TIDMGNS
RNS Number : 6342L
Genus PLC
07 September 2023
Immediate release 7 September 2023
Genus plc
Preliminary results for the year ended 30 June 2023
SOLID PERFORMANCE AND GOOD STRATEGIC PROGRESS
Adjusted results(1) Statutory results
----------------------------------
Actual currency Constant Actual currency
currency
change(2)
Year ended 30 June 2023 2022 Change 2023 2022 Change
------ ------ ------ ------ -----
GBPm GBPm % % GBPm GBPm %
Revenue 689.7 593.4 16 10 689.7 593.4 16
Operating profit 74.6 68.8 8 2 40.5 49.4 (18)
Operating profit inc
JVs 85.8 77.7 10 3 n/a n/a n/a
Operating profit inc
JVs exc gene editing 100.1 85.6 17 9 n/a n/a n/a
Profit before tax 71.5 71.5 - (8) 39.4 48.4 (19)
Free cash flow 18.2 (13.5) n/a n/a
Basic earnings per share
(pence) 84.8 82.7 3 (5) 50.8 62.5 (19)
Dividend per share (pence) 32.0 32.0 -
--------------------------- ------ ------ ------ ---------- ------ ----- ------
Solid Group performance
-- Group revenue rose by 10% in constant currency (16% in actual currency)
-- Adjusted operating profit including joint ventures up 3% in
constant currency (10% in actual currency)
-- R&D investment increased by 19%(2) as planned, including
a 66%(2) rise in gene editing expense in preparation for the
anticipated commercialisation of pigs resistant to porcine
reproductive and respiratory syndrome virus (PRRSv) which continues
to make excellent progress
-- Adjusted profit before tax (PBT) flat in actual currency (8%
lower in constant currency), with net finance costs up 124%(2)
-- Statutory PBT reduced by 19% to GBP39.4m, with a GBP16.9m
reduction in the non-cash fair value IAS41 valuation of the Group's
biological assets
Record PIC performance, profit growth achieved in all
regions
-- Strong demand for PIC's differentiated genetics drove a 5%
increase in volumes, revenue up 7%(2) and strategically important
royalty revenue growth across all regions, up 10%(2)
-- Adjusted operating profit including joint ventures increased
by 11%(2) , as the business continued to expand and strengthen
commercial relationships with producers around the world
-- The performance was driven by strong profit growth in North
America, Latin America and Asia. Good growth in Europe, with
improved performance in the second half
-- Performance in China was affected by ongoing market
volatility, particularly in the second half of the year. Volumes
were 1% lower in the year, with revenue stable. Royalty revenue was
up 26% (2) and adjusted operating profit was GBP9.4m (2022:
GBP5.6m, impacted by a GBP4m customer credit)
Solid ABS performance, profit growth achieved in all regions
other than Latin America, which was stable
-- Volumes up 3%, revenue up 12%(2) supported by robust price increases
-- Adjusted operating profit up 5%, after a stronger second
half. Expansion of long-term partnerships with strategic accounts,
underpinned by Sexcel and NuEra beef genetics, drove strong profit
growth in North America and good growth in Europe
-- Latin America profits stable, despite challenging market
conditions, particularly in Brazil where macroeconomic conditions
continued to impact beef supply and demand dynamics
-- Sexed genetics volumes up 18%; strong growth in volumes of
Sexcel and third-party IntelliGen production
Good cash flow, debt leverage reduced and dividend
maintained
-- Free cash inflow(1) of GBP18.2m (2022: GBP13.5m outflow),
reflecting record high adjusted EBITDA(1) , lower working capital
outflows and lower capital expenditure. Strong cash conversion of
105%(1) (2022: 82%) above target level of 90%
-- Net debt to EBITDA ratio improved to 1.6x(1) (2022: 1.7x);
within the 1.0x-2.0x target range. Net debt(1) of GBP195.8m (2022:
GBP185.0m) as expected
-- Adjusted earnings per share rose 3% in actual currency, full
year dividend maintained at 32.0p per share, with 2.7x(1) adjusted
earnings cover, comfortably within the 2.5x-3.0x target range
Good strategic progress and continued investment for growth
-- Genus's PRRSv-resistant pigs programme continued to make
excellent progress, with submissions to the US Food and Drug
Administration (FDA) completed ahead of schedule and approval
expected in the first half of 2024. We are making regulatory
progress in Colombia, Brazil and also China, where we have obtained
consent for import of PRRSv-resistant pigs for in-country
assessment
-- PIC's new world-class elite farms in Canada, Brazil and China
well positioned to capture future growth opportunities
-- GenusOne successfully deployed throughout the majority of
Europe in the year; implementation underway in LATAM
-- Strong progress in reducing CO2 emissions; primary intensity
ratio reduced by 36% and Scope 1 and 2 emissions reduced by 14%
compared to our 2019 baseline
Commenting on the performance and outlook, Jorgen Kokke, Chief
Executive Officer, said:
"The Group achieved a strong operational performance despite
ongoing challenging market conditions for producers in several
important markets. Revenues grew in all regions and both PIC and
ABS delivered profit growth. This also enabled us to deliver record
adjusted EBITDA and good cashflow for the Group. Growth in R&D
investments, primarily due to the strategically important gene
editing work and expansion of PIC's elite farms, as well as higher
interest costs, resulted in adjusted profit before tax consistent
with the prior year.
"PIC's performance was particularly impressive, achieving a
record adjusted operating profit for the year. Whilst PIC China had
a more challenging second half, this was offset by the strong
performance in the rest of the world. Our focus is on ensuring that
PIC China can offer the best genetics and customer service in the
market, underpinned by royalty contracts where we share in our
customers' success and build a predictable business. Population of
PIC's new world-class elite farms in Canada, Brazil and China
positions the business very well to capture future growth
opportunities, including commercialising PRRSv-resistant edited
pigs.
"The PRRSv-resistant pig programme is reaching an exciting
stage, having completed our submissions to the FDA ahead of
schedule. Approval is expected in the first half of 2024. We are
also progressing the approvals for other markets, including China
where we now have consent to import PRRSv-resistant pigs for
in-country assessment.
"ABS saw trading improve in the second half and it continued to
expand business with strategic accounts, by continuing to build
long-term partnerships and offering the leading combination of
Sexcel and NuEra beef genetics. This, along with robust price
increases to counter inflation, enabled ABS to achieve good
performances across most regions, countering the weakness in the
Brazilian market, where nevertheless we increased market share.
"In fiscal year 2024 we expect to perform in line with our
medium-term growth expectations in constant currency. Based on the
recent strengthening of sterling against certain key currencies and
higher interest rates in the current year, we expect modest growth
in adjusted profit before tax in actual currency. The Board remains
confident in the Group's strategy and the many opportunities for
Genus."
Results presentation today
A pre-recorded investors, analysts and bankers briefing to
discuss the preliminary results for the year ended 30 June 2023
will be accessible via the following link from 7:01am UK time
today:
https://stream.buchanan.uk.com/broadcast/64d23b9607eccc4a190b942c
This will be followed by a live Q&A session by invitation.
Those unable to attend in person can also join via Zoom at 10:30am
UK time. Please contact Verity Parker at Buchanan for details:
verity.parker@buchanancomms.co.uk
Enquiries:
Genus plc (Jorgen Kokke, Chief Executive Officer / Tel: 01256 345970
Alison Henriksen, Chief Financial Officer /
Anand Date, Investor Relations Director)
Buchanan (Charles Ryland / Chris Lane / Verity Parker) Tel: 0207 4665000
------------------
About Genus
Genus advances animal breeding and genetic improvement by
applying biotechnology and sells added value products for livestock
farming and food producers. Its technology is applicable across
livestock species and is currently commercialised by Genus in the
dairy, beef and pork food production sectors.
Genus's worldwide sales are made in over 75 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 24 countries on six continents, with research
laboratories located in Madison, Wisconsin, USA.
(1) Adjusted results are the Alternative Performance Measures
('APMs') used by the Board to monitor underlying performance at a
Group and operating segment level, which are applied consistently
throughout. These APMs should be considered in addition to
statutory measures, and not as a substitute for or as superior to
them. For more information on APMs, see the APM Glossary.
(2) Constant currency percentage movements are calculated by
representing the results for the year ended 30 June 2023 at the
average exchange rates applied to adjusted operating profit for the
year ended 30 June 2022.
(3) The primary intensity ratio is a measure of the Group's
Scope 1 and 2 emissions per tonne of animal weight
Chief Executive Officer's Review
I am pleased to be reporting to you for the first time as CEO of
Genus. Since joining the Company in May this year, I have been
deeply impressed by what I have seen, including the strong
competitive position of our businesses, the depth of the Group's
talent, its cutting-edge science and the quality of investment in
the Group's facilities. It is very clear to me that Genus has a
significant growth opportunity ahead of it and I am looking forward
to progressing our growth strategy in the years to come.
In the year to 30 June 2023, the Group faced challenging
conditions in several markets, notably for PIC China and ABS
Brazil. Nevertheless, PIC and ABS achieved geographically
broad-based profit growth, enabling the Group to deliver solid
results, and we have continued to invest in the growth drivers of
our business, positioning ourselves for sustainable success.
Group Performance
Revenue for the year was GBP689.7m, up 16% (10% in constant
currency), with adjusted profit before tax stable at GBP71.5m (-8%
in constant currency), reflecting investment in our gene editing
programme and higher interest costs.
PIC's global volumes were up 5% and revenue rose by 7% in
constant currency, with strategically important royalty revenue up
10%. Adjusted operating profit (including joint ventures) was 11%
higher in constant currency. The North and Latin America businesses
continued to perform strongly, while the European business saw an
improvement in trading in the second half of the year, after being
affected by difficult market conditions in some countries in the
first six months.
PIC China saw a significant swing in its performance during the
year, as the market recovery in the first half stalled. The market
was weak from December 2022, reflecting high supply of slaughter
pigs due to ASF and weak consumer demand. As a result, pig prices
fell to a point where producers were unprofitable, with many
delaying rebuilding their sow herds. After an operating profit of
GBP8.8m in the first half, PIC China had only a modest profit in
the second half of the year. We remain confident that our
investments in PIC China give us a strong platform to capture the
growth opportunities in China and build a strong predictable
royalty-based business, including commercialising PRRSv-resistant
pigs.
ABS saw trading improve as the year progressed. Volumes
increased by 3%, revenue was 12% higher in constant currency and
adjusted operating profit grew by 5%. The North American business
had a strong year and Europe delivered good growth, although in
Latin America, market conditions remained challenging in Brazil,
particularly in the first half. Volumes in ABS continued to benefit
from take-up of sexed genetics.
Strategic Progress
Our PRRSv-resistant pig programme is reaching an exciting stage,
as we have continued to deliver important milestones. During the
year we finished the final regulatory animal studies and since the
year end we have completed our submissions to the FDA. We expect
the FDA's approval in the first half of 2024. In preparation for
commercialising our gene-edited animals, we continue to engage with
customers and industry participants, and are seeing high interest.
In China, the regulatory environment is developing, with the
publication of regulations on gene-edited animals, and we also
gained consent to import PRRSv-resistant pigs to China, for
in-country regulatory assessment. We also made progress towards
obtaining regulatory approval in Colombia and Brazil.
In addition to PRRSv, we have active research programmes using
gene editing to produce animals resistant to other diseases.
Elsewhere in our R&D programme, we have seen encouraging
progress in reproductive biology and have further enhanced our
IntelliGen capabilities and technology, to deliver continuous
improvement and efficiency gains.
After a peak year of investment in the 2022 fiscal year, we have
invested further to complete multi-year investments in our
facilities and systems. In the porcine business, our Atlas facility
in Canada came into operation in the year, Granja Genesis in Brazil
was stocked and we have started stocking Ankang in China. We used
the opportunity of the new capacity in North America to temporarily
destock the Aurora farm to enable facility and health upgrades to
be made, which will further strengthen our porcine supply
capability. We have continued to build out ABS's facilities in
Leeds, Wisconsin. We have also completed the majority of the
rollout of GenusOne in Europe, with Latin America and Asia to
follow. The system is already giving us much greater visibility of
performance in the countries where we are using it, giving us
access to data we did not have before, identifying further
opportunities within the business.
Sustainability
We made further progress with our sustainability agenda as we
continued to work through our plan, delivering real reductions in
our carbon footprint. In the year our scope 1 and 2 carbon
footprint reduced by 5% and since 2019 has reduced by 14%, while
continuing to grow our business, resulting in a 36% improvement in
our primary intensity ratio over this period, ahead of our original
target. At the same time, we see sustainability as a business
opportunity, as our customers look to use genetics to reduce
emissions from their herds. Genus recently received a grant of
GBP3m from Innovate UK to further our work on Climate-Smart
Genetics in beef, which is a validation of the work we have been
doing to show that genetics can make an important difference. In
addition, we are working in collaboration with the Gates Foundation
and other partners to improve dairy genetics in East Africa.
People
As previously announced, my predecessor Stephen Wilson will
retire from Genus at the end of September 2023. We have been
working closely together on the transition and I thank him for his
support and his significant contribution to the Group during his
decade on the Board.
Dr Bill Christianson has also retired as Chief Operating Officer
of Genus PIC. He joined our porcine business 30 years ago and has
been instrumental in its success. We were delighted to fill this
key position internally and I look forward to working with Dr Matt
Culbertson, previously Global Product Development and Technical
Services Director, who was the outstanding candidate for the
role.
Genus employs highly talented people at all levels of the
business and around the world, and I thank them all on the Board's
behalf for their contribution this year. We continue to invest in
learning and development, strengthen our approach to diversity and
inclusion and enable our people to share in the Group's success
through a new employee share scheme.
Outlook
Genus achieved a strong adjusted operating profit performance in
fiscal year 2023, despite challenging conditions for our customers
in several parts of the world. Over a five-year period we have
delivered performance in line with our stated medium term objective
of a 10% CAGR in adjusted operating profit excluding gene editing,
in constant currency. We remain confident that Genus is well placed
to continue gaining market share through our world class team,
market leading genetics, global supply chain and pioneering
technology.
We have a clear focus on continuing to drive growth through
leveraging the significant investments the Group has made in recent
years. The PRRSv-resistant pig represents the most substantial
opportunity in the medium term with FDA approval expected in the
first half of 2024, having completed our submissions ahead of
schedule.
We anticipate that the China porcine market will continue to be
volatile, reflecting continued disease outbreaks, a less
consolidated industry structure and weak consumer demand. We remain
confident PIC China will be a resilient growth business over the
medium-term through offering the best genetics, customer service
and increasing the penetration of our royalty-based model.
In fiscal year 2024 we expect to continue to perform in line
with our expectations for adjusted operating profit excluding gene
editing, in constant currency. However, the recent strengthening of
the pound sterling relative to several of our key trading
currencies is currently anticipated to lead to a currency
translation headwind of approximately GBP5-6m in the year. In
addition, we expect finance costs to increase by approximately
GBP2m as a result of the higher interest rate environment. The
Board therefore expects modest growth in adjusted profit before tax
in actual currency for fiscal year 2024.
The Board remains confident in the Group's strategy and our
medium-term growth expectations remain unchanged.
Financial and Operating Review
Financial Review
In the year ended 30 June 2023, the Group achieved revenue
growth of 16% in actual currency (10% in constant currency).
Adjusted operating profit including joint ventures was up 10% (3%
in constant currency), reflecting good profit growth across our
businesses, and was 17% higher (9% in constant currency) before
gene editing costs. R&D investment increased by 29% (19% in
constant currency), as planned, due to an increase in gene editing
costs as we move closer to commercialisation of the PRRSv-resistant
pig and higher porcine product development costs, primarily due to
the start of operations at our Atlas facility in Canada.
On a statutory basis, profit before tax was GBP39.4m (2022:
GBP48.4m). The difference between the movement in statutory and
adjusted profit before tax was mainly due to a reduction in the
non-cash fair value of IAS 41 porcine biological assets, and a
higher share-based payment charge. Basic earnings per share on a
statutory basis were 50.8 pence (2022: 62.5 pence).
Adjusted profit before tax remained at GBP71.5m (down 8% in
constant currency), with the improved trading performance being
offset by higher interest expense, which increased from GBP6.2m to
GBP14.3m (up 124% in constant currency).
The effect of exchange rate movements on the translation of
overseas profits was to increase the Group's adjusted profit before
tax for the year by GBP5.4m compared with 2022, primarily due to
the strength of the Brazilian Real and Mexican Peso against
Sterling during the year. All growth rates quoted are in constant
currency unless otherwise stated. Constant currency percentage
movements are calculated by restating the results for the year
ended 30 June 2023 at the average exchange rates applied to
adjusted operating profit for the year ended 30 June 2022.
Revenue
Revenue increased by 16% (10% in constant currency) to GBP689.7m
(2022: GBP593.4m). PIC's revenue rose by 14% (7% in constant
currency) with growth across all regions and a double-digit
increase in strategically important royalty revenue. In ABS,
revenue was up 17% (12% in constant currency), reflecting the
continuing success of Genus's sexed genetics and NuEra beef
genetics as well as the implementation of robust prices increases
to offset the effects of cost inflation.
Adjusted Operating Profit Including JVs
Actual currency Constant
currency
change
---------
Year ended 30 June 2023 2022 Change
------ ------ ------ ---------
Adjusted Profit Before Tax(1) GBPm GBPm % %
Genus PIC 145.3 121.2 20 11
Genus ABS 43.6 40.5 8 5
R&D (86.3) (67.1) (29) (19)
Central costs (16.8) (16.9) 1 1
------ ------ ------ ---------
Adjusted operating profit inc
JVs 85.8 77.7 10 3
Net finance costs (14.3) (6.2) (131) (124)
------ ------ ------ ---------
Adjusted profit before tax 71.5 71.5 0 (8)
====== ====== ====== =========
(1) Includes share of adjusted pre-tax profits of joint ventures
and removes share of adjusted profits of non-controlling
interests.
Adjusted operating profit including joint ventures was GBP85.8m
(2022: GBP77.7m), 3% higher in constant currency. The Group's share
of adjusted joint venture operating profit, primarily from our
Brazilian joint venture with Agroceres, was higher at GBP10.8m
(2022: GBP9.2m).
Gene editing investment, which is primarily focused on the
PRRSv-resistant pig programme, increased to GBP14.3m (2022:
GBP7.9m) as planned. This enabled us to continue expanding our
population of gene-edited animals and increase preparation for
commercialisation. Adjusted operating profit including joint
ventures and excluding gene editing investment was GBP100.1m (2022:
GBP85.6m), 9% higher in constant currency. Over the last five
years, our compound annual growth rate in this profit measure
remains at 10% in constant currency, in line with our medium-term
objective.
PIC's performance was a record level, with adjusted operating
profit including joint ventures up 11% in constant currency.
Volumes were up by 5% and strategically important royalty revenue
was up 10%, with increases across all regions.
ABS's volumes rose by 3% and adjusted operating profit also rose
by 5%. Demand for Sexcel, our proprietary bovine sexed product,
continued to increase, as well as our IntelliGen third party sexed
processing, supporting an 18% rise in sexed volumes and further
growth in our proprietary NuEra beef genetics. There was adjusted
operating profit growth across most regions, with North America
increasing adjusted operating profit by 17% in constant currency.
Latin America's profits were stable, despite the region continuing
to suffer from challenging market conditions. Europe's adjusted
operating profit grew by 7%, due to growth across most countries,
and in Asia adjusted operating profit was 4% higher, due to growth
in our India IntelliGen business.
Central costs were stable, at GBP16.8m (2022: GBP16.9m) in
constant currency, primarily due to prudent cost management.
