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Origin Enterprises Plc   -  OGN   

Interim Results Statement

Released 07:00 05-Mar-2020

RNS Number : 0535F
Origin Enterprises Plc
05 March 2020
 

 

 

Origin Enterprises plc

INTERIM RESULTS STATEMENT

Highly challenging operating conditions reduce demand for agronomy services and crop inputs

 

 

5 March 2020

 

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 interim results for the half year ended 31 January 2020.

 

Highlights

·    Group revenue decreased by 13.8% to €604.9 million

·    Operating loss of €2.8 million in the first half of the year

·    Decrease in underlying operating profit of €11.4 million, principally reflecting a 25.6% reduction in business volumes in Ireland and the UK, due to lower autumn and winter crop plantings

·    Continental Europe and Latin America divisions performing in line with expectations

·    Strong working capital performance in Continental Europe offset by higher working capital in Ireland and the UK as a result of lower sales

·    Adoption and integration of the Agrii brand across our Continental European agronomy businesses

·    Over 1.2 million hectares on-boarded on Contour digital platform

·    Increase in net debt to €264.2 million

·    Interim dividend of 3.15 cent per share

 

 

Results Summary

 

31 Jan 2020

€'000

 

31 Jan 2019

€'000

 

Change

€'000

Constant

Currency

   €'000

 

 

Group revenue

 

604,908

 

701,551

 

(96,643)

 

(106,534)

 

Operating (loss)/profit1

(2,789)

9,071

(11,860)

(11,299)

 

Associates and joint venture2

1,137

1,809

(672)

(689)

 

Total Group operating (loss)/profit1

(1,652)

10,880

(12,532)

(11,988)

 

Finance cost, net

(5,532)

(5,881)

(349)

(100)

 

(Loss)/profit before tax1

(7,184)

4,999

(12,183)

(11,888)

 

Adjusted diluted (loss)/earnings per share (cent)3

(4.53)

3.61

(8.14)

(7.75)

 

Group net debt4  

264,241

238,818

(25,423)

 

 

Interim dividend per ordinary share (cent)

3.15

3.15

-

 

 

 

 

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

2            Profit after interest and tax

3            Before amortisation of non-ERP intangible assets, net of related deferred tax (2020: €3.9 million, 2019: €3.4 million) and exceptional items, net of tax (2020: gain of €0.3 million, 2019: charge of €0.7 million)

4            Before impact of IFRS 16 Lease transition

 

 

Origin Enterprises plc

 

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

 

"It has been a challenging first six months for the Group. Operating conditions faced by farmers and growers, principally in the UK, due to intense and prolonged rainfall has led to a 40% year-on-year reduction in the level of autumn and winter crop plantings. This significantly exceeds the 25% reduction estimated at the time of our Q1 Trading Update in November 2019 and has resulted in lower than expected underlying profitability and cash generation in our largest division, Ireland and the UK.

 

Continental Europe and Latin America recorded good performances in the first half of the year, delivering an underlying increase in operating profits. Especially pleasing was the reduction in working capital delivered by our teams in Continental Europe.

 

As set out in our Trading Update on 26 February 2020, the adverse weather conditions experienced in Ireland and the UK, together with the challenges associated with an anticipated large increase in spring cropping means that it is likely that Group operating profit and adjusted diluted earnings per share for the full year will now be significantly lower than expected at the time of our Q1 Trading Update.  Against these particularly challenging conditions, we will focus on optimising operational performance while pausing M&A activity.

 

Consistent with prior years, we will provide a comprehensive update on full year guidance at the time of the Q3 Trading Update on 17 June 2020.  Notwithstanding the weather challenges currently being experienced in Ireland and the UK, we remain confident in the delivery of our 2023 growth ambition as set out at our 2019 Capital Markets Day."

 

 

 

ENDS 

Conference Call

 

Origin will host a live conference call and webcast, for analysts and institutional investors today, 5 March 2020, at 08:00 (Irish/UK time). Dial-in details are set out below for the conference call and the webcast can be accessed on the Group website: www.originenterprises.com.  Participants are requested to dial in 5 to 10 minutes prior to the scheduled start time.

 

Participant access numbers:

 

Ireland:

Tel:

+353 (0)1 431 9615

UK/International:

Tel:

+44 (0)844 571 8892

 

 

 

Confirmation Code:

9758682

 

Replay

 

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

 

Replay Access Code:

9758682

 

 

 

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)

 

 

Finbarr Griffin

Tel:

+353 (0)1 641 9278

 

 

 

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 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 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

 

 

INTERIM RESULTS STATEMENT

 

Financial Review - Summary

 

 

6 months ended

31 Jan 2020

€'000

6 months ended

31 Jan 2019

€'000

 

 

 

Group revenue

604,908

701,551

Operating (loss)/profit1

(2,789)

9,071

Associates and joint venture, net2

1,137

1,809

Group operating (loss)/profit1

(1,652)

10,880

Finance cost, net

(5,532)

(5,881)

Pre-tax (loss)/profit

(7,184)

4,999

Income tax credit/(charge)

1,499

(393)

Adjusted net (loss)/profit

(5,685)

4,606

 

 

 

Adjusted diluted (loss)/earnings per share (cent)3

(4.53)

3.61

 

 

 

 

 

 

Adjusted net profit reconciliation

 

 

Reported net (loss)/profit

(9,365)

441

Amortisation of non-ERP intangible assets

4,797

4,265

Tax on amortisation of non-ERP related intangible assets

(857)

(833)

Exceptional items, net of tax

(260)

733

Adjusted net (loss)/profit

(5,685)

4,606

 

 

 

Adjusted diluted (loss)/earnings per share (cent)3

(4.53)

3.61

 

 

Origin delivered an adjusted diluted loss per share3 for the period of 4.53 cent compared to an adjusted diluted earnings per share of 3.61 cent in the corresponding period last year.  On a like-for-like basis (excluding the impact of currency movements and acquisitions) the underlying decrease was 8.02 cent. 

 

Group revenue

 

Group revenue was €604.9 million compared to €701.6 million in the corresponding period last year, a reduction of 13.8%.  On an underlying basis at constant currency, revenues decreased by €108.1 million (15.4%), reflecting reduced agronomy service revenue and crop input volumes.

 

The underlying reduction in agronomy services and crop input volumes, excluding crop marketing, was 19.1% in the period compared to the corresponding period last year.

 

Operating (loss)/profit1

 

Operating loss1 from the Agri-Services business was €2.8 million compared to a profit of €9.1 million in the corresponding period last year.  On an underlying basis at constant currency, the decrease year-on-year was €11.4 million. 

 

Associates and joint venture2

 

Origin's share of the profit after interest and taxation from associates and joint venture amounted to €1.1 million, a €0.7 million decrease on the prior year.

