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RNS
Origin Enterprises Plc  -  OGN   

Final Results

Released 07:00 26-Sep-2018

RNS Number : 9269B
Origin Enterprises Plc
26 September 2018
 

Origin Enterprises plc

 

PRELIMINARY RESULTS STATEMENT

 

Origin delivers resilient trading performance in challenging year

Adjusted diluted EPS up 4.7% to 48.80 cent

 

26 September 2018

 

Origin Enterprises plc ('Origin' or 'the Group'), the Agri-Services group, today announces its full year results for the year ended 31 July 2018.

 

Highlights

 

·    Adjusted diluted earnings per share up 4.7% to 48.80 cent, ahead of guidance, and up 7.6% on a constant currency basis

·    Operating profit of €71.2 million, an increase of 1.7% and up 4.6% on a constant currency basis

·    Acquisitions contributed 5.0% to sales growth and 3.6% to operating profit growth in the year on a constant currency basis

·    Reported net profit of €56.8 million, an increase of 24.5% primarily due to a significant reduction of exceptional items

·    Group operating margin of 4.4%, a decrease of 20 basis points

·    Strong free cash flow generation of €56.6 million (2017: €32.5 million)

·    Expansion into Latin America through agreement to acquire interests in two Brazil based agri-service businesses, Fortgreen and Ferrari Zagatto

·    Announcing today the appointment of Declan Giblin as CEO, Latin American Division

·    Proposed final dividend of 17.85 cent, giving a total dividend of 21.0 cent (2017: 21.0 cent)

 

Results Summary

 

 

2018

€'000

 

2017

€'000

     

Change

%

Constant

Currency

%

 

 

 

 

 

 

Group revenue

1,627,533

1,528,468

6.5%

9.0%

 

 

 

 

 

Operating profit1

71,190

70,009

1.7%

4.6%

Associates and joint venture2

7,221

4,366

65.4%

70.0%

Total group operating profit1

78,411

74,375

5.4%

8.4%

 

 

 

 

 

Finance expense, net

(8,082)

(6,914)

(16.9%)

(21.7%)

Profit before tax1

70,329

67,461

4.3%

7.0%

Basic EPS (cent)

45.22

36.33

24.5%

28.0%

Adjusted diluted EPS (cent)3

48.80

46.62

4.7%

7.6%

Return on capital employed

13.5%

13.7%

(20bps)

 

Group net debt4

(38,356)

(31,450)

(22.0%)

 

Operating margin1

4.4%

4.6%

(20bps)

 

Free cash flow

56,562

32,472

74.2%

 

Dividend per ordinary share (cent)

21.00

21.00

-

 

                                                                                               

1           Before amortisation of non-ERP intangible assets and exceptional items  

2            Profit after interest and tax before amortisation of non-ERP intangible assets and before exceptional items

3           Before amortisation of non-ERP intangible assets, net of related deferred tax (2018: €4.9m, 2017: €3.9m) and exceptional items, net of tax (2018: €Nil, 2017: €9.3m)

4           Including restricted cash of €0.5m (2017: €Nil)

 

 

Commenting on the results, Origin's Chief Executive Officer, Tom O'Mahony said:

"Origin achieved a very satisfactory full year result, ahead of guidance, recording a 4.7% increase in adjusted diluted earnings per share and generating €56.6 million in free cash flow. The business performed robustly while supporting our customers manage the operational demands of a highly challenging growing season in 2018.

 

It has been a significant year in terms of strategic developments including our entry into the Latin American market. The agreement to acquire Fortgreen and Ferrari Zagatto in Brazil provides tangible growth opportunity in markets that address the Group's requirements for further geographical diversification and seasonality balance.

 

We have seen steadily improving sentiment on-farm over recent months which may be challenged in the UK by the uncertain nature of Brexit and its timing.  The Group is well positioned to capitalise on its scalable and diversified business platforms, development opportunities and strong cash generation."

 

 

ENDS

 

 

 

The preliminary results statement is available on the company website www.originenterprises.com.  There will be a live conference call at 8.30am (UK/Ireland time) today.  To listen to this conference call, please dial the number below.  Participants are requested to dial in 5 to 10 minutes prior to the scheduled start time.

 

 

Confirmation Code:

6403607

 

 

Participant access number:

 

 

 

Dublin:

Tel: +353 (0)1 246 5621

UK/International:

Tel: +44 (0)330 336 9411

 

 

Replay:

 

 

 

A replay of this call will be available for seven days.

 

Replay Access Code:

6403607

 

 

Replay Access Numbers:

 

 

 

Dublin:

Tel: +353 (0)1 533 9810

UK/International:

Tel: +44 (0)207 660 0134

 

                                               

 

                       

                                                           

                                                                       

                                               

 

Enquiries

 

Origin Enterprises plc

 

 

Sean Coyle

 

 

Chief Financial Officer

Tel:

+353 (0)1 563 4959

 

 

 

Brendan Corcoran

 

 

Head of Investor Relations and
Group Planning

 

Tel:

 

+353 (0)1 563 4900

 

 

 

Goodbody (ESM Adviser)

 

 

Siobhan Wall

Tel:

+353 (0)1 641 6019

 

 

 

Davy (Nominated Adviser)

 

 

Anthony Farrell

Tel:

+353 (0)1 614 9993

 

 

 

Numis Securities (Stockbroker)

 

 

Stuart Skinner

Tel:

+44 (0)20 7260 1314

 

 

 

Powerscourt (Financial PR Advisers)

 

 

Jack Hickey / Eavan Gannon (Ireland)

Tel:

+353 (0)83 448 8339

Rob Greening / Jana Tsiligiannis (UK)

Tel:

+44 (0)207 250 1446

 

 

About Origin Enterprises plc

 

Origin Enterprises plc is a focused Agri-Services group providing specialist On-Farm Agronomy Services, Digital Agricultural Services and the supply of crop technologies and inputs.  The Group has leading market positions in Ireland, the United Kingdom, Belgium, Brazil, Poland, Romania and Ukraine.  Origin is listed on the ESM and AIM markets of the Irish and London Stock Exchanges.

 

ESM ticker symbol:

OIZ

AIM ticker symbol

OGN

Website:

www.originenterprises.com

           

 

 

Financial Review - Summary

 

 

2018

€'000

2017

€'000

 

 

 

Group revenue

1,627,533

1,528,468

Operating profit1

71,190

70,009

Associates and joint venture, net2

7,221

4,366

Group operating profit1

78,411

74,375

Finance costs, net

(8,082)

(6,914)

Profit before tax1

70,329

67,461

Income tax

(8,668)

(8,636)

Adjusted net profit

61,661

58,825

 

 

 

Adjusted net profit reconciliation

 

 

 

 

 

Reported net profit

56,785

45,620

Amortisation of non-ERP intangible assets

5,655

4,837

Tax on amortisation of non-ERP related intangible assets

(768)

(934)

Exceptional items (net of tax)

    (11)

9,302

Adjusted net profit

61,661

58,825

 

 

 

Adjusted diluted EPS (cent)3

48.80c

46.62c

Operating margin1

Return on capital employed

4.4%

13.5%

4.6%

13.7%

Free cash flow (€'m)

€56.6m

€32.5m

 

 

 

 

Origin delivered a 4.7% increase in adjusted diluted earnings per share3 for the year ending 31 July 2018 to 48.80 cent.  On a constant currency basis, there was a 7.6% increase in adjusted diluted earnings per share.

 

 

Group revenue

 

Group revenue comprises the totality of revenue from the Group's wholly owned operations which are based in Ireland, the United Kingdom, Belgium, Poland, Romania and Ukraine.  These businesses provide Integrated Agronomy and On-Farm Services, Business-to-Business Agri-Inputs and Digital Agricultural Services.  

