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INTERIM RESULTS
Investor Presentation
Half year ended 31 December 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 progress and solid performance
> Results in line with expectations
− Operating profit excluding gene editing up 3% in constant currency
− Adjusted profit before tax up 1% (2% in constant currency)
> Continued strategic progress
− Strong Sexcel® growth
− PRRSv resistance programme progressing
> Interim dividend increased 10% to 8.9p per share
4
Financial results
Stephen Wilson
Finance Director
5
Results
% Change
2018 2017 Actual Currency
Constant Currency£m £m
Revenue 238.8 238.6 - -
Adjusted operating profit inc JV excgene editing
34.2 33.6 2% 3%
Adjusted operating profit inc JV 31.1 31.5 (1)% -
Net finance costs (1.9) (2.5) 24% 24%
Adjusted profit before tax 29.2 29.0 1% 2%
Adjusted earnings per share1 (pence) 35.8 40.9 (12)% (11)%
Dividend per share (pence) 8.9 8.1 10%
Half year ended 31 December 2018
6(1) Prior year includes a £3.7m deferred tax credit following the US tax reforms
6%4% 4%
8%
1%0%
2%
4%
6%
8%
10%
FY15 FY16 FY17 FY18 FY19 1H vsFY18 1H
PorcineVolume growth (%)
5% excluding China
Volume growth
Half year ended 31 December 2018
7FY15-FY18 are financial years (e.g. FY15 is the period July 2014 – June 2015)FY19 1H vs FY18 1H are the periods July – December 2018 compared to July – December 2017
6%
(6)%
1%
5%7%
(6)%
(4)%
(2)%
0%
2%
4%
6%
8%
FY15 FY16 FY17 FY18 FY19 1H vsFY18 1H
Dairy & BeefVolume growth (%)
Adjusted operating profit – by business unit
% Change
2018£m
2017£m
Actual Currency
Constant Currency
Genus PIC 48.6 47.7 2% 1%
Genus ABS 12.7 11.6 9% 10%
Operating units 61.3 59.3 3% 3%
Research and Development (24.9) (22.1) (13)% (10)%
Central costs (5.3) (5.7) 7% 7%
Adjusted operating profit inc JV 31.1 31.5 (1)% -
Adjusted operating profit exc gene editing 34.2 33.6 2% 3%
Half year ended 31 December 2018
8Note: Business Unit results include joint venture profits, less non-controlling interests
> Profit growth of 1% despite outbreak of ASF across China (up 7% exc China)
− 1% volume growth (5% excluding China) with strong growth in Latin America and Spain
− Royalty revenue up 11% with all regions growing
> Europe profit up 19%, with royalty revenue up 13%
− Good progress with Møllevang strategic collaboration
> Latin America volumes up 9%, profit up 23% and royalty revenue up 21%
> North America volumes up 3%, profit 4% lower
− Impact of FY18 health challenges will recede in H2
> Profit in Asia 40% lower from a c. £3m impact of ASF in China on breeding stock sales
− Strong performance in the Philippines and other Asian markets
Genus PIC
% Change
2018£m
2017£m
Actual Currency
Constant Currency
Revenue 125.6 126.4 (1)% (2)%
Adjusted operating profit exc JV 45.9 44.1 4% 2%
Adjusted operating profit inc JV 48.6 47.7 2% 1%
Adjusted operating margin exc JV 36.5% 34.9% 1.6pts 1.4pts
Half year ended 31 December 2018
9
Note: All % changes are in constant currency unless otherwise stated
% Change
2018£m
2017£m
Actual Currency
Constant Currency
Revenue 107.8 105.6 2% 4%
Adjusted operating profit 12.8 11.7 9% 10%
Adjusted operating profit less NCI1 12.7 11.6 9% 10%
Adjusted operating margin 11.9% 11.1% 0.8pts 0.7pts
Genus ABS
> ABS volumes up 7%, revenue up 4% and profit up 10%
− Strong sexed volume growth of 26% reflecting the successful performance of Sexcel
− Beef volumes up 24% with increased use of differentiated beef genetics in dairy herds
> North America profit up 19% and volumes up 8%
− Sexed volumes up 39%, beef volumes up 111% and strong embryo performance
− Investments in key account management driving success
> Europe profit up 4% led by strong performances in Italy and Russia
> Latin America volumes up 10%
− Profit lower due to phasing of embryo services in prior year
> Asia profit up 8% with double digit growth in Australia and India
