Company Announcements

The following amendment has been made to the 'Interim Results' announcement released on 23 February at 07:00:07 under RNS Number: 7740Q. Update of PIC half-year revenue figure on the first page to 'up 12%'. All other details remain unchanged. The full amended text is shown below.

Genus plc

Interim results for the six months ended 31 December 2022

GOOD FINANCIAL AND STRATEGIC PROGRESS ACHIEVED

Good Group performance

·    Group revenue increased by 13% in constant currency (25% in actual currency)

·    Operating profit including joint ventures up 9% in constant currency (22% in actual currency)

·    R&D investment increased by 18%² as planned, including gene editing spend which was up 86%² reflecting the PRRSv programme and continued investment in other discovery projects

·    Adjusted profit before tax (PBT) up 1% in constant currency (14% in actual currency); net finance costs up 115%²

·    Statutory PBT reduced by 39% to £15.0m with a reduction in the IAS41 valuation of the Group's biological assets, reflecting higher global interest rates which impacted the valuation discount rates applied

Record half-year PIC performance, gradual recovery in China

·    Strong demand for PIC's differentiated genetics, with both new and existing customers, drove growth in volumes up 5%, revenue up 12%² and strategically important royalty revenue growth across all regions, up 14%²

·    Adjusted operating profit including joint ventures increased by 19%², to a new record half-year high

·    Strong profit growth continued in North America, solid performances in Latin America and Asia. Europe's performance impacted by challenging market conditions in certain countries

·    In China, PIC's volumes increased by 23%, with revenue up 11%², royalty revenue up significantly by 102%² and much improved adjusted operating profit of £8.8m (2021: £1.0m)

·    The China pig price peaked at 28 RMB/kg in October before falling to 15 RMB/kg currently, due to African Swine Fever (ASF) and COVID-19 related supply and demand volatility.

ABS volumes up 4%, revenue up 13%², despite particularly challenging markets in Latin America

·    Expansion of long-term partnerships with strategic accounts underpinned by Sexcel and NuEra genetics drove strong profit growth in North America and solid performances in Europe and Asia.  Latin America's performance impacted by very challenging market conditions, particularly in Brazil where macroeconomics affected supply and demand

·    Continued growth in sexed genetics, volumes up 14%, through Sexcel and third party sales of IntelliGen sexed semen production in North America and Europe

·    Overall, ABS's adjusted operating profit declined by 7%² due to Latin America's profit decrease, adverse production cost variances and planned digital investment costs, partially offset by lower patent royalty payments

Improved cash flows, dividend maintained

·    Free cash outflow¹ of £3.3m (2021: £16.1m outflow), reflecting higher adjusted profit performance and lower capital expenditure. Cash conversion of 62%¹ (2021: 63%) in line with seasonal half-year expectations

·    Net debt¹ increased to £214.5m as expected, with a net debt to EBITDA ratio of 1.8x¹, within 1.0x-2.0x targeted range

·    Adjusted earnings per share 15% higher, interim dividend of 10.3p per share, with 2.8x¹ adjusted earnings cover within 2.5x-3.0x targeted range

Good strategic progress achieved and continued investment for growth

·    Good progress on three new world-class elite PIC farms; Atlas (Canada) now fully operational; Ankang (China) has commenced stocking; Granja Genesis (Brazil) is ready for stocking; positioning Genus well to capture future growth opportunities

·    GenusOne deployed throughout the UK in the period, implementation underway in the rest of Europe

·    Settlement of the 987 appeal, the fee award appeal and the Indian patent litigation with STgenetics (ST), delivering lower patent royalty payments for ABS

·    Genus's PRRSv-resistant pigs programme continues to make progress towards  completing the US Food and Drug Administration (FDA) submissions by December 2023, with an aim to secure approval in 2024, and we are engaging with other international regulatory agencies

Commenting on the performance and outlook, Stephen Wilson, Chief Executive, said:

"The Group achieved a good performance during the first half of the year, despite challenging market conditions for producers in several markets. PIC delivered a new record half year performance, with strong momentum in North America in particular, and China's performance improved as the porcine market began a gradual recovery from the cyclical downturn, as we had expected.