Statutory Profit Before Tax
The table below reconciles adjusted profit before tax to
statutory profit before tax:
2023 2022
GBPm GBPm
Adjusted Profit Before Tax 71.5 71.5
Operating profit attributable to non-controlling
interest (0.4) 0.3
Net IAS 41 valuation movement on biological
assets in JVs and associates 3.6 (1.4)
Tax on JVs and associates (3.9) (2.6)
Adjusting items:
Net IAS 41 valuation movement on biological
assets (16.9) (5.4)
Amortisation of acquired intangible assets (7.7) (8.3)
Share-based payment expense (6.0) (3.7)
Other gains and losses 2.7 -
Exceptional items (3.5) (2.0)
------- -------
Statutory Profit Before Tax 39.4 48.4
======= =======
Statutory profit before tax was GBP39.4m (2022: GBP48.4m), with
improved trading performance being offset by higher interest
expense, a higher non-cash fair value net charge for IAS 41
biological asset movement, higher share-based payment expenses and
higher net exceptional items. Within this, there was a GBP24.9m
reduction (2022: GBP24.5m uplift) in porcine biological assets,
primarily due to the temporary destocking of the Aurora farm in
Canada to complete a facility and health upgrade, and a GBP8.0m
uplift (2022: GBP29.9m reduction) in bovine biological assets, due
to certain fair value model estimate changes. Share-based payment
expense was GBP6.0m (2022: GBP3.7m). These reconciling items are
primarily non-cash, can be volatile and do not correlate to the
underlying trading performance in the year.
Exceptional Items
There was a GBP3.5m net exceptional expense in the year (2022:
GBP2.0m net expense), which included legal fees of GBP5.4m (2022:
GBP1.4m) primarily related to Genus ABS's ongoing litigation with
STgenetics and a GBP0.9m credit for a part that was settled during
the year. It also included a GBP1.7m credit relating to an in-year
sale of our Canadian ABS facilities, following the prior year ABS
production restructuring.
The prior year benefited from a GBP3.3m credit relating to a
non-refundable cash receipt related to a legacy legal claim in
Brazil, GBP2.8m of restructuring expense principally related to the
closure of ABS supply chain barns in Canada and GBP0.5m of one-time
costs to resolve an IT security incident.
Net Finance Costs
Net finance costs increased to GBP14.3m (2022: GBP6.2m),
primarily due to interest rate rises during the year. Average
interest rates more than doubled to 4.94% (2022: 2.27%), raising
the cost of like-for-like borrowings by GBP4.6m. Average borrowings
increased by 30% to GBP226.9m (2022: GBP173.9m), primarily due to
the cash investments in the prior period on supply chain capacity
and the acquisition of Olymel's AlphaGene programme, resulting in a
further GBP2.6m increase in interest costs in this year. The
interest rate increases were partially mitigated by the company's
fixed interest cover, which reduced the impact of rate increases by
around GBP1.0m.
Amortisation costs in the year were GBP1.1m (2022: GBP0.9m) and
within other interest there was IFRS 16 finance lease interest of
GBP1.2m (2022: GBP1.1m) and both a discount interest unwind on the
Group's pension liabilities and put options totalling GBP0.5m
(2022: GBP0.4m). Foreign interest in the year was an expense of
GBP0.2m (2022: GBP0.3m income).
Taxation
The statutory profit tax charge for the period, including share
of income tax of equity accounted investees, of GBP11.5m (June 22:
GBP14.3m) represents an effective tax rate (ETR) of 26.6% (June 22:
28.0%). The reduction in the statutory ETR of 1.4 points results
from the recognition of additional deferred tax assets, net of
increased UK and foreign tax rates, as explained further below.
The adjusted profit tax charge for the year of GBP15.9m (June
22: GBP17.4m) represents an ETR on adjusted profits of 22.2% (June
22: 24.3%), a reduction of 2.1 points. Of this, a decrease of 6.2
points is due to the recognition of deferred tax assets for brought
forward losses in Genus's Australia and France subsidiaries. This
is offset by a 1.5 point increase, due to the rise in the UK and
Consolidation Tax rates from 19% to 20.5%, and by a further 2.6
point increase in overseas taxes during the year. These higher
overseas taxes are due to an increased share of Group profits in
higher tax jurisdictions and reduced tax credits relating to
agricultural activity in China. The Group's anticipated adjusted
ETR for 2024 is 24% to 27%, which is higher than the current year
due to the full year impact of the UK tax rate increase to 25% that
took effect from April 2023 and the above noted change in profit
mix to higher tax rate jurisdictions.
Earnings Per Share
Adjusted basic earnings per share increased by 3% (5% reduction
in constant currency) to 84.8 pence (2022: 82.7 pence), reflecting
the improved trading performance and lower effective tax rate, and
offset by higher interest expenses. Basic earnings per share on a
statutory basis were 50.8 pence (2022: 62.5 pence), taking into
account the factors above and the impact of a higher non-cash fair
value net charge for IAS 41 biological asset movement, higher
share-based payment expenses and higher net exceptional items.
Biological Assets
A feature of the Group's net assets is its substantial
investment in biological assets, which under IAS 41 are stated at
fair value. At 30 June 2023, the carrying value of biological
assets was GBP364.7m (2022: GBP387.7m), as set out in the table
below:
2023 2022
GBPm GBPm
Non-current assets 318.2 333.7
Current assets 23.8 33.1
Inventory 22.7 20.9
------ ------
364.7 387.7
====== ======
Represented by:
Porcine 242.7 278.8
Dairy and beef 122.0 108.9
------ ------
364.7 387.7
====== ======
The movement in the overall balance sheet carrying value of
biological assets of GBP23.0m includes the effect of an exchange
rate translation decrease of GBP17.2m. Excluding the translation
effect there was:
-- a GBP23.7m reduction in the carrying value of porcine
biological assets, due principally to the depopulation of animals
held in Aurora, our genetic nucleus farm in Canada, in preparation
for an upgrade to the farm facilities and health status, and higher
global interest rates which impact the valuation discount rates;
and
-- a GBP17.9m increase in the bovine biological assets carrying
value, primarily reflecting increases in average selling
prices.
The historical cost of these assets, less depreciation, was
GBP83.4m at 30 June 2023 (2022: GBP77.2m), which is the basis used
for the adjusted results. The historical cost depreciation of these
assets included in adjusted results was GBP13.4m (2022:
GBP10.7m).
Retirement Benefit Obligations
The Group's retirement benefit obligations at 30 June 2023 were
GBP6.9m (2022: GBP8.3m) before tax and GBP5.6m (2022: GBP7.0m) net
of related deferred tax. The largest element of this liability now
relates to some legacy unfunded pension commitments dating prior to
Genus's acquisition of PIC.
Despite difficult stock market conditions, robust investment
strategies and higher bond yields during the year mean our two main
defined benefit obligation schemes have remained in sound financial
positions. Prior to any IFRIC 14 amendments, both the Dalgety
Pension Fund and our share of the Milk Pension Fund reported IAS 19
surpluses.
Cash Flow
2023 2022
Cash flow (before debt repayments) GBPm GBPm
Cash generated by operations 78.7 56.6
Interest and paid taxes (28.3) (22.3)
Capital expenditure (35.2) (50.9)
Net cash received from JVs 0.7 3.2
Other 2.3 (0.1)
------- -------
Free cash flow 18.2 (13.5)
Acquisitions and investments 1.2 (19.5)
Dividends (21.0) (20.9)
Net cash outflow (before debt repayments) (1.6) (53.9)
------- -------
Cash generated by operations of GBP78.7m (2022: GBP56.6m)
represented cash conversion of 105% (2022: 82%) of adjusted
operating profit excluding joint ventures. The cash conversion rate
of adjusted operating profit to cash exceeded our objective to
achieve conversion of at least 90% annually. We expect to continue
meeting this objective in the coming year. The increase in cash
generation primarily reflected a record adjusted EBITDA performance
of GBP110.6m (2022: GBP99.9m), along with lower working capital and
biological asset outflows. Working capital improvement was aided
particularly by focused accounts receivable collections, which
improved days sales outstanding by 8 days to 48 days.
Capital expenditure cash flow of GBP35.2m (2022: GBP50.9m) was
significantly lower as planned, after our peak year of investment
in 2022. Spend included GBP19.8m of continued investment in our
global facilities, as well as work to upgrade our Whenby UK
facility, further investment in global IntelliGen capabilities and
investment in software development, including the continued rollout
of our GenusOne platform and improvements to our digital
platform.
Net cash inflow from joint ventures was GBP0.7m (2022: GBP3.2m).
After interest and tax paid, total free cash flow was GBP18.2m
inflow (2022: GBP13.5m outflow).
The cash inflow from investments was GBP1.2m (2022: GBP19.5m
outflow), with proceeds from the sale of Caribou shares of GBP3.4m
being offset by investments in our China joint ventures of GBP1.0m,
to increase production capacity, and GBP0.8m of deferred
consideration payments from previous acquisitions. The prior-year
investments included GBP14.5m to acquire the intellectual property
in Olymel's elite porcine genetics.
Net Debt and Credit Facilities
Net debt increased to GBP195.8m at 30 June 2023 (2022:
GBP185.0m). Cash inflows and outflows in the year largely balanced,
with the increase in net debt primarily driven by new lease
agreements. The ratio of net debt to EBITDA as calculated under our
financing facilities at the year-end has reduced to 1.6 times
(2022: 1.7 times) which remains in line with our medium-term
objective of having a ratio of net debt to EBITDA of between 1.0 -
2.0 times. At the end of June 2023, interest cover was at 10 times
(2022: 27 times).
During the year, the Group's principal credit facilities
comprised a GBP190m multi-currency revolving credit facility (RCF),
a USD 150m RCF and a USD 20m bond and guarantee facility. An
additional GBP40m of accordion facility remains available for the
duration of the facility agreement. The maturity date of the
facility was extended by a further year in August 2022, to 24
August 2025. EBITDA, as calculated under our financing facilities,
includes cash received from joint ventures. Net debt as calculated
under our financing facilities excludes IFRS 16 lease liabilities
up to a cap of GBP30m but includes bank guarantees. On 30 June
2023, the Group had headroom of GBP118.7m (2022: GBP77.8m) under
its available credit facilities.
Capital allocation priorities and return on adjusted invested
capital
Our capital allocation prioritises the investment of cash in
areas that will deliver future earnings growth and strong cash
returns on a sustainable basis. This includes investment for
organic growth as a first priority through investment in our
existing businesses, including capital expenditure in
infrastructure, innovation in new products and the development of
our people. We supplement organic growth with value enhancing
acquisitions in current and adjacent market niches, aligned with
our purpose. This brings new technology, intellectual property and
talent into the Group and expands our market reach, keeping Genus
well-positioned in growing markets over the long term.
The return on adjusted invested capital, as defined in the
alternative performance measures glossary, was higher at 14.7%
(2022: 13.9%), reflecting growth of 14% in adjusted operating
profit including joint ventures after tax to GBP66.8m (2022:
GBP58.8m), due to the 10% increase in operating profit including
joint ventures, and a 2.1 point improvement in the adjusted
effective tax rate. Adjusted invested capital increased at a slower
rate, by 8% to GBP455.0m (2022: GBP422.0m), as we continued to
invest in facilities, IntelliGen capacity, digital capability and
our biological assets.
Dividend
Recognising the importance of balancing investment for the
future with ensuring an attractive return for shareholders, the
Board is recommending a final dividend of 21.7 pence per ordinary
share, consistent with the prior year final dividend. When combined
with the interim dividend, this will result in a total dividend for
the year of 32.0 pence per ordinary share (2022: 32.0 pence per
share). Dividend cover from adjusted earnings of 2.7 times (2022:
2.6 times), is within the medium-term target of an adjusted
earnings cover range of 2.5 to 3.0 times.
It is proposed that the final dividend will be paid on 8
December 2023 to the shareholders on the register at the close of
business on 10 November 2023.
Genus PIC - Operating Review
Actual currency Constant
currency
change
---------
Year ended 30 June 2023 2022 Change
----- ----- ------ ---------
GBPm GBPm % %
Revenue 349.5 306.6 14 7
Adjusted operating
profit exc JV 135.0 112.3 20 11
Adjusted operating
profit inc JV 145.3 121.2 20 11
Adjusted operating
margin exc JV 38.6% 36.6% 2.0pts 1.6pts
Porcine markets around the world continued to face challenging
conditions during the year. These included economic uncertainty,
volatile pig prices and outbreaks of disease, especially African
Swine Fever (ASF) and PRRSv. China, the world's largest porcine
market, experienced greater volatility than other markets. Pig
prices in China averaged 18.8 RMB/kg through the year and were much
weaker than expected in the second half, averaging 14.7 RMB/kg
since January.
Price declines in many regions caused significant pressure on
producer margins. This, together with inflation increasing input
costs, drove some producers to reduce or delay replenishing their
herds.
Despite such challenging conditions impacting porcine markets,
PIC increased adjusted operating profit by 11% as the business
continued to expand and strengthen commercial relationships with
producers around the world. Volumes rose by 5%, aided by increased
breeding stock sales in Europe and further growth in market share
within North America. Revenue growth across all regions resulted in
overall revenue increasing by 7% and strategically important
royalty revenue rising by 10%.
North America
The US breeding herd declined slightly, with slower production
growth in the second half of the year as domestic demand was lower
in the face of rising inflation and competition from other
proteins. Pig prices fell sharply as a result, reducing producer
margins already under pressure from high input costs. However,
exports continued to grow, aided by lower prices compared with some
other markets and a weakening US dollar. This was driven
particularly by strong demand from China and Mexico.
Performance: The business performed strongly throughout the
year, with market share gains across our customer base through
sales of both sireline and damline products (volumes up 4% and 15%
respectively). This was aided particularly by the continuing
popularity of the PIC 800 sire and Camborough sow. The increases in
market share and contributions from Olymel's AlphaGene programme
drove strong royalty revenue growth and a double-digit increase in
adjusted operating profit.
-- volumes +9%
-- revenue +4% and royalty revenue +8%
-- adjusted operating profit +9%
Latin America
In Mexico, pork prices were lower than the previous year but
remained well above the five-year average and rose again in the
final quarter. Production increased slightly, as expected, but
weaker domestic demand meant many producers made losses for much of
the year, although they are now approaching or above breakeven. In
Brazil, declining feed prices fuelled an increase in production and
helped to meet rising export demand, particularly from China. These
exports, when combined with seasonal domestic demand, helped pig
prices rise by over 10% in the final quarter, strengthening
producer margins.
Performance: Lower breeding stock sales meant sales revenue
declined. However, strong royalty revenue from Mexico, Chile and
Colombia, as well as 14% growth in income from our joint venture
with Agroceres, drove a double-digit increase in adjusted operating
profit, with all the larger countries contributing.
-- volumes 0%
-- revenue -6% and royalty revenue +12%
-- adjusted operating profit +12%
Europe
The region experienced the greatest reduction in its breeding
herd for 10 years and production contracted in major markets, due
to the ongoing economic, geopolitical and regulatory challenges
impacting the agricultural sector. This led to tight supply,
driving pig prices to record highs and significantly improving
producer margins. These factors, along with high feed costs,
disease challenges and declining pork exports, are likely to
constrain industry recovery and sow herd growth in the future.
Performance: Despite challenging market conditions, breeding
stock sales in relation to royalty contracts rose and led to
revenue growing 20%. Rising royalty revenue, including double-digit
growth in Spain, PIC's largest European market, and Russia, from
previous expansion projects, helped the business deliver further
growth in adjusted operating profit.
-- volumes +8%
-- revenue +20% and royalty revenue +9%
-- adjusted operating profit +6%
Asia
Volatility in the China porcine market continued through this
fiscal year, with p ig prices declining from a high of 28 RMB/kg in
October 2022 to 14 RMB/kg by the end of June 2023. In addition,
China experienced significant ASF outbreaks, which created high
levels of pork inventory, and there was a slow recovery in domestic
demand following the relaxation of COVID-19 restrictions. All these
factors resulted in many producers operating at a loss and
remaining cautious. Elsewhere in the region, ASF outbreaks affected
both Vietnam and the Philippines, although pork production is
gradually growing in both markets.
Performance: Rising sales in the Philippines and Asia franchise
businesses, including Vietnam and South Korea, led to increased
revenue. In China, market volatility caused a decline in breeding
stock sales, but overall revenue remained stable, aided in
particular by solid growth in royalty revenue . The growth in
royalty revenue, as well as the impact of a one-time GBP4m customer
credit in the prior year, meant there was a double-digit rise in
adjusted operating profit despite lower breeding stock margins and
the impact of two disease outbreaks on joint venture farms in the
second half of the year. Continued investment in China's supply
chain and biosecurity means Genus is well-positioned to benefit as
the market stabilises.
-- volumes 0% (PIC China -1%)
-- revenue +3% (PIC China stable) and royalty revenue +20% (PIC China +26%)
-- adjusted operating profit +32% (PIC China +62%)
Genus ABS - Operating Review
Actual currency Constant
currency
change
---------
Year ended 30 June 2023 2022 Change
----- ----- -------- ---------
GBPm GBPm % %
Revenue 318.8 272.0 17 12
Adjusted operating
profit 43.6 40.5 8 5
Adjusted operating
margin 13.7% 14.9% (1.2)pts (1.1)pts
Declining feed costs encouraged producers in Europe to maintain
high levels of milk production, but markets in Latin America were
affected by high costs, drought and limited forage. Growth in China
was more modest than expected due to slow recovery following the
relaxation of COVID-19 restrictions. High inventory and weaker
consumer demand led to reduced milk prices in Brazil and China, and
prices in the US declined significantly in the second half of the
year.
Global beef production remained steady, with dips in the US and
Europe offset by rises in Brazil and Australia. Beef prices
remained high in the US but declined year-on-year in Brazil, due to
high inventory and lower consumer spending power. Prices in Europe
declined as more animals were sent to slaughter in response to the
falling milk prices.
Despite the challenging market conditions, ABS continued to
expand and strengthen its partnerships with strategic accounts
around the world. Through these exclusive relationships, ABS is
developing and delivering bespoke genetic plans and growing sales
of Sexcel and NuEra beef genetics to accelerate customer success.
These relationships drove a 3% increase in volumes, which more than
offset lower sales of conventional beef and dairy genetics in some
markets. More widely, the business continued to follow robust
pricing strategies to mitigate the impact of cost inflation and
exercised effective cost management. Such factors helped to deliver
a 12% rise in revenue, which translated into 5% growth in adjusted
operating profit, after taking account of the impact of higher
supply chain costs following an IT incident in June 2022.
North America
Dairy demand remained stable but milk prices fell significantly
in the second half of the year. This reduced producer margins,
leading to higher herd culling and feed ration changes, which is
likely to slow growth in milk production. The US beef herd
contracted due to drought conditions and production has declined
during 2023 to date, with tighter supply driving wholesale prices
to approach record highs. These have yet to impact retail demand
but the high prices and lower domestic production have
significantly reduced export volumes.
Performance: Double-digit growth in revenue was driven by robust
price increases, rising sales of sexed genetics and ancillary
products and services. This more than offset lower volumes of
conventional and beef genetics as customers used sexed genetics to
invest in more replacement heifers, rather than beef by-product
income. These activities, along with continued expansion of our
IntelliGen sexed processing for third-party customers, achieved a
17% increase in adjusted operating profit.
-- volumes +5%
-- revenue +15%
-- adjusted operating profit +17%
Latin America
High costs, drought and limited forage availability affected
milk production in Argentina and Uruguay, reducing producer
margins. Milk production in Brazil remained subdued and previously
rising prices are now declining due to lower consumer demand and
the increase in supply following imports. Strong beef exports from
Brazil were driven by growing demand from China in particular, but
high inventory and lower consumer purchasing power impacted the
domestic market. Demand for beef in Mexico remains steady and
exports have recently improved after a slow start to 2023.