− IntelliGen® production commences at the Mehsana cooperative in Gujarat
Half year ended 31 December 2018
10
(1) NCI = Non-controlling Interest Note: All % changes are in constant currency unless otherwise stated
% Change
2018£m
2017£m
Actual Currency
Constant Currency
Porcine product development 8.5 8.4 1% (1)%
Bovine product development 9.4 7.8 21% 17%
Gene editing 3.1 2.1 48% 43%
Other research and development 3.9 3.8 3% -
Research and Development less NCI1 24.9 22.1 13% 10%
> Porcine product development 1% lower
− Increased genetic testing and Møllevang integration costs offset by farm operational efficiencies
> Bovine product development up 17%
− Continued development of IntelliGen platform and amortisation of past capitalised development costs
− Investment in industry leading dairy bull portfolio and proprietary NuEra® beef bulls
> Gene editing investment increased 43% as planned, primarily on the PRRSv resistance project
− Substantial expansion of the numbers of elite gene edited pigs and regulatory engagement
> Other research and development stable
− Continued activities including bioinformatics, genome science and external discovery collaborations
Genus R&D
Half year ended 31 December 2018
11
(1) NCI = Non-controlling Interest Note: All % changes are in constant currency unless otherwise stated
2018 2017 Variance£m £m £m
Adjusted operating profit exc JV 28.7 28.3 0.4
Net IAS 41 valuation movement (9.3) (3.6) (5.7)Amortisation of acquired intangible assets (4.7) (5.0) 0.3Share-based payments (2.4) (3.0) 0.6Exceptional items- Pension GMP equalisation (15.5) - (15.5)- Litigation/other (3.1) (2.4) (0.7)
Operating (loss)/profit (6.3) 14.3 (20.6)
Share of post-tax profit of JVs 1.4 2.5 (1.1)Net finance costs (1.9) (2.5) 0.6
(Loss)/profit before tax (6.8) 14.3 (21.1)
Taxation1 (0.3) 28.3 (28.6)
(Loss)/profit after tax (7.1) 42.6 (49.7)
Half year ended 31 December 2018
12(1) Prior year includes a £32m non-cash deferred tax credit, principally relating to biological assets, following US tax reforms
Statutory income statement
2018 2017 Variance£m £m £m
Adjusted operating profit exc JV 28.7 28.3 0.4
Depreciation and amortisation 8.1 7.2 0.9Adjusted EBITDA 36.8 35.5 1.3
Working capital (11.7) (4.8) (6.9)Biological assets (0.6) (0.4) (0.2)Pension deficit repair, exceptionals and other (9.0) (8.3) (0.7)Cash generated by operations 15.5 22.0 (6.5)Cash conversion % 54% 78% (24pts)
Interest and tax paid (7.0) (7.7) 0.7Capital expenditure (15.0) (7.1) (7.9)Other 1.2 0.3 0.9Free cash flow (5.3) 7.5 (12.8)
Acquisitions and investments (23.1) (1.6) (21.5)Net share proceeds 66.5 - 66.5Dividends (11.0) (9.9) (1.1)Net cash flow 27.1 (4.0) 31.1
Net Debt 85.3 113.4 (28.1)
Half year ended 31 December 2018
13
Cash flow
Strong financial position
2018 2017£m £m
Owners’ equity 486.1 419.1
Net Debt 85.3 113.4
Key Financial ratios1:
- Gearing 18% 27%- Net debt to EBITDA 1.1x 1.4x- Interest cover 32x 27x- Dividend cover 2.6x 3.3x
> 5% equity placement in December 2018 raising £66.5m net
> Interim dividend up 10%
> £126m headroom on bank facilities
− £224m of facilities extend to 2021
− £179m of facilities extend to 2022
Half year ended 31 December 2018
14(1) Calculated on a 12 month rolling basis where applicable
Business update
Karim Bitar
Chief Executive
15
Strong strategic progress
16
> Porcine
− Strong growth in Europe and Latin America offsets ASF impact in China
− PRRSv resistance programme progressing well
> Bovine
− Leading position in genetics through proprietary programmes
− Accelerating demand for Sexcel and differentiated beef genetics
− Expanding IntelliGen presence to meet growing global demand
17
Robust royalty revenue growth bodes well for the future
Porcine
North America EMEA
Latin America Asia
Geographical split indicative of internal segmentation of territories; Russia now part of EMEA (previously Asia)
• Growing maternal line market share
• Expanding supply chain post FY18 health challenges