"The China porcine market has been on a path to recovery since June 2022, but continues to be volatile. Since December the changes in China's COVID-19 polices and outbreaks of ASF have caused imbalances in supply and demand.  The pig price peaked at 28 RMB/kg in October, but has since unexpectedly reduced to the current price of 15 RMB/kg.  Industry projections suggest prices will recover in Spring/Summer of 2023, with consumer demand expected to improve following the reduction of COVID-19 restrictions and supply expected to reduce. However, there is still uncertainty as to the shape and strength of this recovery.

"Across the regions ABS has continued to expand business with strategic accounts by building long-term partnerships and offering the leading combination of Sexcel and NuEra beef genetics. This, along with robust price increases to counter inflation, meant ABS achieved strong performances outside Latin America, in particular in North America. Latin American beef and dairy producers faced very challenging conditions during the period, as a result of the inflationary effects on input costs and weak consumer demand. As a result, ABS's volume in Latin America declined, despite growing market share in Brazil. The political and economic uncertainties in the region are expected to continue to weigh on beef and dairy producers across Latin America for the remainder of the fiscal year.

"We also made good strategic progress with further investments in R&D, with an increase of spend on gene editing as we move towards FDA and international regulatory approval of our PRRSv-resistant pigs.

"The Board remains confident in the Group's strategy and the many opportunities for Genus. Expectations for the 2023 fiscal year remain unchanged.

"In a separate statement also made today, I have announced my intention to retire on 30 September following ten years with Genus, the last four of which I have served as the CEO. It has been a great privilege and pleasure to lead such a talented group of people and help to develop Genus into the leading global animal genetics business it is today. 

"Genus has many strong growth opportunities, and I will remain fully focused on the continued successful execution of our strategy while the Board progresses the search for my successor, in order to achieve a smooth transition."

Results presentation today

A pre-recorded analysts and bankers briefing to discuss the preliminary results for the six months ended 31 December 2022 will be held via a video webcast facility and will be accessible via the following link from 7:01am today:

https://stream.buchanan.uk.com/broadcast/63cab28d777efd4a8b5137d0

This will be followed by a live Q&A session to be held by invitation via Zoom at 10:30am. Please contact Verity Parker at Buchanan for details; verityp@buchanan.uk.com

Enquiries:

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 75 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 24 countries on six continents, with research laboratories located in Madison, Wisconsin, USA.

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 Constant currency percentage movements are calculated by restating the results for the six months ended 31 December 2022 at the average exchange rates applied to adjusted operating profit for the year ended 30 June 2022.

³ n/m = not meaningful

Group Performance

Genus achieved good progress in the first half of the year with volumes, revenue and adjusted profits all increasing. PIC delivered a strong performance, with North America continuing to gain share, and the expected improving performance in China as the porcine market began to recover from last year's cyclical downturn. ABS performance was mixed with strength in North America offset by tough markets in Latin America, particularly in Brazil. Finance costs rose, as expected, due to higher debt and rising interest rates. Genus continued to make significant strategic progress and increased investment in R&D, including an 86% increase in spend on gene editing as we progress towards the regulatory approval of our PRRSv-resistant pigs.

Revenue increased by 13% in constant currency (25% in actual currency) to £350.2m (2021: £281.2m). PIC revenue increased by 12%, royalty revenue was up 14%, while volumes grew by 5%. ABS increased revenue by 13% and grew volumes by 4%, with strategically important sexed genetics up 14% and beef volumes stable compared with the same period last year. ABS implemented robust price increases to offset the effects of cost inflation, particularly in Europe.

Adjusted operating profit, including joint ventures and excluding gene editing, was £56.0m (2021: £43.3m), up 15% in constant currency. Within this, Genus's share of adjusted joint venture operating profits was £6.9m (2021: £4.9m), supported by growth in profit of PIC Agroceres in Brazil and in our joint ventures in China. Net finance costs were higher at £6.1m (2021: £2.7m), due to increased interest rates as well as higher debt levels following the capital investments made during FY22.

