Final Results

RNS Number : 7924Z
Origin Enterprises Plc
23 September 2020
 

 Origin Enterprises plc

 

PRELIMINARY RESULTS STATEMENT

 

Adjusted diluted EPS of 25.69 cent in line with guidance

Strong cash generation in the year

Resilient performance through unprecedented operational challenges

 

 

Dublin, London, 23 September 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 full year results for the year ended 31 July 2020.

 

Overview

 

· Group revenue decrease of 11.6% to €1,589.1 million, and 11.7% on an underlying basis

· Operating profit1 of €44.1 million, a decrease of 46.4% and 44.6% on an underlying basis

· Group operating margin of 2.8% (2019: 4.6%)

· Adjusted diluted earnings per share3 of 25.69 cent in line with guidance

· Strong cash generation with free cash flow of €64.3 million (2019: €54.0 million)

· Reduction in net debt4 to €53.2 million (2019: €75.6 million)

· Working capital inflow of €30.3 million (2019: Outflow of €12.7 million)

· Suspension of final dividend with total dividend of 3.15 cent (2019: 21.32 cent)

· Strong performance in LATAM, delivering underlying volume and revenue growth

· Disposal of the Group's 20% stake in Ferrari Zagatto, Brazil

· Continuity of service to the agricultural community maintained through COVID-19

· Appointment of Sean Coyle as Chief Executive Officer and TJ Kelly as Chief Financial Officer

· Appointment of Alex Steel as Group Commercial Director and Brendan Kent as Managing Director of Agri-Inputs division post year end

 

Results Summary

 

 

2020

€'000

 

2019

€'000

 

Change

%

Constant

Currency

%

 

 

 

 

 

Group revenue

1,589,142

  1,798,197

(11.6%)

(11.6%)

Operating profit1

44,099

82,263

(46.4%)

(44.5%)

Associates and joint venture2

6,154

6,717

(8.4%)

(8.6%)

Total group operating profit1

50,253

88,980

(43.5%)

(41.7%)

Finance expense, net

(11,250)

(11,808)

(4.7%)

(6.0%)

Profit before tax1

39,003

77,172

(49.5%)

(47.2%)

Basic EPS (cent)

15.81

41.98

(62.3%)

(59.6%)

Adjusted diluted EPS (cent)3

25.69

52.65

(51.2%)

(49.2%)

Return on capital employed

7.3%

13.2%

(590bps)

 

Group net debt4 (€'000)

(53,213)

(75,596)

22,383

 

Operating margin1

2.8%

4.6%

(180bps)

 

Free cash flow

64,288

54,039

10,249

 

Dividend per ordinary share (cent)

3.15

21.32

(85.2%)

 

 

 

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 (2020: €7.7m, 2019: €7.1m) and exceptional items, net of tax (2020: €5.2m, 2019: €7.0m)

4

 Group net debt as defined for banking covenant purposes, before impact of IFRS 16 Lease transition

 

 

 

Commenting on the results, Origin's Chief Executive Officer, Sean Coyle said:

"FY20 was a challenging year for the Group, with prolonged unseasonal weather conditions, particularly in the UK and Ireland, reducing demand for agronomy services and crop input investment spend. COVID-19 presented further operational challenges for the business, however thanks to the collective efforts of all of our people and our contingency actions we continued to serve our customers, delivering solid profitability and strong operating cash flow. 

 

Despite Group revenue decreasing by 11.6% to €1,589.1 million and Group operating profit falling by 46.4% to €44.1 million, we delivered free cash flow of €64.3 million, a working capital inflow of €30.3 million and reduced net debt of €53.2 million.

 

FY20 was defined by extreme weather challenges, with the wettest autumn winter planting season in 30 years, followed by extremely dry conditions in the third quarter, which persisted into June, further lowering the intensity of crop input investment spend. Given the extreme nature of these weather conditions, we would expect crop plantings to normalise in FY21, which will increase market demand for agronomy services and crop inputs and return the Group to growth.

 

With the possibility of Brexit without a trade deal on 31 December 2020 and the ongoing COVID-19 pandemic, FY21 will bring challenges for our business. Consequently, we will continue to implement our prudent risk management approach and capital allocation strategy. With our resilient, integrated crop services business model, scalable and diversified market positions, and strong leadership team in place, I am confident we will successfully overcome these challenges and deliver on the Group's 2023 strategic and financial growth ambitions."

 

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:

8188332

 

 

Participant access number:

 

 

 

Dublin:

Tel: +353 (0)1 5060650

UK/International:

Tel: +44 (0)844 481 9752

 

 

Replay:

 

 

 

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

 

Replay Access Code:

8188332

 

 

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 Executive Officer

Tel:

+353 (0)1 563 4959

 

 

 

 

 

Brendan Corcoran

 

 

 

Head of Investor Relations

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 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

 

 

2020

€'000

 

2019

€'000

 

 

 

 

Group revenue

1,589,142

 

1,798,197

Operating profit1

44,099

 

82,263

Associates and joint venture, net2

6,154

 

6,717

Group operating profit1

50,253

 

88,980

Finance costs, net

(11,250)

 

(11,808)

Profit before tax1

39,003

 

77,172

Income tax

(6,157)

 

(10,439)

Adjusted net profit

32,846

 

  66,733

 

 

 

 

Adjusted diluted EPS (cent)3

25.69c

 

52.65c

 

 

 

 

Adjusted net profit reconciliation

 

 

 

 

 

 

 

Reported net profit

19,859

 

52,720

Amortisation of non-ERP intangible assets

9,381

 

8,769

Tax on amortisation of non-ERP related intangible assets

(1,638)

 

(1,709)

Exceptional items (net of tax)

5,244

 

6,953

Adjusted net profit

32,846

 

66,733

 

 

 

 

Adjusted diluted EPS (cent)3

25.69c

 

52.65c

Operating margin1

2.8%

 

4.6%

Return on capital employed

7.3%

 

13.2%

Free cash flow (€'m)

€64.3m

 

€54.0m

 

 

 

 

 

Adjusted diluted earnings per share3 decreased by 51.2% to 25.69 cent. On a constant currency basis, adjusted diluted earnings per share decreased by 49.2% when compared to the prior year.

 

 

Group revenue

 

Group revenue decreased by 11.6% from €1,798.2 million in the prior year to €1,589.1 million. On an underlying basis revenue decreased by 11.7% driven by reduced demand for crop protection, seed and fertiliser, particularly in the UK.

 

Underlying reduction in agronomy services and crop input volumes, excluding crop marketing volumes, was 10.7% for FY20.

