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RNS
Origin Enterprises Plc   -  OGN   

Final Results

Released 07:00 25-Sep-2019

RNS Number : 5389N
Origin Enterprises Plc
25 September 2019
 

Origin Enterprises plc

 

PRELIMINARY RESULTS STATEMENT

 

Strong performance in FY19

15.6% growth in operating profit

Adjusted diluted EPS up 7.9% to 52.65 cent

 

 

Dublin, London, 25 September 2019: Origin Enterprises plc ('Origin' or 'the Group'), the international Agri-Services group, providing specialist agronomy advice, crop inputs and digital agricultural solutions to farmers, growers and amenity professionals, today announces its full year results for the year ended 31 July 2019.

 

Highlights

 

·    Group revenue increase of 10.5% to €1,798.2 million, and 7.2% on an underlying basis

·    Operating profit of €82.3 million, an increase of 15.6% and up 3.5% on an underlying basis

·    Group operating margin of 4.6%, an increase of 20 basis points

·    Adjusted diluted earnings per share3 up 7.9% to 52.65 cent

·    Acquisitions contributed 3.2% to sales growth and 12.0% to operating profit growth in the year

·    Strong cash generation with free cash flow of €54.0 million (2018: €56.6 million)

·    Increase in net debt to €75.6 million (2018: €38.4 million)

·    Proposed 1.5% increase in total dividend to 21.32 cent (2018: 21.0 cent)

·    Good first-time contribution from Fortgreen acquisition in Latin America

·    Exceptional charge of €7.0 million, principally due to a non-cash impairment relating to our Ukrainian business

·    Conditional agreement to dispose of Cork Docklands property for cash consideration of up to €47.5 million

 

Results Summary

 

 

2019

€'000

 

2018

€'000

     

Change

%

Constant

Currency

%

 

 

 

 

 

Group revenue

1,798,197

1,627,533

10.5%

10.4%

 

 

 

 

 

Operating profit1

82,263

71,190

15.6%

15.5%

Associates and joint venture2

6,717

7,221

(7.0%)

(7.2%)

Total group operating profit1

88,980

78,411

13.5%

13.4%

Finance expense, net

(11,808)

(8,082)

(46.1%)

(45.0%)

Profit before tax1

77,172

70,329

9.7%

9.7%

Basic EPS (cent)

41.98

45.22

(7.2%)

(7.3%)

Adjusted diluted EPS (cent)3

52.65

48.80

7.9%

7.8%

Return on capital employed

13.2%

13.5%

(30bps)

 

Group net debt4 (€'000)

(75,596)

(38,356)

(37,240)

 

Operating margin1

4.6%

4.4%

20bps

 

Free cash flow

54,039

56,562

(2,523)

 

Dividend per ordinary share (cent)

21.32

21.00

1.5%

 

 

1

Before amortisation of non-ERP intangible assets and exceptional items

2

Profit after interest and tax before exceptional items

3

Before amortisation of non-ERP intangible assets, net of related deferred tax (2019: €7.1m, 2018: €4.9m) and exceptional items, net of tax (2019: €7.0m, 2018: €Nil)

4

Including restricted cash of €Nil (2018: €0.5m)

 

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

"Our business has performed well in the period with the Group benefiting from favourable organic and acquisition growth. A 15.6% increase in operating profit was recorded while continuing to deliver strong free cash flow generation.

  

The FY19 result reflects our commitment to maintaining a diversified business portfolio with an excellent first-time contribution from Latin America together with the benefit of good demand levels in Ireland and the UK more than offsetting the impact of a more challenging operating environment in Continental Europe, where highly competitive trading conditions within the Ukrainian market impacted profitability.

 

Demand for agronomy services and crop inputs for Ireland and the UK is expected to normalise in FY20 and to be lower than the above average market demand levels experienced in FY19.   Fertiliser and feed demand is not expected to match the demand created by the fodder crisis in the first half of FY19.  Our Continental European and Latin American segments are expected to grow in FY20 in line with our long-term guidance.  Against the backdrop of the uncertain nature of Brexit, and its timing, we continue to prioritise a prudent approach to risk management and capital allocation.

 

The Group is well positioned to capitalise on the Group's scalable and diversified market positions, integrated crop services business model and strong balance sheet to deliver on our 2023 financial and strategic objectives."

 

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.

 

Conference Call:

 

Confirmation Code:

7075732

 

 

Participant access number:

 

 

 

Dublin:

Tel: +353 (0)1 431 9615

UK/International:

Tel: +44 (0)844 571 8892

 

 

Replay:

 

 

 

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

 

Replay Access Code:

7075732

 

 

Replay Access Numbers:

 

 

 

Dublin:

Tel: +353 (0)1 553 8777

UK/International:

Tel: +44 (0)844 571 8951

 

 

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 (Euronext Growth (Dublin) 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

 

 

 

FTI Consulting (Financial Communications Advisers)

 

 

Jonathan Neilan/ Patrick Berkery

Tel:

+353 (0)1 765 0884

 

 

 

 

 

About Origin Enterprises plc

 

Origin Enterprises plc is an international Agri-Services group, providing specialist agronomy advice, crop inputs and digital agricultural solutions to farmers, growers and amenity professionals.  The Group has leading market positions in Ireland, the United Kingdom, Belgium, Brazil, Poland, Romania and Ukraine.  Origin is listed on the Euronext Growth (Dublin) and AIM markets of the Irish and London Stock Exchanges.

 

Euronext Growth (Dublin)  ticker symbol:

OIZ

AIM ticker symbol

OGN

Website:

www.originenterprises.com

           

 

Financial Review - Summary

 

 

2019

€'000

 

2018

€'000

 

 

 

 

Group revenue

1,798,197

 

1,627,533

Operating profit1

82,263

 

71,190

Associates and joint venture, net2

6,717

 

7,221

Group operating profit1

88,980

 

78,411

Finance costs, net

(11,808)

 

(8,082)

Profit before tax1

77,172

 

70,329

Income tax

(10,439)

 

(8,668)

Adjusted net profit

  66,733

 

61,661

 

 

 

 

Adjusted diluted EPS (cent)3

52.65c

 

48.80c

 

 

 

 

Adjusted net profit reconciliation

 

 

 

 

 

 

 

Reported net profit

52,720

 

56,785

Amortisation of non-ERP intangible assets

8,769

 

5,655

Tax on amortisation of non-ERP related intangible assets

(1,709)

 

(768)

Exceptional items (net of tax)

6,953

 

(11)

Adjusted net profit

66,733

 

61,661

 

 

 

 

Adjusted diluted EPS (cent)3

52.65c

 

48.80c

Operating margin1

4.6%

 

4.4%

Return on capital employed

13.2%

 

13.5%

Free cash flow (€'m)

€54.0m

 

€56.6m

 

 

 

 

 

Adjusted diluted earnings per share3 increased by 7.9% to 52.65 cent. On a constant currency basis, adjusted diluted earnings per share increased by 7.8% when compared to prior year.

