Genus pleased with 'strong' porcine performance

Animal genetics company Genus reported its preliminary results for the year to 30 June on Thursday, with revenue of £459.1m - an increase of 18%, or 6% in constant currency.

The FTSE 250 firm said it saw “strong” porcine revenues during the year, up 20% - or 7% in constant currency - particularly in Asia, as well as from royalties.

It also saw a return to growth in bovine revenues, which increased 13% - or 2% in constant currency.

Adjusted profit before tax was up 13% to £56.4m, though its was down 1% in constant currency, with strong performance in its Genus PIC division - particularly in China - offset by planned increased research and development investments and lower Genus ABS results.

Statutory profit before tax fell 33% to £40.7m, which the board said was primarily due to lower pension-related exceptional credits of £5.7m compared with a £44.2m credit in the prior year, partially offset by a smaller reduction in the value of biological assets of £1.1m, compared to a £17.1m decrease in the prior year.

Adjusted basic earnings per share were up 14% to 69.4p, or unchanged in constant currency, and statutory basic earnings per share were down 34% to 53.8p, which the board said reflected the lower exceptional pension credit.

It had “strong” free cash flow of £25.4m, up from £15.7m year-on-year, with “solid” cash conversion of 84%, down slightly from 88%, and “good” cash inflows from joint ventures of £8.3m, which rose from £3.4m.

Net debt to EBITDA stood at 1.5x, compared to 1.4x last year, after acquisitions and investments of £30.0m - a figure which had risen from £7.2m.

Its after-tax return on invested capital improved to 19.9%, from 19.1%.

The Genus board recommended a dividend increase of 10% to 23.6p, which it said was well-covered by adjusted earnings at 2.9x, compared to 2.8x.

“Genus made substantial strategic progress in 2017 and performed in line with expectations for the year,” said chief executive Karim Bitar.

“We have now brought Sexcel, our proprietary innovative sexed semen product, to market and are excited about its prospects to improve the outcomes for our customers.”

Bitar said ABS overall had an “improved” second half year following actions taken, while IVB continued to perform “well”, with the board “pleased” to now own 100% of that business.

PIC also continued to perform well, Bitar explained, and the board further strengthened it with the genetic acquisition and distribution and production partnership with Hermitage.

“As planned, we increased our investment in our gene editing platform and made good progress in the development plan. We expect to further increase this investment in 2018.

“We see solid growth opportunities in the year ahead across our businesses and anticipate performing in line with our expectations,” Bitar added.

“Reflecting the board's continuing confidence in the Group's prospects we are recommending a 10% increase in the dividend for the year.”