 

Net debt and financing costs

 

Average net debt amounted to €279.3 million compared to €277.1 million in the prior year.  Net debt5 at 31 January 2020 was €264.2 million compared with €238.8 million at 31 January 2019, and is 3.24 times EBITDA4 for the twelve months to 31 January 2020.  The average and period end net debt increase is principally attributable to Ireland and the UK, reflecting a reduction in sales in H1 on foot of weather impacted demand and a reduction in operating profit. Net finance costs amounted to €5.5 million compared to €5.9 million in the corresponding period last year.  Excluding the impact of IFRS 16, there was a reduction in net finance costs of €1.2m reflecting lower local debt levels in our Continental European businesses and lower interest rates, year-on-year, in Brazil and Ukraine.    

 

At period end our key banking covenants are as follows:

 

 

Banking Covenant

H1 2020

Times

H1 2019

Times

FY 19

Times

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net debt to EBITDA

Maximum 3.5

3.24

2.57

0.87

 

 

 

 

 

 

 

 

 

EBITDA to net interest

Minimum 3.0

7.57

9.25

8.06

 

 

 

 

Working capital

 

Following the seasonal investment in working capital in the period, the net cash outflow from operating activities was €141.2 million (H1 2019: €134.1 million) and there was an increase of €138.4 million in working capital (H1 2019: €137.5 million).  The year-on-year net working capital outflow reflects higher working capital investments in Ireland and the UK against the prior year, as a result of the reduction in, and timing of sales, which were largely offset by working capital reductions in Continental Europe.

 

 

Dividend

 

An interim dividend of 3.15 cent per share will be paid on 14 April 2020 to shareholders on the register on 27 March 2020.

 

 

1           Operating (loss)/profit and Group operating (loss)/profit are stated before amortisation of non-ERP intangible assets and exceptional items

2           Profit after interest and tax

3           Before amortisation of non-ERP intangible assets, net of related deferred tax (2020: €3.9 million, 2019: €3.4 million) and exceptional items, net of tax (2020: gain of €0.3 million, 2019: charge of €0.7 million)

4           Net debt/EBITDA ratio as per the requirements of the Group's syndicated bank loan agreement

5           Before impact of IFRS 16 Lease transition

 

 

Review of Operations

 

Group Overview

 

 

 

 

Change on prior period

 

 

H1 2020

€’m

 

H1 2019

€’m

 

Change

€’m

 

Underlying4

€’m

Constant
 Currency5
€’m

 

 

 

 

 

 

 

Revenue

604.9

701.6

(96.7)

(108.1)

(106.5)

Operating (loss) / profit1

(2.8)

9.1

(11.9)

(11.4)

(11.3)

 

 

 

 

 

 

Associates and joint venture2

1.1

1.8

(0.7)

(0.9)

(0.7)

 

 

 

 

 

 

Adjusted diluted EPS (cent)3

(4.53)

3.61

(8.14)

(8.02)

(7.75)

 

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

    2 Profit after interest and tax

 3 Before amortisation of non-ERP intangible assets, net of related deferred tax (2020: €3.9 million, 2019: €3.4 million) and exceptional items, net of tax (2020: gain of €0.3 million, 2019: charge of €0.7 million)

    4 Excluding currency movements and the impact of acquisitions

5 Excluding currency movements

 

Origin's financial performance in the period was impacted by extremely challenging operating conditions for farmers and growers in Ireland and the UK. This resulted in a reduction in Group revenue, operating profit and adjusted fully diluted earnings per share of €96.7 million, €11.9 million and 8.14 cent, respectively.  Prolonged unseasonal weather conditions have resulted in a significantly lower planted area for autumn and winter crops relative to a normal year, impacting demand for agronomy services and crop inputs in the period.

 

Ireland and the United Kingdom

 

 

 

 

Change on prior period

 

 

H1 2020

€’m

 

H1 2019

€’m

 

Change

€’m

 

Underlying3

€’m

Constant
 Currency4
€’m

 

 

 

 

 

 

 

Revenue

337.4

433.9

(96.5)

(103.8)

(102.7)

Operating (loss) / profit1

(9.1)

2.8

(11.9)

(11.7)

(11.7)

 

 

 

 

 

 

Associates and joint venture2

0.9

1.8

(0.9)

(0.9)

(0.9)

 

 

 

 

 

 

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

    2 Profit after interest and tax

 3 Excluding currency movements and the impact of acquisitions

    4 Excluding currency movements

  

Ireland and the United Kingdom recorded lower revenues and profits in the seasonally quiet first half.

 

The decline in revenues and margins in the period largely reflected prolonged unseasonal weather conditions, resulting in a lower planted area for autumn and winter crops, relative to a normal year impacting agronomy service, seed, fertiliser and crop protection volumes.  On an underlying basis, at constant currency, there was an €11.7 million reduction in operating profit. The reduction in underlying business volumes was 25.6% in the period.

 

Integrated On-Farm Agronomy Services

 

Integrated Agronomy and On-Farm Services recorded lower revenues and operating profits in the period, reflecting the impact of highly challenging operating conditions in-field as a result of intense and prolonged rainfall throughout the period. Following a poor start to the autumn and winter crop planting season in the first quarter, minimal progress was achieved in the second quarter. Farmers and growers were unable to complete their planned sowings as large areas of cropping land remained waterlogged, thereby precluding any meaningful field work. This has resulted in the lowest level of autumn/winter oil seed and cereal plantings in 30 years.  Due to the sustained nature of the adverse weather conditions, it is likely that a proportion of hectares will not transfer to spring cropping and remain unplanted in 2020.

 

Total autumn and winter plantings for the principal crops are estimated to be 40.4%, or 1.1 million hectares, behind last year at 1.7 million hectares.  The area of winter wheat is estimated to be down 43.0% to 1.0 million hectares (1.8 million hectares in FY2019). Relative to winter crop production systems, spring crops are lower yielding and typically attract a reduced investment spend.  Based upon current estimates, approximately 55% of the 1.1 million autumn and winter cropping shortfall will transfer to spring planting with the balance remaining as fallow hectares.  Total autumn, winter and spring plantings for the 2020 growing season are forecasted to be 10.7% behind last year, at 4.0 million hectares.

 

Digital Agricultural Services

 

The Group's Digital offering has continued to deliver increased functionality to farmers and growers throughout autumn and early winter.  This has seen our active hectares under the platform grow to 1.2 million hectares, including significant growth in our Continental European operations. 

 

In a challenging season in many of our geographies, the ability to use data to make decisions on cropping, to measure establishment and to produce more comprehensive advice, input prescriptions and climate sensitive practices to sustainably exploit the available crop potential is ever more critical.  Farmers and growers use our digital solutions to manage cropping and varieties, identify and take decisions to manage pest and disease risks, use high resolution satellite imagery to isolate issues within the crop and rapidly create nutrition plans to maximise return on investment. 

 

New image-based functionality deployed during the period is enabling highly efficient planning at a sub-field level to allow farmers restore soil health and nutrients over time while more precisely and effectively applying inputs to drive crop performance.  We continue to see farmers adopting digital solutions as an integral part of our overall offering to manage their crop production systems in a sustainable and responsible manner.

 

Business-to-Business Agri-Inputs

 

Business-to-Business Agri-Inputs had a challenging start to the financial year, recording lower volumes and margins for fertiliser and animal feed ingredients, set against a strong comparative period last year.

