ACCELERATING
CUSTOMER
SUCCESS
GENUS PLC / ANNUAL REPORT 2023
CONTENTS
STRATEGIC REPORT
01 2023 Highlights
02 Business Model
12 Genus at a Glance
14 Chairman’s Statement
18 Market Overview
20 Strategic Framework and Key
Performance Indicators
24 Operating Reviews
30 Financial Review
34 People and Culture
36 Sustainability Report
46 TCFD Statement
58 Stakeholder Engagement
60 Non-Financial Information Statement
and Section 172 Statement
61 Principal Risks and Uncertainties
65 Going Concern and
Viability Statement
FINANCIAL STATEMENTS
117 Independent Auditor’s Report
124 Group Income Statement
125 Group Statement of
Comprehensive Income
126 Group Statement of Changes
in Equity
127 Group Balance Sheet
128 Group Statement of Cash Flows
129 Notes to the Group
Financial Statements
187 Parent Company Balance Sheet
188 Parent Company Statement of
Changes in Equity
189 Notes to the Parent Company
Financial Statements
CORPORATE GOVERNANCE
66 Chairman’s Letter
68 Board of Directors and
Company Secretary
70 Genus Executive Leadership Team
72 Corporate Governance Statement
72 Board Leadership and Purpose
73 The Board’s Year in Review
76 Division of Responsibilities
78 Composition, Succession
and Evaluation
80 Nomination Committee Report
83 Audit & Risk Committee Report
89 Directors’ Remuneration Report
114 Directors’ Report
116 Directors’ Responsibilities
ADDITIONAL INFORMATION
199 Five-Year Record –
Consolidated Results
200 Alternative Performance
Measures Glossary
208 Glossary
209 Advisers
I’m excited about
the prospects
for Genus. I see
real potential in
maximising the
benefit of all
the investment
made to date.
JORGEN KOKKE
Chief Executive
12
OUR PURPOSE IN ACTION
16
CHIEF EXECUTIVE Q&A
36
SUSTAINABILITY REPORT
—
genusplc.com
01
GENUS PLC / ANNUAL REPORT 2023
STRATEGIC REPORT
2023 HIGHLIGHTS
GROUP REVENUE
£689.7m
2022: £593.4m
STATUTORY PROFIT BEFORE TAX
£39.4m
2022: £48.4m
ADJUSTED PROFIT BEFORE TAX
1
£71.5m
2022: £71.5m
ADJUSTED BASIC EARNINGS PER SHARE
1
84.8p
2022: 82.7p
FREE CASH FLOW
1
£18.2m
2022: £(13.5)m
DIVIDEND PER SHARE
32.0p
2022: 32.0p
SOLID GROUP PERFORMANCE
• Group revenue rose 10%
2
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 IAS 41 valuation
of the Group’s biological assets
Read more on pages 30-33
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 growth was £9.4m (2022: £5.6m,
impacted by a £4m customer credit)
Read more on pages 24-25
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
Read more on pages 26-27
GOOD CASH FLOW, DEBT LEVERAGE
REDUCED AND DIVIDEND MAINTAINED
• Free cash inflow
1
of £18.2m (2022:
£13.5m outflow), reflecting record high
adjusted EBITDA
1
, 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 1.6x
1 (
2022: 1.7x) within the 1.0x-2.0x
target range. Net debt
1
of £195.8m
(2022: £185.0m) as expected
• Adjusted earnings per share rose
3%, full year dividend maintained at
32.0p per share, with 2.7x
1
adjusted
earnings cover comfortably within
the 2.5x-3.0x target range.
Read more on pages 30-33
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 CO
2
emissions; primary intensity ratio
reduced by 36% and Scope 1
and 2 emissions reduced by 14%
compared to our 2019 baseline
Read more on pages 30-33
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. For more
information on APMs, see the APM Glossary
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
02
STRATEGIC REPORT
GENUS PLC / ANNUAL REPORT 2023
02
GENUS NUERA GENETICS INDEX AND
NUERA SALES
190
140
150
170
160
180
120
130
110
100
FY18 FY21FY20FY19 FY22 FY23
NuEra % of total ABS beef volumes
NuEra Genetic Index
NuEra Genetic Index
1
45%
40%
35%
15%
10%
5%
30%
25%
20%
0%
NuEra % of total ABS beef volumes
1
STRATEGIC REPORT
GENETIC IMPROVEMENT
Trial outcomes
validate that
PIC800
®
delivers
superior survivability
and more full value
pigs in commercial
settings, leading
to a significant
economic advantage
for customers.
MATT CULBERTSON
Chief Operating Officer
Genus PIC
OUR INDUSTRY-LEADING NUERA BEEF
GENETIC PROGRAMME IS DELIVERING
NuEra, our proprietary beef
breeding programme, produces
industry-leading genetics for
beef supply chains around the
globe. These genetics have proven
their superiority in head-to-head
trials against competitors and
also in internal validations using
thousands of customer records
from NuEra-sired progeny. In these
evaluations of thousands of animals,
advantages for the beef supply
chain have ranged from $38 per
animal leaving the grower at four
months of age, up to more than
$400 per animal, for animals at
harvest when using NuEra. This has
driven demand for our proprietary
NuEra Genetics, which from full
commercial launch in FY18 now
represent more than a third of overall
ABS beef sales volumes in FY23.
1 Based on three-year rolling average of our
porcine genetic index. See Strategic Framework
on page 20
2 See Technology section on page 4
Genus breeds and sells market-leading
genetically superior animals, which enable
farmers to produce more animal protein
with fewer resources. Driving genetic
progress lies at the heart of our business.
Genus is a global leader in genetic
improvement. Our bovine business,
Genus ABS, has a strong dairy genetics
portfolio and has a leading beef
breeding programme. In Genus PIC,
our porcine programme has benefited
our customers by delivering over $3.00
profit improvement per commercial
pig per year in the past three years
1
.
We achieve these results by starting
with our world-class, proprietary herds,
and applying leading technology and
capabilities to rapidly improve them.
Genus is uniquely positioned as a
leading player of scale. Serving many of
the Top 100 pig producers and dairies
globally through our strategic supply
chain and distribution networks in over
80 countries. Our cash generation and
listed status enables us to invest more
in leading technologies
2
, which we can
leverage across species. We also attract
top talent across our 3,500 employees,
which include more than 130 PhDs.
Read more on pages 24-29
DRIVING
GENETIC
IMPROVEMENT
1 NuEra genetic index for Genus proprietary
T14 line
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GENUS PLC / ANNUAL REPORT 2023
STRATEGIC REPORT
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STRATEGIC REPORT
MEETING THE UNIQUE
NEEDS OF THE INDIAN
DAIRY MARKET THROUGH
SEXED SEMEN
Milk is a major protein source in India
and demand is growing. With imported
milk being unaffordable, the country
needs more productive cows with better
genetic potential. However, conventional
breeding results in unwanted bulls,
which cannot be slaughtered, are
a drain on limited resources and
a safety risk on Indian roads.
In response, the Federal Government
has provided financial assistance to
establish sexed semen laboratories
and supported the purchase of sexed
semen straws. Through the Government
programme, we have served six Indian
states with over 400,000 Sexcel
straws, with repeat orders from five
states and over 50% market share.
Training in using sexed semen is vital,
since each straw costs up to 50 times
as much as conventional semen. In
FY23, we trained around 4,000 vets and
technicians, to help them understand
the importance of genetics and
selecting the right animals, and how to
store, handle and use the straws. This
helps to maximise farmers’ returns and
creates advocacy for using our genetics.
To further improve outcomes, we
imported seven Jersey bulls from the US.
Jersey milk has the right level of solids
and the cows have longer productive
lives and greater sustainability than
Holsteins in tropical conditions. The
new bulls have contributed to the
profitability index for the best Jersey
bull in India more than tripling.
Our R&D team in India is now working
on targeted improvements to our sexed
semen technology, to reflect demand
for sexed water buffalo semen. Water
buffalo are the most important farm
animals in Asia and account for around
58% of all milk production in India.
Read more on pages 28-29
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GENUS PLC / ANNUAL REPORT 2023
STRATEGIC REPORT
ENHANCING ANIMAL
WELFARE AND CUSTOMER
PROFITABILITY THROUGH
GENE EDITING
In the last year, we have made further
good progress with our programme
to produce gene-edited pigs that are
resistant to the deadly PRRS virus.
In particular, we have submitted
our final filings to the US FDA, with
acceptance expected in early 2024.
To support submissions in other key
countries, we have prepared an
international dossier and engaged
with authorities in Colombia, Brazil,
Mexico, Canada and Japan.
To encourage customer acceptance,
we are nearing completion of our life
cycle analysis, to demonstrate
their sustainability benefits, and
conducting research to show the
potential reduction in antibiotic use.
We are also focused on consumer
acceptance of gene-edited pigs,
which is essential for ensuring an
end-market for our customers.
As we prepare to offer PRRS-resistant
pigs commercially, we have started
to expand our pig population with
the initiation of a second nucleus
farm. This will give us greater scope
for detailed animal testing and
selection, to accelerate annual genetic
improvement, as well as increasing
the availability of elite breeding stock,
so we can begin sales worldwide.
Read more on pages 28-29
05
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STRATEGIC REPORT
TECHNOLOGY
Our world-class
teams of scientists
continue to break
new ground, as
we invest in our
programmes to
deliver rapid genetic
advances to benefit
our customers.
ELENA RICE
Chief Scientific Officer
and Head of R&D
To drive genetic improvement in our
proprietary herds and deliver superior
breeding animals to our customers, we
leverage leading-edge technologies
that we develop in-house and access
through strategic partnerships.
Our genome science and bioinformatics
teams have a deep understanding of
the link between DNA and animals’
observable characteristics, such as
protein and fat content, aided by our
extensive databases of real-world animal
performance data. We employ this
knowledge in our proprietary breeding
programmes to select superior parents
with desirable characteristics to breed
successive generations of animals.
Our biosystems engineering team
uses technology to interrogate and
select cells, such as in our proprietary
semen sexing technology, IntelliGen,
one of only two commercially available
bovine sexing technologies globally.
Today IntelliGen operates in ten
countries, with 15 labs globally.
In gene editing, we have built strong
in-house technical and regulatory
capabilities. Our PRRSv resistance
programme is developing more
sustainable, disease-resistant breeding
pigs by making precise changes to
their genes. We are also exploring
whether gene editing can provide
solutions to other porcine diseases.
We have active R&D workstreams
in multiple advanced reproductive
technologies, including enhancing
embryo quality, efficient determination
of embryo viability and exploring how
embryonic stem cells can enhance
genetic gain and accelerate traits.
Read more on pages 28-29
THROUGH
LEADING-EDGE
TECHNOLOGIES
10
countries where
IntelliGen operates
GENUS PLC / ANNUAL REPORT 2023
06
STRATEGIC REPORT
TOTAL SEXED SALES VOLUMES
(000s)
1
7,000
3,000
4,000
5,000
6,000
2,000
1,000
0
FY18 FY19 FY20 FY21 FY22 FY23
Other sexed
Sexcel
IntelliGen (3rd Party)
Genus’s global supply chain efficiently
delivers porcine and bovine genetics
to customers while mitigating risk for
us, for example by using third-party
multiplier farms and by spreading
facilities across the world.
PIC pure-bred pig lines are housed
in strategically located biosecure
facilities in four continents. ‘Market’ pigs
for processing are then produced in
‘breeding pyramids’ over four generations.
