SOLID PERFORMANCE AND GOOD STRATEGIC
PROGRESS
WEBCAST AVAILABLE AT 7:01AM GMT, 2.01 EST
Genus (LSE:GNS), a leading global animal genetics company, today
announces its preliminary results for the year ended 30 June 2023.
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:
“The Group achieved a strong operational performance despite
ongoing challenging market conditions for producers in several
important markets. Revenues grew in all regions and both PIC and
ABS delivered profit growth. This also enabled us to deliver record
adjusted EBITDA and good cashflow for the Group. Growth in R&D
investments, primarily due to the strategically important gene
editing work and expansion of PIC’s elite farms, as well as higher
interest costs, resulted in adjusted profit before tax consistent
with the prior year.
“PIC’s performance was particularly impressive, achieving a
record adjusted operating profit for the year. Whilst PIC China had
a more challenging second half, this was offset by the strong
performance in the rest of the world. Our focus is on ensuring that
PIC China can offer the best genetics and customer service in the
market, underpinned by royalty contracts where we share in our
customers’ success and build a predictable business. Population of
PIC’s new world-class elite farms in Canada, Brazil and China
positions the business very well to capture future growth
opportunities, including commercialising PRRSv-resistant edited
pigs.
“The PRRSv-resistant pig programme is reaching an exciting
stage, having completed our submissions to the FDA ahead of
schedule. Approval is expected in the first half of 2024. We are
also progressing the approvals for other markets, including China
where we now have consent to import PRRSv-resistant pigs for
in-country assessment.
“ABS saw trading improve in the second half and it continued to
expand business with strategic accounts, by continuing to build
long-term partnerships and offering the leading combination of
Sexcel and NuEra beef genetics. This, along with robust price
increases to counter inflation, enabled ABS to achieve good
performances across most regions, countering the weakness in the
Brazilian market, where nevertheless we increased market share.
“In fiscal year 2024 we expect to perform in line with our
medium-term growth expectations in constant currency. Based on the
recent strengthening of sterling against certain key currencies and
higher interest rates in the current year, we expect modest growth
in adjusted profit before tax in actual currency. The Board remains
confident in the Group's strategy and the many opportunities for
Genus.”
Outlook
Genus achieved a strong adjusted operating profit performance in
fiscal year 2023, despite challenging conditions for our customers
in several parts of the world. Over a five-year period we have
delivered performance in line with our stated medium term objective
of a 10% CAGR in adjusted operating profit excluding gene editing,
in constant currency. We remain confident that Genus is well placed
to continue gaining market share through our world class team,
market leading genetics, global supply chain and pioneering
technology.
We have a clear focus on continuing to drive growth through
leveraging the significant investments the Group has made in recent
years. The PRRSv-resistant pig represents the most substantial
opportunity in the medium term with FDA approval expected in the
first half of 2024, having completed our submissions ahead of
schedule.
We anticipate that the China porcine market will continue to be
volatile, reflecting continued disease outbreaks, a less
consolidated industry structure and weak consumer demand. We remain
confident PIC China will be a resilient growth business over the
medium-term through offering the best genetics, customer service
and increasing the penetration of our royalty-based model.
In fiscal year 2024 we expect to continue to perform in line
with our expectations for adjusted operating profit excluding gene
editing, in constant currency. However, the recent strengthening of
the pound sterling relative to several of our key trading
currencies is currently anticipated to lead to a currency
translation headwind of approximately £5-6m in the year. In
addition, we expect finance costs to increase by approximately £2m
as a result of the higher interest rate environment. The Board
therefore expects modest growth in adjusted profit before tax in
actual currency for fiscal year 2024.
The Board remains confident in the Group’s strategy and our
medium-term growth expectations remain unchanged.
Results presentation today
A pre-recorded investors, analysts and bankers briefing to
discuss the preliminary results for the year ended 30 June 2023
will be accessible via the following link from 7:01am UK time
today:
https://stream.buchanan.uk.com/broadcast/64d23b9607eccc4a190b942c
This will be followed by a live Q&A session by invitation.
