TIDMGNS
RNS Number : 6357C
Genus PLC
24 February 2022
Immediate 24 February 2022
Genus plc
Unaudited half year results for the six months ended 31 December
2021
GOOD STRATEGIC PROGRESS and INVESTING FOR GROWTH
Adjusted results [1] Statutory results
--------------------------------
Actual currency Constant Actual currency
currency
change
2
---------
Six months ended 31 December 2021 2020 Change 2021 2020(3) Change
3
------ ----- ------ --------- ----- -------
GBPm GBPm % % GBPm GBPm %
Revenue 281.2 285.7 (2) 1 281.2 285.7 (2)
Operating profit exc JVs 35.0 43.8 (20) (18) 23.9 34.2 (30)
Operating profit inc JVs
exc gene editing 43.3 53.4 (19) (17)
Profit before tax 37.0 47.1 (21) (19) 24.4 37.4 (35)
Free cash flow (16.1) 26.6 n/m(4) n/m 4
Basic earnings per share
(pence) 42.4 55.3 (23) (21) 30.4 46.4 (34)
Dividend per share (pence) 10.3 10.3 -
----------------------------- ------ ----- ------ --------- ----- ------- ------
Group performance impacted by PIC China; strong progress in the
rest of the business
-- Total Group revenue up 1% in constant currency (2% lower in
actual currency), adjusted profit before tax ('PBT')(1) down 19% in
constant currency (21% in actual currency)
-- Excluding PIC China; Group adjusted PBT up 28% in constant
currency (25% in actual currency), and revenue up 7% in constant
currency (4% in actual currency)
-- R&D investment increased 10%(2) as planned
-- Statutory PBT decreased by 35% to GBP24.4m, due to the lower
adjusted profit and net IAS 41 biological asset valuation
decrease
Challenging market conditions for PIC in China as expected,
strong PIC performance elsewhere
-- China pig prices currently under 13RMB/kg, down from 35RMB/kg in December 2020
-- PIC volumes 2% lower, revenue 4%(2) lower. Royalty revenue
1%(2) lower excluding a customer refund in China (5) .
Consequently, PIC's Adjusted operating profit declined 15% (2)
-- Strong market share gains in North America and Latin America;
PIC's volumes up 7% excluding China
-- Excluding China, PIC's revenue up 8% (2) , royalty revenue up
4% (2) , adjusted operating profit up 13% (2)
Good revenue growth of 4%(2) and volume growth of 4% in ABS,
building on a very strong prior year
-- Continued Sexcel(R) success with sexed volumes up 24% and NuEra(R) beef with volumes up 13%
-- Continued shift in ABS's product mix with 24% of global volumes sexed genetics and 32% beef
-- Strong growth in Brazil, India and China
-- ABS's adjusted operating profit up 21%(2)
Lower cash generation and earnings than prior year, dividends
maintained
-- Free cash outflow(1) of GBP16.1m, reflecting expected higher
working capital outflows and planned capital investment
-- Net debt(1) increased to GBP143.3m, net debt to EBITDA(1)
ratio of 1.4x, within 1.0x-2.0x targeted range
-- Adjusted earnings per share(1) down 21%(2)
-- Recommended interim dividend maintained at 10.3p with 2.8x adjusted earnings cover 6
Good strategic progress
-- With our leading porcine and bovine genetics, Genus continued to win customers globally
-- Accelerating genetic improvement and supply availability in
our porcine elite farms. Investments include a new elite genetics
farm, Ankang, in China and Atlas, in Canada, where the first
animals have arrived
-- New third party IntelliGen technology customer wins,
including a significant government tender win in India
-- Investments in our new industry leading bull facilities delivering strong efficiency gains
-- PRRSv resistant pigs programme is progressing to plan with
hundreds of third generation gene-edited animals today
-- On 22 February 2022 PIC entered a strategic collaboration
with Olymel, the largest porcine producer in Canada, to acquire
their elite porcine genetics for CAD$25m (GBP14.5m), and for the
long-term provision of products and services through their
AlphaGene genetics programme
Commenting on the interim results, Stephen Wilson, Chief
Executive, said:
"As expected, the Group performed strongly other than in the
porcine business in China and continued to make good strategic
progress while investing for the future. Our strategic
collaboration with Olymel announced today will further strengthen
PIC's North America business.
"Building on record volume growth in the first half of last
year, ABS continued to grow volumes and expand margins, driven by
the success of Sexcel , strong growth across all regions of our
proprietary NuEra beef genetics and continued operating
leverage.
"PIC's adjusted operating profits (excluding PIC China) achieved
strong growth, underpinned by market share gains in key customers
in North America and Latin America. However, as previously
announced in November 2021, the current porcine market in China has
had an adverse impact on our trading in China during the first half
of the 2022 fiscal year. Since November, the live pig price in
China has remained below the cost of production and declined
further to below 13RMB/kg since the beginning of January. The
significant impact of PIC China's trading has consequently
decreased PIC's and the Group's adjusted operating profit.
"China live pig prices need to improve and be sustained for
producer confidence to return and lead to improved demand for
porcine genetics. Industry expectations are that prices will
improve later in the year, however there is uncertainty on the
timing and extent of a recovery. Consequently, we expect the China
porcine market will continue to impact on the Group's performance
in the second half of the 2022 fiscal year. Importantly, following
the investments in our porcine elite supply chain, Genus is well
placed to support Chinese producers needs when market conditions
improve, and we remain confident in the future growth prospects of
PIC China.
"The Board remains confident in the Group's strategy, the many
opportunities for Genus and medium-term growth expectations remain
unchanged."
Results presentation today
A pre-recorded analysts and bankers briefing to discuss the
interim results for the six months ended 31 December 2021 will be
held via a video webcast facility and will be accessible via the
following link from 7:01am today:
https://webcasting.buchanan.uk.com/broadcast/61f900ee12956e448c9972f7
This will be followed by a live Q&A session to be held by
invitation via Zoom Webinar at 10:30am.
Enquiries:
Genus plc (Stephen Wilson, Chief Executive Officer / Alison Tel: 01256 345970
Henriksen, Chief Financial Officer)
Buchanan ( Charles Ryland / Chris Lane / Sophie Wills) Tel: 0207 466 5000
About Genus
Genus advances animal breeding and genetic improvement by
applying biotechnology and sells added value products for livestock
farming and food producers. Its technology is applicable across
livestock species and is currently commercialised by Genus in the
dairy, beef and pork food production sectors.
Genus's worldwide sales are made in over 80 countries under the
trademarks 'ABS' (dairy and beef cattle) and 'PIC' (pigs) and
comprise semen, embryos and breeding animals with superior genetics
to those animals currently in farms. Genus's customers' animals
produce offspring with greater production efficiency and quality,
and our customers use them to supply the global dairy and meat
supply chains.
Genus's competitive edge comes from the ownership and control of
proprietary lines of breeding animals, the biotechnology used to
improve them and its global supply chain, technical service and
sales and distribution network.
Headquartered in Basingstoke, United Kingdom, Genus companies
operate in over 24 countries on six continents, with research
laboratories located in Madison, Wisconsin, USA.
[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 All growth/decline rates quoted are in constant currency
unless otherwise stated. Constant currency percentage movements are
calculated by restating the results for the six months ended 31
December 2021 at the average exchange rates applied to adjusted
operating profit for the year ended 30 June 2021.
3 Results restated following an April 2021 IFRIC Interpretation
Committee agenda decision that resulted in previously capitalised
software assets being expensed lowering profit by GBP1.3m in FY21
H1.
4 n/m = not meaningful
5 Commercial terms with a customer changed in the period to
align with long term interests resulting in a one-time GBP3.7m
refund related to historic royalties.
6 Calculated on a rolling 12-month basis.
Group Performance
As expected, tough porcine market conditions in China resulted
in a decrease in PIC China's performance, which had an impact on
the overall performance of the Group in the first half of the year,
with adjusted profit before tax declining by 19% in constant
currency (21% in actual currency) to GBP37.0m. Without PIC China,
adjusted profit before tax would have grown by 28% in constant
currency, due to robust growth across the rest of the Group and
prudent cost management.
Revenue increased by 1% in constant currency (down 2% in actual
currency) to GBP281.2m (2020: GBP285.7m). PIC revenue declined by
4% and, excluding a customer refund in China, royalty revenue was
down 1% year on year. When all of PIC China's results are excluded,
the rest of PIC's business achieved, in constant currency, revenue
growth of 8% and royalty revenue growth of 4% reflecting further
market share gains, particularly in North America and Latin
America. ABS revenue grew by 4% in constant currency and achieved
volume growth of 4%, with the strategically important sexed
genetics and beef genetics up 24% and 13% respectively.
Adjusted operating profit, including joint ventures and
excluding gene editing, was GBP43.3m (2020: GBP53.4m), down 17% (in
constant currency), but was up by 26% when the PIC China results
are excluded. Our medium-term objective continues to be to achieve
10% CAGR growth in this measure, noting that 37% growth was
achieved in FY21. Adjusted operating profit, including joint
ventures and after the costs of gene editing, fell by 18% in
constant currency. Within this, Genus's share of adjusted joint
venture operating profits was GBP4.9m (2020: GBP5.9m), with a
strong performance from the PIC Agroceres joint venture in Brazil
not enough to offset the decline in profits from our joint ventures
in China. Net finance costs were GBP2.7m (2020: GBP2.6m).
Statutory profit before tax was GBP24.4m (2020 restated:
GBP37.4m), reflecting the adjusted profit decline during the period
and a GBP6.8m non-cash decrease (2020: GBP3.5m increase) in the net
IAS 41 biological asset fair value. This was partially offset by
lower share-based expense and an exceptional net credit balance of
GBP1.7m (2020: GBP5.1m expense) that includes a GBP3.6m
non-refundable cash receipt for the assignment of rights to a
legacy legal claim in Brazil. In the prior year, a non-cash
Guaranteed Minimum Pension ('GMP') equalisation charge of GBP3.3m
in respect of legacy pension schemes had been recognised due to a
High Court ruling in 2020.
The tax charge on adjusted profits for the period was GBP9.3m
(2020: GBP11.1m), which represented a tax rate on adjusted profits
of 25.1% (2020: 23.6%). The Group tax rate increased by 150 basis
points, due to the reduced share of Group profits arising from
China where there is a benefit from the availability of tax relief
on owned production agricultural activities. The statutory profit
after tax was GBP18.9m (2020 restated: GBP29.0m).
The effect of exchange rate movements on the translation of
Genus's overseas profits was an adverse impact of GBP0.6m compared
with the prior period, primarily from stronger Sterling against the
Brazilian Real and Euro.
Free cash outflow of GBP16.1m (2020: GBP26.6m inflow) reflected
lower operating cashflows from expected increases in working
capital and high planned capital expenditure in the six months.
Cash generated by operations of GBP22.2m (2020 restated: GBP42.8m)
represented 63% conversion (2020 restated: 98%) of adjusted
operating profit of GBP35.0m (2020 restated: GBP43.8m) into cash.
This was impacted by expected working capital outflows, including
performance related payments to employees in the period relating to
the strong prior year results and the employee special COVID-19
bonus paid in July 2021. Our medium-term objective is to achieve
annual conversion of at least 90%, and we remain committed to this
target. Capital expenditure of GBP27.8m (2020 restated: GBP9.7m)
included continued investment in the ABS supply chain with
state-of-the-art new bull housing in Wisconsin and expansion of PIC
supply chain capacity through construction work on a new elite
genetics farm in Canada.
Net debt increased to GBP143.3m (June 2021: GBP105.6m),
reflecting the increase in capital expenditure and expected working
capital outflows. The net debt to EBITDA ratio of 1.4x (June 2021:
0.9x) as defined in the debt facility agreement reflects a decline
in EBITDA and higher net debt levels. This level of leverage is
comfortably within our medium-term objective of having a ratio of
net debt to EBITDA of between 1.0 - 2.0 times.
The Board has declared an interim dividend of 10.3 pence per
share, the same as last year's interim dividend, which is payable
on 31 March 2022 to shareholders on the register at 4 March
2022.
Strategic Progress
Genus continued to make good strategic progress. We have
sustained our genetic leadership in all species, we are winning
share with leading pork, dairy and beef farmers globally, and our
supply chain investments are increasing supply and resilience, to
position us for further growth.
Our porcine business continues to deliver rapid genetic
improvement as investments in genomic selection, expanding nucleus
populations and other initiatives have further improved the quality
of animals selectively bred in our proprietary herds. We are in the
process of implementing digital phenotyping technologies, which
increase the volume and accuracy of data used in breeding selection
to accelerate the rate of genetic progress delivered to
customers.
In China, where the porcine industry has experienced severe
volatility, we remain well positioned for the opportunity and
currently serve over one third of leading Chinese pig producers. We
have a local team of over 170 people, including technical services
teams that are supporting customers through these challenging
times. Our focus on making China a home market includes joint
US-China product development projects, engagement with Chinese
academic institutions and our Porcine Reproductive and Respiratory
Syndrome virus (PRRSv) resistant development collaboration with
BCA, which is progressing as planned.
We are growing and strengthening our porcine supply chain and by
FY23 will have increased our elite genetics capacity by over 80%
compared with FY19. We are building a new elite genetics farm,
Ankang, in China which will increase in-country access to our most
elite lines. These lines will be multiplied and disseminated
through our growing supply network in China, which has grown
fivefold to over 130,000 sows in the past three years. Atlas, our
new elite genetics farm in Canada to support global customer
growth, is now being stocked and will be completed in 2022, and in
Brazil, our joint venture with Agroceres is building a new elite
genetics farm to support local growth, with the potential to serve
as an export facility in the future. In February 2022 PIC
strengthened further its position in North America through entering
a strategic collaboration with Olymel, the largest porcine producer
in Canada, to acquire their elite porcine genetics and for the
long-term provision of products and services through their
AlphaGene genetics programme.
Genetic progress in our proprietary dairy herds has sustained
our strong global position in dairy genetics. Our proprietary
beef-on-dairy genetics are also achieving strong trial and field
results, proving the economic difference our genetics can achieve.
We are making progress in changing the way we engage with and
support dairies with comprehensive, multi-annual product and
service packages that include tailored technical and genetic
services. The uptake in key markets is encouraging, and in EMEA
over 25% of our sales volumes in direct markets are contracted.
We continue to invest in R&D and made good progress in a
number of portfolio initiatives in gene editing, reproductive
biology and biosystems engineering. In the period we achieved new
IntelliGen third-party customer wins and extensions in New Zealand,
North America and Europe, which includes the first deal for our
second generation IntelliGen instruments. Subsequent to the
reporting close, we have also won a significant national tender in
India. Our PRRSv resistant programme continues to progress well,
consistent with the timelines we have previously communicated. We
now have hundreds of third generation animals on which data is
being collected for the next phase of our regulatory submissions.
Matings of this generation are planned in the summer, with fourth
generation births expected by the end of the 2022 calendar
year.
Sustainability Focus
Our primary focus is the use of animal genetic improvement to
drive increased animal efficiency through the reduction of
production inputs which result in lower use of carbon, energy,
water and land in animal protein production. Our vision is
'Pioneering animal genetic improvement to help nourish the world':
the use of our genetics directly helps our customers in their
transition to lower-carbon production. To further this objective
Genus became a founder member of the Greener Cattle Initiative
announced at COP26 to conduct research into ways of reducing
methane from cattle.
As a responsible business, we are targeting carbon reduction
within internal operations which are aligned with international
(COP26) climate goals: Genus will reduce its carbon emissions by
25% (per tonne animal weight from 2019 levels) by 2030 and aims to
be a carbon 'net zero' business by 2050. We have established a
carbon reduction trajectory and contributory reduction
opportunities as part of our 'Delta C' programme. We are targeting
'least cost mitigation' measures for emissions from manures and
have enhanced our measurement and reporting of our emissions and
'sinks' (including soils which we are targeting for carbon
sequestration in South Dakota, Saskatchewan and Yorkshire). We have
commissioned a new solar farm to power almost all our electricity
needs in our Leeds and Dekorra operations in the US and are
reviewing new opportunities in other countries. We have commenced
conservation management of soils on our estate and are further
targeting greenhouse gas reduction using among other things,
methane capture and renewable natural gas power generation and
electric vehicles.
People
To achieve our vision of 'Pioneering animal genetic improvement
to help nourish the world', we need to attract, retain and develop
outstanding people. We completed our biennial all-employee
engagement survey during the second half of 2021 and engagement
remains high, with 83% of employees completing the survey, 82%
(2019: 79%) agreeing with the statement "I would recommend to a
friend to work at Genus" and 89% (2019: 85%) agreeing with the
statement "I enjoy working at Genus". We also saw good progress
against some of the themes we focused on from the 2019 survey,
which included the development of people managers and the areas of
reward and recognition. It was encouraging that our people remain
highly committed to Genus despite it being a very challenging
period during the COVID-19 pandemic.