• China upfront sales impacted by ASF
• Strong growth in Philippines and Vietnam
• 20%+ vol growth in key Spanish market
• Hermitage adding to growth in share and profits
• Møllevang genetics enabling key account wins
• Key account growth in Mexico and Chile
• Growing distribution of terminal sire genetics
11% growth in royalty revenue
0.2% 3% 2%
FY17 FY18 FY19 H1
3%
15%21%
FY17 FY18 FY19 H1
20%30%
13%
FY17 FY18 FY19 H1
45%35%
71%
FY17 FY18 FY19 H1
African Swine Fever widespread across China
18Sources: Rabobank report (30 Jan); Reuters; Swineweb; Genus analysis
ASF spread
> ASF first reported in Aug 2018, has spread nationally
> 100+ reported cases (farms of all sizes)
> Impact known to be significantly higher
Response to spread
> Officially 1m pigs culled
> Transport restrictions implemented causing wide regional price spread
> Dec 2018 restrictions officially relaxed in some regions though transport still challenging
ASF outbreaks, transport restrictions
ASF outbreaks, transport restrictions partially removed
Transport restrictions now removed
Porcine
Likely impact of ASF in China on porcine industry
19Sources: Rabobank; Reuters; Swineweb; China MoA, Boyar, Genus analysis
Current FY20 FY21-FY23
ASF widespread,substantial impact
DISEASE
CHINA SUPPLY
PRICES
CHINA BREEDING
STOCK
Disease spreaddifficult to control
Managing disease continues to be very challenging
National sow herddown c.10% vs. FY18
Production falls10-20+%
Growth intechnified production
Regionally diverse Prices surgePrices remain high
& gradually stabilise
Transport restrictionslimit stockings
Price increaseincentivises restocking
High quality breeding stock in high demand
INTERNATIONAL TRADE Limited changes
Increased demand for imported pork
Continued demand for imported pork
Porcine
0
5
10
15
20
25
30
35
0%
20%
40%
60%
80%
100%
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19F FY20F FY21F
Owned JV
Multiplication Multiplication - ASF impacted
Total sows pre ASF Sows net of ASF
20
Strengthening our supply chain in China Porcine
PIC contracted multiplication
PIC Farms
Target multiplication locations
Strategic growth of our supply chain1Expanding our footprint and strategic contracted multiplication partnerships
% o
f el
ite
sow
s b
y p
rod
uct
ion
Total su
pp
ly chain
in th
ou
sand
s of G
GP
/GP
2
(1) ASF impact shown for FY19F-FY21F based on known current disruption continuing(2) GGP/GP refers to great grandparent and grandparent maternal line females or boar mothers
21
PRRSv resistance programme on track Porcine
(1) First batches created in 2017 (2) United States Food & Drug Administration Note: Timeline represents calendar years
First births fromfounder pig breedings
~100 Homozygous edited pure line animals off test
~100 Homozygous Camborough™ parentsows farrowed
Live animal diseasechallenge of Genus edit
Additional animal diseasechallenge of Genus edit
Cell line disease testing of Genus edit
Animal Amplification & Evaluation
Disease Testing
Regulatory Submissions
First US FDA submission
US FDA package complete
2019 2020 2021 2022+2018
~1000 terminal pigs evaluated
Gateway #1 Gateway #2
Batches of editedfounder pigs created1
US and European patents granted
Current
•Successful matings and births of 700+ second generation pigs
•Expanding to second dedicated large scale nucleus farm
•Continuing constructive engagement with FDA2
•Three additional patents granted – total five
0
5
10
15
20
25
30
35
40
45
50
ABS Competitor 1 Competitor 2 Competitor 3 Competitor 4
Proven bulls Active genomic bulls Pipeline bulls
22
Proven and genomic analysis based on Top 100 Holsteins (using data from Dec 2018 from CDCB); Ownership of pipeline bulls based on Genus analysis using data through 19 Feb 2019 and includes non-active genomic bulls (young bulls that are not yet producing semen, but have been genetically assessed). Data varies from month to month; NM$ refers to Net Merit Dollar rankings.
