements containing “forward-looking statements” with respect to certain of the Company’s plans and its current goals and expectations relating to its future financial condition, performance, strategic initiatives, objectives and results. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Announcement. Forward-looking statements sometimes use words such as “aim”, “anticipate”, “target”, “expect”, “estimate”, “intend”, “plan”, “goal”, “believe”, “seek”, “may”, “could”, “outlook”, “will” or other words of similar meaning. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond the control of the Company, including amongst other things, diverse factors such as domestic and global economic business conditions, market-related risks such as fluctuations in commodity prices, interest rates and exchange rates, the policies and actions of governmental and regulatory authorities, the effect of sanctions on the ability to trade, the effect of competition, inflation, deflation, the timing effect and other uncertainties of future acquisitions or combinations within relevant industries, the effect of the spread of African Swine Fever and other animal diseases, the continued development and improvement of our IntelliGen® technology, the development and registration of our innovative new products, such as our gene edited porcine reproductive and respiratory syndrome virus resistant pigs, the continued growth in emerging markets, the effect of tax and other legislation and other regulations in the jurisdictions in which the Company and its respective affiliates operate, the effect of volatility in the equity, capital and credit markets on the Company’s profitability and ability to access capital and credit, a decline in the Company’s credit ratings; the effect of operational risks; and the loss of key personnel. As a result, the actual future financial condition, performance and results of the Company may differ materially from the plans, goals and expectations set forth in any forward-looking statements. Except as required by applicable law or regulation, the Company expressly disclaims any obligation or undertaking to publish any updates or revisions to any forward-looking statements contained in this Announcement to reflect any changes in the Company’s expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.

No statement in this Announcement is intended to be a profit forecast, and no statement in this Announcement should be interpreted to mean that earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings per share of the Company. Information contained in this Announcement should not be relied upon as a guide to the Company’s future performance.

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

GROUP INCOME STATEMENT For the year ended 30 June 2024
	2024 £m	2023 £m
REVENUE	668.8	689.7
Adjusted operating profit	67.0	74.6
Adjusting items:
– Net IAS 41 valuation movement on biological assets	(23.2)	(16.9)
– Amortisation of acquired intangible assets	(5.8)	(7.7)
– Share-based payment expense	(7.0)	(6.0)
	(36.0)	(30.6)
Exceptional items (net)	(24.6)	(3.5)
Total adjusting items	(60.6)	(34.1)
OPERATING PROFIT	6.4	40.5
Share of post-tax profit of joint ventures and associates retained	19.1	10.5
Other gains and losses	(1.7)	2.7
Finance costs	(22.2)	(15.4)
Finance income	3.9	1.1
PROFIT BEFORE TAX	39.4
Taxation	(3.1)	(7.6)
PROFIT FOR THE YEAR	2.4	31.8
ATTRIBUTABLE TO:
Owners of the Company	7.9	33.3
Non-controlling interest	(5.5)	(1.5)
	2.4	31.8
EARNINGS PER SHARE
Basic earnings per share	12.0p	50.8p
Diluted earnings per share	11.9p	50.5p

	2024 £m	2023 £m
Alternative Performance Measures
Adjusted operating profit	67.0	74.6
Adjusted operating loss attributable to non-controlling interest	0.9	0.4
Pre-tax share of profits from joint ventures and associates excluding net IAS 41 valuation movement	10.2	10.8
Adjusted operating profit including joint ventures and associates	78.1	85.8
Net finance costs	(18.3)	(14.3)
Adjusted profit before tax	59.8	71.5
Adjusted earnings per share
Basic adjusted earnings per share	65.5p	84.8p
Diluted adjusted earnings per share	65.0p	84.2p
Adjusted results are the Alternative Performance Measures (‘APMs’) used by the Board to monitor underlying performance at a Group and operating segment level, which are applied consistently throughout. These APMs should be considered in addition to statutory measures, and not as a substitute for or as superior to them.

