REG - Genus - Preliminary Results
05/09/2024 07:00
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RNS Number : 9713C Genus PLC 05 September 2024
For immediate release 5 September 2024
Genus plc
Preliminary results for the year ended 30 June 2024
STRUCTURALLY STRENGTHENING GENUS IN A CHALLENGING YEAR
Adjusted results(1) Statutory results
Actual currency Constant currency change(2) Actual currency
Year ended 30 June 2024 2023 Change 2024 2023 Change
£m £m % % £m £m %
Revenue 668.8 689.7 (3) 2 668.8 689.7 (3)
Operating profit 67.0 74.6 (10) (3) 6.4 40.5 (84)
Operating profit inc JVs 78.1 85.8 (9) (3) n/a n/a n/a
Profit before tax 59.8 71.5 (16) (8) 5.5 39.4 (86)
Net cash flows from operating activities 55.1 45.9 20 n/m(5) 29.8 50.4 (41)
Free cash flow(6) (3.2) 9.1 n/m(5) n/m(5)
Basic earnings per share (pence) 65.5 84.8 (23) (15) 12.0 50.8 (76)
Dividend per share (pence) 32.0 32.0 -
Strategic progress achieved despite challenging markets
· Management actions limited the impact on adjusted operating profit in
a difficult year for volumes:
o ABS Value Acceleration Programme ("VAP") initiated to structurally improve
Bovine's margins, cash generation and returns profile; Phase 1 delivered
£7.3m of adjusted operating profit benefit in FY24 (£10m annualised
benefit); Phase 2 underway and expected to deliver £5m of adjusted operating
profit benefit in FY25 (£10m annualised)
o R&D strategic review completed, resulting in a sharper focus on key
workstreams and savings of £2.4m realised in FY24 (£5m of annualised
adjusted operating profit benefit in FY25)
o Exceptional restructuring costs related to management actions of £6.7m in
FY24
· Encouraging regulatory progress on the PRRS(3) Resistant Pig ("PRP"):
o Favourable regulatory determinations from Brazil (April 2024) and Colombia
(October 2023)
o Continuing positive engagement with the US FDA(4), with approval expected
in 2025
o Initial submissions to Canadian and Japanese authorities made, as planned
o PIC PRPs arriving in China imminently for in-country testing
Financial performance as expected, with structural changes driving stronger
performance in the second half
· Second half adjusted operating profit including JVs of £40.0m, 15%
higher year on year in constant currency, with £9.4m of benefit from
management actions. Compares with first half adjusted operating profit
including JVs of £38.1m, 17% lower year on year in constant currency
· Adjusted operating profit including JVs 3%(2) lower in constant
currency (9% lower in actual currency). Good PIC ex-China growth and the
realisation of benefits across ABS and R&D were offset by poor China
performances and ABS volume trends
· Adjusted profit before tax (PBT) of £59.8m, 8%(2) lower in constant
currency (16% lower in actual currency). Statutory PBT of £5.5m, 86% lower in
actual currency, primarily due to a £8.6m decrease in the non-cash fair value
IAS41 valuation of Group biological assets (including JV's) and net
exceptional expenses of £24.6m(8) (2023: £3.5m net expense)
· New cash conversion(1) metric introduced which includes investments
in biological assets, capital expenditure, lease repayments and cash received
from JVs; 71% achieved in FY24 (2023: 53%)
· Net Debt(1) increased to £248.7m with a net debt to adjusted
EBITDA(1) ratio of 2.0x, as expected, within our target range of 1.0x to 2.0x
Divisional headlines(7)
· PIC - Resilient growth ex-China, in a difficult market PIC China
doubled its royalty customer numbers:
o Continued genetic improvement, delivering $4.39/pig of genetic profit gain
(2023: $3.74/pig)
o PIC volumes increased 3%, revenue decreased 1%(2) and strategically
important royalty revenue increased 4%(2), in constant currency
o PIC trading regions ex-China adjusted operating profit increased 4%(2) in
constant currency
o PIC China adjusted operating profit decreased 60%(2) in constant currency
due to the challenging market environment and planned supply chain
investments; good commercial progress - 13 new royalty customers won since
June 2023
· ABS - Challenging markets, particularly China; VAP delivering
structural improvements and significant cost efficiencies:
o Volumes decreased 6% (ABS ex-China volumes decreased 1%) with sexed
volumes up 3%, beef volumes decreased 6%
o Revenue increased 4%(2) in constant currency as price actions, mix and
IntelliGen growth offset volume declines
o Adjusted operating profit decreased 3%(2) in constant currency mitigated
by VAP actions
o VAP Phase 1 achieved £10m run-rate of annualised adjusted operating
profit improvement by the end of FY24; Phase 2 underway and expected to
deliver £5m of savings in FY25 (£10m annualised)
Outlook
· Market conditions stable to slowly improving although we remain
cautious, particularly in China
· Solid adjusted operating profit growth expected from PIC in constant
currency
· ABS expected to return to adjusted operating profit growth in
constant currency, a stronger business with actions from VAP
· Management expects significant growth in FY25 Group adjusted profit
before tax in constant currency, in-line with current market expectations
· Currency headwind of approximately £8-9m in FY25 if current exchange
rates continue throughout the fiscal year
Commenting on the performance and outlook, Jorgen Kokke, Chief Executive
Officer, said:
"Genus made significant progress against its strategic priorities during FY24.
I am confident that our decisive actions to structurally strengthen the Group
will yield significant benefits in the years to come.
In FY25, we will continue to execute against our strategic priorities and we
expect to achieve significant growth in Group adjusted profit before tax in
constant currency, in-line with market expectations. However, Sterling has
continued to appreciate against key foreign currencies since our trading
update on 17 July 2024, and we now expect a currency headwind of approximately
£8-9m in FY25, if current exchange rates continue throughout the fiscal
year."
Results presentation and live Q&A session today
A pre-recorded investors, analysts and bankers briefing to discuss the
preliminary results for the year ended 30 June 2024 will be accessible via the
following link from 7:01am UK time today:
https://webcasting.buchanan.uk.com/broadcast/66b0dea408f685532e0148c7
(https://urldefense.com/v3/__https:/webcasting.buchanan.uk.com/broadcast/66b0dea408f685532e0148c7__;!!KBw1CrJ9avNo!01C8c8_tTH_gPylKjBAtA7JppmA5x0GOJ_-fnoo-NKc4-bTj9SGFztOBWudMvblxYcnUJmA8HGH2tqlkgsPWjk8$)
This will be followed by at 10.30 UKT time by a live Q&A session by
invitation at Peel Hunt, 100 Liverpool Street, EC2M 2AT. Those unable to
attend in person can also join via Zoom. Please contact Verity Parker at
Buchanan for details: verity.parker@buchanancomms.co.uk
(mailto:verity.parker@buchanancomms.co.uk)
Enquiries:
Genus plc (Jorgen Kokke, Chief Executive Officer / Alison Henriksen, Chief Tel: 01256 345970
Financial Officer /
Anand Date, Investor Relations Director)
Buchanan (Charles Ryland / Toto Berger / Sophie Wills / 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 80 countries under the trademarks
'ABS' (dairy and beef cattle) and 'PIC' (pigs) and comprise semen, embryos and
breeding animals with superior genetics to those animals currently in farms.
Genus's customers' animals produce offspring with greater production
efficiency and quality, and our customers use them to supply the global dairy
and meat supply chains. Genus thereby enables its customers to produce greater
volumes of high quality animal protein whilst using fewer inputs such as feed,
water and land. This is both good for the environment and the sustainability
of our customers' operations.
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 statutory measures, and not as a substitute for or
as superior to them. For more information on APMs, see the APM Glossary
(2) Constant currency percentage movements are calculated by representing the
results for the year ended 30 June 2024 at the average exchange rates applied
to adjusted operating profit for the year ended 30 June 2023
(3) Porcine Reproductive and Respiratory Syndrome
(4) United States Food and Drug Administration
(5) n/m = not meaningful
(6) Free cash flow definition has changed this year to include lease
repayments, the 2023 comparative has also been restated
(7) Prior year period restated. Please see Note 2 of the notes to the
condensed set of Financial Statements changes of reportable segments
(8) Net exceptional expenses of £24.6m predominantly comprised £10.4m
related to ST litigation and settlements, £6.7m related to restructuring
activity and £7.4m related to a number of potential corporate transactions
which are no longer active
CHIEF EXECUTIVE'S REVIEW
Strategic Priorities Have Started To Deliver
FY24 was a challenging year for Genus, due particularly to market conditions
in many parts of the world, but we took proactive steps to minimise the impact
and made significant strategic progress to strengthen the company's position
for FY25 and beyond.
Group Performance
Group revenue increased by 2% in constant currency and decreased 3% in actual
currency. Adjusted PBT decreased by 8% in constant currency (16% in actual
currency), whilst statutory PBT decreased by 86%.
PIC achieved a robust performance, growing market share and increasing profit
in all regions outside Asia. Europe was the standout performer, while North
America increased profits in very challenging conditions. Asia was impacted by
the ongoing slow recovery in China, resulting in reduced profits. Overall
PIC's volumes increased 3%, revenue decreased 1% and royalty revenue increased
4%, in constant currency. Adjusted operating profit (including joint ventures)
decreased by 2% in constant currency.
ABS faced significant challenges around the globe, particularly in China and
Brazil. As a result, volumes decreased 6% albeit revenues increased by 4% in
constant currency. Adjusted operating profit decreased 3% in constant
currency, with the impact of the challenging trading largely offset by £7.3m
of profit improvements from our Value Acceleration Programme (VAP). ABS was
significantly impacted by exchange rate movements in the year, most notably
the Argentine Peso. This resulted in adjusted operating profit in actual
currency decreasing 25%.
Our Strategic Priorities
This year, we have focused on our four strategic priorities to improve
profitability and guide our progress.
1. Continue growth in porcine, with more stable growth in China
We continued to extend PIC's lead in differentiated genetics and services,
supported by continued acceleration of genetic gain for target traits across
our product lines. PIC also demonstrated superior genetic performance through
product validation trials in every geography. In China, we focused our
go-to-market strategy on driving royalty revenue with key accounts. This
enhanced commercial approach resulted in us signing new royalty customers in
FY24, which both supports long-term growth and reduces exposure to volatility.
We have a strong relationship with the BCA and we continue to work together to
bring PRP to China.
2. Deliver successful commercialisation of PRP
We continued to invest in preparations for the prospective commercialisation
of this ground-breaking product, increasing our population of pigs, which now
spans multiple generations. In parallel, we made encouraging progress with
regulatory approvals, achieving favourable determinations in Colombia and
Brazil while continuing to engage with regulators in other target markets. In
particular, we maintained positive engagement with the US Food and Drug
Administration, with the focus now being post-approval compliance. We also
made regulatory submissions in Canada and Japan and received a licence to
import gene-edited animals into China for testing, with shipments expected to
start in FY25.
3. Deliver greater value from bovine
Through VAP, we are taking concerted action to strengthen the business,
increase effectiveness and enhance efficiency which will improve margins.
Under the leadership of Jim Low, who joined in April as our new ABS Chief
Operating Officer, we are focused on delivering a multi-year transformation
programme. Actions to date have included price increases on our value-added
services, rationalisation of production and integration of beef, dairy and
IntelliGen to increase productivity and drive efficiencies in our supply
chain. Further actions being taken in FY25 are expected to deliver £5m of
profit improvement in FY25 at an annualised run-rate of £10m by the end of
that year.
During the year, ABS launched its new Sexcel Male Beef product. This is a
major breakthrough which utilises our proprietary sexing technology to help
customers produce more male calves, for sale into the beef supply chain.
4. Generate attractive returns from more focused R&D investments
We conducted a strategic review of our R&D activities, considering each
project's deliverability, commercial potential and strategic fit. As a result,
we stopped work on around a third of these projects, giving Genus a more
focused approach and balanced portfolio, closely aligned with company strategy
and business need. We expect £5m of annualised adjusted operating profit
benefit from FY25. While our near-term focus is on PRP regulatory approval
and the launch of Sexcel Male Beef, we continue to be excited about the
opportunities generated by our R&D programme in areas such as disease
resistant animals and reproductive technology.
Our People And Culture
Colleagues across our company continued to demonstrate deep commitment, drive
and energy, despite some difficult circumstances during the year. Our teams
helped us navigate challenges and deliver the strategic progress that
positions us well for the future. I would like to thank all Genus team members
for their contribution.
Any successful company requires a compelling vision and a vibrant culture that
unites its people. We have reviewed both this year.
We adjusted our vision to be Pioneering animal genetic improvement to
sustainably nourish the world. We retained the focus on innovation, which is
the bedrock of our genetic improvement work. However, we added explicit
reference to sustainability, to recognise how we help customers increase the
global supply of safe, nutritious and affordable protein, with use of fewer
natural resources.
We also refreshed our company values, which reflect our culture, to help
inspire colleagues around the world and guide the way we all work. These four
values are Collaborate as One Team, Create Value for Customers, Innovate with
Purpose and Never Stop Improving. These values represent who we are at our
best and are being embedded across the company.
Helping Customers Achieve Their Sustainability Goals
The animal protein sector is a significant producer of greenhouse gases and we
continue to demonstrate the role that genetic improvement plays in reducing
emissions. PIC has completed a life cycle analysis (LCA) in North America
showing that its conventional genetics reduce emissions by more than 7%
against the industry average. The PRP will further improve this, as better
animal health leads to increased production and higher animal welfare. We are
pursuing further LCAs globally, in PIC and ABS, as we continue to demonstrate
the environmental commitment reflected in our vision.
Financial and Operating Review
Financial Review
In the year ended 30 June 2024, Group revenue decreased by 3% in actual
currency (a 2%(2) increase in constant currency). Adjusted operating profit
including joint ventures decreased by 9% (3%(2) in constant currency),
reflecting the challenging market environments experienced by both businesses
along with foreign currency headwinds. R&D investment decreased by 12%
(9%(2) in constant currency) following a strategic review of activities to
align to Genus's strategy and ensure they have compelling commercial
opportunity, resulting in around a third of projects being stopped. During
the year, management also initiated ABS's Value Acceleration Programme to
structurally improve margins, ROIC(1) and cash generation(1). Phase 1 of VAP
has achieved £7.3m of adjusted operating profit improvement in the year.
On a statutory basis, profit before tax was £5.5m (2023: £39.4m). The
difference between statutory and adjusted profit before tax was predominantly
due to a £23.2m decrease in the non-cash fair value IAS41 valuation of
biological assets of the Group, a £14.6m increase in the non-cash fair value
IAS41 valuation of biological assets in JVs and associates, and net
exceptional expenses of £24.6m (2023: £3.5m net expense). Basic earnings per
share on a statutory basis were 12.0 pence (2023: 50.8 pence).
Adjusted profit before tax of £59.8m decreased 8% in constant currency, with
interest expense increasing from £14.3m to £18.3m (a 22%(2) increase in
constant currency) primarily from higher interest rates.
The effect of exchange rate movements on the translation of overseas profits
decreased the Group's adjusted profit before tax for the year by £6.2m
compared with 2023, primarily due to the weakness of the Argentine Peso and
Russian Ruble against Sterling during the year.
Revenue
Revenue decreased by 3% in actual currency (a 2%(2) increase in constant
currency) to £668.8m (2023: £689.7m). PIC's revenue decreased by 4% (a 1%(2)
decrease in constant currency), however strategically important royalty
revenues increased by 4%(2) in constant currency. In ABS, revenue decreased by
2% (a 4%(2) increase in constant currency), however sexed revenues increased
8% in constant currency reflecting the continuing success of Genus's sexed
genetics and IntelliGen processing capability.
Adjusted Operating Profit Including JVs
Actual currency Constant currency change
Year ended 30 June 2024 2023(2) Change
Adjusted Profit Before Tax(1) £m £m % %
Genus PIC 103.6 108.7 (5) (2)
Genus ABS 14.0 18.7 (25) (3)
R&D (21.8) (24.8) (12) (9)
Central costs (17.7) (16.8) (5) (12)
Adjusted operating profit inc JVs 78.1 85.8 (9) (3)
Net finance costs (18.3) (14.3) (28) (22)
Adjusted profit before tax 59.8 71.5 (16) (8)
(1) Includes share of adjusted pre-tax profits of joint ventures and removes
share of adjusted profits of non-controlling interests
(2) Prior year period restated. Please see Note 2 of the notes to the
condensed set of Financial Statements changes of reportable segments
Adjusted operating profit including joint ventures was £78.1m (2023:
£85.8m), a 3%(2) decrease in constant currency. The Group's share of adjusted
joint venture operating profit, primarily from our Brazilian joint venture
with Agroceres, was similar to prior year at £10.2m (2023: £10.8m).
PIC's adjusted operating profit including joint ventures decreased by 2%(2) in
constant currency predominantly due to performance in China and increased PRP
investment, partially offset by tight cost management across the business.
