TIDMGNS
RNS Number : 7740Q
Genus PLC
23 February 2023
Immediate release 23 February 2023
Genus plc
Interim results for the six months ended 31 December 2022
GOOD FINANCIAL AND STRATEGIC PROGRESS ACHIEVED
Adjusted results(1) Statutory results
---------------------------------
Actual currency Constant Actual currency
currency
change(2)
Six months ended 31
December 2022 2021 Change 2022 2021 Change
----- ------ ------ ------ -----
GBPm GBPm % % GBPm GBPm %
Revenue 350.2 281.2 25 13 350.2 281.2 25
Operating profit 41.2 35.0 18 6 14.7 23.9 (38)
Operating profit inc
JVs 48.3 39.7 22 9 n/a n/a n/a
Operating profit inc
JVs exc gene editing 56.0 43.3 29 15 n/a n/a n/a
Profit before tax 42.2 37.0 14 1 15.0 24.4 (39)
Free cash flow (3.3) (16.1) n/m(3) n/m(3)
Basic earnings per share
(pence) 48.8 42.4 15 2 20.4 30.4 (33)
Dividend per share (pence) 10.3 10.3 -
--------------------------- ----- ------ ------ ---------- ------ ----- ------
Good Group performance
-- Group revenue increased by 13% in constant currency (25% in actual currency)
-- Operating profit including joint ventures up 9% in constant currency (22% in actual currency)
-- R&D investment increased by 18%(2) as planned, including
gene editing spend which was up 86% (2) reflecting the PRRSv
programme and continued investment in other discovery projects
-- Adjusted profit before tax (PBT) up 1% in constant currency
(14% in actual currency); net finance costs up 115%(2)
-- Statutory PBT reduced by 39% to GBP15.0m with a reduction in
the IAS41 valuation of the Group's biological assets, reflecting
higher global interest rates which impacted the valuation discount
rates applied
Record half-year PIC performance, gradual recovery in China
-- Strong demand for PIC's differentiated genetics, with both
new and existing customers, drove growth in volumes up 5%, revenue
up 9% (2) and strategically important royalty revenue growth across
all regions, up 14% (2)
-- Adjusted operating profit including joint ventures increased
by 19% (2) , to a new record half-year high
-- Strong profit growth continued in North America, solid
performances in Latin America and Asia. Europe's performance
impacted by challenging market conditions in certain countries
-- In China, PIC's volumes increased by 23%, with revenue up 11%
(2) , royalty revenue up significantly by 102% (2) and much
improved adjusted operating profit of GBP8.8m (2021: GBP1.0m)
-- The China pig price peaked at 28 RMB/kg in October before
falling to 15 RMB/kg currently, due to African Swine Fever (ASF)
and COVID-19 related supply and demand volatility.
ABS volumes up 4%, revenue up 13%(2) , despite particularly
challenging markets in Latin America
-- Expansion of long-term partnerships with strategic accounts
underpinned by Sexcel and NuEra genetics drove strong profit growth
in North America and solid performances in Europe and Asia. Latin
America's performance impacted by very challenging market
conditions, particularly in Brazil where macroeconomics affected
supply and demand
-- Continued growth in sexed genetics, volumes up 14%, through
Sexcel and third party sales of IntelliGen sexed semen production
in North America and Europe
-- Overall, ABS's adjusted operating profit declined by 7% (2)
due to Latin America's profit decrease, adverse production cost
variances and planned digital investment costs, partially offset by
lower patent royalty payments
Improved cash flows, dividend maintained
-- Free cash outflow(1) of GBP3.3m (2021: GBP16.1m outflow),
reflecting higher adjusted profit performance and lower capital
expenditure. Cash conversion of 62%(1) (2021: 63%) in line with
seasonal half-year expectations
-- Net debt(1) increased to GBP214.5m as expected, with a net
debt to EBITDA ratio of 1.8x(1) , within 1.0x-2.0x targeted
range
-- Adjusted earnings per share 15% higher, interim dividend of
10.3p per share, with 2.8x(1) adjusted earnings cover within
2.5x-3.0x targeted range
Good strategic progress achieved and continued investment for
growth
-- Good progress on three new world-class elite PIC farms; Atlas
(Canada) now fully operational; Ankang (China) has commenced
stocking; Granja Genesis (Brazil) is ready for stocking;
positioning Genus well to capture future growth opportunities
-- GenusOne deployed throughout the UK in the period,
implementation underway in the rest of Europe
-- Settlement of the 987 appeal, the fee award appeal and the
Indian patent litigation with STgenetics (ST), delivering lower
patent royalty payments for ABS
-- Genus's PRRSv-resistant pigs programme continues to make
progress towards completing the US Food and Drug Administration
(FDA) submissions by December 2023, with an aim to secure approval
in 2024, and we are engaging with other international regulatory
agencies
Commenting on the performance and outlook, Stephen Wilson, Chief
Executive, said:
"The Group achieved a good performance during the first half of
the year, despite challenging market conditions for producers in
several markets. PIC delivered a new record half year performance,
with strong momentum in North America in particular, and China's
performance improved as the porcine market began a gradual recovery
from the cyclical downturn, as we had expected.
"The China porcine market has been on a path to recovery since
June 2022, but continues to be volatile. Since December the changes
in China's COVID-19 polices and outbreaks of ASF have caused
imbalances in supply and demand. The pig price peaked at 28 RMB/kg
in October, but has since unexpectedly reduced to the current price
of 15 RMB/kg. Industry projections suggest prices will recover in
Spring/Summer of 2023, with consumer demand expected to improve
following the reduction of COVID-19 restrictions and supply
expected to reduce. However, there is still uncertainty as to the
shape and strength of this recovery.
"Across the regions ABS has continued to expand business with
strategic accounts by building long-term partnerships and offering
the leading combination of Sexcel and NuEra beef genetics. This,
along with robust price increases to counter inflation, meant ABS
achieved strong performances outside Latin America, in particular
in North America. Latin American beef and dairy producers faced
very challenging conditions during the period, as a result of the
inflationary effects on input costs and weak consumer demand. As a
result, ABS's volume in Latin America declined, despite growing
market share in Brazil. The political and economic uncertainties in
the region are expected to continue to weigh on beef and dairy
producers across Latin America for the remainder of the fiscal
year.
"We also made good strategic progress with further investments
in R&D, with an increase of spend on gene editing as we move
towards FDA and international regulatory approval of our
PRRSv-resistant pigs.
"The Board remains confident in the Group's strategy and the
many opportunities for Genus. Expectations for the 2023 fiscal year
remain unchanged.
"In a separate statement also made today, I have announced my
intention to retire on 30 September following ten years with Genus,
the last four of which I have served as the CEO. It has been a
great privilege and pleasure to lead such a talented group of
people and help to develop Genus into the leading global animal
genetics business it is today.
"Genus has many strong growth opportunities, and I will remain
fully focused on the continued successful execution of our strategy
while the Board progresses the search for my successor, in order to
achieve a smooth transition."
Results presentation today
A pre-recorded analysts and bankers briefing to discuss the
preliminary results for the six months ended 31 December 2022 will
be held via a video webcast facility and will be accessible via the
following link from 7:01am today:
https://stream.buchanan.uk.com/broadcast/63cab28d777efd4a8b5137d0
This will be followed by a live Q&A session to be held by
invitation via Zoom at 10:30am. Please contact Verity Parker at
Buchanan for details; verityp@buchanan.uk.com
Enquiries:
Genus plc (Stephen Wilson, Chief Executive Officer / Alison Tel: 01256 345970
Henriksen, Chief Financial Officer)
Buchanan (Charles Ryland / Chris Lane / Verity Parker) Tel: 0207 4665000
About Genus
Genus advances animal breeding and genetic improvement by
applying biotechnology and sells added value products for livestock
farming and food producers. Its technology is applicable across
livestock species and is currently commercialised by Genus in the
dairy, beef and pork food production sectors.
Genus's worldwide sales are made in over 75 countries under the
trademarks 'ABS' (dairy and beef cattle) and 'PIC' (pigs) and
comprise semen, embryos and breeding animals with superior genetics
to those animals currently in farms. Genus's customers' animals
produce offspring with greater production efficiency and quality,
and our customers use them to supply the global dairy and meat
supply chains.
Genus's competitive edge comes from the ownership and control of
proprietary lines of breeding animals, the biotechnology used to
improve them and its global supply chain, technical service and
sales and distribution network.
Headquartered in Basingstoke, United Kingdom, Genus companies
operate in over 24 countries on six continents, with research
laboratories located in Madison, Wisconsin, USA.
(1) Adjusted results are the Alternative Performance Measures
('APMs') used by the Board to monitor underlying performance at a
Group and operating segment level, which are applied consistently
throughout. These APMs should be considered in addition to, and not
as a substitute for or as superior to statutory measures. For more
information on APMs, see APM Glossary.
(2) Constant currency percentage movements are calculated by
restating the results for the six months ended 31 December 2022 at
the average exchange rates applied to adjusted operating profit for
the year ended 30 June 2022.
(3) n/m = not meaningful
Group Performance
Genus achieved good progress in the first half of the year with
volumes, revenue and adjusted profits all increasing. PIC delivered
a strong performance, with North America continuing to gain share,
and the expected improving performance in China as the porcine
market began to recover from last year's cyclical downturn. ABS
performance was mixed with strength in North America offset by
tough markets in Latin America, particularly in Brazil. Finance
costs rose, as expected, due to higher debt and rising interest
rates. Genus continued to make significant strategic progress and
increased investment in R&D, including an 86% increase in spend
on gene editing as we progress towards the regulatory approval of
our PRRSv-resistant pigs.
Revenue increased by 13% in constant currency (25% in actual
currency) to GBP350.2m (2021: GBP281.2m). PIC revenue increased by
12%, royalty revenue was up 14%, while volumes grew by 5%. ABS
increased revenue by 13% and grew volumes by 4%, with strategically
important sexed genetics up 14% and beef volumes stable compared
with the same period last year. ABS implemented robust price
increases to offset the effects of cost inflation, particularly in
Europe.
Adjusted operating profit, including joint ventures and
excluding gene editing, was GBP56.0m (2021: GBP43.3m), up 15% in
constant currency. Within this, Genus's share of adjusted joint
venture operating profits was GBP6.9m (2021: GBP4.9m), supported by
growth in profit of PIC Agroceres in Brazil and in our joint
ventures in China. Net finance costs were higher at GBP6.1m (2021:
GBP2.7m), due to increased interest rates as well as higher debt
levels following the capital investments made during FY22.
Statutory profit before tax was GBP15.0m (2021: GBP24.4m), and
reflected a GBP17.2m non-cash decrease (2021: GBP6.8m decrease) in
the net IAS 41 biological assets fair value, reflecting an increase
in discount rates applied in the valuation calculation as well as
offsetting movements in other key inputs. Net exceptional items in
the period were an expense of GBP2.2m which was primarily legal
fees related to the litigation disputes with ST, part of which has
now been settled. In the prior period there was an exceptional
credit of GBP1.7m that included a GBP3.6m non-refundable cash
receipt for the assignment of rights to a legacy legal claim in
Brazil.
The tax charge on adjusted profits for the period was GBP10.2m
(2021: GBP9.3m), which represented a tax rate on adjusted profits
of 24.2% (2021: 25.1%). The statutory profit after tax was GBP12.0m
(2021: GBP18.9m).
The effect of exchange rate movements on the translation of
Genus's overseas profits was a favourable impact of GBP4.8m
compared with the prior period, primarily from weaker Sterling
against Latin American currencies.
Free cash outflow of GBP3.3m (2021: GBP16.1m outflow) reflected
the higher profit performance in the period along with a reduction
in capital expenditure following the prior year investment to
expand our world class facilities. Cash generated by operations,
which is seasonally weaker in H1, of GBP25.7m (2021: GBP22.2m)
represented 62% conversion (2021: 63%) of adjusted operating profit
of GBP41.2m (2021: GBP35.0m) into cash. Our medium-term objective
is to achieve annual conversion of at least 90%, and we are on
track to achieve it this fiscal year.
Net debt increased to GBP214.5m (June 2022: GBP185.0m),
reflecting the payment of the final dividend, free cash outflow and
foreign exchange movements. The net debt to EBITDA ratio of 1.8x
(June 2022: 1.7x) as defined in the debt facility agreement
reflects an increase in EBITDA compared with higher net debt
levels. This level of leverage is within our medium-term objective
of having a ratio of net debt to EBITDA of between 1.0 - 2.0 x.
The Board has declared an unchanged interim dividend of 10.3
pence per share, which is payable on 30 March 2023 to shareholders
on the register at 3 March 2023.
Strategic Progress
To maintain our leading industry position, Genus continued to
invest in our growth drivers: world-class genetics, global supply
chains, long-term customer relationships, pioneering technology and
top talent around the world.
In porcine, we have strengthened our supply chains in North
America, Brazil and China. We are now fully operational in Atlas
(Canada), have commenced stocking in Ankang (China) and have
animals ready for stocking at Granja Genesis (Brazil), enhancing
our ability to meet customer demand as this grows. Our long-term
genetics collaboration with Olymel is exceeding our expectations,
with PIC genetics gaining a larger share of the Canadian
market.
