Interim Results

Genus plc

Interim results for the six months ended 31 December 2024

STRONG FIRST HALF PERFORMANCE, CONTINUED MOMENTUM EXPECTED

Strong first half financial performance

· Adjusted operating profit including joint ventures increased 19% to £45.2m in actual currency, driven by broad-based growth in PIC and Value Acceleration Programme ("VAP") actions benefitting ABS

· Adjusted profit before tax (PBT) increased 21% to £35.4m in actual currency (38% increase in constant currency)

· Statutory PBT of £3.3m (FY24 H1: £14.3m) was impacted by a £16.0m decrease in the non-cash fair value IAS41 valuation of biological assets, principally bovine

· Very strong cash generated by operations of £46.1m (FY24H1: £12m) and conversion1 of 102% (FY24 H14: 31%) resulting in a free cash inflow1 of £10.3m (FY24 H1: £12.2m outflow) which includes expected exceptional cash outflows of £15.2m (FY24 H1: £6.1m)

· Net debt1 of £261.4m resulted in a net debt to adjusted EBITDA ratio of 2.0x1 (30 June 2024: 2.0x), as expected

· Adjusted earnings per share increased 20% and interim dividend maintained at 10.3p per share with 2.2x1 adjusted earnings cover

Substantial strategic progress achieved

· Porcine: Continued momentum in China with 7 new royalty customer wins (now 20 new royalty customers signed over the last eighteen months)

· PRRS6 Resistant Pig ("PRP"): FDA approval expected in calendar year 2025 with significant milestones achieved to date; the U.S. Food and Drug Administration ("FDA") conducted planned site inspections and Genus has responded to the FDA's feedback; the FDA has accepted Genus's Environmental Assessment submission

· Bovine: VAP Phase 2 initiatives actioned and on track for £10m annualised adjusted operating profit benefit; VAP Phase 3 planning underway; genetic supply chain strengthened through Genus taking 100% control of its De Novo joint venture via the acquisition of minority interests

Divisional headlines

· PIC - Strong trading across all regions, continuing momentum of new royalty customer wins in China

o  Strategically important royalty revenue growth of 5%2 and total volumes up 9%

o  Adjusted operating profit including joint ventures increased by 16%2 driven by strong growth in the Americas and Asia with Europe maintaining its performance relative to a strong prior year period

o  More stable trading environment in China; continued momentum with 7 new royalty customer wins (now 20 new royalty customers signed over the last eighteen months) and a supply chain Joint Venture signed with cornerstone customers for PIC's LuoDian farm. PIC China has now secured royalty agreements with 3 of the Top 5 producers in China for modest initial volumes

· ABS - VAP initiatives delivering significant adjusted operating profit and cash flow improvements

o  Volumes increased 5% with sexed volume up 13%, conventional dairy volume up 7% and beef volume down 4%

o  Significant improvement in adjusted operating profit to £8.6m (2024 H1: £7.3m) driven by benefits from VAP Phase 1 and 2 initiatives of £6.3m, partially offset by lower profit in ABS China, costs relating to aged inventory and adverse impact of FX translation

o  VAP Phase 2 initiatives actioned and now expected to deliver £6.5m of in-year benefit (FY25 H1: £2.5m) and £10m of annualised benefit

o  Genetic supply chain strengthened through the strategic acquisition of remaining non-controlling interest in De Novo on 19 September 2024 with £2.6m paid in the period and £10.6m of deferred consideration payable in equal instalments over four years, finalising 1 July 2029

Outlook in-line with market expectations

· Market conditions are stable albeit caution remains around potential geopolitical-driven market volatility

· Second half PIC adjusted operating profit in constant currency is expected to grow year on year albeit at a slower pace than the first half as a result of planned increases in PRP costs and higher supply chain costs in PIC China

· ABS adjusted operating profit growth in constant currency expected to increase in the second half primarily due to VAP Phase 2 initiatives

· Currency headwinds of approximately £8m to £9m expected in FY25 if current exchange rates continue throughout the fiscal year

· On 15 January 2025, Genus's Board announced an increase to its expectation for FY25 Group adjusted profit before tax in actual currency. Market expectations5 are now in-line with this view

Commenting on the performance and outlook, Jorgen Kokke, Chief Executive, said:

"Genus achieved a strong first half with broad-based growth across PIC and a significant improvement in ABS profitability. We are particularly pleased to have achieved very strong cash generation in the period through significantly enhanced working capital management and disciplined investments in the business.

