GENSF (GENSF) Q4 2026 Earnings Report, Transcript and Summary

Okay. Good morning, everybody. It is 09:00, so let's get started. Welcome to our presentation of the GENES FY 2026 results. My name is Jorgen Kokke. And I am Genus' CEO. I am joined by Andy Russell, Genus' CFO. And together, we will be taking you through our excellent results for FY 2026. This is the usual disclaimer. I would encourage you to read it separately. Let me start with a brief overview of GENUS and the key highlights from the year. I will then hand over to Andy, who will take you through the financial results in more detail. Before I return to take you through our strategic progress. Before turning to the results, this is a slide as a brief reminder of what GENES does. And the value we create for our customers, and for society. The key takeaway is that our products improve farmer productivity, and profitability, while simultaneously reducing the environmental impact of animal protein production. Turning now to the key highlights. FY 2026 was a year of excellent progress across the group. From a financial point of view, adjusted profit before tax and adjusted earnings per share both increased by 35%. We also generated £62 million of free cash flow, substantially ahead of prior year. In relation to our novel PRP technology, in the year, we secured approvals or favorable determinations in Argentina, Canada, Uruguay, and Peru. We are also now beginning the process of commercializing PRP in selected Latin American countries. We also successfully formed our porcine joint venture in China This platform backed by a large state owned entity, accelerates PIC's long term growth opportunity, in the world's largest porcine market. While also crystallizing significant value for Genus shareholders. Our balance sheet has been materially strengthened through our strong free cash flow. And from the proceeds of our China JV. In line with our capital allocation framework, we are therefore announcing a £60 million share buyback which we expect to be completed in FY 2027. The buyback reflects the Group's strong balance sheet, strong sustainable cash generation, and the board's confidence in the future growth prospects of the business. I am also pleased to report that the board is recommending a 10% increase in the full year dividend. Let me now hand over to Andy to take you through the financial results.