PIC supplies live animals and semen
to customers’ pyramids, enabling
them to produce pigs with the latest,
best-performing genetics. Third-party
herd multipliers and studs expand our
breeding pig populations and produce
semen for commercial sale, with PIC
controlling the sale of its animals to
protect our intellectual property. In
total, PIC boars are housed in more
than 400 studs globally and there are
more than 500 multiplication farms.
New farm builds, such as our owned
Atlas (Canada), Granja Genesis
(Brazil), and Ankang (China) farms have
expanded our global supply of elite
porcine genetics. In China our porcine
supply chain is unparalleled amongst
international genetics companies,
with over 180,000 great grandparent
and grandparent sows in owned, joint
venture and contracted farms locally,
enabling us to support industry growth.
ABS breeds elite bulls in four continents.
The best bulls go to one of ABS’s six
owned and contracted stud facilities
in the US, Europe, Brazil, India and
Australia, where over 1,000 bulls’
semen is collected for distribution
as frozen semen ‘straws’ or used to
create embryos for sale. ABS operates
embryo labs in Brazil, Mexico and the
US, and sexing operations in the US,
Europe, Latin America and Asia.
Animals at ABS’s and PIC’s facilities
benefit from industry-leading welfare
standards, and we have started to roll-
out solar panels, solar generation has
increased by more than 100% since FY22.
Read more on pages 24-27
1 Sexed units delivered or produced for
customers in the year
GROWING OUR SEXING PLATFORM
We have continued to grow our
sexing platform to support the
growing demand for Sexcel,
our proprietary genetics sexed
by IntelliGen, and third-party
demand for sexing services
provided directly by IntelliGen.
INVESTING
IN OUR
SUPPLY CHAIN
SUPPLY CHAIN
GENUS PLC / ANNUAL REPORT 2023
07
STRATEGIC REPORT
Pork producers need
the right products at
the right time to keep
their operations running
smoothly and profitably.
PIC is dedicated to
making sure customers
can access the high-
quality genetics they
desire, and we work
with a global network
of partners to achieve
this goal.
NICK MCCULLEY
Global Porcine Supply Chain Director
08
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STRATEGIC REPORT
SUPPORTING
SUSTAINABILITY AND
PRODUCTIVITY WITH
GENEADVANCE
Over the last three years, we have
worked with Ancali dairy in Chile
to implement our GENEadvance
programme. GENEadvance uses
genomic testing to predict the genetic
merit of heifers at a very young age,
so the customer can use our ranking to
select the right animals to breed future
herd replacements and those to sell or
breed to beef. Our revenue is then based
on the outcomes for the customer.
“In Ancali, we are building an extremely
disruptive business model,” says Miguel
Aparicio, General Manager of Agrícola
Ancali. “We have built the largest
robotic farm worldwide, with the most
modern production and environmental
strategy, backed by a strong team. This
helps us to deliver our key sustainability,
social and governance pillars.
“We have a strong and successful
business relationship with ABS, using
GENEadvance to deliver our ambitious
production and sustainability objectives.
We are achieving excellent results,
and we are now starting a high-quality
embryo project for export purposes.”
Read more on pages 26-27
STRATEGIC REPORT
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GENUS PLC / ANNUAL REPORT 2023
STRATEGIC REPORT
CUSTOMERS
Genus serves over 50,000 customers
in more than 80 countries, including
many of the Top 100 pig producers and
Top 100 dairies globally. Our porcine
business is global leader and we are a
strong second in bovine. We sell products
through different channels, either as
multi-annual product and service bundles
or transactionally, always looking to align
pricing with value delivered to customers.
Our technical teams support customers to
get the best from our products, delivering
a superior customer experience.
We build trust with porcine customers by
linking pricing to on-farm performance
and by running validation trials. 85% of
our volumes
1
are on multi-annual royalty
contracts, where PIC supplies animals
and semen at cost, and customers
typically then pay for every parent
selected for breeding, every piglet
weaned or every pig sent to market.
In bovine, customers have traditionally
purchased semen straws or embryos on a
per-unit fee. In FY19, we introduced multi-
annual product and service bundles,
which typically require customers to
commit to a three to five year contract
and purchase 100% of their product
requirements from ABS
2
. Today, this
business represents 32%
3
of our direct
sales volumes in EMEA. To serve customers
better, we have introduced digital sales
channels, which account for around one
third of beef semen sales volumes in Latin
America, an early adopter. We have also
introduced digital tools and services to
support contracted customers in key
markets. We price each straw of semen
according to a genetic index score used
by the industry to estimate the economic
value of breeding animals for farmers. We
have also introduced beef weaned calf
fees, which are similar to PIC’s model.
Read more on pages 26-27
1 Including our Brazilian joint venture
2 Programme offering, customer commitment, pricing
and contract lengths vary
3 Contracted business for 1-5 years, including our key
account partner programme, reproductive
management services, Breeder Tag programme,
and other contracted services where the customer
has committed 80-100% business with Genus ABS
PARTNERING
WITH OUR
CUSTOMERS
We build long-term
relationships with
our customers,
share in the value
we deliver for them
and continually look
for ways to serve
them better.
ANDREW THOMPSON
Head of ABS EMEA
10
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STRATEGIC REPORT
STAKEHOLDERS
Superior genetics
are increasingly
important to ‘climate
smart’ production
of animal protein,
as we work to help
further reduce our
customers’ emissions.
JORGEN KOKKE
Chief Executive
NOURISHING
THE WORLD
SUSTAINABLY
Genus breeds more productive and
resilient breeding animals, which enables
farmers to produce meat and milk
more efficiently and sustainably. Our
market-leading breeding animals have a
significant impact on whole protein value
chains and benefit multiple stakeholders,
with customers being our central focus.
In the past 40 years, genetic improvement
has contributed to doubling US dairy
farmers’ average milk per cow, from 5.4
to 10.8 tonnes per year
1
. Genetic progress
has also helped to deliver significant
resource savings and environmental
benefits in protein production. Today
it takes 1.6kg less feed to produce a
kilogramme of pork in a professional
farm system than it did 50 years ago
2
.
By improving productivity, cost and
resource utilisation, genetic improvement
makes nutritious animal protein more
accessible to consumers globally,
helping to nourish the world more
sustainably, in line with our vision.
3,500 employees help to deliver our
vision and more than 12,000 shareholders
are invested in our opportunity
3
. By
sharing in the value that we deliver
to meat and milk producers globally,
we provide career opportunities
to our employees and generate
financial returns for our investors.
Read more on pages 36-59
1 USDA ERS data for the period 1980-2020
2 Genus PIC data for the period 1970-2020
3 Number of Genus shareholders as of 30 June 2023
4 Genus PIC data; PIC herd represents top performing
PIC customers
18
14
16
12
10
2010 2020 2030F
Pigs weaned/litter
Feed
Pigs weaned/litter
2.40x
1.80x
2.00x
2.20x
1.60x
Feed conversion (efficiency)
Genetic improvement in PIC herds
has delivered benefits across
multiple observable traits, including
pigs weaned per litter and feed
conversion. These all contribute
to improving the overall pork
produced per sow and reducing the
resources required to produce it.
PRODUCTIVITY INCREASES IN
PIC HERD
4
11
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STRATEGIC REPORT
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STRATEGIC REPORT
INVESTMENT CASE
GENUS AT A GLANCE
PIONEERING
ANIMAL GENETIC
IMPROVEMENT TO
HELP NOURISH
THE WORLD
WHAT WE DO
HOW WE DO IT
We analyse animals’ DNA and look
for markers that we know are linked to
desirable characteristics for farmers. We
then select the animals with the strongest
genetic profile from our proprietary
and partner herds, and breed them
to produce even better offspring, in a
continuous cycle. We distribute these
superior genetics to customers in the
form of live animals, semen or embryos.
We also own technology that enables
us to sort semen for desirable traits,
for example to produce more female
calves for the dairy market. In addition,
we make precise gene edits to animals’
DNA, which we are employing in our
R&D programmes to produce animals
which are resistant to fatal disease.
We focus on serving progressive farmers,
who are best placed to realise and
measure the benefits of our superior
genetics and technologies.
Leading multi-species market positions
We supply 50,000+ customers in 75+
countries, including some of the world’s
top pig and dairy farmers. Our
international, multi-species model reduces
our reliance on individual markets. In
contrast, many of our competitors are
regional single-species cooperatives.
Positive long-term market
fundamentals
Demand for animal protein is growing
globally, while the need to operate
sustainably is becoming even greater.
Genus’s genetic improvement
technologies enable farmers to produce
more animal protein with fewer
resources, helping to reduce their
environmental impact.
Focused technology-driven
business model
We focus on delivering high-quality
breeding animals to farmers by
discovering, developing and delivering
pioneering technologies spanning the
genomics, gene editing, sexing and
reproductive technology fields, across
multiple species.
People and relationships
We attract some of the best talent in the
industry. Our 3,500 employees, including
130+ PhDs, enable us to deliver superior
products and services to our customers
globally. Close relationships with leading
research and strategic partners further
strengthen our capabilities.
Scale and financial strength
Genus is the only large, listed animal
genetics company operating in pork,
beef and dairy. We are cash generative
with a strong financial position and
access to strategic capital. We leverage
our R&D investment across species to
further our genetic lead.
13
GENUS PLC / ANNUAL REPORT 2023
GENOME SCIENCE AND BIOINFORMATICS
SCIENTIFIC COMPUTING
SHARED PROPRIETARY TECHNOLOGY PLATFORM
GENETIC IMPROVEMENT
REPRODUCTIVE
BIOLOGY
STRATEGIC REPORT
GENOMIC
SELECTION
BIOSYSTEMS
ENGINEERING
GENE
EDITING
OUR INNOVATION-DRIVEN BUSINESS MODEL
OUR COMMERCIAL DIVISIONS
Genus’s leading porcine and bovine divisions, PIC and ABS, deliver genetically elite breeding animals and services to thousands of
farmers globally. Given the different nature of PIC’s and ABS’s markets and business models, PIC and ABS have different financial profiles.
Genus’s business model is based on
creating and delivering genetically
improved breeding animals across
different species, by leveraging
a common, innovation-driven
technology platform across
different species. Our innovative
R&D function includes over 450+
highly skilled employees including
scientists, technicians, engineers and
bioinformaticians. Our world-leading
teams manage our proprietary
breeding programmes by leveraging
our extensive real-world data,
collected on farms and through DNA
analysis. More information on the
key aspects of our business model
can be found on pages 2 to 11.
CUSTOMER PROFILE Consolidated and vertically integrated Consolidating
REGIONAL VARIATION Low High
GENETIC VALUE BASIS PIC proprietary index Moving from public to proprietary indices
GENETICS PURCHASING
MODEL
Multi-year, royalty-based contracts Priced per straw, shifting to multi-year
genetic programmes
NUMBER OF EMPLOYEES
650+ 2,400+
ADJUSTED REVENUE
1
£349.5m £318.8m
ADJUSTED OPERATING
PROFIT
1
£145.3m £43.6m
ADJUSTED OPERATING
MARGIN
2
38.6% 13.7%
PIC divisional review can be read
on pages 24-25
ABS divisional review can be read
on pages 26-27
1 Revenue and Adjusted Operating Profit Includes Joint Ventures
2 Excluding Joint Ventures
•
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GENUS PLC / ANNUAL REPORT 2023
STRATEGIC REPORT
The Board carefully
considers the
balance between
investing for the
future and ensuring
an attractive
current return
for shareholders.
