Welcome to the Genus full year results Q&A webinar. We're joined today by Stephen Wilson, the Chief Executive, and Alison Henriksen, who's the Finance Director. Stephen, over to you. Let me just welcome you all to this live Q&A session. We hope you've had a chance to look at the video of our results that we published this morning. Don't want to say more at this point, but just let's get straight away into Q&A. Thank you for that, Stephen. Today's Q&A will be via questions. To ask a question, please use the Raise Your Hand button, which can be found in the Zoom panel below. We will then take questions in turn. When invited to ask a question, you will be promoted to a panelist. Please bear in mind this may take a few moments, and once you're in the main section, please unmute yourself and start your video. Now, I'm delighted to welcome Charles Hall from Peel Hunt, who will ask the first question. Charles, please unmute yourself and turn on your video. Thank you, Charles. Please go ahead. Morning, Stephen. Morning, Alison. Morning. Morning. Can we start? It's nice to see the PIC tie, Charles. Very important. You know, it's the only tie I have to wear now. You know, it's a sign of the times. Right, you've totally thrown me now. I'll have to remember what my question was. China. Interesting on your slide on China to see the royalty volumes picking up quite nicely in H2 and actually pretty similar to H2 prior. Can you just unpick what's happened on the royalty side? 'Cause I totally understand the volume's well down overall. Is that just a function of the customers on royalties becoming larger or just explain what's happening there. Alison, do you want to take that? Yeah. It's just a reflection of the customers who bought our genetics. A couple of customers who are starting to stock new farms and sell a few pigs to third parties as well. They just happen to be royalty-based contracts. I mean, through this downturn, we're seeing no change really in the mix of business. You know, we started the downturn, if you like, with about 30%. Mm-hmm. Of our contracts or volume under royalty, and that's, you know, still the case. The comment on the prepared words were that it'll take a few months for volumes to start improving in China for obvious reasons. Where do you feel the customer base is? Obviously, they've had a pretty horrendous year, bled a lot of cash. Are they still feeling pretty battered or are they sort of starting to look forward to a market where there's a lower supply and potentially better money to be made? Yeah. Maybe I'll take that. Look, I think, as you'd expect, the customers are pleased to see the price has increased, and so they're feeling better. As you know, any businesses which are coming out of a pretty steep recession, you take a little bit of time to, you know, rebuild balance sheet, to reset to a new market environment. That's why we would expect the demand for genetics, which is typically a little bit lagging market movements. Yeah. You know, will take a number of months to, you know, get going again. I think that's. So. I think it's a very normal cycle. Yeah. We've seen it before. Is there anything happening on the customer side or is it more a matter of supplying the customers you've already won, as in it's quite difficult to win customers when the market's really tough? Look, I think we're actually pleased with progress in terms of conversations with both customers and prospects. I will say that one of the challenges that our China team have really been facing in the second half has been the COVID lockdowns. Mm-hmm. You know, just that ability to travel and meet with customers face-to-face, if you want to get business done, the ability to be in the same room is still quite important. I think, you know, the COVID lockdowns have definitely been something that have presented a challenge for the team. Obviously that's a challenge in the period, but presumably it's even more of a challenge for your competitors given that you've got a supply chain in China, whereas a lot of others have to fly in personnel and. Yeah, I think it's a challenge for everyone involved in business in China, frankly. Yeah. One last question from me before I let someone else have a go. You pulled out some numbers on China bovine, which has obviously become a bit of a success story having been a weak spot in years gone by. Then it also in the prepared remarks, you said it was beginning to become a less expansionary market. Do you want to just weigh up those two factors in terms of how your position is improving against where the market sits? Yeah. Look, I think that markets are always gonna go through phases where you know, they have expansion and then take a pause for breath. I think structurally what we've seen is that the China dairy market has grown quite substantially. Structurally, what you also see from the chart in the deck is that China still imports a lot of dairy product. Mm-hmm. I think there's still ongoing opportunity for there to be continued growth in the dairy market in China. The other big structural shift which has taken place, which I would say if you look back five or six years, you would see a dramatic difference, is that in the past the dairy business was made up of many small farms. What we've seen is a very significant consolidation into a few large dairying groups, which are actually quite integrated, owning both farming and processing. That's a very different environment from the one that existed several years ago. You've also seen that from some of the examples that we've taken a very structured and strategic approach to our relationships with these