 

Group revenue increased to €1,627.5 million from €1,528.5 million in the prior year, an increase of 6.5%.  On a constant currency basis, revenue increased by €137.5m (9.0%) primarily reflecting an increase in fertiliser and feed volumes and fertiliser prices.

 

Underlying volume growth in agronomy services and crop inputs (excluding crop marketing volumes) was 2.7% for the year.

 

Operating profit1

 

Operating profit1 amounted to €71.2 million compared to €70.0 million in the previous year, an increase of 1.7%. On a constant currency basis, operating profit1 increased by €3.2 million (4.6%). This was driven by increased fertiliser and feed volumes being partially offset by a reduction in agronomy service volumes in the period.  The Group operating margin decreased from 4.6% to 4.4% principally due to higher fertiliser prices in the year.  

 

 

Associates and joint venture2

 

Origin's share of the profit after interest and taxation from associates and joint venture amounted to €7.2 million in the period (2017: €4.4m). The improved performance in the period was principally supported by higher feed volumes.

 

 

Finance costs and net debt

 

Net finance costs amounted to €8.1 million, an increase of €1.2 million (16.9%) on the prior year level. The finance cost was primarily driven by gross debt balances with cash yields negligible in the current environment. Average net debt amounted to €226.0 million compared to €217.0 million last year.  Actual net debt at 31 July 2018 was €38.4 million4 compared to net debt of €31.5 million4 at the end of the previous year. 

 

Origin's financial position remains strong. At year end the Group had unsecured committed banking facilities of €430 million (2017: €430 million), of which €30 million will expire in August 2021 and €400m million will expire in May 2022.

 

At year end the Group's key banking covenants were as follows:

 

 

Banking Covenant

2018

Times

2017

Times

 

 

 

 

 

 

 

 

Net debt to EBITDA

Maximum 3.5

0.54

0.49

 

 

 

 

EBITDA to net interest

Minimum 3.0

9.81

11.45

 

 

 

 

 

 

Working capital

 

For the year ended 31 July 2018, there was working capital inflow of €0.7 million. Investment in working capital remains a key area of focus for the Group given the associated funding costs.  The year end represents the low point in the working capital cycle for the Group reflecting the seasonality of the business.

 

 

Adjusted diluted earnings per share ('EPS')3

 

EPS3 amounted to 48.80 cent per share, an increase of 4.7% from 2017.  This movement was driven by an increase in like-for-like underlying profits of 5.7%, along with the positive impact of acquisitions of 1.9%, partly offset by a 2.9% reduction as a result of foreign currency translation.

Free cash flow

 

2018

€'m

2017

€'m

 

Free cash flow

56.6

32.5

 

The Group generated free cash flow in the year of €56.6 million (2017: €32.5 million). Free cash flow is an important metric as it indicates the amount of internally generated capital that is available for re-investment in the business or for distribution to shareholders.

 

Free cash flow means the total of earnings before interest, tax, depreciation, amortisation of non-ERP related intangible assets and exceptional items of wholly owned businesses ('EBITDA') adjusted to take account of interest, tax, routine capital expenditure, working capital cash flows and dividends received.

 

 

Return on capital employed

 

2018

2017

 

Return on capital employed

13.5%

13.7%

 

Return on capital employed is a key performance indicator for the Group and represents Group earnings before interest, tax and amortisation of non-ERP related intangible assets from continuing operations ('EBITA') taken as a percentage of the Group Net Assets. For the purposes of this calculation:

 

(i)       EBITA includes the net profit contribution from associates and joint venture (after interest and tax) and excludes the impact of exceptional and non-recurring items.

 

(ii)      Group Net Assets means total assets less total liabilities as shown in the annual report excluding net debt, derivative financial instruments, put option liabilities, accumulated amortisation of non-ERP related intangible assets and taxation related balances. Net Assets are also adjusted to reflect the average level of acquisition investment spend and the average level of working capital for the accounting period.

 

 

Exceptional items

 

Exceptional items net of tax amounted to €Nil in the year.  These principally relate to acquisition, disposal and restructuring costs and a fair value adjustment on the Group's investment properties. Exceptional items are summarised in the table below:

 

 

2018

€'m

2017

€'m

 

 

 

Transaction, other related costs and put option, net

2.3

(0.6)

Rationalisation costs, net

0.7

8.3

Gain on disposal of chemical business, net

(1.5)

-

Fair value adjustment on investment properties

(1.5)

-

Organisational redesign costs

     -

  1.6

Total exceptional items, net of tax

     -

  9.3

 

 

 

 

 

Reporting segments

 

Following the changes made to our reporting segments in the prior year, and in recognition of the agreement to acquire Fortgreen and Ferrari Zagatto in Brazil, going forward the Group will have three separate reporting segments as set out below.

 

Ireland and the United Kingdom

 

This segment includes the Group's wholly owned Irish and UK based Business-to-Business Agri-Input operations, Integrated Agronomy and On-Farm Service operations and Digital Agricultural Services business. In addition, this segment includes the Group's associates and joint venture undertakings.

 

Continental Europe

 

This segment includes the Group's operations in Belgium, Poland, Romania and Ukraine.

 

Latin America

 

This segment includes the Group's operations in Latin America including Fortgreen, the Brazil based crop nutrition and speciality inputs business acquired subsequent to the year end.

 

 

Dividend

 

The Board recommends a final dividend of 17.85 cent per ordinary share which, when combined with the interim dividend of 3.15 cent per ordinary share, brings the total dividend for the year to 21.0 cent per ordinary share (2017: 21.0 cent).  Subject to shareholder approval at the Annual General Meeting, this final dividend will be paid on 14 December 2018 to shareholders on the register on 30 November 2018.

 

 

Investor relations

 

The Group continues to focus on effective communications with shareholders. Contact with institutional shareholders is the responsibility of the executive management team including the Chief Executive Officer, Chief Financial Officer, Group Finance Director and Head of Investor Relations. During the year there were 170 meetings / conference calls with institutional investors across seven financial centres.

 

Brendan Corcoran was appointed as Head of Investor Relations and Group Planning during the year and joined the Group in September 2018.

 

 

Brexit

 

The UK's exit from the European Union continues to be an area of focus for the Group. Regular updates on the potential impacts of Brexit on Origin have been presented to the Board on a range of areas including the implications for UK domestic agricultural policy, regulation and the future trading relationship between the UK and the European Union.

 

Given the Group's well-diversified business in the UK, Continental Europe and Latin America, it is able to maintain a flexible approach to dealing with the potential challenges that will arise following Brexit.  We believe that we are well prepared for any short-term logistical disruption that may result from a no-deal Brexit. The Board and senior management will continue to closely monitor Brexit negotiations and adjust the Group's strategic and operational plans as necessary.

 

 

Annual General Meeting (AGM)

 

The AGM will be held on 23 November 2018 at 11.00 a.m. in the Merrion Hotel, Upper Merrion Street, Dublin 2.

