Interim results for the six months ended 31 December 2024

STRONG FIRST HALF PERFORMANCE, CONTINUED MOMENTUM EXPECTED

Strong first half financial performance

• Adjusted operating profit including joint ventures increased 19% to £45.2m in actual currency, driven by broad- based growth in PIC and Value Acceleration Programme (“VAP”) actions benefitting ABS
• Adjusted profit before tax (PBT) increased 21% to £35.4m in actual currency (38% increase in constant currency)
• Statutory PBT of £3.3m (FY24 H1: £14.3m) was impacted by a £16.0m decrease in the non-cash fair value IAS41 valuation of biological assets, principally bovine
• Very strong cash generated by operations of £46.1m (FY24H1: £12m) and conversion1 of 102% (FY24 H14: 31%) resulting in a free cash inflow1 of £10.3m (FY24 H1: £12.2m outflow) which includes expected exceptional cash outflows of £15.2m (FY24 H1: £6.1m)
• Net debt¹ of £261.4m resulted in a net debt to adjusted EBITDA ratio of 2.0x1 (30 June 2024: 2.0x), as expected
• Adjusted earnings per share increased 20% and interim dividend maintained at 10.3p per share with 2.2x1 adjusted earnings cover

Substantial strategic progress achieved

• Porcine: Continued momentum in China with 7 new royalty customer wins (now 20 new royalty customers signed over the last eighteen months)
• PRRS6 Resistant Pig (“PRP”): FDA approval expected in calendar year 2025 with significant milestones achieved to date; the U.S. Food and Drug Administration (“FDA”) conducted planned site inspections and Genus has responded to the FDA’s feedback; the FDA has accepted Genus’s Environmental Assessment submission
• Bovine: VAP Phase 2 initiatives actioned and on track for £10m annualised adjusted operating profit benefit; VAP Phase 3 planning underway; genetic supply chain strengthened through Genus taking 100% control of its De Novo joint venture via the acquisition of minority interests

Divisional headlines

• PIC – Strong trading across all regions, continuing momentum of new royalty customer wins in China
  
  • Strategically important royalty revenue growth of 5%2 and total volumes up 9%
  • Adjusted operating profit including joint ventures increased by 16%2 driven by strong growth in the Americas and Asia with Europe maintaining its performance relative to a strong prior year period 
  • More stable trading environment in China; continued momentum with 7 new royalty customer wins (now 20 new royalty customers signed over the last eighteen months) and a supply chain Joint Venture signed with cornerstone customers for PIC’s LuoDian farm. PIC China has now secured royalty agreements with 3 of the Top 5 producers in China for modest initial volumes
• ABS – VAP initiatives delivering significant adjusted operating profit and cash flow improvements
  
  • Volumes increased 5% with sexed volume up 13%, conventional dairy volume up 7% and beef volume down 4%
  • Significant improvement in adjusted operating profit to £8.6m (2024 H1: £7.3m) driven by benefits from VAP Phase 1 and 2 initiatives of £6.3m, partially offset by lower profit in ABS China, costs relating to aged inventory and adverse impact of FX translation
  • VAP Phase 2 initiatives actioned and now expected to deliver £6.5m of in-year benefit (FY25 H1: £2.5m) and £10m of annualised benefit
  • Genetic supply chain strengthened through the strategic acquisition of remaining non-controlling interest in De Novo on 19 September 2024 with £2.6m paid in the period and £10.6m of deferred consideration payable in equal instalments over four years, finalising 1 July 2029

Outlook in-line with market expectations

• Market conditions are stable albeit caution remains around potential geopolitical-driven market volatility
• Second half PIC adjusted operating profit in constant currency is expected to grow year on year albeit at a slower pace than the first half as a result of planned increases in PRP costs and higher supply chain costs in PIC China
• ABS adjusted operating profit growth in constant currency expected to increase in the second half primarily due to VAP Phase 2 initiatives
• Currency headwinds of approximately £8m to £9m expected in FY25 if current exchange rates continue throughout the fiscal year
• On 15 January 2025, Genus’s Board announced an increase to its expectation for FY25 Group adjusted profit before tax in actual currency. Market expectations5 are now in line with this view

Commenting on the performance and outlook, Jorgen Kokke, Chief Executive, said:
“Genus achieved a strong first half with broad-based growth across PIC and a significant improvement in ABS profitability. We are particularly pleased to have achieved very strong cash generation in the period through significantly enhanced working capital management and disciplined investments in the business.

We also made substantial progress in relation to our strategic priorities. PIC China won a further seven new royalty customers with 20 having now been won over the last eighteen months. Post-period end, the FDA conducted planned site inspections of two PRP facilities. We have responded to the FDA’s feedback and continue to expect FDA approval for PRP in calendar year 2025. Within ABS, Phase 2 of the Value Acceleration Programme is on track and Phase 3 planning has commenced to accelerate growth. As a result, we look forward to the second half with confidence.”

Enquiries:

You can see PDF with full financial results here

Additional resources: Financial Results Webcast and Investor Presentation

About Genus

Genus’s core commercial proposition is helping farmers rear healthier animals that produce more high-quality animal protein with fewer resources. Genus advances genetic improvement through genomic selection and biotechnology. The Group sells its products and services to livestock farmers and food producers predominantly in the dairy, beef and pork food production sectors.

Genus's worldwide sales are made in over 85 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. The PRP is a market leading innovation in gene editing, which Genus is looking to commercialise in the porcine industry once regulatory approval is gained in certain markets.

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

_{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, and not as a substitute for or as superior to statutory measures. For more information on APMs, see APM Glossary
² Constant currency percentage movements are calculated by restating the results for the six months ended 31 December 2024 at the average exchange rates applied to adjusted operating profit for the year ended 30 June 2024
³ n/a = not applicable
⁴ Cash conversion and Free cash flow definition has changed from that reported in FY24 H1 announcement. Please refer to the FY24 full year investor presentation for details. The FY24 H1 comparative has been restated for the new definitions
⁵ The company compiled consensus range for FY25 adjusted profit before tax in actual currency is £66.9m to £70.0m with an average of £67.7m. This is based upon 10 analyst estimates
⁶ Porcine Reproductive and Respiratory Syndrome}