GROUP STATEMENT OF COMPREHENSIVE INCOME For the year ended 30 June 2024
	2024 £m	2024 £m	2023 £m	2023 £m
PROFIT FOR THE YEAR		2.4		31.8
Items that may be reclassified subsequently to profit or loss
Foreign exchange translation differences	(16.0)		(27.2)
Fair value movement on net investment hedges	0.4		–
Fair value movement on cash flow hedges	(1.6)		0.8
Tax relating to components of other comprehensive expense/(income)	(0.1)		3.1
		(17.3)		(23.3)
Items that may not be reclassified subsequently to profit or loss
Actuarial loss on retirement benefit obligations	(6.0)		(40.4)
Movement on pension asset recognition restriction	3.9		38.3
Release of additional pension liability	2.1		3.0
(Loss)/gain on equity instruments measured at fair value	(2.8)		1.7
Tax relating to components of other comprehensive expense/(income)	(0.1)		(1.2)
		(2.9)		1.4
OTHER COMPREHENSIVE EXPENSE FOR THE YEAR		(20.2)		(21.9)
TOTAL COMPREHENSIVE (EXPENSE)/INCOME FOR THE YEAR		(17.8)		9.9
ATTRIBUTABLE TO:
Owners of the Company	(12.3)		11.1
Non-controlling interest	(5.5)		(1.2)
		(17.8)		9.9

GROUP STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2024
	Called up share capital £m	Share premium account £m	Own shares £m	Trans- lation reserve £m	Hedging reserve £m	Retained earnings £m	Total £m	Non- controlling interest £m	Total equity £m
BALANCE AT 30 June 2022	6.6	179.1	(0.1)	50.9	1.4	340.6	578.5	(6.4)	572.1
Foreign exchange translation differences, net of tax	–	–	–	(24.2)	–	–	(24.2)	0.3	(23.9)
Fair value movement on net investment hedges, net of tax	–	–	–	–	–	–	–	–	–
Fair value movement on cash flow hedges, net of tax	–	–	–	–	0.6	–	0.6	–	0.6
Gain on equity instruments measured at fair value, net of tax	–	–	–	–	–	0.7	0.7	–	0.7
Actuarial loss on retirement benefit obligations, net of tax	–	–	–	–	–	(30.3)	(30.3)	–	(30.3)
Movement on pension asset recognition restriction, net of tax	–	–	–	–	–	28.7	28.7	–	28.7
Recognition of additional pension liability, net of tax	–	–	–	–	–	2.3	2.3	–	2.3
Other comprehensive (expense)/income for the year	–	–	–	(24.2)	0.6	1.4	(22.2)	0.3	(21.9)
Profit/(loss) for the year	–	–	–	–	–	33.3	33.3	(1.5)	31.8
Total comprehensive income/(expense) for the year	–	–	–	(24.2)	0.6	34.7	11.1	(1.2)	9.9
Recognition of share-based payments, net of tax	–	–	–	–	–	6.3	6.3	–	6.3
Dividends	–	–	–	–	–	(21.0)	(21.0)	–	(21.0)
Adjustment arising from change in non-controlling interest and written put option	–	–	–	–	–	–	–	(0.1)	(0.1)
BALANCE AT 30 June 2023	6.6	179.1	(0.1)	26.7	2.0	360.6	574.9	(7.7)	567.2
Foreign exchange translation differences, net of tax	–	–	–	(16.6)	–	–	(16.6)	–	(16.6)
Fair value movement on net investment hedges, net of tax	–	–	–	0.4	–	–	0.4	–	0.4
Fair value movement on cash flow hedges, net of tax	–	–	–	–	(1.1)	–	(1.1)	–	(1.1)
Loss on equity instruments measured at fair value, net of tax	–	–	–	–	–	(2.8)	(2.8)	–	(2.8)
Actuarial loss on retirement benefit obligations, net of tax	–	–	–	–	–	(4.6)	(4.6)	–	(4.6)
Movement on pension asset recognition restriction, net of tax	–	–	–	–	–	2.9	2.9	–	2.9
Recognition of additional pension liability, net of tax	–	–	–	–	–	1.6	1.6	–	1.6
Other comprehensive (expense)/income for the year	–	–	–	(16.2)	(1.1)	(2.9)	(20.2)	–	(20.2)
Profit/(loss) for the year	–	–	–	–	–	7.9	7.9	(5.5)	2.4
Total comprehensive income/(expense) for the year	–	–	–	(16.2)	(1.1)	5.0	(12.3)	(5.5)	(17.8)
Recognition of share-based payments, net of tax	–	–	–	–	–	6.6	6.6	–	6.6
Dividends	–	–	–	–	–	(21.0)	(21.0)	–	(21.0)
Adjustment arising from change in non-controlling interest and written put option	–	–	–	–	–	–	–	8.9	8.9
BALANCE AT 30 June 2024	6.6	179.1	(0.1)	10.5	0.9	351.2	548.2	(4.3)	543.9

