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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Genus Plc | LSE:GNS | London | Ordinary Share | GB0002074580 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -4.00 | -0.21% | 1,876.00 | 1,868.00 | 1,898.00 | 1,876.00 | 1,876.00 | 1,876.00 | 244 | 08:10:36 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Coml Physical, Biologcl Resh | 689.7M | 33.3M | 0.5043 | 37.28 | 1.24B |
From May 2019 to May 2024
TIDMGNS
RNS Number : 2729Q
Genus PLC
25 February 2021
Immediate 25 February 2021
Genus plc
Unaudited half year results for the six months ended 31 December 2020
VERY STRONG PERFORMANCE and GOOD STRATEGIC PROGRESS
Hot Features
Premium
Adjusted results ([1]) Statutory results
-------------------------------
Actual currency Constant Actual currency
currency
change
([2])
---------
Six months ended 31 December 2020 2019 Change 2020 2019 Change
----- ----- ------ --------- ------ -----
GBPm GBPm % % GBPm GBPm %
Revenue 285.7 270.7 6 11 285.7 270.7 6
Operating profit exc
JVs 45.1 34.4 31 37 35.5 28.1 26
Operating profit inc
JVs exc gene editing 54.7 43.7 25 35
Profit before tax 48.4 36.6 32 44 38.7 30.4 27
Free cash flow 26.6 10.5 153 n/m ([3])
Basic earnings per share
(pence) 57.3 43.5 32 44 48.4 36.5 33
Dividend per share (pence) 10.3 9.4 10
----------------------------- ----- ----- ------ --------- ------ ----- ------
Strong revenue growth of 6% in actual currency and 11% in constant currency(2)
-- Strong revenue growth of 8%(2) in PIC, our porcine genetics business; royalty revenue up 7%(2) , particularly high growth in Asia and Europe
-- Continued royalty growth and high breeding stock sales in China contributing to PIC volume growth 11% (up 7% excluding China)
-- Excellent revenue growth of 17%(2) in ABS, our bovine genetics business, particularly Brazil, Russia, India and China; continued success with Sexcel (R) and NuEra (R) beef genetics
-- ABS volume growth of 19%, with sexed volumes up 42% and beef up 22%
Record adjusted profit before tax ('PBT')(1) , up 44% in constant currency; statutory PBT at GBP38.7m
-- Adjusted operating profit including joint ventures and excluding gene editing cost(1) up 35%(2)
-- Double digit adjusted operating profit growth(1) in PIC (up 17%(2) ) and ABS (up 37%(2) ); R&D investment decreased 2%(2) with lower spend than planned due to COVID-19 short-term constraints
-- Statutory PBT increased 27% to GBP38.7m, impacted by a lower net IAS 41 biological asset valuation uplift offset by lower exceptional costs
Strong cash generation, earnings momentum and increased dividends
-- Record first half free cash inflow(1) of GBP26.6m, net debt(1) reduced to GBP92.2m, net debt to EBITDA(1) of 0.8x
-- Adjusted earnings per share(1) up 44%(2) ; interim dividend up 10% with 3.3x adjusted earnings cover ([4])
Good strategic progress
-- Continue to win new customers globally, with leading porcine and bovine genetics; contributing through genetic improvements to the reduction in use of energy, water and land in animal protein production
-- Beijing Capital Agribusiness Co. Ltd ('BCA') long-term collaboration in relation to PRRSv is progressing well, and first non-gene edited pigs shipped from US to stock BCA multiplication farms
-- Continued shift in ABS's product mix with more than 20% of global sales volume now Sexcel (R)
-- Significant capex spend is planned to support expansion of best in industry farm facilities for PIC and ABS
-- Sustainability a key focus through our 'Delta C' programme; climate targets set to reduce carbon emissions and become carbon neutral
Commenting on the interim results, Stephen Wilson, Chief Executive, said:
"Genus performed very strongly and made further good strategic progress in the first half of the 2021 fiscal year. The Group continued to show its resilience during the COVID-19 pandemic and I would like to thank our people who have shown great dedication to our customers whilst navigating the various challenges that the pandemic has caused.
"Both PIC and ABS grew adjusted operating profits in double digits, with China, Brazil, India and Russia, being notably high growth markets. PIC's expansion in China was significant, gaining share with large producers that have been re-stocking following the spread of African Swine Fever in 2019. PIC Europe's growth was also very strong reflecting success with key accounts, leveraging our genetics and supply chain.
"ABS's volume growth in the half was a record, driven by the continued success of Sexcel(R), and strong performance by our proprietary NuEra(R) beef business. Latin America, Europe and Asia all grew strongly, and ABS's adjusted operating margin improved through better product mix and operating leverage.
"In the second half of the 2021 fiscal year we expect that growth will be lower and there are increased currency headwinds. Nevertheless, Genus continues to have significant growth opportunities and the Board's expectations remain unchanged for the full year."
Results presentation today
A pre-recorded analysts and bankers briefing to discuss the interim results for the six months ended 31 December 2020 will be held via a video webcast facility and will be accessible via the following link from 7:01am today:
https://webcasting.buchanan.uk.com/broadcast/600ed56bea090471deaf6780
This will be followed by a live Q&A session to be held by invitation via Microsoft Teams at 10:30am.
Enquiries:
Genus plc ( Stephen Wilson, Chief Executive Officer / Alison Tel: 01256 345970 Henriksen, Chief Financial Officer) Buchanan ( Charles Ryland / Chris Lane / Sophie Wills) Tel: 0207 466 5000
About Genus
Genus advances animal breeding and genetic improvement by applying biotechnology and sells added value products for livestock farming and food producers. Its technology is applicable across livestock species and is currently commercialised by Genus in the dairy, beef and pork food production sectors.
Genus's worldwide sales are made in over 80 countries under the trademarks 'ABS' (dairy and beef cattle) and 'PIC' (pigs) and comprise semen, embryos and breeding animals with superior genetics to those animals currently in farms. Genus's customers' animals produce offspring with greater production efficiency and quality, and our customers use them to supply the global dairy and meat supply chains.
Genus's competitive edge comes from the ownership and control of proprietary lines of breeding animals, the biotechnology used to improve them and its global supply chain, technical service and sales and distribution network.
Headquartered in Basingstoke, United Kingdom, Genus companies operate in over 25 countries on six continents, with research laboratories located in Madison, Wisconsin, USA.
Group Performance
Whilst there were some impacts from COVID-19 in the Group, the overall performance in the first half of the year was very strong, with revenue increasing by 6% (11% in constant currency), and adjusted profit before tax growing 32% (44% in constant currency), to a record GBP48.4m.
Revenue of GBP285.7m (2019: GBP270.7m) increased 6% in actual and 11% in constant currency during the period. PIC (8% growth) and ABS (17% growth) both contributed, with particularly strong trading across Brazil, Russia, India and China. Strategically important porcine royalty revenue was up 7% in constant currency and ABS's volume growth was a record high of 19% achieved through sexed genetics up 42%, and beef up 22%.
Adjusted operating profit, including joint ventures and excluding gene editing, was GBP54.7m (2019: GBP43.7m), up 25% (35% in constant currency). Adjusted operating profit, including joint ventures and after the costs of gene editing, increased 40% in constant currency. Adjusted operating margin, including joint ventures, expanded to 17.9% (2019: 14.6%). Within this, Genus's share of adjusted joint venture operating profits was GBP5.9m (2019: GBP5.3m), with a strong performance in the PIC Agroceres JV in Brazil. The impact to profit from COVID-19 effects on trading across the Group were largely offset by short term travel savings of approximately GBP5m. Net finance costs decreased to GBP2.6m (2019: GBP2.8m).
Adjusted profit before tax was up 32% (44% in constant currency), the highest growth rate in over 10 years. This reflected double digit growth in adjusted operating profit in both PIC and ABS. The ongoing impact of African Swine Fever ('ASF') in China led to very high pork prices continuing through the period, driving strong breeding stock sales, royalty income and farm margins for PIC.
The statutory profit before tax was GBP38.7m (2019: GBP30.4m), benefitting from a GBP3.5m non-cash increase (2019: GBP13.3m) in net IAS 41 biological asset fair value. Other adjusting items, including amortisation of acquired intangibles and share based payments, were slightly higher in aggregate period to period. Exceptional costs of GBP5.1m were GBP7.7m lower than the prior period which included damages and costs for the ongoing ST litigation. A non-cash Guaranteed Minimum Pension ('GMP') equalisation charge of GBP3.3m in respect of legacy pension schemes has been recognised due to a High Court ruling on 20 November 2020, which ruled individual transfer payments made by UK pension schemes since 17 May 1990 would need to be equalised for the effects of GMP.
The tax rate on adjusted profit before tax was 22.9% (2019: 23.0%) and continued to benefit from the increased proportion of the Group's profit arising in China, where there is agricultural tax relief on certain activities. The statutory profit after tax was GBP30.3m (2019: GBP24.1m).
The effect of exchange rate movements on the translation of Genus's overseas profits was an adverse impact of GBP3.7m compared with the prior period, primarily from stronger Sterling against the Brazilian Real, Mexican Peso and Russian Rouble.
Free cash inflow of GBP26.6m (2019: GBP10.5m inflow) reflected the strong trading and a continued focus on improving working capital management. Cash generated by operations of GBP45.0m (2019: GBP32.9m) represented 100% conversion (2019: 96%) of adjusted operating profit of GBP45.1m (2019: GBP34.4m) into cash. Capital expenditure of GBP11.9m (2019: GBP17.0m) included continuing investment in the ABS supply chain and the new GenusOne enterprise system. Overall capital investment was lower than the same period last year, due to IntelliGen capital expenditure for new production locations incurred last year.
Net debt decreased to GBP92.2m (2019: GBP107.2m) benefiting from the strong free cash inflow and favourable foreign currency movement on US dollar loans of GBP7.0m, offset by payment of GBP7.0m of deferred consideration on previous acquisitions. The net debt to EBITDA ratio of 0.8x (2019: 0.9x) as defined in the debt facility agreement reflects strong EBITDA growth and lower net debt levels.
As a result of Genus's strong earnings growth and cash flow generation, the Board has declared an interim dividend of 10.3 pence per share, an increase of 10% on last year's interim dividend, which is payable on 1 April 2021 to shareholders on the register at 5 March 2021.
Strategic Progress
Despite the challenges of COVID-19, Genus continued to successfully advance its strategy of creating value for farmers through delivering differentiated and sustainable proprietary genetic solutions that have been created through harnessing leading edge technologies, data and the talent of our people.
Our strategic investments in Genus's proprietary pork, dairy and beef breeding programs and leading sexing technology continued to benefit performance for both PIC and ABS. In PIC, demand for our superior genetics fuelled customer wins in all regions, and during the first half of the year PIC progressed its distribution contract with BCA in China with the delivery of the first non-gene-edited pigs from the USA as scheduled.
ABS now own over 50 of the top 100 Holstein bulls globally ($Net Merit Index), and its NuEra beef programme gained further traction with customers as US beef feedlot trials demonstrated significant per calf value creation compared with alternatives.
In addition to delivering today, Genus is focused on the long term. Notwithstanding the short-term decrease in R&D spending in the first half, growing R&D investment to support the development of new technologies for our customers remains a focus. We are continuously improving IntelliGen, our bovine sexing technology, and our potentially transformational porcine PRRSv-resistance programme is progressing as planned. We have also made important new hires in the fields of reproductive biology and scientific data, as we explore new ways to create value for our customers.
The implementation of GenusOne, the Group's new enterprise system, is progressing well. We have now completed the 'go-live' in both businesses in North America and have plans to complete the rollout to the rest of the world on schedule.
We are investing over GBP50m in capex during the next two years, to create new porcine nucleus farms in Canada and Russia and new and upgraded bull housing facilities in the US and UK. These investments will support the Group's objectives of accelerating genetic improvement, meeting the growing demand for our products, increase supply chain resilience and lead the industry in terms of animal welfare standards and sustainability.
Sustainability Focus
Our primary focus is the use of animal genetic improvement to drive the reduction in use of carbon/energy, water and land in animal protein production. The vision of Genus is 'Pioneering animal genetic improvement to help nourish the world' and as we look over time, we can see the clear impact improving genetics has on reducing greenhouse gasses ('GHGs') in protein production.
Additionally, w e have two climate targets focused on our internal operations that support international (Paris) climate goals: Genus will reduce its carbon emissions by 25% (per tonne animal weight from 2020 levels) by 2030 and become a carbon 'net zero' business by 2050. We have established a carbon reduction trajectory and contributory reduction opportunities as part of our 'Delta C' programme. We are targeting 'least cost mitigation' measures for emissions from manures. We have completed an initial assessment of the potential for 'conservation' management of soils on our estate and are developing plans to realize this opportunity. We are also targeting reductions in GHGs using, among other things, renewable energy, methane management and capture, and electric vehicles in our operations.
Outlook
Genus performed very strongly in the first half of the year, and we expect that the Group will remain resilient as the COVID-19 pandemic continues to impact society and the world economy and presents challenges for elements of the animal protein value chain. Although growth in the second half is anticipated to be lower than experienced in the first half and there are increased currency headwinds, the Board expects the company to perform in line with its expectations for the financial year 2021.
Genus PIC - Operating Review
Actual currency Constant
currency
change
---------
Six months ended 31 2020 2019 Change
December
----- ----- ------ ---------
GBPm GBPm % %
Revenue 152.9 146.5 4 8
Adjusted operating
profit exc JV 63.0 57.3 10 14
Adjusted operating
profit inc JV 68.9 62.6 10 17
Adjusted operating
margin exc JV 41.2% 39.1% 2.1pts 2.3pts
Market
COVID-19 and ASF caused significant volatility in global pork demand and supply in the period.
