TIDMGNS
RNS Number : 2729Q
Genus PLC
25 February 2021
Immediate 25 February 2021
Genus plc
Unaudited half year results for the six months ended 31 December
2020
VERY STRONG PERFORMANCE and GOOD STRATEGIC PROGRESS
Adjusted results ([1]) Statutory results
-------------------------------
Actual currency Constant Actual currency
currency
change
([2])
---------
Six months ended 31 December 2020 2019 Change 2020 2019 Change
----- ----- ------ --------- ------ -----
GBPm GBPm % % GBPm GBPm %
Revenue 285.7 270.7 6 11 285.7 270.7 6
Operating profit exc
JVs 45.1 34.4 31 37 35.5 28.1 26
Operating profit inc
JVs exc gene editing 54.7 43.7 25 35
Profit before tax 48.4 36.6 32 44 38.7 30.4 27
Free cash flow 26.6 10.5 153 n/m ([3])
Basic earnings per share
(pence) 57.3 43.5 32 44 48.4 36.5 33
Dividend per share (pence) 10.3 9.4 10
----------------------------- ----- ----- ------ --------- ------ ----- ------
Strong revenue growth of 6% in actual currency and 11% in
constant currency(2)
-- Strong revenue growth of 8%(2) in PIC, our porcine genetics
business; royalty revenue up 7%(2) , particularly high growth in
Asia and Europe
-- Continued royalty growth and high breeding stock sales in
China contributing to PIC volume growth 11% (up 7% excluding
China)
-- Excellent revenue growth of 17%(2) in ABS, our bovine
genetics business, particularly Brazil, Russia, India and China;
continued success with Sexcel (R) and NuEra (R) beef genetics
-- ABS volume growth of 19%, with sexed volumes up 42% and beef up 22%
Record adjusted profit before tax ('PBT')(1) , up 44% in
constant currency; statutory PBT at GBP38.7m
-- Adjusted operating profit including joint ventures and
excluding gene editing cost(1) up 35%(2)
-- Double digit adjusted operating profit growth(1) in PIC (up
17%(2) ) and ABS (up 37%(2) ); R&D investment decreased 2%(2)
with lower spend than planned due to COVID-19 short-term
constraints
-- Statutory PBT increased 27% to GBP38.7m, impacted by a lower
net IAS 41 biological asset valuation uplift offset by lower
exceptional costs
Strong cash generation, earnings momentum and increased
dividends
-- Record first half free cash inflow(1) of GBP26.6m, net
debt(1) reduced to GBP92.2m, net debt to EBITDA(1) of 0.8x
-- Adjusted earnings per share(1) up 44%(2) ; interim dividend
up 10% with 3.3x adjusted earnings cover ([4])
Good strategic progress
-- Continue to win new customers globally, with leading porcine
and bovine genetics; contributing through genetic improvements to
the reduction in use of energy, water and land in animal protein
production
-- Beijing Capital Agribusiness Co. Ltd ('BCA') long-term
collaboration in relation to PRRSv is progressing well, and first
non-gene edited pigs shipped from US to stock BCA multiplication
farms
-- Continued shift in ABS's product mix with more than 20% of global sales volume now Sexcel (R)
-- Significant capex spend is planned to support expansion of
best in industry farm facilities for PIC and ABS
-- Sustainability a key focus through our 'Delta C' programme;
climate targets set to reduce carbon emissions and become carbon
neutral
Commenting on the interim results, Stephen Wilson, Chief
Executive, said:
"Genus performed very strongly and made further good strategic
progress in the first half of the 2021 fiscal year. The Group
continued to show its resilience during the COVID-19 pandemic and I
would like to thank our people who have shown great dedication to
our customers whilst navigating the various challenges that the
pandemic has caused.
"Both PIC and ABS grew adjusted operating profits in double
digits, with China, Brazil, India and Russia, being notably high
growth markets. PIC's expansion in China was significant, gaining
share with large producers that have been re-stocking following the
spread of African Swine Fever in 2019. PIC Europe's growth was also
very strong reflecting success with key accounts, leveraging our
genetics and supply chain.
"ABS's volume growth in the half was a record, driven by the
continued success of Sexcel(R), and strong performance by our
proprietary NuEra(R) beef business. Latin America, Europe and Asia
all grew strongly, and ABS's adjusted operating margin improved
through better product mix and operating leverage.
"In the second half of the 2021 fiscal year we expect that
growth will be lower and there are increased currency headwinds.
Nevertheless, Genus continues to have significant growth
opportunities and the Board's expectations remain unchanged for the
full year."
Results presentation today
A pre-recorded analysts and bankers briefing to discuss the
interim results for the six months ended 31 December 2020 will be
held via a video webcast facility and will be accessible via the
following link from 7:01am today:
https://webcasting.buchanan.uk.com/broadcast/600ed56bea090471deaf6780
This will be followed by a live Q&A session to be held by
invitation via Microsoft Teams at 10:30am.
Enquiries:
Genus plc ( Stephen Wilson, Chief Executive Officer / Alison Tel: 01256 345970
Henriksen, Chief Financial Officer)
Buchanan ( Charles Ryland / Chris Lane / Sophie Wills) Tel: 0207 466 5000
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'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 25 countries on six continents, with research
laboratories located in Madison, Wisconsin, USA.
Group Performance
Whilst there were some impacts from COVID-19 in the Group, the
overall performance in the first half of the year was very strong,
with revenue increasing by 6% (11% in constant currency), and
adjusted profit before tax growing 32% (44% in constant currency),
to a record GBP48.4m.
Revenue of GBP285.7m (2019: GBP270.7m) increased 6% in actual
and 11% in constant currency during the period. PIC (8% growth) and
ABS (17% growth) both contributed, with particularly strong trading
across Brazil, Russia, India and China. Strategically important
porcine royalty revenue was up 7% in constant currency and ABS's
volume growth was a record high of 19% achieved through sexed
genetics up 42%, and beef up 22%.
Adjusted operating profit, including joint ventures and
excluding gene editing, was GBP54.7m (2019: GBP43.7m), up 25% (35%
in constant currency). Adjusted operating profit, including joint
ventures and after the costs of gene editing, increased 40% in
constant currency. Adjusted operating margin, including joint
ventures, expanded to 17.9% (2019: 14.6%). Within this, Genus's
share of adjusted joint venture operating profits was GBP5.9m
(2019: GBP5.3m), with a strong performance in the PIC Agroceres JV
in Brazil. The impact to profit from COVID-19 effects on trading
across the Group were largely offset by short term travel savings
of approximately GBP5m. Net finance costs decreased to GBP2.6m
(2019: GBP2.8m).
Adjusted profit before tax was up 32% (44% in constant
currency), the highest growth rate in over 10 years. This reflected
double digit growth in adjusted operating profit in both PIC and
ABS. The ongoing impact of African Swine Fever ('ASF') in China led
to very high pork prices continuing through the period, driving
strong breeding stock sales, royalty income and farm margins for
PIC.
The statutory profit before tax was GBP38.7m (2019: GBP30.4m),
benefitting from a GBP3.5m non-cash increase (2019: GBP13.3m) in
net IAS 41 biological asset fair value. Other adjusting items,
including amortisation of acquired intangibles and share based
payments, were slightly higher in aggregate period to period.
Exceptional costs of GBP5.1m were GBP7.7m lower than the prior
period which included damages and costs for the ongoing ST
litigation. A non-cash Guaranteed Minimum Pension ('GMP')
equalisation charge of GBP3.3m in respect of legacy pension schemes
has been recognised due to a High Court ruling on 20 November 2020,
which ruled individual transfer payments made by UK pension schemes
since 17 May 1990 would need to be equalised for the effects of
GMP.
The tax rate on adjusted profit before tax was 22.9% (2019:
23.0%) and continued to benefit from the increased proportion of
the Group's profit arising in China, where there is agricultural
tax relief on certain activities. The statutory profit after tax
was GBP30.3m (2019: GBP24.1m).
The effect of exchange rate movements on the translation of
Genus's overseas profits was an adverse impact of GBP3.7m compared
with the prior period, primarily from stronger Sterling against the
Brazilian Real, Mexican Peso and Russian Rouble.
Free cash inflow of GBP26.6m (2019: GBP10.5m inflow) reflected
the strong trading and a continued focus on improving working
capital management. Cash generated by operations of GBP45.0m (2019:
GBP32.9m) represented 100% conversion (2019: 96%) of adjusted
operating profit of GBP45.1m (2019: GBP34.4m) into cash. Capital
expenditure of GBP11.9m (2019: GBP17.0m) included continuing
investment in the ABS supply chain and the new GenusOne enterprise
system. Overall capital investment was lower than the same period
last year, due to IntelliGen capital expenditure for new production
locations incurred last year.
Net debt decreased to GBP92.2m (2019: GBP107.2m) benefiting from
the strong free cash inflow and favourable foreign currency
movement on US dollar loans of GBP7.0m, offset by payment of
GBP7.0m of deferred consideration on previous acquisitions. The net
debt to EBITDA ratio of 0.8x (2019: 0.9x) as defined in the debt
facility agreement reflects strong EBITDA growth and lower net debt
levels.
As a result of Genus's strong earnings growth and cash flow
generation, the Board has declared an interim dividend of 10.3
pence per share, an increase of 10% on last year's interim
dividend, which is payable on 1 April 2021 to shareholders on the
register at 5 March 2021.
Strategic Progress
Despite the challenges of COVID-19, Genus continued to
successfully advance its strategy of creating value for farmers
through delivering differentiated and sustainable proprietary
genetic solutions that have been created through harnessing leading
edge technologies, data and the talent of our people.
Our strategic investments in Genus's proprietary pork, dairy and
beef breeding programs and leading sexing technology continued to
benefit performance for both PIC and ABS. In PIC, demand for our
superior genetics fuelled customer wins in all regions, and during
the first half of the year PIC progressed its distribution contract
with BCA in China with the delivery of the first non-gene-edited
pigs from the USA as scheduled.
ABS now own over 50 of the top 100 Holstein bulls globally ($Net
Merit Index), and its NuEra beef programme gained further traction
with customers as US beef feedlot trials demonstrated significant
per calf value creation compared with alternatives.
In addition to delivering today, Genus is focused on the long
term. Notwithstanding the short-term decrease in R&D spending
in the first half, growing R&D investment to support the
development of new technologies for our customers remains a focus.
We are continuously improving IntelliGen, our bovine sexing
technology, and our potentially transformational porcine
PRRSv-resistance programme is progressing as planned. We have also
made important new hires in the fields of reproductive biology and
scientific data, as we explore new ways to create value for our
customers.
The implementation of GenusOne, the Group's new enterprise
system, is progressing well. We have now completed the 'go-live' in
both businesses in North America and have plans to complete the
rollout to the rest of the world on schedule.
We are investing over GBP50m in capex during the next two years,
to create new porcine nucleus farms in Canada and Russia and new
and upgraded bull housing facilities in the US and UK. These
investments will support the Group's objectives of accelerating
genetic improvement, meeting the growing demand for our products,
increase supply chain resilience and lead the industry in terms of
animal welfare standards and sustainability.
Sustainability Focus
Our primary focus is the use of animal genetic improvement to
drive the reduction in use of carbon/energy, water and land in
animal protein production. The vision of Genus is 'Pioneering
animal genetic improvement to help nourish the world' and as we
look over time, we can see the clear impact improving genetics has
on reducing greenhouse gasses ('GHGs') in protein production.
Additionally, w e have two climate targets focused on our
internal operations that support international (Paris) climate
goals: Genus will reduce its carbon emissions by 25% (per tonne
animal weight from 2020 levels) by 2030 and become a carbon 'net
zero' business by 2050. We have established a carbon reduction
trajectory and contributory reduction opportunities as part of our
'Delta C' programme. We are targeting 'least cost mitigation'
measures for emissions from manures. We have completed an initial
assessment of the potential for 'conservation' management of soils
on our estate and are developing plans to realize this opportunity.
We are also targeting reductions in GHGs using, among other things,
renewable energy, methane management and capture, and electric
vehicles in our operations.
Outlook
Genus performed very strongly in the first half of the year, and
we expect that the Group will remain resilient as the COVID-19
pandemic continues to impact society and the world economy and
presents challenges for elements of the animal protein value chain.
Although growth in the second half is anticipated to be lower than
experienced in the first half and there are increased currency
headwinds, the Board expects the company to perform in line with
its expectations for the financial year 2021.
Genus PIC - Operating Review
Actual currency Constant
currency
change
---------
Six months ended 31 2020 2019 Change
December
----- ----- ------ ---------
GBPm GBPm % %
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 JV 41.2% 39.1% 2.1pts 2.3pts
Market
COVID-19 and ASF caused significant volatility in global pork
demand and supply in the period.
ASF continues to be a major influence on China's porcine
industry. As expected, larger producers are rapidly growing
capacity to rebuild China's pig herd. The Chinese herd recovered
significantly in size through 2020, but ASF outbreaks continue.
China's full recovery may take several years, keeping pig prices
inflated and supporting higher pork imports than pre-ASF. While pig
prices in China are down around 8% compared with a year ago and
down 20% from their 24-month peak, they are around 150% higher than
prices than pre-ASF. Pig prices are expected to moderate, but
remain above historical levels, in the coming months in China,
making market confidence and efficiency of producers even more
important.