Thanks, Jorgen, and good morning, everyone. I will take you through the group's financial performance, the main drivers within PIC and ABS our cash flow and balance sheet, and the implications of the PIC China joint venture for future comparability. Starting with the headline group financials. FY 2026 was a very strong year. Revenue was NOK 658.1 million, 2% lower in actual currency primarily reflecting the deconsolidation of PIC China following formation of the joint venture. Adjusted profit before tax increased by 35% to NOK 100.2 million. And adjusted earnings per share also increased by 35% to 110.3p. These figures include the £5.6 million milestone receipt from BCA, we recognized in the first half. Free cash flow increased to £62 million, representing cash conversion of 94%. This reflects strong underlying trading increased dividends from joint ventures and lower exceptional cash payments. Our balance sheet also strengthened substantially as a result of our very strong free cash flow and proceeds from the JV formation. Leverage reduced from 1.5x at January 2025 to 0.4x at January 2026. Our balance sheet strength gives us strategic optionality, And as referenced earlier, having reviewed our capital allocation options, we have decided to return CHF 60 million of capital via a share buyback program. This is in addition to 10% growth in our full year dividend. The share buyback program will commence immediately, and we expect it to complete in the second half of FY 27. Finally, return on invested capital also improved materially, reflecting higher profit and disciplined capital management. Moving to the next slide. The group result was supported by continued momentum in both business units in PIC, a-- sorry. We-- here we go. Sorry. We have got a-- we are good now. Okay. In PIC, adjusted royalty revenue grew by 5% in constant currency, Adjusted royalty revenue is defined as PIC's royalty revenue plus PIC's share of joint venture royalty revenues. it is a metric that better illustrates PIC's performance because joint venture royalty revenue is not otherwise consolidated. Given the increasing size and significance of PIC's joint ventures, we believe this is an important metric with which to consider group performance. As you can see, every PIC region delivered growth. With particularly strong contributions from Southeast Asia and our joint ventures. We PIC adjusted operating profit increased by 17% to NOK 130.8 million, including the NOK 5.6 million BCA milestone, and the adjusted operating margin increased by 33 basis points to 30.9%. In ABS, Seb volumes increased by 2% to 8.8 million units, Adjusted operating profit increased by 17% to £22.9 million, and the margin improved by 130 basis points to 7.5%. Driven principally by benefits from the Value Acceleration Programme. Moving to group adjusted operating profit. The year on year growth was broad based. Group adjusted operating profit, including joint ventures, increased by 25% to £135.5 million. The largest contribution came from PIC, including strong performance in China and Latin America, as well as the GBP 5.6 million BCA milestone compared with a £3.7 million milestone reported last year. ABS also delivered good profit growth, predominantly through VAT benefits. Group adjusted operating margin increased by 380 basis points to 17.6%. Excluding the BCA milestones in FY 25 and FY 26, the margin increased by 350 basis points to 16.8%. Demonstrating the strength of the underlying improvement. Looking now at PIC in more detail, Adjusted operating profit increased by 17% to £22.9 million, and the margin increased to 30.9%. Excluding the BCA milestones in both periods, profit grew by 16% and the margin was 29.3%. Latin America performed very strongly. Supported by high breeding stock sales, while Southeast Asia and China also delivered good growth. This was partially offset by customer disease challenges in North America, during the second half. Excluding the milestones of $5.6 million in FY 2026 and £3.7 million last year. Underlying PRP costs increased by £1.5 million as we continue to invest ahead of commercialization. Global production also benefited by around £5 million from nonrecurring favorable input costs in the first half and a farm sale in the second half. Foreign exchange also provided a £1.3 million tailwind in the year. Given the increasing size and significance of PIC's joint ventures, we wanted to provide additional color on the performance of these JVs. On this slide, you will see the performance of AgroSeries PIC and PIC China laid out. We have a 49% equity share in both. The top row shows the performance of 100% of each joint venture entity. Agroceres had an extremely strong year with adjusted operating profit increasing by 56% to million, partially driven by strong breeding stock sales. Genus' share of AgroSerus profit increased to £19.1 million. China also performed strongly. For the full entity, volumes increased by 71%, royalty revenue increased by 52% and adjusted operating profit increased by 81% to £15.2 million. Genus' reported share of PIC China adjusted operating profit was £12.2 million, reflecting 7 months of full ownership followed by 5 months at our 49% joint venture interest. These results demonstrate the strength of our partnership in these 2 incredibly important porcine markets. Turning now to ABS. Adjusted operating profit increased by 17% to £22.9 million, and the margin improved from 6.3% to 7.5%. VAP continued to be the principal driver of the improvement We realized £9 million of benefit in FY 2026. Comprising NOK 2 million from the annualization of Phase 2 and GBP 7 million of in-year Phase 3 benefits. Phase 3 exited the year at the targeted GBP 9 million annualized run rate. Our Sexcel business continued to grow although this was offset by challenging dairy related genetics volumes, amidst weaker market conditions. Bovine product development costs increased by £3.6 million as expected, principally due to higher depreciation associated with prior period investments. We are pleased with the continued progress in ABS and remain focused on achieving a double-digit margin over the medium term. Research and product development remains central to Genus' competitive advantage and long term growth. Looking at the top left chart, total research and product development spend, excluding the BCA milestone, was GBP 73 million. In FY 2026. Equivalent