ASF continues to be a major influence on China's porcine industry. As expected, larger producers are rapidly growing capacity to rebuild China's pig herd. The Chinese herd recovered significantly in size through 2020, but ASF outbreaks continue. China's full recovery may take several years, keeping pig prices inflated and supporting higher pork imports than pre-ASF. While pig prices in China are down around 8% compared with a year ago and down 20% from their 24-month peak, they are around 150% higher than prices than pre-ASF. Pig prices are expected to moderate, but remain above historical levels, in the coming months in China, making market confidence and efficiency of producers even more important.
In the first nine months of 2020, EU pork exports were up more than 16%, with Chinese demand driving nearly all the growth. In September 2020, ASF was found in Germany and many trade partners, including China immediately banned German pork, affecting approximately 42% of German pork exports. Spanish exports to China have benefited but the ban decreased slaughter prices significantly across Europe, with producers incurring negative margins. Pressure on prices will continue into 2021, with lower consumption caused by COVID-19 also a factor. Labour shortages in slaughterhouses due to COVID-19 infections and new labour regulations have also caused backlogs of pigs and frozen pork in multiple EU countries. Sow inventory reductions have started, especially in North West Europe, supported by government buyout programmes to improve the environment, forthcoming animal welfare regulations and poor market conditions.
In the United States, COVID-19 brought unprecedented volatility to pork prices as slaughter pigs could not be slaughtered due to packing plant slowdowns. In 2021, production is forecast to be just 1% higher, with flat exports as less demand for exports to China are offset by increased demand from Japan and Mexico. While recent increases in corn and soybean prices are expected to have some impact on farmers' profits, buoyant lean hog futures point to profitable margins for producers in 2021.
In South America, Brazil had a record year for pork production helped by exports to China rising 36%. Brazilian pork production in 2021 is projected to increase 2.5% over 2020 levels on the back of recovering local demand and an increased share of China's lower import requirements.
Performance
PIC's adjusted operating profit including joint ventures was GBP68.9m for the period, up 17% in constant currency, driven by very strong growth in most countries and especially China, Russia and Brazil. Volumes were up 11%, with all regions contributing and the highest growth was experienced in Asia and Europe. Total revenue increased by 8% in constant currency and strategically important porcine royalty revenue was up 7% in constant currency.
In North America, as expected COVID-19 continued to cause market volatility, packing plant slowdowns and reductions in customer breeding stock investments and pig numbers. Adjusted operating profit was down 6% and revenue was down 3% reflecting a 4% decline in royalty revenue. However, there was continued strong demand for the Camborough sow and Duroc PIC 800 sire from both new and existing customers, providing royalty growth opportunity for future periods.
Latin American adjusted operating profit grew by 13% in constant currency, with most countries contributing. Volumes were up 4% and royalty revenue were up 9% in constant currency. The buoyant market in Brazil, supported by strong exports to China, drove PIC Brazil adjusted operating profit growth of 30%. Higher royalties in Chile also contributed to growth in the period.
Adjusted operating profit in Europe rose by 42% and revenue was up by 10%. Royalty revenue was up 15%, with nearly all countries achieving growth. Expansion projects in Russia continued, nearly doubling profits, and PIC's partnerships with Hermitage Genetics and Møllevang continue to add value in the region and globally, through the wider portfolio of genetics, distribution and supply.
Asia's adjusted operating profit grew by 56%. The continued strength in pig prices contributed to exceptional profits across the pork industry in China, leading to PIC's continued growth in customer breeding projects, higher royalties and improved farm margins. PIC continued to invest in operations across Asia, and expanded its customer base in China, meaning it is now serving around one third of the top 50 producers. However, the Philippines continued to be adversely affected by a combination of COVID-19 and ASF.
Genus ABS - Operating Review
Actual currency Constant
currency
change
---------
Six months ended 31 2020 2019 Change
December
----- ----- ------ ---------
GBPm GBPm % %
Revenue 129.0 118.0 9 17
Adjusted operating
profit 18.7 14.6 28 37
Adjusted operating
margin 14.5% 12.4% 2.1pts 2.1pts
Market
In the second half of 2020, consistent demand from retail and food services resulted in milk prices remaining stable. China and other Asian markets played an important role supporting these prices, with demand increasing compared with 2019. Some markets, such as Brazil, saw record milk prices, underpinned by local government initiatives aimed at countering the COVID-19 pandemic.
Much of the demand in China and Asia was met by increased imports from the US and New Zealand. In 2020, total milk exports worldwide grew at the fastest rate for three years, showing the resilience of dairy producers despite the COVID-19 pandemic. The second half of the year saw the major exporting nations achieve export growth of over 2 billion litres of milk against the same period in 2019. In the US, this was the result of an increase in the national herd size compared with the first half of 2020. The UK saw improved performance per cow, although the national herd decreased. China's increasing demand for feed, particularly for its recovering pork industry, continued to drive up global feed prices in the latter part of 2020. This is likely to continue into early 2021 applying pressure to dairy producer margins.
The COVID-19 pandemic affected beef consumption trends during 2020 and, in many markets, the switch from dining out to home eating stabilised overall demand in the second half of the year. Demand for beef in China also remained at the higher level it reached during the ASF pandemic, despite pork producers restocking. This contributed to beef prices throughout the period being higher than the prior year in Brazil, Australia and China, with demand outweighing supply. In Europe, beef prices were down moderately in the second half of 2020, underpinned by a constrained recovery in demand as COVID-19 restrictions remained greater than in other global markets. Uncertainty in the U.S. also saw prices fall by 5% in 2020 when compared to 2019, although prices stabilised in the second half of the year.
In the bovine genetics marketplace, the significant investment required to run competitive breeding programmes saw a number of trading partnerships develop, particularly between European co-operatives during this period. This trend is likely to continue as a smaller number of growing dairy and beef producers want to partner with world class leading genetics companies to help them grow sustainable protein production.
Performance
Globally, COVID-19 created dynamic and challenging market conditions for our customers but overall demand for ABS's products was resilient. This was helped by the salesforce's focus on obtaining 100% of customers' business and the introduction of new partnership-based contract structures.
ABS's adjusted operating profit increased by 37%, with volumes up 19% and revenue up 17% in constant currency, as dairy customers continued the shift from conventional to sexed and beef genetics. Sexed volumes grew by 42%, reflecting Sexcel's continued success. Increased use of NuEra beef genetics in dairy herds, and customer growth in the traditional beef segment supported a 22% increase in global beef volumes.
Europe achieved volume growth of 10% and revenue growth of 12%, with adjusted operating profit up 28% against the prior year in constant currency. The business made strategic progress with key accounts in Russia and saw strong growth in other distributor markets. However, conditions in the UK and Italy were particularly challenging as COVID-19 lockdowns reduced salesforce mobility and customer access, and dairy producers limited their herd growth. Sexed semen volumes rose by 43%, with the UK, Ireland and the European distributor business achieving the strongest growth. The trend of dairy customers using sexed genetics, coupled with beef genetics for a portion of the herd, led to beef volumes increasing by 4%. During the period, a new IntelliGen production facility was opened in Europe, our fourth external customer site globally.
In North America, revenue grew by 3% and adjusted operating profit increased by 5% in constant currency. Our ability to leverage our strategic investments in key account management was limited, as COVID-19 travel restrictions prevented face to face customer interactions. Overall volumes were 1% lower, as dairy producers rationalised genetic inventory on farm in response to the uncertain market conditions. Volumes of beef genetics into dairy animals rose 25%, supported by proprietary NuEra genetics selected for cross-bred beef-on-dairy performance, but there was limited growth in sexed volumes of 2% and customers also used less conventional product. Embryo volumes increased by 8%.
In Latin America, revenue grew by 35% and adjusted operating profit increased by 68% in constant currency, with Brazil particularly strong. The Brazil beef market was strong, and the team achieved good success through innovative digital sales campaigns, while maintaining robust pricing policies. Volumes in Latin America overall increased by 19%, with sexed volumes up 48% and beef volumes up 31%, utilising NuEra genetics, selected for cross-bred performance of North American sires with tropical cows. Embryo volumes increased by 35%.
In Asia, adjusted operating profit was up 116% and volumes by 52%, with trading activity increasing in China following a period of vertical integration among customers, as dairy processors acquired farms. Australia rebounded strongly from last year's turbulent drought and bushfire conditions. Sexed volumes were up 142%, with strong Sexcel sales in China and the business seeing the benefits of IntelliGen production at the State of Uttar Pradesh facility in India, which started operation earlier in 2020.
Research and Development - Operating Review
Actual currency Constant
currency
change
---------
Six months ended 31 2020 2019 Change
December
----- ---- ------ ---------
GBPm GBPm % %
Porcine product development 10.3 12.0 (14) (11)
Bovine product development 9.3 9.7 (4) 1
Gene editing 3.7 4.3 (14) (12)
Other research and
development 5.7 4.8 19 23
Net expenditure in
R&D ([5]) 29.0 30.8 (6) (2)
Performance
Net research and development investment decreased by 2% in constant currency, primarily due to the large investments in the prior period to expand the porcine elite nucleus populations. External research collaboration spend was also lower due to timing caused by COVID-19 constraints, and the Group benefited from efficiencies in gene editing capability, from internalising gene edited animal production. Genus continued to strengthen its proprietary differentiated offerings and to invest in key strategic initiatives, including gene editing, IntelliGen production capacity and porcine elite farm nucleuses, as well as further developing its research and development pipeline.
Porcine product development continued to deliver high rates of genetic improvement, driven by the combination of our expanded genetic production, implementing the best science and capturing accurate and meaningful data. Our ongoing improvement initiatives were focused on further refining our genomic evaluation, exploring digital tools for automated capture of new and novel traits, and continued integration of Møllevang genetics. The decrease in porcine product development expenditure was primarily related to start-up costs on projects in 2019 to expand capacity in Genus PIC's elite farms.
Bovine product development continued to generate an industry leading Holstein dairy bull portfolio, which supported strong volume growth in ABS. The De Novo joint venture continued to produce more than 50% of these animals and the strong pipeline of young bulls will help sustain our leadership position. Global demand for NuEra Genetics continued to grow and represented more than 20% of total beef volumes produced. Recent validation trials in customer systems have demonstrated NuEra's significant superiority to competitor genetics. In addition, we continue to invest in IntelliGen while amortising previously capitalised development costs. We expect to expand our production capacity further to meet increasing demand for sexed semen.
Gene editing expenditure decreased by 12% in the period, as work with Caribou completed and we internalised our capability for producing gene edited animals as planned. The PRRSv programme is progressing as planned, and we maintained our engagement with the US Food and Drug Administration, with whom we have a constructive and positive relationship. Directly and with local partners, we also initiated conversations on regulatory and market acceptance in key global markets including China and Japan.
Other research and development expenditure increased by 23%. This included initiating work on reproductive biology and data science objectives, and continuing efforts in our bioinformatics platform and genome science. External collaborations in a variety of discovery areas also continued, though at slower pace due to institutions prioritising COVID-19 research and vaccines.
Principal risks and uncertainties
Genus's approach to risk management is to identify, evaluate and prioritise risks and uncertainties and actively manage actions to mitigate them. The Genus plc Annual Report 2020 (a copy of which is available on the Genus plc website at www.genusplc.com) sets out on pages 44-46 a number of risks and uncertainties that might impact the performance of the Group.
Some of these risks relate to the current business operations in our global agricultural markets, while others relate to future commercial exploitation of our leading-edge R&D programmes. We are also exposed to global economic and political risks such as trade restrictions. Additionally, we also monitor emerging new risks such as changing consumption patterns, environmental sustainability and the emergence of alternative proteins such as lab-based meat.
There has been no material change to the principal risks in the current financial year that might affect the performance of the Group.
GENUS PLC
CONDENSED CONSOLIDATED INCOME STATEMENT
For the six months ended 31 December 2020
Six months Six months Year
ended ended ended
31 December 31 December 30 June
Notes 2020 2019 2020
GBPm GBPm GBPm
REVENUE 4 285.7 270.7 551.4
Adjusted operating profit 4 45.1 34.4 65.3
Adjusting items:
* Net IAS 41 valuation movement on biological assets 10 3.5 13.3 15.8
* Amortisation of acquired intangible assets 9 (3.7) (4.0) (8.5)
* Share-based payment expense (4.3) (2.8) (5.8)
------------ ------------ --------
(4.5) 6.5 1.5
- Exceptional items: 5
- Litigation (1.7) (12.0) (16.4)
- Pension related (3.3) - -
- Acquisition and integration (0.1) (0.5) (2.1)
- Other - (0.3) (0.7)
Total exceptional items (5.1) (12.8) (19.2)
Total adjusting items (9.6) (6.3) (17.7)
OPERATING PROFIT 35.5 28.1 47.6
Share of post-tax profit of joint
ventures and associates retained 12 5.8 5.1 8.9
Finance costs 6 (2.8) (2.9) (5.3)
Finance income 6 0.2 0.1 0.3
------------ ------------ --------
PROFIT BEFORE TAX 38.7 30.4 51.5
Taxation 7 (8.4) (6.3) (10.6)
------------ ------------ --------
PROFIT FOR THE PERIOD 30.3 24.1 40.9
============ ============ ========
ATTRIBUTABLE TO:
Owners of the Company 31.5 23.7 40.5
Non-controlling interest (1.2) 0.4 0.4
------------ ------------ --------
30.3 24.1 40.9
============ ============ ========
EARNINGS PER SHARE 14
Basic earnings per share 48.4p 36.5p 62.4p
Diluted earnings per share 48.0p 36.3p 61.9p
Alternative Performance Measures
Adjusted operating profit 45.1 34.4 65.3
Adjusted operating profit attributable
to non-controlling interest - (0.3) (0.6)
Pre-tax share of profits from joint
ventures and associates excluding
net IAS 41 valuation movement 5.9 5.3 11.3
Gene editing costs 3.7 4.3 5.2
------------ ------------ --------
Adjusted operating profit including
joint ventures and associates, excluding
gene editing costs 54.7 43.7 81.2
Gene editing costs (3.7) (4.3) (5.2)
Adjusted operating profit including
joint ventures and associates 51.0 39.4 76.0
Net finance costs 6 (2.6) (2.8) (5.0)
------------ ------------ --------
Adjusted profit before tax 48.4 36.6 71.0
Adjusted earnings per share 14
Basic adjusted earnings per share 57.3p 43.5p 85.4p
Diluted adjusted earnings per share 56.9p 43.2p 84.7p
Adjusted results are the Alternative Performance Measures ('APMs') used by the Board to monitor underlying performance at a Group and operating segment level, which are applied consistently throughout. These APMs should be considered in addition to statutory measures, and not as a substitute for or as superior to them. For more information on APMs, see APM Glossary.