In the first nine months of 2020, EU pork exports were up more
than 16%, with Chinese demand driving nearly all the growth. In
September 2020, ASF was found in Germany and many trade partners,
including China immediately banned German pork, affecting
approximately 42% of German pork exports. Spanish exports to China
have benefited but the ban decreased slaughter prices significantly
across Europe, with producers incurring negative margins. Pressure
on prices will continue into 2021, with lower consumption caused by
COVID-19 also a factor. Labour shortages in slaughterhouses due to
COVID-19 infections and new labour regulations have also caused
backlogs of pigs and frozen pork in multiple EU countries. Sow
inventory reductions have started, especially in North West Europe,
supported by government buyout programmes to improve the
environment, forthcoming animal welfare regulations and poor market
conditions.
In the United States, COVID-19 brought unprecedented volatility
to pork prices as slaughter pigs could not be slaughtered due to
packing plant slowdowns. In 2021, production is forecast to be just
1% higher, with flat exports as less demand for exports to China
are offset by increased demand from Japan and Mexico. While recent
increases in corn and soybean prices are expected to have some
impact on farmers' profits, buoyant lean hog futures point to
profitable margins for producers in 2021.
In South America, Brazil had a record year for pork production
helped by exports to China rising 36%. Brazilian pork production in
2021 is projected to increase 2.5% over 2020 levels on the back of
recovering local demand and an increased share of China's lower
import requirements.
Performance
PIC's adjusted operating profit including joint ventures was
GBP68.9m for the period, up 17% in constant currency, driven by
very strong growth in most countries and especially China, Russia
and Brazil. Volumes were up 11%, with all regions contributing and
the highest growth was experienced in Asia and Europe. Total
revenue increased by 8% in constant currency and strategically
important porcine royalty revenue was up 7% in constant
currency.
In North America, as expected COVID-19 continued to cause market
volatility, packing plant slowdowns and reductions in customer
breeding stock investments and pig numbers. Adjusted operating
profit was down 6% and revenue was down 3% reflecting a 4% decline
in royalty revenue. However, there was continued strong demand for
the Camborough sow and Duroc PIC 800 sire from both new and
existing customers, providing royalty growth opportunity for future
periods.
Latin American adjusted operating profit grew by 13% in constant
currency, with most countries contributing. Volumes were up 4% and
royalty revenue were up 9% in constant currency. The buoyant market
in Brazil, supported by strong exports to China, drove PIC Brazil
adjusted operating profit growth of 30%. Higher royalties in Chile
also contributed to growth in the period.
Adjusted operating profit in Europe rose by 42% and revenue was
up by 10%. Royalty revenue was up 15%, with nearly all countries
achieving growth. Expansion projects in Russia continued, nearly
doubling profits, and PIC's partnerships with Hermitage Genetics
and Møllevang continue to add value in the region and globally,
through the wider portfolio of genetics, distribution and
supply.
Asia's adjusted operating profit grew by 56%. The continued
strength in pig prices contributed to exceptional profits across
the pork industry in China, leading to PIC's continued growth in
customer breeding projects, higher royalties and improved farm
margins. PIC continued to invest in operations across Asia, and
expanded its customer base in China, meaning it is now serving
around one third of the top 50 producers. However, the Philippines
continued to be adversely affected by a combination of COVID-19 and
ASF.
Genus ABS - Operating Review
Actual currency Constant
currency
change
---------
Six months ended 31 2020 2019 Change
December
----- ----- ------ ---------
GBPm GBPm % %
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
Market
In the second half of 2020, consistent demand from retail and
food services resulted in milk prices remaining stable. China and
other Asian markets played an important role supporting these
prices, with demand increasing compared with 2019. Some markets,
such as Brazil, saw record milk prices, underpinned by local
government initiatives aimed at countering the COVID-19
pandemic.
Much of the demand in China and Asia was met by increased
imports from the US and New Zealand. In 2020, total milk exports
worldwide grew at the fastest rate for three years, showing the
resilience of dairy producers despite the COVID-19 pandemic. The
second half of the year saw the major exporting nations achieve
export growth of over 2 billion litres of milk against the same
period in 2019. In the US, this was the result of an increase in
the national herd size compared with the first half of 2020. The UK
saw improved performance per cow, although the national herd
decreased. China's increasing demand for feed, particularly for its
recovering pork industry, continued to drive up global feed prices
in the latter part of 2020. This is likely to continue into early
2021 applying pressure to dairy producer margins.
The COVID-19 pandemic affected beef consumption trends during
2020 and, in many markets, the switch from dining out to home
eating stabilised overall demand in the second half of the year.
Demand for beef in China also remained at the higher level it
reached during the ASF pandemic, despite pork producers restocking.
This contributed to beef prices throughout the period being higher
than the prior year in Brazil, Australia and China, with demand
outweighing supply. In Europe, beef prices were down moderately in
the second half of 2020, underpinned by a constrained recovery in
demand as COVID-19 restrictions remained greater than in other
global markets. Uncertainty in the U.S. also saw prices fall by 5%
in 2020 when compared to 2019, although prices stabilised in the
second half of the year.
In the bovine genetics marketplace, the significant investment
required to run competitive breeding programmes saw a number of
trading partnerships develop, particularly between European
co-operatives during this period. This trend is likely to continue
as a smaller number of growing dairy and beef producers want to
partner with world class leading genetics companies to help them
grow sustainable protein production.
Performance
Globally, COVID-19 created dynamic and challenging market
conditions for our customers but overall demand for ABS's products
was resilient. This was helped by the salesforce's focus on
obtaining 100% of customers' business and the introduction of new
partnership-based contract structures.
ABS's adjusted operating profit increased by 37%, with volumes
up 19% and revenue up 17% in constant currency, as dairy customers
continued the shift from conventional to sexed and beef genetics.
Sexed volumes grew by 42%, reflecting Sexcel's continued success.
Increased use of NuEra beef genetics in dairy herds, and customer
growth in the traditional beef segment supported a 22% increase in
global beef volumes.
Europe achieved volume growth of 10% and revenue growth of 12%,
with adjusted operating profit up 28% against the prior year in
constant currency. The business made strategic progress with key
accounts in Russia and saw strong growth in other distributor
markets. However, conditions in the UK and Italy were particularly
challenging as COVID-19 lockdowns reduced salesforce mobility and
customer access, and dairy producers limited their herd growth.
Sexed semen volumes rose by 43%, with the UK, Ireland and the
European distributor business achieving the strongest growth. The
trend of dairy customers using sexed genetics, coupled with beef
genetics for a portion of the herd, led to beef volumes increasing
by 4%. During the period, a new IntelliGen production facility was
opened in Europe, our fourth external customer site globally.
In North America, revenue grew by 3% and adjusted operating
profit increased by 5% in constant currency. Our ability to
leverage our strategic investments in key account management was
limited, as COVID-19 travel restrictions prevented face to face
customer interactions. Overall volumes were 1% lower, as dairy
producers rationalised genetic inventory on farm in response to the
uncertain market conditions. Volumes of beef genetics into dairy
animals rose 25%, supported by proprietary NuEra genetics selected
for cross-bred beef-on-dairy performance, but there was limited
growth in sexed volumes of 2% and customers also used less
conventional product. Embryo volumes increased by 8%.
In Latin America, revenue grew by 35% and adjusted operating
profit increased by 68% in constant currency, with Brazil
particularly strong. The Brazil beef market was strong, and the
team achieved good success through innovative digital sales
campaigns, while maintaining robust pricing policies. Volumes in
Latin America overall increased by 19%, with sexed volumes up 48%
and beef volumes up 31%, utilising NuEra genetics, selected for
cross-bred performance of North American sires with tropical cows.
Embryo volumes increased by 35%.
In Asia, adjusted operating profit was up 116% and volumes by
52%, with trading activity increasing in China following a period
of vertical integration among customers, as dairy processors
acquired farms. Australia rebounded strongly from last year's
turbulent drought and bushfire conditions. Sexed volumes were up
142%, with strong Sexcel sales in China and the business seeing the
benefits of IntelliGen production at the State of Uttar Pradesh
facility in India, which started operation earlier in 2020.
Research and Development - Operating Review
Actual currency Constant
currency
change
---------
Six months ended 31 2020 2019 Change
December
----- ---- ------ ---------
GBPm GBPm % %
Porcine product development 10.3 12.0 (14) (11)
Bovine product development 9.3 9.7 (4) 1
Gene editing 3.7 4.3 (14) (12)
Other research and
development 5.7 4.8 19 23
Net expenditure in
R&D ([5]) 29.0 30.8 (6) (2)
Performance
Net research and development investment decreased by 2% in
constant currency, primarily due to the large investments in the
prior period to expand the porcine elite nucleus populations.
External research collaboration spend was also lower due to timing
caused by COVID-19 constraints, and the Group benefited from
efficiencies in gene editing capability, from internalising gene
edited animal production. Genus continued to strengthen its
proprietary differentiated offerings and to invest in key strategic
initiatives, including gene editing, IntelliGen production capacity
and porcine elite farm nucleuses, as well as further developing its
research and development pipeline.
Porcine product development continued to deliver high rates of
genetic improvement, driven by the combination of our expanded
genetic production, implementing the best science and capturing
accurate and meaningful data. Our ongoing improvement initiatives
were focused on further refining our genomic evaluation, exploring
digital tools for automated capture of new and novel traits, and
continued integration of Møllevang genetics. The decrease in
porcine product development expenditure was primarily related to
start-up costs on projects in 2019 to expand capacity in Genus
PIC's elite farms.
Bovine product development continued to generate an industry
leading Holstein dairy bull portfolio, which supported strong
volume growth in ABS. The De Novo joint venture continued to
produce more than 50% of these animals and the strong pipeline of
young bulls will help sustain our leadership position. Global
demand for NuEra Genetics continued to grow and represented more
than 20% of total beef volumes produced. Recent validation trials
in customer systems have demonstrated NuEra's significant
superiority to competitor genetics. In addition, we continue to
invest in IntelliGen while amortising previously capitalised
development costs. We expect to expand our production capacity
further to meet increasing demand for sexed semen.
Gene editing expenditure decreased by 12% in the period, as work
with Caribou completed and we internalised our capability for
producing gene edited animals as planned. The PRRSv programme is
progressing as planned, and we maintained our engagement with the
US Food and Drug Administration, with whom we have a constructive
and positive relationship. Directly and with local partners, we
also initiated conversations on regulatory and market acceptance in
key global markets including China and Japan.
Other research and development expenditure increased by 23%.
This included initiating work on reproductive biology and data
science objectives, and continuing efforts in our bioinformatics
platform and genome science. External collaborations in a variety
of discovery areas also continued, though at slower pace due to
institutions prioritising COVID-19 research and vaccines.
Principal risks and uncertainties
Genus's approach to risk management is to identify, evaluate and
prioritise risks and uncertainties and actively manage actions to
mitigate them. The Genus plc Annual Report 2020 (a copy of which is
available on the Genus plc website at www.genusplc.com) sets out on
pages 44-46 a number of risks and uncertainties that might impact
the performance of the Group.
Some of these risks relate to the current business operations in
our global agricultural markets, 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. Additionally, we also monitor emerging new
risks such as changing consumption patterns, environmental
sustainability and the emergence of alternative proteins such as
lab-based meat.
There has been no material change to the principal risks in the
current financial year that might affect the performance of the
Group.
GENUS PLC
CONDENSED CONSOLIDATED INCOME STATEMENT
For the six months ended 31 December 2020
Six months Six months Year
ended ended ended
31 December 31 December 30 June
Notes 2020 2019 2020
GBPm GBPm GBPm
REVENUE 4 285.7 270.7 551.4
Adjusted operating profit 4 45.1 34.4 65.3
Adjusting items:
* Net IAS 41 valuation movement on biological assets 10 3.5 13.3 15.8
* Amortisation of acquired intangible assets 9 (3.7) (4.0) (8.5)
* Share-based payment expense (4.3) (2.8) (5.8)
------------ ------------ --------
(4.5) 6.5 1.5
- Exceptional items: 5
- Litigation (1.7) (12.0) (16.4)
- Pension related (3.3) - -
- Acquisition and integration (0.1) (0.5) (2.1)
- Other - (0.3) (0.7)
Total exceptional items (5.1) (12.8) (19.2)
Total adjusting items (9.6) (6.3) (17.7)
OPERATING PROFIT 35.5 28.1 47.6
Share of post-tax profit of joint
ventures and associates retained 12 5.8 5.1 8.9
Finance costs 6 (2.8) (2.9) (5.3)
Finance income 6 0.2 0.1 0.3
------------ ------------ --------
PROFIT BEFORE TAX 38.7 30.4 51.5
Taxation 7 (8.4) (6.3) (10.6)
------------ ------------ --------
PROFIT FOR THE PERIOD 30.3 24.1 40.9
============ ============ ========
ATTRIBUTABLE TO:
Owners of the Company 31.5 23.7 40.5
Non-controlling interest (1.2) 0.4 0.4
------------ ------------ --------
30.3 24.1 40.9
============ ============ ========
EARNINGS PER SHARE 14
Basic earnings per share 48.4p 36.5p 62.4p
Diluted earnings per share 48.0p 36.3p 61.9p
Alternative Performance Measures
Adjusted operating profit 45.1 34.4 65.3
Adjusted operating profit attributable
to non-controlling interest - (0.3) (0.6)
Pre-tax share of profits from joint
ventures and associates excluding
net IAS 41 valuation movement 5.9 5.3 11.3
Gene editing costs 3.7 4.3 5.2
------------ ------------ --------
Adjusted operating profit including
joint ventures and associates, excluding
gene editing costs 54.7 43.7 81.2
Gene editing costs (3.7) (4.3) (5.2)
Adjusted operating profit including
joint ventures and associates 51.0 39.4 76.0
Net finance costs 6 (2.6) (2.8) (5.0)
------------ ------------ --------
Adjusted profit before tax 48.4 36.6 71.0
Adjusted earnings per share 14
Basic adjusted earnings per share 57.3p 43.5p 85.4p
Diluted adjusted earnings per share 56.9p 43.2p 84.7p
Adjusted results are the Alternative Performance Measures
('APMs') used by the Board to monitor underlying performance at a
Group and operating segment level, which are applied consistently
throughout. These APMs should be considered in addition to
statutory measures, and not as a substitute for or as superior to
them. For more information on APMs, see APM Glossary.