Our PRRSv-resistant pigs programme has made continued progress
towards completing the US FDA submissions by December 2023, with an
aim to secure approval in 2024. We are engaging with the FDA on the
design of the final animal studies, and are also engaging with
international regulatory agencies. As we move closer to the
commercialisation of our gene-edited animals we have intensified
our engagement with key porcine industry participants and
commentators and have expanded our production capacity for
PRRSv-resistant pigs.
In bovine, NuEra beef genetics are achieving positive results
through initiatives with beef supply chains. In North America and
in the UK, we have established arrangements to connect farmer
networks with large meat processors and retailers who offer premium
prices for carcasses delivered, enabling ABS and farmers, to share
in the value created. In the period we expanded IntelliGen third
party production and signed an agreement with a leading bovine
co-operative to supply sexed semen processing as well as commenced
production of sexed semen for the Government of India as part of
its ambition to expand milk production and productivity
significantly.
We continue to make steady progress on digitalisation.
GENEadvance, our complete solutions approach for dairy producers,
gives customers access to a unique application and complementary
web portal that provide insight into genetic progress within their
herd. This has been successfully rolled out and adopted by
customers in our main bovine markets in North America, Europe and
Latin America. The rollout of our new enterprise system, GenusOne,
continues with the UK going live in the period with plans to
complete implementation across the rest of Europe this year.
Sustainability
Sustainability lies at the heart of what Genus does. We believe
that animal genetics play an important role in helping producers
meet the increased demands for affordable, nutritious food for all,
using fewer resources of water, energy and land.
Within the company, we also continue to reduce the environmental
impact of our operations, guided by our Climate Change Policy.
During the period, we continued to invest in advanced manure
management solutions and to introduce solar arrays at some of our
largest sites, which are designed to meet around half of the energy
demand on those sites. We also continued to switch to lower carbon
fuel sources. Our longer-term aims are to reduce our primary
intensity ratio (against our 2019 baseline) by 25% by 2030 and to
become a 'net zero' greenhouse gas emissions business by 2050. We
are making good progress and are on track to achieve these
objectives.
People
As a people-focused business, Genus encourages and enables
employees at all levels of the company to develop and broaden their
skill base and build fulfilling and successful careers. During the
period, we continued to enhance and expand the range of learning
opportunities and development programmes we offer, and won
recognition for the intern program we have in the US, one of
several programs we have around the world where we are attracting
the next generation of talent. We continued to strengthen diversity
and inclusion across the company, with steps including the
introduction of a global minimum provision of family leave. We also
introduced a new employee share scheme, TakeStock, to give our
people an opportunity to share in the success they create. This is
currently open to employees in the US and UK, with an intention to
expand over time to other countries.
Outlook
As stated above, conditions remain challenging for our customers
in several parts of the world. The most volatile conditions are
currently being experienced by Chinese pig producers and Brazilian
beef producers, and whilst there is some uncertainty as to when a
sustained improvement will occur in those markets, we are confident
that Genus remains well-placed to take advantage of a recovery.
However, the performances of our business elsewhere, in particular
in North America, are a testament to the benefits of Genus's
geographic diversification and the strength of our strategy. More
broadly, our strong product portfolio and depth of talent in our
company give us confidence that we will continue to make strategic
and financial progress. Taking these factors into account, the
Board's expectations for the 2023 fiscal year remain unchanged.
Genus PIC - Operating Review
Actual currency Constant
currency
change
---------
Six months ended 31
December 2022 2021 Change
----- ----- ------ ---------
GBPm GBPm % %
Revenue 179.0 143.5 25 12
Adjusted operating
profit exc JV 70.1 52.2 34 19
Adjusted operating
profit inc JV 76.8 57.0 35 19
Adjusted operating
margin exc JV 39.2% 36.4% 2.8pts 2.5pts
PIC increased adjusted profit by 19% in constant currency,
compared with the same period last year. This was driven by growth
in North America, Latin America (in particular Mexico) and Asia (in
particular China). Volumes rose by 5%, revenue by 12% and royalty
revenue by 14%.
The performance in China improved, particularly the growth from
royalty contracts as customers began recovering from the previous
year's downturn. Adjusted profit increased to GBP8.8m (2021:
GBP1.0m), with the prospect of further growth as producers replace
and rebuild sow herds over time using PIC's genetics, although
current volatility in the market is creating challenges for
producers.
Although the business experienced more difficult conditions in
Europe, its focus on product differentiation, predictable customer
experience and world-class support services ensured further
progress during this period. This is reflected in the 14% growth in
royalty revenue in the region.
North America
The size of the US breeding herd remained stable during the
period, ending the decline seen in the previous two years which saw
an overall reduction of around 5%. Domestic demand was stable while
exports strengthened, due particularly to demand from China, South
Korea, Dominican Republic and Mexico. Pig prices remained high for
much of the period, and producers continued to achieve positive
margins despite higher input costs, but pig prices declined at the
end of the period due to backlogs at processors caused by
worse-than-normal winter weather, putting pressure on producer's
current margins.
Performance: A strong performance, with further increases in
market share through volume growth across both sireline and damline
products (volumes up 10% and 12% respectively) was achieved. This
was driven by growth of business with strategic accounts, aided by
the popularity of the PIC800 sire, as well as from Olymel following
the acquisition of its genetics programme in February 2022
-- volumes +11%
-- revenue +17% and royalty revenue +10%
-- adjusted operating profit +14%
Latin America
In Brazil, lower feed prices helped to boost producer margins.
Production increased during the period and exports rose, due in
particular to renewed demand from China. Both production and
exports are expected to grow again during 2023, although at a
slower pace than 2022. In Mexico, the region's other major market,
pork prices remained near record highs. This helped to offset
higher feed costs, which dipped during the period but remained
around 50% above pre-pandemic levels. Production continued to rise
gradually and is expected to grow by a further 3% in 2023.
Performance: Lower sales of breeding stock meant a decline in
volumes and revenue, compared with strong sales the previous year,
however all markets achieved adjusted profit growth due to
double-digit increases in royalty revenue following the prior
year's expansion of business with strategic accounts.
-- volumes -3%
-- revenue -10% and royalty revenue +14%
-- adjusted operating profit +12%
Europe
Pork production continued to contract during the period,
particularly in UK, Germany, Poland and Denmark. Prices rose as a
result of tighter supply and exports declined, despite a small
increase in demand from China. These factors, combined with the
impact of ASF outbreaks, create an uncertain outlook for producers
and processors in 2023. Production is expected to decline by a
further 3-4% during the year.
Performance: Increases in volumes and revenue, primarily driven
by strong breeding stock sales through royalty contracts in Spain,
supporting ongoing expansion projects with key customers, and
royalty growth in Russia. However, adjusted profits declined as a
result of lower volumes in Germany, following herd health issues in
the market, and in the UK due to the market factors
highlighted.
-- volumes +4%
-- revenue +13% and royalty revenue +5%
-- adjusted operating profit -5%
Asia
China experienced significant volatility, as pig prices rose to
28 RMB/kg in October before declining sharply to 17 RMB/kg through
the end of the period, and 15 RMB/kg currently. There was culling
of animals amid seasonal ASF outbreaks and reduced demand as
COVID-19 infections rose following the removal of restrictions in
December. However, as this situation stabilises, prices are
expected to improve in the Spring/Summer of 2023. Elsewhere in the
region, the Philippines continued to be impacted by ASF, while
economic growth stimulated consumer demand in Vietnam.
Performance: Adjusted profit increased by over 150%, driven by
profit growth in China, from GBP1.0m to GBP8.8m, arising from
higher royalty revenue and improved by-product margins. In the
prior period, China had also incurred a one-time customer refund of
GBP3.7 million. Outside China, performance was affected by market
conditions: in Japan and the Philippines market volatility, driven
by lower pig prices as production increases, impacted
profitability, whereas Vietnam grew profits slightly as economic
conditions improved.
-- volumes +10% (China +23%)
-- revenue +4% and royalty revenue +58% (China +11% and +102% respectively)
-- adjusted operating profit +154% (China +642%)
Genus ABS - Operating Review
Actual currency Constant
currency
change
---------
Six months ended 31
December 2022 2021 Change
----- ----- -------- ---------
GBPm GBPm % %
Revenue 160.8 130.9 23 13
Adjusted operating
profit 22.5 22.1 2 (7)
Adjusted operating
margin 14.0% 16.9% (2.9)pts (2.9)pts
Overall, ABS volumes rose by 4% compared with the same period
last year. Dairy customers continued to transition to Sexcel and
NuEra beef genetics in their herds, with sexed volumes rising by
14%, while beef volumes remained stable against strong growth in
the same period last year. Revenue rose by 13%, due to the growing
use of sexed genetics and robust price increases. Profits grew
strongly in North America, Europe and Asia. However, despite ABS
increasing its share of business across both beef and dairy in
Latin America, volumes and profit from the region declined by 3%
and 18% respectively, due to challenging market conditions. In
addition, ABS invested to support its digital strategy and
experienced adverse production cost variances due to lower units
produced primarily related to the IT incident in June 2022. These
impacts were partially offset by lower patent royalty payments to
ST following the settlement of the 987 appeal, the fee award
appeal, and the Indian patent litigation. Other elements of the
litigation remain ongoing (refer to note 3 of the financial
statements).
North America
Dairy demand was resilient, with milk production and cow numbers
both increasing, and producers remained profitable. Production is
expected to increase in 2023, although higher feed costs may reduce
margins. U.S. beef production and exports reached record highs by
the end of the period, following the acceleration of cattle culling
due to drought conditions, but both are expected to be lower in
2023.
Performance: Double-digit growth in revenue and adjusted profit,
driven from growth with strategic accounts. Sales of Sexcel sexed
genetics, provision of udder care products and robust price
increases were all contributory factors and more than offset a
small decline in beef volumes from the record first-half
performance in the prior period.
-- total volumes +5%, sexed volumes +24%, beef volumes -4%
-- revenue +18%
-- adjusted operating profit +26%
Latin America
Producers in Latin America faced very challenging conditions
during the period, as a result of the effect of inflation on both
input costs and consumer demand, as well as drought in a large part
of the region. Beef cattle prices in Brazil declined, as supply
exceeded weak domestic demand, despite rising exports driven
particularly by demand from China. Mexican beef production
continued to grow, reaching a record high in December. F ollowing a
record fall in the first half of 2022, milk production in Brazil
began to recover. In 2023, it is expected that confidence in both
the dairy and beef industries will be affected by ongoing
inflationary pressures and political uncertainty across the
region.
Performance: The increase in revenue and market share was aided
by further rises in digital sales (now representing 20% of volumes)
and growth in long-term partnerships with strategic accounts.
However, the challenging market conditions for producers led to a
decline in demand for genetics, particularly in the embryo
business, while high business cost inflation also had an adverse
impact.
-- total volumes -3%, sexed volumes +1%, beef volumes stable
-- revenue +3%
-- adjusted operating profit -18%
Europe
High beef and dairy prices generally offset rising costs faced
by producers during the period. However, the impact of inflation
dampened consumer demand and added to high levels of economic
uncertainty across the region, undermining producer confidence. For
both dairy and beef, this situation is expected to persist and
increase pressure on margins further in 2023.
Performance: Increases in beef and sexed volumes, particularly
across France, Spain, Northern Ireland and Russia, were offset by
the decline in conventional semen volumes which led to the overall
volume decrease. Rises in both revenue and adjusted profit were
aided by robust price increases and growth in long-term
partnerships with strategic accounts.
-- total volumes -2%, sexed volumes +13%, beef volumes +6%
-- revenue +10%
-- adjusted operating profit +8%
Asia
In Australia, favourable climatic conditions continued to
support strong beef cattle prices, but excessive rainfall impacted
milk production. In China, beef prices remained stable while dairy
producers continued to increase milk production and build the
domestic inventory, despite COVID-19 impacting the demand for dairy
products. Elsewhere in the region, outbreaks of disease had a small
impact on milk production in India, while rising inflation in Japan
dampened consumer demand.
Performance: Double digit growth in both volumes and adjusted
profits, driven by strong increases in dairy conventional and sexed
volumes in China. There was higher demand for sexed and beef
genetics in Australia and growth in business in India through the
contract with the Indian Government secured in the prior period,
partially offset by declines in Japan.
-- total volumes +15%, sexed volumes +12%, beef volumes -9%
-- revenue +21%
-- adjusted operating profit +11%
Research and Development - Operating Review
Actual currency Constant
currency
change
Six months ended 31
December 2022 2021 Change
----- ---- ------
GBPm GBPm % %
Porcine product development 13.0 10.3 26 12
Bovine product development 12.4 10.5 18 3
Gene editing 7.7 3.6 114 86
Other research and
development 9.4 7.0 34 17
----- ---- ------ ---------
Net expenditure in
R&D 42.5 31.4 35 18
Net investment in R&D expenditure rose by 18% during the
period, as planned, as we made further progress on the range of
research programmes, technologies and product development
initiatives we are pursuing to deliver additional value for
customers in the coming years.