Statutory profit before tax was £15.0m (2021: £24.4m), and reflected a £17.2m non-cash decrease (2021: £6.8m decrease) in the net IAS 41 biological assets fair value, reflecting an increase in discount rates applied in the valuation calculation as well as offsetting movements in other key inputs. Net exceptional items in the period were an expense of £2.2m which was primarily legal fees related to the litigation disputes with ST, part of which has now been settled.  In the prior period there was an exceptional credit of £1.7m that included a £3.6m non-refundable cash receipt for the assignment of rights to a legacy legal claim in Brazil.

The tax charge on adjusted profits for the period was £10.2m (2021: £9.3m), which represented a tax rate on adjusted profits of 24.2% (2021: 25.1%). The statutory profit after tax was £12.0m (2021: £18.9m).

The effect of exchange rate movements on the translation of Genus's overseas profits was a favourable impact of £4.8m compared with the prior period, primarily from weaker Sterling against Latin American currencies.

Free cash outflow of £3.3m (2021: £16.1m outflow) reflected the higher profit performance in the period along with a reduction in capital expenditure following the prior year investment to expand our world class facilities. Cash generated by operations, which is seasonally weaker in H1, of £25.7m (2021: £22.2m) represented 62% conversion (2021: 63%) of adjusted operating profit of £41.2m (2021: £35.0m) into cash. Our medium-term objective is to achieve annual conversion of at least 90%, and we are on track to achieve it this fiscal year.

Net debt increased to £214.5m (June 2022: £185.0m), reflecting the payment of the final dividend, free cash outflow and foreign exchange movements. The net debt to EBITDA ratio of 1.8x (June 2022: 1.7x) as defined in the debt facility agreement reflects an increase in EBITDA compared with higher net debt levels. This level of leverage is within our medium-term objective of having a ratio of net debt to EBITDA of between 1.0 - 2.0 x.

The Board has declared an unchanged interim dividend of 10.3 pence per share, which is payable on 30 March 2023 to shareholders on the register at 3 March 2023.

Strategic Progress

To maintain our leading industry position, Genus continued to invest in our growth drivers: world-class genetics, global supply chains, long-term customer relationships, pioneering technology and top talent around the world.

In porcine, we have strengthened our supply chains in North America, Brazil and China. We are now fully operational in Atlas (Canada), have commenced stocking in Ankang (China) and have animals ready for stocking at Granja Genesis (Brazil), enhancing our ability to meet customer demand as this grows.  Our long-term genetics collaboration with Olymel is exceeding our expectations, with PIC genetics gaining a larger share of the Canadian market.

Our PRRSv-resistant pigs programme has made continued progress towards completing the US FDA submissions by December 2023, with an aim to secure approval in 2024. We are engaging with the FDA on the design of the final animal studies, and are also engaging with international regulatory agencies. As we move closer to the commercialisation of our gene-edited animals we have intensified our engagement with key porcine industry participants and commentators and have expanded our production capacity for PRRSv-resistant pigs.

In bovine,  NuEra beef genetics are achieving positive results through initiatives with beef supply chains. In North America and in the UK, we have established arrangements to connect farmer networks with large meat processors and retailers who offer premium prices for carcasses delivered, enabling ABS and farmers, to share in the value created. In the period we expanded IntelliGen third party production and signed an agreement with a leading bovine co-operative to supply sexed semen processing as well as commenced production of sexed semen for the Government of India as part of its ambition to expand milk production and productivity significantly.

We continue to make steady progress on digitalisation. GENEadvance, our complete solutions approach for dairy producers, gives customers access to a unique application and complementary web portal that provide insight into genetic progress within their herd. This has been successfully rolled out and adopted by customers in our main bovine markets in North America, Europe and Latin America. The rollout of our new enterprise system, GenusOne, continues with the UK going live in the period with plans to complete implementation across the rest of Europe this year.

Sustainability

Sustainability lies at the heart of what Genus does. We believe that animal genetics play an important role in helping producers meet the increased demands for affordable, nutritious food for all, using fewer resources of water, energy and land.

Within the company, we also continue to reduce the environmental impact of our operations, guided by our Climate Change Policy. During the period, we continued to invest in advanced manure management solutions and to introduce solar arrays at some of our largest sites, which are designed to meet around half of the energy demand on those sites. We also continued to switch to lower carbon fuel sources. Our longer-term aims are to reduce our primary intensity ratio (against our 2019 baseline) by 25% by 2030 and to become a 'net zero' greenhouse gas emissions business by 2050. We are making good progress and are on track to achieve these objectives.