GENUS PLC
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 31 December 2020
Six months ended Six months Year ended
31 December ended 30 June 2020
2020 31 December
2019
GBPm GBPm GBPm GBPm GBPm GBPm
PROFIT FOR THE PERIOD 30.3 24.1 40.9
Items that may be reclassified
subsequently to profit
or loss
Foreign exchange translation
differences (39.4) (24.1) (4.9)
Fair value movement on
net investment hedges - 0.6 (0.1)
Fair value movement on
cash flow hedges 0.1 (0.2) (0.4)
Tax relating to components
of other comprehensive
income 6.2 3.2 (1.4)
(33.1) (20.5) (6.8)
-------- ------- ------
Items that may not be
reclassified subsequently
to profit or loss
Actuarial gain/(loss)
on retirement benefit
obligations 0.2 (26.7) (16.6)
Movement on pension asset
recognition restriction 0.6 13.6 10.4
Release of additional
pension liability 1.8 13.2 4.7
Tax relating to components
of other comprehensive
income (0.5) - 0.8
2.1 0.1 (0.7)
-------- ------- ------
Other comprehensive expense
for the period (31.0) (20.4) (7.5)
-------- ------- ------
TOTAL COMPREHENSIVE (EXPENSE)/INCOME
FOR THE PERIOD (0.7) 3.7 33.4
======== ======= ======
ATTRIBUTABLE TO:
Owners of the Company 0.4 3.5 33.1
Non-controlling interest (1.1) 0.2 0.3
-------- ------- ------
(0.7) 3.7 33.4
======== ======= ======
GENUS PLC
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 31 December 2020
Called
up Share Non-
share premium Own Trans-lation Hedging Retained controlling Total
capital account shares reserve reserve earnings Total interest equity
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
BALANCE AT 30 JUNE
2019 (restated*) 6.5 179.0 (0.1) 35.8 0.2 267.0 488.4 (1.3) 487.1
Foreign exchange
translation
differences, net
of tax - - - (6.4) - - (6.4) (0.1) (6.5)
Fair value movement
on net
investment hedges,
net of tax - - - 0.1 - - 0.1 - 0.1
Fair value movement
on cash flow hedges,
net of tax - - - - (0.4) - (0.4) - (0.4)
Actuarial loss on
retirement
benefit obligations,
net of tax - - - - - (10.4) (10.4) - (10.4)
Movement on pension
asset recognition
restriction, net
of tax - - - - - 6.8 6.8 - 6.8
Release of additional
pension liability,
net of tax - - - - - 2.9 2.9 - 2.9
Other comprehensive
expense for the
year - - - (6.3) (0.4) (0.7) (7.4) (0.1) (7.5)
Profit for the
year - - - - - 40.5 40.5 0.4 40.9
Total comprehensive
(expense)/income
for the year - - - (6.3) (0.4) 39.8 33.1 0.3 33.4
Recognition of
share-based
payments, net of
tax - - - - - 5.5 5.5 - 5.5
Dividends 8 - - - - - (18.3) (18.3) - (18.3)
Issue of ordinary
shares - 0.1 - - - - 0.1 - 0.1
BALANCE AT 30 JUNE
2020 6.5 179.1 (0.1) 29.5 (0.2) 294.0 508.8 (1.0) 507.8
Foreign exchange
translation
differences, net
of tax - - - (33.3) - - (33.3) 0.1 (33.2)
Fair value movement
on net - - - - - - - - -
investment hedges,
net of tax
Fair value movement
on cash flow hedges,
net of tax - - - - 0.1 - 0.1 - 0.1
Actuarial gain on
retirement
benefit obligations,
net of tax - - - - - 0.2 0.2 - 0.2
Movement on pension
asset recognition
restriction, net
of tax - - - - - 0.5 0.5 - 0.5
Release of additional
pension liability,
net of tax - - - - - 1.4 1.4 - 1.4
Other comprehensive
(expense)/income
for the period - - - (33.3) 0.1 2.1 (31.1) 0.1 (31.0)
Profit/(loss)
for
the period - - - - - 31.5 31.5 (1.2) 30.3
Total comprehensive
(expense)/income
for the period - - - (33.3) 0.1 33.6 0.4 (1.1) (0.7)
Recognition of
share-based
payments, net of
tax - - - - - 4.0 4.0 - 4.0
Adjustment arising
from changes in
non-controlling
interest - - - - - - - (0.2) (0.2)
Dividends 8 - - - - - (12.8) (12.8) - (12.8)
.
------- ------- ------ ------------ ------- -------- -------- ----------- --------
BALANCE AT 31 DECEMBER
2020 6.5 179.1 (0.1) (3.8) (0.1) 318.8 500.4 (2.3) 498.1
Called
up Share Non-
share premium Own Trans-lation Hedging Retained controlling Total
capital account shares reserve reserve earnings Total interest equity
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
BALANCE AT 30 JUNE
2019 (restated*) 6.5 179.0 (0.1) 35.8 0.2 267.0 488.4 (1.3) 487.1
Foreign exchange
translation
differences, net
of tax - - - (20.6) - - (20.6) (0.2) (20.8)
Fair value
movement
on net
investment
hedges,
net of tax - - - 0.5 - - 0.5 - 0.5
Fair value
movement
on cash flow
hedges,
net of tax - - - - (0.2) - (0.2) - (0.2)
Actuarial loss on
retirement
benefit
obligations,
net of tax - - - - - (22.1) (22.1) - (22.1)
Movement on
pension
asset
recognition
restriction, net
of tax - - - - - 11.3 11.3 - 11.3
Release of
additional
pension
liability,
net of tax - - - - - 10.9 10.9 - 10.9
Other
comprehensive
(expense)/income
for the period - - - (20.1) (0.2) 0.1 (20.2) (0.2) (20.4)
Profit
for the
period - - - - - 23.7 23.7 0.4 24.1
Total
comprehensive
(expense)/income
for the period - - - (20.1) (0.2) 23.8 3.5 0.2 3.7
Recognition of
share-based
payments, net of
tax - - - - - 1.3 1.3 - 1.3
Dividends 8 - - - - - (12.2) (12.2) - (12.2)
BALANCE AT 31
DECEMBER
2019 (restated*) 6.5 179.0 (0.1) 15.7 - 279.9 481.0 (1.1) 479.9
*see note 1 for details of the prior period restatement
GENUS PLC
CONDENSED CONSOLIDATED BALANCE SHEET
As at 31 December 2020
Notes (restated*)
31 December 31 December 30 June
2020 2019 2020
GBPm GBPm GBPm
Assets
Goodwill 99.4 101.5 105.6
Other intangible assets 9 68.7 77.1 76.2
Biological assets 10 294.2 287.1 310.1
Property, plant and equipment 11 110.0 107.8 117.9
Interests in joint ventures
and associates 12 28.4 24.4 22.7
Other investments 6.8 6.7 6.9
Other receivables 2.0 - 1.8
Deferred tax assets 3.3 2.7 3.7
Total non-current assets 612.8 607.3 644.9
Inventories 35.0 33.7 37.4
Biological assets 10 38.2 46.1 39.8
Trade and other receivables 101.5 96.8 100.8
Cash and cash equivalents 50.2 31.1 41.3
Income tax receivable 2.9 3.0 3.1
Derivative financial asset 17 0.9 0.3 1.2
Asset held for sale 0.2 0.2 0.2
Total current assets 228.9 211.2 223.8
------------- ------------- ---------
Total assets 841.7 818.5 868.7
Liabilities
Trade and other payables (92.5) (86.7) (95.0)
Interest-bearing loans and
borrowings (9.8) (8.7) (9.2)
Provisions 18 (3.7) (10.0) (4.0)
Deferred consideration 19 (1.0) (0.4) (7.5)
Obligations under leases (9.0) (7.5) (10.0)
Current tax liabilities (6.5) (2.9) (4.0)
Derivative financial liabilities 17 (0.4) (0.5) (0.5)
------------- ------------- ---------
Total current liabilities (122.9) (116.7) (130.2)
------------- ------------- ---------
*see note 1 for details of the prior period restatement
(restated*)
31 December 31 December 30 June
Notes 2020 2019 2020
GBPm GBPm GBPm
Trade and other payables (4.8) - (3.3)
Interest-bearing loans and
borrowings (105.0) (100.4) (103.6)
Retirement benefit obligations 16 (15.0) (20.5) (18.1)
Provisions 18 (10.9) (4.9) (11.8)
Deferred consideration 19 (0.4) (4.3) (1.2)
Deferred tax liabilities (60.1) (64.6) (65.5)
Derivative financial liabilities 17 (5.9) (5.5) (6.1)
Obligations under leases (18.6) (21.7) (21.1)
Total non-current liabilities (220.7) (221.9) (230.7)
Total liabilities (343.6) (338.6) (360.9)
Net assets 498.1 479.9 507.8
Equity
Called up share capital 6.5 6.5 6.5
Share premium account 179.1 179.0 179.1
Own shares (0.1) (0.1) (0.1)
Translation reserve (3.8) 15.7 29.5
Hedging reserve (0.1) - (0.2)
Retained earnings 318.8 279.9 294.0
Equity attributable to owners
of the Company 500.4 481.0 508.8
Non-controlling interest 2.8 4.4 4.6
Put option over non-controlling
interest (5.1) (5.5) (5.6)
Total non-controlling interest (2.3) (1.1) (1.0)
Total equity 498.1 479.9 507.8
*see note 1 for details of the prior period restatement
GENUS PLC
GROUP STATEMENT OF CASH FLOWS
For the six months ended 31 December 2020
Six months Six months Year
ended ended ended
31 December 31 December 30 June
Notes 2020 2019 2020
GBPm GBPm GBPm
Net cash flow from operating activities 15 38.1 24.1 65.8
Cash flows from investing activities
Dividends received from joint ventures
and associates - 0.2 2.5
Joint venture loan repayment - 1.2 1.2
Investment in joint venture (0.4) (2.2) (2.2)
Disposal of joint venture - 3.8 3.8
Deferred consideration paid (6.6) (1.3) (1.7)
Purchase of owned property, plant
and equipment (9.5) (11.1) (24.6)
Purchase of intangible assets (2.4) (5.9) (10.8)
Proceeds from sale of owned property,
plant and equipment 0.6 2.0 1.1
Net cash outflow from investing activities (18.3) (13.3) (30.7)
Cash flows from financing activities
Drawdown of borrowings 148.3 54.5 80.0
Repayment of borrowings (138.0) (46.0) (73.8)
Payment of lease liabilities (5.0) (5.1) (11.1)
Equity dividends paid (12.8) (12.2) (18.3)
Dividend to non-controlling interest (0.2) - -
Debt issue costs (1.9) - -
Issue of ordinary shares - - 0.1
Net cash outflow from financing activities (9.6) (8.8) (23.1)
Net increase in cash and cash equivalents 10.2 2.0 12.0
Cash and cash equivalents at beginning
of period 41.3 30.5 30.5
Net increase in cash and cash equivalents 10.2 2.0 12.0
Effect of exchange rate fluctuations
on cash and cash equivalents (1.3) (1.4) (1.2)
Total cash and cash equivalents at
end of period 50.2 31.1 41.3
GENUS PLC
ANALYSIS OF NET DEBT
For the six months ended 31 December 2020
At Net At 31
1 July cash Foreign Non-cash December
2020 flows exchange movement 2020
GBPm GBPm GBPm GBPm GBPm
Cash and cash equivalents 41.3 10.2 (1.3) - 50.2
-------- ------- ---------- ---------- ----------
Interest-bearing loans
- current (9.2) (0.7) 0.6 (0.5) (9.8)
Lease liabilities -current (10.0) 5.0 0.5 (4.5) (9.0)
-------- ------- ---------- ---------- ----------
(19.2) 4.3 1.1 (5.0) (18.8)
-------- ------- ---------- ---------- ----------
Interest-bearing loans
non-current (103.6) (7.7) 6.3 - (105.0)
Lease liabilities - non-current (21.1) - 1.0 1.5 (18.6)
-------- ------- ---------- ---------- ----------
(124.7) (7.7) 7.3 1.5 (123.6)
-------- ------- ---------- ---------- ----------
Total debt financing (143.9) (3.4) 8.4 (3.5) (142.4)
Net debt (102.6) 6.8 7.1 (3.5) (92.2)
======== ======= ========== ========== ==========
At At
1 July Adoption 1 July
of IFRS
2019 16 2019 Net
At 31
(post cash Foreign Non-cash December
(reported) leases adoption) flows exchange movement 2019
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Cash and
cash equivalents 30.5 - 30.5 2.0 (1.4) - 31.1
------------ --------- ----------- -------- --------- --------- ----------
Interest-bearing
loans -
current (2.1) - (2.1) (6.7) 0.3 (0.2) (8.7)
Lease liabilities
-current (2.2) (7.5) (9.7) 5.1 0.1 (3.0) (7.5)
------------ --------- ----------- -------- --------- --------- ----------
(4.3) (7.5) (11.8) (1.6) 0.4 (3.2) (16.2)
------------ --------- ----------- -------- --------- --------- ----------
Interest-bearing
loans non-current (101.9) - (101.9) (1.8) 3.3 - (100.4)
Lease liabilities
- non-current (3.9) (19.1) (23.0) - 1.1 0.2 (21.7)
------------ --------- ----------- -------- --------- --------- ----------
(105.8) (19.1) (124.9) (1.8) 4.4 0.2 (122.1)
Total debt
financing (110.1) (26.6) (136.7) (3.4) 4.8 (3.0) (138.3)
Net debt (79.6) (26.6) (106.2) (1.4) 3.4 (3.0) (107.2)
============ ========= =========== ======== ========= ========= ==========
Net debt is defined as the total of cash and cash equivalents,
interest-bearing loans, unamortised debt issue costs and lease
obligations.
