PRELIMINARY RESULTS Investor Presentation Year ended 30 June 2018
Disclaimer This presentation has been prepared by Genus (“Genus” or “the Company”) and has not been independently verified. Genus is solely responsible for the contents of this document and has taken all reasonable care to ensure that the facts stated herein are true and accurate in all material respects and that there are no material facts the omission of which would make misleading any statement in this document whether of fact or opinion. While the information contained in this presentation has been provided in good faith, neither the Company, nor any of their advisers, representatives, officers, agents or employees makes any representation, warranty or undertaking, express or implied, in respect of this presentation and no responsibility or liability is accepted by any of them as to the accuracy, completeness or reasonableness of the information provided. The issue of this presentation to the recipient does not create any obligation on the part of the issuer to provide the recipient access to any additional information or to update this presentation or any additional information or to correct any inaccuracies in this presentation or any additional information which may become apparent. The recipient should conduct its own investigation into the Company and of any other information contained in the presentation. This presentation is for information purposes only and does not constitute, and shall not be interpreted as, either an offer for sale, prospectus, invitation to subscribe for shares or debentures in the Company, or as the basis of a contract. This presentation has been prepared on the basis that it will only be made available to investment professionals and is thereby exempt from the provisions of s21 of the Financial Services and Markets Act 2000. 2
Overview Bob Lawson Chairman 3
Strong strategic and financial progress > Results in line with expectations − Profit before tax up 4% (9% in constant currency) − Strong free cash flow − Earnings per share 75.9p, up 9% (15% in constant currency) > Strategic progress − Successful Sexcel launch − Strong product development progress > Dividend increased 10% to 26.0p per share 4
Financial results Stephen Wilson Finance Director 5
Results Year ended 30 June 2018 % Change 2018 2017 Actual Constant £m £m Currency Currency Revenue 470.3 459.1 2% 6% Adjusted operating profit 57.7 55.1 5% 9% Attributable to non-controlling interest (0.8) (2.1) 62% 57% Adjusted share of JV profits 6.2 7.1 (13)% (4)% Adjusted operating profit inc JV 63.1 60.1 5% 10% Finance costs (4.6) (3.7) (24)% (24)% Adjusted profit before tax 58.5 56.4 4% 9% Adjusted earnings per share (pence) 75.9 69.4 9% 15% Dividend per share (pence) 26.0 23.6 10% 6
Volume growth Year ended 30 June 2018 Porcine Dairy & Beef Volume growth (%) Volume growth (%) 10% 8% 6% 8% 4% 6% 5% 5% 6% 2% 1% 9% 0% 4% 8% FY14 FY15 FY16 FY17 FY18 6% (2)% (6)% 2% 4% 4% (4)% 0% (6)% FY14 FY15 FY16 FY17 FY18 7
Adjusted operating profit – by business unit % Change Year ended 30 June 2018 2018 2017 Actual Constant £m £m Currency Currency Genus PIC 94.8 94.8 0% 5% Genus ABS 26.1 21.3 23% 29% Operating units 120.9 116.1 4% 9% Research and Development (46.8) (43.8) (7)% (13)% Central costs (11.0) (12.2) 10% 6% Adjusted operating profit inc JV 63.1 60.1 5% 10% Adjusted operating profit exc gene editing 68.1 63.6 7% 12% 8 Note: Business Unit results include joint venture profits, less non-controlling interests
Genus PIC % Change Year ended 30 June 2018 2018 2017 Actual Constant £m £m Currency Currency Revenue 247.7 249.5 (1)% 3% Adjusted operating profit exc JV 88.7 87.7 1% 6% Adjusted operating profit inc JV 94.8 94.8 - 5% Adjusted operating margin exc JV 35.8% 35.2% 0.6pts 1.0pts Continued growth in volumes up 8% and profit up 5% > − Royalty revenues up 10% with all regions contributing Europe profit up 48% from strong royalty revenues (+32%), customer wins and strategic pricing initiatives > − Hermitage initial contribution encouraging − Møllevang to contribute further growth going forward Latin America profits up 17% with royalty revenue up 15% and strong Brazil JV performance > North America profit up 1% impacted by health breaks in sireline farms and supply chain investments > Asia volumes up 19% driven by China, Russia and Philippines > − Profit growth (+1%) held back by China, down £1.4m − Lower pork prices in China reduced owned farm margins and Besun JV by £4m 9 Note: All % changes are in constant currency unless otherwise stated