IAIN FERGUSON CBE
Chairman
CHAIRMAN’S STATEMENT
SEIZING THE
OPPORTUNITIES
Performance was robust in the Group,
which enabled us to deliver solid overall
results for FY23, despite challenging
market conditions for our customers
and continued weakness in the porcine
market in China. We continued to make
excellent progress with implementing
our strategy, leaving us well positioned
to seize the opportunities in front of us.
PERFORMANCE AND DIVIDEND
Genus PIC achieved strong operating
profit growth in most regions. However,
the weak Chinese porcine market from
December 2022 onwards resulted in PIC
China being only modestly profitable in
the last six months of FY23. Genus ABS
faced very challenging markets in Latin
America in the first half but saw better
trading in the second half of the year, with
operating profit growth in all regions.
Overall, the Group’s adjusted profit
before tax was £71.5m (2022: £71.5m)
and adjusted operating profit excluding
gene editing was £100.1m (2022: £85.6m).
Statutory PBT was £39.4m (2022: £48.4m).
•
15
GENUS PLC / ANNUAL REPORT 2023
STRATEGIC REPORT
The Board carefully considers the balance
between investing for the future and
ensuring an attractive current return
for shareholders. Our target is for the
annual dividend to be 2.5x-3.0x covered
by adjusted earnings. The Board is
recommending a final dividend of 21.7p per
share, which will give a total dividend of
32.0p (2022: 32.0p), including the
unchanged interim dividend of 10.3p per
share paid in March 2023. This results in
dividend cover of 2.7 times for the year,
within our target range. The final dividend
will be paid on 8 December 2023, to
shareholders on the register at the close
of business on 10 November 2023.
CONTINUED STRATEGIC PROGRESS
The nature of our business means
that whatever happens in our markets
in the near term, we must continue
to press forward with our strategic
investments. Working to improve the
genetic potential of animals and then
making that potential available to
customers can only take place across
multiple breeding cycles, which makes
it important to invest consistently.
Our differentiated genetics deliver long-
term value to our customers and are
key to achieving higher efficiency from
their herds, resulting in greater output
of animal protein from fewer resources.
This is at the heart of our purpose –
pioneering animal genetic improvement
to help nourish the world – while at the
same time reducing the associated
environmental impact. Increasingly, we
see our genetics as being ‘climate smart’,
equipping our customers to continue
as animal producers into the future by
protecting their licence to operate.
During the year, we made strong
progress with our PRRSv-resistant pigs
programme, which opens up significant
new opportunities for us. We have also
continued to strengthen our supply
chains, invest in digitalisation and develop
our long-term customer relationships.
More information can be found in the
Chief Executive Q&A on page 16.
THE BOARD
The most significant development on the
Board this year was Stephen Wilson’s
decision to retire after more than ten years
with Genus, including four as our Chief
Executive Officer. The Group has made
great strides in his time on the Board and
Stephen has made a major contribution
to its success. He leaves the business in
excellent shape. We are delighted to have
attracted a high-calibre replacement in
Jorgen Kokke, who joined the Board in
May 2023 and succeeded Stephen as CEO
on 1 July 2023. We have a well-ordered
process, supporting an effective handover
of responsibility in the lead up to Stephen’s
retirement at the end of September.
Lykele van der Broek will retire as a
Non-Executive Director at the Annual
General Meeting in November. He has
made an important contribution to the
Board over the last nine years and we
have begun the process of recruiting
a successor who will also offer Lykele’s
highly valuable experience in science-
based agricultural businesses.
OUR PEOPLE
Genus employs highly talented people
at all levels of the business and around
the world, and I thank them all on the
Board’s behalf for their contribution this
year. We continue to invest in learning and
development, strengthen our approach
to diversity and inclusion and enable our
people to share in the Group’s success
through a new employee share scheme.
We also celebrate and reward our people
in many other ways. The Chairman’s Awards
highlight outstanding innovation from
across the business, while the Genus CEO
Scholarships support colleagues to
accelerate their professional development.
We received a record number of
applications for the scholarships this year
and will cover the fees for two colleagues
to undertake MBAs.
I want to thank Dr Bill Christianson, who
has retired as Chief Operating Officer
of Genus PIC after three decades with
the Group. Our succession planning
work identified Dr Matt Culbertson as
the outstanding candidate to step up
into Bill’s role and we are delighted to
have filled this key position internally.
LOOKING FORWARD
High inflation, rising interest rates and
geopolitical instability mean the near-term
economic environment remains uncertain.
However, the Board believes that our
continued focus on investing in our growth
drivers leaves Genus well placed for
success. We therefore look forward to the
future with confidence.
Iain Ferguson CBE
Chairman
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GENUS PLC / ANNUAL REPORT 2023
STRATEGIC REPORT
CHIEF EXECUTIVE OFFICERS’ Q&A
Genus is very well
positioned. We
have a very strong
workforce around
the world.
JORGEN KOKKE
Chief Executive
Our new Chief Executive Jorgen Kokke
(‘JK’) and his predecessor Stephen
Wilson (‘SW’) discuss our performance
in the year, our strategic progress and
Jorgen’s priorities for the future.
17
GENUS PLC / ANNUAL REPORT 2023
STRATEGIC REPORT
Genus has faced some tough market
conditions this year. How has this
affected performance?
SW: We delivered solid overall results,
despite challenging markets and
macroeconomic conditions. Genus
PIC had good results. The business
performed strongly in North America
throughout the year and also did well in
Latin America. European porcine markets
were difficult in H1 but the business
had a better second half. However,
the first half Chinese market recovery
stalled in December 2022, reflecting the
high supply of slaughter pigs and soft
consumer demand in China. Pig prices
fell to the point where producers were
unprofitable, causing many to delay
restocking their sow herds. That led to
PIC China swinging from an adjusted
operating profit of £8.8m in the first
half to only a modest profit in H2.
Conversely, Genus ABS saw trading
improve as the year progressed. The
North American business had a strong
year and Europe delivered good growth,
although market conditions remained
challenging in Brazil. Volumes in ABS
have continued to benefit from take-up
of sexed and NuEra beef genetics.
JK: We’re confident that our investments
in PIC China give us a strong platform
to capture the growth opportunities
and build a strong predictable
royalty-based business, including
commercialising PRRSv-resistant pigs.
What did these conditions mean for
Genus’s financial results?
SW: We finished the year with good growth
in adjusted operating profit excluding
gene editing of 9% in constant currency
(17% in actual currency). Increased
investment in gene editing as planned
and higher interest rates meant that
our adjusted profit before tax was
unchanged from the prior year, at
£71.5m (8% lower in constant currency).
Genus PIC’s volumes and revenue in
constant currency were up 5% and 7%
respectively, with strategically important
royalty revenue up 10%. Adjusted
operating profit (including joint ventures)
was 11% higher. Volumes in Genus ABS
increased by 3%, revenue was up 12% and
adjusted operating profit grew by 5%.
Stephen, you’re about to retire after a
decade on the Board. How has Genus
evolved in that time?
SW: We’ve seen many challenges through
that time but the key thing was that
we really stayed the course in building
for the long term. The business is in a
completely different place in terms of its
technology and R&D capability. Some
of the Group’s major achievements over
that time include launching IntelliGen
and NuEra beef genetics, the growth
of our dairy breeding programme with
De Novo, significantly strengthening
PIC across all geographies, a number
of very value-adding acquisitions and
a significant refresh of our facilities,
to give us world-class animal housing
for the next decade and more. I think
the capability in the team is also much
stronger across all areas of the business.
In the last 12 months, we’ve finished the
final animal studies for our PRRSv-resistant
pigs programme and we’re now waiting
for approval from the US FDA of the
submissions we completed since the year
end. In China, the regulatory environment
for this technology is moving forward,
with the publication of regulations on
gene-edited animals. We also have active
research programmes on using gene
editing to produce animals resistant to
other diseases. In addition, we’ve seen
encouraging progress in reproductive
biology and we’ve further enhanced our
IntelliGen capabilities and technology.
Our porcine business is benefiting from
our Atlas facility in Canada which was
fully operational in the year, Granja
Genesis in Brazil was stocked and
we have started stocking Ankang in
China. We’ve continued to build out
ABS’s facilities in Leeds, Wisconsin.
We’ve also completed the rollout of
GenusOne in the majority of Europe,
with Latin America and Asia next in the
plan. The system is giving us access to
data we didn’t have before, so we have
much better visibility of performance
in the countries where we’re using it.
JK: Since I joined the business, I’ve really
seen the benefit of the long-term
investment Stephen has talked about.
I think Genus is very well positioned.
We have a very strong workforce
around the world and the passion,
professionalism and dedication of the
team members is phenomenal. There
have been tremendous investments in
the animal barns, the R&D capability
is even stronger than I would have
envisaged and I’m impressed by the
cutting-edge science we’re performing.
Based on that, what are your immediate
priorities Jorgen?
JK: Having made the investments, we need
to work hard to monetise them, which
means developing programmes and
projects that will benefit customers and
ultimately shareholders. Commercial
excellence and efficiency will be a key
part of driving those returns. In ABS, we’re
already focusing on improving sales,
execution and operational performance.
From a technological standpoint the
PRRSv-resistant pig is the number one
opportunity before us. That will have
my full attention and it should make a
significant contribution over three to
five years. The question then is what’s
next? Resistance to other diseases
may be part of that and the R&D team
is working on other game-changing
technologies with great potential.
How are your sustainability plans
progressing?
SW: We’ve made real progress and we’re
continuing to work through our plan,
which delivered a 5% reduction in our
Scope 1 and 2 emissions during the year.
Since 2019 we have reduced our Scope
1 and 2 emissions by 14%, while also
growing our business, resulting in a 36%
improvement in our primary intensity
ratio. At the same time, our genetics can
support our customers with reducing
the emissions from their herds, which
will only become more important.
JK: Helping our customers with their
sustainability is a real opportunity for us.
We’ve recently received a grant of £3m
from Innovate UK to further our work on
climate-smart genetics in beef, which is
a validation of the work we have been
doing to show that genetics can make
an important difference. In addition, we
are working in collaboration with the
Gates foundation and other partners to
improve dairy genetics in East Africa.
What’s the outlook for the Group?
JK: From what I’ve already said, you’ll
understand that I’m excited about the
prospects for this business. I see real
potential in maximising the benefit of
all the investment that’s been done
to date and continuing to move the
science forward, to benefit customers
and society. 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
will also continue to drive commercial
excellence to grow sales, increase
efficiency and improve margins.
In the near term, conditions remain
challenging for our customers in several
parts of the world, most notably for
Chinese pig producers and Brazilian
beef producers. However, the profit
growth achieved by both businesses
in FY23 illustrates the strength of
our strategy and competitiveness
of our offer to customers.
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 FY24 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. We therefore expect
modest growth in adjusted profit
before tax in actual currency for FY24.
The Board remains confident in the
Group’s strategy and our medium-term
growth expectations remain unchanged.