 

Fertiliser

 

Sales demand in the period was below expectation reflecting the extreme difficulties encountered by farmers and growers due to impact of extended rainfall and an uncertain pricing environment for fertiliser raw materials. This has resulted in farmers adopting a cautious approach to procurement ahead of the main application period in the second half of the financial year. Although activity levels on-farm were more favourable in January 2020, the reduced cropping profile in the UK is likely to result in full year demand behind that achieved in the prior year.

 

The Group's speciality and bespoke nutrition ranges continue to gain momentum.

 

Amenity

 

Amenity delivered an improved performance on the prior period, with volume development in the case of the professional sports turf channel returning to normal levels following a challenging FY19.

 

Feed Ingredients

 

Feed Ingredients achieved a satisfactory performance in the period, recording, as expected, lower volumes against a strong comparative period last year. Prior year volume development benefitted from higher demand due to the impact of fodder shortages in the earlier part of FY19.

 

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

 

Continental Europe1 
 

 

 

 

Change on prior period

 

 

H1 2020

€'m

 

H1 2019

€'m

 

Change

€'m

 

Underlying3

€'m

Constant
Currency4
€'m

 

 

 

 

 

 

 

Revenue

142.1

147.9

(5.8)

(9.5)

(9.5)

Operating profit2

0.7

0.6

0.1

0.2

0.2

 

 

 

 

 

 

Excluding crop marketing. While crop marketing has a significant impact on revenue, its impact on operating profit is insignificant.  An analysis of revenue and profit attributable to agronomy services and inputs more accurately reflects the underlying drivers of business performance

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 recorded a €0.2 million increase in underlying operating profit at constant currency in the seasonally less significant first half.  Underlying business volumes reduced by 3.4% compared with the corresponding period last year, with a good start to the year in Poland and Ukraine set against a slower start in Romania. The overall winter and spring cropping area across our CE markets is expected to be largely in line with last year.

Performance in the first half was supported by the benefit of improved working capital efficiency and pleasing sales momentum in the case of the Group's value added seed and nutrition portfolios.

 

In common with Origin's direct farm customer facing business operations in the UK and Poland, our Romanian and Ukrainian businesses adopted the Group's single brand identity, Agrii, in the period.  The common identity supports the group-wide framework for technically led and integrated agronomy services.  

 

Belgium

 

Belgium delivered a satisfactory performance in the period, on lower underlying business volumes.  Early season demand has been impacted by wet conditions and an uncertain pricing environment for fertiliser raw materials is resulting in farmers maintaining a cautious approach to procurement until closer to the main application period in the second half of the financial year.

 

Poland

 

Poland achieved higher revenues and profits in the seasonally quiet first half. Performance was supported by a combination of favourable business mix and the benefit of improved in-field conditions for growers compared to the challenges experienced in FY19.

 

Autumn and winter plantings are estimated to be in line with last year at 4.7 million hectares with an increase in winter cereals offsetting a 1.5% reduction in the oil seed rape area. The total cropping area for the 2020 growing season is expected to be marginally ahead of the prior year at 8.2 million hectares. To date winter crops are well established supported by favourable growing conditions in the period.

 

Romania

 

Romania has delivered a satisfactory performance against lower underlying business volumes in the first half of the year. This reflected a delayed start to plantings in the first quarter due to unseasonably dry conditions throughout the main crop growing regions.

 

The second quarter experienced a significant catch up in cropping activity with the total sown area for autumn and winter plantings now forecast to be 5.3% ahead of last year at 3.0 million hectares. This increase will result in a reduction in the estimated spring cropping area, with the combined area for winter and spring cropping estimated to be in line with the prior year at 8.3 million hectares.

 

Ukraine

 

Ukraine recorded an improved result in the period in highly competitive trading conditions.  Performance benefitted from a combination of favourable business mix and enhanced commercial effectiveness. Overall crop establishment in the period is satisfactory, however the continuation of current dry conditions may impact full year demand.  

 

Total autumn and winter plantings are anticipated to be marginally behind last year at 8.2 million hectares with combined autumn and spring plantings currently forecast to be in line with last year at 22.5 million hectares.

 

Latin America

 

 

 

 

Change on prior period

 

 

H1 2020

€'m

 

H1 2019

€'m

 

Change

€'m

 

Underlying3

€'m

Constant
 Currency4
€'m

 

 

 

 

 

 

 

Revenue

21.9

21.3

0.6

0.7

1.1

Operating profit1

5.7

5.5

0.2

0.4

0.4

 

 

 

 

 

 

Associate2

0.2

-

0.2

-

0.2

 

 

 

 

 

 

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

2 Profit after interest and tax

3 Excluding currency movements and the impact of acquisitions

4 Excluding currency movements

             

 

Latin America, which includes the Group's Brazilian speciality inputs business, Fortgreen, achieved higher underlying operating profits in the seasonally significant first half. Underlying business volumes grew by 2.9% compared with the corresponding period last year. Volume development was influenced by the impact of sustained dry conditions which led to a delayed planting season for Brazil's principal crop, soya. This drove lower overall market demand in the period which is expected to continue in the second half of the year.

The total cropping area in Brazil dedicated to soya in the current year is estimated to be 36.6 million hectares, an increase of 2.0% on last year. The cropping area dedicated to Brazil's secondary crop, maize is also expected to increase in the current year by 2.3% to 13.2 million hectares.

Outlook

 

The impact on Ireland and the UK performance of the prolonged, adverse conditions experienced to-date together with the challenges associated with an anticipated large increase in spring cropping, means that we expect Group operating profit and adjusted diluted earnings per share for the full year will be significantly lower than expected at the time of our Q1 Trading Update, as set out in our market release on 26 February 2020.

 

Consistent with prior years, we will provide a comprehensive update on full year guidance in our Q3 Trading Update on 17 June 2020.

 

 

ENDS

 

 

 

Origin Enterprises plc

 

Condensed Interim Consolidated Income Statement     

for the six months ended 31 January 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months

 

Six months

 

Six months

 

Six months

 

Year

 

 

ended

 

ended

 

ended

 

ended

 

ended

 

 

January

 

January

 

January

 

January

 

 July

 

 

2020

 

2020

 

2020

 

2019

 

2019

 

 

Pre-exceptional

 

Exceptional

 

Total

 

Total

 

Total

 

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

Notes

 

 

 

 

 

 

 

 

Note 5

 

 

 

 

 

 

 

 

 

 

 

Revenue

3

604,908

 

-

 

604,908

 

701,551

 

1,798,197

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

(527,580)

 

-

 

(527,580)

 

(612,346)

 

(1,527,363)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

77,328

 

-

 

77,328

 

89,205

 

270,834

 

 

 

 

 

 

 

 

 

 

 

Operating costs

 

(84,914)

 

260

 

(84,654)

 

(85,132)

 

(203,914)

 

 

 

 

 

 

 

 

 

 

 

Share of profit of associates and joint venture

1,137

 

-

 

1,137

 

1,809

 

6,294

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating (loss)/profit

3

(6,449)

 

260

 