Genus ABS % Change Year ended 30 June 2018 2018 2017 Actual Constant £m £m Currency Currency Revenue 210.6 195.9 8% 11% Adjusted operating profit 26.2 22.3 17% 23% Adjusted operating profit less NCI 1 26.1 21.3 23% 29% Adjusted operating margin 12.4% 11.4% 1.0pts 1.2pts ABS volumes up 5%, revenue up 11% and profit up 29% > − Strong sexed volume growth of 25% with launch of Sexcel Europe profit up 12% benefiting from Sexcel launch; Sexed volumes up 24% > − Strong performances in Italy and France and solid growth in UK Latin America profit up 4%; Sexed volumes up 8%, Beef up 5%; Brazil up 14% > North America revenue up 5%, profit down 17% with investment to strengthen focus on large dairy accounts > Asia profit up 36% with strong performances in Australia and Japan > IVB strong volume and revenue growth > − Integrated into ABS regional structure for 2019 10 (1) NCI = Non-controlling Interest Note: All % changes are in constant currency unless otherwise stated
Genus R&D % Change Year ended 30 June 2018 2018 2017 Actual Constant £m £m Currency Currency Porcine product development 17.0 16.6 2% 8% Bovine product development 17.2 15.3 12% 18% Gene editing 5.0 3.5 43% 46% Other research and development 7.6 8.4 (10)% (2)% Research and Development less NCI 1 46.8 43.8 7% 13% Porcine product development up 8% > − Expanded genetic testing, product validation and investment to identify new traits Bovine product development up 18% > − Amortisation of previously capitalised IntelliGen development costs and further platform development − Continued beef investment to build differentiated customer products Gene editing investment increased 46% > − First generations of gene edited pigs and regulatory engagement with FDA progressing Other research ; investments to drive genetic improvement and differentiation even faster > 11 (1) NCI = Non-controlling Interest Note: All % changes are in constant currency unless otherwise stated
Statutory income statement 2018 2017 Variance Year ended 30 June 2018 £m £m £m Adjusted operating profit exc JV 57.7 55.1 2.6 Net IAS 41 valuation movement (28.7) (1.1) (27.6) Amortisation of acquired intangible assets (9.5) (8.7) (0.8) Share-based payments (5.4) (4.6) (0.8) Exceptional items - Litigation (5.0) (5.3) 0.3 - Other (0.9) 2.8 (3.7) Operating profit 8.2 38.2 (30.0) - Share of post-tax profit of JVs 4.2 6.2 (2.0) - Net finance costs (4.6) (3.7) (0.9) Profit before tax 7.8 40.7 (32.9) Taxation 1 33.8 (6.4) 40.2 Profit after tax 41.6 34.3 7.3 12 (1) Includes a £32.5m non-cash deferred tax credit, principally relating to biological assets, following US tax reforms
Cash flow 2018 2017 Variance Year ended 30 June 2018 £m £m £m Adjusted operating profit exc JV 57.7 55.1 2.6 Depreciation and amortisation 14.6 11.5 3.1 Adjusted EBITDA 72.3 66.6 5.7 Working capital - (1.8) 1.8 Biological assets (1.9) (5.7) 3.8 Pension deficit repair, exceptionals and other (12.1) (12.8) 0.7 Cash generated by operations 58.3 46.3 12.0 Cash conversion % 101% 84% 17pts Interest and tax paid (15.1) (11.7) (3.4) Capital expenditure (22.5) (18.9) (3.6) Cash received from joint ventures 2.8 8.3 (5.5) Other 0.8 1.4 (0.6) Free cash flow 24.3 25.4 (1.1) Acquisitions and investments (1.8) (30.0) 28.2 Dividends (14.9) (13.5) (1.4) Net cash flow 7.6 (18.1) 25.7 Net Debt 108.5 111.6 (3.1) 13
Strong financial position Year ended 30 June 2018 2018 2017 £m £m Owners’ equity 416.6 399.3 Net Debt 108.5 111.6 Key Financial ratios: - Return on adjusted capital 23.9% 19.9% - Gearing 26% 28% - Net debt to EBITDA 1.4x 1.5x - Interest cover 25x 37x - Dividend cover 2.9x 2.9x > Dividend up 10% > £99m headroom on bank facilities − £220m of facilities extend to 2021 − £176m of facilities extend to 2022 14
Business update Karim Bitar Chief Executive 15
Strong performance in 2018, increasingly challenging market context for 2019 > Increasingly challenging market context − Trade tariffs impacting customers − African Swine Fever in China > PIC strategic progress − Møllevang strategic partnership − PRRSv resistance programme > ABS strategic progress − Increasing Sexcel production to meet growing global demand − Strengthening product and service offering 16
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