People

As a people-focused business, Genus encourages and enables employees at all levels of the company to  develop and broaden their skill base and build fulfilling and successful careers. During the period, we continued to enhance and expand the range of learning opportunities and development programmes we offer, and won recognition for the intern program we have in the US, one of several programs we have around the world where we are attracting the next generation of talent.  We continued to strengthen diversity and inclusion across the company, with steps including the introduction of a global minimum provision of family leave. We also introduced a new employee share scheme, TakeStock, to give our people an opportunity to share in the success they create. This is currently open to employees in the US and UK, with an intention to expand over time to other countries.

Outlook

As stated above, conditions remain challenging for our customers in several parts of the world.  The most volatile conditions are currently being experienced by Chinese pig producers and Brazilian beef producers, and whilst there is some uncertainty as to when a sustained improvement will occur in those markets, we are confident that Genus remains well-placed to take advantage of a recovery.  However, the performances of our business elsewhere, in particular in North America, are a testament to the benefits of Genus's geographic diversification and the strength of our strategy.  More broadly, our strong product portfolio and depth of talent in our company give us confidence that we will continue to make strategic and financial progress. Taking these factors into account, the Board's expectations for the 2023 fiscal year remain unchanged.   

Genus PIC - Operating Review

PIC increased adjusted profit by 19% in constant currency, compared with the same period last year. This was driven by growth in North America, Latin America (in particular Mexico) and Asia (in particular China). Volumes rose by 5%, revenue by 12% and royalty revenue by 14%.

The performance in China improved, particularly the growth from royalty contracts as customers began recovering from the previous year's downturn. Adjusted profit increased to £8.8m (2021: £1.0m), with the prospect of further growth as producers replace and rebuild sow herds over time using PIC's genetics, although current volatility in the market is creating challenges for producers.  

Although the business experienced more difficult conditions in Europe, its focus on product differentiation, predictable customer experience and world-class support services ensured further progress during this period. This is reflected in the 14% growth in royalty revenue in the region.

North America

The size of the US breeding herd remained stable during the period, ending the decline seen in the previous two years which saw an overall reduction of around 5%. Domestic demand was stable while exports strengthened, due particularly to demand from China, South Korea, Dominican Republic and Mexico. Pig prices remained high for much of the period, and producers continued to achieve positive margins despite higher input costs, but pig prices declined at the end of the period due to backlogs at processors caused by worse-than-normal winter weather, putting pressure on producer's current margins.

Performance:  A strong performance, with further increases in market share through volume growth across both sireline and damline products (volumes up 10% and 12% respectively) was achieved. This was driven by growth of business with strategic accounts, aided by the popularity of the PIC800 sire, as well as from Olymel following the acquisition of its genetics programme in February 2022

·    volumes +11%

·    revenue +17% and royalty revenue +10%

·    adjusted operating profit +14%

Latin America

In Brazil, lower feed prices helped to boost producer margins. Production increased during the period and exports rose, due in particular to renewed demand from China. Both production and exports are expected to grow again during 2023, although at a slower pace than 2022. In Mexico, the region's other major market, pork prices remained near record highs. This helped to offset higher feed costs, which dipped during the period but remained around 50% above pre-pandemic levels. Production continued to rise gradually and is expected to grow by a further 3% in 2023.

Performance: Lower sales of breeding stock meant a decline in volumes and revenue, compared with strong sales the previous year, however all markets achieved adjusted profit growth due to double-digit increases in royalty revenue following the prior year's expansion of business with strategic accounts.

·    volumes -3%

·    revenue -10% and royalty revenue +14% 

·    adjusted operating profit +12%

Europe

Pork production continued to contract during the period, particularly in UK, Germany, Poland and Denmark. Prices rose as a result of tighter supply and exports declined, despite a small increase in demand from China. These factors, combined with the impact of ASF outbreaks, create an uncertain outlook for producers and processors in 2023. Production is expected to decline by a further 3-4% during the year.