Strategically important royalty revenues increased 4%(2) in constant currency
and grew in every region other than Asia.
ABS's adjusted operating profit decreased by 3% in constant currency. Demand
for Sexcel, our proprietary bovine sexed product, continued to increase, as
well as our IntelliGen third party sexed processing, however there was
weakness across many markets, particularly China and Brazil. As mentioned
above, management initiated ABS's Value Acceleration Program during the year
to structurally improve margins, ROIC(1) and cash generation(1).
Statutory Profit Before Tax
The table below reconciles adjusted profit before tax to statutory profit
before tax:
2024 2023
£m £m
Adjusted Profit Before Tax 59.8 71.5
Operating loss attributable to non-controlling interest (0.9) (0.4)
Net IAS 41 valuation movement on biological assets in JVs and associates 14.6 3.6
Tax on JVs and associates (5.7) (3.9)
Adjusting items:
Net IAS 41 valuation movement on biological assets (23.2) (16.9)
Amortisation of acquired intangible assets (5.8) (7.7)
Share-based payment expense (7.0) (6.0)
Other gains and losses (1.7) 2.7
Exceptional items (24.6) (3.5)
Statutory Profit Before Tax 5.5 39.4
Statutory profit before tax was £5.5m (2023: £39.4m), reflecting the lower
adjusted profit performance, higher interest expense, higher share-based
payment expenses and higher net exceptional items. The net IAS 41 valuation
uplift on biological assets in JVs was principally caused by the stocking of
Genesis, a PIC JV farm in Brazil, but this was offset by a reduction in the
Group's net IAS 41 valuation on biological assets comprising a £20.2m uplift
(2023: £24.9m reduction) in porcine biological assets, principally due to the
restocking of Aurora, our genetic nucleus farm in Canada, following an upgrade
to the farm facilities and health status, along with stocking of the Ankang
and LuoDian farms in China, and a £43.4m reduction (2023: £8.0m uplift) in
bovine biological assets, reflecting lower forecast sales volume growth and
rationalisation of bulls. Share-based payment expense was £7.0m (2023:
£6.0m). These reconciling items are primarily non-cash, can be volatile and
do not correlate to the underlying trading performance in the year.
Exceptional Items
There was a £24.6m net exceptional expense in the year (2023: £3.5m net
expense), which includes legal fees, settlement and related costs of £10.4m
(2023: £4.5m) primarily related to a settlement agreement reached with
STgenetics on litigation matters. As part of ABS's on-going Value Acceleration
Programme, significant one-off expenses were recognised in relation to staff
redundancies (£3.0m), fixed asset and inventory write downs (£1.1m) and
consultancy fees (£1.9m). Staff redundancy costs of £0.7m were recognised in
relation to changes made as a result of the R&D strategic review completed
in the year. £7.4m of exceptional cost was professional fees, primarily
incurred in relation to potential corporate transactions which are no longer
active.
Net Finance Costs
Net finance costs increased to £18.3m (2023: £14.3m), primarily due to
interest rate rises during the year. Average interest rates in the period
increased to 6.20% (2023: 4.94%), raising the cost of like-for-like borrowings
by £2.9m. Average borrowings increased by 3% to £234.4m (2023: £226.9m)
resulting in a further £0.3m increase in interest costs in the year. The
interest rate increases were mitigated by the company's fixed interest cover,
which reduced the impact of rate increases to the above levels by £2.3m
(2023: £1.0m).
Amortisation costs in the year were £0.9m (2023: £1.1m) and within other
interest there was IFRS 16 finance lease interest of £2.8m (2023: £1.2m) and
both a discount interest unwind on the Group's pension liabilities and put
options totalling £0.5m (2023: £0.5m). Foreign interest in the year was an
income of £0.4m (2023: £0.2m expense).
Taxation
The statutory profit tax charge for the period, including share of income tax
of equity accounted investees of £8.8m (2023: £11.5m), represents an
effective tax rate (ETR) of 78.6% (2023: 26.6%). The increase in the statutory
ETR of 52 points results primarily from an increase of 18.8% in the impact of
fixed withholding taxes as a percentage of the lower statutory profit, an
increase of 45.1% in non-deductible expenses due to the disallowance for tax
of advisor fees on increased corporate transaction activity, less the
favourable (13.5)% impact of changes in judgements on deferred tax balances,
movements in provisions and prior year credits.
The adjusted profit tax charge for the year of £16.8m (2023: £15.9m)
represents an ETR on adjusted profits of 28.1% (2023: 22.2%). In the current
year, the adjusted tax charge has benefitted by 2.6% from the above mentioned
changes in judgements on deferred tax balances, movements in provisions and
prior year credits and increased by 2.6% from increases in withholding taxes
and non-deductible expenses in the year. In the prior year, the Group adjusted
ETR benefitted by 6.2% due to the initial recognition of deferred tax assets
in respect of losses forward in the Group's subsidiaries in Australia and
France. The expected adjusted profit for the Group in FY25 is in the range of
26-28%.
Earnings Per Share
Adjusted basic earnings per share reduced by 23% (15% reduction in constant
currency) to 65.5 pence (2023: 84.8 pence) as PIC ex-China growth and
management actions across ABS and R&D were offset by China, volume trends
in ABS and higher interest expenses. Basic earnings per share on a statutory
basis were 12.0 pence (2023: 50.8 pence), taking into account the factors
above and higher share-based payment expenses and higher net exceptional
items.
Biological Assets
A feature of the Group's net assets is its substantial investment
in biological assets, which under IAS 41 are stated at fair value. At 30
June 2024, the carrying value of biological assets was £349.7m (2023:
£364.7m), as set out in the table below:
2024 2023
£m £m
Non-current assets 297.4 318.2
Current assets 32.3 23.8
Inventory 20.0 22.7
349.7 364.7
Represented by:
Porcine 267.4 242.7
Dairy and beef 82.3 122.0
349.7 364.7
The movement in the overall balance sheet carrying value of biological assets
of £15.0m includes the effect of an exchange rate translation decrease of
£1.4m. Excluding the translation effect there was:
· a £26.0m increase in the carrying value of porcine biological
assets, due principally to the restocking of Aurora, our genetic nucleus farm
in Canada, following an upgrade to the farm facilities and health status,
along with stocking of the Ankang and LuoDian farms in China; and
· a £39.6m decrease in the bovine biological assets carrying value,
primarily reflecting lower forecast sales volumes and rationalisation of
bulls.
The historical cost of these assets, less depreciation, was £80.9m at 30 June
2024 (2023: £83.4m), which is the basis used for the adjusted results. The
historical cost depreciation of these assets included in adjusted results was
£15.3m (2023: £13.4m).
Retirement Benefit Obligations
The Group's retirement benefit obligations at 30 June 2024 were £6.6m (2023:
£6.9m) before tax and £5.4m (2023: £5.6m) net of related deferred tax. The
largest element of this liability now relates to some legacy unfunded pension
commitments dating prior to Genus's acquisition of PIC.
Robust investment strategies mean our two main defined benefit obligation
schemes have remained in sound financial positions. Prior to any IFRIC 14
amendments, both the Dalgety Pension Fund and our share of the Milk Pension
Fund reported IAS 19 surpluses.
Cash Flow
2024 2023
Free Cash flow £m £m
Adjusted EBITDA 108.9 110.6
Cash received from joint ventures 4.7 2.6
Working capital (11.2) (12.3)
Biological assets (9.6) (11.1)
Net capital expenditure (24.0) (32.8)
Lease repayments (13.7) (11.1)
Adjusted cash from operating activities 55.1 45.9
Exceptional items (17.9) (7.1)
Pension contributions, provisions & other (1.4) (1.4)
Interest and tax paid (39.0) (28.3)
Free cash flow inc. lease repayments (3.2) 9.1
Adjusted cash from operating activities of £55.1m (2023: £45.9m) comprised
broadly similar adjusted EBITDA of £108.9m (2023: £110.6m) but with
significantly lower net capital expenditure of £24.0m (2023: £32.8m), as
planned. Free cash outflow, including lease repayments, of £3.2m (2023:
£9.1m inflow) was impacted by a higher year on year cash outflow of £10.8m
in relation to exceptional items along with increased interest and tax
payments.
2024 2023
Cash conversion % £m £m
Adjusted Operating profit inc. JV 78.1 85.8
Adjusted cash from operating activities 55.1 45.9
Cash conversion % 71% 53%
To improve our measurement of cash flow performance we have introduced a new
cash conversion key performance indicator which incorporates investments in
biological assets, capital expenditure, lease repayments and cash received
from joint ventures. This new metric aligns with our management reporting and
the operational management of cash flows in Genus's business. Under this new
metric, cash flow conversion in FY24 was 71% (FY23: 53%) and our new annual
target for cash flow conversion is at least 70%, which we expect to meet in
the coming year.
The cash inflow from investments, including joint venture loans, was £nil
(2023: £0.7m outflow), with proceeds primarily from the sale of NMR shares of
£4.6m being offset by loan investments in our China joint ventures of £2.2m,
to increase production capacity, and £2.9m to purchase the remaining 61%
shareholding in Xelect Limited, a leading provider of specialist genetics and
breeding management services to the aquaculture industry.
Net Debt and Credit Facilities
Net debt increased to £248.7m at 30 June 2024 (2023: £195.8m) was impacted
by a Free cash outflow of £3.2m, dividend payments of £21.0m and a net
increase in lease liabilities of £26.2m, primarily from new farm leases in
China. The ratio of net debt to adjusted EBITDA as calculated under our
financing facilities at the year-end increased to 2.0 times (2023: 1.6 times)
which remains in line with our medium-term objective of having a ratio of net
debt to EBITDA of between 1.0 - 2.0 times. At the end of June 2024, interest
cover was at 8 times (2023: 10 times).
At the balance sheet date, the Company's credit facilities comprised a £190m
multi-currency revolving credit facility ('RCF'), and a USD170 million RCF.
The original term of the facility was for three years to 24 August 2023. The
Company and its lenders extended the maturity date of the total facilities to
24 August 2024 and 24 August 2025 respectively. A further one-year extension
to 24 August 2026 was signed on 31 July 2024. The Company's credit facility at
30 June 2024 also included a remaining balance of £39m from the facility's
£100m uncommitted accordion option. On 21 August 2024, £28.2m of the
remaining £39m accordion feature in the Group Facility Agreement was made
available by the Group's lenders. This additional amount was requested in part
to replace a £17m reduction in headroom following the planned departure of
one of the syndicate banks. This bank withdrew from the facility on 23 August
2024 at the end of the first facility extension period as part of a strategy
to concentrate on clients with substantial operations in their homeland.
Following these changes, £208.2m and USD161.0m RCFs are available to 24
August 2025, reducing to £186.4m and USD141.5m of facilities for the final
extension to 24 August 2026. The Company is planning to establish a new
multi-year facility during the second half of FY25.
Net debt as calculated under our financing facilities excludes IFRS 16 lease
liabilities up to a cap of £30m but includes bank guarantees. On 30 June
2024, the Group had headroom of £106.7m (2023: £118.7m) under its available
credit facilities.
Capital allocation priorities and return on adjusted invested capital
Our capital allocation prioritises the investment of cash in areas that will
deliver future earnings growth and strong cash returns on a sustainable basis.
This includes investment for organic growth as a first priority through
investment in our existing businesses, including capital expenditure in
infrastructure, innovation in new products and the development of our people.
We supplement organic growth with value enhancing acquisitions in current and
adjacent market niches, aligned with our purpose. This brings new technology,
intellectual property and talent into the Group and expands our market reach,
keeping Genus well-positioned in growing markets over the long term.
The return on adjusted invested capital, as defined in the alternative
performance measures glossary, was lower at 11.5% (2023: 14.7%), reflecting a
decrease in adjusted operating profit including joint ventures after tax to
£56.2m (2023: £66.8m), due to the 9% decrease in adjusted operating profit
including joint ventures and a 5.9 point increase in the adjusted effective
tax rate. Adjusted invested capital increased by 8% to £489.5m (2023:
£455.0m), predominantly due to £24.2m of new leases in the year related to
two farms in China.
Dividend
Recognising the importance of balancing investment for the future with
ensuring an attractive return for shareholders, the Board is recommending a
final dividend of 21.7 pence per ordinary share, consistent with the prior
year final dividend. When combined with the interim dividend, this will result
in an unchanged total dividend for the year of 32.0 pence per ordinary share
(2023: 32.0 pence per share). Dividend cover from adjusted earnings decreased
to 2.0 times (2023: 2.7 times).
It is proposed that the final dividend will be paid on 6 December 2024 to the
shareholders on the register at the close of business on 8 November 2024.
(1) Adjusted results are the Alternative Performance Measures ('APMs') used by
the Board to monitor underlying performance at a Group and operating segment
level, which are applied consistently throughout. These APMs should be
considered in addition to statutory measures, and not as a substitute for or
as superior to them. For more information on APMs, see the APM Glossary
(2) Constant currency percentage movements are calculated by representing the
results for the year ended 30 June 2024 at the average exchange rates applied
to adjusted operating profit for the year ended 30 June 2023
Genus PIC - Operating Review
Actual currency Constant currency
Year ended 30 June 2024 2023* Change Change
£m £m % %
Revenue 352.5 368.1 (4) (1)
Adjusted operating profit pre-product development 141.6 145.3 (3) 1
Porcine product development expense 38.0 36.6 4 8
Adjusted operating profit exc JV 93.8 98.4 (5) (2)
Adjusted operating profit inc JV 103.6 108.7 (5) (2)
Adjusted operating margin exc JV 26.6% 26.7% (0.1)pts (0.2)pts
* Prior year period restated. Please see Note 2 of the notes to the condensed
set of Financial Statements changes of reportable segments
In many parts of the world, pork producers made losses in the first half of
FY24 but benefitted from improving economic conditions in the second half. In
North America, after the worst period of financial losses across the industry
since the 2008-2010 financial crisis, pork producers recorded small profits.
The picture was similar in China, where the pork production industry
registered aggregate profits in the second half, following many years of
aggregate losses. Lower feed costs in the second half of the fiscal year
improved margins for Latin American producers. In contrast to other regions,
producers in Europe were profitable throughout FY24, benefitting from high
prices due to tight supply following the contraction of the region's breeding
herd in previous years.
Against this backdrop, PIC's revenue decreased 1% in constant currency. This
was predominantly due to the performance in China and lower breeding stock
sales in North America. Strategically important royalty revenues increased 4%
in constant currency and grew in every region other than Asia. Costs were
managed tightly with constant currency savings in production and supply chain
offset by a planned £2.6m increase in PRP costs and a £1.6m increase in IT
and other support function costs. Adjusted operating profit excluding JVs
decreased 2% in constant currency at a margin of 26.6%. JV income decreased
£0.5m in actual currency (a decrease of £0.4m in constant currency).
Adjusted operating profit including JVs decreased 2% in constant currency.
PIC's product development teams continued to strengthen genomic selection and
accelerate progress on target traits, delivering $4.39 of genetic profit gain
in the year which exceeded its target of $3.80. In addition, PIC took further
steps to embed digital phenotyping tools across our facilities and contracted
elite farms. During the year, PIC also made significant strides in cementing
its sustainability leadership by receiving ISO certification for its Life
Cycle Assessments ("LCAs"). These LCAs demonstrate that using PIC full
programme genetics delivers an approximately 7% reduction in greenhouse gas
emissions, water consumption and land usage relative to industry average
genetics in North America and Europe.
Significant PRP progress was also made during the year. From a regulatory
perspective, PIC received favourable determinations from Brazil (26 April
2024) and Colombia (5 October 2023) and continues to engage positively with
the US FDA. Concurrent submissions to Canadian and Japanese authorities have
also begun. Testing of live PRP animals in China is expected to start in FY25,
with PIC receiving the first ever license to import gene-edited animals into
the country. Market acceptance activities have also been ramped up to engage
the wider pork supply chain ahead of North American commercialisation.
Year ended 30 June 2024 Revenue Royalty Revenue Volumes (MPEs) Adjusted Operating Profit*
Actual Currency
PIC Total £352.5m(-4%) £177.4m (+0%) 202.2m (+3%) £103.6m (-5%)
Constant Currency
NAM -6% +4% 0% +5%
LATAM +10% +6% +4% +3%
EMEA +2% +9% +7% +13%
ASIA +13% -8% -3% -37%
Asia ex-China -10% +5% +3% -5%
NB: Growth rates compared to the same period last year
* Including JVs. Prior year period restated; please see Note 2 of the notes to
the condensed set of Financial Statements changes of reportable segments
Regional Trading Commentary
North America achieved an adjusted operating profit increase of 5%*, supported
by a 4%* increase in royalty revenues from existing customers despite the
tough trading environment. Total revenue decreased by 6%* as a result of lower
sales of new breeding stock. Over the year the U.S. breeding herd declined
slightly but production continued to grow, benefitting from stable herd health
and higher productivity. Pork producers made losses in the first half of the
fiscal year, but started generating profits in the second half as prices
improved and feed costs reduced. Export volumes were also strong in the second
half of the year, with sales growth to Mexico and South Korea more than
offsetting declines to China, Japan and Canada.