18
GENUS PLC / ANNUAL REPORT 2023
STRATEGIC REPORT
1 PIC
2 Competitor 1
3 Competitor 2
4 Competitor 3
5 Competitor 4
8 Competitor 7
7 Competitor 6
6 Competitor 5
9 Competitor 8
10 Competitor 9
11%
9%
8%
5%
4%
3%
1 Competitor 1
2 ABS
3 Competitor 2
4 Competitor 3
5 Competitor 4
6 Competitor 5
7 Other
60%
12
11
7
8
9
10
6
5
4
3
2
1
PORK4
7
6
5
4
3
2
1
BEEF & DAIRY5
16%
6%
5%
2%
2%
2%
1%
1%
1%
11 Internal programmes
12 Other
2%
19%
44%
WHAT DRIVES DEMAND
FOR ELITE GENETICS
INCREASING DEMAND FOR
ANIMAL PROTEIN
The global population is expanding
and urbanising, and seeking a more
varied and nutritious diet. This is driving
increases in consumption of pork, milk
and beef, which are forecast to grow
by 1-2% p.a. in the next decade.
1
NEED TO PRODUCE FOOD
MORE SUSTAINABLY
Competition for resources, such as
land and water, and the need to
reduce greenhouse gas emissions to
tackle climate change, puts pressure
on farmers to become more efficient
through the use of technology and
genetically superior animals, which are
demonstrated to be more sustainable.
2
CONSUMERS DEMANDING
BETTER PRODUCTS
Consumers are increasingly
demanding healthier and more
sustainable products, which are
produced with a focus on animal
welfare, traceability and reduced
drug use. This increases farmers’
demand for genetically superior
breeding animals, which are naturally
more resilient and sustainable.
3
FARM CONSOLIDATION AND
TECHNOLOGY ADOPTION
Progressive farmers, who are more
open to new technologies and
measure performance in more
detail, are consolidating the sector.
They understand the economic and
sustainability benefits of genetically
superior animals and optimised
breeding strategies, such as combining
the use of sexed dairy and beef semen
on dairy herds to maximise profit.
OUR POSITION
Genus is a leading player in global
porcine and bovine genetics markets,
serving many of the Top 100 pig producers
and dairies globally. Investment in our
proprietary genetic programmes has
delivered world-leading products in all
our species, validated by indices and
on-farm trials. Genus is also recognised
as a global leader in genomic, gene
editing and sexing technologies.
1 OECD FAO production forecasts for period
2022–2031
2 As demonstrated through Genus real-world data
and various trials in porcine, dairy and beef systems
3 Genus animals are selected according to indices
that include productivity and health traits
4 Source: Government agencies, Eurostat, pork
organisations, Genus estimates. Market shares
represent the estimated share of pig production in
top pig production markets
5 Source: Government agencies, USDA, OECD,
genetics and agriculture organisations, Genus
estimates. Market shares represent the estimated
share of combined dairy and beef volumes in ABS’s
Top 32 target markets for dairy and Top 8 target
markets for beef
FEEDING THE
WORLD MORE
SUSTAINABLY
MARKET OVERVIEW
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GENUS PLC / ANNUAL REPORT 2023
STRATEGIC REPORT
GENUS OPPORTUNITY
• Driving genetic improvement faster
than competitors
• Drive the adoption of our sexed and
Beef x Dairy genetics amongst dairy
farmers, to maximise their profitability
• Grow our presence with progressive
industry consolidators globally
• Deploy our proprietary sexing technology
with partner studs, delivering competition,
value and sustainability to the industry
GENUS OPPORTUNITY
• Demonstrate the superiority of our
proprietary beef genetics across the
value chain through trials and partnerships
• Build on our product leadership in beef
semen for dairy and tropical cross-breeding
• Develop naturally more resilient cattle,
through genomic selection and gene
editing technologies
• Progress pull-through demand
partnerships to underpin demand
for Beef x Dairy genetics
GENUS OPPORTUNITY
• Maintain our genetic lead by
driving genetic improvement faster
than competitors and customers’
internal programmes
• Ensure biosecure supply of breeding
stock and semen for progressive
producers in all key markets
• Drive market share gains via strategic
partnerships with major producers
• Make China a ‘home market’, with local
nucleus herds, supply chain and superior
customer service
• Obtain approval for and launch our
gene-edited PRRSv-resistant pigs,
and explore technology solutions to
other diseases
PRODUCTION
Pig production is largely technified with
progressive producers employing similar
production systems globally. To stock a
farm, producers typically acquire breeding
pigs and semen from specialist genetic
improvement companies or captive breeding
programmes. Thereafter, they periodically
acquire semen so they can benefit from
the latest and best-performing genetics.
Disease poses a significant risk to pig
producers, who rely on biosecurity protocols
and health products to manage the
threats such as African Swine Fever and
PRRSv, which causes billions of dollars
of damage to the industry annually.
China is by far the world’s largest pork
market and pigs there were historically
produced mainly in small ‘backyard’ farms.
In 2018, an outbreak of African Swine Fever
caused the national sow herd to decline
by about one-third. The resulting shortfall
in pork drove the expansion of large-scale
technified pig production, further aided by
the legislative drive to professionalise the
sector. Today, the top 50 producers control
around a quarter of the sow herd in China.
PRODUCTION
Beef is produced in a variety of systems
globally and from many breeds, using both
artificial insemination and ‘natural service’.
Beef animals are often traded multiple
times between birth and processing.
In the US, beef is mainly produced from
pure-bred beef animals, which are bred
naturally from bulls on farm or sourced from
the open market. A modest but growing
portion of beef cattle is produced by
breeding dairy cattle with beef semen
(Beef x Dairy). Beef x Dairy uses ‘surplus’
dairy breedings to produce high-quality
beef animals that are more consistent
than those from pure-bred beef systems.
In Brazil, beef is mainly produced from
pure-bred ‘tropical’ beef cattle suited to
local conditions, although tropical cattle are
increasingly being cross-bred with semen
from European breeds. The resulting cross-
bred calves have better meat quality and
growth rates than tropical animals, and are
more heat tolerant than European breeds.
PRODUCTION
Milk production systems vary due to genetics,
technification and the local environment,
resulting in the average US cow producing
over ten tonnes of milk annually compared
with two tonnes in India. Dairy production
is fragmented, but progressive farmers are
consolidating. Average herd size in the US has
grown by 77% over ten years
3
, and China’s
dairy sector has significantly consolidated
in recent years with the top three producers
controlling almost 20% of production.
Historically farmers selected breeding
animals based on their progeny’s
performance. However, in 2008, genomics
enabled the selection of animals at birth
from their DNA. Leading studs such as ABS
responded by consolidating the ownership
of elite genetics and transitioning from
purchasing bulls to proprietary breeding
programmes. Between 2008 and 2023,
the number of breeders featured in the
top bull rankings fell from 107 to 30
4
.
Sexing technology use has grown
rapidly, enabling farmers to produce
herd replacements from their best cows
with fewer breedings, given the ~90%
chance of a female. Other animals in
the herd are increasingly bred with beef
semen to produce a high value cross-
bred beef calf. The proportion of ABS’s
sales to US dairies consisting of sexed
and beef genetics has grown from 16%
to 78% between FY16 and FY23.
TRENDS IN OUR MARKET
1
TOTAL PORK
122mt
TOP 3 MARKETS
ADVANCED GENETICS USE ADVANCED GENETICS USE ADVANCED GENETICS USE
TOTAL BEEF
721mt
TOP 3 MARKETS
TOTAL MILK
2
911mt
TOP 3 MARKETS
45% 17% 22%18% 12% 17%10% 10% 11%
1 Sources: OECD FAO 2023 (forecast data), Rabobank, Boyar, Journal of Swine Health and Production, Genus Analysis
2 Represents 81% cow milk, 15% buffalo milk, 4% other (OECD FAO 2023 forecast data)
3 USDA data for the period 2011 to 2021
4 Represents the number of US Holstein breeders represented in the Top 200 NM$ rankings by birth year; 2023 data based on Top 200 Holsteins active using August 2023 data
from the Council on Dairy Cattle Breeding
20
GENUS PLC / ANNUAL REPORT 2023
STRATEGIC REPORT
DELIVER A
DIFFERENTIATED
PROPRIETARY
GENETIC OFFERING
STRATEGIC PRIORITIES
STRATEGIC FRAMEWORK
DELIVERING
AND SHARING
IN THE VALUE
We harness innovative
technologies and know-
how to breed genetically
superior animals for
progressive farmers
globally, and link our pricing
to the performance of our
products on-farm.
STRATEGIC IMPLEMENTATION
Our overarching strategy, success
drivers (which feed into the focus
areas of our business model), and
associated KPIs are determined at
Group level. The strategy is then
implemented at business unit level.
Our overarching business unit
priorities and strategic progress
in FY23 can be found on pages 24-29.
Sustainability lies at the heart of our
business. KPIs marked with the icon
on the right are considered by the
Board to be indicative of our progress
in this area. For more information see
pages 36-57.
FOCUS ON PROGRESSIVE
PROTEIN PRODUCERS
GLOBALLY
SHARE IN THE
VALUE DELIVERED
SUSTAINABILITY
AT THE HEART OF
OUR BUSINESS
21
GENUS PLC / ANNUAL REPORT 2023
STRATEGIC REPORT
Read more on pages 22-23
LINK TO KPIS
$3.74
Porcine Genetic
Improvement Index
1,084
Genomic Bull Net Merit
Index (NM$)
3%
Dairy & Beef Volume
Growth
5%
Porcine Volume Growth
£0.64
Adjusted Operating Profit
per Market Pig Equivalent
£0.72
Adjusted Bovine Operating
Profit per Dose
6.04
Primary Intensity Ratio
82%
1
Engagement Survey Results
1 FY22 Result
ELITE ANIMALS
TECHNOLOGY
AND CAPABILITIES
DATA
GLOBAL POSITION
GLOBAL SUPPLY CHAIN
CUSTOMER EXPERIENCE
SUCCESS DRIVERS WHAT DOES SUCCESS LOOK LIKE?
VALUE-BASED PRICING
PRODUCT VALIDATION
LEVERAGE SCALE
GENETIC GAIN
Creating superior breeding animals
for farmers, measured against indices
comprising traits that help to drive
farmers’ productivity and sustainability.
VOLUME GROWTH
Growing volumes, particularly with
progressive livestock farmers.
PROFITABILITY
Generating profit resulting from
the performance of our products in
customers’ systems, and growing
margin as we leverage scale and
R&D investment across species.
Our strategy is underpinned by our
approach to sustainable business and
the strength of our people. The Board
measures the performance of these
key areas using the KPIs opposite.
22
GENUS PLC / ANNUAL REPORT 2023
STRATEGIC REPORT
0 1084
2023
2022
2021
2020
2019
951
900
797
764
1,084
GENOMIC BULL NET MERIT INDEX (NM$)
0 13
2023
2022
2021
2020
2019
5%
PIC VOLUME GROWTH (%)
13% including China
5% excl China
6% excl China
6% excl China
8% excl China
0
5% excl China
0
11% including China
0.00 3.74
2023
2022
2021
2020
2019
3.73
3.53
3.15
3.12
3.74
PORCINE GENETIC IMPROVEMENT INDEX (US$)
0 15
2023
2022
2021
2020
2019
3
15
8
6
3
DAIRY & BEEF VOLUME GROWTH (%)
KEY PERFORMANCE INDICATORS
Measures the genetic improvement we achieve in our porcine
nucleus herds, which ultimately filters down to our customers’ farms.
Tracks our global unit sales growth in dairy and beef.
DEFINITION: The index measures the marginal improvement in
customers’ US$ profitability, per commercial pig per year, on a rolling
three-year average.
DEFINITION: The change in dairy, beef and sorted units of semen and
embryos delivered or produced for customers in the year.