to approximately 11% of group revenue. The year on year decrease primarily reflected favorable commodity effects within Porcine product development, and planned lower research expenditure. Moving to the bottom left, lower research expenditure in FY 2026 represents a base level and we expect research costs to grow in FY 2027 albeit remaining below 3% of group revenue. With Porcine, lower product development spend in FY 2026 was primarily due to the commodity favorability, Underlying PRP investment increased adjusting for the BCA milestone receipt, we expect underlying PRP costs to increase further in FY 2027 as commercialization activity builds. Bovine product development increased, driven by higher depreciation on earlier investments, and the impact of the de novo minority acquisition. Moving now to our statutory income statement. As a reminder, we consistently measure and report adjusted results as we think these give a better view of the group's underlying performance. Our statutory results were affected by non cash items, in particular, IAS 41, which can give a misleading view of the group's underlying performance. The net IAS 41 movement was a £12.8 million increase. Primarily driven by Porcine compared with a £13.3 million decrease in the prior year Exceptional expenses reduced to £5.8 million from GBP 11.4 million last year, as expected. Within other gains and losses, is a GBP 204 million gain arising on the deconsolidation of PIC China following formation of the joint venture with BCA. This is the main reason why statutory profit before tax increased to £310.5 million. Net finance costs reduced to £15.8 million, reflecting lower borrowing and lower average interest rates. Lastly, our adjusted tax rate was broadly stable, at 27.2%, And you will see from our technical guidance in the appendix that we expect a broadly similar tax rate FY 2027 as well. Turning now to cash flow. We generated £62 million of free cash flow in FY 2026, compared with CHF 40.9 million last year. We saw strong positive contributions from higher adjusted EBITDA and a NOK 10 million increase in dividends from joint ventures. The substantial increase in JV dividends was driven by a larger than usual catch up dividend from Agroceres, The year on year working capital movement was negative, largely because FY 2025 benefited from a very strong improvement in bovine inventories and receivables. We are pleased to have held on to the majority of these gains, but the year on year is therefore a negative. I am pleased that exceptional cash payments were lower, partly offset in the working capital movement. Cash conversion remained strong at 94%, Looking ahead, we expect FY 2027 free cash flow to also be strong but lower than FY 2026. Principally due to the China joint venture formation and because of a modest increase in net capital expenditure. Strong free cash flow generation and proceeds from the China JV formation have significantly strengthened the group's financial position. Net debt reduced to GBP 71.8 million at 06/30/2026, and leverage fell from 1.5 times at the start of the fiscal year to 0.4 times at year end. Return on adjusted invested capital improved to 18.4% compared with a restated 15% in FY 2025. The prior year figure has been restated to remove biological asset fair value uplifts in joint ventures. Providing a more consistent measure of underlying returns. The Board is proposing a full year dividend of 35.2p per share an increase of 10% a return to sustainable growth. This represents a payout of 32% of adjusted earnings per share is consistent with our progressive dividend policy. Moving to the next slide, we wanted to take you through the normalization of FY 2026. Given the substantial number of moving parts in the year. Starting with our reported FY 2026 results, we have laid out the impact of firstly, removing PIC China from the full year which reduces adjusted PBT by CHF 12.2 million. Secondly, adding back a full year of 49% of PIC China, which increases adjusted PBT by GBP 7.5 million. Next, we removed the BCA milestone of GBP 5.6 million And lastly, we adjust for the impact of the JV proceeds and hedging which increases PBT by a further NOK 5.1 million. This gets us to a pro forma FY 2026 PBT of SEK 95 million compared to our reported CHF 100.2 million. We have then isolated the CHF 4.7 million of 1-off production benefits in PIC relating to nonrecurring input cost benefits of 2.8 million and a farm sale of CHF 1.9 million. This then gets us to a normalized FY 2026 PBT of NOK 90.3 million. Which equates to 24% growth over the FY 2025 equivalent of CHF 72.8 million. Believe NOK 90.3 million is the appropriate base to consider as we look ahead to FY 2027. For FY 2027 itself, we have then flagged the key considerations. The annualization of ABS VAP Phase 3 benefits, higher bovine product development costs, higher porcine product development and PRP expenditure, and the benefit of lower average net debt. Let me now lastly turn to our capital allocation framework. And deployment during FY 2026. Continue to target through the cycle leverage of between 1 and 2x net debt to EBITDA, At 0.4 times, the year end position is below that range, giving us significant strategic flexibility. Our first priority remains investment in compelling organic growth opportunities. FY 2026, we invested approximately £76 million in research and development. Our second priority is a progressive ordinary dividend. The proposed full year dividend of 35.2p per share represents 10% growth, and a 32% payout ratio. Third, we will continue to assess inorganic opportunities. Against strict financial and strategic criteria. We are monitoring the market, but we will remain disciplined. Finally, where capital is surplus to these priorities, we will return it to shareholders. In line with that framework, we are announcing a £60 million share buyback, we expect to complete during FY 2027. The buyback maintains a strong balance sheet, whilst delivering an additional return to shareholders and reflects the Board's confidence in the future growth prospects and cash generation of the business. Post the buyback, I would expect that with another year of good free cash generation, and leverage by the end of FY 2027 to be around the bottom end of our targeted range. Of 1 to 2 times. With that, I will hand back to Jorgen to discuss our strategic progress and the outlook.