Performance: A transition from conventional to sexed genetics
across the region, along with robust price increases, led to a 12%
rise in revenue on broadly stable volumes comparable to the
previous year. Growth and effective cost management in Argentina
supported an increase in adjusted operating profit there, although
this was offset by declines in other countries, primarily Brazil,
where there were challenging market conditions that particularly
impacted the embryo business, along with high business cost
inflation.
-- volumes -1%
-- revenue +12%
-- adjusted operating profit 0%
Europe
Lower input costs encouraged producers to maintain milk
production levels. Following highs in the previous year, milk
prices declined amid concerns over weakening consumer demand in the
face of inflationary pressure. Beef production across the region
dipped and carcass prices have begun to decline as more cows are
sent for slaughter in response to the falling milk price, although
it remains well above the five-year average. Beef exports fell by
more than 20% during the year, as high carcass prices led customers
in some markets to source cheaper alternatives.
Performance: Increased sales in most retail markets,
particularly France and Russia, were partially offset by lower
volumes in some distributor-led markets, due to economic conditions
and limited availability of certain types of bulls for those
markets. However, both revenue and adjusted operating profit rose
following targeted price increases and the expansion of GeneAdvance
long-term contracts with strategic accounts. IntelliGen third-party
business in the region continued to grow, with new customers in
Italy, the Netherlands, and Israel.
-- volumes +1%
-- revenue +8%
-- adjusted operating profit +7%
Asia
Milk production in China continued to grow, albeit more slowly
in the second half of the year, but high domestic inventory and
weak consumer demand meant that milk prices declined. This led to
growing numbers of animals being sent to slaughter, boosting beef
production. Slaughter volumes also increased in Australia, but
lower domestic milk production contributed to a double-digit
reduction in exports. Growth in India's milk production slowed,
despite increasing consumer demand, due to the impact of disease
outbreaks and rising costs, particularly for feed. Demand for beef
in Japan continued to fall.
Performance: Overall volumes rose by 8%, with double-digit
growth in sales of sexed genetics in Australia, China and India
tempered by fewer deliveries through our distributor network,
particularly in Japan due to a market slowdown in the second half
of the year. Growth in volumes in India were driven by a contract
with the Government of India and support for third-party customers
through IntelliGen technology. These increases in volumes, together
with significant strategic account growth in China, drove a 20%
rise in revenue and 4% increase in adjusted operating profit.
-- volumes +8%
-- revenue +20%
-- adjusted operating profit +4%
Research and Development - Operating Review
Actual currency Constant
currency
change
Year ended 30 June 2023 2022 Change
----- ---- ------
GBPm GBPm % %
Porcine product development 29.7 22.5 32 24
Bovine product development 24.9 22.7 10 1
Gene editing 14.3 7.9 81 66
Other research and
development 17.4 14.0 24 13
----- ---- ------ ---------
Net expenditure in
R&D 86.3 67.1 29 19
During the year, net research and development expenditure rose
by 19% in constant currency, as planned. This increase enabled
further investment in a wide range of areas, including the research
and development pipeline, new technologies, gene editing projects
and product development initiatives.
Porcine product development
Porcine product development made further progress on genomic
selection and enhanced genetic gain for target traits, including
prolificacy, throughput, carcass value and efficiency. We also
expanded our use of digital phenotyping to four further sites,
helping us identify patterns in movement and behaviour to aid
improvement of robustness and longevity. These advances, along with
continued expansion of our global supply chain (including the
addition of three facilities to our nucleus network) enabled us to
enhance resilience of supply for customers around the world.
Product development costs increased by 24% during the year, due
principally to the start of operations at our Atlas facility in
Canada. Higher feed prices during the year also contributed to the
increase in expenditure.
Bovine product development
We continued to strengthen our proprietary range of NuEra beef
genetics and to invest in further product trials, from which
preliminary data shows positive performance against competitor
genetics in areas such as feed efficiency and growth rates.
We made further investments in our proprietary bovine sexing
technology, enabling us to continue strengthening our capability to
produce sexed genetics for ABS and for third-party customers
through IntelliGen technology.
Gene editing
We made significant progress on our PRRSv-resistant pig
programme, as we seek regulatory approval for our gene-edited
animals in target markets around the world. This included
completing data submissions to the FDA ahead of schedule and we
expect approval in the first half of 2024. We are also making
regulatory progress in Brazil and Colombia andwe gained consent to
import PRRSv-resistant pigs to China, for in-country regulatory
assessment. In parallel, we continued to expand capacity across our
nucleus network in preparation for the potential marketing of our
gene-edited animals. We also continued to explore how responsible
use of gene editing could combat other porcine diseases. This
included evaluating potential target edits and establishing further
collaborations with academic partners.
Other research and development
Other research and development expenditure increased by 13%,
compared to the previous year. This enabled us to make further
progress with our pioneering work on reproductive biology,
including collaborating with the University of Florida to explore
how embryonic stem cells could enhance genetic gain, and
introducing a new medium for embryo culture, which improves the
quantity and quality of embryos produced in commercial
laboratories.
The increased investment also helped us develop our work on
biosystems engineering and data analytics, with progress in the
latter area enabling us to link and query different data sets
simultaneously and elicit faster and deeper insights to inform
genetic improvement. We also continued to collaborate with external
partners on a series of discovery projects.
genus risk management
Genus is exposed to a wide range of risks and uncertainties as
it fulfils its purpose of providing farmers with superior genetics,
which in turn supports the fulfilment of its vision of nourishing
the world more sustainably.
Some of these risks relate to our business operations, while
others relate to future commercial exploitation of our leading-edge
R&D programmes. We are also exposed to global economic and
political risks such as trade restrictions attributed to the
ongoing Russia-Ukraine conflict and slow economic recovery in China
post Covid-19.
As part of our risk management process, we monitor emerging
risks and consider when to include them in our main risk assessment
process. This year our reviews of risks focused on:
-- the continued impact of the Russia-Ukraine conflict;
-- geopolitical tensions across the globe;
-- macroeconomic conditions;
-- impacts of climate change;
-- carbon pricing; and
-- cyber security.
There have been two changes to our principal risks this year.
The first is an increase to our Sustainability risk given increased
regulations, reporting requirements and carbon pricing. The second
is a reduction in our Hiring and
Retaining Talented People risk based on our successful
recruitment and succession planning for key positions.
Last year we elevated cyber security to a principal risk and we
continue to see an increase in the sophistication and frequency of
cyber-crime across industries.
From our broad risk universe, we have identified 11 principal
risks, which we regularly evaluate based on an assessment of the
likelihood of occurrence and the magnitude of potential impact,
together with the effectiveness of our risk mitigation
controls.
Risk Risk description How we manage Risk change in
risk FY23
--------------- ------------------------------------------------------------- ---------------- ------------------
Strategic Risks
DEVELOPING Dedicated teams No change. Our
PRODUCTS * Development programmes fail to produce best genetics align analysis and
WITH for customers. our product benchmarking
COMPETITIVE development continue to
ADVANTAGE to customer support
* Increased competition to secure elite genetics. requirements. our genetic
We use improvements.
large-scale
data and
advanced
genomic analysis
to
ensure we meet
our
breeding goals.
We
frequently
measure
our performance
against
competitors in
customers'
systems, to
ensure
the value added
by
our genetics
remains
competitive. We
also
partner with
universities
and other bodies
to
further our
developments.
------------------------------------------------------------- ---------------- ----------------
CONTINUING Our continued No change. We
TO SUCCESSFULLY * Failure to manage the technical, production and development have
DEVELOP financial risks associated with the rapid development of the expanded the
INTELLIGEN of the IntelliGen business. technology number
TECHNOLOGY and its of machines in
deployment our customer
to new markets base
is this year and
supported by continue
dedicated to optimise
internal performance.
resources
and agreements There continues
with to be
suppliers. To uncertainty
ensure over further
optimum legal
performance actions and
we provide uncertainties
maintenance in relation to
and specialist patent
training infringements.
to our
customers.
Current patent
infringement
proceedings
initiated
by STgenetics in
the
US continue to
be
vigorously
defended.
--------------- ------------------------------------------------------------- ---------------- ----------------
DEVELOPING We stay aware of No change. Key
AND * Failure to develop successfully and commercialise new initiatives
COMMERCIALISING gene-editing technologies due to technical, technology continue
GENE EDITING intellectual property ('IP'), market, regulatory or opportunities to progress
AND OTHER financial barriers. through a wide through
NEW network the R&D life
TECHNOLOGIES of academic and cycle,
* Competitors secure 'game- changing' new technology. industry and we maintain
contacts. Our the high level
Genus of investment
Portfolio needed
Steering to bring the end
Committee products to
oversees market.
our research,
ensures We work closely
we correctly with regulators
prioritise to ensure our
our R&D products
investments meet exacting
and assesses the standards.
adequacy We are expecting
of resources and FDA regulatory
the approval for our
relevant IP PRRSv resistant
landscapes. pigs in the
We have formal first
collaboration half of 2024.
agreements with
key
partners, to
ensure
responsible
exploration
and development
of
technologies and
the
protection of
IP.
The Board is
updated
regularly on key
development
projects.
--------------- ------------------------------------------------------------- ---------------- ----------------
CAPTURING We have a No change. We
VALUE THROUGH * Failure to identify appropriate investment rigorous continue
ACQUISITIONS opportunities or to perform sound due diligence. acquisition to work
analysis diligently
and due to identify
* Failure to successfully integrate an acquired diligence areas
business. process, with of opportunity
the consistent with
Board reviewing our strategic
and plans,
signing off all values and our
material aim to
projects. We accelerate
also growth and
have a create
structured value for our
post-acquisition shareholders.
integration Our experiences
planning and with
execution post-acquisition
process focused integration
on provide
maximising value a platform for
successfully
integrating
newly acquired
businesses.
--------------- ------------------------------------------------------------- ---------------- ----------------
SUCCEEDING Our organisation No change. The
IN GROWTH * Failure to appropriately develop our business in blends global
MARKETS China and other growth markets. local and macroeconomic
expatriate conditions
executives, driven
supported by post Covid-19
by the global recovery and the
species Russia-Ukraine
teams, to allow conflict have
us driven
to grow our market price
business volatility.
in key markets, This has been
while especially
managing risks felt in the
and China
ensuring we porcine market.
comply
with our global
standards
and with
sanctions.
We also
establish
local
partnerships
where
appropriate,
to increase
market
access.
------------------------------------------------------------- ---------------- ----------------
Risk Risk description How we manage Risk change in
risk FY23
------------------------------------------------------------- ---------------- -----------------
Strategic Risks continued
SUSTAINABILITY We have a global Increased.
* Failure to lead the market in sustainable animal sustainability There
protein production and help our customers to meet the strategy and is increasing
challenge of producing meat and milk efficiently and Climate regulation
sustainably, as climate change increases demand. Change Policy and demand for
that transparency
are approved, and
* Failure to fulfil our commitment to reduce the and accuracy of
environmental impact of our own operations and regularly reporting
implement our Climate Change Policy and TCFD reviewed, on
reporting. at Board level. sustainability
Our targets. There
Sustainability is an increase
Committee in carbon cost
oversees the and a notable
implementation change
of the strategy in more
and frequent
the annual weather-related
objective events across
setting process the
as globe.
well as
monitoring Our carbon
progress using reduction
key plans are on
performance track
indicators to meet our
and our 2030
sustainability goals and we
risk register. have
We achieved a
have developed significant
our reduction in
2030 emissions our
reduction intensity
plan (and 2050 measures
net since 2019.
zero plan) and
developed
quantifiable,
robust
performance
indicators
in relation to
life-cycle
carbon reduction
(per
generation) of
pigs,
beef and dairy
cows.
Operational Risks
PROTECTING We have a No change. We
IP * Failure to protect our IP could mean Genus-developed global, continue
genetic material, methods, systems and technology cross-functional actively to
become freely available to third parties. process protect
to identify and our IP by
protect filing
our IP. Our patents
customer attributed
contracts and to our R&D
our activity.
selection of
multipliers
and joint
venture
partners include
appropriate
measures to
protect
our IP. We
maintain
IP appropriate
landscape
watches and
where
necessary
conduct
robust 'freedom
to
operate'
searches,
to identify
third-party
rights to
technology.
-------------- ------------------------------------------------------------- ---------------- ---------------
ENSURING We have No change.
BIOSECURITY * Loss of key livestock, owing to disease outbreak. stringent There
AND CONTINUITY biosecurity continue to be
OF SUPPLY standards, global supply
* Loss of ability to move animals or semen freely with independent chain
(including across borders) due to disease outbreak, reviews challenges
environmental incident or international trade throughout the driven
sanctions and disputes. year by the current
to ensure economic
compliance. climate,
* Lower demand for our products, due to industry-wide We investigate increased trade
disease outbreaks. biosecurity sanctions, and
incidents, to the continued
ensure spread
learning across of ASF,
the especially
organisation. We in China.
regularly
review the
geographical
diversity of our
production
facilities, to
avoid
over-reliance on
single
sites.
-------------- ------------------------------------------------------------- ---------------- ---------------
HIRING AND We have a robust Reduced. We
RETAINING * Failure to attract, recruit, develop and retain the talent have
TALENTED global talent needed to deliver our growth plans and and succession been able to
PEOPLE R&D programmes. planning attract
process, and recruit key
including talent to
annual critical
assessments roles including
of our global the new CEO.
talent Post-COVID
pool and active employee
leadership turnover
development in certain
programmes. areas
The Group's has now
reward returned
and remuneration to normal
policies levels.
are reviewed
regularly,
to ensure their
competitiveness,
and we have a
long-term
retention
incentive
scheme. We work
closely
with several
specialist
recruitment
agencies,
to identify
candidates
with the skills
we
need.
-------------- ------------------------------------------------------------- ---------------- ---------------
Risk Risk description How we manage Risk change in
risk FY23
-------------------------------------------------------------- ------------- -----------------
Operational Risks continued
CYBER We utilise a No change.
SECURITY * Failure to adequately detect and mitigate a malicious flexible There
cyber-attack by internal or external activists and multi-layered has been a
the ability to quickly recover. approach continued
that focuses rise in the
on employee sophistication,
* Failure to properly protect our data and systems from awareness and methods of
an attack. training, attack
policies, and frequency
software, of
and a cyber-crime.
third-party Increased
24 x 7 geopolitical
monitoring tensions
Security also heighten
Operations the
Centre and risks of a
follow targeted
ISO 27001 cyber-attack.
standards. To
We have mitigate these
improved our risks, our
system and programme
data backup of enhancing
procedures cyber
and hardened protection
our servers following
to further the IT security
strengthen incident in
our June
resilience 2022 was
and have a successfully
programme implemented in
focused on the year.
continued
cyber
security
improvements.
Our GenusOne
programme
continues to
progress
well,
improving our
operational
controls
and IT
security as
we move to
the cloud.
-------------------------------------------------------------- ------------- ---------------
Financial Risks
MANAGING We No change.
AGRICULTURAL * Fluctuations in agricultural markets affect customer continuously There
MARKET AND profitability and therefore demand for our products monitor has been a slow
COMMODITY and services. markets and post Covid-19
PRICES seek to economic
VOLATILITY balance our recovery and
* Commodity pricing volatility may increase our costs global
operating costs. and resources inflationary
in response pressure,
to market however
* Climate factors may have a longer-term influence on demand. agricultural
the cost and availability of agricultural inputs We actively input prices
(animal feed). monitor are
and update now reducing
our hedging for
* Geopolitical tensions and the Russia-Ukraine conflict strategy to producers in
may impact on agricultural markets. manage many
our exposure. of our markets.
Our The China pork
porcine market
royalty model continues
and extensive to deal with
use the
of challenges of
third-party ASF,
multipliers volatile prices
mitigates the and weak
impact demand.
of cyclical
price
and/or cost
changes
in pig
production.
------------ -------------------------------------------------------------- ------------- ---------------
Group Income Statement
For the year ended 30 June 2023
2023 2022
Note GBPm GBPm
---------------------------------------------------------- ---- ------ ------
REVENUE 3 689.7 593.4
Adjusted operating profit 3 74.6 68.8
Adjusting items:
- Net IAS 41 valuation movement on biological assets 11 (16.9) (5.4)
- Amortisation of acquired intangible assets 10 (7.7) (8.3)
- Share-based payment expense (6.0) (3.7)
---------------------------------------------------------- ---- ------ ------
(30.6) (17.4)
Exceptional items (net) 4 (3.5) (2.0)
---------------------------------------------------------- ---- ------ ------
Total adjusting items (34.1) (19.4)
OPERATING PROFIT 40.5 49.4
Share of post-tax profit of joint ventures and associates
retained 13 10.5 5.2
Other gains and losses 5 2.7 -
Finance costs 6 (15.4) (6.6)
Finance income 6 1.1 0.4
---------------------------------------------------------- ---- ------ ------
PROFIT BEFORE TAX 39.4 48.4
Taxation 7 (7.6) (11.7)
---------------------------------------------------------- ---- ------ ------
PROFIT FOR THE YEAR 31.8 36.7
---------------------------------------------------------- ---- ------ ------
ATTRIBUTABLE TO:
Owners of the Company 33.3 40.9
Non-controlling interest (1.5) (4.2)
---------------------------------------------------------- ---- ------ ------
31.8 36.7
---------------------------------------------------------- ---- ------ ------
EARNINGS PER SHARE
Basic earnings per share 8 50.8p 62.5p
Diluted earnings per share 8 50.5p 62.2p
---------------------------------------------------------- ---- ------ ------
2023 2022
Note GBPm GBPm
----------------------------------------------------- ---- ------ ------
Alternative Performance Measures
Adjusted operating profit 74.6 68.8
Adjusted operating loss/(profit) attributable to
non-controlling interest 0.4 (0.3)
Pre-tax share of profits from joint ventures and
associates excluding net IAS 41 valuation movement 10.8 9.2
Gene editing costs 14.3 7.9
----------------------------------------------------- ---- ------ ------
Adjusted operating profit including joint ventures
and associates, excluding gene editing costs 100.1 85.6
Gene editing costs (14.3) (7.9)
----------------------------------------------------- ---- ------ ------
Adjusted operating profit including joint ventures
and associates 85.8 77.7
Net finance costs 6 (14.3) (6.2)
----------------------------------------------------- ---- ------ ------
Adjusted profit before tax 71.5 71.5
----------------------------------------------------- ---- ------ ------
Adjusted earnings per share
Basic adjusted earnings per share 8 84.8p 82.7p
Diluted adjusted earnings per share 8 84.2p 82.3p
----------------------------------------------------- ---- ------ ------
Adjusted results are the Alternative Performance Measures
('APMs') used by the Board to monitor underlying performance at a
Group and operating segment level, which are applied consistently
throughout. These APMs should be considered in addition to
statutory measures, and not as a substitute for or as superior to
them. For more information on APMs, see APM Glossary.
