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Jorgen Kokke: Good morning, everyone. Thank you very much for joining us here at Buchanan. My name is Jorgen Kokke and I am Genus's CEO. In this presentation, Alison Henriksen, our CFO, and I will take you through Genus's interim results for the 6 months ended 31st of December, 2024. Welcome. Thank you for joining. In summary, I would say that we have achieved strong financial results as well as significant strategic progress. I'd like to take this opportunity to thank all of Genus' employees for their contributions in achieving these results. Let me start with an overview of our -- an overview and our key financial headlines. Here are my 3 strategic priorities, which are unchanged. Our first priority is continued growth in porcine with more stable growth coming from China. I am pleased to report that PIC, excluding China, achieved a 13% increase in operating profit in H1. In China, we signed up another 7 new royalty customers and we now have royalty contracts in place with 3 of the top 5 producers in the largest porcine market in the world. Our second priority is the successful commercialization of PRP, which is the biggest opportunity from our R&D program. I'm happy to report that we've made substantial progress. The FDA has accepted our environmental assessment and the FDA has also conducted site inspections of our PRP facilities. In the meantime, we have responded to the FDA site inspection feedback, and we continue to expect approval for PRP in calendar year 2025. Beyond the FDA, our engagement with other international regulators continues to be encouraging. Our third priority is driving greater value from bovine. As a reminder, we initiated a comprehensive Value Acceleration Program 18 months ago to return our ABS business to growth and also improve margins, return on capital and cash generation. There has been very good progress and VAP is on track to deliver GBP 21 million run rate benefit by the end of this fiscal year. One area I'd particularly like to highlight is the substantial improvement in bovine cash flow from better inventory management, benefit from VAP. Alison will take you through this in her section. During the first half, we also acquired the minority interest in ABS' De Novo joint venture. This acquisition demonstrates our commitment to a strong genetic lineup in bovine and we are already seeing the benefits of full ownership. Turning then to our headline financial performance in the first half of FY '25. Adjusted operating profit grew 19%, in actual currency to GBP 45.2 million, and adjusted profit before tax grew 21%, in actual currency to GBP 35.4 million. We're delighted with this profit performance and we are maintaining an interim dividend of 10.3p per share. Looking then at our markets, and I will pick out a few highlights for each of the species. PIC performed very well across the Americas with producers also operating with positive margins. European producers also made money, although there were a number of disease challenges throughout Europe. Against this backdrop, PIC Europe performed well, though flat against a tough year period comparator. Profits in Asia also increased, driven predominantly by higher byproduct revenues. Chinese pork producers were profitable throughout the period, but the pig price has gradually softened in recent month. We believe the H2 outlook across the regions is stable, albeit there are normal disease and other risks. Moving to bovine. The high-level overview is that ABS performed well in North America and in Europe, while Brazil beef and China dairy continue to be challenging. In North America, dairy and beef producers were profitable in the period and ABS achieved strong sexed growth. VAP initiatives also helped drive strong performance. It was a similar story in Europe, with strong ABS profit growth as a result of VAP initiatives. Demand for beef genetics in LATAM continues to be weak. ABS LATAM performance was stable in constant currency, but significantly impacted by FX translation. In Asia, China dairy continues to be extremely challenged. Data suggests a 9% contraction in Chinese dairy production in the fourth quarter of 2024. ABS China performance was therefore below prior year. In India, we achieved very strong conventional and sexed volume growth, although unit prices in India are relatively low. In terms of H2 outlook, we believe the market environments in Europe and North America will be reasonably stable, while Brazil beef and Chinese dairy will continue to be challenging. With that, let me now turn over to Alison to take you through our first half financial performance.