Latin America increased adjusted operating profit by 3%*, supported by a 6%*
increase in royalty revenue. This was despite the impact of currency
instability in Argentina, and reduced JV income by £0.5m* from our joint
venture with Agroceres. Royalty volumes in Chile and Colombia were
particularly strong, driven by improved productivity of customers in the
region. In Brazil, declining feed costs and strong export volumes drove
further increases in production and enhanced margins for producers. In Mexico,
higher pork prices and lower feed costs in the second half of the fiscal year
helped producers improve profitability.
Europe had an excellent year and grew market share, achieving a 13%* increase
in adjusted operating profit on royalty revenue growth of 9%*. Performance in
Spain, Germany and Italy was particularly strong with both volume and price
growth. The EU breeding herd began to stabilise in the second half of the
fiscal year after significant contraction in prior periods due to economic,
geopolitical and regulatory challenges. As a result of the herd contraction,
pork prices remained above averages seen in 2019 to 2023 with producers
generally achieving positive margins. Export volumes and domestic pork meat
consumption, however, continued to struggle as a result of relatively high
prices, geopolitical events and on-going disease challenges such as African
Swine Fever ("ASF").
Asia saw adjusted operating profit decrease by 37%* driven predominantly by a
60%* reduction in PIC China due to the challenging trading conditions and
higher supply chain costs. Excluding China, customers in the rest of Asia
were impacted by disease outbreaks with adjusted operating profit decreasing
5%* despite royalty revenue growth of 5%*. Chinese pork producers endured a
challenging first half of the fiscal year as pig prices remained below the
cost of production. There were signs of improving profitability in the second
half as the Chinese pig price to feed ratio climbed and remained above 6x (a
proxy for industry break-even) from April 2024. However, Chinese producers
remain cautious after many years of industry losses. Herd health continues to
be a challenge for producers across the region, with ASF and PRRS the two most
challenging diseases. During the year, PIC China's commercial focus on
building recurring royalty revenue gained strong traction, leading to
agreements with 13 new royalty customers, doubling the number of royalty
customers PIC China has to 26. It typically takes 2-4 years for royalty
revenues from new royalty customers to reach production maturity.
* Constant currency growth rate compared to the same period last year
Genus ABS - Operating Review
Actual currency Constant currency
Year ended 30 June 2024 2023* Change Change
£m £m % %
Revenue 314.9 321.6 (2) 4
Adjusted operating profit pre-product development 37.3 43.6 (14) (3)
Bovine product development expense 23.3 24.9 (6) (3)
Adjusted operating profit 14.0 18.7 (25) (3)
Adjusted operating margin 4.4% 5.8% (1.4)pts (0.4)pts
* Prior year period restated. Please see Note 2 of the notes to the condensed
set of Financial Statements changes of reportable segments
Bovine producers experienced a challenging period across all regions. Dairy
producers generally had a tougher year than beef producers as global milk
prices proved less robust than beef prices. In China, demand for dairy
genetics was significantly impacted by reduced consumer demand coinciding with
increased dairy production from prior year farm expansions. Latin America was
also challenging as a result of currency instability in Argentina and weak
demand from Brazilian beef producers. Global dairy producer migration from
conventional to sexed and beef-on-dairy genetic strategies continued, with a
strong increase in sexed adoption in Latin America in particular. Whilst
growth of sexed adoption has slowed in some developed markets, IntelliGen
continued to achieve growth from further global adoption and new customer wins
on both technology transfers and third party processing.
During the year, management initiated ABS's Value Acceleration Programme. This
comprehensive programme will structurally improve margins, ROIC and cash
generation. Actions being taken include organisational structure change,
redeployment of resources to higher returning markets and customers, a more
robust sales and operational planning process, and stronger pricing mechanisms
and governance. In FY24 these actions delivered c.£10m of annualised
efficiencies and savings, of which £7.3m were realised in-year. Exceptional
costs of £6.0m associated with these actions were recognised in FY24. ABS
will continue to drive and embed further improvement with Phase 2 of the Value
Acceleration Programme in FY25 to build a stronger and more sustainably
profitable Bovine business.
Amidst tough markets, ABS revenue increased 4% in constant currency. Strong
pricing governance and mix offset a volume decrease of 6%, comprising a 12%
decrease in dairy conventional volumes, a 6% decrease in beef conventional
volumes and a 3% increase in sexed volumes. Controllable costs decreased
versus the prior year but were offset by inventory provisions and other supply
chain impacts of £3.1m. Adjusted operating profit decreased 3% in constant
currency at a margin of 4.4%.
From a product development perspective, ABS continued to strengthen its range
of proprietary dairy genetics. ABS's current Jersey and polled Holstein
genetics are market leaders and ABS currently markets 12 of the top 30 Jersey
sires for Cheese Merit and 18 of the top 20 homozygous polled Holstein sires
for Net Merit. The pipeline of dairy bulls yet to reach the market has the
potential to strengthen these market-leading positions. In Beef, the
proprietary NuEra genetic programme continues to exceed genetic improvement
targets with product performance trials continuing to demonstrate the superior
performance of these genetics in customer systems. ABS also initiated
pioneering Life Cycle Assessments for beef to show how its elite genetics
reduce an animal's carbon footprint.
Year ended 30 June 2024 Revenue Volume (m straws) Adjusted Operating Profit*
Actual Currency
ABS Total £314.9 (-2%) 24.8m (-6%) £14.0m (-25%)
Constant Currency
NAM +2% -6% +5%
LATAM +13% -6% +31%
EMEA +7% +4% +6%
ASIA -13% -12% -24%
NB: Growth rates compared to the same period last year
* Prior year period restated. Please see Note 2 of the notes to the condensed
set of Financial Statements changes of reportable segments
Regional Trading Commentary
North America saw volumes decrease by 6%, comprising a 21% reduction in dairy
conventional volumes, a 9% decrease in beef volumes, and a more robust 3%
increase in sexed volumes. Dairy conventional volumes were challenged by
producers' continued transition to a sexed and beef-on-dairy strategy as well
as market contraction due to better herd fertility. Despite this revenue
increased by 2%*, driven by strong price management, and adjusted operating
profit increased 5%*, also reflecting actions taken in VAP Phase 1 to improve
profitability of products and services to certain customers. Within this
result, Intelligen performed well with volume and operating profit increasing
on new contract wins. In the second half of the year, highly pathogenic avian
influenza was confirmed in the US dairy herd, however the impact on producer
productivity and consumer demand has been limited.
Latin America saw volumes decrease by 6%, with a 6% increase in sexed volumes
offset by a 9% decrease in dairy conventional volumes and an 8% decrease in
beef volumes. Dairy volumes were driven by increased penetration of sexed
volumes in Gene Advance accounts as well as increased market adoption of sexed
and beef-on-dairy strategies. Beef volumes were challenging, especially in
Brazil, where macroeconomic weakness continued to impact demand. Despite this,
strong mix and pricing drove a 13%* increase in revenue. Cost management
actions also helped expand operational gearing to drive a 31%* increase in
adjusted operating profit, albeit this was tempered in actual currency by
Argentine currency devaluation.
EMEA saw volumes increase by 4%, with a 5% decrease in dairy conventional
volumes being more than offset by a 3% increase in beef volumes and a 13%
increase in sexed volumes. Market headwinds in Northern Europe impacted farmer
profitability but this was offset by strong growth in France, Ukraine, South
Africa and some distributor markets. Targeted pricing initiatives and improved
mix also helped drive a 7%* increase in revenue. Adjusted operating profit
increased by 6%*, a marginally lower level than revenue growth, due to wage
inflation in the region.
Asia saw volumes decrease by 12%, comprising a 13% decrease in dairy
conventional volumes, a 19% decrease in beef volumes and a 7% decrease in
sexed volumes. China was the key driver as a material reduction in dairy and
dairy product consumption coincided with an increase in production from farm
expansions in prior years. This resulted in milk prices dropping below the
cost of production and milk processors taking substantial action to restrict
milk collections. The resulting impact on producer profitability significantly
reduced demand for elite dairy genetics. Sexed volumes were also particularly
impacted as Chinese dairy farmers sought to contract production. In Australia,
beef prices remained at low levels which led to weak demand for beef genetics.
Against this backdrop, revenues decreased by 13%* and adjusted operating
profit by 24%*.
* Constant currency growth rate compared to the same period last year
Research and Development - Operating Review
Actual currency Constant currency
Year ended 30 June 2024 2023* Change Change
£m £m % %
Gene editing 6.3 7.4 (15) (11)
Other research and development 15.5 17.4 (11) (8)
Net expenditure in R&D 21.8 24.8 (12) (9)
* Prior year period restated. Please see Note 2 of the notes to the condensed
set of Financial Statements changes of reportable segments
During the year, Genus completed a strategic review of its R&D activities.
The goal was to ensure that all early-stage projects align to Genus's
strategy, have a compelling commercial opportunity, are deliverable, and lead
to a balanced portfolio overall. As a result of this review R&D stopped
work on around a third of its projects. Resources have either been reallocated
to key workstreams or realised as savings. In FY24 these savings amounted to
£2.4m and R&D continues to expect £5m of annualised savings in FY25.
Genus recognised £0.7m of exceptional costs associated with the R&D
strategic review in FY24. Overall net expenditure in R&D decreased by 9%
in constant currency reflecting the initial impact of R&D's strategic
review.
R&D continued to make good progress across a number of its programmes in
FY24, with the immediate focus being to bring PRP to market and leverage our
IntelliGen sexing technology to drive profitable growth in ABS.
As noted in the PIC operating review, we made encouraging PRP regulatory
progress in the year. We received favourable determinations from Brazil (April
2024) and Colombia (October 2023) and continue to engage positively with the
US FDA. Concurrent submissions to Canadian and Japanese authorities have also
begun. Testing of live PRP animals in China is expected to start in FY25, with
PIC receiving the first ever license to import gene-edited animals into the
country.
During the year, ABS commercially launched Sexcel Male Beef which was enabled
by iterative improvements to our IntelliGen technology. Sexcel Male Beef is a
novel product that applies sexing technology to beef-on-dairy genetics to
produce high male skew straws of semen. Male beef calves are more attractive
to the beef industry for their faster growth rates and greater muscle mass.
Sexcel Male Beef therefore adds to our portfolio of value-adding products for
our customers.
genus risk management
Genus is exposed to a wide range of risks and uncertainties as it fulfils its
purpose of helping farmers produce high quality meat and milk more efficiently
and sustainably, which increases the availability of safe and affordable
animal protein for consumers.
Some of these risks relate to our business operations, while others relate to
future commercial exploitation of our leading-edge R&D programmes. We are
also exposed to global economic and political risks such as trade restrictions
attributed to the on-going conflicts in Russia-Ukraine, the Middle East, and
trade restrictions attributed to disease outbreaks like Avian Flu in the US
which can restrict the movement of our products.
As part of our continuous risk management process we monitor current and
emerging internal and external risks and where appropriate we reflect the
changes in principal risks or on our group risk register.
Emerging Risks
This year our reviews of emerging risks focused on:
• the impact of general elections in the UK and upcoming US
presidential election; and
• disease outbreaks, specifically Avian Flu in the US.
Changes to principal risk names
We have changed the principal risk name of the following risks to better
reflect the nature of the risks as follows:
• Capturing value through acquisitions was renamed to Capturing
value through Corporate Transactions to cover all M&A activity,
investments, or divestments; and
• Sustainability to climate change to reflect the focus on
climate-related impacts.
In reviewing our principal risks, we have made the following changes to better
reflect the evolving risk landscape. We increased three risks:
· Developing Products with Competitive Advantage, to reflect the
increased bovine market consolidation and competition for elite genetics;
· Hiring and Retaining Talented People reflecting the global economic
challenges and the fight for talent, and our ABS Value Acceleration programme
and the impact of significant change for the organisation; and
· Cyber Security to the reflect the increased risk attributed to the
rapid development and use of Artificial Intelligence by malicious actors.
We decreased our Protecting IP to reflect our strong process of protecting
our IP, supported by the settlement of a long-term dispute with STgenetic.
From our broad risk universe, we have identified 11 principal risks, which we
regularly evaluate based on an assessment of the likelihood of occurrence and
the magnitude of potential impact, together with the effectiveness of our risk
mitigation controls.
Risk Risk description How we manage risk Risk change in FY24
Strategic Risks
DEVELOPING PRODUCTS WITH COMPETITIVE ADVANTAGE · Development programmes fail to produce best genetics for customers. Dedicated teams align our product development to customer requirements. We use Increased. Bovine market consolidation, competition, and downturn has put
large-scale data and advanced genomic analysis to make sure we meet our pressure on maintaining our genetic lead.
· Increased competition to secure elite genetics. breeding goals. We frequently measure our performance against competitors in
customers' systems, to ensure the value added by our genetics remains However, our analysis and benchmarking continue to support the competitiveness
competitive. We also partner with universities and other bodies to further our of our genetic improvements in porcine, demonstrated by new royalty customers
developments. This includes the life cycle assessments being undertaken for in China.
our porcine and bovine genetics to demonstrate the value of our products.
CONTINUING TO SUCCESSFULLY DEVELOP INTELLIGEN TECHNOLOGY · Failure to manage the technical, production and financial risks Our continued advancement of the technology and its deployment to new markets No Change. We have improved our technology, expanded the number of machines
associated with the continued advancement of the IntelliGen business. and customers is supported by dedicated internal resources and agreements with and our customer base this year and maintain optimal performance.
suppliers. We work with key customers on technological and performance
improvements and to ensure optimum performance we provide maintenance and This year we concluded a long-term patent dispute with STgenetics, bringing
specialist training to our customers and continuously monitor productivity. the case to a close.
DEVELOPING AND COMMERCIALISING GENE EDITING AND OTHER NEW TECHNOLOGIES · Failure to develop successfully and commercialise gene editing We stay aware of new technology opportunities through a wide network of No Change. Key initiatives continue to progress through the R&D life
technologies due to technical, intellectual property ('IP'), market, academic and industry contacts. Our Genus Portfolio Steering Committee cycle, which includes the commercial viability of the product with the
regulatory or financial barriers. oversees our research, ensures we correctly prioritise our R&D investments businesses, and we maintain the high level of investment needed to bring the
and assesses the adequacy of resources and the relevant IP landscapes. We have end products to market.
· Competitors secure 'game- changing' new technology. formal collaboration agreements with key partners, to ensure responsible
exploration and development of technologies and the protection of IP. The We work closely with regulators to make sure our products meet exacting
· Consumer acceptance of gene edited proteins. Board is updated regularly on key development projects. standards. We are actively working with the US FDA to obtain regulatory
approval for our PRRSv-resistant pigs (PRP) in 2025.
CAPTURING VALUE Coporate transactions · Failure to identify appropriate investment, merger, and divestment We have a rigorous process to evaluate market opportunities aligned with our No Change. This year we acquired the remaining shares of Xelect, our
opportunities or to perform sound due diligence. strategic plans, Values, and our aim to accelerate growth and create value for aquaculture business in Scotland and have integrated it into our operations.
our shareholders, with all material projects being reviewed and approved by
· Failure to successfully integrate an acquired business. the Board. We also have a structured post-acquisition integration process
focused on maximising value.
SUCCEEDING IN GROWTH MARKETS · Failure to appropriately develop our business in China and other growth Our organisation blends local and expatriate executives, supported by the No change. The ongoing global macroeconomic conditions, continuing conflicts
markets. global species teams, to allow us to grow our business in key markets, while with Russia-Ukraine and Israel-Palestine continue to limit growth
managing risks and ensuring we comply with our global standards and comply opportunities. However, in the second half of the year we have gained new
with sanctions. We also establish local partnerships where appropriate, to royalty customers in China, a sign of our competitive porcine products. We are
increase market access. also exploring opportunities in Southeast Asia. The risks to our business in
Russia are described in note 4.
Risk Risk description How we manage risk Risk change in FY24
Strategic Risks continued
cLIMATE CHANGE · Failure to lead the market in efficient and sustainable animal protein We have a global sustainability strategy and Climate Change Policy that are No Change. There is increasing regulation and demand for transparency and
production and help our customers to meet the challenge of producing meat and approved, and regularly reviewed, at Board level. Our Sustainability Committee accuracy of reporting on sustainability targets. We continue to develop our
milk the same way as climate change increases demand to reduce carbon oversees the implementation of the strategy and the annual objective setting reporting capability to enable better accuracy. There is an increase in carbon
emissions. process as well as monitoring progress using key performance indicators and cost and a notable change in more frequent weather-related events across the
our sustainability risk register. We have developed our 2030 emissions globe.
