GENUS PLC / ANNUAL REPORT 2022

DRIVING

ANIMAL

GENETIC

IMPROVEMENT

GENUS PLC / ANNUAL REPORT 2022

CONTENTS

STRATEGIC REPORT

01 2022 Highlights

02 Business Model

12 Genus at a Glance

14 Chairman and Chief Executive Q&A

16 Market Overview

18 Strategic Framework and Key

Performance Indicators

20 Operating Reviews

26 Financial Review

30 People and Culture

32 Sustainability Report

39 TCFD Disclosures Statement

41 Non-Financial Information Statement

and Section 172 Statement

42 Stakeholder Engagement

43 Principal Risks and Uncertainties

47 Going Concern and

Viability Statement

FINANCIAL STATEMENTS

107 Independent Auditor’s Report

114 Group Income Statement

115 Group Statement of

Comprehensive Income

116 Group Statement of Changes

in Equity

117 Group Balance Sheet

118 Group Statement of Cash Flows

119 Notes to the Group

Financial Statements

177 Parent Company Balance Sheet

178 Parent Company Statement of

Changes in Equity

179 Notes to the Parent Company

Financial Statements

CORPORATE GOVERNANCE

48 Chairman’s Letter

50 Board of Directors and

Company Secretary

52 Genus Executive Leadership Team

54 Corporate Governance Statement

54 Board Leadership and Purpose

55 The Board’s Year in Review

58 Division of Responsibilities

60 Composition, Succession and

Evaluation

62 Nomination Committee Report

65 Audit & Risk Committee Report

70 Directors’ Remuneration Report

104 Directors’ Report

106 Directors’ Responsibilities

ADDITIONAL INFORMATION

189 Five-Year Record –

Consolidated Results

190 Alternative Performance

Measures Glossary

198 Glossary

199 Advisers

OUR PURPOSE IN ACTION

CHAIRMAN AND CHIEF EXECUTIVE Q&A

PEOPLE AND CULTURE

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genusplc.com

Customers choose

us because of the

strength of our

genetics and we

have delivered

good genetic

progress across

all species

STEPHEN WILSON

Chief Executive

GENUS PLC / ANNUAL REPORT 2022

STRATEGIC REPORT

2022 HIGHLIGHTS

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 the APM Glossary

2 Constant currency percentage movements are

calculated by restating the results for the year

ended 30 June 2022 at the average exchange rates

applied to adjusted operating proﬁt for the year

ended 30 June 2021

3 The primary intensity ratio is a measure of the

Group’s Scope 1 and 2 emissions per tonne of

animal weight

GROUP REVENUE

£593.4m

2021: £574.3m +3%

ADJUSTED PROFIT BEFORE TAX

£71.5m

2021: £84.8m -16%

FREE CASH FLOW

-£13.5m

2021: £37.5m -136%

STATUTORY PROFIT BEFORE TAX

£48.4m

2021: £55.8m -13%

ADJUSTED BASIC EARNINGS PER SHARE

82.7p

2021: 100.9p -18%

DIVIDEND PER SHARE

32.0p

2021: 32.0p +00%

ROBUST PERFORMANCE ACROSS THE

BUSINESS DESPITE CHALLENGING

MACROECONOMIC EVENTS; GROUP

RESULTS ADVERSELY IMPACTED BY CHINA

> Group revenue up 2% in constant

currency (3% in actual currency),

adjusted proﬁt before tax (‘PBT’)

down 18% in constant currency

(16% in actual currency)

> Excluding PIC China, Group

adjusted PBT up 25% in constant

currency (28% in actual currency)

and revenue up 7% in constant

currency (9% in actual currency)