 

 

Operating profit1

 

Operating profit1 decreased by 46.4% to €44.1 million compared to €82.3 million in the previous year. On an underlying basis, operating profit1 decreased by €36.7 million (44.6%), primarily driven by decreased volumes and margins in Ireland and the UK. 

Group operating margin decreased from 4.6% to 2.8% in FY20. This was principally driven by the Ireland and UK segment, which saw its operating margin fall from 5.2% in FY19 to 2.4% in FY20.

 

 

Associates and joint venture2

 

Origin's share of the profit after interest and taxation from associates and joint venture amounted to €6.2 million in the period (2019: €6.7million). This was a solid performance set against challenging conditions.  The 2020 figure reflects the contribution from our 20% stake in Ferrari Zagatto which was acquired on 12 June 2019 and disposed of prior to the year end.

 

 

Finance costs and net debt4

 

Net debt4 at 31 July 2020 was €53.2 million (€93.9 million including IFRS 16 lease debt) compared to net debt of €75.6 million at the end of the prior year. The movement was driven by an inflow in working capital in the period, following a sustained focus on working capital management across the Group.   

 

Net finance costs amounted to €11.3 million, which represents a decrease of €0.6 million on the prior year. Excluding the impact of IFRS 16, there was a reduction in net finance costs of €2.3 million reflecting lower local debt levels in our Continental European businesses and lower interest rates, year-on-year, across the Group.

 

At 31 July 2020, the Group had unsecured committed banking facilities of €430.0 million (2019: €430.0 million), of which €30.0 million will expire in September 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

 

2020

 

2019

 

 

 

 

 

 

 

 

Net debt to EBITDA

Maximum 3.5

1.18

0.87

 

 

 

 

EBITDA to net interest

 Minimum 3.0

5.76

8.06

 

 

 

 

 

 

Working capital

 

For the year ended 31 July 2020, there was a working capital inflow of €30.3 million following a sustained focus on working capital management across the Group during the year. €14.6m of the inflow relates to UK COVID-19 VAT deferrals which will reverse in the second half of FY21. Working capital allocation remains a key priority for the Group. 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 25.69 cent per share, a decrease of 51.2% from FY19. This was driven by a decrease in like-for-like underlying profits of 50.3%, along with the positive impact of acquisitions of 1.1% and a reduction of 2.0% as a result of foreign currency translation.

 

 

Free cash flow

 

2020

€'m

2019

€'m

 

Free cash flow

64.3

54.0

 

Free cash flow conversion ratio

240.9%

 

90.0%

 

 

 

 

The Group generated free cash flow in the year of €64.3 million (2019: €54.0 million).

 

Free cash flow means the total of earnings before interest, tax, depreciation (excluding depreciation of IFRS16 Right of Use leased assets), 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

 

2020

2019

 

Return on capital employed

7.3%

13.2%

 

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; and

 

 

(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 €5.2   million in the year. These principally relate to the non-cash write down of intangible assets due to rebranding, fair value adjustment on the Group's investment properties and transaction related costs. Exceptional items are summarised in the table below:

 

Exceptional items

 

2020

€'m

 

2019

€'m

 

 

 

 

 

 

Write down of intangible assets due to rebranding

5.7

 

-

 

Arising on disposal of associates and joint venture

0.5

 

0.4

 

Pension and rationalisation related costs

0.2

 

0.3

 

Fair value adjustment and related costs on investment properties

(0.7)

 

(5.4)

 

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

(0.5)

 

0.3

 

Impairment of investment in Ukraine, net of put option gain

-

 

7.3

 

Impairment of property, plant and equipment

  -

 

4.1

 

Total exceptional items, net of tax

5.2

 

7.0

 

 

 

 

 

 

 

Dividends

 

In light of market conditions and uncertainty relating to the COVID-19 pandemic, in June 2020 the Board determined that it would be prudent to suspend the final dividend for FY20. As a result, the total dividend for the year will be 3.15 cent per ordinary share following the payment of the interim dividend in April 2020. Acknowledging the decision to suspend the final dividend, the Executive Directors voluntarily waived their entitlement to any unvested share options.

 

 

Management changes

 

On 11 June 2020 the Group announced the retirement of Tom O'Mahony after 35 years of service. Tom

was Group CEO for 13 years and his dedication, commitment and leadership of Origin over this time has resulted in the development of the Group into the leading international agri-services provider it is today. Sean Coyle was appointed as Tom's successor, effective 1 July 2020.

 

The Company has appointed TJ Kelly as Group Chief Financial Officer. TJ will join Origin no later than March 2021 and will be appointed as a Director of the Company at that time.

 

 

Investor relations

 

Our strategy aims to create long-term shareholder value and 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. In the second half of the financial year, all engagement was facilitated remotely through the use of virtual conferences and video calls.

 

Contact with institutional shareholders is the responsibility of the executive management team including the Chief Executive Officer, the Chief Financial Officer and the Head of Investor Relations.

 

During the year there were 152 meetings / conference calls with institutional investors across 8 financial centres.

 

 

Brexit

 

The Group continues to monitor the trade negotiations between the European Union and the United Kingdom, following the United Kingdom's formal exit from the EU on 31 January 2020. The Group is progressing its plans should no trade deal be concluded by the end of the transition period on 31 December 2020. All appropriate steps have been taken, and scenario planning completed, to ensure the Group is adequately prepared in the event of a no deal scenario.

 

 

COVID-19

 

The rapid outbreak of COVID-19 in the second half of the Group's financial year required prompt planning, communication and implementation of safety protocols across the Group's operations to protect our team, mitigate the risk of the virus spreading and ensure continuity of service to our customers. Agriculture is identified as a key sector and the services we provide are deemed essential to the maintenance and continuity of the food supply chain.

 

Our number one priority is the health of our people, trading partners, customers and the communities where we operate. The Group continuously monitors the advice and guidance of governments and health authorities across our markets, with ongoing audits at all our operating facilities to ensure we adhere to safe social distancing and all other health and safety guidance. Thanks to the professionalism and dedication of our team, key logistics and warehousing activities have been maintained and agronomy advice delivered, despite farm visits being limited in accordance with social distancing protocols. All employees in a position to work from home have been supported to do so. We are grateful to all our colleagues for their efforts in maintaining our operational capability which is enabling us to deliver continuity of service to the agricultural community during this crisis.