· Failure to fulfil our commitment to reduce the environmental impact of reduction plan (and 2050 net zero plan) and developed quantifiable, robust
our own operations and implement our Climate Change Policy and TCFD reporting. performance indicators in relation to life cycle carbon reduction (per
generation) of pigs, beef and dairy cows.
Our carbon reduction plans are on track to meet our 2030 goals and we have
achieved a significant reduction in our intensity measures since 2019.
Operational Risks
PROTECTING IP · Failure to protect our IP could mean Genus-developed genetic material, We have a global, cross-functional process to identify and protect our IP. Our Decreased. We continue actively to protect our IP by filing patents
methods, systems and technology become freely available to third parties. customer contracts and our selection of multipliers and joint venture partners attributed to our R&D activity.
include appropriate measures to protect our IP. We maintain IP appropriate
landscape watches and where necessary conduct robust 'freedom to operate'
searches, to identify third-party rights to technology.
This year we concluded a long-term patent dispute with STgenetics.
ENSURING BIOSECURITY AND CONTINUITY OF SUPPLY · Loss of key livestock, owing to disease outbreak. We have stringent biosecurity standards, with independent reviews throughout No change. There continue to be global supply chain challenges driven by the
the year to ensure compliance. We investigate biosecurity incidents, to ensure current economic climate, increased trade sanctions, disease outbreaks and the
· Loss of ability to move animals or semen freely (including across learning across the organisation. We regularly review the geographical continued spread of ASF, especially in China.
borders) due to disease outbreak, environmental incident or international diversity of our production facilities, to avoid over-reliance on single
trade sanctions and disputes. sites.
· Lower demand for our products, due to industry-wide disease outbreaks.
HIRING AND RETAINING TALENTED PEOPLE · Failure to attract, recruit, develop and retain the global talent We have a robust talent and succession planning process, including annual Increased. The global economic challenges, the fight for talent, and our ABS
needed to deliver our growth plans and R&D programmes. assessments of our global talent pool and active leadership development Value Acceleration Programme increase the risk of employee turnover. However
programmes. The Group's reward and remuneration policies are reviewed we have been able to attract and promote key talent to critical leadership
regularly, to ensure their market competitiveness, and we have a long-term roles for our ABS and PIC businesses.
retention incentive scheme. We work closely with several specialist
recruitment agencies, to identify candidates with the skills we need.
Risk Risk description How we manage risk Risk change in FY24
Operational Risks continued
CYBER SECURITY · Failure to adequately detect and mitigate a malicious cyber-attack by We utilise a flexible multi-layered approach that focuses on employee Increased. The rapid development and use of Artificial Intelligence by
internal or external activists and the ability to quickly recover. awareness and training, policies, software, and a third-party 24/7 monitoring malicious actors increases the intensity and frequency for attacks to occur.
Security Operations Centre and follow ISO 27001 standards [and have cyber
· Failure to properly protect our data and systems from an attack. security insurance]. We continue to improve our systems and data backup
procedures and harden our servers to further strengthen our resilience and
have a programme focused on continuous cyber security improvements. We have To mitigate these risks, we partner with our third-party Security Operations
entered our final phase of our GenusOne programme which further strengthens Centre to alert us of potential attacks, employ continuous employee awareness
our operational controls and IT security as we move to the cloud. training, and have robust policies in place to mitigate any IT security
incidents.
Financial Risks
MANAGING AGRICULTURAL MARKET AND COMMODITY PRICES VOLATILITY · Fluctuations in agricultural markets affect customer profitability and We continuously monitor markets and seek to balance our costs and resources in No Change. There continues to be slow economic recovery and global
therefore demand for our products and services. response to market demand. We actively monitor and update our hedging strategy inflationary pressures have eased but cost pressures remain. Agricultural
to manage our exposure. Our porcine royalty model and extensive use of input prices are stabilising or reducing for producers in many of our markets.
· Increase in our operating costs due to commodity pricing volatility. third-party multipliers mitigates the impact of cyclical price and/or cost
changes in pig production. China has seen a small increase in pig prices and a reduction of input costs
· Longer-term influence of climate factors on the cost and availability
of agricultural inputs (animal feed).
· Geopolitical tensions and on-going conflicts in Russia-Ukraine, and
the Middle East impacts agricultural markets.
Group Income Statement
For the year ended 30 June 2024
Note 2024 2023
£m
£m
REVENUE 3 668.8 689.7
Adjusted operating profit 3 67.0 74.6
Adjusting items:
- Net IAS 41 valuation movement on biological assets 11 (23.2) (16.9)
- Amortisation of acquired intangible assets 10 (5.8) (7.7)
- Share-based payment expense (7.0) (6.0)
(36.0) (30.6)
Exceptional items (net) 4 (24.6) (3.5)
Total adjusting items (60.6) (34.1)
OPERATING PROFIT 6.4 40.5
Share of post-tax profit of joint ventures and associates retained 13 19.1 10.5
Other gains and losses 5 (1.7) 2.7
Finance costs 6 (22.2) (15.4)
Finance income 6 3.9 1.1
PROFIT BEFORE TAX 5.5 39.4
Taxation 7 (3.1) (7.6)
PROFIT FOR THE YEAR 2.4 31.8
ATTRIBUTABLE TO:
Owners of the Company 7.9 33.3
Non-controlling interest (5.5) (1.5)
2.4 31.8
EARNINGS PER SHARE
Basic earnings per share 8 12.0p 50.8p
Diluted earnings per share 8 11.9p 50.5p
Note 2024
£m
2023
£m
Alternative Performance Measures
Adjusted operating profit 67.0 74.6
Adjusted operating loss attributable to non-controlling interest 0.9 0.4
Pre-tax share of profits from joint ventures and associates excluding net IAS 10.2 10.8
41 valuation movement
Adjusted operating profit including joint ventures and associates 78.1 85.8
Net finance costs 6 (18.3) (14.3)
Adjusted profit before tax 59.8 71.5
Adjusted earnings per share
Basic adjusted earnings per share 8 65.5p 84.8p
Diluted adjusted earnings per share 8 65.0p 84.2p
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.
Group Statement of Comprehensive Income
For the year ended 30 June 2024
Note 2024 2024 2023 2023
£m
£m
£m
£m
PROFIT FOR THE YEAR 2.4 31.8
Items that may be reclassified subsequently to profit or loss
Foreign exchange translation differences (16.0) (27.2)
Fair value movement on net investment hedges 0.4 -
Fair value movement on cash flow hedges (1.6) 0.8
Tax relating to components of other comprehensive expense/(income) (0.1) 3.1
(17.3) (23.3)
Items that may not be reclassified subsequently to profit or loss
Actuarial loss on retirement benefit obligations 18 (6.0) (40.4)
Movement on pension asset recognition restriction 18 3.9 38.3
Release of additional pension liability 18 2.1 3.0
(Loss)/gain on equity instruments measured at fair value (2.8) 1.7
Tax relating to components of other comprehensive expense/(income) (0.1) (1.2)
(2.9) 1.4
OTHER COMPREHENSIVE EXPENSE FOR THE YEAR (20.2) (21.9)
TOTAL COMPREHENSIVE (EXPENSE)/INCOME FOR THE YEAR (17.8) 9.9
ATTRIBUTABLE TO:
Owners of the Company (12.3) 11.1
Non-controlling interest (5.5) (1.2)
(17.8) 9.9
Group Statement of Changes in Equity
For the year ended 30 June 2024
Note Called up Share premium account £m Own shares Trans- Hedging reserve Retained earnings £m Total Non- Total equity
share capital
£m
lation reserve
£m
£m
controlling interest
£m
£m
£m
£m
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 - - - (24.2) - - (24.2) 0.3 (23.9)
Fair value movement on net investment hedges, net of tax - - - - - - - - -
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 - - - - - 0.7 0.7 - 0.7
Actuarial loss on retirement benefit obligations, net of tax - - - - - (30.3) (30.3) - (30.3)
Movement on pension asset recognition restriction, net of tax - - - - - 28.7 28.7 - 28.7
Recognition of additional pension liability, net of tax - - - - - 2.3 2.3 - 2.3
Other comprehensive (expense)/income for the year - - - (24.2) 0.6 1.4 (22.2) 0.3 (21.9)
Profit/(loss) for the year - - - - - 33.3 33.3 (1.5) 31.8
Total comprehensive income/(expense) for the year - - - (24.2) 0.6 34.7 11.1 (1.2) 9.9
Recognition of share-based payments, net of tax - - - - - 6.3 6.3 - 6.3
Dividends 9 - - - - - (21.0) (21.0) - (21.0)
Adjustment arising from change in non-controlling interest and written put - - - - - - - (0.1) (0.1)
option
BALANCE AT 30 June 2023 6.6 179.1 (0.1) 26.7 2.0 360.6 574.9 (7.7) 567.2
Foreign exchange translation differences, net of tax - - - (16.6) - - (16.6) - (16.6)
Fair value movement on net investment hedges, net of tax - - - 0.4 - - 0.4 - 0.4
Fair value movement on cash flow hedges, net of tax - - - - (1.1) - (1.1) - (1.1)
Loss on equity instruments measured at fair value, net of tax - - - - - (2.8) (2.8) - (2.8)
Actuarial loss on retirement benefit obligations, net of tax - - - - - (4.6) (4.6) - (4.6)
Movement on pension asset recognition restriction, net of tax - - - - - 2.9 2.9 - 2.9
Recognition of additional pension liability, net of tax - - - - - 1.6 1.6 - 1.6
Other comprehensive (expense)/income for the year - - - (16.2) (1.1) (2.9) (20.2) - (20.2)
Profit/(loss) for the year - - - - - 7.9 7.9 (5.5) 2.4
Total comprehensive income/(expense) for the year - - - (16.2) (1.1) 5.0 (12.3) (5.5) (17.8)
Recognition of share-based payments, net of tax - - - - - 6.6 6.6 - 6.6
Dividends 9 - - - - - (21.0) (21.0) - (21.0)
Adjustment arising from change in non-controlling interest and written put - - - - - - - 8.9 8.9
option
BALANCE AT 30 June 2024 6.6 179.1 (0.1) 10.5 0.9 351.2 548.2 (4.3) 543.9
Group Balance Sheet
As at 30 June 2024
Note 2024 2023
£m
£m
ASSETS
Goodwill 110.3 107.8
Other intangible assets 10 65.4 66.2
Biological assets 11 297.4 318.2
Property, plant and equipment 12 182.0 164.4
Interests in joint ventures and associates 13 60.5 53.5
Other investments 14 1.1 8.8
Derivative financial assets 1.2 4.9
Other receivables 16 11.8 8.2
Deferred tax assets 28.1 16.5
TOTAL NON-CURRENT ASSETS 757.8 748.5
Inventories 15 57.1 61.3
Biological assets 11 32.3 23.8
Trade and other receivables 16 135.2 132.1
Cash and cash equivalents 42.5 36.3
Income tax receivable 2.1 4.0
Derivative financial assets 1.9 1.5
TOTAL CURRENT ASSETS 271.1 259.0
TOTAL ASSETS 1,028.9 1,007.5
LIABILITIES
Trade and other payables 17 (123.2) (122.0)
Interest-bearing loans and borrowings (4.9) (4.2)
Provisions (1.0) (1.8)
Deferred consideration (0.6) -
Obligations under leases (14.0) (10.0)
Tax liabilities (5.2) (7.4)
Derivative financial liabilities (1.7) (1.8)
TOTAL CURRENT LIABILITIES (150.6) (147.2)
Trade and other payables 17 (4.2) -
Interest-bearing loans and borrowings (228.2) (196.0)
Retirement benefit obligations 18 (6.6) (6.9)
Provisions (0.4) (10.3)
Deferred consideration (0.2) (0.6)
Deferred tax liabilities (44.4) (51.2)
Derivative financial liabilities (6.3) (6.2)
Obligations under leases (44.1) (21.9)
TOTAL NON-CURRENT LIABILITIES (334.4) (293.1)
TOTAL LIABILITIES (485.0) (440.3)
NET ASSETS 543.9 567.2
EQUITY
Called up share capital 6.6 6.6
Share premium account 179.1 179.1
Own shares (0.1) (0.1)
Translation reserve 10.5 26.7
Hedging reserve 0.9 2.0
Retained earnings 351.2 360.6
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY 548.2 574.9
Non-controlling interest 21 1.2 (2.2)
Put option over non-controlling interest 21 (5.5) (5.5)
TOTAL NON-CONTROLLING INTEREST (4.3) (7.7)
TOTAL EQUITY 543.9 567.2
Group Statement of Cash Flows
For the year ended 30 June 2024
Note 2024 2023
£m
£m
NET CASH FLOW FROM OPERATING ACTIVITIES 19 29.8 50.4
CASH FLOWS FROM INVESTING ACTIVITIES
Dividends received from joint ventures and associates 13 4.7 2.6
Joint venture and associate loan investment 13 (2.2) (1.9)
Acquisition of joint venture and associate 13 - (1.0)
Sale of other investments 5.1 3.4
Acquisition of Xelect Limited 22 (2.9) -
Acquisition of other investments - (0.4)
Payment of deferred consideration - (0.8)
Purchase of property, plant and equipment (14.8) (25.9)
Purchase of intangible assets (9.9) (9.3)
Proceeds from sale of property, plant and equipment 0.7 2.4
NET CASH OUTFLOW FROM INVESTING ACTIVITIES (19.3) (30.9)
CASH FLOWS FROM FINANCING ACTIVITIES
Drawdown of borrowings 140.4 126.8
Repayment of borrowings (108.5) (111.7)
Payment of lease liabilities (13.7) (11.1)
Equity dividends paid 9 (21.0) (21.0)
Dividend to non-controlling interest - (0.1)
Debt issue costs - (1.1)
NET CASH OUTFLOW FROM FINANCING ACTIVITIES (2.8) (18.2)
NET INCREASE IN CASH AND CASH EQUIVALENTS 7.7 1.3
Cash and cash equivalents at start of the year 36.3 38.8
Net increase in cash and cash equivalents 7.7 1.3
Effect of exchange rate fluctuations on cash and cash equivalents (1.5) (3.8)
TOTAL CASH AND CASH EQUIVALENTS AT 30 JUNE 42.5 36.3
Notes to the Group Financial Statements
For the year ended 30 June 2024
1. REPORTING ENTITY
Genus plc (the 'Company') is a public company limited by shares and
incorporated in England, United Kingdom under the Companies Act 2006. Its
company number is 02972325 and its registered office is Matrix House, Basing
View, Basingstoke, Hampshire RG21 4DZ.
The condensed financial information given does not constitute the Group's
financial statements for the year ended 30 June 2024 or the year ended 30 June
2023 but is derived from those financial statements. The financial statements
for the year ended 30 June 2023 have been delivered to the Registrar of
Companies and those for the year ended 30 June 2024 will be delivered
following the Company's annual general meeting. The auditors have reported on
those financial statements; their reports were unqualified, did not draw
attention to any matters by way of emphasis without qualifying their reports,
and did not contain statements under s. 498(2) or (3) Companies Act 2006.
2. BASIS OF PREPARATION
We have prepared the condensed financial information for the year ended 30
June 2024 together with the comparative year has been computed in accordance
with international accounting standards in conformity with the requirements of
the Companies Act 2006 and International Financial Reporting Standards
('IFRSs'). The Group Financial Statements have also been prepared in
accordance with IFRSs as issued by the IASB.
Functional and presentational currency
We present the Group Financial Statements in Sterling, which is the Company's
functional and presentational currency. All financial information presented in
Sterling has been rounded to the nearest £0.1m.
The principal exchange rates were as follows:
Average Closing
2024 2023 2022 2024 2023 2022
US Dollar/£ 1.26 1.21 1.32 1.27 1.27 1.22
Euro/£ 1.17 1.15 1.18 1.18 1.16 1.16
Brazilian Real/£ 6.35 6.20 6.94 7.07 6.08 6.39
Mexican Peso/£ 21.69 22.84 26.97 23.12 21.74 24.45
Chinese Yuan/£ 9.06 8.44 8.55 9.19 9.21 8.15
Russian Rouble/£ 115.46 86.29 98.75 108.18 112.79 66.73
While the condensed financial information included in this preliminary
announcement has been computed in accordance with IFRSs, this announcement
does not itself contain sufficient information to comply with IFRSs. The
Company expects to publish full financial statements that comply with IFRSs in
October 2024. These financial statements have also been prepared in accordance
with the accounting policies set out in the 2023 Annual Report and Financial
Statements, as amended by the following new accounting standards.
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 2023 and have
been implemented with effect from 1 July 2023. These are:
> Amendments to IAS 1 and IFRS Practice Statement 2 - 'Disclosure of
Accounting Policies';
> Amendments to IAS 8 - ' Definition of Accounting Estimates';
> Amendments to IAS 12 - 'Amendment to IAS 12 - International tax
reform'; and
> Amendments to IAS 12 - 'International Tax Reform Pillar Two Model
Rules - application of the exception and disclosure of that fact'.