PERFORMANCE: Genus continues to deliver increasing rates of genetic
improvement through expanding and maintaining a large nucleus
population for high selection intensity, improving technical processes
for genomic evaluation, implementing precision data collection from
birth to consumer and continuing to add new traits and data streams.
PERFORMANCE: Bovine volumes improved 3% to 25.9 million units,
with strong growth in Asia and North America. Sexed volumes were
up 18%, reflecting strong growth in both Sexcel and third-party
IntelliGen production.
LINK TO
STRATEGIC PRIORITIES:
LINK TO
STRATEGIC PRIORITIES:
Measures the genetic quality of our bulls released to market,
based on economically relevant traits for farmers.
Tracks the growth in the number of commercial pigs with PIC
genetics globally.
DEFINITION: The average NM$ index score of generally available
Holstein commercial bulls launched in the year for genomically tested
sires. This definition has been revised this year to better reflect the
breadth of high quality bulls released to market each year.
DEFINITION: The change in volume of both direct and royalty animal
sales, using a standardised MPEs measure of commercial slaughter
animals that contain our genetics.
PERFORMANCE: Genus continues to improve the quality of its
commercially available bulls to maintain a leading genetic position in
the dairy industry. Genus also has maintained a strong pipeline of
young bulls tested but not yet in production. This is mainly driven by
the large proportion of high-quality bulls sourced from our proprietary
breeding programme, De Novo.
PERFORMANCE: Porcine volumes grew by 5%, 6% excluding China, to
197 million MPEs, with growth across North America, Europe and Asia.
Strategically important royalty volumes increased 7%. In China,
volumes declined 1%, with strong royalty volume growth of 41%, offset
by lower breeding stock volumes.
LINK TO
STRATEGIC PRIORITIES:
LINK TO
STRATEGIC PRIORITIES:
KEY PERFORMANCE INDICATORS
MEASURING
OUR SUCCESS
23
GENUS PLC / ANNUAL REPORT 2023
STRATEGIC REPORT
0.00 0.72
2023
2022
2021
2020
2019
0.71
0.69
0.55
0.50
0.72
BOVINE ADJUSTED OPERATING PROFIT PER DOSE (£)
0.00 0.65
2023
2022
2021
2020
2019
0.59
0.65
0.61
0.60
0.64
ADJUSTED OPERATING PROFIT PER MARKET PIG EQUIVALENT (£)
2022
2019
2017
79%
75%
82%
ENGAGEMENT SURVEY RESULTS
2023
2022
2021
2020
2019
6.98
8.31
8.33
9.37
6.04
PRIMARY INTENSITY RATIO
OTHER NON-FINANCIAL KEY PERFORMANCE INDICATORS
KEY TO STRATEGIC PRIORITIES
Deliver a differentiated
proprietary genetic offering
Focus on progressive
protein producers globally
Share in the
value delivered
Sustainability at the
heart of our business
Monitors porcine profitability per unit.
Measures the emissions intensity of the Group’s operations,
which are largely driven by animal weight.
DEFINITION: Net porcine adjusted operating profit globally,
expressed per MPE. Results include our share of Agroceres PIC,
our Brazilian joint venture.
DEFINITION: The primary intensity ratio is a measure of the Group’s
Scope 1 and 2 emissions per tonne of animal weight.
PERFORMANCE: Operating profit per MPE was £0.64, £0.05 higher
(stable in constant currency). This was primarily due to continued
royalty revenue growth across all regions, up 10% in constant currency,
partially offset by growth in porcine product development due to the
start of operations at our Atlas facility in Canada.
PERFORMANCE: The primary intensity ratio has reduced by 14.6% from
FY22. This is driven by improved efficiency of producing animals, improved
manure management to reduce methane and nitrous oxide emissions,
and increased herd size. We have continued to invest in biogas capture,
renewable energy generation and our elite genetics which have driven an
absolute reduction in our Scope 1 and 2 emissions in FY23.
Monitors bovine profitability per unit.
Measures levels of employee engagement over time.
DEFINITION: Bovine adjusted operating profit globally, expressed per
dose of semen or embryo delivered or produced for customers.
DEFINITION: Employees’ response to the statement “I would
recommend a friend to work at Genus”.
PERFORMANCE: Operating profit per dose was £0.72, up £0.01
(up £0.04 in constant currency). This was due to profit margin
expansion through continued sales growth of our premium Sexcel
product, robust pricing strategies to mitigate cost inflation impacts
and effective cost management, including across our bovine product
development investment.
PERFORMANCE: Our employee engagement survey, Your Voice, is
conducted every two years. No survey was carried out in FY23
although management remain focused on embedding the actions
which arose from the last survey in FY22.
The next survey will be conducted in FY24.
LINK TO
STRATEGIC PRIORITIES:
LINK TO
STRATEGIC PRIORITIES:
LINK TO
STRATEGIC PRIORITIES:
LINK TO
STRATEGIC PRIORITIES:
24
GENUS PLC / ANNUAL REPORT 2023
STRATEGIC REPORT
OPERATING REVIEW: PIC
INCREASING
OUR IMPACT
Year ended 30 June
Actual currency Constant
currency
change
%
2023
£m
2022
£m
Change
%
Revenue 349.5 306.6 14 7
Adjusted operating profit exc JV 135.0 112.3 20 11
Adjusted operating profit inc JV 145.3 121.2 20 11
Adjusted operating margin exc JV 38.6% 36.6% 2.0pts 1.6pts
CREATE DIFFERENTIATED
PROPRIETARY GENETIC
SOLUTIONS
• Continued to enhance
genetic gain for target
traits (including prolificacy,
throughput, carcass value
and efficiency)
• Expanded use of digital
phenotyping to four further
sites, helping us identify
patterns in movement
and behaviour to aid
improvement of robustness
and longevity
• Added three facilities
to our nucleus network,
enhancing resilience of
supply and expanding
capacity in preparation
for the marketing of
PRRSv-resistant pigs
SERVE PROGRESSIVE PROTEIN
PRODUCERS EFFECTIVELY
• Delivered growth across
all regions through strong
product performance,
a robust supply chain and
world-class support services
• Increased our share of
damline and sireline business
with producers across North
America, contributing to a
9% rise in operating profit
• Continued to invest in our
team, services and supply
chain in China, enabling us
to increase operating profit
by 32% despite challenging
market conditions
• Maintained momentum in
Latin America and Europe by
strengthening relationships
with strategic accounts,
enhancing operating profits
by 12% and 6% respectively
SHARE IN THE
VALUE DELIVERED
• Grew royalty volumes
in China by 41%, while
increasing the proportion
of global business covered
by royalty contracts to 85%
1
• Increased the volume of
boars distributed through
our CBV Max programme,
in which our most elite genes
command a higher price,
by 80%
• Commitment to improve the
knowledge of our products
and to show the economic
benefits of using PIC’s
genetics was shown through
61 product validation and
management trials in 10
countries, involving over
98,000 pigs
1 Genus Group (inc Brazil JV)
DR MATT CULBERTSON
Chief Operating Officer
Genus PIC
BUSINESS PRIORITIESBUSINESS PRIORITIES
STRATEGIC PROGRESS IN 2022-2023
MEDIUM TERM
Expand availability of
PRRSv-resistant pigs and
keep building our royalty
business in China
LONG TERM
Continue to strengthen
relationships with customers
by enhancing genetic gain,
product performance and
consistency of supply
SHORT TERM
Begin offering PRRSv-
resistant pigs to customers
in target markets, once
regulatory approval has
been received
25
GENUS PLC / ANNUAL REPORT 2023
STRATEGIC REPORT
Porcine markets around the world
continued to face challenging
conditions during the year. These
included economic uncertainty,
volatile pig prices and outbreaks of
disease, especially African Swine
Fever (ASF’) and PRRSv. China, the
world’s largest porcine market,
experienced greater volatility than
other markets. Pig prices in China
averaged 18.8 RMB/kg through
the year and were much weaker
than expected in the second half,
averaging 14.7 RMB/kg since January.
Price declines in many regions
caused significant pressure on
producer margins. This, together
with inflation increasing input costs,
drove some producers to reduce
or delay replenishing their herds.
Despite such challenging conditions
impacting porcine markets, PIC
increased adjusted operating profit
by 11% as the business continued to
expand and strengthen commercial
relationships with producers around
the world. Volumes rose by 5%, aided
by increased breeding stock sales
in Europe and further growth in
market share within North America.
Revenue growth across all regions
resulted in overall revenue increasing
by 7% and strategically important
royalty revenue rising by 10%.
All growth rates on this page
are presented in constant
currency, where relevant.
+0%
volumes
(PIC China -1%)
+3%
revenue
(PIC China
stable)
+20%
royalty
revenue
(PIC China
+26%)
+32%
adjusted
operating
profit
(PIC China
+62%)
+8%
volumes
+20%
revenue
+9%
royalty
revenue
+6%
adjusted
operating
profit
+9%
volumes
+4%
revenue
+8%
royalty
revenue
+9%
adjusted
operating
profit
0%
volumes
-6%
revenue
+12%
royalty
revenue
+12%
adjusted
operating
profit
PERFORMANCE: The business performed
strongly throughout the year, with
market share gains across our customer
base through sales of both sireline
and damline products (volumes up 4%
and 15% respectively). This was aided
particularly by the continuing popularity
of the PIC800
®
sire and Cambrough
sow. The increases in market share and
contributions from Olymel’s AlphaGene
programme drove strong royalty
revenue growth and a double-digit
increase in adjusted operating profit.
PERFORMANCE: Despite challenging
market conditions, breeding stock sales in
relation to royalty contracts rose and led
to revenue growing by 20%. Rising royalty
revenue, including double-digit growth
in Spain, PIC’s largest European market,
and Russia, from previous expansion
projects, helped the business deliver
further growth in adjusted operating profit.
PERFORMANCE: Lower breeding stock
sales meant sales revenue declined.
However, strong royalty revenue from
Mexico, Chile, and Colombia, as well
as 14% growth in income from our joint
venture with Agroceres, drove a double-
digit increase in adjusted operating profit,
with all the larger countries contributing.
PERFORMANCE: Rising sales in the
Philippines and Asia franchise businesses,
including Vietnam and South Korea, led
to increased revenue. In China, market
volatility caused a decline in breeding stock
sales, but overall revenue remained stable,
aided in particular by solid growth in royalty
revenue. The growth in royalty revenue,
as well as the impact of a one-time £4m
customer credit in the prior year, meant
there was a double-digit rise in adjusted
operating profit despite lower breeding
stock margins and the impact of two
disease outbreaks on joint venture farms
in the second half of the year. Continued
investment in China’s supply chain and
biosecurity means Genus is well positioned
to benefit as the market stabilises.
NORTH AMERICA
The US breeding herd declined slightly, with
slower production growth in the second
half of the year as domestic demand was
lower in the face of rising inflation and
competition from other proteins. Pig prices
fell sharply as a result, reducing producer
margins already under pressure from high
input costs. However, exports continued to
grow, aided by lower prices compared with
some other markets and the weakening
US dollar. This was driven particularly by
strong demand from China and Mexico.
EUROPE
The region experienced the greatest
reduction in its breeding herd for 10 years
and production contracted in major markets,
due to the ongoing economic, geopolitical
and regulatory challenges impacting the
agricultural sector. This led to tight supply,
driving pig prices to record highs and
significantly improving producer margins.
These factors, along with high feed costs,
disease challenges and declining pork
exports, are likely to constrain industry
recovery and sow herd growth in the future.
