PRELIMINARY RESULTS Investor Presentation Year ended 30 June 2017
Disclaimer This presentation has been prepared by Genus ( Genus or the Company ) and has not been independently verified. Genus is solely responsible for the contents of this document and has taken all reasonable care to ensure that the facts stated herein are true and accurate in all material respects and that there are no material facts the omission of which would make misleading any statement in this document whether of fact or opinion. While the information contained in this presentation has been provided in good faith, neither the Company, nor any of their advisers, representatives, officers, agents or employees makes any representation, warranty or undertaking, express or implied, in respect of this presentation and no responsibility or liability is accepted by any of them as to the accuracy, completeness or reasonableness of the information provided. The issue of this presentation to the recipient does not create any obligation on the part of the issuer to provide the recipient access to any additional information or to update this presentation or any additional information or to correct any inaccuracies in this presentation or any additional information which may become apparent. The recipient should conduct its own investigation into the Company and of any other information contained in the presentation. This presentation is for information purposes only and does not constitute, and shall not be interpreted as, either an offer for sale, prospectus, invitation to subscribe for shares or debentures in the Company, or as the basis of a contract. This presentation has been prepared on the basis that it will only be made available to investment professionals and is thereby exempt from the provisions of s21 of the Financial Services and Markets Act 2000. 2
Overview Bob Lawson Chairman 3
Strong strategic progress and solid financial results > Results in line with expectations Profit before tax up 13% (1% lower in constant currency) Strong free cash flow Earnings per share 69.4p, up 14% (unchanged in constant currency) > Strong strategic progress Hermitage agreement and growing PIC royalties Gene editing progress Sexcel launched > Dividend increased 10% to 23.6p per share 4
Financial results Stephen Wilson Finance Director 5
Results Year ended 30 June 2017 % Change 2017 2016 Actual m m Currency Constant Currency Revenue 459.1 388.3 18% 6% Adjusted operating profit 55.1 49.3 12% (1)% Attributable to non-controlling interest (2.1) (1.4) (50)% (19)% Adjusted share of JV profits 7.1 6.4 11% (10)% Adjusted operating profit (inc JV) 60.1 54.3 11% (2)% Finance costs (3.7) (4.6) 20% 18% Adjusted profit before tax 56.4 49.7 13% (1)% Adjusted earnings per share (pence) 69.4 60.7 14% - Dividend per share (pence) 23.6 21.4 10% 6
Volume growth Year ended 30 June 2017 Porcine Volume growth (%) 10% Dairy & Beef Volume growth (%) 6% 8% 6% 4% 2% 5% 9% 6% 4% 4% 4% 2% 0% (2%) (4%) 6% 5% 5% 1% 2013 2014 2015 2016 2017 (6%) 0% 2013 2014 2015 2016 2017 (6%) 7
Adjusted operating profit by business unit Year ended 30 June 2017 2017 m 2016 m Actual Currency % Change Constant Currency Genus PIC 94.8 78.0 22% 7% Genus ABS 21.3 22.0 (3)% (13)% Operating units 116.1 100.0 16% 2% Research and Development (43.8) (34.4) (27)% (12)% Central costs (12.2) (11.3) (8)% 5% Adjusted operating profit inc JV 60.1 54.3 11% (2)% > Asia now included in global PIC and ABS business units 8
Genus PIC Year ended 30 June 2017 % Change 2017 m 2016 m Actual Currency Constant Currency* Revenue 249.5 207.5 20% 7% Adjusted operating profit exc JV 87.7 71.7 22% 8% Adjusted operating profit inc JV 94.8 78.0 22% 7% Adjusted operating margin exc JV 35.2% 34.6% 0.6pts 0.3pts > Continued growth in profit up 7% and royalty revenues up 5% Volumes up 4%, with 77% under royalty (+1 pt, +3 pts excluding China) > Overall volumes unchanged in North America and Latin America Significant new stockings in North America support future royalty growth Latin America; strong profit performance in Mexico (+11%) offsets impact of instability in Venezuela > Europe profit up 26% from royalty growth and business transformation Hermitage initial contribution encouraging > Asia volumes up 20% and profit up 60% with growth in all countries Strong product performance in buoyant market helped China to 80%+ profit growth * All % changes are in constant currency unless otherwise stated 9