Porcine product development
Porcine product development delivered further improvements in
genetic gain by combining leading-edge scientific techniques,
expanded genetic production and the use of robust data. During the
period, we continued to refine genomic selection and explore
digital tools for capturing new or novel traits. We also continued
to increase production of animals across our network of elite
farms, including our Atlas facility in Canada which is now fully
operational and reaching full capacity.
Bovine product development
We continued to strengthen our pipeline of proprietary dairy
genetics through De Novo Genetics, our joint venture with De-Su
Holsteins. De Novo animals represent more than half of our dairy
line-up. In parallel, we continued to invest in improving our
proprietary technology for producing sexed semen.
We also continued to develop our proprietary offer for beef,
NuEra Genetics, which accounts for one third of our total beef
volumes, and accelerated product differentiation through robust
testing. We increased the number of product validation trials,
which continued to demonstrate the superior performance of NuEra
Genetics compared with competitors.
Gene editing
We continued to make progress on our PRRSv resistance project,
while maintaining engagement with the US FDA as we seek regulatory
approval for our gene-edited animals. This engagement is enabling
us to continue refining the pathway for regulatory approval. More
widely, beyond the US, we continued to engage with regulatory
bodies and agencies in other target markets around the world. In
parallel, we increased investment in preparations for the potential
commercialisation of PRRSv-resistant pigs, expanding our population
of gene-edited animals by over 50% during the period. We also
continued to advance projects evaluating the potential for
responsible use of gene editing to combat other porcine
diseases.
Other research and development
Other research and development expenditure increased by 17%,
supporting further investment in areas such as genome science,
bioinformatics and data science. This investment also helped us
further progress our research into the field of reproductive
biology, and to continue working with external partners on other
discovery projects.
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 2022 (a copy of which is
available on the Genus plc website at www.genusplc.com) sets out on
pages 43-46 the principal 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 and the ongoing war in Ukraine, along with global
pandemics in animal and human healthcare that can have a material
impact on our business performance and markets. Additionally, we
monitor emerging risks such as changing consumption patterns,
environmental sustainability expectations and the evolution of
alternative proteins such as lab-based meat.
On 7 November 2022, Genus was granted a General Licence from UK
Treasury in relation to the UK sanctions regime (INT/2022/2349952).
The licence permits Genus to continue to trade in "agricultural
commodities" including reproductive materials, with Russian
entities, consistent with terms of the licence.
There has been no other material change to the principal risks
in the current financial year that might affect the performance of
the Group.
GENUS PLC
CONDENSED CONSOLIDATED INCOME STATEMENT
For the six months ended 31 December 2022
Six months Six months Year
ended ended ended
31 December 2022 31 December 30 June
GBPm 2021 2022
Note GBPm GBPm
--------------------------------------------------------------------- ---- ----------------- ------------ --------
REVENUE 2 350.2 281.2 593.4
Adjusted operating profit 2 41.2 35.0 68.8
Adjusting items:
- Net IAS 41 valuation movement on biological assets 8 (17.2) (6.8) (5.4)
- Amortisation of acquired intangible assets 7 (4.8) (3.8) (8.3)
- Share-based payment expense (2.3) (2.2) (3.7)
--------------------------------------------------------------------- ---- ----------------- ------------ --------
(24.3) (12.8) (17.4)
Exceptional items (net) 3 (2.2) 1.7 (2.0)
--------------------------------------------------------------------- ---- ----------------- ------------ --------
Total adjusting items (26.5) (11.1) (19.4)
OPERATING PROFIT 14.7 23.9 49.4
Share of post-tax profit of joint ventures and associates retained 10 6.4 3.2 5.2
Finance costs 4 (6.1) (2.8) (6.6)
Finance income 4 - 0.1 0.4
--------------------------------------------------------------------- ---- ----------------- ------------ --------
PROFIT BEFORE TAX 15.0 24.4 48.4
Taxation 5 (3.0) (5.5) (11.7)
--------------------------------------------------------------------- ---- ----------------- ------------ --------
PROFIT FOR THE PERIOD 12.0 18.9 36.7
--------------------------------------------------------------------- ---- ----------------- ------------ --------
ATTRIBUTABLE TO:
Owners of the Company 13.4 19.9 40.9
Non-controlling interest (1.4) (1.0) (4.2)
--------------------------------------------------------------------- ---- ----------------- ------------ --------
12.0 18.9 36.7
--------------------------------------------------------------------- ---- ----------------- ------------ --------
EARNINGS PER SHARE
Basic earnings per share 14 20.4p 30.4p 62.5p
Diluted earnings per share 14 20.3p 30.2p 62.2p
--------------------------------------------------------------------- ---- ----------------- ------------ --------
Alternative Performance Measures
Adjusted operating profit 41.2 35.0 68.8
Adjusted operating profit attributable to non-controlling interest 0.2 (0.2) (0.3)
Pre-tax share of profits from joint ventures and associates excluding
net IAS 41 valuation
movement 6 .9 4.9 9.2
Gene editing costs 7.7 3.6 7.9
--------------------------------------------------------------------- ---- ----------------- ------------ --------
Adjusted operating profit including joint ventures and associates,
excluding gene editing
costs 56.0 43.3 85.6
Gene editing costs (7.7) (3.6) (7.9)
--------------------------------------------------------------------- ---- ----------------- ------------ --------
Adjusted operating profit including joint ventures and associates 48.3 39.7 77.7
Net finance costs 4 (6.1) (2.7) (6.2)
--------------------------------------------------------------------- ---- ----------------- ------------ --------
Adjusted profit before tax 42.2 37.0 71.5
--------------------------------------------------------------------- ---- ----------------- ------------ --------
Adjusted earnings per share
Basic adjusted earnings per share 14 48.8p 42.4p 82.7p
Diluted adjusted earnings per share 14 48.5p 42.1p 82.3p
--------------------------------------------------------------------- ---- ----------------- ------------ --------
Adjusted results are the Alternative Performance Measures
('APMs') used by the Board to monitor underlying performance at a
Group and operating segment level, which are applied consistently
throughout. These APMs should be considered in addition to
statutory measures, and not as a substitute for or as superior to
them. For more information on APMs, see APM Glossary.
GENUS PLC
CONDENSED CONSOLIDATED Statement of Comprehensive Income
For the six months ended 31 December 2022
Six months ended Six months ended Year ended
31 December 2022 31 December 2021 30 June 2022
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------ -------------- ---------- --------------- --------- ----------- --------
PROFIT FOR THE PERIOD 12.0 18.9 36.7
Items that may be reclassified
subsequently to profit or loss
Foreign exchange translation
differences (4.5) 4.6 66.6
Fair value movement on net investment
hedges (0.9) 0.2 (0.7)
Fair value movement on cash flow
hedges 0.6 - 1.9
Tax relating to components of other
comprehensive expense 0.7 (1.3) (8.2)
------------------------------------- -------------- ---------- --------------- --------- ----------- --------
(4.1) 3.5 59.6
Items that may not be reclassified
subsequently to profit or loss
Actuarial (losses)/gains on
retirement benefit obligations (36.4) 24.1 27.3
Movement on pension asset recognition
restriction 36.9 (24.0) (69.8)
Release of additional pension
liability - - 43.7
Gain/(loss) on equity instruments
measured at fair value 1.1 - (6.1)
Tax relating to components of other
comprehensive (expense)/income (0.3) - 1.1
------------------------------------- -------------- ---------- --------------- --------- ----------- --------
1.3 0.1 (3.8)
------------------------------------ -------------- ---------- --------------- --------- ----------- --------
OTHER COMPREHENSIVE (EXPENSE)/INCOME
FOR THE PERIOD (2.8) 3.6 55.8
------------------------------------- -------------- ---------- --------------- --------- ----------- --------
TOTAL COMPREHENSIVE INCOME FOR THE
PERIOD 9.2 22.5 92.5
------------------------------------- -------------- ---------- --------------- --------- ----------- --------
ATTRIBUTABLE TO:
Owners of the Company 10.9 23.7 97.3
Non-controlling interest (1.7) (1.2) (4.8)
------------------------------------- -------------- ---------- --------------- --------- ----------- --------
9.2 22.5 92.5
------------------------------------ -------------- ---------- --------------- --------- ----------- --------
GENUS PLC
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 31 December 2022
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 2021 6.6 179.1 (0.1) (7.9) - 320.4 498.1 (1.5) 496.6
Foreign exchange
translation
differences,
net of tax - - - 59.4 - - 59.4 (0.6) 58.8
Fair value
movement on net
investment
hedges, net of
tax - - - (0.6) - - (0.6) - (0.6)
Fair value
movement on
cash flow
hedges, net of
tax - - - - 1.4 - 1.4 - 1.4
Loss on equity
instruments
measured at
fair value, net
of tax - - - - - (4.6) (4.6) - (4.6)
Actuarial gains
on retirement
benefit
obligations,
net of tax - - - - - 19.5 19.5 - 19.5
Movement on
pension asset
recognition
restriction,
net of tax - - - - - (49.7) (49.7) - (49.7)
Recognition of
additional
pension
liability, net
of tax - - - - - 31.0 31.0 - 31.0
---------------- ---- -------- -------- --------- ----------- -------- -------- ------ ----------- ---------
Other
comprehensive
income for the
year - - - 58.8 1.4 (3.8) 56.4 (0.6) 55.8
Profit/(loss)
for the year - - - - - 40.9 40.9 (4.2) 36.7
---------------- ---- -------- -------- --------- ----------- -------- -------- ------ ----------- ---------
Total
comprehensive
income for the
year - - - 58.8 1.4 37.1 97.3 (4.8) 92.5
Recognition of
share-based
payments, net
of tax - - - - - 4.0 4.0 - 4.0
Dividends 6 - - - - - (20.9) (20.9) - (20.9)
Adjustment
arising from
change in
non-controlling
interest and
written put
option - - - - - - - (0.1) (0.1)
BALANCE AT 30
JUNE 2022 6.6 179.1 (0.1) 50.9 1.4 340.6 578.5 (6.4) 572.1
Foreign exchange
translation
differences,
net of tax - - - (3.7) - - (3.7) (0.3) (4.0)
Fair value
movement on net
investment
hedges, net of
tax - - - (0.7) - - (0.7) - (0.7)
Fair value
movement on
cash flow
hedges, net of
tax - - - - 0.6 - 0.6 - 0.6
Gain on equity
instruments
measured at
fair value, net
of tax - - - - - 0.8 0.8 - 0.8
Actuarial losses
on retirement
benefit
obligations,
net of tax - - - - - (29.4) (29.4) - (29.4)
Movement on
pension asset
recognition
restriction,
net of tax - - - - - 29.9 29.9 - 29.9
Other
comprehensive
expense for the
period - - - (4.4) 0.6 1.3 (2.5) (0.3) (2.8)
Profit/(loss)
for the period - - - - - 13.4 13.4 (1.4) 12.0
---------------- ---- -------- -------- --------- ----------- -------- -------- ------ ----------- ---------
Total
comprehensive
income for the
period - - - (4.4) 0.6 14.7 10.9 (1.7) 9.2
Recognition of
share-based
payments, net
of tax - - - - - 2.9 2.9 - 2.9
Dividends 6 - - - - - (14.2) (14.2) - (14.2)
Adjustment
arising from
change in
non-controlling
interest and
written put
option - - - - - - - (0.1) (0.1)
BALANCE AT 31
DECEMBER 2022 6.6 179.1 (0.1) 46.5 2.0 344.0 578.1 (8.2) 569.9
---------------- ---- -------- -------- --------- ----------- -------- -------- ------ ----------- ---------
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 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
----------------- ---- -------- -------- --------- ----------- -------- -------- ------ ----------- --------
GENUS PLC
CONDENSED CONSOLIDATED BALANCE SHEET
As at 31 December 2022
31 December 31 December 30 June
2022 2021 2022
Note GBPm GBPm GBPm
--------------------------------------------- ---- ----------- ----------- -------
ASSETS
Goodwill 111.7 102.2 111.0
Other intangible assets 7 68.4 55.4 72.0
Biological assets 8 322.7 288.2 333.7
Property, plant and equipment 9 168.3 142.2 171.4
Interests in joint ventures and associates 10 49.1 36.1 41.2
Other investments 11.7 15.9 10.2
Derivative financial assets 17 2.6 - 2.2
Other receivables 12 8.1 1.8 8.6
Deferred tax assets 10.1 5.1 10.1
--------------------------------------------- ---- ----------- ----------- -------
TOTAL NON-CURRENT ASSETS 752.7 646.9 760.4
--------------------------------------------- ---- ----------- ----------- -------
Inventories 11 59.2 44.3 50.9
Biological assets 8 30.9 36.6 33.1
Trade and other receivables 12 135.9 118.1 129.5
Cash and cash equivalents 42.3 45.9 38.8
Income tax receivable 2.0 3.6 4.0
Derivative financial assets 17 0.9 0.6 1.0
Asset held for sale 0.2 0.2 0.2
--------------------------------------------- ---- ----------- ----------- -------
TOTAL CURRENT ASSETS 271.4 249.3 257.5
--------------------------------------------- ---- ----------- ----------- -------
TOTAL ASSETS 1,024.1 896.2 1017.9
--------------------------------------------- ---- ----------- ----------- -------
LIABILITIES
Trade and other payables 13 (110.8) (113.1) (124.7)
Interest-bearing loans and borrowings (7.3) (10.6) (7.1)
Provisions (2.1) (1.6) (1.9)