Alison Henriksen: Thank you, Jorgen, and good morning, everyone. I'm now going to take you through the financial performance for the half. But before I do that, I did want to highlight a few takeaways. Firstly, PIC is stronger than ever. ABS has turned the corner. They're delivering VAP, but there's more to do, and operating cash flow is very strong. The high investment period is behind us and we've now passed the peak of exceptional cash outflows. So we're well on our way to delivering strong free cash flows that cover our dividends. But they've been no free passes, we focused on what we can control and I want to thank everyone at Genus for their passion and dedication in delivering these results. So let's get into it, and we'll start with volume. If you recall, last year, things were pretty tough in several porcine markets. In fact, it was the worst we'd seen for over a decade. But what PIC have proven over many cycles is they emerge stronger after downturns and that's because there's further consolidation of the winners and they're the large producers and they're PIC's customers and that's what's happened. As you can see on the chart on the left, PIC's volume was up 9% and up 10% excluding China. And this growth was broad-based with every region achieving volume growth. And as you can see, the growth of PIC's volumes, excluding China, was the highest it's been for over 5 years. ABS volumes have stabilized after a very challenging period in FY '24 when volumes declined and it was good to see sexed volume growth return to 13%. However, whilst total volume growth was 5%, I want to flag that a significant proportion of dairy volume growth came from India and that's where units typically sell at lower price points. So excluding India, aggregate volume growth for ABS was flat compared with the prior year, but this is still an improvement on the prior year trend. Moving to our trading performance, group adjusted operating profit increased 31% in constant currency and 19% in actual currency to GBP 45.2 million. And our adjusted operating profit, excluding China, was GBP 41.2 million. And as shown on the chart to the right, this is a record first half performance and there was steady improvement from PIC China. Our total operating profit margin increased 200 basis points to 13.4% and that really is because both our businesses are performing. Both contributed to that progress. ABS delivered profit improvements from VAP, PIC delivered strong growth and R&D savings flowed through from the strategic review we did a year ago. Net financing costs increased to GBP 9.8 million as a result of higher interest rates and average borrowings over the period. And adjusted PBT, therefore, grew 38% in constant currency, and sterling has not been our friend, strengthening primarily against the LATAM currencies and therefore having an adverse impact of GBP 4.8 million on translation. But nevertheless, PBT grew by 21% in actual currency to GBP 35.4 million. So now, let's have a look at the divisions in a bit more detail, and I'll start with PIC. PICs adjusted operating profit increased 16% in constant currency or revenue, that was 8% higher and adjusted operating margin increased 140 basis points to 28.1% and that's through operating leverage. The chart on the right of the slide shows you the detail, the key drivers, and you can see PIC achieved good growth, ex-China, with constant currency operating profit increasing by GBP 4.6 million, or 6% year-on-year. And PIC China profits themselves increased by GBP 1.5 million, and this was primarily because of byproduct revenues, which were higher reflecting higher China peak prices in the period. Lower fee costs were the main driver of product development costs being a bit lower, and PRP costs were also lower in the first half, but this was due to phasing and we expect them to be higher in the second half. The last point to flag is that FX was a very significant headwind for PIC in the period, with a GBP 4 million impact on translation of sterling strengthening really against the Mexican peso and Brazilian real. And this slide presents our normal walk around the world for PIC. And as you can see, their performance was broad-based. North America continues to deliver very resilient growth with constant currency profit growing 6%, on royalty revenue growth of 5%. Europe's first half was down 3% in constant currency. But to remind you that follows profit growth of 26% last year and Latin America was the standout region with operating profit growth of 13% in constant currency, supported by very strong 11% increase in royalty revenue. And that was across the countries in the region. In Asia, profits were up 28% albeit from a low base. And within this PIC China increased their profits 59% and Asia, excluding China, grew 3% and that was because of growth in Vietnam and Korea. So PIC, as a whole, achieved royalty revenue of growth of 5% and it was 6% if we exclude China. And the reason is that whilst we are enjoying good success with winning new royalty customers in China, the associated royalty revenue streams take time, take 2 to 4 years to ramp up to a steady state. Moving to ABS, which had a significantly better performance. Revenue increased 3% in constant currency on a volume increase of 5%. And adjusted operating profit grew 38% in constant currency and by 18% in actual currency to GBP 8.6 million with the margin improving 100 basis points to 5.6%. And as I previously said, sexed volume growth was good, 13%. Conventional dairy volume growth was also strong at 7%. However, some of the sexed growth was in India at prices materially lower than the rest of the world. And beef volumes were 4% lower in the half as demand for beef genetics in Brazil continues to be weak. Thus, there was margin contribution growth, but this was offset by wage inflation. So as you can see in the chart on the right of the slide, that was the key driver of profit growth in the period. The annualization of VAP Phase 1 initiatives achieved GBP 3.8 million of benefit in the first half and that VAP Phase 2 initiatives achieved a further GBP 2.5 million, leading to a total benefit in the period of GBP 6.3 million. And we now expect VAP Phase 2 to deliver GBP 6.5 million of in-year benefit for the full year of '25. ABS China profits were down GBP 1.6 million year-on-year as China dairy continues to be very challenged. And we expect it to continue to be challenging with the recent restriction placed on importing bovine semen from the U.S. Higher supply chain costs of GBP 1.3 million were predominantly caused by inventory provisions. And this relates to inventory that was produced towards the end of 2023 before ABS reduced its production. And as a result, these provisions represent a cleanup of older inventory and are unlikely to repeat. And ABS was also impacted by FX in the half with a GBP 1.4 million impact, again, predominantly