 

 

1              Before amortisation of non-ERP intangible assets and exceptional items                           

2               Profit after interest and tax before amortisation of non-ERP intangible assets and before exceptional items

3               Before amortisation of non-ERP intangible assets, net of related deferred tax (2018: €4.9m, 2017: €3.9m) and exceptional items, net of tax (2018: €Nil, 2017: €9.3m)

4               Including restricted cash of €0.5m (2017: €Nil)

 

 

 

 

Review of Operations

 

Group Overview

 

 

 

 

Change of prior year

 

 

2018

€m

 

2017

€m

 

Change

%

 

Underlying3

%

Constant Currency4 %

 

 

 

 

 

 

 

Revenue

1,627.5

1,528.5

6.5%

4.0%

9.0%

Operating profit1

71.2

70.0

1.7%

1.0%

4.6%

Operating margin1

4.4%

4.6%

(20bps)

(20bps)

(20bps)

 

 

 

 

 

 

Adjusted diluted EPS (cent)2

48.80

46.62

4.7%

5.7%

7.6%

 

 

 

 

 

 

1 Before amortisation of non-ERP intangible assets and exceptional items

2 Before amortisation of non-ERP intangible assets, net of related deferred tax (2018: €4.9m, 2017: €3.9m) and exceptional items, net of tax (2018: €Nil, 2017: €9.3m)

3 Excluding currency movements and the impact of acquisitions

4 Excluding currency movements

                 

 

Origin has delivered a strong operational performance in 2018 with growth in Group revenue, operating profit and adjusted fully diluted earnings per share of 9.0%, 4.6% and 7.6% respectively on a constant currency basis.  Operating margin decreased by 20 basis points to 4.4%. The overall performance benefited from the contribution of acquisitions in the year, delivering a 5.0% increase in revenue.

 

 

Ireland and the United Kingdom

 

 

 

 

Change on prior year

 

2018

€m

2017

€m

Change

%

Underlying3

%

 

 

 

 

 

Revenue

1,038.1

955.0

8.7%

6.1%

Operating profit1

54.8

53.4

2.5%

1.4%

Operating margin1

5.3%

5.6%

(30bps)

(30bps)

 

 

 

 

 

Associates and joint venture2

7.2

4.4

65.4%

70.0%

 

1 Before amortisation of non-ERP intangible assets and exceptional items

2 Profit after interest and tax before amortisation of non-ERP intangible assets and before exceptional items

3 Excluding currency movements and the impact of acquisitions

 

           

 

Ireland and the UK delivered a satisfactory performance, recording a 6.1% increase in underlying revenue and a 1.4% increase in underlying operating profit against a backdrop of a very challenging growing season for primary producers. Underlying volume growth in agronomy services and inputs was 2.1% reflecting increased fertiliser and feed volumes.  Operating margin decreased by 30 basis points to 5.3% due to higher fertiliser prices in the year offset by an improved portfolio mix. 

 

 

 

Integrated Agronomy and On-Farm Services

 

Integrated Agronomy and On-Farm Services performed in line with last year with improved sales margins offset by lower agronomy service revenues and crop protection volumes. Crop drillings and input application were significantly curtailed in early spring as a result of unseasonably cold weather. A return to more settled weather conditions in the fourth quarter facilitated robust catch up activity levels on-farm, which resulted in a substantial recovery of shortfalls in third quarter volumes. There was a strong operational performance for the period as a whole with Origin's service orientated and customised agronomy model maintaining good momentum with new applications designed to maximise the economic potential of crops in a highly challenging growing season.

 

Improved farmer crop margins underpinned by the recent trend of higher output prices will help offset the impact of lower yield potential in 2018 resulting from the unseasonably dry conditions in the fourth quarter. The backdrop of more favourable farm sentiment is expected to positively influence growers crop planting intentions in 2019.

 

 

Digital Agricultural Services

 

Digital Agricultural Services performed well in the period with continued momentum in product adoption by both agronomists and primary producers.

 

The roll out of the Group's digital platform, Contour, advanced in the period, with further product enhancements set to be delivered throughout 2019. Contour is a digital information service for agronomists and farmers which incorporates an integrated suite of whole farm and field level monitoring tools. Contour brings farmers and agronomists closer together by providing highly functional and shared applications which enable data driven solutions to maximise the return for farmers. In addition to soil and crop health information and localised weather data, Contour provides a yield prediction capability that supports in season crop performance analysis to evaluate agronomic decisions.  

 

Over 700,000 hectares have now been on-boarded onto the Contour platform, which provides a strong basis for further development in 2019.

 

 

Business-to-Business Agri-Inputs

 

Business-to-Business Agri-Inputs has performed strongly in the period, delivering good growth in operating profits principally supported by higher volumes of both fertiliser and feed ingredients.

 

 

Fertiliser

 

Fertiliser achieved higher volumes, revenues and profits in 2018 with performance underpinned by strong operational delivery as the business successfully met customers' demand requirements in a highly concentrated and delayed application window due to the challenging weather conditions experienced in the early part of the year. Fertiliser benefitted from incremental volume growth in the latter part of the season as farmers strived to replenish fodder stocks following the extended drought conditions during much of the late grass growing season.

 

Branded speciality nutrition continued to deliver strong growth through the development of differentiated and bespoke applications designed to be relevant to primary producers' crop specific and growing system requirements.

 

Bunn Fertiliser, acquired in August 2017, was successfully integrated into the UK and Group fertiliser platform in the year and has contributed positively to the performance of the enlarged business.

 

 

Amenity

 

Origin Amenity delivered a good performance across all sales channels in 2018 against lower volumes due to the impact of poor spring weather followed by unusually high temperatures. Performance benefitted from the positive contribution from acquisitions that were completed in 2016 and 2017 providing new and differentiated product and service offerings.

 

The integration of Linemark, the UK based leader in advanced sports and amenity-marking solutions, acquired in 2017, was successfully completed in the period.

 

 

Feed Ingredients

 

Feed Ingredients achieved an excellent performance in the period underpinned by strong volume growth and improved margins. Volume development largely reflected the combination of a more favourable demand backdrop for feed due to higher livestock numbers and lower availability of substitute farm produced fodder supply due to very poor grass growing conditions in the year. 

 

The Group's animal feed manufacturing associate, John Thompson & Sons Limited, in which the Group has a 50% shareholding, delivered a very satisfactory performance in the period.

 

 

 

 

Continental Europe1

 

 

 

 

Change on prior year

 

2018

€m

2017

€m

Change

%

Underlying3

%

 

 

 

 

 

Revenue

431.0

397.3

8.5%

5.4%

Operating profit2

16.2

16.2

0.6%

0.9%

Operating margin2

3.8%

4.1%

(30bps)

(30bps)

 

Excluding crop marketing. While crop marketing has a significant impact on revenue, its impact on operating profit is insignificant. For the year ending 31 July 2018 crop marketing revenues and profits attributable to Continental Europe amounted to €158.4 million and €0.2 million respectively (2017: €176.2 million and €0.4 million respectively).  An analysis of revenues, profits and margins attributable to agronomy services and inputs more accurately reflects the underlying drivers of business performance.

2  Before amortisation of non-ERP intangible assets and exceptional items

3  Excluding currency movements and the impact of acquisitions

 

           

 

Continental Europe achieved a satisfactory performance in line with last year. The result was set against highly challenging operating conditions experienced by primary producers in the period arising from extreme weather conditions, which led to a condensed spring growing season followed by sustained dry conditions impacting yield development over the summer period.

 

Underlying business volumes grew 4.0% in the period due to continued development of the Group's fertiliser and nutrition portfolios. Operating margins declined 30 basis points to 3.8% reflecting a combination of higher fertiliser prices and the impact of more condensed seasonality in the period.

 

 

Belgium

 

During the year, the Group completed the acquisition of Pillaert-Mekoson in Belgium, a new geography for the Group. Headquartered in Ghent, Pillaert-Mekoson is a leading provider of standard and prescription fertilisers in Belgium and surrounding geographies. The business, which enjoys a brand heritage of over 50 years, markets an extensive range of technically based nutrition applications and operates a strong business-to-business and retail customer franchise.