 

 

Group revenue

 

Group revenue increased by 10.5% to €1,798.2 million from €1,627.5 million in the prior year.  On an underlying basis, at constant currency, revenue increased by €117.3 million (7.2%) driven by strong growth in crop protection, seeds and fertiliser volumes, and an increase in fertiliser prices.

 

Underlying growth in agronomy services and crop input volumes, excluding crop marketing volumes, was 4.0% for FY19.

 

 

Operating profit1

 

Operating profit1 increased by 15.6% to €82.3 million compared to €71.2 million in the previous year. Acquisitions contributed a total of €8.5 million to operating profit in the year, with our new Latin American segment delivering €8.1 million in its first year. On an underlying basis, operating profit1 increased by €2.5 million (3.5%) primarily driven by increased volumes and margins in Ireland and the UK. 

 

The Group operating margin increased from 4.4% to 4.6% principally due to the higher margin profile of our Latin America segment, somewhat diluted by the impact of increased fertiliser volumes and prices in Ireland and the UK and a reduction in operating margin in Continental Europe due to the profit decline in our Ukrainian business. 

 

 

Associates and joint venture2

 

Origin's share of the profit after interest and taxation from associates and joint venture amounted to €6.7 million in the period (2018: €7.2million). This is another strong performance and is set against an excellent outturn in FY18.

 

 

Finance costs and net debt

 

Net debt at 31 July 2019 was €75.6 million4 compared to net debt of €38.4 million4 at the end of the previous year, reflecting a €62.4 million spend on acquisitions and investment capital expenditure.  Average net debt amounted to €270.6 million compared to €226.0 million last year. 

 

Net finance costs amounted to €11.8 million, which represents an increase of €3.7 million on the prior year level. The higher finance costs were driven by the first time cost of financing the acquisition of the Brazil-based Fortgreen business, additional cost of working capital financing due to an increase in the level of sales, combined with increased financing rates in Continental Europe. The average and year end net debt increase is principally attributable to the acquisition cost and working capital investment relating to Fortgreen and an increased investment in Group working capital.

 

During the year the Group extended the maturity of €300.0 million of its core syndicated facilities for a further two years. At 31 July 2019 the Group had unsecured committed banking facilities of €430.0 million (2018: €430.0 million), of which €30.0 million will expire in August 2021, €100.0 million will expire in May 2022 and €300.0 million will expire in June 2024.

 

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

 

 

Banking Covenant

2019

Times

2018

Times

 

 

 

 

 

 

 

 

Net debt to EBITDA

Maximum 3.5

0.87

0.54

 

 

 

 

EBITDA to net interest

Minimum 3.0

8.06

9.81

 

 

 

 

 

 

Working capital

 

For the year ended 31 July 2019, there was a working capital outflow of €12.7 million primarily due to an investment in working capital in Fortgreen in Brazil and increased year on year sales across the Group. Working capital allocation remains a key priority 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

 

Adjusted diluted EPS3 amounted to 52.65 cent per share, an increase of 7.9% from FY18.  This was driven by an increase in like-for-like underlying profits of 0.1%, along with the positive impact of acquisitions of 7.7% and 0.1% as a result of foreign currency translation.

 

 

Free cash flow

 

2019

€'m

2018

€'m

 

Free cash flow

54.0

56.6

 

Free cash flow conversion ratio

 

90.0%

 

106.0%

 

 

 

 

The Group generated free cash flow in the year of €54.0 million (2018: €56.6 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.

 

Free cash flow conversion ratio means free cash flow as a percentage of profit after tax of wholly owned businesses, excluding exceptional items and amortisation of non-ERP related intangible assets.

 

 

Return on capital employed

 

2019

2018

 

Return on capital employed

13.2%

13.5%

 

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 €7.0 million in the year.  These principally relate to the impairment of goodwill and intangibles in Ukraine, acquisition costs, restructuring costs and a fair value adjustment on the Group's investment properties and property, plant and equipment. Exceptional items are summarised in the table below:

 

Exceptional items

 

2019

€'m

 

2018

€'m

 

 

 

 

Impairment of investment in Ukraine, net of put option gain

7.3

 

-

Fair value adjustment and related costs on investment properties

(5.4)

 

(1.5)

Impairment of property, plant and equipment

4.1

 

-

Arising on associates and joint venture

0.4

 

-

Pension and rationalisation related costs

0.3

 

0.7

Transaction, other related costs and movements in contingent consideration, net

0.3

 

2.3

Gain on disposal of chemical business, net

-

 

(1.5)

Total exceptional items, net of tax

7.0

 

-

 

 

 

 

 

Disposal of Cork dockland properties

 

Origin announced during the year that it had reached conditional agreement for the disposal of up to 31 acres of land owned by the Group in Ireland at South Docklands in Cork ('Docklands') for a cash consideration of up to €47.5 million.

 

The transaction is subject to the satisfaction of a number of conditions necessary to realise the full disposal proceeds including the granting of various permissions and approvals and the relocation of the Group's existing operating business in Docklands at an economically viable cost to an alternative location in Cork.

 

 

Dividends

 

In line with the Group's progressive dividend policy, the Board recommends an increased final dividend of 18.17 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 21.32 cent per ordinary share (2018: 21.0 cent), an increase of 1.5%.  Subject to shareholder approval at the Annual General Meeting, this final dividend will be paid on 13 December 2019 to shareholders on the register on 29 November 2019.

 

 

Investor relations

 

Our strategy aims to create long-term shareholder value. We support this strategy through regular and open communication with all capital market participants. We engage with institutional investors in numerous one-on-one meetings, as well as at roadshows and conferences worldwide.

 

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 150 meetings / conference calls with institutional investors across 9 financial centres. In addition, in May 2019 the Group held a Capital Markets Day in London with presentations from the Chief Executive Officer, key divisional management and a detailed overview of our 2023 ambition from the Chief Financial Officer.

 

 

Annual General Meeting (AGM)

 

The AGM will be held on 20 November 2019 at 11.00am (UK/Ireland time) in the Merrion Hotel, Upper Merrion Street, Dublin 2.

 

 

Reporting segments

 

The Group has three separate reporting segments.

 

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.

