Genus plc · LSE:GNS
Genus — H1 FY2021 Earnings Presentation
35 slides from Genus's earnings presentation, February 2021
Slide 1: Interim Results, Half year ended 31 December 2020
Interim Results Half year ended 31 December 2020
Slide 2: Disclaimer
> Disclaimer This presentation has been prepared by Genus plc (“Genus” or “the Company”) and has not been independently verified. Genus is solely responsible for the contents of this document and has taken all reasonable care to ensure that the facts stated herein are true and accurate in all materi
Slide 3: Business & strategic update
INTERIM RESULTS 3 > Business & strategic update Stephen Wilson Chief Executive
Slide 4: Strong financial and strategic progress
Half year ended 31 December 2020 INTERIM RESULTS 4 > Strong financial and strategic progress STRONG FINANCIAL PERFORMANCE REVENUE ADJ. OPERATING PROFIT1 ADJ. PROFIT BEFORE TAX +6% (£285.7m) +29% (£51.0m) +32% (£48.4m) EPS CASH CONVERSION INTERIM DIVIDEND +32% (57.3p) 100% (FY20 1H: 96%) 10.3P (10% i
Slide 5: Volume growth
Half year ended 31 December 2020 INTERIM RESULTS 5 > Volume growth Half year ended 31 December 2020 Excluding China Genus PIC Genus ABS Volume growth (%) FY19 FY20 1H 21 Volume growth (%) 5% 6% 6% 14% 20% 18% 12% 16% 10% 14% 13% 11% 12% 8% 10% 19% 6% 8% 4% 8% 6% 4% 8% 2% 4% 5% 6% 2% 0% 1% 0% 0% FY17
Slide 6: Market snapshot
Half year ended 31 December 2020 INTERIM RESULTS 6 > Market snapshot US Lean Hog Prices ($ per cwt) 100 > US production and market normalised, but higher feed costs in 2021 will impact margins 80 > Record exports to China; demand expected to 60 be lower in 2021 following China restocking 40 > German
Slide 7: High pig prices in China drive industry investment
Half year ended 31 December 2020 INTERIM RESULTS 7 > High pig prices in China drive industry investment PORCINE Producers still experiencing unprecedented market Large producers are rapidly expanding production, conditions, with prices expected to soften in 2021 transforming the Chinese pork industr
Slide 8: Growing in China with leading producers
Half year ended 31 December 2020 INTERIM RESULTS 8 > Growing in China with leading producers PORCINE Strong demand for Genus’s superior genetics in PIC increasingly the genetic partner of choice for China, and we are expanding our royalty business leading Chinese pig producers PIC China MPEs1 25 Pos
Slide 9: BCA partnership supporting growth and long-term opportunity in China
Half year ended 31 December 2020 INTERIM RESULTS 9 > BCA partnership supporting growth and long-term opportunity in China PORCINE BCA import December 2020 PRRSv resistance Distribution for PIC China FY19 Signed partnership1 FY20 Signed distribution agreement Received signing fee ($7mln) Set
Slide 10: PRRSv resistance programme on track
Half year ended 31 December 2020 INTERIM RESULTS 10 > PRRSv resistance programme on track PORCINE Progress continues with our JV partner BCA in China Encouraging global market movements Founder Animal Production / Optimization o Post-Brexit UK Expand to second Internalize founder o Increasingly
Slide 11: Strengthening our European supply chain through targeted strategic partnerships
Half year ended 31 December 2020 INTERIM RESULTS 11 > Strengthening our European supply chain through targeted strategic partnerships PORCINE • New strategic nucleus in • Integrated Møllevang Ireland with Hermitage genetics exceeding • Increases availability of expectations elite maternal & terminal
Slide 12: Sustained leadership in dairy genetics
