Slide 1: Interim Results: Half Year ended December 2021
INTERIM RESULTS Half Year ended 31 December 2021 1 Interim Results: Half Year ended 31 December 2021
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 material
Slide 3: Business & Strategic Update
BUSINESS & STRATEGIC UPDATE STEPHEN WILSON CHIEF EXECUTIVE
Slide 4: FY22 H1 Headlines
FY22 H1 HEADLINES PIC CHINA IMPACTS H1 PERFORMANCE1 REVENUE ADJ. PROFIT BEFORE TAX2 ADJ. EPS2 (2)% (21)% (23)% £281.2m £37.0m 42.4p REVENUE EX. PIC CHINA ADJ. PBT EX. PIC CHINA1 H1 DIVIDEND MAINTAINED +4% +25% 10.3P GOOD STRATEGIC PROGRESS, INVESTING FOR GROWTH > Leading genetics driving strategic c
Slide 5: Volume Growth
VOLUME GROWTH HALF YEAR ENDED 31 DECEMBER 2021 GENUS PIC – VOLUME GROWTH (%) GENUS ABS – VOLUME GROWTH (%) EXCLUDING CHINA FY19 FY20 FY21 FY22 H1 5% 6% 5% 7% 16% 14% 14% 12% 12% 10% 8% 10% 13% 6% 11% 8% 15% 4% 8% 6% 2% 0% 4% 8% 0% 6% (2%) 5% -2% 2% 4% -4% 0% FY18 FY19 FY20 FY21 FY22 H1 FY18 FY19 FY2
Slide 6: China: Short Term Challenges, Long Term Opportunity
CHINA: SHORT TERM CHALLENGES, LONG TERM OPPORTUNITY CHINA SOW HERD ESTIMATES (M)1 CHINA PIG PRICE (RMB/KG) 50 50 ASF impact 40 40 30 30 ASF outbreak 20 20 ~20% 10 10 0 Dec 18 Dec 19 Dec 20 Dec 21 0 Sows - Top 50 pig producers (m) Sows - Rest of China (m) 2018 2019 2020 2021 2022 > Latest pig price b
Slide 7: China: Positioning for Growth
CHINA: POSITIONING FOR GROWTH BUILDING OUR POSITION WITH LEADING PIG PRODUCERS MAKING CHINA A HOME MARKET # OF TOP PIG PRODUCERS IN CHINA1 40 Other GENETIC IMPROVEMENT Tailoring products to meet our local customers’ needs PIC Customers 30 INNOVATION Collaboration for PRRSv gene editing and other tec
Slide 8: China: Strategic Supply Chain
PIC Farm CHINA: STRATEGIC SUPPLY CHAIN PIC Joint Venture PIC Multiplier OUR GROWING SUPPLY FOOTPRINT EXPANDING OUR SUPPLY CHAIN TO Benxi, Liaoning SUPPORT GROWTH Farm refurb and expansion; capacity growing by 80%+ 100% 160 Heilongjiang Haoxiang JV, Inner Mongolia 140 New elite JV farm, stocking 80%
Slide 9: Strong Progress in North America
STRONG PROGRESS IN NORTH AMERICA CUSTOMER CASE STUDY: GROWING WITH A TOP 10 NORTH AMERICAN PIG PRODUCTION SYSTEM NA ROYALTY REVENUE (FY22 H1) PIC800: superior terminal sire +5% H1 FY21: (4)% > Trial at the Customer’s farm demonstrated the PIC800’s superior +1.5 points NA SALES VOLUMES (MPEs m)4 robu
Slide 10: Olymel AlphaGene Collaboration
OLYMEL ALPHAGENE COLLABORATION OLYMEL – #1 CANADIAN PORCINE GROUP LONG TERM GENETIC COLLABORATION Transaction > Genus PIC has acquired all intellectual property in Olymel’s AlphaGene genetics > Genus PIC paid CAD$ 25m (£14.5m) cash consideration to Olymel Exclusive long term genetics collaboration >
Slide 11: Driving Genetic Improvement
DRIVING GENETIC IMPROVEMENT ACCELERATING GENETIC GAIN IN OUR HERDS DIGITAL PHENOTYPING – IMPROVING SELECTION ON PIC GENETIC INDEX WEIGHT, BEHAVIOUR AND COMPOSITION 150 3 Growing elite 5 125 herd population Entered relationship 6 100 with Møllevang Digital Phenotyping 75 More emphasis on growth 50 2