 

While our agricultural supply chain businesses are essential to food production, our amenity business faced the challenge of a large proportion of its customer base having to temporarily close. Consequently, our amenity businesses furloughed members of the team, on a rotating basis, from late March onwards. Availing of that support and acknowledging the impact of COVID-19 on our stakeholders, the Board and Executive Directors considered it appropriate to take a voluntary 20% reduction in respective fees and base salaries, for the period 1 April to 31 July 2020.

 

The Group continues to monitor developments closely across our locations and is taking appropriate actions to ensure we provide the safest environment we can for our stakeholders, while continuing to serve the needs of the agricultural community in a responsible manner.

 

 

Annual General Meeting (AGM)

 

The AGM is scheduled to be held on 18 November 2020 at 11.00am (UK/Ireland time) in the Merrion Hotel, Upper Merrion Street, Dublin 2. Any changes to the AGM required to reflect the evolving COVID-19 situation will be published in advance.

 

 

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 (2020: €7.7m, 2019: €7.1m) and exceptional items, net of tax (2020: €5.2m, 2019: €7.0m)

4

 Group net debt as defined for banking covenant purposes, before impact of IFRS 16 Lease transition

 

Review of Operations

Group Overview

 

 

 

 

Change on prior year

 

 

2020

€'m

 

2019

€'m

 

Change

%

 

Underlying3

%

Constant Currency4

 %

 

 

 

 

 

 

Revenue

1,589.1

1,798.2

(11.6%)

(11.7%)

(11.6%)

Operating profit1

44.1

82.3

(46.4%)

(44.6%)

(44.5%)

Operating margin1

2.8%

4.6%

(180bps)

(170bps)

(170bps)

 

 

 

 

 

 

Adjusted diluted EPS (cent)2

25.69

52.65

(51.2%)

(50.3%)

(49.2%)

 

1

Before amortisation of non-ERP intangible assets and exceptional items

2

Before amortisation of non-ERP intangible assets, net of related deferred tax (2020: €7.7m, 2019: €7.1m) and exceptional items, net of tax (2020: €5.2m, 2019: €7.0m)

3

Excluding currency movements and the impact of acquisitions

4

Excluding currency movements

 

FY20 was a challenging year for Origin with decreases in Group revenue, operating profit and adjusted fully diluted earnings per share of 11.6%, 44.5% and 49.2% respectively on a constant currency basis. Operating margin decreased to 2.8% from 4.6% primarily due to challenges in the Ireland and UK segment resulting from the impact of adverse weather conditions and the COVID-19 pandemic.

 

The underlying reduction in agronomy services and crop input volumes, excluding crop marketing volumes, was 10.7% for FY20 

 

 

Ireland and the United Kingdom

 

 

 

 

Change on prior year

 

 

2020

€'m

 

2019

€'m

 

Change

%

 

Underlying3

%

Constant Currency4

%

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

967.9

1,159.4

(16.5%)

(17.0%)

(16.8%)

Operating profit1

23.3

60.0

(61.1%)

(61.4%)

(61.3%)

Operating margin1

2.4%

5.2%

(280bps)

(280bps)

(280bps)

 

 

 

 

 

 

Associates and joint venture2

5.8

6.7

(13.4%)

(13.9%)

(13.7%)

 

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 disappointing performance as a result of extremely challenging conditions, recording a 17.0% decrease in underlying revenue and a 61.4% decrease in underlying operating profit.

 

The underlying volume reduction for agronomy services and crop inputs was 14.4% in the period.

 

Prolonged unseasonal weather conditions in Ireland and the UK resulted in lower volumes and margins across the segment. Volume development in the UK was impacted by a 10.7% reduction in total plantings, and importantly, a significant shift from winter cropping to spring cropping within the year. Despite spring planting ultimately progressing well, a prolonged dry period from March to early June resulted in reduced crop yield expectations, in addition to limited pest and disease pressure, which resulted in a 20.3% reduction in crop protection volumes.

 

Operating margin decreased to 2.4% from 5.2% driven by a lower intensity of crop input spend by farmers and growers as a result of the change in cropping mix.

 

 

Integrated Agronomy and On-Farm Services

 

Integrated Agronomy and On-Farm Services delivered a disappointing result during the year, recording lower volumes, revenues and margins across its service and input portfolios.

 

Demand for agronomy services and inputs was impacted by negative on-farm sentiment driven by extremely challenging operating conditions as a result of sustained unfavourable weather and the impact of COVID-19 restrictions. Intense and prolonged rainfall in the first half of the year was followed by unseasonably dry conditions which impacted overall crop potential and curtailed on-farm investment.

 

Despite these challenges, Integrated Agronomy and On-Farm Services delivered an excellent operational performance against a backdrop of COVID-19 related restrictions and the implementation of a range of measures to ensure continuity of service to farmers and growers. The volumes delivered on-farm in the third and fourth quarter demonstrated the robustness of the Group's operational capabilities.

 

 

Digital Agricultural Services

 

During the year, the Group's digital agronomy and precision farming operation, Rhiza, which has developed a suite of agronomist-farmer enabled digital applications, designed to optimise crop performance and input utilisation, continued to add increased functionality for farmers.

 

The development and roll-out of Origin's digital offering continued at pace during the year, with over 1.4 million active hectares on-boarded to date, including significant growth in Continental Europe, and is firmly on track to deliver our target of 4.0 million hectares by 2023.

 

 

Business-to-Business Agri-Inputs

 

Business-to-Business Agri-Inputs had a challenging financial year, impacted by prolonged unseasonal weather resulting in lower volumes and margins for fertiliser and animal feed ingredients albeit set against a strong comparable prior year.

 

 

Fertiliser

 

Despite a solid operating performance, fertiliser recorded lower volumes and profits in the period. The adverse weather resulted in a reduced cropping profile in the UK which impacted demand. Although activity levels on-farm were more favourable in the second half of the financial year, full year demand was behind that achieved in the prior year. Downward movement in global fertiliser markets as the year progressed was also a factor in revenue and margin performance in the period.

 

The development and promotion of enhanced efficiency fertiliser and bespoke nutrition ranges will continue to be a significant focus in FY21. During the year the Group developed the UK's first independently validated carbon footprint calculator, NUTRI-CO2OL, which will enable us to quantify the carbon footprint for each of the 13,000+ fertiliser blends we offer.

 

 

Amenity

 

Amenity recorded lower volumes, revenues and profits in the period. The closure of all sporting venues along with the significant reduction in landscaping and local authority channels at the height of the COVID-19 restrictions significantly curtailed demand during the year.

 

With a large proportion of its customer base having to temporarily close, our amenity businesses furloughed members of their teams, on a rotating basis, from late March onwards.

 

 

Feed Ingredients

 

Feed Ingredients delivered a reasonable result in the year reflecting a good operational performance despite a reduction in volumes.