Genus ABS Year ended 30 June 2017 % Change 2017 m 2016 m Actual Currency Constant Currency* Revenue 195.9 172.8 13% 2% Adjusted operating profit 22.3 23.3 (4)% (15)% Adjusted operating profit less NCI** 21.3 22.0 (3)% (13)% Adjusted operating margin 11.4% 13.5% (2.1)pts (2.1)pts > ABS volumes up 1% with stronger second-half performance (+8%) in improving markets Strong sexed volume growth of 10%, beef volumes 3% lower in challenging markets > Europe volumes up 6% and profit up 8% benefiting from actions taken in 2016 and 2017 > Latin America profit up 41% with continued action to increase prices (+11%) Volumes 2% lower primarily due to weak beef markets > North America profit down 12%, including impact from weaker beef markets Focus on improving commercial execution in large dairy enterprises > Double digit volume growth in IVB driven by US; strong first year in Mexico Remaining 49% shares of IVB acquired ahead of schedule * All % changes are in constant currency unless otherwise stated ** NCI = Non-controlling Interest 10
Genus R&D Year ended 30 June 2017 2017 m 2016 m Actual Currency % Change Constant Currency* Gene editing 3.5 0.9 289% 251% Other research 8.4 7.1 18% 2% Porcine product development 16.6 13.5 23% 7% Bovine product development 15.3 12.9 19% 6% Research and Development inc NCI** 43.8 34.4 27% 12% > Gene editing investment of 3.5m as planned PRRSv programme platform capability build; pregnancies for first generation of gene edited pigs created > Other research up 2%; continued activities in genomic evaluation, core informatics and IP > Porcine product development up 7% Increased spend from lower by-product market prices and increased animal volumes > Bovine product development up 6% GSS manufacturing and launch preparation costs in excess of 2m partially offset by efficiencies in bull development costs through De Novo and other initiatives * All % changes are in constant currency unless otherwise stated ** NCI = Non-controlling Interest 11
Statutory income statement Year ended 30 June 2017 2017 2016 Variance m m m Adjusted operating profit exc JV 55.1 49.3 5.8 Net IAS 41 valuation movement (1.1) (17.1) 16.0 Amortisation of intangibles (8.7) (6.1) (2.6) Share-based payments (4.6) (3.8) (0.8) Exceptional items - Pension related 5.7 44.2 (38.5) - Litigation (5.3) (6.9) 1.6 - Acquisition and integration (0.6) (0.2) (0.4) - Other (including restructuring) (2.3) (0.8) (1.5) Operating profit 38.2 58.6 (20.4) - Share of post-tax profit of JVs 6.2 6.9 (0.7) - Net finance costs (3.7) (4.6) 0.9 Profit before tax 40.7 60.9 (20.2) 12
Cash flow Year ended 30 June 2017 2017 2016 Variance m m m Adjusted operating profit exc JV 55.1 49.3 5.8 Depreciation and amortisation 11.5 8.4 3.1 Adjusted EBITDA 66.6 57.7 8.9 Working capital (1.1) 1.1 (2.2) Biological assets (5.7) (3.8) (1.9) Pension deficit repair, exceptionals and other (13.5) (11.7) (1.8) Net cash inflow from operating activities 46.3 43.3 3.0 Cash conversion % 84% 88% (4)Pts Interest and tax paid (11.7) (13.3) 1.6 Capital expenditure (18.9) (18.6) (0.3) Cash received from joint ventures 8.3 3.4 4.9 Other 1.4 0.9 0.5 Free cash flow 25.4 15.7 9.7 Acquisitions and investments (30.0) (7.2) (22.8) Dividends (13.5) (12.2) (1.3) Net cash flow (18.1) (3.7) (14.4) Net Debt 111.6 89.7 21.9 13
Strong financial position Year ended 30 June 2017 2017 2016 m m Owners equity 399.3 374.5 Net Debt 111.6 89.7 Key Financial ratios: - Return on adjusted capital 19.9% 19.1% - Gearing 28% 24% - Net debt to EBITDA 1.5x 1.4x - Interest cover 37x 35x - Dividend cover 2.9x 2.8x > Dividend up 10% > 74m headroom on bank facilities 14
Business update Karim Bitar Chief Executive 15
Strong strategic progress > ABS Leveraging De Novo, launching Sexcel, growing IVB Improving commercial execution Launching NuEra proprietary beef genetics > PIC Growing in key markets and segments, particularly in China Hermitage integration and partnership on track > R&D Continuing to strengthen proprietary technology platform 16