Thank you, Andy. Let me now take you through the strategic progress we made during FY 2026. Firstly, our 3 strategic priorities remain clear and unchanged. Our first priority is continued growth in Porcine, and accelerating PIC's long term growth in China. During FY 2026, PIC delivered solid royalty revenue growth and strong profit growth. As for China, as Andy highlighted, we achieved 52% royalty revenue growth. In the largest porcine market in the world. And of course, we successfully formed our strategic joint venture there. Our second priority is successfully commercializing PRP and generating attractive returns from our R&D investments. Many of you will know that PRP is our game changing new technology, And during the year, we secured further approvals The Americas. The commercialization process is now beginning in selected Latin American markets. Our third priority is driving greater value from Bovine. VAP phase 3 has achieved its targets, and VAP overall has transformed ABS into a leaner and more efficient business. As we transition to life after VAP, our ambition remains achieving double digit operating profit margins over the medium term. Starting with our first priority, royalty revenue is a fundamental driver of the earnings quality as well as the resilience of our business. Our royalty model aligns BIC's economics with the value delivered to customers. It incentivizes customers to update genetics more frequently, deepens long term relationships, and generates recurring revenue that is relatively independent of commodity price movements. Adjusted royalty revenue, including our 49% share of the joint ventures, reached £197 million in the year representing a 4-year CAGR of about 6%. The 4-year compound growth rate shown on the slides are healthy across the portfolio. 4% in North America, 8% in Latin America, 6% in EMEA, 12% in Asia, and 12% across our joint ventures. This broad based growth demonstrates both the strength of our genetics, and highlights the opportunity in both developing as well as in mature markets. Growing royalty revenue remains 1 of our most important long term value drivers. Turning then to China. PIC delivered strong growth in FY 2026 despite declining pork prices, and weak producer profitability. Royalty revenue increased materially, as I mentioned before, while strong breeding stock activity supported non royalty revenue growth. We also had a positive and collaborative start to our joint venture relationship with BCA. Together, we are building a strong platform for growth, and we are continuing to win new royalty customers. We estimate that PIC's market share increased from 3.4% in FY 2025 to 5.4% in FY 26. This demonstrates that customers continue to recognize the economic value of our genetics even in a challenging market. We remain very excited about the long term opportunity China is the world's largest porcine market and our current share leaves substantial room for growth. Moving to our second priority, PRP. FY 2026 was another year of meaningful regulatory progress for the PRRS resistant pig. Following earlier determinations, in Colombia, Brazil, The Dominican Republic, and U. S. FDA approval We secured the green light in Argentina, Canada, Uruguay, and Peru. This expands the potential commercial footprint for PRP and represents important validation of the technology and our regulatory approach. The Canadian approval is an important step towards North America, American commercialization. As you all know, PRP is the first mainstream gene edited livestock product. And as such, regulatory timelines are difficult to predict. Mexico, Japan and China remain in process, and we continue to engage constructively with the relevant authorities. Importantly, I would like to flag that the commercialization process is beginning in select selected Latin American countries. Our goal is to establish operational and customer foundations, for long term adoption. Importantly, this will provide real world experience and data to support commercialization elsewhere in the world. Turning now to ABS. The Value Acceleration Program has delivered substantial progress since it began in FY 2024. Phases 1 and 2 focused on creating unified global leadership, improved pricing governance, selective globalization, and better product allocation and mix management. Together, they delivered approximately £21 million of adjusted operating profit benefit. Phase 3 has focused on reshaping the go to market model, and ensuring we better recover our service cost. VAP 3 delivered £7 million of benefit in FY 26, and achieved an annualized run rate of £9 million We are now targeting the VAP program to complete during the first half of FY 27, However, the focus on productivity established through VAP will continue. And is now part of the way ABS operates, rather than a standalone transformation program. As we are wrapping up VAP, I wanted to highlight the strength of the ABS business. ABS is a leading bovine genetics player. It has deep customer relationships. Leading dairy genetics, best in class beef genetics, and is 1 of only 2 industry players with com with a commercial sexing technology. Building on these strengths, we are pursuing 2 primary strategies to achieve our double digit operating margin goal. First, we will drive our top line through commercial excellence. Building a higher performing commercial organization, creating leverage through repeatable processes and systems, resulting in profitable volume growth. Second, we will drive our margin through operational excellence. Expanding gross margins, sustainably by embedding lean principles, and continuous improvement and using intelligent automation and AI enabled process improvements to enhance customer value and eliminate waste. We have recruited 2 experienced new leaders, from outside of our industry, to lead commercial and to lead operational excellence. And drive these broad based value creation initiatives throughout ABS. We remain excited by the opportunity ahead and committed to achieving a double digit ABS operating margin over the medium term. Let me now conclude with our outlook for FY 2027. First, FY 2026 was a year of strong profit and cash generation. Combined with significant strategic progress. We formed a strategic joint venture in China secured further PRP regulatory milestones, and are ready to begin the commercialization process in certain Latin American markets. We are returning surplus capital to shareholders via a £60 million share buyback, which reflects our strong balance sheet. Sustainable cash flow, and confidence in the future prospects of the business. As we look to FY 2027, we expect resilient underlying profit growth despite cyclical weakness in a number of agricultural markets. At the group level, we expect underlying adjusted PBT constant currency, to be moderately higher year on year. In line with consensus expectations. For PIC, we expect moderate adjusted operating profit growth, from a normalized base, as Andy outlined earlier. For ABS, we also expect moderate adjusted operating profit growth, as VAP benefits annualize and continuous improvement initiatives progress. Group PBT is expected to be second half weighted, noting that the first half of last year included a £5.6 million BCA milestone, and fully consolidated PIC China. Lastly, we also expect FY 2027 to represent another year of strong free cash flow generation. With that, let me leave you with the high level investment case for Genius. First, our end markets are growing and resilient. Supported by increasing global demand, for animal protein. Second, we have strong market position, positions and leading products. Third, there is significant white space, even PIC. The clear global leader in porcine genetics. Has less than 20% global market share. Fourth, we have 2 potentially transformative growth opportunities in PIC China and with the PRRS resistant pig. And finally, our competitive position is protected by a highly defensible, intellectual property portfolio. Together, we believe these strengths support resilient growth, attractive returns, significant long term value creation. With that, let me thank you for your attention Andy and I are now happy to take your questions. Joss?