We also made substantial progress in relation to our strategic priorities. PIC China won a further seven new royalty customers with 20 having now been won over the last eighteen months. Post-period end, the FDA conducted planned site inspections of two PRP facilities. We have responded to the FDA's feedback and continue to expect FDA approval for PRP in calendar year 2025. Within ABS, Phase 2 of the Value Acceleration Programme is on track and Phase 3 planning has commenced to accelerate growth. As a result, we look forward to the second half with confidence."

Results presentation today

Management is hosting an in-person results presentation and Q&A session today at 08:30am at Burson Buchanan's London offices (107 Cheapside, London, EC2V 6DN). Those unable to attend in person can also join remotely. Please contact Jesse McNab at Burson Buchanan for details: [email protected]

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 85 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. The PRP is a market leading innovation in gene editing, which Genus is looking to commercialise in the porcine industry once regulatory approval is gained.

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 2024 at the average exchange rates applied to adjusted operating profit for the year ended 30 June 2024

3 n/a = not applicable

4 Cash conversion and Free cash flow definition has changed from that reported in FY24 H1 announcement. Please refer to the FY24 full year investor presentation for details. The FY24 H1 comparative has been restated for the new definitions

5 The company compiled consensus range for FY25 adjusted profit before tax in actual currency is £66.9m to £70.0m with an average of £67.7m. This is based upon 10 analyst estimates

6 Porcine Reproductive and Respiratory Syndrome

Group Performance

Group revenue increased by 1% (6% increase in constant currency) to £336.4m (FY24 H1: £333.6m). PIC revenue increased by 3% (8% increase in constant currency) with strategically important royalty revenue increasing 5% in constant currency and total volumes growing 9%. ABS revenue decreased by 2% (3% increase in constant currency) with volume increasing 5%. Higher margin sexed volume grew 13% with conventional dairy volume also growing 7%, albeit driven by growth in India at low price points. Beef volume declined 4% although robust price increases were achieved.

Adjusted operating profit including joint ventures increased to £45.2m (FY24 H1: £38.1m), growth of 19% (31% increase in constant currency). PIC adjusted operating profit increased to £55.4m (FY24 H1: £51.4m), growth of 8% (16% increase in constant currency). This growth was broad-based apart from PIC Europe which performed well but where adjusted operating profit was lower than the prior year against a strong comparator. In ABS, adjusted operating profit increased to £8.6m (FY24 H1: £7.3m), growth of 18% (38% increase in constant currency). VAP initiatives were the major driver of ABS's improved adjusted operating profit and contributed £6.3m in the period comprising £3.8m of annualising Phase 1 initiatives and £2.5m of in-year benefit from Phase 2 initiatives. R&D investment decreased as planned to £7.9m (FY24 H1: £11.3m), a decrease of 30% (28% decrease in constant currency), and Group Central costs increased to £10.9m (FY24 H1: £9.3m), principally due to an increase in performance based remuneration accruals. Genus's share of adjusted joint venture operating profits was £4.8m (FY24 H1: £4.7m).

Adjusted profit before tax of £35.4m (FY24 H1: £29.2m), was an increase of 21% (38% increase in constant currency). Net finance costs were higher at £9.8m (FY24 H1: £8.9m) with £0.5m due to higher interest rates and £0.4m due to increased average borrowings year on year. The effect of exchange rate movements on the translation of overseas profits decreased the Group's adjusted profit before tax by £4.8m compared with the prior year.

On a statutory basis, profit before tax was £3.3m (FY24 H1: £14.3m). The difference between statutory and adjusted profit before tax was primarily driven by a £16.0m non-cash decrease (FY24 H1: £2.6m increase) in net IAS 41 biological assets fair value and exceptional costs of £6.0m, of which £3.7m relates to ABS restructuring under its VAP programme.