LATIN AMERICA
In Mexico, pork prices were lower than the
previous year but remained well above
the five-year average and rose again in
the final quarter. Production increased
slightly, as expected, but weaker domestic
demand meant many producers made
losses for much of the year, although they
are now approaching or above breakeven.
In Brazil, declining feed prices fuelled an
increase in production and helped to meet
rising export demand, particularly from
China. These exports, when combined with
seasonal domestic demand, helped pig
prices rise by over 10% in the final quarter,
but strengthening producer margins.
ASIA
Volatility in the China porcine market
continued through this fiscal year, with pig
prices declining from a high of 28 RMB/kg
in October 2022 to 14 RMB/kg by the end of
June 2023. In addition, China experienced
significant ASF outbreaks, which created
high levels of pork inventory, and there
was a slow recovery in domestic demand
following the relaxation of COVID-19
restrictions. All these factors resulted in
many producers operating at a loss and
remaining cautious. Elsewhere in the region,
ASF outbreaks affected both Vietnam and
the Philippines, although pork production
is gradually growing in both markets.
26
GENUS PLC / ANNUAL REPORT 2023
STRATEGIC REPORT
OPERATING REVIEW: ABS
SHARING IN
CUSTOMER
SUCCESS
BUSINESS PRIORITIES
STRATEGIC PROGRESS IN 2022-2023
Year ended 30 June
Actual currency Constant
currency
change
%
2023
£m
2022
£m
Change
%
Revenue 318.8 272.0 17 12
Adjusted operating profit 43.6 40.5 8 5
Adjusted operating margin 13.7% 14.9% (1.2)pts (1.1)pts
CREATE DIFFERENTIATED
PROPRIETARY GENETIC
SOLUTIONS
• Expanded GENEadvance,
the programme through
which producers agree a
100% partnership with ABS, to
more than 600 herds globally
• Increased sales of Sexcel
and Beef InFocus genetics,
so they now represent 75%
of units for GENEadvance
customers
• Expanded production
of NuEra Genetics, our
proprietary beef range,
and accelerated genetic
improvement in our
nucleus herds
SERVE PROGRESSIVE PROTEIN
PRODUCERS EFFECTIVELY
• Initiated an extensive review
of our approach to serving
customers in core markets,
identifying key success
factors and sharing learning
between markets
• Expanded use of digital
platforms, particularly in
Latin America, with nearly
30% of sales in Brazil now
online (over 20% of Brazil’s
digital sales this year were
to new customers)
• Increased market share in
key territories including Brazil,
US and China – despite
challenging market
conditions in each – and
achieved record results
in Australia
SHARE IN THE
VALUE DELIVERED
• Grew UK beef pull-through
volumes, with over 700 farms
now committed to ABS supply
chains, increased calf flow
to the Schmucker network
in the US and established
new supply chains in Spain,
France and the Netherlands
• Continued to ensure
GENEadvance contracts are
built around outcome-based
pricing, which rewards us
for the progress we help
customers make towards
their goals
• Began five new product
performance trials to
provide further evidence
of the superior value NuEra
Genetics delivers across
the beef supply chain
JERRY THOMPSON
Chief Operating Officer
Genus ABS Beef
DR NATE ZWALD
Chief Operating Officer
Genus ABS Dairy
MEDIUM TERM
Leverage our world-leading
genetics, technology
and people to secure
further partnerships with
progressive producers
LONG TERM
Drive innovative strategies to
develop more sustainable
food systems through further
genetic progress
SHORT TERM
Implement actions arising
from our review of approach
to serving customers in
core markets
27
GENUS PLC / ANNUAL REPORT 2023
STRATEGIC REPORT
Declining feed costs encouraged
producers in Europe to maintain
high levels of milk production, but
markets in Latin America were
affected by high costs, drought
and limited forage. Growth in China
was more modest than expected
due to slow recovery following the
relaxation of COVID-19 restrictions.
High inventory and weaker consumer
demand led to reduced milk prices
in Brazil and China, and prices
in the US declined significantly
in the second half of the year.
Global beef production remained
steady, with dips in the US and
Europe offset by rises in Brazil and
Australia. Beef prices remained high
in the US, but declined year-on-year
in Brazil due to high inventory and
lower consumer spending power.
Prices in Europe declined as more
animals were sent to slaughter in
response to the falling milk prices.
Despite the challenging market
conditions, ABS continued to expand
and strengthen its partnerships
with strategic accounts around
the world. Through these exclusive
relationships, ABS is developing and
delivering bespoke genetic plans
and growing sales of Sexcel and
NuEra beef genetics to accelerate
customer success. These relationships
drove a 3% increase in volumes,
which more than offset lower sales of
conventional beef and dairy genetics
in some markets. More widely, the
business continued to follow robust
pricing strategies to mitigate the
impact of cost inflation and exercised
effective cost management. Such
factors helped to deliver a 12% rise
in revenue, which translated into
5% growth in adjusted operating
profit, after taking account of the
impact of higher supply chain costs
following an IT incident in June 2022.
All growth rates on this page are
presented in constant currency,
where relevant.
+8%
volumes
+20%
revenue
+4%
adjusted
operating
profit
+1%
volumes
+8%
revenue
+7%
adjusted
operating
profit
+5%
volumes
+15%
revenue
+17%
adjusted
operating
profit
–1%
volumes
+12%
revenue
+0%
adjusted
operating
profit
NORTH AMERICA
Dairy demand remained stable, but milk
prices fell significantly in the second
half of the year. This reduced producer
margins, leading to higher herd culling
and feed ration changes, which is likely
to slow growth in milk production. The
US beef herd contracted due to drought
conditions and production has declined
during 2023 to date, with tighter supply
driving wholesale prices to approach
record highs. These have yet to impact
retail demand, but the high prices
and lower domestic production have
significantly reduced export volumes.
PERFORMANCE: Double-digit growth
in revenue was driven by robust price
increases, rising sales of sexed genetics
and ancillary products and services.
This more than offset lower volumes
of conventional and beef genetics as
customers used sexed genetics to invest
in more replacement heifers, rather
than beef by-product income. These
activities, along with continued expansion
of our IntelliGen sexed processing for
third-party customers, achieved a 17%
increase in adjusted operating profit.
PERFORMANCE: A transition from
conventional to sexed genetics across
the region, along with robust prices
increases, led to a 12% rise in revenue on
broadly stable volumes comparable to
the prior year. Growth and effective cost
management in Argentina supported
an increase in adjusted operating
profit there, although this was offset
by declines in other countries, primarily
Brazil, where there were challenging
market conditions that particularly
impacted the embryo business, along
with high business cost inflation.
PERFORMANCE: Increased sales in most
retail markets, particularly France and
Russia, were partially offset by lower
volumes in some distributor-led markets,
due to economic conditions and limited
availability of certain types of bulls for
those markets. However, both revenue
and adjusted operating profit rose
following targeted price increases and
the expansion of GENEadvance long-
term contracts with strategic accounts.
IntelliGen third-party business in the region
continued to grow, with new customers
in Italy, the Netherlands and Israel.
PERFORMANCE: Overall volumes rose by
8%, with double-digit growth in sales of
sexed genetics in Australia, China and
India tempered by fewer deliveries through
our distributor network, particularly in
Japan due to a market slowdown in
the second half of the year. Growth in
volumes in India was driven particularly
by a contract with the Government
of India and support for third-party
customers through IntelliGen technology.
This increase in volumes, together with
significant strategic account growth in
China, drove a 20% rise in revenue and 4%
increase in adjusted operating profit.
EUROPE
Lower input costs encouraged producers
to maintain milk production levels.
Following highs in the previous year,
milk prices declined amid concerns over
weakening consumer demand in the face
of inflationary pressure. Beef production
across the region dipped and carcass
prices have begun to decline as more cows
are sent for slaughter in response to the
falling milk price, although it remains well
above the five-year average. Beef exports
fell by more than 20% during the year, as
high carcass prices led customers in some
markets to source cheaper alternatives.
ASIA
Milk production in China continued to
grow, albeit more slowly in the second half
of the year, but high domestic inventory
and weak consumer demand meant
that milk prices declined. This led to
growing numbers of animals being sent
to slaughter, boosting beef production.
Slaughter volumes also increased
in Australia, but lower domestic milk
production contributed to a double-
digit reduction in exports. Growth in
India’s milk production slowed, despite
increasing consumer demand, due to the
impact of disease outbreaks and rising
costs, particularly for feed. Demand
for beef in Japan continued to fall.
LATIN AMERICA
High costs, drought and limited forage
availability affected milk production
in Argentina and Uruguay, reducing
producer margins. Milk production in Brazil
remained subdued and previously rising
prices are now declining due to lower
consumer demand and the increase in
supply following imports. Strong beef
exports from Brazil were driven by growing
demand from China in particular, but
high inventory and lower consumer
purchasing power impacted the domestic
market. Demand for beef in Mexico
remains steady and exports have recently
improved after a slow start to 2023.
28
GENUS PLC / ANNUAL REPORT 2023
STRATEGIC REPORT
OPERATING REVIEW: R&D
ADVANCING
INNOVATION
BUSINESS PRIORITIES
STRATEGIC PROGRESS IN 2022-2023
MEDIUM TERM
Achieve regulatory approval
for PRRSv-resistant pigs
in China and other target
markets and accelerate work
on reproductive technology
SHORT TERM
Gain regulatory approvals
for PRRSv-resistant pigs
in the US, Colombia and
Brazil. Secure third-party
customers for our dashboard
integrating data from
different instruments
LONG TERM
Continue using pioneering
technology to enhance
genetic gain, combat disease
and support a sustainable
food system
GENE EDITING
• Completed data package submissions to
seek approval for PRRSv-resistant pigs from
the Food and Drug Administration in the US,
while also completing regulatory submissions
in Colombia and Brazil
• Gained approval to import PRRSv-resistant pigs
to China, for in-country regulatory assessment
• Continued to evaluate potential target edits
to combat Swine Influenza
• Established several collaborations with
academic partners to accelerate work on
identifying target edits to combat African
Swine Fever
GENDER SKEW
• Continued to enhance the efficiency of
our proprietary bovine sexing technology,
increasing the number of straws produced
from each bull
• Established a further three IntelliGen
Technologies laboratories for third-party
customers and signed one technology transfer
contract, licensing customers to use our
process and instruments
REPRODUCTIVE BIOLOGY
• Introduced our new medium for embryo culture,
which improves the quantity and quality of
embryos produced, in commercial laboratories
• Expanded our work exploring how embryonic
stem cells could enhance genetic gain,
following encouraging results from initial
research, and began a new collaboration
with the University of Florida
DATA STRATEGY
• Completed implementation of our data
analytics strategy, enabling us to link and
query different data sets simultaneously
and elicit faster and deeper insights to inform
genetic improvement
• Integrated data from different locations around
the world and developed dashboards to
monitor production performance, instrument
efficiency and quality control parameters:
aiding our operations and establishing a
new product offer for third-party customers
DR ELENA RICE
Chief Scientific Officer
and Head of R&D
29
GENUS PLC / ANNUAL REPORT 2023
STRATEGIC REPORT
During the year, net research and
development expenditure rose by 19%
in constant currency as planned. This
increase enabled further investment
in a wide range of areas, including the
research and development pipeline,
new technologies, gene editing projects
and product development initiatives.
PORCINE PRODUCT DEVELOPMENT
Porcine product development made
further progress on genomic selection and
enhanced genetic gain for target traits,
including prolificacy, throughput, carcass
value and efficiency. We also expanded
our use of digital phenotyping to four
further sites, helping us identify patterns
in movement and behaviour to aid
improvement of robustness and longevity.