Deferred consideration - (1.3) (0.8)
Obligations under leases (9.9) (8.6) (10.1)
Tax liabilities (1.8) (4.3) (4.9)
Derivative financial liabilities 17 (1.7) (1.2) (1.8)
--------------------------------------------- ---- ----------- ----------- -------
TOTAL CURRENT LIABILITIES (133.6) (140.7) (151.3)
--------------------------------------------- ---- ----------- ----------- -------
Trade and other payables 13 - (1.3) (0.2)
Interest-bearing loans and borrowings (214.9) (151.0) (182.1)
Retirement benefit obligations 16 (7.3) (8.8) (8.3)
Provisions (11.0) (10.9) (12.0)
Deferred consideration (0.6) (0.6) (0.7)
Deferred tax liabilities (55.8) (50.9) (60.3)
Derivative financial liabilities 17 (6. 3) (6.6) (6.4)
Obligations under leases (24.7) (19.0) (24.5)
--------------------------------------------- ---- ----------- ----------- -------
TOTAL NON-CURRENT LIABILITIES (320.6) (249.1) (294.5)
--------------------------------------------- ---- ----------- ----------- -------
TOTAL LIABILITIES (454.2) (389.8) (445.8)
--------------------------------------------- ---- ----------- ----------- -------
NET ASSETS 569.9 506.4 572.1
--------------------------------------------- ---- ----------- ----------- -------
EQUITY
Called up share capital 6.6 6.6 6.6
Share premium account 179.1 179.1 179.1
Own shares (0.1) (0.1) (0.1)
Translation reserve 46.5 (4.2) 50.9
Hedging reserve 2.0 - 1.4
Retained earnings 344.0 327.7 340.6
--------------------------------------------- ---- ----------- ----------- -------
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY 578.1 509.1 578.5
Non-controlling interest (2.5) 2.5 (0.7)
Put option over non-controlling interest (5.7) (5.2) (5.7)
--------------------------------------------- ---- ----------- ----------- -------
TOTAL NON-CONTROLLING INTEREST (8.2) (2.7) (6.4)
--------------------------------------------- ---- ----------- ----------- -------
TOTAL EQUITY 569.9 506.4 572.1
--------------------------------------------- ---- ----------- ----------- -------
GENUS PLC
Condensed consolidated Group Statement of Cash Flows
For the six months ended 31 December 2022
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2022 2021 2022
Note GBPm GBPm GBPm
------------------------------------------------------------------ ---- ------------- ------------ --------
NET CASH FLOW FROM OPERATING ACTIVITIES 15 11.8 11.6 34.3
------------------------------------------------------------------ ---- ------------- ------------ --------
CASH FLOWS FROM INVESTING ACTIVITIES
Dividends received from joint ventures and associates - - 3.2
Acquisition of joint venture and associate (2.0) (1.1) (2.2)
Disposal of joint venture and associate - 0.1 -
Acquisition of trade and assets - (0.2) (0.8)
Acquisition of Olymel AlphaGene assets - - (14.5)
Acquisition of investments (0.4) (0.1) (1.0)
Payment of deferred consideration (0.8) (0.5) (1.0)
Purchase of property, plant and equipment (10.7) (24.1) (42.1)
Purchase of intangible assets (4.3) (3.7) (8.8)
Proceeds from sale of property, plant and equipment - 0.1 -
------------------------------------------------------------------ ---- ------------- ------------ --------
NET CASH OUTFLOW FROM INVESTING ACTIVITIES (18.2) (29.5) (67.2)
------------------------------------------------------------------ ---- ------------- ------------ --------
CASH FLOWS FROM FINANCING ACTIVITIES
Drawdown of borrowings 80.1 62.8 138.7
Repayment of borrowings (47.2) (25.4) (83.9)
Payment of lease liabilities (5.9) (5.2) (11.3)
Equity dividends paid (14.2) (14.2) (20.9)
Dividend to non-controlling interest (0.1) - (0.1)
Debt issue costs (1.1) (0.6) (0.6)
NET CASH INFLOW FROM FINANCING ACTIVITIES 11.6 17.4 21.9
------------------------------------------------------------------ ---- ------------- ------------ --------
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 5.2 (0.5) (11.0)
------------------------------------------------------------------ ---- ------------- ------------ --------
Cash and cash equivalents at start of period 38.8 46.0 46.0
Net increase/(decrease) in cash and cash equivalents 5.2 (0.5) (11.0)
Effect of exchange rate fluctuations on cash and cash equivalents (1.7) 0.4 3.8
------------------------------------------------------------------ ---- ------------- ------------ --------
TOTAL CASH AND CASH EQUIVALENTS AT OF PERIOD 42.3 45.9 38.8
------------------------------------------------------------------ ---- ------------- ------------ --------
GENUS PLC
ANALYSIS OF NET DEBT
For the six months ended 31 December 2022
At 1 July Net
2022 cash flows Foreign exchange Non-cash movement At 31 December 2022
GBPm GBPm GBPm GBPm GBPm
------------------------- ---------- ------------ ----------------- ------------------ --------------------
Cash and cash equivalents 38.8 5.2 (1.7) - 42.3
--------------------------- ---------- ------------ ----------------- ------------------ --------------------
Interest-bearing loans -
current (7.1) 0.4 (0.1) (0.5) (7.3)
Lease liabilities -
current (10.1) 5.9 0.1 (5.8) (9.9)
--------------------------- ---------- ------------ ----------------- ------------------ --------------------
(17.2) 6.3 - (6.3) (17.2)
------------------------- ---------- ------------ ----------------- ------------------ --------------------
Interest-bearing loans -
non-current (182.1) (32.2) (0.6) - (214.9)
Lease liabilities -
non-current (24.5) - 0.3 (0.5) (24.7)
--------------------------- ---------- ------------ ----------------- ------------------ --------------------
(206.6) (32.2) (0.3) (0.5) (239.6)
------------------------- ---------- ------------ ----------------- ------------------ --------------------
Total debt financing (223.8) (25.9) (0.3) (6.8) (256.8)
--------------------------- ---------- ------------ ----------------- ------------------ --------------------
Net debt (185.0) (20.7) (2.0) (6.8) (214.5)
=========================== ========== ============ ================= ================== ====================
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)
=========================== ========== ============ ================= ================== ====================
Net debt is gross debt, made up of unsecured bank loans and
overdrafts and obligations under finance leases, with a deduction
for cash and cash equivalents.
GENUS PLC
NOTES TO THE CONDENSED SET OF FINANCIAL STATEMENTS
For the six months ended 31 December 2022
1. BASIS OF PREPARATION
The unaudited Condensed Set of Financial Statements for the six
months ended 31 December 2022:
-- 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
2022;
-- 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 22 February 2023.
The information relating to the year ended 30 June 2022, with
the exception of one disclosure detailed in note 12 and note 17, 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 2022 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 2022. The Genus plc Annual Report 2022 (a copy of
which is available on the Genus plc website at www.genusplc.com )
sets out on pages 43-46 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
2022 2021 2022 2022 2021 2022
=================== ========== ========== ======= ======== ========= =====
US Dollar/GBP 1.18 1.36 1.32 1.21 1.35 1.22
Euro/GBP 1.16 1.17 1.18 1.13 1.19 1.16
Brazilian Real/GBP 6.16 7.40 6.94 6.39 7.54 6.39
Mexican Peso/GBP 23.38 27.90 26.97 23.57 27.76 24.45
Chinese Yuan/GBP 8.24 8.73 8.55 8.35 8.60 8.15
Russian Rouble/GBP 74.46 99.50 98.75 89.22 101.20 66.73
=================== ========== ========== ======= ======== ========= =====
Impact of Russian Sanctions
The Group has two group operating companies that are
incorporated in Russia - Limited Liability Co. Genus ABS Russia and
PIC Genetics LLC ('Russian subsidiaries'). Following the sanctions
that have been put in place by the UK and other governments the
Group implemented a comprehensive screening process with external
counsel to ensure that its Russian entities do not trade with
sanctioned individuals or entities controlled by them. The main
impact of the sanctions regime has been to categorise the banks in
Russia into sanctioned and non-sanctioned banks. When the Russian
subsidiaries received money from sanctioned banks they were unable
to use the cash without a licence from His Majesty's Treasury
('HMT'). Cash receipts from non-sanctioned banks into the Russian
subsidiaries' non-sanctioned banks are available for use in Russia
for day-to-day operations.
The Group applied for a licence to HMT on 25 April 2022 to allow
the Russian subsidiaries' use of cash receipts from sanctioned
banks of non-sanctioned Russian customers for the delivery of
porcine and bovine genetics; use money in a non-sanctioned Russian
bank account in the name of the Russian subsidiaries to pay Russian
suppliers who continue to use sanctioned Russian bank accounts, and
to remit any excess money in the Russian subsidiaries
non-sanctioned Russian bank account (regardless of whether it was
received from a sanctioned or non-sanctioned Russian bank account)
to other Genus Group company UK bank accounts.
The HMT Office of Financial Sanctions Implementation (OFSI)
issued a general licence for trading in Agricultural Commodities in
Russia effective on the 4 November 2022 and provides exemptions to
the sanctions regime in connection with the export, production and
transport of Agricultural Commodities. This definition includes
Reproductive Materials such as are supplied by Genus. Under this
General Licence, receipts from non-sanctioned customers received
from and before 4 November 2022 from sanctioned banks no longer
need to be frozen and can be freely used. Also receipts from a
sanctioned customer if made through a non-sanctioned bank no longer
need to be frozen and can be freely used. If any customer is or
becomes sanctioned and pays through a sanctioned bank these funds
would still need to be frozen even after 4 November 2022.
Under the requirements of IAS 7, disclosure is required of cash
that is not available to be used by the rest of the Group. As at 31
December 2022, the Group had a cash balance of GBP4.9m in the
Russian subsidiaries of which GBP0.2m is not currently available to
be used by the Group due to being received from sanctioned
customers and held in a sanctioned bank.
Management have reviewed the operations and cash flow over a
period of 18 months from 31 December 2022 to 30 June 2024 based
upon the 2023 and 2024 plans to determine whether the Russian
subsidiaries have sufficient non-sanctioned cash flow to enable
them to continue day-to-day operations and to meet liabilities as
they fall due. The analysis indicates they do have sufficient
non-sanctioned cash flow to enable them to meet day-to-day
operational needs.
Critical accounting judgement - exercise of control
Management has assessed whether the actions of the UK and
Russian Governments have caused the Group to lose control of the
Russian subsidiaries, and concluded that the Group does have
control for the half year ended 31 December 2022, as defined under
IFRS 10 'Consolidated financial statements' over the Russian
subsidiaries and are still able to consolidate. Each of the asset
balances have been assessed for impairment. The material areas that
could give rise to impairment are:
> PIC Russia farm (GBP3.0m) - the value of the farm is
predicated on the future economic benefit of the animals that are
being reared there. It is necessary to assess if the open market
price (less cost to sell) the property would support the carrying
value.
> Trade receivables (GBP3.0m) - the ongoing financial
sanctions may affect the ability of customers to pay the Russian
subsidiaries for their products and services. If it is determined
that their customers are unlikely to repay these amounts then for a
provision is required.
> IAS 41 valuation (GBP3.0m) - the ongoing impacts of both
the local economic outlook and the Russian subsidiaries customers'
ability to pay debts as they fall due could result in a reversal of
the fair value of the Russian biological assets in the December
valuation.
Management will continue to monitor the situation closely to see
if any further changes require additional analysis that may result
in a different conclusion.
In the event of changes in legislation, such as more restrictive
sanctions imposed by the UK Government or actions taken by the
Russian Government, management may determine that the Group does
not exercise control, as defined under IFRS 10 'Consolidated
financial statements', over the assets and operations of the
Russian subsidiaries and therefore would not be able to consolidate
these companies into the financial statements of the Group. The
deconsolidation would mean that the Russian entities would be
reclassified as investments and would need to be assessed for
impairment. A charge of up to GBP13.7m may need to be recognised in
the Income Statement representing the total net assets of the two
Russian subsidiaries. Dependent on the nature of the events leading
to the decision to deconsolidate the Russian subsidiaries there may
be additional expenses incurred which cannot be estimated at this
time. In addition, revenues would not be consolidated into the
financial statements of the Genus Group from the date of any
deconsolidation. Revenues from the Russian entities were GBP11.9m
in the six months ended 31 December 2022.
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 2022 and have been implemented with effect
from 1 July 2022. These are:
> 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';
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 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';
> Amendments to IAS 8- ' Definition of Accounting Estimates'; and
> Amendments to IFRS 16- ' Lease Liability in a Sale and Leaseback'.