(6,189)

 

5,882

 

73,214

 

 

 

 

 

 

 

 

 

 

 

Finance income

 

622

 

-

 

622

 

416

 

1,519

 

 

 

 

 

 

 

 

 

 

 

Finance expense

 

(6,154)

 

-

 

(6,154)

 

(6,297)

 

(13,327)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss)/profit before income tax

 

(11,981)

 

260

 

(11,721)

 

1

 

61,406

 

 

 

 

 

 

 

 

 

 

 

Income tax credit/(expense)

 

2,356

 

-

 

2,356

 

440

 

(8,686)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss)/profit attributable to equity shareholders

(9,625)

 

260

 

(9,365)

 

441

 

52,720

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months

 

Six months

 

Year

 

 

 

 

 

 

ended

 

ended

 

ended

 

 

 

 

 

 

January

 

January

 

 July

 

 

 

 

 

 

2020

 

2019

 

2019

 

 

 

 

 

 

 

 

 

 

 

Basic (loss)/earnings per share

4

 

 

 

 

(7.46c)

 

0.35c

 

41.98c

 

 

 

 

 

 

 

 

 

 

 

Diluted (loss)/earnings per share

4

 

 

 

 

(7.46c)

 

0.35c

 

41.60c

 

 

 

 

Origin Enterprises plc

 

Condensed Interim Consolidated Statement of Comprehensive Income

for the six months ended 31 January 2020

 

 

 Six months

 

 Six months

 

Year

 

ended

 

ended

 

ended

 

January

 

January

 

July

 

2020

 

2019

 

2019

 

€'000

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

(Loss)/profit for the period

(9,365)

 

441

 

52,720

 

 

 

 

 

 

Other comprehensive income/(expense)

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

Group/Associate defined benefit pension obligations

 

 

 

 

 

- remeasurements of Group's defined benefit pension schemes

(703)

 

(4,753)

 

(3,599)

- deferred tax effect of remeasurements

120

 

800

 

450

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

-

 

-

 

(1,668)

- share of deferred tax effect of remeasurements - associates

-

 

-

 

284

 

 

 

 

 

 

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

 

 

 

 

 

Group foreign exchange translation details

 

 

 

 

 

- exchange difference on translation of foreign operations

6,653

 

2,784

 

(3,507)

Group/Associate cash flow hedges

 

 

 

 

 

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

(977)

 

(80)

 

100

- fair value of cash flow hedges transferred to operating costs

87

 

(2,708)

 

(2,783)

- deferred tax effect of cash flow hedges

164

 

462

 

369

- share of associates and joint venture cash flow hedges

(3,663)

 

(902)

 

727

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

458

 

113

 

(91)

 

 

 

 

 

 

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

2,139

 

(4,284)

 

(9,718)

 

 

 

 

 

 

Total comprehensive (expense)/income for the period attributable to equity shareholders

(7,226)

 

(3,843)

 

 

43,002

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Origin Enterprises plc

 

Condensed Interim Consolidated Statement of Financial Position

as at 31 January 2020

 

 

 

 

 

January

 

January

 

July

 

 

 

2020

 

2019

 

2019

 

Notes

 

€'000

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

Property, plant and equipment

6

 

114,230

 

124,717

 

 108,411

Right of use asset

12

 

43,313

 

-

 

-

Investment properties

 

 

4,221

 

11,825

 

  4,221

Goodwill and intangible assets

7

 

273,057

 

285,310

 

271,085

Investments in associates and joint venture

8

 

41,194

 

 42,867

 

  47,140

Other financial assets

 

 

620

 

 562

 

 607

Derivative financial instruments

 

 

-

 

 608

 

-

Deferred tax assets

 

 

3,907

 

 5,085

 

3,620

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total non-current assets

 

 

480,542

 

470,974

 

435,084

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Properties held for sale

 

 

24,135

 

-

 

24,135

Inventory

 

 

270,927

 

243,488

 

202,806

Trade and other receivables

 

 

306,446

 

301,315

 

529,328

Derivative financial instruments

 

 

677

 

1,051

 

2,345

Cash and cash equivalents

 

 

63,146

 

84,892

 

111,830

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total current assets

 

 

665,331

 

630,746

 

870,444

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

 

1,145,873

 

1,101,720

 

1,305,528

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Origin Enterprises plc

 

Condensed Interim Consolidated Statement of Financial Position (continued)

as at 31 January 2020

 

 

 

 

January

 

January

 

July

 

 

 

2020

 

2019

 

2019

 

Notes

 

€'000

 

€'000

 

€'000

 

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

 

Called up share capital presented as equity

11

 

1,264

 

1,264

 

1,264

Share premium

 

 

160,498

 

160,422

 

160,498

Retained earnings and other reserves

 

 

153,034

 

142,363

 

184,077

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL EQUITY

 

 

480,542

 

470,974

 

435,084

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

 

Interest-bearing borrowings

 

 

299,868

 

281,981

 

163,236

Lease liability

12

 

31,584

 

-

 

-

Deferred tax liabilities

 

 

22,199

 

29,829

 

23,143

Put option liability

 

 

27,800

 

27,097

 

29,607

Provision for liabilities

9

 

1,906

 

3,999

 

4,166

Post employment benefit obligations

 

 

1,369

 

3,694

 

1,476

Derivative financial instruments

 

 

751

 

197

 

912

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total non-current liabilities

 

 

385,477

 

346,797

 

222,540

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Interest-bearing borrowings

 

 

27,519

 

41,729

 

24,190

Lease liability

12

 

11,882

 

-

 

-

Put option liability

 

 

-

 

5,771

 

-

Trade and other payables

 

 

388,146

 

383,663

 

686,175

Corporation tax payable

 

 

6,540

 

4,200

 

11,845

Provision for liabilities

9

 

10,598

 

13,642

 

14,452

Derivative financial instruments

 

 

915

 

1,869

 

487

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total current liabilities

 

 

445,600

 

450,874

 

737,149

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

 

831,077

 

797,671

 

959,689

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL EQUITY AND LIABILITIES

 

 

1,145,873

 

1,101,720

 

1,305,528

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Origin Enterprises plc

 

Condensed Interim Consolidated Statement of Changes in Equity

for the six months ended 31 January 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 2019

1,264

 

160,498

 

(8)

 

134

 

1,832

 

12,843

 

1,537

 

(196,884)

 

(42,826)

 

407,449

 

345,839

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss for the period

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(9,365)

 

(9,365)

 

Other comprehensive expense for the period

-

 

-

 

-

 

-

 

(3,931)

 

-

 

-

 

-

 

6,653

 

(583)

 

2,139

 

Share-based payment charge

-

 

-

 

-

 

-

 

-

 

-

 

90

 

-

 

-

 

-

 

90

 

Change in fair value of put option

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(1,081)

 

(1,081)

 

Dividend paid to shareholders (Note 13)

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(22,826)

 

(22,826)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 31 January 2020

1,264

 

160,498

 

(8)

 

134

 

(2,099)

 

12,843

 

1,627

 

(196,884)

 

(36,173)