GENUS PLC
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 31 December 2020
Six months ended Six months Year ended
31 December ended 30 June 2020
2020 31 December
2019
GBPm GBPm GBPm GBPm GBPm GBPm
PROFIT FOR THE PERIOD 30.3 24.1 40.9
Items that may be reclassified
subsequently to profit
or loss
Foreign exchange translation
differences (39.4) (24.1) (4.9)
Fair value movement on
net investment hedges - 0.6 (0.1)
Fair value movement on
cash flow hedges 0.1 (0.2) (0.4)
Tax relating to components
of other comprehensive
income 6.2 3.2 (1.4)
(33.1) (20.5) (6.8)
-------- ------- ------
Items that may not be
reclassified subsequently
to profit or loss
Actuarial gain/(loss)
on retirement benefit
obligations 0.2 (26.7) (16.6)
Movement on pension asset
recognition restriction 0.6 13.6 10.4
Release of additional
pension liability 1.8 13.2 4.7
Tax relating to components
of other comprehensive
income (0.5) - 0.8
2.1 0.1 (0.7)
-------- ------- ------
Other comprehensive expense
for the period (31.0) (20.4) (7.5)
-------- ------- ------
TOTAL COMPREHENSIVE (EXPENSE)/INCOME
FOR THE PERIOD (0.7) 3.7 33.4
======== ======= ======
ATTRIBUTABLE TO:
Owners of the Company 0.4 3.5 33.1
Non-controlling interest (1.1) 0.2 0.3
-------- ------- ------
(0.7) 3.7 33.4
======== ======= ======
GENUS PLC
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 31 December 2020
Called
up Share Non-
share premium Own Trans-lation Hedging Retained controlling Total
capital account shares reserve reserve earnings Total interest equity
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
BALANCE AT 30 JUNE
2019 (restated*) 6.5 179.0 (0.1) 35.8 0.2 267.0 488.4 (1.3) 487.1
Foreign exchange
translation
differences, net
of tax - - - (6.4) - - (6.4) (0.1) (6.5)
Fair value movement
on net
investment hedges,
net of tax - - - 0.1 - - 0.1 - 0.1
Fair value movement
on cash flow hedges,
net of tax - - - - (0.4) - (0.4) - (0.4)
Actuarial loss on
retirement
benefit obligations,
net of tax - - - - - (10.4) (10.4) - (10.4)
Movement on pension
asset recognition
restriction, net
of tax - - - - - 6.8 6.8 - 6.8
Release of additional
pension liability,
net of tax - - - - - 2.9 2.9 - 2.9
Other comprehensive
expense for the
year - - - (6.3) (0.4) (0.7) (7.4) (0.1) (7.5)
Profit for the
year - - - - - 40.5 40.5 0.4 40.9
Total comprehensive
(expense)/income
for the year - - - (6.3) (0.4) 39.8 33.1 0.3 33.4
Recognition of
share-based
payments, net of
tax - - - - - 5.5 5.5 - 5.5
Dividends 8 - - - - - (18.3) (18.3) - (18.3)
Issue of ordinary
shares - 0.1 - - - - 0.1 - 0.1
BALANCE AT 30 JUNE
2020 6.5 179.1 (0.1) 29.5 (0.2) 294.0 508.8 (1.0) 507.8
Foreign exchange
translation
differences, net
of tax - - - (33.3) - - (33.3) 0.1 (33.2)
Fair value movement
on net - - - - - - - - -
investment hedges,
net of tax
Fair value movement
on cash flow hedges,
net of tax - - - - 0.1 - 0.1 - 0.1
Actuarial gain on
retirement
benefit obligations,
net of tax - - - - - 0.2 0.2 - 0.2
Movement on pension
asset recognition
restriction, net
of tax - - - - - 0.5 0.5 - 0.5
Release of additional
pension liability,
net of tax - - - - - 1.4 1.4 - 1.4
Other comprehensive
(expense)/income
for the period - - - (33.3) 0.1 2.1 (31.1) 0.1 (31.0)
Profit/(loss)
for
the period - - - - - 31.5 31.5 (1.2) 30.3
Total comprehensive
(expense)/income
for the period - - - (33.3) 0.1 33.6 0.4 (1.1) (0.7)
Recognition of
share-based
payments, net of
tax - - - - - 4.0 4.0 - 4.0
Adjustment arising
from changes in
non-controlling
interest - - - - - - - (0.2) (0.2)
Dividends 8 - - - - - (12.8) (12.8) - (12.8)
.
------- ------- ------ ------------ ------- -------- -------- ----------- --------
BALANCE AT 31 DECEMBER
2020 6.5 179.1 (0.1) (3.8) (0.1) 318.8 500.4 (2.3) 498.1
Called
up Share Non-
share premium Own Trans-lation Hedging Retained controlling Total
capital account shares reserve reserve earnings Total interest equity
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
BALANCE AT 30 JUNE
2019 (restated*) 6.5 179.0 (0.1) 35.8 0.2 267.0 488.4 (1.3) 487.1
Foreign exchange
translation
differences, net
of tax - - - (20.6) - - (20.6) (0.2) (20.8)
Fair value
movement
on net
investment
hedges,
net of tax - - - 0.5 - - 0.5 - 0.5
Fair value
movement
on cash flow
hedges,
net of tax - - - - (0.2) - (0.2) - (0.2)
Actuarial loss on
retirement
benefit
obligations,
net of tax - - - - - (22.1) (22.1) - (22.1)
Movement on
pension
asset
recognition
restriction, net
of tax - - - - - 11.3 11.3 - 11.3
Release of
additional
pension
liability,
net of tax - - - - - 10.9 10.9 - 10.9
Other
comprehensive
(expense)/income
for the period - - - (20.1) (0.2) 0.1 (20.2) (0.2) (20.4)
Profit
for the
period - - - - - 23.7 23.7 0.4 24.1
Total
comprehensive
(expense)/income
for the period - - - (20.1) (0.2) 23.8 3.5 0.2 3.7
Recognition of
share-based
payments, net of
tax - - - - - 1.3 1.3 - 1.3
Dividends 8 - - - - - (12.2) (12.2) - (12.2)
BALANCE AT 31
DECEMBER
2019 (restated*) 6.5 179.0 (0.1) 15.7 - 279.9 481.0 (1.1) 479.9
*see note 1 for details of the prior period restatement
GENUS PLC
CONDENSED CONSOLIDATED BALANCE SHEET
As at 31 December 2020
Notes (restated*)
31 December 31 December 30 June
2020 2019 2020
GBPm GBPm GBPm
Assets
Goodwill 99.4 101.5 105.6
Other intangible assets 9 68.7 77.1 76.2
Biological assets 10 294.2 287.1 310.1
Property, plant and equipment 11 110.0 107.8 117.9
Interests in joint ventures
and associates 12 28.4 24.4 22.7
Other investments 6.8 6.7 6.9
Other receivables 2.0 - 1.8
Deferred tax assets 3.3 2.7 3.7
Total non-current assets 612.8 607.3 644.9
Inventories 35.0 33.7 37.4
Biological assets 10 38.2 46.1 39.8
Trade and other receivables 101.5 96.8 100.8
Cash and cash equivalents 50.2 31.1 41.3
Income tax receivable 2.9 3.0 3.1
Derivative financial asset 17 0.9 0.3 1.2
Asset held for sale 0.2 0.2 0.2
Total current assets 228.9 211.2 223.8
------------- ------------- ---------
Total assets 841.7 818.5 868.7
Liabilities
Trade and other payables (92.5) (86.7) (95.0)
Interest-bearing loans and
borrowings (9.8) (8.7) (9.2)
Provisions 18 (3.7) (10.0) (4.0)
Deferred consideration 19 (1.0) (0.4) (7.5)
Obligations under leases (9.0) (7.5) (10.0)
Current tax liabilities (6.5) (2.9) (4.0)
Derivative financial liabilities 17 (0.4) (0.5) (0.5)
------------- ------------- ---------
Total current liabilities (122.9) (116.7) (130.2)
------------- ------------- ---------
*see note 1 for details of the prior period restatement
(restated*)
31 December 31 December 30 June
Notes 2020 2019 2020
GBPm GBPm GBPm
Trade and other payables (4.8) - (3.3)
Interest-bearing loans and
borrowings (105.0) (100.4) (103.6)
Retirement benefit obligations 16 (15.0) (20.5) (18.1)
Provisions 18 (10.9) (4.9) (11.8)
Deferred consideration 19 (0.4) (4.3) (1.2)
Deferred tax liabilities (60.1) (64.6) (65.5)
Derivative financial liabilities 17 (5.9) (5.5) (6.1)
Obligations under leases (18.6) (21.7) (21.1)
Total non-current liabilities (220.7) (221.9) (230.7)
Total liabilities (343.6) (338.6) (360.9)
Net assets 498.1 479.9 507.8
Equity
Called up share capital 6.5 6.5 6.5
Share premium account 179.1 179.0 179.1
Own shares (0.1) (0.1) (0.1)
Translation reserve (3.8) 15.7 29.5
Hedging reserve (0.1) - (0.2)
Retained earnings 318.8 279.9 294.0
Equity attributable to owners
of the Company 500.4 481.0 508.8
Non-controlling interest 2.8 4.4 4.6
Put option over non-controlling
interest (5.1) (5.5) (5.6)
Total non-controlling interest (2.3) (1.1) (1.0)
Total equity 498.1 479.9 507.8
*see note 1 for details of the prior period restatement
GENUS PLC
GROUP STATEMENT OF CASH FLOWS
For the six months ended 31 December 2020
Six months Six months Year
ended ended ended
31 December 31 December 30 June
Notes 2020 2019 2020
GBPm GBPm GBPm
Net cash flow from operating activities 15 38.1 24.1 65.8
Cash flows from investing activities
Dividends received from joint ventures
and associates - 0.2 2.5
Joint venture loan repayment - 1.2 1.2
Investment in joint venture (0.4) (2.2) (2.2)
Disposal of joint venture - 3.8 3.8
Deferred consideration paid (6.6) (1.3) (1.7)
Purchase of owned property, plant
and equipment (9.5) (11.1) (24.6)
Purchase of intangible assets (2.4) (5.9) (10.8)
Proceeds from sale of owned property,
plant and equipment 0.6 2.0 1.1
Net cash outflow from investing activities (18.3) (13.3) (30.7)
Cash flows from financing activities
Drawdown of borrowings 148.3 54.5 80.0
Repayment of borrowings (138.0) (46.0) (73.8)
Payment of lease liabilities (5.0) (5.1) (11.1)
Equity dividends paid (12.8) (12.2) (18.3)
Dividend to non-controlling interest (0.2) - -
Debt issue costs (1.9) - -
Issue of ordinary shares - - 0.1
Net cash outflow from financing activities (9.6) (8.8) (23.1)
Net increase in cash and cash equivalents 10.2 2.0 12.0
Cash and cash equivalents at beginning
of period 41.3 30.5 30.5
Net increase in cash and cash equivalents 10.2 2.0 12.0
Effect of exchange rate fluctuations
on cash and cash equivalents (1.3) (1.4) (1.2)
Total cash and cash equivalents at
end of period 50.2 31.1 41.3
GENUS PLC
ANALYSIS OF NET DEBT
For the six months ended 31 December 2020
At Net At 31
1 July cash Foreign Non-cash December
2020 flows exchange movement 2020
GBPm GBPm GBPm GBPm GBPm
Cash and cash equivalents 41.3 10.2 (1.3) - 50.2
-------- ------- ---------- ---------- ----------
Interest-bearing loans
- current (9.2) (0.7) 0.6 (0.5) (9.8)
Lease liabilities -current (10.0) 5.0 0.5 (4.5) (9.0)
-------- ------- ---------- ---------- ----------
(19.2) 4.3 1.1 (5.0) (18.8)
-------- ------- ---------- ---------- ----------
Interest-bearing loans
non-current (103.6) (7.7) 6.3 - (105.0)
Lease liabilities - non-current (21.1) - 1.0 1.5 (18.6)
-------- ------- ---------- ---------- ----------
(124.7) (7.7) 7.3 1.5 (123.6)
-------- ------- ---------- ---------- ----------
Total debt financing (143.9) (3.4) 8.4 (3.5) (142.4)
Net debt (102.6) 6.8 7.1 (3.5) (92.2)
======== ======= ========== ========== ==========
At At
1 July Adoption 1 July
of IFRS
2019 16 2019 Net
At 31
(post cash Foreign Non-cash December
(reported) leases adoption) flows exchange movement 2019
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Cash and
cash equivalents 30.5 - 30.5 2.0 (1.4) - 31.1
------------ --------- ----------- -------- --------- --------- ----------
Interest-bearing
loans -
current (2.1) - (2.1) (6.7) 0.3 (0.2) (8.7)
Lease liabilities
-current (2.2) (7.5) (9.7) 5.1 0.1 (3.0) (7.5)
------------ --------- ----------- -------- --------- --------- ----------
(4.3) (7.5) (11.8) (1.6) 0.4 (3.2) (16.2)
------------ --------- ----------- -------- --------- --------- ----------
Interest-bearing
loans non-current (101.9) - (101.9) (1.8) 3.3 - (100.4)
Lease liabilities
- non-current (3.9) (19.1) (23.0) - 1.1 0.2 (21.7)
------------ --------- ----------- -------- --------- --------- ----------
(105.8) (19.1) (124.9) (1.8) 4.4 0.2 (122.1)
Total debt
financing (110.1) (26.6) (136.7) (3.4) 4.8 (3.0) (138.3)
Net debt (79.6) (26.6) (106.2) (1.4) 3.4 (3.0) (107.2)
============ ========= =========== ======== ========= ========= ==========
Net debt is defined as the total of cash and cash equivalents, interest-bearing loans, unamortised debt issue costs and lease obligations.
