Genus plc

Okay, good morning everybody. It is nine o'clock, so let's get started. Welcome to our presentation of the Genus FY26 results. My name is Juergen Koke and I am Genus CEO. I'm joined by Andy Russell, Genus CFO, and together we'll be taking you through our excellent results for FY26. This is the usual disclaimer. I'd encourage you to read it separately. Let me start with a brief overview of Genus and the key highlights from the year. I'll then hand over to Andy, who will take you through the financial results in more detail, before I return to take you through our strategic progress. Before turning to the results, this is a slide as a brief reminder of what Genus does and the value we create for our customers and for society. The key takeaway is that our products improve farmer productivity and profitability while simultaneously reducing the environmental impact of animal protein production. Turning now to the key highlights, FY26 was a year of excellent progress across the group. From a financial point of view, adjusted profit before tax and adjusted earnings per share both increased by 35%. We also generated £62 million of free cash flow, substantially ahead of prior year. In relation to our novel PRP technology, in the year we secured approvals or favorable determinations in Argentina, Canada, Uruguay and Peru. We are also now beginning the process of commercializing PRP in selected Latin American countries. We also successfully formed our Porcine joint venture in China. This platform, backed by a large state-owned entity, accelerates PIC's long-term growth opportunity in the world's largest porcine market, while also crystallizing significant value for genus shareholders. Our balance sheet has been materially strengthened through our strong free cash flow and from the proceeds of our China JV. In line with our capital allocation framework, we are therefore announcing a 60 million share buyback, which we expect to be completed in FY27. The buyback reflects the group's strong balance sheet, the strong sustainable cash generation, and the board's confidence in the future growth prospects of the business. I'm also pleased to report that the board is recommending a 10% increase in the full year dividend. Let me now hand over to Andy to take you through the financial results.

Thanks, Jürgen, and good morning, everyone. I'll take you through the group's financial performance. The main drivers within PIC and ABS are cash flow and balance sheet and the implications of the PIC China joint venture for future comparability. starting with the headline group financials fy26 was a very strong year revenue was 658.1 million two percent lower in actual currency primarily reflecting the deconsolidation of pic china following formation of the joint venture adjusted profit for tax increased by 35 percent to 100.2 million and adjusted earnings per share also increased by 35% to 110.3 pence. These figures include the 5.6 million milestone receipt from BCA that we recognised in the first half. Free cash flow increased to 62 million, representing cash conversion of 94%. This reflects strong underlying trading, increased dividends from joint ventures and lower exceptional cash payments. Our balance sheet also strengthened substantially as a result of our very strong free cash flow and proceeds from the JV formation. Leverage reduced from 1.5 times at June 2025 to 0.4 times at June 2026. Our balance sheet strength gives us strategic optionality and as Jürgen referenced earlier, having reviewed our capital allocation options, we've decided to return 60 million of capital via a share buyback program. This is in addition to 10% growth in our full year dividend. The share buyback program will commence immediately and we expect it to complete in the second half of FY27. finally return on invested capital also improved materially reflecting higher profit and disciplined capital management moving to the next slide the group result was supported by continued momentum in both business units in pic sorry we here we go sorry we've got a In PIC, adjusted royalty revenue grew by 5% in constant currency. Adjusted royalty revenue is defined as PIC's royalty revenue plus PIC's share of joint venture royalty revenues. It's a metric that better illustrates PIC's performance because joint venture royalty revenue is not otherwise consolidated. Given the increasing size and significance of PIC's joint ventures, we believe this is an important metric with which to consider group performance. As you can see, every PIC region delivered growth, with particularly strong contributions from Southeast Asia and our joint ventures. PIC adjusted operating profit increased by 17% to 130.8 million including the 5.6 million BCA milestone and the adjusted operating margin increased by 330 basis points to 30.9%. In ABS sex volumes increased by 2% to 8.8 million units adjusted operating profit increased by 17% to 22.9 million and the margin improved by 130 basis points to 7.5% driven principally by benefits from the value acceleration program. Moving to Group Adjusted Operating Profit, the year-on-year growth was broad-based. Group Adjusted Operating Profit, including joint ventures, increased by 25% to $116 million. The largest contribution came from PIC, including strong performance in China and Latin America, as well as the $5.6 million BCA milestone compared with a $3.7 million milestone reported last year. ABS also delivered good profit growth, predominantly through VAT benefits. Group adjusted operating margin increased by 380 basis points to 17.6%. Excluding the BCA milestones in FY25 and FY26, the margin increased by 350 basis points to 16.8%, demonstrating the