due to sterling strengthening against the Brazilian real and Mexican peso. And this slide shows the regional performance in ABS. The standout performers were North America and EMEA. In North America, volume grew 7% with very strong sexed growth of 22%. And VAP initiatives were also impactful, resulting in profit growth of 25%. And in Europe, volume growth was generally unchanged from prior year, but the positive impact of VAP initiatives drove a substantial 34% increase in profits. In Latin America, beef volumes decreased 5% as Brazil beef continues to be challenged. And sexed volumes grew 17%, but that is from a comparatively low base. So as a result, profits were unchanged in constant currency, but down 20% in actual currency. In Asia, volume growth was 14%, whilst profits decreased 22%. And the reason for this profit decline is China dairy. So let's now move on to research and product development. And I'd just remind you that research constitutes other gene editing and key R&D investments in reproductive biology, genome science and bioinformatics. And our research spend decreased 30% to GBP 7.9 million, and this represented 2.3% of revenue in the first half. And going forward, we'd expect spend to remain below 3% of revenue. The annualized impact of actions taken last year is a total of GBP 5 million. And as previously mentioned, there is some phasing of PRP costs into the second half. Bovine product development costs, meanwhile, were broadly unchanged on the prior year, although, as Jorgen mentioned, we made a substantial investment to buy out the De Novo Genetic herd. And across our research and product development, we are continuing to spend more than 10% of revenue on these innovative activities and this remains a key focus for the group. Now moving to our statutory income statement. Those of you who know us know that we consistently measure and report adjusted results as we think these give a better view of the group's underlying performance. Our statutory results are affected by certain non-cash items, in particular, IAS 41, which is the valuation of our biological assets. And the movement in this valuation in the half was a GBP 16 million decrease compared with a GBP 2.6 million increase in the prior year and this is predominantly due to a decrease in bovine. Exceptional expenses in the first half were GBP 6 million that included GBP 3.7 million of VAP restructuring costs and GBP 1.5 million in relation to aborted corporate transactions that were largely in FY '24. And exceptional expenses in the second half are expected to be lower than in the first half, although we are expecting further restructuring costs as ABS continues to execute VAP. Our adjusted tax rate was 26%, which was slightly higher year-on-year due to an increased profit mix from higher tax jurisdictions. But we continue to expect an adjusted tax rate between 26% and 28% for the full year. Now with that, let me now turn to our cash flow performance. I'm very pleased to say we've returned to a position of generating positive free cash flow in the first half of the year. And looking at the chart on the left, you can see that the big improvement in free cash flow was a result of almost GBP 20 million year-on-year improvement in working capital, a GBP 7 million reduction in cash outflows for biological assets and GBP 6.5 million lower spend on capital expenditure. Now the improvement in group working capital is primarily driven by better bovine inventory and debtor management. Supply chain management has been one of the key focus areas under VAP and it's pleasing to see the positive impact flowing through. The year-on-year reduction in biological asset outflows was a function of a sizable outflow last year as PIC restocked its Aurora nucleus farm in Canada after completing a refurbishment. And lower capital expenditure was expected, although there was some phasing from the first half to the second half. But we're expecting for the full year CapEx of GBP 17 million to GBP 19 million, and that's well below our spend in FY '24. As we previously guided, our exceptional cash outflows peaked in this half we just finished at GBP 15.2 million and that included exceptional expenses that were recognized in the second half of FY '24. In the second half of this year, we expect exceptional outflows to be around half of the level of the exceptional cash outflows we've had in the first half. So also, as we look into FY '26, we expect exceptionals to be much lower for the year, noting that we have 1 settlement payment left in relation to the historical ST litigation of GBP 4 million and we expect further restructuring costs to arise in relation to VAP. So the chart on the right shows our progress in relation to free cash flow generation and cash conversion over the last 5 years. And I want to remind you that our peak investment period is behind us, having upgraded and expanded the facilities for both PIC and ABS. And we also completed last year the rollout of Genus One, our global ERP system. There's now been 3 consecutive years of improvement in operating cash flow and cash conversion. In fact, both were records for the half. And we're very focused on delivering positive free cash flow going forwards. And I'd expect free cash flow in the second half to be similar to the first half. Bovine working capital has reached a steady level, and therefore, cash conversion will be lower than in the first half, but exceptional outflows should also be lower. So let me lastly now talk about our balance sheet, which remains solid. Net debt rose as expected to GBP 261 million at July -- June -- at December, sorry. As shown on the chart, we generated free cash flow of GBP 10.3 million and paid GBP 14.3 million of dividends in the period, returning to a position where we're covering our dividend with free cash flow is a high priority. There were 2 other broadly offsetting impacts in the period, a GBP 10.6 million increase in deferred consideration relating to the acquisition of the De Novo minority interest and a GBP 9.2 million reduction in lease liabilities, primarily relating to PIC's Luodian being sold into a joint venture. The De Novo deferred consideration is payable in 4 equal installments over 4 years ending in July 2029. And our net debt to EBITDA at the period end was 2x, which is within our targeted range of 1x to 2x and we expect a similar leverage level in June. Our facilities mature in August 2026 and we have over GBP 100 million of headroom at the end of the period. And lastly, I'll just remind you, there have been a lot of moving parts I've talked about, but we have got a technical guidance slide, which outlines the expected impacts of our FY '25 accounts for various line items, including the exceptional items. So with that, let me now turn the presentation back to Jorgen, who will give you more detail around our strategic progress and outlook.