 

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 year

 

 

2020

€'m

 

2019

€'m

 

Change

%

 

Underlying3

%

Constant Currency4

%

 

 

 

 

 

 

Revenue

417.5

440.1

(5.1%)

(5.9%)

(5.9%)

Operating profit2

13.2

13.9

(4.7%)

(2.3%)

(2.3%)

Operating margin2

3.2%

3.2%

-

10bps

10bps

 

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 2020 crop marketing revenues and profits attributable to Continental Europe amounted to €172.7 million and €0.4 million respectively (2019: €165.1 million and €0.3million 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 delivered a satisfactory performance despite a challenging operating environment during the year. Our Romanian and Ukrainian businesses adopted the Group's single brand identity, Agrii, in common with Origin's direct farm customer facing business operations in the UK and Poland. The common Agrii identity supports the Group-wide framework for technically led and integrated agronomy services. Underlying business volumes declined by 1.9% in the period, with operating margins in line with FY19 at 3.2%.

 

The Group is pleased the sustained focus during the year on working capital and operating margin improvement in our Continental European businesses delivered a comparable operating margin year-on-year. 

 

 

Belgium

 

Belgium delivered a reduced result for the year, encountering volume and price challenges primarily driven by weather related challenges and global raw material price movements throughout the year.

 

 

Poland

 

Poland delivered an improved performance on the prior year.

 

There was positive volume development across all market channels supported by a solid cropping area broadly in line with the prior year. Performance benefited from the ongoing enhancement of Origin's seed and speciality nutrition portfolios and an excellent operational performance, including improved operating margin and working capital management.

 

 

Romania

 

Romania delivered a satisfactory result during the year, in line with the performance of FY19.

 

Romania's contribution was impacted by sustained periods of dry weather from early spring which impacted on-farm investment decisions and resulted in lower volumes recorded year-on-year.

 

Operational performance continues to improve, with enhanced commercial effectiveness during the period resulting in improved operating margins and lower working capital in the business. The move to amalgamate our Romanian businesses was accelerated with the rebranding of the Group's operations in Romania as Agrii, in line with the rest of the Group's direct farm facing businesses in the UK and Poland.

 

 

Ukraine

 

Ukraine delivered a disappointing result for the year, recording a reduction in profitability, driven by a challenging operational backdrop characterised by highly competitive trading conditions and volatile currency movements.

 

The Group continues to prioritise operational and working capital efficiencies in Ukraine along with the further development of high service agronomy channels and precision digital offerings. In common with our Romanian businesses, our operations in Ukraine also rebranded as Agrii during the year.

 

 

Latin America

 

 

 

 

 

Change on prior period

 

 

2020

€'m

 

2019

€'m

 

Change

%

 

Underlying3

%

Constant Currency4

 %

 

 

 

 

 

 

Revenue

 

31.1

33.6

(7.4%)

6.4%

7.6%

Operating profit1

 

7.1

8.1

(11.9%)

4.8%

4.9%

Operating margin1

 

22.9%

24.1%

(120bps)

(40bps)

(60bps)

 

 

 

 

 

 

 

Associates and Joint venture2

 

0.4

-

100.0%

-

100.0%

        

 

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

 

The Latin American ('LATAM') reporting segment incorporates the Group's subsidiary and associate operations in Brazil.

The Group completed the acquisition of a 20% shareholding in Ferrari Zagatto E Cia. Ltda. ('Ferrari'), a leading provider of agronomy services, inputs, crop handling and marketing services in June 2019. Following a review of the Group's M&A priorities, the Board decided not to increase the shareholding in Ferrari, and consequently to divest of the Group's 20% shareholding in Ferrari to its existing shareholders, a transaction that completed in July 2020.

LATAM delivered an excellent operating performance with the volume development and underlying growth delivered against a delayed season and start to in-field operations for Brazil's principal crop, soya.

 

Underlying business volumes increased by 4.3% in the period with revenues increasing by 6.4% on an underlying basis and by 7.6% at constant currency. The weakening of the Brazilian Real in the second half of the year has impacted earnings in the LATAM segment. Reported operating profit has decreased by 11.9% despite an increase in operating profit of 4.9% on a constant currency basis.

 

 

Outlook

 

Following a year of extreme and unprecedented weather conditions, the Group expects crop plantings to normalise in FY21 which, in turn, will improve agronomy services and crop inputs and return the Group to growth. With the possibility of Brexit without a trade deal on 31 December 2020 and the ongoing COVID-19 pandemic, FY21 will bring challenges for the Group. Given the macro environment, Origin will continue to implement a prudent risk management approach and capital allocation strategy.

 

With a resilient, integrated crop services business model, scalable and diversified market positions, and strong leadership team in place, Origin is positioned to successfully overcome these challenges and deliver on the Group's 2023 strategic and financial growth ambitions.

 

Consistent with prior years, the Group will provide a Q1 Trading Update for FY21 on 18 November 2020.

 

 

ENDS

 

 

Origin Enterprises plc

 

Consolidated Income Statement

For the financial year ended 31 July 2020

 

 

 

 

Pre-

 

 

 

 

 

Pre-

 

 

 

 

 

 

exceptional

 

Exceptional

 

Total

 

exceptional

 

Exceptional

 

Total

 

 

2020

 

  2020

 

  2020

 

2019

 

  2019

 

  2019

 

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

Notes

 

 

(Note 3)

 

 

 

 

 

(Note 3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

2

1,589,142

 

-

 

1,589,142

 

1,798,197

 

-

 

1,798,197

Cost of sales

 

(1,359,547)

 

-

 

(1,359,547)

 

(1,527,363)

 

-

 

(1,527,363)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

229,595

 

-

 

229,595

 

270,834

 

-

 

270,834

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating costs

 

 

(194,877)

 

(6,505)

 

(201,382)

 

 

(197,340)

 

(6,574)

 

(203,914)

Share of profit of associates and joint venture

 

 

6,154

 

 

-

 

 

6,154

 

 

6,717

 

 

(423)

 

 

6,294

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit

 

40,872

 

(6,505)

 

34,367

 

80,211

 

(6,997)

 

73,214

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance income

 

954

 

-

 

954

 

1,519

 

-

 

1,519

Finance expense

 

(12,204)

 

-

 

(12,204)

 

(13,327)

 

-

 

(13,327)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit before income tax

 

 

29,622

 

 

(6,505)

 

 

23,117

 

 

68,403

 

 

(6,997)

 

 

61,406

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax (expense)/credit

 