 

Pillaert-Mekoson was successfully integrated into the Group during the period and delivered a very satisfactory performance, with positive volume momentum achieved.  This was driven by increased demand as a result of the impact of feed shortages during the year and the promotion of grass production.

 

 

Poland

 

Poland delivered an improved result in the period against lower business volumes with performance benefitting from a combination of a favourable sales mix and efficiency gains.  Trading conditions were highly challenging as service and input applications were significantly curtailed during the spring period due to unseasonably cold weather, followed by drought conditions in large areas of Poland, which adversely impacted crop yield. 

 

Value added agronomy applications continued to drive overall development in direct farm channels. The launch of 'Agrii Demo' was favourably received in the period and helped to underscore the importance of technically led and integrated crop management solutions and approaches in delivering superior results for farmers.

 

 

Romania

 

Romania achieved a good result in the period with solid growth achieved across the principal sales channels. Crop development over the course of the year was satisfactory other than the impact of some localised drought conditions on yield. Total plantings were in line with last year at 8.3 million hectares.

 

Nutrition portfolios continued to deliver strong growth in the period as the Group capitalises on the market opportunity from primary producers' demand for improved ranges and speciality applications.

 

Strong momentum was achieved in relation to digital adoption in the period. Over 150,000 hectares were on-boarded onto the Group's Contour platform during the year, which provides an excellent foundation for further development in 2019.

 

 

Ukraine

 

Ukraine recorded lower profits and margins in the period as currency volatility and input price inflation drove heightened competition. Although adverse weather conditions resulted in a delayed season and a reduction in the underlying level of volume application, total cropping remained in line with last year at approximately 22.4 million hectares.

 

Good progress was achieved in the development of speciality crop technology packages, which delivered solid growth in the period.

 

The business continues to successfully drive market share gain supported by a targeted expansion of the agronomy sales and distribution footprint.

 

 

Acquisitions

 

Origin announced in June that it had reached an agreement to acquire a 65% interest in the Brazilian business, Fortgreen Commercial Agricola Ltda. ('Fortgreen'). As part of this transaction, Origin has also agreed to acquire a 20% shareholding in the Brazilian business, Ferrari Zagatto E Cia. Ltda. ('Ferrari Zagatto').

 

Fortgreen, which is headquartered in Paraná State in southern Brazil, and was founded in 2004, is focused on the development of value added crop nutrition and speciality inputs. Ferrari Zagatto, founded in 1988, and also headquartered in Paraná, is one of the leading providers of agronomy services, crop inputs and crop marketing support to grain and speciality crop growers in Paraná.

 

In August 2018, Origin announced the completion of the acquisition of the 65% interest in Fortgreen following the satisfaction of the conditions of the transaction.

 

 

 

 

 

Management changes

 

Origin separately announces today that Declan Giblin, Executive Director, with responsibility for Corporate Development, has been appointed Chief Executive Officer for the Group's Latin American Division effective 1 October 2018. The appointment follows the completion of the acquisition of the Brazilian based speciality nutrition and crop inputs business, Fortgreen, on 14 August 2018 and the agreement to acquire a 20% shareholding in Ferrari Zagatto in Brazil.

 

Declan will remain an Executive Director of Origin and will continue to retain responsibility for corporate development in Latin America.

 

The appointment of a Head of Corporate Development for Europe will be made in due course. 

 

Also during the year, the Group announced the appointment of Sean Coyle as Chief Financial Officer. Sean joined Origin on 1 September 2018 and will be appointed as a Director of the Company with effect from 1 October 2018.

 

 

Outlook

 

We have seen steadily improving sentiment on-farm over recent months which may be challenged in the UK by the uncertain nature of Brexit and its timing.  The Group is well positioned to capitalise on its scalable and diversified business platforms, development opportunities and strong cash generation.

 

ENDS

 

 

 

Origin Enterprises plc

 

Consolidated Statement of Comprehensive Income

For the financial year ended 31 July 2018

 

 

 

Pre-

 

 

 

 

 

Pre-

 

 

 

 

 

 

exceptional

 

Exceptional

 

Total

 

exceptional

 

Exceptional

 

Total

 

 

2018

 

   2018

 

   2018

 

2017

 

   2017

 

   2017

 

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

Notes

 

 

(Note 3)

 

 

 

 

 

(Note 3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

2

1,627,533

 

-

 

1,627,533

 

1,528,468

 

-

 

1,528,468

Cost of sales

 

(1,389,926)

 

-

 

(1,389,926)

 

(1,297,009)

 

-

 

(1,297,009)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

237,607

 

-

 

237,607

 

231,459

 

-

 

231,459

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating costs

 

 

(172,072)

 

663

 

(171,409)

 

(166,287)

 

(12,524)

 

(178,811)

Share of profit of associates and joint venture

 

 

7,221

 

 

-

 

 

7,221

 

 

4,366

 

 

-

 

 

4,366

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit

 

72,756

 

663

 

73,419

 

69,538

 

(12,524)

 

57,014

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance income

 

1,432

 

-

 

1,432

 

703

 

-

 

703

Finance expense

 

(9,514)

 

-

 

(9,514)

 

(7,617)

 

-

 

(7,617)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit before income tax

 

 

64,674

 

 

663

 

 

65,337

 

 

62,624

 

 

(12,524)

 

 

50,100

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax (expense)/credit

 

 

(7,900)

 

 

(652)

 

 

(8,552)

 

 

(7,702)

 

 

3,222

 

 

(4,480)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the year

 

 

56,774

 

 

11

 

 

56,785

 

 

54,922

 

 

(9,302)

 

 

45,620

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2018

 

2017

Earnings per share for the year

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

4

 

45.22c

 

36.33c

 

 

 

 

 

 

Diluted earnings per share

4

 

44.94c

 

36.15c

 

 

 

 

 

 

 

 

 

 

Origin Enterprises plc

 

Consolidated Statement of Comprehensive Income

For the financial year ended 31 July 2018

 

 

2018

 

2017

 

€'000

 

€'000

 

 

 

 

Profit for the year

56,785

 

45,620

 

 

 

 

Other comprehensive income/(expense)

 

 

 

 

 

 

 

Items that are not reclassified subsequently to the Group income statement:

 

 

 

Group/Associate defined benefit pension obligations

 

 

 

-remeasurements on Group's defined benefit pension schemes

3,628

 

3,407

-deferred tax effect of remeasurements

(504)

 

(519)

-share of remeasurements on associate's defined benefit pension schemes

5,865

 

(614)

-share of deferred tax effect of remeasurements - associates

(997)

 

135

 

 

 

 

Items that may be reclassified subsequently to the Group income statement:

 

 

 

Group foreign exchange translation details

 

 

 

-exchange difference on translation of foreign operations

(1,243)

 

(10,674)

 

 

 

 

Group/Associate cash flow hedges

 

 

 

-effective portion of changes in fair value of cash flow hedges

1,396

 

(2,025)

-fair value of cash flow hedges transferred to operating costs and other income

888

 

1,754

-deferred tax effect of cash flow hedges

(333)

 

86

-share of associates and joint venture cash flow hedges

4,827

 

(4,289)

-deferred tax effect of share of associates and joint venture cash flow hedges

(603)

 

536

 

 

 

 

 

 

 

 

Other comprehensive income/(expense) for the year, net of tax

12,924

 

(12,203)

 

 

 

 

 

 

 

 

Total comprehensive income for the year attributable to equity shareholders

69,709

 

33,417

 

 

 

 

 

 

 

 

 

 

Origin Enterprises plc

 

Consolidated Statement of Financial Position

As at 31 July 2018

 

 