GENUS PLC
NOTES TO THE CONDENSED SET OF FINANCIAL STATEMENTS
For the six months ended 31 December 2020
1. Basis of preparation
The unaudited Condensed Set of Financial Statements for the six
months ended 31 December 2020:
-- were prepared in accordance with International Accounting
Standard 34 'Interim Financial Reporting' ('IAS 34') and thereby
have been prepared in conformity with the requirements of the
Companies Act 2006 and the International Financial Reporting
Standards ('IFRSs') adopted pursuant to the Regulation (EC) No
1606/2002 as it applies in the European Union;
-- are presented on a condensed basis as permitted by IAS 34 and
therefore do not include all disclosures that would otherwise be
required in a full set of financial statements; these should be
read, therefore, in conjunction with the Genus plc Annual Report
2020;
-- includes all adjustments, consisting of normal recurring
adjustments, necessary for a fair statement of the results for the
periods presented;
-- do not constitute statutory accounts within the meaning of
section 435 of the Companies Act 2006; and
-- were approved by the Board of Directors on 24 February 2021.
The information relating to the year ended 30 June 2020 is an
extract from the published financial statements for that year,
which have been delivered to the Registrar of Companies. The
auditor's report on those financial statements was not qualified
and did not contain statements under section 498(2) or (3) of the
Companies Act 2006.
The unaudited Condensed Set of Financial Statements for the six
months ended 31 December 2020 has not been reviewed by our
Auditor.
The unaudited condensed set of financial statements have been
prepared on the basis of the accounting policies set out in the
Annual Report 2020. The Genus plc Annual Report 2020 (a copy of
which is available on the Genus plc website at www.genusplc.com )
sets out on pages 44-46 a number of risks and uncertainties that
might impact upon the performance of the Group. There has been no
material change to the principal risks that might affect the
performance of the Group in the current financial year.
As part of the directors' consideration of the appropriateness
of adopting the going concern basis in preparing the financial
statements, they have considered
-- these risks and uncertainties including uncertainty arising
from Covid-19 and its impact on our people, our customers and our
critical business processes, taking into account the resilient
performance of the Group to date in dealing with the challenges of
Covid-19;
-- Genus's results to 31 December 2020 including it's strong
cash position with free cash flow of GBP26.6m (2019: GBP10.5m) and
net debt of GBP92.2m (2019: GBP107.2m) and had substantial headroom
of GBP135.8m (2019: GBP125.6m) under the Group's credit facilities
of GBP241m; and
-- Genus's new credit facility agreement which consists of a
GBP150m multi-currency RCF, a 125m US dollar RCF and a 20m US
dollar bond and guarantee facility. The term of the new facility is
for three years with an option to extend the maturity date before
the first and second anniversaries of the signing date for a
further year. The facility also includes an uncommitted GBP100m
accordion option which can be requested on a maximum of three
occasions over the lifetime of the facility to fund the Group's
business development plans.
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 half-yearly report and the Condensed
Set of Financial Statements.
The preparation of the Condensed Set of Financial Statements
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the balance sheet date, and
the reported amounts of revenue and expenses during the period.
Actual results could vary from these estimates. The estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period or in
the period of revision and future periods if the revision affects
both current and future periods.
For the year ended 30 June 2020, we restated the prior period
balances sheets in accordance with IAS 8 and in accordance with IAS
1 (revised), to update an input used in the valuation of our
porcine biological assets that was not in line with operational
data, reducing the biological asset value by GBP20.5m and related
deferred tax balances of GBP5.3m. We have therefore also
reclassified the comparative period to 31 December 2019 to reflect
these previously reported changes, so to be consistent with the
2020 Annual Report. For the six months ended 31 December 2019,
there has been no material effect on the Group Income Statement,
Group Statement of Comprehensive Income and no impact on the Group
Statement of Cash Flows. Therefore, there has been no restatement
of the Group Income Statement and there is no adjustment to
earnings per share.
2. Accounting policies and non-GAAP measures
New standards and interpretations
In the current period, the Group has applied a number of
amendments to IFRSs issued by the International Accounting
Standards Board that are mandatorily effective for an accounting
period that begins after 1 January 2020 and has been implemented
with effect from 1 July 2020.
-- Applying IFRS 9 'Financial Instruments' with IFRS 4
'Insurance Contracts' (Amendments to IFRS 4);
-- Amendments to References to the Conceptual Framework in IFRS Standards;
-- Definition of Material (Amendments to IAS 1 and IAS 8);
-- Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7);
-- Definition of a Business (Amendments to IFRS 3);
-- Covid-19-Related Rent Concessions (Amendment to IFRS 16).
Their addition has not had any material impact on the
disclosures, or the 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 in accordance with the Companies Act 2006). The Group will
continue to assess the impact of these amendments prior to their
adoption.
-- Classification of Liabilities as Current or Non-Current
(Amendments to IAS 1);
-- Property, Plant and Equipment - Proceeds before Intended Use
(Amendments to IAS 16);
-- Annual Improvements 2018-2020 Cycle;
-- Onerous Contracts - Cost of Fulfilling a Contract (Amendments
to IAS 37);
-- Amendments to IFRS 17;
Alternative performance measures ('APMs')
In reporting nancial information, the Group presents Alternative
Performance Measures, ('APMs'), which are not de ned or speci ed
under the requirements of IFRS and which are not considered to be a
substitute for, or superior to, IFRS measures.
The Group believes that these APMs provide stakeholders with
additional helpful information on the performance of the business.
The APMs are consistent with how we plan our business performance
and report on it in our internal management reporting to the Board
and the executive leadership team. 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 at the end of this release.
3. Foreign currencies
The principal exchange rates used were as follows:
Average Closing
----------------------------------- ----------------------------------
Six months Six months Year
ended 31 ended 31 ended 30
December December 30 June 31 December 31 December June
2020 2019 2020 2020 2019 2020
US Dollar/GBP 1.32 1.26 1.26 1.37 1.33 1.24
Euro/GBP 1.11 1.14 1.14 1.12 1.18 1.10
Brazilian Real/GBP 7.18 5.13 5.74 7.10 5.33 6.77
Mexican Peso/GBP 28.07 24.50 26.08 27.16 25.11 28.52
Chinese Yuan/GBP 8.90 8.88 8.89 8.92 9.23 8.75
Russian Rouble/GBP 100.37 81.02 85.17 101.11 82.30 88.19
The assets and liabilities of foreign operations, including
goodwill arising on consolidation, are translated into Sterling at
the prevailing exchange rates at the balance sheet date. We
translate these operations' revenues and expenses using an average
rate for the period.
4. 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 Group Chief Executive and
the Board to allocate resources to the segments and to assess their
performance.
The Group's operating and reporting structure comprises of three
operating segments; Genus PIC, Genus ABS and 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
-- Research and Development - our global spend on research and
development.
A segment analysis of revenue, operating profit and segment
assets and liabilities are detailed below. We do not include our
adjusting items in the revenue and operating profit segments as we
believe these do not reflect the trading progress of the segments.
The accounting policies of the reportable segments are the same as
the Group's accounting policies as described in the financial
statements.
Revenue
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2020 2019 2020
GBPm GBPm GBPm
Genus PIC 152.9 146.5 298.8
Genus ABS 129.0 118.0 237.6
Research and Development
----------------------------------------- ------------- ------------- ------------
Porcine Product Development 3.0 5.0 11.7
Bovine Product Development 0.8 1.2 3.3
Gene Editing - - -
Other Research and Development - - -
----------------------------------------- ------------- ------------- ------------
3.8 6.2 15.0
------------- ------------- ------------
285.7 270.7 551.4
------------- ------------- ------------
Adjusted operating profit by segment is set out below and
reconciled to the Group's adjusted operating profit. A
reconciliation of adjusted operating profit to profit for the
period is shown on the face of the Condensed Consolidated Income
Statement.
Adjusted operating profit
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2020 2019 2020
GBPm GBPm GBPm
Genus PIC 63.0 57.3 113.3
Genus ABS 18.7 14.6 32.5
Research and Development
----------------------------------------- ------------- ------------- -------------
Porcine Product Development (10.3) (12.0) (28.9)
Bovine Product Development (9.3) (9.4) (20.6)
Gene Editing (3.7) (4.3) (5.2)
Other Research and Development (5.7) (4.8) (10.2)
----------------------------------------- ------------- ------------- -------------
(29.0) (30.5) (64.9)
------------- ------------- -------------
Adjusted segment operating profit 52.7 41.4 80.9
Central (7.6) (7.0) (15.6)
------------- ------------- -------------
Adjusted operating profit 45.1 34.4 65.3
------------- ------------- -------------
Our business is not highly seasonal and our customer base is
diversified, with no individual customer generating more than 2% of
revenue.
Exceptional items, not included within adjusted operating
profit, of GBP5.1m expense (2019: GBP12.8m expense), relate to
Genus ABS (GBP1.6m expense), Genus PIC (GBPnil) and our central
segment (GBP3.5m expense). Note 5 provides the details of these
exceptional items.
We consider share-based payment expenses, not included within
adjusted operating profit, on a Group-wide basis and do not
allocate them to reportable segments.
Segment assets Segment liabilities
31 (restated*) 30 (restated*) 30
December 31 December June 31 December 31 December June
2020 2019 2020 2020 2019 2020
GBPm GBPm GBPm GBPm GBPm GBPm
Genus PIC 253.9 242.1 247.6 (52.7) (62.4) (72.6)
Genus ABS 198.5 184.8 201.3 (57.3) (47.5) (52.9)
Research and
Development
--------------------------- --------- ------------ ------ ----------- ------------ -------
Porcine Product
Development 216.7 211.6 226.3 (51.9) (50.7) (56.3)
Bovine Product
Development 130.9 134.0 146.5 (28.9) (26.4) (33.6)
Research 6.4 7.6 7.2 (3.7) (1.5) (3.5)
--------------------------- --------- ------------ ------ ----------- ------------ -------
354.0 353.2 380.0 (84.5) (78.6) (93.4)
Segment total 806.4 780.1 828.9 (194.5) (188.5) (218.9)
Central 35.3 38.4 39.8 (149.1) (150.1) (142.0)
--------- ------------ ------ ----------- ------------ -------
Total 841.7 818.5 868.7 (343.6) (338.6) (360.9)
========= ============ ====== =========== ============ =======
*see note 1 for details of the prior period restatement
Revenue by product
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2020 2019 2020
GBPm GBPm GBPm
Sale of animals, semen, embryos, products
and ancillary services 212.0 199.9 408.1
Royalties 70.2 67.4 136.2
Consulting services 3.5 3.4 7.1
------------- ------------- ---------
285.7 270.7 551.4
============= ============= =========
Revenue from contracts with customers
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2020 2019 2020
GBPm GBPm GBPm
Genus PIC 151.5 144.8 295.5
Genus ABS 119.1 108.0 217.7
Research and Development 3.8 6.2 14.9
------------- ------------- ---------
Recognised at a point in time 274.4 259.0 528.1
------------- ------------- ---------
Genus PIC 1.4 1.7 3.3
Genus ABS 9.9 10.0 19.9
Research and Development - - 0.1
------------- ------------- ---------
Recognised over time 11.3 11.7 23.3
------------- ------------- ---------
Total Revenue 285.7 270.7 551.4
============= ============= =========
5. Exceptional items
Six months Six months Year
ended ended ended
31 December 31 December 30
2020 2019 June
2020
Operating expenses: GBPm GBPm GBPm
Litigation and damages (1.7) (12.0) (16.4)
Pension related (3.3) - -
Acquisition and integration (0.1) (0.5) (2.1)
Other - (0.3) (0.7)
------------ ------------ ------
(5.1) (12.8) (19.2)
------------ ------------ ------
Litigation
Litigation includes legal fees and related costs of GBP1.7m
(2019: GBP3.8m) related to the actions between ABS Global, Inc.