The tax charge on adjusted profits for the period was £9.2m (FY24 H1: £7.3m), which represented a tax rate on adjusted profit before tax of 26% (FY24 H1: 25%). The adjusted tax rate increased due to a change in profit mix to higher tax rate jurisdictions.

Adjusted earnings per share was 39.8p (FY24 H1: 33.3p) an increase of 20% (36% increase in constant currency). Statutory earnings per share was 2.4p (FY24 H1: 20.6p).

Free cash flow improved significantly to a £10.3m inflow (FY24 H1: £12.2m outflow). Higher EBITDA and strong operating cash conversion was augmented by significantly improved inventory and debtor management in bovine, resulting in a working capital inflow of £3.0m (FY24 H1: £16.9m outflow), lower capital expenditure of £7.7m (FY24 H1: £14.4m) and no cash outflow in relation to biological assets (FY24 H1: £7.2m outflow, primarily due to the restocking of PIC's Aurora farm). Cash conversion in the period was 102% (FY24 H1: 31%).

Net debt increased to £261.4m (FY24: £248.7m) with a net debt to adjusted EBITDA ratio of 2.0x (30 June 2024: 2.0x). Higher free cash flows and a £7.5m improvement in net debt through the LuoDian joint venture agreement were offset by payment of the Group's final dividend and acquisition of the remaining De Novo non-controlling interest which included a £2.6m cash outflow and a non-cash increase in net debt of £10.6m in relation to deferred consideration.

The Board has declared an unchanged interim dividend of 10.3 pence per share, which is payable on 4 April 2025 to shareholders on the register at 7 March 2025.

Strategic Priorities

We continue to focus on the same strategic priorities to improve profitability and guide our progress.

1. Continued growth in porcine, with more stable growth in China

PIC continued to demonstrate the strength of its industry-leading genetics, supply chain and customer care. Performance outside China was strong and in China, our go-to-market focus on winning new royalty customers resulted in 7 new customers being signed in the period (now 20 new royalty customers signed in the last eighteen months). Royalty revenue from new royalty customers usually ramps up two years post stocking and reaches a steady state of royalty revenue approximately four years post stocking. We therefore expect strong PIC China royalty revenue growth in FY26 and we expect this new royalty business to drive PIC China's long-term growth and reduced volatility over time.

2. Deliver successful commercialisation of our PRP gene edit and deliver attractive returns from R&D

Our near-term focus is achieving PRP regulatory approvals. In the medium-term, we continue to be excited by the opportunities in disease resistance and reproductive technology.

We continue to work closely with regulatory authorities to secure approvals for PRP commercialisation. In the year to date we submitted our Validation Report and Durability Plan ("VRDP") and Environmental Assessment ("EA") to the FDA. Post period end, the FDA accepted our EA and conducted site inspections of our Waunakee genomics laboratory and Bluegrass PRP farm. We have responded to the FDA's site inspection feedback and we continue to expect FDA approval for PRP in calendar year 2025. Our engagement with multiple other international regulatory agencies also continues to make good progress.

3. Drive greater value from bovine

We initiated VAP to accelerate Bovine's growth and structurally improve margins, ROIC and cash generation. VAP Phase 2 is on track to deliver £6.5m of in-year benefit to adjusted operating profit and £10.0m of annualised benefit, as expected. The positive outcomes of VAP are becoming increasingly visible; on stable volumes, ABS's adjusted operating profit increased by 38% in constant currency and bovine cash generation improved significantly compared with the prior year. We are focused on driving further value creation through a return to top-line growth via improved go-to-market productivity and commercial excellence.

People

We continue to nurture a culture in which all of our employees around the world can perform to their best and fulfil their potential. During the period, we refreshed our company values, following input from a wide range of colleagues in different parts of the business. We launched these values through more than 50 in-person and online launch events, involving more than 3,000 people, gaining very positive feedback. We are now embedding the values and associated behaviours across our company, including touchpoints with prospective employees so we can ensure cultural alignment as we attract and recruit new colleagues.

Genus PIC - Operating Review

Market conditions for pork producers were generally benign, supported in particular by lower feed costs. In North America, pork producer profitability was stronger than industry forecasters had expected earlier in calendar year 2024. The majority of pork producers operated at positive margins in Latin America and Europe. Pork prices in China remained at levels that supported aggregate industry profitability.