 

2018

 

2017

 

Notes

€'000

 

€'000

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

Property, plant and equipment

5

117,929

 

105,271

Investment properties

 

11,825

 

9,675

Goodwill and intangible assets

6

216,334

 

205,961

Investments in associates and joint venture

7

48,171

 

34,206

Other financial assets

 

450

 

531

Derivative financial instruments

 

835

 

169

Deferred tax assets

 

3,280

 

3,475

Post employment benefit surplus

9

725

 

-

 

 

 

 

 

Total non-current assets

 

399,549

 

359,288

 

 

 

 

 

Current assets

 

 

 

 

Inventory

 

194,192

 

159,245

Trade and other receivables

 

461,199

 

401,303

Derivative financial instruments

 

1,399

 

560

Restricted cash

 

500

 

-

Cash and cash equivalents

 

147,212

 

162,631

 

 

 

 

 

Total current assets

 

804,502

 

723,739

 

 

 

 

 

TOTAL ASSETS

 

1,204,051

 

1,083,027

 

 

 

 

 

 

Origin Enterprises plc

 

Consolidated Statement of Financial Position (continued)

As at 31 July 2018

 

 

 

2018

 

2017

 

Notes

€'000

 

€'000

 

 

 

 

 

EQUITY

 

 

 

 

 

 

 

 

 

Called up share capital presented as equity

       12

1,264

 

1,264

Share premium

 

160,422

 

160,422

Retained earnings and other reserves

 

168,561

 

125,043

 

 

 

 

 

TOTAL EQUITY

 

330,247

 

286,729

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

Interest-bearing borrowings

 

165,232

 

177,854

Deferred tax liabilities

 

22,171

 

17,553

Put option liability

 

5,531

 

5,450

Provision for liabilities

8

8,045

 

8,072

Post employment benefit obligations

9

-

 

3,646

Derivative financial instruments

 

46

 

204

 

 

 

 

 

Total non-current liabilities

 

201,025

 

212,779

 

 

 

 

 

Current liabilities

 

 

 

 

Interest-bearing borrowings

 

20,836

 

16,227

Trade and other payables

 

638,161

 

548,130

Corporation tax payable

 

8,143

 

11,090

Provision for liabilities

8

5,467

 

7,392

Derivative financial instruments

 

172

 

680

 

 

 

 

 

Total current liabilities

 

672,779

 

583,519

 

 

 

 

 

TOTAL LIABILITIES

 

873,804

 

796,298

 

 

 

 

 

 

 

 

 

 

TOTAL EQUITY AND LIABILITIES

 

1,204,051

 

1,083,027

 

 

 

 

 

 

 

 

 

 

 


 

 

Origin Enterprises plc

 

Consolidated Statement of Changes in Equity

For the financial year ended 31 July 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-

 

 

 

Foreign

 

 

 

 

 

 

 

 

 

 

 

Capital

 

Cashflow

 

 

 

based

 

 

 

currency

 

 

 

 

 

Share

 

Share

 

Treasury

 

redemption

 

hedge

 

Revaluation

 

payment

 

Re-organisation

 

translation

 

Retained

 

 

 

capital

 

premium

 

shares

 

reserve

 

reserve

 

reserve

 

reserve

 

reserve

 

reserve

 

earnings

 

Total

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 August 2017

1,264

 

160,422

 

(8)

 

134

 

(2,665)

 

12,843

 

358

 

(196,884)

 

(38,076)

 

349,341

 

286,729

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the year

         -  

 

            -  

 

            -  

 

-  

 

-

 

                 -  

 

-  

 

                       -  

 

-

 

56,785

 

56,785

Other comprehensive income/(expense) for the year

         -  

 

            -  

 

            -  

 

            -  

 

6,175

 

                 -  

 

-

 

                       -  

 

(1,243)

 

7,992

 

12,924

Total comprehensive income/(expense) for the year

-

 

-

 

-

 

-

 

6,175

 

-

 

-

 

-

 

(1,243)

 

64,777

 

69,709

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based payment charge

-

 

-

 

-

 

-

 

-

 

-

 

180

 

-

 

-

 

-

 

180

Dividend paid to shareholders

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(26,371)

 

(26,371)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 31 July 2018

1,264

 

160,422

 

(8)

 

134

 

3,510

 

12,843

 

538

 

(196,884)

 

(39,319)

 

387,747

 

330,247

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Origin Enterprises plc

 

Consolidated Statement of Cash Flows

For the financial year ended 31 July 2018

 

 

 

2018

 

2017

 

€'000

 

€'000

 

 

 

 

Cash flows from operating activities

 

 

 

Profit before tax

65,337

 

50,100

Exceptional items

(663)

 

12,524

Finance income

(1,432)

 

(703)

Finance expense

9,514 

 

7,617

Profit on disposal of property, plant and equipment

(285)

 

(229)

Share of profit of associates and joint venture

(7,221)

 

(4,366)

Depreciation of property, plant and equipment

7,451 

 

7,099

Amortisation of intangible assets

7,946 

 

6,718

Employee share-based payment charge

180 

 

358

Pension contributions in excess of service costs

(852)

 

(576)

Payment of exceptional rationalisation costs

(3,334)

 

(10,145)

Payment of exceptional acquisition costs

(3,688)

 

(1,532)

 

 

 

 

 

 

 

 

Operating cash flow before changes in working capital

72,953 

 

66,865

 

 

 

 

Movement in inventory

(28,505)

 

(2,706)

Movement in trade and other receivables

(58,469)

 

13,765

Movement in trade and other payables

87,713 

 

(37,115)

 

 

 

 

 

 

 

 

Cash generated from operating activities

73,692 

 

40,809

 

 

 

 

Interest paid

(6,927)

 

(6,336)

Income tax paid

(10,428)

 

(8,166)

 

 

 

 

 

 

 

 

Cash inflow from operating activities

56,337 

 

26,307

 

 

 

 

 

 

 

 

 

Origin Enterprises plc

 

Consolidated Statement of Cash Flows (continued)

For the financial year ended 31 July 2018

 

 

 

2018

 

2017

 

€'000

 

€'000

 

 

 

 

Cash flows from investing activities

 

 

 

Proceeds from sale of property, plant and equipment

1,410 

 

409

Proceeds from sale of equity investment

-

 

306

Purchase of property, plant and equipment

(11,602)

 

(11,206)

Additions to intangible assets

(5,645)

 

(3,566)

Arising on acquisition

(23,857)

 

(20,305)

Payment of contingent acquisition consideration

(1,627)

 

(3,408)

Proceeds from sale of Chemicals division

5,250 

 

-

Payment of put option liability

-

 

(1,746)

Restricted cash

(500)

 

2,948

Repayment from/loans to associates and joint venture

85 

 

-

Dividends received from associates

2,483 

 

3,822

 

 

 

 

 

 

 

 

Cash outflow from investing activities

(34,003)

 

(32,746)

 

 

 

 

Cash flows from financing activities

 

 

 

Drawdown of bank loans

141,775

 

113,471

Repayment of bank loans

(158,155)

 

(89,440)

Payment of dividends to equity shareholders

(26,371)

 

(26,371)

 

 

 

 

 

 

 

 

Cash outflow from financing activities

(42,751)

 

(2,340)

 

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents

(20,417)

 

(8,779)

 

 

 

 

Translation adjustment

261

 

(3,963)

 

 

 

 

Cash and cash equivalents at start of year

146,715 

 

159,457

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of year (Note 11)

126,559 

 

146,715

 

 

 

 

 

 

 

 

 

 

Origin Enterprises plc

 

Notes to the preliminary results statement

                For the financial year ended 31 July 2018

 

1       Basis of preparation

 

The financial information included on pages 15 to 36 of this preliminary results statement has been extracted from the Group financial statements for the year ended 31 July 2018 on which the auditor has issued an unqualified audit opinion.