Jorgen Kokke: Thank you. Thank you, Alison. I'll now discuss our strategy and outlook in more detail. Let me review each of the 3 strategic priorities. Firstly, I'd like to take a deeper look at PIC's royalty revenues. We continue to grow our royalty revenue in every region, excluding Asia. Our 4-year CAGR is 5% in North America, 12% in Latin America and 6% in Europe. As PIC continues to demonstrate it can grow with both existing and new royalty customers. In Asia, our 4-year royalty revenue CAGR is minus 1%, which highlights why we increased our commercial focus on royalties in China 18 months ago. I will discuss China in more detail on the next page. But first, the high adoption of the royalty model led by 97% penetration in North America underpins the stable growth of PIC. The chart on the right helps demonstrate this stability. It shows U.S. pork producer profitability over time. There is no doubt that U.S. pork producer profitability is cyclical. And yet PIC North America has consistently grown royalty revenue throughout these volatile cycles. Let's now move to PIC China. Our goal is, of course, to grow the business, but also to improve the stability of earnings. The first chart shows the pig price to corn ratio in China. This is a proxy for pork producer profitability. When this ratio is above 6, Chinese pork producers on average are making a positive margin. As you can see, Chinese pork producers were generally making money during the period, which provided a stable market backdrop for PIC China. Moving to the chart in the middle. You can see that it was the increase in non-royalty revenue that was the primary driver of our profit improvement in the half. As Alison explained, the increase in non-royalty revenues was predominantly a result of higher byproduct revenues. The logical question is, why were our royalty revenues unchanged despite us signing new royalty customers? The reason moving to the chart on the right is that as we have flagged before, royalty revenues from new customers can take up to 4 years to reach financial steady state. Revenues and gross margin in the first 2 years are typically fairly limited. As a result, our commercial success from winning 20 new royalty customers over the last 18 months hasn't turned into significant sales yet. We expect China royalty growth to start becoming more prominent in FY '26. In this context, I'd like to highlight that we now have royalty agreements with 3 of the top 5 Chinese producers in place, although initial volumes within their systems are modest. Moving to our PRRS Resistant Pig. We made significant progress with the U.S. FDA during the period and post period end. We submitted our validation report and durability plan and our environmental assessment. The EA has now been accepted by the FDA. The FDA has also conducted site inspections of 2 of our facilities and we have already responded to the FDA site inspection feedback. We expect the remaining steps to approval to be: firstly, FDA acceptance of our validation report and durability plan and other minor technical submissions. Secondly, after FDA acceptance of our final submissions, we will submit a new animal drug application. And thirdly, the FDA will conduct a final review of our new animal drug application, which typically takes around 60 days to complete. I am pleased with the progress and thankful to our team for getting us to this point. We continue to expect FDA approval for PRP in calendar year 2025. Looking beyond the FDA to other jurisdictions, we remain encouraged by the progress we're making in Canada and in Japan. In Mexico, we've had good discussions with the new administration about the regulatory pathway for gene-edited animal protein and increased our collaboration with domestic producers who are keen to access PRP. Lastly, in China, when we last spoke in September, we had PRPs on route to a specially designed research farm that has been built by our Chinese partner, BCA. I'm pleased to say that our animals arrived safely, and we now have pregnant sows, so generational testing will begin soon. So good progress all around, although I would remind you that the timing of regulatory decisions remains uncertain as this is the first mainstream gene-edited protein to seek approval. Moving now to bovine and our Value Acceleration Program. We initiated this program 18 months ago with clear objectives: to accelerate growth and improve ABS' margins, returns on capital and cash generation by embedding commercial excellence and deploying our resources more effectively. We can now see the benefits of our actions, and we remain committed to building a better and more profitable and growing bovine business. Let's move on to the details of VAP Phase 1 and Phase 2. Phase 1 initiatives were completed in FY '24. As you know, we made significant changes to the ABS organization by unifying the dairy, beef and intelligent business units under the leadership of a new leader that joined us from the outside, Jim Low, who took up his position in April of 2024. Alongside this, we also started implementing stronger pricing governance and value capture in Phase 1. Phase 1 delivered GBP 7.3 million of benefit in FY '24. And in the first half of FY '25, we achieved a further GBP 3.8 million of benefit, taking the total realized benefit under Phase 1 to GBP 11 million. Moving to Phase 2. We outlined our new focus areas of selective globalization and product allocation and mix management last September. At the same time, we are continuously improving the processes that were implemented in Phase 1, sales and operation planning, inventory management being a case in point. We have made considerable progress in these areas. With regards to selective globalization, we have further optimized our organizational structure to create global product management and supply chain teams. Through these teams, we have identified and actioned improvements to our commercial strategy and product focus. Product allocation and mix management refers to how we produce, price