Group Statement of Comprehensive Income
For the year ended 30 June 2023
2023 2023 2022 2022
Note GBPm GBPm GBPm GBPm
-------------------------------------------------- ---- ------ ------ ------ -----
PROFIT FOR THE YEAR 31.8 36.7
Items that may be reclassified subsequently
to profit or loss
Foreign exchange translation differences (27.2) 66.6
Fair value movement on net investment
hedges - (0.7)
Fair value movement on cash flow hedges 0.8 1.9
Tax relating to components of other comprehensive
expense/(income) 3.1 (8.2)
-------------------------------------------------- ---- ------ ------ ------ -----
(23.3) 59.6
Items that may not be reclassified subsequently
to profit or loss
Actuarial (loss)/gains on retirement
benefit obligations 17 (40.4) 27.3
Movement on pension asset recognition
restriction 17 38.3 (69.8)
Release of additional pension liability 17 3.0 43.7
Gain/(loss) on equity instruments measured
at fair value 1.7 (6.1)
Tax relating to components of other comprehensive
(income)/expense (1.2) 1.1
-------------------------------------------------- ---- ------ ------ ------ -----
1.4 (3.8)
-------------------------------------------------- ---- ------ ------ ------ -----
OTHER COMPREHENSIVE (EXPENSE)/INCOME
FOR THE YEAR (21.9) 55.8
-------------------------------------------------- ---- ------ ------ ------ -----
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 9.9 92.5
-------------------------------------------------- ---- ------ ------ ------ -----
ATTRIBUTABLE TO:
Owners of the Company 11.1 97.3
Non-controlling interest (1.2) (4.8)
-------------------------------------------------- ---- ------ ------ ------ -----
9.9 92.5
-------------------------------------------------- ---- ------ ------ ------ -----
Group Statement of Changes in Equity
For the year ended 30 June 2023
Called
up Share Trans- Non-
share premium Own 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
2021 6.6 179.1 (0.1) (7.9) - 320.4 498.1 (1.5) 496.6
Foreign exchange
translation
differences, net of
tax - - - 59.4 - - 59.4 (0.6) 58.8
Fair value movement
on net
investment hedges,
net of tax - - - (0.6) - - (0.6) - (0.6)
Fair value movement
on cash
flow hedges, net of
tax - - - - 1.4 - 1.4 - 1.4
Loss on equity
instruments
measured at fair
value, net
of tax - - - - - (4.6) (4.6) - (4.6)
Actuarial gains on
retirement
benefit obligations,
net of
tax - - - - - 19.5 19.5 - 19.5
Movement on pension
asset recognition
restriction, net of
tax - - - - - (49.7) (49.7) - (49.7)
Recognition of
additional pension
liability, net of
tax - - - - - 31.0 31.0 - 31.0
--------------------- ---- -------- -------- ------- -------- -------- --------- ------ ------------ -------
Other comprehensive
income/(expense)
for the year - - - 58.8 1.4 (3.8) 56.4 (0.6) 55.8
Profit/(loss) for the
year - - - - - 40.9 40.9 (4.2) 36.7
--------------------- ---- -------- -------- ------- -------- -------- --------- ------ ------------ -------
Total comprehensive
income/(expense)
for the year - - - 58.8 1.4 37.1 97.3 (4.8) 92.5
Recognition of
share-based
payments, net of tax - - - - - 4.0 4.0 - 4.0
Dividends 9 - - - - - (20.9) (20.9) - (20.9)
Adjustment arising
from change
in non-controlling
interest
and written put
option - - - - - - - (0.1) (0.1)
--------------------- ---- -------- -------- ------- -------- -------- --------- ------ ------------ -------
BALANCE AT 30 JUNE
2022 6.6 179.1 (0.1) 50.9 1.4 340.6 578.5 (6.4) 572.1
Foreign exchange
translation
differences, net of
tax - - - (24.2) - - (24.2) 0.3 (23.9)
Fair value movement
on net
investment hedges,
net of tax - - - - - - - - -
Fair value movement
on cash
flow hedges, net of
tax - - - - 0.6 - 0.6 - 0.6
Gain on equity
instruments
measured at fair
value, net
of tax - - - - - 0.7 0.7 - 0.7
Actuarial loss on
retirement
benefit obligations,
net of
tax - - - - - (30.3) (30.3) - (30.3)
Movement on pension
asset recognition
restriction, net of
tax - - - - - 28.7 28.7 - 28.7
Recognition of
additional pension
liability, net of
tax - - - - - 2.3 2.3 - 2.3
--------------------- ---- -------- -------- ------- -------- -------- --------- ------ ------------ -------
Other comprehensive
(expense)/income
for the year - - - (24.2) 0.6 1.4 (22.2) 0.3 (21.9)
Profit/(loss) for the
year - - - - - 33.3 33.3 (1.5) 31.8
--------------------- ---- -------- -------- ------- -------- -------- --------- ------ ------------ -------
Total comprehensive
income/(expense)
for the year - - - (24.2) 0.6 34.7 11.1 (1.2) 9.9
Recognition of
share-based
payments, net of tax - - - - - 6.3 6.3 - 6.3
Dividends 9 - - - (21.0) (21.0) - (21.0)
Adjustment arising
from change
in non-controlling
interest
and written put
option - - - - - - - (0.1) (0.1)
--------------------- ---- -------- -------- ------- -------- -------- --------- ------ ------------ -------
BALANCE AT 30 JUNE
2023 6.6 179.1 (0.1) 26.7 2.0 360.6 574.9 (7.7) 567.2
--------------------- ---- -------- -------- ------- -------- -------- --------- ------ ------------ -------
Group Balance Sheet
As at 30 June 2023
2023 2022
Note GBPm GBPm
--------------------------------------------- ---- ------- -------
ASSETS
Goodwill 107.8 111.0
Other intangible assets 10 66.2 72.0
Biological assets 11 318.2 333.7
Property, plant and equipment 12 164.4 171.4
Interests in joint ventures and associates 13 53.5 41.2
Other investments 8.8 10.2
Derivative financial assets 4.9 2.2
Other receivables 15 8.2 8.6
Deferred tax assets 16.5 10.1
--------------------------------------------- ---- ------- -------
TOTAL NON-CURRENT ASSETS 748.5 760.4
--------------------------------------------- ---- ------- -------
Inventories 14 61.3 50.9
Biological assets 11 23.8 33.1
Trade and other receivables 15 132.1 129.5
Cash and cash equivalents 36.3 38.8
Income tax receivable 4.0 4.0
Derivative financial assets 1.5 1.0
Asset held for sale - 0.2
--------------------------------------------- ---- ------- -------
TOTAL CURRENT ASSETS 259.0 257.5
--------------------------------------------- ---- ------- -------
TOTAL ASSETS 1,007.5 1,017.9
--------------------------------------------- ---- ------- -------
LIABILITIES
Trade and other payables 16 (122.0) (124.7)
Interest-bearing loans and borrowings (4.2) (7.1)
Provisions (1.8) (1.9)
Deferred consideration - (0.8)
Obligations under leases (10.0) (10.1)
Tax liabilities (7.4) (4.9)
Derivative financial liabilities (1.8) (1.8)
--------------------------------------------- ---- ------- -------
TOTAL CURRENT LIABILITIES (147.2) (151.3)
--------------------------------------------- ---- ------- -------
Trade and other payables 16 - (0.2)
Interest-bearing loans and borrowings (196.0) (182.1)
Retirement benefit obligations 17 (6.9) (8.3)
Provisions (10.3) (12.0)
Deferred consideration (0.6) (0.7)
Deferred tax liabilities (51.2) (60.3)
Derivative financial liabilities (6.2) (6.4)
Obligations under leases (21.9) (24.5)
--------------------------------------------- ---- ------- -------
TOTAL NON-CURRENT LIABILITIES (293.1) (294.5)
--------------------------------------------- ---- ------- -------
TOTAL LIABILITIES (440.3) (445.8)
--------------------------------------------- ---- ------- -------
NET ASSETS 567.2 572.1
--------------------------------------------- ---- ------- -------
EQUITY
Called up share capital 6.6 6.6
Share premium account 179.1 179.1
Own shares (0.1) (0.1)
Translation reserve 26.7 50.9
Hedging reserve 2.0 1.4
Retained earnings 360.6 340.6
--------------------------------------------- ---- ------- -------
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY 574.9 578.5
Non-controlling interest (2.2) (0.7)
Put option over non-controlling interest (5.5) (5.7)
--------------------------------------------- ---- ------- -------
TOTAL NON-CONTROLLING INTEREST (7.7) (6.4)
--------------------------------------------- ---- ------- -------
TOTAL EQUITY 567.2 572.1
--------------------------------------------- ---- ------- -------
Group Statement of Cash Flows
For the year ended 30 June 2023
2023 2022
Note GBPm GBPm
------------------------------------------------------ ---- ------- ------
NET CASH FLOW FROM OPERATING ACTIVITIES 18 50.4 34.3
------------------------------------------------------ ---- ------- ------
CASH FLOWS FROM INVESTING ACTIVITIES
Dividends received from joint ventures and associates 13 2.6 3.2
Joint venture and associate loan investment 13 (1.9) -
Acquisition of joint venture and associate 13 (1.0) (2.2)
Acquisition of trade and assets - (0.8)
Acquisition of Olymel AlphaGene assets - (14.5)
Sale of other investments 3.4 -
Acquisition of other investments (0.4) (1.0)
Payment of deferred consideration (0.8) (1.0)
Purchase of property, plant and equipment (25.9) (42.1)
Purchase of intangible assets (9.3) (8.8)
Proceeds from sale of property, plant and equipment 2.4 -
------------------------------------------------------ ---- ------- ------
NET CASH OUTFLOW FROM INVESTING ACTIVITIES (30.9) (67.2)
------------------------------------------------------ ---- ------- ------
CASH FLOWS FROM FINANCING ACTIVITIES
Drawdown of borrowings 126.8 138.7
Repayment of borrowings (111.7) (83.9)
Payment of lease liabilities (11.1) (11.3)
Equity dividends paid (21.0) (20.9)
Dividend to non-controlling interest (0.1) (0.1)
Debt issue costs (1.1) (0.6)
Issue of ordinary shares - -
------------------------------------------------------ ---- ------- ------
NET CASH (OUTFLOW)/INFLOW FROM FINANCING ACTIVITIES (18.2) 21.9
------------------------------------------------------ ---- ------- ------
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 1.3 (11.0)
------------------------------------------------------ ---- ------- ------
Cash and cash equivalents at start of the year 38.8 46.0
Net increase/(decrease) in cash and cash equivalents 1.3 (11.0)
Effect of exchange rate fluctuations on cash and
cash equivalents (3.8) 3.8
------------------------------------------------------ ---- ------- ------
TOTAL CASH AND CASH EQUIVALENTS AT 30 JUNE 36.3 38.8
------------------------------------------------------ ---- ------- ------
NOTES TO THE GROUP FINANCIAL STATEMENTS
For the year ended 30 June 2023
1. REPORTING ENTITY
Genus plc (the 'Company') is a public company limited by shares
and incorporated in England, United Kingdom under the Companies Act
2006. Its company number is 02972325 and its registered office is
Matrix House, Basing View, Basingstoke, Hampshire RG21 4DZ.
The condensed financial information given does not constitute
the Group's financial statements for the year ended 30 June 2023 or
the year ended 30 June 2022, but is derived from those financial
statements. The financial statements for the year ended 30 June
2022 have been delivered to the Registrar of Companies and those
for the year ended 30 June 2023 will be delivered following the
Company's annual general meeting. The auditors have reported on
those financial statements; their reports were unqualified, did not
draw attention to any matters by way of emphasis without qualifying
their reports, and did not contain statements under s. 498(2) or
(3) Companies Act 2006.
2. BASIS OF PREPARATION
We have prepared the condensed financial information for the
year ended 30 June 2023 together with the comparative year has been
computed in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006 and
International Financial Reporting Standards ('IFRSs'). The Group
Financial Statements have also been prepared in accordance with
IFRSs as issued by the IASB.
Functional and presentational currency
We present the Group Financial Statements in Sterling, which is
the Company's functional and presentational currency. All financial
information presented in Sterling has been rounded to the nearest
GBP0.1m.
The principal exchange rates were as follows:
Average Closing
------------------- -------------------- ---------------------
2023 2022 2021 2023 2022 2021
------------------- ----- ----- ------ ------ ----- ------
US Dollar/GBP 1.21 1.32 1.36 1.27 1.22 1.38
------------------- ----- ----- ------ ------ ----- ------
Euro/GBP 1.15 1.18 1.13 1.16 1.16 1.17
------------------- ----- ----- ------ ------ ----- ------
Brazilian Real/GBP 6.20 6.94 7.33 6.08 6.39 6.87
------------------- ----- ----- ------ ------ ----- ------
Mexican Peso/GBP 22.84 26.97 28.15 21.74 24.45 27.57
------------------- ----- ----- ------ ------ ----- ------
Chinese Yuan/GBP 8.44 8.55 8.94 9.21 8.15 8.93
------------------- ----- ----- ------ ------ ----- ------
Russian Rouble/GBP 86.29 98.75 102.04 112.79 66.73 101.10
------------------- ----- ----- ------ ------ ----- ------
While the condensed financial information included in this
preliminary announcement has been computed in accordance with
IFRSs, this announcement does not itself contain sufficient
information to comply with IFRSs. The Company expects to publish
full financial statements that comply with IFRSs in October 2023.
These financial statements have also been prepared in accordance
with the accounting policies set out in the 2022 Annual Report and
Financial Statements, as amended by the following new accounting
standards.
New standards and interpretations
In the current year, the Group has applied a number of
amendments to IFRS issued by the International Accounting Standards
Board that are mandatorily effective for an accounting period that
begins after 1 January 2022 and have been implemented with effect
from 1 July 2022. These are:
> Amendments to IFRS 3 - 'Business Combinations' - References
to the Conceptual Framework;
> Amendments to IAS 12 - 'Income Taxes' - International tax
reform - Pillar two model rules;
> Amendments to IAS 16 - 'Property, Plant and Equipment' -
Proceeds before Intended Use;
> Amendments to IAS 37 - 'Onerous Contracts' - Cost of
Fulfilling a Contract; and
> Annual Improvements 2018-2020 Cycle.
Their addition has not had any material impact on the
disclosures, or amounts reported in the Group Financial
Statements.
New standards and interpretations not yet adopted
At the date of the Annual Report, the following standards and
interpretations which have not been applied in the report were in
issue but not yet effective (and in some cases had not yet been
adopted by the UK). The Group will continue to assess the impact of
these amendments prior to their adoption. These are:
> Amendments to IFRS 16 - 'Lease Liability in a Sale and
Leaseback';
> Amendments to IAS 1 - 'Classification of Liabilities as
Current or Non-Current';
> Amendments to IAS 1 and IFRS Practice Statement 2 -
'Disclosure of Accounting Policies';
> Amendments to IAS 7 and IFRS 7 - 'Disclosures: Supplier
Finance Arrangements';
> Amendments to IAS 8 - 'Definition of Accounting Estimates';
and
> Amendments to IAS 12 - 'Deferred Tax related to Assets and
Liabilities arising from a Single Transaction'.
Impact of Russian Sanctions
The Group has two group operating companies that are
incorporated in Russia - Limited Liability Co. Genus ABS Russia and
PIC Genetics LLC ('Russian-based subsidiaries/entities'). Following
the sanctions that have been put in place by the UK and other
governments, the Group implemented a comprehensive screening
process with external counsel to ensure that its Russian entities
do not trade with sanctioned individuals or entities controlled by
them. The main impact of the sanctions regime on our business has
been to categorise the banks in Russia into sanctioned and
non-sanctioned banks. Where we receive money from sanctioned banks
we are unable to use the cash without a licence from His Majesty's
Treasury ('HMT'). For cash receipts from non-sanctioned banks into
the entities' non-sanctioned banks we are able to use the cash in
Russia for day-to-day operations.
The Group applied to HMT for a licence on 25 April 2022, to
allow the use of payments from sanctioned banks by non-sanctioned
Russian customers for the delivery of porcine and bovine genetics;
to allow the use of money in a non-sanctioned Russian bank account
in the name of Genus Russia to pay Russian suppliers who continue
to use sanctioned Russian bank accounts; and to remit any excess
money in Genus Russia's non-sanctioned Russian bank account
(regardless of whether it was received from a sanctioned or
nonsanctioned Russian bank account) to other Genus Group company UK
bank accounts.
The UK Office of Financial Sanctions Implementation ('OFSI')
issued a general licence for trading in agricultural commodities in
Russia effective on the 4 November 2022 which provides exemptions
to the sanctions regime in connection with the export, production
and transport of agricultural commodities. This definition includes
reproductive materials such as are supplied by Genus. Under this
general licence, receipts from non-sanctioned customers received
from and before 4 November 2022 from sanctioned banks no longer
need to be frozen and can be freely used. Also receipts from a
sanctioned customer, if made through a non-sanctioned bank, no
longer need to be frozen and can be freely used. If any customer is
or becomes sanctioned and pays through a sanctioned bank, these
funds would still need to be frozen even after 4 November 2022.
Under the requirements of IAS 7, where there is cash that is not
available to be used by the rest of the Group this needs to be
disclosed. On 24 February 2023, the UralSib bank was put on the UK
financial sanctions list and as such ABS and PIC Russia
subsequently opened new bank accounts with the OTP Bank on 21 March
2023 and on 16 May 2023 respectively. Any receipts from sanctioned
banks into the sanctioned UralSib account have been frozen and are
not used for business disbursements.
As at 30 June 2023, we had a cash balance of GBP3.1m (30 June
2022 GBP4.5m) in the Russian entities of which GBP0.8m (30 June
2022: GBP0.2m) is not currently available to be used by the Group
due to being received from sanctioned banks and held in a
sanctioned bank. Management has reviewed the operations and cash
flow over a period of 18 months from 30 June 2023 to 31 December
2024, based upon the 2024 plans, to determine whether the Russian
entities have sufficient non-sanctioned cash flow to enable them to
continue day-to-day operations and to meet liabilities as they fall
due. The analysis indicates they do have sufficient non-sanctioned
cash flow to enable them to meet their day-to-day operational
needs.
Critical accounting judgement - exercise of control
Management has assessed whether the actions of the UK and
Russian Governments have caused the Group to lose control of these
Russian-based subsidiaries. Genus PLC applied for a licence to the
Department for International Trade ('DIT') on 22 September 2022, to
allow for UK-based employees within the Genus group to provide
accounting, business and management consulting services to the
Russian-based subsidiaries, for the purpose of helping them carry
out business operations in Russia, delivery of humanitarian
assistance activity and for the production or distribution of food,
provided that it is for the benefit of the civilian population.
The licence was authorised by the DIT and came into force on 11
January 2023. It authorises the following services:
> The fullest possible range of accounting services, business
and management consulting services, to include advisory, guidance
and operational assistance services provided for business policy
and strategy, and the overall planning, structuring, and control of
the organisation.
> The oversight that a parent company would typically provide
to its subsidiaries in the areas of accounting, financial controls,
tax, treasury, finance and human resources, along with similar
oversight in the areas of information technology, supply chain and
other types of technology.
The licence expires on 11 January 2025 and, provided the facts
and circumstances surrounding the issuance of the licence currently
in place do not change materially we do not foresee any reasons why
the licence could not be renewed.
We have concluded that we do have control over the Russian-based
subsidiaries for the year ended 30 June 2023, as defined under IFRS
10 'Consolidated financial statements', and we are still able to
consolidate them despite short-term restrictions on extracting
cash. We have also assessed each of the asset balances for
impairment. The material areas that could give rise to impairment
are:
> PIC Russia farm: GBP2.4m (30 June 2022: GBP3.7m) - the
value of the farm is predicated on the future economic benefit of
the animals that are being reared there. We would need to assess if
the property's open market price (less cost to sell) would support
the carrying value.
> Trade receivables: GBP2.7m (30 June 2022: GBP6.0m) - the
ongoing financial sanctions may affect our customers ability to pay
us for their goods. If determined that our customers are unlikely
to repay these amounts, then they should be provided for.