Outlook
As expected, the Group performed strongly other than in the
porcine business in China and continues to make good strategic
progress while investing for the future. The Board is monitoring
closely the potential risks to Genus and its employees of the
geopolitical situation in Russia and the Ukraine. We are taking
risk management actions where appropriate.
As referenced in the November 2021 AGM Trading Update, the
current porcine market in China has had an adverse impact on our
trading in China during the first half of the 2022 fiscal year.
Since November, the live pig price in China has remained below the
cost of production and declined further to below 13RMB/kg since the
beginning of January. The impact of PIC China's trading has
consequently decreased PIC's and the Group's adjusted operating
profit, despite robust performance from the rest of the Group.
China live pig prices need to improve and be sustained for
producer confidence to return and lead to improved demand for
porcine genetics. Industry expectations are that prices will
improve later in the year, however there is uncertainty as to the
timing and extent of recovery. Consequently, we expect the China
porcine market will continue to impact on the Group's performance
in the second half of the 2022 fiscal year. Importantly, following
the investments in our porcine elite supply chain, Genus is well
placed to support Chinese producers needs when market conditions
improve, and we are confident in the future growth prospects of PIC
China.
The Board remains confident in the Group's strategy, the many
opportunities for Genus and medium-term growth expectations remain
unchanged.
Genus PIC - Operating Review
Actual currency Constant
currency
change
---------
Six months ended 31 2021 2020 Change
December
----- ----- -------- ---------
GBPm GBPm % %
Revenue 143.5 152.9 (6) (4)
Adjusted operating
profit exc JV 52.2 63.0 (17) (15)
Adjusted operating
profit inc JV 57.0 68.9 (17) (15)
Adjusted operating
margin exc JV 36.4% 41.2% (4.8)pts (4.8)pts
Market
Global pork markets were negatively impacted throughout the
period due to oversupply in China leading to low prices and the
continued impact of African Swine Fever (ASF) and COVID-19,
resulting in challenges both in relation to supply and demand.
This was particularly evident in China's porcine market, where
there was a 63% decline in live pork prices in the first half of
2021, from 35RMB/kg in December 2020 to 13RMB/kg in mid-June.
Prices remained suppressed throughout the remainder of the year,
ranging between 10RMB/kg and 18RMB/kg and are currently below
13RMB/kg. These prices are below the cost of production when
combined with the high feed costs also incurred throughout the
period. After posting losses for much of the second half of 2021,
producers sought to reduce their sow herds or exit the market
entirely. Investments in new and replacement breeding animals
declined and will continue to be depressed over the coming months
until a sustained price rise is achieved, and market confidence
returns. The emergence of the Delta and Omicron variants of
COVID-19 in China caused a further slowdown in the industry as
localised transport restrictions were implemented. Consumer demand
for pork has also been affected by lower spending due to lockdowns,
a less buoyant economy and some shift in consumer consumption to
other proteins. Chinese imports of pork dropped 9% compared with
the same prior year period and the expectation is that imports will
remain depressed through the early part of 2022. ASF continued to
be a major challenge for producers in China and across southeast
Asia, with eradication proving challenging.
In Europe, further waves of the COVID-19 pandemic, the latest
being the Omicron variant, and localised ASF outbreaks had a
disruptive and negative impact on the market. The impact of the
pandemic caused supply chain constraints with significant labour
shortfalls in both live production and processing facilities.
Average slaughter prices dropped to their lowest in nine years, due
to oversupply caused in part by the loss of key exports to China
following reduced demand and ASF outbreaks in Eastern Germany and
across parts of Eastern Europe. ASF has also recently been found in
Italy. Moreover, increasing commodity prices across grain and oil
markets, along with inflation in other costs of production, also
had a negative impact on production margins for most European pig
producers, resulting in a small reduction of the European sow herd
through 2021 which is expected to continue into 2022.
In the United States, 2021 was a profitable year for pork
producers, notwithstanding uncertainty and volatility in the
industry. Lean hog and primal pork prices peaked near record highs
during the summer of 2021 due to robust demand and lower pig
numbers, before reducing slightly in late Autumn. Current lean hog
futures indicate another profitable year for US pork production in
2022, with prices over $100/cwt for the summer months. Furthermore,
the United States Department of Agriculture is forecasting stable
production volumes through the year, while exports are projected to
grow by 4%.
In Latin America, key markets experienced a mixed year. In
Mexico, a sharp increase in pig prices to 45MXN/kg in the early
part of 2021 following supply disruptions was followed by a decline
to 35MXN/kg, which, when combined with high imported feed costs,
left Mexican producers under margin pressure. In Brazil, exports
remained a key driver of the pork market, supporting strong
production growth in the period. Large inventory supplies and
favourable exchange rates further boosted Brazilian
competitiveness. However, the reduced demand from China has
recently caused a supply-demand imbalance and through the month of
January pig prices have declined by 20%, causing producers to delay
breeding projects.
Performance
Genus PIC's adjusted operating profit for the period was
GBP52.2m, down 15% in constant currency on the first half of FY21.
Global volumes declined by 2%, revenue by 4% and royalty revenue by
1%, excluding a China customer refund, in constant currencies.
However, when all of China's results are excluded, the business
achieved a strong performance with revenue and royalty revenue up
8% and 4% respectively. Global volumes, excluding China, rose by 7%
and operating profit grew by 13% in constant currency, due to
strong performances across the North and Latin American regions and
prudent cost management.
In North America, market share gains and positive market
conditions contributed to adjusted operating profit growth of 6% in
constant currency. Growth in PIC's share of the sireline market
during the period contributed to 7% volume growth, while royalty
revenue also increased by 5% in constant currency. Key account wins
involving damline products and strong sales growth for the PIC800
boar continued to build momentum across the US and Canada. On 22
February 2022, we entered a long-term strategic collaboration with
Olymel, the largest porcine producer in Canada, to acquire all
intellectual property in Olymel's elite porcine genetics for
CAD$25m (GBP14.5m) and for the provision of genetic products and
services. This will provide significant benefit to customers of
Olymel's AlphaGene genetics through their porcine production
pyramid.
Latin America's adjusted operating profit grew by 13% in
constant currency, with all key trading countries generating
double-digit growth. Volumes increased by 10% and royalty revenue
rose by 16% in constant currency. Solid revenue and profit growth,
despite the varying market conditions discussed earlier, reflected
strong product performance and robust customer demand across the
region. Initiatives to increase supply, including a new elite
genetic farm in Brazil and multiple imports of elite genetics, are
underway during FY22.
In Europe, following a very strong performance in the prior
year, volatile market conditions caused by the localised ASF
outbreaks mentioned earlier resulted in a mixed trading picture.
The prior year performance was supported by large key account
expansion projects in Russia. These projects continued in the
period, however a planned mix shift from gilt sales to boar sales
contributed to a revenue decline of 11%, while supporting a volume
increase of 1% in Europe. Royalty revenue rose by 5% in constant
currency, driven by growth in countries such as Spain, not impacted
by ASF and the China import ban, while adjusted operating profit
declined 2%. The ongoing expansion projects in Russia and in Spain
will support long-term growth with pork producers in these
important markets.
Adjusted operating profit in Asia was 78% lower in constant
currency than the prior year, while volumes decreased by 36% and
royalty revenue declined by 33% in constant currency, excluding a
customer refund in China discussed below. The region's results
predominantly reflect the performance in China, where sharp
declines in pig prices during 2021 resulted in significant losses
for producers in the period and a reduction in demand for genetics.
This was further exacerbated by disease challenges across the
industry and restrictions in the ability to move animals due to
COVID-19 lockdowns being imposed in certain regions. PIC China
experienced a 51% decline in volumes, and 27% of volumes were under
royalty contracts. Commercial terms with a large customer were
changed in the period to more closely align the economic interests
of a unique outcome-based royalty contract in place. This resulted
in a one-time refund of GBP3.7m, related to historic royalties. PIC
China's operating profit decreased by 94% in constant currency due
to the reduction in revenues, the customer refund, lower by-product
margins, and investments in the local supply chain. Investment in
PIC's supply chain in China continued throughout the period with
the expansion and refurbishment of one farm and the new
construction of the Ankang farm to replace a smaller ageing
facility, with the aim of supporting the rapid recovery of sales
when market conditions improve.
In Asia more widely, the industry in the Philippines started to
show signs of recovery from ASF and demand for PIC's genetics
improved, with operating profits increasing by 144% in constant
currency compared with the same period in FY21. There were also
positive signs from Asian franchises, with operating profit
increasing by 22%.
Overall, in the first half of FY22, very weak conditions in
China led to lower results for PIC. However, Genus's proven
strategy focused on developing product differentiation, ensuring a
predictable customer experience and delivering high value through a
world-class team positions PIC very well to gain further market
share in China and other geographies.
Genus ABS - Operating Review
Actual currency Constant
currency
change
---------
Six months ended 31 2021 2020 Change
December
----- ----- ------ ---------
GBPm GBPm % %
Revenue 130.9 129.0 1 4
Adjusted operating
profit 22.1 18.7 18 21
Adjusted operating
margin 16.9% 14.5% 2.4pts 2.4pts
Market
After nine consecutive quarters of increases, growth in milk
supply from the "Big Seven" exporting regions (the EU, USA, New
Zealand, Australia, Brazil, Argentina and Uruguay) came to an end
in the third quarter of 2021 and contracted in the fourth quarter.
This was primarily driven by reductions in production across New
Zealand, Australia and the EU. The cost of milk production grew
sharply during the second half of 2021, due to rising labour costs
and increases in the price of feed. Dairy demand grew during the
year and the Global Dairy Trade Whole Milk Powder auction price
increased by 17%, with China's dairy imports alone rising by 29%
during the first three quarters of 2021, before tapering off in the
final part of the year as economic uncertainty rose, and regional
COVID-19 lockdowns were enforced. In North America, dairy
production declined through the period due to margin pressure from
increasing feed costs. This is expected to continue into 2022, with
the likelihood that it will impact the global dairy market due to
its high degree of influence.
In the second half of 2021, downstream parts of the supply chain
were affected by several factors, including increases in on-farm
commodity costs relating to production, restrictions on movements
due to COVID-19, inflationary pressures and a squeeze on margins
for food manufacturers, driven by increasing feed and labour costs.
These factors are expected to drive dairy price increases in 2022
as producers look to pass on the higher costs to customers. Given
these factors dairy producers should benefit from higher prices in
2022, however they will be cautious to increase production whilst
input costs rise.
The COVID-19 pandemic continued to affect beef consumption as
the emergence of the Omicron variant impacted the hospitality
industry, with many consumers continuing to eat at home rather than
dine out. A slowdown in US beef production caused some constriction
of the global beef market in 2021 leading to an increase in beef
prices of around 10% through the year. This constriction looks
likely to continue through 2022, with drought in parts of North
America leading to reductions in herd size, potentially creating
opportunities for beef imports. Brazil remained the world's largest
beef exporter through 2021, over half of which was exported to
China. Export prices peaked in June 2021 at $5,500/metric ton, but
due to a suspension imposed by China on Brazil imports after two
atypical BSE cases were detected, declined during the second half
of the year to $5,000/metric ton. Trading has now resumed.
Globally, we continued to see genetic suppliers increase
investments in R&D and breeding programmes. Further
consolidation is expected as suppliers seek to leverage these
investments more widely, although few mergers have yet been
completed. Nonetheless, we continue to see a ramp up in
collaborations between industry players, including on the sourcing
of elite genetics, so that they can continue to offer commercially
relevant products to their customer base.
Performance
Despite challenging market conditions in some regions, overall
demand for ABS products remained strong. Volumes increased by a
further 4% against a very strong comparative period in the prior
year, revenue by 4% and adjusted operating profit by 21% in
constant currencies. Demand from dairy customers for sexed and beef
genetics remained high, with sexed volumes up 24% and strong beef
volume growth of 13%. This reflects the continued success of Sexcel
and the increasing adoption of our NuEra beef genetics in dairy
herds.
In Europe, volumes and revenue were marginally lower, by 2% and
1% in constant currency respectively. Operating profit was 15%
lower compared with a strong first half in FY21 that benefited from
the opening of a new IntelliGen production facility at an external
customer site. This production facility continues to operate
effectively, and the contract was extended in the period. COVID-19
related lockdowns and restrictions continued to reduce access to
customers and create considerable uncertainty within the region.
However, sexed volumes rose by 22%, with particularly strong growth
in our UK business and with European distributors. Good progress
was also made on migrating our customers to partnership-based
contracts and we continued to strengthen our service offerings.
More than 25% of volumes in direct European markets are now sold
under annual or multi-annual partnership contracts, where customers
commit to acquiring most/all of their product from ABS under a fee
per cow arrangement, for which ABS also provides technical
services.
In North America, volumes rose by 2%, while revenue declined by
2% and operating profit by 20% in constant currencies. NuEra
beef-on-dairy volumes grew by a record 37% as customers shifted
from dairy semen, particularly conventional, due to the buoyant
beef market. Customers also continued to adopt Sexcel, driving
sexed volume growth of 9%, while conventional volumes declined by
31%. Embryo volumes declined by 20% as a large key account made a
short-term tactical change to its breeding strategy to use Sexcel,
however this is likely to revert in the future. We invested in
strengthening our team in the region, both key account and
technical services personnel. This investment will help to further
differentiate ABS as the genetics partner of choice for our
customers and progress is being made in developing relationships
through the strategic account programme.
After record performances in FY21, Latin America continued to
grow, delivering an 8% increase in revenue and a 22% rise in
operating profit in constant currencies. Performance in Brazil was
particularly encouraging, delivering 3% growth in semen volumes,
following record volume growth of 31% in the prior year period and
despite the temporary Chinese ban on Brazilian beef. This was
driven particularly by a series of innovative digital sales
campaigns. There was also a 7% rise in embryo volumes, aided by the
increasing adoption of advanced reproduction techniques.
In Asia, total revenues in the period rose by 36%, driving
operating profit growth of 35% in constant currencies. The region
delivered strong growth in sexed volumes, up 37%, as well as
increases in dairy conventional and beef volumes (up 1% and 58%
respectively). This growth was underpinned by strong demand in
China, where volumes rose by 25%, with strong growth across dairy,
beef and sexed segments, driving revenue growth of 43% and
operating profit growth of 37%. In Australia, volumes also grew
sharply by 31%, due to the continuing industry rebound following
the intense period of drought and bushfires in 2019/20, as well as
strong growth of Sexcel, up 75%, and beef sales, up 59%.
Performance in India was stable, with encouraging momentum on new
wins with a Government of India tender for sexed semen being
secured subsequent to the reporting close.
Research and Development - Operating Review
Actual currency Constant
currency
change
---------
Six months ended 31 2021 2020 Change
December
----- ---- ------ ---------
GBPm GBPm % %
Porcine product development 10.3 10.3 0 2
Bovine product development 10.5 9.3 13 16
Gene editing 3.6 3.7 (3) 0
Other research and
development 7.0 5.7 23 23
----- ---- ------ ---------
Net expenditure in
R&D(7) 31.4 29.0 8 10
Performance
Net research and development investment increased as planned by
10% in constant currency, as we invested to further strengthen our
proprietary differentiated offerings and to take advantage of
market opportunities. In the second half of the year, we will make
further investments in gene editing, IntelliGen production capacity
and elite porcine farm nuclei, while continuing to strengthen the
research and development pipeline.
During the period, we accelerated differentiation in porcine
product development through pioneering scientific techniques. By
using genotyping across more of our global elite farm network, we
were able to achieve our highest ever rate of global genetic gain.
To build on this progress, we are now enhancing genomic evaluation
by expanding our phenotyping capabilities through precision digital
tools and capturing data that best predicts profit potential for
our customers. To meet growing global sales demand, we have also
added a new elite contract boar stud in Minnesota to our network
and are starting to stock a further elite facility in Canada which
will be completed during 2022. Bovine product development delivered
a highly competitive dairy and beef germplasm pipeline, which
contributed to continued volume growth in ABS. De Novo Genetics,
our joint venture with De-Su Holsteins, produced around 50% of new
Holstein bulls introduced to market in the period and its strong
pipeline of young bulls will help sustain our industry leading
position. Global demand for our proprietary NuEra genetics
continued to grow and these genetics represented around one third
of our total beef volumes in the first six months of FY22. Further
validation trials in customers' systems reinforced NuEra's superior
performance when compared with competitor genetics.
We continued to expand our sexed production capacity by
introducing the second generation of our proprietary sexing
technology, opening another production facility in North America at
our new Leeds bull stud, increasing bull housing and production
capacity, and delivering production efficiency gains. Our new
technology and the expansion of capacity is helping us meet
increasing global demand for Sexcel and our third party IntelliGen
products and services.