 

1

Before amortisation of non-ERP intangible assets and exceptional items

2

Profit after interest and tax before exceptional items

3

Before amortisation of non-ERP intangible assets, net of related deferred tax (2019: €7.1m, 2018: €4.9m) and exceptional items, net of tax (2019: €7.0m, 2018: €Nil)

4

Including restricted cash of €Nil (2018: €0.5m)

 

 

 

 

Review of Operations

 

Group Overview

 

 

 

 

Change of prior year

 

 

2019

€'m

 

2018

€'m

 

Change

%

 

Underlying3

%

Constant Currency4

 %

 

 

 

 

 

 

Revenue

1,798.2

1,627.5

10.5%

7.2%

10.4%

Operating profit1

82.3

71.2

15.6%

3.5%

15.5%

Operating margin1

4.6%

4.4%

20bps

(20bps)

20bps

 

 

 

 

 

 

Adjusted diluted EPS (cent)2

52.65

48.80

7.9%

0.1%

7.8%

 

1

Before amortisation of non-ERP intangible assets and exceptional items

2

Before amortisation of non-ERP intangible assets, net of related deferred tax (2019: €7.1m, 2018: €4.9m) and exceptional items, net of tax (2019: €7.0m, 2018: €Nil)

3

Excluding currency movements and the impact of acquisitions

4

Excluding currency movements

 

Origin delivered a strong full year performance in FY19 with growth in Group revenue, operating profit and adjusted fully diluted earnings per share of 10.4%, 15.5% and 7.8% respectively on a constant currency basis.  Operating margin increased by 20 basis points to 4.6%. The overall performance benefited from the contribution of acquisitions in the year, delivering a 12.0% increase in operating profit.

 

Underlying growth in agronomy services and crop input volumes, excluding crop marketing volumes, was 4.0% for FY19.   

 

 

Ireland and the United Kingdom

 

 

 

 

Change on prior year

 

 

2019

€'m

 

2018

€'m

 

Change

%

 

Underlying3

%

Constant Currency4

%

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

1,159.4

1,038.1

11.7%

11.0%

11.2%

Operating profit1

60.0

54.8

9.5%

8.6%

9.1%

Operating margin1

5.2%

5.3%

(10bps)

(10bps)

(10bps)

 

 

 

 

 

 

Associates and joint venture2

6.7

7.2

(7.0%)

(7.2%)

(7.2%)

 

1

       Before amortisation of non-ERP intangible assets and exceptional items

2

       Profit after interest and tax before exceptional items

3

       Excluding currency movements and the impact of acquisitions

4

       Excluding currency movements

 

Ireland and the UK delivered a very strong performance, recording an 11.0% increase in underlying revenue and an 8.6% increase in underlying operating profit.

 

Underlying volume growth for agronomy services and crop inputs was 6.8% in the period. Volume development was supported by strong demand for crop inputs reflecting a combination of robust activity in-field, early procurement planning by primary producers for crop protection products for application in 2020 and higher feed and fertiliser volumes in the period following the impact of poor grass growing conditions in 2018. Market volumes are expected to normalise in 2020 compared with the above average demand levels experienced in 2019.   

 

Operating margin decreased by 10 basis points to 5.2% primarily due to the impact of increased fertiliser volumes and prices, offsetting the favourable margin development achieved across our agronomy services and inputs portfolio.

 

 

Integrated Agronomy and On-Farm Services

 

Integrated Agronomy and On-Farm Services delivered a good performance during the year, recording higher volumes, revenues and margins across its service and input portfolios.

 

Demand for agronomy services and inputs was driven by favourable operating conditions and was supported by the beneficial impact of sterling weakness on growers' crop margins.

 

Performance in the period also benefited, in part, from early procurement planning by farmers and growers to secure supply of specific crop technologies for in-field application in 2020 whose product registrations are scheduled to expire after 2019. 

 

Good progress was achieved in the further development of the Group's agronomy portfolio across high value and speciality crop sectors.

 

 

Digital Agricultural Services

 

Origin has developed a suite of agronomist-farmer enabled digital applications designed to optimise crop performance and input utilisation.

 

During the year, the Group's digital agronomy and precision farming capabilities were merged under a new identity called Rhiza. Rhiza facilitates novel and enhanced engagement with farmers through offering real time and prescriptive digital agronomy solutions which address complex requirements relating to environmental stewardship, compliance, risk management and field level crop performance.

 

The development and roll out of Origin's digital offering continued at pace during the year, with over 1.0 million hectares on-boarded to date and firmly on track to deliver our target of 4.0 million hectares by 2023.

 

 

Business-to-Business Agri-Inputs

 

Business-to-Business Agri-Inputs performed strongly in the period, delivering good growth in operating profits, supported by favourable volume development and improved margins.

 

 

Fertiliser

 

Fertiliser recorded higher volumes and profits in the period. Performance reflected the benefit of favourable weather conditions and a stable pricing environment which positively influenced purchasing decisions on-farm.

 

The successful integration of the UK based Bunn Fertiliser, acquired in 2018, was a key enabler of an enhanced supply chain and customer service capability to meet higher demand in the period and to address farmers' increasingly sophisticated requirements relating to soil fertility and crop nutrition.

 

Margins continue to be positively supported by growth in volumes of enhanced efficiency fertiliser and bespoke nutrition applications.

 

 

Amenity

 

Amenity recorded lower revenues and profits in the period.

 

The residual impact of unseasonal weather conditions in 2018 was reflected in elevated carryover stockholdings at customer level which led to lower demand in the period.

 

Performance was favourably supported through new customer gains in Home & Garden and by the first-time contribution from Symbio, the speciality organic crop technologies business acquired in November 2018.

 

 

Feed Ingredients

 

Feed Ingredients delivered a very satisfactory result in the year reflecting the benefit of strong operational execution and a robust volume performance following the exceptional demand experienced in 2018.

 

Volume development in the period was positively supported by higher livestock numbers and generally stable returns for primary dairy producers.

 

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

 

 

2019

€'m

 

2018

€'m

 

Change

%

 

Underlying3

%

Constant Currency4

%

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

440.1

431.0

2.1%

(1.3%)

2.3%

Operating profit2

13.9

16.2

(14.5%)

(14.1%)

(12.7%)

Operating margin2

3.2%

3.8%

(60bps)

(50bps)

(50bps)

 

1

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 2019 crop marketing revenues and profits attributable to Continental Europe amounted to €165.1 million and €0.3 million respectively (2018: €158.4 million and €0.2m 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

4

Excluding currency movements

 

Continental Europe encountered a challenging operating environment during the year which resulted in lower margins and operating profits primarily driven by the under-performance of our Ukrainian business.

 

Underlying business volumes declined by 2.9% in the period and operating margins reduced by 60 basis points to 3.2%.

 

 

Belgium

 

Belgium delivered a strong performance in the year, recording solid volume and margin development. Margins were favourably supported by growth in sales of speciality and bespoke nutrition applications.

 

 

Poland

 

Poland performed in line with the prior period.

 

While volume development in the period was impacted by lower demand due to a reduction in early autumn crop plantings, performance benefited from the ongoing enhancement of Origin's seed and speciality nutrition portfolios through the further development of the Group's product based capabilities. 