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:
> IFRS S1 'General Requirements for Disclosure of
Sustainability-related Financial Information';
> IFRS S2 'Climate-related Disclosures';
> Amendments to IAS 1 - ' Classification of Liabilities as Current or
Non-Current';
> Amendments to IAS 7 and IFRS 7 - 'Disclosures: Supplier Finance
Arrangements';
> Amendments to IAS 21 - 'Lack of Exchangeability';
> Amendments to IFRS 16- ' Lease Liability in a Sale and Leaseback';
> IFRS 18 - 'Presentation and Disclosure in Financial Statements'; and
> Amendment to IFRS 9 and IFRS 7 - 'Classification and Measurement of
Financial Instruments'.
Going Concern
In the assessment of the Group's going concern and viability the Directors
utilise a three-step approach focusing on a Base case, modelling a 'severe yet
plausible downside' scenario and utilising reverse stress test modelling. The
Board considered the budget, strategic plan alongside the Group's available
finances, strategy, business model, and market outlook. The annually prepared
budget and strategic plan are compiled using a bottom-up process, aggregating
those prepared by PIC and ABS. The consolidated Group budget and forecasts are
then reviewed by the Board and used to monitor business performance. The
Strategic Plan forms management's best estimate of the future performance and
position of the Group.
The Board have considered the Group's access to available financing, which
consists of the following over the term of the agreement:
> June 2024 - £190m multi-currency RCF, a 170m US dollar RCF.
> from August 2024 - £208m multi-currency RCF and a 161m US dollar
RCF.
> from August 2025 - £186m multi-currency RCF and a 142m US dollar
RCF.
Additionally, the agreement contains an uncommitted £11m accordion option
which can be requested on one further occasion over the remaining lifetime of
the facility. The current facility expires in August 2026 having already
exercised all extension options. The Group will to enter discussions with the
banking syndicate regarding a new facility during the first half of 2025, and
given the current standing of our business relationship with the syndicate we
have a reasonable expectation that a new facility would be offered on
appropriate terms.
In their assessment of the Group's viability, the Directors have determined
that a three-year time horizon, to June 2027, is an appropriate period to
adopt. This was based on the Group's visibility of its product development
pipeline, for example, because of the genetic lag of approximately three years
between the porcine nucleus herds and customers' production systems and the
pipeline of young bulls.
Our downside modelling has incorporated the Directors' assessment of events
that could occur in a 'severe yet plausible downside' scenario. The risks
modelled are linked to the 'Principial Risks and Uncertainties' described
above.
The most significant material risks modelled were as follows, these are
consistent with the previous year:
Ensuring biosecurity and continuity of supply.
> Disease outbreaks in our Genetic Nucleus and Bull Stud farms,
modelled as a one-off cash cost to clean and restock the farms.
> The impact of severe weather events impacting our global supply chain
and the wider agricultural industry, modelled as a one-off cash cost.
> Loss of ability to move animals or semen freely (including across
borders) due to disease outbreak, environmental incident or international
trade sanctions and disputes, modelled as a multi-year cash impact resulting
from increased supply costs and lost trading that cannot be replaced in the
short-term.
Managing agricultural market and commodity prices volatility
> Increase in our operating costs due to commodity pricing volatility,
modelled as a multi-year cash reduction.
> Geopolitical tensions and ongoing conflicts in Russia & Ukraine
and the Middle East impact agricultural markets, modelled as a multi-year cash
impact resulting from loss of trade.
Succeeding in growth markets
> Failure to appropriately develop our business in China and other
growth markets modelled as a multi-year cash impact resulting from a reduction
in the forecast growth rate in those markets.
Individually these scenarios do not result in the elimination of our facility
headroom or breach of bank covenants. If multiple severe but plausible
scenarios were to occur in combination the Board would be able to take
mitigation measures to protect the Group in the short term. These would be
realised through reductions in dividends and postponing capital spend and
strategic investments. We have considered the position if each of the
identified risks materialised individually and where multiple risks occur in
parallel. We have overlaid this downside scenario, net of mitigations on our
facility headroom and banking covenants. Under this assessment our headroom
remains adequate under these sensitivities including our ability to take
mitigating actions and expectation of renewing appropriate facilities.
To assess the level of headroom within our Going Concern and Viability
assessment a reverse stress test was performed with the level of performance
deterioration against the base case while applying the mitigations outline
previously. Over the Going Concern and Viability period the smallest required
reduction in forecast Adjusted Operating Profit to exceed the permissible
ratio of net debt to EBITDA (as calculated under our financing facilities)
would be 26%. Similarly, a one-off cash cost of an equivalent size would
increase net debt and result in the same outcome. In all reverse stress
scenarios, the covenant would be breached before the facility is exceed.
Based on this assessment, 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 Annual Report. Also,
based on this assessment, the Directors have a reasonable expectation that the
Group will be able to continue in operation and meet its liabilities as they
fall due over the viability period to 30 June 2027, subject to the credit
facility being renewed. There are no indications from this assessment that
change this expectation when looking beyond 30 June 2027 at the Group's
longer-term prospects.
Alternative Performance Measures ('APMs')
In reporting financial information, the Group presents APMs, which are not
defined or specified 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.
Change of reportable segments
During the year, management determined that product development revenues,
costs and attributable assets and liabilities are more accurately presented as
part of each trading unit's profit and loss account. This adjustment aligns
our external reporting with our internal reporting structure, reflecting how
the performance of the trading units is assessed and managed. As a result, the
prior periods comparatives in note 3 have been restated to reflect the change.
Revenue (As previously reported) Year ended 30 June 2023 Impact of restatement (restated) Year ended 30 June 2023
£m £m £m
Genus PIC 349.5 18.6 368.1
Genus ABS 318.8 2.8 321.6
Genus Research and Development
Porcine product development 18.5 (18.5) -
Bovine product development 2.8 (2.8) -
Gene editing 0.1 (0.1) -
Other research and development - -
21.4 (21.4) -
689.7 - 689.7
Adjusted operating profit (As previously reported) Year ended 30 June 2023 Impact of restatement (restated) Year ended 30 June 2023
£m £m £m
Genus PIC 135.0 (36.6) 98.4
Genus ABS 43.4 (25.6) 17.8
Genus Research and Development
Porcine product development (29.7) 29.7 -
Bovine product development (25.6) 25.6 -
Gene editing (14.3) 6.9 (7.4)
Other research and development (17.4) - (17.4)
(87.0) 62.2 (24.8)
Adjusted segment operating profit 91.4 - 91.4
Central (16.8) - (16.8)
Adjusted operating profit 74.6 - 74.6
Depreciation (As previously reported) Year ended 30 June 2023 Impact of restatement (restated) Year ended 30 June 2023
£m £m £m
Genus PIC 5.0 4.9 9.9
Genus ABS 16.0 1.7 17.7
Genus Research and Development
Research 1.3 (0.4) 0.9
Porcine product development 4.5 (4.5) -
Bovine product development 1.7 (1.7) -
7.5 (6.6) 0.9
Segment total 28.5 - 28.5
Central 1.7 - 1.7
Total 30.2 - 30.2
Amortisation (As previously reported) Year ended 30 June 2023 Impact of restatement (restated) Year ended 30 June 2023
£m £m £m
Genus PIC 6.8 - 6.8
Genus ABS 4.4 0.4 4.8
Genus Research and Development
Research - - -
Porcine product development - - -
Bovine product development 0.4 (0.4) -
0.4 (0.4) -
Segment total 11.6 - 11.6
Central 1.8 - 1.8
Total 13.4 - 13.4
Additions to non-current assets (excluding deferred taxation and financial (As previously reported) Year ended 30 June 2023 Impact of restatement (restated) Year ended 30 June 2023
instruments)
£m £m £m
Genus PIC 6.8 2.2 9.0
Genus ABS 21.8 4.9 26.7
Genus Research and Development
Research 1.6 (1.0) 0.6
Porcine product development 1.2 (1.2) -
Bovine product development 4.9 (4.9) -
7.7 (7.1) 0.6
Segment total 36.3 - 36.3
Central 7.0 - 7.0
Total 43.3 - 43.3
Segment assets (As previously reported) Year ended 30 June 2023 Impact of restatement (restated) Year ended 30 June 2023
£m £m £m
Genus PIC 265.4 269.9 535.3
Genus ABS 281.7 126.5 408.2
Genus Research and Development
Research 11.4 (2.3) 9.1
Porcine product development 269.1 (269.1) -
Bovine product development 125.0 (125.0) -
405.5 (396.4) 9.1
Segment total 952.6 - 952.6
Central 54.9 - 54.9
Total 1,007.5 - 1,007.5
Segment liabilities (As previously reported) Year ended 30 June 2023 Impact of restatement (restated) Year ended 30 June 2023
£m £m £m
Genus PIC (66.0) (55.6) (121.6)
Genus ABS (72.5) (21.3) (93.8)
Genus Research and Development
Research (4.5) 2.0 (2.5)
Porcine product development (55.3) 55.3 -
Bovine product development (19.6) 19.6 -
(79.4) 76.9 (2.5)
Segment total (217.9) - (217.9)
Central (222.4) - (222.4)
Total (440.3) - (440.3)
Climate change
In preparing these consolidated financial statements we have considered the
impact of both physical and transition climate change risks on the current
valuation of our assets and liabilities. We do not believe that there is a
material impact on the financial reporting judgements and estimates arising
from our considerations and as a result the valuations of our assets or
liabilities have not been significantly impacted by these risks as at 30 June
2024. In concluding, we specifically considered the impact of climate change
on the growth rates and projected cash flows as part of our goodwill
impairment testing. As government policies evolve as a result of commitments
to limit global warming to 1.5°C, we will continue to monitor implications on
the valuations of our assets and liabilities that could arise in future years.
Approval
This preliminary announcement was approved by the board on 4 September 2024.
3. 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, depreciation, amortisation,
non-current asset additions, segment assets and liabilities and geographical
information is provided below. We do not include our adjusting items in the
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 2024 (restated(1))
£m 2023
£m
Genus PIC 352.5 368.1
Genus ABS 314.9 321.6
Central 1.4 -
668.8 689.7
1 See note 2 for details of the prior period restatement.
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 year is shown on the face of the Group Income
Statement.
Adjusted operating profit 2024 (restated(1))
£m 2023
£m
Genus PIC 93.8 98.4
Genus ABS 12.7 17.8
Genus Research and Development (21.8) (24.8)
Adjusted segment operating profit 84.7 91.4
Central (17.7) (16.8)
Adjusted operating profit 67.0 74.6
1 See note 2 for details of the prior period restatement.
Our business is not highly seasonal and our customer base is diversified, with
no individual customer generating more than 2% of revenue.
Exceptional items of £24.6m net expense (2023: £3.5m net expense). Genus
ABS, £16.4m net expense (2023: £2.7m net expense), Genus PIC, £0.6m expense
(2023: £nil), Genus Research and Development £0.7m expense (2023: £nil) and
our central segment, £6.9m net expense (2023: £0.8m net expense). Note 4
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 segmental information
Depreciation Amortisation Additions to non-current assets (excluding deferred taxation and financial
instruments)
2024 (restated(1)) 2024 (restated(1)) 2024 (restated(1))
£m 2023 £m 2023 £m 2023
£m £m £m
Genus PIC 14.1 9.9 4.8 6.8 41.8 9.0
Genus ABS 18.0 17.7 5.0 4.8 20.0 26.7
Genus Research and Development 0.9 0.9 - - 0.4 0.6
Segment total 33.0 28.5 9.8 11.6 62.2 36.3
Central 1.7 1.7 2.5 1.8 12.5 7.0
Total 34.7 30.2 12.3 13.4 74.7 43.3
Segment assets Segment liabilities
2024 (restated(1)) 2023 2024 (restated(1)) 2023
£m £m £m £m
Genus PIC 591.7 535.3 (157.0) (121.6)
Genus ABS 363.9 408.2 (50.9) (93.8)
Genus Research and Development 6.7 9.1 (3.7) (2.5)
Segment total 962.3 952.6 (211.6) (217.9)
Central 66.6 54.9 (273.4) (222.4)
Total 1,028.9 1,007.5 (485.0) (440.3)
1 See note 2 for details of the prior period restatement.
Geographical information
The Group's revenue by geographical segment is analysed below. This analysis
is stated on the basis of where the customer is located.
Revenue
2024 2023
£m £m
North America 263.5 288.5
Latin America 109.9 105.6
UK 92.3 93.1
Rest of Europe, Middle East, Russia and Africa 114.8 109.6
Asia 88.3 92.9
Total revenue 668.8 689.7
Non-current assets (excluding deferred taxation and financial instruments)
The Group's non-current assets by geographical segment are analysed below and
are stated on the basis of where the assets are located.
2024 2023
£m £m
North America 482.8 508.6
Latin America 75.5 69.6
UK 70.1 71.5
Rest of Europe, Middle East, Russia and Africa 45.4 43.8
Asia 54.7 33.6
Non-current assets (excluding deferred taxation and financial instruments) 728.5 727.1
4. EXCEPTIONAL ITEMS
Operating (expense)/credit 2024 2023
£m £m
Litigation (10.4) (4.5)
Corporate transactions (7.4) (0.4)
ABS restructuring (6.0) 1.7
R&D restructuring (0.7) -
Other (0.1) (0.3)
Net exceptional items (24.6) (3.5)
Litigation
Litigation includes legal fees, settlement and related costs of £10.4m (2023:
£4.5m) related to the actions between ABS Global, Inc. and certain affiliates
('ABS') and Inguran, LLC and certain affiliates (also known as STgenetics
('ST')).
Material litigation activities to 31 August 2024
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'). On 29
January 2020, ST filed a new US complaint against ABS in the same court ('ABS
III').
On 10 March 2020, the United States Patent and Trademark Office ('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. The ABS I, ABS II, ABS III and ABS IV proceedings in
the periods before the year ended 30 June 2023 are more fully described in the
Notes to the Financial Statements in previous Annual Reports.
On 26 October 2020, ABS filed Inter Partes Reviews ('IPR') against the '439
with the USPTO. On 4 May 2021, the Patent Trial and Appeal Board ('PTAB')
instituted the '439 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 certain
ABS III and ABS IV motions. In relation to ABS III, the court dismissed ABS
III litigation in its entirety and ST appealed certain aspects of the 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 followed the jury
decision in ABS II, and in relation to ABS IV, the Court denied ABS's motion
to dismiss the patent claims. Appeals were filed by ABS on the validity of the
8,206,987 patent (the '987 Appeal'), the 7,311,476, patent and the 7,611,309
patent (the 'ABS II Appeal') and ST appealed the award of the $5.3m in costs
(the 'Fee Award Appeal').
On 27 December 2022, ABS and ST settled the 987 Appeal, the Fee Award Appeal
and the Indian Patent Proceedings (see below).
On 5 July 2023, the Court of Appeals accepted ST's arguments in the ABS III
Appeal in relation to claim preclusion for technology transfer. The ABS III
and ABS IV litigations were then consolidated, and the hearing moved to 31
March 2025.
On 19 October 2023, the Court of Appeals for the Federal Circuit overturned
PTAB's decision in the 439 Appeal and found the independent claims of the '439
patent unpatentable. The Court of Appeals vacated PTAB's decision and
remanded the decision back to the Board for further consideration.
On 11 January 2024, a settlement agreement relating to the '439 Appeal, the
ABS II Appeal, the ABS III/IV litigation and the New Zealand Litigation (see
below) was agreed between the parties and each of these matters were
discontinued. Other than the details given in note 17, the terms of the
settlement agreement are confidential. The CCI Appeal remains ongoing between
the parties (see below).
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, '309 patents and US patent 7,311,476 asserted in ABS II (the 'Indian
Patent Proceedings'). In June 2021, ST appealed the decision of the
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 Uttar Pradesh Livestock Development Board
(the 'CCI Appeal').
New Zealand Litigation: On 14 June 2023, ST initiated proceedings against ABS,
Genus, ABS Genus (NZ) Limited, CRV International BV and CRV Limited in New
Zealand, alleging patent infringement and seeking a preliminary injunction.
ABS sought a stay of the New Zealand Litigation while the US courts consider
whether the settlement agreement between ABS and ST dated 27 December 2022
precludes the New Zealand Litigation. The hearing of the ABS's stay
application and ST's preliminary injunction application was on 27 November
2023 and on 14 December 2023, the New Zealand Court awarded the ST parties the
interim injunction for a limited three month period to 30 March 2024 and
dismissed the ABS stay application.
Corporate transactions
During the year, £7.4m of exceptional cost was incurred, primarily in
relation to potential corporate transactions which are no longer active.
ABS restructuring
As part of an ongoing strategic global Value Acceleration Programme,
significant one-off expenses in relation to £3.0m of staff redundancies,
£1.1m relating to fixed asset and inventory write downs were incurred and
£1.9m consultancy fees.