We maintained our expenditure on gene editing, primarily through
ongoing investment in the PRRSv resistance project. This project
progressed as planned and we continued to engage with the Food and
Drug Administration in the United States, with whom we continue to
have positive engagement. We also held further conversations on
regulatory and market acceptance in other key global markets
including China and Japan, both directly and through local
partners.
Other research and development expenditure increased by 23% as
planned. This investment was for research in the field of
reproductive biology and to expand data science capabilities, while
maintaining work on genome science and the development of our
bioinformatics platform. We also continued to collaborate with
external partners in a variety of discovery areas. These
collaborations are gathering pace as academic institutions begin to
move away from focusing on COVID-19 research.
(7) Excluding profit attributable to non-controlling
interest
Principal risks and uncertainties
Genus's approach to risk management is to identify, evaluate and
prioritise risks and uncertainties so we can take action to
mitigate them. The Genus plc Annual Report 2021 (a copy of which is
available on the Genus plc website at www.genusplc.com) sets out on
pages 46-48 a number of risks and uncertainties that might impact
the performance of the Group.
Some of these risks relate to current business operations in
global agricultural markets, while others relate to future
commercialisation of our leading-edge R&D programmes. We are
also exposed to global economic and political risks such as trade
restrictions. Additionally, we monitor emerging risks such as
changing consumption patterns, environmental sustainability
expectations and the evolution of alternative proteins such as
lab-based meat.
Other than the risk of conflict in Ukraine and sanctions on
Russia increasing existing risks, there has been no material change
to the principal risks in the current financial year that might
affect the performance of the Group. The Group has a strong
market-leading porcine business in Russia with a largely local
supply chain, and bovine businesses in both Russia and Ukraine.
GENUS PLC
CONDENSED CONSOLIDATED INCOME STATEMENT
For the six months ended 31 December 2021
(restated)(1)
Six months Six months Year
ended ended ended
31 December 2021 31 December 30 June
GBPm 2020 2021
Note GBPm GBPm
----------------------------------------------------------------- ---- ------------------ ------------- --------
REVENUE 2 281.2 285.7 574.3
Adjusted operating profit 2 35.0 43.8 76.9
Adjusting items:
- Net IAS 41 valuation movement on biological assets 8 (6.8) 3.5 (10.8)
- Amortisation of acquired intangible assets 7 (3.8) (3.7) (7.4)
- Share-based payment expense (2.2) (4.3) (7.7)
----------------------------------------------------------------- ---- ------------------ ------------- --------
(12.8) (4.5) (25.9)
- Exceptional items: 3
- Litigation (1.8) (1.7) (2.5)
- Acquisition and integration (0.1) (0.1) (0.3)
- Pension related - (3.3) (2.3)
- Other 3.6 - 1.8
Total exceptional items 1.7 (5.1) (3.3)
----------------------------------------------------------------- ---- ------------------ ------------- --------
Total adjusting items (11.1) (9.6) (29.2)
OPERATING PROFIT 23.9 34.2 47.7
Share of post-tax profit of joint ventures and associates
retained 10 3.2 5.8 13.1
Finance costs 4 (2.8) (2.8) (5.4)
Finance income 4 0.1 0.2 0.4
----------------------------------------------------------------- ---- ------------------ ------------- --------
PROFIT BEFORE TAX 24.4 37.4 55.8
Taxation 5 (5.5) (8.4) (9.0)
----------------------------------------------------------------- ---- ------------------ ------------- --------
PROFIT FOR THE PERIOD 18.9 29.0 46.8
----------------------------------------------------------------- ---- ------------------ ------------- --------
ATTRIBUTABLE TO:
Owners of the Company 19.9 30.2 47.3
Non-controlling interest (1.0) (1.2) (0.5)
----------------------------------------------------------------- ---- ------------------ ------------- --------
18.9 29.0 46.8
----------------------------------------------------------------- ---- ------------------ ------------- --------
EARNINGS PER SHARE
Basic earnings per share 12 30.4p 46.4p 72.6p
Diluted earnings per share 12 30.2p 46.0p 72.0p
----------------------------------------------------------------- ---- ------------------ ------------- --------
Alternative Performance Measures
Adjusted operating profit 35.0 43.8 76.9
Adjusted operating profit attributable to non-controlling
interest (0.2) - (0.1)
Pre-tax share of profits from joint ventures and associates
excluding net IAS 41 valuation
movement 4 .9 5.9 13.0
Gene editing costs 3.6 3.7 7.6
----------------------------------------------------------------- ---- ------------------ ------------- --------
Adjusted operating profit including joint ventures and
associates, excluding gene editing
costs 43.3 53.4 97.4
Gene editing costs (3.6) (3.7) (7.6)
----------------------------------------------------------------- ---- ------------------ ------------- --------
Adjusted operating profit including joint ventures and associates 39.7 49.7 89.8
Net finance costs 4 (2.7) (2.6) (5.0)
----------------------------------------------------------------- ---- ------------------ ------------- --------
Adjusted profit before tax 37.0 47.1 84.8
----------------------------------------------------------------- ---- ------------------ ------------- --------
Adjusted earnings per share
Basic adjusted earnings per share 12 42.4p 55.3p 100.9p
Diluted adjusted earnings per share 12 42.1p 54.9p 100.1p
----------------------------------------------------------------- ---- ------------------ ------------- ----------
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 APM Glossary.
1 See note 1 for details of the prior period restatement.
GENUS PLC
CONDENSED CONSOLIDATED Statement of Comprehensive Income
For the six months ended 31 December 2021
(restated)(1)
Six months ended Six months ended Year ended
31 December 2021 31 December 2020 30 June 2021
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------- --------------- --------- ------------ ----------- ---------- ---------
PROFIT FOR THE PERIOD 18.9 29.0 46.8
Items that may be reclassified
subsequently to profit or loss
Foreign exchange translation
differences 4.6 (39.4) (45.2)
Fair value movement on net investment
hedges 0.2 - 0.4
Fair value movement on cash flow
hedges - 0.1 0.2
Tax relating to components of other
comprehensive expense (1.3) 6.2 7.6
-------------------------------------- --------------- --------- ------------ ----------- ---------- ---------
3.5 (33.1) (37.0)
Items that may not be reclassified
subsequently to profit or loss
Actuarial gain on retirement benefit
obligations 24.1 0.2 22.3
Movement on pension asset recognition
restriction (24.0) 0.6 (0.1)
Release/(recognition) of additional
pension liability - 1.8 (19.9)
Gain on equity instruments measured at
fair value - - 6.7
Tax relating to components of other
comprehensive income/(expense) - (0.5) (2.0)
-------------------------------------- --------------- --------- ------------ ----------- ---------- ---------
0.1 2.1 7.0
------------------------------------- --------------- --------- ------------ ----------- ---------- ---------
OTHER COMPREHENSIVE INCOME/(EXPENSE)
FOR THE PERIOD 3.6 (31.0) (30.0)
-------------------------------------- --------------- --------- ------------ ----------- ---------- ---------
TOTAL COMPREHENSIVE INCOME/(EXPENSE)
FOR THE PERIOD 22.5 (2.0) 16.8
-------------------------------------- --------------- --------- ------------ ----------- ---------- ---------
ATTRIBUTABLE TO:
Owners of the Company 23.7 (0.9) 17.1
Non-controlling interest (1.2) (1.1) (0.3)
-------------------------------------- --------------- --------- ------------ ----------- ---------- ---------
22.5 (2.0) 16.8
------------------------------------- --------------- --------- ------------ ----------- ---------- ---------
1 See note 1 for details of the prior period restatement.
GENUS PLC
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 31 December 2021
Called
up Share Non-
share premium Own Translation Hedging Retained controlling Total
capital account shares reserve reserve earnings Total interest equity
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- ---- -------- -------- --------- ----------- -------- -------- ------ ----------- --------
BALANCE AT 30
JUNE 2020 6.5 179.1 (0.1) 29.5 (0.2) 280.7 495.5 (1.0) 494.5
Foreign exchange
translation
differences, net
of tax - - - (37.7) - - (37.7) 0.2 (37.5)
Fair value
movement on net
investment
hedges, net of
tax - - - 0.3 - - 0.3 - 0.3
Fair value
movement on cash
flow hedges, net
of tax - - - - 0.2 - 0.2 - 0.2
Gain on equity
instruments
measured at fair
value, net of
tax - - - - - 5.0 5.0 - 5.0
Actuarial gain on
retirement
benefit
obligations, net
of tax - - - - - 19.8 19.8 - 19.8
Movement on
pension asset
recognition
restriction, net
of tax - - - - - (0.1) (0.1) - (0.1)
Recognition of
additional
pension
liability, net
of tax - - - - - (17.7) (17.7) - (17.7)
----------------- ---- -------- -------- --------- ----------- -------- -------- ------ ----------- --------
Other
comprehensive
(expense)/income
for the year - - - (37.4) 0.2 7.0 (30.2) 0.2 (30.0)
Profit/(loss) for
the year - - - - - 47.3 47.3 (0.5) 46.8
----------------- ---- -------- -------- --------- ----------- -------- -------- ------ ----------- --------
Total
comprehensive
(expense)/income
for the year - - - (37.4) 0.2 54.3 17.1 (0.3) 16.8
Recognition of
share-based
payments, net of
tax - - - - - 4.9 4.9 - 4.9
Dividends 6 - - - - - (19.5) (19.5) - (19.5)
Adjustment
arising from
change in
non-controlling
interest and
written put
option - - - - - - - (0.2) (0.2)
Issue of ordinary
shares 0.1 - - - - - 0.1 - 0.1
----------------- ---- -------- -------- --------- ----------- -------- -------- ------ ----------- --------
BALANCE AT 30
JUNE 2021 6.6 179.1 (0.1) (7.9) - 320.4 498.1 (1.5) 496.6
Foreign exchange
translation
differences, net
of tax - - - 3.5 - - 3.5 (0.2) 3.3
Fair value
movement on net
investment
hedges, net of
tax - - - 0.2 - - 0.2 - 0.2
Actuarial gains
on retirement
benefit
obligations, net
of tax - - - - - 18.8 18.8 - 18.8
Movement on
pension asset
recognition
restriction, net
of tax - - - - - (18.7) (18.7) - (18.7)
Other
comprehensive
income for the
period - - - 3.7 - 0.1 3.8 (0.2) 3.6
Profit/(loss) for
the period - - - - - 19.9 19.9 (1.0) 18.9
----------------- ---- -------- -------- --------- ----------- -------- -------- ------ ----------- --------
Total
comprehensive
income/(expense)
for the period - - - 3.7 - 20.0 23.7 (1.2) 22.5
Recognition of
share-based
payments, net of
tax - - - - - 1.5 1.5 - 1.5
Dividends 6 - - - - - (14.2) (14.2) - (14.2)
BALANCE AT 31
DECEMBER 2021 6.6 179.1 (0.1) (4.2) - 327.7 509.1 (2.7) 506.4
----------------- ---- -------- -------- --------- ----------- -------- -------- ------ ----------- --------
Called
up Share Non-
share premium Own Translation Hedging Retained controlling Total
capital account shares reserve reserve earnings Total interest equity
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- ---- -------- -------- --------- ----------- -------- -------- ------ ----------- --------
BALANCE AT 30
JUNE 2020 6.5 179.1 (0.1) 29.5 (0.2) 280.7 495.5 (1.0) 494.5
Foreign exchange
translation
differences, net
of tax - - - (33.3) - - (33.3) 0.1 (33.2)
Fair value - - - - - - - - -
movement on net
investment
hedges, net of
tax
Fair value
movement on cash
flow hedges, net
of tax - - - - 0.1 - 0.1 - 0.1
Actuarial gain on
retirement
benefit
obligations, net
of tax - - - - - 0.2 0.2 - 0.2
Movement on
pension asset
recognition
restriction, net
of tax - - - - - 0.5 0.5 - 0.5
Recognition of
additional
pension
liability, net
of tax - - - - - 1.4 1.4 - 1.4
----------------- ---- -------- -------- --------- ----------- -------- -------- ------ ----------- --------
Other
comprehensive
(expense)/income
for the year - - - (33.3) 0.1 2.1 (31.1) 0.1 (31.0)
Profit/(loss) for
the year
(restated) (1) - - - - - 30.2 30.2 (1.2) 29.0
----------------- ---- -------- -------- --------- ----------- -------- -------- ------ ----------- --------
Total
comprehensive
(expense)/income
for the year - - - (33.3) 0.1 32.3 (0.9) (1.1) (2.0)
Recognition of
share-based
payments, net of
tax - - - - - 4.0 4.0 - 4.0
Dividends 6 - - - - - (12.8) (12.8) - (12.8)
Adjustment
arising from
change in
non-controlling
interest and
written put
option - - - - - - - (0.2) (0.2)
BALANCE AT 31
DECEMBER 2020 6.5 179.1 (0.1) (3.8) (0.1) 304.2 485.8 (2.3) 483.5
1 See note 1 for details of the prior period restatement.
GENUS PLC
CONDENSED CONSOLIDATED BALANCE SHEET
As at 31 December 2021
(restated)(1)
31 December 31 December 30 June
2021 2020 2021
Note GBPm GBPm GBPm
--------------------------------------------- ---- ----------- ------------- -------
ASSETS
Goodwill 102.2 99.4 101.5
Other intangible assets 7 55.4 54.1 56.3
Biological assets 8 288.2 294.2 279.9
Property, plant and equipment 9 142.2 110.0 123.0
Interests in joint ventures and associates 10 36.1 28.4 34.1
Other investments 15.9 6.8 14.7
Other receivables 11 1.8 2.0 1.8
Deferred tax assets 5.1 3.3 8.0
--------------------------------------------- ---- ----------- ------------- -------
TOTAL NON-CURRENT ASSETS 646.9 598.2 619.3
--------------------------------------------- ---- ----------- ------------- -------
Inventories 44.3 35.0 37.0
Biological assets 8 36.6 38.2 39.6
Trade and other receivables 11 118.1 101.5 106.2
Cash and cash equivalents 45.9 50.2 46.0
Income tax receivable 3.6 2.9 2.6
Derivative financial assets 15 0.6 0.9 0.1
Asset held for sale 0.2 0.2 0.2
--------------------------------------------- ---- ----------- ------------- -------
TOTAL CURRENT ASSETS 249.3 228.9 231.7
--------------------------------------------- ---- ----------- ------------- -------
TOTAL ASSETS 896.2 827.1 851.0
--------------------------------------------- ---- ----------- ------------- -------
LIABILITIES
Trade and other payables (113.1) (92.5) (110.3)
Interest-bearing loans and borrowings (10.6) (9.8) (13.9)
Provisions (1.6) (3.7) (1.3)
Deferred consideration (1.3) (1.0) (1.6)
Obligations under leases (8.6) (9.0) (9.0)
Tax liabilities (4.3) (6.5) (6.4)
Derivative financial liabilities 15 (1.2) (0.4) -
--------------------------------------------- ---- ----------- ------------- -------
TOTAL CURRENT LIABILITIES (140.7) (122.9) (142.5)
--------------------------------------------- ---- ----------- ------------- -------
Trade and other payables (1.3) (4.8) (1.4)
Interest-bearing loans and borrowings (151.0) (105.0) (109.4)
Retirement benefit obligations 14 (8.8) (15.0) (11.1)
Provisions (10.9) (10.9) (11.1)
Deferred consideration (0.6) (0.4) (0.5)
Deferred tax liabilities (50.9) (60.1) (53.0)
Derivative financial liabilities 15 (6. 6) (5.9) (6.1)
Obligations under leases (19.0) (18.6) (19.3)
--------------------------------------------- ---- ----------- ------------- -------
TOTAL NON-CURRENT LIABILITIES (249.1) (220.7) (211.9)
--------------------------------------------- ---- ----------- ------------- -------
TOTAL LIABILITIES (389.8) (343.6) (354.4)
--------------------------------------------- ---- ----------- ------------- -------
NET ASSETS 506.4 483.5 496.6
--------------------------------------------- ---- ----------- ------------- -------
EQUITY
Called up share capital 6.6 6.5 6.6
Share premium account 179.1 179.1 179.1
Own shares (0.1) (0.1) (0.1)
Translation reserve (4.2) (3.8) (7.9)
Hedging reserve - (0.1) -
Retained earnings 327.7 304.2 320.4
--------------------------------------------- ---- ----------- ------------- -------
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY 509.1 485.8 498.1
Non-controlling interest 2.5 2.8 3.6
Put option over non-controlling interest (5.2) (5.1) (5.1)
--------------------------------------------- ---- ----------- ------------- -------
TOTAL NON-CONTROLLING INTEREST (2.7) (2.3) (1.5)
--------------------------------------------- ---- ----------- ------------- -------
TOTAL EQUITY 506.4 483.5 496.6
--------------------------------------------- ---- ----------- ------------- -------