Going Concern
The Genus plc Annual Report 2022 (a copy of which is available
on the Genus plc website at www.genusplc.com) sets out on pages
44-46 several 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 fiscal year.
In assessing the appropriateness of adopting the going concern
basis of preparing the financial statements, the Board have
considered: -
> Genus's Budget, Forecasts and Strategic Plan which forms
management's best estimate of the future performance and position
of the Group
> Genus's 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
GBP190m multi-currency RCF, a 150m US dollar RCF and a US 20m USD
bond guarantee. The term of the facility is for four years to
August 2025 having already exercised both extension options.
Additionally, there is an uncommitted GBP40m accordion option which
can be requested a further two occasions over the remaining
lifetime of the facility; and
> The availability of mitigating actions that could be
utilised if needed; 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 viability 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 because of
failing to produce best genetics for our customers or to secure
elite genetics;
> Ensuring biosecurity or continuity of supply, which is
modelled through one off impacts of disease outbreaks and border
closures;
> Impact of the war in Ukraine, modelled through reduction in
profit expectations and cash restrictions;
> Financial and operational impact of cyber security incidents; and
> Impact of increased pressures from changes global commodity prices.
The Directors 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
2022 2021 2022
GBPm GBPm GBPm
------------------------------- ------------- ------------- ---------
Genus PIC 179.0 143.5 306.6
Genus ABS 160.8 130.9 272.0
Genus Research and Development
------------------------------- ------------- ------------- ---------
Porcine product development 9.0 6.0 12.4
Bovine product development 1.4 0.8 1.7
Gene editing - - 0.7
Other research and development - - -
------------------------------- ------------- ------------- ---------
10.4 6.8 14.8
------------------------------- ------------- ------------- ---------
350.2 281.2 593.4
------------------------------- ------------- ------------- ---------
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
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2022 2021 2022
GBPm GBPm GBPm
---------------------------------- ------------- ------------- ---------
Genus PIC 70.1 52.2 112.3
Genus ABS 22.4 22.1 40.5
Genus Research and Development
---------------------------------- ------------- ------------- ---------
Porcine product development (13.0) (10.3) (22.4)
Bovine product development (12.7) (10.4) (22.8)
Gene editing (7.7) (3.6) (7.9)
Other research and development (9.4) (7.0) (14.0)
---------------------------------- ------------- ------------- ---------
(42.8) (31.3) (67.1)
---------------------------------- ------------- ------------- ---------
Adjusted segment operating profit 49.7 43.0 85.7
Central (8.5) (8.0) (16.9)
---------------------------------- ------------- ------------- ---------
Adjusted operating profit 41.2 35.0 68.8
---------------------------------- ------------- ------------- ---------
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 GBP2.2m net expense (2021: GBP1.7m credit)
relate to Genus ABS (GBP 2.0m net expense) and our central segment
(GBP0.2m expense). 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
----------------------------- -----------------------------
31 31 30 31 31 30
December December June December December June
2022 2021 2022 2022 2021 2022
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------- --------- --------- ------- --------- --------- -------
Genus PIC 294.8 253.8 305.4 (65.4) (63.3) (73.4)
Genus ABS 278.4 232.9 261.4 (72.1) (77.7) (78.9)
Genus Research and Development
------------------------------- --------- --------- ------- --------- --------- -------
Research 15.8 18.3 14.7 (4.0) (5.0) (4.4)
Porcine product development 276.5 236.0 275.0 (53.5) (57.8) (57.7)
Bovine product development 112.2 119.0 119.6 (13.2) (21.5) (16.7)
------------------------------- --------- --------- ------- --------- --------- -------
404.5 373.3 409.3 (70.7) (84.3) (78.8)
------------------------------- --------- --------- ------- --------- --------- -------
Segment total 977.7 860.0 976.1 (208.2) (225.3) (231.1)
Central 46.4 36.2 41.8 (246.0) (164.5) (214.7)
------------------------------- --------- --------- ------- --------- --------- -------
Total 1,024.1 896.2 1,017.9 (454.2) (389.8) (445.8)
------------------------------- --------- --------- ------- --------- --------- -------
Revenue by type
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2022 2021 2022
GBPm GBPm GBPm
-------------------------------------------------------------------- ------------ ------------ --------
Genus PIC 90.1 77.4 158.4
Genus ABS 155.9 126.5 262.5
Genus Research and Development 10.4 6.8 14.8
-------------------------------------------------------------------- ------------ ------------ --------
Sale of animals, semen, embryos and ancillary products and services 256.4 210.7 435.7
-------------------------------------------------------------------- ------------ ------------ --------
Genus PIC 88.9 66.1 148.2
Genus ABS 0.5 0.5 1.1
Genus Research and Development - - -
-------------------------------------------------------------------- ------------ ------------ --------
Royalties 89.4 66.6 149.3
-------------------------------------------------------------------- ------------ ------------ --------
Genus PIC - - -
Genus ABS 4.4 3.9 8.4
Genus Research and Development - - -
-------------------------------------------------------------------- ------------ ------------ --------
Consulting services 4.4 3.9 8.4
-------------------------------------------------------------------- ------------ ------------ --------
Total revenue 350.2 281.2 593.4
-------------------------------------------------------------------- ------------ ------------ --------
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
2022 2021 2022
GBPm GBPm GBPm
------------------------------- ------------ ------------ --------
Genus PIC 176.5 142.0 303.2
Genus ABS 148.6 119.3 247.2
Genus Research and Development 10.4 6.8 14.1
------------------------------- ------------ ------------ --------
Recognised at a point in time 335.5 268.1 564.5
------------------------------- ------------ ------------ --------
Genus PIC 2.5 1.5 3.4
Genus ABS 12.2 11.6 24.8
Genus Research and Development - - 0.7
------------------------------- ------------ ------------ --------
Recognised over time 14.7 13.1 28.9
------------------------------- ------------ ------------ --------
Total revenue 350.2 281.2 593.4
------------------------------- ------------ ------------ --------
3. EXCEPTIONAL ITEMS
Operating (expense)/credit Six months Six months Year
ended ended ended
31 31 30
December December June
2022 2021 2022
GBPm GBPm GBPm
----------------------------------------- ---------- ---------- ------
Litigation, settlement and damages (net) (1.8) (1.8) (1.4)
Acquisition and integration - (0.1) (0.3)
Pension related - - (0.4)
Legacy legal claim - 3.6 3.3
ABS production restructuring (0.2) - (2.8)
Other (0.2) - (0.4)
----------------------------------------- ---------- ---------- ------
(2.2) 1.7 (2.0)
----------------------------------------- ---------- ---------- ------
Litigation and damages
Litigation includes legal fees, settlement and related costs of
GBP1.8m (2021: GBP1.8m) related to the actions between ABS Global,
Inc. and certain affiliates ('ABS') and Inguran, LLC and certain
affiliates (aka STgenetics ('ST')). The net expense comprises
GBP2.7m of legal costs and a GBP0.9m settlement credit (see below
for further details).
Material litigation activities during the period ended 31
December 2022
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 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.
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. 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 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 opposed this action.
On September 20, 2022 the USPTO issued patent 11,446,665 (the
'665 patent) and ST subsequently sought a third supplement of ABS
III by adding a claim of infringement of the '665 patent. ABS has
opposed this action as well, and sought dismissal of all
infringement claims.
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, and the hearing was completed on 2
February 2022. On 7 June 2021, PTAB declined to institute the '210
patent IPR and on 28 April 2022, PTAB issued its decision and
declined to invalidate the claims of the '439 patent. ABS has
appealed the '439 patent decision (the "439 Appeal").
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 (the "987
patent'), 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 in favour of ABS. ST has appealed this decision
(the "ABS III Appeal").
On 1 July 2022, the court reached a decision on the ABS II
post-judgment motions as well as the pending motions in ABS IV. The
court deferred to the jury's verdict in ABS II confirming the
validity and infringement of US patents 7,311,476, and 7,611,309
(the "476 and '309 patents' respectively) and the '987 patent, and
further confirmed the award of costs to ABS of $5.3m in connection
with ABS I. In relation to ABS IV, the Court denied ABS' motion to
dismiss the '439 and '210 patent claims on the basis that the
challenges were too fact-based to be resolved at this stage. ABS
filed counterclaims alleging, among other things, anti-competitive
conduct and infringement of four ABS patents. A court scheduling
conference confirmed a hearing date of 15 July 2024 for ABS IV
hearing. Appeals have been filed by ABS on the validity and
infringement of the '987 patent (the "987 Appeal"), the '476 and
the '309 patents (the "ABS II Appeal") and ST has appealed the
award of the $5.3m costs (the "Fee Award Appeal").
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 476 and 309 patents 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 (the "Indian Patent Proceedings").
In June 2021, ST appealed the decision of Competition Commission of
India ("CCI") which had confirmed that ABS India had not breached
the Indian Competition Act in relation to its participation in a
sexed semen tender offered by the Utter Pradesh Livestock
Development Board (the "CCI Appeal").
On 27 December 2022, ABS and ST settled the 987 Appeal, the Fee
Award Appeal and the Indian Patent Proceedings (along with related
patent oppositions in India), delivering lower patent royalty
payments for ABS and a settlement exceptional credit of GBP0.9m.
The ABS II Appeal, the ABS III Appeal, the ABS IV litigation, the
439 Appeal, and the CCI Appeal remain ongoing.
4. NET FINANCE COSTS
Six months Six months Year
ended ended ended
31 31 30
December December June
2022 2021 2022
GBPm GBPm GBPm
----------------------------------------------------------- ---------- ---------- ------
Interest payable on bank loans and overdrafts (4.7) (1.6) (4.1)
Amortisation of debt issue costs (0.5) (0.4) (0.9)
Other interest payable - - (0.1)
Unwinding of discount put options (0.2) (0.3) (0.2)
Net interest cost in respect of pension scheme liabilities (0.1) (0.1) (0.2)
Interest on lease liabilities (0.6) (0.4) (1.1)
----------------------------------------------------------- ---------- ---------- ------
Total interest expense (6.1) (2.8) (6.6)
Interest income on bank deposits - 0.1 0.4
Total interest income - 0.1 0.4
----------------------------------------------------------- ---------- ---------- ------
Net finance costs (6.1) (2.7) (6.2)
----------------------------------------------------------- ---------- ---------- ------
5. TAXATION AND DEFERRED TAXATION
Income tax expense
Six months Six months Year
ended ended ended
31 31 30
December December June
2022 2021 2022
GBPm GBPm GBPm
------------------------- ---------- ---------- ------
Current tax 7.3 6.6 15.4
Deferred tax (4.3) (1.1) (3.7)
------------------------- ---------- ---------- ------
Total income tax expense 3.0 5.5 11.7
------------------------- ---------- ---------- ------
The tax charge for the period of GBP3.0m (2021: GBP5.5m) on the
statutory profit represents an effective tax rate of 20.0% (2021:
22.5%). The reduction in the statutory ETR of 2.5% results from the
reduced deferred tax charge on previously unrecognised losses as
explained further below.
The tax charge on adjusted profits for the period is GBP10.2m
(2021: GBP9.3m), which represents a tax rate on adjusted profits of
24.2% (2021: 25.1%). The Group tax rate has decreased by
approximately 90 basis points due to a reduction in the deferred
tax charge on previously unrecognised losses in 2022 being a credit
of GBP0.3m (2021: charge of GBP0.1m).
There is a deferred tax liability at the period end of GBP55.8m
(2021: GBP50.9m) which mainly relates to the recognition at fair
value of biological assets and intangible assets arising on
acquisition and a deferred tax asset of GBP10.1m (2021: GBP5.1m)
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
2022 2021 2022
GBPm GBPm GBPm
------------------------------------------------------------------------- ---------- ---------- ------
Final dividend
Final dividend for the year ended 30 June 2022 of 21.7 pence per share 14.2 - -
Final dividend for the year ended 30 June 2021 of 21.7 pence per share - 14.2 14.2
Interim dividend
Interim dividend for the year ended 30 June 2022 of 10.3 pence per share - - 6.7
14.2 14.2 20.9
------------------------------------------------------------------------- ---------- ---------- ------
The final dividend for the year ended 30 June 2022 was approved
at the Company Annual General Meeting on 23 November 2022 and paid
on 08 December 2022.
On 22 February 2023, the Directors proposed an interim dividend
of 10.3 pence per share payable on 31 March 2023.