Those unable to attend in person can also join via Zoom at 10:30am
UK time. Please contact Verity Parker at Buchanan for details:
verity.parker@buchanancomms.co.uk
Results Highlights
Adjusted results1
Statutory results
Actual currency
Constant currency
change2
Actual currency
Year ended 30 June
2023
2022
Change
2023
2022
Change
£m
£m
%
%
£m
£m
%
Revenue
689.7
593.4
16
10
689.7
593.4
16
Operating profit
74.6
68.8
8
2
40.5
49.4
(18)
Operating profit inc JVs
85.8
77.7
10
3
n/a
n/a
n/a
Operating profit inc JVs exc gene
editing
100.1
85.6
17
9
n/a
n/a
n/a
Profit before tax
71.5
71.5
-
(8)
39.4
48.4
(19)
Free cash flow
18.2
(13.5)
n/a
n/a
Basic earnings per share (pence)
84.8
82.7
3
(5)
50.8
62.5
(19)
Dividend per share (pence)
32.0
32.0
-
Solid Group performance
- Group revenue rose by 10% in constant currency (16% in actual
currency)
- Adjusted operating profit including joint ventures up 3% in
constant currency (10% in actual currency)
- R&D investment increased by 19%2 as planned, including a
66%2 rise in gene editing expense in preparation for the
anticipated commercialisation of pigs resistant to porcine
reproductive and respiratory syndrome virus (PRRSv) which continues
to make excellent progress
- Adjusted profit before tax (PBT) flat in actual currency (8%
lower in constant currency), with net finance costs up 124%2
- Statutory PBT reduced by 19% to £39.4m, with a £16.9m reduction
in the non-cash fair value IAS41 valuation of the Group’s
biological assets
Record PIC performance, profit growth achieved in all
regions
- Strong demand for PIC’s differentiated genetics drove a 5%
increase in volumes, revenue up 7%2 and strategically important
royalty revenue growth across all regions, up 10%2
- Adjusted operating profit including joint ventures increased by
11%2, as the business continued to expand and strengthen commercial
relationships with producers around the world
- The performance was driven by strong profit growth in North
America, Latin America and Asia. Good growth in Europe, with
improved performance in the second half
- Performance in China was affected by ongoing market volatility,
particularly in the second half of the year. Volumes were 1% lower
in the year, with revenue stable. Royalty revenue was up 26%2 and
adjusted operating profit was £9.4m (2022: £5.6m, impacted by a £4m
customer credit)
Solid ABS performance, profit growth achieved in all regions
other than Latin America, which was stable
- Volumes up 3%, revenue up 12%2 supported by robust price
increases
- Adjusted operating profit up 5%, after a stronger second half.
Expansion of long-term partnerships with strategic accounts,
underpinned by Sexcel and NuEra beef genetics, drove strong profit
growth in North America and good growth in Europe
- Latin America profits stable, despite challenging market
conditions, particularly in Brazil where macroeconomic conditions
continued to impact beef supply and demand dynamics
- Sexed genetics volumes up 18%; strong growth in volumes of
Sexcel and third-party IntelliGen production
Good cash flow, debt leverage reduced and dividend
maintained
- Free cash inflow1 of £18.2m (2022: £13.5m outflow), reflecting
record high adjusted EBITDA1, lower working capital outflows and
lower capital expenditure. Strong cash conversion of 105%1 (2022:
82%) above target level of 90%
- Net debt to EBITDA ratio improved to 1.6x1 (2022: 1.7x); within
the 1.0x-2.0x target range. Net debt1 of £195.8m (2022: £185.0m) as
expected
- Adjusted earnings per share rose 3% in actual currency, full
year dividend maintained at 32.0p per share, with 2.7x1 adjusted
earnings cover, comfortably within the 2.5x-3.0x target range
Good strategic progress and continued investment for
growth
- Genus’s PRRSv-resistant pigs programme continued to make
excellent progress, with submissions to the US Food and Drug
Administration (FDA) completed ahead of schedule and approval
expected in the first half of 2024. We are making regulatory
progress in Colombia, Brazil and also China, where we have obtained
consent for import of PRRSv-resistant pigs for in-country
assessment
- PIC’s new world-class elite farms in Canada, Brazil and China
well positioned to capture future growth opportunities
- GenusOne successfully deployed throughout the majority of
Europe in the year; implementation underway in LATAM
- Strong progress in reducing CO2 emissions; primary intensity
ratio reduced by 36% and Scope 1 and 2 emissions reduced by 14%
compared to our 2019 baseline
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 2023 at the average exchange rates applied to adjusted
operating profit for the year ended 30 June 2022.