Charles Hall from Peel Hunt. Yeah. I mean, obviously, you had a really strong performance. In both Brazil and in China in the JVs last year, which you highlighted. Both of those markets are facing pretty weak pig prices at the moment. Can you just give an on how the businesses are performing against that backdrop, Joel?

Yes. We have had a tremendously strong performance in Latin America over the last year. Latin America and particularly Brazil benefited from strong export markets and also strong domestic demand. That market is facing certain headwinds as you noted Charles pork price in Brazil particularly has dropped. it is partially to do with the situation in The Middle East, and also exports of poultry, you know, sort of not flowing into The Middle East and that pushes down pork prices as well. And I will come back to China. However, we have a strong business model with our royalty revenues you know, protecting us against volatility in the underlying commodity. And so we are confident as it relates to the future. But that being said, we are probably going to see lower growth in Brazil in FY 2027. And that is obviously baked into the outlook that we just shared. Now, as it relates to China, China has been suffering from very low pork prices. Actually during and throughout FY 2026, we saw the prices materially weakening during FY 2026. But given our low market share, we have been able to strongly grow our business in China. I note the more than 50% growth in royalty revenues. It certainly highlights the strength of our product And, you know, I would say in general, in the tough times, and when markets are not good, customers really sort of go to PIC for productivity savings. Obviously, our products help to produce more with less, so more protein with less feed, less water, potentially lower labor cost and as such, in the bad times, PIC genetics tend to perform robustly. And so in China, we still have a lot of growth ahead of us.

1 other question for me. You highlighted disease instance being higher in North America in the winter, higher price rates. Can you just give some color on what that actually implies for royalty revenues? In full year 2027?

Yes. The disease season in North America has been particularly bad. PRRS particularly has been rampant in North America. That obviously has an impact on the sector, It probably helps with pork prices, but then sort of the volumes go down. Because as a farm gets hit with purse, you know, they may have to clear the farm or, you know, certainly productivity goes down a lot and so that has an impact on our royalties, right, because there is fewer piglets born and fewer piglets weaned and so that has a bit of an impact on our royalty revenues. That has played out in the second half of FY 2026, that pattern. We are now in the summer season, so we are gonna have to see what happens next winter. We would probably expect more normalization. And if that happens, we will see a return to growth in North America in the second half of FY 2027.

Great, thanks.

Seb, please.

Thanks. Seb Jantet with Panmure Liberum. Just 2 questions, if I can then.

Just first of all, you called out that the BCA JV started well. I am just wondering kind of as you are out now, kind of, you know, you go got your feet on the table. What are you seeing in terms of changes with there? Has that helped you gain more traction with customers? It helped open some more markets? So yes, I would say that we have not seen a lot of change, and that is intentional. there is been no changes in the management team. You know, and so which we believe is a really good thing. Our team is focused on working with customers, executing in the market and both J. V. Shareholders are aligned in our intention and our desire our commitment to grow our business in China. And while the partnership may help us down the road, you know, with getting access to certain SOE type of customers, We have not seen that as yet. But I would certainly say that the joint venture has made a successful start. Again, I point to the 52% in royalty revenue growth. And I also point to the growth in market share from, you know, about 3 to more than 5. And we certainly intend to continue on that path. Towards growth.

Okay. And then 1 other question, if I may. Just in the statement, you called out an Indian contract in kind of ABS. I wonder if you could me a little bit more detail on that contract.

Yes. We are very pleased with our position in India. Which is a successful and profitable business for ABS. We have been able to secure a 5-year contract with 1 of the largest states in India. So it is a government contract. We have experienced working with them and we are now in the process of ramping up that contract. We are ramping up our production there, bringing machines into India. But it has started well. And so we are very positive and pleased with the with the progress in India. Which obviously is a Sexcel contract. So it is Thanks. Thanks very much. Adam Tomlinson from Berenberg: Just 3 questions, please. Just on China and that royalty rate growth there, you mentioned new customer wins. Yeah. Is-- so is there just any more color you can give on that. Just type of customer you are winning over there. And, also, is there more to do with the existing customer base as well, as is there more you can extract from that is the first question. Second question is just on ABS. With some I noticed some sort of M&A going on in the in the competitive environment there in The US. Just any comment on that and how that market dynamic might have changed? And then thirdly, just on cash flow, obviously, noting that great growth this year in terms of free cash flow, a little bit of working capital movement over the past couple of years. Just any guidance just from a modeling point of view in terms of how we should think about working capital going forward. Thanks. Okay. Thanks, Adam. I will give the cash flow question to Andy. But maybe I will take the China question first.