R&D restructuring
As part of an ongoing strategic review of Research and Development,
significant one-off expenses in relation to £0.7m of staff redundancies were
incurred.
Other
Included with other is £0.6m expense that relates to costs of repairing
extensive weather damage to part of our elite porcine farm in Canada, offset
by £0.6m credit resulting from a share forfeiture exercise.
5. OTHER GAINS AND LOSSES
Included with other gains and losses is a £2.1m loss on the mark to market
valuation ('MTM') in relation to £60m of SONIA interest rate swaps executed
in April 2023. Whilst the interest rate swaps are a perfect commercial hedge
of a similar amount of our GBP borrowings for at least a three-year period, as
the executing banks have a written option at the three-year point to
unilaterally terminate the swaps at no cost, the transaction does not qualify
for hedge accounting treatment. Accordingly the MTM gain on the valuation of
these swaps as at 30 June 2024 is recognised in the Group Income Statement.
Also included is a £0.4m release of contingent deferred consideration in
relation to Dairy LLC ('BoviSync').
2024 2023
£m
£m
Release of contingent deferred consideration 0.4 -
(Loss)/gain on derivative (2.1) 2.7
Other gains and losses (1.7) 2.7
6. NET FINANCE COSTS
2024 2023
£m £m
Interest payable on bank loans and overdrafts (17.8) (12.3)
Amortisation of debt issue costs (0.9) (1.1)
Other interest payable (0.2) (0.3)
Unwinding of discount on put options (0.2) (0.3)
Net interest cost in respect of pension scheme liabilities (0.3) (0.2)
Interest on lease liabilities (2.8) (1.2)
Total interest expense (22.2) (15.4)
Interest income on bank deposits 0.6 0.1
Net interest income on derivative financial instruments 3.3 1.0
Total interest income 3.9 1.1
Net finance costs (18.3) (14.3)
7. TAXATION AND DEFERRED TAXATION
Income tax expense
2024 2023
£m £m
Current tax expense
Current period 20.3 20.6
Adjustment for prior periods 1.3 0.9
Total current tax expense in the Group Income Statement 21.6 21.5
Deferred tax expense
Origination and reversal of temporary differences (14.0) (9.2)
Adjustment for prior periods (4.5) (4.7)
Total deferred tax credit in the Group Income Statement (18.5) (13.9)
Total income tax expense excluding share of income tax of equity-accounted 3.1 7.6
investees
Share of income tax of equity-accounted investees (see note 13) 5.7 3.9
Total income tax expense in the Group Income Statement 8.8 11.5
Reconciliation of effective tax rate
2024 2024 2023 2023
% £m % £m
Profit before tax 5.5 39.4
Add back share of income tax of equity-accounted investees 5.7 3.9
Profit before tax excluding share of income tax of equity-accounted investees 11.2 43.3
Income tax at UK corporation tax of 25.0% (2023: 20.5%) 25.0 2.8 20.5 8.9
Effect of tax rates in foreign jurisdictions 46.4 5.2 13.6 5.9
Non-deductible expenses 51.8 5.8 6.7 2.9
Tax exempt income and incentives (17.9) (2.0) (3.0) (1.3)
Change in tax rate 1.8 0.2 (1.2) (0.5)
Movements in recognition of tax losses (8.0) (0.9) (5.0) (2.2)
Change in unrecognised temporary differences 27.7 3.1 (7.8) (3.4)
Tax over/(under) provided in prior periods (28.5) (3.2) 1.8 0.8
Change in provisions (15.2) (1.7) 0.5 0.2
Tax on undistributed reserves (4.5) (0.5) 0.5 0.2
Total income tax expense in the Group Income Statement 78.6 8.8 26.6 11.5
8. EARNINGS PER SHARE
Basic earnings per share is the profit generated for the financial year
attributable to equity shareholders, divided by the weighted average number of
shares in issue during the year.
Basic earnings per share from continuing operations
2024 2023
(pence) (pence)
Basic earnings per share 12.0 50.8
The calculation of basic earnings per share from continuing operations is
based on the net profit attributable to owners of the Company from continuing
operations of £7.9m (2023: £33.3m) and a weighted average number of ordinary
shares outstanding of 65,686,000 (2023: 65,557,000), which is calculated as
follows:
Weighted average number of ordinary shares (basic)
2024 2023
000s 000s
Issued ordinary shares at the start of the year 66,027 65,774
Effect of own shares held (345) (468)
Shares issued on exercise of stock options and share incentive plans 4 1
Shares issued in relation to Employee Benefit Trust - 250
Weighted average number of ordinary shares in year 65,686 65,557
Diluted earnings per share from continuing operations
2024 2023
(pence) (pence)
Diluted earnings per share 11.9 50.5
The calculation of diluted earnings per share from continuing operations is
based on the net profit attributable to owners of the Company from continuing
operations of £7.9m (2023: £33.3m) and a weighted average number of ordinary
shares outstanding, after adjusting for the effects of all potential dilutive
ordinary shares, of 66,174,000 (2023: 65,998,000), which is calculated as
follows:
Weighted average number of ordinary shares (diluted)
2024 2023
000s 000s
Weighted average number of ordinary shares (basic) 65,686 65,557
Dilutive effect of share awards and options 488 441
Weighted average number of ordinary shares for the purposes of diluted 66,174 65,998
earnings per share
Adjusted earnings per share from continuing operations
2024 2023
(pence) (pence)
Adjusted earnings per share 65.5 84.8
Diluted adjusted earnings per share 65.0 84.2
Adjusted earnings per share is calculated on profit before the net IAS 41
valuation movement on biological assets, amortisation of acquired intangible
assets, share-based payment expense, other gains and losses and exceptional
items, after charging taxation associated with those profits, of £43.0m
(2023: £55.6m), which is calculated as follows:
2024 2023
£m £m
Profit before tax from continuing operations 5.5 39.4
Add/(deduct):
Net IAS 41 valuation movement on biological assets (see note 11) 23.2 16.9
Amortisation of acquired intangible assets (see note 10) 5.8 7.7
Share-based payment expense 7.0 6.0
Exceptional items (see note 4) 24.6 3.5
Other gains and losses (see note 5) 1.7 (2.7)
Net IAS 41 valuation movement on biological assets in joint ventures (see note (14.6) (3.6)
13)
Tax on joint ventures and associates (see note 13) 5.7 3.9
Attributable to non-controlling interest 0.9 0.4
Adjusted profit before tax 59.8 71.5
Adjusted tax charge (16.8) (15.9)
Adjusted profit after tax 43.0 55.6
Effective tax rate on adjusted profit 28.1% 22.2%
9. DIVIDENDS
Dividends are one type of shareholder return, historically paid to our
shareholders in late November/early December and late March.
Amounts recognised as distributions to equity holders in the year
2024 2023
£m £m
Final dividend
Final dividend for the year ended 30 June 2023 of 21.7 pence per share 14.3 -
Final dividend for the year ended 30 June 2022 of 21.7 pence per share - 14.3
Interim dividend
Interim dividend for the year ended 30 June 2024 of 10.3 pence per share 6.7 -
Interim dividend for the year ended 30 June 2023 of 10.3 pence per share - 6.7
Total dividend 21.0 21.0
The Directors have proposed a final dividend of 21.7 pence per share for 2024.
This is subject to shareholders' approval at the AGM and we have therefore not
included it as a liability in these Financial Statements. The total proposed
and paid dividend for year ended 30 June 2024 is 32.0 pence per share (2023:
32.0 pence per share).
10. INTANGIBLE ASSETS
Porcine Brands, multiplier contracts and customer relationships Separately identified acquired intangible assets Software Assets under construction IntelliGen Patents, licences and other Total
and bovine genetics technology £m £m £m £m £m £m £m
£m
Cost
Balance at 1 July 2022 56.5 102.9 159.4 28.9 3.7 26.8 4.4 223.2
Additions - - - - 9.3 - - 9.3
Transfers - - - 5.9 (5.9) - - -
Effect of movements in exchange rates (0.2) (4.0) (4.2) (0.3) (0.1) (1.1) - (5.7)
Balance at 30 June 2023 56.3 98.9 155.2 34.5 7.0 25.7 4.4 226.8
Additions - - - 0.1 9.9 - - 10.0
Business combination (see note 22) - 1.9 1.9 - - - 0.1 2.0
Transfers - - - 8.1 (8.1) - - -
Effect of movements in exchange rates (0.5) (1.0) (1.5) - - - - (1.5)
Balance at 30 June 2024 55.8 99.8 155.6 42.7 8.8 25.7 4.5 237.3
Amortisation and impairment losses
Balance at 1 July 2022 39.1 80.1 119.2 15.5 - 12.3 4.2 151.2
Amortisation for the year 3.3 4.4 7.7 2.9 - 2.7 0.1 13.4
Effect of movements in exchange rates 0.1 (3.3) (3.2) (0.2) - (0.6) - (4.0)
Balance at 30 June 2023 42.5 81.2 123.7 18.2 - 14.4 4.3 160.6
Amortisation for the year 3.3 2.5 5.8 3.8 - 2.6 0.1 12.3
Effect of movements in exchange rates (0.3) (0.7) (1.0) - - - - (1.0)
Balance at 30 June 2024 45.5 83.0 128.5 22.0 - 17.0 4.4 171.9
Carrying amounts
At 30 June 2024 10.3 16.8 27.1 20.7 8.8 8.7 0.1 65.4
At 30 June 2023 13.8 17.7 31.5 16.3 7.0 11.3 0.1 66.2
Included within brands, multiplier contracts and customer relationships are
carrying amounts for brands of £0.5m (2023: £0.6m), multiplier contracts of
£7.9m (2023: £9.2m) and customer relationships of £8.4m (2023: £7.9m).
Included within the software class of assets is £13.3m (2023: £9.5m) and
included in assets in the course of construction is £0.2m (2023: £2.3m)
that relate to the ongoing development costs of GenusOne, our single global
enterprise system and £5.0m (2023: £1.6m) that relate to IntelliGen.
11. BIOLOGICAL ASSETS
Fair value of biological assets Bovine Porcine Total
£m £m £m
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
Increases due to purchases 23.2 228.9 252.1
Decreases attributable to sales - (259.4) (259.4)
Decrease due to harvest (14.6) (31.4) (46.0)
Changes in fair value less estimated sale costs 6.6 38.2 44.8
Effect of movements in exchange rates (3.9) (12.4) (16.3)
Balance at 30 June 2023 99.3 242.7 342.0
Non-current biological assets 99.3 218.9 318.2
Current biological assets - 23.8 23.8
Balance at 30 June 2023 99.3 242.7 342.0
Increases due to purchases 18.8 200.0 218.8
Decreases attributable to sales - (214.8) (214.8)
Decrease due to harvest (11.7) (32.2) (43.9)
Changes in fair value less estimated sale costs (44.5) 73.0 28.5
Effect of movements in exchange rates 0.4 (1.3) (0.9)
Balance at 30 June 2024 62.3 267.4 329.7
Non-current biological assets 62.3 235.1 297.4
Current biological assets - 32.3 32.3
Balance at 30 June 2024 62.3 267.4 329.7
Bovine
Bovine biological assets include £7.7m (2023: £8.9m) 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 leases.
There were no movements in the carrying value of the bovine biological assets
in respect of sales or other changes during the year.
A risk-adjusted rate of 12.5% (2023: 13.2%) has been used to discount future
net cash flows from the sale of bull semen.
Decreases due to harvest represent the semen extracted from the biological
assets. Inventories of such semen are shown as biological asset harvest in
note 15.
Porcine
Included in increases due to purchases is the aggregate increase arising
during the year on initial recognition of biological assets in respect of
multiplier purchases, other than parent gilts, of £85.1m (2023: £91.5m).
Decreases attributable to sales during the year of £214.8m (2023: £259.4m)
include £103.3m (2023: £104.6m) 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 £89.9m (2023: £96.5m) 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 year.
Total revenue in the year, including parent gilts, includes £259.7m (2023:
£281.9m) in respect of these contracts, comprising £82.3m (2023: £105.9m)
on initial transfer of animals and semen to customers and £177.4m (2023:
£176.0m) in respect of royalties received.
A risk-adjusted rate of 12.5% (2023: 12.9%) 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
(2023: seven) and their estimated useful lifespan is 1.4 years (2023: 1.4
years).
Year ended 30 June 2024
Bovine Porcine Total
£m £m £m
Changes in fair value of biological assets (44.5) 73.0 28.5
Inventory transferred to cost of sales at fair value 1.1 (32.2) (31.1)
Biological assets transferred to cost of sales at fair value - (21.3) (21.3)
(43.4) 19.5 (23.9)
Fair value movement in related financial derivative - 0.7 0.7
Net IAS 41 valuation movement on biological assets(1) (43.4) 20.2 (23.2)
Year ended 30 June 2023
Bovine Porcine Total
£m £m £m
Changes in fair value of biological assets 6.6 38.2 44.8
Inventory transferred to cost of sales at fair value 1.4 (31.4) (30.0)
Biological assets transferred to cost of sales at fair value - (31.4) (31.4)
8.0 (24.6) (16.6)
Fair value movement in related financial derivative - (0.3) (0.3)
Net IAS 41 valuation movement on biological assets(1) 8.0 (24.9) (16.9)
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)
12. PROPERTY, PLANT AND EQUIPMENT
Land and buildings Plant, motor vehicles and equipment Assets under construction Total Land and buildings Plant, motor vehicles and equipment Total Total
owned
right-of-use
£m £m £m
assets £m £m
£m
assets
£m
£m
Cost or deemed cost
Balance at 1 July 2022 100.2 113.6 29.6 243.4 31.5 28.4 59.9 303.3
Additions 0.2 3.1 19.8 23.1 2.0 8.9 10.9 34.0
Transferred from assets held for sale 0.2 - - 0.2 - - - 0.2
Transfers 18.3 12.1 (30.4) - - - - -
Disposals (1.3) (3.7) (0.3) (5.3) - (4.9) (4.9) (10.2)
Effect of movements in exchange rates (6.4) (5.4) (1.8) (13.6) (1.8) (0.8) (2.6) (16.2)
Balance at 30 June 2023 111.2 119.7 16.9 247.8 31.7 31.6 63.3 311.1
Additions 1.4 2.3 12.8 16.5 32.7 8.8 41.5 58.0
Business combination (see note 22) - 0.3 - 0.3 0.4 - 0.4 0.7
Transfers 11.3 8.4 (19.7) - - - - -
Disposals (0.2) (5.4) - (5.6) (2.5) (2.1) (4.6) (10.2)
Effect of movements in exchange rates (1.3) (1.2) 0.1 (2.4) (1.1) 0.5 (0.6) (3.0)
Balance at 30 June 2024 122.4 124.1 10.1 256.6 61.2 38.8 100.0 356.6
Depreciation and impairment losses
Balance at 1 July 2022 32.2 73.3 - 105.5 11.4 15.0 26.4 131.9
Depreciation for the year 5.6 12.8 - 18.4 4.6 7.2 11.8 30.2
Disposals (1.1) (2.7) - (3.8) - (4.7) (4.7) (8.5)
Effect of movements in exchange rates (2.2) (3.6) - (5.8) (0.7) (0.4) (1.1) (6.9)
Balance at 30 June 2023 34.5 79.8 - 114.3 15.3 17.1 32.4 146.7
Depreciation for the year 5.5 12.9 - 18.4 8.9 7.4 16.3 34.7
Disposals (0.1) (3.9) - (4.0) (2.3) (0.9) (3.2) (7.2)
Impairment 1.5 0.2 - 1.7 - - - 1.7
Effect of movements in exchange rates (0.4) (0.7) - (1.1) (0.7) 0.5 (0.2) (1.3)
Balance at 30 June 2024 41.0 88.3 - 129.3 21.2 24.1 45.3 174.6
Carrying amounts
At 30 June 2024 81.4 35.8 10.1 127.3 40.0 14.7 54.7 182.0
At 30 June 2023 76.7 39.9 16.9 133.5 16.4 14.5 30.9 164.4
Included within additions right-of-use assets is £24.2m relating to the lease
of two pig farms in China.
13. EQUITY-ACCOUNTED INVESTEES
The carrying value of the investments is reconciled as follows:
2024 2023
£m
£m
Balance at 1 July 53.5 41.2
Share of post-tax retained profits of joint ventures and associates 19.1 10.5
Additions - 1.0
Acquisition of controlling interest of Xelect Limited (see note 22) (2.5) -
Long-term loan investment 2.2 1.9
Dividends received from Agroceres - PIC Genética de Suínos Ltda (Brazil) (3.2) (2.4)
Dividends received from Società Agricola GENEETIC S.r.l (Italy) (0.2) (0.2)
Dividends received from Zhidan - Yan'an Xinyongxiang Technology Co., Ltd (1.3) -
(China)
Effect of other movements including exchange rates (7.1) 1.5
Balance at 30 June 60.5 53.5
The long-term loan investment in the year solely relate to cash injections
made to Inner Mongolia Haoxiang Pig Breeding Co. Ltd. to fund their operation.