GENUS PLC
NOTES TO THE CONDENSED SET OF FINANCIAL STATEMENTS
For the six months ended 31 December 2020
1. Basis of preparation
The unaudited Condensed Set of Financial Statements for the six months ended 31 December 2020:
-- were prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' ('IAS 34') and thereby have been prepared in conformity with the requirements of the Companies Act 2006 and the International Financial Reporting Standards ('IFRSs') adopted pursuant to the Regulation (EC) No 1606/2002 as it applies in the European Union;
-- are presented on a condensed basis as permitted by IAS 34 and therefore do not include all disclosures that would otherwise be required in a full set of financial statements; these should be read, therefore, in conjunction with the Genus plc Annual Report 2020;
-- includes all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the periods presented;
-- do not constitute statutory accounts within the meaning of section 435 of the Companies Act 2006; and
-- were approved by the Board of Directors on 24 February 2021.
The information relating to the year ended 30 June 2020 is an extract from the published financial statements for that year, which have been delivered to the Registrar of Companies. The auditor's report on those financial statements was not qualified and did not contain statements under section 498(2) or (3) of the Companies Act 2006.
The unaudited Condensed Set of Financial Statements for the six months ended 31 December 2020 has not been reviewed by our Auditor.
The unaudited condensed set of financial statements have been prepared on the basis of the accounting policies set out in the Annual Report 2020. The Genus plc Annual Report 2020 (a copy of which is available on the Genus plc website at www.genusplc.com ) sets out on pages 44-46 a number of risks and uncertainties that might impact upon the performance of the Group. There has been no material change to the principal risks that might affect the performance of the Group in the current financial year.
As part of the directors' consideration of the appropriateness of adopting the going concern basis in preparing the financial statements, they have considered
-- these risks and uncertainties including uncertainty arising from Covid-19 and its impact on our people, our customers and our critical business processes, taking into account the resilient performance of the Group to date in dealing with the challenges of Covid-19;
-- Genus's results to 31 December 2020 including it's strong cash position with free cash flow of GBP26.6m (2019: GBP10.5m) and net debt of GBP92.2m (2019: GBP107.2m) and had substantial headroom of GBP135.8m (2019: GBP125.6m) under the Group's credit facilities of GBP241m; and
-- Genus's new credit facility agreement which consists of a GBP150m multi-currency RCF, a 125m US dollar RCF and a 20m US dollar bond and guarantee facility. The term of the new facility is for three years with an option to extend the maturity date before the first and second anniversaries of the signing date for a further year. The facility also includes an uncommitted GBP100m accordion option which can be requested on a maximum of three occasions over the lifetime of the facility to fund the Group's business development plans.
Based on this assessment, the Directors have a reasonable expectation that the Group has adequate resources to continue its operational existence for the foreseeable future and for a period of at least 12 months from the date of this report. Accordingly, the Directors continue to adopt and consider appropriate the going concern basis in preparing the half-yearly report and the Condensed Set of Financial Statements.
The preparation of the Condensed Set of Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the balance sheet date, and the reported amounts of revenue and expenses during the period. Actual results could vary from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of revision and future periods if the revision affects both current and future periods.
For the year ended 30 June 2020, we restated the prior period balances sheets in accordance with IAS 8 and in accordance with IAS 1 (revised), to update an input used in the valuation of our porcine biological assets that was not in line with operational data, reducing the biological asset value by GBP20.5m and related deferred tax balances of GBP5.3m. We have therefore also reclassified the comparative period to 31 December 2019 to reflect these previously reported changes, so to be consistent with the 2020 Annual Report. For the six months ended 31 December 2019, there has been no material effect on the Group Income Statement, Group Statement of Comprehensive Income and no impact on the Group Statement of Cash Flows. Therefore, there has been no restatement of the Group Income Statement and there is no adjustment to earnings per share.
2. Accounting policies and non-GAAP measures
New standards and interpretations
In the current period, the Group has applied a number of amendments to IFRSs issued by the International Accounting Standards Board that are mandatorily effective for an accounting period that begins after 1 January 2020 and has been implemented with effect from 1 July 2020.
-- Applying IFRS 9 'Financial Instruments' with IFRS 4 'Insurance Contracts' (Amendments to IFRS 4);
-- Amendments to References to the Conceptual Framework in IFRS Standards; -- Definition of Material (Amendments to IAS 1 and IAS 8); -- Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7); -- Definition of a Business (Amendments to IFRS 3); -- Covid-19-Related Rent Concessions (Amendment to IFRS 16).
Their addition has not had any material impact on the disclosures, or the amounts reported in the Group Financial Statements.
New standards and interpretations not yet adopted
At the date of the interim report, the following standards and interpretations which have not been applied in the report were in issue but not yet effective (and in some cases had not yet been adopted in accordance with the Companies Act 2006). The Group will continue to assess the impact of these amendments prior to their adoption.
-- Classification of Liabilities as Current or Non-Current (Amendments to IAS 1);
-- Property, Plant and Equipment - Proceeds before Intended Use (Amendments to IAS 16);
-- Annual Improvements 2018-2020 Cycle;
-- Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37);
-- Amendments to IFRS 17;
Alternative performance measures ('APMs')
In reporting nancial information, the Group presents Alternative Performance Measures, ('APMs'), which are not de ned or speci ed under the requirements of IFRS and which are not considered to be a substitute for, or superior to, IFRS measures.
The Group believes that these APMs provide stakeholders with additional helpful information on the performance of the business. The APMs are consistent with how we plan our business performance and report on it in our internal management reporting to the Board and the executive leadership team. Some of these measures are also used for the purpose of setting remuneration targets.
For a full list of all APMs please see the Alternative Performance Measures glossary at the end of this release.
3. Foreign currencies
The principal exchange rates used were as follows:
Average Closing
----------------------------------- ----------------------------------
Six months Six months Year
ended 31 ended 31 ended 30
December December 30 June 31 December 31 December June
2020 2019 2020 2020 2019 2020
US Dollar/GBP 1.32 1.26 1.26 1.37 1.33 1.24
Euro/GBP 1.11 1.14 1.14 1.12 1.18 1.10
Brazilian Real/GBP 7.18 5.13 5.74 7.10 5.33 6.77
Mexican Peso/GBP 28.07 24.50 26.08 27.16 25.11 28.52
Chinese Yuan/GBP 8.90 8.88 8.89 8.92 9.23 8.75
Russian Rouble/GBP 100.37 81.02 85.17 101.11 82.30 88.19
The assets and liabilities of foreign operations, including goodwill arising on consolidation, are translated into Sterling at the prevailing exchange rates at the balance sheet date. We translate these operations' revenues and expenses using an average rate for the period.
4. Segmental information
IFRS 8 'Operating Segments' requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Group Chief Executive and the Board to allocate resources to the segments and to assess their performance.
The Group's operating and reporting structure comprises of three operating segments; Genus PIC, Genus ABS and Research and Development. These segments are the basis on which the Group reports its segmental information. The principal activities of each segment are as follows:
-- Genus PIC - our global porcine sales business;
-- Genus ABS - our global bovine sales business; and
-- Research and Development - our global spend on research and development.
A segment analysis of revenue, operating profit and segment assets and liabilities are detailed below. We do not include our adjusting items in the revenue and operating profit segments as we believe these do not reflect the trading progress of the segments. The accounting policies of the reportable segments are the same as the Group's accounting policies as described in the financial statements.
Revenue
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2020 2019 2020
GBPm GBPm GBPm
Genus PIC 152.9 146.5 298.8
Genus ABS 129.0 118.0 237.6
Research and Development
----------------------------------------- ------------- ------------- ------------
Porcine Product Development 3.0 5.0 11.7
Bovine Product Development 0.8 1.2 3.3
Gene Editing - - -
Other Research and Development - - -
----------------------------------------- ------------- ------------- ------------
3.8 6.2 15.0
------------- ------------- ------------
285.7 270.7 551.4
------------- ------------- ------------
Adjusted operating profit by segment is set out below and reconciled to the Group's adjusted operating profit. A reconciliation of adjusted operating profit to profit for the period is shown on the face of the Condensed Consolidated Income Statement.
Adjusted operating profit
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2020 2019 2020
GBPm GBPm GBPm
Genus PIC 63.0 57.3 113.3
Genus ABS 18.7 14.6 32.5
Research and Development
----------------------------------------- ------------- ------------- -------------
Porcine Product Development (10.3) (12.0) (28.9)
Bovine Product Development (9.3) (9.4) (20.6)
Gene Editing (3.7) (4.3) (5.2)
Other Research and Development (5.7) (4.8) (10.2)
----------------------------------------- ------------- ------------- -------------
(29.0) (30.5) (64.9)
------------- ------------- -------------
Adjusted segment operating profit 52.7 41.4 80.9
Central (7.6) (7.0) (15.6)
------------- ------------- -------------
Adjusted operating profit 45.1 34.4 65.3
------------- ------------- -------------
Our business is not highly seasonal and our customer base is diversified, with no individual customer generating more than 2% of revenue.
Exceptional items, not included within adjusted operating profit, of GBP5.1m expense (2019: GBP12.8m expense), relate to Genus ABS (GBP1.6m expense), Genus PIC (GBPnil) and our central segment (GBP3.5m expense). Note 5 provides the details of these exceptional items.
We consider share-based payment expenses, not included within adjusted operating profit, on a Group-wide basis and do not allocate them to reportable segments.
Segment assets Segment liabilities
31 (restated*) 30 (restated*) 30
December 31 December June 31 December 31 December June
2020 2019 2020 2020 2019 2020
GBPm GBPm GBPm GBPm GBPm GBPm
Genus PIC 253.9 242.1 247.6 (52.7) (62.4) (72.6)
Genus ABS 198.5 184.8 201.3 (57.3) (47.5) (52.9)
Research and
Development
--------------------------- --------- ------------ ------ ----------- ------------ -------
Porcine Product
Development 216.7 211.6 226.3 (51.9) (50.7) (56.3)
Bovine Product
Development 130.9 134.0 146.5 (28.9) (26.4) (33.6)
Research 6.4 7.6 7.2 (3.7) (1.5) (3.5)
--------------------------- --------- ------------ ------ ----------- ------------ -------
354.0 353.2 380.0 (84.5) (78.6) (93.4)
Segment total 806.4 780.1 828.9 (194.5) (188.5) (218.9)
Central 35.3 38.4 39.8 (149.1) (150.1) (142.0)
--------- ------------ ------ ----------- ------------ -------
Total 841.7 818.5 868.7 (343.6) (338.6) (360.9)
========= ============ ====== =========== ============ =======
*see note 1 for details of the prior period restatement
Revenue by product
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2020 2019 2020
GBPm GBPm GBPm
Sale of animals, semen, embryos, products
and ancillary services 212.0 199.9 408.1
Royalties 70.2 67.4 136.2
Consulting services 3.5 3.4 7.1
------------- ------------- ---------
285.7 270.7 551.4
============= ============= =========
Revenue from contracts with customers
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2020 2019 2020
GBPm GBPm GBPm
Genus PIC 151.5 144.8 295.5
Genus ABS 119.1 108.0 217.7
Research and Development 3.8 6.2 14.9
------------- ------------- ---------
Recognised at a point in time 274.4 259.0 528.1
------------- ------------- ---------
Genus PIC 1.4 1.7 3.3
Genus ABS 9.9 10.0 19.9
Research and Development - - 0.1
------------- ------------- ---------
Recognised over time 11.3 11.7 23.3
------------- ------------- ---------
Total Revenue 285.7 270.7 551.4
============= ============= =========
5. Exceptional items
Six months Six months Year
ended ended ended
31 December 31 December 30
2020 2019 June
2020
Operating expenses: GBPm GBPm GBPm
Litigation and damages (1.7) (12.0) (16.4)
Pension related (3.3) - -
Acquisition and integration (0.1) (0.5) (2.1)
Other - (0.3) (0.7)
------------ ------------ ------
(5.1) (12.8) (19.2)
------------ ------------ ------
Litigation
Litigation includes legal fees and related costs of GBP1.7m (2019: GBP3.8m) related to the actions between ABS Global, Inc. ('ABS') and Inguran, LLC (aka STGenetics ('ST')) and GBPnil (2019: GBP8.2m) for damages and costs related to patent infringement, which is included in non-current provisions (see note 18).