 

373,594

 

314,796

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

Origin Enterprises plc

 

Condensed Interim Consolidated Statement of Changes in Equity

for the six months ended 31 January 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 2018

1,264

 

160,422

 

(8)

 

134

 

3,510

 

12,843

 

538

 

(196,884)

 

(39,319)

 

387,747

 

330,247

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss for the period

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

441

 

441

 

Other comprehensive expense for the period

-

 

-

 

-

 

-

 

(3,115)

 

-

 

-

 

-

 

2,784

 

(3,953)

 

(4,284)

 

Share-based payment charge

-

 

-

 

-

 

-

 

-

 

-

 

90

 

-

 

-

 

-

 

90

 

Dividend paid to shareholders

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(22,445)

 

(22,445)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 31 January 2019

1,264

 

160,422

 

(8)

 

134

 

395

 

12,843

 

628

 

(196,884)

 

(36,535)

 

361,790

 

304,049

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Origin Enterprises plc

 

Condensed Interim Consolidated Statement of Cash Flows 

for the six months ended 31 January 2020

 

 

 

 

 Six months

 

 Six months

 

Year

 

 

ended

 

ended

 

ended

 

 

January
2020

 

January 2019

 

July

2019

 

 

€'000

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

(Loss)/profit before tax

 

(11,721)

 

1

 

61,406 

Exceptional items

 

(260)

 

733

 

6,997 

Finance income

 

(622)

 

(416)

 

(1,519)

Finance expense

 

6,154 

 

6,297

 

13,327

Profit on disposal of property, plant and equipment

 

(248)

 

(156)

 

(292)

Share of profit of associates and joint venture

 

(1,137)

 

(1,809)

 

(6,717)

Depreciation of property, plant and equipment

 

8,843 

 

3,845

 

8,300 

Amortisation of intangible assets

 

6,036 

 

5,476

 

11,059 

Employee share-based payment charge

 

90

 

90

 

999 

Pension contributions in excess of service costs

 

(642)

 

(462)

 

(741)

Payment of exceptional pension related/ rationalisaton costs

 

(449)

 

(829)

 

(1,342)

Payment of exceptional acquisition costs

 

(1,057)

 

(358)

 

(1,775)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating cash flow before changes in working capital

 

4,987 

 

12,412

 

89,702 

 

 

 

 

 

 

 

Increase in inventory

 

(57,251)

 

(40,746)

 

      (2,408)

Decrease in trade and other receivables

 

239,349 

 

176,595 

 

(50,450)

Decrease in trade and other payables

 

(320,499)

 

(273,359)

 

40,118   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash (absorbed)/generated from operating activities

 

(133,414)

 

(125,098)

 

76,962 

 

 

 

 

 

 

 

Interest paid

 

(3,639)

 

(4,564)

 

(11,349)

Income tax paid

 

(4,128)

 

(4,449)

 

(12,572)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash (outflow)/inflow from operating activities

 

(141,181)

 

(134,111)

 

53,041 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Origin Enterprises plc

 

Condensed Interim Consolidated Statement of Cash Flows (continued)

for the six months ended 31 January 2020

 

 

 

 Six months

 

 Six months

 

Year

 

 

ended

 

ended

 

ended

 

 

January 2020

 

January 2019

 

July 

2019

 

 

€'000

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

Proceeds from sale of investment property

 

-

 

-

 

750 

Proceeds from sale of property, plant and equipment

 

542 

 

440

 

1,005 

Purchase of property, plant and equipment

 

(7,041)

 

(7,223)

 

(12,049)

Additions to intangible assets

 

(1,792)

 

(1,717)

 

(4,346)

Arising on acquisitions

 

-

 

(33,239)

 

(36,554)

Payment of contingent acquisition consideration

 

(2,341)

 

(1,091)

 

(1,705)

Payment of put option liability

 

-

 

-

 

(3,594) 

Restricted cash

 

-

 

500

 

500

Loan repayment/(advance) with associate

 

42 

 

(98)

 

(4,671) 

Dividends received from associates

 

5,682 

 

6,909

 

7,037 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash outflow from investing activities

 

(4,908)

 

(35,519)

 

(53,627)

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

Drawdown of bank loans

 

199,821

 

180,557

 

228,996 

Repayment of bank loans

 

(59,603)

 

(45,000)

 

(238,491)

Lease liability payments

 

(5,397)

 

-

 

-

Shares issued

 

-

 

-

 

76 

Payment of dividends to equity shareholders (Note 13)

 

(22,826)

 

(22,445)

 

(26,371)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash inflow/(outflow) from financing activities

 

111,995 

 

113,112

 

(35,790)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents

 

(34,094)

 

(56,518)

 

(36,376)

 

 

 

 

 

 

 

Translation adjustment

 

1,979 

 

1,233

 

(2,298)   

 

 

 

 

 

 

 

Cash and cash equivalents at start of period

 

87,885 

 

126,559

 

126,559 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period (Note 10)

 

55,770 

 

71,274

 

87,885 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Origin Enterprises plc

 

Notes to the Condensed Interim Consolidated Financial Statements

for the six months ended 31 January 2020

 

1   Basis of preparation

 

The Group condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting (IAS 34), as endorsed by the EU. The condensed interim consolidated financial statements have been prepared as information for the shareholders and do not include all the information and disclosures required in the annual financial statements. They should be read in conjunction with the Group's annual financial statements in respect of the year ended 31 July 2019, which have been prepared in accordance with IFRSs. The financial statements for the year ended 31 July 2019 are available on the company's website www.originenterprises.com. Those financial statements contained an unqualified audit report.

 

The Group condensed interim consolidated financial statements for the six months ended 31 January 2020 and the comparative figures for the six months ended 31 January 2019 are unaudited and have not been reviewed by the Auditors. The summary financial statements for the year ended 31 July 2019 represent an abbreviated version of the Group's full accounts for that year.

 

The Group condensed interim consolidated financial statements are presented in euro and rounded to the nearest thousand, which is the functional currency of the parent.

 

A comprehensive review of the Group's performance for the six months ended 31 January 2020 is included in the financial highlights section included on pages 5 to 11. The group's business is seasonal and is heavily weighted towards the second half of the financial year.

 

 

2   Accounting policies

 

The Group interim financial statements have been prepared on the basis of the accounting policies as set out on pages 126 to 136 of the Group's Annual Report for the year ended 31 July 2019, with the exception of the new accounting standards outlined below.

 

The following new accounting standards have been adopted by the Group in the current financial period:

 

IFRS 16 Leases 

 

The Group adopted IFRS 16 Leases from its mandatory adoption date of 1 August 2019.

 

IFRS 16 Leases replaces the existing guidance in IAS 17 Leases. IFRS 16 eliminates the classification of leases as either operating leases or finance leases. It introduces a single lessee accounting model, which requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months and to recognise depreciation of lease assets separately from interest on lease liabilities in the income statement. The transition to IFRS 16 impacts the measurement of many components in the Group's consolidated financial statements including operating profit, finance costs, earnings per share, net debt and return on capital employed.