So our growth in China is fueled by both new customers as well as existing customers. We have previously communicated the number of new customers. 1, but reflecting on that, feel that the appropriate metrics are more market share, and royalty revenue growth. The reason is that winning a customer could mean you win 2% of their market share or it could mean you win 100% of their market share. But rest assured, our growth opportunity is both with existing customers as well as with new customers. And so with many of the large customers, we are really in the early innings So meaning, you know, we only have 1 of their farms and they might have 100 farms. To give you to give you a sense of it. So that is clearly our focus. You know, as it relates to ABS, and I think your question is, whether I can comment on the competitive sort of merger activity right? Well, I really cannot say much about it. Of course, I read you know, the newspapers as well, but there is there is 2 competitors. They are they are named ST Technology and Select. They announced their desire or their plans to merge about 3 years ago, I know that it is taken them a very long time navigating the you know, hurdles that they have to go through. There are certainly rumors out there that they might be able to navigate that, but I cannot really say more than that. Yeah.

On working capital, you are right. We have as part of the VAP early VAP program, we had a focus on inventory and receivables within the Bovine business within ABS. That led to quite a significant reduction in working capital in FY 2025. Through FY 2026, I think we have seen a return to normal working capital movements to support growth. But not losing those 1 off benefits that we realized in FY 2025. I think as we go into FY 2027, as Jorgen pointed out, we continue to see growth which is a good thing given the market backdrop. And I would expect a normal investment in working capital to support that growth. But not seeing the reduction in working capital that we have seen in FY 2025. So back to normality, I would say. Yes. Yeah. Just on the share buyback, really, the £60 million. Do not know if you could give us your thought behind that number. Why £60 million here? it is just a relatively modest number in the grand scheme of things? Andy, you want to take that?

Yep. Thank you. Yeah. Yeah. So I would start off with the capital allocation framework that we set out in February. And importantly, referring to the leverage range of 1 to 2 times through the cycle. it is an important guide. And then looking at the overall the buyback itself, this is our first buyback that we have done. And so I want to be cautious and also looking at the net Marvel proceeds which came through, which were around about £81 million. And then looking at the year ahead, where we expect to see continued free cash flow generation, is a good thing. But also looking at where we think we will end the year within that leverage range. Like I said, all things going to plan, I would expect us to be at the bottom end of that range. And I think importantly, we want to maintain that strong and strategic optionality in the balance sheet such that we are ready for investments as they appear. So 've got identified organic investments, which will continue to drive the growth, but it gives us that strategic optionality through the year. And then come the end of FY 27, we will continue that disciplined execution against the framework that we have set out.

Andrew, or? Andrew Forster from Peel Hunt. I am just thinking about North America, mainly sort of PIC, sort of hearing a lot about the k-shaped economy. And I know genius is 1 step or 1 or 2 steps removed from that. But I am just wondering sort of, are your customers' customers and Genus's products fairly broad based in terms of exposure to that US sort of end consumer? that is the first question. I will, yeah, leave you with that and come back to the next. Yes. I would say yes. Our products are very broad in terms of where they are used, where they find their way, right? I would also point to exports from The US. The US exports about 30% of its pork production. You know, as we have discussed before, Mexico would be the number 1 export destinations, but there is many more export destinations. But to your question, is it narrow, is it broad based? Now we would cover the entire pork industry. Right? I mean, our market share, I think, is well known, about 50%. We do business with 19 of the largest 20 producers. And our products find their way in, you know, food service, retail, know, across the entire spectrum and nationally for sure. Great. Thank you. And the next 1 sort of on China and the market share growth, obviously, really impressive this year. And it is sort of following on from Seb's question, but the early signs from the BCA, what is your sort of expectations for market share growth sort of in the short term next year, FY 2027? And maybe even, you know, beyond that sort of both xPIC and then how much could sorry. PRP, how much could that sort of enhance it? When we think a bit more about the medium term opportunity there? Yeah. I would say first also sort of building on Seb's earlier question, right, about the relationship with BCA. What they really bring to the table is connectivity with the government. So we do see benefit in that relationship in terms of navigating the PRP regulatory process. And I am sure we will talk about PRP. Right? But that is certainly an area where they have great strength. Our partner is partially owned by 1 of the largest state owned entities active in the food sector. So they are directly connected to the Beijing government that is definitely you know, an important aspect that they bring to the relationship. But in terms of market share gains, yes, I am not going to give you any specific numbers, you probably know. But yes, we continue to pursue growth at the current sort of pace and at the current trend. And, yeah, our partners have high expectations. They have high expectations, so we are certainly working towards double digits right, in, let's say, certainly not in f y 27. But in future years. And we will not stop at that and that is clearly when we talk about the opportunity I think we are proving that we can capitalize on that opportunity. Of course, the Chinese pork market has always been large, right? But our market share has been low, And so to gain 2 percentage points in 1 year, I mean, is very encouraging. They described it as Thank you. Yeah.