 

(4,519)

 

 

1,261

 

 

(3,258)

 

 

(8,730)

 

 

44

 

 

(8,686)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the year

 

 

25,103

 

 

(5,244)

 

 

19,859

 

 

59,673

 

 

(6,953)

 

 

52,720

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2020

 

2019

Earnings per share for the year

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

4

 

15.81c

 

41.98c

 

 

 

 

 

 

Diluted earnings per share

4

 

15.53c

 

41.60c

 

 

 

 

 

 

Origin Enterprises plc

 

Consolidated Statement of Comprehensive Income

For the financial year ended 31 July 2020

 

 

2020

 

2019

 

€'000

 

€'000

 

 

 

 

Profit for the year

19,859

 

52,720

 

 

 

 

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

553

 

(3,599)

-deferred tax effect of remeasurements

(70)

 

450

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

(1,001)

 

(1,668)

-share of deferred tax effect of remeasurements - associates

190

 

284

 

 

 

 

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

 

 

 

Group foreign exchange translation details

 

 

 

-exchange difference on translation of foreign operations

(17,350)

 

(3,507)

 

 

 

 

Group/Associate cash flow hedges

 

 

 

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

(1,976)

 

100

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

(58)

 

(2,783)

-deferred tax effect of cash flow hedges

311

 

369

-share of associates and joint venture cash flow hedges

(5,508)

 

727

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

689

 

(91)

 

 

 

 

 

 

 

 

Other comprehensive expense for the year, net of tax

(24,220)

 

(9,718)

 

 

 

 

 

 

 

 

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

(4,361)

 

43,002

 

 

 

 

Origin Enterprises plc

 

Consolidated Statement of Financial Position

As at 31 July 2020

 

 

 

2020

 

2019

 

Notes

€'000

 

€'000

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

Property, plant and equipment

5

109,363

 

108,411

Right of use asset

10

39,824

 

-

Investment properties

 

2,270

 

4,221

Goodwill and intangible assets

6

235,949

 

271,085

Investments in associates and joint venture

7

40,597

 

47,140

Other financial assets

 

575

 

607

Deferred tax assets

 

  6,890

 

3,620

Post employment benefit surplus

9

403

 

-

 

 

 

 

 

Total non-current assets

 

435,871

 

435,084

 

 

 

 

 

Current assets

 

 

 

 

Properties held for sale

 

27,100

 

24,135

Inventory

 

188,775

 

202,806

Trade and other receivables

 

406,857

 

529,328

Derivative financial instruments

 

1,460

 

2,345

Cash and cash equivalents

11

172,309

 

111,830

 

 

 

 

 

Total current assets

 

796,501

 

870,444

 

 

 

 

 

TOTAL ASSETS

 

1,232,372

 

1,305,528

 

 

 

 

 

Origin Enterprises plc

 

Consolidated Statement of Financial Position (continued)

As at 31 July 2020

 

 

 

2020

 

2019

 

Notes

€'000

 

€'000

 

 

 

 

 

EQUITY

 

 

 

 

 

 

 

 

 

Called up share capital presented as equity

  12

1,264

 

1,264

Share premium

 

160,498

 

160,498

Retained earnings and other reserves

 

150,564

 

184,077

 

 

 

 

 

TOTAL EQUITY

 

312,326

 

345,839

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

Interest-bearing borrowings

11

205,889

 

163,236

Lease liabilities

10

31,961

 

-

Deferred tax liabilities

 

19,785

 

23,143

Put option liability

 

22,073

 

29,607

Provision for liabilities

8

1,649

 

4,166

Post employment benefit obligations

9

-

 

1,476

Derivative financial instruments

 

1,262

 

912

 

 

 

 

 

Total non-current liabilities

 

282,619

 

222,540

 

 

 

 

 

Current liabilities

 

 

 

 

Interest-bearing borrowings

11

19,633

 

24,190

Lease liabilities

10

8,775

 

-

Trade and other payables

 

590,182

 

686,175

Corporation tax payable

 

11,976

 

11,845

Provision for liabilities

8

4,393

 

14,452

Derivative financial instruments

 

2,468

 

487

 

 

 

 

 

Total current liabilities

 

637,427

 

737,149

 

 

 

 

 

TOTAL LIABILITIES

 

920,046

 

959,689

 

 

 

 

 

 

 

 

 

 

TOTAL EQUITY AND LIABILITIES

 

1,232,372

 

1,305,528

 

 

 

 

 

 

 

 

 

 

Origin Enterprises plc

 

Consolidated Statement of Changes in Equity

For the financial year ended 31 July 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-

 

 

 

Foreign

 

 

 

 

 

 

 

 

 

 

 

Capital

 

Cash flow

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the year

  - 

 

  - 

 

  - 

 

 

-

 

  - 

 

 

  - 

 

-

 

19,859

 

19,859

Other comprehensive expense for the year

  - 

 

  - 

 

  - 

 

  - 

 

(6,542)

 

  - 

 

-

 

  - 

 

(17,350)

 

(328)

 

(24,220)

Total comprehensive (expense) / income for the year

-

 

-

 

-

 

-

 

(6,542)

 

-

 

-

 

-

 

(17,350)

 

19,531

 

(4,361)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based payment credit

-

 

-

 

-

 

-

 

-

 

-

 

(406)

 

-

 

-

 

-

 

(406)

Change in fair value of put option

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(1,966)

 

(1,966)

Dividend paid to shareholders

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(26,780)

 

(26,780)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 31 July 2020

1,264

 

160,498

 

(8)

 

134

 

(4,710)

 

12,843

 

1,131

 

(196,884)

 

(60,176)

 

398,234

 

312,326

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Origin Enterprises plc

 

Consolidated Statement of Cash Flows

For the financial year ended 31 July 2020

 

 

 

2020

 

2019

 

€'000

 

€'000

 

 

 

 

Cash flows from operating activities

 

 

 

Profit before tax

23,117

 

61,406

Exceptional items

6,505

 

6,997

Finance income

(954)

 

(1,519)

Finance expense

12,204

 

13,327 

Profit on disposal of property, plant and equipment

(533)

 

(292)

Share of profit of associates and joint venture

(6,154)

 

(6,717)

Depreciation of property, plant and equipment

8,564

 

8,300 

Depreciation of right of use assets

10,184

 

-

Amortisation of intangible assets

12,301

 

11,059 

Employee share-based payment (credit)/ charge

(406)

 

999 

Pension contributions in excess of service costs

(1,007)

 

(741)

Payment of exceptional rationalisation costs

(726)

 

(1,342)