larger corporate customers. We're starting to move the nature of those relationships away from transactional selling and towards relationships where we can really explain and articulate and they can value what genetics can really bring to their herds. I think that it bodes well structurally for the future of our business in the sector in China. Does this mean you can potentially bring IVF into China, or is it not that far developed? No, I think there are opportunities for embryos alongside sexed genetics. I think you know an area that perhaps has not yet been really taken up by the Chinese dairying industry would be the idea of beef on dairy. You know, perhaps at this point, the industry has really been focused on expanding the dairy footprint. I think over time I'd like to see a significant opportunity for our beef on dairy genetics there as well. Great. Very interesting. Thank you very much. Thank you for that, Charles. Just as a reminder, if you'd like to ask a question, please use the Raise Hand button in the toolbar below. Our next question is going to be from Anand Date from HSBC. Anand, we have promoted you to panelist. If you could please unmute yourself and turn on your camera. Hello, everyone. Sorry, that took a moment. I was wondering, guys, could I ask a little bit about North America or Genus ABS, PIC China for a moment? North America seems unbelievably strong to me, and I was wondering, you know, you got 7% profit growth in PIC North America, 7% royalty growth. A, could you give us an understanding of what's driving that? And B, is it right that North America is sort of the center of excellence for how you do things? And to what extent then has that been applied globally? Is that the case already, or is there a lot more to do? Thank you. North America is performing extremely well. It really is a combination of a few things. First of all, the PIC 800 Duroc has been introduced into the market over the last couple of years. As Stephen showed in our presentation, they now have 85% of the top 20. The other thing is, of course, the Olymel acquisition, which occurred in February, reaping royalties from that, and also just the other internal programs that they've gained over the last couple of years. It's a combination of all those things, and we expect more growth to come. I wouldn't dare to say that they are the leaders within PIC because all of our regional teams are excellent at what they do. I think, you know, if you look at the numbers of each of the regions, you can see that. Leading PIC China's financial performance in the year. Even so, if you look at underlying what they're doing as well in setting up the supply chain for the future, you know, that it's an A-team, whichever region you look. Just on that, can we talk about sort of the market share? I think previously you've said sort of 25%, and you see no reason why you can't get to 40%. Is there an aggregate figure you can give sort of for LatAm or for EMEA, and therefore we can sort of say, "Well, okay, North America, most mature, most consolidated, they still think they can do this." You know, there's multiples of that still to go in EMEA, LatAm, etc. Maybe I'll take that. I'm not exactly sure of all the numbers you're quoting. Just to give a sense of how we are by region from a PIC perspective, I'd say we have a very strong market position in North America, and we've been taking share in North America, which you can clearly see from the data that we've shared with you. In LatAm, I would describe our position as really super strong. I don't wanna get into, you know, exact numbers, but I would say we have a super strong market share position in Latin America. In Europe, we historically had actually quite a modest market share, but we have been gaining share quite nicely. I think there's still plenty of opportunity in Europe to grow share further. In Asia, particularly in China, you know, we still have you know, a very small share of the market. The opportunity, you know, you can decide how big you want to make the numbers. Mm-hmm. It's a big market, and there's plenty of opportunity. Okay. Thank you. I have one on reproductive biology. You've provided that chart on the future incremental R&D-driven profit streams, which is quite interesting. I expect the answer is no, but would you be able to talk about some of the nearer term initiatives? On reproductive biology specifically, I'm very curious about the NPVs you sort of come out with. I would have thought success in reproductive biology offers sort of multiples of the NPVs you're flagging, because it accelerates chance of progress, takes out significant cost. Just curious what I'm sort of missing there. Yeah. Look, firstly, I think in terms of the chart that we've shared on our R&D pipeline, the key message from this chart is that our pipeline of R&D projects has grown quite substantially over the last two years as we built out teams in various areas that didn't exist before. One of those teams, as you point out, is reproductive biology. We're not gonna go into detail of specifying exactly what all of these projects are. You'll understand that there are commercial and IP reasons that we would not want to do that. I think the key message of the chart is there's lots of exciting things being worked on in our R&D teams. In terms of how one sizes the NPVs of these different projects, you know, there's obviously a you know an element of judgment required in the way that those are modeled. I think the main point is that does reproductive biology offer some potentially large transformational opportunities over time? I think the answer to that would be