Investor Presentation Year ended 30 June 2018 Disclaimer This - - PowerPoint PPT Presentation

PRELIMINARY RESULTS Investor Presentation Year ended 30 June 2018

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 and financial progress

> Results in line with expectations − Profit before tax up 4% (9% in constant currency) − Strong free cash flow − Earnings per share 75.9p, up 9% (15% in constant currency) > Strategic progress − Successful Sexcel launch − Strong product development progress > Dividend increased 10% to 26.0p per share

4

Financial results

Stephen Wilson Finance Director

5

Results

% Change 2018 2017 Actual Currency Constant Currency £m £m Revenue 470.3 459.1 2% 6% Adjusted operating profit 57.7 55.1 5% 9% Attributable to non-controlling interest (0.8) (2.1) 62% 57% Adjusted share of JV profits 6.2 7.1 (13)% (4)% Adjusted operating profit inc JV 63.1 60.1 5% 10% Finance costs (4.6) (3.7) (24)% (24)% Adjusted profit before tax 58.5 56.4 4% 9% Adjusted earnings per share (pence) 75.9 69.4 9% 15% Dividend per share (pence) 26.0 23.6 10%

Year ended 30 June 2018

6

Volume growth

Year ended 30 June 2018

7

5% 6% (6)% 1% 5%

(6)% (4)% (2)% 0% 2% 4% 6% 8%

FY14 FY15 FY16 FY17 FY18

Dairy & Beef Volume growth (%) 9% 6% 4% 4% 8%

0% 2% 4% 6% 8% 10%

FY14 FY15 FY16 FY17 FY18

Porcine Volume growth (%)

Adjusted operating profit – by business unit

% Change 2018 £m 2017 £m Actual Currency Constant Currency Genus PIC 94.8 94.8 0% 5% Genus ABS 26.1 21.3 23% 29% Operating units 120.9 116.1 4% 9% Research and Development (46.8) (43.8) (7)% (13)% Central costs (11.0) (12.2) 10% 6% Adjusted operating profit inc JV 63.1 60.1 5% 10% Adjusted operating profit exc gene editing 68.1 63.6 7% 12%

Year ended 30 June 2018

8

Note: Business Unit results include joint venture profits, less non-controlling interests

> Continued growth in volumes up 8% and profit up 5% − Royalty revenues up 10% with all regions contributing > Europe profit up 48% from strong royalty revenues (+32%), customer wins and strategic pricing initiatives − Hermitage initial contribution encouraging − Møllevang to contribute further growth going forward > Latin America profits up 17% with royalty revenue up 15% and strong Brazil JV performance > North America profit up 1% impacted by health breaks in sireline farms and supply chain investments > Asia volumes up 19% driven by China, Russia and Philippines − Profit growth (+1%) held back by China, down £1.4m − Lower pork prices in China reduced owned farm margins and Besun JV by £4m

Genus PIC

% Change 2018 £m 2017 £m Actual Currency Constant Currency Revenue 247.7 249.5 (1)% 3% Adjusted operating profit exc JV 88.7 87.7 1% 6% Adjusted operating profit inc JV 94.8 94.8

• 5%

Adjusted operating margin exc JV 35.8% 35.2% 0.6pts 1.0pts

Year ended 30 June 2018

9

Note: All % changes are in constant currency unless otherwise stated

% Change 2018 £m 2017 £m Actual Currency Constant Currency Revenue 210.6 195.9 8% 11% Adjusted operating profit 26.2 22.3 17% 23% Adjusted operating profit less NCI1 26.1 21.3 23% 29% Adjusted operating margin 12.4% 11.4% 1.0pts 1.2pts

Genus ABS

> ABS volumes up 5%, revenue up 11% and profit up 29% − Strong sexed volume growth of 25% with launch of Sexcel > Europe profit up 12% benefiting from Sexcel launch; Sexed volumes up 24% − Strong performances in Italy and France and solid growth in UK > Latin America profit up 4%; Sexed volumes up 8%, Beef up 5%; Brazil up 14% > North America revenue up 5%, profit down 17% with investment to strengthen focus on large dairy accounts > Asia profit up 36% with strong performances in Australia and Japan > IVB strong volume and revenue growth − Integrated into ABS regional structure for 2019

Year ended 30 June 2018

10

(1) NCI = Non-controlling Interest Note: All % changes are in constant currency unless otherwise stated

% Change 2018 £m 2017 £m Actual Currency Constant Currency Porcine product development 17.0 16.6 2% 8% Bovine product development 17.2 15.3 12% 18% Gene editing 5.0 3.5 43% 46% Other research and development 7.6 8.4 (10)% (2)% Research and Development less NCI1 46.8 43.8 7% 13%