Slide 12: Investment Delivering Elite Genetic Supply Growth of 80%+
INVESTMENT DELIVERING ELITE GENETIC SUPPLY GROWTH OF 80%+1 FRENEYSTOWN, IRELAND ATLAS, CANADA EISK, RUSSIA AURORA, CANADA OTRADA, RUSSIA MØLLEVANG, DENMARK SURMAN, GERMANY WULKOW, GERMANY Atlas, 06/11/21 CABINILLAS, SPAIN APEX, USA PROGAVAL, SPAIN BF FARM, USA BROADVIEW, USA MAIN FARM, USA SANDHILLS
Slide 13: Transforming Our Customer Relationships and Service Model
TRANSFORMING OUR CUSTOMER RELATIONSHIPS AND SERVICE MODEL A GROWING PORTION OF OUR VOLUMES Moving to contracted customer models1 IN EMEA ARE CONTRACTED2 > Shifting towards 3-5 years contract commitments 60% > Product and services typically priced on fee per cow, per month FY21 Today Rolling out our
Slide 14: Driving Genetic Improvement
DRIVING GENETIC IMPROVEMENT BEEF – INDUSTRY LEADING GENETIC PROGRAMME DAIRY – INDUSTRY LEADING GENETIC PROGRAMME GENUS NUERA GENETIC INDEX AND NUERA SALES AVERAGE NM$ INDEX SCORE OF NEW COMMERCIAL BULLS LAUNCHED3 180 40% 1000 2020 NM$ 950 2021 NM$ NuEra % of total ABS beef volumes2 160 30% 900 NuEra
Slide 15: Growing Demand for Our Beef Genetics Across the Beef Supply Chain
GROWING DEMAND FOR OUR BEEF GENETICS ACROSS THE BEEF SUPPLY CHAIN ABS GENETICS SALES VOLUMES TO US DAIRY FARMERS1 Case Study: Strong demand for our beef genetics 100% 80% 60% 40% 20% > Leading US dairy with 60k head signed as 100% ABS customer > NuEra genetics delivering higher value Beef x Dairy ca
Slide 16: Supply Chain Investments Yielding Benefits
SUPPLY CHAIN INVESTMENTS YIELDING BENEFITS NEW FACILITIES WITH INDUSTRY EFFICIENCY BENEFITS LEADING STANDARDS CHANGE IN SUPPLY CHAIN EFFICIENCY IN NEW FACILITIES1 +73% total semen batches collected +14% points improvement in rejection rate >2x +16% saleable straws per batch saleable straws produced
Slide 17: Growing Demand for Our Sexing Technology
GROWING DEMAND FOR OUR SEXING TECHNOLOGY TOTAL SEXED SALES VOLUMES (000s)1 PROGRESS WITH THIRD PARTY INTELLIGEN CUSTOMERS 4,000 3,000 2,000 1,000 IntelliGen 2nd Generation Machines, Wisconsin > Third party IntelliGen wins/extensions in New Zealand, Europe and North America - FY18 1H FY18 2H FY19 1H
Slide 18: PRRSv-Resistant Pigs
PRRSV-RESISTANT PIGS PROGRAMME ON TRACK TECHNICAL DEVELOPMENT • Hundreds of E2 generation pigs being reared for testing in North America • Additional facility to add capacity for E3 births at end of 2022 REGULATORY PROGRESS • Phase I Product Claim and Methods submissions completed • Collecting data
Slide 19: ESG
ESG CONTINUED PROGRESS ON PEOPLE ENGAGEMENT AND SUSTAINABILITY GROWING ENGAGEMENT AMONGST EMPLOYEES1 DRIVING SUSTAINABILITY THROUGH GENETIC IMPROVEMENT % EMPLOYEES WHO WOULD RECOMMEND TO A FRIEND TO WORK AT GENUS 85% 80% 82% 79% 75% 75% 70% 73% 65% 2015 2017 2019 2021 % EMPLOYEES WHO ENJOY WORKING A