Payment of exceptional acquisition costs

(1,439)

 

(1,775)

 

 

 

 

 

 

 

 

Operating cash flow before changes in working capital

61,656

 

89,702 

 

 

 

 

Movement in inventory

6,622

 

(2,408)

Movement in trade and other receivables

104,366

 

(50,450)

Movement in trade and other payables

(80,663)

 

40,118 

 

 

 

 

 

 

 

 

Cash generated from operating activities

91,981

 

76,962

 

 

 

 

Interest paid

(8,628)

 

(11,349)

Income tax paid

(7,947)

 

(12,572)

 

 

 

 

 

 

 

 

Cash inflow from operating activities

75,406

 

53,041 

 

 

 

 

 

 

 

 

Origin Enterprises plc

 

Consolidated Statement of Cash Flows (continued)

For the financial year ended 31 July 2020

 

 

 

2020

 

2019

 

€'000

 

€'000

 

 

 

 

Cash flows from investing activities

 

 

 

Proceeds from sale of investment property

-

 

750

Proceeds from disposal of investment in associate

904

 

-

Proceeds from sale of property, plant and equipment

991

 

1,005 

Purchase of property, plant and equipment

(12,056)

 

(12,049)

Additions to intangible assets

(3,670)

 

(4,346)

Arising on acquisition

-

 

(36,554)

Payment of contingent acquisition consideration

(7,386)

 

(1,705)

Payment of put option liability

-

 

(3,594)

Restricted cash

-

 

500

Disposal / loan to equity investment

113

 

(4,671) 

Dividends received from associates

5,776

 

7,037 

 

 

 

 

 

 

 

 

Cash outflow from investing activities

(15,328)

 

(53,627)

 

 

 

 

Cash flows from financing activities

 

 

 

Drawdown of bank loans

250,025

 

228,996

Repayment of bank loans

(209,528)

 

(238,491)

Lease liability payments

(11,422)

 

-

Shares issued

-

 

76

Payment of dividends to equity shareholders

(26,780)

 

(26,371)

 

 

 

 

 

 

 

 

Cash inflow/ (outflow) from financing activities

2,295

 

(35,790)

 

 

 

 

 

 

 

 

Net increase / (decrease) in cash and cash equivalents

62,373

 

(36,376)

 

 

 

 

Translation adjustment

2,418

 

(2,298) 

 

 

 

 

Cash and cash equivalents at start of year

87,885

 

126,559 

 

 

 

 

 

 

 

 

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

152,676

 

87,885 

 

 

 

 

 

 

 

 

Origin Enterprises plc

 

Notes to the preliminary results statement

  For the financial year ended 31 July 2020

 

1     Basis of preparation

 

The financial information included on pages 15 to 35 of this preliminary results statement has been extracted from the Group financial statements for the year ended 31 July 2020 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 2020, 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 2020

 

2 Segment information (continued)

 

(i) Segment revenue and results
 

 

Ireland & the UK

 

 

Continental Europe

 

Latin America

 

Total Group

 

2020

 

 

2020

 

2019

 

2020

 

2019

 

2020

 

2019

 

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

1,284,946

 

1,563,259

 

590,181

 

605,204

 

50,435

 

33,556

 

1,925,562

 

2,202,019

 

Less revenue from associates & joint venture

(317,057)

 

(403,822)

 

-

 

-

 

(19,363)

 

-

 

(336,420)

 

(403,822)

 

Revenue

967,889

 

1,159,437

 

590,181

 

605,204

 

31,072

 

33,556

 

1,589,142

 

1,798,197

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment result

23,302

 

59,976

 

13,686

 

14,212

 

7,111

 

8,075

 

44,099

 

82,263

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit from associates and joint venture

5,808

 

6,717

 

-

 

-

 

346

 

-

 

6,154

 

6,717

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortisation of non-ERP intangible assets

(5,035)

 

(4,328)

 

(2,145)

 

(1,884)

 

(2,201)

 

(2,557)

 

(9,381)

 

(8,769)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating profit before exceptional items

24,075

 

62,365

 

11,541

 

12,328

 

5,256

 

5,518

 

40,872

 

80,211

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exceptional items

(2,670)

 

1,509

 

(3,555)

 

(7,604)

 

(280)

 

(902)

 

(6,505)

 

(6,997)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit

21,405

 

63,874

 

7,986

 

4,724

 

4,976

 

4,616

 

34,367

 

73,214

 

                                             

Origin Enterprises plc

 

Notes to the preliminary results statement (continued)

For the financial year ended 31 July 2020

 

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:

 

 

2020

 

2019

 

€'000

 

€'000

 

 

 

 

Segment earnings before financing costs and tax

34,367

 

73,214

 

 

 

 

Finance income

954

 

1,519

Finance expense

(12,204)

 

(13,327)

 

 

 

 

 

 

 

 

Reported profit before tax

23,117

 

61,406

 

 

 

 

Income tax expense

(3,258)

 

(8,686)

 

 

 

 

 

 

 

 

Reported profit after tax

19,859

 

52,720

 

 

 

 

 

 

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:

 

2020

 

2019

 

€'000

 

€'000

Write down of intangible assets arising from re-branding (i)

(6,853)

 

-

Transaction related credit / (costs) (ii)

379

 

(273)

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

730

 

5,680

Pension and rationalisation related costs (iv)

(202)

 

(426)

Loss on disposal of associate (v)

(559)

 

-

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

-

 

(7,455)

Write down on property, plant and equipment (iii)

-

 

(4,100)

Total exceptional charge before tax

(6,505)

 

(6,574)

Arising in associates and joint venture (vii)

-

 

(423)

Total exceptional charge before tax including associates and joint venture

(6,505)

 

(6,997)

Tax credit on exceptional items

1,261

 

44

Total exceptional charge after tax

(5,244)

 

(6,953)

 

 

 

 

 

Origin Enterprises plc

 

Notes to the preliminary results statement (continued)

For the financial year ended 31 July 2020

 

3 Exceptional items (continued)

 

(i)   Write down in intangible assets arising from re-branding

During the year, the Group completed a re-branding of the businesses in Continental Europe. As a result, legacy intangible assets relating to the branding of these businesses were written down by €3.6 million and charged to the Consolidated Income Statement as an exceptional item. In addition legacy brands within the Ireland/UK segment attributable to bolt on acquisitions were also written down by €3.3 million as the business is now fully integrated under the Origin brand. The tax impact of this in the current year was a tax credit of €1.2 million (2019: €Nil).