 

The Group adopted IFRS 16 on the transition date of 1 August 2019 using the modified retrospective approach. The comparative information for prior periods has not been re-stated and is presented as previously reported under IAS 17 and related interpretations.

 

At transition date, the lease liability was initially measured as the present value of the outstanding lease commitments that are payable for the lease term, discounted using the Group's incremental borrowing rate. In calculating the lease liability, the Group has applied judgement in determining the lease term for those leases with termination or extension options and an appropriate discount rate, which is based on the borrowing rate. These judgements significantly impact on the right-of-use asset and the lease liability to be recognised. 

 

A corresponding right-of-use leased asset was recognised on the Group's Balance Sheet which was adjusted for any prepayments, accruals and onerous lease provisions with no adjustment to opening retained earnings. The right-of-use asset is depreciated on a straight line basis over the lower of the lease term and the useful life of the asset. Right-of-use assets are subject to impairment testing.

 

The Group previously recognised operating lease rentals in operating expenses in the Income Statement. Under IFRS 16, a right-of-use leased asset is capitalised and depreciated over the term of the lease as an operating expense with an associated finance cost applied annually to the lease creditor. During the six months to 31 January 2020, the Group recognised €4,753,000 of depreciation costs and €859,000 of interest costs from these leases.  Had IFRS 16 not been introduced, there would be an additional operating lease cost of €5,397,000 associated with these leases in accordance with IAS 17, instead of the additional depreciation and finance costs.

 

2   Accounting policies (continued)

 

The overall impact on the Income Statement of adopting IFRS 16 will be neutral over the life of a lease but will result in a higher charge in the earlier years following implementation and a lower charge in the later years. It will not change overall cash flows or the economic effect of the leases. There is no effect on the Group's existing banking covenants as a result of the implementation of IFRS 16.

 

The Group has elected to use the following practical expedients when applying IFRS 16 to leases previously classified as operating leases under IAS 17:

·    accounting for short-term leases (leases less than 12 month) or low value asset leases (where the relevant criteria are met) by recognising the lease payments as an operating expense on a straight-line basis over the term of the lease;

·    apply a single discount rate to a portfolio of leases with reasonably similar characteristics; and

·    used hindsight in determining the lease term if the contract contained options to extend or terminate the lease.

 

Contracts that qualified as leases as defined by IFRS 16 related primarily to property, motor vehicles and office equipment. On transition to IFRS 16, the principal impacts were the recognition of right-of-use assets of €39.7 million and lease liabilities of €39.7 million. Further information is included in Note 12.

 

There are a number of new standards which are also effective from 1 August 2019. These are not currently relevant for the Group or expected to have a material impact on the Group consolidated financial statements.

 

The Group has not applied early adoption of any standards for which the effective date is not yet required.

  

3   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. Three operating segments have been identified: (1) Ireland and the United Kingdom, (2) Continental Europe and (3) Latin America.

 

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 Associate 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 Ukraine.

 

Latin America

This segment includes the Group's 65 per cent controlling interest in the Brazilian based speciality nutrition and crop inputs business, Fortgreen Commercial Agricola Ltda.

 

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. 

       3   Segment information (continued)

 

(i) Segment revenue and result

Ireland and UK

 

Continental Europe

 

Latin America

 

Total Group

 

Six months

 

Six months

 

Six months

 

Six months

 

Six months

 

Six months

 

Six months

 

Six months

 

ended

 

ended

 

ended

 

ended

 

ended

 

ended

 

ended

 

ended

 

Jan 2020

 

Jan 2019

 

Jan 2020

 

Jan 2019

 

Jan 2020

 

Jan 2019

 

Jan 2020

 

Jan 2019

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

489,359

 

644,207

 

245,659

 

246,318

 

31,816

 

21,312

 

766,834

 

911,837

Less revenue from associates and joint venture

(151,963)

 

(210,286)

 

-      

 

-      

 

(9,963)

 

-      

 

(161,926)

 

(210,286)

Revenue

337,396

 

433,921

 

245,659

 

246,318

 

21,853

 

21,312

 

604,908

 

701,551

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment result

(9,079)

 

2,827

 

633

 

793

 

5,657

 

5,451

 

(2,789)

 

9,071

Profit from associates and joint venture

893

 

1,809

 

-   

 

-   

 

244

 

-   

 

1,137

 

1,809

Amortisation of non-ERP intangible assets

(2,490)

 

(2,119)

 

(1,072)

 

(915)

 

(1,235)

 

(1,231)

 

(4,797)

 

(4,265)

Operating (loss)/profit before exceptional items

(10,676)

 

2,517

 

(439)

 

(122)

 

4,666

 

4,220

 

(6,449)

 

6,615

Exceptional items

(178)

-   

(437)

 

-   

 

(253)

 

438

 

(43)

 

260

 

(733)

Operating (loss)/profit

(10,854)

 

2,080

 

(439)

 

(375)

 

5,104

 

4,177

 

(6,189)

 

5,882

Reported (loss)/profit after tax

 

 

 

 

 

 

 

 

 

 

 

 

(9,365)

 

441

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

       3   Segment information (continued)

 

(ii) Segment assets

Ireland & UK

 

Continental Europe

 

Latin America

 

Total Group

 

 

Six months

 

Six months

 

Six months

 

Six months

 

Six months

 

Six months

 

Six months

 

Six months

 

 

ended

 

ended

 

ended

 

ended

 

ended

 

ended

 

ended

 

ended

 

 

Jan 2020

 

Jan 2019

 

Jan 2020

 

Jan 2019

 

Jan 2020

 

Jan 2019

 

Jan 2020

 

Jan 2019

 

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

Assets excluding investment in associates

and joint venture

594,305

 

555,627

 

335,047

 

322,915

 

106,977

 

88,113

 

1,036,329

 

966,655

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment in associates and joint venture

(including other financial assets)

40,530

 

43,429

 

-   

 

-   

 

1,284

 

-   

 

41,814

 

43,429

 

Segment assets

634,835

 

599,056

 

335,047

 

322,915

 

108,261

 

88,113

 

1,078,143

 

1,010,084

 

Reconciliation to total assets as reported in Condensed Interim Consolidated Statement of Financial Position

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

63,146

 

84,892

 

Derivative financial instruments

 

 

 

 

 

 

 

 

 

 

 

 

677

 

1,659

 

Deferred tax assets

 

 

 

 

 

 

 

 

 

 

 

 

3,907

 

5,085

 

Total assets as reported in Condensed Interim Consolidated Statement of Financial Position

 

1,145,873

 

1,101,720

 

 

 

 

 

 

 

(iii) Segment liabilities

Ireland & UK

 

Continental Europe

 

Latin America

 

Total Group

 

Six months

 

Six months

 

Six months

 

Six months

 

Six months

 

Six months

 

Six months

 

Six months

 

 

ended

 

ended

 

ended

 

ended

 

ended

 

ended

 

ended

 

ended

 

 

Jan 2020

 

Jan 2019

 

Jan 2020

 

Jan 2019

 

Jan 2020

 

Jan 2019

 