3 The primary intensity ratio is a measure
of the Group’s Scope 1 and 2 emissions per tonne of animal
weight
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 75 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’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 2023
2023 £m
2022 £m
REVENUE
689.7
593.4
Adjusted operating profit
74.6
68.8
Adjusting items:
– Net IAS 41 valuation movement on
biological assets
(16.9)
(5.4)
– Amortisation of acquired intangible
assets
(7.7)
(8.3)
– Share-based payment expense
(6.0)
(3.7)
(30.6)
(17.4)
Exceptional items (net)
(3.5)
(2.0)
Total adjusting items
(34.1)
(19.4)
OPERATING PROFIT
40.5
49.4
Share of post-tax profit of joint ventures
and associates retained
10.5
5.2
Other gains and losses
2.7
-
Finance costs
(15.4)
(6.6)
Finance income
1.1
0.4
PROFIT BEFORE TAX
39.4
48.4
Taxation
(7.6)
(11.7)
PROFIT FOR THE YEAR
31.8
36.7
ATTRIBUTABLE TO:
Owners of the Company
33.3
40.9
Non-controlling interest
(1.5)
(4.2)
31.8
36.7
EARNINGS PER SHARE
Basic earnings per share
50.8p
62.5p
Diluted earnings per share
50.5p
62.2p
2023 £m
2022 £m
Alternative Performance
Measures
Adjusted operating profit
74.6
68.8
Adjusted operating loss/(profit)
attributable to non-controlling interest
0.4
(0.3)
Pre-tax share of profits from joint
ventures and associates excluding net IAS 41 valuation movement
10.8
9.2
Gene editing costs
14.3
7.9
Adjusted operating profit including
joint ventures and associates, excluding gene editing costs
100.1
85.6
Gene editing costs
(14.3)
(7.9)
Adjusted operating profit including
joint ventures and associates
85.8
77.7
Net finance costs
(14.3)
(6.2)
Adjusted profit before tax
71.5
71.5
Adjusted earnings per share
Basic adjusted earnings per share
84.8p
82.7p
Diluted adjusted earnings per share
84.2p
82.3p
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 2023
2023 £m
2023 £m
2022 £m
2022 £m
PROFIT FOR THE YEAR
31.8
36.7
Items that may be reclassified
subsequently to profit or loss
Foreign exchange translation
differences
(27.2)
66.6
Fair value movement on net investment
hedges
-
(0.7)
Fair value movement on cash flow
hedges
0.8
1.9
Tax relating to components of other
comprehensive expense/(income)
3.1
(8.2)
(23.3)
59.6
Items that may not be reclassified
subsequently to profit or loss
Actuarial (loss)/gains on retirement
benefit obligations
(40.4)
27.3
Movement on pension asset recognition
restriction
38.3
(69.8)
Release of additional pension
liability
3.0
43.7
Gain/(loss) on equity instruments measured
at fair value
1.7
(6.1)
Tax relating to components of other
comprehensive (income)/expense
(1.2)
1.1
1.4
(3.8)
OTHER COMPREHENSIVE (EXPENSE)/INCOME
FOR THE YEAR
(21.9)
55.8
TOTAL COMPREHENSIVE INCOME FOR THE
YEAR
9.9
92.5
ATTRIBUTABLE TO:
Owners of the Company
11.1
97.3
Non-controlling interest
(1.2)
(4.8)
9.9
92.5
GROUP STATEMENT OF CHANGES IN
EQUITY
For the year ended 30 June 2023
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 2021
6.6
179.1
(0.1)
(7.9)
–
320.4
498.1
(1.5)
496.6
Foreign exchange translation differences,
net of tax
–
–
–
59.4
–
–
59.4
(0.6)
58.8
Fair value movement on net investment
hedges, net of tax
–
–
–
(0.6)
–
–
(0.6)
–
(0.6)
Fair value movement on cash flow hedges,
net of tax
–
–
–
–
1.4
–
1.4
–
1.4
Loss on equity instruments measured at
fair value, net of tax
–
–
–
–
–
(4.6)
(4.6)
–
(4.6)
Actuarial gains on retirement benefit
obligations, net of tax
–
–
–
–
–
19.5
19.5
–
19.5
Movement on pension asset recognition
restriction, net of tax
–
–
–
–
–
(49.7)
(49.7)
–
(49.7)
Recognition of additional pension
liability, net of tax
–
–
–
–
–
31.0
31.0
–
31.0
Other comprehensive income/(expense)
for the year
–
–
–
58.8
1.4
(3.8)
56.4
(0.6)
55.8
Profit/(loss) for the year
–
–
–
–
–
40.9
40.9
(4.2)
36.7
Total comprehensive income/(expense)
for the year
–
–
–
58.8
1.4
37.1
97.3
(4.8)
92.5
Recognition of share-based payments, net