 

(ii) Transaction related credit / (costs)

The transaction related credit arose on the movement in contingent consideration for both Fortgreen and Resterra, and is net of transaction related costs incurred in relation to the acquisitions completed during the prior year and potential acquisitions in the current year. The tax impact in the current year was a tax credit of €0.1 million (2019: €Nil).

 

(iii) Fair value adjustment of investment properties and properties held-for-sale

During the year, investment properties valued at €2.9 million were reclassified as held for sale as it is expected these properties will be sold within 12 months. There was a fair value uplift on these properties of €1.0 million. Also included are costs relating to the disposal of the properties. The tax impact of this exceptional item in the current year is a charge of €Nil (2019: €0.4 million).

 

In the prior year, a credit of €5.7 million was recognised comprising €5.5 million of an uplift in the value of the Group's Cork properties and investment properties, 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. In the prior year a write-down of €4.1 million was also reflected in the value of the Group's property, plant and equipment.

 

(iv)  Pension and rationalisation related costs

Rationalisation costs relate to 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 €Nil (2019: €0.1 million).

 

(v) Loss on disposal of associate

On 31 July 2020, the Group disposed of it's 20% shareholding in Ferrari Zagatto E Cia Ltda, a Brazilian based agronomy services and crop input distribution business. A loss of €0.6 million arose on the disposal as follows:

 

€'000

Consideration received from disposal of interest in Ferrari Zagatto

904

Carrying value of investment (Note 7)

(1,308)

Foreign exchange differences previously taken to comprehensive income

(155)

Loss arising on disposal of associate

(559)

 

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

In the prior year, 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 was 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 prior year was a tax credit of €0.2million.

 

(vii)  Arising in associates and joint venture

The exceptional charge in the prior year 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 prior year was a credit of €0.1 million.

 

Origin Enterprises plc

 

Notes to the preliminary results statement (continued)

For the financial year ended 31 July 2020

 

4 Earnings per share

 

 

Basic earnings per share

 

 

 

 

2020

 

2019

 

€'000

 

€'000

 

 

 

 

Profit for the financial year attributable to equity shareholders

19,859

 

52,720

 

 

 

 

 

'000

 

'000

Weighted average number of ordinary shares for the year

125,595

 

125,583

 

 

 

 

 

Cent

 

Cent

 

 

 

 

Basic earnings per share

15.81

 

41.98

 

 

Diluted earnings per share

 

 

 

 

2020

 

2019

 

€'000

 

€'000

 

 

 

 

Profit for the financial year attributable to equity shareholders

19,859

 

52,720

 

 

 

 

 

'000

 

'000

 

 

 

 

Weighted average number of ordinary shares used in basic calculation

125,595

 

125,583

Impact of shares with a dilutive effect

373

 

478

Impact of the SAYE scheme

1,901

 

677

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

127,869

 

126,738

 

 

 

 

 

Cent

 

Cent

 

 

 

 

Diluted earnings per share

15.53

 

41.60

 

Origin Enterprises plc

 

Notes to the preliminary results statement (continued)

For the financial year ended 31 July 2020

 

4 Earnings per share (continued)

 

2020

 

2019

 

'000

 

'000

Adjusted basic earnings per share

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of ordinary shares for the year

125,595

 

125,583

 

 

 

2020

 

2019

 

€'000

 

€'000

 

 

 

 

Profit for the financial year

19,859

 

52,720

 

 

 

 

Adjustments:

 

 

 

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

9,381

 

8,769

Tax on amortisation of non-ERP related intangible assets

(1,638)

 

(1,709)

Exceptional items, net of tax

5,244

 

6,953

Adjusted earnings

32,846

 

66,733

 

 

 

 

 

Cent

 

Cent

 

 

 

 

Adjusted basic earnings per share

26.15

 

53.14

 

 

Adjusted diluted earnings per share

 

 

 

 

2020

 

2019

 

'000

 

'000

 

 

 

 

 

 

 

 

Weighted average number of ordinary shares used in basic calculation

125,595

 

125,583

Impact of shares with a dilutive effect

373

 

478

Impact of the SAYE scheme

  1,901

 

677

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

127,869

 

126,738

         

 

 

 

2020

 

2019

 

€'000

 

€'000

 

 

 

 

  Adjusted earnings (as above)

32,846

 

66,733

 

 

 

 

 

Cent

 

Cent

 

 

 

 

  Adjusted diluted earnings per share

25.69

 

52.65

Origin Enterprises plc

 

Notes to the preliminary results statement (continued)

  For the financial year ended 31 July 2020

 

5  Property, plant and equipment

 

 

2020

 

2019

 

€'000

 

€'000

 

 

 

 

At 1 August

108,411

 

117,929

Leased asset transfer on IFRS 16 adoption

(1,230)

 

-

Arising on acquisition

-

 

4,471

Additions

14,055

 

11,938

Disposals

(424)

 

(712)

Transfers to properties held for sale

-

 

(11,215)

Write down of property, plant and equipment

-

 

(4,100)

Depreciation charge for the year

(8,564)

 

(8,300)

Translation adjustments

(2,885)

 

(1,600)

At 31 July

109,363

 

108,411

 

 

 

 

 

 

 

6  Goodwill and intangible assets

 

 

2020

 

2019

 

€'000

 

€'000

 

 

 

 

At 1 August

271,085

 

216,334

Arising on acquisition

-

 

73,283

Additions

3,684

 

4,346

Impairment of goodwill and intangibles

(6,853)

 

(9,429)

Amortisation of non-ERP intangible assets

(9,381)

 

(8,769)

ERP intangible amortisation

(2,920)

 

(2,290)

Translation adjustments

(19,666)

 

(2,390)

At 31 July

235,949

 

271,085

 

 

 

 

Origin Enterprises plc

 

Notes to the preliminary results statement (continued)

  For the financial year ended 31 July 2020

 

7  Investments in associates and joint venture

 

 

2020

 

2019

 

€'000

 

€'000

 

 

 

 

At 1 August

47,140

 

48,171

Share of profits after tax, before exceptional items

6,154

 

6,717

Share of exceptional items, net of tax

-

 

(423)

Dividends received

(5,776)

 

(7,037)

Share of other comprehensive expense

(5,630)

 

(748)

Disposal of interest in Ferrari Zagatto (Note 3) (i)

(1,308)

 

-

(Disposal)/ acquisition of equity investment

(113)

 

1,117

Translation adjustment

130

 

(657)

At 31 July

40,597

 

47,140

Split as follows:

 

 

 

Total associates

21,194

 

22,961

Total joint venture

19,403

 

24,179

 

40,597

 

47,140

 

 

 

 

  (i) On 31 July 2020, the Group disposed of it's 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.