Performance: Increases in volumes and revenue, primarily driven by strong breeding stock sales through royalty contracts in Spain, supporting ongoing expansion projects with key customers, and royalty growth in Russia. However, adjusted profits declined as a result of lower volumes in Germany, following herd health issues in the market, and in the UK due to the market factors highlighted. 

·    volumes +4%

·    revenue +13% and royalty revenue +5%

·    adjusted operating profit -5%

Asia

China experienced significant volatility, as pig prices rose to 28 RMB/kg in October before declining sharply to 17 RMB/kg through the end of the period, and 15 RMB/kg currently. There was culling of animals amid seasonal ASF outbreaks and reduced demand as COVID-19 infections rose following the removal of restrictions in December. However, as this situation stabilises, prices are expected to improve in the Spring/Summer of 2023. Elsewhere in the region, the Philippines continued to be impacted by ASF, while economic growth stimulated consumer demand in Vietnam.

Performance: Adjusted profit increased by over 150%, driven by profit growth in China, from £1.0m to £8.8m, arising from higher royalty revenue and improved by-product margins. In the prior period, China had also incurred a one-time customer refund of £3.7 million. Outside China, performance was affected by market conditions: in Japan and the Philippines market volatility, driven by lower pig prices as production increases, impacted profitability, whereas Vietnam grew profits slightly as economic conditions improved.  

·    volumes +10% (China +23%)

·    revenue +4% and royalty revenue +58% (China +11% and +102% respectively)

·    adjusted operating profit +154% (China +642%)

Genus ABS - Operating Review

Overall, ABS volumes rose by 4% compared with the same period last year. Dairy customers continued to transition to  Sexcel and NuEra beef genetics in their herds, with sexed volumes rising by 14%, while beef volumes remained stable against strong growth in the same period last year. Revenue rose by 13%, due to the growing use of sexed genetics and robust price increases. Profits grew strongly in North America, Europe and Asia.  However, despite ABS increasing its share of business across both beef and dairy in Latin America, volumes and profit from the region declined by 3% and 18% respectively,  due to challenging market conditions. In addition, ABS invested to support its digital strategy and experienced adverse production cost variances  due to lower units produced primarily related to the IT incident in June 2022. These impacts were partially offset by lower patent royalty payments to ST following the settlement of the 987 appeal, the fee award appeal, and the Indian patent litigation. Other elements of the litigation remain ongoing (refer to note 3 of the financial statements).

North America

Dairy demand was resilient, with milk production and cow numbers both increasing, and producers remained profitable.  Production is expected to increase in 2023, although higher feed costs may reduce margins. U.S. beef production and exports reached record highs by the end of the period, following the acceleration of cattle culling due to drought conditions, but both are expected to be lower in 2023.

Performance: Double-digit growth in revenue and adjusted profit, driven from growth with strategic accounts. Sales of Sexcel sexed genetics, provision of udder care products and robust price increases were all contributory factors and more than offset a small decline in beef volumes from the record first-half performance in the prior period.

·    total volumes +5%, sexed volumes +24%, beef volumes -4%

·    revenue +18%

·    adjusted operating profit +26%

Latin America

Producers in Latin America faced very challenging conditions during the period, as a result of the effect of inflation on both input costs and consumer demand, as well as drought in a large part of the region. Beef cattle prices in Brazil declined, as supply exceeded weak domestic demand, despite rising exports driven particularly by demand from China. Mexican beef production continued to grow, reaching a record high in December. Following a record fall in the first half of 2022, milk production in Brazil began to recover. In 2023, it is expected that confidence in both the dairy and beef industries will be affected by ongoing inflationary pressures and political uncertainty across the region.

Performance: The increase in revenue and market share was aided by further rises in digital sales (now representing 20% of volumes) and growth in long-term partnerships with strategic accounts. However, the challenging market conditions for producers led to a decline in demand for genetics, particularly in the embryo business, while high business cost inflation also had an adverse impact.

·    total volumes -3%, sexed volumes +1%, beef volumes stable

·    revenue +3%

·    adjusted operating profit -18%

Europe

High beef and dairy prices generally offset rising costs faced by producers during the period. However, the impact of inflation dampened consumer demand and added to high levels of economic uncertainty across the region, undermining producer confidence. For both dairy and beef, this situation is expected to persist and increase pressure on margins further in 2023.