 

 

Romania

 

Romania achieved higher revenues and profits in challenging operating conditions.

 

Good volume momentum was achieved across all market channels against lower demand due to the impact of extended dry conditions on winter oilseed rape plantings.

 

Performance benefited from improved commercial effectiveness together with good progress achieved in the period relating to customer channel integration and business portfolio alignment. 

Ukraine

 

Ukraine recorded a significant reduction in profitability in the period. Business performance reflected a market characterised by lower liquidity and excess inventories which drove highly competitive trading conditions.

 

In the context of this challenging market backdrop, the Group continues to prioritise operational and working capital efficiencies along with the further development of high service agronomy channels and precision digital offerings.

 

 

Latin America

 

 

 

 

 

Change on prior period

 

 

2019

€'m

 

2018

€'m

 

Change

%

 

Underlying2

%

Constant Currency3

 %

 

 

 

 

 

 

Revenue

 

33.6

-

100.0%

-

-

Operating profit1

 

8.1

-

100.0%

-

-

Operating margin1

 

24.1%

-

-

-

-

               

 

1

Before amortisation of non-ERP intangible assets and exceptional items

2

Excluding currency movements and the impact of acquisitions

3

Excluding currency movements

 

The Latin American reporting segment incorporates the Group's business operations in Brazil.

Origin made its first-time entry into the Brazilian agri-services market following the completion of the acquisition of Fortgreen in August 2018. Fortgreen, headquartered in Paraná State in southern Brazil, is focused on the development and marketing of speciality inputs and value-added crop nutrition.

Latin America has delivered an excellent first-time contribution in the period, with performance in line with pre-acquisition expectations. Integration is progressing to plan, including the development of partnerships with other Origin entities to enhance the Group's own product based capabilities.

Performance in the year was supported by good growth in soluble nutrition technologies for grain and speciality crop applications and aided by a strong harvest for Brazil's principal spring crop, soya. The Group has invested in additional production and storage capability to support this growth.

The acquisition of a 20% shareholding in the Brazilian business Ferrari Zagatto E Cia. Ltda., ('Ferrari') announced in the prior financial year, completed on 10 June 2019. Also headquartered in Paraná State, Ferrari is a leading provider of agronomy services, inputs, crop handling and marketing services. Ferrari provides an important route-to-market for Fortgreen's speciality inputs and nutrition offering.

 

 

Outlook

 

Demand for agronomy services and crop inputs for Ireland and the UK is expected to normalise in FY20 and to be lower than the above average market demand levels experienced in FY19.   Fertiliser and feed demand is not expected to match the demand created by the fodder crisis in the first half of FY19.  Our Continental European and Latin American segments are expected to grow in FY20 in line with our long-term guidance.  Against the backdrop of the uncertain nature of Brexit, and its timing, we continue to prioritise a prudent approach to risk management and capital allocation.

 

The Group is well positioned to capitalise on the Group's scalable and diversified market positions, integrated crop services business model and strong balance sheet to deliver on our 2023 financial and strategic objectives.

 

 

ENDS

 

Origin Enterprises plc

 

Consolidated Statement of Comprehensive Income

For the financial year ended 31 July 2019

 

 

 

 

Pre-

 

 

 

 

 

Pre-

 

 

 

 

 

 

exceptional

 

Exceptional

 

Total

 

exceptional

 

Exceptional

 

Total

 

 

2019

 

   2019

 

   2019

 

2018

 

   2018

 

   2018

 

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

Notes

 

 

(Note 3)

 

 

 

 

 

(Note 3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

2

1,798,197

 

-

 

1,798,197

 

1,627,533

 

-

 

1,627,533

Cost of sales

 

(1,527,363)

 

-

 

(1,527,363)

 

(1,389,926)

 

-

 

(1,389,926)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

270,834

 

-

 

270,834

 

237,607

 

-

 

237,607

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating costs

 

 

(197,340)

 

(6,574)

 

(203,914)

 

(172,072)

 

663

 

(171,409)

Share of profit of associates and joint venture

 

 

6,717

 

 

(423)

 

 

6,294

 

 

7,221

 

 

-

 

 

7,221

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit

 

80,211

 

(6,997)

 

73,214

 

72,756

 

663

 

73,419

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance income

 

1,519

 

-

 

1,519

 

1,432

 

-

 

1,432

Finance expense

 

(13,327)

 

-

 

(13,327)

 

(9,514)

 

-

 

(9,514)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit before income tax

 

 

68,403

 

 

(6,997)

 

 

61,406

 

 

64,674

 

 

663

 

 

65,337

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax (expense)/credit

 

 

(8,730)

 

 

44

 

 

(8,686)

 

 

(7,900)

 

 

(652)

 

 

(8,552)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the year

 

 

59,673

 

 

(6,953)

 

 

52,720

 

 

56,774

 

 

11

 

 

56,785

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

 

2018

Earnings per share for the year

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

4

 

41.98c

 

45.22c

 

 

 

 

 

 

Diluted earnings per share

4

 

41.60c

 

44.94c

 

 

 

 

 

 

                           

 

Origin Enterprises plc

 

Consolidated Statement of Comprehensive Income

For the financial year ended 31 July 2019

 

 

2019

 

2018

 

€'000

 

€'000

 

 

 

 

Profit for the year

52,720

 

56,785

 

 

 

 

Other comprehensive (expense)/income

 

 

 

 

 

 

 

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

(3,599)

 

3,628

-deferred tax effect of remeasurements

450

 

(504)

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

(1,668)

 

5,865

-share of deferred tax effect of remeasurements - associates

284

 

(997)

 

 

 

 

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

 

 

 

Group foreign exchange translation details

 

 

 

-exchange difference on translation of foreign operations

(3,507)

 

(1,243)

 

 

 

 

Group/Associate cash flow hedges

 

 

 

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

100

 

1,396

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

(2,783)

 

888

-deferred tax effect of cash flow hedges

369

 

(333)

-share of associates and joint venture cash flow hedges

727

 

4,827

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

(91)

 

(603)

 

 

 

 

 

 

 

 

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

(9,718)

 

12,924

 

 

 

 

 

 

 

 

Total comprehensive income for the year attributable to equity shareholders

43,002

 

69,709

 

 

 

 

 

 

 

 

 

 

Origin Enterprises plc

 

Consolidated Statement of Financial Position

As at 31 July 2019

 

 

 

2019

 

2018

 

Notes

€'000

 

€'000

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

Property, plant and equipment

5

 108,411

 

117,929

Investment properties

 

  4,221

 

11,825

Goodwill and intangible assets

6

271,085

 

216,334

Investments in associates and joint venture

7

  47,140

 

48,171

Other financial assets

 

 607

 

450

Derivative financial instruments

 