and allocate our genetics. We are already seeing the benefits of our optimization work. In aggregate, these Phase 2 initiatives achieved a GBP 2.5 million benefit in the first half. We now expect to deliver GBP 6.5 million of benefit versus GBP 5 million previously indicated and we are confident that we can reach our Phase 2 goal of EUR 10 million run rate by the end of this year. Across Phase 1 and Phase 2, we're therefore expecting to achieve GBP 21 million of annualized benefit, which is a significant achievement. That said, we believe we can go further and we are now scoping the focus areas for a Phase 3 of VAP. It is too early to give much detail at this stage, but we will be focused on strategies to accelerate profitable growth and embed commercial excellence. In closing, let me now turn to Genus’ outlook. We have achieved a strong first half financial performance with broad-based improvement across the business. We have also made good strategic progress on multiple fronts, not least with PRP, where the FDA has conducted its site visits as planned. Looking then to the second half, we're seeing continued positive momentum. Underlying market conditions for our producer customers are stable, albeit there is the usual caution. We expect both PIC and ABS to grow profits year-on-year in the second half. Currency has been a significant headwind for us in the first half and we expect this to continue in the second half given current exchange rates. We continue to expect an GBP 8 million to GBP 9 million FX headwind for the full year, if rates remain where they are today. You will be aware that we raised our FY '25 PBT expectations just over a month ago on 15th of January. We are reiterating that view today, which will result in significant FY '25 PBT growth in actual currency. This is in line with the current market expectations. That concludes our presentation of Genus's FY '25 first half results. Before I conclude, I wanted to take a moment to thank Alison for her leadership and contributions as CFO of Genus over the last 5 years. It has been a true privilege to partner with Alison and I look forward to working with her over the next 5 years and hopefully -- 5 months. Yes, that reflects my desire. Unfortunately, it's only 5 months and hope to sign off on a high note. Thank you very much all for your time and interest and we now look forward to addressing your questions.
A - Jorgen Kokke: Charles, please.
Charles Hall: Charles Hall from Peel Hunt. Jorgen, can you just talk a little bit about tariffs and what you see in both PIC and ABS? And obviously, there's lots of unknowns, but how do you see tariffs and how do you prepare for them?
Jorgen Kokke: Yes. So we would say that, in general, tariffs are unhelpful and it is unclear what exactly they will be. Of course, we read the newspapers. But the way we're thinking about it is sort of the indirect impact. So the impacts on our customers and their customers further down the chain. I can give you a few examples. The U.S. exports significant portion of their pork, about 30% to Mexico. It's the largest U.S. trading partner in the pork chain. If the U.S. would implement tariffs and Mexico would retaliate, what would the impact be? I mean, it would be inflationary, I would say, at a minimum, probably. Would that impact demand for ham, for example, in Mexico? Maybe. Would that mean, for example, that there is an opportunity for Brazil to play a role, a bigger role in Mexico in export? Possibly. If that was to happen, well, we are well-positioned with our supply chain because we have multiple supply points and we could, for example, benefit from an increased demand on Brazil. Another indirect example would be Canada. They send pigs south of the border for further slaughtering and processing. If there was to be a, let's say, 25% duty, it would -- again, it would be inflationary. Potentially, that would mean that there would be a rearrangement of the supply chain, but Canada doesn't quite have the capacity to process all these pigs. So it remains quite uncertain and I can give you similar examples for the dairy and beef supply chains. If you go more to the direct impact on Genus, again, I would say that the U.S. is an origin of exports to us. So the U.S. implementing tariffs wouldn't necessarily impact us very much, but it would be the retaliation. Again, I can't speculate on what that's going to be and when. But we are well-positioned relative to our competitors, I would say. We have multiple sourcing points. If you think about PIC in Brazil, in Europe, in China and in the U.S. and in Canada. So we'll see how that plays out. If you look at ABS, there's probably a bit more of exports from the U.S. to the U.K., for example. I know that the U.K. Prime Minister is making a visit to Washington, D.C. So we'll read the newspapers what may come out of that, but also to Europe and to China. But overall, yes, we'll watch this space very, very closely, but it is too early to give you any indication as to how it might impact us.
Charles Hall: And I'm just turning to PIC, very strong performance in the first half, well above the long-term trend. Do you see that as a short-term blip because of the bounce back from last year? Or can it be sustained for a period and then go back to trend?
Jorgen Kokke: We feel that ABS is -- sorry, PIC is well-positioned to perform well. We highlighted the customer wins in China, which has been going on now for a while. The royalty revenues in China haven't really shown in our results yet. I mentioned that we're more optimistic about that from FY '26 on forward. So I think there's some upside there, if you will, if you look out. But we believe that PIC is well-positioned to continue to perform well.
Alison Henriksen: I'd say North America had particularly strong growth, which is above their typical run rate. So as we go into FY '26, we'd expect North America's growth to be low single digits, which means that the overall growth may be a little lower than what you saw in this half.