Performance: Increases in beef and sexed volumes, particularly across France, Spain, Northern Ireland and Russia, were offset by the decline in conventional semen volumes which led to the overall volume decrease. Rises in both revenue and adjusted profit were aided by robust price increases and growth in long-term partnerships with strategic accounts.

·    total volumes -2%, sexed volumes +13%, beef volumes +6%

·    revenue +10%

·    adjusted operating profit +8%

Asia

In Australia, favourable climatic conditions continued to support strong beef cattle prices, but excessive rainfall impacted milk production. In China, beef prices remained stable while dairy producers continued to increase milk production and build the domestic inventory, despite COVID-19 impacting the demand for dairy products. Elsewhere in the region, outbreaks of disease had a small impact on milk production in India, while rising inflation in Japan dampened consumer demand.

Performance: Double digit growth in both volumes and adjusted profits, driven by strong increases in dairy conventional and sexed volumes in China. There was higher demand for sexed and beef genetics in Australia and growth in business in India through the contract with the Indian Government secured in the prior period, partially offset by declines in Japan.

·    total volumes +15%, sexed volumes +12%, beef volumes -9%

·    revenue +21%

·    adjusted operating profit +11%

Research and Development - Operating Review

Net investment in R&D expenditure rose by 18% during the period, as planned, as we made further progress on the range of research programmes, technologies and product development initiatives we are pursuing to deliver additional value for customers in the coming years.

Porcine product development

Porcine product development delivered further improvements in genetic gain by combining leading-edge scientific techniques, expanded genetic production and the use of robust data. During the period, we continued to refine genomic selection and explore digital tools for capturing new or novel traits. We also continued to increase production of animals across our network of elite farms, including our Atlas facility in Canada which is now fully operational and reaching full capacity.   

Bovine product development

We continued to strengthen our pipeline of proprietary dairy genetics through De Novo Genetics, our joint venture with De-Su Holsteins. De Novo animals represent more than half of our dairy line-up. In parallel, we continued to invest in improving our proprietary technology for producing sexed semen.

We also continued to develop our proprietary offer for beef, NuEra Genetics, which accounts for one third of our total beef volumes, and accelerated product differentiation through robust testing.  We increased the number of product validation trials, which continued to demonstrate the superior performance of NuEra Genetics compared with competitors.

Gene editing

We continued to make progress on our PRRSv resistance project, while maintaining engagement with the US FDA as we seek regulatory approval for our gene-edited animals. This engagement is enabling us to continue refining the pathway for regulatory approval.  More widely, beyond the US, we continued to engage with regulatory bodies and agencies in other target markets around the world. In parallel, we increased investment in preparations for the potential commercialisation of PRRSv-resistant pigs, expanding our population of gene-edited animals by over 50% during the period. We also continued to advance projects evaluating the potential for responsible use of gene editing to combat other porcine diseases.

Other research and development

Other research and development expenditure increased by 17%, supporting further investment in areas such as genome science, bioinformatics and data science. This investment also helped us further progress our research into the field of reproductive biology, and to continue working with external partners on other discovery projects.

Principal Risks and Uncertainties

Genus's approach to risk management is to identify, evaluate and prioritise risks and uncertainties so we can take action to mitigate them. The Genus plc Annual Report 2022 (a copy of which is available on the Genus plc website at www.genusplc.com) sets out on pages 43-46 the principal risks and uncertainties that might impact the performance of the Group.

Some of these risks relate to current business operations in global agricultural markets, while others relate to future commercialisation of our leading-edge R&D programmes. We are also exposed to global economic and political risks such as trade restrictions and the ongoing war in Ukraine, along with global pandemics in animal and human healthcare that can have a material impact on our business performance and markets. Additionally, we monitor emerging risks such as changing consumption patterns, environmental sustainability expectations and the evolution of alternative proteins such as lab-based meat.

On 7 November 2022, Genus was granted a General Licence from UK Treasury in relation to the UK sanctions regime (INT/2022/2349952).  The licence permits Genus to continue to trade in "agricultural commodities" including reproductive materials, with Russian entities, consistent with terms of the licence. 

There has been no other 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 2022

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 2022