ST litigation activities six-month period ended 31 December 2020.
The ABS I and ABS II proceedings in the periods before the year ended 30 June 2020 are more fully described in the Notes to the Financial Statements in previous Annual Reports.
On 29 January 2020, ST filed a new US complaint against ABS ('ABS III'). ABS has prepared and filed a response to the ABS III complaint, including a motion to dismiss, on the basis that all these issues were fully resolved in either the ABS I or ABS II litigations. The parties await the court's decision.
On 10 March 2020, the USPTO issued patent 10,583,439 (the "439 patent'), and subsequently ST asked the court for permission to file a supplemental complaint in ABS III asserting infringement of the '439 patent. ABS believes that ST's claim for infringement falls short and has filed an opposition to ST's request. On 15 April 2020, ST filed a new complaint ('ABS IV'), asserting the same claim of infringement of the '439 patent alleged in its supplemental complaint and then moved to consolidate the ABS IV and ABS III litigation. ABS has opposed this action and has filed a motion for summary dismissal. On 23 June 2020, the USPTO issued patent 10,689,210 (the '210 patent'), and on 6 July 2020, ST sought a second supplement of ABS III by adding a claim of '210 patent infringement. ABS has opposed this action. The parties await the court's decision. On 26 October 2020 and 10 December 2020 ABS filed Inter Partes Review against the '439 and '210 patents.
ABS has also sought judgments as a matter of law ('JMOL') in relation to the invalidity of all three of the patents considered in ABS II, JMOLs in relation to the non-infringement of two of those patents, and a reduction in damages awarded by the jury. The parties await the court's decision.
Indian Litigation: In September 2019, ST also filed parallel patent infringement proceedings against ABS in India alleging infringement of the Indian patent 240790 ("790 patent'). The '790 patent is the equivalent of the US patent 7,311,476 asserted in ABS II. ABS had already sought the revocation of the '790 patent in April 2017 before the Indian Patent Office and has now consolidated the revocation petition as a counterclaim in the Indian court proceedings.
Pension related
On 20 November 2020, the High Court ruled that individual transfer payments made since 17 May 1990 would need to be equalised for the effects of GMP. This judgment followed on from the previous judgment on 26 October 2018, where the High Court ruled that schemes had a legal obligation to pay benefits allowing for GMP equalisation, resulting in an additional liability being recognised. The previous judgment had not considered historic transfer values. Genus's legacy pension schemes are also affected by this ruling, resulting in an aggregate past service charge of GBP3.3m in the period, being GBP0.9m for the Dalgety Pension Fund ('DPF') and GBP2.4m for the Milk Pension Fund ('MPF').
Acquisition and integration
During the period GBP0.1m (2019: GBP0.5m) of expenses were incurred in relation to acquisitions and integration.
6. Net finance costs
Six months Six months Year
ended ended ended
31 December 31 December 30
2020 2019 June
2020
GBPm GBPm GBPm
Interest payable on bank loans and overdrafts (1.4) (1.7) (2.9)
Amortisation of debt issue costs (0.5) (0.2) (0.4)
Other interest payable - (0.2) (0.1)
Unwinding of discount put options (0.3) - (0.5)
Interest on lease liabilities (0.4) (0.5) (1.0)
Net interest cost in respect of pension
scheme liabilities (0.2) (0.3) (0.4)
------------ ------------ ------
Total interest expense (2.8) (2.9) (5.3)
Interest income on bank deposits 0.2 0.1 0.3
------------ ------------ ------
Total interest income 0.2 0.1 0.3
------------ ------------ ------
Net finance costs (2.6) (2.8) (5.0)
------------ ------------ ------
7. Taxation
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2020 2019 2020
GBPm GBPm GBPm
Current tax 8.2 3.7 12.7
Deferred tax 0.2 2.6 (2.1)
-------------- ------------------ ---------------
Income tax expense 8.4 6.3 10.6
-------------- ------------------ ---------------
The tax charge for the period of GBP8.4m (2019: GBP6.3m) on the statutory profit represents an effective tax rate of 21.7% (2019: 20.7%).
The tax charge on adjusted profits for the period is GBP11.1m (2019: GBP8.4m), which represents a tax rate on adjusted profits of 22.9% (2019: 23.0%). The Group tax charge benefits by approximately 2.5% from the share of Group profits arising in China, which is taxed at an average rate of 15% due to the availability of tax relief on owned production agricultural activities.
In common with other UK Groups, the Group has a potential exposure to the State Aid challenge of the European Commission to group financing arrangements put in place under the UK's CFC Finco regime. The maximum potential exposure is GBP4.3m. Based on a comparative benchmarking study of the significant people functions performed in the UK relating to these structures, the company has made a provision of GBP1m for this uncertain tax position in a previous year and we believe this provision remains adequate. In February 2021 the company received correspondence from HMRC advising that they would shortly issue a charging notice for GBP1.2m in respect of these exposures. The company intends to appeal this charging notice.
There is a deferred tax liability at the period end of GBP60.1m (2019: GBP64.6m) which mainly relates to the recognition at fair value of biological assets and intangible assets arising on acquisition and a deferred tax asset of GBP3.3m (2019: GBP2.7m) relating to future tax deductions in respect of pension scheme liabilities, share scheme awards and financial instruments.
8. Dividends
Six months Six months Year
ended ended ended
31 December 31 December 30
2020 2019 June
2020
Amounts recognised as distributions GBPm GBPm GBPm
to equity holders in the period:
Final dividend
Final dividend for the year ended
30 June 2020 of 19.7 pence per share 12.8 - -
Final dividend for the year ended
30 June 2019 of 18.8 pence per share - 12.2 12.2
Interim dividend
Interim dividend for the year ended
30 June 2020 of 9.4 pence per share - - 6.1
------------- ------------- -------
12.8 12.2 18.3
============= ============= =======
The final dividend for the year ended 30 June 2020 was approved at the Company Annual General Meeting on 25 November 2020 and paid on 11 December 2020.
On 24 February 2021, the Directors proposed an interim dividend of 10.3 pence per share payable on 1 April 2021.
9. Other intangible assets
Brand, Separately
Porcine multiplier identified Patents,
and bovine contracts acquired Assets licence
genetics and customer intangible under and
Technology relationships assets Software Constructi-on IntelliGen other Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Cost
Balance at 1 July
2019 53.0 85.1 138.1 14.7 11.0 24.0 4.4 192.2
Additions - - - 0.1 8.9 1.8 - 10.8
Disposals - - - (0.6) - (1.0) - (1.6)
Transfers - - - 13.6 (13.6) - - -
Effect of movements
in exchange rates (1.0) 0.8 (0.2) 0.1 - 0.6 - 0.5
Balance at 30 June
2020 52.0 85.9 137.9 27.9 6.3 25.4 4.4 201.9
========== ============== =========== ========= ============== =========== ========= ========
Additions - - - - 1.5 0.9 - 2.4
Disposals - - - (0.8) - - - (0.8)
Transfers - - - 0.2 (0.2) - - -
Effect of movements
in exchange rates (0.3) (6.8) (7.1) (0.6) - (2.5) (0.1) (10.3)
Balance at 31 December
2020 51.7 79.1 130.8 26.7 7.6 23.8 4.3 193.2
========== ============== =========== ========= ============== =========== ========= ========
Amortisation and
impairment losses
Balance at 1 July
2019 30.8 61.8 92.6 11.6 - 5.0 2.9 112.1
Impairment - - - 0.2 - - - 0.2
Disposal - - - - - (0.4) - (0.4)
Amortisation for
the year 2.9 5.6 8.5 1.6 - 2.3 1.0 13.4
Effect of movements
in exchange rates (0.5) 0.8 0.3 0.1 - - - 0.4
Balance at 30 June
2020 33.2 68.2 101.4 13.5 - 6.9 3.9 125.7
========== ============== =========== ========= ============== =========== ========= ========
Amortisation for
the period 1.4 2.3 3.7 1.3 - 1.0 0.1 6.1
Disposal - - - (0.3) - - - (0.3)
Effect of movements
in exchange rates (0.1) (5.6) (5.7) (0.5) - (0.7) (0.1) (7.0)
Balance at 31 December
2020 34.5 64.9 99.4 14.0 - 7.2 3.9 124.5
========== ============== =========== ========= ============== =========== ========= ========
Carrying amounts
At 31 December 2020 17.2 14.2 31.4 12.7 7.6 16.6 0.4 68.7
========== ============== =========== ========= ============== =========== ========= ========
At 30 June 2020 18.8 17.7 36.5 14.4 6.3 18.5 0.5 76.2
========== ============== =========== ========= ============== =========== ========= ========
Included within the Software class of assets is GBP10.6m (30 June 2020: GBP11.5m) and included in assets in the course of construction is GBP7.5m (30 June 2020: GBP5.7m) that relate to the ongoing development costs of GenusOne, our single global enterprise system.
10. Biological assets
Fair value of biological assets Bovine Porcine Total
GBPm GBPm GBPm
Balance at 1 July 2020 107.2 242.7 349.9
Increases due to purchases 5.9 57.4 63.3
Decreases attributable to sales - (111.6) (111.6)
Decrease due to harvest (11.1) (10.7) (21.8)
Changes in fair value less estimated
sale costs 3.9 77.4 81.3
Effect of movements in exchange rates (9.0) (19.7) (28.7)
------- ------------ --------
Balance at 31 December 2020 96.9 235.5 332.4
======= ============ ========
Non-current biological assets 96.9 197.3 294.2
Current biological assets - 38.2 38.2
------- ------------ --------
Balance at 31 December 2020 96.9 235.5 332.4
======= ============ ========
Balance at 1 July 2019 (restated*) 98.7 228.5 327.2
Increases due to purchases 6.6 53.9 60.5
Decreases attributable to sales - (112.5) (112.5)
Decrease due to harvest (11.1) (12.3) (23.4)
Changes in fair value less estimated
sale costs 13.1 82.5 95.6
Effect of movements in exchange rates (4.4) (9.8) (14.2)
------- ------------ --------
Balance at 31 December 2019 (restated*) 102.9 230.3 333.2
======= ============ ========
Non-current biological assets 102.9 184.2 287.1
Current biological assets - 46.1 46.1
------- ------------ --------
Balance at 31 December 2019 (restated*) 102.9 230.3 333.2
======= ============ ========
Balance at 1 July 2019 (restated*) 98.7 228.5 327.2
Increases due to purchases 17.5 118.7 136.2
Decreases attributable to sales - (217.3) (217.3)
Decrease due to harvest (24.5) (22.7) (47.2)
Changes in fair value less estimated
sale costs 13.5 130.6 144.1
Effect of movements in exchange rates 2.0 4.9 6.9
------- ------------ --------
Balance at 30 June 2020 107.2 242.7 349.9
======= ============ ========
Non-current biological assets 107.2 202.9 310.1
Current biological assets - 39.8 39.8
------- ------------ --------
Balance at 30 June 2020 107.2 242.7 349.9
======= ============ ========
*see note 1 for details of the prior period restatement
Bovine
Bovine biological assets include GBP8.2m (2019: GBP5.4m) representing the fair value of bulls owned by third parties but managed by the Group, net of expected future payments to such third parties, which are therefore treated as assets held under finance leases. There are no movements in the carrying value of the bovine biological assets in respect of sales or other changes during the period.
A risk adjusted rate of 8.8% (2019: 8.7%) has been used to discount future net cash flows from the sale of bull semen.
Decreases due to harvest represent the semen extracted from the biological assets. Inventories of such semen are shown as biological asset harvest.
Porcine
Included in increases due to purchases is the aggregate increase arising during the period on initial recognition of biological assets in respect of multiplier purchases, other than parent gilts, of GBP23.4m (2019: GBP18.0m).
Decreases attributable to sales during the period of GBP111.6m (2019: GBP112.5m) include GBP34.7m (2019: GBP33.5m) in respect of the reduction in fair value of the retained interest in the genetics of animals, other than parent gilts, transferred under royalty contracts.
Also included is GBP46.0m (2019: GBP49.2m) relating to the fair value of the retained interest in the genetics in respect of animals, other than parent gilts, sold to customers under royalty contracts in the period.
Total revenue in the period, including parent gilts, includes GBP109.1m (2019: GBP103.0m) in respect of these contracts, comprising GBP34.2m (2019: GBP35.5m) on initial transfer of animals and semen to customers and GBP74.9m (2019: GBP67.4m) in respect of royalties received.
A risk adjusted rate of 8.8% (2019: 11.0%) has been used to discount future net cash flows from the expected output of the pure line porcine herds. The number of future generations which have been taken into account is seven (2019: seven) and their estimated useful lifespan is 1.4 years (2019: 1.4 years).