1 See note 1 for details of the prior period restatement.
GENUS PLC
Condensed consolidated Group Statement of Cash Flows
For the six months ended 31 December 2021
(restated)(1)
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2021 2020 2021
Note GBPm GBPm GBPm
------------------------------------------------------------------ ---- ------------- ------------- --------
NET CASH FLOW FROM OPERATING ACTIVITIES 13 11.6 35.9 67.5
------------------------------------------------------------------ ---- ------------- ------------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Dividends received from joint ventures and associates - - 4.1
Joint venture loan payment - - (0.4)
Investment in joint venture and associate (1.1) (0.4) (2.4)
Disposal of joint venture and associate 0.1 - -
Acquisition of trade and assets (0.2) - (6.9)
Acquisition of investments (0.1) - (0.9)
Payment of deferred consideration (0.5) (6.6) (6.7)
Purchase of property, plant and equipment (24.1) (9.5) (28.7)
Purchase of intangible assets (3.7) (0.2) (5.1)
Proceeds from sale of property, plant and equipment 0.1 0.6 0.3
------------------------------------------------------------------ ---- ------------- ------------- --------
NET CASH USED IN INVESTING ACTIVITIES (29.5) (16.1) (46.7)
------------------------------------------------------------------ ---- ------------- ------------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Drawdown of borrowings 62.8 148.3 195.1
Repayment of borrowings (25.4) (138.0) (176.1)
Payment of lease liabilities (5.2) (5.0) (11.7)
Equity dividends paid (14.2) (12.8) (19.5)
Dividend to non-controlling interest - (0.2) (0.2)
Debt issue costs (0.6) (1.9) (1.9)
Issue of ordinary shares - - 0.1
------------------------------------------------------------------ ---- ------------- ------------- --------
NET CASH FROM/(USED IN) FINANCING ACTIVITIES 17.4 (9.6) (14.2)
------------------------------------------------------------------ ---- ------------- ------------- --------
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (0.5) 10.2 6.6
------------------------------------------------------------------ ---- ------------- ------------- --------
Cash and cash equivalents at beginning of period 46.0 41.3 41.3
Net (decrease)/increase in cash and cash equivalents (0.5) 10.2 6.6
Effect of exchange rate fluctuations on cash and cash equivalents 0.4 (1.3) (1.9)
------------------------------------------------------------------ ---- ------------- ------------- --------
TOTAL CASH AND CASH EQUIVALENTS AT OF PERIOD 45.9 50.2 46.0
------------------------------------------------------------------ ---- ------------- ------------- --------
1 See note 1 for details of the prior period restatement.
GENUS PLC
ANALYSIS OF NET DEBT
For the six months ended 31 December 2021
At 1 July Net
2021 cash flows Foreign exchange Non-cash movement At 31 December 2021
GBPm GBPm GBPm GBPm GBPm
------------------------- ---------- ------------ ----------------- ------------------ --------------------
Cash and cash equivalents 46.0 (0.5) 0.4 - 45.9
--------------------------- ---------- ------------ ----------------- ------------------ --------------------
Interest-bearing loans -
current (13.9) 3.8 (0.1) (0.4) (10.6)
Lease liabilities -
current (9.0) 5.2 (0.1) (4.7) (8.6)
--------------------------- ---------- ------------ ----------------- ------------------ --------------------
(22.9) 9.0 (0.2) (5.1) (19.2)
------------------------- ---------- ------------ ----------------- ------------------ --------------------
Interest-bearing loans -
non-current (109.4) (40.6) (1.0) - (151.0)
Lease liabilities -
non-current (19.3) - (0.2) 0.5 (19.0)
--------------------------- ---------- ------------ ----------------- ------------------ --------------------
(128.7) (40.6) (1.2) 0.5 (170.0)
------------------------- ---------- ------------ ----------------- ------------------ --------------------
Total debt financing (151.6) (31.6) (1.4) (4.6) (189.2)
--------------------------- ---------- ------------ ----------------- ------------------ --------------------
Net debt (105.6) (32.1) (1.0) (4.6) (143.3)
=========================== ========== ============ ================= ================== ====================
At 1 July Net
2020 cash flows Foreign exchange Non-cash movement At 31 December 2020
GBPm GBPm GBPm GBPm GBPm
------------------------- ---------- ------------ ----------------- ------------------ --------------------
Cash and cash equivalents 41.3 10.2 (1.3) - 50.2
--------------------------- ---------- ------------ ----------------- ------------------ --------------------
Interest-bearing loans -
current (9.2) (0.7) 0.6 (0.5) (9.8)
Lease liabilities -
current (10.0) 5.0 0.5 (4.5) (9.0)
--------------------------- ---------- ------------ ----------------- ------------------ --------------------
(19.2) 4.3 1.1 (5.0) (18.8)
------------------------- ---------- ------------ ----------------- ------------------ --------------------
Interest-bearing loans -
non-current (103.6) (7.7) 6.3 - (105.0)
Lease liabilities -
non-current (21.1) - 1.0 1.5 (18.6)
--------------------------- ---------- ------------ ----------------- ------------------ --------------------
(124.7) (7.7) 7.3 1.5 (123.6)
------------------------- ---------- ------------ ----------------- ------------------ --------------------
Total debt financing (143.9) (3.4) 8.4 (3.5) (142.4)
--------------------------- ---------- ------------ ----------------- ------------------ --------------------
Net debt (102.6) 6.8 7.1 (3.5) (92.2)
=========================== ========== ============ ================= ================== ====================
Net debt is defined as the total of cash and cash equivalents,
interest-bearing loans, unamortised debt issue costs and lease
obligations.
GENUS PLC
NOTES TO THE CONDENSED SET OF FINANCIAL STATEMENTS
For the six months ended 31 December 2021
1. BASIS OF PREPARATION
The unaudited Condensed Set of Financial Statements for the six
months ended 31 December 2021:
-- were prepared in accordance with International Accounting
Standard 34 'Interim Financial Reporting' ('IAS 34') and thereby
have been prepared in conformity with the requirements of the
Companies Act 2006 and the International Financial Reporting
Standards ('IFRSs') adopted in the United Kingdom;
-- are presented on a condensed basis as permitted by IAS 34 and
therefore do not include all disclosures that would otherwise be
required in a full set of financial statements; these should be
read, therefore, in conjunction with the Genus plc Annual Report
2021;
-- includes all adjustments, consisting of normal recurring
adjustments, necessary for a fair statement of the results for the
periods presented;
-- do not constitute statutory accounts within the meaning of
section 435 of the Companies Act 2006; and
-- were approved by the Board of Directors on 23 February 2022.
The information relating to the year ended 30 June 2021 is an
extract from the published financial statements for that year,
which have been delivered to the Registrar of Companies. The
auditor's report on those financial statements was not qualified
and did not contain statements under section 498(2) or (3) of the
Companies Act 2006.
The unaudited Condensed Set of Financial Statements for the six
months ended 31 December 2021 has not been reviewed by our
Auditor.
The unaudited condensed set of financial statements have been
prepared on the basis of the accounting policies set out in the
Annual Report 2021. The Genus plc Annual Report 2021 (a copy of
which is available on the Genus plc website at www.genusplc.com )
sets out on pages 46-48 a number of risks and uncertainties that
might impact upon the performance of the Group. There has been no
material change to the principal risks that might affect the
performance of the Group in the current financial period.
The preparation of the Condensed Set of Financial Statements
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the balance sheet date, and
the reported amounts of revenue and expenses during the period.
Actual results could vary from these estimates. The estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period or in
the period of revision and future periods if the revision affects
both current and future periods.
Functional and presentational currency
The principal exchange rates were as follows:
Average Closing
========== ========== ======= ======== ========= ======
Six months Six months Year
ended ended
31 31 ended 31 31 30
December December 30 June December December June
2021 2020 2021 2021 2020 2021
=================== ========== ========== ======= ======== ========= ======
US Dollar/GBP 1.36 1.32 1.36 1.35 1.37 1.38
Euro/GBP 1.17 1.11 1.13 1.19 1.12 1.17
Brazilian Real/GBP 7.40 7.18 7.33 7.54 7.10 6.87
Mexican Peso/GBP 27.90 28.07 28.15 27.76 27.16 27.57
Chinese Yuan/GBP 8.73 8.90 8.94 8.60 8.92 8.93
Russian Rouble/GBP 99.50 100.37 102.04 101.20 101.11 101.10
=================== ========== ========== ======= ======== ========= ======
Change in accounting policy - Software-as-a-service (SaaS)
arrangements
During 2021, the Company changed its accounting policy related
to the capitalisation of certain software costs; following the
IFRIC Interpretation Committee's agenda decision published in April
2021 and relating to the capitalisation of costs of configuring or
customising application software under 'Software as a Service'
(SaaS) arrangements.
The Group's accounting policy was historically to capitalise
costs directly attributable to the configuration and customisation
of SaaS arrangements as intangible assets in the Balance Sheet,
irrespective of whether the services were performed by the SaaS
supplier or third party. Following the adoption of the above IFRIC
agenda guidance, current SaaS arrangements were identified and
assessed to determine if the Group has control of the software. For
those arrangements where we did not have control of the developed
software, to the extent that the services were performed by third
parties, the Group derecognised the intangible asset previously
capitalised. Amounts paid to the supplier in advance of the
commencement of the service period, including for configuration or
customisation, were treated as a prepayment.
Accordingly, in the FY21 Annual report the prior period Balance
Sheets at 30 June 2020 and 30 June 2019 were restated in accordance
with IAS 8, and, in accordance with IAS 1 (revised). The full
impact of the change in accounting policy is detailed in note 2 -
basis of preparation in the Genus plc Annual Report 2021.
For the six months ended 31 December 2020, this change in
accounting policy has led to a GBP1.3m increase in operating
expenses within administrative expenses, impacting the reported
operating profit, basic and diluted earnings per share, statutory
and effective tax rate and statutory cashflow, reducing operating
cashflow and reducing cash outflow in respect of investing
activities. No impact on the overall increase in cash and cash
equivalent for the period.
New standards and interpretations
In the current period, the Group has applied a number of
amendments to IFRS issued by the International Accounting Standards
Board that are mandatorily effective for an accounting period that
begins after 1 January 2021 and have been implemented with effect
from 1 July 2021. These are:
> Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 -'
Interest Rate Benchmark Reform - Phase 2'; and
> Amendment to IFRS 16 - ' COVID-19-Related Rent Concessions beyond 30 June 2021'.
Their addition has not had any material impact on the
disclosures, or amounts reported in the Group Financial
Statements.
New standards and interpretations not yet adopted
At the date of the interim report, the following standards and
interpretations which have not been applied in the report were in
issue but not yet effective (and in some cases had not yet been
adopted by the UK). The Group will continue to assess the impact of
these amendments prior to their adoption. These are:
> Amendments to IAS 1 - ' Classification of Liabilities as Current or Non-Current';
> Amendments to IAS 16 - ' Property, Plant and Equipment - Proceeds before Intended Use';
> Annual Improvements 2018-2020 Cycle;
> Amendments to IAS 37 - ' Onerous Contracts - Cost of Fulfilling a Contract';
> Amendments to IAS 1 and IFRS Practice Statement 2 - ' Disclosure of Accounting Policies';
> Amendments to IAS 12 - ' Deferred Tax related to Assets and
Liabilities arising from a Single Transaction'; and
> Amendments to IAS 8- ' Definition of Accounting Estimates'.
Going Concern
In assessing the appropriateness of adopting the going concern
basis of preparing the financial statements, the Board have
considered:
> Genus's Budget and Strategic Plan which forms management's
best estimate of the future performance and position of the
Group.
> Genus's credit facility agreement which consists of a
GBP150m multi-currency RCF, a 125m US dollar RCF and a 20m US
dollar bond and guarantee facility. The term of the facility is for
four years to August '24 having already exercised the first
extension option in August '21. The facility also includes a second
extension option to August '25.
> The facility also includes an uncommitted GBP100m accordion
option which can be requested on a maximum of three occasions over
the lifetime of the facility to fund the Group's business
development plans, and
> The potential use of mitigating actions including reduction
in dividends and postponing certain capital spend and
investments.
As part of the Directors' consideration of the appropriateness
of adopting the going concern basis in preparing the financial
statements, the Board considered several key factors, including our
business model and our strategic framework. In addition, all
principal risks identified by the Group were considered in a
downside scenario within the going concern assessment with specific
focus paid to those that could reasonably have a material impact
within our outlook period, including:
> Growing in emerging markets, which we have modelled through
reductions to short term growth expectations, particularly in
China.
> Developing products with competitive advantage, modelled
through reductions to short term growth expectations as a result of
failing to produce best genetics for our customers or to secure
elite genetics.
> Managing agricultural market and commodity prices
volatility; modelled through reductions in price expectations,
particularly in China; and
> Ensuring biosecurity or continuity of supply, which is
modelled through one off impacts of disease outbreaks and border
closures.
We have considered the position if each of the identified
principal risks materialised individually and where multiple risks
occur in parallel. In addition, we have overlaid this downside
scenario, net of mitigating actions. Based on this assessment our
headroom under these sensitivities, including our mitigating
actions, remain adequate and the Directors have a reasonable
expectation that the Group has adequate resources to continue its
operational existence for the foreseeable future and for a period
of at least 12 months from the date of this report. Accordingly,
the Directors continue to adopt and consider appropriate the going
concern basis in preparing the half-yearly report and the Condensed
Set of Financial Statements.
Alternative Performance Measures ('APMs')
In reporting nancial information, the Group presents APMs, which
are not de ned or speci ed under the requirements of IFRS and which
are not considered to be a substitute for, or superior to, IFRS
measures.
The Group believes that these APMs provide stakeholders with
additional helpful information on the performance of the business.
The APMs are consistent with how we plan our business performance
and report on it in our internal management reporting to the Board
and GELT. Some of these measures are also used for the purpose of
setting remuneration targets.
For a full list of all APMs please see the Alternative
Performance Measures Glossary section at the end of this
release.
2. SEGMENTAL INFORMATION
IFRS 8 'Operating Segments' requires operating segments to be
identified on the basis of internal reports about components of the
Group that are regularly reviewed by the Chief Executive and the
Board, to allocate resources to the segments and to assess their
performance. The Group's operating and reporting structure
comprises three operating segments: Genus PIC, Genus ABS and Genus
Research and Development. These segments are the basis on which the
Group reports its segmental information. The principal activities
of each segment are as follows:
> Genus PIC - our global porcine sales business;
> Genus ABS - our global bovine sales business; and
> Genus Research and Development - our global spend on
research and development.
A segmental analysis of revenue, operating profit, segment
assets and liabilities and is provided below. We do not include our
adjusting items in the income statement segments, as we believe
these do not reflect the underlying performance of the segments.
The accounting policies of the reportable segments are the same as
the Group's accounting policies, as described in the Financial
Statements.
Revenue
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2021 2020 2021
GBPm GBPm GBPm
------------------------------- ------------- ------------- ---------
Genus PIC 143.5 152.9 315.6
Genus ABS 130.9 129.0 250.1
Genus Research and Development
------------------------------- ------------- ------------- ---------
Porcine product development 6.0 3.0 7.3
Bovine product development 0.8 0.8 1.3
Gene editing - - -
Other research and development - - -
------------------------------- ------------- ------------- ---------
6.8 3.8 8.6
------------------------------- ------------- ------------- ---------
281.2 285.7 574.3
------------------------------- ------------- ------------- ---------
Adjusted operating profit by segment is set out below and
reconciled to the Group's adjusted operating profit. A
reconciliation of adjusted operating profit to profit for the
period is shown on the face of the Condensed Consolidated Income
Statement.
Adjusted operating profit (restated)(1)
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2021 2020 2021
GBPm GBPm GBPm
---------------------------------- ------------- ------------- ---------
Genus PIC 52.2 63.0 122.9
Genus ABS 22.1 18.7 36.4
Genus Research and Development
---------------------------------- ------------- ------------- ---------
Porcine product development (10.3) (10.3) (21.9)
Bovine product development (10.4) (9.3) (19.6)
Gene editing (3.6) (3.7) (7.6)
Other research and development (7.0) (5.7) (13.3)
---------------------------------- ------------- ------------- ---------
(31.3) (29.0) (62.4)
---------------------------------- ------------- ------------- ---------
Adjusted segment operating profit 43.0 52.7 96.9
Central (8.0) (8.9) (20.0)
---------------------------------- ------------- ------------- ---------
Adjusted operating profit 35.0 43.8 76.9
---------------------------------- ------------- ------------- ---------
1 See note 1 for details of the prior period restatement.
Our business is not highly seasonal and our customer base is
diversified, with no individual customer generating more than 2% of
revenue.
Exceptional items of GBP1.7m credit (2020: GBP5.1m expense)
relate to Genus ABS (GBP1.9m expense) and our central segment
(GBP3.6m credit). Note 3 provides details of these exceptional
items.
We consider share-based payment expenses on a Group-wide basis
and do not allocate them to reportable segments.