Charles Hall: And then lastly, on PRP, can you just comment on the DOGE process and whether you've seen any impact from that? And also, there was mention of increased spend on commercialization in H2. Can you give a bit of detail on what you're actually doing?
Jorgen Kokke: Yes. Our interaction with the FDA has been positive. We find them extremely professional and constructive. And we have not detected any signs of political interference. Things have progressed as planned. And so yes, we remain optimistic about next steps. Yes, we are preparing for market acceptance. And so we're doing various studies, consumer studies. We're engaging with various players in the pork supply chain and we're preparing communication materials. We're speaking at conventions. We're developing websites. We are developing contracts. We have hired a number of people that are very experienced in these matters. And so yes, we continue to prepare. Seb?
Seb Jantet: Seb Jantet from Panmure Liberum. So just a couple, I guess. Just -- so obviously, very pleased to see you signed up some of the big producers in China on the royalty contracts and I appreciate it's small volumes. But I guess what I'm curious of, if you looked at examples in the past, perhaps in the States where you've done a similar thing, signed up a big kind of supplier with a small volume. How long has that then taken for it to progress through the rest of the herd? Is that kind of a rapid process that take a long time? Just to get a sense of that.
Jorgen Kokke: Yes. It generally takes about 2 years until we see material revenues and it has to do with the fact that they need to take deliveries and then they need to disseminate the genes throughout their supply chain and multiply the pigs. And so it takes several generations to get to a point where that commercial impact is significant. But there's sort of 2 elements to it. One is you sign up a customer and they would commit to using our genes at one farm or a particular number of farms. Over time, once we demonstrate that our genes -- our genetics are superior, we will also gain market share. So there's sort of a 2-step approach where, first, you need to get a foot in the door and that establish a working relationship. It established -- it enables the customer to fully understand the financial and commercial value of working with PIC. And then over time, typically, we would gain more market share.
Seb Jantet: I guess the question was in your experience in the States, how long does it then take -- I get it takes 2 years to generate revenue, but how long does it then take for them to start taking it across a bigger proportion of their farm? Is that pretty rapid? Or does it take them another 2 years after the --
Jorgen Kokke: Probably a couple more years. Yes.
Seb Jantet: And then second question is just around kind of VAP 3. I guess you're not going to tell us what it's worth. But maybe if I can ask the question slightly differently. Within the current structure of ABS, where do you think you can get the margins to? Can that still get to be a double-digit kind of margin business once you've kind of got through the kind of the VAP 3?
Alison Henriksen: Still work to do to get to that. But yes, the medium-term aspiration is to get to double digit.
Seb Jantet: Okay. Then last question is just around kind of PRP approval and particularly in Mexico. I'm just trying to get a sense of kind of what that potentially does for commercialization timelines because I accept you don't need to have China necessarily to commercialize PRP in the States. But as things currently stand and obviously this might change if the tariffs come in, a lot of export from U.S. to Mexico. Have you got -- can you give us any more details on where you are in that process and whether it's going to be an approval or a determination? And does that -- do you still think you can get that approved during the course of this year or early next year so that you can kick off U.S. commercialization in '26?
Jorgen Kokke: Yes. So just to refresh everybody's memory, right, we've always indicated that for the U.S. commercialization, we need to get approval in the U.S., Canada, Mexico and Japan. We don't think China is absolutely required to commercialize in the U.S. Canada and Japan are progressing well. There's clear processes. There's very good interaction, exchange of data, Q&A, and we find them constructive and things are moving along. I can't tell you exactly when things might be approved, but it appears to be developing well. As it relates to Mexico, there's a new government in place, the Sheinbaum administration, which I think they were installed in September or October of last year. We've been in contact with the agricultural ministry and other key players in that process. As you say, Seb, we're trying to understand whether it's going to be a determination, so more similar to Colombia or Brazil, which, in a sense, is a lighter process than a few -- than a full approval, which does include a full safety review. And so it's much more heavy in terms of data. We are working closely with the Mexican pork producers. We have hired good legal advisers and regulatory advisers. And we've had initial discussions with the new administration. And so we don't perceive any major blockages, but there's still a lot of work to be done and things to be navigated. So that's where we are.
Unidentified Analyst: Excellent. First question, just in reference to PIC China, clearly encouraging to sign new customers there. Just wondering how we should think about the cadence of royalty customer growth from here and your view of the size of the prize there? What number of desirable customers are there out there beyond those other 2 major producers that you referenced? Second question, just in reference to working capital, clearly, a positive outcome. Can you just provide some more color as to what exactly has been done to release that cash into the business and how much further work there is to be done on working capital?
Alison Henriksen: Do you want to take the first? I'll take the second.
Jorgen Kokke: Yes. Yes. Look, I mean, I think our natural place to compete in the China market would probably be the top 100 customers. So there's still more customers to gain. But building on the question that Seb just asked, there's also, of course, once you sign a contract with a customer, it doesn't mean you have 100% of their business. Typically, you don't. And so there's also that market share opportunity within those customers. But I would say what we're looking for in China is probably double-digit royalty revenue growth over the next couple of years. That's probably sort of a realistic expectation to have as it relates to PIC China.