> IAS 41 valuation: GBP3.9m (30 June 2022: GBP2.8m) - the
ongoing impacts of both the local economic outlook and our
customers' ability to pay us could result in a reversal of the fair
value of the Russian biological assets in the June valuation.
Management's impairment analysis indicates that, under the
current business environment and based on the plans for the
Financial Year 2024 no impairment is required as at 30 June
2023.
Management will continue to monitor the situation closely to see
if any further changes require additional analysis that may result
in a different conclusion.
In the event of changes in legislation, such as more restrictive
sanctions imposed by the UK Government or actions taken by the
Russian Government, we may determine that we do not exercise
control, as defined under IFRS 10 'Consolidated financial
statements', over the assets and operations of the Russian entities
and we would not be able to consolidate these companies into the
Financial Statements. The deconsolidation would mean that we would
reclassify the Russian entities as investments and we would need to
assess for impairment. A charge of up to GBP11.7m (2022: GBP16.6m)
may need to be recognised in the Income Statement, representing the
total net assets of the two Russian entities. Dependent on the
nature of the events leading to the decision to deconsolidate the
entities, there may be additional expenses incurred which we are
unable to estimate at this time. In addition, revenues would not be
consolidated into the Financial Statements from the date of any
deconsolidation. Revenues from the Russian entities were GBP21.7m
in the year ended 30 June 2023 (2022: GBP14.6m).
Going Concern
As part of the directors' consideration of the appropriateness
of adopting the going concern basis in preparing the financial
statements, as well as their assessment of the Group's viability,
the Board considered several key factors, including our business
model and our strategic framework. In addition, all principal risks
identified by the Group were considered in a downside scenario
within the viability assessment with specific focus paid to those
that could reasonably have a material impact within our outlook
period, including
> Growing in emerging markets, which we have modelled through
reductions to short term growth expectations, particularly in
China;
> Managing agricultural market and commodity prices
volatility; modelled through reductions in price expectations,
particularly in China;
> Developing products with competitive advantage, modelled
through reductions to short term growth expectations because of
failing to produce best genetics for our customers or to secure
elite genetics;
> Ensuring biosecurity or continuity of supply, which is
modelled through one off impacts of disease outbreaks and border
closures; and
> Impact of the war in Ukraine, modelled through reduction in
profit expectations and cash restrictions.
We have considered the position if each of the identified
principal risks materialised individually and where multiple risks
occur in parallel. In addition, we have overlaid this downside
scenario, net of mitigating actions, with reverse stress tests on
both our headroom and banking covenants to ensure the range beyond
the downside scenario is fully assessed.
Based on this assessment our headroom under these sensitivities
and reverse stress tests, including our mitigating actions, remain
adequate.
In their assessment of the Group's viability, the Directors have
determined that a three-year time horizon, to June 2026, is an
appropriate period to adopt. This was based on the Group's
visibility of its product development pipeline, for example,
because of the genetic lag of approximately three years between the
porcine nucleus herds and customers' production systems and the
pipeline of young bulls. The Board also considered the nature of
the principal risks affecting Genus, including the agricultural
markets in which it operates.
Genus's credit facility agreement which consists of a GBP190m
multi-currency RCF, a 150m US dollar RCF and a US 20m USD bond
guarantee. The term of the facility is for four years to August
2025 having already exercised both extension options. Additionally,
there is an uncommitted GBP40m accordion option which can be
requested a further two occasions over the remaining lifetime of
the facility. The group have yet to enter discussions with the
banking syndicate regarding a new facility, however given the
current standing of our business relationship with the syndicate we
have a reasonable expectation that a new facility would be offered
on appropriate terms.
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 this report.
Also, based on this assessment, the Directors have a reasonable
expectation that the Group will be able to continue in operation
and meet its liabilities as they fall due over the period to 30
June 2026. There are no indications from this assessment that
change this expectation when looking beyond 30 June 2026 at the
Group's longer-term prospects.
Alternative Performance Measures ('APMs')
In reporting nancial information, the Group presents 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 GELT. Some of these measures are also used for the purpose of
setting remuneration targets.
For a full list of all APMs please see the Alternative
Performance Measures Glossary section.
Change in trade and other receivables
It was identified that certain contract assets were previously
incorrectly classified as current trade receivables. The prior
periods have been restated, reducing current trade receivables by
GBP9.6m in June 2022, with a corresponding increase in current
contract assets.
Climate change
In preparing these consolidated financial statements we have
considered the impact of both physical and transition climate
change risks on the current valuation of our assets and
liabilities. We do not believe that there is a material impact on
the financial reporting judgements and estimates arising from our
considerations and as a result the valuations of our assets or
liabilities have not been significantly impacted by these risks as
at 30 June 2023. In concluding, we specifically considered the
impact of climate change on the growth rates and projected cash
flows as part of our goodwill impairment testing. As government
policies evolve as a result of commitments to limit global warming
to 1.5degC, we will continue to monitor implications on the
valuations of our assets and liabilities that could arise in future
years.
Approval
This preliminary announcement was approved by the board on 6
September 2023.
3. SEGMENTAL INFORMATION
IFRS 8 'Operating Segments' requires operating segments to be
identified on the basis of internal reports about components of the
Group that are regularly reviewed by the Chief Executive and the
Board, to allocate resources to the segments and to assess their
performance. The Group's operating and reporting structure
comprises three operating segments: Genus PIC, Genus ABS and Genus
Research and Development. These segments are the basis on which the
Group reports its segmental information. The principal activities
of each segment are as follows:
> Genus PIC - our global porcine sales business;
> Genus ABS - our global bovine sales business; and
> Genus Research and Development - our global spend on
research and development.
A segmental analysis of revenue, operating profit, depreciation,
amortisation, non-current asset additions, segment assets and
liabilities and geographical information is provided below. We do
not include our adjusting items in the segments, as we believe
these do not reflect the underlying performance of the segments.
The accounting policies of the reportable segments are the same as
the Group's accounting policies, as described in the Financial
Statements.
2023 2022
Revenue GBPm GBPm
-------------------------------- ----- -----
Genus PIC 349.5 306.6
Genus ABS 318.8 272.0
Genus Research and Development
-------------------------------- ----- -----
Porcine product development 18.5 12.4
Bovine product development 2.8 1.7
Gene editing 0.1 0.7
Other research and development - -
-------------------------------- ----- -----
21.4 14.8
-------------------------------- ----- -----
689.7 593.4
-------------------------------- ----- -----
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 year
is shown on the face of the Group Income Statement.
2023 2022
Adjusted operating profit GBPm GBPm
---------------------------------- ------ ------
Genus PIC 135.0 112.3
Genus ABS 43.4 40.5
Genus Research and Development
---------------------------------- ------ ------
Porcine product development (29.7) (22.4)
Bovine product development (25.6) (22.8)
Gene editing (14.3) (7.9)
Other research and development (17.4) (14.0)
---------------------------------- ------ ------
(87.0) (67.1)
---------------------------------- ------ ------
Adjusted segment operating profit 91.4 85.7
Central (16.8) (16.9)
---------------------------------- ------ ------
Adjusted operating profit 74.6 68.8
---------------------------------- ------ ------
Our business is not highly seasonal and our customer base is
diversified, with no individual customer generating more than 2% of
revenue.
Exceptional items of GBP3.5m net expense (2022: GBP2.0m net
expense) relate to Genus ABS (GBP2.7m net expense) (2022: GBP4.2m
net expense), Genus PIC (GBPnil) (2022: GBP0.6m net expense) and
our central segment (GBP0.8m net expense) (2022: GBP2.8m net
credit). Note 4 provides details of these exceptional items. We
consider share-based payment expenses on a Group-wide basis and do
not allocate them to reportable segments.
Other segment information
Additions to
non-current
assets (excluding
deferred taxation
and financial
Depreciation Amortisation instruments)
-------------- -------------- --------------------
2023 2022 2023 2022 2023 2022
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------- ------ ------ ------ ------ --------- ---------
Genus PIC 5.0 4.5 6.8 7.4 6.8 45.2
Genus ABS 16.0 14.3 4.4 3.4 21.8 25.4
Genus Research and Development
------------------------------- ------ ------ ------ ------ --------- ---------
Research 1.3 1.0 - - 1.6 3.3
Porcine product development 4.5 2.2 - - 1.2 1.3
Bovine product development 1.7 2.0 0.4 0.2 4.9 2.7
------------------------------- ------ ------ ------ ------ --------- ---------
7.5 5.2 0.4 0.2 7.7 7.3
------------------------------- ------ ------ ------ ------ --------- ---------
Segment total 28.5 24.0 11.6 11.0 36.3 77.9
Central 1.7 2.4 1.8 1.6 7.0 5.8
------------------------------- ------ ------ ------ ------ --------- ---------
Total 30.2 26.4 13.4 12.6 43.3 83.7
------------------------------- ------ ------ ------ ------ --------- ---------
Segment assets Segment liabilities
---------------- ---------------------
2023 2022 2023 2022
GBPm GBPm GBPm GBPm
------------------------------- ------- ------- ---------- ---------
Genus PIC 265.4 305.4 (66.0) (73.4)
Genus ABS 281.7 261.4 (72.5) (78.9)
Genus Research and Development
------------------------------- ------- ------- ---------- ---------
Research 11.4 14.7 (4.5) (4.4)
Porcine product development 269.1 275.0 (55.3) (57.7)
Bovine product development 125.0 119.6 (19.6) (16.7)
------------------------------- ------- ------- ---------- ---------
405.5 409.3 (79.4) (78.8)
------------------------------- ------- ------- ---------- ---------
Segment total 952.6 976.1 (217.9) (231.1)
Central 54.9 41.8 (222.4) (214.7)
------------------------------- ------- ------- ---------- ---------
Total 1,007.5 1,017.9 (440.3) (445.8)
------------------------------- ------- ------- ---------- ---------
Geographical information
The Group's revenue by geographical segment is analysed below.
This analysis is stated on the basis of where the customer is
located.
Revenue
2023 2022
GBPm GBPm
----------------------------------------------- ----- -----
North America 288.5 238.5
Latin America 105.6 94.6
UK 93.1 88.7
Rest of Europe, Middle East, Russia and Africa 109.6 88.3
Asia 92.9 83.3
----------------------------------------------- ----- -----
Total revenue 689.7 593.4
----------------------------------------------- ----- -----
Non-current assets (excluding deferred taxation and financial
instruments )
The Group's non-current assets by geographical segment are
analysed below and are stated on the basis of where the assets are
located.
2023 2022
GBPm GBPm
-------------------------------------------------------------- ----- -----
North America 508.6 529.6
Latin America 69.6 56.7
UK 71.5 69.8
Rest of Europe, Middle East, Russia and Africa 43.8 45.7
Asia 33.6 46.3
-------------------------------------------------------------- ----- -----
Non-current assets (excluding deferred taxation and financial
instruments) 727.1 748.1
-------------------------------------------------------------- ----- -----
Revenue by type
2023 2022
GBPm GBPm
------------------------------------------------------- ----- -----
Genus PIC 173.5 158.4
------------------------------------------------------- ----- -----
Genus ABS 307.8 262.5
------------------------------------------------------- ----- -----
Genus Research and Development 21.4 14.8
------------------------------------------------------- ----- -----
Sale of animals, semen, embryos and ancillary products
and services 502.7 435.7
------------------------------------------------------- ----- -----
Genus PIC 176.0 148.2
------------------------------------------------------- ----- -----
Genus ABS 1.4 1.1
------------------------------------------------------- ----- -----
Genus Research and Development - -
------------------------------------------------------- ----- -----
Royalties 177.4 149.3
------------------------------------------------------- ----- -----
Genus PIC - -
------------------------------------------------------- ----- -----
Genus ABS 9.6 8.4
------------------------------------------------------- ----- -----
Genus Research and Development - -
------------------------------------------------------- ----- -----
Consulting services 9.6 8.4
------------------------------------------------------- ----- -----
Total revenue 689.7 593.4
------------------------------------------------------- ----- -----
Revenue from contracts with customers
The Group's revenue is analysed below by the timing at which it
is recognised.
2023 2022
GBPm GBPm
------------------------------- ----- -----
Genus PIC 343.7 303.2
------------------------------- ----- -----
Genus ABS 293.0 247.2
------------------------------- ----- -----
Genus Research and Development 21.3 14.1
------------------------------- ----- -----
Recognised at a point in time 658.0 564.5
------------------------------- ----- -----
Genus PIC 5.8 3.4
------------------------------- ----- -----
Genus ABS 25.8 24.8
------------------------------- ----- -----
Genus Research and Development 0.1 0.7
------------------------------- ----- -----
Recognised over time 31.7 28.9
------------------------------- ----- -----
Total revenue 689.7 593.4
------------------------------- ----- -----
4. EXCEPTIONAL ITEMS
2023 2022
Operating (expense)/credit GBPm GBPm
----------------------------- ----- -----
Litigation (4.5) (1.4)
Acquisition and integration (0.4) (0.3)
Pension related - (0.4)
Legacy legal claim - 3.3
ABS production restructuring 1.7 (2.8)
Other (0.3) (0.4)
----------------------------- ----- -----
Net exceptional items (3.5) (2.0)
----------------------------- ----- -----
Litigation
Litigation includes legal fees and related costs of GBP4.5m
(2022: GBP1.4m) related to the actions between ABS Global, Inc. and
certain affiliates ('ABS') and Inguran, LLC and certain affiliates
(also known as STgenetics ('ST')). The net expense comprises
GBP5.4m of legal costs and a GBP0.9m settlement credit (see below
for further details).
Material litigation activities to 31 August 2023
In July 2014, ABS launched a legal action against ST in the US
District Court for the Western District of Wisconsin and initiated
anti-trust proceedings, which ultimately enabled the launch of
ABS's IntelliGen sexing technology in the US market ('ABS I'). In
June 2017, ST filed proceedings against ABS in the same District
Court, where ST alleged that ABS infringed seven patents and
asserted trade secret and breach of contract claims ('ABS II'). The
ABS I and ABS II proceedings in the periods before the year ended
30 June 2021 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.
On 10 March 2020, the United States Patent and Trademark Office
('USPTO') issued patent 10,583,439 (the "439 patent'), and
subsequently ST asked the court for permission to file a
supplemental complaint in ABS III asserting infringement of the
'439 patent. On 15 April 2020, ST filed a new complaint ('ABS IV'),
asserting the same claim of infringement of the '439 patent alleged
in its supplemental complaint and then moved to consolidate the ABS
IV and ABS III litigation. ABS 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 opposed this action. On 20 September 2022 the
USPTO issued patent 11,446,665 (the "665 patent') and ST
subsequently sought a third-party supplement of ABS III by adding a
claim of infringement of the '665 patent. ABS has opposed this
action as well, and sought dismissal of all infringement
claims.
On 26 October 2020 and 10 December 2020, ABS filed Inter Partes
Reviews ('IPR') against the '439 and '210 patents with the USPTO.
On 4 May 2021, the Patent Trial and Appeal Board ('PTAB')
instituted the '439 patent IPR, and the hearing was completed on 2
February 2022. On 7 June 2021, PTAB declined to institute the '210
patent IPR and on 28 April 2022, PTAB issued its decision and
declined to invalidate the claims of the '439 patent. ABS has
appealed the '439 patent decision (the "439 Appeal').
On 20 December 2021, the Wisconsin Federal Court reached a
decision on the ABS III and IV motions, granting ABS's motion to
dismiss all claims relating to US patent 8,206,987 (the "987
patent'), and denying ST's motion to amend ABS III to add the '439
and '210 patents. The court dismissed ABS III in its entirety and
entered judgment in favour of ABS. ST appealed certain aspects of
the decision relating to technology transfer to third parties, one
of the three arguments put forward by ST in ABS III (the 'ABS III
Appeal'). On 5 July 2023, the Court of Appeals accepted ST's
argument that claim preclusion from the ABS I decision did not
apply against ABS III in relation to technology transfer, and that
the Federal court improperly broadened the scope of the ABS I
judgment to address induced infringement.
On 1 July 2022, the court reached a decision on the ABS II
post-judgment motions as well as the pending motions in ABS IV. The
court deferred to the jury's verdict in ABS II confirming the
validity and infringement of US patents 7,311,476, and 7,611,309
(the "476 and '309 patents' respectively) and the '987 patent, and
further confirmed the award of costs to ABS of $5.3m in connection
with ABS I. In relation to ABS IV, the Court denied ABS's motion to
dismiss the '439 and '210 patent claims on the basis that the
challenges were too fact-based to be resolved at this stage. ABS
filed counterclaims alleging, among other things, anti-competitive
conduct and infringement of four ABS patents, later narrowed to
three ABS patents. The hearing date of 15 July 2024 has been
confirmed for ABS IV. Appeals were filed by ABS on the validity and
infringement of the '987 patent (the "987 Appeal"), the '476 and
the '309 patents (the "ABS II Appeal") and ST has appealed the
award of the $5.3m costs (the 'Fee Award Appeal').
On 27 December 2022, ABS and ST settled the 987 Appeal, the Fee
Award Appeal and the Indian Patent Proceedings (along with related
patent oppositions in India), delivering lower patent royalty
payments for ABS and a settlement exceptional credit of GBP0.9m.
The ABS II Appeal, the ABS III Appeal, the ABS IV litigation, the
439 Appeal, and the CCI Appeal remain ongoing. The 439 Appeal is
scheduled for hearing on 5 September 2023 and the ABS II appeal is
likely to be heard before the end of the year.
Indian Litigation: In September 2019, ST also filed parallel
patent infringement proceedings against ABS in India, alleging
infringement of the Indian patent 240790 ("790 patent'). The '790
patent is the equivalent of the US '476 , '309 patents and US
patent 7, 311,476 asserted in ABS II. 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 (the "Indian Patent
Proceedings"). In June 2021, ST appealed the decision of the
Competition Commission of India ('CCI') which had confirmed that
ABS India had not breached the Indian Competition Act in relation
to its participation in a sexed semen tender offered by the Utter
Pradesh Livestock Development Board (the "CCI Appeal"). The CCI
Appeal is scheduled for 11 October 2023.
NZ litigation: On 14 June 2023, ST initiated proceedings against
ABS, Genus, ABS Genus (NZ) Limited, CRV International BV and CRV
Limited (together 'CRV') in New Zealand, alleging patent
infringement and seeking a preliminary injunction. ABS had
previously been awarded the semen sexing services for CRV's bovine
semen in New Zealand and other jurisdictions. ABS has sought a stay
of the New Zealand proceedings while the US court's consider
whether the settlement agreement between ABS and ST dated 27
December 2022 precludes the New Zealand proceedings. The hearing of
the ABS's stay application and ST's preliminary injunction
application is scheduled for 27 November 2023.
Acquisitions and integration
During the year, GBP0.4m (2022: GBP0.3m) of expenses were
incurred in relation to potential acquisitions.
ABS production restructuring
A one-off credit of GBP1.7m primarily related to the sale of our
Canadian ABS facilities as part of a production restructuring. The
cash inflow of GBP1.8m is included in investing activities.
Other
Included in Other is an expense of GBP0.3m relating to the
sign-on bonus of the newly appointed CEO, a GBP0.2m credit
resulting from a share forfeiture exercise and GBP0.2m in relation
to the prior year IT incident. In the prior year, a GBP0.5m expense
relating to legal advice, IT consultancy and one-time costs was
incurred as the direct result of an IT security incident in June
2022.
5. Other gains and losses
Included with other gains and losses is a GBP2.7m gain on the
mark to market valuation (MTM) in relation to GBP60m of SONIA
interest rate swaps executed in April 2023. Whilst the interest
rate swaps are a perfect commercial hedge of a similar amount of
our GBP borrowings for at least a three-year period, as the
executing banks have a written option at the three-year point to
unilaterally terminate the swaps at no cost, the transaction does
not qualify for hedge accounting treatment. Accordingly the MTM
gain on the valuation of these swaps as at 30 June 2023 is
recognised in the Group Income Statement.