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 2021 51.7 81.6 133.3 20.0 2.7 23.6 4.3 183.9
Additions 4.2 10.3 14.5 0.2 8.6 - - 23.3
Acquisition - 0.4 0.4 - - - - 0.4
Transfers - - - 7.7 (7.7) - - -
Effect of
movements
in exchange
rates 0.6 10.6 11.2 1.0 0.1 3.2 0.1 15.6
--------------- ----------- -------------- ----------- ---------- -------------- ---------- ---------- -------
Balance at 30
June
2022 56.5 102.9 159.4 28.9 3.7 26.8 4.4 223.2
--------------- ----------- -------------- ----------- ---------- -------------- ---------- ---------- -------
Additions - - - - 4.3 - - 4.3
Acquisition - - - - - - - -
Transfers - - - 2.3 (2.3) - - -
Effect of
movements
in exchange
rates (0.1) 0.1 - - - 0.2 - 0.2
--------------- ----------- -------------- ----------- ---------- -------------- ---------- ---------- -------
Balance at 31
December
2022 56.4 103.0 159.4 31.2 5.7 27.0 4.4 227.7
--------------- ----------- -------------- ----------- ---------- -------------- ---------- ---------- -------
Amortisation
and impairment
losses
Balance at 1
July 2021 36.0 66.2 102.2 13.0 - 8.4 4.0 127.6
Amortisation
for the
year 3.0 5.3 8.3 1.7 - 2.5 0.1 12.6
Effect of
movements
in exchange
rates 0.1 8.6 8.7 0.8 - 1.4 0.1 11.0
--------------- ----------- -------------- ----------- ---------- -------------- ---------- ---------- -------
Balance at 30
June
2022 39.1 80.1 119.2 15.5 - 12.3 4.2 151.2
--------------- ----------- -------------- ----------- ---------- -------------- ---------- ---------- -------
Disposals - - - - - - - -
Amortisation
for the
period 1.6 3.2 4.8 1.4 - 1.4 0.1 7.7
Effect of
movements
in exchange
rates 0.1 0.3 0.4 - - - - 0.4
--------------- ----------- -------------- ----------- ---------- -------------- ---------- ---------- -------
Balance at 31
December
2022 40.8 83.6 124.4 16.9 - 13.7 4.3 159.3
--------------- ----------- -------------- ----------- ---------- -------------- ---------- ---------- -------
Carrying
amounts
At 31 December
2022 15.6 19.4 35.0 14.3 5.7 13.3 0.1 68.4
--------------- ----------- -------------- ----------- ---------- -------------- ---------- ---------- -------
At 30 June 2022 17.4 22.8 40.2 13.4 3.7 14.5 0.2 72.0
--------------- ----------- -------------- ----------- ---------- -------------- ---------- ---------- -------
Included within brands, multiplier contracts and customer
relationships are carrying amounts for brands of GBP 0.6m (30 June
2022: GBP0.5m), multiplier contracts of GBP10.0m (30 June 2022:
GBP11.1m) and customer relationships of GBP8.8m (30 June 2022:
GBP11.2m).
Included within the software class of assets is GBP 8.6m (30
June 2022: GBP6.9m) and included in assets in the course of
construction is GBP2.0m (30 June 2022: GBP2.7m) 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 2022 88.0 278.8 366.8
Increases due to purchases 10.7 75.7 86.4
Decreases attributable to sales - (160.8) (160.8)
Decrease due to harvest (6.9) (15.7) (22.6)
Changes in fair value less estimated sale costs (11.9) 97.4 85.5
Effect of movements in exchange rates 0.6 (2.3) (1.7)
------------------------------------------------ ------ ------- -------
Balance at 31 December 2022 80.5 273.1 353.6
Non-current biological assets 80.5 242.2 322.7
Current biological assets - 30.9 30.9
------------------------------------------------ ------ ------- -------
Balance at 31 December 2022 80.5 273.1 353.6
------------------------------------------------ ------ ------- -------
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 2021 92.0 227.5 319.5
Increases due to purchases 23.3 225.8 249.1
Decreases attributable to sales - (234.8) (234.8)
Decrease due to harvest (17.7) (26.3) (44.0)
Changes in fair value less estimated sale costs (19.6) 61.2 41.6
Effect of movements in exchange rates 10.0 25.4 35.4
------------------------------------------------ ------ ------- -------
Balance at 30 June 2022 88.0 278.8 366.8
Non-current biological assets 88.0 245.7 333.7
Current biological assets - 33.1 33.1
------------------------------------------------ ------ ------- -------
Balance at 30 June 2022 88.0 278.8 366.8
------------------------------------------------ ------ ------- -------
Bovine
Bovine biological assets include GBP6.3m (2021: GBP7.1m)
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 16.0% (June 2022: 12.5%) 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.
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 GBP28.6m (2021: GBP39.5m).
Decreases attributable to sales during the period of GBP160.8m
(2021: GBP 137.3m) include GBP38.7m (2021: GBP38.0m) 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 GBP49.1m (2021: GBP58.2m) 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
GBP127.6m (2021: GBP104.1m) in respect of these contracts,
comprising GBP38.7m (2021: GBP38.0m) on initial transfer of animals
and semen to customers and GBP88.9m (2021: GBP66.1m) in respect of
royalties received.
A risk-adjusted rate of 12.5% (June 2022: 10.3%) 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 (2021: seven) and their
estimated useful lifespan is 1.4 years (2021: 1.4 years).
Six months ended 31 December 2022
Bovine Porcine Total
GBPm GBPm GBPm
------------------------------------------------------ ------ ------- ------
Changes in fair value of biological assets (11.9) 97.4 85.5
Inventory transferred to cost of sales at fair value (0.1) (15.7) (15.8)
Biological assets transferred to cost of sales at
fair value - (87.0) (87.0)
------------------------------------------------------ ------ ------- ------
(12.0) (5.3) (17.3)
Fair value movement in related financial derivative - 0.1 0.1
------------------------------------------------------ ------ ------- ------
(5.2
Net IAS 41 valuation movement on biological assets(1) (12.0) ) (17.2)
------------------------------------------------------ ------ ------- ------
Six months ended 31 December 2021
Bovine Porcine Total
GBPm GBPm GBPm
------------------------------------------------------ ------ ------- ------
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 - - -
------------------------------------------------------ ------ ------- ------
Net IAS 41 valuation movement on biological assets(1) (9.2) 2.4 (6.8)
------------------------------------------------------ ------ ------- ------
Year ended 30 June 2022
Bovine Porcine Total
GBPm GBPm GBPm
------------------------------------------------------ ------ ------- ------
Changes in fair value of biological assets (19.6) 61.2 41.6
Inventory transferred to cost of sales at fair value (10.3) (26.3) (36.6)
Biological assets transferred to cost of sales at
fair value - (10.3) (10.3)
------------------------------------------------------ ------ ------- ------
(29.9) 24.6 (5.3)
Fair value movement in related financial derivative - (0.1) (0.1)
------------------------------------------------------ ------ ------- ------
Net IAS 41 valuation movement on biological assets(1) (29.9) 24.5 (5.4)
------------------------------------------------------ ------ ------- ------
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,
Land motor Assets Total motor Total
and vehicles under owned Land vehicles right-of-use
buildings and equipment construction assets and buildings and equipment assets Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------- ------------ ------------- ------- ------------- ------------- -----
Cost or
deemed cost
Balance at 1
July 2021 66.6 88.0 22.1 176.7 20.7 26.0 46.7 223.4
Additions 0.2 3.9 40.3 44.4 9.2 6.1 15.3 59.7
Transfers 23.5 12.8 (36.3) - - - - -
Disposals (1.4) (2.0) - (3.4) (0.5) (6.0) (6.5) (9.9)
Effect of
movements
in exchange
rates 11.3 10.9 3.5 25.7 2.1 2.3 4.4 30.1
------------- ------------ ------------- ------------- ------- ------------- ------------- ------------- -----
Balance at 30
June
2022 100.2 113.6 29.6 243.4 31.5 28.4 59.9 303.3
------------- ------------ ------------- ------------- ------- ------------- ------------- ------------- -----
Additions - 1.5 6.3 7.8 1.0 5.3 6.3 14.1
Transfers 16.3 3.3 (19.6) - - - - -
Disposals - (1.1) - (1.1) - (4.5) (4.5) (5.6)
Effect of
movements
in exchange
rates (1.7) (0.8) (0.8) (3.3) (0.2) 1.0 0.8 (2.5)
------------- ------------ ------------- ------------- ------- ------------- ------------- ------------- -----
Balance at 31
December
2022 114.8 116.5 15.5 246.8 32.3 30.2 62.5 309.3
------------- ------------ ------------- ------------- ------- ------------- ------------- ------------- -----
Depreciation
and
impairment
losses
Balance at 1
July 2021 24.5 56.9 - 81.4 6.5 12.5 19.0 100.4
Depreciation
for the
year 3.8 11.0 - 14.8 4.8 6.8 11.6 26.4
Disposals (1.3) (1.8) - (3.1) (0.5) (5.9) (6.4) (9.5)
Impairment 0.8 0.1 - 0.9 - - - 0.9
Effect of
movements
in exchange
rates 4.4 7.1 - 11.5 0.6 1.6 2.2 13.7
------------- ------------ ------------- ------------- ------- ------------- ------------- ------------- -----
Balance at 30
June
2022 32.2 73.3 - 105.5 11.4 15.0 26.4 131.9
------------- ------------ ------------- ------------- ------- ------------- ------------- ------------- -----
Depreciation
for the
period 2.7 6.3 - 9.0 2.4 3.5 5.9 14.9
Disposals - (0.7) - (0.7) - (4.3) (4.3) (5.0)
Effect of
movements
in exchange
rates (0.5) (0.5) - (1.0) (0.4) 0.6 0.2 (0.8)
------------- ------------ ------------- ------------- ------- ------------- ------------- ------------- -----
Balance at 31
December
2022 34.4 78.4 - 112.8 13.4 14.8 28.2 141.0
------------- ------------ ------------- ------------- ------- ------------- ------------- ------------- -----
Carrying
amounts
------------- ------------ ------------- ------------- ------- ------------- ------------- ------------- -----
At 31
December
2022 80.4 38.1 15.5 134.0 18.9 15.4 34.3 168.3
------------- ------------ ------------- ------------- ------- ------------- ------------- ------------- -----
At 30 June
2022 68.0 40.3 29.6 137.9 20.1 13.4 33.5 171.4
------------- ------------ ------------- ------------- ------- ------------- ------------- ------------- -----
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 2022 was GBP6 .4m
(2021: GBP3.2m).
The carrying value of the investment is reconciled as
follows:
31 31
December December
2022 2021
GBPm GBPm
-------------------------------------------------------------------- ---------- ---------
Balance at 1 July 41.2 34.1
Share of post-tax retained profits of joint ventures and associates 6.4 3.2
Additions 2.0 1.1
Disposal - (0.1)
Effect of other movements including exchange rates (0.5) (2.2)
Balance at 31 December 49.1 36.1
-------------------------------------------------------------------- ---------- ---------
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 2022 24.4 0.9 (17.5) (1.4) 6.4
---------------------------------- --------- -------------- ---------- ---------- --------------
Six months ended 31 December 2021 19.6 (0.4) (14.7) (1.3) 3.2
Year ended 30 June 2022 39.9 (1.4) (30.7) (2.6) 5.2
---------------------------------- --------- -------------- ---------- ---------- --------------
11. INVENTORIES
31 December 31 December 30 June
2022 2021 2022
GBPm GBPm GBPm
-------------------------------------------------- ----------- ----------- -------
Biological assets' harvest classed as inventories 21.8 19.8 20.9
Raw materials and consumables 5.1 3.3 3.6
Goods held for resale 32.3 21.2 26.4
-------------------------------------------------- ----------- ----------- -------
59.2 44.3 50.9
-------------------------------------------------- ----------- ----------- -------
Goods held for resale have increased since June 2022 as a result
of increased acquisition of components used to produce the 2nd
Generation IntelliGen technology platforms (Gen2.0). These
platforms are used to process sexed bovine semen for ABS and
third-party customers.
12. TRADE AND OTHER RECEIVABLES
(restated*) (restated*)
31 December 31 December 30 June
2022 2021 2022
GBPm GBPm GBPm
------------------------------------ ------------- ------------ -----------
Trade receivables (restated*) 94.4 82.4 95.7
Less expected credit loss allowance (3.8) (3.6) (4.3)
------------------------------------ ------------- ------------ -----------
Trade receivables net of impairment 90.6 78.8 91.4
Other debtors 8.9 7.8 10.7
Prepayments 11.4 9.3 8.5
Contract assets (restated*) 21.3 18.3 17.3
Other taxes and social security 3.7 3.9 1.6
------------------------------------ ------------- ------------ -----------
Current trade and other receivables 135.9 118.1 129.5
Other debtors 2.2 1.8 3.7
Contract assets 5.9 - 4.9
------------------------------------ ------------- ------------ -----------
Non-current other receivables 8.1 1.8 8.6
------------------------------------ ------------- ------------ -----------
144.0 119.9 138.1
------------------------------------ ------------- ------------ -----------
* During the period it was identified that certain contract
assets in a particular component were incorrectly classified as
current trade receivables. The prior periods have been restated
reducing current trade receivables by GBP8.5m in December 2021 and
GBP9.6m in June 2022, with a corresponding increase in current
contract assets.
Trade receivables
The average credit period our customers take on the sales of
goods is 50 days (30 June 2022 (restated*): 56 days). We do not
charge interest on receivables for the first 30 days from the date
of the invoice.
The Group 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 2022: no more than 5%).