 

The financial information has been prepared in accordance with the accounting policies set out in the Group's consolidated financial statements for the year ended 31 July 2018, which were prepared in accordance with International Financial Reporting Standards as adopted by the EU.

 

The consolidated financial information is presented in Euro, rounded to the nearest thousand which is the functional currency of the parent.

 

2       Segment information

 

IFRS 8, 'Operating Segments' requires operating segments to be identified on the basis of internal reports that are regularly reviewed by the Chief Operating Decision Maker ('CODM') in order to allocate resources to the segments and to assess their performance. 

 

The Group has two operating segments as follows:

               

                Ireland and the United Kingdom

 

This segment includes the Group's wholly owned Irish and UK based Business-to-Business Agri-Inputs operations, Integrated Agronomy and On-Farm Services operations and Digital Agricultural Services business. In addition, this segment includes the Group's Associates and joint venture undertakings.

 

                Continental Europe

 

This segment includes the Group's Business-to-Business Agri-Inputs operations, Integrated Agronomy and On-Farm Services operations in Belgium, Poland, Romania and the Ukraine.

 

Information regarding the results of each reportable segment is included below.  Performance is measured based on segment operating profit as included in the internal management reports that are reviewed by the Group's CODM, being the Origin Executive Directors.  Segment operating profit is used to measure performance, as this information is the most relevant in evaluating the results of the Group's segments.  Segment results include all items directly attributable to a segment.

 

 

Origin Enterprises plc

 

Notes to the preliminary results statement (continued)

                For the financial year ended 31 July 2018

 

2              Segment information (continued)

 

(i) Segment revenue and results

 

Ireland & the UK

 

 

Continental Europe

 

Total Group

 

2018

 

2017

 

2018

 

2017

 

2018

 

2017

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

1,395,377

 

1,266,159

 

589,480

 

573,483

 

1,984,857

 

1,839,642

Less revenue from associates and joint venture

(357,324)

 

(311,174)

 

-

 

-

 

(357,324)

 

(311,174)

Revenue

1,038,053

 

954,985

 

589,480

 

573,483

 

1,627,533

 

1,528,468

 

 

 

 

 

 

 

 

 

 

 

 

Segment result

54,752

 

53,431

 

16,438

 

16,578

 

71,190

 

70,009

 

 

 

 

 

 

 

 

 

 

 

 

Profit from associates and joint venture

7,221

 

4,366

 

-

 

-

 

7,221

 

4,366

 

 

 

 

 

 

 

 

 

 

 

 

Amortisation of non- ERP intangible assets

(3,863)

 

(3,071)

 

(1,792)

 

(1,766)

 

(5,655)

 

(4,837)

 

 

 

 

 

 

 

 

 

 

 

 

Total operating profit before exceptional items

58,110

 

54,726

 

14,646

 

14,812

 

72,756

 

69,538

 

 

 

 

 

 

 

 

 

 

 

 

Exceptional items

(17)

 

(12,145)

 

680

 

(379)

 

663

 

(12,524)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit

58,093

 

42,581

 

15,326

 

14,433

 

73,419

 

57,014

 

 

Origin Enterprises plc

 

Notes to the preliminary results statement (continued)

For the financial year ended 31 July 2018

 

2       Segment information (continued)

 

(ii) Segment earnings before financing costs and tax is reconciled to reported profit before tax and profit after tax as follows:

 

2018

 

2017

 

€'000

 

€'000

 

 

 

 

                Segment earnings before financing costs and tax

73,419

 

57,014

 

 

 

 

                Finance income

1,432

 

703

                Finance expense

(9,514)

 

(7,617)

 

 

 

 

 

 

 

 

 Reported profit before tax

65,337

 

50,100

 

 

 

 

                Income tax expense

(8,552)

 

(4,480)

 

 

 

 

 

 

 

 

                Reported profit after tax

56,785

 

45,620

 

 

 

 

 

        

      

 

 

Origin Enterprises plc

 

Notes to the preliminary results statement (continued)

For the financial year ended 31 July 2018

 

3        Exceptional items

 

Exceptional items are those that, in management's judgement, should be separately presented and disclosed by virtue of their nature or amount.  Such items are included within the Consolidated Income Statement caption to which they relate.  The following exceptional items arose during the year:

 

2018

 

2017

 

€'000

 

€'000

Rationalisation costs (i)

(876)

 

(10,990)

Gain on disposal of business (ii)

1,870

 

-

Transaction and strategy related costs (iii)

(2,560)

 

(2,460)

Organisational redesign costs (iv)

-

 

(1,740)

Fair value adjustment on investment properties (v)

2,150

 

-

Fair value adjustment on put option liability (vi)

79

 

2,666

Total exceptional credit/(charge) before tax

663

 

(12,524)

Tax (charge)/credit on exceptional items

(652)

 

3,222

Total exceptional credit/(charge) after tax

11

 

(9,302)

 

 

 

 

(i)   Rationalisation costs

Rationalisation costs comprise the compensation and termination payments arising from the restructuring of our agronomy services businesses in the UK, net of unutilised accruals relating to previous restructuring programmes of €0.6 million. The tax impact of this exceptional item in the current year is a tax credit of €0.2 million (2017: €2.1 million).

 

(ii)  Gain on disposal of business

Following the disposal of the Groups Chemicals business operated through Goulding Chemicals Limited and the closure of a seed plant in the UK, a gain of €2.6 million and a loss of €0.7 million respectively were recorded. The tax impact of this exceptional item in the current year was a tax charge of €0.4 million.

 

(iii) Transaction and strategy related costs

Transaction related costs principally comprise costs incurred in relation to the acquisitions completed during the year and post year end. Strategy related costs relate to once off consultancy costs in the prior year associated with the Groups' Agri-Services five-year strategy review. The tax impact of this item in the current year was a tax credit of €0.2 million (2017: €0.9 million).

 

(iv) Organisational redesign costs

During the prior year the Group incurred costs relating to the commencement of an organisation redesign project, the purpose of which was to enhance the Origin Group's central capabilities to enable it to continue to support the Group as it grows. The primary areas of focus were on how the reporting and management structures, in addition to centralised functions, need to evolve as the Group continues to integrate existing businesses and expand its footprint. The tax impact of this exceptional item in the prior year was a tax credit of €0.2 million.

 

(v)  Fair value adjustment of investment properties

At 31 July 2018 the valuation of the Group's investment properties was determined by the Directors using a market approach with reference to local knowledge and judgement. As part of the Director's assessment, guidance was obtained from an independent valuation expert. Following this assessment an uplift of €2.2 million was reflected in the value of the Group's investment properties as at 31 July 2018. The tax impact of this exceptional item in the current year is €0.6 million.

 

(vi) Fair value of put option liability

This gain relates to the movement in fair value of the put option liability in respect of the Agroscope acquisition. The tax impact of this exceptional item in the current year is nil.