Six months ended 31 December 2020 Bovine Porcine Total
GBPm GBPm GBPm
Net IAS 41 valuation movement on biological
assets*
Changes in fair value of biological assets 3.9 77.4 81.3
Inventory transferred to cost of sales at
fair value (10.5) (10.7) (21.2)
Biological assets transferred to cost of
sales at fair value - (56.4) (56.4)
(6.6) 10.3 3.7
Fair value movements in related financial
derivative - (0.2) (0.2)
(6.6) 10.1 3.5
Six months ended 31 December 2019 Bovine Porcine Total
GBPm GBPm GBPm
Net IAS 41 valuation movement on biological
assets*
Changes in fair value of biological assets 13.1 82.5 95.6
Inventory transferred to cost of sales at
fair value (9.7) (12.3) (22.0)
Biological assets transferred to cost of
sales at fair value - (59.5) (59.5)
3.4 10.7 14.1
Fair value movements in related financial
derivative - (0.8) (0.8)
3.4 9.9 13.3
Year ended 30 June 2020 Bovine Porcine Total
GBPm GBPm GBPm
Net IAS 41 valuation movement on biological
assets*
Changes in fair value of biological assets 13.5 130.6 144.1
Inventory transferred to cost of sales at
fair value (10.9) (22.7) (33.6)
Biological assets transferred to cost of
sales at fair value - (95.1) (95.1)
2.6 12.8 15.4
Fair value movements in related financial
derivative - 0.4 0.4
2.6 13.2 15.8
* This represents the difference between operating profit prepared under IAS 41 and operating profit prepared under historical cost accounting, which forms part of the reconciliation to adjusted operating profit.
11. Property, plant and equipment
Plant, Plant,
motor motor Total
vehicles Assets Total Land vehicles Right
Land and and under Owned and and of Use
buildings equipment construction Assets Buildings equipment Assets Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Cost or
deemed cost
Balance at 1
July
2019 62.1 91.3 4.7 158.1 - - - 158.1
Recognised on
the
adoption of
IFRS
16 - - - - 19.7 6.9 26.6 26.6
Transfers on
the
adoption of
IFRS
16 - (12.2) - (12.2) - 12.2 12.2 -
Additions 0.4 9.4 14.8 24.6 1.9 7.2 9.1 33.7
Transfers 6.6 4.7 (11.3) - - - - -
Disposals (1.6) (5.4) - (7.0) - (2.7) (2.7) (9.7)
Effect of
movements
in exchange
rates 0.4 - - 0.4 0.3 0.4 0.7 1.1
Balance at 30
June
2020 67.9 87.8 8.2 163.9 21.9 24.0 45.9 209.8
Additions 0.2 1.9 7.4 9.5 1.0 2.7 3.7 13.2
Transfers 3.5 2.6 (6.1) - - - - -
Disposals (0.3) (1.3) - (1.6) (1.5) (1.3) (2.8) (4.4)
Effect of
movements
in exchange
rates (5.9) (6.5) (0.6) (13.0) (1.4) (1.3) (2.7) (15.7)
Balance at 31
December
2020 65.4 84.5 8.9 158.8 20.0 24.1 44.1 202.9
Depreciation
and
impairment
losses
Balance at 1
July
2019 20.8 51.3 - 72.1 - - - 72.1
Transfer of
the adoption
of IFRS 16 - (4.8) - (4.8) - 4.8 4.8 -
Depreciation
for
the year 3.8 9.3 - 13.1 4.4 6.5 10.9 24.0
Disposals (0.7) (2.7) - (3.4) - (1.5) (1.5) (4.9)
Effect of
movements
in exchange
rates 0.4 - - 0.4 - 0.3 0.3 0.7
Balance at 30
June
2020 24.3 53.1 - 77.4 4.4 10.1 14.5 91.9
Depreciation
for
the period 1.6 5.0 - 6.6 1.8 3.5 5.3 11.9
Disposals (0.2) (0.8) - (1.0) (0.9) (1.2) (2.1) (3.1)
Effect of
movements
in exchange
rates (2.7) (4.2) - (6.9) (0.3) (0.6) (0.9) (7.8)
Balance at 31
December
2020 23.0 53.1 - 76.1 5.0 11.8 16.8 92.9
Carrying amounts At 31 December 2020 42.4 31.4 8.9 82.7 15.0 12.3 27.3 110.0 At 30 June 2020 43.6 34.7 8.2 86.5 17.5 13.9 31.4 117.9 12. Interests in joint ventures and associates
The Group's share of profit after tax in its equity accounted investees for the six months ended 31 December 2020 was GBP5.8m (2019: GBP5.1m).
The carrying value of the investment is reconciled as follows:
31 31
December December
2020 2019
GBPm GBPm
Balance at 1 July 22.7 23.6
Share of post-tax retained profits of joint ventures
and associates 5.8 5.1
Additions 0.4 2.2
Disposal proceeds - (3.8)
Loan repayment - (1.2)
Dividend received - (0.2)
Effect of other movements including exchange rates (0.5) (1.3)
Balance at 31 December 28 .4 24.4
Summary financial information for equity accounted investees, adjusted for the Group's percentage ownership, is shown below:
Net IAS 41
valuation
movement
on biological Profit
Revenue assets Expenses Taxation after tax
Income statement GBPm GBPm GBPm GBPm GBPm
Six months ended 31 December
2020 20.6 2. 1 (14.7) (2.2) 5.8
======= ============== ======== ======== ==========
Six months ended 31 December
2019 16.8 1.5 (11.5) (1.7) 5.1
======= ============== ======== ======== ==========
Year ended 30 June 2020 33.5 (0.1) (22.2) (2.3) 8.9
======= ============== ======== ======== ==========
13. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
Bomaz, Inc. and Bogz Dairy, LLC, are well recognised breeders in the industry, and are related parties to the Group as these entities are under the control of relatives of Nate Zwald, our ABS Dairy COO.
We transact with Bomaz, Inc. and Bogz Dairy, LLC as part of our bull product development effort, under a variety of contracts and agreements. Payments in the six months ended 31 December 2020 amounted to GBP0.4m (2019: GBP1.0m). As at 31 December 2020, the balance owing to these entities was GBPnil (2019: GBPnil), all amounts were settled in cash.
These related party transactions were made on terms equivalent to those that prevail in arms' length transactions.
Other related party transactions
Transactions between the Group and its joint ventures and associates are described below:
Transaction value Balance outstanding
Six months Six months
ended 31 ended 31 Year 31 December 31 December 30
December December ended 2020 2019 June
2020 2019 30 June 2020
2020
GBPm GBPm GBPm GBPm GBPm GBPm
Sale of goods and
services to joint
ventures and associates - - (1.2) - - -
Purchase of goods
and services from
joint ventures
and associates 3.3 0.3 3.1 (1.0) (0.2) (1.6)
========== ========== ========= ============= ============= =======
All outstanding balances with joint ventures and associates are priced on an arm's length basis and are to be settled in cash within six months of the reporting date. None of the balances are secured.
14. Earnings per share
Six months Six months Year
ended ended ended
31 31 30
December December June
2020 2019 2020
000s 000s 000s
Weighted average number of ordinary
shares (basic) 65,056 64,868 64,908
Dilutive effect of share options and
awards 554 485 519
Weighted average number of ordinary
shares for the purpose of diluted earnings
per share 65,610 65,353 65,427
Year
Six months Six months ended
ended ended 30
31 December 31 December June
2020 2019 2020
Earnings per share
Basic earnings per share 48.4p 36.5p 62.4p
Diluted earnings per share 48.0p 36.3p 61.9p
Adjusted earnings per share
Adjusted earnings per share 57.3p 43.5p 85.4p
Diluted adjusted earnings per share 56.9p 43.2p 84.7p
Earnings per share measures are calculated on the weighted average number of ordinary shares in issue during the period. As in previous periods, adjusted earnings per share have been shown, since the Directors consider that this alternative measure gives a more comparable indication of the Group's trading performance.
Basic earnings per share is based on the net profit attributable to owners of the Company for the period of GBP31.5m (six months ended 31 December 2019: GBP23.7m; year ended 30 June 2020: GBP40.5m) divided by weighted average number of ordinary shares (basic and diluted) as calculated above.
Adjusted earnings per share is calculated on profit for the period before net IAS 41 valuation movement on biological assets, amortisation of acquired intangible assets, share-based payment expense and exceptional items, after charging taxation associated with those profits, of GBP37.3m (six months ended 31 December 2019: GBP28.2m; year ended 30 June 2020: GBP55.4m), which is calculated as follows:
Adjusted earnings Six months Six months Year
ended ended ended
31 31 30
December December June
2020 2019 2020
GBPm GBPm GBPm
Profit before tax 38.7 30.4 51.5
Add/(deduct):
Net IAS 41 valuation movement on
biological assets (3.5) (13.3) (15.8)
Amortisation of acquired intangible
assets 3.7 4.0 8.5
Share-based payment expense 4.3 2.8 5.8
Exceptional items 5.1 12.8 19.2
Net IAS 41 valuation movement on
biological assets in joint ventures
and associates (2.1) (1.5) 0.1
Tax on joint ventures and associates 2.2 1.7 2.3
Attributable to non-controlling
interest - (0.3) (0.6)
Adjusted profit before tax 48.4 36.6 71.0
Adjusted tax charge (11.1) (8.4) (15.6)
Adjusted profit after tax 37.3 28.2 55.4
Effective tax rate on adjusted profit 22.9% 23.0% 22.0%
15. Cash flow from operating activities
Six months Six months Year
ended ended ended
31 31 December 30
December 2019 June
2020 2020
GBPm GBPm GBPm
Profit for the period 30.3 24.1 40.9
Adjustment for:
Net IAS 41 valuation movement on biological
assets (3.5) (13.3) (15.8)
Amortisation of acquired intangible
assets 3.7 4.0 8.5
Share-based payment expense 4.3 2.8 5.8
Share of profit of joint ventures and
associates (5.8) (5.1) (8.9)
Finance costs (net) 2.6 2.8 5.0
Income tax expense 8.4 6.3 10.6
Exceptional items 5.1 12.8 19.2
Adjusted operating profit 45.1 34.4 65.3
Depreciation of property plant and equipment 11.9 10.5 24.0
Loss on disposal of property plant and
equipment - 0.1 3.7
Loss on disposal of intangible assets 0.5 - 1.2
Amortisation and impairment of intangible
assets 2.4 2.4 5.1
Adjusted earnings before interest, tax,
depreciation and amortisation 59.9 47.4 99.3
Cash impact of exceptional items (1.8) (2.7) (5.8)
Other movements in biological assets
and harvested produce (7.7) (4.9) (2.9)
Decrease in provisions and release in
deferred consideration (0.4) (2.1) (2.2)
Additional pension contribution in excess
of pension charge (3.2) (3.6) (7.9)
Other (0.6) 0.2 (0.9)
Operating cash flows before movement
in working capital 46.2 34.3 79.6
Decrease/(increase) in inventories 0.6 (0.8) 0.1
Increase in receivables (5.7) (2.2) (8.8)
Increase in payables 3.9 1.6 12.0
Cash generated by operations 45.0 32.9 82.9
Interest received 0.2 0.1 0.3
Interest and other finance costs paid (1.4) (1.9) (3.4)
Interest on leased assets (0.4) (0.4) (1.0)
Cash flow from derivative financial
instruments - - 0.5
Income taxes paid (5.3) (6.6) (13.5)
Net cash from operating activities 38.1 24.1 65.8
=========== ============= =======
16. Retirement benefit obligations
The Group has a number of defined contribution and defined benefit pension schemes covering many of its employees, further details can be found in the Genus plc Annual Report 2020. The aggregated position of defined benefit schemes are provided below:
31 December (restated*) 30 June
2020 31 December 2020
2019
GBPm GBPm GBPm
Present value of funded obligations 1,166.1 1,189.1 1,159.5
Present value of unfunded obligations 9.0 8.8 9.8
Total present value of obligations 1,175.1 1,197.9 1,169.3
Fair value of plan assets (1,189.0) (1,196.4) (1,182.5)
Restricted recognition of asset (DPF) 8.1 5.5 8.7
Recognition of additional liability
(MPF) 20.8 13.5 22.6
Recognised liability for defined benefit
obligations 15.0 20.5 18.1
*The December 2019 comparative figures have been restated to include in the aggregated disclosures the assets and related liabilities of the bulk annuity policies. The deficit recognised in 2019 has not been impacted.
The principal actuarial assumptions (expressed as weighted averages) are:
31 31 December 30
December 2019 June
2020 2020
% % %
Discount rate 1.45 2.05 1.65
Retail Price Index 2.60 2.95 2.80
Consumer Price Index 2.10 2.05 2.10
Guaranteed Minimum Pension ('GMP')
On 20 November 2020, the High Court ruled that individual transfer payments made since 17 May 1990 would need to be equalised for the effects of GMP. This judgment followed on from the previous judgment on 26 October 2018, where the High Court ruled that schemes had a legal obligation to pay benefits allowing for GMP equalisation, resulting in an additional liability being recognised. The previous judgment had not considered historic transfer values. Genus's legacy pension schemes are also affected by this ruling, resulting in an aggregate past service charge of GBP3.3m in the period.
The Dalgety Pension Fund ('DPF') is both in surplus and additionally had a reserve of GBP8.7m at 30 June 2020 against future unknown liabilities, neither of which has been recognised in the Genus accounts as the Group does not have a unilateral right to them. The cost of GMP equalisation relating to individual transfer payments is estimated to be GBP0.9m for the DPF which will be fully met by the scheme reserve without a cash cost to Genus. However, IAS19 requires us to record a charge in the Income Statement of GBP0.9m, which is offset by an equal and opposite credit in the Statement of Comprehensive Income.
The cost of GMP equalisation relating to individual transfer payments for Genus's share of the Milk Pension Fund ('MPF') is estimated to be GBP2.4m which is also recorded as a charge to the Income Statement. On an IAS19 basis the MPF is also in surplus, however under IFRIC 14 Genus accounts for its committed payments under the deficit recovery plan agreed as part of the 31 March 2018 scheme valuation as a liability.