of tax
–
–
–
–
–
4.0
4.0
–
4.0
Dividends
–
–
–
–
–
(20.9)
(20.9)
–
(20.9)
Adjustment arising from change in
non-controlling interest and written put option
–
–
–
–
–
–
–
(0.1)
(0.1)
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
GROUP BALANCE SHEET
As at 30 June 2023
2023 £m
2022 £m
ASSETS
Goodwill
107.8
111.0
Other intangible assets
66.2
72.0
Biological assets
318.2
333.7
Property, plant and equipment
164.4
171.4
Interests in joint ventures and
associates
53.5
41.2
Other investments
8.8
10.2
Derivative financial assets
4.9
2.2
Other receivables
8.2
8.6
Deferred tax assets
16.5
10.1
TOTAL NON-CURRENT ASSETS
748.5
760.4
Inventories
61.3
50.9
Biological assets
23.8
33.1
Trade and other receivables
132.1
129.5
Cash and cash equivalents
36.3
38.8
Income tax receivable
4.0
4.0
Derivative financial assets
1.5
1.0
Asset held for sale
-
0.2
TOTAL CURRENT ASSETS
259.0
257.5
TOTAL ASSETS
1,007.5
1,017.9
LIABILITIES
Trade and other payables
(122.0)
(124.7)
Interest-bearing loans and borrowings
(4.2)
(7.1)
Provisions
(1.8)
(1.9)
Deferred consideration
-
(0.8)
Obligations under leases
(10.0)
(10.1)
Tax liabilities
(7.4)
(4.9)
Derivative financial liabilities
(1.8)
(1.8)
TOTAL CURRENT LIABILITIES
(147.2)
(151.3)
Trade and other payables
-
(0.2)
Interest-bearing loans and borrowings
(196.0)
(182.1)
Retirement benefit obligations
(6.9)
(8.3)
Provisions
(10.3)
(12.0)
Deferred consideration
(0.6)
(0.7)
Deferred tax liabilities
(51.2)
(60.3)
Derivative financial liabilities
(6.2)
(6.4)
Obligations under leases
(21.9)
(24.5)
TOTAL NON-CURRENT LIABILITIES
(293.1)
(294.5)
TOTAL LIABILITIES
(440.3)
(445.8)
NET ASSETS
567.2
572.1
EQUITY
Called up share capital
6.6
6.6
Share premium account
179.1
179.1
Own shares
(0.1)
(0.1)
Translation reserve
26.7
50.9
Hedging reserve
2.0
1.4
Retained earnings
360.6
340.6
EQUITY ATTRIBUTABLE TO OWNERS OF THE
COMPANY
574.9
578.5
Non-controlling interest
(2.2)
(0.7)
Put option over non-controlling
interest
(5.5)
(5.7)
TOTAL NON-CONTROLLING INTEREST
(7.7)
(6.4)
TOTAL EQUITY
567.2
572.1
GROUP STATEMENT OF CASH FLOWS
For the year ended 30 June 2023
2023 £m
2022 £m
NET CASH FLOW FROM OPERATING
ACTIVITIES
50.4
34.3
CASH FLOWS FROM INVESTING
ACTIVITIES
Dividends received from joint ventures and
associates
2.6
3.2
Joint venture and associate loan
investment
(1.9)
–
Acquisition of joint venture and
associate
(1.0)
(2.2)
Acquisition of trade and assets
-
(0.8)
Acquisition of Olymel AlphaGene assets
-
(14.5)
Sale of other investments
3.4
-
Acquisition of other investments
(0.4)
(1.0)
Payment of deferred consideration
(0.8)
(1.0)
Purchase of property, plant and
equipment
(25.9)
(42.1)
Purchase of intangible assets
(9.3)
(8.8)
Proceeds from sale of property, plant and
equipment
2.4
–
NET CASH OUTFLOW FROM INVESTING
ACTIVITIES
(30.9)
(67.2)
CASH FLOWS FROM FINANCING
ACTIVITIES
Drawdown of borrowings
126.8
138.7
Repayment of borrowings
(111.7)
(83.9)
Payment of lease liabilities
(11.1)
(11.3)
Equity dividends paid
(21.0)
(20.9)
Dividend to non-controlling interest
(0.1)
(0.1)
Debt issue costs
(1.1)
(0.6)
Issue of ordinary shares
-
–
NET CASH (OUTFLOW)/INFLOW FROM
FINANCING ACTIVITIES
(18.2)
21.9
NET INCREASE/(DECREASE) IN CASH AND
CASH EQUIVALENTS
1.3
(11.0)
Cash and cash equivalents at start of the
year
38.8
46.0
Net increase/(decrease) in cash and cash
equivalents
1.3
(11.0)
Effect of exchange rate fluctuations on
cash and cash equivalents
(3.8)
3.8
TOTAL CASH AND CASH EQUIVALENTS AT 30
JUNE
36.3
38.8
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230906828945/en/
Enquiries: Genus plc (Jorgen Kokke, Chief Executive
Officer / Alison Henriksen, Chief Financial Officer / Anand Date,
Investor Relations Director) Tel: +44 1256 345970
Buchanan (Charles Ryland / Chris Lane / Verity Parker) Tel: +44
207 4665000
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