In the period, PIC revenue increased 8%* driven by a 9% increase in volumes. Strategically important royalty revenue increased 5%* with growth in every trading region except Europe, which was unchanged against a strong prior year comparator. Adjusted operating profit including JVs increased 16%* due to strong growth in PIC's Americas and Asia trading regions and robust performance in Europe. Product development costs decreased £3.0m primarily due to the phasing of PRP commercialisation costs and favourable commodity pricing positively impacting production costs.

NB: Growth rates compared with the same period last year

+ Including JVs

Regional Trading Commentary

North America achieved an adjusted operating profit increase of 5%*, supported by a 5%* increase in royalty revenue. Total revenue increased by 7%* on strong volume growth of 6%. Pork producers made consistent profits over the period as pork prices proved to be stronger than the industry had expected earlier in the calendar year. This resulted in a stabilisation of the breeding herd compared with prior period declines. PIC continued to win customer wallet share over the period.

Latin America had a very strong first half, achieving adjusted operating profit growth of 13%* supported by a very strong 11%* increase in royalty revenue. Royalty growth was broad-based and producers across the region generated good margins in the period. Mexico and Colombia were stand-out performers within PIC LATAM.

Europe maintained its performance against a strong prior year, with adjusted operating profit decreasing 3%* on unchanged royalty revenue growth*. Producers were generally profitable over the period albeit the aggregate breeding herd continued to contract due to economic, geopolitical and regulatory challenges. PIC Europe was particularly impacted by lower animal sales and customer's health challenges within their herds, offset by continued progress in Germany and Spain.

Asia adjusted operating profit increased by 28%* in the period with royalty revenue growing 2%*. Excluding China, adjusted operating profit grew 3%*. In China, adjusted operating profit increased 59%* driven predominantly by lower supply chain costs as a result of increased by-product revenue. Pork prices in China remained at levels that supported aggregate industry profitability. Producers, however, continue to be cautious after several years of low profitability and disease challenge. PIC China's commercial focus on building recurring royalty revenue continued to gain strong traction with a further 7 new royalty customers signed in the period (now 20 new customers signed in the last eighteen months). PIC China has now secured royalty agreements with 3 of the Top 5 producers in China for modest initial volumes within their systems.

* Constant currency growth rate compared with the same period last year

Genus ABS - Operating Review

Bovine markets were varied around the world. Producers in Europe and North America enjoyed a stronger period for profitability whereas those in Brazil and China experienced challenging markets. Global milk prices were generally on a stronger footing with beef prices continuing to remain at elevated levels.

ABS achieved a volume increase of 5% in the period with sexed volume increasing 13%, beef volumes decreasing 4% and conventional dairy volumes increased 7%. ABS revenue increased by 3%* and adjusted operating profit increased by 38%*, a margin improvement of 1.6pts in constant currency, compared with the prior year. Spend on bovine product development decreased 3%* as efficiency savings were realised from the newly combined management of the dairy and beef product development programmes. During the period ABS acquired the remaining non-controlling interest in its De Novo Joint Venture with £2.6m paid on completion and £10.6m deferred over four years, finalising 1 July 2029. This acquisition gives ABS full control of its internal Holstein programme and there are encouraging trends in the performance of the herd. The commercial launch of Sexcel Male Beef also progressed well over the half.

In FY24, Management initiated a comprehensive Value Acceleration Programme ("VAP") to accelerate Bovine's growth and structurally improve margins, ROIC and cash generation. VAP Phase 1 was completed in FY24, delivering £7.3m of profit benefit in FY24 and a further £3.8m of benefit in the first half of FY25. As a result, VAP Phase 1 delivered a total annualised profit benefit of £11m, outperforming its target of £10m.

VAP Phase 2 commenced in FY25 and is targeting a further £10m of annualised profit benefit with approximately £5m to be delivered in-year. Actions taken in the first half of FY25 include select globalisation of specific functions within ABS and increased focus on product allocation excellence. In the first half of FY25 these initiatives delivered £2.5m and ABS now expects £6.5m of in-year benefit to be delivered in FY25. Exceptional restructuring costs of £3.7m associated with VAP Phase 2 were recognised in the first half.