Alison Henriksen: In terms of bovine and working capital, a few things have happened. First of all, in the early days, if you like, last year, the leadership of our intelligent production and our ABS commercial operations was merged under one leader being Jim Low. And that in itself was a benefit in terms of alignment between supply and demand within the business. And secondly, we've created an S&OP function. We didn't have that function before in ABS. Now it's still quite early days actually with that function. There's more to do. More opportunity in the future. But we have had a significant reduction in inventory, which you see in terms of that movement in cash flow in the half. And you shouldn't expect that same degree of improvement again in the next 6 months, certainly. But over the medium term, I would expect there's more opportunity to improve the inventory holdings that we have in ABS.
Jorgen Kokke: Joe?
Unidentified Analyst: [indiscernible] from HSBC. Can you talk a little bit about the acquisition you made, the De Novo joint venture? What's the benefit of bringing that into full ownership? Are those benefits operational or is there a financial aspect to that as well?
Jorgen Kokke: Yes. Yes, we're very pleased with the De Novo acquisition. We had a minority -- we had a majority, but we had a minority partner who actually executed, let's say, the work. We've now taken full control and that is accelerating our progress. It means we're in control of our own genetic destiny. We've seen improvements, for example, in pregnancy rates. We've been able to work with younger animals. There is logistical efficiencies. We've moved animals to our Wisconsin campus and our Wisconsin farms and there are synergies with that. So we're very pleased with that. There was an additional factor and that was that the minority partner wasn't motivated to continue in the long run. But we're very pleased and we're already seeing benefits from that De Novo acquisition.
Unidentified Analyst: And then just on the R&D side, obviously, the spend has kind of come down across the group, not just in the standalone bucket, but also within the divisions as well.
Jorgen Kokke: I don't think the microphone works.
Unidentified Analyst: In terms of the R&D buckets, obviously, the spend has come down not just in the standalone bucket, but also in the divisional spend as well. Is that R&D spend now to a level that you would like to sustain it at or is there further efficiencies to come out of that spend?
Jorgen Kokke: Yes. I can talk to R&D and Alison, please chime in. I think the question was whether the R&D spend is now at a level where it will continue. There's a couple of comments that I'd like to make relative to R&D. As Alison mentioned, the research part, so the real kind of R&D is focused on research will remain below 3%. But if you look at our Genus's investment and spend on research and product development, it adds up to more than 10% of revenues. So we have a substantial investment in ensuring that our product is leading-edge that we invest in innovation. So I'd say there's a very significant commitment there. We have world-class scientists and we have a very exciting R&D program. PRP is a case in point. I would also point to the fact that PRP, the spend on PRP for the most part has moved from R&D into PIC. You see that on Page 15, the gray part in the PIC bar. But just to answer your question, yes, we see -- we sort of see it remaining at this level.
Alison Henriksen: I just want to make the point that we're not looking to reduce product development cost. We did have a little decrease in porcine product development, which reflects lower feed costs, which is good for everyone in PIC. And we had some phasing of PRP spend. So you shouldn't expect a decreasing trend in porcine product development. And bovine has been steady, but we have made the investment in the genetic herd through the acquisition of the minority interest in De Novo as well.
Sean Conroy: Sean Conroy from Shore Capital. Just a question around VAP and how the changes you've been implementing there are being felt by your ABS staff. I mean is the pace of change that's occurring in that business something that they've been quite receptive to or when you're looking towards Phase 3 and the plans that you have there, would you be looking at rolling out things at a slower pace of change?
Alison Henriksen: Did you catch that?
Jorgen Kokke: I didn't fully catch the question.
Alison Henriksen: How have employees reacted in ABS?
Jorgen Kokke: Okay. Yes. Clearly, when you look at ABS and VAP, that is a major transformation. We take great care of our employees, treat them with the utmost respect, make a huge effort in communicating very well with our teams, town halls, Q&A sessions. In general, I would say that the teams at ABS understand that there is a need for change. And as such, engagement scores, which we measure have actually trended up surprisingly over the last year. I would also note that our voluntary turnover rate has also dropped actually during this time. So I'd say you have 2 sort of indications there that ABS team members understand what we're doing and they're buying into what we're doing and they're motivated. Damian?
Damian McNeela: Damian from Deutsche Numis. Two questions on ABS, please. The first one is India. Clearly, you indicated we had good volume growth there. But how should we think about the profitability of that country sort of short term and then perhaps sort of medium to long term? And then just hopefully, a quick one on ABS China. Profits down again. Is the business profitable in China? And again, how should we think about the evolution of that?