GROUP BALANCE SHEET As at 30 June 2024
	2024 £m	2023 £m
ASSETS
Goodwill	110.3	107.8
Other intangible assets	65.4	66.2
Biological assets	297.4	318.2
Property, plant and equipment	182.0	164.4
Interests in joint ventures and associates	60.5	53.5
Other investments	1.1	8.8
Derivative financial assets	1.2	4.9
Other receivables	11.8	8.2
Deferred tax assets	28.1	16.5
TOTAL NON-CURRENT ASSETS	757.8	748.5
Inventories	57.1	61.3
Biological assets	32.3	23.8
Trade and other receivables	135.2	132.1
Cash and cash equivalents	42.5	36.3
Income tax receivable	2.1	4.0
Derivative financial assets	1.9	1.5
TOTAL CURRENT ASSETS	271.1	259.0
TOTAL ASSETS	1,028.9	1,007.5
LIABILITIES
Trade and other payables	(123.2)	(122.0)
Interest-bearing loans and borrowings	(4.9)	(4.2)
Provisions	(1.0)	(1.8)
Deferred consideration	(0.6)	–
Obligations under leases	(14.0)	(10.0)
Tax liabilities	(5.2)	(7.4)
Derivative financial liabilities	(1.7)	(1.8)
TOTAL CURRENT LIABILITIES	(150.6)	(147.2)
Trade and other payables	(4.2)	–
Interest-bearing loans and borrowings	(228.2)	(196.0)
Retirement benefit obligations	(6.6)	(6.9)
Provisions	(0.4)	(10.3)
Deferred consideration	(0.2)	(0.6)
Deferred tax liabilities	(44.4)	(51.2)
Derivative financial liabilities	(6.3)	(6.2)
Obligations under leases	(44.1)	(21.9)
TOTAL NON-CURRENT LIABILITIES	(334.4)	(293.1)
TOTAL LIABILITIES	(485.0)	(440.3)
NET ASSETS	543.9	567.2
EQUITY
Called up share capital	6.6	6.6
Share premium account	179.1	179.1
Own shares	(0.1)	(0.1)
Translation reserve	10.5	26.7
Hedging reserve	0.9	2.0
Retained earnings	351.2	360.6
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY	548.2	574.9
Non-controlling interest	1.2	(2.2)
Put option over non-controlling interest	(5.5)	(5.5)
TOTAL NON-CONTROLLING INTEREST	(4.3)	(7.7)
TOTAL EQUITY	543.9	567.2

GROUP STATEMENT OF CASH FLOWS For the year ended 30 June 2024
	2024 £m	2023 £m
NET CASH FLOW FROM OPERATING ACTIVITIES	29.8	50.4
CASH FLOWS FROM INVESTING ACTIVITIES
Dividends received from joint ventures and associates	4.7	2.6
Joint venture and associate loan investment	(2.2)	(1.9)
Acquisition of joint venture and associate	-	(1.0)
Sale of other investments	5.1	3.4
Acquisition of Xelect Limited	(2.9)	-
Acquisition of other investments	-	(0.4)
Payment of deferred consideration	-	(0.8)
Purchase of property, plant and equipment	(14.8)	(25.9)
Purchase of intangible assets	(9.9)	(9.3)
Proceeds from sale of property, plant and equipment	0.7	2.4
NET CASH OUTFLOW FROM INVESTING ACTIVITIES	(19.3)	(30.9)
CASH FLOWS FROM FINANCING ACTIVITIES
Drawdown of borrowings	140.4	126.8
Repayment of borrowings	(108.5)	(111.7)
Payment of lease liabilities	(13.7)	(11.1)
Equity dividends paid	(21.0)	(21.0)
Dividend to non-controlling interest	-	(0.1)
Debt issue costs	-	(1.1)
NET CASH OUTFLOW FROM FINANCING ACTIVITIES	(2.8)	(18.2)
NET INCREASE IN CASH AND CASH EQUIVALENTS	7.7	1.3
Cash and cash equivalents at start of the year	36.3	38.8
Net increase in cash and cash equivalents	7.7	1.3
Effect of exchange rate fluctuations on cash and cash equivalents	(1.5)	(3.8)
TOTAL CASH AND CASH EQUIVALENTS AT 30 JUNE	42.5	36.3