strength of the underlying improvement. Looking now at PIC in more detail, adjusted operating profit increased by 17% to £130.8 million and the margin increased to 30.9%. Excluding the BCA milestones, in both periods, profit grew by 16% and the margin was 29.3%. Latin America performed very strongly supported by high breeding stock sales while Southeast Asia and China also delivered good growth. This was partially offset by customer disease challenges in North America during the second half. Excluding the milestones of 5.6 million FY26 and 3.7 million last year, underlying PRP costs increased by 1.5 million as we continue to invest ahead of commercialisation. Global production also benefited by around 5 million from non-recurring favourable input costs in the first half and a farm sale in the second half. Foreign exchange also provided a 1.3 million tailwind in the year. Given the increasing size and significance of PIC's joint ventures, we wanted to provide additional colour on the performance of these JVs. On this slide you'll see the performance of Agro Series PIC and PIC China laid out. We have a 49% equity share in both. The top row shows the performance of 100% of each joint venture entity. AgroSeries had an extremely strong year, with adjusted operating profit increasing by 56% to $38.9 million, partially driven by strong breeding stock sales. Genus's share of AgroSeries' profit increased to $19.1 million. China also performed strongly. For the full entity, volumes increased by 71%, royalty revenue increased by 52%, and adjusted operating profit increased by 81% to $15.2 million. genus's reported share of pic china adjusted operating profit was 12.2 million reflecting seven months of full ownership followed by five months at our 49 joint venture interest these results demonstrate the strength of our partnership in these two incredibly important porcine markets Turning now to ABS, adjusted operating profit increased by 17% to 22.9 million, and the margin improved from 6.3% to 7.5%. VAP continued to be the principal driver of the improvement, We realised £9 million of benefit in FY26, comprising £2 million from the annualisation of Phase 2 and £7 million of in-year Phase 3 benefits. Phase 3 exited the year at the targeted £9 million annualised run rate. Our sex business continued to grow, although this was offset by challenging dairy-related genetics volumes amidst weaker market conditions. Bovine product development costs increased by 3.6 million, as expected, principally due to higher depreciation associated with prior period investments. We're pleased with the continued progress in ABS and remain focused on achieving a double digit margin over the medium term. Research and product development remains central to Genus's competitive advantage and long term growth. Looking at the top left chart, total research and product development spend, excluding the BCA milestone, was £73 million in FY26, equivalent to approximately 11% of group revenue. The year-on-year decrease primarily reflected favourable commodity effects within porcine product development and planned lower research expenditure. Moving to the bottom left, lower research expenditure in FY26 represents a base level and we expect research costs to grow in FY27, albeit remaining below 3% of group revenue. With poor sign, lower product development spend in FY26 was primarily due to the commodity favourability. Underlying PRP investment increased after adjusting for the BCA milestone receipt and we expect underlying PRP costs to increase further in FY27 as commercialisation activity builds. Bovine product development increased, driven by higher depreciation on earlier investments and the impact of the de novo minority acquisition. Moving now to our statutory income statement. As a reminder, we consistently measure and report adjusted results as we think these give a better view of the group's underlying performance. Our statutory results are affected by non-cash items, in particular IAS 41, which can give a misleading picture of the group's underlying performance. The net IAS41 movement was a £12.8 million increase, primarily driven by porcine, compared with a £13.3 million decrease in the prior year. Exceptional expenses reduced to £5.8 million from £11.4 million last year, as expected. Within other gains and losses is a 204 million gain arising on the deconsolidation of PIC China following formation of the joint venture with BCA. This is the main reason why statutory profit before tax increased to 310.5 million. Net finance costs reduced to £15.8 million, reflecting lower borrowing and lower average interest rates. Lastly, our adjusted tax rate was broadly stable at 27.2% and you'll see from our technical guidance in the appendix that we expect a broadly similar tax rate in FY27 as well. Turning now to cash flow, we generated 62 million of free cash flow in FY26 compared with 40.9 million last year. We saw strong positive contributions from higher adjusted EBITDA and a 10 million increase in dividends from joint ventures. The substantial increase in JV dividends was driven by a larger than usual catch-up dividend from AgroSeries. The year-on-year working capital movement was negative, largely because FY25 benefited from a very strong improvement in bovine inventories and receivables. We're pleased to have held on to the majority of these gains, but the year on year is therefore a negative. I'm pleased that exceptional cash payments were lower, partly offset in the working capital movement. Cash conversion remained strong at 94%. Looking ahead, we expect FY27 free cash flow to also be strong, but lower than FY26, principally due to the China joint venture