NB: Growth rates compared with the same period last year

Regional Trading Commentary

North America volumes increased 7%, comprising a 22% increase in sexed volume, a 1% decrease in beef volume and a 12% decrease in dairy conventional volume. Dairy producers enjoyed favourable market conditions in the period with beef prices also remaining strong. Adjusted operating profit increased 25%* driven predominantly by strong VAP benefits. IntelliGen third party business also performed well driven by volume increases from existing customers and new customer wins.

Latin America volume was stable , with sexed volume growth of 17%, a 7% increase in dairy conventional volume and a 5% decrease in beef volume. Strong pricing initiatives helped drive a 7% increase in revenue. Better market conditions for dairy producers drove greater adoption of sexed genetics and stabilisation of the beef cycle stopped volume declines for producers albeit demand for beef genetics remains subdued. Adjusted operating profit was unchanged in constant currency due primarily to a decline in high contribution margin embryo volumes.

EMEA volume decreased 2%, comprising a 1% increase in sexed volume, a 1% decrease in beef volume and a 9% decrease in dairy conventional volume. Dairy producers were generally profitable over the period but farmers remain cautious as farm rationalisation continues due to relatively strong cow prices. Adjusted operating profit grew 34%* driven predominantly by strong VAP benefits. IntelliGen EMEA also achieved strong adjusted operating profit growth as next generation machines were deployed to existing customers.

Asia volume increased 14%, comprising a 15% increase in sexed volume, a 14% decrease in beef volume and 15% increase in dairy conventional volume. Volume growth in India was particularly strong albeit at relatively low price points, with sexed volume growing 37% and conventional dairy volume growing 21% on stronger product availability and phasing of customer orders. The dairy sector in China continued to be challenged with industry estimates suggesting that milk production contracted 9% year on year in the fourth quarter of 2024. The majority of Chinese dairy production is still unprofitable at current price levels. Weak Chinese dairy consumption also impacted dairy producers in Australia. Adjusted operating profit in Asia decreased 22%*.

* Constant currency growth rate compared with the same period last year

Research and Development - Operating Review

Net expenditure on R&D decreased 28%* as planned as efficiency initiatives actioned in FY24 annualised in the first half of FY25. For the full year, the impact of the initiatives is a saving of £5m, and net expenditure on R&D is expected to be below 3% of group revenue. R&D's key near-term focus is achieving PRP regulatory approvals. In the medium-term, R&D continues to explore opportunities in disease resistance and reproductive technology.

* Constant currency growth rate compared with the same period last year

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 2024 (a copy of which is available on the Genus plc website at www.genusplc.com) sets out on pages 52-55 the principal risks and uncertainties that might impact the performance of the Group.

Some of these risks relate to our business operations, while others relate to future commercial exploitation of our leading-edge R&D programmes and IntelliGen technology. We are also exposed to global economic and political risks such as trade restrictions attributed to the ongoing Russia-Ukraine conflict, and disease risks (e.g. Avian Flu). Additionally, we monitor evolving risks such as the continued geopolitical tensions across the globe, US President Trump's imposition of trade tariffs, impacts of climate change, and cyber security.

There has been no material change to the principal risks that might affect the performance of the Group in the current financial year.

GENUS PLC

CONDENSED CONSOLIDATED INCOME STATEMENT

For the six months ended 31 December 2024

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 2024

GENUS PLC

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 31 December 2024

GENUS PLC

CONDENSED CONSOLIDATED BALANCE SHEET

As at 31 December 2024

GENUS PLC

Condensed consolidated Group Statement of Cash Flows

For the six months ended 31 December 2024

GENUS PLC

ANALYSIS OF NET DEBT

For the six months ended 31 December 2024

Included within non-cash movements is £13.2m in relation to the acquisition of De-Novo Genetics LLC non-controlling interest, of which £2.6m of the consideration was paid on signing (see note 19), (£1.3m) in relation to net new leases (including disposals) and £0.5m in the unwinding of debt issue cost.

Net debt is gross debt, made up of unsecured bank loans and overdrafts and obligations under finance leases, with a deduction for cash and cash equivalents.