13. TRADE AND OTHER PAYABLES
31 December 31 December 30 June
2022 2021 2022
GBPm GBPm GBPm
------------------------------------- ----------- ----------- -------
Trade payables 31.5 29.5 36.0
Other payables 12.8 9.7 8.2
Accrued Expenses 51.0 54.3 61.4
Contract liabilities 7.1 12.1 10.1
Other taxes and social security 8.4 7.5 9.0
------------------------------------- ----------- ----------- -------
Current trade and other payables 110.8 113.1 124.7
------------------------------------- ----------- ----------- -------
Contract labilities - 1.3 0.2
------------------------------------- ----------- ----------- -------
Non-current trade and other payables - 1.3 0.2
------------------------------------- ----------- ----------- -------
110.8 114.4 124.9
------------------------------------- ----------- ----------- -------
The average credit period taken for trade purchases is 30 days
(30 June 2022: 39 days).
14. EARNINGS PER SHARE
Weighted average number of ordinary shares (diluted)
Six months Six months Year
ended ended ended
31 31 30
December December June
2022 2021 2022
000s 000s 000s
------------------------------------------------------------------------------------- ----------- ---------- ------
Weighted average number of ordinary shares (basic) 65,540 65,390 65,395
Dilutive effect of share awards and options 441 430 319
------------------------------------------------------------------------------------- ----------- ---------- ------
Weighted average number of ordinary shares for the purpose of diluted earnings per
share 65,981 65,820 65,714
------------------------------------------------------------------------------------- ----------- ---------- ------
Six months Six months Year
ended ended ended
31 31 30
December December June
2022 2021 2022
(pence) (pence) (pence)
------------------------------------ ------------ ----------- ---------
Earnings per share
Basic earnings per share 20.4 30.4 62.5
Diluted earnings per share 20.3 30.2 62.2
------------------------------------ ------------ ----------- ---------
Adjusted earnings per share
Adjusted earnings per share 48.8 42.4 82.7
Diluted adjusted earnings per share 48.5 42.1 82.3
------------------------------------ ------------ ----------- ---------
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 GBP13.4m (six months
ended 31 December 2021: GBP19.9m; year ended 30 June 2022:
GBP40.9m) 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 GBP32.0m (six months ended 31 December 2021:
GBP27.7m; year ended 30 June 2022: GBP54.1m), which is calculated
as follows:
Adjusted earnings
Six months Six months Year
ended ended ended
31 31 30
December December June
2022 2021 2022
GBPm GBPm GBPm
------------------------------------------------------------------------------- ------------ ------------ ------
Profit before tax 15.0 24.4 48.4
Add/(deduct):
Net IAS 41 valuation movement on biological assets (note 8) 17.2 6.8 5.4
Amortisation of acquired intangible assets (note 7) 4.8 3.8 8.3
Share-based payment expense 2.3 2.2 3.7
Exceptional items (see note 3) 2.2 (1.7) 2.0
Net IAS 41 valuation movement on biological assets in joint ventures (note 10) (0.9) 0.4 1.4
Tax on joint ventures and associates (note 10) 1.4 1.3 2.6
Attributable to non-controlling interest 0.2 (0.2) (0.3)
------------------------------------------------------------------------------- ------------ ------------ ------
Adjusted profit before tax 42.2 37.0 71.5
Adjusted tax charge (10.2) (9.3) (17.4)
------------------------------------------------------------------------------- ------------ ------------ ------
Adjusted profit after tax 32.0 27.7 54.1
------------------------------------------------------------------------------- ------------ ------------ ------
Effective tax rate on adjusted profit 24.2% 25.1% 24.3%
------------------------------------------------------------------------------- ------------ ------------ ------
15. CASH FLOW FROM OPERATING ACTIVITIES
Six months Six months Year
ended ended ended
31 31 30
December December June
2022 2021 2022
GBPm GBPm GBPm
---------------------------------------------------------------------- ------------ ---------- ------
Profit for the period 12.0 18.9 36.7
Adjustment for:
Net IAS 41 valuation movement on biological assets 17.2 6.8 5.4
Amortisation of acquired intangible assets 4.8 3.8 8.3
Share-based payment expense 2.3 2.2 3.7
Share of profit of joint ventures and associates (6.4) (3.2) (5.2)
Finance costs (net) 6.1 2.7 6.2
Income tax expense 3.0 5.5 11.7
Exceptional items 2.2 (1.7) 2.0
----------------------------------------------------------------------- ------------ ---------- ------
Adjusted operating profit from continuing operations 41.2 35.0 68.8
Depreciation of property, plant and equipment 14.9 12.2 26.4
Loss/(profit) on disposal of plant and equipment 0.6 (0.1) 0.4
Amortisation and impairment of intangible assets 2.9 2.0 4.3
----------------------------------------------------------------------- ------------ ---------- ------
Adjusted earnings before interest, tax, depreciation and amortisation 59.6 49.1 99.9
Cash impact of exceptional items (3.0) 2.7 1.1
Other movements in biological assets and harvested produce (6.7) (5.8) (19.1)
Decrease in provisions and release in deferred consideration (0.8) (0.1) -
Additional pension contributions in excess of pension charge (0.6) (2.3) (3.1)
Other 0.6 (0.6) 0.2
----------------------------------------------------------------------- ------------ ---------- ------
Operating cash flows before movement in working capital 49.1 43.0 79.0
Increase in inventories (7.4) (8.2) (6.1)
Increase in receivables (7.1) (11.9) (18.5)
(Decrease)/Increase in payables (8.9) (0.7) 2.2
----------------------------------------------------------------------- ------------ ---------- ------
Cash generated by operations 25.7 22.2 56.6
Interest received - 0.1 0.4
Interest and other finance costs paid (4.4) (1.7) (4.0)
Interest on leased assets (0.6) (0.4) (1.1)
Cash flow from derivative financial instruments (0.2) (0.3) (0.1)
Income taxes paid (8.7) (8.3) (17.5)
----------------------------------------------------------------------- ------------ ---------- ------
Net cash from operating activities 11.8 11.6 34.3
----------------------------------------------------------------------- ------------ ---------- ------
16. 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 2022. The
aggregated position of defined benefit schemes are provided
below:
31 December 31 December 30 June
2022 2021 2022
GBPm GBPm GBPm
----------------------------------------------------- ----------- ----------- -------
Present value of funded obligations 778.1 1,100.2 857.6
Present value of unfunded obligations 7.7 9.0 8.4
----------------------------------------------------- ----------- ----------- -------
Total present value of obligations 785.8 1,109.2 866.0
Fair value of plan assets (820.2) (1,176.1) (936.3)
Restricted recognition of asset (MPF and DPF) 41.7 75.7 78.6
Recognised liability for defined benefit obligations 7.3 8.8 8.3
----------------------------------------------------- ----------- ----------- -------
The principal actuarial assumptions (expressed as weighted
averages) are:
31 31 30
December December June
2022 2021 2022
--------------------- --------- --------- -----
Discount rate 4.85% 1.95% 3.90%
Consumer Price Index 2.55% 2.30% 2.40%
Retail Price Index 2.95% 3.05% 2.90%
--------------------- --------- --------- -----
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.
Further details of the Milk Pension Fund can be found in the
Genus plc Annual Report 2022.
17. Financial instruments fair value disclosures
The table below sets out the categorisation of the financial
instruments held by the Group at 31 December 2022.
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.
(restated*) (restated*)
31 December 2022 31 December 2021 30 June 2022
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 7.6 - 4. 1 11.7 12.4 - 3.5 15.9 6.5 - 3.7 10.2
Trade
receivables and
other debtors,
excluding
prepayments and
contract assets
(see note 12)
(restated*) - 105.4 - 105.4 - 92.3 - 92.3 - 107.4 - 107.4
Cash and cash
equivalents - 42.3 - 42.3 - 45.9 - 45.9 - 38.8 - 38.8
Derivative
instruments in
non-designated
hedge
accounting
relationships - 0.9 - 0.9 - 0.6 - 0.6 - 1.0 - 1.0
Derivate
instruments in
designated
hedge
accounting
relationships - 2.6 - 2.6 - - - - - 2.2 - 2.2
7.6 151.2 4.1 162.9 12.4 138.8 3.5 154.7 6.5 149.4 3.7 159.6
---------------- ------ ------- ------ ------- ------ ------- ------ ------- ------ ------- ------ -------
Financial
liabilities
Trade and other
payables,
excluding other
taxes and
social security - (102.4) - (102.4) - (106.9) - (106.9) - (115.9) - (115.9)
Loans and
overdrafts - (222.2) - (222.2) - (161.6) - (161.6) - (189.2) - (189.2)
Leasing
obligations - (34.6) - (34.6) - (27.6) - (27.6) - (34.6) - (34.6)
Derivative
instruments in
non-designated
hedge
accounting
relationships - (0.6) - (0.6) - (0.3) - (0.3) - (0.9) - (0.9)
Derivative
instruments in
designated
hedge
accounting
relationships - - - - - - - - - (0.3) - (0.3)
Put options for
purchase of
share in an
investment - - - - - (0.9) - (0.9) - - - -
Put option over
non-controlling
interest - (7.4) - (7.4) - (6.6) - (6.6) - (7.0) - (7.0)
Deferred
consideration - - (0.6) (0.6) - (0.2) (1.7) (1.9) - - (1.5) (1.5)
---------------- ------ ------- ------ ------- ------ ------- ------ ------- ------ ------- ------ -------
- (367.2) (0.6) (367.8) - (304.1) (1.7) (305.8) - (347.9) (1.5) (349.4)
---------------- ------ ------- ------ ------- ------ ------- ------ ------- ------ ------- ------ -------
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.
* During the period it was identified that certain contract
assets in a particular component were incorrectly classified as
current trade receivables. The prior periods have been restated
reducing current trade receivables by GBP8.5m in December 2021 and
GBP9.6m in June 2022, with a corresponding increase in current
contract assets.
18. 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 2022
amounted to GBP1.2m (2021: GBP0.1m). As at 31 December 2022, the
balance owing to these entities was GBP0.1m (2021: GBPnil), all
amounts were settled in cash.
These related party transactions were made on terms equivalent
to those that prevail in arms' length transactions.
During the prior year, as part of an international secondment
agreement with a member of Genus's executive, Genus agreed to fund
an amount of GBP0.4m in respect of a personal taxation expense. A
tax refund has been claimed and cash is expected to be received in
Financial Year 2023, which will be used to settle the outstanding
amount in full.
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
2022 2021 2022 2022 2021 2022
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------------------------ ---------- ---------- ------ ---------- ---------- ------
Sale of goods and services to joint ventures and - - - - - -
associates
Purchase of goods and services from joint ventures and
associates 1.5 2.8 6.5 (0.2) (0.3) (0.3)
------------------------------------------------------ ---------- ---------- ------ ---------- ---------- ------
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.
GENUS PLC
RESPONSIBILITY STATEMENT
For the six months ended 31 December 2022
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
22 February 2023
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 Calculation methodology and Reasons why we believe
Performance Measures closest the
equivalent IFRS measure (where APMs are useful
applicable)
--------------------- -------------------------------- -------------------------------------------------------------
Income statement measures
----------------------------------------------------------------------------------------------------------------------
Adjusted operating Adjusted operating profit is Allows the comparison
profit exc JVs operating of underlying financial
profit with the net IAS 41 performance by excluding
valuation the impacts of exceptional
movement on biological assets, items and is a performance
amortisation indicator against
of acquired intangible assets, which short-term and
share-based long-term incentive
payment expense and outcomes for our senior
exceptional items executives are measured:
added back and excludes JV and * net IAS 41 valuation movements on biological assets -
associate these movements can be materially volatile and do not
Adjusted operating results. directly correlate to the underlying trading
profit inc JVs performance in the period. Furthermore, the movement
Closest equivalent IFRS is non-cash related and many assumptions used in the
measure: valuation model are based on projections rather than
Operating profit(1) current trading;
See reconciliation below.
* amortisation of acquired intangible assets -
excluding this improves the comparability between
Adjusted operating acquired and organically grown operations, as the
profit inc JVs latter cannot recognise internally generated
exc gene editing intangible assets. Adjusting for amortisation
costs Including adjusted operating provides a more consistent basis for comparison
profit between the two;
from JV and associate results.
See reconciliation below. * share-based payments - this expense is considered to
be relatively volatile and not fully reflective of
Adjusted operating the current period trading, as the performance
profit inc JVs criteria are based on EPS performance over a
after tax three-year period and include estimates of future
performance; and
Including adjusted operating
profit
Adjusted profit from JV and associate results * exceptional items - these are items which due to
inc JVs before but either their size or their nature are excluded, to
tax excluding gene editing costs. improve the understanding of the Group's underlying
performance.
See reconciliation below.
Adjusted profit
inc JVs
after tax Adjusted operating profit
including
JV less adjusted effective
tax.
See reconciliation below.
Adjusted operating profit
including
JVs less net finance costs.
See reconciliation below.
Adjusted profit including JVs
before
tax less adjusted effective
tax.
See reconciliation below.