Jan 2020

 

Jan 2019

 

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

Segment liabilities

211,310

 

264,728

 

169,307

 

126,360

 

49,202

 

46,778

 

429,819

 

437,866

 

Reconciliation of total liabilities as reported in Condensed Interim Consolidated Statement of Financial Position

 

 

 

 

 

Interest-bearing loans and liabilities

 

 

 

 

 

 

 

 

 

 

 

 

370,853

 

323,710

 

Derivative financial instruments

 

 

 

 

 

 

 

 

 

 

 

 

1,666

 

2,066

 

Current and deferred tax liabilities

 

 

 

 

 

 

 

 

 

 

 

 

28,739

 

34,029

 

Total liabilities as reported in Condensed Interim Consolidated Statement of Financial Position

 

831,077

 

797,671

 

                                     

 

4   (Loss)/earnings per share

 

Basic (loss)/earnings per share

 

Six months

 

Six months

 

ended

 

ended

 

January

 

January

 

2020

 

2019

 

€'000

 

€'000

 

 

 

 

    (Loss)/profit for the financial period attributable to equity shareholders

(9,365)

 

441

 

 

 

 

 

'000

 

'000

 

 

 

 

    Weighted average number of ordinary shares for the period

125,596

 

125,582

 

 

 

 

 

Cent

 

Cent

 

 

 

 

    Basic (loss)/earnings per share

(7.46)

 

0.35

                                                                                                                                                                                       

 

        Diluted (loss)/earnings per share

Six months

 

Six months

 

ended

 

ended

 

January

 

January

 

2020

 

2019

 

€'000

 

€'000

 

 

 

 

    (Loss)/profit for the financial period attributable to equity shareholders

(9,365)

 

441

 

 

 

 

 

'000

 

'000

 

 

 

 

        Weighted average number of ordinary shares used in basic calculation

125,596

 

125,582

        Potential impact of shares with dilutive effect (1)

323

 

1,108

        Potential impact of SAYE scheme with dilutive effect  (1)

677

 

726

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

126,596

 

127,416

 

 

 

 

 

Cent

 

Cent

 

 

 

 

    Diluted (loss)/earnings per share

(7.46)

 

0.35

 

 

 

4  (Loss)/earnings per share (continued)

 

 

Adjusted basic (loss)/earnings per share

 

Six months

 

Six months

 

 

 

ended

 

ended

 

 

 

January

 

January

 

 

 

2020

 

2019

 

 

 

€'000

 

€'000

 

 

 

 

 

 

 

(Loss)/profit for the financial period attributable to equity shareholders

 

(9,365)

 

441

 

Amortisation of non-ERP related intangible assets

 

4,797

 

4,265

 

Tax on amortisation of non-ERP related intangible assets

 

(857)

 

(833)

 

Exceptional items, net of tax

 

(260)

 

733

 

Adjusted basic (loss)/earnings

 

(5,685)

 

4,606

 

 

 

 

 

 

 

 

 

Cent

 

Cent

 

Adjusted basic (loss)/earnings per share

 

(4.53)

 

3.67

 

 

 

 

 

 

 

Total adjusted basic (loss)/earnings - as above

 

(5,685)

 

4,606

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cent

 

Cent

 

Total adjusted diluted (loss)/earnings per share (1)

 

(4.53)

 

3.61

 

 

 

 

 

 

The calculation of basic adjusted earnings per share is based on the weighted average number of shares in issue during the period of 125,595,854 (31 January 2019: 125,581,696). The weighted average number of shares used in the calculation of adjusted diluted earnings/(loss) per share is 126,596,854 (31 January 2019: 127,416,250).

 

(1) The impact from potential shares are anti-dilutive for the earnings per share.

 

 

5  Condensed Interim Consolidated Income Statements for the six months ended 31 January 2019 and year ended 31 July 2019

 

        An analysis of the Condensed Interim Consolidated Income Statement (including exceptional items) for the six months ended 31 January 2019 and year ended 31 July 2019 is set out below.

 

 

Six months ended 31 January 2019

 

 

 

 

 

 

 

 

 

 

Six months

 

Six months

 

Six months

 

 

 

 

ended

 

ended

 

ended

 

 

 

 

Jan 2019

 

Jan 2019

 

Jan 2019

 

 

 

 

Pre-Exceptional

 

Exceptional

 

Total

 

 

 

 

€'000

 

€'000

 

€'000

 

 

Revenue

 

701,551

 

-

 

701,551

 

 

Cost of sales

 

(612,346)

 

-

 

(612,346)

 

 

Gross profit

 

89,205

 

-

 

89,205

 

 

Operating costs

 

(84,399)

 

(733)

 

(85,132)

 

 

Share of profit of associates and joint venture

 

1,809

 

-

 

1,809

 

 

Operating profit

 

6,615

 

(733)

 

5,882

 

 

Finance income

 

416

 

-

 

416

 

 

Finance expense

 

(6,297)

 

-

 

(6,297)

 

 

Profit/(loss) before income tax

 

734

 

(733)

 

1

 

 

Income tax credit

 

440

 

-

 

440

 

 

Profit/(loss) attributable to equity shareholders

 

1,174

 

(733)

 

441

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended 31 July 2019

 

 

 

 

 

 

 

 

 

 

Year ended

 

Year ended

 

Year ended

 

 

 

 

July 2019

 

July 2019

 

July 2019

 

 

 

 

Pre-Exceptional

 

Exceptional

 

Total

 

 

 

 

€'000

 

€'000

 

€'000

 

 

Revenue

 

1,798,197

 

-

 

1,798,197

 

 

Cost of sales

 

(1,527,363)

 

-

 

(1,527,363)

 

 

Gross profit

 

270,834

 

-

 

270,834

 

 

Operating costs

 

(197,340)

 

(6,574)

 

(203,914)

 

 

Share of profit of associates and joint venture

 

6,717

 

(423)

 

6,294

 

 

Operating profit

 

80,211

 

(6,997)

 

73,214

 

 

Finance income

 

1,519

 

-

 

1,519

 

 

Finance expense

 

(13,327)

 

-

 

(13,327)

 

 

Profit before income tax

 

68,403

 

(6,997)

 

61,406

 

 

Income tax expense

 

(8,730)

 

44

 

(8,686)

 

 

Profit for the year

 

59,673

 

(6,953)

 

52,720

 

 

 

 

 

 

 

 

 

 

 

 

6  Property, plant and equipment

 

 

January

 

July

 

2020

 

2019

 

€'000

 

€'000

 

 

 

 

Net book value

 

 

 

At beginning of period

108,411

 

117,929

Arising on acquisitions

-

 

4,471

Additions

7,089

 

11,938

Reclassification of assets held under finance leases (Note 12)

(1,230)

 

-

Disposals

(290)

 

(712)

Transfers to properties held for sale

-

 

(11,215)

Write down of property, plant and equipment

-

 

(4,100)

Depreciation charge

(4,090)

 

(8,300)

Translation adjustments

4,340

 

(1,600)

 

 

 

 

 

 

 

 

At end of period

114,230

 

108,411

 

 

 

 

 

 

 

 

 

 

       

7  Goodwill and intangible assets

 

 

January

 

July

 

2020

 

2019

 

€'000

 

€'000

 

 

 

Net book value

 

 

At beginning of period

 

216,334

Arising on acquisitions

 

73,283

Additions

 

4,346

Impairment of goodwill and intangibles relating to Ukraine investment

 

(9,429)

Amortisation of non-ERP intangible assets

 

(8,769)

ERP intangible amortisation

 

(2,290)

Translation adjustments

 

(2,390)

 

 

 

 

 

 

 

 

At end of period

273,057

 

271,085

 

 

 

 

 

 

     Included in the total goodwill and intangible assets above is goodwill of €180,556,000 (July 2019: €176,292,000). There have been no indicators of impairment in the first half of the year therefore a full assessment of the carrying value of goodwill and intangibles will be carried out in the second half of the year.