Other segment information
Segment assets Segment liabilities
---------------------------------- -------------------------------
(restated)(1)
31 31 30 31 31 30
December December June December December June
2021 2020 2021 2021 2020 2021
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------- ---------- ------------- ------- ---------- ---------- -------
Genus PIC 253.8 253.9 261.5 (63.3) (52.7) (57.4)
Genus ABS 232.9 198.5 203.1 (77.7) (57.3) (56.0)
Genus Research and Development
------------------------------- ---------- ------------- ------- ---------- ---------- -------
Research 18.3 6.4 17.8 (5.0) (3.7) (6.1)
Porcine product development 236.0 216.7 213.6 (57.8) (51.9) (55.0)
Bovine product development 119.0 130.9 125.0 (21.5) (28.9) (25.5)
------------------------------- ---------- ------------- ------- ---------- ---------- -------
373.3 354.0 356.4 (84.3) (84.5) (86.6)
------------------------------- ---------- ------------- ------- ---------- ---------- -------
Segment total 860.0 806.4 821.0 (225.3) (194.5) (200.0)
Central 36.2 20.7 30.0 (164.5) (149.1) (154.4)
------------------------------- ---------- ------------- ------- ---------- ---------- -------
Total 896.2 827.1 851.0 (389.8) (343.6) (354.4)
------------------------------- ---------- ------------- ------- ---------- ---------- -------
1 See note 1 for details of the prior period restatement.
Revenue by type
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2021 2020 2021
GBPm GBPm GBPm
-------------------------------------------------------------------- ------------ ------------ --------
Genus PIC 77.4 82.7 172.6
Genus ABS 126.5 125.5 242.2
Genus Research and Development 6.8 3.8 8.6
-------------------------------------------------------------------- ------------ ------------ --------
Sale of animals, semen, embryos and ancillary products and services 210.7 212.0 423.4
-------------------------------------------------------------------- ------------ ------------ --------
Genus PIC 66.1 70.2 143.0
Genus ABS 0.5 - 0.6
Genus Research and Development - - -
-------------------------------------------------------------------- ------------ ------------ --------
Royalties 66.6 70.2 143.6
-------------------------------------------------------------------- ------------ ------------ --------
Genus PIC - - -
Genus ABS 3.9 3.5 7.3
Genus Research and Development - - -
-------------------------------------------------------------------- ------------ ------------ --------
Consulting services 3.9 3.5 7.3
-------------------------------------------------------------------- ------------ ------------ --------
Total revenue 281.2 285.7 574.3
-------------------------------------------------------------------- ------------ ------------ --------
Revenue from contracts with customers
The Group's revenue is analysed below by the timing at which it
is recognised.
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2021 2020 2021
GBPm GBPm GBPm
------------------------------- ------------ ------------ --------
Genus PIC 142.0 151.5 312.8
Genus ABS 119.3 119.1 229.1
Genus Research and Development 6.8 3.8 8.6
------------------------------- ------------ ------------ --------
Recognised at a point in time 268.1 274.4 550.5
------------------------------- ------------ ------------ --------
Genus PIC 1.5 1.4 2.8
Genus ABS 11.6 9.9 21.0
Genus Research and Development - - -
------------------------------- ------------ ------------ --------
Recognised over time 13.1 11.3 23.8
------------------------------- ------------ ------------ --------
Total revenue 281.2 285.7 574.3
------------------------------- ------------ ------------ --------
3. EXCEPTIONAL ITEMS
Operating credit/(expense) Six months Six months Year
ended ended ended
31 31 30
December December June
2021 2020 2021
GBPm GBPm GBPm
---------------------------- ---------- ---------- ------
Litigation and damages (1.8) (1.7) (2.5)
Acquisition and integration (0.1) (0.1) (0.3)
Pension related - (3.3) (2.3)
Other 3.6 - 1.8
---------------------------- ---------- ---------- ------
1.7 (5.1) (3.3)
---------------------------- ---------- ---------- ------
Litigation and damages
Litigation includes legal fees and related costs of GBP1.8 m
(2020: GBP1.7m) related to the actions between ABS Global, Inc. and
certain affiliates ('ABS') and Inguran, LLC and certain affiliates
(aka STGenetics ('ST')).
Material litigation activities during the period ended 31
December 2021
In July 2014, ABS launched a legal action against ST in the US
District Court for the Western District of Wisconsin and initiated
anti-trust proceedings which ultimately enabled the launch of ABS's
IntelliGen sexing technology in the US market ('ABS I'). In June
2017, ST filed proceedings against ABS in the same District Court,
where ST alleged that ABS infringed seven patents and asserted
trade secret and breach of contract claims ('ABS II'). The ABS I
and ABS II proceedings in the periods before the year ended 30 June
2021 are more fully described in the Notes to the Financial
Statements in previous Annual Reports. ABS has sought judgments as
a matter of law ('JMOL') in relation to the invalidity of all three
of the patents considered in ABS II, JMOLs in relation to the
non-infringement of two of those patents, and a reduction in
damages awarded by the jury. The parties await the court's
decision.
On 29 January 2020, ST filed a new US complaint against ABS
('ABS III'). ABS has prepared and filed a response to the ABS III
complaint, including a motion to dismiss, on the basis that all
these issues were fully resolved in either the ABS I or ABS II
litigations.
On 10 March 2020, the USPTO issued patent 10,583,439 (the "439
patent'), and subsequently ST asked the court for permission to
file a supplemental complaint in ABS III asserting infringement of
the '439 patent. ABS believes that ST's claim for infringement
falls short and has filed an opposition to ST's request. On 15
April 2020, ST filed a new complaint ('ABS IV'), asserting the same
claim of infringement of the '439 patent alleged in its
supplemental complaint and then moved to consolidate the ABS IV and
ABS III litigation. ABS has opposed this action and has filed a
motion for summary dismissal. On 23 June 2020, the USPTO issued
patent 10,689,210 (the "210 patent'), and on 6 July 2020, ST sought
a second supplement of ABS III by adding a claim of '210 patent
infringement. ABS has opposed this action. The parties await the
court's decision.
On 26 October 2020 and 10 December 2020, ABS filed Inter Partes
Reviews ('IPR') against the '439 and '210 patents with the USPTO.
On 4 May 2021, the Patent Trial and Appeal Board ('PTAB')
instituted the '439 patent IPR, finding a likelihood of success on
all challenged claims. The hearing in the '439 patent IPR was
completed on 2 February 2022 and the parties await the Board's
decision. On 7 June 2021, PTAB declined to institute the '210
patent IPR without examining the merits of the case. PTAB's
decision was based on its exercise of its discretion, concluding
that the prior art referenced in the IPR was cited during the
initial examination, therefore ABS could not demonstrate the
examiner made a material error, notwithstanding that the relevant
prior art was not addressed by the examiner. A rehearing
application was rejected by PTAB.
On 20 December 2021, the Wisconsin Federal Court reached a
decision on the ABS III and IV motions, granting ABS's motion to
dismiss all claims relating to US patent 8,206,987 and denying ST's
motion to amend ABS III to add the '439 and '210 patents. The court
dismissed ABS III in its entirety and entered judgment favour of
ABS. In relation to ABS IV, the court stayed the case pending
completion of the '439 IPR and granted ST leave to amend ABS IV to
add the '210 patent. ST has appealed this decision.
Indian Litigation: In September 2019, ST also filed parallel
patent infringement proceedings against ABS in India, alleging
infringement of the Indian patent 240790 ("790 patent'). The '790
patent is the equivalent of the US patent 7,311,476 asserted in ABS
II. ABS had already sought the revocation of the '790 patent in
April 2017 before the Indian Patent Office and has now consolidated
the revocation petition as a counterclaim in the Indian court
proceedings. Progress of these proceedings has been delayed due to
the impact of the pandemic.
Acquisitions and integration
During the period , GBP0.1m (2020: GBP0.1m) of expenses were
incurred in relation to acquisitions during the period.
Other
Included within Other is a GBP3.6m credit relating to
non-refundable cash received for the assignment of rights to a
legacy legal claim against the Instituto Brasileiro de Café (IBC)
in Brazil. The claim was for reimbursement of unpaid amounts plus
interest in respect of coffee shipments made by a group subsidiary
to the IBC in the 1990s, when the subsidiary was part of the
Dalgety Group. Under the assignment agreement, the subsidiary has
assigned any future receipt from the legal claim to an Investment
Fund in Brazil, in exchange for an immediate cash amount and a
sliding scale earn out payment which decreases over the duration of
the period to the eventual receipt of proceeds by the assignee. No
amount has been recognised in respect of the earn out payment, as
the duration to the eventual settlement of the legal claim cannot
be estimated with any certainty.
Included in the prior year was a GBP2.0m credit resulting from a
share forfeiture exercise, in accordance with the Articles of
Association. As a three-year liability period ended during the
year, the related provision was no longer needed and was therefore
released.
Pension related
In the prior year, on 20 November 2020, the High Court ruled
that individual transfer payments made since 17 May 1990 would need
to be equalised for the effects of Guaranteed Minimum Pension
('GMP'). This judgment followed on from the previous judgment on 26
October 2018, where the High Court ruled that schemes had a legal
obligation to pay benefits allowing for GMP equalisation, resulting
in an additional liability being recognised. The previous judgment
had not considered historic transfer values. Genus's pension
schemes were also affected by this ruling, resulting in an
aggregate past service charge of GBP2.3m in the prior period, being
GBP0.9m for the Dalgety Pension Fund ('DPF') and GBP1.4m for the
Milk Pension Fund ('MPF').
4. NET FINANCE COSTS
Six months Six months Year
ended ended ended
31 31 30
December December June
2021 2020 2021
GBPm GBPm GBPm
----------------------------------------------------------- ---------- ---------- ------
Interest payable on bank loans and overdrafts (1.6) (1.4) (2.8)
Amortisation of debt issue costs (0.4) (0.5) (0.9)
Unwinding of discount put options (0.3) (0.3) (0.6)
Net interest cost in respect of pension scheme liabilities (0.1) (0.2) (0.3)
Interest on lease liabilities (0.4) (0.4) (0.8)
----------------------------------------------------------- ---------- ---------- ------
Total interest expense (2.8) (2.8) (5.4)
Interest income on bank deposits 0.1 0.2 0.4
----------------------------------------------------------- ---------- ---------- ------
Total interest income 0.1 0.2 0.4
----------------------------------------------------------- ---------- ---------- ------
Net finance costs (2.7) (2.6) (5.0)
----------------------------------------------------------- ---------- ---------- ------
5. TAXATION AND DEFERRED TAXATION
Income tax expense
Six months Six months Year
ended ended ended
31 31 30
December December June
2021 2020 2021
GBPm GBPm GBPm
------------------------- ---------- ---------- ------
Current tax 6.6 8.2 19.6
Deferred tax (1.1) 0.2 (10.6)
------------------------- ---------- ---------- ------
Total income tax expense 5.5 8.4 9.0
------------------------- ---------- ---------- ------
The tax charge for the period of GBP5.5m (2020: GBP8.4m) on the
statutory profit represents an effective tax rate of 22.5% (2020:
22.5%), including a tax benefit from the exceptional credit receipt
of GBP3.6m which is taxed at a lower tax rate of 14%, offset by the
reduced agricultural relief available in China as explained further
below.
The tax charge on adjusted profits for the period is GBP9.3m
(2020: GBP11.1m), which represents a tax rate on adjusted profits
of 25.1% (2020: 23.6%). The Group tax rate has increased by
approximately 150 basis points due to the reduced share of Group
profits arising in China which benefit from the availability of tax
relief on owned production agricultural activities. The lower
proportion of Group profits arising in China has resulted from a
decrease in PIC China's operating profit due to a decrease in
demand for breeding animals following the downturn in the Chinese
porcine market.
There is a deferred tax liability at the period end of GBP50.9m
(2020: GBP60.1m) which mainly relates to the recognition at fair
value of biological assets and intangible assets arising on
acquisition and a deferred tax asset of GBP5.1m (2020: GBP3.3m)
which mainly relates to future tax deductions in respect of pension
scheme liabilities, losses and share scheme awards.
6. DIVIDS
Amounts recognised as distributions to equity holders in the
period
Six months Six months Year
ended ended ended
31 31 30
December December June
2021 2020 2021
GBPm GBPm GBPm
------------------------------------------------------------------------- ---------- ---------- ------
Final dividend
Final dividend for the year ended 30 June 2021 of 21.7 pence per share 14.2 - -
Final dividend for the year ended 30 June 2020 of 19.7 pence per share - 12.8 12.8
Interim dividend
Interim dividend for the year ended 30 June 2021 of 10.3 pence per share - - 6.7
14.2 12.8 19.5
------------------------------------------------------------------------- ---------- ---------- ------
The final dividend for the year ended 30 June 2021 was approved
at the Company Annual General Meeting on 24 November 2021 and paid
on 10 December 2021.
On 23 February 2022, the Directors proposed an interim dividend
of 10.3 pence per share payable on 31 March 2022.
7. OTHER INTANGIBLE ASSETS
Brands, Separately
Porcine multiplier identified
and bovine contracts acquired Assets Patents,
genetics and customer intangible under licences
technology relationships assets Software construction IntelliGen and other Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- ----------- ----------- ---------- -------------- ---------- ---------- -------
Cost
Balance at 1
July 2020 52.0 85.9 137.9 18.4 2.0 25.4 4.4 188.1
Additions - - - 0.4 3.8 0.9 - 5.1
Acquisition - 3.7 3.7 - - - - 3.7
Disposals - - - (1.1) - - - (1.1)
Transfers - - - 3.1 (3.1) - - -
Effect of
movements
in exchange
rates (0.3) (8.0) (8.3) (0.8) - (2.7) (0.1) (11.9)
--------------- ----------- -------------- ----------- ---------- -------------- ---------- ---------- -------
Balance at 30
June
2021 51.7 81.6 133.3 20.0 2.7 23.6 4.3 183.9
--------------- ----------- -------------- ----------- ---------- -------------- ---------- ---------- -------
Additions - - - 0.1 4.1 - - 4.2
Acquisition - 0.3 0.3 - - - - 0.3
Transfers - - - 2.5 (2.5) - - -
Effect of
movements
in exchange
rates (0.3) 1.1 0.8 0.1 - 0.5 - 1.4
--------------- ----------- -------------- ----------- ---------- -------------- ---------- ---------- -------
Balance at 30
December
2021 51.4 83.0 134.4 22.7 4.3 24.1 4.3 189.8
--------------- ----------- -------------- ----------- ---------- -------------- ---------- ---------- -------
Amortisation
and impairment
losses
Balance at 1
July 2020 33.2 68.2 101.4 13.0 - 6.9 3.9 125.2
Disposals - - - (0.6) - - - (0.6)
Amortisation
for the
period 2.8 4.6 7.4 1.4 - 2.2 0.1 11.1
Effect of
movements
in exchange
rates - (6.6) (6.6) (0.8) - (0.7) - (8.1)
--------------- ----------- -------------- ----------- ---------- -------------- ---------- ---------- -------
Balance at 30
June
2021 36.0 66.2 102.2 13.0 - 8.4 4.0 127.6
--------------- ----------- -------------- ----------- ---------- -------------- ---------- ---------- -------
Disposals - - - - - - - -
Amortisation
for the
period 1.4 2.4 3.8 0.7 - 1.2 0.1 5.8
Effect of
movements
in exchange
rates (0.2) 0.9 0.7 0.1 - 0.2 - 1.0
--------------- ----------- -------------- ----------- ---------- -------------- ---------- ---------- -------
Balance at 31
December
2021 37.2 69.5 106.7 13.8 - 9.8 4.1 134.4
--------------- ----------- -------------- ----------- ---------- -------------- ---------- ---------- -------
Carrying
amounts
At 31 December
2021 14.2 13.5 27.7 8.9 4.3 14.3 0.2 55.4
--------------- ----------- -------------- ----------- ---------- -------------- ---------- ---------- -------
At 30 June 2021 15.7 15.4 31.1 7.0 2.7 15.2 0.3 56.3
--------------- ----------- -------------- ----------- ---------- -------------- ---------- ---------- -------
Included within brands, multiplier contracts and customer
relationships are carrying amounts for brands of GBP 0.6m (30 June
2021: GBP0.7m), multiplier contracts of GBP0.2m (30 June 2021:
GBP0.3m) and customer relationships of GBP12.7m (30 June 2021:
GBP14.4m).
Included within the software class of assets is GBP 7.3m (30
June 2021: GBP5.4m) and included in assets in the course of
construction is GBP0.7m (30 June 2021: GBP1.1m) that relate to the
ongoing development costs of GenusOne, our single global enterprise
system.