The Milk Pension Fund
We have accounted for our section of the scheme and our share of any orphan assets and liabilities, which together represent approximately 86% of the MPF. Although the MPF is managed on a sectionalised basis, it is a "last man standing scheme", which means that all participating employers are joint and severally liable for all of the fund's liabilities.
Further details of the Milk Pension Fund can be found in the Genus plc Annual Report 2020.
17. Financial instruments fair value disclosures
The table below sets out the categorisation of the financial instruments held by the Group at 31 December 2020.
We have categorised financial instruments held at valuation into a three-level fair value hierarchy, based on the priority of the inputs to the valuation technique in accordance with IFRS 13. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Valuations categorised as Level 2 are obtained from third parties. If the inputs used to measure fair value fall within different levels of the hierarchy, we base the category level on the lowest priority level input that is significant to the fair value measurement of the instrument in its entirety.
31 December 2020 31 December 2019 30 June 2020
Level Level 2 Level Total Level Level 2 Level Total Level Level 2 Level Total
1 3 1 3 1 3
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Financial assets
Other
investments 1.8 - 5.0 6.8 2.0 - 4.7 6.7 1.8 - 5.1 6.9
Trade
receivables and
other debtors,
excluding
prepayments and
accrued income - 90.1 - 90.1 - 87.7 - 87.7 - 89.0 - 89.0
Cash and cash
equivalents - 50.2 - 50.2 - 31.1 - 31.1 - 41.3 - 41.3
Derivative
instruments in
non-designated
hedge
accounting
relationships - 0.9 - 0.9 - 0.1 - 0.1 - 1.2 - 1.2
Derivative
instruments in
designated
hedge
accounting
relationships - - - - - 0.2 - 0.2 - - - -
------ -------- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------
Financial assets 1.8 141.2 5.0 148.0 2.0 119.1 4.7 125.8 1.8 131.5 5.1 138.4
====== ======== ====== ======== ====== ======== ====== ======== ====== ======== ====== ========
Financial
liabilities
Trade and other
payables,
excluding other
taxes and
social security - (89.7) - (89.7) - (79.1) - (79.1) - (92.2) - (92.2)
Loans and
overdrafts - (114.8) - (114.8) - (109.1) - (109.1) - (112.8) - (112.8)
Leasing
obligations - (27.6) - (27.6) - (29.2) - (29.2) - (31.1) - (31.1)
Derivative
instruments in
non-designated
hedge
accounting
relationships - (0.3) - (0.3) - (0.4) - (0.4) - (0.3) - (0.3)
Derivative
instruments in
designated
hedge
accounting
relationships - (0.1) - (0.1) - (0.1) - (0.1) - (0.2) - (0.2)
Put option over
non-controlling
interest - (5.9) - (5.9) - (5.5) - (5.5) - (6.1) - (6.1)
Deferred
consideration
(see note 19) (0.4) (1.0) (1.4) - (4.7) - (4.7) - (5.1) (3.6) (8.7)
------ -------- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------
- (238.8) (1.0) (239.8) - (228.1) - (228.1) - (247.8) (3.6) (251.4)
====== ======== ====== ======== ====== ======== ====== ======== ====== ======== ====== ========
The Directors consider that the carrying value amounts of financial assets and financial liabilities recorded at amortised cost in the financial statements are approximately equal to their fair values.
18. Provisions
Contingent
ST deferred consideration Share Other provisions
litigation GBPm forfeiture GBPm Total
GBPm GBPm GBPm
Balance at 1 July 2019 - 4.5 2.0 2.3 8.8
Additional provision in
the year 10.2 - 0.3 2.5 13.0
Utilisation of provision - - - (1.6) (1.6)
Release of provision - - - (0.2) (0.2)
Reclassified to deferred
consideration* - (4.5) - - (4.5)
Effect of movement in
exchange rates 0.3 - - - 0.3
------------ ------------------------ ------------ ------------------ -------
Balance at 30 June 2020 10.5 - 2.3 3.0 15.8
Additional provision in
the year 0.2 - - 1.5 1.7
Utilisation of provision (0.1) - - (1.5) (1.6)
Release of provision - - - (0.2) (0.2)
Effect of movement in
exchange rates (1.0) - - (0.1) (1.1)
------------ ------------------------ ------------ ------------------ -------
Balance at 31 December
2020 9.6 - 2.3 2.7 14.6
------------ ------------------------ ------------ ------------------ -------
*Contingent deferred consideration has been reclassified to be disclosed within deferred consideration, as the balances are recorded at fair value and not estimated.
31 December 31 December 30 June
2020 2019 2020
GBPm GBPm GBPm
Current 3.7 10.0 4.0
Non-current 10.9 4.9 11.8
----------- ----------- -------
14.6 14.9 15.8
----------- ----------- -------
ST litigation relates specifically to our litigation only with Sexing Technologies, as described in note 5.
19. Deferred consideration
Contingent
deferred consideration Deferred consideration
GBPm GBPm Total
GBPm
Balance at 1 June 2019 - 6.2 6.2
Reclassified from provisions 4.5 - 4.5
Payment of consideration (0.6) (1.1) (1.7)
Release of unutilised contingent
consideration (0.4) - (0.4)
Effect of movement in exchange rates 0.1 - 0.1
----------------------- ------------------------ -------
Balance at 30 June 2020 3.6 5.1 8.7
Payment of consideration (2.0) (4.6) (6.6)
Release of unutilised contingent
consideration (0.4) - (0.4)
Effect of movement in exchange rates (0.2) (0.1) (0.3)
----------------------- ------------------------ -------
Balance at 31 December 2020 1.0 0.4 1.4
----------------------- ------------------------ -------
Current 0.6 0.4 1.0
Non-current 0.4 - 0.4
--- --- ---
Balance at 31 December 2020 1.0 0.4 1.4
--- --- ---
Current 2.8 4.7 7.5
Non-current 0.8 0.4 1.2
--- --- ---
Balance at 30 June 2020 3.6 5.1 8.7
--- --- ---
The balance at 31 December 2020 relates to the following transactions:
Contingent
Fiscal year deferred Deferred
of transaction consideration consideration Total
GBPm GBPm GBPm
De Novo Genetics LLC 2017 - 0.4 0.4
Hermitage Genetics DAC 2017 0.5 - 0.5
Dairy LLC (n/a Bovisync) 2019 0.4 - 0.4
Progenex S.L. 2019 0.1 - 0.1
-------------- --------------- -------
Balance at 31 December 2020 1.0 0.4 1.4
-------------- --------------- -------
GENUS PLC
RESPONSIBILITY STATEMENT
For the six months ended 31 December 2020
We confirm that to the best of our knowledge;
a) the Condensed Set of Financial Statements has been prepared in accordance with IAS 34;
b) the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of the principal risks and uncertainties for the remaining six months of the year); and
c) the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and charges therein).
Neither the Company nor the Directors accept any liability to any person in relation to the half-yearly financial report except to the extent that such liability could arise under English Law. Accordingly, any liability to a person who has demonstrated reliance on any untrue or misleading statement or omission shall be determined in accordance with section 90A of the Financial Services and Markets Act 2000.
By order of the Board
Chief Executive Chief Financial Officer Stephen Wilson Alison Henriksen
24 February 2021
Alternative Performance Measures ('APMs) - Glossary
The Group tracks a number of APMs in managing its business, which are not defined or specified under the requirements of IFRS because they exclude amounts that are included in, or include amounts that are excluded from, the most directly comparable measure calculated and presented in accordance with IFRS, or are calculated using financial measures that are not calculated in accordance with IFRS.
The Group believes that these APMs, which are not considered to be a substitute for or superior to IFRS measures, provide stakeholders with additional helpful information on the performance of the business. These APMs are consistent with how the business performance is planned and reported within the internal management reporting to the Board and executive leadership team. Some of these APMs are also used for the purpose of setting remuneration targets.
These APM should be viewed as supplemental to, but not as a substitute for, measures presented in the consolidated financial information relating to the Group, which are prepared in accordance with IFRS. The Group believes that these APMs are useful indicators of its performance. However, they may not be comparable to similarly-titled measures reported by other companies due to differences in the way they are calculated. The key APMs that the Group uses include:
Alternative Performance Measures Calculation methodology and closest Reasons why we believe the APMs are
equivalent IFRS measure (where useful
applicable)
Income statement measures
Adjusted operating profit exc JVs Adjusted operating profit is Allows the comparability of
operating profit with the net IAS 41 underlying financial performance by
valuation movement on biological excluding the impacts of exceptional
assets, amortisation of acquired items and is a performance indicator
intangible assets, share-based against which short-term and
payment expense and exceptional long-term incentive outcomes
items added back and excludes JV and for our senior executives are
associate results. measured.
Closest equivalent IFRS measure:- -- net IAS 41 valuation movements on
Operating profit* biological assets - these movements
See reconciliation below. can be materially
volatile and do not directly
correlate to the underlying trading
performance in the period.
Furthermore, the movement is non-cash
related and many assumptions used in
the valuation model
are based on projections rather than
current trading;
-- amortisation of acquired
intangible assets - excluding this
improves the comparability
between acquired and organically
grown operations, as the latter
cannot recognise internally
generated intangible assets.
Adjusting for amortisation provides a
more consistent basis for
comparison between the two;
-- share based payments - this
expense is considered to be
relatively volatile and not fully
reflective of the current period
trading, as the performance criteria
are based on EPS performance
over a three-year period and include
estimates of future performance; and
-- exceptional items - these are
items which due to either their size
or their nature are
excluded to improve the understanding
of the Group's underlying
performance.
-------------------------------------- --------------------------------------
Adjusted operating profit inc JVs Including adjusted operating profit
from JV and associate results.
See reconciliation below.
-------------------------------------- --------------------------------------
Adjusted operating profit inc JVs exc Including adjusted operating profit
gene editing costs from JV and associate results but
excluding gene editing
costs.
See reconciliation below.
--------------------------------------
Adjusted profit inc JVs before tax Adjusted operating profit inc JVs
less net finance costs
See reconciliation below.
-------------------------------------- --------------------------------------
Adjusted effective tax rate Total income tax charge for the Group Provides an underlying tax rate to
excluding the tax impact of adjusting allow comparability of underlying
items divided financial performance
the adjusted operating profit by excluding the impacts of net IAS
Closest equivalent IFRS measure:- 41 valuation movement on biological
Effective tax rate assets, amortisation
See reconciliation below. of acquired intangible assets,
share-based payment expense and
exceptional items.
-------------------------------------- --------------------------------------
Adjusted basic earnings per share Adjusted profit after tax divided by On a per share basis, this allows the
the weighted basic average number of comparability of underlying financial
shares performance by
Closest equivalent IFRS measure:- excluding the impacts of adjusting
Earnings per share items.
See calculation below.
-------------------------------------- --------------------------------------
Adjusted diluted earnings per share Underlying attributable profit
divided by the diluted weighted
average number of shares
Closest equivalent IFRS measure:-
Diluted earnings per share
See calculation below.
-------------------------------------- --------------------------------------
Adjusted earnings cover Adjusted earnings per share divided The board dividend policy targets the
by the expected dividend for the adjusted earning cover to be between
year. 2.5 - 3 times
See calculation below.
-------------------------------------- --------------------------------------
Adjusted EBITDA- calculated in This is adjusted operating profit, This APM is presented because it is
accordance with the definitions used adding back cash received from our used in calculating our ratio of net
in our financing facilities joint ventures, depreciation debt to EBITDA and
of property, plant & equipment, our interest cover which we report to
depreciation of the historical cost our banks to ensure compliance with
of biological assets, our bank covenants.
operational amortisation (i.e.
excluding amortisation on acquired
intangibles) and deducting
the amount attributable to minority
interest.
Closest equivalent IFRS measure:-
Operating profit*
See calculation & reconciliation
below.
-------------------------------------- --------------------------------------
Adjusted operating margin Adjusted operating profit (inc JV) Allows for the comparability of
divided by Revenue underlying financial performance by
excluding the impacts
of exceptional items.
-------------------------------------- --------------------------------------
Adjusted operating margin (exc JV) Adjusted operating profit (exc JV)
divided by Revenue
-------------------------------------- --------------------------------------
Constant currency basis The Group reports certain nancial The Group business operates in
measures, on both a reported and multiple worldwide and its trading
constant currency basis results when translated
and retranslates the current year's back into the groups functional
results at the average actual currency of GBP Sterling. This
exchange rates used in the measure eliminates the effects
previous nancial year. of exchange rate uctuations when
comparing the year-on-year reported
results.
-------------------------------------- --------------------------------------
Balance sheet measures
Net debt Net debt is gross debt, made up of This allows the Group to monitor its
unsecured bank loans and overdrafts levels of debt.
and obligations under
finance leases, with a deduction for
cash and cash equivalents.
See reconciliation below.
-------------------------------------- --------------------------------------
Net debt - calculated in accordance Net debt exc the impact of adopting This is a key metric that we report
with the definitions used in our IFRS 16 and adding back guarantees to our banks to ensure compliance
financing facilities and deferred purchase with our bank covenants.
arrangements.
See reconciliation below .
-------------------------------------- --------------------------------------
Cash flow measures
Cash conversion Cash generated by operations as a This is used to measure how much
percentage of adjusted operating operating cash flow we are generating
profit exc JVs. and how efficient we
See calculation below. are at converting our operating
profit into cash.