These advances, along with continued
expansion of our global supply chain
(including the addition of three facilities
to our nucleus network) enabled us to
enhance resilience of supply for customers
around the world. Product development
costs increased by 24% during the year,
due principally to the start of operations
at our Atlas facility in Canada. Higher feed
prices during the year also contributed
to the increase in expenditure.
Year ended 30 June
Actual currency Constant
currency
change
%
2023
£m
2022
£m
Change
%
Porcine product development 29.7 22.5 32 24
Bovine product development 24.9 22.7 10 1
Gene editing 14.3 7.9 81 66
Other research and development 17.4 14.0 24 13
Net expenditure in R&D 86.3 67.1 29 19
BOVINE PRODUCT DEVELOPMENT
We continued to strengthen our
proprietary range of NuEra beef
genetics and to invest in further product
trials, from which preliminary data
shows positive performance against
competitor genetics in areas such as
feed efficiency and growth rates.
We made further investments in our
proprietary bovine sexing technology,
enabling us to continue strengthening
our capability to produce sexed genetics
for ABS and for third-party customers
through IntelliGen technology.
GENE EDITING
We made significant progress on our
PRRSv-resistant pig programme, as we
seek regulatory approval for our gene-
edited animals in target markets around
the world. This included completing data
submissions to the FDA ahead of schedule
and we expect approval in the first half
of 2024. We are also making regulatory
progress in Brazil and Colombia and
we gained consent to import PRRSv-
resistant pigs to China, for in-country
regulatory assessment. In parallel, we
continued to expand capacity across our
nucleus network in preparation for the
potential marketing of our gene-edited
animals. We also continued to explore
how responsible use of gene editing
could combat other porcine diseases.
This included evaluating potential
target edits and establishing further
collaborations with academic partners.
OTHER RESEARCH AND DEVELOPMENT
Other research and development
expenditure increased by 13%, compared
to the previous year. This enabled us to
make further progress with our pioneering
work on reproductive biology, including
collaborating with the University of
Florida to explore how embryonic
stem cells could enhance genetic
gain, and introducing a new medium
for embryo culture, which improves
the quantity and quality of embryos
produced in commercial laboratories.
The increased investment also helped
us develop our work on biosystems
engineering and data analytics, with
progress in the latter area enabling
us to link and query different data
sets simultaneously and elicit faster
and deeper insights to inform genetic
improvement. We also continued to
collaborate with external partners
on a series of discovery projects.
+19%
net research and
development
expenditure
30
GENUS PLC / ANNUAL REPORT 2023
STRATEGIC REPORT
FINANCIAL REVIEW
SOLID
PERFORMANCE AND
GOOD STRATEGIC
PROGRESS
In the year, the
Group achieved
revenue growth
of 16% in actual
currency (10% in
constant currency).
ALISON HENRIKSEN
Chief Financial Officer
31
GENUS PLC / ANNUAL REPORT 2023
STRATEGIC REPORT
In the year ended 30 June 2023, the Group achieved revenue
growth of 16% in actual currency (10% in constant currency).
Adjusted operating profit including joint ventures was up 10%
(3% in constant currency), reflecting good profit growth across our
businesses, and was 17% higher (9% in constant currency) before
gene editing costs. R&D investment increased by 29% (19% in
constant currency), as planned due to an increase in gene editing
costs as we move closer to commercialisation of the PRRSv-
resistant pig and higher porcine product development costs,
primarily due to the start of operations at our Atlas facility
in Canada.
On a statutory basis, profit before tax was £39.4m (2022: £48.4m).
The difference between the movement in statutory and adjusted
profit before tax was mainly due to a reduction in the non-cash
fair value of IAS 41 porcine biological assets, and a higher
share-based payment charge. Basic earnings per share
on a statutory basis were 50.8 pence (2022: 62.5 pence).
Adjusted profit before tax remained at £71.5m (down 8% in
constant currency), with the improved trading performance being
offset by higher interest expense, which increased from £6.2m to
£14.3m (up 124% in constant currency).
The effect of exchange rate movements on the translation of
overseas profits was to increase the Group’s adjusted profit before
tax for the year by £5.4m, compared with 2022, primarily due to
the strength of the Brazilian Real and Mexican Peso against
Sterling during the year. All growth rates quoted are in constant
currency unless otherwise stated. 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.
REVENUE
Revenue increased by 16% (10% in constant currency) to £689.7m
(2022: £593.4m). PIC’s revenue rose by 14% (7% in constant
currency) with growth across all regions and a double-digit
increase in strategically important royalty revenue. In ABS,
revenue was up 17% (12% in constant currency), reflecting the
continuing success of Genus’s sexed genetics and NuEra beef
genetics as well as the implementation of robust prices increases
to offset the effects of cost inflation.
Adjusted results
1
Statutory results
Actual currency Constant
currency
change
%
2
Actual currency
Year ended 30 June
2023
£m
2022
£m
Change
%
2023
£m
2022
£m
Change
%
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 –
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 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
ADJUSTED OPERATING PROFIT INCLUDING JVS
Actual currency Constant
currency
change
%
Year ended 30 June
Adjusted Profit Before Tax
1
2023
£m
2022
£m
Change
%
Genus PIC 145.3 121.2 20 11
Genus ABS 43.6 40.5 8 5
R&D (86.3) (67.1) (29) (19)
Central costs (16.8) (16.9) 1 1
Adjusted operating profit
inc JVs 85.8 77.7 10 3
Net finance costs (14.3) (6.2) (131) (124)
Adjusted profit before tax 71.5 71.5 0 (8)
1 Includes share of adjusted pre-tax profits of joint ventures and removes share of
adjusted profits of non-controlling interests
Adjusted operating profit including joint ventures was £85.8m
(2022: £77.7m), 3% higher in constant currency. The Group’s share of
adjusted joint venture operating profit, primarily from our Brazilian
joint venture with Agroceres, was higher at £10.8m (2022: £9.2m).
Gene editing investment, which is primarily focused on
the PRRSv-resistant pig programme, increased to £14.3m
(2022: £7.9m) as planned. This enabled us to continue
expanding our population of gene-edited animals and increase
preparation for commercialisation. Adjusted operating profit
including joint ventures and excluding gene editing investment
was £100.1m (2022: £85.6m), 9% higher in constant currency. Over
the last five years our compound annual growth rate in this profit
measure remains at 10% in constant currency, in line with our
medium-term objective.
PIC’s performance was a record level, with adjusted operating
profit including joint ventures up 11% in constant currency. Volumes
were up by 5% and strategically important royalty revenue was up
10%, with increases across all regions.
ABS’s volumes rose by 3% and adjusted operating profit also rose
by 5%. Demand for Sexcel, our proprietary bovine sexed product,
continued to increase, as well as our IntelliGen third-party sexed
processing, supporting an 18% rise in sexed volumes and further
growth in our proprietary NuEra beef genetics. There was adjusted
operating profit growth across most regions, with North America
increasing adjusted operating profit by 17% in constant currency.
Latin America’s profits were stable, despite the region continuing
to suffer from challenging market conditions. Europe’s adjusted
operating profit grew by 7%, due to growth across most countries,
and in Asia adjusted operating profit was 4% higher, due to strong
growth in our India IntelliGen business.
Central costs were stable, at £16.8m (2022: £16.9m) in constant
currency, primarily due to prudent cost management.
32
GENUS PLC / ANNUAL REPORT 2023
STRATEGIC REPORT
FINANCIAL REVIEW CONTINUED
STATUTORY PROFIT BEFORE TAX
The table below reconciles adjusted profit before tax to statutory
profit before tax:
2023
£m
2022
£m
Adjusted Profit Before Tax 71.5 71.5
Operating profit attributable to
non-controlling interest (0.4) 0.3
Net IAS 41 valuation movement on biological
assets in JVs and associates 3.6 (1.4)
Tax on JVs and associates (3.9) (2.6)
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)
Other gains and losses 2.7 –
Exceptional items (3.5) (2.0)
Statutory Profit Before Tax 39.4 48.4
Statutory profit before tax was £39.4m (2022: £48.4m), with
improved trading performance being offset by higher interest
expense, a higher non-cash fair value net charge for IAS 41
biological asset movement, higher share-based payment
expenses and higher net exceptional items. Within this, there was
a £24.9m reduction (2022: £24.5m uplift) in porcine biological
assets, primarily due to the temporary destocking of the Aurora
farm in Canada to complete a facility and health upgrade, and a
£8.0m uplift (2022: £29.9m reduction) in bovine biological assets,
due to certain fair value model estimate changes. Share-based
payment expense was £6.0m (2022: £3.7m). These reconciling
items are primarily non-cash, can be volatile and do not correlate
to the underlying trading performance in the year.
EXCEPTIONAL ITEMS
There was a £3.5m net exceptional expense in the year
(2022: £2.0m net expense), which included legal fees of £5.4m
(2022: £1.4m) primarily related to Genus ABS’s ongoing litigation
with STgenetics and a £0.9m credit for a part that was settled
during the year. It also included a £1.7m credit relating to an
in-year sale of our Canadian ABS facilities, following the prior
year ABS restructuring.
The prior year benefited from a £3.3m credit relating to a
non-refundable cash receipt related to a legacy legal claim in
Brazil, and £2.8m of restructuring expense, principally related to
the closure of ABS supply chain barns in Canada and £0.5m of
one-time costs to resolve an IT security incident.
NET FINANCE COSTS
Net finance costs increased to £14.3m (2022: £6.2m), primarily due
to interest rate rises during the year. Average interest rates more
than doubled to 4.94% (2022: 2.27%), raising the cost of like-for-
like borrowings by £4.6m. Average borrowings increased by 30%
to £226.9m (2022: £173.9m), primarily due to the cash investments
in the prior period on supply chain capacity and the acquisition
of Olymel’s AlphaGene programme, resulting in a further £2.6m
increase in interest costs in this year. The interest rate increases
were partially mitigated by the Company’s fixed interest cover,
which reduced the impact of rate increases by around £1.0m.
Amortisation costs in the year were £1.1m (2022: £0.9m) and
within other interest there was IFRS 16 finance lease interest of
£1.2m (2022: £1.1m) and both a discount interest unwind on the
Group’s pension liabilities and put options totalling £0.5m
(2022: £0.4m). Foreign interest in the year was an expense of
£0.2m (2022: £0.3m income).
TAXATION
The statutory profit tax charge for the period, including share
of income tax of equity accounted investees, of £11.5m (June 22:
£14.3m) represents an effective tax rate (‘ETR’) of 26.6% (June 22:
28.0%). The reduction in the statutory ETR of 1.4 points results
from the recognition of additional deferred tax assets, net of
increased UK and foreign tax rates, as explained further below.
The adjusted profit tax charge for the year of £15.9m (June
22: £17.4m) represents an ETR on adjusted profits of 22.2%
(June 22: 24.3%), a reduction of 2.1 points. Of this, a decrease
of 6.2 points is due to the recognition of deferred tax assets
for brought forward losses in Genus’s Australia and France
subsidiaries. This is offset by a 1.5 point increase, due to the
rise in the UK and Consolidation Tax rates from 19% to 20.5%,
and by a further 2.6 point increase in overseas taxes during
the year. These higher overseas taxes are due to an increased
share of Group profits in higher tax jurisdictions and reduced
tax credits relating to agricultural activity in China. The Group’s
anticipated adjusted ETR for 2024 is 24% to 27%, which is higher
than the current year due to the full year impact of the UK tax
rate increase to 25% that took effect from April 2023 and the
above noted change in profit mix to higher tax rate jurisdictions.