8. BIOLOGICAL ASSETS
Bovine Porcine Total
Fair value of biological assets GBPm GBPm GBPm
------------------------------------------------ ------ ------- -------
Balance at 1 July 2021 92.0 227.5 319.5
Increases due to purchases 10.1 76.5 86.6
Decreases attributable to sales - (137.3) (137.3)
Decrease due to harvest (9.4) (12.7) (22.1)
Changes in fair value less estimated sale costs (5.0) 76.8 71.8
Effect of movements in exchange rates 1.6 4 .7 6.3
------------------------------------------------ ------ ------- -------
Balance at 31 December 2021 89.3 235.5 324.8
Non-current biological assets 89.3 198.9 288.2
Current biological assets - 36.6 36.6
------------------------------------------------ ------ ------- -------
Balance at 31 December 2021 89.3 235.5 324.8
------------------------------------------------ ------ ------- -------
Balance at 1 July 2020 107.2 242.7 349.9
Increases due to purchases 5.9 57.4 63.3
Decreases attributable to sales - (111.6) (111.6)
Decrease due to harvest (11.1) (10.7) (21.8)
Changes in fair value less estimated sale costs 3.9 77.4 81.3
Effect of movements in exchange rates (9.0) (19.7) (28.7)
------------------------------------------------ ------ ------- -------
Balance at 31 December 2020 96.9 235.5 332.4
Non-current biological assets 96.9 197.3 294.2
Current biological assets - 38.2 38.2
------------------------------------------------ ------ ------- -------
Balance at 31 December 2020 96.9 235.5 332.4
------------------------------------------------ ------ ------- -------
Balance at 1 July 2020 107.2 242.7 349.9
Increases due to purchases 15.2 134.8 150.0
Decreases attributable to sales - (223.0) (223.0)
Decrease due to harvest (24.4) (21.4) (45.8)
Business combination - 0.3 0.3
Changes in fair value less estimated sale costs 3.9 118.4 122.3
Effect of movements in exchange rates (9.9) (24.3) (34.2)
------------------------------------------------ ------ ------- -------
Balance at 30 June 2021 92.0 227.5 319.5
Non-current biological assets 92.0 187.9 279.9
Current biological assets - 39.6 39.6
------------------------------------------------ ------ ------- -------
Balance at 30 June 2021 92.0 227.5 319.5
------------------------------------------------ ------ ------- -------
Bovine biological assets include GBP7.1m (2020: GBP8.2m)
representing the fair value of bulls owned by third parties but
managed by the Group, net of expected future payments to such third
parties, which are therefore treated as assets held under finance
leases.
There were no movements in the carrying value of the bovine
biological assets in respect of sales or other changes during the
period.
A risk-adjusted rate of 9.5% (2020: 8.8%) has been used to
discount future net cash flows from the sale of bull semen.
Decreases due to harvest represent the semen extracted from the
biological assets. Inventories of such semen are shown as
biological asset harvest.
In porcine, included in increases due to purchases is the
aggregate increase arising during the period on initial recognition
of biological assets in respect of multiplier purchases, other than
parent gilts , of GBP39.5m (2020: GBP23.4m).
Decreases attributable to sales during the period of GBP137.3m
(2020: GBP111.6m) include GBP38.0m (2020: GBP34.7m) in respect of
the reduction in fair value of the retained interest in the
genetics of animals, other than parent gilts, transferred under
royalty contracts.
Also included is GBP58.2m (2020: GBP46.0m) relating to the fair
value of the retained interest in the genetics in respect of
animals, other than parent gilts, sold to customers under royalty
contracts in the period.
Total revenue in the period, including parent gilts, includes
GBP104.1m (2020: GBP109.1m) in respect of these contracts,
comprising GBP38.0m (2020: GBP38.9m) on initial transfer of animals
and semen to customers and GBP66.1m (2020: GBP70.2m) in respect of
royalties received.
A risk-adjusted rate of 9.3% (2020: 8.8%) has been used to
discount future net cash flows from the expected output of the pure
line porcine herds. The number of future generations which have
been taken into account is seven (2020: seven) and their estimated
useful lifespan is 1.4 years (2020: 1.4 years).
Six months ended 31 December 2021
Bovine Porcine Total
GBPm GBPm GBPm
------------------------------------------------------ ------ ------- ------
Net IAS 41 valuation movement on biological assets(1)
Changes in fair value of biological assets (5.0) 76.8 71.8
Inventory transferred to cost of sales at fair value (4.2) (12.7) (16.9)
Biological assets transferred to cost of sales at
fair value - (61.7) (61.7)
------------------------------------------------------ ------ ------- ------
(9.2) 2.4 (6.8)
Fair value movement in related financial derivative - - -
------------------------------------------------------ ------ ------- ------
(9.2) 2 .4 (6.8)
------------------------------------------------------ ------ ------- ------
Six months ended 31 December 2020
Bovine Porcine Total
GBPm GBPm GBPm
------------------------------------------------------ ------ ------- ------
Net IAS 41 valuation movement on biological assets(1)
Changes in fair value of biological assets 3.9 77.4 81.3
Inventory transferred to cost of sales at fair value (10.5) (10.7) (21.2)
Biological assets transferred to cost of sales at
fair value - (56.4) (56.4)
------------------------------------------------------ ------ ------- ------
(6.6) 10.3 3.7
Fair value movement in related financial derivative - (0.2) (0.2)
------------------------------------------------------ ------ ------- ------
(6.6) 10.1 3.5
------------------------------------------------------ ------ ------- ------
Year ended 30 June 2021
Bovine Porcine Total
GBPm GBPm GBPm
------------------------------------------------------ ------ ------- ------
Net IAS 41 valuation movement on biological assets(1)
Changes in fair value of biological assets 3.9 118.4 122.3
Inventory transferred to cost of sales at fair value (21.1) (21.4) (42.5)
Biological assets transferred to cost of sales at
fair value - (90.0) (90.0)
------------------------------------------------------ ------ ------- ------
(17.2) 7.0 (10.2)
Fair value movement in related financial derivative - (0.6) (0.6)
------------------------------------------------------ ------ ------- ------
(17.2) 6.4 (10.8)
------------------------------------------------------ ------ ------- ------
1 This represents the difference between operating profit
prepared under IAS 41 and operating profit prepared under
historical cost accounting, which forms part of the reconciliation
to adjusted operating
profit (see APMs).
9. PROPERTY, PLANT AND EQUIPMENT
Plant, Plant,
motor Assets Total motor Total
Land and vehicles under owned Land and vehicles right-of-use
buildings and equipment construction assets buildings and equipment assets Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- ---------- -------------- ------- ---------- ------------- ------
Cost or deemed
cost
Balance at 1
July 2020 67.9 87.8 8.2 163.9 21.9 24.0 45.9 209.8
Additions 1.1 5.9 22.3 29.3 2.3 8.1 10.4 39.7
Business
combination - 0.2 - 0.2 - - - 0.2
Transfers 4.3 3.5 (7.8) - - - - -
Disposals (0.3) (2.1) - (2.4) (1.9) (4.7) (6.6) (9.0)
Effect of
movements
in exchange
rates (6.4) (7.3) (0.6) (14.3) (1.6) (1.4) (3.0) (17.3)
--------------- ---------- -------------- ------------- ------- ---------- -------------- ------------- ------
Balance at 30
June
2021 66.6 88.0 22.1 176.7 20.7 26.0 46.7 223.4
--------------- ---------- -------------- ------------- ------- ---------- -------------- ------------- ------
Additions - 1.5 24.5 26.0 1.7 2.5 4.2 30.2
Transfers 11.5 8.1 (19.6) - - - - -
Disposals (0.5) (0.5) - (1.0) (0.2) (6.1) (6.3) (7.3)
Effect of
movements
in exchange
rates 1.2 1.1 (0.2) 2.1 0.2 0.2 0.4 2.5
--------------- ---------- -------------- ------------- ------- ---------- -------------- ------------- ------
Balance at 31
December
2021 78.8 98.2 26.8 203.8 22.4 22.6 45.0 248.8
--------------- ---------- -------------- ------------- ------- ---------- -------------- ------------- ------
Depreciation
and impairment
losses
Balance at 1
July 2020 24.3 53.1 - 77.4 4.4 10.1 14.5 91.9
Depreciation
for the
year 3.2 9.8 - 13.0 3.7 7.3 11.0 24.0
Disposals (0.3) (1.5) - (1.8) (1.3) (4.2) (5.5) (7.3)
Effect of
movements
in exchange
rates (2.7) (4.5) - (7.2) (0.3) (0.7) (1.0) (8.2)
--------------- ---------- -------------- ------------- ------- ---------- -------------- ------------- ------
Balance at 30
June
2021 24.5 56.9 - 81.4 6.5 12.5 19.0 100.4
--------------- ---------- -------------- ------------- ------- ---------- -------------- ------------- ------
Depreciation
for the
period 1.8 5.3 - 7.1 1.8 3.3 5.1 12.2
Disposals (0.5) (0.4) - (0.9) (0.2) (6.0) (6.2) (7.1)
Effect of
movements
in exchange
rates 0.3 0.8 - 1.1 (0.1) 0.1 - 1.1
--------------- ---------- -------------- ------------- ------- ---------- -------------- ------------- ------
Balance at 31
December
2021 26.1 62.6 - 88.7 8.0 9.9 17.9 106.6
--------------- ---------- -------------- ------------- ------- ---------- -------------- ------------- ------
Carrying
amounts
--------------- ---------- -------------- ------------- ------- ---------- -------------- ------------- ------
At 31 December
2021 52.7 35.6 26.8 115.1 14.4 12.7 27.1 142.2
--------------- ---------- -------------- ------------- ------- ---------- -------------- ------------- ------
At 30 June 2021 42.1 31.1 22.1 95.3 14.2 13.5 27.7 123.0
--------------- ---------- -------------- ------------- ------- ---------- -------------- ------------- ------
10. Interests in joint ventures and associates
The Group's share of profit after tax in its equity accounted
investees for the six months ended 31 December 2021 was GBP3.2m
(2020: GBP5.8m).
The carrying value of the investment is reconciled as
follows:
31 31
December December
2021 2020
GBPm GBPm
-------------------------------------------------------------------- ---------- ---------
Balance at 1 July 34.1 22.7
Share of post-tax retained profits of joint ventures and associates 3.2 5.8
Additions 1.1 0.4
Disposal (0.1) -
Effect of other movements including exchange rates (2.2) (0.5)
Balance at 31 December 36.1 28.4
-------------------------------------------------------------------- ---------- ---------
Summary unaudited financial information for equity accounted
investees, adjusted for the Group's percentage ownership, is shown
below:
Net IAS 41
valuation
movement
on biological Profit after
Revenue assets Expenses Taxation tax
Income Statement GBPm GBPm GBPm GBPm GBPm
---------------------------------- --------- -------------- ---------- ---------- --------------
Six months ended 31 December 2021 19.6 (0.4) (14.7) (1.3) 3.2
---------------------------------- --------- -------------- ---------- ---------- --------------
Six months ended 31 December 2020 20.6 2.1 (14.7) (2.2) 5.8
Year ended 30 June 2021 38.9 3.1 (25.9) (3.0) 13.1
---------------------------------- --------- -------------- ---------- ---------- --------------
11. TRADE AND OTHER RECEIVABLES
31 December 31 December 30 June
2021 2020 2021
GBPm GBPm GBPm
------------------------------------ ----------- ----------- -------
Trade receivables 90.9 86.0 87.2
Less expected credit loss allowance (3.6) (4.8) (5.0)
------------------------------------ ----------- ----------- -------
Trade receivables net of impairment 87.3 81.2 82.2
Other debtors 7.8 6.5 6.4
Prepayments 9.3 6.6 6.6
Contract assets 9.8 4.8 7.7
Other taxes and social security 3.9 2.4 3.3
------------------------------------ ----------- ----------- -------
Current trade and other receivables 118.1 101.5 106.2
Non-current other receivables 1.8 2.0 1.8
------------------------------------ ----------- ----------- -------
119.9 103.5 108.0
------------------------------------ ----------- ----------- -------
Trade receivables
The average credit period our customers take on the sales of
goods is 53 days (30 June 2021: 53 days). We do not charge interest
on receivables for the first 30 days from the date of the
invoice.
The Group always measures the loss allowance for trade
receivables at an amount equal to lifetime expected credit losses
('ECLs'). The ECLs on trade receivables are estimated using a
provision matrix by reference to past default experience of the
debtor and an analysis of the debtor's current financial position,
adjusted for factors that are specific to the general economic
conditions of the industry and country in which the debtor operates
and an assessment of both the current and the forecast direction of
conditions at the reporting date. The Group writes off a trade
receivable when there is information indicating that the debtor is
in severe financial difficulty and there is no realistic prospect
of recovery, such as when the debtor has been placed under
liquidation or has entered into bankruptcy proceedings.
No customer represents more than 5% of the total balance of
trade receivables (30 June 2021: no more than 5%).
12. EARNINGS PER SHARE
Weighted average number of ordinary shares (diluted)
Six months Six months Year
ended ended ended
31 31 30
December December June
2021 2020 2021
000s 000s 000s
-------------------------------------------------------------------------------------- ---------- ---------- ------
Weighted average number of ordinary shares (basic) 65,390 65,056 65,108
Dilutive effect of share options and awards 430 554 554
-------------------------------------------------------------------------------------- ---------- ---------- ------
Weighted average number of ordinary shares for the purpose of diluted earnings per
share 65,820 65,610 65,662
-------------------------------------------------------------------------------------- ---------- ---------- ------
(restated)(1)
Six months Six months Year
ended ended ended
31 31 30
December December June
2021 2020 2021
(pence) (pence) (pence)
------------------------------------ ----------- ------------- ---------
Earnings per share
Basic earnings per share 30.4 46.4 72.6
Diluted earnings per share 30.2 46.0 72.0
------------------------------------ ----------- ------------- ---------
Adjusted earnings per share
Adjusted earnings per share 42.4 55.3 100.9
Diluted adjusted earnings per share 42.1 54.9 100.1
------------------------------------ ----------- ------------- ---------
1 See note 1 for details of the prior period restatement.
Earnings per share measures are calculated on the weighted
average number of ordinary shares in issue during the period. As in
previous periods, adjusted earnings per share have been shown,
since the Directors consider that this alternative measure gives a
more comparable indication of the Group's trading performance.
Basic earnings per share is based on the net profit attributable
to owners of the Company for the period of GBP19.9m (six months
ended 31 December 2020: GBP30.2m; year ended 30 June 2021:
GBP47.3m) divided by weighted average number of ordinary shares
(basic and diluted) as calculated above.