yes. However, there's a lot of discovery involved. That takes time. You see that the timeline axis on this chart is an important one also. Great. The last one on maybe not so positive a note. I was just looking at the risk register, in Sexcel you're sort of flagging the next generation of benches. I was just curious that you put it that the risk is increased. I was wondering why that was. The R&D pipeline, you know, a variety of things that you're dealing with. I'd say we're pleased with the growth that we've seen in Sexcel, with the performance that the business is delivering for ourselves and for third parties. You know, I wouldn't read too much into it. Okay. Perfect. Okay. Thanks very much. Thank you very much for your questions that are there. I'd now like to ask Jens Lindqvist from Investec to come and ask a question. You've been promoted to a panelist. Please unmute yourself and also start your video. Jens, if you just unmute yourself, and now start your video, please. Yeah. Sorry, it took a little while. A couple of questions if I may. First of all, on PIC800, obviously doing fantastically well in North America, you know, has done over the past couple of years. Could you give a little bit of color on the commercial potential for that sire what's outside of North America? You know, perhaps specifically in Europe and would expect a sort of a similarly positive reception elsewhere. If not, why not, I guess? Secondly, on Spain specifically, which appears to be emerging as the pig production hub of Europe almost. Could you give a little bit more detail on the market share you have in that geography among the top producers? If there, you know, what the scope for a market share gain could be, perhaps in addition to the underlying growth? All for now. Thank you. Yeah. Thanks. Thanks, Jens. I need to also congratulate you on the PIC tie there, so. Oh, yes. Thanks. Very good. Look, the PIC800, I think is doing well everywhere. We highlighted North America, you know, because I think there's just quite a dramatic story there. You know, the Duroc sire in North America has been quite a trend amongst producers over the last few years. You would find in some other geographies, you know, take Europe, for example, where you would find if you went to, say, a country like Germany, you would have a heavy emphasis on, say, Pietrain boars. There are some different preferences amongst producers in different parts of the world. Generically, I would say, the PIC800 is doing super well in America. It's doing well everywhere, and the opportunity is good for it. Okay. If we then go to your question around Spain, then I'd put it in a little bit of a historical context. If we went back quite a few years ago, then we had a very disappointing, and I would say, inappropriate share of market in Spain. We changed a lot of things there in terms of the product we were offering, the way that we were setting up with our availability of product in the marketplace, the personnel and the team. You know, we've really refreshed a lot of things, and we've been working steadily over many years to grow our presence in that marketplace. Structurally, I'd say that we've made very good progress on the female side, particularly. You can see that a little bit in some of the customers that we're highlighting, where you can see the female share has done very well. We've had a bit more ground to catch up on the male side of the business, and that's why you've seen us actually be quite proactive over the last couple of years in creating more capacity to serve the marketplace. The Semen Cardona relationship was around creating more boar stud capacity. The Sergal acquisition, the same theme. Let's get more boar stud capacity. We think there's a good opportunity as we add this distribution capability for the male market share in Spain to start to catch up to the female share. Okay. Understood. Thank you. Thank you, Jens. We have our next question from Damian McNeela, who's from Numis. Damian, we're promoting you to panelist. Damian, if you could please unmute yourself, and please turn on your camera when you arrive. Damian, please. Hi. Morning, everybody. I'm feeling slightly left out. I don't have the PIC tie on, so, I'm gonna have a go and purchase one. A couple of questions from me, please. First on China, I think it's really interesting to sort of see that sort of, as most people expected, that cycle is coming back. Interested in your comments around how we should think about or how customer conversations are going around composition of revenues going forward, whether we. As the industry builds back, are we seeing consolidation in the same way that you sort of mentioned that the dairy industry is consolidated? Should we see more royalty contracts coming through in China? How that sort of looks would be sort of my first question. Yeah. I think it is inevitable there'll be more consolidation of the industry as the market recovers, and we're very well placed to take advantage of that because all of our customers are in the top 50. In terms of contract mix, PIC have continued to promote the royalty model in China, but also being selective about who they have that type of contract with. But having said all that, yes, I fully expect over time we'll see further increase in mix of royalty contracts relative to upfront contracts. In the near term, should we expect sort of a similar mix of business that we had? Yes. I. In the more recently? We're not expecting a big shift in the near term. I don't expect a dramatic shift in the next six months, no. No. Yeah. Okay. That's pretty clear. Thank you, Alison. Then just on sort of