Genus plc Preliminary Results for the Year Ended 30 June 2024

Genus (LSE:GNS, Financial), 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: [email protected]

Results Highlights

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)

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

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