 

Origin Enterprises plc

 

Notes to the preliminary results statement (continued)

For the financial year ended 31 July 2018

 

4      Earnings per share

 

        Basic earnings per share

 

2018

 

2017

 

€'000

 

€'000

 

 

 

 

        Profit for the financial year attributable to equity shareholders

56,785

 

45,620

 

 

 

 

 

'000

 

'000

        Weighted average number of ordinary shares for the year

125,582

 

125,582

 

 

 

 

 

Cent

 

Cent

 

 

 

 

        Basic earnings per share

45.22

 

36.33

 

       

 

        Diluted earnings per share

 

 

2018

 

2017

 

€'000

 

€'000

 

 

 

 

        Profit for the financial year attributable to equity shareholders

56,785

 

45,620

 

 

 

 

 

'000

 

'000

 

 

 

 

        Weighted average number of ordinary shares used in basic calculation

125,582

 

125,582

        Impact of shares with a dilutive effect

120

 

77

        Impact of the SAYE scheme

665

 

531

        Weighted average number of ordinary shares (diluted) for the year

126,367

 

126,190

 

 

 

 

 

Cent

 

Cent

 

 

 

 

        Diluted earnings per share

44.94

 

36.15

 

       

(i)            

 

Origin Enterprises plc

 

Notes to the preliminary results statement (continued)

For the financial year ended 31 July 2018

 

4      Earnings per share (continued)

 

2018

 

2017

 

'000

 

'000

       Adjusted basic earnings per share

 

 

 

       

 

 

 

 

 

 

 

        Weighted average number of ordinary shares for the year

125,582

 

125,582

 

 

 

2018

 

2017

 

€'000

 

€'000

 

 

 

 

        Profit for the financial year

56,785

 

45,620

 

 

 

 

        Adjustments:

 

 

 

        Amortisation of non-ERP related intangible assets (Note 6)

5,655

 

4,837

        Tax on amortisation of non-ERP related intangible assets

(768)

 

(934)

        Exceptional items, net of tax

(11)

 

9,302

        Adjusted earnings

61,661

 

58,825

 

 

 

 

 

Cent

 

Cent

 

 

 

 

        Adjusted basic earnings per share

49.10

 

46.84

 

        Adjusted diluted earnings per share

       

2018

 

2017

 

'000

 

'000

 

 

 

 

       

 

 

 

        Weighted average number of ordinary shares used in basic calculation

125,582

 

125,582

        Impact of shares with a dilutive effect

120

 

77

        Impact of the SAYE scheme

665

 

531

        Weighted average number of ordinary shares (diluted) for the year

126,367

 

126,190

         

 

 

 

2018

 

2017

 

€'000

 

€'000

 

 

 

 

        Adjusted earnings (as above)

61,661

 

58,825

 

 

 

 

 

Cent

 

Cent

 

 

 

 

        Adjusted diluted earnings per share

48.80

 

46.62

 

Origin Enterprises plc

 

Notes to the preliminary results statement (continued)

             For the financial year ended 31 July 2018

 

5    Property, plant and equipment

 

 

2018

 

2017

 

€'000

 

€'000

 

 

 

 

At 1 August

105,271

 

102,796

Arising on acquisition (Note 10)

10,087

 

388

Additions

11,628

 

11,816

Disposals

(1,571)

 

(180)

Depreciation charge for the year

(7,451)

 

(7,099)

Translation adjustments

(35)

 

(2,450)

 

 

 

 

At 31 July

117,929

 

105,271

 

 

 

 

 

                                                                                                  

 

6    Goodwill and intangible assets

 

 

2018

 

2017

 

€'000

 

€'000

 

 

 

 

At 1 August

205,961

 

192,696

Arising on acquisition (Note 10)

11,997

 

25,602

Additions

5,645

 

3,566

Amortisation of non-ERP intangible assets

(5,655)

 

(4,837)

ERP intangible amortisation

(2,291)

 

(1,881)

Translation adjustments

677

 

(9,185)

 

 

 

 

At 31 July

216,334

 

205,961

 

 

 

 

 

Origin Enterprises plc

 

Notes to the preliminary results statement (continued)

             For the financial year ended 31 July 2018

 

7    Investments in associates and joint venture

 

 

2018

 

2017

 

€'000

 

€'000

 

 

 

 

   At 1 August

34,206

 

39,008

   Share of profits after tax

7,221

 

4,366

   Dividends received

(2,483)

 

(3,822)

   Share of other comprehensive income/(expense)

9,092

 

(4,232)

   Translation adjustment

135

 

(1,114)

 

 

 

 

                At 31 July

48,171

 

34,206

 

 

 

 

 

                Split as follows:

 

 

 

                Total associates

23,200

 

17,620

                Total joint venture

24,971

 

16,586

       

48,171

 

34,206

 

 

 

 

 

 

           

8    Provision for liabilities

 

      The estimate of provisions is a key judgement in the preparation of the financial statements.

 

 

 

 

                          

 

2018

                  €'000

 

                          

 

2017

                  €'000

 

 

 

 

 

 

At 1 August

 

 

15,464

 

13,778

Arising on acquisition

 

 

2,995

 

5,129

Provided in year

 

 

2,007

 

11,590

Paid in year

 

 

(4,964)

 

(13,560)

Released in year

 

 

(2,137)

 

(977)

Currency translation adjustment

 

 

147

 

(496)

At 31 July

 

 

13,512

 

15,464

 

 

 

 

 

 

 

 

Provisions primarily relate to contingent acquisition consideration arising on a number of acquisitions completed during the current and prior year and rationalisation costs comprising termination payments arising from the restructuring of Agri-Services in the UK.

 

 

Origin Enterprises plc

 

Notes to the preliminary results statement (continued)

             For the financial year ended 31 July 2018

 

9    Post employment benefit surplus/(obligations)

 

The Group operates a number of defined benefit pension schemes and defined contribution schemes with assets held in separate trustee administered funds. All of the defined benefit schemes are closed to new members.

 

In 2016 the Origin UK Defined Benefit Pension Schemes were merged into one scheme with assets and liabilities transferred to a new single Defined Benefit Scheme. The assets of the scheme continue to be managed under the pre-existing investment arrangements and the liabilities have not changed.

 

The valuations of the defined benefit schemes used for the purposes of the following disclosures are those of the most recent actuarial valuations carried out at 31 July 2018 by an independent, qualified actuary.  The valuations have been performed using the projected unit method.

 

Movement in net asset/(liability) recognised in the Consolidated Statement of Financial Position

 

 

 

2018

 

2017

 

 

€'000

 

€'000

 

 

 

 

 

 

At 1 August

(3,646)

 

(7,713)

 

Current service cost

(552

)

(758)

 

Past service cost

-

 

(131)

 

Contributions

1,404

 

1,465

 

Other finance expense

(80)

 

(170)

 

Remeasurements

3,628

 

3,407

 

Translation adjustments

(29)

 

254

 

 

 

 

 

 

At  31 July

725

 

(3,646)

 

 

 

 

 

 

 

Origin Enterprises plc

                                 

Notes to the preliminary results statement (continued)

For the financial year ended 31 July 2018

 

10  Acquisition of subsidiary undertakings

 

During the period, the Group completed the acquisition of the fertiliser activities and certain assets of Bunn Fertilisers Limited ('Bunn') in the United Kingdom and the acquisition of Pillaert-Mekoson Group ('Pillaert-Mekoson') in Belgium. These acquisitions complement the Group's prescription fertilisers and speciality nutrition business. Details of the acquisitions are as follows:

 

1.     On 10 August 2017 the Group completed the acquisition of the fertiliser activities and certain assets of Bunn. Based in the United Kingdom, Bunn is a leading producer of prescription fertiliser blends and nutrition management systems servicing the arable grassland and horticulture sector

  

2.     On 23 January 2018 the Group announced it had acquired 100% of Pillaert-Mekoson. Based in Belgium, Pillaert-Mekoson markets an extensive range of technically based nutrition applications and operates a strong business and retail customer franchise

       

 

 

Origin Enterprises plc

 

Notes to the preliminary results statement (continued)