Half year ended 31 December 2020 INTERIM RESULTS 12 > Sustained leadership in dairy genetics BOVINE # of Top 100 NM$ bulls1 # of Top 100 NM$ females2 60 Proven bulls ABS Active genomic bulls 50 Pipeline bulls Other 40 30 20 Aligned Competitor 4 10 Genetic Rights 0 Competitor 3 Competitor 1 Competito
Slide 13: Adoption of our leading sexed and beef genetics continues to grow
Half year ended 31 December 2020 INTERIM RESULTS 13 > Adoption of our leading sexed and beef genetics continues to grow BOVINE ABS - Global sales volume Maximising customer value and experience 28% 29% 25% 21% 22% 20% 22% 11% 16% 9% FY17 FY18 FY19 FY20 1H 21 “Sexcel & NuEra Beef is the Sexed Beef Da
Slide 14: NuEra beef genetics gaining traction in the industry
Half year ended 31 December 2020 INTERIM RESULTS 14 > NuEra beef genetics gaining traction in the industry BOVINE Our superior NuEra beef genetics deliver better We are expanding our programme to meet the performance for farmers and the value chain growing demand for our NuEra beef genetics Beef vol
Slide 15: Investing in our infrastructure to support growth
Half year ended 31 December 2020 INTERIM RESULTS 15 > Investing in our infrastructure to support growth Expanded Dekorra bull facility, Wisconsin Facilities Enterprise system > New bull facilities: industry-leading animal welfare & > Global enterprise system – “GenusOne” sustainability > Deliver bes
Slide 16: Genus's sustainability focus
Half year ended 31 December 2020 INTERIM RESULTS 16 > Genus’s sustainability focus Our focus areas % Reduction in CO2e emissions per kg of beef from Addressable UN SDGs3 progeny bred with sires of varying genetic merit2 16% Reduction in kgCO2e / kg carcass Genetic improvement Sire 4 compared with lo
Slide 17: Financial Results
INTERIM RESULTS 17 > Financial Results Alison Henriksen Chief Financial Officer
Slide 18: Genus adjusted operating profit performance
Half year ended 31 December 2020 INTERIM RESULTS 18 > Genus adjusted operating profit performance % Change % Change 60 Genus Adjusted Operating Profit £m1 22.0% £m 1H 21 1H 20 Actual Constant Half year results Genus PIC 68.9 62.6 10% 17% 50 20.0% 51.0 Genus ABS 18.7 14.6 28% 37% 40 18.0% Operating u
Slide 19: Genus PIC
Half year ended 31 December 2020 INTERIM RESULTS 19 > Genus PIC PORCINE Genus PIC Adj. Operating Profit £m1 80 Half year results 60 68.9 45.0% ROYALTY REVENUE +7% ADJUSTED 40 62.6 40.0% 47.7 48.6 41.2% OPERATING PROFIT1 46.1 39.1% +17% 20 35.0% 36.5% 34.9% 34.9% 0 30.0% 1H 17 1H 18 1H 19 1H 20 1H 21
Slide 20: Genus ABS
Half year ended 31 December 2020 INTERIM RESULTS 20 > Genus ABS BOVINE 20 Genus ABS Adj. Operating Profit £m SEXED VOLUME +42% Half year results 15 18.7 16.0% ADJUSTED 10 12.7 14.6 14.5% 11.6 OPERATING PROFIT 8.3 12.4% 11.0% BEEF VOLUME +37% 5 11.8% +22% 11.0% 8.9% 0 6.0% 1H 17 1H 18 1H 19 1H 20 1H
Slide 21: Genus R&D
Half year ended 31 December 2020 INTERIM RESULTS 21 > Genus R&D R&D Net Research and Development1 £m Half year results 30.8 29.0 4.8 24.9 5.7 21.9 22.1 3.9 4.3 3.7 4.0 3.8 3.1 1.5 2.1 9.7 9.3 8.2 7.8 9.4 12.0 10.3 8.2 8.4 8.5 1H 17 1H 18 1H 19 1H 20 1H 21 Other Gene editing Bovine PD Porcine PD 6 we
Slide 22: Statutory income
Half year ended 31 December 2020 INTERIM RESULTS 22 > Statutory income 1H 21 1H 20 Change £m £m £m Adjusted operating profit exc JV 45.1 34.4 10.7 Net IAS 41 valuation movement 3.5 13.3 (9.8) Amortisation of acquired intangible assets (3.7) (4.0) 0.3 Share-based payments (4.3) (2.8) (1.5) Exceptiona
Slide 23: Strong financial position
Half year ended 31 December 2020 INTERIM RESULTS 23 > Strong financial position £m New CASH CONVERSION 100% Opening Net Operating Interest and Capital JV income financing Closing Net Debt Jul-20 cashflow tax paid Expenditure and other Dividends Acquisitions leases FX Debt Dec-20 (1H 20: 96%) Continu