2023 2022
GBPm GBPm
----------------------- ----- -----
Gain on derivative 2.7 -
Other gains and losses 2.7 -
----------------------- ----- -----
6. NET FINANCE COSTS
2023 2022
GBPm GBPm
----------------------------------------------------------- ------ -----
Interest payable on bank loans and overdrafts (12.3) (4.1)
Amortisation of debt issue costs (1.1) (0.9)
Other interest payable (0.3) (0.1)
Unwinding of discount on put options (0.3) (0.2)
Net interest cost in respect of pension scheme liabilities (0.2) (0.2)
Interest on lease liabilities (1.2) (1.1)
----------------------------------------------------------- ------ -----
Total interest expense (15.4) (6.6)
Interest income on bank deposits 0.1 0.4
Net interest income on derivative financial instruments 1.0 -
----------------------------------------------------------- ------ -----
Total interest income 1.1 0.4
----------------------------------------------------------- ------ -----
Net finance costs (14.3) (6.2)
----------------------------------------------------------- ------ -----
7. TAXATION AND DEFERRED TAXATION
Income tax expense
2023 2022
GBPm GBPm
-------------------------------------------------------- ------ -----
Current tax expense
Current period 20.6 13.6
Adjustment for prior periods 0.9 1.8
-------------------------------------------------------- ------ -----
Total current tax expense in the Group Income Statement 21.5 15.4
-------------------------------------------------------- ------ -----
Deferred tax expense
Origination and reversal of temporary differences (9.2) (0.5)
Adjustment for prior periods (4.7) (3.2)
-------------------------------------------------------- ------ -----
Total deferred tax credit in the Group Income Statement (13.9) (3.7)
-------------------------------------------------------- ------ -----
Total income tax expense excluding share of income tax
of equity accounted investees 7.6 11.7
Share of income tax of equity accounted investees (see
note 13) 3.9 2.6
-------------------------------------------------------- ------ -----
Total income tax expense in the Group Income Statement 11.5 14.3
-------------------------------------------------------- ------ -----
Reconciliation of effective tax rate
2023 2023 2022 2022
% GBPm % GBPm
------------------------------------------------- ----- ------ ----- -----
Profit before tax 39.4 48.4
Add back share of income tax of equity accounted
investees 3.9 2.6
------------------------------------------------- ----- ------ ----- -----
Profit before tax excluding share of income
tax of equity accounted investees 43.3 51.0
Income tax at UK corporation tax of 20.5% (2022:
19.0%) 20.5 8.9 19.0 9.7
Effect of tax rates in foreign jurisdictions 13.6 5.9 9.2 4.7
Non-deductible expenses 6.7 2.9 4.3 2.2
Tax exempt income and incentives (3.0) (1.3) (1.8) (0.9)
Change in tax rate (1.2) (0.5) 2.5 1.3
Movements in recognition of tax losses (5.0) (2.2) 0.2 0.1
Change in unrecognised temporary differences (7.8) (3.4) (3.7) (1.9)
Tax over / (under) provided in prior periods 1.8 0.8 (2.1) (1.1)
Change in provisions 0.5 0.2 (0.2) (0.1)
Tax on undistributed reserves 0.5 0.2 0.6 0.3
------------------------------------------------- ----- ------ ----- -----
Total income tax expense in the Group Income
Statement 26.6 11.5 28.0 14.3
------------------------------------------------- ----- ------ ----- -----
8. EARNINGS PER SHARE
Basic earnings per share is the profit generated for the
financial year attributable to equity shareholders, divided by the
weighted average number of shares in issue during the year.
Basic earnings per share from continuing operations
2023 2022
(pence) (pence)
------------------------- --------- --------
Basic earnings per share 50.8 62.5
------------------------- --------- --------
The calculation of basic earnings per share from continuing
operations is based on the net profit attributable to owners of the
Company from continuing operations of GBP33.3m (2022: GBP40.9m) and
a weighted average number of ordinary shares outstanding of
65,557,000 (2022: 65,395,000), which is calculated as follows:
Weighted average number of ordinary shares (basic)
2023 2022
000s 000s
---------------------------------------------------- ------ ------
Issued ordinary shares at the start of the year 65,774 65,761
Effect of own shares held (468) (373)
Shares issued on exercise of stock options 1 7
Shares issued in relation to Employee Benefit Trust 250 -
---------------------------------------------------- ------ ------
Weighted average number of ordinary shares in year 65,557 65,395
---------------------------------------------------- ------ ------
Diluted earnings per share from continuing operations
2023 2022
(pence) (pence)
--------------------------- --------- ---------
Diluted earnings per share 50.5 62.2
--------------------------- --------- ---------
The calculation of diluted earnings per share from continuing
operations is based on the net profit attributable to owners of the
Company from continuing operations of GBP33.3m (2022: GBP40.9m) and
a weighted average number of ordinary shares outstanding, after
adjusting for the effects of all potential dilutive ordinary
shares, of 65,988,000 (2022: 65,714,000), which is calculated as
follows:
Weighted average number of ordinary shares (diluted)
2023 2022
000s 000s
------------------------------------------------------------ ------ ------
Weighted average number of ordinary shares (basic) 65,557 65,395
Dilutive effect of share awards and options 441 319
------------------------------------------------------------ ------ ------
Weighted average number of ordinary shares for the purposes
of diluted earnings per share 65,998 65,714
------------------------------------------------------------ ------ ------
Adjusted earnings per share from continuing operations
2023 2022
(pence) (pence)
------------------------------------ --------- --------
Adjusted earnings per share 84.8 82.7
Diluted adjusted earnings per share 84.2 82.3
------------------------------------ --------- --------
Adjusted earnings per share is calculated on profit before the
net IAS 41 valuation movement on biological assets, amortisation of
acquired intangible assets, share-based payment expense, other
gains and losses and exceptional items, after charging taxation
associated with those profits, of GBP55.6m (2022: GBP54.1m), which
is calculated as follows:
2023 2022
GBPm GBPm
------------------------------------------------------------ ------ ------
Profit before tax from continuing operations 39.4 48.4
Add/(deduct):
Net IAS 41 valuation movement on biological assets (see
note 11) 16.9 5.4
Amortisation of acquired intangible assets (see note 10) 7.7 8.3
Share-based payment expense 6.0 3.7
Exceptional items (see note 4) 3.5 2.0
Other gains and losses (see note 5) (2.7) -
Net IAS 41 valuation movement on biological assets in joint
ventures (see note 13) (3.6) 1.4
Tax on joint ventures and associates (see note 13) 3.9 2.6
Attributable to non-controlling interest 0.4 (0.3)
------------------------------------------------------------ ------ ------
Adjusted profit before tax 71.5 71.5
Adjusted tax charge (15.9) (17.4)
------------------------------------------------------------ ------ ------
Adjusted profit after tax 55.6 54.1
------------------------------------------------------------ ------ ------
Effective tax rate on adjusted profit 22.2% 24.3%
------------------------------------------------------------ ------ ------
9. DIVIDS
Dividends are one type of shareholder return, historically paid
to our shareholders in late November/early December and late
March.
Amounts recognised as distributions to equity holders in the
year
2023 2022
GBPm GBPm
--------------------------------------------------------- ----- -----
Final dividend
Final dividend for the year ended 30 June 2022 of 21.7
pence per share 14.3 -
Final dividend for the year ended 30 June 2021 of 21.7
pence per share - 14.2
Interim dividend
Interim dividend for the year ended 30 June 2023 of 10.3
pence per share 6.7 -
Interim dividend for the year ended 30 June 2022 of 10.3
pence per share - 6.7
--------------------------------------------------------- ----- -----
Total dividend 21.0 20.9
--------------------------------------------------------- ----- -----
The Directors have proposed a final dividend of 21.7 pence per
share for 2023. This is subject to shareholders' approval at the
AGM and we have therefore not included it as a liability in these
Financial Statements. The total proposed and paid dividend for year
ended 30 June 2023 is 32.0 pence per share (2022: 32.0 pence per
share).
10. INTANGIBLE ASSETS
Brands, Separately
Porcine multiplier identified
and bovine contracts acquired Assets Patents,
genetics and customer intangible under licences
technology relationships assets Software construction IntelliGen and other Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------------- ----------- ----------- -------- ------------- ---------- ---------- -----
Cost
Balance at 1 July
2021 51.7 81.6 133.3 20.0 2.7 23.6 4.3 183.9
Additions 4.2 10.3 14.5 0.2 8.6 - - 23.3
Acquisition - 0.4 0.4 - - - - 0.4
Transfers - - - 7.7 (7.7) - - -
Effect of movements
in exchange rates 0.6 10.6 11.2 1.0 0.1 3.2 0.1 15.6
-------------------- ----------- -------------- ----------- -------- ------------- ---------- ---------- -----
Balance at 30 June
2022 56.5 102.9 159.4 28.9 3.7 26.8 4.4 223.2
-------------------- ----------- -------------- ----------- -------- ------------- ---------- ---------- -----
Additions - - - - 9.3 - - 9.3
Transfers - - - 5.9 (5.9) - - -
Effect of movements
in exchange rates (0.2) (4.0) (4.2) (0.3) (0.1) (1.1) - (5.7)
-------------------- ----------- -------------- ----------- -------- ------------- ---------- ---------- -----
Balance at 30 June
2023 56.3 98.9 155.2 34.5 7.0 25.7 4.4 226.8
-------------------- ----------- -------------- ----------- -------- ------------- ---------- ---------- -----
Amortisation and
impairment
losses
Balance at 1 July
2021 36.0 66.2 102.2 13.0 - 8.4 4.0 127.6
Amortisation for the
year 3.0 5.3 8.3 1.7 - 2.5 0.1 12.6
Effect of movements
in exchange rates 0.1 8.6 8.7 0.8 - 1.4 0.1 11.0
-------------------- ----------- -------------- ----------- -------- ------------- ---------- ---------- -----
Balance at 30 June
2022 39.1 80.1 119.2 15.5 - 12.3 4.2 151.2
-------------------- ----------- -------------- ----------- -------- ------------- ---------- ---------- -----
Amortisation for the
year 3.3 4.4 7.7 2.9 - 2.7 0.1 13.4
Effect of movements
in exchange rates 0.1 (3.3) (3.2) (0.2) - (0.6) - (4.0)
-------------------- ----------- -------------- ----------- -------- ------------- ---------- ---------- -----
Balance at 30 June
2023 42.5 81.2 123.7 18.2 - 14.4 4.3 160.6
-------------------- ----------- -------------- ----------- -------- ------------- ---------- ---------- -----
Carrying amounts
At 30 June 2023 13.8 17.7 31.5 16.3 7.0 11.3 0.1 66.2
-------------------- ----------- -------------- ----------- -------- ------------- ---------- ---------- -----
At 30 June 2022 17.4 22.8 40.2 13.4 3.7 14.5 0.2 72.0
-------------------- ----------- -------------- ----------- -------- ------------- ---------- ---------- -----
At 30 June 2021 15.7 15.4 31.1 7.0 2.7 15.2 0.3 56.3
-------------------- ----------- -------------- ----------- -------- ------------- ---------- ---------- -----
Included within brands, multiplier contracts and customer
relationships are carrying amounts for brands of GBP0.6m (2022:
GBP0.5m), multiplier contracts of GBP9.2m (2022: GBP11.1m) and
customer relationships of GBP7.9m (2022: GBP11.2m).
Included within the software class of assets is GBP9.5m (2022:
GBP6.9m) and included in assets in the course of construction is
GBP2.3m (2022: GBP2.7m) that relate to the ongoing development
costs of GenusOne, our single global enterprise system and GBP1.6m
(2022: GBPnil) that relate to IntelliGen.
11. BIOLOGICAL ASSETS
Bovine Porcine Total
Fair value of biological assets GBPm GBPm GBPm
------------------------------------------------ ------ ------- -------
Non-current biological assets 92.0 187.9 279.9
Current biological assets - 39.6 39.6
------------------------------------------------ ------ ------- -------
Balance at 30 June 2021 92.0 227.5 319.5
------------------------------------------------ ------ ------- -------
Increases due to purchases 23.3 225.8 249.1
Decreases attributable to sales - (234.8) (234.8)
Decrease due to harvest (17.7) (26.3) (44.0)
Changes in fair value less estimated sale costs (19.6) 61.2 41.6
Effect of movements in exchange rates 10.0 25.4 35.4
------------------------------------------------ ------ ------- -------
Balance at 30 June 2022 88.0 278.8 366.8
Non-current biological assets 88.0 245.7 333.7
Current biological assets - 33.1 33.1
------------------------------------------------ ------ ------- -------
Balance at 30 June 2022 88.0 278.8 366.8
------------------------------------------------ ------ ------- -------
Increases due to purchases 23.2 228.9 252.1
Decreases attributable to sales - (259.4) (259.4)
Decrease due to harvest (14.6) (31.4) (46.0)
Changes in fair value less estimated sale costs 6.6 38.2 44.8
Effect of movements in exchange rates (3.9) (12.4) (16.3)
------------------------------------------------ ------ ------- -------
Balance at 30 June 2023 99.3 242.7 342.0
------------------------------------------------ ------ ------- -------
Non-current biological assets 99.3 218.9 318.2
Current biological assets - 23.8 23.8
------------------------------------------------ ------ ------- -------
Balance at 30 June 2023 99.3 242.7 342.0
------------------------------------------------ ------ ------- -------
Bovine
Bovine biological assets include GBP8.9m (2022: GBP6.9m)
representing the fair value of bulls owned by third parties but
managed by the Group, net of expected future payments to such third
parties, which are therefore treated as assets held under
leases.
There were no movements in the carrying value of the bovine
biological assets in respect of sales or other changes during the
year.
A risk-adjusted rate of 13.2% (2022: 12.5%) has been used to
discount future net cash flows from the sale of bull semen.
Decreases due to harvest represent the semen extracted from the
biological assets. Inventories of such semen are shown as
biological asset harvest in note 14.
Porcine
Included in increases due to purchases is the aggregate increase
arising during the year on initial recognition of biological assets
in respect of multiplier purchases, other than parent gilts, of
GBP91.5m (2022: GBP101.2m).
Decreases attributable to sales during the year of GBP259.4m
(2022: GBP234.8) include GBP104.6m (2022: GBP74.0m) 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 GBP96.5m (2022: GBP119.0m) relating to the fair
value of the retained interest in the genetics in respect of
animals, other than parent gilts, sold to customers under royalty
contracts in the year.
Total revenue in the year, including parent gilts, includes
GBP281.9m (2022: GBP231.4m) in respect of these contracts,
comprising GBP105.9m (2022: GBP83.2m) on initial transfer of
animals and semen to customers and GBP176.0m (2022: GBP148.2m) in
respect of royalties received.
A risk-adjusted rate of 12.9% (2022: 10.3%) 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 (2022: seven) and their estimated
useful lifespan is 1.4 years (2022: 1.4 years).
Year ended 30 June 2023
Bovine Porcine Total
GBPm GBPm GBPm
------------------------------------------------------ ------ ------- ------
Changes in fair value of biological assets 6.6 38.2 44.8
Inventory transferred to cost of sales at fair value 1.4 (31.4) (30.0)
Biological assets transferred to cost of sales at
fair value - (31.4) (31.4)
------------------------------------------------------ ------ ------- ------
8.0 (24.6) (16.6)
Fair value movement in related financial derivative - (0.3) (0.3)
------------------------------------------------------ ------ ------- ------
Net IAS 41 valuation movement on biological assets(1) 8.0 (24.9) (16.9)
------------------------------------------------------ ------ ------- ------
Year ended 30 June 2022
Bovine Porcine Total
GBPm GBPm GBPm
------------------------------------------------------ ------ ------- ------
Changes in fair value of biological assets (19.6) 61.2 41.6
Inventory transferred to cost of sales at fair value (10.3) (26.3) (36.6)
Biological assets transferred to cost of sales at
fair value - (10.3) (10.3)
------------------------------------------------------ ------ ------- ------
(29.9) 24.6 (5.3)
Fair value movement in related financial derivative - (0.1) (0.1)
------------------------------------------------------ ------ ------- ------
Net IAS 41 valuation movement on biological assets(1) (29.9) 24.5 (5.4)
------------------------------------------------------ ------ ------- ------
1 This represents the difference between operating profit
prepared under IAS 41 and operating profit prepared under
historical cost accounting, which forms part of the reconciliation
to adjusted operating profit (see APMs)
12. PROPERTY, PLANT AND EQUIPMENT
Plant,
motor Plant,
Land vehicles Assets Total motor Total
and and under owned Land vehicles right-of-use
buildings equipment construction assets and buildings and equipment assets Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------- ------------ ------------ ------- ------------- ------------- ------
Cost or
deemed cost
Balance at 1
July 2021 66.6 88.0 22.1 176.7 20.7 26.0 46.7 223.4
Additions 0.2 3.9 40.3 44.4 9.2 6.1 15.3 59.7
Transfers 23.5 12.8 (36.3) - - - - -
Disposals (1.4) (2.0) - (3.4) (0.5) (6.0) (6.5) (9.9)
Effect of
movements
in exchange
rates 11.3 10.9 3.5 25.7 2.1 2.3 4.4 30.1
------------- ------------ ------------ ------------- ------- ------------- ------------- ------------- ------
Balance at 30
June
2022 100.2 113.6 29.6 243.4 31.5 28.4 59.9 303.3
------------- ------------ ------------ ------------- ------- ------------- ------------- ------------- ------
Additions 0.2 3.1 19.8 23.1 2.0 8.9 10.9 34.0
Transferred
from assets
held for
sale 0.2 - - 0.2 - - - 0.2
Transfers 18.3 12.1 (30.4) - - - - -
Disposals (1.3) (3.7) (0.3) (5.3) - (4.9) (4.9) (10.2)
Effect of
movements
in exchange
rates (6.4) (5.4) (1.8) (13.6) (1.8) (0.8) (2.6) (16.2)
------------- ------------ ------------ ------------- ------- ------------- ------------- ------------- ------
Balance at 30
June
2023 111.2 119.7 16.9 247.8 31.7 31.6 63.3 311.1
------------- ------------ ------------ ------------- ------- ------------- ------------- ------------- ------
Depreciation
and
impairment
losses
Balance at 1
July 2021 24.5 56.9 - 81.4 6.5 12.5 19.0 100.4
Depreciation
for the
year 3.8 11.0 - 14.8 4.8 6.8 11.6 26.4
Disposals (1.3) (1.8) - (3.1) (0.5) (5.9) (6.4) (9.5)
Impairment 0.8 0.1 - 0.9 - - - 0.9
Effect of
movements
in exchange
rates 4.4 7.1 - 11.5 0.6 1.6 2.2 13.7
------------- ------------ ------------ ------------- ------- ------------- ------------- ------------- ------
Balance at 30
June
2022 32.2 73.3 - 105.5 11.4 15.0 26.4 131.9
------------- ------------ ------------ ------------- ------- ------------- ------------- ------------- ------
Depreciation
for the
year 5.6 12.8 - 18.4 4.6 7.2 11.8 30.2
Disposals (1.1) (2.7) - (3.8) - (4.7) (4.7) (8.5)
Impairment - - - - - - - -
Effect of
movements
in exchange
rates (2.2) (3.6) - (5.8) (0.7) (0.4) (1.1) (6.9)
------------- ------------ ------------ ------------- ------- ------------- ------------- ------------- ------
Balance at 30
June
2023 34.5 79.8 - 114.3 15.3 17.1 32.4 146.7
------------- ------------ ------------ ------------- ------- ------------- ------------- ------------- ------
Carrying
amounts
------------- ------------ ------------ ------------- ------- ------------- ------------- ------------- ------
At 30 June
2023 76.7 39.9 16.9 133.5 16.4 14.5 30.9 164.4
------------- ------------ ------------ ------------- ------- ------------- ------------- ------------- ------
At 30 June
2022 68.0 40.3 29.6 137.9 20.1 13.4 33.5 171.4
------------- ------------ ------------ ------------- ------- ------------- ------------- ------------- ------
13. EQUITY ACCOUNTED INVESTEES
2023 2022
GBPm GBPm
--------------------------------------------------------- ----- -----
Balance at 1 July 41.2 34.1
Share of post-tax retained profits of joint ventures and
associates 10.5 5.2
Additions 1.0 2.2
Long term loan investment 1.9 -
Dividends received from Agroceres - PIC Genética de
Suínos Ltda (Brazil) (2.4) (3.1)
Dividends received from Società Agricola GENEETIC
S.r.l (Italy) (0.2) (0.1)
Effect of other movements including exchange rates 1.5 2.9
--------------------------------------------------------- ----- -----
Balance at 30 June 53.5 41.2
--------------------------------------------------------- ----- -----
The additions in the year solely relate to cash injections made
to Inner Mongolia Haoxiang Pig Breeding Co. Ltd. to fund their
operation.