Adjusted earnings per share is calculated on profit for the
period before net IAS 41 valuation movement on biological assets,
amortisation of acquired intangible assets, share-based payment
expense and exceptional items, after charging taxation associated
with those profits, of GBP27.7m (six months ended 31 December 2020:
GBP36.0m; year ended 30 June 2021: GBP65.7m), which is calculated
as follows:
Adjusted earnings
(restated)(1)
Six months Six months Year
ended ended ended
31 31 30
December December June
2021 2020 2021
GBPm GBPm GBPm
--------------------------------------------------------------------- ------------ ------------- ------
Profit before tax 24.4 37.4 55.8
Add/(deduct):
Net IAS 41 valuation movement on biological assets 6.8 (3.5) 10.8
Amortisation of acquired intangible assets 3.8 3.7 7.4
Share-based payment expense 2.2 4.3 7.7
Exceptional items (see note 3) (1.7) 5.1 3.3
Net IAS 41 valuation movement on biological assets in joint ventures 0.4 (2.1) (3.1)
Tax on joint ventures and associates 1.3 2.2 3.0
Attributable to non-controlling interest (0.2) - (0.1)
--------------------------------------------------------------------- ------------ ------------- ------
Adjusted profit before tax 37.0 47.1 84.8
Adjusted tax charge (9.3) (11.1) (19.1)
--------------------------------------------------------------------- ------------ ------------- ------
Adjusted profit after tax 27.7 36.0 65.7
--------------------------------------------------------------------- ------------ ------------- ------
Effective tax rate on adjusted profit 25.1% 23.6% 22.5%
--------------------------------------------------------------------- ------------ ------------- ------
1 See note 1 for details of the prior period restatement.
13. CASH FLOW FROM OPERATING ACTIVITIES
(restated)(1)
Six months Six months Year
ended ended ended
31 31 30
December December June
2021 2020 2021
GBPm GBPm GBPm
---------------------------------------------------------------------- ------------ ------------- ------
Profit for the period 18.9 29.0 46.8
Adjustment for:
Net IAS 41 valuation movement on biological assets 6.8 (3.5) 10.8
Amortisation of acquired intangible assets 3.8 3.7 7.4
Share-based payment expense 2.2 4.3 7.7
Share of profit of joint ventures and associates (3.2) (5.8) (13.1)
Finance costs (net) 2.7 2.6 5.0
Income tax expense 5.5 8.4 9.0
Exceptional items (1.7) 5.1 3.3
----------------------------------------------------------------------- ------------ ------------- ------
Adjusted operating profit from continuing operations 35.0 43.8 76.9
Depreciation of property, plant and equipment 12.2 11.9 24.0
(Profit)/loss on disposal of plant and equipment (0.1) - 0.4
Loss on disposal of intangible assets - 0.4 0.5
Amortisation and impairment of intangible assets 2.0 1.6 3.7
----------------------------------------------------------------------- ------------ ------------- ------
Adjusted earnings before interest, tax, depreciation and amortisation 49.1 57.7 105.5
Cash impact of exceptional items 2.7 (1.8) (3.0)
Other movements in biological assets and harvested produce (5.8) (7.7) (12.8)
Decrease in provisions and release in deferred consideration (0.1) (0.4) (0.4)
Additional pension contributions in excess of pension charge (2.3) (3.2) (7.0)
Other (0.6) (0.6) (1.3)
----------------------------------------------------------------------- ------------ ------------- ------
Operating cash flows before movement in working capital 43.0 44.0 81.0
(Increase)/decrease in inventories (8.2) 0.6 (1.3)
Increase in receivables (11.9) (5.7) (11.0)
(Decrease)/Increase in payables (0.7) 3.9 17.9
----------------------------------------------------------------------- ------------ ------------- ------
Cash generated by operations 22.2 42.8 86.6
Interest received 0.1 0.2 0.4
Interest and other finance costs paid (1.7) (1.4) (2.8)
Interest on leased assets (0.4) (0.4) (0.8)
Cash flow from derivative financial instruments (0.3) - 0.2
Income taxes paid (8.3) (5.3) (16.1)
----------------------------------------------------------------------- ------------ ------------- ------
Net cash from operating activities 11.6 35.9 67.5
----------------------------------------------------------------------- ------------ ------------- ------
1 See note 1 for details of the prior period restatement.
14. RETIREMENT BENEFIT OBLIGATIONS
The Group has a number of defined contribution and defined
benefit pension schemes covering many of its employees, further
details can be found in the Genus plc Annual Report 2021. The
aggregated position of defined benefit schemes are provided
below:
31 December 31 December 30 June
2021 2020 2021
GBPm GBPm GBPm
----------------------------------------------------- ----------- ----------- ---------
Present value of funded obligations 1,100.2 1,166.1 1,097.7
Present value of unfunded obligations 9.0 9.0 8.9
----------------------------------------------------- ----------- ----------- ---------
Total present value of obligations 1,109.2 1,175.1 1,106.6
Fair value of plan assets (1,176.1) (1,189.0) (1,147.2)
Restricted recognition of asset (DPF) 9.6 8.1 8.8
Restricted recognition of asset (MPF) 66.1 20.8 42.9
----------------------------------------------------- ----------- ----------- ---------
Recognised liability for defined benefit obligations 8.8 15.0 11.1
----------------------------------------------------- ----------- ----------- ---------
The principal actuarial assumptions (expressed as weighted
averages) are:
31 31 30
December December June
2021 2020 2021
--------------------- --------- --------- -----
Discount rate 1.95% 1.45% 1.90%
Consumer Price Index 2.30% 2.10% 2.10%
Retail Price Index 3.05% 2.60% 2.85%
--------------------- --------- --------- -----
The Milk Pension Fund
We have accounted for our section of the scheme and our share of
any orphan assets and liabilities, which together represent
approximately 86% of the MPF. Although the MPF is managed on a
sectionalised basis, it is a "last man standing scheme", which
means that all participating employers are joint and severally
liable for all of the fund's liabilities.
On 23 September 2021, a formal actuarial valuation with an
effective date of 31 March 2021 was completed by the scheme's
actuary Aon Solutions UK Limited. The market value of the available
assets at 31 March 2021 was GBP492m. The value of those assets
represented approximately 103% of the value of the uninsured
liabilities, which were GBP480m at the 31 March 2021. Reflecting
the improvement in the funding position and with effect from 1
September 2021, no deficit repair contributions are payable but
funding the scheme's operating expenses of GBP1.1m per annum was
agreed to be paid, rising thereafter by 3.4% per annum until 30
September 2026.
Further details of the Milk Pension Fund can be found in the
Genus plc Annual Report 2021.
15. Financial instruments fair value disclosures
The table below sets out the categorisation of the financial
instruments held by the Group at 31 December 2021.
We have categorised financial instruments held at valuation into
a three-level fair value hierarchy, based on the priority of the
inputs to the valuation technique in accordance with IFRS 13. The
hierarchy gives the highest priority to quoted prices in active
markets for identical assets or liabilities (Level 1) and the
lowest priority to unobservable inputs (Level 3). Valuations
categorised as Level 2 are obtained from third parties. If the
inputs used to measure fair value fall within different levels of
the hierarchy, we base the category level on the lowest priority
level input that is significant to the fair value measurement of
the instrument in its entirety.
31 December 2021 31 December 2020 30 June 2021
Level Level 2 Level Total Level Level 2 Level Total Level Level 2 Level Total
1 GBPm 3 GBPm 1 GBPm 3 GBPm 1 GBPm 3 GBPm
GBPm GBPm GBPm GBPm GBPm GBPm
---------------- ------ ------- ------ ------- ------ ------- ------ ------- ------ ------- ------ -------
Financial assets
Other
investments 12.4 - 3. 5 15.9 1.8 - 5.0 6.8 2.0 10.4 2.3 14.7
Trade
receivables and
other debtors,
excluding
prepayments and
contract assets
(see note 11) - 100.8 - 100.8 - 90.1 - 90.1 - 91.9 - 91.9
Cash and cash
equivalents - 45.9 - 45.9 - 50.2 - 50.2 - 46.0 - 46.0
Derivative
instruments in
non-designated
hedge
accounting
relationships - 0.6 - 0.6 - 0.9 - 0.9 - 0.1 - 0.1
12.4 147.3 3.5 163.2 1.8 141.2 5.0 148.0 2.0 148.4 2.3 152.7
---------------- ------ ------- ------ ------- ------ ------- ------ ------- ------ ------- ------ -------
Financial
liabilities
Trade and other
payables,
excluding other
taxes and
social security - (106.9) - (106.9) - (89.7) - (89.7) - (102.1) - (102.1)
Loans and
overdrafts - (161.6) - (161.6) - (114.8) - (114.8) - (123.3) - (123.3)
Leasing
obligations - (27.6) - (27.6) - (27.6) - (27.6) - (28.3) - (28.3)
Derivative
instruments in
non-designated
hedge
accounting
relationships - (0.3) - (0.3) - (0.3) - (0.3) - - - -
Derivative
instruments in
designated
hedge
accounting
relationships - - - - - (0.1) - (0.1) - - - -
Put options for
purchase of
share in an
investment - (0.9) - (0.9) - - - - - - - -
Put option over
non-controlling
interest - (6.6) - (6.6) - (5.9) - (5.9) - (6.1) - (6.1)
Deferred
consideration - (0.2) (1.7) (1.9) - (0.4) (1.0) (1.4) - (0.4) (1.7) (2.1)
---------------- ------ ------- ------ ------- ------ ------- ------ ------- ------ ------- ------ -------
- (304.1) (1.7) (305.8) - (238.8) (1.0) (239.8) - (260.2) (1.7) (261.9)
---------------- ------ ------- ------ ------- ------ ------- ------ ------- ------ ------- ------ -------
The Directors consider that the carrying value amounts of
financial assets and financial liabilities recorded at amortised
cost in the financial statements are approximately equal to their
fair values.
16. RELATED PARTY TRANSACTIONS
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note.
Bomaz, Inc. and Bogz Dairy, LLC, are well recognised breeders in
the industry, and are related parties to the Group as these
entities are under the control of relatives of Nate Zwald, our ABS
Dairy COO.
We transact with Bomaz, Inc. and Bogz Dairy, LLC as part of our
bull product development effort, under a variety of contracts and
agreements. Payments in the six months ended 31 December 2021
amounted to GBP0.1m (2020: GBP0.4m). As at 31 December 2021, the
balance owing to these entities was GBPnil (2020: GBPnil), all
amounts were settled in cash.
These related party transactions were made on terms equivalent
to those that prevail in arms' length transactions.
Other related party transactions
Transactions between the Group and its joint ventures and
associates are described below:
Transaction value Balance outstanding
------------------------------ ------------------------------
Six months Six months Year Six months Six months Year
ended ended ended ended ended ended
31 31 30 31 31 30
December December June December December June
2021 2020 2021 2021 2020 2021
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------------------------ ---------- ---------- ------ ---------- ---------- ------
Sale of goods and services to joint ventures and
associates - - (1.8) - - 0.4
Purchase of goods and services from joint ventures and
associates 2.8 3.3 5.0 (0.3) (1.0) (0.4)
------------------------------------------------------ ---------- ---------- ------ ---------- ---------- ------
All outstanding balances with joint ventures and associates are
priced on an arm's length basis and are to be settled in cash
within six months of the reporting date. None of the balances are
secured.
17. Post Balance sheet event
On 22 February 2022, PIC has entered into an agreement with
Olymel LP, a leader in the Canadian agrifood industry, for
provision of genetic products and services in connection with the
Olymel's AlphaGene porcine genetic improvement program. Under the
transaction, PIC has acquired all intellectual property in Olymel's
elite porcine genetics for a total cash consideration of CAD$ 25.0m
(GBP14.5m). The parties have also entered into an exclusive long
term genetics collaboration agreement, where PIC will supply elite
germplasm and manage the ongoing genetic improvement of Olymel's
AlphaGene genetics.
Due to the timing of the acquisition the initial accounting for
the business combination is incomplete and the associated
disclosures cannot currently be made. Those disclosures will be
made in our financial statements for the year ended 30 June
2022.
GENUS PLC
RESPONSIBILITY STATEMENT
For the six months ended 31 December 2021
We confirm that to the best of our knowledge;
a) the Condensed Set of Financial Statements has been prepared in accordance with IAS 34;
b) the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first six months and description of the principal risks
and uncertainties for the remaining six months of the year);
and
c) the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related party
transactions and charges therein).
Neither the Company nor the Directors accept any liability to
any person in relation to the half-yearly financial report except
to the extent that such liability could arise under English Law.
Accordingly, any liability to a person who has demonstrated
reliance on any untrue or misleading statement or omission shall be
determined in accordance with section 90A of the Financial Services
and Markets Act 2000.
By order of the Board
Chief Executive Chief Financial Officer
Stephen Wilson Alison Henriksen
23 February 2022
Alternative Performance Measures GLOSSARY
The Group tracks a number of APMs in managing its business,
which are not defined or specified under the requirements of IFRS
because they exclude amounts that are included in, or include
amounts that are excluded from, the most directly comparable
measure calculated and presented in accordance with IFRS, or are
calculated using financial measures that are not calculated in
accordance with IFRS.
The Group believes that these APMs, which are not considered to
be a substitute for or superior to IFRS measures, provide
stakeholders with additional helpful information on the performance
of the business. These APMs are consistent with how the business
performance is planned and reported within the internal management
reporting to the Board and GELT. Some of these APMs are also used
for the purpose of setting remuneration targets.
These APMs should be viewed as supplemental to, but not as a
substitute for, measures presented in the consolidated financial
information relating to the Group, which are prepared in accordance
with IFRS. The Group believes that these APMs are useful indicators
of its performance. However, they may not be comparable to
similarly-titled measures reported by other companies, due to
differences in the way they are calculated.
The key APMs that the Group uses include:
Alternative Performance Calculation methodology and closest Reasons why we believe
Measures equivalent IFRS measure (where applicable) the
APMs are useful
----------------------- ---------------------------------------------- --------------------------------
Income statement measures
---------------------------------------------------------------------------------------------------------
Adjusted operating Adjusted operating profit is operating Allows the comparison
profit exc JVs profit with the net IAS 41 valuation of underlying financial
movement on biological assets, amortisation performance by excluding
of acquired intangible assets, share-based the impacts of exceptional
payment expense and exceptional items items and is a performance
added back and excludes JV and associate indicator against
results. which short-term and
long-term incentive
Closest equivalent IFRS measure: Operating outcomes for our senior
profit(1) executives are measured:
net IAS 41 valuation
See reconciliation below. movements on biological
Adjusted operating assets - these movements
profit inc JVs can be materially
volatile and do not
directly correlate
to the underlying
Including adjusted operating profit trading performance
from JV and associate results. in the period. Furthermore,
the movement is non-cash
See reconciliation below. related and many assumptions
Adjusted operating used in the valuation
profit inc JVs model are based on
exc gene editing projections rather
costs than current trading;
amortisation of acquired
Including adjusted operating profit intangible assets
from JV and associate results but - excluding this improves
excluding gene editing costs. the comparability
between acquired and
Adjusted operating organically grown
profit inc JVs See reconciliation below. operations, as the
after tax latter cannot recognise
internally generated
Adjusted operating profit including intangible assets.
JV less adjusted effective tax. Adjusting for amortisation
Adjusted profit provides a more consistent
inc JVs before basis for comparison
tax See reconciliation below. between the two;
share-based payments
- this expense is
considered to be relatively
Adjusted profit Adjusted operating profit including volatile and not fully
inc JVs JVs less net finance costs. reflective of the
after tax current period trading,
See reconciliation below. as the performance
criteria are based
on EPS performance
over a three-year
Adjusted profit including JVs before period and include
tax less adjusted effective tax. estimates of future
performance; and
See reconciliation below. exceptional items
- these are items
which due to either
their size or their
nature are excluded,
to improve the understanding
of the Group's underlying
performance.
----------------------- ---------------------------------------------- --------------------------------
Adjusted profit Adjusted operating profit before tax, This measure is presented
inc JVs before excluding the impact of the change only this year to
tax exc SaaS in accounting policy related to the demonstrate the impact
impact accounting for Software as a service of our change in accounting
('SaaS') (See note 1) policy, and will not
be presented in future
See reconciliation below periods. We present
this measure to allow
comparability of financial
performance with the
expectations of the
year, which were based
on our pre-existing
accounting policy
----------------------- ---------------------------------------------- --------------------------------
Adjusted effective Total income tax charge for the Group Provides an underlying
tax rate excluding the tax impact of adjusting tax rate to allow
items, divided by the adjusted profit comparability of underlying
before tax. financial performance,
by excluding the impacts
Closest equivalent IFRS measure: of net IAS 41 valuation
Effective tax rate movement on biological
assets, amortisation
See reconciliation below. of acquired intangible
assets, share-based
payment expense and
exceptional items.
----------------------- ---------------------------------------------- --------------------------------
Adjusted basic Adjusted profit after tax profit divided On a per share basis,
earnings by the this allows the comparability
per share weighted basic average number of shares. of underlying financial
performance by excluding
Closest equivalent IFRS measure: the impacts of adjusting
Earnings per share items.
See calculation below.
Adjusted diluted
earnings per Underlying attributable profit divided
share by the diluted weighted basic average
number of shares.
Closest equivalent IFRS measure:
Diluted earnings per share
See calculation below.
----------------------- ---------------------------------------------- --------------------------------
Adjusted earnings Adjusted earnings per share divided The Board dividend
cover by the expected dividend for the preceding policy targets the
12 months. adjusted earning cover
to be between 2.5-3
See calculation below. times.
----------------------- ---------------------------------------------- --------------------------------
Adjusted EBITDA This is adjusted operating profit, This APM is presented
- calculated adding back cash received from our because it is used
in accordance joint ventures, depreciation of property, in calculating our
with the definitions plant and equipment, depreciation ratio of net debt
used in our financing of the historical cost of biological to EBITDA and our
facilities assets, operational amortisation (i.e. interest cover, which
excluding amortisation of acquired we report to our banks
intangibles) and deducting the amount to ensure compliance
attributable to minority interest. with our bank covenants.
Closest equivalent IFRS measure: Operating
profit(1)
See reconciliation below.
----------------------- ---------------------------------------------- --------------------------------
Adjusted operating Adjusted operating profit (including Allows for the comparability
margin JVs) divided by revenue. of underlying financial
performance by excluding
the impacts of exceptional
items.
----------------------- ---------------------------------------------- --------------------------------
Adjusted operating Adjusted operating profit divided
margin (exc JVs) by revenue.
----------------------- ---------------------------------------------- --------------------------------
Constant currency The Group reports certain financial The Group's business
basis measures, on both a reported and constant operates in multiple
currency basis and re-translates the countries worldwide
current year's results at the average and its trading results
actual exchange rates used in the are translated back
previous financial year. into the Group's functional
currency of Sterling.
This measure eliminates
the effects of exchange
rate fluctuations
when comparing year-on-year
reported results.
----------------------- ---------------------------------------------- --------------------------------
Balance sheet measures
---------------------------------------------------------------------------------------------------------
Net debt Net debt is gross debt, made up of This allows the Group
unsecured bank loans and overdrafts to monitor its levels
and obligations under finance leases, of debt.
with a deduction for cash and cash
equivalents.