GENUS PLC

NOTES TO THE CONDENSED SET OF FINANCIAL STATEMENTS

For the six months ended 31 December 2024

1. BASIS OF PREPARATION

The unaudited Condensed Set of Financial Statements for the six months ended 31 December 2024:

· were prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' ('IAS 34') and thereby have been prepared in conformity with the requirements of the Companies Act 2006 and the International Financial Reporting Standards ('IFRSs') adopted in the United Kingdom;

· are presented on a condensed basis as permitted by IAS 34 and therefore do not include all disclosures that would otherwise be required in a full set of financial statements; these should be read, therefore, in conjunction with the Genus plc Annual Report 2024;

· includes all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the periods presented;

· do not constitute statutory accounts within the meaning of section 435 of the Companies Act 2006; and

· were approved by the Board of Directors on 26 February 2025.

The information relating to the year ended 30 June 2024 is an extract from the published financial statements for that year, which have been delivered to the Registrar of Companies. The auditor's report on those financial statements was not qualified and did not contain statements under section 498(2) or (3) of the Companies Act 2006.

The unaudited Condensed Set of Financial Statements for the six months ended 31 December 2024 has not been reviewed by our Auditor.

The unaudited condensed set of financial statements have been prepared on the basis of the accounting policies set out in the Annual Report 2024. The Genus plc Annual Report 2024 (a copy of which is available on the Genus plc website at www.genusplc.com) sets out on pages 52-55 a number of risks and uncertainties that might impact upon the performance of the Group. There has been no material change to the principal risks that might affect the performance of the Group in the current financial period.

The preparation of the Condensed Set of Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the balance sheet date, and the reported amounts of revenue and expenses during the period. Actual results could vary from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of revision and future periods if the revision affects both current and future periods.

Functional and presentational currency

The principal exchange rates were as follows:

Impact of Russian Sanctions

The Group has two group operating companies that are incorporated in Russia - Limited Liability Co. Genus ABS Russia and PIC Genetics LLC ('Russian-based subsidiaries/entities'). Following the sanctions that have been put in place by the UK and other governments, the Group implemented a comprehensive screening process with external counsel to ensure that its Russian entities do not trade with sanctioned individuals or entities controlled by them. The main impact of the sanctions regime on our business has been to categorise the banks in Russia into sanctioned and non-sanctioned banks. Where we receive money from sanctioned banks we are unable to use the cash without a licence from His Majesty's Treasury ('HMT'). For cash receipts from non-sanctioned banks into the entities' non-sanctioned banks we are able to use the cash in Russia for day-to-day operations.

The UK Office of Financial Sanctions Implementation ('OFSI') issued a general licence for trading in agricultural commodities in Russia effective on the 4 November 2022 which provides exemptions to the sanctions regime in connection with the export, production and transport of agricultural commodities. This definition includes reproductive materials such as are supplied by Genus. Under this general licence, receipts from non-sanctioned customers received from and before 4 November 2022 from sanctioned banks no longer need to be frozen and can be freely used. Also receipts from a sanctioned customer, if made through a non-sanctioned bank, no longer need to be frozen and can be freely used. If any customer is or becomes sanctioned and pays through a sanctioned bank, these funds would still need to be frozen even after 4 November 2022.

Under the requirements of IAS 7, where there is cash that is not available to be used by the rest of the Group this needs to be disclosed. As at 31 December 2024, we had a cash balance of £6.4m (30 June 2024: £5.2m) in the Russian entities of which £0.7m (30 June 2024: £0.9m) is not currently available to be used by the Group due to being received from sanctioned banks and held in a sanctioned bank.

Management has reviewed the operations and cash flow over a period of 18 months from 31 December 2024 to 30 June 2026, based upon the 2025 and 2026 plans, to determine whether the Russian entities have sufficient non-sanctioned cash flow to enable them to continue day-to-day operations and to meet liabilities as they fall due. The analysis indicates they do have sufficient non-sanctioned cash flow to enable them to meet their day-to-day operational needs.

Critical accounting judgement - exercise of control

Management has assessed whether the actions of the UK and Russian Governments have caused the Group to lose control of these Russian-based subsidiaries.