Christian Glennie with Stifel. I have just the usual kind of question as much as you can, you know, anything we can glean around PRP in Mexico and China. I know I know obviously, there is no key updates here. But just anything in terms of some any anything further you can say around, obviously, there was a new slight change in administration in Mexico and things like that, anything around that. And then on China, the status of PRP in China, please.

Yeah. Yeah. Thank you, Christian. Well, I will make the usual caveat that which I also highlighted in the presentation is that this is a new technology. Right? it is the first mainstream gene edited protein or livestock product. That goes through the regulatory process. I would say that in almost any country, it is been very difficult to predict the timing. Say The US is probably the country that has the sort of clearest process laid out, but even there, it took I would say, probably years longer than we had expected. Mexico is not as clear you know, in terms of how the process works. that is for sure. That being said, we have very constructive dialogue with Mexican authorities. There is a organization called SENASICA, which is the local equivalent to the FDA. We find them extremely professional and supportive. Of the technology. And so I cannot give any timelines other but I can say that we have satisfied all their requests for information. And hopeful to complete the process. I would say in terms of China, it is a little bit different. China is the only country where we had to do local disease challenge studies. So what does that mean? Well, it means that we brought PRRS resistant pigs into China and we exposed them to China born PRRS viruses. Actually, we did more testing in China than we did in The US, and we used The US data for all other countries. That has now been completed on multiple generations of pigs and that has been completed successfully. So that we are now in a position to pull our dossier together proceed towards a submission Our data will then be reviewed by an expert panel, so Chinese scientists, And assuming that goes well, then they will make a recommendation to the Ministry of Agriculture. So again, I mean, we are pretty positive about that. Again, I do not wanna give timing, but really good progress in China.

Thanks. And then a follow-up on ABS and the progression to the double digit margin. You highlighted the 2-- the combination of top line growth, but also some further operational gains. what is the sort of rough mix of how you get to that of those 2 component parts to how you get to that 10%? And is a 10% a mid-term is a 3- to 5-year? what is-- yeah.

Yeah. Sure. Yeah. And maybe I will take that 1.

So you are right. So if you stand back from the ABS performance I mean, we were at sub-5 percent margins a couple of years ago. Increased that 6.2 last year and now 7.5 this year. So there is there is a nice track record of margin expansion over the last 3 years. And VAP has been an important part of that. As we progress now over the next few years, there will be a slight mix in how that will impact the P and L, if you like. So commercial excellence is very much focused on getting the top line moving. So volume growth. Translating to revenues. We talk about operational excellence, and that is where I am looking at the gross margin line and that margin percentage looking to improve off the back of some of that lean thinking, which Jorgen referred to. And then we continued to adopt the ABS way of looking at our cost base as well. To continually looking for efficiency. So I see that margin expansion coming from multiple different parts of the P and L. And you are right, this will be over the medium term, right? So whatever you translate that, but that is going to be over the next few years without a doubt. And then there is a lot of hard work to do, but we are absolutely focused on it. it is the target.

Hi. it is Gary Martin here from Davys. Just a quick question just on the PRP commercialization in Latin America. Would it be possible just to get a bit of insight into some of the initial commercial terms? Like, do they rhyme with some of the terms that were outlined provisionally at the Capital Markets Day? And just any additional insight would just be very helpful. Thanks.