> Porcine product development up 8% − Expanded genetic testing, product validation and investment to identify new traits > Bovine product development up 18% − Amortisation of previously capitalised IntelliGen development costs and further platform development − Continued beef investment to build differentiated customer products > Gene editing investment increased 46% − First generations of gene edited pigs and regulatory engagement with FDA progressing > Other research; investments to drive genetic improvement and differentiation even faster

Genus R&D

Year ended 30 June 2018

11

(1) NCI = Non-controlling Interest Note: All % changes are in constant currency unless otherwise stated

Statutory income statement

2018 2017 Variance £m £m £m Adjusted operating profit exc JV 57.7 55.1 2.6 Net IAS 41 valuation movement (28.7) (1.1) (27.6) Amortisation of acquired intangible assets (9.5) (8.7) (0.8) Share-based payments (5.4) (4.6) (0.8) Exceptional items

• Litigation

(5.0) (5.3) 0.3

• Other

(0.9) 2.8 (3.7) Operating profit 8.2 38.2 (30.0)

• Share of post-tax profit of JVs

4.2 6.2 (2.0)

• Net finance costs

(4.6) (3.7) (0.9) Profit before tax 7.8 40.7 (32.9) Taxation1 33.8 (6.4) 40.2 Profit after tax 41.6 34.3 7.3

Year ended 30 June 2018

12

(1) Includes a £32.5m non-cash deferred tax credit, principally relating to biological assets, following US tax reforms

Cash flow

2018 2017 Variance £m £m £m Adjusted operating profit exc JV 57.7 55.1 2.6 Depreciation and amortisation 14.6 11.5 3.1 Adjusted EBITDA 72.3 66.6 5.7 Working capital

• (1.8)

1.8 Biological assets (1.9) (5.7) 3.8 Pension deficit repair, exceptionals and other (12.1) (12.8) 0.7 Cash generated by operations 58.3 46.3 12.0

Cash conversion % 101% 84% 17pts

Interest and tax paid (15.1) (11.7) (3.4) Capital expenditure (22.5) (18.9) (3.6) Cash received from joint ventures 2.8 8.3 (5.5) Other 0.8 1.4 (0.6) Free cash flow 24.3 25.4 (1.1) Acquisitions and investments (1.8) (30.0) 28.2 Dividends (14.9) (13.5) (1.4) Net cash flow 7.6 (18.1) 25.7 Net Debt 108.5 111.6 (3.1)

Year ended 30 June 2018

13

Strong financial position

2018 2017 £m £m Owners’ equity 416.6 399.3 Net Debt 108.5 111.6 Key Financial ratios:

• Return on adjusted capital

23.9% 19.9%

• Gearing

26% 28%

• Net debt to EBITDA

1.4x 1.5x

• Interest cover

25x 37x

• Dividend cover

2.9x 2.9x > Dividend up 10% > £99m headroom on bank facilities − £220m of facilities extend to 2021 − £176m of facilities extend to 2022

Year ended 30 June 2018

14

Business update

Karim Bitar Chief Executive

15

Strong performance in 2018, increasingly challenging market context for 2019

16

> Increasingly challenging market context − Trade tariffs impacting customers − African Swine Fever in China > PIC strategic progress − Møllevang strategic partnership − PRRSv resistance programme > ABS strategic progress − Increasing Sexcel production to meet growing global demand − Strengthening product and service offering

40 50 60 70 80 90 100 Actual Futures Aug 17 Futures Mar 18 Futures Aug 18 13 14 15 16 17 18 Actual Futures Aug 17 Futures Mar 18 Futures Aug 18

Increasingly challenging market context

17 US pork prices (USD per cwt)

Trade barriers / uncertainty Challenging economic context in emerging markets

Brazil Argentina Turkey US/China NAFTA Brexit US milk prices (USD per cwt)

Sources: USDA, CME; milk price relates to Class III Milk Price; pork based on lean hog prices; tariff figures relate to US pork exports to China and Mexico 70% tariff 20% tariff

African Swine Fever (ASF) first reported cases in China

18

Sources: World Organisation for Animal Health; CME; Reuters; Bloomberg; ASF cases in China as at 5 September 2018

The negative impact of ASF virus ASF spreading in China

> Causes fever, loss of appetite, haemorrhages and death in 2-10 days > High mortality rates and no vaccine > Virus resilient and spreads through fluids, tissue, meat and tics > Endemic in parts of Eastern Europe, Russia and Africa > Eight ASF cases confirmed in five provinces > Over 35,000 pigs culled and restrictions on transportation to fight the spread

(1) Aug 3 Liaoning (2) Aug 16 Henan (3) Aug 19 Jiangsu (4) Aug 23 Zhejiang (5) Aug 30 Anhui (6,7) Sep 2,3 Anhui (8) Sep 3 Jiangsu