-

 

835

Deferred tax assets

 

3,620

 

3,280

Post employment benefit surplus

9

-

 

725

 

 

 

 

 

Total non-current assets

 

435,084

 

399,549

 

 

 

 

 

Current assets

 

 

 

 

Properties held for sale

 

24,135

 

-

Inventory

 

202,806

 

194,192

Trade and other receivables

 

529,328

 

461,199

Derivative financial instruments

 

2,345

 

1,399

Restricted cash

 

-

 

500

Cash and cash equivalents

 

111,830

 

147,212

 

 

 

 

 

Total current assets

 

870,444

 

804,502

 

 

 

 

 

TOTAL ASSETS

 

1,305,528

 

1,204,051

 

 

 

 

 

 

 

Origin Enterprises plc

 

Consolidated Statement of Financial Position (continued)

As at 31 July 2019

 

 

 

2019

 

2018

 

Notes

€'000

 

€'000

 

 

 

 

 

EQUITY

 

 

 

 

 

 

 

 

 

Called up share capital presented as equity

12

1,264

 

1,264

Share premium

 

160,498

 

160,422

Retained earnings and other reserves

 

184,077

 

168,561

 

 

 

 

 

TOTAL EQUITY

 

345,839

 

330,247

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

Interest-bearing borrowings

 

163,236

 

165,232

Deferred tax liabilities

 

23,143

 

22,171

Put option liability

 

29,607

 

5,531

Provision for liabilities

8

4,166

 

8,045

Post employment benefit obligations

9

1,476

 

-

Derivative financial instruments

 

912

 

46

 

 

 

 

 

Total non-current liabilities

 

222,540

 

201,025

 

 

 

 

 

Current liabilities

 

 

 

 

Interest-bearing borrowings

 

24,190

 

20,836

Trade and other payables

 

686,175

 

638,161

Corporation tax payable

 

11,845

 

8,143

Provision for liabilities

8

14,452

 

5,467

Derivative financial instruments

 

487

 

172

 

 

 

 

 

Total current liabilities

 

737,149

 

672,779

 

 

 

 

 

TOTAL LIABILITIES

 

959,689

 

873,804

 

 

 

 

 

 

 

 

 

 

TOTAL EQUITY AND LIABILITIES

 

1,305,528

 

1,204,051

 

 

 

 

 

 

 

 

 

 

 

 

Origin Enterprises plc

 

Consolidated Statement of Changes in Equity

For the financial year ended 31 July 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-

 

 

 

Foreign

 

 

 

 

 

 

 

 

 

 

 

Capital

 

Cashflow

 

 

 

based

 

Re-

 

currency

 

 

 

 

 

Share

 

Share

 

Treasury

 

redemption

 

hedge

 

Revaluation

 

payment

 

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 2018

1,264

 

160,422

 

(8)

 

134

 

3,510

 

12,843

 

538

 

(196,884)

 

(39,319)

 

387,747

 

330,247

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the year

-

 

-

 

-

 

-

 

-

 

  -

 

-

 

  -

 

-

 

52,720

 

52,720

Other comprehensive expense for the year

-

 

-

 

-

 

-

 

(1,678)

 

  -

 

-

 

  -

 

(3,507)

 

(4,533)

 

(9,718)

Total comprehensive expense for the year

-

 

-

 

-

 

-

 

(1,678)

 

-

 

-

 

-

 

(3,507)

 

48,187

 

43,002

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based payment charge

-

 

-

 

-

 

-

 

-

 

-

 

999

 

-

 

-

 

-

 

999

Shares issued

-

 

76

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

76

Change in fair value of put option

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(2,114)

 

(2,114)

Dividend paid to shareholders

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(26,371)

 

(26,371)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 31 July 2019

1,264

 

160,498

 

(8)

 

134

 

1,832

 

12,843

 

1,537

 

(196,884)

 

(42,826)

 

407,449

 

345,839

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Origin Enterprises plc

 

Consolidated Statement of Cash Flows

For the financial year ended 31 July 2019

 

 

 

2019

 

2018

 

€'000

 

€'000

 

 

 

 

Cash flows from operating activities

 

 

 

Profit before tax

61,406

 

65,337

Exceptional items

6,997

 

(663)

Finance income

(1,519)

 

(1,432)

Finance expense

13,327

 

9,514 

Profit on disposal of property, plant and equipment

(292)

 

(285)

Share of profit of associates and joint venture

(6,717)

 

(7,221)

Depreciation of property, plant and equipment

8,300

 

7,451 

Amortisation of intangible assets

11,059

 

7,946 

Employee share-based payment charge

999

 

180 

Pension contributions in excess of service costs

(741)

 

(852)

Payment of exceptional rationalisation costs

(1,342)

 

(3,334)

Payment of exceptional acquisition costs

(1,775)

 

(3,688)

 

 

 

 

 

 

 

 

Operating cash flow before changes in working capital

89,702

 

72,953 

 

 

 

 

Movement in inventory

 (2,408)

 

(28,505)

Movement in trade and other receivables

(50,450)

 

(58,469)

Movement in trade and other payables

40,118

 

87,713 

 

 

 

 

 

 

 

 

Cash generated from operating activities

76,962

 

73,692 

 

 

 

 

Interest paid

(11,349)

 

(6,927)

Income tax paid

(12,572)

 

(10,428)

 

 

 

 

 

 

 

 

Cash inflow from operating activities

53,041

 

56,337 

 

 

 

 

 

 

 

 

 

 

Origin Enterprises plc

 

Consolidated Statement of Cash Flows (continued)

For the financial year ended 31 July 2019

 

 

 

2019

 

2018

 

€'000

 

€'000

 

 

 

 

Cash flows from investing activities

 

 

 

Proceeds from sale of investment property

750

 

-

Proceeds from sale of property, plant and equipment

1,005

 

1,410 

Purchase of property, plant and equipment

(12,049)

 

(11,602)

Additions to intangible assets

(4,346)

 

(5,645)

Arising on acquisition

(36,554)

 

(23,857)

Payment of contingent acquisition consideration

(1,705)

 

(1,627)

Proceeds from sale of Chemicals division

-

 

5,250 

Payment of put option liability

(3,594)

 

-

Restricted cash

500

 

(500)

Loans (to)/from associates and joint venture

(4,671)

 

85 

Dividends received from associates

7,037

 

2,483 

 

 

 

 

 

 

 

 

Cash outflow from investing activities

(53,627)

 

(34,003)

 

 

 

 

Cash flows from financing activities

 

 

 

Drawdown of bank loans

228,996

 

141,775

Repayment of bank loans

(238,491)

 

(158,155)

Shares issued

76

 

-

Payment of dividends to equity shareholders

(26,371)

 

(26,371)

 

 

 

 

 

 

 

 

Cash outflow from financing activities

(35,790)

 

(42,751)

 

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents

(36,376)

 

(20,417)

 

 

 

 

Translation adjustment

(2,298)

 

261

 

 

 

 

Cash and cash equivalents at start of year

126,559

 

146,715

 

 

 

 

 

 

 

 

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

87,885

 

126,559 

 

 

 

 

 

 

 

 

 

 

Origin Enterprises plc

 

Notes to the preliminary results statement

For the financial year ended 31 July 2019

 

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 2019 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 2019, 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 three 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.