Slide 20: Financial Results
FINANCIAL RESULTS ALISON HENRIKSEN CHIEF FINANCIAL OFFICER
Slide 21: Genus Adjusted Operating Profit Performance
GENUS ADJUSTED OPERATING PROFIT PERFORMANCE % Change % Change £m FY22 H1 FY21 H13 Actual Constant GENUS ADJUSTED OPERATING PROFIT £M1,3 Genus PIC 57.0 68.9 (17)% (15)% Half year results Genus ABS 22.1 18.7 18% 21% Operating units 79.1 87.6 (10)% (8)% 49.7 R&D (31.4) (29.0) (8)% (10)% 17.4% Central (
Slide 22: PIC China Impact
PIC CHINA IMPACT GENUS ADJ. OPERATING PROFIT1 EX. PIC CHINA £M PIC CHINA VOLUMES (MPE’S M) 15 Half year results Breeding stock Royalty 38.7 10 Adj. Operating Profit ex. China Adj. Operating Margin ex. China ASF outbreak 5 31.5 +23% 0 14.6% FY18 H1 FY18 H2 FY19 H1 FY19 H2 FY20 H1 FY20 H2 FY21 H1 FY21
Slide 23: Genus PIC
GENUS PIC PORCINE ADJUSTED OPERATING PROFIT1 LATIN AMERICA (15)%, +13% ex. China ROYALTY REVENUE +13% (1)%, +4% ex. China 3 > Strong double digit operating profit growth across all key trading countries > Volumes up +10%, Royalty revenue growth +16% > Initiatives to increase supply GENUS PIC ADJ. OP
Slide 24: Genus ABS
GENUS ABS BOVINE ADJUSTED OPERATING PROFIT LATIN AMERICA +21% SEXED VOLUME BEEF VOLUME +22% > Continued growth; volumes up +3%, despite Chinese import ban on Brazil beef (now lifted) +24% +13% > Continued success of innovative digital sales campaigns GENUS ABS ADJ. OPERATING PROFIT £M EMEA Half year
Slide 25: Genus R&D
GENUS R&D NET RESEARCH AND DEVELOPMENT1 £M PORCINE PRODUCT GENE EDITING Half year results DEVELOPMENT STABLE INVESTMENT STABLE 0% (3)% > Increased usage of genotyping > Ongoing investment in the PRRSv 31.4 across more of our global elite farm resistance project 30.8 29.0 network > Regulatory process
Slide 26: Statutory Income
STATUTORY INCOME FY22 H1 FY21 H11 Change £m £m £m STATUTORY PROFIT BEFORE TAX Adjusted operating profit ex. JV 35.0 43.8 (8.8) £24.4m (FY21 H1: £37.4m) Net IAS 41 valuation movement (6.8) 3.5 (10.3) Amortisation of acquired intangible assets (3.8) (3.7) (0.1) Non-cash impacts Share-based payments (2
Slide 27: Solid Financial Position
SOLID FINANCIAL POSITION NET DEBT BRIDGE £M CASH CONVERSION Net Debt: Net Debt: 63% (FY21 H1: 98%) EBITDA1 EBITDA1 0.9x Free cashflow: £(16.1)m 1.4x Growth in capital investments > Capital expenditure £27.8m (FY21 H1: £9.7m) > Higher working capital, includes staff rewards paid in respect of FY21 >
Slide 28: Summary & Outlook
SUMMARY & OUTLOOK STEPHEN WILSON CHIEF EXECUTIVE
Slide 29: Summary and Outlook
SUMMARY AND OUTLOOK STRONG PERFORMANCE EX. PIC CHINA > Profit Before Tax excluding PIC China +25%1 GOOD STRATEGIC PROGRESS > Leading genetics; strong presence with strategic customers; growing, resilient global supply chain INVESTING FOR GROWTH > Progress in core technologies; digital phenotyping in
Slide 30: Appendices
APPENDICES
Slide 31: Proportion of Total Porcine Volumes Under Royalty