EARNINGS PER SHARE
Adjusted basic earnings per share increased by 3% (5% reduction
in constant currency) to 84.8 pence (2022: 82.7 pence), reflecting
the improved trading performance and lower effective tax rate
and offset by higher interest expenses. Basic earnings per share
on a statutory basis were 50.8 pence (2022: 62.5 pence), taking
into account the factors above and the impact of a higher
non-cash fair value net charge for IAS 41 biological asset
movement, higher share-based payment expenses and higher
net exceptional items.
BIOLOGICAL ASSETS
A feature of the Group’s net assets is its substantial investment
in biological assets, which under IAS 41 are stated at fair value.
At 30 June 2023, the carrying value of biological assets was
£364.7m (2022: £387.7m), as set out in the table below:
2023
£m
2022
£m
Non-current assets 318.2 333.7
Current assets 23.8 33.1
Inventory 22.7 20.9
364.7 387.7
Represented by:
Porcine 242.7 278.8
Dairy and beef 122.0 108.9
364.7 387.7
The movement in the overall balance sheet carrying value of
biological assets of £23.0m includes the effect of an exchange
rate translation decrease of £17.2m. Excluding the translation
effect there was:
• a £23.7m reduction in the carrying value of porcine biological
assets, due principally to the depopulation of animals held
in Aurora, our genetic nucleus farm in Canada, in preparation
for an upgrade to the farm facilities and health status,
and higher global interest rates which impact the valuation
discount rates; and
• a £17.9m increase in the bovine biological assets carrying value,
primarily reflecting increases in average selling prices.
The historical cost of these assets, less depreciation, was £83.4m
at 30 June 2023 (2022: £77.2m), which is the basis used for the
adjusted results. The historical cost depreciation of these assets
included in adjusted results was £13.4m (2022: £10.7m).
33
GENUS PLC / ANNUAL REPORT 2023
STRATEGIC REPORT
RETIREMENT BENEFIT OBLIGATIONS
The Group’s retirement benefit obligations at 30 June 2023 were
£6.9m (2022: £8.3m) before tax and £5.6m (2022: £7.0m) net of
related deferred tax. The largest element of this liability now
relates to some legacy unfunded pension commitments dating
prior to Genus’s acquisition of PIC.
Despite difficult stock market conditions, robust investment
strategies and higher bond yields during the year mean our two
main defined benefit obligation schemes remained in sound
financial positions. Prior to any IFRIC 14 amendments, both the
Dalgety Pension Fund and our share of the Milk Pension Fund
reported IAS 19 surpluses.
CASH FLOW
Cash flow (before debt repayments)
2023
£m
2022
£m
Cash generated by operations 78.7 56.6
Interest and paid taxes (28.3) (22.3)
Capital expenditure (35.2) (50.9)
Net cash received from JVs 0.7 3.2
Other 2.3 (0.1)
Free cash flow 18.2 (13.5)
Acquisitions and investments 1.2 (19.5)
Dividends (21.0) (20.9)
Net cash outflow (before debt repayments) (1.6) (53.9)
Cash generated by operations of £78.7m (2022: £56.6m)
represented cash conversion of 105% (2022: 82%) of adjusted
operating profit excluding joint ventures. The cash conversion
rate of adjusted operating profit to cash exceeded our objective
to achieve conversion of at least 90% annually. We expect
to continue meeting this objective in the coming year. The
increase in cash generation primarily reflected a record adjusted
EBITDA performance of £110.6m (2022: £99.9m), along with lower
working capital and biological asset outflows. Working capital
improvement was aided particularly by focused accounts
receivable collections, which improved days sales outstanding
by 8 days to 48 days.
Capital expenditure cash flow of £35.2m (2022: £50.9m) was
significantly lower as planned, after our peak year of investment
in 2022. Spend included £19.8m of continued investment in our
global facilities, as well as work to upgrade our Whenby UK
facility, further investment in global IntelliGen capabilities and
investment in software development, including the continued
rollout of our GenusOne platform and improvements to our
digital platform.
Net cash inflow from joint ventures was £0.7m (2022: £3.2m).
After interest and tax paid, total free cash flow was £18.2m inflow
(2022: £13.5m outflow).
The cash inflow from investments was £1.2m (2022: £19.5m outflow),
with proceeds from the sale of Caribou shares of £3.4m being
offset by investments in our China joint ventures of £1.0m, to
increase production capacity, and £0.8m of deferred
consideration payments from previous acquisitions. The prior-year
investments included £14.5m to acquire the intellectual property
in Olymel’s elite porcine genetics.
NET DEBT AND CREDIT FACILITIES
Net debt increased to £195.8m at 30 June 2023 (2022: £185.0m).
Cash inflows and outflows in the year largely balanced, with the
increase in net debt primarily driven by new lease agreements.
The ratio of net debt to EBITDA as calculated under our financing
facilities at the year-end has reduced to 1.6 times (2022: 1.7 times)
which remains in line with our medium-term objective of having
a ratio of net debt to EBITDA of between 1.0–2.0 times. At the end
of June 2023, interest cover was at 10 times (2022: 27 times).
During the year, the Group’s principal credit facilities comprised
a £190m multi-currency revolving credit facility (‘RCF’), a USD 150m
RCF and a USD 20m bond and guarantee facility. An additional
£40m of accordion facility remains available for the duration
of the facility agreement. The maturity date of the facility was
extended by a further year in August 2022, to 24 August 2025.
EBITDA, as calculated under our financing facilities, includes cash
received from joint ventures. Net debt as calculated under our
financing facilities excludes IFRS 16 lease liabilities up to a cap
of £30m but includes bank guarantees.
On 30 June 2023, the Group had headroom of £118.7m (2022: £77.8m)
under its available credit facilities.
CAPITAL ALLOCATION PRIORITIES AND RETURN
ON ADJUSTED CAPITAL
Our capital allocation prioritises the investment of cash in areas
that will deliver future earnings growth and strong cash returns on
a sustainable basis. This includes investment for organic growth
as a first priority through investment in our existing businesses,
including capital expenditure in infrastructure, innovation in new
products and the development of our people. We supplement
organic growth with value enhancing acquisitions in current and
adjacent market niches, aligned with our purpose. This brings new
technology, intellectual property and talent into the Group and
expands our market reach, keeping Genus well-positioned in
growing markets over the long term.
The return on adjusted invested capital, as defined in the
alternative performance measures glossary, was higher at 14.7%
(2022: 13.9%), reflecting growth of 14% in adjusted operating profit
including joint ventures after tax to £66.8m (2022: £58.8m), due to
the 10% increase in operating profit including joint ventures, and a
2.1 point improvement in the adjusted effective tax rate. Adjusted
invested capital increased at a slower rate, by 8% to £455.0m
(2022: £422.0m), as we continued to invest in facilities, IntelliGen
capacity, digital capability and our biological assets.
DIVIDEND
Recognising the importance of balancing investment for
the future with ensuring an attractive return for shareholders,
the Board is recommending a final dividend of 21.7 pence per
ordinary share, consistent with the prior year final dividend.
When combined with the interim dividend, this will result in
a total dividend for the year of 32.0 pence per ordinary share
(2022: 32.0 pence per share). Dividend cover from adjusted
earnings of 2.7 times (2022: 2.6 times), is within the medium-term
target of an adjusted earnings cover range of 2.5 to 3.0 times.
It is proposed that the final dividend will be paid on 8 December
2023 to the shareholders on the register at the close of business
on 10 November 2023.
34
GENUS PLC / ANNUAL REPORT 2023
STRATEGIC REPORT
PASSIONATE AND
PURPOSE-DRIVEN
PEOPLE
PEOPLE AND CULTURE
MAINTAINING OUR CULTURE
We nurture an open, supportive and
enjoyable working environment, built on
mutual respect and equal opportunity.
Our Company values remain at the heart
of this culture. Our global employee
handbook sets out behaviours expected
of all Genus employees to ensure a
workplace free from discrimination of
any kind. We embed this philosophy in
practice through recruitment, onboarding,
training and performance management.
These steps are helping us build an
increasingly diverse team and inclusive
Company. Examples include our ongoing
focus on recruiting, developing and
promoting more women across the
Company. We are continuing to enhance
inclusion of people with different needs,
with steps including the establishment
of a Company-wide minimum level of
leave for parents or carers when a new
child joins their family (through natural
birth, adoption or a long-term fostering
arrangement). Our employee resource
group AWAKE (Advancing Women’s
Advocacy, Knowledge and Empowerment)
is also helping us strengthen efforts
to enhance gender inclusion.
ATTRACTING AND DEVELOPING TALENT
We continue to offer a wide range of
internships, trainee schemes and graduate
programmes in different parts of the
world. Since 2018, for example, we have
attracted nearly 175 people to join our
programmes in the UK and North America.
This year, we received recruitment
industry recognition for our early career
hiring programme in North America.
Across 24 countries, we
employ a global team of
3,500 colleagues, many
of them world-leading
experts in their field.
Our global jobs framework maps out
career paths for colleagues and clarifies
the skills and competencies needed to
support their development and career
progression. This year, we also introduced
a global jobs portal to help colleagues
search and apply for vacancies around
the world. This also enables employees
to upload CVs and career goals, to
aid internal talent sourcing for roles.
We offer a wide range of training and
development opportunities to help our
people progress through career paths,
including the bespoke leadership and
management programmes explored
opposite. We also empower colleagues
to advance their own development
through a suite of on-demand courses
and content, with much of the material
available in multiple languages.
All employees also take a series of
mandatory annual training modules,
including on our Code of Conduct and
role-specific health and safety topics.
REVIEWING PAY AND BENEFITS
We regularly review our range of
employee benefits to ensure it caters
for colleagues with different needs,
making improvements where we
identify opportunities. This year,
we also introduced a new benefits
portal in several countries to increase
understanding of, and access to, benefits
information and well-being resources.
This year, we also launched TakeStock,
a new share plan enabling employees
to become shareholders in the business.
Employees receive one free share for
every three purchased. We introduced
the plan in the US and UK, with over 25% of
eligible employees taking part, spanning
all segments of our workforce. To build on
this success, we are now exploring how we
can roll out this plan in other countries.
More widely, we continue to benchmark
local pay in the markets where we operate,
to ensure we are offering a competitive
package to attract and retain talent.
We empower, equip
and support our
talented global
team to fulfil
their potential.
ANGELLE ROSATA
Group HR Director
OUR VALUES
CUSTOMER CENTRIC
RESULTS DRIVEN
PIONEERING
PEOPLE FOCUSED
RESPONSIBLE
35
GENUS PLC / ANNUAL REPORT 2023
STRATEGIC REPORT
ENHANCING ENGAGEMENT
We continue to increase employee
involvement in the Company through
a multimedia communication and
engagement programme (from
newsletters and videos to town halls
and CEO round table discussions). Our
two Non-Executive Director ‘employee
representatives’, Lesley Knox and Lykele
van der Broek, also held a breakfast
discussion with employees at our Uberaba
site in Brazil, gathering feedback and
insights that they shared with the Board.
We introduced our new CEO, Jorgen
Kokke, to colleagues across the Company
through a range of communications.
Jorgen also held informal discussions and
Q&A discussions with colleagues on site
visits during his onboarding p