 

 

2020

  €'000

 

 

2019

  €'000

 

 

 

 

At 1 August

18,618

 

13,512

Arising on acquisition

-

 

8,508

Provided in year

144

 

1,120

Paid in year

(9,750)

 

(3,271)

Released in year

(2,000)

 

(1,374)

Currency translation adjustment

(970)

 

123

At 31 July

6,042

 

18,618

Split as follows:

 

 

 

Current liabilities

4,393

 

Non-current liabilities

1,649

 

4,166

 

6,042

 

18,618

 

 

 

 

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

Origin Enterprises plc

 

Notes to the preliminary results statement (continued)

  For the financial year ended 31 July 2020

 

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 2020 by an independent, qualified actuary.  The valuations have been performed using the projected unit method.

 

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

 

 

 

2020

 

2019

 

 

€'000

 

€'000

 

 

 

 

 

 

At 1 August

(1,476)

 

725

 

Current service cost

(624)

 

(527)

 

Past service (credit)/ costs

151

 

(30)

 

Settlement gain

387

 

548

 

Contributions

1,480

 

1,298

 

Other finance (expense) / income

(9)

 

24

 

Remeasurements

553

 

(3,599)

 

Translation adjustments

(59)

 

85

 

 

 

 

 

 

At 31 July

403

 

(1,476)

 

 

 

 

 

           

Origin Enterprises plc

 

Notes to the preliminary results statement (continued)

For the financial year ended 31 July 2020

 

10  Transition to IFRS 16 'Leases'

 

The Group has adopted IFRS 16 Leases with effect from 1 August 2019. IFRS 16 introduces a single lessee accounting model, and the majority of all lease agreements will now result in the recognition of a right of use asset and a lease liability on the balance sheet. The income statement charge in relation to all leases will now comprise a depreciation element relating to the right of use asset and also a financing charge relating to the lease liability.

 

In the previous year, the Group only recognised lease assets and lease liabilities in relation to leases that were classified as 'finance leases' under IAS 17 Leases. The assets were presented in property, plant and equipment and the liabilities as part of the group's borrowings.

 

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 as finance leases on adoption of IFRS 16

1,230

 

Additions in period

9,499

 

Termination of leases

(43)

 

Leased assets purchased and transferred to property, plant and equipment

(208)

 

Depreciation charge

(10,184)

 

Foreign exchange movement

(137)

 

Right-of-use leased assets at 31 July 2020

39,824

 

 

 

 

  Right of use assets include land and buildings, vehicles, machinery and IT software, and is comprised as:

 

     

 

  Land and

  buildings

  Plant and

  machinery

  Motor

Vehicles

  IT

software

Total

 

 

€'000

€'000

€'000

€'000

€'000

At 31 July 2020

25,565

 

8,771

 

  5, 465

 

  23

 

39,824

 

Origin Enterprises plc

 

Notes to the preliminary results statement (continued)

  For the financial year ended 31 July 2020

 

10  Transition to IFRS 16 'Leases' - continued

 

The movement in the Group's related lease liabilities during the period is 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

9,499

 

Termination of leases

(43)

 

Lease payments

(11,422)

 

Interest expense on lease liability

1,766

 

Foreign exchange movement

359

 

Lease liabilities at 31 July 2020

40,736

 

 

 

 

Current

8,775

 

Non-current

31,961

 

Lease liabilities at 31 July 2020

40,736

 

 

 

 

 

11  Analysis of net debt

 

 

 

 

 

IFRS 16

 

 

 

Non-cash

 

Translation

 

 

 

 

2019

 

transition

 

Cash flow

 

movements

 

adjustment

 

2020

 

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

€'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

111,830

 

-

 

62,709

 

-

 

(2,230)

 

172,309 

 

Overdrafts

(23,945)

 

-

 

(336)

 

-

 

4,648

 

(19,633)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

87,885

 

-

 

62,373

 

-

 

2,418 

 

152,676

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

(162,571)

 

-

 

(40,497)

 

(609)

 

(2,212)

 

(205,889)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net debt

(74,686)

 

-

 

21,876

 

(609)

 

206

 

(53,213)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease liabilities

(910)

 

(39,667)

 

11,422

 

(11,222)

 

(359)

 

(40,736)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net debt including lease creditors

(75,596)

 

(39,667)

 

33,298

 

(11,831)

 

(153)

 

(93,949)

 

 

 

 

 

 

 

 

 

 

 

 

 

Origin Enterprises plc

 

Notes to the preliminary results statement (continued)

For the financial year ended 31 July 2020

 

12  Share capital

 

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 (2019: 126,396,184) ordinary shares of €0.01 each (i) (ii)

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.

Origin Enterprises plc

 

Notes to the preliminary results statement (continued)

For the financial year ended 31 July 2020

 

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.

 

 

2020

€'000

2020

€'000

2019

€'000

 

 

 

Excludes IFRS 16*

 

Total assets

1,232,372

1,192,548

1,305,528

Total liabilities

(920,046)

(879,310)

(959,689)

Adjusted for:

 

 

 

Net debt

93,949

53,213

75,596

Tax, put option and derivative financial instruments, net

49,214

49,214

60,029

Accumulated amortisation of non-ERP related intangible assets

54,413

54,413

54,945

Capital employed

509,902

470,078

536,409

Average capital employed

686,898

647,075

675,404

 

 

 

 

Operating profit (excluding exceptional items)

34,718

34,718

73,494

Impact of re-statement of lease rentals charge

-

(1,238)

-

Amortisation of non-ERP intangible assets

9,381

9,381

8,769

Share of profit of associates and joint venture

6,154

6,154

6,717

Return

50,253

49,015

88,980

 

 

 

 

Return on capital employed

7.3%

7.6%

13.2%

         

 

 

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.

 

* FY2020 amounts have been re-stated excluding the impact of IFRS 16 to compare year-on-year on a like for like basis

 

 

14   Related party transactions

 

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

 

 

15   Dividend

 

An interim dividend of 3.15 cent (2019: 3.15 cent) per ordinary share was paid to shareholders on 14 April 2020. The Board has determined that it is prudent to suspend the final dividend for the 2020 financial year (2019: 18.17 cent per share).

Origin Enterprises plc

 

Notes to the preliminary results statement (continued)

For the financial year ended 31 July 2020

 

16 Financial commitments

 

The Group has a financial commitment of €5.6 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 2020 that would require adjustment to or disclosure in this report.

 

 

 

 

 

 

 

 

 

 

 

 

 

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