Potential impact of ASF in China on pork industry

19

Decline in demand for breeding stock Demand for breeding stock grows Short term Thereafter High risk of spread DISEASE SUPPLY PRICES Endemic (possible) Oversupply & movement limitations Supply shortfall & accelerating technification Probable decline in China Probable increase in China & globally IMPACT

96% 96% 96% 97% 97%

FY14 FY15 FY16 FY17 FY18

20

Growing royalties and strengthening our supply chain Porcine

North America EMEA Latin America Asia

65% 64% 73% 77% 77%

FY14 FY15 FY16 FY17 FY18

38% 59% 64% 63% 70%

FY14 FY15 FY16 FY17 FY18

35% 46% 41% 50% 45%

FY14 FY15 FY16 FY17 FY18

% volumes under royalty % volumes under royalty

Volumes based on market pig equivalents; geographical split indicative of internal segmentation of territories

% volumes under royalty % volumes under royalty

• Expanding supply

to improve biosecurity and support growth

• 30% growth in

royalty revenues

• Significant upfront

stockings in China

• Key account growth

particularly Spain

• Delivering value

from Hermitage

• Entering Denmark

through Møllevang

• Strong growth in

royalty accounts, particularly in Brazil

• Driving industry

toward ‘liquid genetics’ model

21

Møllevang strategic partnership commences Porcine

> Leading porcine breeder, formerly part of Danish cooperative > PIC exclusive relationship commenced on 2 July 2018

PIC enters Danish market

• Møllevang to distribute PIC genetics in Denmark
• PIC previously had no presence in this Top 10

global market

Stronger supply chain in Europe

• Møllevang to multiply PIC genetics
• Will supply Denmark and other European markets

Accelerate genetic improvement

• Increased genetic diversity will strengthen product
• Customers to be offered superior genetics and

service

Strategic Partnership

22

Strong FY18 performance in key Asian markets Porcine

China Russia Philippines

Growth represents increase in volume (MPEs); all figures relate to FY18

Volumes under royalty Royalty volume growth

40% 17% 51%

• Imported elite genetics to

stock customers / grow supply

• 44% growth in volumes in

challenging market

• New damline and sireline

royalty business

• Price-to-value initiatives
• Expanding business with

Russia’s leading pork producer

• Hermitage legacy customers

performing strongly Key developments

8% 64% 56%

23

PRRSv resistance programme progressing Porcine

First births from founder pig breedings ~100 Homozygous edited pure line animals off test ~100 Homozygous Camborough™ parent sows farrowed Live animal disease challenge of Genus edit Additional animal disease challenge of Genus edit Cell line disease testing

• f Genus edit

Animal Amplification & Evaluation Disease Testing Workstream Regulatory Submissions

First US FDA submission US FDA package complete

(1) First batches created in 2017 (2) ‘475 patent granted to the University of Missouri; and patent ‘790 patent granted to the University of Edinburgh in 2017 Note: Timeline represents calendar years

2019 2020 2021 2022+ 2018

~1000 terminal pigs evaluated Gateway #1 Gateway #2 Batches of edited founder pigs created1 US and European patents granted2

Current

24

ABS performance in FY18 was driven by strong demand for our leading sexed genetics

Bovine

North America EMEA Latin America Asia

• Invested in key

account and service capabilities

• Targeting large

progressive dairies

• Strong double digit

growth in India, Russia, China

• Genus first to sex

bovine semen in India

• Strong performance

in Italy, France and UK / Ireland

• Provided IntelliGen

technology to Norwegian stud

• Beef cross-breeding

indices delivering value for our customers and ABS (XBlack)

+29% +24% +8% +55%

FY18 sexed volume growth

Sexcel and our leading beef genetics are delivering value for our customers

25

(1) Represents share of total units sold in the UK excluding sexed beef units

Dairy

Very positive customer feedback on their experience with Sexcel…

9% 9% 12% 36% 43% 47% 55% 47% 41%

FY14 FY16 FY18

ABS sales volumes in the UK1 Dairy conventional Beef Dairy sexed

…and dairy customers are increasingly demanding our leading beef genetics along with our sexed dairy genetics

“I have been using Sexcel for 5 months now and the conception rates are fantastic. Sexcel is giving me more options with beef on my cows and less Holstein bull calves. Sexcel has been a great success”

Andrew Leggott – Yorkshire, UK

5 10 15 20 25 30 35 40 45 50 Competitor 1 Competitor 2 Competitor 3 Competitor 4 Top 100 NM$ bulls - Proven Top 100 NM$ bulls - Active Genomic Top 100 NM$ bulls - Pipeline*

26

Analysis based on Top 100 Holsteins (using data from 7 August 2018 from CDCB); NM$ refers to Net Merit Dollar rankings * Includes both active and non-active genomic bulls (young bulls that are not yet producing semen, but have been genetically assessed)