Genus PLC received a licence from the Department for International Trade ('DIT'), effective from 11 January 2023 for 2 years, to allow for UK-based employees within the Genus group to provide accounting, business and management consulting services to the Russian-based subsidiaries, for the purpose of helping them carry out business operations in Russia, delivery of humanitarian assistance activity and for the production or distribution of food, provided that it is for the benefit of the civilian population. It authorises the following services:

> The fullest possible range of accounting services, business and management consulting services, to include advisory, guidance and operational assistance services provided for business policy and strategy, and the overall planning, structuring, and control of the organisation.

> The oversight that a parent company would typically provide to its subsidiaries in the areas of accounting, financial controls, tax, treasury, finance and human resources, along with similar oversight in the areas of information technology, supply chain and other types of technology.

In February 2025, the DIT licence was renewed and extended for an additional two years, now expiring on 6 February 2027.

We have concluded that we do have control over the Russian-based subsidiaries for the half year ended 31 December 2024, as defined under IFRS 10 'Consolidated financial statements', and we are still able to consolidate them despite short-term restrictions on extracting cash. We have also assessed each of the asset balances for impairment. The material areas that could give rise to impairment are:

> PIC Russia farm: £1.9m (30 June 2024: £2.5m) - the value of the farm is predicated on the future economic benefit of the animals that are being reared there. We would need to assess if the property's open market price (less cost to sell) would support the carrying value.

> Trade receivables: £3.0m (30 June 2024: £4.4m) - the ongoing financial sanctions may affect our customers' ability to pay us for their goods. If it is determined that our customers are unlikely to repay these amounts, then they should be provided for.

> IAS 41 valuation: £2.4m (30 June 2024: £2.7m) - the ongoing impacts of both the local economic outlook and our customers' ability to pay us could result in a reversal of the fair value of the Russian biological assets in the December valuation.

Management's impairment analysis indicates that, under the current business environment and based on the plans for the FY25 and FY26 no impairment is required as at 31 December 2024.

Management will continue to monitor the situation closely to see if any further changes require additional analysis that may result in a different conclusion.

In the event of changes in legislation, such as more restrictive sanctions imposed by the UK Government or actions taken by the Russian Government, we may determine that we do not exercise control, as defined under IFRS 10 'Consolidated financial statements', over the assets and operations of the Russian entities and we would not be able to consolidate these companies into the Financial Statements. The deconsolidation would mean that we would reclassify the Russian entities as investments and we would need to assess for impairment. A charge of up to £14.2m (2024: £15.8m) may need to be recognised in the Income Statement, representing the total net assets of the two Russian entities. Dependent on the nature of the events leading to the decision to deconsolidate the entities, there may be additional expenses incurred which we are unable to estimate at this time. In addition, revenues would not be consolidated into the Financial Statements from the date of any deconsolidation. Revenues from the Russian entities were £6.9m in the half year ended 31 December 2024 (31 December 2023: £7.2m).

New standards and interpretations

In the current period, the Group has applied a number of amendments to IFRS issued by the International Accounting Standards Board that are mandatorily effective for an accounting period that begins after 1 January 2024 and have been implemented with effect from 1 July 2024. These are:

> Amendments to IAS 1 - 'Classification of Liabilities as Current or Non-Current';

> Amendments to IAS 7 and IFRS 7 - 'Disclosures: Supplier Finance Arrangements'; and

> Amendments to IFRS 16 - 'Lease Liability in a Sale and Leaseback'.

Their addition has not had any material impact on the disclosures, or amounts reported in the Group Financial Statements.

New standards and interpretations not yet adopted

At the date of the interim report, the following standards and interpretations which have not been applied in the report were in issue but not yet effective (and in some cases had not yet been adopted by the UK). The Group will continue to assess the impact of these amendments prior to their adoption. These are:

> IFRS S1 'General Requirements for Disclosure of Sustainability-related Financial Information';

> IFRS S2 'Climate-related Disclosures';

> Amendments to IAS 12 - 'International Tax Reform Pillar Two Model Rules - other disclosure requirements';

> Amendments to IAS 21 - 'Lack of Exchangeability';

> IFRS 18 - 'Presentation and Disclosure in Financial Statements'; and

> Amendment to IFRS 9 and IFRS 7 - 'Classification and Measurement of Financial Instruments'.