--------------------- -------------------------------- -------------------------------------------------------------
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 weighted basic average number this allows the comparability
per share 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
31 December 31 December 30 June
2022 2021 2022
------------- -------------- -------------
GBPm GBPm GBPm GBPm GBPm GBPm Reference
----------------------------------- ------ ----- ----- ------- ---- ------- -----------------------------------
Operating profit 14.7 23.9 49.4 Group Income Statement
Add back:
Net IAS 41 valuation movement on
biological assets 17.2 6.8 5.4 Group Income Statement
Amortisation of acquired intangible
assets 4.8 3.8 8.3 Group Income Statement
Share-based payment expense 2.3 2.2 3.7 Group Income Statement
Exceptional items 2.2 (1.7) 2.0 Group Income Statement
----------------------------------- ------ ----- ----- ------- ---- ------- -----------------------------------
Adjusted operating profit exc JVs 41.2 35.0 68.8 Group Income Statement
Less: amounts attributable to
non-controlling interest 0.2 (0.2) (0.3) Group Income Statement
Operating profit from joint
ventures and associates 6.4 3.2 5.2 Group Income Statement
Tax on joint ventures and 1.4 1.3 2.6 Note 10 - Interests in joint
associates ventures and associates
Net IAS 41 valuation movement (0.9) 0.4 1.4 Note 10 - Interests in joint
attributable to joint ventures ventures and associates
----------------------------------- ------ ----- ----- ------- ---- ------- -----------------------------------
Adjusted operating profit from JVs 6.9 4.9 9.2
----------------------------------- ------ ----- ----- ------- ---- ------- -----------------------------------
Adjusted operating profit inc JVs 48.3 39.7 77.7
Gene editing costs 7.7 3.6 7.9 Note 2 - Segmental information
----------------------------------- ------ ----- ----- ------- ---- ------- -----------------------------------
Adjusted operating profit inc JVs
and exc gene editing costs 56.0 43.3 85.6
----------------------------------- ------ ----- ----- ------- ---- ------- -----------------------------------
Adjusted profit inc JVs before tax
Adjusted profit inc JVs after tax
31 December 31 December 30 June
2022 2021 2022
------------ ----------- -------
GBPm GBPm GBPm Reference
----------------------------------- ----------- ----------- ------- ----------------------------
Adjusted operating profit inc JVs 48.3 39.7 77.7 See APM
Less net finance costs (6.1) (2.7) (6.2) Note 4 - Net finance costs
------------------------------------ ----------- ----------- ------- ----------------------------
Adjusted profit inc JVs before tax 42.2 37.0 71.5
Adjusted tax (10.2) (9.3) (17.4) Note 14 - Earnings per share
------------------------------------ ----------- ----------- ------- ----------------------------
Adjusted profit inc JVs after tax 32.0 27.7 54.1
------------------------------------ ----------- ----------- ------- ----------------------------
Adjusted effective tax GBPm/rate
31 December 31 December 30 June
2022 2021 2022
--------------- --------------- -------------
GBPm % GBPm % GBPm % Reference
--------------------------------------- ------ ------- ------ ------- ----- ------ ----------------------------
Adjusted effective tax GBPm/rate 10.2 24.2 9.3 25.1 17.4 24.3 Note 14 - Earnings per share
Exceptional items (0.5) (22.7) 0.1 - (0.8) (40.0) No direct reference
Share-based payment expense (0.5) (21.7) (0.5) (22.7) (0.5) (13.5) No direct reference
Amortisation of acquired intangible
assets (0.8) (16.7) (0.7) (18.4) (3.3) (39.8) No direct reference
Net IAS 41 valuation movement on
biological assets (4.0) (23.3) (1.3) (19.1) 1.5 27.8 No direct reference
Effective tax GBPm/rate 4.4 26.8 6.9 21.2 14.3 28.0 No direct reference
--------------------------------------- ------ ------- ------ ------- ----- ------ ----------------------------
Adjusted basic earnings per share
31 December 31 December 30 June
2022 2021 2022 Reference
------------------------------------------ -------------- ------------- ------- ----------------------------
Adjusted profit inc JVs after tax (GBPm) 32.0 27.7 54.1 See APM
Weighted average number of ordinary shares
('000) 65.540 65.390 65.395 Note 14 - Earnings per share
------------------------------------------- ------------- ------------- ------- ----------------------------
Adjusted basic earnings per share (pence) 48.8 42.4 82.7
------------------------------------------- ------------- ------------- ------- ----------------------------
Adjusted diluted earnings per share
31 December 31 December 30 June
2022 2021 2022 Reference
------------------------------------------ -------------- ------------- ------- ----------------------------
Adjusted profit inc JVs after tax (GBPm) 32.0 27.7 54.1 See APM
Weighted average number of diluted ordinary
shares ('000) 65.981 65.820 65.714 Note 14 - Earnings per share
------------------------------------------- ------------- ------------- ------- ----------------------------
Adjusted diluted earnings per share (pence) 48.5 42.1 82.3
------------------------------------------- ------------- ------------- ------- ----------------------------
Rolling 12 month Adjusted Earnings cover
31 December 31 December 30 June
2022 2021 2022
--------------- --------------- ------------
Pence Times Pence Times Pence Times Reference
------------------------------------------------- -------- ----- -------- ----- ----- ----- -------------------
Adjusted Earnings per share 48.8 42.4 82.7 See APM
Add: Prior June Adjusted Earnings per share 82.7 100.9 N/a See APM
Deduct: Prior Interim Adjusted Earnings per share (42.4) (55.3) N/a See APM
------------------------------------------------- -------- ----- -------- ----- ----- ----- -------------------
Rolling 12 month adjusted Earnings per share 89.1 88.0 82.7
Dividend for the period 10.3 10.3 32.0 Note 6 - Dividends
Add: Dividend for prior June 32.0 32.0 N/a Note 6 - Dividends
Less: prior interim dividend (10.3) (10.3) N/a Note 6 - Dividends
------------------------------------------------- -------- ----- -------- ----- ----- ----- -------------------
Rolling 12-month dividend 32.0 32 .0 32.0
------------------------------------------------- -------- ----- -------- ----- ----- ----- -------------------
Rolling 12 month Adjusted Earnings cover 2.8 2.8 2.6 No direct reference
------------------------------------------------- -------- ----- -------- ----- ----- ----- -------------------
Adjusted EBITDA - as calculated under our financing
facilities
31 December 31 December 30 June
2022 2021 2022
--------------- --------------- -------------
GBPm GBPm GBPm GBPm GBPm GBPm Reference
---------------------------------- ------- ------ -------- ----- ------ ----- ---------------------------------
Operating profit 14.7 23.9 49.4 Group Income Statement
Add back:
Net IAS 41 valuation movement on
biological assets 17.2 6.8 5.4 Group Income Statement
Amortisation of acquired
intangible assets 4.8 3.8 8.3 Group Income Statement
Share-based payment expense 2.3 2.2 3.7 Group Income Statement
Exceptional items 2.2 (1.7) 2.0 Group Income Statement
---------------------------------- ------- ------ -------- ----- ------ ----- ---------------------------------
Adjusted operating profit exc JVs 41.2 35.0 68.8 Group Income Statement
Adjust for:
Cash received from JVs (dividend - - 3.2 Group Statement of Cash Flows
and loan repayment)
Depreciation: property, plant and Note 9 - Property, plant and
equipment 14.9 12.2 26.4 equipment
Operational lease payments (6.5) (5.6) (12.4) No direct reference
Depreciation: historical cost of
biological assets 7.2 5.5 10.7 No direct reference
Amortisation and impairment
(excluding separately
identifiable acquired intangible
assets) 2.9 2.0 4.3 Note 7 - Intangible assets
Less amounts attributable to
non-controlling interest 0.2 (0.2) (0.3) Group Income Statement
---------------------------------- ------- ------ -------- ----- ------ ----- ---------------------------------
Adjusted EBITDA - as calculated
under our financing facilities 59 .9 48.9 100.7
---------------------------------- ------- ------ -------- ----- ------ ----- ---------------------------------
Rolling 12 month Adjusted EBITDA - as calculated under our
financing facilities
31 December 31 December 30 June
2022 2021 2022
--------------- --------------- ------------
GBPm GBPm GBPm GBPm GBPm GBPm Reference
----------------------------------------------------------- -------- ----- -------- ----- ----- ----- ---------
Operating profit
Adjusted EBITDA - as calculated under our financing
facilities 59.9 48.9 100.7 See APM
Add: Prior June Adjusted EBITDA 100.7 106.1 N/a See APM
Deduct: Prior Interim Adjusted EBITDA (48.9) (57.1) N/a See APM
Rolling 12 month Adjusted EBITDA 111.7 97.9 100.7
----------------------------------------------------------- -------- ----- -------- ----- ----- ----- ---------
Balance sheet measures
Net Debt
Net debt as calculated under our financing facilities
31 December 31 December 30 June
2022 2021 2022
--------------- --------------- -------------
GBPm GBPm GBPm GBPm GBPm GBPm Reference
------------------------------------------------ ------ ------- ------ ------- ----- ------ -------------------
Current unsecured bank loans and overdrafts 7.3 10.6 7.1
Non-current unsecured bank loans and overdrafts 214.9 151.0 182.1
------------------------------------------------ ------ ------- ------ ------- ----- ------ -------------------
Unsecured bank loans and overdrafts 222.2 161.6 189.2 Group Balance Sheet
Current obligations under finance leases 9.9 8.6 10.1
Non-current obligations under finance leases 24.7 19.0 24.5
------------------------------------------------ ------ ------- ------ ------- ----- ------ -------------------
Obligations under finance leases 34.6 27.6 34.6 Group Balance Sheet
------------------------------------------------ ------ ------- ------ ------- ----- ------ -------------------
Total debt financing 256.8 189.2 223.8
Deduct:
Cash and cash equivalents (42.3) (45.9) (38.8) Group Balance Sheet
------------------------------------------------ ------ ------- ------ ------- ----- ------ -------------------
Net debt 214.5 143.3 185.0
------------------------------------------------ ------ ------- ------ ------- ----- ------ -------------------
Deduct:
Lower of obligations under finance leases or
GBP30m (30.0) (27.6) (30.0)
Add back:
Guarantees 13.7 19.1 20.2 No direct reference
Deferred purchase arrangements 1.4 1.1 - No direct reference
------------------------------------------------ ------ ------- ------ ------- ----- ------ -------------------
Net debt - as calculated under our financing
facilities 199.6 135.9 175.2
------------------------------------------------ ------ ------- ------ ------- ----- ------ -------------------
Cash flow measures
Cash conversion
31 December 31 December 30 June
2022 2021 2022
--------------- --------------- -----------
GBPm GBPm GBPm GBPm GBPm GBPm Reference
----------------------------------- ------- ------ -------- ----- ----- ---- ----------------------------------
Cash generated by operations 25.7 22.2 56.6 Note 15 - Notes to the cash flow
statement
Operating profit 14.7 23.9 49.4 Group Income Statement
Add back:
Net IAS 41 valuation movement on
biological assets 17.2 6.8 5.4 Group Income Statement
Amortisation of acquired intangible
assets 4.8 3.8 8.3 Group Income Statement
Share-based payment expense 2.3 2.2 3.7 Group Income Statement
Exceptional items 2.2 (1.7) 2.0 Group Income Statement
----------------------------------- ------- ------ -------- ----- ----- ---- ----------------------------------
Adjusted operating profit exc JVs 41.2 35.0 68.8 Group Income Statement
Cash conversion (%) 62 % 63 % 82%
----------------------------------- ------- ------ -------- ----- ----- ---- ----------------------------------
Free cash flow
31 December 31 December 30 June
2022 2021 2022
-------------- ------------- ---------
GBPm GBPm GBPm Reference
---------------------------------- ------------- ------------- --------- ----------------------------------
Note 15 - Notes to cash flow
Cash generated by operations 25.7 22.2 56.6 statement
Note 15 - Notes to cash flow
Net interest and tax paid (13.9) (10.6) (22.3) statement
Capital expenditure (15.0) (27.8) (50.9) Group Statement of Cash flows
Dividend received from joint - - 3.2 Group Statement of Cash flows
venture and associate
Joint venture and associate loan - - - Group Statement of Cash flows
repayment
Proceeds from sale of property,
plant and equipment - 0.1 - Group Statement of Cash flows
Dividend to non-controlling
interest (0.1) - (0.1) Group Statement of Cash flows
----------------------------------- ------------- ------------- --------- ----------------------------------
Free cash flow (3.3) (16.1) (13.5)
----------------------------------- ------------- ------------- --------- ----------------------------------
Other measures
Ratio of net debt to adjusted EBITDA
31 December 31 December 30 June
2022 2021 2022
--------------- --------------- ------------
GBPm Times GBPm Times GBPm Times Reference
-------------------------------------------------------- -------- ----- ------- ------ ----- ----- ---------
Net debt - as calculated under our financing facilities 199.6 135.9 175.2 See APM
Rolling 12 month Adjusted EBITDA -
as calculated under our financing facilities 111 .7 97.9 100.7 See APM
Ratio of net debt to Adjusted EBITDA 1.8 1.4 1.7
-------------------------------------------------------- -------- ----- ------- ------ ----- ----- ---------
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