Slide 24: Strong performance vs. medium term objectives
Half year ended 31 December 2020 INTERIM RESULTS 24 > Strong performance vs. medium term objectives Grow adjusted operating profit : 10% CAGR Convert profit to cash : 90%+ cash conversion (constant currency, ex. gene editing) (net cash from operations : op. profit ex. JVs) 35% 127% 101% 100% 84% 84%
Slide 25: Summary & outlook
INTERIM RESULTS 25 > Summary & outlook Stephen Wilson Chief Executive
Slide 26: Summary and outlook
Half year ended 31 December 2020 INTERIM RESULTS 26 > Summary and outlook Strong 1H 21 Good strategic performance progress Record 1H 21 for both PIC and ABS; Sustained genetic lead; winning with key +29% adj. Operating Profit1 customers; growing share Mixed Macro Continued environment Investment Chi
Slide 27: Appendices
INTERIM RESULTS 27 > Appendices
Slide 28: Proportion of total porcine volumes under royalty
Half year ended 31 December 2020 INTERIM RESULTS 28 > Proportion of total porcine volumes under royalty PORCINE North America EMEA 73% 97% 97% 98% 96% 97% 70% 68% 68% 64% FY17 FY18 FY19 FY20 1H 21 FY17 FY18 FY19 FY20 1H 21 Latin America Asia 81% 78% 58% 77% 77% 77% 44% 46% 41% 37% FY17 FY18 FY19 FY2
Slide 29: Porcine royalty revenue growth
Half year ended 31 December 2020 INTERIM RESULTS 29 > Porcine royalty revenue growth PORCINE North America EMEA 3.2% 30% 2.5% 0.2% 1.0% 20% FY17 FY18 FY19 FY20 1H 21 15% 13% -4.0% 11% FY17 FY18 FY19 FY20 1H 21 Latin America Asia 15% 14% 51% 50% 45% 9% 9% 35% 19% 3% FY17 FY18 FY19 FY20 1H 21 FY17 FY1
Slide 30: Financial results
Half year ended 31 December 2020 INTERIM RESULTS 30 > Financial results 1H 21 1H 20 % Change % Change Actual Constant £m £m Currency Currency Revenue 285.7 270.7 6% 11% Adjusted Operating Profit inc JV exc 54.7 43.7 25% 35% gene editing Adjusted Operating Profit inc JV 51.0 39.4 29% 40% Net finance
Slide 31: Genus PIC results
Half year ended 31 December 2020 INTERIM RESULTS 31 > Genus PIC results 1H 21 1H 20 % Change % Change Actual Constant £m £m Currency Currency Revenue 152.9 146.5 4% 8% Adjusted Operating Profit exc JV 63.0 57.3 10% 14% Adjusted Operating Profit inc JV 68.9 62.6 10% 17% Adjusted operating margin exc
Slide 32: Genus ABS results
Half year ended 31 December 2020 INTERIM RESULTS 32 > Genus ABS results 1H 21 1H 20 % Change % Change Actual Constant £m £m Currency Currency Revenue 129.0 118.0 9% 17% Adjusted operating profit 18.7 14.6 28% 37% Adjusted operating margin 14.5% 12.4% 2.1pts 2.1pts
Slide 33: Cash flow statement
Half year ended 31 December 2020 INTERIM RESULTS 33 > Cash flow statement 1H 21 1H 20 Variance £m £m £m Adjusted operating profit exc JV 45.1 34.4 10.7 Depreciation and amortisation 14.8 13.0 1.8 Adjusted EBITDA 59.9 47.4 12.5 Working capital (1.2) (1.4) 0.2 Biological assets (7.7) (4.9) (2.8) Pensi
Slide 34: Exchange rate sensitivity
Half year ended 31 December 2020 INTERIM RESULTS 34 > Exchange rate sensitivity FY20 1H 21 Spot @ Profit Average1 Average1 22 Feb 2021 Sensitivity £m2 Genus’ geographic profile Chinese Yuan 8.89 8.88 9.09 2.2 can lead to translational currency impacts Mexican Peso 26.1 28.0 29.2 1.4 We monitor key r
Slide 35: Glossary
Half year ended 31 December 2020 INTERIM RESULTS 35 > Glossary Artificial insemination (‘AI’) – Using semen collected from a bull or boar to impregnate a Index/Indices – A formula incorporating economically important traits for ranking the cow or sow when in estrus. Artificial insemination allows a