Strengthening competitive position and execution focus Dairy Strategic progress Leveraging competitive strengths Managing performance More focused execution under new leadership Making own genetics Sexing with proprietary technology NORTH AMERICA Implementing turnaround Growing IVB USA EMEA Improved volume and performance Growing product offering Producing embryos with our sexed genetics LATIN AMERICA Improved value capture Strong start for IVB Mexico Geographical split indicative of internal segmentation of territories not all countries shown are served by ABS ASIA China: Growing direct business India: Producing elite genetics, strengthening indirect channel 17
Genus ABS launches Sexcel September 1 st, 2017 18
Sexcel launch customer field trial experience Dairy Bottom line, it gets heifers pregnant. No matter what you re dealing with. No matter what time of year you re breeding US customer I am very impressed with my experience with Sexcel we have seen an 8% increase in conception rates UK customer ABS genetics in Sexcel gives me confidence in the future animals that will enter into my herd Italian customer 19
Strategic progress in India Dairy ABS STRYKER #1 Holstein bull in India ABS TYSON #1 Jersey bull in India ABS REDHU #1 Murrah bull in India Producing India s leading temperate and indigenous genetics locally Sexing temperate and indigenous genetics locally with our proprietary sexing technology 20
Strong IVB performance Dairy Beef 100% Genus ownership of IVB to further accelerate growth Growing presence with large enterprise dairies in the US and Latin America >100% Volume growth in IVB USA Volume growth refers to embryos produced by IVB in the US 21
Launching NuEra proprietary beef genetics Beef Efficiency, Profitability, Sustainability Creating value for our customers......through proprietary genetic improvement focusing on key markets and segments Product focus on customer profitability, not breeds, proven through trials Breeding proprietary animals to profit-focused indices Serving progressive beef & dairy herds with terminal beef and cross-bred genetics 22
PIC continues to deliver strategic growth Pork North America % volumes under royalty 96% 96% 96% 97% % volumes under royalty EMEA Three new top 20 North American accounts won FY14 FY15 FY16 FY17 59% 64% 63% 38% FY14 FY15 FY16 FY17 Key account growth in Spain Hermitage growth Latin America Asia Key account growth in Brazil Developing Colombian franchise business % volumes under royalty 65% 64% 73% 77% % volumes under royalty 46% 35% 41% 50% China: Three new royalty customers Royalty growth in Russia and the Philippines FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 Volumes based on market pig equivalents; geographical split indicative of internal segmentation of territories not all countries shown are served by PIC 23
Hermitage integration on track Pork Integrating genetic programmes Strategic partnership multiplication, distribution Growing with key customers > Integrating Hermitage genes into PIC gene pool > Customers to access stronger products > Hermitage distributing PIC genetics under royalty in key markets > Hermitage producing PIC genetics under contract > Growing key account presence in Europe > Successfully transitioned key customer relationships 24
China aligning with our global business model and performing strongly Pork Supply chain Royalty customers 100% 90% 23% 24% 25% 13,770 16,000 14,000 Previous FY17+ 80% 70% 60% 50% 40% 100% 51% 54% 8,270 7,900 8,650 49% 8,305 48% 45% 7,970 62% 12,000 10,000 8,000 6,000 30% 20% 10% 0% 49% 46% 26% 2,970 28% 28% 30% 12% FY12 FY13 FY14 FY15 FY16 FY17 FY18(F) 4,000 2,000 0 Owned JV Multiplication GGPs TOTAL > Growing our overall capacity > Three new royalty customers > Continuing to transition production to contracted multiplication > Trebled royalty income in FY17 Note: FY17+ customers includes one customer signed in July 2017; royalty customer map shows operational location for 8 royalty customers in total 25
Genus strategy Dairy Pork Beef GENETIC IMPROVEMENT SHARED PROPRIETARY TECHNOLOGY PLATFORM GENOMIC SELECTION BIOSYSTEMS ENGINEERING GENOME SCIENCE GENE EDITING 26
Genomic selection: delivering continuous improvement Pork PIC Genetic Index Dairy Source of new Holstein bulls in the US Beef 140 120 100 80 60 40 20 Relationship based genomic selection starts 1% 20% 23% ~40% FY15 FY16 FY17 FY18(F) ABS Internal/ De Novo Independent breeders > DNA-based selection continues to deliver > Integration of Hermitage genes underway > De Novo one year in: ~trebled size of ABS breeding programme > De Novo consistently producing high quality genetics > New global brand for proprietary beef offering > New tailored indices and Beef x Dairy products supporting price-to-value initiatives 27