             For the financial year ended 31 July 2018

 

10  Acquisition of subsidiary undertakings (continued)

 

           Details of the net assets acquired and goodwill arising from the business combinations are as follows:

 

 

Provisional*

Fair

 

 

value

Assets

 

€'000

Non-current

 

 

Property, plant and equipment

 

10,087

Intangible assets

 

3,064

 

 

 

Total non-current assets

 

13,151

 

 

 

Current assets

 

 

Inventory

 

6,718

Trade receivables (i)

 

4,578

Other receivables

 

508

 

 

 

Total current assets

 

11,804

 

 

 

Liabilities

 

 

Trade payables

 

(1,430)

Onerous lease provision

 

(2,495)

Other payable

 

(3,181)

Corporation tax

 

(371)

Deferred tax liability

 

(2,054)

 

 

 

Total liabilities

 

(9,531)

 

 

 

Total identifiable net assets at fair value

 

15,424

Goodwill arising on acquisition

 

8,933

 

Total net assets acquired (excluding cash acquired)

 

 

24,357

 

 

 

Consideration satisfied by:

 

 

Cash consideration

 

29,985

Cash acquired

 

(6,128)

Net cash outflow

 

23,857

 

 

 

Contingent consideration

 

500

 

 

 

Total consideration related to acquisitions

 

24,357

 

 

 

 

 

 

 

 

 

           

 

 

 

(i) Gross trade receivables acquired were €4.6 million. All amounts are deemed to be recoverable.

* The acquisition accounting for Bunn Fertilisers Limited has been finalised.

 

Origin Enterprises plc

 

Notes to the preliminary results statement (continued)

             For the financial year ended 31 July 2018

 

11  Analysis of net debt

 

 

 

 

 

 

 

Non-cash

 

Translation

 

  

 

 

2017

 

Cashflow

 

movements

 

adjustment

 

2018

 

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

Cash

162,631

 

(15,432)

 

-

 

13

 

147,212

 

Overdrafts

(15,916)

 

(4,985)

 

-

 

248

 

(20,653)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

146,715

 

(20,417)

 

-

 

261

 

126,559

 

 

 

 

 

 

 

 

 

 

 

 

Finance lease obligations

(739)

 

(7)

 

(128)

 

12

 

(862)

 

Loans

(177,426)

 

16,387

 

(677)

 

(2,837)

 

(164,553)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net debt

(31,450)

 

(4,037)

 

(805)

 

(2,564)

 

(38,856)

 

 

 

 

 

 

 

 

 

 

 

 

Restricted cash

-

 

500

 

-

 

-

 

500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net debt including restricted cash

(31,450)

 

(3,537)

 

(805)

 

(2,564)

 

(38,356)

 

 

 

 

 

 

 

 

 

 

 

 

Origin Enterprises plc

 

Notes to the preliminary results statement (continued)

For the financial year ended 31 July 2018

 

12    Share capital

2018

 

2017

 

€'000

 

€'000

        Authorised

 

 

 

        250,000,000 ordinary shares of €0.01 each (i)

2,500

 

2,500

 

 

 

 

 

 

 

 

        Allotted, called up and fully paid

 

 

 

        126,382,206  (2017: 126,382,206) ordinary shares of €0.01 each (i) (ii) (iii)

1,264

 

1,264

 

 

 

 

 

 

 

 

 

 

(i)    Ordinary shareholders are entitled to dividends as declared and each ordinary share carries equal voting rights at meetings of the Company.

 

(ii)    In December 2012, the issued ordinary share capital was increased by the issue of 1,212,871 ordinary shares of nominal value of €0.01 each, at an issue price of €4.04 each, pursuant to a share subscription by a wholly owned subsidiary for the purposes of the Origin Long Term Incentive Plan 2012 ( "2012 LTIP Plan"). Under the terms of 2012 LTIP Plan, 412,541 of these shares were transferred to the directors and senior management as a result of certain financial targets having been achieved.  The remaining 800,330 ordinary shares continue to be held as treasury shares.

 

(iii)   In July 2017, the issued ordinary share capital was increased by the issue of 3,429 ordinary shares of nominal value €0.01 each, at an issue price of €5.48 each pursuant to the terms of the Origin Save As You Earn Scheme 2016.

 

 

 

 

Origin Enterprises plc

 

Notes to the preliminary results statement (continued)

For the financial year ended 31 July 2018

 

        13    Return on capital employed

 

Return on capital employed is a key performance indicator for the Group and represents Group earnings before interest, tax and amortisation of non-ERP related intangible assets taken as a percentage of Group net assets and is consistent with the definition approved as part of the 2015 Long Term Incentive Plan.

 

 

2018

€'000

2017

€'000

 

 

 

Total assets

1,204,051

1,083,027

Total liabilities

(873,804)

(796,298)

Adjusted for:

 

 

Net debt

38,356

31,450

Tax, put option and derivative financial instruments, net

30,549

30,773

Accumulated amortisation of non-ERP related intangible assets

48,046

42,300

Capital employed

447,198

391,252

Average capital employed

581,598

543,812

 

 

 

Operating profit (excluding exceptional items)

65,535

65,172

Amortisation of non-ERP intangible assets

5,655

4,837

Share of profit of associates and joint venture

7,221

4,366

Return

78,411

74,375

 

 

 

Return on capital employed

13.5%

13.7%

 

 

In years where the Group makes significant acquisitions or disposals, the return on invested capital calculation is adjusted accordingly to ensure that the impact of the acquisition or disposal is time apportioned appropriately.

 

 

14   Related party transactions

 

Related party transactions occurring in the year were similar in nature to those described in the 2017 Annual Report.

 

 

15   Dividend

 

The Board is recommending a final dividend of 17.85 cent per ordinary share which when combined with the interim dividend of 3.15 cent per ordinary share brings the total dividend for the year to 21.0 cent per share (total dividend of €26.4 million) (2017: 21.0 cent per share).  Subject to shareholders' approval at the Annual General Meeting, the dividend will be paid on 14 December 2018 to shareholders on the register on 30 November 2018.  In accordance with IFRS, this dividend has not been provided for in the Consolidated Statement of Financial Position as at 31 July 2018.

 

Origin Enterprises plc

 

Notes to the preliminary results statement (continued)

For the financial year ended 31 July 2018

 

16   Financial commitments

 

The Group has a financial commitment of €7.7 million attributable to a strategic partnership with University College Dublin ('UCD'). The commitment is over a five year period.

 

 

17   Subsequent events

 

      On 14 August 2018 Origin announced it had completed the acquisition of a 65% controlling interest in the Brazilian based speciality nutrition and crop inputs business, Fortgreen Commercial Agricola Ltda. ('Fortgreen').

 

        Due to the short time frame between completion date and the date of issuance of this report, it was not possible to reliably estimate the fair values of assets and liabilities or the goodwill amount associated with this acquisition.

 

        The separate transaction to acquire a 20% shareholding in the Brazilian based agronomy services and crop input distribution business, Ferrari Zagatto E Cia. Ltda., ('Ferrari Zagatto'), is expected to complete during the first half of FY2019 financial year.

 

        Origin has agreed a put and call option with the Founders to acquire the remaining 35% shareholding in Fortgreen on specified dates, with the purchase price based on an agreed formula linked to future profitability. Separately Origin has been granted an option to purchase an additional 40% interest in Ferrari Zagatto in 2020 which, if exercised, will lead to the acquisition of the balance of the Founders' shareholding on specified dates with the purchase price based on an agreed formula linked to future profitability

 

        There have been no other material events subsequent to 31 July 2018 that would require adjustment to or disclosure in this report.

 

 

 

 


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