European market share growth, can you sort of talk a little bit more about how important the Sergal acquisition or the Sergal deal has been in terms of helping you drive that market share growth and whether there are any other markets outside of Spain that are sort of that you view as sort of critical to sort of helping drive market share gains across Europe? Yeah. Sergal has been important for the Spanish business, no doubt about that. There will be other opportunities in Europe potentially for PIC. Yeah, we've got our eyes open. There's no sort of particular target market that you're sort of focusing on across Europe at the minute. It's sort of just a. Well. Broad-based. Yeah. Approach. Is that fair? Not one particular country. No. Yeah. Okay. Last one from me, just geeky question on the NPV chart, the PRRS bubble, is that global or is that ex-China? That's global. Global. Okay. Thank you. Damian, thank you very much for your question that's there. We have our next question from Darren Shirley. Darren, we're promoting you to panelist. Please join, then start your video, and then unmute yourself. Thank you. Darren, please go ahead. Yeah. Hi. Sorry that took a while. I have a question on the Russian operations. Can you update us a little bit how things are going there? Have you been able to operate normally or were results down, maybe excluding the ruble tailwind? Something that would be interesting if you could talk a little bit how your experience operating in Russia in these circumstances has maybe changed how you look at China as an opportunity, because as you probably are well aware, a lot of companies are rethinking their China strategy. I was wondering if you're also doing this in this regard. Thanks. Yeah. Let me just address Russia. I think the first thing to say is that you know, we took a decision To continue operating in Russia as we're part of the food supply chain, providing basic commodities that are important for people's diets. We felt in line with our, you know, vision and mission of helping to nourish the world, it was important that we, you know, were consistent with that. In saying that then, we've also been very cognizant of the fact that a variety of sanctions legislation has been passed, and we're, you know, very scrupulous in ensuring that we're adhering to all of those requirements in, you know, the people that we deal with and the banking system and all the other aspects of the sanctions legislation. I think that's very important to state upfront. That obviously has made business more complicated and challenging. Transport obviously is another matter that has obviously become, you know, significantly challenging. If we, yeah, you know, look overall at the business, we have continued to operate there. Our results in the year were down overall, and partly reflecting actually the very strong prior year that we had in porcine due to some specific projects that were taking place in that year. Generally, you know, we have a good market position in Russia, and we have strong teams there and, you know, we're trying to support them in the best doing business in the best way that we can, while adhering to all the sanctions legislation. With regard to your question on China, you know, I think that we see China as a very important market globally and, consistent again, with our vision and values, we believe we should be active there and helping to feed the world. There are 1.4 billion people there, and there are significant opportunities to improve the efficiency and sustainability of food production in China, and we think that, you know, we should rightly be continuing to play a major role in seeking to help with that. Okay, that's clear. Thank you. Thanks very much for that, Darren. We will now have another question from Anand Date from HSBC. Anand, please go ahead. Hi, guys. I just wanted to ask about industry consolidation in the sort of tail. So sort of Eurotranssemen over, I think there were some co-ops in Europe on the porcine side that are getting together. Or A, what are your thoughts on that? And B, has it had an impact? Do you think it will have any impact, please? Yeah. So I would say I don't think we have seen significant impact from it. Generally speaking, I think there is scope for further industry consolidation in both porcine and bovine. You mentioned European co-ops. There are a number of bovine European co-ops that you know actively in discussions with each other. You know, we've seen Topigs and Norsvin come together to make Topigs Norsvin. You know, on the other side, we've seen actually a fragmentation of DanBred into multiple companies. So these shifts are gonna continue. Generally speaking, we like industry consolidation, whether that's something that we're participating in or others are doing, we think it's good news either way. I think I'll leave it at that. There's no discernible impact on your business yet. Is that fair? Yeah. Okay. Thank you. Thank you very much for that question. Just as a reminder, if you'd like to ask a question, please could you raise your hand. Anybody who'd like to ask a further question, please raise your hand. Thank you. Just pause for a moment while we wait for any further questions. Okay, as we have no further questions at the moment, I'd like to pass back to you, Stephen, for any closing and final remarks. Just to thank everyone for your time today, for participating, for some good questions. We'll be making the webcast available on our website, along with the prerecorded remarks and the presentation. We look forward to continuing conversations with you as we go through the roadshow. Thank you.