 

 

8  Investments in associates and joint venture

 

 

             January

 

July

 

              2020

 

              2019

 

             €'000

 

             €'000

 

 

 

 

At beginning of period

47,140

 

48,171

Share of profits after tax, before exceptional items

1,137

 

6,717

Share of exceptional items, net of tax

-

 

(423)

Dividends received

(5,682)

 

(7,037)

Acquisition of equity investment

-

 

1,117

Share of other comprehensive expense

(3,205)

 

(748)

Translation adjustments

1,804

 

(657)

 

 

 

 

 

 

 

 

At end of period

41,194

 

47,140

 

 

 

 

 

 

 

 

 

 

 

9  Provision for liabilities

 

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

 

 

January

 

July

 

              2020

 

              2019

 

             €'000

 

             €'000

 

 

 

 

At beginning of period

18,618

 

13,512

Arising on acquisition

-

 

8,508

Provided in period

44

 

1,120

Paid in period

(4,004)

 

(3,271)

Released in period

(1,107)

 

(263)

Released as exceptional gain in period

(966)

 

(1,111)

Translation adjustments

        (81)

 

123

 

 

 

 

 

 

 

 

At end of period

12,504

 

18,618

 

 

 

 

 

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

 

  

10  Analysis of net debt

 

 

 

31 July

 

IFRS 16

 

 

 

Non-cash

 

Translation

 

31 January

 

 

2019

 

transition

 

Cashflow

 

movements

 

adjustment

 

2020

 

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

111,830 

 

-

 

(50,479)

 

-

 

1,795

 

63,146

 

Overdraft

(23,945)

 

-

 

16,385

 

-

 

184

 

(7,376)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

87,885

 

-

 

(34,094)

 

-

 

1,979

 

55,770

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IAS 17 finance lease liability

(910)

 

910

 

-

 

-

 

-

 

-

 

Loans

(162,571)

 

-

 

(140,218)

 

(318)

 

(16,904)

 

(320,011)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net debt before IFRS 16 lease transition

(75,596)

 

910

 

(174,312)

 

(318)

 

(14,925)

 

(264,241)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease creditors arising on adoption of IFRS 16

-

 

(40,577)

 

5,397

 

(5,193)

 

(3,093)

 

(43,466)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net debt after IFRS 16 lease transition

(75,596)

 

(39,667)

 

(168,915)

 

(5,511)

 

(18,018)

 

(307,707)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The loans included above are unsecured and the facility extends to May 2022.

 

 

 

11 Share capital

 

 

January

 

July

 

 

2020

 

2019

 

 

€'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 ordinary shares of €0.01 each (i)

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.

 

 

12  Transition to IFRS 16 'Leases'

 

        The Group adopted IFRS 16 Leases with effect from 1 August 2019. At the date of transition, the Group calculated the lease commitments outstanding at that date and applied appropriate discount rates to calculate the present value of the lease commitment. The Group recognised €43.3m of right-of-use leased assets and €43.5m of lease liabilities at 31 January 2020.

 

      The table below reconciles the Group's operating lease obligations at 31 July 2019 to the lease obligations recognised on initial application of IFRS 16 at 1 August 2019.

 

 

€'000

 

 

 

 

Operating lease commitment at 31 July 2019

42,275

 

Extension options reasonably certain to be exercised

5,299

 

Commitments relating to low value and short-term leases

(942)

 

Effect of discounting

(6,965)

 

Finance lease liabilities recognised at 31 July 2019

910

 

 

 

 

Lease liabilities at 1 August 2019

40,577 

 

 

 

 

        The movement in the Group's right-of-use leased assets during the period is as follows:

 

 

€'000

 

 

 

 

Arising on adoption of IFRS 16 at 1 August 2019

39,667

 

Reclassification of assets held under IAS 17 finance leases on adoption of IFRS 16

1,230

 

Additions in period

4,349

 

Termination of leases

(15)

 

Leased assets purchased and transferred to property, plant and equipment

(211)

 

Depreciation charge

(4,753)

 

Foreign exchange movement

3,046

 

 

 

 

Carrying value at 31 January 2020

43,313

 

 

 

        As per FY2019 Group Annual Report, the initial guidance indicated that the opening right-of-use asset would be within the range of €39.0 million to €43.0 million at transition.

 

        The carrying amount of lease liabilities are as follows:

 

 

€'000

 

 

 

 

Arising on adoption of IFRS 16 at 1 August 2019

39,667

 

Reclassification of IAS 17 finance leases on adoption of IFRS 16

910

 

New leases arising in the period

4,349

 

Termination of leases

(15)

 

Lease payments

(5,397)

 

Discount unwinding

859

 

Foreign exchange movement

3,093

 

 

 

 

Lease liabilities at 31 January 2020

43,466

 

 

 

 

 

13   Dividends

 

On 13 December 2019 a final dividend of 18.17 cent per ordinary share was paid in respect of the year ended 31 July 2019 which when combined with the interim dividend of 3.15 cent per ordinary share brings the total dividend for the year ended 31 July 2019 to 21.32 cent per ordinary share.

 

An interim dividend of 3.15 cent (2019: 3.15 cent) per ordinary share will be paid on 14 April 2020 to shareholders on the register on 27 March 2020. These condensed interim consolidated financial statements do not reflect this dividend payable. 

 

14   Taxation

 

The taxation credit for the interim period is an estimate based on the expected full year effective tax rate on full year profits. 

 

15   Contingent liabilities

 

The Group is not aware of any major changes with regard to contingent liabilities in comparison with the situation as of 31 July 2019.

 

16   Financial commitments

 

The Group has a financial commitment of €6.4 million attributable to a strategic partnership with University College Dublin ('UCD'). The commitment is over a four year period. 

 

17   Related party transactions

 

Related party transactions occurring in the period were similar in nature to those described in the 2019 Annual Report.

 

18   Release of half yearly condensed interim consolidated financial statements

 

The Group condensed interim consolidated financial information was approved for release by the Board on 4 March 2020. 

 

19   Distribution of Interim Report

 

This interim report is available on the Group's website (www.originenterprises.com). A printed copy is available to the public at the Company's registered office.

 


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Interim Results Statement - RNS