-------------------------------------- --------------------------------------
Free cashflow Cash generated by the Group before Shows the cash retained by the group
debt repayments, acquisitions and in the year.
investments, dividends
and proceeds from share issues
Closest equivalent IFRS measure:-
Net cashflow from operating
activities
See reconciliation below
-------------------------------------- --------------------------------------
Other measures
Ratio of net debt to Adjusted EBITDA The ratio of net debt, calculated in This APM is used as a measurement of
accordance with the definitions used our leverage and is also a key metric
in our financing that we report
facilities, is gross debt, made up of to our banks to ensure compliance
unsecured bank loans and overdrafts with our bank covenants.
and obligations
under finance leases, with a
deduction for cash and cash
equivalents and adding back amounts
related to guarantees and deferred
purchase arrangements, to EBITDA.
Closest equivalent IFRSs components
for the ratio:-
The equivalent IFRS components are
gross debt, cash and cash equivalents
and operating profit.
See calculation below
-------------------------------------- --------------------------------------
* Operating profit is not defined per IFRS. It is presented in the Group Income Statement and is shown as profit before tax, finance income/costs and share of post-tax profit of joint ventures and associates retained.
The tables below reconcile the closest equivalent IFRS measure to the APM or outline the calculation of the APM.
Income Statement Measures
Adjusted operating profit exc 31 December 31 December 30 June
JVs 2020 2019 2020
Adjusted operating profit inc
JVs
Adjusted operating profit inc
JVs and exc gene editing costs GBPm GBPm GBPm GBPm GBPm GBPm Reference
-------------------------------- ------- ----- ------- ------ ------- ------ --------------------------------
Operating Profit 35.5 28.1 47.6 Group Income Statement
Add back:
Net IAS 41 valuation movement
on biological assets (3.5) (13.3) (15.8) Group Income Statement
Amortisation of acquired
intangible assets 3.7 4.0 8.5 Group Income Statement
Share-based payment expense 4.3 2.8 5.8 Group Income Statement
Exceptional items 5.1 12.8 19.2 Group Income Statement
------- ------- -------
Adjusted operating profit exc
JVs 45.1 34.4 65.3 Group Income Statement
Less: amounts attributable to
non-controlling interest - (0.3) (0.6)
Operating profit from joint
ventures and associates 5.8 5.1 8.9 Group Income Statement
Tax on joint ventures and Note 12 - Equity accounted
associates 2.2 1.7 2.3 investees
Note 12 - Equity accounted
Net IAS 41 valuation movement (2.1) (1.5) 0.1 investees
------- ------- -------
Adjusted operating profit from
JVs 5.9 5.3 11.3
----- ------ ------
Adjusted operating profit inc
JVs 51.0 39.4 76.0
Gene editing costs 3.7 4.3 5.2 Note 4 - Segmental information
----- ------ ------
Adjusted operating profit inc
JVs and exc gene editing costs 54.7 43.7 81.2
-------------------------------- ------- ----- ------- ------ ------- ------ ----------------------------------
31 December 31 December 30 June
Adjusted profit inc JVs before tax 2020 2019 2020
Adjusted profit inc JVs after tax GBPm GBPm GBPm Reference
------------ ------------ --------
Adjusted operating profit inc JVs 51.0 39.4 76.0 See APM
Less net finance costs (2.6) (2.8) (5.0) Note 6 - Net Finance Costs
------------ ------------ --------
Adjusted profit inc JVs before tax 48.4 36.6 71.0
Adjusted tax (11.1) (8.4) (15.6) Note 14 - Earnings per share
------------ ------------ --------
Adjusted profit inc JVs after tax 37.3 28.2 55.4
------------------------------------ ------------ ------------ -------- -----------------------------
31 December 31 December 30 June
2020 2019 2020
Adjusted effective tax GBPm/rate GBPm % GBPm % GBPm % Reference
------------------------------------ ------ ------- ------ ------- ------ ------- -----------------------------
Adjusted effective tax GBPm/rate 8.4 21.7 6.3 20.7 15.6 22.0 Note 14 - Earnings per share
Exceptional items 1.0 19.6 3.2 24.7 (4.5) (23.4)
Share-based payment expense 0.8 18.9 (0.2) (6.6) (1.1) (19.0)
Amortisation of acquired intangible
assets 0.8 21.6 0.9 22.5 (1.8) (21.2)
Net IAS 41 valuation movement on
biological assets (1.0) (28.6) (3.0) (22.3) 4.7 29.7
Net IAS 41 valuation movement on
biological assets in JVs (1.1) (52.4) (0.5) (33.3) - -
Tax on share of profits from joint
ventures and associates 2.2 100.0 1.7 100.0 - -
------ ------- ------ ------- ------ -------
Effective tax GBPm/rate 11.1 22.9 8.4 23.0 12.9 24.0 Note 7 - Income tax expense
------------------------------------ ------ ------- ------ ------- ------ ------- -----------------------------
31 December 31 December 30 June
Adjusted Basic Earnings per share 2020 2019 2020 Reference
------------ ------------ --------
Adjusted profit inc JVs after tax (GBPm) 37.3 28.2 55.4 See APM
Weighted average number of ordinary shares (m) 65.056 64.868 64.908 Note 14 - Earnings per share
Adjusted Earnings per share (pence) 57.3 43.5 85.4
------------------------------------------------ ------------ ------------ -------- -----------------------------
31 December 31 December 30 June
Adjusted Diluted Earnings per share 2020 2019 2020 Reference
------------ ------------ --------
Adjusted profit inc JVs after tax (GBPm) 37.3 28.2 55.4 See APM
Weighted average number of diluted ordinary
shares (m) 65.610 65.353 65.427 Note 14 - Earnings per share
Diluted adjusted Earnings per share (pence) 56.9 43.2 84.7
------------------------------------------------- ------------ ------------ -------- -----------------------------
31 December 31 December 30 June
2020 2019 2020 Reference
Rolling 12 month Adjusted Earnings cover Pence Times Pence Times Pence Times
----------------------------------------------- ------- ------ ------- ------ ------ ------ -------------------
Adjusted Earnings per share (pence) 57.3 43.5 85.4 See APM
Add: Prior June Adjusted Earnings per share
(pence) 85.4 73.2 N/a See APM
Deduct: Prior Interim Adjusted Earnings per
share (pence) (43.5) (35.8) N/a See APM
------- ------- ------
Rolling 12 month adjusted Earnings per share 99.2 80.9 85.4
Final dividend for the year ended 30 June 2019 18.8 Note 8 - Dividends
Interim dividend for the year end 30 June 2020 9.4 9.4 Note 8 - Dividends
Final dividend for the year ended 30 June 2020 19.7 19.7 Note 8 - Dividends
Interim dividend for the year end 30 June 2021 10.3 Note 8 - Dividends
------- ------- ------
Rolling 12-month dividend 30.0 28.2 29.1
Rolling 12 month Adjusted Earnings cover 3.3 2.9 2.9
----------------------------------------------- ------- ------ ------- ------ ------ ------ -------------------
Adjusted EBITDA - as calculated 31 December 31 December 30 June
under our financing 2020 2019 2020
facilities GBPm GBPm GBPm GBPm GBPm GBPm Reference
---------------------------------- ------- ----- ------- ----- ------- ----- ----------------------------------
Operating Profit 35.5 28.1 47.6 Group Income Statement
Add back:
Net IAS 41 valuation movement on
biological assets (3.5) (13.3) (15.8) Group Income Statement
Amortisation of acquired
intangible assets 3.7 4.0 8.5 Group Income Statement
Share-based payment expense 4.3 2.8 5.8 Group Income Statement
Exceptional items 5.1 12.8 19.2 Group Income Statement
------- ------- -------
Adjusted operating profit exc JVs 45.1 34.4 65.3 Group Income Statement
Adjust for:
Cash received from JVs (dividend
and loan repayment) - 1.4 3.7 Group Statement of Cash Flows
Depreciation:- Property, plant & Note 11 - Property, Plant &
equipment owned assets 6.6 6.0 13.1 Equipment
Depreciation:- historical cost of
biological assets 5.2 5.0 11.0 No direct reference
Amortisation and impairment
(excluding separately identified
acquired intangible assets) 2.4 2.4 5.1 Note 9 - Intangible Assets
Less amounts attributable to
non-controlling interest - (0.3) (0.6) Group Income Statement
------- ------- -------
Adjusted EBITDA - as calculated
under our financing facilities 59.3 48.9 97.6
---------------------------------- ------- ----- ------- ----- ------- ----- ----------------------------------
31 December 31 December 30 June
2020 2019 2020
Rolling 12 month Adjusted EBITDA -
as calculated under our financing facilities GBPm GBPm GBPm GBPm GBPm GBPm Reference
------------------------------------------------- ------- ------ ------- ----- ----- ----- ----------
Adjusted EBITDA
- as calculated under our financing facilities 59.3 48.9 97.6 See APM
Add: Prior June Adjusted EBITDA 97.6 88.3 N/a See APM
Deduct: Prior Interim Adjusted EBITDA (48.9) (40.7) N/a See APM
------- ------- -----
Rolling 12 month Adjusted EBITDA 108.0 96.5 97.6
------------------------------------------------- ------- ------ ------- ----- ----- ----- ----------
Balance Sheet Measures
Net Debt
Net debt as calculated under our financing 31 December 31 December 30 June
facilities 2020 2019 2020 Reference
--------------- --------------- ---------------
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------------------- ------ ------- ------ ------- ------ ------- ---------------------
Current unsecured bank loans and overdrafts 9.8 8.7 9.2 Group Balance Sheet
Non-current unsecured bank loans and
overdrafts 105.0 100.4 103.6 Group Balance Sheet
------ ------ ------
Total unsecured bank loans and overdrafts 114.8 109.1 112.8
Current obligations under finance leases 9.0 7.5 10.0 Group Balance Sheet
Non-current obligations under finance
leases 18.6 21.7 21.1 Group Balance Sheet
------ ------ ------
Total obligations under finance leases 27.6 29.2 31.1
Total debt financing 142.4 138.3 143.9 Analysis of Net Debt
Deduct:-
Cash and cash equivalents (50.2) (31.1) (41.3) Group Balance Sheet
------- ------- -------
Net Debt 92.2 107.2 102.6
Deduct:-
Impact of IFRS 16 adoption* - (23.4) (24.7) No direct reference
Lower of obligations under finance leases
or GBP30m* (27.6) N/a N/a Group Balance Sheet
Add back:-
Guarantees 19.6 4.9 5.9 No direct reference
Deferred purchase arrangements 1.2 1.3 0.2 No direct reference
------- ------- -------
Net Debt - as calculated under our
financing facilities 85.4 90.0 84.0
-------------------------------------------- ------ ------- ------ ------- ------ ------- ---------------------
*Following Genus entering a new credit facility the definition of net debt was revised alongside the adoption of IFRS 16 'Leases'
Cashflow Measures
31 December 31 December 30 June
2020 2019 2020
Cash conversion GBPm GBPm GBPm GBPm GBPm GBPm Reference
---------------------------------- ------- ----- ------- ----- ------- ----- ----------------------------------
Note 15 - Notes to the cash flow
Cash generated by operations 45.0 32.9 82.9 statement
Operating Profit 35.5 28.1 47.6 Group Income Statement
Add back:
Net IAS 41 valuation movement on
biological assets (3.5) (13.3) (15.8) Group Income Statement
Amortisation of acquired
intangible assets 3.7 4.0 8.5 Group Income Statement
Share-based payment expense 4.3 2.8 5.8 Group Income Statement
Exceptional items 5.1 12.8 19.2 Group Income Statement
------- ------- -------
Adjusted operating profit exc JVs 45.1 34.4 65.3 Group Income Statement
Cash Conversion (%) 100% 96% 127%
---------------------------------- ------- ----- ------- ----- ------- ----- ----------------------------------
31 December 31 December 30 June
2020 2019 2020
Free cashflow GBPm GBPm GBPm Reference
------------ ------------ --------
Cash generated by operations 45.0 32.9 82.9 Note 15 - Notes to cashflow statement
Interest and tax paid (6.9) (8.8) (17.1) Note 15 - Notes to cashflow statement
Capital expenditure (11.9) (17.0) (35.4) Group Statement of Cashflows
Cash received from JV (dividends and
loan repayment) - 1.4 3.7 Group Statement of Cashflows
Other 0.4 2.0 1.1 Group Statement of Cashflows
------------ --------
Free cashflow 26.6 10.5 35.2
---------------------------------------- ------------ ------------ -------- --------------------------------------
Other Measures
31 December 31 December 30 June
2020 2019 2020
Ratio of net debt to Adjusted EBITDA GBPm Times GBPm Times GBPm Times Reference
----------------------------------------------- ------ ------ ------ ------ ----- ------ ----------
Net Debt -
as calculated under our financing facilities 85.4 90.0 84.0 See APM
Rolling 12 month Adjusted EBITDA -
as calculated under our financing facilities 108.0 96.5 97.6 See APM
Ratio of net debt to Adjusted EBITDA 0.8 0.9 0.9
----------------------------------------------- ------ ------ ------ ------ ----- ------ ----------
[1] Adjusted results are the Alternative Performance Measures ('APMs') used by the Board to monitor underlying performance at a Group and operating segment level, which are applied consistently throughout. These APMs should be considered in addition to, and not as a substitute for or as superior to statutory measures. For more information on APMs, see APM Glossary.
[2] All growth/decline rates quoted are in constant currency unless otherwise stated. Constant currency percentage movements are calculated by restating the results for the six months ended 31 December 2020 at the average exchange rates applied to adjusted operating profit for the year ended 30 June 2020.
[3] n/m = not meaningful
[4] Calculated on a rolling 12 month basis
[5] Excluding profit attributable to non-controlling interest
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