formation and because of a modest increase in net capital expenditure. Strong free cash flow generation and proceeds from the China JV formation have significantly strengthened the group's financial position. Net debt reduced to 71.8 million at 30 June 2026 and leverage fell from 1.5 times at the start of the fiscal year to 0.4 times at year end. Return on adjusted invested capital improved to 18.4% compared with a restated 15% in FY25. The prior year figure has been restated to remove biological asset fair value uplifts in joint ventures, providing a more consistent measure of underlying returns. The Board is proposing a full year dividend of £35.2 per share, an increase of 10% and a return to sustainable growth. This represents a payout of 32% of adjusted earnings per share and is consistent with our progressive dividend policy. Moving to the next slide, we wanted to take you through the normalization of FY26, given the substantial number of moving parts in the year. Starting with our reported FY26 results, we've laid out the impact of firstly removing PIC China from the full year, which reduces adjusted PBT by 12.2 million. Secondly, adding back a full year of 49% of PoC China, which increases adjusted PVT by 7.5 million. Next we remove the BCA milestone of 5.6 million and lastly we adjust for the impact of the JV proceeds and hedging which increases PBT by a further 5.1 million. This gets us to a pro forma FY26 PBT of 95 million compared to our reported 100.2 million. We've then isolated the 4.7 million of one-off production benefits in PIC relating to non-recurring input cost benefits of 2.8 million and a farm sale of 1.9 million. This then gets us to a normalised FY26 PBT of 90.3 million, which equates to 24% growth over the FY25 equivalent of 72.8 million. We believe 90.3 million is the appropriate base to consider as we look ahead to FY27. For FY27 itself, we then flagged the key considerations, the annualisation of ABS VAP Phase 3 benefits, higher bovine product development costs, higher porcine product development and PRP expenditure, and the benefit of lower average net debt. Let me now lastly turn to our capital allocation framework and deployment during FY26. We continue to target through the cycle leverage of between 1 and 2 times net debt to EBITDA. At 0.4 times, the year end position is below that range, giving us significant strategic flexibility. Our first priority remains investment in compelling organic growth opportunities. In FY26 we invested approximately £76 million in research and development. Our second priority is a progressive ordinary dividend. The proposed full year dividend of £35.2 per share represents 10% growth and a 32% payout ratio. Third, we will continue to assess inorganic opportunities against strict financial and strategic criteria. We are monitoring the market, but will remain disciplined. Finally, where capital is surplus to these priorities, we will return it to shareholders. In line with that framework, we're announcing a 60 million share buyback which we expect to complete during FY27. The buyback maintains a strong balance sheet whilst delivering an additional return to shareholders and reflects the Board's confidence in the future growth prospects and cash generation of the business. Post the buyback, I'd expect that with another year of good free cash generation, our leverage by the end of FY27 will be around the bottom end of our targeted range of one to two times. With that, I will hand back to Jürgen to discuss our strategic progress and the outlook.

Thank you, Andy. Let me now take you through the strategic progress we made during FY26. Firstly, our three strategic priorities remain clear and unchanged. Our first priority is continued growth in porcine and accelerating PIC's long-term growth in China. During FY26, PIC delivered solid royalty revenue growth and strong profit growth. As for China, as Andy highlighted, we achieved 52% royalty revenue growth in the largest porcine market in the world. And of course, we successfully formed our strategic joint venture there. Our second priority is successfully commercializing PRP and generating attractive returns from our R&D investments. Many of you will know that PRP is our game-changing new technology. And during the year, we secured further approvals in the Americas. with the commercialization process now beginning in selected Latin American markets. Our third priority is driving greater value from bovine. VEP phase three has achieved its targets and VEP overall has transformed ABS into a leaner and more efficient business. As we transition to life after VEP, our ambition remains achieving double digit operating profit margins over the medium term. Starting with our first priority, royalty revenue is a fundamental driver of the earnings quality as well as the resilience of our business. Our royalty model aligns PIC's economics with the value delivered to customers. It incentivizes customers to update genetics more frequently, deepens long-term relationships, and generates recurring revenue that is relatively independent of commodity price movements. Adjusted royalty revenue, including our 49% share of the joint ventures, reached 197 million pounds in the year, representing a four-year CAGR of about 6%. The four-year compound growth rates shown on the slides are healthy across the portfolio. 4% in North America, 8% in Latin America, 6% in EMEA, 12% in Asia and 12% across our joint ventures. This broad-based growth demonstrates both the strength of our genetics and highlights the opportunity in both developing as well as in mature markets. Growing royalty revenue remains one of our most important long-term value drivers.