There are no significant restrictions on the ability of the
joint ventures and associates to transfer funds to the Parent,
other than those imposed by the Companies Act 2006 or equivalent
government rules within the joint venture's jurisdiction.
Summary unaudited financial information for equity accounted
investees, adjusted for the Group's percentage ownership, is shown
below:
Net IAS 41
valuation
movement
on biological Profit after
Revenue assets Expenses Taxation tax
Income Statement GBPm GBPm GBPm GBPm GBPm
------------------------ --------- -------------- ---------- ---------- --------------
Year ended 30 June 2023 48.1 3.6 (37.3) (3.9) 10.5
------------------------ --------- -------------- ---------- ---------- --------------
Year ended 30 June 2022 39.9 (1.4) (30.7) (2.6) 5.2
------------------------ --------- -------------- ---------- ---------- --------------
14. INVENTORIES
2023 2022
GBPm GBPm
-------------------------------------------------- ----- -----
Biological assets' harvest classed as inventories 22.7 20.9
Raw materials and consumables 3.9 3.6
Goods held for resale 34.7 26.4
-------------------------------------------------- ----- -----
Inventories 61.3 50.9
-------------------------------------------------- ----- -----
15. TRADE AND OTHER RECEIVABLES
(restated(1)
)
2023 2022
GBPm GBPm
------------------------------------ ------ ------------
Trade receivables (restated(1) ) 95.4 95.7
Less expected credit loss allowance (3.9) (4.3)
------------------------------------ ------ ------------
Trade receivables net of impairment 91.5 91.4
Other debtors 8.1 10.7
Prepayments 7.7 8.5
Contract assets (restated(1) ) 22.4 17.3
Other taxes and social security 2.4 1.6
------------------------------------ ------ ------------
Current trade and other receivables 132.1 129.5
Other debtors 3.0 3.7
Contract assets 5.2 4.9
------------------------------------ ------ ------------
Non-current other receivables 8.2 8.6
------------------------------------ ------ ------------
Trade and other receivables 140.3 138.1
------------------------------------ ------ ------------
1 See note 2 for details of the prior period restatement.
Trade receivables
The average credit period our customers take on the sales of
goods is 48 days (2022 (restated(1) ): 56 days). We do not charge
interest on receivables for the first 30 days from the date of the
invoice.
The Group always measures the loss allowance for trade
receivables at an amount equal to lifetime expected credit losses
('ECLs'). The ECLs on trade receivables are estimated using a
provision matrix by reference to past default experience of the
debtor and an analysis of the debtor's current financial position,
adjusted for factors that are specific to the general economic
conditions of the industry and country in which the debtor operates
and an assessment of both the current and the forecast direction of
conditions at the reporting date. The Group writes off a trade
receivable when there is information indicating that the debtor is
in severe financial difficulty and there is no realistic prospect
of recovery, such as when the debtor has been placed under
liquidation or has entered into bankruptcy proceedings.
No customer represents more than 5% of the total balance of
trade receivables (2022: no more than 5%).
16. TRADE AND OTHER PAYABLES
2023 2022
GBPm GBPm
------------------------------------- ----- -----
Trade payables 34.8 36.0
Other payables 11.6 8.2
Accrued expenses 58.1 61.4
Contract liabilities 9.8 10.1
Other taxes and social security 7.7 9.0
------------------------------------- ----- -----
Current trade and other payables 122.0 124.7
------------------------------------- ----- -----
Contract liabilities - 0.2
------------------------------------- ----- -----
Non-current trade and other payables - 0.2
------------------------------------- ----- -----
The average credit period taken for trade purchases is 32 days
(2022: 39 days).
17. RETIREMENT BENEFIT OBLIGATIONS
The Group operates a number of defined contribution and defined
benefit pension schemes, covering many of its employees. The
principal funds are the Milk Pension Fund ('MPF') and the Dalgety
Pension Fund ('DPF') in the UK, which are defined benefit schemes.
The assets of these funds are held separately from the Group's
assets, are administered by trustees and managed professionally.
These schemes are closed to new members.
Retirement benefit obligations
The financial positions of the defined benefit schemes, as
recorded in accordance with IAS 19 and IFRIC 14, are aggregated for
disclosure purposes. The liability/(asset) split by principal
scheme is set out below.
2023 2022
GBPm GBPm
-------------------------------------- ----- -----
The Milk Pension Fund - Genus's share - -
The Dalgety Pension Fund - -
National Pig Development Pension Fund (0.2) 0.1
Post-retirement healthcare 0.5 0.6
Other unfunded schemes 6.6 7.6
-------------------------------------- ----- -----
Overall net pension liability 6.9 8.3
-------------------------------------- ----- -----
Overall, we expect to pay GBP0.9m (2022: GBP1.0m) in
contributions to defined benefit plans in the 2024 financial
year.
Aggregated position of defined benefit schemes
2023 2022
GBPm GBPm
---------------------------------------------------------- ------- -------
Present value of funded obligations (includes Genus's 86%
share of MPF (2022: 86%)) 746.8 857.6
Present value of unfunded obligations 7.4 8.4
---------------------------------------------------------- ------- -------
Total present value of obligations 754.2 866.0
Fair value of plan assets (includes Genus's 86% share of
MPF (2022: 86%)) (787.6) (936.3)
Restricted recognition of asset (MPF and DPF) 40.3 78.6
Recognition of additional liability (MPF) - -
---------------------------------------------------------- ------- -------
Recognised liability for defined benefit obligations 6.9 8.3
---------------------------------------------------------- ------- -------
Summary of movements in Group deficit during the year
2023 2022
GBPm GBPm
---------------------------------------------------- ------ ------
Deficit in schemes at the start of the year (8.3) (11.1)
Administration expenses (0.7) (0.4)
Exceptional cost - (0.4)
Contributions paid into the plans 1.5 3.5
Net pension finance cost (0.2) (0.2)
Actuarial (losses)/gains recognised during the year (40.4) 27.3
Movement in restriction of assets 38.3 (69.8)
Release of additional liability 3.0 43.7
Exchange rate adjustment (0.1) (0.9)
---------------------------------------------------- ------ ------
Deficit in schemes at the end of the year (6.9) (8.3)
---------------------------------------------------- ------ ------
The expense is recognised in the following line items in the
Group Income Statement
2023 2022
GBPm GBPm
------------------------ ----- -----
Administrative expenses 0.7 0.4
Exceptional cost - 0.4
Net finance charge 0.2 0.2
------------------------ ----- -----
0.9 1.0
------------------------ ----- -----
Actuarial assumptions and sensitivity analysis
Principal actuarial assumptions (expressed as weighted averages)
are:
2023 2022
--------------------- ----- -----
Discount rate 5.25% 3.90%
Consumer Price Index 2.65% 2.40%
Retail Price Index 3.05% 2.90%
--------------------- ----- -----
The mortality assumptions used are consistent with those
recommended by the schemes' actuaries and reflect the latest
available tables, adjusted for the experience of the scheme where
appropriate. For 2023, the mortality tables used are 100% of the
S3PMA (males)/S3PFA_M (females) all lives tables, with birth year
and CMI 2022 projections with parameters of Sk=7.0 and A=0.5% and
weighting parameters of w2020=0%, w2021=0% and w2022=25%, subject
to a long-term rate of improvement of 1.50% per annum for males and
females and for 2022, the mortality tables used are 100% of the
S3PMA (males)/ S3PFA_M (females) all lives tables, with birth year
and 2021 CMI projections with a smoothing parameter of Sk = 7.0 and
A = 0.5%, subject to a long-term rate of improvement of 1.5% per
annum for males and females.
18. NOTES TO THE CASH FLOW STATEMENT
2023 2022
GBPm GBPm
--------------------------------------------------------- ------ ------
Profit for the year 31.8 36.7
Adjustment for:
Net IAS 41 valuation movement on biological assets 16.9 5.4
Amortisation of acquired intangible assets 7.7 8.3
Share-based payment expense 6.0 3.7
Share of profit of joint ventures and associates (10.5) (5.2)
Other gains and losses (2.7) -
Finance costs (net) 14.3 6.2
Income tax expense 7.6 11.7
Exceptional items (net) 3.5 2.0
---------------------------------------------------------- ------ ------
Adjusted operating profit from continuing operations 74.6 68.8
Depreciation of property, plant and equipment 30.2 26.4
Loss on disposal of plant and equipment 0.1 0.4
Amortisation and impairment of intangible assets 5.7 4.3
---------------------------------------------------------- ------ ------
Adjusted earnings before interest, tax, depreciation
and amortisation 110.6 99.9
Cash impact of exceptional items relating to operating
activities (7.1) 1.1
Other movements in biological assets and harvested
produce (11.1) (19.1)
Decrease in provisions (1.0) -
Additional pension contributions in excess of pension
charge (0.6) (3.1)
Other 0.2 0.2
---------------------------------------------------------- ------ ------
Operating cash flows before movement in working capital 91.0 79.0
Increase in inventories (9.6) (6.1)
Increase in receivables (9.3) (18.5)
Increase in payables 6.6 2.2
---------------------------------------------------------- ------ ------
Cash generated by operations 78.7 56.6
Interest received 0.1 0.4
Interest and other finance costs paid (10.7) (4.0)
Interest on leased assets (1.2) (1.1)
Cash flow from derivative financial instruments 1.3 (0.1)
Income taxes paid (17.8) (17.5)
---------------------------------------------------------- ------ ------
Net cash from operating activities 50.4 34.3
---------------------------------------------------------- ------ ------
Analysis of net debt
Total changes in liabilities due to financing activities are as
follows:
At 1 Net Other
July cash Foreign non-cash At 30
2022 flows exchange movements June 2023
GBPm GBPm GBPm GBPm GBPm
------------------------------------- ------- ------- ---------- ---------- -----------
Cash and cash equivalents 38.8 1.3 (3.8) - 36.3
-------------------------------------- ------- ------- ---------- ---------- -----------
Interest-bearing loans - current (7.1) 3.8 0.2 (1.1) (4.2)
Lease liabilities - current (10.1) 11.1 0.5 (11.5) (10.0)
-------------------------------------- ------- ------- ---------- ---------- -----------
(17.2) 14.9 0.7 (12.6) (14.2)
------------------------------------- ------- ------- ---------- ---------- -----------
Interest-bearing loans - non-current (182.1) (17.8) 3.9 - (196.0)
Lease liabilities - non-current (24.5) - 0.8 1.8 (21.9)
-------------------------------------- ------- ------- ---------- ---------- -----------
(206.6) (17.8) 4.7 1.8 (217.9)
------------------------------------- ------- ------- ---------- ---------- -----------
Total debt financing (223.8) (2.9) 5.4 (10.8) (232.1)
-------------------------------------- ------- ------- ---------- ---------- -----------
Net debt (185.0) (1.6) 1.6 (10.8) (195.8)
-------------------------------------- ------- ------- ---------- ---------- -----------
Included within non-cash movements is GBP9.7m in relation to net
new leases and GBP1.1m in the unwinding of debt issue costs.
At 1 Net Other
July cash Foreign non-cash At 30
2021 flows exchange movements June 2022
GBPm GBPm GBPm GBPm GBPm
------------------------------------- ------- ------- ---------- ---------- -----------
Cash and cash equivalents 46.0 (11.0) 3.8 - 38.8
-------------------------------------- ------- ------- ---------- ---------- -----------
Interest-bearing loans - current (13.9) 8.9 (1.2) (0.9) (7.1)
Lease liabilities - current (9.0) 11.3 (0.7) (11.7) (10.1)
-------------------------------------- ------- ------- ---------- ---------- -----------
(22.9) 20.2 (1.9) (12.6) (17.2)
------------------------------------- ------- ------- ---------- ---------- -----------
Interest-bearing loans - non-current (109.4) (63.1) (9.6) - (182.1)
Lease liabilities - non-current (19.3) - (1.6) (3.6) (24.5)
-------------------------------------- ------- ------- ---------- ---------- -----------
(128.7) (63.1) (11.2) (3.6) (206.6)
------------------------------------- ------- ------- ---------- ---------- -----------
Total debt financing (151.6) (42.9) (13.1) (16.2) (223.8)
-------------------------------------- ------- ------- ---------- ---------- -----------
Net debt (105.6) (53.9) (9.3) (16.2) (185.0)
-------------------------------------- ------- ------- ---------- ---------- -----------
Included within non-cash movements is GBP15.3m in relation to
net new leases and GBP0.9m in the unwinding of debt issue
costs.
19. CONTINGENCIES AND BANK GUARANTEES
Contingent liabilities are potential future cash outflows, where
the likelihood of payments is considered more than remote but is
not considered probable or cannot be measured reliably. Assessing
the amount of liabilities that are not probable is highly
judgemental.
The retirement benefit obligations referred to in note 17
include obligations relating to the MPF defined benefit scheme.
Genus, together with other participating employers, is joint and
severally liable for the scheme's obligations. Genus has accounted
for its section and its share of any orphan assets and liabilities,
collectively representing approximately 86% (2022: 86%) of the MPF.
As a result of the joint and several liability, Genus has a
contingent liability for the scheme's obligations that it has not
accounted for.
As described in note 4, the Group is involved in ongoing
litigation proceedings and investigations with ST that are at
various legal stages. The Group makes a provision for amounts to
the extent where an outflow of economic benefit is probable and can
be reliably estimated. However, there are specific claims
identified in the litigation where the Group considers the outcome
of the claim is not probable and will not result in the outflow of
economic benefit.
The Group's future tax charge and effective tax rate could be
affected by factors such as countries reforming their tax
legislation to implement the OECD's BEPS recommendations and by
European Commission initiatives including state aid
investigations.
At 30 June 2023, we had entered into bank guarantees totalling
GBP12.6m (2022: GBP20.2m).
Alternative Performance Measures Glossary
The Group tracks a number of APMs in managing its business,
which are not defined or specified under the requirements of IFRS
because they exclude amounts that are included in, or include
amounts that are excluded from, the most directly comparable
measure calculated and presented in accordance with IFRS, or are
calculated using financial measures that are not calculated in
accordance with IFRS.
The Group believes that these APMs, which are not considered to
be a substitute for or superior to IFRS measures, provide
stakeholders with additional helpful information on the performance
of the business. These APMs are consistent with how the business
performance is planned and reported within the internal management
reporting to the Board and GELT. Some of these APMs are also used
for the purpose of setting remuneration targets.
These APMs should be viewed as supplemental to, but not as a
substitute for, measures presented in the consolidated financial
information relating to the Group, which are prepared in accordance
with IFRS. The Group believes that these APMs are useful indicators
of its performance. However, they may not be comparable to
similarly-titled measures reported by other companies, due to
differences in the way they are calculated.
The key APMs that the Group uses include:
Alternative Calculation methodology and Reasons why we believe
Performance closest the
Measures equivalent IFRS measure APMs are useful
(where applicable)
---------------------- --------------------------------- -----------------------------------------------------------
Income Statement measures
----------------------------------------------------------------------------------------------------------------------
Adjusted operating Adjusted operating profit is Allows the comparison
profit exc JVs operating of underlying financial
profit with the net IAS 41 performance by excluding
valuation the impacts of exceptional
movement on biological assets, items and is a performance
amortisation indicator against which
of acquired intangible assets, short-term and long-term
share-based incentive outcomes for
payment expense and exceptional our senior executives
items are measured:
added back and excludes JV and * net IAS 41 valuation movements on biological assets -
associate these movements can be materially volatile and do not
Adjusted operating results. directly correlate to the underlying trading
profit inc JVs performance in the period. Furthermore, the movement
Closest equivalent IFRS measure: is non-cash related and many assumptions used in the
Operating profit(1) valuation model are based on projections rather than
current trading;
See reconciliation below.
* amortisation of acquired intangible assets -
excluding this improves the comparability between
Adjusted operating acquired and organically grown operations, as the
profit inc JVs Including adjusted operating latter cannot recognise internally generated
exc gene editing profit intangible assets. Adjusting for amortisation
costs from JV and associate results. provides a more consistent basis for comparison
between the two but it is also a measure excluded
See reconciliation below from our managements remuneration assessment, as well
as our debt agreements and banking covenants. It is
also one requested and used by our investor group to
evaluate our performance.;
Adjusted operating
profit inc JVs
after tax Including adjusted operating * share-based payments - this expense is considered to
profit be relatively volatile and not fully reflective of
from JV and associate results but the current period trading, as the performance
excluding gene editing costs. criteria are based on EPS performance over a
three-year period and include estimates of future
Adjusted profit See reconciliation below performance; and
inc
JVs before tax
* exceptional items - these are items which due to
either their size or their nature are excluded, to
Adjusted operating profit improve the understanding of the Group's underlying
including performance.
JV less adjusted effective tax.
Adjusted profit
inc See reconciliation below
JVs after tax
Adjusted operating profit
including
JVs less net finance costs.
See reconciliation below
Adjusted profit including JVs
before
tax less adjusted effective tax.
See reconciliation below
---------------------- --------------------------------- -----------------------------------------------------------
Adjusted effective Total income tax charge for the Provides an underlying
tax rate Group tax rate to allow comparability
excluding the tax impact of of underlying financial
adjusting performance, by excluding
items, divided by the adjusted the impacts of net IAS
operating 41 valuation movement
profit. on biological assets,
amortisation of acquired
Closest equivalent IFRS measure: intangible assets, share-based
Effective tax rate payment expense and
exceptional items.
See reconciliation below
---------------------- --------------------------------- -----------------------------------------------------------
Adjusted basic Adjusted profit after tax profit On a per share basis,
earnings per divided by the weighted basic this allows the comparability
share average of underlying financial
number of shares. performance by excluding
the impacts of adjusting
Closest equivalent IFRS measure: items.
Earnings per share
See reconciliation below
---------------------- --------------------------------- -----------------------------------------------------------
Adjusted diluted Underlying attributable profit
earnings per divided
share by the diluted weighted basic
average
number of shares.
Closest equivalent IFRS measure:
Diluted earnings per share
See reconciliation below
---------------------- --------------------------------- -----------------------------------------------------------
Adjusted earnings Adjusted earnings per share The Board's dividend
cover divided policy targets adjusted
by the expected dividend for the earning cover to be
year. between 2.5-3 times.