PROPORTION OF TOTAL PORCINE VOLUMES UNDER ROYALTY NORTH AMERICA EMEA 80% 97% 98% 96% 98% 98% 77% 70% 68% 68% FY18 FY19 FY20 FY21 FY22 H1 FY18 FY19 FY20 FY21 FY22 H1 LATIN AMERICA ASIA 81% 82% 78% 58% 77% 77% 51% 46% 48% 37% FY18 FY19 FY20 FY21 FY22 H1 FY18 FY19 FY20 FY21 FY22 H1 31 Interim Results:
Slide 32: Porcine Royalty Revenue Growth
PORCINE ROYALTY REVENUE GROWTH NORTH AMERICA EMEA 5.0% 30% 3.2% 2.5% 13% 1.0% 11% 11% -0.7% 5% FY18 FY19 FY20 FY21 FY22 H1 FY18 FY19 FY20 FY21 FY22 H1 LATIN AMERICA ASIA 70% 50% 35% 15% 16% 14% 19% 9% 9% 1 (33%) FY18 FY19 FY20 FY21 FY22 H1 FY18 FY19 FY20 FY21 FY22 H1 32 Interim Results: Half Year en
Slide 33: Financial Results
FINANCIAL RESULTS FY21 H1 FY22 H1 % Change % Change restated1 Actual Constant £m £m Currency Currency Revenue 281.2 285.7 (2)% 1% Adjusted operating profit inc JV ex. gene editing 43.3 53.4 (19)% (17%) Adjusted operating profit inc JV 39.7 49.7 (20)% (18)% Net finance costs (2.7) (2.6) (4)% (5)% Adj
Slide 34: Genus PIC Results
GENUS PIC RESULTS FY22 H1 FY21 H1 % Change % Change Actual Constant £m £m Currency Currency Revenue 143.5 152.9 (6)% (4)% Adjusted operating profit ex. JV 52.2 63.0 (17)% (15)% Adjusted operating profit inc JV 57.0 68.9 (17)% (15)% Adjusted operating margin ex. JV 36.4% 41.2% (4.8)pts (4.8)pts 34 In
Slide 35: Genus ABS Results
GENUS ABS RESULTS FY22 H1 FY21 H1 % Change % Change Actual Constant £m £m Currency Currency Revenue 130.9 129.0 1% 4% Adjusted operating profit 22.1 18.7 18% 21% Adjusted operating margin 16.9% 14.5% 2.4pts 2.4pts 35 Interim Results: Half Year ended 31 December 2021
Slide 36: Cash Flow Statement
CASH FLOW STATEMENT FY21 H1 FY22 H1 Variance restated1 £m £m £m Adjusted operating profit ex. JV 35.0 43.8 (8.8) Depreciation and amortisation 14.1 13.9 0.2 Adjusted EBITDA 49.1 57.7 (8.6) Working capital (20.8) (1.2) (19.6) Biological assets (5.8) (7.7) 1.9 Pension deficit repair (2.3) (3.2) 0.9 Ex
Slide 37: Exchange Rate Sensitivity
EXCHANGE RATE SENSITIVITY > Genus’s geographic profile can FY21 FY22 H1 Spot at Profit lead to translational currency Average1 Average1 17 Feb 2022 Sensitivity £m2 impacts Mexican Peso 28.1 27.9 27.7 1.4 > We monitor key rates against GBP Brazilian Real 7.15 7.40 7.04 1.4 > Latest spot rates would E
Slide 38: PRRSv Resistance Programme
PRRSV RESISTANCE PROGRAMME DELIVERING ANIMAL WELLBEING AND SUSTAINABILITY THROUGH TECHNOLOGY FOUNDER ANIMAL PRODUCTION / OPTIMISATION Expand to Internalize founder animal second NA production facility for increased production DISEASE AND PHENOTYPIC TESTING OF PURELINES (2 GENERATIONS) Research Chall
Slide 39: Glossary
GLOSSARY Artificial insemination (‘AI’) Using semen collected from a bull or Genomic bull A bull which has been assessed through genomic NuEra The ABS beef breeding programme and index designed to boar to impregnate a cow or sow when in estrus. Artificial testing. This typically refers to bulls whic