('ABS') and Inguran, LLC (aka STGenetics ('ST')) and GBPnil (2019:
GBP8.2m) for damages and costs related to patent infringement,
which is included in non-current provisions (see note 18).
ST litigation activities six-month period ended 31 December
2020.
The ABS I and ABS II proceedings in the periods before the year
ended 30 June 2020 are more fully described in the Notes to the
Financial Statements in previous Annual Reports.
On 29 January 2020, ST filed a new US complaint against ABS
('ABS III'). ABS has prepared and filed a response to the ABS III
complaint, including a motion to dismiss, on the basis that all
these issues were fully resolved in either the ABS I or ABS II
litigations. The parties await the court's decision.
On 10 March 2020, the USPTO issued patent 10,583,439 (the "439
patent'), and subsequently ST asked the court for permission to
file a supplemental complaint in ABS III asserting infringement of
the '439 patent. ABS believes that ST's claim for infringement
falls short and has filed an opposition to ST's request. On 15
April 2020, ST filed a new complaint ('ABS IV'), asserting the same
claim of infringement of the '439 patent alleged in its
supplemental complaint and then moved to consolidate the ABS IV and
ABS III litigation. ABS has opposed this action and has filed a
motion for summary dismissal. On 23 June 2020, the USPTO issued
patent 10,689,210 (the '210 patent'), and on 6 July 2020, ST sought
a second supplement of ABS III by adding a claim of '210 patent
infringement. ABS has opposed this action. The parties await the
court's decision. On 26 October 2020 and 10 December 2020 ABS filed
Inter Partes Review against the '439 and '210 patents.
ABS has also sought judgments as a matter of law ('JMOL') in
relation to the invalidity of all three of the patents considered
in ABS II, JMOLs in relation to the non-infringement of two of
those patents, and a reduction in damages awarded by the jury. The
parties await the court's decision.
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 patent 7,311,476 asserted in ABS
II. ABS had already sought the revocation of the '790 patent in
April 2017 before the Indian Patent Office and has now consolidated
the revocation petition as a counterclaim in the Indian court
proceedings.
Pension related
On 20 November 2020, the High Court ruled that individual
transfer payments made since 17 May 1990 would need to be equalised
for the effects of GMP. This judgment followed on from the previous
judgment on 26 October 2018, where the High Court ruled that
schemes had a legal obligation to pay benefits allowing for GMP
equalisation, resulting in an additional liability being
recognised. The previous judgment had not considered historic
transfer values. Genus's legacy pension schemes are also affected
by this ruling, resulting in an aggregate past service charge of
GBP3.3m in the period, being GBP0.9m for the Dalgety Pension Fund
('DPF') and GBP2.4m for the Milk Pension Fund ('MPF').
Acquisition and integration
During the period GBP0.1m (2019: GBP0.5m) of expenses were
incurred in relation to acquisitions and integration.
6. Net finance costs
Six months Six months Year
ended ended ended
31 December 31 December 30
2020 2019 June
2020
GBPm GBPm GBPm
Interest payable on bank loans and overdrafts (1.4) (1.7) (2.9)
Amortisation of debt issue costs (0.5) (0.2) (0.4)
Other interest payable - (0.2) (0.1)
Unwinding of discount put options (0.3) - (0.5)
Interest on lease liabilities (0.4) (0.5) (1.0)
Net interest cost in respect of pension
scheme liabilities (0.2) (0.3) (0.4)
------------ ------------ ------
Total interest expense (2.8) (2.9) (5.3)
Interest income on bank deposits 0.2 0.1 0.3
------------ ------------ ------
Total interest income 0.2 0.1 0.3
------------ ------------ ------
Net finance costs (2.6) (2.8) (5.0)
------------ ------------ ------
7. Taxation
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2020 2019 2020
GBPm GBPm GBPm
Current tax 8.2 3.7 12.7
Deferred tax 0.2 2.6 (2.1)
-------------- ------------------ ---------------
Income tax expense 8.4 6.3 10.6
-------------- ------------------ ---------------
The tax charge for the period of GBP8.4m (2019: GBP6.3m) on the
statutory profit represents an effective tax rate of 21.7% (2019:
20.7%).
The tax charge on adjusted profits for the period is GBP11.1m
(2019: GBP8.4m), which represents a tax rate on adjusted profits of
22.9% (2019: 23.0%). The Group tax charge benefits by approximately
2.5% from the share of Group profits arising in China, which is
taxed at an average rate of 15% due to the availability of tax
relief on owned production agricultural activities.
In common with other UK Groups, the Group has a potential
exposure to the State Aid challenge of the European Commission to
group financing arrangements put in place under the UK's CFC Finco
regime. The maximum potential exposure is GBP4.3m. Based on a
comparative benchmarking study of the significant people functions
performed in the UK relating to these structures, the company has
made a provision of GBP1m for this uncertain tax position in a
previous year and we believe this provision remains adequate. In
February 2021 the company received correspondence from HMRC
advising that they would shortly issue a charging notice for
GBP1.2m in respect of these exposures. The company intends to
appeal this charging notice.
There is a deferred tax liability at the period end of GBP60.1m
(2019: GBP64.6m) which mainly relates to the recognition at fair
value of biological assets and intangible assets arising on
acquisition and a deferred tax asset of GBP3.3m (2019: GBP2.7m)
relating to future tax deductions in respect of pension scheme
liabilities, share scheme awards and financial instruments.
8. Dividends
Six months Six months Year
ended ended ended
31 December 31 December 30
2020 2019 June
2020
Amounts recognised as distributions GBPm GBPm GBPm
to equity holders in the period:
Final dividend
Final dividend for the year ended
30 June 2020 of 19.7 pence per share 12.8 - -
Final dividend for the year ended
30 June 2019 of 18.8 pence per share - 12.2 12.2
Interim dividend
Interim dividend for the year ended
30 June 2020 of 9.4 pence per share - - 6.1
------------- ------------- -------
12.8 12.2 18.3
============= ============= =======
The final dividend for the year ended 30 June 2020 was approved
at the Company Annual General Meeting on 25 November 2020 and paid
on 11 December 2020.
On 24 February 2021, the Directors proposed an interim dividend
of 10.3 pence per share payable on 1 April 2021.
9. Other intangible assets
Brand, Separately
Porcine multiplier identified Patents,
and bovine contracts acquired Assets licence
genetics and customer intangible under and
Technology relationships assets Software Constructi-on IntelliGen other Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Cost
Balance at 1 July
2019 53.0 85.1 138.1 14.7 11.0 24.0 4.4 192.2
Additions - - - 0.1 8.9 1.8 - 10.8
Disposals - - - (0.6) - (1.0) - (1.6)
Transfers - - - 13.6 (13.6) - - -
Effect of movements
in exchange rates (1.0) 0.8 (0.2) 0.1 - 0.6 - 0.5
Balance at 30 June
2020 52.0 85.9 137.9 27.9 6.3 25.4 4.4 201.9
========== ============== =========== ========= ============== =========== ========= ========
Additions - - - - 1.5 0.9 - 2.4
Disposals - - - (0.8) - - - (0.8)
Transfers - - - 0.2 (0.2) - - -
Effect of movements
in exchange rates (0.3) (6.8) (7.1) (0.6) - (2.5) (0.1) (10.3)
Balance at 31 December
2020 51.7 79.1 130.8 26.7 7.6 23.8 4.3 193.2
========== ============== =========== ========= ============== =========== ========= ========
Amortisation and
impairment losses
Balance at 1 July
2019 30.8 61.8 92.6 11.6 - 5.0 2.9 112.1
Impairment - - - 0.2 - - - 0.2
Disposal - - - - - (0.4) - (0.4)
Amortisation for
the year 2.9 5.6 8.5 1.6 - 2.3 1.0 13.4
Effect of movements
in exchange rates (0.5) 0.8 0.3 0.1 - - - 0.4
Balance at 30 June
2020 33.2 68.2 101.4 13.5 - 6.9 3.9 125.7
========== ============== =========== ========= ============== =========== ========= ========
Amortisation for
the period 1.4 2.3 3.7 1.3 - 1.0 0.1 6.1
Disposal - - - (0.3) - - - (0.3)
Effect of movements
in exchange rates (0.1) (5.6) (5.7) (0.5) - (0.7) (0.1) (7.0)
Balance at 31 December
2020 34.5 64.9 99.4 14.0 - 7.2 3.9 124.5
========== ============== =========== ========= ============== =========== ========= ========
Carrying amounts
At 31 December 2020 17.2 14.2 31.4 12.7 7.6 16.6 0.4 68.7
========== ============== =========== ========= ============== =========== ========= ========
At 30 June 2020 18.8 17.7 36.5 14.4 6.3 18.5 0.5 76.2
========== ============== =========== ========= ============== =========== ========= ========
Included within the Software class of assets is GBP10.6m (30
June 2020: GBP11.5m) and included in assets in the course of
construction is GBP7.5m (30 June 2020: GBP5.7m) that relate to the
ongoing development costs of GenusOne, our single global enterprise
system.
10. Biological assets
Fair value of biological assets Bovine Porcine Total
GBPm GBPm GBPm
Balance at 1 July 2020 107.2 242.7 349.9
Increases due to purchases 5.9 57.4 63.3
Decreases attributable to sales - (111.6) (111.6)
Decrease due to harvest (11.1) (10.7) (21.8)
Changes in fair value less estimated
sale costs 3.9 77.4 81.3
Effect of movements in exchange rates (9.0) (19.7) (28.7)
------- ------------ --------
Balance at 31 December 2020 96.9 235.5 332.4
======= ============ ========
Non-current biological assets 96.9 197.3 294.2
Current biological assets - 38.2 38.2
------- ------------ --------
Balance at 31 December 2020 96.9 235.5 332.4
======= ============ ========
Balance at 1 July 2019 (restated*) 98.7 228.5 327.2
Increases due to purchases 6.6 53.9 60.5
Decreases attributable to sales - (112.5) (112.5)
Decrease due to harvest (11.1) (12.3) (23.4)
Changes in fair value less estimated
sale costs 13.1 82.5 95.6
Effect of movements in exchange rates (4.4) (9.8) (14.2)
------- ------------ --------
Balance at 31 December 2019 (restated*) 102.9 230.3 333.2
======= ============ ========
Non-current biological assets 102.9 184.2 287.1
Current biological assets - 46.1 46.1
------- ------------ --------
Balance at 31 December 2019 (restated*) 102.9 230.3 333.2
======= ============ ========
Balance at 1 July 2019 (restated*) 98.7 228.5 327.2
Increases due to purchases 17.5 118.7 136.2
Decreases attributable to sales - (217.3) (217.3)
Decrease due to harvest (24.5) (22.7) (47.2)
Changes in fair value less estimated
sale costs 13.5 130.6 144.1
Effect of movements in exchange rates 2.0 4.9 6.9
------- ------------ --------
Balance at 30 June 2020 107.2 242.7 349.9
======= ============ ========
Non-current biological assets 107.2 202.9 310.1
Current biological assets - 39.8 39.8
------- ------------ --------
Balance at 30 June 2020 107.2 242.7 349.9
======= ============ ========
*see note 1 for details of the prior period restatement
Bovine
Bovine biological assets include GBP8.2m (2019: GBP5.4m)
representing the fair value of bulls owned by third parties but
managed by the Group, net of expected future payments to such third
parties, which are therefore treated as assets held under finance
leases. There are no movements in the carrying value of the bovine
biological assets in respect of sales or other changes during the
period.
A risk adjusted rate of 8.8% (2019: 8.7%) has been used to
discount future net cash flows from the sale of bull semen.
Decreases due to harvest represent the semen extracted from the
biological assets. Inventories of such semen are shown as
biological asset harvest.
Porcine
Included in increases due to purchases is the aggregate increase
arising during the period on initial recognition of biological
assets in respect of multiplier purchases, other than parent gilts,
of GBP23.4m (2019: GBP18.0m).
Decreases attributable to sales during the period of GBP111.6m
(2019: GBP112.5m) include GBP34.7m (2019: GBP33.5m) 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 GBP46.0m (2019: GBP49.2m) relating to the fair
value of the retained interest in the genetics in respect of
animals, other than parent gilts, sold to customers under royalty
contracts in the period.
Total revenue in the period, including parent gilts, includes
GBP109.1m (2019: GBP103.0m) in respect of these contracts,
comprising GBP34.2m (2019: GBP35.5m) on initial transfer of animals
and semen to customers and GBP74.9m (2019: GBP67.4m) in respect of
royalties received.
A risk adjusted rate of 8.8% (2019: 11.0%) 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 (2019: seven) and their estimated
useful lifespan is 1.4 years (2019: 1.4 years).