See reconciliation below.
---------------------- --------------------------------- -----------------------------------------------------------
Adjusted EBITDA This is adjusted operating This APM is presented
- calculated profit, because it is used in
in accordance adding back cash received from calculating our ratio
with the definitions our of net debt to EBITDA
used in our financing JVs, depreciation of property, and our interest cover,
facilities plant which we report to our
and equipment, depreciation of banks to ensure compliance
the with our bank covenants.
historical cost of biological
assets,
operational amortisation (i.e.
excluding
amortisation of acquired
intangibles)
and deducting the amount
attributable
to minority interest.
Closest equivalent IFRS measure:
Operating profit (1)
See reconciliation below
---------------------- --------------------------------- -----------------------------------------------------------
Adjusted operating Adjusted operating profit Allows for the comparability
margin (including of underlying financial
JVs) divided by revenue. performance by excluding
the impacts of exceptional
items.
---------------------- --------------------------------- -----------------------------------------------------------
Adjusted operating Adjusted operating profit divided
margin (exc JVs) by revenue.
---------------------- --------------------------------- -----------------------------------------------------------
Constant currency The Group reports certain The Group's business
basis financial operates in multiple
measures, on both a reported and countries worldwide
constant currency basis and and its trading results
retranslates are translated back
the current year's results at the into the Group's functional
average actual exchange rates currency of Sterling.
used This measure eliminates
in the previous financial year. the effects of exchange
rate fluctuations when
comparing year-on-year
reported results.
---------------------- --------------------------------- -----------------------------------------------------------
Balance Sheet measures
----------------------------------------------------------------------------------------------------------------------
Net debt Net debt is gross debt, made up This allows the Group
of to monitor its levels
unsecured bank loans and of debt.
overdrafts
and obligations under finance
leases,
with a deduction
for cash and cash equivalents.
See reconciliation below
---------------------- --------------------------------- -----------------------------------------------------------
Net debt - calculated Net debt excluding the impact of This is a key metric
in accordance adopting IFRS 16 and adding back that we report to our
with the definitions guarantees and deferred purchase banks to ensure compliance
used in our financing arrangements. with our bank covenants.
facilities
See reconciliation below
---------------------- --------------------------------- -----------------------------------------------------------
Cash flow measures
----------------------------------------------------------------------------------------------------------------------
Cash conversion Cash generated by operations as a This is used to measure
percentage of adjusted operating how much operating cash
profit excluding JVs. flow we are generating
and how efficient we
See reconciliation below are at converting our
operating profit into
cash.
---------------------- --------------------------------- -----------------------------------------------------------
Free cash flow Cash generated by the Group Shows the cash retained
before by the Group in the
debt repayments, acquisitions and year.
investments, dividends and
proceeds
from share issues.
Closest IFRS measure: Net cash
flow
from operating activities
See reconciliation below
---------------------- --------------------------------- -----------------------------------------------------------
Other measures
----------------------------------------------------------------------------------------------------------------------
Interest cover The ratio of adjusted net finance This APM is used to
costs, calculated in accordance understand our ability
with to meet our interest
the definitions used in our payments and is also
financing a key metric that we
facilities, is net finance costs report to our banks
with to ensure compliance
a deduction for pension interest, with our bank covenants.
interest from adopting IFRS 16,
unwinding
of discount on put options and
amortisation
of refinancing fees, to adjusted
EBITDA.
Closest equivalent IFRS
components
for the ratio: The equivalent
IFRS
components are finance costs,
finance
income and operating profit
See reconciliation below
---------------------- --------------------------------- -----------------------------------------------------------
Ratio of net The ratio of net debt, calculated This APM is used as
debt to adjusted in accordance with the a measurement of our
EBITDA definitions leverage and is also
used in our financing facilities, a key metric that we
is gross debt, made up of report to our banks
unsecured to ensure compliance
bank loans and overdrafts and with our bank covenants.
obligations
under finance leases,
with a deduction for cash and
cash
equivalents and adding back
amounts
related to guarantees and
deferred
purchase arrangements, to
adjusted
EBITDA.
Closest equivalent IFRS
components
for the ratio: The equivalent
IFRS
components are gross debt, cash
and
cash equivalents and operating
profit
See reconciliation below
---------------------- --------------------------------- -----------------------------------------------------------
Return on adjusted The Group's return on adjusted This APM is used to
invested capital invested measure our ability
capital is measured on to efficiently invest
the basis of adjusted operating our capital and gives
profit including JVs after tax, us a sense of how well
which we are using our resources
is operating profit with the to generate returns.
pre-tax
share of profits from JVs and
associates,
net IAS 41 valuation movement on
biological assets, amortisation
of
acquired intangible assets,
share-based
payment expense and exceptional
items
added back, net of amounts
attributable
to non-controlling interest and
tax.
The adjusted operating profit
including
JVs after tax is divided by
adjusted
invested capital, which is the
equity
attributable to owners of the
Company
adding back net debt, pension
liability
net of related deferred tax and
deducting
biological assets (less
historical
cost) and goodwill, net of
related
deferred tax.
Closest equivalent IFRS
components
for the ratio:
Return on invested capital
See reconciliation below
---------------------- --------------------------------- -----------------------------------------------------------
1 Operating profit is not defined per IFRS. It is presented in
the Group Income Statement and is shown as profit before tax,
finance income/costs and share of post-tax profit of JVs and
associates retained
The tables below reconcile the closest equivalent Ifrs measure
to the apm or outline the calculation of the apm
Income statement measures
Adjusted operating profit exc JVs
Adjusted operating profit inc JVs
Adjusted operating profit inc JVs and exc gene editing costs
2023 2022
------------ -----------
GBPm GBPm GBPm GBPm Reference
---------------------------------------- ----- ----- ---- ----- ----------------------
Operating profit 40.5 49.4 Group Income Statement
Add back:
Net IAS 41 valuation movement
on biological assets 16.9 5.4 Group Income Statement
Amortisation of acquired intangible
assets 7.7 8.3 Group Income Statement
Share-based payment expense 6.0 3.7 Group Income Statement
Exceptional items 3.5 2.0 Group Income Statement
---------------------------------------- ----- ----- ---- ----- ----------------------
Adjusted operating profit exc
JVs 74.6 68.8 Group Income Statement
Amounts attributable to non-controlling
interest 0.4 (0.3) Group Income Statement
Operating profit from JVs and
associates 10.5 5.2 Group Income Statement
Note 7 - Income
Tax on JVs and associates 3.9 2.6 tax expense
Note 13 - Equity
Net IAS 41 valuation movement (3.6) 1.4 accounted investees
---------------------------------------- ----- ----- ---- ----- ----------------------
Adjusted operating profit from
JVs 10.8 9.2
---------------------------------------- ----- ----- ---- ----- ----------------------
Adjusted operating profit inc
JVs 85.8 77.7
Note 3 - Segmental
Gene editing costs 14.3 7.9 information
---------------------------------------- ----- ----- ---- ----- ----------------------
Adjusted operating profit inc
JVs and exc gene editing costs 100.1 85.6
---------------------------------------- ----- ----- ---- ----- ----------------------
Adjusted operating profit inc JVs after tax
2023 2022
------------- -------------
GBPm GBPm Reference
------------------------------ ----- ------ ----- ------ -------------------
Adjusted operating profit inc
JVs 85.8 77.7 See APM
Note 8 - Earnings
Effective Tax Rate 22.2% 24.3% per share
Adjusted tax (19.0) (18.9) No direct reference
------------------------------ ----- ------ ----- ------ -------------------
Adjusted operating profit inc
JVs after tax 66.8 58.8
------------------------------ ----- ------ ----- ------ -------------------
Adjusted profit inc JVs before tax
Adjusted profit inc JVs after tax
2023 2022
------- ------
GBPm GBPm Reference
------------------------------- ------ ------ --------------------
Adjusted operating profit inc
JVs 85.8 77.7 See APM
Note 6 - Net finance
Less net finance costs (14.3) (6.2) costs
-------------------------------- ------ ------ --------------------
Adjusted profit inc JVs before
tax 71.5 71.5
Note 8 - Earnings
Adjusted tax (15.9) (17.4) per share
-------------------------------- ------ ------ --------------------
Adjusted profit inc JVs after
tax 55.6 54.1
-------------------------------- ------ ------ --------------------
Adjusted effective tax GBPm/rate
2023 2022
------------- -------------
GBPm % GBPm % Reference
------------------------------------ ----- ------ ----- ------ ----------------------
Note 8 - Earnings
Adjusted effective tax GBPm/rate 15.9 22.2 17.4 24.3 per share
Exceptional items (0.9) (25.7) (0.8) (40.0) No direct reference
Share-based payment expense (0.8) (14.5) (0.5) (13.5) No direct reference
Other gains and losses 0.7 25.0 - - No direct reference
Amortisation of acquired intangible
assets (1.9) (24.7) (3.3) (39.8) No direct reference
Net IAS 41 valuation movement
on biological assets (1.5) (8.8) 1.5 27.8 No direct reference
------------------------------------ ----- ------ ----- ------ ----------------------
Note 7 - Taxation
Effective tax GBPm/rate 11.5 26.6 14.3 28.0 and deferred taxation
------------------------------------ ----- ------ ----- ------ ----------------------
Adjusted basic earnings per share
2023 2022 Reference
------------------------------------ ------ ------ -----------------
Adjusted profit inc JVs after
tax (GBPm) 55.6 54.1 See APM
Weighted average number of ordinary Note 8 - Earnings
shares (000s) 65.557 65.395 per share
------------------------------------- ------ ------ -----------------
Adjusted basic earnings per
share (pence) 84.8 82.7
------------------------------------- ------ ------ -----------------
Adjusted diluted earnings per share
2023 2022 Reference
------------------------------------ ------ ------ -----------------
Adjusted profit inc JVs after tax
(GBPm) 55.6 54.1 See APM
Weighted average number of diluted Note 8 - Earnings
ordinary shares (000s) 65.998 65.714 per share
------------------------------------ ------ ------ -----------------
Adjusted diluted earnings per share
(pence) 84.2 82.3
------------------------------------ ------ ------ -----------------
Adjusted earnings cover
2023 2022
------------ ------------
pence times pence times Reference
---------------------------- ----- ----- ----- ----- ------------------
Adjusted earnings per share 84.8 82.7 See APM
Dividend for the year 32.0 32.0 Note 9 - Dividends
Adjusted earnings cover 2.7 2.6
---------------------------- ----- ----- ----- ----- ------------------
Adjusted EBITDA - as calculated under our financing
facilities
2023 2022
------------- -------------
GBPm GBPm GBPm GBPm Reference
---------------------------------------- ------ ----- ------ ----- ----------------------
Operating profit 40.5 49.4 Group Income Statement
Add back:
Net IAS 41 valuation movement
on biological assets 16.9 5.4 Group Income Statement
Amortisation of acquired intangible
assets 7.7 8.3 Group Income Statement
Share-based payment expense 6.0 3.7 Group Income Statement
Exceptional items 3.5 2.0 Group Income Statement
---------------------------------------- ------ ----- ------ ----- ----------------------
Adjusted operating profit exc
JVs 74.6 68.8 Group Income Statement
Adjust for:
Cash received from JVs (dividend Group Statement
and loan investment) 0.7 3.2 of Cash Flows
Depreciation: property, plant Note 12 - Property,
and equipment 30.2 26.4 plant and equipment
Operational lease payments (12.3) (12.4) No direct reference
Depreciation: historical cost
of biological assets 13.4 10.7 No direct reference
Amortisation and impairment
(excluding separately identifiable Note 10 - Intangible
acquired intangible assets) 5.7 4.3 assets
Amounts attributable to non-controlling
interest 0.4 (0.3) Group Income Statement
---------------------------------------- ------ ----- ------ ----- ----------------------
Adjusted EBITDA - as calculated
under our financing facilities 112.7 100.7
---------------------------------------- ------ ----- ------ ----- ----------------------
Balance sheet measures
Net debt
Net debt as calculated under our financing facilities
2023 2022
------------- -------------
GBPm GBPm GBPm GBPm Reference
------------------------------------ ----- ------ ----- ------ -----------------------
Current unsecured bank loans
and overdrafts 4.2 7.1
Non-current unsecured bank loans
and overdrafts 196.0 182.1
------------------------------------ ----- ------ ----- ------ -----------------------
Unsecured bank loans and overdrafts 200.2 189.2 Group Balance Sheet
Current obligations under finance
leases 10.0 10.1
Non-current obligations under
finance leases 21.9 24.5
------------------------------------ ----- ------ ----- ------ -----------------------
Obligations under finance leases 31.9 34.6 Group Balance Sheet
------------------------------------ ----- ------ ----- ------ -----------------------
Note 18 - Notes
to the cash flow
Total debt financing 232.1 223.8 statement
Deduct:
Cash and cash equivalents (36.3) (38.8) Group Balance Sheet
------------------------------------ ----- ------ ----- ------ -----------------------
Net debt 195.8 185.0
------------------------------------ ----- ------ ----- ------ -----------------------
Deduct:
Lower of obligations under finance
leases or GBP30m (30.0) (30.0)
Add back:
Note 19 - Contingencies
Guarantees 12.6 20.2 and bank guarantees
Cash not available 0.8 - No direct reference
------------------------------------ ----- ------ ----- ------ -----------------------
Net debt - as calculated under
our financing facilities 179.2 175.2
------------------------------------ ----- ------ ----- ------ -----------------------
Cash flow measures
Cash conversion
2023 2022
---------- ----------
GBPm GBPm GBPm GBPm Reference
------------------------------------ ---- ---- ---- ---- ----------------------
Note 18 - Notes
to the cash flow
Cash generated by operations 78.7 56.6 statement
Operating profit 40.5 49.4 Group Income Statement
Add back:
Net IAS 41 valuation movement
on biological assets 16.9 5.4 Group Income Statement
Amortisation of acquired intangible
assets 7.7 8.3 Group Income Statement
Share-based payment expense 6.0 3.7 Group Income Statement
Exceptional items 3.5 2.0 Group Income Statement
------------------------------------ ---- ---- ---- ---- ----------------------
Adjusted operating profit exc
JVs 74.6 68.8 Group Income Statement
Cash conversion (%) 105% 82%
------------------------------------ ---- ---- ---- ---- ----------------------
Free cash flow
2023 2022
------------- ------------
GBPm GBPm GBPm GBPm Reference
-------------------------------- ----- ------ ---- ------ -----------------
Note 18 - Notes
to the cash flow
Cash generated by operations 78.7 56.6 statement
Note 18 - Notes
to the cash flow
Net interest and tax paid (28.3) (22.3) statement
Group Statement
Capital expenditure (35.2) (50.9) of Cash Flows
Dividends received from JV and Group Statement
associates 2.6 3.2 of Cash Flows
Joint venture and associate Group Statement
loan investment (1.9) - of Cash Flows
Proceeds from sale of property, Group Statement
plant and equipment 2.4 - of Cash Flows
Dividend to non-controlling Group Statement
interest (0.1) (0.1) of Cash Flows
--------------------------------------- ------ ---- ------ -----------------
Free cash flow 18.2 (13.5)
--------------------------------------- ------ ---- ------ -----------------
Other measures
Interest cover
2023 2022
------------ ------------
GBPm Times GBPm Times Reference
---------------------------------- ----- ----- ----- ----- ----------------------
Finance costs 15.4 6.6 Group Income Statement
Finance income (1.1) (0.4) Group Income Statement
---------------------------------- ----- ----- ----- ----- ----------------------
Note 6 - Net finance
Net finance costs 14.3 6.2 costs
Deduct:
Note 6 - Net finance
Pension interest (0.2) (0.2) costs
Note 6 - Net finance
Interest on lease liabilities (1.2) (1.1) costs
Note 6 - Net finance
Unwinding discount on put options (0.3) (0.2) costs
Amortisation of refinancing Note 6 - Net finance
fees (1.1) (0.9) costs
---------------------------------- ----- ----- ----- ----- ----------------------
Adjusted net finance costs 11.5 3.8
Adjusted EBITDA - as calculated
under our financing facilities 112.7 100.7 See APM
Interest cover 10 27
---------------------------------- ----- ----- ----- ----- ----------------------
Ratio of net debt to adjusted EBITDA
2023 2022
------------ ------------
GBPm Times GBPm Times Reference
-------------------------------- ----- ----- ----- ----- ---------
Net debt - as calculated under
our financing facilities 179.2 175.2 See APM
Adjusted EBITDA - as calculated
under our financing facilities 112.7 100.7 See APM
Ratio of net debt to EBITDA 1.6 1.7
-------------------------------- ----- ----- ----- ----- ---------
Return on adjusted invested capital
2023 2022
-------------- --------------
GBPm % GBPm % Reference
----------------------------------- ------- ----- ------- ----- ---------------------
Adjusted operating profit inc
JVs after tax 66.8 58.8 See APM
Equity attributable to owners
of the Company 574.9 578.5 Group Balance Sheet
Add back:
Note 18 - Notes
to the cash flow
Net debt 195.8 185.0 statement
Pension liability 6.9 8.3 Group Balance Sheet
Related deferred tax (1.2) (1.3) No direct reference
Adjust for:
Biological assets - carrying Note 11 - Biological
value (342.0) (366.8) assets
Biological assets' harvest classed
as inventories (22.7) (20.9) Note 14 - Inventories
Biological assets - historic
cost 83.4 77.2 No direct reference
Goodwill (107.8) (111.0) Group Balance Sheet
Related deferred tax 67.7 73.0 No direct reference
----------------------------------- ------- ----- ------- ----- ---------------------
Adjusted invested capital 455.0 422.0
Return on adjusted invested
capital 14.7% 13.9%
----------------------------------- ------- ----- ------- ----- ---------------------
Return on invested capital
2023 2022
------------- -------------
GBPm % GBPm % Reference
--------------------------------------- ------ ----- ------ ----- ----------------------
Return on adjusted invested
capital 14.7% 13.9% See APM
Adjusted operating profit inc
JVs after tax 66.8 58.8 See APM
Note 8 - Earnings
Tax rate 19.0 22.2% 18.9 24.3% per share
--------------------------------------- ------ ----- ------ ----- ----------------------
Adjusted operating profit inc
JVs 85.8 77.7 Group Income Statement
Adjusted operating profit attributable
to non-controlling interest (0.4) 0.3 Group Income Statement
Pre-tax share of profits from
JVs exc net IAS 41 valuation
movement (10.8) (9.2) Group Income Statement
--------------------------------------- ------ ----- ------ ----- ----------------------
Adjusted operating profit exc
JVs 74.6 68.8 Group Income Statement
Fair value movement on biological
assets (16.9) (5.4) Group Income Statement
Amortisation of acquired intangibles (7.7) (8.3) Group Income Statement
Share-based payment expense (6.0) (3.7) Group Income Statement
Exceptional items (3.5) (2.0) Group Income Statement
Share of post-tax profit of
JVs 10.5 5.2 Group Income Statement
Other gains and losses 2.7 - Group Income Statement
Finance costs (14.3) (6.2) Group Income Statement
--------------------------------------- ------ ----- ------ ----- ----------------------
Profit before tax 39.4 48.4 Group Income Statement
Tax (7.6) (11.7) Group Income Statement
--------------------------------------- ------ ----- ------ ----- ----------------------
Profit 31.8 36.7 Group Income Statement
Equity attributable to owners
of the Company 574.9 578.5 Group Balance Sheet
Return on invested capital 5.5% 6.3%
--------------------------------------- ------ ----- ------ ----- ----------------------
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END
FR FLFVTARIRIIV
(END) Dow Jones Newswires
September 07, 2023 02:00 ET (06:00 GMT)
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