See reconciliation below.
----------------------- ---------------------------------------------- --------------------------------
Net debt - calculated Net debt excluding the impact of adopting This is a key metric
in accordance IFRS 16 and adding back guarantees that we report to
with the definitions and deferred purchase arrangements. our banks to ensure
used in our financing compliance with our
facilities See reconciliation below. bank covenants.
----------------------- ---------------------------------------------- --------------------------------
Cash flow measures
---------------------------------------------------------------------------------------------------------
Cash conversion Cash generated by operations as a This is used to measure
percentage of adjusted operating profit how much operating
excluding JVs. cash flow we are generating
and how efficient
See calculation below. we are at converting
our operating profit
into cash.
----------------------- ---------------------------------------------- --------------------------------
Free cash flow Cash generated by the Group before Shows the cash retained
debt repayments, acquisitions and by the Group in the
investments, dividends and proceeds year.
from share issues.
Closest IFRS measure: Net cash flow
from operating activities
See reconciliation below.
----------------------- ---------------------------------------------- --------------------------------
Other measures
---------------------------------------------------------------------------------------------------------
Ratio of net The ratio of net debt, calculated This APM is used as
debt to adjusted in accordance with the definitions a measurement of our
EBITDA used in our financing facilities, leverage and is also
is gross debt, made up of unsecured a key metric that
bank loans and overdrafts and obligations we report to our banks
under finance leases, with a deduction to ensure compliance
for cash and cash equivalents and with our bank covenants.
adding back amounts related to guarantees
and deferred purchase arrangements,
to adjusted EBITDA.
Closest equivalent IFRS components
for the ratio: The equivalent IFRS
components are gross debt, cash and
cash equivalents and operating profit.
See calculation below.
1 Operating profit is not defined per IFRS. It is presented in
the Group Income Statement and is shown as profit before tax,
finance income/costs and share of post-tax profit of joint ventures
and associates retained.
The tables below reconcile the closest equivalent Ifrs measure
to the apm or outline the calculation of the apm
Income statement measures
Adjusted operating profit exc JVs
Adjusted operating profit inc JVs
Adjusted operating profit inc JVs and exc gene editing costs
(restated)(1)
31 December 31 December 30 June
2021 2020 2021
-------------- --------------- ------------
GBPm GBPm GBPm GBPm GBPm GBPm Reference
----------------------------------- ------ ------ -------- ----- ----- ----- ----------------------------------
Operating profit 23.9 34.2 47.7 Group Income Statement
Add back:
Net IAS 41 valuation movement on
biological assets 6.8 (3.5) 10.8 Group Income Statement
Amortisation of acquired intangible
assets 3.8 3.7 7.4 Group Income Statement
Share-based payment expense 2.2 4.3 7.7 Group Income Statement
Exceptional items (1.7) 5.1 3.3 Group Income Statement
----------------------------------- ------ ------ -------- ----- ----- ----- ----------------------------------
Adjusted operating profit exc JVs 35.0 43.8 76.9 Group Income Statement
Less: amounts attributable to
non-controlling interest (0.2) - (0.1) Group Income Statement
Operating profit from joint
ventures and associates 3.2 5.8 13.1 Group Income Statement
Tax on joint ventures and 1.3 2.2 3.0 Note 10 - Interests in joint
associates ventures and associates
Net IAS 41 valuation movement 0.4 (2.1) (3.1) Note 10 - Interests in joint
ventures and associates
----------------------------------- ------ ------ -------- ----- ----- ----- ----------------------------------
Adjusted operating profit from JVs 4.9 5.9 13.0
----------------------------------- ------ ------ -------- ----- ----- ----- ----------------------------------
Adjusted operating profit inc JVs 39.7 49.7 89.8
Gene editing costs 3.6 3.7 7.6 Note 2 - Segmental information
----------------------------------- ------ ------ -------- ----- ----- ----- ----------------------------------
Adjusted operating profit inc JVs
and exc gene editing costs 43.3 53.4 97.4
----------------------------------- ------ ------ -------- ----- ----- ----- ----------------------------------
Adjusted profit inc JVs before tax
Adjusted profit inc JVs after tax
(restated)(1)
31 December 31 December 30 June
2021 2020 2021
------------- ------------- --------
GBPm GBPm GBPm Reference
----------------------------------- ------------ ------------- -------- ----------------------------
Adjusted operating profit inc JVs 39.7 49.7 89.8 See APM
Less net finance costs (2.7) (2.6) (5.0) Note 4 - Net finance costs
------------------------------------ ------------ ------------- -------- ----------------------------
Adjusted profit inc JVs before tax 37.0 47.1 84.8
Adjusted tax (9.3) (11.1) (19.1) Note 12 - Earnings per share
------------------------------------ ------------ ------------- -------- ----------------------------
Adjusted profit inc JVs after tax 27.7 36.0 65.7
------------------------------------ ------------ ------------- -------- ----------------------------
Adjusted profit inc JVs before tax exc SaaS impact
(restated)(1)
31 December 31 December 30 June
2021 2020 2021
------------- ------------- --------
GBPm GBPm GBPm Reference
--------------------------------------------------- ------------ ------------- -------- -------------------
Adjusted profit inc JVs before tax 37.0 47.1 84.8 See APM
Impact of change in accounting policy - 1.3 2.7 No direct reference
---------------------------------------------------- ------------ ------------- -------- -------------------
Adjusted profit inc JVs before tax exc SaaS impact 37.0 48.4 87.5
---------------------------------------------------- ------------ ------------- -------- -------------------
1 See note 1 for details of the prior period restatement.
Adjusted effective tax GBPm/rate
(restated)(1)
31 December 31 December 30 June
2021 2020 2021
-------------- --------------- -------------
GBPm % GBPm % GBPm % Reference
---------------------------------------- ------ ------ ------ ------- ----- ------ ----------------------------
Adjusted effective tax GBPm/rate 9.3 25.1 11.1 23.6 19.1 22.5 Note 12 - Earnings per share
Exceptional items 0.1 - (1.0) (19.6) (1.1) (33.3) No direct reference
Share-based payment expense (0.5) (22.7) (0.8) (18.9) (1.6) (20.8) No direct reference
Amortisation of acquired intangible
assets (0.7) (18.4) (0.8) (21.6) (1.5) (20.3) No direct reference
Net IAS 41 valuation movement on
biological assets (1.3) (19.1) 1.3 37.1 (2.9) (26.9) No direct reference
Effective tax GBPm/rate 6.9 21.2 9.8 19.9 12.0 20.4 No direct reference
---------------------------------------- ------ ------ ------ ------- ----- ------ ----------------------------
Adjusted basic earnings per share
(restated)(1)
31 December 31 December 30 June
2021 2020 2021 Reference
------------------------------------------- ------------- ------------- ------- ----------------------------
Adjusted profit inc JVs after tax (GBPm) 27.7 36.0 65.7 See APM
Weighted average number of ordinary shares
('000) 65.390 65.056 65.108 Note 12 - Earnings per share
-------------------------------------------- ------------ ------------- ------- ----------------------------
Adjusted basic earnings per share (pence) 42.4 55.3 100.9
-------------------------------------------- ------------ ------------- ------- ----------------------------
Adjusted diluted earnings per share
(restated)(1)
31 December 31 December 30 June
2021 2020 2021 Reference
------------------------------------------- ------------- ------------- ------- ----------------------------
Adjusted profit inc JVs after tax (GBPm) 27.7 36.0 65.7 See APM
Weighted average number of diluted ordinary
shares ('000) 65.820 65.610 65.662 Note 12 - Earnings per share
-------------------------------------------- ------------ ------------- ------- ----------------------------
Adjusted diluted earnings per share (pence) 42.1 54.9 100.1
-------------------------------------------- ------------ ------------- ------- ----------------------------
Rolling 12 month Adjusted Earnings cover
(restated)(1)
31 December 31 December 30 June
2021 2020 2021
-------------- --------------- ------------
Pence Times Pence Times Pence Times Reference
-------------------------------------------------- ------- ----- -------- ----- ----- ----- -------------------
Adjusted Earnings per share 42.4 55.3 100.9 See APM
Add: Prior June Adjusted Earnings per share 100.9 77.3 N/a See APM
Deduct: Prior Interim Adjusted Earnings per share (55.3) (43.0) N/a See APM
-------------------------------------------------- ------- ----- -------- ----- ----- ----- -------------------
Rolling 12 month adjusted Earnings per share 88.0 89.6 100.9
Dividend for the period 10.3 10.3 32.0 Note 6 - Dividends
Add: Dividend for prior June 32.0 29.1 N/a Note 6 - Dividends
Less: prior interim dividend (10.3) (9.4) N/a Note 6 - Dividends
-------------------------------------------------- ------- ----- -------- ----- ----- ----- -------------------
Rolling 12-month dividend 32 .0 30.0 32.0
-------------------------------------------------- ------- ----- -------- ----- ----- ----- -------------------
Rolling 12 month Adjusted Earnings cover 2.8 3.0 3. 2 No direct reference
-------------------------------------------------- ------- ----- -------- ----- ----- ----- -------------------
1 See note 1 for details of the prior period restatement.
Adjusted EBITDA - as calculated under our financing
facilities
(restated)(1,2)
31 December 31 December 30 June
2021 2020 2021
-------------- ----------------- -------------
GBPm GBPm GBPm GBPm GBPm GBPm Reference
--------------------------------- ------- ----- --------- ------ ------ ----- ---------------------------------
Operating profit 23.9 34.2 47.7 Group Income Statement
Add back:
Net IAS 41 valuation movement on
biological assets 6.8 (3.5) 10.8 Group Income Statement
Amortisation of acquired
intangible assets 3.8 3.7 7.4 Group Income Statement
Share-based payment expense 2.2 4.3 7.7 Group Income Statement
Exceptional items (1.7) 5.1 3.3 Group Income Statement
--------------------------------- ------- ----- --------- ------ ------ ----- ---------------------------------
Adjusted operating profit exc JVs 35.0 43.8 76.9 Group Income Statement
Adjust for:
Cash received from JVs (dividend - - 4.1 Group Statement of Cash Flows
and loan repayment)
Depreciation: property, plant and Note 9 - Property, plant and
equipment 12.2 11.9 24.0 equipment
Operational lease payments (5.6) (5.4) (12.5) No direct reference
Depreciation: historical cost of
biological assets 5.5 5.2 10.0 No direct reference
Amortisation and impairment
(excluding separately
identifiable acquired intangible
assets) 2.0 1.6 3.7 Note 7 - Intangible assets
Less amounts attributable to
non-controlling interest (0.2) - (0.1) Group Income Statement
--------------------------------- ------- ----- --------- ------ ------ ----- ---------------------------------
Adjusted EBITDA - as calculated
under our financing facilities 48.9 57.1 106.1
--------------------------------- ------- ----- --------- ------ ------ ----- ---------------------------------
Rolling 12 month Adjusted EBITDA - as calculated under our
financing facilities
(restated)(1,2)
31 December 31 December 30 June
2021 2020 2021
-------------- ----------------- ------------
GBPm GBPm GBPm GBPm GBPm GBPm Reference
---------------------------------------------------------- -------- ---- --------- ------ ----- ----- ---------
Operating profit
Adjusted EBITDA - as calculated under our financing
facilities 48.9 57.1 106.1 See APM
Add: Prior June Adjusted EBITDA 106.1 96.4 N/a See APM
Deduct: Prior Interim Adjusted EBITDA (57.1) (42.8) N/a See APM
Rolling 12 month Adjusted EBITDA 97.9 110.7 106.1
---------------------------------------------------------- -------- ---- --------- ------ ----- ----- ---------
1 See note 1 for details of the prior period restatement.
2 Following Genus entering a new credit facility the definitions
of EBITDA, Borrowings and Net Debt were amended. Consequently, the
comparative values have been restated to reflect the amended
definitions as reported to the banks.
Balance sheet measures
Net Debt
Net debt as calculated under our financing facilities
31 December 31 December 30 June
2021 2020 2021
--------------- --------------- -------------
GBPm GBPm GBPm GBPm GBPm GBPm Reference
------------------------------------------------ ------ ------- ------ ------- ----- ------ -------------------
Current unsecured bank loans and overdrafts 10.6 9.8 13.9
Non-current unsecured bank loans and overdrafts 151.0 105.0 109.4
------------------------------------------------ ------ ------- ------ ------- ----- ------ -------------------
Unsecured bank loans and overdrafts 161.6 114.8 123.3 Group Balance Sheet
Current obligations under finance leases 8.6 9.0 9.0
Non-current obligations under finance leases 19.0 18.6 19.3
------------------------------------------------ ------ ------- ------ ------- ----- ------ -------------------
Obligations under finance leases 27.6 27.6 28.3 Group Balance Sheet
------------------------------------------------ ------ ------- ------ ------- ----- ------ -------------------
Total debt financing 189.2 142.4 151.6
Deduct:
Cash and cash equivalents (45.9) (50.2) (46.0) Group Balance Sheet
------------------------------------------------ ------ ------- ------ ------- ----- ------ -------------------
Net debt 143.3 92.2 105.6
------------------------------------------------ ------ ------- ------ ------- ----- ------ -------------------
Deduct:
Lower of obligations under finance leases or
GBP30m(2) (27.6) (27.6) (28.3)
Add back:
Guarantees 19.1 19.6 19.1 No direct reference
Deferred purchase arrangements 1.1 1.2 0.1 No direct reference
------------------------------------------------ ------ ------- ------ ------- ----- ------ -------------------
Net debt - as calculated under our financing
facilities 135.9 85.4 96.5
------------------------------------------------ ------ ------- ------ ------- ----- ------ -------------------
Cash flow measures
Cash conversion
(restated)(1,2)
31 December 31 December 30 June
2021 2020 2021
-------------- ----------------- ----------
GBPm GBPm GBPm GBPm GBPm GBPm Reference
----------------------------------- ------- ----- --------- ------ ---- ---- ----------------------------------
Cash generated by operations 22.2 42.8 86.6 Note 13 - Notes to the cash flow
statement
Operating profit 23.9 34.2 47.7 Group Income Statement
Add back:
Net IAS 41 valuation movement on
biological assets 6.8 (3.5) 10.8 Group Income Statement
Amortisation of acquired intangible
assets 3.8 3.7 7.4 Group Income Statement
Share-based payment expense 2.2 4.3 7.7 Group Income Statement
Exceptional items (1.7) 5.1 3.3 Group Income Statement
----------------------------------- ------- ----- --------- ------ ---- ---- ----------------------------------
Adjusted operating profit exc JVs 35.0 43.8 76.9 Group Income Statement
Cash conversion (%) 63 % 98% 113%
----------------------------------- ------- ----- --------- ------ ---- ---- ----------------------------------
Free cash flow
(restated)(1,2)
31 December 31 December 30 June
2021 2020 2021
------------- --------------- --------
GBPm GBPm GBPm Reference
---------------------------------- ------------ --------------- -------- ----------------------------------
Note 13 - Notes to cash flow
Cash generated by operations 22.2 42.8 86.6 statement
Note 13 - Notes to cash flow
Interest and tax paid (10.6) (6.9) (19.1) statement
Capital expenditure (27.8) (9.7) (33.8) Group Statement of Cash flows
Dividend received from joint - - 4.1 Group Statement of Cash flows
venture and associate
Joint venture and associate loan - - (0.4) Group Statement of Cash flows
repayment
Proceeds from sale of property,
plant and equipment 0.1 0.6 0.3 Group Statement of Cash flows
Dividend to non-controlling
interest - (0.2) (0.2) Group Statement of Cash flows
----------------------------------- ------------ --------------- -------- ----------------------------------
Free cash flow (16.1) 26.6 37.5
----------------------------------- ------------ --------------- -------- ----------------------------------
1 See note 1 for details of the prior period restatement.
2 Following Genus entering a new credit facility the definitions
of EBITDA, Borrowings and Net Debt were amended. Consequently, the
comparative values have been restated to reflect the amended
definitions as reported to the banks.
Other measures
Ratio of net debt to adjusted EBITDA
(restated)(1,2)
31 December 31 December 30 June
2021 2020 2021
-------------- ----------------- ------------
GBPm Times GBPm Times Reference
-------------------------------------------------------- -------- ---- -------- ------- ----- ----- ---------
Net debt - as calculated under our financing facilities 135.9 85.4 96.5 See APM
Rolling 12 month Adjusted EBITDA -
as calculated under our financing facilities 97.9 110.7 106.1 See APM
Ratio of net debt to Adjusted EBITDA 1.4 0.8 0.9
-------------------------------------------------------- -------- ---- -------- ------- ----- ----- ---------
1 See note 1 for details of the prior period restatement.
2 Following Genus entering a new credit facility the definitions
of EBITDA, Borrowings and Net Debt were amended. Consequently, the
comparative values have been restated to reflect the amended
definitions as reported to the banks.
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