Six months ended 31 December 2020 Bovine Porcine Total
GBPm GBPm GBPm
Net IAS 41 valuation movement on biological
assets*
Changes in fair value of biological assets 3.9 77.4 81.3
Inventory transferred to cost of sales at
fair value (10.5) (10.7) (21.2)
Biological assets transferred to cost of
sales at fair value - (56.4) (56.4)
(6.6) 10.3 3.7
Fair value movements in related financial
derivative - (0.2) (0.2)
(6.6) 10.1 3.5
Six months ended 31 December 2019 Bovine Porcine Total
GBPm GBPm GBPm
Net IAS 41 valuation movement on biological
assets*
Changes in fair value of biological assets 13.1 82.5 95.6
Inventory transferred to cost of sales at
fair value (9.7) (12.3) (22.0)
Biological assets transferred to cost of
sales at fair value - (59.5) (59.5)
3.4 10.7 14.1
Fair value movements in related financial
derivative - (0.8) (0.8)
3.4 9.9 13.3
Year ended 30 June 2020 Bovine Porcine Total
GBPm GBPm GBPm
Net IAS 41 valuation movement on biological
assets*
Changes in fair value of biological assets 13.5 130.6 144.1
Inventory transferred to cost of sales at
fair value (10.9) (22.7) (33.6)
Biological assets transferred to cost of
sales at fair value - (95.1) (95.1)
2.6 12.8 15.4
Fair value movements in related financial
derivative - 0.4 0.4
2.6 13.2 15.8
* 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.
11. Property, plant and equipment
Plant, Plant,
motor motor Total
vehicles Assets Total Land vehicles Right
Land and and under Owned and and of Use
buildings equipment construction Assets Buildings equipment Assets Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Cost or
deemed cost
Balance at 1
July
2019 62.1 91.3 4.7 158.1 - - - 158.1
Recognised on
the
adoption of
IFRS
16 - - - - 19.7 6.9 26.6 26.6
Transfers on
the
adoption of
IFRS
16 - (12.2) - (12.2) - 12.2 12.2 -
Additions 0.4 9.4 14.8 24.6 1.9 7.2 9.1 33.7
Transfers 6.6 4.7 (11.3) - - - - -
Disposals (1.6) (5.4) - (7.0) - (2.7) (2.7) (9.7)
Effect of
movements
in exchange
rates 0.4 - - 0.4 0.3 0.4 0.7 1.1
Balance at 30
June
2020 67.9 87.8 8.2 163.9 21.9 24.0 45.9 209.8
Additions 0.2 1.9 7.4 9.5 1.0 2.7 3.7 13.2
Transfers 3.5 2.6 (6.1) - - - - -
Disposals (0.3) (1.3) - (1.6) (1.5) (1.3) (2.8) (4.4)
Effect of
movements
in exchange
rates (5.9) (6.5) (0.6) (13.0) (1.4) (1.3) (2.7) (15.7)
Balance at 31
December
2020 65.4 84.5 8.9 158.8 20.0 24.1 44.1 202.9
Depreciation
and
impairment
losses
Balance at 1
July
2019 20.8 51.3 - 72.1 - - - 72.1
Transfer of
the adoption
of IFRS 16 - (4.8) - (4.8) - 4.8 4.8 -
Depreciation
for
the year 3.8 9.3 - 13.1 4.4 6.5 10.9 24.0
Disposals (0.7) (2.7) - (3.4) - (1.5) (1.5) (4.9)
Effect of
movements
in exchange
rates 0.4 - - 0.4 - 0.3 0.3 0.7
Balance at 30
June
2020 24.3 53.1 - 77.4 4.4 10.1 14.5 91.9
Depreciation
for
the period 1.6 5.0 - 6.6 1.8 3.5 5.3 11.9
Disposals (0.2) (0.8) - (1.0) (0.9) (1.2) (2.1) (3.1)
Effect of
movements
in exchange
rates (2.7) (4.2) - (6.9) (0.3) (0.6) (0.9) (7.8)
Balance at 31
December
2020 23.0 53.1 - 76.1 5.0 11.8 16.8 92.9
Carrying
amounts
At 31
December
2020 42.4 31.4 8.9 82.7 15.0 12.3 27.3 110.0
At 30 June
2020 43.6 34.7 8.2 86.5 17.5 13.9 31.4 117.9
12. Interests in joint ventures and associates
The Group's share of profit after tax in its equity accounted
investees for the six months ended 31 December 2020 was GBP5.8m
(2019: GBP5.1m).
The carrying value of the investment is reconciled as
follows:
31 31
December December
2020 2019
GBPm GBPm
Balance at 1 July 22.7 23.6
Share of post-tax retained profits of joint ventures
and associates 5.8 5.1
Additions 0.4 2.2
Disposal proceeds - (3.8)
Loan repayment - (1.2)
Dividend received - (0.2)
Effect of other movements including exchange rates (0.5) (1.3)
Balance at 31 December 28 .4 24.4
Summary financial information for equity accounted investees,
adjusted for the Group's percentage ownership, is shown below:
Net IAS 41
valuation
movement
on biological Profit
Revenue assets Expenses Taxation after tax
Income statement GBPm GBPm GBPm GBPm GBPm
Six months ended 31 December
2020 20.6 2. 1 (14.7) (2.2) 5.8
======= ============== ======== ======== ==========
Six months ended 31 December
2019 16.8 1.5 (11.5) (1.7) 5.1
======= ============== ======== ======== ==========
Year ended 30 June 2020 33.5 (0.1) (22.2) (2.3) 8.9
======= ============== ======== ======== ==========
13. Related party transactions
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note.
Bomaz, Inc. and Bogz Dairy, LLC, are well recognised breeders in
the industry, and are related parties to the Group as these
entities are under the control of relatives of Nate Zwald, our ABS
Dairy COO.
We transact with Bomaz, Inc. and Bogz Dairy, LLC as part of our
bull product development effort, under a variety of contracts and
agreements. Payments in the six months ended 31 December 2020
amounted to GBP0.4m (2019: GBP1.0m). As at 31 December 2020, the
balance owing to these entities was GBPnil (2019: GBPnil), all
amounts were settled in cash.
These related party transactions were made on terms equivalent
to those that prevail in arms' length transactions.
Other related party transactions
Transactions between the Group and its joint ventures and
associates are described below:
Transaction value Balance outstanding
Six months Six months
ended 31 ended 31 Year 31 December 31 December 30
December December ended 2020 2019 June
2020 2019 30 June 2020
2020
GBPm GBPm GBPm GBPm GBPm GBPm
Sale of goods and
services to joint
ventures and associates - - (1.2) - - -
Purchase of goods
and services from
joint ventures
and associates 3.3 0.3 3.1 (1.0) (0.2) (1.6)
========== ========== ========= ============= ============= =======
All outstanding balances with joint ventures and associates are
priced on an arm's length basis and are to be settled in cash
within six months of the reporting date. None of the balances are
secured.
14. Earnings per share
Six months Six months Year
ended ended ended
31 31 30
December December June
2020 2019 2020
000s 000s 000s
Weighted average number of ordinary
shares (basic) 65,056 64,868 64,908
Dilutive effect of share options and
awards 554 485 519
Weighted average number of ordinary
shares for the purpose of diluted earnings
per share 65,610 65,353 65,427
Year
Six months Six months ended
ended ended 30
31 December 31 December June
2020 2019 2020
Earnings per share
Basic earnings per share 48.4p 36.5p 62.4p
Diluted earnings per share 48.0p 36.3p 61.9p
Adjusted earnings per share
Adjusted earnings per share 57.3p 43.5p 85.4p
Diluted adjusted earnings per share 56.9p 43.2p 84.7p
Earnings per share measures are calculated on the weighted
average number of ordinary shares in issue during the period. As in
previous periods, adjusted earnings per share have been shown,
since the Directors consider that this alternative measure gives a
more comparable indication of the Group's trading performance.
Basic earnings per share is based on the net profit attributable
to owners of the Company for the period of GBP31.5m (six months
ended 31 December 2019: GBP23.7m; year ended 30 June 2020:
GBP40.5m) divided by weighted average number of ordinary shares
(basic and diluted) as calculated above.
Adjusted earnings per share is calculated on profit for the
period before net IAS 41 valuation movement on biological assets,
amortisation of acquired intangible assets, share-based payment
expense and exceptional items, after charging taxation associated
with those profits, of GBP37.3m (six months ended 31 December 2019:
GBP28.2m; year ended 30 June 2020: GBP55.4m), which is calculated
as follows:
Adjusted earnings Six months Six months Year
ended ended ended
31 31 30
December December June
2020 2019 2020
GBPm GBPm GBPm
Profit before tax 38.7 30.4 51.5
Add/(deduct):
Net IAS 41 valuation movement on
biological assets (3.5) (13.3) (15.8)
Amortisation of acquired intangible
assets 3.7 4.0 8.5
Share-based payment expense 4.3 2.8 5.8
Exceptional items 5.1 12.8 19.2
Net IAS 41 valuation movement on
biological assets in joint ventures
and associates (2.1) (1.5) 0.1
Tax on joint ventures and associates 2.2 1.7 2.3
Attributable to non-controlling
interest - (0.3) (0.6)
Adjusted profit before tax 48.4 36.6 71.0
Adjusted tax charge (11.1) (8.4) (15.6)
Adjusted profit after tax 37.3 28.2 55.4
Effective tax rate on adjusted profit 22.9% 23.0% 22.0%
15. Cash flow from operating activities
Six months Six months Year
ended ended ended
31 31 December 30
December 2019 June
2020 2020
GBPm GBPm GBPm
Profit for the period 30.3 24.1 40.9
Adjustment for:
Net IAS 41 valuation movement on biological
assets (3.5) (13.3) (15.8)
Amortisation of acquired intangible
assets 3.7 4.0 8.5
Share-based payment expense 4.3 2.8 5.8
Share of profit of joint ventures and
associates (5.8) (5.1) (8.9)
Finance costs (net) 2.6 2.8 5.0
Income tax expense 8.4 6.3 10.6
Exceptional items 5.1 12.8 19.2
Adjusted operating profit 45.1 34.4 65.3
Depreciation of property plant and equipment 11.9 10.5 24.0
Loss on disposal of property plant and
equipment - 0.1 3.7
Loss on disposal of intangible assets 0.5 - 1.2
Amortisation and impairment of intangible
assets 2.4 2.4 5.1
Adjusted earnings before interest, tax,
depreciation and amortisation 59.9 47.4 99.3
Cash impact of exceptional items (1.8) (2.7) (5.8)
Other movements in biological assets
and harvested produce (7.7) (4.9) (2.9)
Decrease in provisions and release in
deferred consideration (0.4) (2.1) (2.2)
Additional pension contribution in excess
of pension charge (3.2) (3.6) (7.9)
Other (0.6) 0.2 (0.9)
Operating cash flows before movement
in working capital 46.2 34.3 79.6
Decrease/(increase) in inventories 0.6 (0.8) 0.1
Increase in receivables (5.7) (2.2) (8.8)
Increase in payables 3.9 1.6 12.0
Cash generated by operations 45.0 32.9 82.9
Interest received 0.2 0.1 0.3
Interest and other finance costs paid (1.4) (1.9) (3.4)
Interest on leased assets (0.4) (0.4) (1.0)
Cash flow from derivative financial
instruments - - 0.5
Income taxes paid (5.3) (6.6) (13.5)
Net cash from operating activities 38.1 24.1 65.8
=========== ============= =======
16. Retirement benefit obligations
The Group has a number of defined contribution and defined
benefit pension schemes covering many of its employees, further
details can be found in the Genus plc Annual Report 2020. The
aggregated position of defined benefit schemes are provided
below:
31 December (restated*) 30 June
2020 31 December 2020
2019
GBPm GBPm GBPm
Present value of funded obligations 1,166.1 1,189.1 1,159.5
Present value of unfunded obligations 9.0 8.8 9.8
Total present value of obligations 1,175.1 1,197.9 1,169.3
Fair value of plan assets (1,189.0) (1,196.4) (1,182.5)
Restricted recognition of asset (DPF) 8.1 5.5 8.7
Recognition of additional liability
(MPF) 20.8 13.5 22.6
Recognised liability for defined benefit
obligations 15.0 20.5 18.1
*The December 2019 comparative figures have been restated to
include in the aggregated disclosures the assets and related
liabilities of the bulk annuity policies. The deficit recognised in
2019 has not been impacted.
The principal actuarial assumptions (expressed as weighted
averages) are:
31 31 December 30
December 2019 June
2020 2020
% % %
Discount rate 1.45 2.05 1.65
Retail Price Index 2.60 2.95 2.80
Consumer Price Index 2.10 2.05 2.10
Guaranteed Minimum Pension ('GMP')
On 20 November 2020, the High Court ruled that individual
transfer payments made since 17 May 1990 would need to be equalised
for the effects of GMP. This judgment followed on from the previous
judgment on 26 October 2018, where the High Court ruled that
schemes had a legal obligation to pay benefits allowing for GMP
equalisation, resulting in an additional liability being
recognised. The previous judgment had not considered historic
transfer values. Genus's legacy pension schemes are also affected
by this ruling, resulting in an aggregate past service charge of
GBP3.3m in the period.