Yeah. So first of all, you know, 1 of first countries that we are targeting is Peru. that is 1 that I can mention. I am not gonna comment on any other countries, but there are others because we are you know, in life negotiations and discussions with our partners and customers there and it would not be right to talk about those countries while these are ongoing. But the terms, look, certainly, good. there is no surprises in that regard. And they are in line with you know, for example, the prices that we outlined 3 years ago at the Capital Markets Day that I think many of you will remember and that are outlined to some of the broker reports So, we are we are very pleased and we are excited. We think it is very important. it is been a long time in the making. So we are pleased that we are gonna get real-world experience and an opportunity to establish our supply chain. it is you know, we are gonna be ramping up throughout, you know, the PRRS straight through the herds of our customers. You know, there is also quite a bit of legal and contractual work around that. Then, I would say, what is extremely important is we are going to be generating data and so the industry will be looking and hopefully, we will be in a position to share that data in terms of improvements in productivity, lowering of mortality, lowering of the prevalence of PRRS and so forth. So, I think a very important milestone. That makes sense. And then just maybe as a second question, to go to the other side of the world, just in Southeast Asia, and just pick more broadly. it is been a strong market. Would it be possible just for you to talk about the potential there and the moving parts as to the maturity of those markets? And just the opportunity sense of the future. Yeah. Certainly, And thanks for calling out Southeast Asia. That is indeed certainly a growth opportunity within PIC. And if you look at the performance in the last 2 years, it is been very strong. We have had very strong double digit growth in South And the region within PIC is actually called Southeast Asia. So it does include Korea and Japan. The growth is really coming from Philippines and from Vietnam. And I had a chance to make a trip to The Philippines and to Vietnam you know, in April and meet with customers and potential customers and our teams and Andy is gonna make a trip to Philippines next week or the week after. So I think it highlights the importance of that area. Philippines for example is a market that is highly dependent on imports. And so there really is not an imperative to produce more pork domestically given that there is high consumption. And 1 of the highest, you know, consuming countries on a per capita of pork. So, yeah, we think those are important markets and we are aligning with large players. We see more and more Chinese companies actually play an important role in Southeast Asia. And so we see synergy with our Chinese business as well. That makes sense. I will pass it on. Thanks. Just 1 follow-up question. I suppose on guidance, really. I think with the outlook statement this morning, of the markets probably being quite quick to pick up on the more negative aspects. I think you mentioned weak cyclical markets, second half weighted profit. Suppose a lot of those pressures were present last year, and you still managed to step forward your profit nicely, and you seem confident in doing that. This year. So maybe just to comment on your confidence around that, just bringing together a lot of the stuff we have already discussed this morning. Andy, do you want to take that?

Yes, sure. So you are right. We have called out off that normalized base, that I referred to, the £90 million we are calling moderate growth. Both in PIC and ABS, despite those the weakening market and sort of headwind that we see. So, if I start with PIC, I mean, we still expect growth, like we were talking about earlier, both China, Southeast Asia. I think North America is in PIC continues to be a headwind, particularly in H1. And so whilst we saw that biting towards the end of Q3 last year, through Q4, think we expect that through H1 this year. With a potential recovery in the second half. We have also talked about Brazil had incredible growth in FY 2026. A lot of that through high breeding stock sales. With lower prices that part of the business does get impacted. So again, we see that we expect that to continue through H1, which was again less of an impact probably more Q4 last year. So it is just a timing point there. And then on ABS, whilst we do see dairy prices being still depressed with no expectation of an immediate recovery. And whilst beef prices remain high, dynamic has an impact on our Sexcel volumes. Then impacts our margins. that is some of the thinking. Particularly in the first half again, which is why we are referring to more second half weighted around where we expect to land On top of that, there is the other points that I have called out around continued increased investment in product development in both species, the increase in PRP costs.

Is there any questions from the call? There are, but it is almost time. So I do not know if you want to wrap that up here, and we can answer them Or go ahead. Maybe take 1. Cool. Yeah. Is there 1 on the call? I did not think that quite a few. there is no questions on the call, but there is a couple submitted written questions. If you would like to hear 1 of them. Yeah. Maybe I mean, we are at the top of the hour. I do not know if people have to go, but I am I am happy to take maybe take 1 question.

Okay. Our question is from Sofia from JPMorgan.

Could you provide any more color on how we should think about the phasing of growth for FY 2027? You have had a strong performance in Brazil in PIC in 2026. Could you provide more context on the anticipated weakness in this market and how you expect this development? in 2027?

Yeah. I suppose Andy actually just answered that question. Yeah. You-- yeah. But maybe a bit more on the phasing.

And really how that phasing compares to FY 2026. So FY 2026, we had a very strong H1. And you will see that phasing is more weighted to H1 I. E, more than 50% in the first half lower in the second half. I would say for FY 2027, it will be a very similar flip around. In terms of the percentages from H1 to H2, largely driven by a lot of those headwinds that I just talked about with the question earlier. So that is how we should think about the phasing.

Okay. Well, I think with that, we close the meeting. And thank you very much for your attention.