 

Latin America

 

This segment includes the Group's 65% controlling interest in Fortgreen Commercial Agricola Ltda ("Fortgreen"). Origin entered the Latin American market in August 2018 through the acquisition of Fortgreen, a business which is focused on the development and marketing of value added crop nutrition and speciality inputs and which is headquartered in Paraná State in southern Brazil.

 

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 2019

 

2

Segment information (continued)

 

(i) Segment revenue and results
 

 

Ireland & the UK

 

 

Continental Europe

 

Latin America

 

Total Group

 

2019

 

2018

 

2019

 

2018

 

2019

 

2018

 

2019

 

2018

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

1,563,259

 

1,395,377

 

605,204

 

589,480

 

33,556

 

-

 

2,202,019

 

1,984,857

Less revenue from associates & joint venture

(403,822)

 

(357,324)

 

-

 

-

 

-

 

-

 

(403,822)

 

(357,324)

Revenue

1,159,437

 

1,038,053

 

605,204

 

589,480

 

33,556

 

-

 

1,798,197

 

1,627,533

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment result

59,976

 

54,752

 

14,212

 

16,438

 

8,075

 

-

 

82,263

 

71,190

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit from associates and joint venture

6,717

 

7,221

 

-

 

-

 

-

 

-

 

6,717

 

7,221

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortisation of non-ERP intangible assets

(4,328)

 

(3,863)

 

(1,884)

 

(1,792)

 

(2,557)

 

-

 

(8,769)

 

(5,655)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating profit before exceptional items

62,365

 

58,110

 

12,328

 

14,646

 

5,518

 

-

 

80,211

 

72,756

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exceptional items

1,509

 

(17)

 

(7,604)

 

680

 

(902)

 

-

 

(6,997)

 

663

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit

63,874

 

58,093

 

4,724

 

15,326

 

4,616

 

-

 

73,214

 

73,419

                                 

 

Origin Enterprises plc

 

Notes to the preliminary results statement (continued)

For the financial year ended 31 July 2019

 

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:

 

2019

 

2018

 

€'000

 

€'000

 

 

 

 

Segment earnings before financing costs and tax

73,214

 

73,419

 

 

 

 

Finance income

1,519

 

1,432

Finance expense

(13,327)

 

(9,514)

 

 

 

 

 

 

 

 

Reported profit before tax

61,406

 

65,337

 

 

 

 

Income tax expense

(8,686)

 

(8,552)

 

 

 

 

 

 

 

 

Reported profit after tax

52,720

 

56,785

 

 

 

 

 

 

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:

 

2019

 

2018

 

€'000

 

€'000

Pension and rationalisation related costs (i)

(426)

 

(876)

Transaction related costs, net (ii)

(273)

 

(2,560)

Impairment in Ukraine investment, net of put option settlement (iii)

(7,455)

 

79

Write down on property, plant and equipment (iv)

(4,100)

 

-

Fair value adjustment on investment properties and properties held for sale (iv)

5,680

 

2,150

Gain on disposal of business (vi)

-

 

1,870

Total exceptional (charge)/credit before tax

(6,574)

 

663

Arising in associates and joint venture (v)

(423)

 

-

Total exceptional (charge)/credit before tax including associates and joint venture

(6,997)

 

663

Tax credit/(charge) on exceptional items

44

 

(652)

Total exceptional (charge)/credit after tax

(6,953)

 

11

 

 

 

 

 

Origin Enterprises plc

 

Notes to the preliminary results statement (continued)

For the financial year ended 31 July 2019

 

3

Exceptional items (continued)

 

(i)   Pension and rationalisation related costs

Rationalisation costs include the compensation and termination payments from restructuring programmes across the Group. This exceptional charge also includes past service costs in respect of the defined benefit pension scheme. The tax impact of this exceptional item in the current year is a tax credit of €0.1 million (2018: €0.2 million).

 

(ii)  Transaction related costs

Transaction related costs principally comprise costs incurred in relation to the acquisitions completed during the year, net of a credit relating to a movement in contingent consideration of €1.1 million. The tax impact of this item in the current year was a tax credit of €nil (2018: €0.2 million).

 

(iii)  Impairment in Ukraine investment, net of put option settlement

At 31 July 2019 the Directors re-assessed the valuation of goodwill and intangible assets based on the trading results for the financial year and the forecasted trading environment for the Ukrainian business. Following the re-assessment, an impairment of €7.9 million was booked against the carrying value of the Ukraine investment and a write down of €1.5 million of part of the Agroscope brand was recorded. Also included is a credit arising on the settlement of the Agroscope put option liability of €1.9 million. This resulted in a total charge of €7.5 million being recorded. The net tax impact of this exceptional item in the current year is a tax credit of €0.2 million (2018: nil).

 

(iv)  Write down of properties and fair value of investment properties and properties held-for-sale

At 31 July 2019 the valuation of the Group's Cork properties and investment properties was determined by the Directors using a market approach with reference to local knowledge and judgement supported by the consideration agreed with a third party for the Cork property transaction announced to the market on 9 July 2019.

 

The Directors also commissioned an independent valuations expert to conduct a valuation of the Group's non-Cork docklands investment properties. The valuation was on the basis of fair value using a market approach with inputs including sales of similar properties in the surrounding area and complies with the requirement of the Royal Institution of Chartered Surveyors ("RICS") Valuation - Global Standards 2017 (the "RICS Red Book") published in June 2017.

 

Following these assessments, an uplift of €5.5 million was reflected in the value of the Group's properties held for sale and investment properties and a write-down of €4.1 million was reflected in the value of the Group's property, plant and equipment as at 31 July 2019. This also includes an exceptional gain of €0.5 million arising from the disposal of six acres of an investment property during 2019, partially offset by property re-organisation costs. The tax impact of this exceptional item in the current year is a charge of €0.4 million (2018: €0.6 million).

 

(v)   Arising in associates and joint venture

This exceptional charge relates to past service costs in respect of the defined benefit pension scheme of associates and joint venture. The net tax impact of this exceptional item in the current year is a tax credit of €0.1 million.

 

(vi)  Gain on disposal of business

Following the disposal of the Group's Chemicals business operated through Goulding Chemicals Limited and the closure of a seed plant in the UK in 2018, a gain of €2.6 million and a loss of €0.7 million respectively were recorded in the prior year. The tax impact of this exceptional item in the prior year was a tax charge of €0.4 million.