PRRSv resistance progress FY16 0.9m expense FY17 3.5m expense CD163 IP licence Gene editing company co-founded Molecular scissor IP licence Molecular scissors optimised for CD163 Molecular scissor optimisation work begins Building regulatory capability US FDA - INAD issued First pregnant sows carrying edited embryos The PRRSv programme is an investigational programme relating to resistance to Porcine Reproductive and Respiratory Syndrome Virus; INAD refers to Investigational New Animal Drug application with the US Food and Drug Administration for the investigational PRRSv programme. The information included on this page reflects Genus plc s research and development pipeline and is not intended for promotional purposes. All timing, including any relevant regulatory approvals, are purely indicative, and any regulatory approvals are subject to the success of ongoing research, the development of clear regulatory review pathway by the relevant regulatory authorities and the approval by the regulators of any new animal drug application. 28
Launch Regulatory Technical & operational Technology Development programme for PRRSv resistance CD163 IP licence Molecular scissor technology licence Yrs 1-2 Yrs 2-5 Yrs 5+ Scissors optimised for CD163 edit Creating founder animals Amplify founder animals by breeding Development stage testing US FDA INAD issued Prepare and submit key country regulatory dossiers Regulatory approvals current Scale & launch The PRRSv programme is an investigational programme relating to resistance to Porcine Reproductive and Respiratory Syndrome Virus; INAD refers to Investigational New Animal Drug application with the US Food and Drug Administration for the investigational PRRSv programme. The information included on this page reflects Genus plc s research and development pipeline and is not intended for promotional purposes. All timing, including any relevant regulatory approvals, are purely indicative, and any regulatory approvals are subject to the success of ongoing research, the development of clear regulatory review pathway by the relevant regulatory authorities and the approval by the regulators of any new animal drug application. 29
Summary and outlook > ABS Leveraging De Novo, launching Sexcel, growing IVB Improving commercial execution Launching NuEra proprietary beef genetics > PIC Growing in key markets and segments, particularly in China Hermitage integration and partnership on track > R&D Continuing to strengthen proprietary technology platform > Expect to perform in line with our expectations for FY18 30
Appendices 31
Market dynamics output prices 50 Dairy - Key Markets (Pence per litre) 3.5 Pork - Key Markets ( per kg) 45 3.0 40 35 30 25 20 China India Russia Brazil EU US 2.5 2.0 1.5 1.0 China EU Russia Brazil US 15 Aug 14 Aug 15 Aug 16 Aug 17 SOURCE: Genus analysis using constant currency 0.5 Aug 14 Aug 15 Aug 16 Aug 17 32
SOURCE: Genus analysis using constant currency Market dynamics - input costs LIFFE Wheat and CBOT Soybean ( per tonne) Corn - Key Markets ( per tonne) 400 300 350 300 250 CBOT Soybean 250 200 China 200 150 100 LIFFE Wheat 150 100 EU US Brazil 50 50 0 Aug 14 Aug 15 Aug 16 Aug 17 0 Aug 14 Aug 15 Aug 16 Aug 17 33
Return on adjusted capital Year ended 30 June 2017 2017 2016 m m Adjusted operating profit inc JV 60.1 54.3 Tax rate 25.0% 25.8% Adjusted operating profit after tax 45.1 40.3 Equity attributable to owners of the company 399.3 374.5 Add back : Net debt 111.6 89.7 Pension liability 40.9 44.5 Related deferred tax (8.5) (9.6) Deduct : Biological assets (less historic cost) (323.8) (311.9) Goodwill (104.7) (86.0) Related deferred tax 111.7 109.7 Adjusted invested capital 226.5 210.9 Return on adjusted invested capital 19.9% 19.1% 34
Exchange rate sensitivity > Genus geographic profile can lead to translational currency impacts > We monitor key rates against GBP > Latest spot rates would indicate a 0-1m gain for FY18 compared with average FY17 rates FY17 FY17 Spot @ Profit Average Closing 04 Sep 17 Sensitivity m* US Dollar 1.27 1.30 1.30 2.0 Euro 1.16 1.14 1.09 1.0 Brazilian Real 4.11 4.30 4.06 0.9 Mexican Peso 24.6 23.5 23.1 1.2 Chinese Yuan 8.67 8.81 8.45 0.9 Russian Rouble 77.6 77.0 74.9 0.2 35 * - 12 month operating profit impact given a +/- 10% movement in exchange rate, based on FY17 results