REG - Genus - Preliminary Results <Origin Href="QuoteRef">GNS.L</Origin> - Part 2
07/09/2017 07:07
- Part 2: For the preceding part double click ID:nRSG0426Qa
Management Team oversees our own
research, ensures we correctly prioritise our
R&D investments and assesses the adequacy of
resources and the relevant IP landscapes. We
have formal collaboration agreements with key
partners, to ensure responsible exploration
and development of technologies and the
protection of IP. The Board is updated
regularly on key development projects.
Capturing value through acquisitions· Failure to identify appropriate investment opportunities or to perform sound due diligence.· Failure to successfully integrate an acquired business. We have a rigorous acquisition analysis and No change. The acquisition process continues to provide valuable and timely access to the right investment opportunities. Our experiences with post-acquisition integration provide a platform for integrating newly acquired businesses.
due diligence process, with the Board
reviewing and signing-off all material
projects. We also have a structured post
-acquisition integration planning and
execution process.
Growing in emerging markets· Failure to appropriately develop our business in China and other emerging markets. We have a robust organisation, blending local No change. Business performance has continued to be strong in China. However, we remain exposed to the pig cycle in China, as the majority of our business there is not yet on a royalty model.
and expatriate executives, supported by the
global species teams. This allows us to grow
our business in key markets, while managing
risks and ensuring we comply with our global
standards.
Operational Risks
Risk description How we manage risk Risk change in 2017
Protecting Intellectual Property ('IP') · Failure to protect our IP could mean Genus-developed genetic material, methods, systems and technology become freely available to third parties. We have a global, cross-functional process to No change.
identify and protect our IP. Our customer
contracts and our selection of multipliers and
joint venture partners include appropriate
measures to protect our IP. We conduct robust
'Freedom To Operate' searches to identify
third-party rights to technology.
Ensuring biosecurity and continuity of supply· Loss of key livestock, owing to disease outbreak.· Loss of ability to move animals or semen freely (including across borders) due to disease outbreak, environmental incident or international trade sanctions.· Lower demand for our products, due to industry-wide disease outbreaks. We have stringent biosecurity standards, with No change.
independent reviews throughout the year to
ensure compliance. We regularly review the
geographical diversity of our production
facilities, to avoid over-reliance on single
sites.
Hiring and retaining talented people· Failure to attract, recruit, develop and retain the global talent needed to deliver our R&D programmes and growth plans in our chosen markets. We have a robust talent and succession New principal risk. Growth in new business areas (including IVB and GSS) and delivery of our R&D programmes depend on having people with appropriate skills.
planning process, including annual assessments
of our global talent pool and active
leadership development programmes. The
Group's reward and remuneration policies are
reviewed regularly, to ensure their
competitiveness. We work closely with a
number of specialist recruitment agencies to
identify candidates with the skills we need.
Financial Risks
Risk description How we manage risk Risk change in 2017
Managing agricultural market and commodity prices volatility· Fluctuations in agricultural markets affect customer profitability and therefore demand for our products and services.· Increase in our operating costs, due to commodity pricing volatility. We continuously monitor markets and seek to No change.
balance our costs and resources in response to
market demand. We actively monitor and update
our hedging strategy to manage our exposure.
Our porcine royalty model and extensive use of
third-party multipliers mitigates the impact
of cyclical price reductions or cost increases
in pig production.
Funding pensions· Exposure to costs associated with failure of third-party members of joint and several liabilities pension scheme.· Exposure to costs as a result of external factors (such as mortality rates, interest rates or investment values) affecting the size of the pension deficit. We are the principal employer for the Milk Reduced. During the year the trustees and Genus consented to a Flexible Appointment Agreement ('FAA') resulting in the NMR Group leaving the scheme after making payments to the fund and to Genus.
Pension Fund and chair the group of
participating employers. The fund is closed to
future service and has an agreed deficit
recovery plan, based on the 2015 actuarial
valuation. In agreement with the employers,
the trustees implemented an investment de
-risking strategy and have started a liability
management exercise. We also monitor the
strengths of other employers in the fund and
have retained external consultants to provide
expert advice.
Group Income Statement Genus plc
For the year ended 30 June 2017
Note 2017£m 2016£m
REVENUE 2 459.1 388.3
ADJUSTED OPERATING PROFIT 2 55.1 49.3
Adjusting items:
- Net IAS 41 valuation movement on biological assets 9 (1.1) (17.1)
- Amortisation of acquired intangible assets 8 (8.7) (6.1)
- Share-based payment expense (4.6) (3.8)
(14.4) (27.0)
- Exceptional items: 3
- Pension related 5.7 44.2
- Litigation (5.3) (6.9)
- Acquisition and integration (0.6) (0.2)
- Other (including restructuring) (2.3) (0.8)
Total exceptional items (2.5) 36.3
Total adjusting items (16.9) 9.3
OPERATING PROFIT 38.2 58.6
Share of post-tax profit of joint ventures and associates retained 6.2 6.9
Finance costs 4 (4.5) (4.7)
Finance income 4 0.8 0.1
PROFIT BEFORE TAX 40.7 60.9
Taxation 5 (6.4) (10.6)
PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS 34.3 50.3
ATTRIBUTABLE TO:
Owners of the Company 32.8 49.3
Non-controlling interest 1.5 1.0
34.3 50.3
EARNINGS PER SHARE FROM CONTINUING OPERATIONS 6
Basic earnings per share 53.8p 81.1p
Diluted earnings per share 53.0p 80.3p
ALTERNATIVE MEASURE OF PERFORMANCE
Adjusted operating profit from continuing operations 55.1 49.3
Adjusted operating profit attributable to non-controlling interest (2.1) (1.4)
Pre-tax share of profits from joint ventures and associates excluding net IAS 41 valuation movement 7.1 6.4
ADJUSTED OPERATING PROFIT INCLUDING JOINT VENTURES AND ASSOCIATES 60.1 54.3
Net finance costs 4 (3.7) (4.6)
ADJUSTED PROFIT BEFORE TAX FROM CONTINUING OPERATIONS 56.4 49.7
ADJUSTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS 6
Basic adjusted earnings per share 69.4p 60.7p
Diluted adjusted earnings per share 68.4p 60.1p
Group Statement of Comprehensive Income Genus plc
For the year ended 30 June 2017
2017£m 2017£m 2016£m 2016£m
PROFIT FOR THE YEAR 34.3 50.3
Items that may be reclassified subsequently to profit or loss
Foreign exchange translation differences 7.7 76.6
Fair value movement on net investment hedges (2.7) (13.3)
Fair value movement on cash flow hedges 2.1 (0.7)
Tax relating to components of other comprehensive income (4.6) (16.8)
2.5 45.8
Items that may not be reclassified subsequently to profit or loss
Actuarial gain/(loss) on retirement benefit obligations 1.2 (12.8)
Movement on pension asset recognition restriction 0.3 (0.6)
Recognition
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