 

 

Origin Enterprises plc

 

Notes to the preliminary results statement (continued)

For the financial year ended 31 July 2019

 

 

4

Earnings per share

 

Basic earnings per share

 

2019

 

2018

 

€'000

 

€'000

 

 

 

 

Profit for the financial year attributable to equity shareholders

52,720

 

56,785

 

 

 

 

 

'000

 

'000

Weighted average number of ordinary shares for the year

125,583

 

125,582

 

 

 

 

 

Cent

 

Cent

 

 

 

 

Basic earnings per share

41.98

 

45.22

 

 

 

Diluted earnings per share

 

2019

 

2018

 

€'000

 

€'000

 

 

 

 

Profit for the financial year attributable to equity shareholders

52,720

 

56,785

 

 

 

 

 

'000

 

'000

 

 

 

 

Weighted average number of ordinary shares used in basic calculation

125,583

 

125,582

Impact of shares with a dilutive effect

478

 

120

Impact of the SAYE scheme

677

 

665

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

126,738

 

126,367

 

 

 

 

 

Cent

 

Cent

 

 

 

 

Diluted earnings per share

41.60

 

44.94

 

Origin Enterprises plc

 

Notes to the preliminary results statement (continued)

For the financial year ended 31 July 2019

 

4

Earnings per share (continued)

 

 

2019

 

2018

 

'000

 

'000

Adjusted basic earnings per share

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of ordinary shares for the year

125,583

 

125,582

 

 

 

2019

 

2018

 

€'000

 

€'000

 

 

 

 

Profit for the financial year

52,720

 

56,785

 

 

 

 

Adjustments:

 

 

 

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

8,769

 

5,655

Tax on amortisation of non-ERP related intangible assets

(1,709)

 

(768)

Exceptional items, net of tax

6,953

 

(11)

Adjusted earnings

66,733

 

61,661

 

 

 

 

 

Cent

 

Cent

 

 

 

 

Adjusted basic earnings per share

53.14

 

49.10

 

Adjusted diluted earnings per share

 

2019

 

2018

 

'000

 

'000

 

 

 

 

 

 

 

 

Weighted average number of ordinary shares used in basic calculation

125,583

 

125,582

Impact of shares with a dilutive effect

478

 

120

Impact of the SAYE scheme

677

 

665

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

126,738

 

126,367

         

 

 

 

2019

 

2018

 

€'000

 

€'000

 

 

 

 

Adjusted earnings (as above)

66,733

 

61,661

 

 

 

 

 

Cent

 

Cent

 

 

 

 

Adjusted diluted earnings per share

52.65

 

48.80

 

 

Notes to the preliminary results statement (continued)

For the financial year ended 31 July 2019

 

5

Property, plant and equipment

 

 

 

2019

 

2018

 

€'000

 

€'000

 

 

 

 

At 1 August

117,929

 

105,271

Disposals

(712)

 

(1,571)

Transfers to properties held for sale

(11,215)

 

-

Write down of property, plant and equipment

(4,100)

 

-

Depreciation charge for the year

(8,300)

 

(7,451)

Translation adjustments

(1,600)

 

(35)

At 31 July

108,411

 

117,929

 

 

 

 

 

6

Goodwill and intangible assets

 

 

2019

 

2018

 

€'000

 

€'000

 

 

 

 

At 1 August

216,334

 

205,961

Arising on acquisition (Note 10)

73,283

 

11,997

Additions

4,346

 

5,645

Impairment of goodwill and intangibles relating to Ukraine investment

(9,429)

 

-

Amortisation of non-ERP intangible assets

(8,769)

 

(5,655)

ERP intangible amortisation

(2,290)

 

(2,291)

Translation adjustments

(2,390)

 

677

 

 

 

 

 

Origin Enterprises plc

 

Notes to the preliminary results statement (continued)

For the financial year ended 31 July 2019

 

7

Investments in associates and joint venture

 

 

 

2019

 

2018

 

€'000

 

€'000

 

 

 

 

At 1 August

48,171

 

34,206

Share of profits after tax, before exceptional items

6,717

 

7,221

Share of exceptional items, net of tax

(423)

 

-

Dividends received

(7,037)

 

(2,483)

Share of other comprehensive (expense)/income

(748)

 

9,092

Acquisition of equity investment (i)

1,117

 

-

Translation adjustment

(657)

 

135

At 31 July

47,140

 

48,171

 

Split as follows:

 

 

 

Total associates

22,961

 

23,265

Total joint venture

24,179

 

24,906

 

47,140

 

48,171

 

 

 

 

(i) On 12 June 2019, the Group acquired a 20% shareholding in Ferrari Zagatto E Cia Ltda, a Brazilian based agronomy services and crop input distribution business

 

8

Provision for liabilities

 

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

 

 

 

2019

€'000

 

 

 

2018

€'000

 

 

 

 

At 1 August

13,512

 

15,464

Arising on acquisition (Note 10)

8,508

 

2,995

Provided in year

1,120

 

2,007

Paid in year

(3,271)

 

(4,964)

Released in year

(1,374)

 

(2,137)

Currency translation adjustment

123

 

147

At 31 July

18,618

 

13,512

 

 

 

 

 

Provisions primarily relate to contingent acquisition consideration arising on a number of acquisitions completed during the current and prior years.

 

 

Notes to the preliminary results statement (continued)

For the financial year ended 31 July 2019

 

9

Post employment benefit 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.

 

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 2019 by an independent, qualified actuary.  The valuations have been performed using the projected unit method.

 

Movement in net liability recognised in the Consolidated Statement of Financial Position

 

 

2019

 

2018

 

€'000

 

€'000

 

 

 

 

At 1 August

725

 

(3,646)

Current service cost

(527)

 

(552)

Past service cost

(30)

 

-

Settlement gain

548

 

-

Contributions

1,298

 

1,404

Other finance expense

24

 

(80)

Remeasurements

(3,599)

 

3,628

Translation adjustments

85

 

(29)

 

 

 

 

At 31 July

(1,476)

 

725

 

 

 

 

 

 

Notes to the preliminary results statement (continued)

For the financial year ended 31 July 2019

 

10

Acquisition of subsidiary undertakings

 

During the period, the Group completed the acquisition of Fortgreen Commercial Agricola Ltda ('Fortgreen') in Brazil, the acquisition of Symbio Group ('Symbio') in the United Kingdom and the acquisition of Vegetable Consulting Services (UK) Limited ('VCS') in the United Kingdom.  These acquisitions complement the Group's prescription fertilisers and speciality nutrition business.  Details of the acquisitions are as follows:

 

1.    On 14 August 2018 the Group acquired a 65% controlling interest in the Brazilian based speciality nutrition and crop inputs business, Fortgreen Commercial Agricola Ltda.