Leadership position in dairy genetics – Aug 2018 Dairy

# of Top 100 NM$ bulls % of new US Holstein bulls produced by De Novo breeding programme

0% 20% 54%

FY14 FY16 FY18

27

Becoming the ultimate genetic and repro partner Dairy

STRATEGIC PILLARS

MAKING

• ur own elite genetics

SEXING with proprietary technology PRODUCING EMBRYOS to accelerate genetic progress DELIVERING superior genetic and repro services

Achieving product leadership Pipeline with 45 of the Top 100 bulls1 World leading technology Sexcel delivering industry leading performance for customers in 50+ countries2 Accelerating genetic improvement Integrating IVF into core ABS offering for large progressive dairies Becoming the advisor of choice Strengthening key account management, repro and genetic services

(1) Based on Top 100 NM$ Holsteins from August 2018, including both active and non-active genomic bulls (2) Sexcel is delivering statistically significant improvement in fertility compared with older technology

STATUS

Strong performance underpinned by strategic progress

28

> Increasingly challenging market context − Trade tariffs impacting customers − African Swine Fever in China > PIC strategic progress − Møllevang strategic partnership − PRRSv resistance programme > ABS strategic progress − Increasing Sexcel production to meet growing global demand − Strengthening product and service offering > Expect to continue to make strategic and financial progress

Appendices

29

30

Genus business model

GENOMIC SELECTION GENE EDITING

SHARED PROPRIETARY TECHNOLOGY PLATFORM

GENETIC IMPROVEMENT

Pork Dairy Beef

BIOSYSTEMS ENGINEERING GENOME SCIENCE

Resilience and flexibility of our business

31 Planned new farms in next ~4 years Existing elite farms

Porcine 75%

• f largest producers

globally use PIC genetics

2,000+

customers

400

multipliers

35+

countries

PIC global platform PIC elite nucleus farms

400

boar studs

Ireland Canada China Russia Brazil

Market dynamics – output prices

SOURCE: Genus analysis using constant currency

32

Brazil US China India 15 20 25 30 35 40 45 50 Aug 15 Aug 16 Aug 17 Aug 18 Dairy - Key Markets (Pence per litre) EU Brazil US China EU Russia 0.5 1.0 1.5 2.0 2.5 3.0 3.5 Aug 15 Aug 16 Aug 17 Aug 18 Pork - Key Markets (£ per kg) Russia

Market dynamics - input costs

33

SOURCE: Genus analysis using constant currency

CBOT Soybean LIFFE Wheat 50 100 150 200 250 300 350 400 Aug 15 Aug 16 Aug 17 Aug 18 LIFFE Wheat and CBOT Soybean (£ per tonne) Brazil US China EU 50 100 150 200 250 300 Aug 15 Aug 16 Aug 17 Aug 18 Corn - Key Markets (£ per tonne)

Pork producer profitability

34

Source: CME; Genus analysis; data reference 27 August 2018

• 0.6
• 0.4
• 0.2

0.0 0.2 0.4 0.6

Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19

Profit / Loss

US Pork Producer Profitability

(£ per kg) Loss Profit

Forecast

• 0.6
• 0.4
• 0.2

0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4

Aug-14 Feb-15 Aug-15 Feb-16 Aug-16 Feb-17 Aug-17 Feb-18 Aug-18

Profit/Loss Loss Profit

China Pork Producer Profitability

(£ per Kg)

Return on adjusted capital

35

2018 2017 £m £m Adjusted operating profit inc JV 63.1 60.1 Tax rate 20.5% 25.0% Adjusted operating profit after tax 50.2 45.1 Equity attributable to owners of the company 416.6 399.3 Add back : Net debt 108.5 111.6 Pension liability 33.9 40.9 Related deferred tax (6.0) (8.5) Deduct : Biological assets (less historic cost) (312.0) (323.8) Goodwill (102.0) (104.7) Related deferred tax 70.7 111.7 Adjusted invested capital 209.7 226.5 Return on adjusted invested capital 23.9% 19.9%

Year ended 30 June 2018

Exchange rate sensitivity

36

* - 12 month operating profit impact given a +/- 10% movement in exchange rate, based on FY18 results

> Genus’ geographic profile can lead to translational currency impacts > We monitor key rates against GBP > Latest spot rates would indicate a circa £1m headwind for FY19 compared with average FY18 rates FY18 FY18 Spot @ Profit Average Closing 31 Aug 18 Sensitivity £m* US Dollar 1.35 1.32 1.30 1.7 Mexican Peso 25.4 26.3 24.7 1.2 Brazilian Real 4.48 5.12 5.25 1.0 Euro 1.13 1.13 1.12 0.9 Chinese Yuan 8.80 8.75 8.85 0.8 Philippines Peso 69.7 70.5 69.3 0.4 Russian Rouble 80.4 82.9 87.5 0.3