Leading position in elite dairy genetics
# of Top 100 NM$ bulls
% of new US Holstein bulls produced by De Novo breeding programme
Bovine
0% 20%55%
FY14 FY16 FY19F
23
Strong demand for our leading sexed genetics continues to drive ABS’s performance
North America EMEA
Latin America Asia
• Growing Sexcel andbeef x dairy genetics
• Winning share with key accounts
• Second IntelliGen facility live in Gujarat
• Construction of third IntelliGen facility in UP
• Growing Sexcel andbeef x dairy genetics
• Direct entry into Spain
• Growing presence with larger dairies in Russia and Turkey
• Growing availability of Sexcel for tropical dairy segment
• Strong demand for NuEra beef genetics
+39% +17%
+16% +29%
FY19 H1 sexed geneticsvolume growth +26%
Bovine
Growing demand for Sexcel and NuEra differentiated beef genetics
24Data represents proportion of total genetic units sold to dairy farmers in the US; excludes beef x beef units
ABS genetics sales volumes to US dairy farmers
Conventional dairy genetics
Beef genetics
Sexed dairy genetics
Bovine
11% 14% 18% 21%~30%5%
4%
9%
18%
~25%
84% 81%74%
61%
~45%
FY16 FY17 FY18 FY19 H1 FY23F
Successfully deploying our sexing technology globally
25(1) Facility under construction
Third party
Third party
Third party1
Bovine
Strong strategic progress
26
> Porcine
− Strong growth in Europe and Latin America offsets ASF impact in China
− PRRSv resistance programme progressing well
> Bovine
− Leading position in genetics through proprietary programmes
− Robust demand for Sexcel and differentiated beef genetics
− Expanding IntelliGen presence to meet growing global demand
> Expect to perform in line with our expectations in constant currency
Half year ended 31 December 2018
Appendices
27
28
Proportion of total volumes under royalty Porcine
North America EMEA
Latin America Asia
Volumes based on market pig equivalents; geographical split indicative of internal segmentation of territories; Russia now part of Europe (previously Asia)
96% 96% 97% 97% 97%
FY15 FY16 FY17 FY18 FY19 H1
65%73% 77% 77% 81%
FY15 FY16 FY17 FY18 FY19 H1
61% 63% 64%68% 70%
FY15 FY16 FY17 FY18 FY19 H1
38%33%
44%37%
68%
FY15 FY16 FY17 FY18 FY19 H1
Market dynamics
SOURCE: Genus analysis using constant currency
29
Pensions
30
> Guaranteed Minimum Pension (GMP) equalisation
− Industry-wide defined benefit scheme issue
− Lloyds Bank case (October 2018) requires schemes to equalise GMPs
− Past service cost charge to Income Statement under IAS19
> Genus legacy scheme effects
Dalgety Pension Fund (DPF)• GMP equalisation cost of £11.0m to be
fully met by the DPF
− No cash cost to Genus
• Scheme is in surplus and has additional £20.9m reserve to cover risks such as GMP
• Credit in Statement of Comprehensive Income offsets GMP charge
Milk Pension Fund (MPF)• GMP equalisation cost of £4.7m
− No cash cost to Genus within recovery plan period
• Scheme is in surplus under IAS19
• Credit in Statement of Comprehensive Income offsets GMP charge
− Genus accounts for liability of recovery plan payments due (IFRIC 14)
• New valuation recently agreed as at 31/3/18
− ~1 year shorter recovery plan (now to 30/9/21)
− Expect 30/6/19 liability to reduce by ~£9m from 31/12/18 level
> Genus’ geographic profile can lead to translational currency impacts
> We monitor key rates against GBP
> Latest spot rates would indicate a headwind of £0.5-1.0m for FY19 compared with average FY18 rates
FY18 FY19 1H Spot @ Profit
Average Average 26 Feb 19 Sensitivity£m1
US Dollar 1.35 1.28 1.32 1.7
Mexican Peso 25.4 25.2 25.4 1.2
Brazilian Real 4.48 4.99 4.98 1.0
Euro 1.13 1.12 1.17 0.9
Chinese Yuan 8.80 9.02 8.86 0.8
Philippines Peso 69.7 68.4 68.9 0.4
Russian Rouble 80.4 85.4 87.3 0.3
Exchange rate sensitivity
31
(1) 12 month operating profit impact given a +/- 10% movement in exchange rate, based on FY18 results