The Dalgety Pension Fund ('DPF') is both in surplus and
additionally had a reserve of GBP8.7m at 30 June 2020 against
future unknown liabilities, neither of which has been recognised in
the Genus accounts as the Group does not have a unilateral right to
them. The cost of GMP equalisation relating to individual transfer
payments is estimated to be GBP0.9m for the DPF which will be fully
met by the scheme reserve without a cash cost to Genus. However,
IAS19 requires us to record a charge in the Income Statement of
GBP0.9m, which is offset by an equal and opposite credit in the
Statement of Comprehensive Income.
The cost of GMP equalisation relating to individual transfer
payments for Genus's share of the Milk Pension Fund ('MPF') is
estimated to be GBP2.4m which is also recorded as a charge to the
Income Statement. On an IAS19 basis the MPF is also in surplus,
however under IFRIC 14 Genus accounts for its committed payments
under the deficit recovery plan agreed as part of the 31 March 2018
scheme valuation as a liability.
The Milk Pension Fund
We have accounted for our section of the scheme and our share of
any orphan assets and liabilities, which together represent
approximately 86% of the MPF. Although the MPF is managed on a
sectionalised basis, it is a "last man standing scheme", which
means that all participating employers are joint and severally
liable for all of the fund's liabilities.
Further details of the Milk Pension Fund can be found in the
Genus plc Annual Report 2020.
17. Financial instruments fair value disclosures
The table below sets out the categorisation of the financial
instruments held by the Group at 31 December 2020.
We have categorised financial instruments held at valuation into
a three-level fair value hierarchy, based on the priority of the
inputs to the valuation technique in accordance with IFRS 13. The
hierarchy gives the highest priority to quoted prices in active
markets for identical assets or liabilities (Level 1) and the
lowest priority to unobservable inputs (Level 3). Valuations
categorised as Level 2 are obtained from third parties. If the
inputs used to measure fair value fall within different levels of
the hierarchy, we base the category level on the lowest priority
level input that is significant to the fair value measurement of
the instrument in its entirety.
31 December 2020 31 December 2019 30 June 2020
Level Level 2 Level Total Level Level 2 Level Total Level Level 2 Level Total
1 3 1 3 1 3
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Financial assets
Other
investments 1.8 - 5.0 6.8 2.0 - 4.7 6.7 1.8 - 5.1 6.9
Trade
receivables and
other debtors,
excluding
prepayments and
accrued income - 90.1 - 90.1 - 87.7 - 87.7 - 89.0 - 89.0
Cash and cash
equivalents - 50.2 - 50.2 - 31.1 - 31.1 - 41.3 - 41.3
Derivative
instruments in
non-designated
hedge
accounting
relationships - 0.9 - 0.9 - 0.1 - 0.1 - 1.2 - 1.2
Derivative
instruments in
designated
hedge
accounting
relationships - - - - - 0.2 - 0.2 - - - -
------ -------- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------
Financial assets 1.8 141.2 5.0 148.0 2.0 119.1 4.7 125.8 1.8 131.5 5.1 138.4
====== ======== ====== ======== ====== ======== ====== ======== ====== ======== ====== ========
Financial
liabilities
Trade and other
payables,
excluding other
taxes and
social security - (89.7) - (89.7) - (79.1) - (79.1) - (92.2) - (92.2)
Loans and
overdrafts - (114.8) - (114.8) - (109.1) - (109.1) - (112.8) - (112.8)
Leasing
obligations - (27.6) - (27.6) - (29.2) - (29.2) - (31.1) - (31.1)
Derivative
instruments in
non-designated
hedge
accounting
relationships - (0.3) - (0.3) - (0.4) - (0.4) - (0.3) - (0.3)
Derivative
instruments in
designated
hedge
accounting
relationships - (0.1) - (0.1) - (0.1) - (0.1) - (0.2) - (0.2)
Put option over
non-controlling
interest - (5.9) - (5.9) - (5.5) - (5.5) - (6.1) - (6.1)
Deferred
consideration
(see note 19) (0.4) (1.0) (1.4) - (4.7) - (4.7) - (5.1) (3.6) (8.7)
------ -------- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------
- (238.8) (1.0) (239.8) - (228.1) - (228.1) - (247.8) (3.6) (251.4)
====== ======== ====== ======== ====== ======== ====== ======== ====== ======== ====== ========
The Directors consider that the carrying value amounts of
financial assets and financial liabilities recorded at amortised
cost in the financial statements are approximately equal to their
fair values.
18. Provisions
Contingent
ST deferred consideration Share Other provisions
litigation GBPm forfeiture GBPm Total
GBPm GBPm GBPm
Balance at 1 July 2019 - 4.5 2.0 2.3 8.8
Additional provision in
the year 10.2 - 0.3 2.5 13.0
Utilisation of provision - - - (1.6) (1.6)
Release of provision - - - (0.2) (0.2)
Reclassified to deferred
consideration* - (4.5) - - (4.5)
Effect of movement in
exchange rates 0.3 - - - 0.3
------------ ------------------------ ------------ ------------------ -------
Balance at 30 June 2020 10.5 - 2.3 3.0 15.8
Additional provision in
the year 0.2 - - 1.5 1.7
Utilisation of provision (0.1) - - (1.5) (1.6)
Release of provision - - - (0.2) (0.2)
Effect of movement in
exchange rates (1.0) - - (0.1) (1.1)
------------ ------------------------ ------------ ------------------ -------
Balance at 31 December
2020 9.6 - 2.3 2.7 14.6
------------ ------------------------ ------------ ------------------ -------
*Contingent deferred consideration has been reclassified to be
disclosed within deferred consideration, as the balances are
recorded at fair value and not estimated.
31 December 31 December 30 June
2020 2019 2020
GBPm GBPm GBPm
Current 3.7 10.0 4.0
Non-current 10.9 4.9 11.8
----------- ----------- -------
14.6 14.9 15.8
----------- ----------- -------
ST litigation relates specifically to our litigation only with
Sexing Technologies, as described in note 5.
19. Deferred consideration
Contingent
deferred consideration Deferred consideration
GBPm GBPm Total
GBPm
Balance at 1 June 2019 - 6.2 6.2
Reclassified from provisions 4.5 - 4.5
Payment of consideration (0.6) (1.1) (1.7)
Release of unutilised contingent
consideration (0.4) - (0.4)
Effect of movement in exchange rates 0.1 - 0.1
----------------------- ------------------------ -------
Balance at 30 June 2020 3.6 5.1 8.7
Payment of consideration (2.0) (4.6) (6.6)
Release of unutilised contingent
consideration (0.4) - (0.4)
Effect of movement in exchange rates (0.2) (0.1) (0.3)
----------------------- ------------------------ -------
Balance at 31 December 2020 1.0 0.4 1.4
----------------------- ------------------------ -------
Current 0.6 0.4 1.0
Non-current 0.4 - 0.4
--- --- ---
Balance at 31 December 2020 1.0 0.4 1.4
--- --- ---
Current 2.8 4.7 7.5
Non-current 0.8 0.4 1.2
--- --- ---
Balance at 30 June 2020 3.6 5.1 8.7
--- --- ---
The balance at 31 December 2020 relates to the following
transactions:
Contingent
Fiscal year deferred Deferred
of transaction consideration consideration Total
GBPm GBPm GBPm
De Novo Genetics LLC 2017 - 0.4 0.4
Hermitage Genetics DAC 2017 0.5 - 0.5
Dairy LLC (n/a Bovisync) 2019 0.4 - 0.4
Progenex S.L. 2019 0.1 - 0.1
-------------- --------------- -------
Balance at 31 December 2020 1.0 0.4 1.4
-------------- --------------- -------
GENUS PLC
RESPONSIBILITY STATEMENT
For the six months ended 31 December 2020
We confirm that to the best of our knowledge;
a) the Condensed Set of Financial Statements has been prepared in accordance with IAS 34;
b) the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first six months and description of the principal risks
and uncertainties for the remaining six months of the year);
and
c) the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related party
transactions and charges therein).
Neither the Company nor the Directors accept any liability to
any person in relation to the half-yearly financial report except
to the extent that such liability could arise under English Law.
Accordingly, any liability to a person who has demonstrated
reliance on any untrue or misleading statement or omission shall be
determined in accordance with section 90A of the Financial Services
and Markets Act 2000.
By order of the Board
Chief Executive Chief Financial Officer
Stephen Wilson Alison Henriksen
24 February 2021
Alternative Performance Measures ('APMs) - 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 executive leadership team. Some of these
APMs are also used for the purpose of setting remuneration
targets.
These APM 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 Reasons why we believe the APMs are
equivalent IFRS measure (where useful
applicable)
Income statement measures
Adjusted operating profit exc JVs Adjusted operating profit is Allows the comparability of
operating profit with the net IAS 41 underlying financial performance by
valuation movement on biological excluding the impacts of exceptional
assets, amortisation of acquired items and is a performance indicator
intangible assets, share-based against which short-term and
payment expense and exceptional long-term incentive outcomes
items added back and excludes JV and for our senior executives are
associate results. measured.
Closest equivalent IFRS measure:- -- net IAS 41 valuation movements on
Operating profit* biological assets - these movements
See reconciliation below. can be materially
volatile and do not directly
correlate to the 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;
-- 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 between the two;
-- 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
-- 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 inc JVs Including adjusted operating profit
from JV and associate results.
See reconciliation below.
-------------------------------------- --------------------------------------
Adjusted operating profit inc JVs exc Including adjusted operating profit
gene editing costs from JV and associate results but
excluding gene editing
costs.
See reconciliation below.
--------------------------------------
Adjusted profit inc JVs before tax Adjusted operating profit inc JVs
less net finance costs
See reconciliation below.
-------------------------------------- --------------------------------------
Adjusted effective tax rate Total income tax charge for the Group Provides an underlying tax rate to
excluding the tax impact of adjusting allow comparability of underlying
items divided financial performance
the adjusted operating profit by excluding the impacts of net IAS
Closest equivalent IFRS measure:- 41 valuation movement on biological
Effective tax rate assets, amortisation
See reconciliation below. of acquired intangible assets,
share-based payment expense and
exceptional items.
-------------------------------------- --------------------------------------
Adjusted basic earnings per share Adjusted profit after tax divided by On a per share basis, this allows the
the weighted basic average number of comparability of underlying financial
shares performance by
Closest equivalent IFRS measure:- excluding the impacts of adjusting
Earnings per share items.
See calculation below.
-------------------------------------- --------------------------------------
Adjusted diluted earnings per share Underlying attributable profit
divided by the diluted weighted
average number of shares
Closest equivalent IFRS measure:-
Diluted earnings per share
See calculation below.
-------------------------------------- --------------------------------------
Adjusted earnings cover Adjusted earnings per share divided The board dividend policy targets the
by the expected dividend for the adjusted earning cover to be between
year. 2.5 - 3 times
See calculation below.
-------------------------------------- --------------------------------------
Adjusted EBITDA- calculated in This is adjusted operating profit, This APM is presented because it is
accordance with the definitions used adding back cash received from our used in calculating our ratio of net
in our financing facilities joint ventures, depreciation debt to EBITDA and
of property, plant & equipment, our interest cover which we report to
depreciation of the historical cost our banks to ensure compliance with
of biological assets, our bank covenants.
operational amortisation (i.e.
excluding amortisation on acquired
intangibles) and deducting
the amount attributable to minority
interest.
Closest equivalent IFRS measure:-
Operating profit*
See calculation & reconciliation
below.
-------------------------------------- --------------------------------------
Adjusted operating margin Adjusted operating profit (inc JV) Allows for the comparability of
divided by Revenue underlying financial performance by
excluding the impacts
of exceptional items.
-------------------------------------- --------------------------------------
Adjusted operating margin (exc JV) Adjusted operating profit (exc JV)
divided by Revenue
-------------------------------------- --------------------------------------
Constant currency basis The Group reports certain nancial The Group business operates in
measures, on both a reported and multiple worldwide and its trading
constant currency basis results when translated
and retranslates the current year's back into the groups functional
results at the average actual currency of GBP Sterling. This
exchange rates used in the measure eliminates the effects
previous nancial year. of exchange rate uctuations when
comparing the year-on-year reported
results.
-------------------------------------- --------------------------------------
Balance sheet measures
Net debt Net debt is gross debt, made up of This allows the Group to monitor its
unsecured bank loans and overdrafts levels of debt.
and obligations under
finance leases, with a deduction for
cash and cash equivalents.
See reconciliation below.
-------------------------------------- --------------------------------------
Net debt - calculated in accordance Net debt exc the impact of adopting This is a key metric that we report
with the definitions used in our IFRS 16 and adding back guarantees to our banks to ensure compliance
financing facilities and deferred purchase with our bank covenants.
arrangements.
See reconciliation below .
-------------------------------------- --------------------------------------
Cash flow measures
Cash conversion Cash generated by operations as a This is used to measure how much
percentage of adjusted operating operating cash flow we are generating
profit exc JVs. and how efficient we
See calculation below. are at converting our operating
profit into cash.
-------------------------------------- --------------------------------------
Free cashflow Cash generated by the Group before Shows the cash retained by the group
debt repayments, acquisitions and in the year.
investments, dividends
and proceeds from share issues
Closest equivalent IFRS measure:-
Net cashflow from operating
activities
See reconciliation below
-------------------------------------- --------------------------------------
Other measures
Ratio of net debt to Adjusted EBITDA The ratio of net debt, calculated in This APM is used as a measurement of
accordance with the definitions used our leverage and is also a key metric
in our financing that we report
facilities, is gross debt, made up of to our banks to ensure compliance
unsecured bank loans and overdrafts with our bank covenants.