Alison Henriksen: Yes, sure. So yes, so look, our India business has grown absolute profit significantly in the 5 years I've been here. So it's a profitable business. It's just the point is that the margin we make on each unit we sell in India is just lower than the average margin we make elsewhere in the world because the price per unit is lower. That's all. So if there's a higher mix of growth from China, that's going to bring down your average. Yes. And your second question about China for ABS, it's a breakeven business essentially at the moment.
Jorgen Kokke: Christian?
Christian Glennie: Christian Glennie from Stifel. Maybe just to keep going a bit on the sort of that -- the conversion of those customers on to the royalty side and the pull-through effect of that to understand, is it just really a matter of time? And/or what are some of the risk factors around all the things you need to demonstrate that means you get that sort of level of adoption? Presumably there's a certain critical hurdles that you need to demonstrate. Is it just about productivity and things? What are some of the key things that the customer needs to see for them to roll it out more across their herd?
Jorgen Kokke: Yes. I would say that there is a lot of time that gets invested with the customer before they sign up, meaning trips around the world, they may come to the U.S. or to Mexico or to Brazil to speak with other customers to look at their data, for example. So we host these large Chinese producers typically in the U.S. travel around through the Midwest and to other countries. So I would say that, that process may take more than a year in terms of these discussions. So once they do sign up, I mean, typically, they do sort of go. Yes. So we have a fairly good degree of confidence that we will grow our royalty revenues in China from FY '26 on forward.
Christian Glennie: And then maybe a point of clarification on PRP and Japan. I think originally, it was an approval, then it may have been put in as a -- sorry, originally as a determination then an approval in the last set of results announced a determination. Has that been a change on their side? And what's going on there?
Jorgen Kokke: No. I think the style of the review with the Japanese is probably very different from any other country. And so it's very conversational. It appears to be very conversational and quite not as regimented and as perhaps data-driven as, let's say, with the U.S. FDA. But they do ask very, very good questions, but it's just a bit different type of and style of process as compared to other countries.
Alison Henriksen: Are there any questions that aren't from the floor from --
Jorgen Kokke: From the call?
Alison Henriksen: No, okay. All right.
Alex Jones: Alex Jones, Bank of America. Two, if I can. One on the FDA site visit. You talked about that having happened and you've given comments back. Can you expand a little bit on how that went? And then the second on CapEx, I think in the back of the deck, you talked about a sort of GBP 2 million or GBP 3 million reduction in the guidance for the year. Can you just explain the drivers of that and whether that's sustainable going forward or a one-off for this year?
Jorgen Kokke: Yes, you want to answer the second question first?
Alison Henriksen: Yes, sure. Look, it's not really timing. No. We were cautious in our estimates at the beginning of the year. And I think the CapEx that we'll incur in this year represents a run rate for a few years, just given all the investments we've now made.
Jorgen Kokke: Yes. So Alex, I just want to make sure I got your first question right, right? It was around the FDA process and specifically the inspections and any feedback, yes. The inspections, we had well-prepared for the inspections with external consultants, ex- FDA people, for example, to prepare us for that. I would say that the inspections went well. There was a number of observations. They were around standard operating procedures. So it's very rigorous, right? They follow the whole product and all the sign-offs and authorizations by different people and track the reports. So, there was a number of observations around SOPs, access rights, for example, also to certain parts of the facilities. There was also one follow-up in terms of a calibration of equipment that we used to test. I actually went to Wisconsin 2 weeks ago and looked at the piece of equipment. But we worked with the vendor. And so we've already done that. We've calibrated with the vendor that piece of equipment. So we feel that we have adequately responded to the FDA and some of these, let's say, corrections are still going to have to be implemented, but we're hopeful that the FDA will be satisfied with our response. So, I think with that, unless if there's any last question, we're going to close --
Alison Henriksen: There is.
Jorgen Kokke: There's one at the back of the room. Yes.
Edward Sham: It's Ed Sham from Singer Capital Markets. I just wanted to kind of probe you on that kind of comment you made about FY '26 growth expected for China in terms of the royalty programs. So I just wondered if that's been baked into guidance or was that something that you see as further upside?
Alison Henriksen: No, well, it's within guidance, yes. You have to remember, it's off a low base, of course, double-digit growth. But yes, we're standing by that.
Edward Sham: Okay. Perfect. And then just on the ABS business and then kind of obviously, the kind of elevated global beef prices. Do you see that as any sort of downside risk if prices kind of come off? And in terms of maybe the volumes for the beef side of the business, is that kind of stable? Or has that kind of gone backwards? And then potentially, what kind of -- are the drivers behind that if it has gone backwards?
Alison Henriksen: I think the other factor is -- I mean, there's a few -- there's been a couple of things going on, right, economic factors and also climatic factors, particularly in Brazil. So they've been hit by both. And right now, it's climatic factors but when they pass, and I'm sure they will, I mean, we would expect the beef market to improve and supply to increase.
Jorgen Kokke: With that, yes, I'd like to thank you very much for your attention, both people in the room here as well as online. We look forward to seeing many of you during the roadshow. Thank you.