There are no significant restrictions on the ability of the joint ventures and
associates to transfer funds to the Parent, other than those imposed by the
Companies Act 2006 or equivalent government rules within the joint venture's
jurisdiction.
Summary unaudited financial information for equity accounted investees,
adjusted for the Group's percentage ownership, is shown below:
Net IAS 41
valuation Profit after
movement tax
on biological £m
Revenue assets Expenses Taxation
Income Statement £m £m £m £m
Year ended 30 June 2024 32.8 14.6 (22.6) (5.7) 19.1
Year ended 30 June 2023 48.1 3.6 (37.3) (3.9) 10.5
14. OTHER INVESTMENTS
Investments carried at fair value 2024 2023
£m
£m
Listed equity shares - Caribou Biosciences, Inc. 0.2 0.4
Unlisted equity shares - Dairy LLC ('BoviSync') - 2.4
Listed equity shares - NMR - 4.4
Unlisted equity shares - Labby, Inc. 0.5 0.5
Unlisted equity shares - SwineTech, Inc. 0.4 0.4
Unlisted equity shares - Other - 0.7
Other investments 1.1 8.8
Caribou Biosciences Inc shares are measured at fair value using the valuation
basis of a Level 1 classification. Caribou shares are publicly traded on the
NASDAQ.
We hold a strategic non-controlling interest in BoviSync, a herd management
software company. The investment is measured at fair value and the valuation
basis of a Level 3 classification, with the nil valuation reflecting the
current trading performance in difficult market conditions.
NMR ordinary shares were acquired as part of the NMR pension agreement, and
are measured at fair value. The valuation basis is Level 1 classification,
where fair value techniques are quoted (unadjusted) prices in active markets
for identical assets and liabilities. On 21 August 2023 these shares were sold
and the total funds received was £4.6m.
15. INVENTORIES
2024 2023
£m
£m
Biological assets' harvest classed as inventories 20.0 22.7
Raw materials and consumables 4.5 3.9
Goods held for resale 32.6 34.7
Inventories 57.1 61.3
16. TRADE AND OTHER RECEIVABLES
2024 2023
£m
£m
Trade receivables 94.9 95.4
Less expected credit loss allowance (4.7) (3.9)
Trade receivables net of impairment 90.2 91.5
Other debtors 7.3 8.1
Prepayments 9.6 7.7
Contract assets net of impairment 25.0 22.4
Other taxes and social security 3.1 2.4
Current trade and other receivables 135.2 132.1
Other debtors 4.9 3.0
Contract assets 6.9 5.2
Non-current other receivables 11.8 8.2
Trade and other receivables 147.0 140.3
Trade receivables
The average credit period our customers take on the sales of goods is 49 days
(2023: 48 days). We do not charge interest on receivables for the first 30
days from the date of the invoice.
The Group always measures the loss allowance for trade receivables and
contract assets at an amount equal to lifetime expected credit losses
('ECLs'). The ECLs on trade receivables and contract assets 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 and a contract asset 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
(2023: no more than 5%).
17. TRADE AND OTHER PAYABLES
2024 2023
£m
£m
Trade payables 34.0 34.8
Other payables 11.2 11.6
Accrued expenses 62.6 58.1
Contract liabilities 8.1 9.8
Other taxes and social security 7.3 7.7
Current trade and other payables 123.2 122.0
Other payables 4.0 -
Contract liabilities 0.2 -
Non-current trade and other payables 4.2 -
Trade and other payables 127.4 122.0
The average credit period taken for trade purchases is 33 days (2023: 32
days).
Other payables include an amount of £11.9m (2023: £nil), of which £4.0m is
classified as non-current that relates to the ST litigation settlement, agreed
to be paid over the next 18 months. Additionally, it includes £0.1m (2023:
£7.5m) repayable on demand to a third-party business partner.
18. RETIREMENT BENEFIT OBLIGATIONS
The Group operates a number of defined contribution and defined benefit
pension schemes, covering many of its employees. The principal funds are the
Milk Pension Fund ('MPF') and the Dalgety Pension Fund ('DPF') in the UK,
which are defined benefit schemes. The assets of these funds are held
separately from the Group's assets, are administered by trustees and managed
professionally. These schemes are closed to new members.
The financial positions of the defined benefit schemes, as recorded in
accordance with IAS 19 and IFRIC 14, are aggregated for disclosure purposes.
The liability/(asset) split by principal scheme is set out below.
2024 2023
£m
£m
The Milk Pension Fund - Genus's share - -
The Dalgety Pension Fund - -
National Pig Development Pension Fund (0.6) (0.2)
Post-retirement healthcare 0.5 0.5
Other unfunded schemes 6.7 6.6
Overall net pension liability 6.6 6.9
Overall, we expect to pay £0.4m (2023: £0.9m) in contributions to defined
benefit plans in the 2025 financial year.
Aggregated position of defined benefit schemes
2024 2023
£m
£m
Present value of funded obligations (includes Genus's 86% share of MPF (2023: 722.8 746.8
86%))
Present value of unfunded obligations 7.4 7.4
Total present value of obligations 730.2 754.2
Fair value of plan assets (includes Genus's 86% share of MPF (2023: 86%)) (760.0) (787.6)
Restricted recognition of asset (MPF and DPF) 36.4 40.3
Recognised liability for defined benefit obligations 6.6 6.9
Summary of movements in Group deficit during the year
2024 2023
£m
£m
Deficit in schemes at the start of the year (6.9) (8.3)
Administration expenses (0.3) (0.7)
Contributions paid into the plans 0.8 1.5
Net pension finance cost (0.3) (0.2)
Actuarial losses recognised during the year (6.0) (40.4)
Movement in restriction of assets 3.9 38.3
Release of additional liability 2.1 3.0
Exchange rate adjustment 0.1 (0.1)
Deficit in schemes at the end of the year (6.6) (6.9)
The expense is recognised in the following line items in the Group Income
Statement
2024 2023
£m
£m
Administrative expenses 0.3 0.7
Net finance charge 0.3 0.2
0.6 0.9
Actuarial assumptions and sensitivity analysis
Principal actuarial assumptions (expressed as weighted averages) are:
2024 2023
Discount rate 5.15% 5.25%
Consumer Price Index 2.55% 2.65%
Retail Price Index 2.90% 3.05%
The mortality assumptions used are consistent with those recommended by the
schemes' actuaries and reflect the latest available tables, adjusted for the
experience of the scheme where appropriate. For 2024, the mortality tables
used are 100% of the S3PMA (males)/S3PFA_M (females) all lives tables, with
birth year and CMI 2023 projections with parameters of Sk=7.0 and A=0.5% and
weighting parameters of w2020=0%, w2021=0% and w2022=55% and w2023=15%,
subject to a long-term rate of improvement of 1.50% per annum for males and
females and for 2023, the mortality tables used are 100% of the S3PMA
(males)/S3PFA_M (females) all lives tables, with birth year and CMI 2022
projections with parameters of Sk=7.0 and A=0.5% and weighting parameters of
w2020=0%, w2021=0% and w2022=25%, subject to a long-term rate of improvement
of 1.50% per annum for males and females.
19. NOTES TO THE CASH FLOW STATEMENT
2024 2023
£m
£m
Profit for the year 2.4 31.8
Adjustment for:
Net IAS 41 valuation movement on biological assets 23.2 16.9
Amortisation of acquired intangible assets 5.8 7.7
Share-based payment expense 7.0 6.0
Share of profit of joint ventures and associates (19.1) (10.5)
Other gains and losses 1.7 (2.7)
Finance costs (net) 18.3 14.3
Income tax expense 3.1 7.6
Exceptional items (net) 24.6 3.5
Adjusted operating profit from continuing operations 67.0 74.6
Depreciation of property, plant and equipment 34.7 30.2
Loss on disposal of plant and equipment 0.8 0.1
Amortisation and impairment of intangible assets 6.4 5.7
Adjusted earnings before interest, tax, depreciation and amortisation 108.9 110.6
Cash impact of exceptional items relating to operating activities (17.9) (7.1)
Other movements in biological assets and harvested produce (9.6) (11.1)
Decrease in provisions (1.0) (1.0)
Additional pension contributions in excess of pension charge (0.5) (0.6)
Other 0.1 0.2
Operating cash flows before movement in working capital 80.0 91.0
Increase in inventories (1.3) (9.6)
Increase in receivables (10.1) (9.3)
Increase in payables 0.2 6.6
Cash generated by operations 68.8 78.7
Interest received 0.5 0.1
Interest and other finance costs paid (14.5) (10.7)
Interest on leased assets (2.8) (1.2)
Cash flow from derivative financial instruments (0.7) 1.3
Income taxes paid (21.5) (17.8)
Net cash from operating activities 29.8 50.4
Analysis of net debt
Total changes in liabilities due to financing activities are as follows:
At 1 July Net Foreign exchange Other At 30 June 2024
2023
cash flows
£m
non-cash movements
£m
£m
£m
£m
Cash and cash equivalents 36.3 7.7 (1.5) - 42.5
Interest-bearing loans - current (4.2) 0.2 - (0.9) (4.9)
Lease liabilities - current (10.0) 13.7 0.3 (18.0) (14.0)
(14.2) 13.9 0.3 (18.9) (18.9)
Interest-bearing loans - non-current (196.0) (32.1) (0.1) - (228.2)
Lease liabilities - non-current (21.9) - 0.6 (22.8) (44.1)
(217.9) (32.1) 0.5 (22.8) (272.3)
Total debt financing (232.1) (18.2) 0.8 (41.7) (291.2)
Net debt (195.8) (10.5) (0.7) (41.7) (248.7)
Included within non-cash movements is £40.4m in relation to net new leases
and £0.9m in the unwinding of debt issue costs.
At 1 July Net Foreign exchange Other At 30 June 2023
2022
cash flows
£m
non-cash movements
£m
£m
£m
£m
Cash and cash equivalents 38.8 1.3 (3.8) - 36.3
Interest-bearing loans - current (7.1) 3.8 0.2 (1.1) (4.2)
Lease liabilities - current (10.1) 11.1 0.5 (11.5) (10.0)
(17.2) 14.9 0.7 (12.6) (14.2)
Interest-bearing loans - non-current (182.1) (17.8) 3.9 - (196.0)
Lease liabilities - non-current (24.5) - 0.8 1.8 (21.9)
(206.6) (17.8) 4.7 1.8 (217.9)
Total debt financing (223.8) (2.9) 5.4 (10.8) (232.1)
Net debt (185.0) (1.6) 1.6 (10.8) (195.8)
Included within non-cash movements is £9.7m in relation to net new leases and
£1.1m in the unwinding of debt issue costs.
20. CONTINGENCIES AND BANK GUARANTEES
Contingent liabilities are potential future cash outflows, where the
likelihood of payments is considered more than remote but is not considered
probable or cannot be measured reliably. Assessing the amount of liabilities
that are not probable is highly judgemental.
The retirement benefit obligations referred to in note 18 include obligations
relating to the MPF defined benefit scheme. Genus, together with other
participating employers, is joint and severally liable for the scheme's
obligations. Genus has accounted for its section and its share of any orphan
assets and liabilities, collectively representing approximately 86% (2023:
86%) of the MPF. As a result of the joint and several liability, Genus has a
contingent liability for the scheme's obligations that it has not accounted
for.
The Group makes a provision for amounts to the extent where an outflow of
economic benefit is probable and can be reliably estimated. However, there are
specific claims identified in the litigation where the Group considers the
outcome of the claim is not probable and will not result in the outflow of
economic benefit.
The Group's future tax charge and effective tax rate could be affected by
factors such as countries reforming their tax legislation to implement the
OECD's BEPS recommendations and by European Commission initiatives including
state aid investigations.
At 30 June 2024, we had entered into bank guarantees totalling £0.6m (2023:
£12.6m).
21. NON-CONTROLLING INTEREST
2024 2023
£m
£m
Non-controlling interest 1.2 (2.2)
Put option over non-controlling interest at inception (5.5) (5.5)
Total non-controlling interest (4.3) (7.7)
The non-controlling interest can be reconciled as follows:
2023
2024 £m
£m
Balance at 1 July (2.2) (0.7)
Total comprehensive expense attributable to the non-controlling interest (5.5) (1.5)
De- Novo Genetics LLC capital injection 8.9 -
Dividends paid by PIC Italia S.r.l - (0.1)
Effect of exchange rates - 0.1
Balance at 30 June 1.2 (2.2)
During the year the owners of De Novo Genetics LLC converted amounts owed by
the company into capital. This did not change the percentage of ownership, as
an equivalent loan was also capitalised from ABS Global Inc.
22. BUSINESS COMBINATIONS
On 5th December 2023, the Group exercised an option to acquire the remaining
61% of the issued share capital of Xelect Limited ('Xelect'). Prior to this,
the Group owned 39% of the issued share capital. Xelect is a leading provider
of specialist genetics and breeding management services to the aquaculture
industry. Xelect was acquired to establish a window into the Aqua sector and a
foundational platform upon which the Group can build an entry into the aqua
germplasm space.
The provisional amounts recognised in respect of the identifiable assets
acquired and the liabilities assumed are as set out in the table below.
£m
Other intangible assets 2.0
Property, plant and equipment 0.3
Right-of-use assets 0.4
Inventories 0.1
Trade and other receivables 0.4
Cash and cash equivalents 0.4
Trade and other payables (0.3)
Obligations under leases (0.4)
Deferred tax liabilities (0.5)
Total identifiable assets 2.4
Goodwill 4.0
Total consideration 6.4
Satisfied by:
Cash 3.3
Previously held 39% (note 13) 2.5
Contingent consideration arrangement 0.6
Total consideration transferred 6.4
Cash consideration 3.3
Less: cash and cash equivalent balances acquired (0.4)
Net cash outflow arising on acquisition 2.9
Prior to control being obtained Xelect was accounted for as an associate (see
note 13), when control was obtained the carrying value of the asset was
£2.5m. The goodwill of £4.0m arising from the acquisition consists of the
knowledge and experience of the workforce. The contingent consideration
arrangement is based on the performance of Xelect in the remainder the year
ending 30 June 2024. The total value of the contingent consideration will not
exceed £0.6m. Acquisition related costs (including administrative costs)
amount to £0.1m.
Xelect contributed £1.2m of revenue and a profit after tax of £0.1m for the
period between the date control was achieved and the balance sheet date. Prior
to control being achieved £nil was recognised in the Group's profit for our
39% share of Xelect's results to that date. If control of Xelect was achieved
on the first day of the financial year, the contribution to revenue would have
been £2.0m and a profit after tax of £nil.
Alternative Performance Measures Glossary
The Group tracks a number of APMs in managing its business, which are not
defined or specified under the requirements of IFRS because they exclude
amounts that are included in, or include amounts that are excluded from, the
most directly comparable measure calculated and presented in accordance with
IFRS, or are calculated using financial measures that are not calculated in
accordance with IFRS.
The Group believes that these APMs, which are not considered to be a
substitute for or superior to IFRS measures, provide stakeholders with
additional helpful information on the performance of the business. These APMs
are consistent with how the business performance is planned and reported
within the internal management reporting to the Board and GELT. Some of these
APMs are also used for the purpose of setting remuneration targets.
These APMs should be viewed as supplemental to, but not as a substitute for,
measures presented in the consolidated financial information relating to the
Group, which are prepared in accordance with IFRS. The Group believes that
these APMs are useful indicators of its performance. However, they may not be
comparable to similarly titled measures reported by other companies, due to
differences in the way they are calculated.
The key APMs that the Group uses include:
Alternative Performance Measures Calculation methodology and closest equivalent IFRS measure Reasons why we believe the
(where applicable)
APMs are useful
Income Statement measures
Adjusted operating profit exc JVs Adjusted operating profit is operating profit with the net IAS 41 valuation Allows the comparison of underlying financial performance by excluding the
movement on biological assets, amortisation of acquired intangible assets, impacts of adjusting items and is a performance indicator against which
share-based payment expense and exceptional items added back and excludes JV short-term and long-term incentive outcomes for our senior executives are
and associate results. measured:
· net IAS 41 valuation movements on biological assets - these
movements can be materially volatile and do not directly correlate to the
Closest equivalent IFRS measure: Operating profit(1) underlying trading performance in the period. Furthermore, the movement is
non-cash related and many assumptions used in the valuation model are based on
projections rather than current trading;
See reconciliation below. · amortisation of acquired intangible assets - excluding this
improves the comparability between acquired and organically grown operations,
as the latter cannot recognise internally generated intangible assets.