> R&D investment increased by 6%

as planned

> Statutory PBT reduced by 13% to

£48.4m, reﬂecting lower adjusted proﬁt,

lower net IAS 41 biological asset

movement and share-based payments

CHALLENGING MARKET CONDITIONS FOR

PIC CHINA AS PREVIOUSLY INDICATED,

STRONG PIC PERFORMANCE ELSEWHERE

> China pig prices averaged 14.6 RMB/kg

through the year, down 50% on the prior

year. Since June 2022, these have now

recovered to over 21 RMB/kg, which

exceeds the cost of production for

most producers

> Overall PIC volumes were stable, with

revenue down 5%, but royalty revenue

up 1%. Adjusted operating proﬁt

declined by 13%

> Excluding China, PIC’s volumes up 8%,

revenue up 4%, royalty revenue up 8%

and adjusted operating proﬁt up 11%

> Strong customer wins drove North

America growth; solid performance

in Latin America and Europe despite

challenging market conditions

for customers

GOOD PERFORMANCE IN ABS, WITH

ADJUSTED OPERATING PROFIT GROWTH

OF 9% AND VOLUME GROWTH OF 3%

DESPITE MORE CHALLENGING MARKET

FOR PRODUCERS

> Continued success for Sexcel

(supporting sexed volume growth of

18%) and NuEra

beef (with volumes up

21% and total beef volumes up 9%)

> Strong growth in third-party sales of

IntelliGen sexed semen production in

North America and Europe

> High growth in Asia, particularly China

and continued growth in Latin America

> Overall, ABS’s adjusted operating proﬁt

up 9%

LOWER CASH GENERATION AND

EARNINGS THAN PRIOR YEAR,

DIVIDENDS MAINTAINED

> Free cash outﬂow of £13.5m, reﬂecting

lower proﬁt from PIC China, continued

investment in the business as well as

expected working capital outﬂows.

Solid cash conversion of 82%

> Net debt increased to £185.0m, with

year end net debt to EBITDA ratio of

1.7x, within 1.0x–2.0x targeted range

> On 26 August 2022, Genus extended its

multi-currency revolving credit facility

to 2025 and increased the facility by

£40m (to £190m) and USD25m (to

USD150m) under an accordion option

> Adjusted earnings per share 18% lower,

ﬁnal dividend in line with prior year,

with 2.6x adjusted earnings cover

CONTINUED STRATEGIC PROGRESS AND

INVESTMENT FOR GROWTH

> Further genetic progress in pork, beef

and dairy, contributing to a reduction in

use of energy, water and land in animal

protein production. Good progress on

reduction of Genus’s carbon emissions,

with the primary intensity ratio reduced

by 25% since 2019

> Acquisition in Canada of Olymel LP’s

internal elite porcine genetics

programme, AlphaGene, for CAD25m

(£14.5m) in February 2022 progressing

well, generating royalties in the

second half

> Signiﬁcant capital investments to

support growth including expansion

of the ABS Leeds facility in Wisconsin,

completion of the PIC Atlas facility

in Canada in June 2022 and further

roll-out of the GenusOne enterprise

system, now live in more than 60% of

Genus’s business

> Investments in digitalisation to

deliver dierentiation for ABS’s

GENEadvance genetic oering

and e-commerce capabilities

BUILDING R&D CAPABILITIES AND

OPPORTUNITY PIPELINE

> PRRSv resistant pig programme on

track, with ﬁnal FDA submissions

expected to be made by

December 2023

> R&D pipeline strengthened from

investments, with an increase in the

number of projects in the discovery

and proof of concept phases

GENUS PLC / ANNUAL REPORT 2022

STRATEGIC REPORT

GENETIC IMPROVEMENT

DRIVING

GENETIC

IMPROVEMENT

Genetic improvement lies at the heart

of Genus’s business. Genus breeds

and sells genetically superior animals,

which enable farmers to produce more

animal protein with fewer resources.

Genus is a global leader in genetic

improvement, with 39 Top 100 dairy

bulls globally, a leading beef breeding

programme, and a porcine programme

that has delivered over $3.00 proﬁt

improvement per commercial pig per

year in the past four years. These results

are achieved by starting with our world

class, proprietary herds, and applying

leading technology and capabilities

to improve them at a fast rate.

Genus is uniquely positioned as a

leading player of scale operating across

pork, beef and dairy genetics. Our cash

generative businesses serve many of

the Top 100 pig producers and dairies

globally through our strategic supply

chain and distribution networks in over

75 countries. Our cash generation and

listed status enables us to invest more

in leading technologies, which can be

leveraged across multiple species. We

also attract top talent across our 3,500

employees, which include over 100 PhDs.

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