Turning then to China.

PIC delivered strong growth in FY26 despite declining pork prices and weak producer profitability. Royalty revenue increased materially, as I mentioned before, while strong breeding stock activity supported non-royalty revenue growth. We also had a positive and collaborative start to our joint venture relationship with BCA. Together, we are building a strong platform for growth and we are continuing to win new royalty customers. We estimate that PIC's market share increased from 3.4% in FY25 to 5.4% in FY26. This demonstrates that customers continue to recognize the economic value of our genetics, even in a challenging market. We remain very excited about the long-term opportunity. China is the world's largest porcine market, and our current share leaves substantial room for growth. Moving to our second priority, PRP. FY26 was another year of meaningful regulatory progress for the PRRS-resistant pig. Following earlier determinations in Colombia, Brazil, the Dominican Republic and US FDA approval, we secured the green light in Argentina, Canada, Uruguay and Peru. This expands the potential commercial footprint for PRP and represents important validation of the technology and our regulatory approach. The Canadian approval is an important step towards North American commercialization. As you all know, PRP is the first mainstream gene-edited livestock product. And as such, regulatory timelines are difficult to predict. Mexico, Japan, and China remain in process and we continue to engage constructively with the relevant authorities. Importantly, I'd like to flag that the commercialization process is beginning in select selected Latin American countries. Our goal is to establish operational and customer foundations for long term adoption. Importantly, this will provide real world experience and data to support commercialization elsewhere in the world. Turning now to ABS. The Value Acceleration Program has delivered substantial progress since it began in FY24. Phases one and two focused on creating unified global leadership, improved pricing governance, selective globalization, and better product allocation and mix management. Together, they delivered approximately 21 million pounds of adjusted operating profit benefit. Phase 3 has focused on reshaping the go-to-market model and ensuring we better recover our service cost. VEP3 delivered 7 million of benefit in FY26 and achieved an annualized run rate of 9 million pounds. We are now targeting the VEP program to complete during the first half of FY27. However, the focus on productivity established through VAP will continue and is now part of the way ABS operates rather than a standalone transformation program. As we are wrapping up VAP, I wanted to highlight the strength of the ABS business. ABS is a leading bovine genetics player. It has deep customer relationships, leading dairy genetics, best in class beef genetics, and is one of only two industry players with a commercial sexing technology. Building on these strengths, we are pursuing two primary strategies to achieve our double digit operating margin goal. First, we will drive our top line through commercial excellence. building a higher performing commercial organization creating leverage through repeatable processes and systems resulting in profitable volume growth second we will drive our margin through operational excellence expanding gross margins sustainably by embedding lean principles and continuous improvement and using intelligent automation and AI enabled process improvements to enhance customer value and eliminate waste. We have recruited two experienced new leaders from outside of our industry to lead commercial and to lead operational excellence and drive these broad based value creation initiatives throughout ABS. We remain excited by the opportunity ahead and committed to achieving a double-digit ABS operating margin over the medium term. Let me now conclude with our outlook for FY27. First, FY26 was a year of strong profit and cash generation combined with significant strategic progress. We formed a strategic joint venture in China, secured further PRP regulatory milestones, and are ready to begin the commercialization process in certain Latin American markets. We are returning surplus capital to shareholders via 60 million share buyback, which reflects our strong balance sheet, sustainable cash flow, and confidence in the future prospects of the business. As we look to FY27, we expect resilient underlying profit growth, despite cyclical weakness in a number of agricultural markets. At the group level, we expect underlying adjusted PBT in constant currency to be moderately higher year on year, in line with consensus expectations. For PIC, we expect moderate adjusted operating profit growth from a normalized base as Andy outlined earlier. For ABS, we also expect moderate adjusted operating profit growth as VAP benefits annualize and continuous improvement initiatives progress. Group PBT is expected to be second half weighted, noting that the first half of last year included the 5.6 million BCA milestone. and fully consolidated PIC China. Lastly, we also expect FY27 to represent another year of strong free cash flow generation. With that, let me leave you with the high-level investment case for Genus. First, our end markets are growing and resilient, supported by increasing global demand for animal protein. Second, we have strong market positions and leading products. Third, there is significant wide space, even PIC, the clear global leader in porcine genetics, has less than 20% global market share. Fourth, we have two potentially transformative growth opportunities in PIC China and with the PRRS-resistant pig. And finally, our competitive position is protected by a highly defensible intellectual property portfolio. Together, we believe these strengths support resilient growth, attractive returns, and significant long-term value creation. With that, let me thank you for your attention.