 

2.     On 20 November 2018 the Group completed the acquisition of 100% of Eco Solutions (C & R) Limited trading as Symbio. Based in the United Kingdom, Symbio specialises in biological based crop technologies.

 

3.     On 31 March 2019 the Group completed the acquisition of 100% of Vegetable Consulting Services (UK) Limited. Based in the United Kingdom, VCS provides agronomy consultancy services.

 

Origin acquired a 65% interest in Fortgreen for cash consideration on 14 August 2018. The Group have also entered into an arrangement with the minority shareholder, under which the minority shareholder has the right at various dates to sell the remaining 35% interest to Origin based on an agreed formula. In the event that this is not exercised, Origin has a similar right to acquire the 35% interest. At the date of acquisition Origin recognised an option liability of €26.4 million which is the fair value of the future estimated amount payable to exercise the option. This has been determined based on an agreed formula which includes an expectation of future trading performance and timing of when the options are expected to be exercised, discounted to present day value.

 

Origin has elected to apply the anticipated acquisition method in accounting for the option whereby the non-controlling interest is not recognised but rather treated as already acquired by Origin both in the Consolidated Statement of Financial Position and the Consolidated Statement of Comprehensive Income. This treatment has been adopted as the Directors have formed the view that based on the structure and timing of the option contracts sufficient risks and rewards are deemed to have transferred to Origin. Profits and losses attributable to the minority shareholder in respect of their 35% interest will be presented as attributable to the equity shareholders of Origin and not as attributable to minority interests. The €26.4 million financial liability recognised by the Group forms part of the contingent consideration for the acquisition. For all new liabilities recognised in respect of shares held by non-controlling shareholders, all movements in the fair value of such options will be recognised in retained earnings.

 

The acquisition method has been used to account for businesses acquired in the Group's financial statements. Given that the valuation of the fair value of assets and liabilities recently acquired for Symbio and VCS is still in progress, the below values included for these are determined provisionally. The valuation of these assets and liabilities will be completed within the measurement period.

 

 

Notes to the preliminary results statement (continued)

For the financial year ended 31 July 2019

 

10

Acquisition of subsidiary undertakings (continued)

 

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

 

 

 

Fair value

Assets

 

€'000

Non-current

 

 

Property, plant and equipment

 

4,471

Intangible assets

 

25,410

Deferred tax asset

 

830

Total non-current assets

 

30,711

 

 

 

Current assets

 

 

Inventory

 

6,078

Trade receivables

 

16,082

Total current assets

 

22,160

 

 

 

Liabilities

 

 

Trade payables

 

(11,425)

Corporation tax

 

(1,005)

Deferred tax liability

 

(8,640)

Interest-bearing borrowings

 

(8,179)

Total liabilities

 

(29,249)

Total identifiable net assets at fair value

 

23,622

Goodwill arising on acquisition

 

47,873

Total net assets acquired (excluding cash acquired)

 

71,495

Consideration satisfied by:

 

 

Cash consideration

 

40,614

Cash acquired

 

(4,060)

Net cash outflow

 

36,554

Put option arising from acquisition

 

26,433

Contingent consideration arising from acquisition

 

8,508

Total consideration related to acquisitions

 

71,495

 

 

Notes to the preliminary results statement (continued)

For the financial year ended 31 July 2019

 

11

Analysis of net debt

 

 

 

 

 

 

 

 

Non-cash

 

Translation

 

 

 

2018

 

Cashflow

 

Acquisition

 

movements

 

adjustment

 

2019

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

Cash

147,212

 

(38,334)

 

4,060

 

-

 

(1,108)

 

111,830 

Overdrafts

(20,653)

 

(2,102)

 

-

 

-

 

(1,190)

 

(23,945)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

126,559

 

(40,436)

 

4,060

 

-

 

(2,298)

 

87,885

 

 

 

 

 

 

 

 

 

 

 

 

Finance lease obligations

(862)

 

(67)

 

-

 

-

 

19 

 

(910)

Loans

(164,553)

 

9,564

 

(8,179)

 

(667)

 

1,264

 

(162,571)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net debt

(38,856)

 

(30,939)

 

(4,119)

 

(667)

 

(1,015)

 

(75,596)

 

 

 

 

 

 

 

 

 

 

 

 

Restricted cash

500

 

(500)

 

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net debt including restricted cash

(38,356)

 

(31,439)

 

(4,119)

 

(667)

 

(1,015)

 

(75,596)

 

 

 

 

 

 

 

 

 

 

 

 

 

Origin Enterprises plc

 

Notes to the preliminary results statement (continued)

For the financial year ended 31 July 2019

 

12

Share capital

2019

 

2018

 

 

€'000

 

€'000

 

Authorised

 

 

 

 

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

2,500

 

2,500

 

 

 

 

 

 

 

 

 

 

 

Allotted, called up and fully paid

 

 

 

 

126,396,184 (2018: 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 2019, the issued ordinary share capital was increased by the issue of 13,978 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.

 

 

Notes to the preliminary results statement (continued)

For the financial year ended 31 July 2019

 

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.

 

 

2019

€'000

2018

€'000

 

 

 

Total assets

1,305,528

1,204,051

Total liabilities

(959,689)

(873,804)

Adjusted for:

 

 

Net debt

75,596

38,356

Tax, put option and derivative financial instruments, net

60,029

30,549

Accumulated amortisation of non-ERP related intangible assets

54,945

48,046

Capital employed

536,409

447,198

Average capital employed

675,404

581,598

 

 

 

Operating profit (excluding exceptional items)

73,494

65,535

Amortisation of non-ERP intangible assets

8,769

5,655

Share of profit of associates and joint venture

6,717

7,221

Return

88,980

78,411

 

 

 

Return on capital employed

13.2%

13.5%

 

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 2018 Annual Report.

 

15

Dividend

 

The Board is recommending a final dividend of 18.17 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 21.32 cent per share (total dividend of €26.9 million) (2018: 21.0 cent per share), an increase of 1.5%.  Subject to shareholders' approval at the Annual General Meeting, the dividend will be paid on 13 December 2019 to shareholders on the register on 29 November 2019.  In accordance with IFRS, this dividend has not been provided for in the Consolidated Statement of Financial Position as at 31 July 2019.

 

 

Notes to the preliminary results statement (continued)

For the financial year ended 31 July 2019

 

16

Financial commitments

 

The Group has a financial commitment of €6.9 million attributable to a strategic partnership with University College Dublin ('UCD'). The commitment is over a five year period.

 

17

Subsequent events

 

There have been no material events subsequent to 31 July 2019 that would require adjustment to or disclosure in this report.

 

 


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Final Results - RNS