Adjusting for amortisation provides a more consistent basis for comparison
Including adjusted operating profit from JV and associate results. between the two but it is also a measure excluded from our managements
remuneration assessment, as well as our debt agreements and banking
See reconciliation below. covenants. It is also one requested and used by our investor group to evaluate
our performance.;
Adjusted operating profit inc JVs Including adjusted operating profit from JV and associate results but
excluding gene editing costs. · share-based payments - this expense is considered to be
relatively volatile and not fully reflective of the current period trading, as
the performance criteria are based on EPS performance over a three-year period
and include estimates of future performance; and
See reconciliation below.
Adjusted operating profit inc JVs exc gene editing costs
· exceptional items - these are items which due to either their
size or their nature are excluded, to improve the understanding of the
Group's underlying performance.
Adjusted operating profit including JV less adjusted effective tax.
See reconciliation below.
Adjusted operating profit including JVs less net finance costs.
Adjusted operating profit inc JVs after tax
See reconciliation below.
Adjusted profit before tax Adjusted profit including JVs before tax less adjusted effective tax.
Adjusted profit after tax
See reconciliation below.
Adjusted effective tax rate Total income tax charge for the Group excluding the tax impact of adjusting Provides an underlying tax rate to allow comparability of underlying financial
items, divided by the adjusted operating profit. performance, by excluding the impacts of net IAS 41 valuation movement on
biological assets, amortisation of acquired intangible assets, share-based
payment expense and exceptional items.
Closest equivalent IFRS measure: Effective tax rate
See reconciliation below.
Adjusted basic earnings per share Adjusted profit after tax profit divided by the weighted basic average number On a per share basis, this allows the comparability of underlying financial
of shares. performance by excluding the impacts of adjusting items.
Closest equivalent IFRS measure: Earnings per share
See calculation below.
Adjusted diluted earnings per share Underlying attributable profit divided by the diluted weighted basic average
number of shares.
Closest equivalent IFRS measure: Diluted earnings per share
See calculation below.
Adjusted earnings cover Adjusted earnings per share divided by the expected dividend for the year. The Board's dividend policy targets adjusted earning cover to be between 2.5-3 times.
See calculation below.
Adjusted EBITDA - calculated in accordance with the definitions used in our This is adjusted operating profit, adding back cash received from our JVs, This APM is presented because it is used in calculating our ratio of net debt
financing facilities depreciation of property, plant and equipment, depreciation of the historical to EBITDA and our interest cover, which we report to our banks to ensure
cost of biological assets, operational amortisation (i.e. excluding compliance with our bank covenants.
amortisation of acquired intangibles) and deducting the amount attributable
to minority interest.
Closest equivalent IFRS measure: Operating profit(1)
See reconciliation below.
Adjusted operating margin Adjusted operating profit (including JVs) divided by revenue. Allows for the comparability of underlying financial performance by excluding
the impacts of exceptional items.
Adjusted operating margin (exc JVs) Adjusted operating profit divided by revenue.
Constant currency basis
The Group reports certain financial measures, on both a reported and constant currency basis and retranslates the current year's results at the average actual exchange rates used in the previous financial year. The Group's business operates in multiple countries worldwide and its trading results are translated back 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 unsecured bank loans and overdrafts and This allows the Group to monitor its levels of debt.
obligations under finance leases, with a deduction for cash and cash
equivalents.
See reconciliation below.
Net debt - calculated in accordance with the definitions used in our financing Net debt excluding the impact of adopting IFRS 16 and adding back guarantees This is a key metric that we report to our banks to ensure compliance with our
facilities and deferred purchase arrangements. bank covenants.
See reconciliation below.
Cash flow measures
Change in alternative performance measures During the period a review was undertaken of the cash flow APMs utilised by
the Group to measure performance. Following this review
the definitions of 'Cash conversion' and 'Free cash flow' were amended,
additionally a new APM 'Adjusted cash from operating
activities' was created. The directors believe that these measures more
accurately reflect the cash management and return on
invested capital. These revised measures are aligned with the way the
performance targets are set and assessed internally.
Cash conversion Adjusted cash from operating activities as a percentage of adjusted operating This is used to measure how much operating cash flow we are generating and
profit excluding JVs. how efficient we are at converting our operating profit into cash and is used
to set performance targets internally.
See calculation below.
Free cash flow Net Cash from operating activities after capital expenditure This is used to measure the amount of
(including capital payments for leased assets) including cash cash retained in the business before
received from our joint ventures. Closest IFRS measure: Net cash from net investing activities, debt
operating activities
repayments and dividend payments.
See calculation below.
Adjusted cash from operating activities Net Cash from operating activities after capital expenditure This is used to measure the amount of
(including leased assets) including cash received from our joint cash that is generated by our
ventures, excluding net interest paid, exceptional cash, pension operating activities and is used to set
charges, movements in provisions and other cash outflows. performance targets internally.
Closes IFRS measure: Net cash from operating activities
See calculation below.
Other measures
Interest cover The ratio of adjusted net finance costs, calculated in accordance with the This APM is used to understand our ability to meet our interest payments and
definitions used in our financing facilities, is net finance costs with a is also a key metric that we report to our banks to ensure compliance with our
deduction for pension interest, interest from adopting IFRS 16, unwinding of bank covenants.
discount on put options and amortisation of refinancing fees, to adjusted
EBITDA.
Closest equivalent IFRS components for the ratio: The equivalent IFRS
components are finance costs, finance income and operating profit
See calculation and reconciliation below.
Ratio of net debt to adjusted EBITDA The ratio of net debt, calculated in accordance with the definitions used in This APM is used as a measurement of our leverage and is also a key metric
our financing facilities, is gross debt, made up of unsecured bank loans and that we report to our banks to ensure compliance with our bank covenants.
overdrafts and obligations under finance leases, with a deduction for cash and
cash equivalents and 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.
Return on adjusted invested capital The Group's return on adjusted invested capital is measured on the basis of This APM is used to measure our ability to efficiently invest our capital and
adjusted operating profit including JVs after tax, which is operating profit gives us a sense of how well we are using our resources to generate returns.
with the pre-tax share of profits from JVs and associates, net IAS 41
valuation movement on biological assets, amortisation of acquired intangible
assets, share-based payment expense and exceptional items added back, net of
amounts attributable to non-controlling interest and tax.
The adjusted operating profit including JVs after tax is divided by adjusted
invested capital, which is the equity attributable to owners of the Company
adding back net debt, pension liability net of related deferred tax and
deducting biological assets (less historical cost) and goodwill, net of
related deferred tax.
Closest equivalent IFRS components for the ratio:
Return on invested capital
See calculation and reconciliation 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 JVs 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
2024 2023
£m £m £m £m Reference
Operating profit 6.4 40.5 Group Income Statement
Add back:
Net IAS 41 valuation movement on biological assets 23.2 16.9 Group Income Statement
Amortisation of acquired intangible assets 5.8 7.7 Group Income Statement
Share-based payment expense 7.0 6.0 Group Income Statement
Exceptional items 24.6 3.5 Group Income Statement
Adjusted operating profit exc JVs 67.0 74.6 Group Income Statement
Amounts attributable to non-controlling interest 0.9 0.4 Group Income Statement
Operating profit from JVs and associates 19.1 10.5 Group Income Statement
Tax on JVs and associates 5.7 3.9 Note 7 - Income tax expense
Net IAS 41 valuation movement in JVs (14.6) (3.6) Note 13 - Equity-accounted investees
Adjusted operating profit from JVs 10.2 10.8
Adjusted operating profit inc JVs 78.1 85.8
Adjusted operating profit inc JVs after tax
2024 2023
£m £m Reference
Adjusted operating profit inc JVs 78.1 85.8 See APM
Effective Tax Rate 28.1% 22.2% Note 8 - Earnings per share
Adjusted tax (21.9) (19.0) No direct reference
Adjusted operating profit inc JVs after tax 56.2 66.8
Adjusted profit before tax
Adjusted profit after tax
2024 2023
£m £m Reference
Adjusted operating profit inc JVs 78.1 85.8 See APM
Less net finance costs (18.3) (14.3) Note 6 - Net finance costs
Adjusted profit before tax 59.8 71.5
Adjusted tax (16.8) (15.9) Note 8 - Earnings per share
Adjusted profit after tax 43.0 55.6
Adjusted effective tax £m/rate
2024 2023
£m % £m % Reference
Adjusted effective tax £m/rate 16.8 28.1 15.9 22.2 Note 8 - Earnings per share
Exceptional items (3.9) (15.9) (0.9) (25.7) No direct reference
Share-based payment expense (0.7) (10.0) (0.8) (13.0) No direct reference
Other gains and losses (0.4) (23.5) 0.7 25.0 No direct reference
Amortisation of acquired intangible assets (1.5) (25.9) (1.9) (24.7) No direct reference
Net IAS 41 valuation movement on biological assets (4.7) (20.3) (1.5) (8.9) No direct reference
Net IAS 41 valuation movement on biological assets in joint ventures 3.2 21.9 - - No direct reference
Effective tax £m/rate 8.8 78.6% 11.5 26.6 Note 7 - Taxation and deferred taxation
Adjusted basic earnings per share
2024 2023 Reference
Adjusted profit after tax (£m) 43.0 55.6 See APM
Weighted average number of ordinary shares (000s) 65.686 65.557 Note 8 - Earnings per share
Adjusted basic earnings per share (pence) 65.5 84.8
Adjusted diluted earnings per share
2024 2023 Reference
Adjusted profit after tax (£m) 43.0 55.6 See APM
Weighted average number of diluted ordinary shares (000s) 66.174 65.998 Note 8 - Earnings per share
Adjusted diluted earnings per share (pence) 65.0 84.2
Adjusted earnings cover
2024 2023
pence times pence times Reference
Adjusted earnings per share 65.5 84.8 See APM
Dividend for the year 32.0 32.0 Note 9 - Dividends
Adjusted earnings cover 2.0 2.7
Adjusted EBITDA - as calculated under our financing facilities
2024 2023
£m £m £m £m Reference
Operating profit 6.4 40.5 Group Income Statement
Add back:
Net IAS 41 valuation movement on biological assets 23.2 16.9 Group Income Statement
Amortisation of acquired intangible assets 5.8 7.7 Group Income Statement
Share-based payment expense 7.0 6.0 Group Income Statement
Exceptional items 24.6 3.5 Group Income Statement
Adjusted operating profit exc JVs 67.0 74.6 Group Income Statement
Adjust for:
Cash received from JVs 4.7 2.6 Group Statement of Cash Flows
Less share of JVs losses (1.7) (2.7) No direct reference
Depreciation: property, plant and equipment 34.7 30.2 Note 12 - Property, plant and equipment
Operational lease payments (16.5) (12.3) No direct reference
Depreciation: historical cost of biological assets 15.3 13.4 No direct reference
Amortisation and impairment (excluding separately identifiable acquired 6.5 5.7 Note 10 - Intangible assets
intangible assets)
Amounts attributable to non-controlling interest 0.9 0.4 Group Income Statement
Adjusted EBITDA - as calculated under our financing facilities 110.9 111.9
Balance sheet measures
Net debt
Net debt as calculated under our financing facilities
2024 2023
£m £m £m £m Reference
Current unsecured bank loans and overdrafts 4.9 4.2 Group Balance Sheet
Non-current unsecured bank loans and overdrafts 228.2 196.0 Group Balance Sheet
Unsecured bank loans and overdrafts 233.1 200.2
Current obligations under finance leases 14.0 10.0 Group Balance Sheet
Non-current obligations under finance leases 44.1 21.9 Group Balance Sheet
Obligations under finance leases 58.1 31.9
Total debt financing 291.2 232.1 Note 19 - Notes to the cash flow statement
Deduct:
Cash and cash equivalents (42.5) (36.3) Group Balance Sheet
Net debt 248.7 195.8
Deduct:
Lower of obligations under finance leases or £30m (30.0) (30.0)
Add back:
Guarantees 0.6 12.6 Note 20 - Contingencies and bank guarantees
Cash not available 0.9 0.8 No direct reference
Cash subject to exchange controls 0.8 0.5 No direct reference
Net debt - as calculated under our financing facilities 221.0 179.7
Cash flow measures
Free cash flow & Adjusted cash from operating activities
2024 2023
£m £m £m £m Reference
Net cash from operating activites 29.8 50.4 Group Statement of Cash Flows
Purchase of property, plant and equipment (14.8) (25.9) Group Statement of Cash Flows
Purchase of intangible assets (9.9) (9.3) Group Statement of Cash Flows
Proceeds from sale of property, plant and equipment 0.7 2.4 Group Statement of Cash Flows
Dividends received from joint ventures and associates 4.7 2.6 Group Statement of Cash Flows
Payment of lease liabilities (13.7) (11.1) Group Statement of Cash Flows
Free cash flow (3.2) 9.1
Add back:
Interest received (0.5) (0.1) Note 19 - Notes to the cash flow statement
Interest and other finance costs paid 14.5 10.7 Note 19 - Notes to the cash flow statement
Interest on leased assets 2.8 1.2 Note 19 - Notes to the cash flow statement
Cash flow from derivative financial instruments 0.7 (1.3) Note 19 - Notes to the cash flow statement
Income taxes paid 21.5 17.8 Note 19 - Notes to the cash flow statement
Cash impact of exceptional items relating to operating activities 17.9 7.1 Note 19 - Notes to the cash flow statement
Additional pension contributions in excess of pension charge 0.5 0.6 Note 19 - Notes to the cash flow statement
Decrease in provisions 1.0 1.0 Note 19 - Notes to the cash flow statement
Other (0.1) (0.2) Note 19 - Notes to the cash flow statement
Adjusted cash from operating activities 55.1 45.9 Group Income Statement
Cash conversion
2024 2023
£m % £m % Reference
Adjusted operating profit inc JVs 78.1 85.8 See APM
Adjusted cash from operating activities 55.1 45.9 See APM
Cash conversion 71% 53%
Other measures
Interest cover
2024 2023
£m Times £m Times Reference
Finance costs 22.2 15.4 Group Income Statement
Finance income (3.9) (1.1) Group Income Statement
Net finance costs 18.3 14.3 Note 6 - Net finance costs
Deduct:
Pension interest (0.3) (0.2) Note 6 - Net finance costs
Interest on lease liabilities (2.8) (1.2) Note 6 - Net finance costs
Unwinding discount on put options (0.2) (0.3) Note 6 - Net finance costs
Amortisation of refinancing fees (0.9) (1.1) Note 6 - Net finance costs
Adjusted net finance costs 14.1 11.5
Adjusted EBITDA - as calculated under our financing facilities 110.9 111.9 See APM
Interest cover 7.9 9.7
Ratio of net debt to adjusted EBITDA
2024 2023
£m Times £m Times Reference
Net debt - as calculated under our financing facilities 221.0 179.7 See APM
Adjusted EBITDA - as calculated under our financing facilities 110.9 111.9 See APM
Ratio of net debt to EBITDA 2.0 1.6
Return on adjusted invested capital
2024 2023
£m % £m % Reference
Adjusted operating profit inc JVs after tax 56.2 66.8 See APM
Equity attributable to owners of the Company 548.2 574.9 Group Balance Sheet
Add back:
Net debt 248.7 195.8 Note 19 - Notes to the cash flow statement
Pension liability 6.6 6.9 Group Balance Sheet
Related deferred tax (1.2) (1.2) No direct reference
Adjust for:
Biological assets - carrying value (329.7) (342.0) Note 11 - Biological assets
Biological assets' harvest classed as inventories (20.0) (22.7) Note 15 - Inventories
Biological assets - historic cost 80.9 83.4 See Financial Review
Goodwill (110.3) (107.8) Group Balance Sheet
Related deferred tax 66.3 67.7 No direct reference
Adjusted invested capital 489.5 455.0
Return on adjusted invested capital 11.5% 14.7%
Return on invested capital
2024 2023
£m % £m % Reference
Return on adjusted invested capital 11.5% 14.7% See APM
Adjusted operating profit inc JVs after tax 56.2 66.8 See APM
Tax rate 21.9 28.1% 19.0 22.2% Note 8 - Earnings per share
Adjusted operating profit inc JVs 78.1 85.8 See APM
Adjusted operating profit attributable (0.9) (0.4) Group Income Statement
to non-controlling interest
Pre-tax share of profits from JVs exc net IAS 41 valuation movement (10.2) (10.8) See APM
Adjusted operating profit exc JVs 67.0 74.6 Group Income Statement
Fair value movement on biological assets (23.2) (16.9) Group Income Statement
Amortisation of acquired intangibles (5.8) (7.7) Group Income Statement
Share-based payment expense (7.0) (6.0) Group Income Statement
Exceptional items (24.6) (3.5) Group Income Statement
Share of post-tax profit of JVs 19.1 10.5 Group Income Statement
Other gains and losses (1.7) 2.7 Group Income Statement
Finance costs (18.3) (14.3) Group Income Statement
Profit before tax 5.5 39.4 Group Income Statement
Tax (3.1) (7.6) Group Income Statement
Profit 2.4 31.8 Group Income Statement
Equity attributable to owners of the Company 548.2 574.9 Group Balance Sheet
Return on invested capital 0.4% 5.5%
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