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 EBITDA.
Closest equivalent IFRSs components
for the ratio:-
The equivalent IFRS components are
gross debt, cash and cash equivalents
and operating profit.
See calculation below
-------------------------------------- --------------------------------------
* Operating profit is not defined per IFRS. It is presented in
the Group Income Statement and is shown as profit before tax,
finance income/costs and share of post-tax profit of joint ventures
and associates retained.
The tables below reconcile the closest equivalent IFRS measure
to the APM or outline the calculation of the APM.
Income Statement Measures
Adjusted operating profit exc 31 December 31 December 30 June
JVs 2020 2019 2020
Adjusted operating profit inc
JVs
Adjusted operating profit inc
JVs and exc gene editing costs GBPm GBPm GBPm GBPm GBPm GBPm Reference
-------------------------------- ------- ----- ------- ------ ------- ------ --------------------------------
Operating Profit 35.5 28.1 47.6 Group Income Statement
Add back:
Net IAS 41 valuation movement
on biological assets (3.5) (13.3) (15.8) Group Income Statement
Amortisation of acquired
intangible assets 3.7 4.0 8.5 Group Income Statement
Share-based payment expense 4.3 2.8 5.8 Group Income Statement
Exceptional items 5.1 12.8 19.2 Group Income Statement
------- ------- -------
Adjusted operating profit exc
JVs 45.1 34.4 65.3 Group Income Statement
Less: amounts attributable to
non-controlling interest - (0.3) (0.6)
Operating profit from joint
ventures and associates 5.8 5.1 8.9 Group Income Statement
Tax on joint ventures and Note 12 - Equity accounted
associates 2.2 1.7 2.3 investees
Note 12 - Equity accounted
Net IAS 41 valuation movement (2.1) (1.5) 0.1 investees
------- ------- -------
Adjusted operating profit from
JVs 5.9 5.3 11.3
----- ------ ------
Adjusted operating profit inc
JVs 51.0 39.4 76.0
Gene editing costs 3.7 4.3 5.2 Note 4 - Segmental information
----- ------ ------
Adjusted operating profit inc
JVs and exc gene editing costs 54.7 43.7 81.2
-------------------------------- ------- ----- ------- ------ ------- ------ ----------------------------------
31 December 31 December 30 June
Adjusted profit inc JVs before tax 2020 2019 2020
Adjusted profit inc JVs after tax GBPm GBPm GBPm Reference
------------ ------------ --------
Adjusted operating profit inc JVs 51.0 39.4 76.0 See APM
Less net finance costs (2.6) (2.8) (5.0) Note 6 - Net Finance Costs
------------ ------------ --------
Adjusted profit inc JVs before tax 48.4 36.6 71.0
Adjusted tax (11.1) (8.4) (15.6) Note 14 - Earnings per share
------------ ------------ --------
Adjusted profit inc JVs after tax 37.3 28.2 55.4
------------------------------------ ------------ ------------ -------- -----------------------------
31 December 31 December 30 June
2020 2019 2020
Adjusted effective tax GBPm/rate GBPm % GBPm % GBPm % Reference
------------------------------------ ------ ------- ------ ------- ------ ------- -----------------------------
Adjusted effective tax GBPm/rate 8.4 21.7 6.3 20.7 15.6 22.0 Note 14 - Earnings per share
Exceptional items 1.0 19.6 3.2 24.7 (4.5) (23.4)
Share-based payment expense 0.8 18.9 (0.2) (6.6) (1.1) (19.0)
Amortisation of acquired intangible
assets 0.8 21.6 0.9 22.5 (1.8) (21.2)
Net IAS 41 valuation movement on
biological assets (1.0) (28.6) (3.0) (22.3) 4.7 29.7
Net IAS 41 valuation movement on
biological assets in JVs (1.1) (52.4) (0.5) (33.3) - -
Tax on share of profits from joint
ventures and associates 2.2 100.0 1.7 100.0 - -
------ ------- ------ ------- ------ -------
Effective tax GBPm/rate 11.1 22.9 8.4 23.0 12.9 24.0 Note 7 - Income tax expense
------------------------------------ ------ ------- ------ ------- ------ ------- -----------------------------
31 December 31 December 30 June
Adjusted Basic Earnings per share 2020 2019 2020 Reference
------------ ------------ --------
Adjusted profit inc JVs after tax (GBPm) 37.3 28.2 55.4 See APM
Weighted average number of ordinary shares (m) 65.056 64.868 64.908 Note 14 - Earnings per share
Adjusted Earnings per share (pence) 57.3 43.5 85.4
------------------------------------------------ ------------ ------------ -------- -----------------------------
31 December 31 December 30 June
Adjusted Diluted Earnings per share 2020 2019 2020 Reference
------------ ------------ --------
Adjusted profit inc JVs after tax (GBPm) 37.3 28.2 55.4 See APM
Weighted average number of diluted ordinary
shares (m) 65.610 65.353 65.427 Note 14 - Earnings per share
Diluted adjusted Earnings per share (pence) 56.9 43.2 84.7
------------------------------------------------- ------------ ------------ -------- -----------------------------
31 December 31 December 30 June
2020 2019 2020 Reference
Rolling 12 month Adjusted Earnings cover Pence Times Pence Times Pence Times
----------------------------------------------- ------- ------ ------- ------ ------ ------ -------------------
Adjusted Earnings per share (pence) 57.3 43.5 85.4 See APM
Add: Prior June Adjusted Earnings per share
(pence) 85.4 73.2 N/a See APM
Deduct: Prior Interim Adjusted Earnings per
share (pence) (43.5) (35.8) N/a See APM
------- ------- ------
Rolling 12 month adjusted Earnings per share 99.2 80.9 85.4
Final dividend for the year ended 30 June 2019 18.8 Note 8 - Dividends
Interim dividend for the year end 30 June 2020 9.4 9.4 Note 8 - Dividends
Final dividend for the year ended 30 June 2020 19.7 19.7 Note 8 - Dividends
Interim dividend for the year end 30 June 2021 10.3 Note 8 - Dividends
------- ------- ------
Rolling 12-month dividend 30.0 28.2 29.1
Rolling 12 month Adjusted Earnings cover 3.3 2.9 2.9
----------------------------------------------- ------- ------ ------- ------ ------ ------ -------------------
Adjusted EBITDA - as calculated 31 December 31 December 30 June
under our financing 2020 2019 2020
facilities GBPm GBPm GBPm GBPm GBPm GBPm Reference
---------------------------------- ------- ----- ------- ----- ------- ----- ----------------------------------
Operating Profit 35.5 28.1 47.6 Group Income Statement
Add back:
Net IAS 41 valuation movement on
biological assets (3.5) (13.3) (15.8) Group Income Statement
Amortisation of acquired
intangible assets 3.7 4.0 8.5 Group Income Statement
Share-based payment expense 4.3 2.8 5.8 Group Income Statement
Exceptional items 5.1 12.8 19.2 Group Income Statement
------- ------- -------
Adjusted operating profit exc JVs 45.1 34.4 65.3 Group Income Statement
Adjust for:
Cash received from JVs (dividend
and loan repayment) - 1.4 3.7 Group Statement of Cash Flows
Depreciation:- Property, plant & Note 11 - Property, Plant &
equipment owned assets 6.6 6.0 13.1 Equipment
Depreciation:- historical cost of
biological assets 5.2 5.0 11.0 No direct reference
Amortisation and impairment
(excluding separately identified
acquired intangible assets) 2.4 2.4 5.1 Note 9 - Intangible Assets
Less amounts attributable to
non-controlling interest - (0.3) (0.6) Group Income Statement
------- ------- -------
Adjusted EBITDA - as calculated
under our financing facilities 59.3 48.9 97.6
---------------------------------- ------- ----- ------- ----- ------- ----- ----------------------------------
31 December 31 December 30 June
2020 2019 2020
Rolling 12 month Adjusted EBITDA -
as calculated under our financing facilities GBPm GBPm GBPm GBPm GBPm GBPm Reference
------------------------------------------------- ------- ------ ------- ----- ----- ----- ----------
Adjusted EBITDA
- as calculated under our financing facilities 59.3 48.9 97.6 See APM
Add: Prior June Adjusted EBITDA 97.6 88.3 N/a See APM
Deduct: Prior Interim Adjusted EBITDA (48.9) (40.7) N/a See APM
------- ------- -----
Rolling 12 month Adjusted EBITDA 108.0 96.5 97.6
------------------------------------------------- ------- ------ ------- ----- ----- ----- ----------
Balance Sheet Measures
Net Debt
Net debt as calculated under our financing 31 December 31 December 30 June
facilities 2020 2019 2020 Reference
--------------- --------------- ---------------
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------------------- ------ ------- ------ ------- ------ ------- ---------------------
Current unsecured bank loans and overdrafts 9.8 8.7 9.2 Group Balance Sheet
Non-current unsecured bank loans and
overdrafts 105.0 100.4 103.6 Group Balance Sheet
------ ------ ------
Total unsecured bank loans and overdrafts 114.8 109.1 112.8
Current obligations under finance leases 9.0 7.5 10.0 Group Balance Sheet
Non-current obligations under finance
leases 18.6 21.7 21.1 Group Balance Sheet
------ ------ ------
Total obligations under finance leases 27.6 29.2 31.1
Total debt financing 142.4 138.3 143.9 Analysis of Net Debt
Deduct:-
Cash and cash equivalents (50.2) (31.1) (41.3) Group Balance Sheet
------- ------- -------
Net Debt 92.2 107.2 102.6
Deduct:-
Impact of IFRS 16 adoption* - (23.4) (24.7) No direct reference
Lower of obligations under finance leases
or GBP30m* (27.6) N/a N/a Group Balance Sheet
Add back:-
Guarantees 19.6 4.9 5.9 No direct reference
Deferred purchase arrangements 1.2 1.3 0.2 No direct reference
------- ------- -------
Net Debt - as calculated under our
financing facilities 85.4 90.0 84.0
-------------------------------------------- ------ ------- ------ ------- ------ ------- ---------------------
*Following Genus entering a new credit facility the definition
of net debt was revised alongside the adoption of IFRS 16
'Leases'
Cashflow Measures
31 December 31 December 30 June
2020 2019 2020
Cash conversion GBPm GBPm GBPm GBPm GBPm GBPm Reference
---------------------------------- ------- ----- ------- ----- ------- ----- ----------------------------------
Note 15 - Notes to the cash flow
Cash generated by operations 45.0 32.9 82.9 statement
Operating Profit 35.5 28.1 47.6 Group Income Statement
Add back:
Net IAS 41 valuation movement on
biological assets (3.5) (13.3) (15.8) Group Income Statement
Amortisation of acquired
intangible assets 3.7 4.0 8.5 Group Income Statement
Share-based payment expense 4.3 2.8 5.8 Group Income Statement
Exceptional items 5.1 12.8 19.2 Group Income Statement
------- ------- -------
Adjusted operating profit exc JVs 45.1 34.4 65.3 Group Income Statement
Cash Conversion (%) 100% 96% 127%
---------------------------------- ------- ----- ------- ----- ------- ----- ----------------------------------
31 December 31 December 30 June
2020 2019 2020
Free cashflow GBPm GBPm GBPm Reference
------------ ------------ --------
Cash generated by operations 45.0 32.9 82.9 Note 15 - Notes to cashflow statement
Interest and tax paid (6.9) (8.8) (17.1) Note 15 - Notes to cashflow statement
Capital expenditure (11.9) (17.0) (35.4) Group Statement of Cashflows
Cash received from JV (dividends and
loan repayment) - 1.4 3.7 Group Statement of Cashflows
Other 0.4 2.0 1.1 Group Statement of Cashflows
------------ --------
Free cashflow 26.6 10.5 35.2
---------------------------------------- ------------ ------------ -------- --------------------------------------
Other Measures
31 December 31 December 30 June
2020 2019 2020
Ratio of net debt to Adjusted EBITDA GBPm Times GBPm Times GBPm Times Reference
----------------------------------------------- ------ ------ ------ ------ ----- ------ ----------
Net Debt -
as calculated under our financing facilities 85.4 90.0 84.0 See APM
Rolling 12 month Adjusted EBITDA -
as calculated under our financing facilities 108.0 96.5 97.6 See APM
Ratio of net debt to Adjusted EBITDA 0.8 0.9 0.9
----------------------------------------------- ------ ------ ------ ------ ----- ------ ----------
[1] Adjusted results are the Alternative Performance Measures
('APMs') used by the Board to monitor underlying performance at a
Group and operating segment level, which are applied consistently
throughout. These APMs should be considered in addition to, and not
as a substitute for or as superior to statutory measures. For more
information on APMs, see APM Glossary.
[2] All growth/decline rates quoted are in constant currency
unless otherwise stated. Constant currency percentage movements are
calculated by restating the results for the six months ended 31
December 2020 at the average exchange rates applied to adjusted
operating profit for the year ended 30 June 2020.
[3] n/m = not meaningful
[4] Calculated on a rolling 12 month basis
[5] Excluding profit attributable to non-controlling
interest
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