Going Concern

The Genus plc Annual Report 2024 (a copy of which is available on the Genus plc website at www.genusplc.com) sets out on pages 52-55 several risks and uncertainties that might impact upon the performance of the Group. There has been no material change to the principal risks that might affect the performance of the Group in the current fiscal year.

In assessing the appropriateness of adopting the going concern basis of preparing the financial statements, the Board have considered: -

> Genus's Budget, Forecasts and Strategic Plan which forms management's best estimate of the future performance and position of the Group.

> Genus's credit facility agreement which consists of a £208m multi-currency RCF and a 161m US dollar RCF. Additionally, there is an uncommitted £11m accordion option which can be requested on one further occasion over the remaining lifetime of the facility. The current facility expires in August 2026 having already exercised all extension options.

> The availability of mitigating actions that could be utilised if needed; including reduction in dividends and postponing certain capital spend and investments.

As part of the directors' consideration of the appropriateness of adopting the going concern basis in preparing the financial statements, the Board considered several key factors, including our business model and our strategic framework. In addition, all principal risks identified by the Group were considered in a downside scenario within the viability assessment with specific focus paid to those that could reasonably have a material impact within our outlook period including;

> Ensuring biosecurity or continuity of supply, which is modelled through one off impacts of disease outbreaks, severe weather events and international trade sanctions and disputes;

> Managing agricultural market and commodity prices volatility, modelled through increases in operating costs, particularly in Russia, Ukraine and the Middle East; and

> Succeeding in growth markets, which we have modelled through reductions in short term growth expectations, particularly in China;

The Directors have considered the position if each of the identified risks materialised individually and where multiple risks occur in parallel. In addition, the Directors have overlaid this downside scenario, net of mitigations, on our facility headroom and banking covenants.

Based on this assessment our headroom under these sensitivities, including our mitigating actions, remain adequate and the Directors have a reasonable expectation that the Group has adequate resources to continue its operational existence for the foreseeable future and for a period of at least 12 months from the date of this report. Accordingly, the Directors continue to adopt and consider appropriate the going concern basis in preparing the half-yearly report and the Condensed Set of Financial Statements.

Alternative Performance Measures ('APMs')

In reporting financial information, the Group presents APMs, which are not defined or specified under the requirements of IFRS and which are not considered to be a substitute for, or superior to, IFRS measures.

The Group believes that these APMs provide stakeholders with additional helpful information on the performance of the business. The APMs are consistent with how we plan our business performance and report on it in our internal management reporting to the Board and GELT. Some of these measures are also used for the purpose of setting remuneration targets.

For a full list of all APMs please see the Alternative Performance Measures Glossary section at the end of this release.

2. SEGMENTAL INFORMATION

IFRS 8 'Operating Segments' requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Executive and the Board, to allocate resources to the segments and to assess their performance. The Group's operating and reporting structure comprises three operating segments: Genus PIC, Genus ABS and Genus Research and Development. These segments are the basis on which the Group reports its segmental information. The principal activities of each segment are as follows:

> Genus PIC - our global porcine business including commercialisation costs relating to PRRS resistant pig ('PRP');

> Genus ABS - our global bovine business; and

> Genus Research and Development - our global spend on gene editing costs (excluding PRP commercialisation) and other research and development costs.

A segmental analysis of revenue, operating profit, segment assets and liabilities and is provided below. We do not include our adjusting items in the income statement segments, as we believe these do not reflect the underlying performance of the segments. The accounting policies of the reportable segments are the same as the Group's accounting policies, as described in the Financial Statements.

Adjusted operating profit by segment is set out below and reconciled to the Group's adjusted operating profit. A reconciliation of adjusted operating profit to profit for the period is shown on the face of the Condensed Consolidated Income Statement.

Our business is not highly seasonal and our customer base is diversified, with no individual customer generating more than 2% of revenue.

Exceptional items of £6.0m net expense (2023: £7.5m net expense) relate to Genus ABS (£6.0m net expense) and Genus PIC (£nil net expense). Note 3 provides details of these exceptional items.

We consider share-based payment expenses on a Group-wide basis and do not allocate them to reportable segments.

Other segment information