TIDMOGN
RNS Number : 9269B
Origin Enterprises Plc
26 September 2018
Origin Enterprises plc
PRELIMINARY RESULTS STATEMENT
Origin delivers resilient trading performance in challenging
year
Adjusted diluted EPS up 4.7% to 48.80 cent
26 September 2018
Origin Enterprises plc ('Origin' or 'the Group'), the
Agri-Services group, today announces its full year results for the
year ended 31 July 2018.
Highlights
-- Adjusted diluted earnings per share up 4.7% to 48.80 cent,
ahead of guidance, and up 7.6% on a constant currency basis
-- Operating profit of EUR71.2 million, an increase of 1.7% and
up 4.6% on a constant currency basis
-- Acquisitions contributed 5.0% to sales growth and 3.6% to
operating profit growth in the year on a constant currency
basis
-- Reported net profit of EUR56.8 million, an increase of 24.5%
primarily due to a significant reduction of exceptional items
-- Group operating margin of 4.4%, a decrease of 20 basis points
-- Strong free cash flow generation of EUR56.6 million (2017: EUR32.5 million)
-- Expansion into Latin America through agreement to acquire
interests in two Brazil based agri-service businesses, Fortgreen
and Ferrari Zagatto
-- Announcing today the appointment of Declan Giblin as CEO, Latin American Division
-- Proposed final dividend of 17.85 cent, giving a total dividend of 21.0 cent (2017: 21.0 cent)
Results Summary
Constant
2018 2017 Change Currency
EUR'000 EUR'000 % %
Group revenue 1,627,533 1,528,468 6.5% 9.0%
Operating profit(1) 71,190 70,009 1.7% 4.6%
Associates and joint venture(2) 7,221 4,366 65.4% 70.0%
Total group operating profit(1) 78,411 74,375 5.4% 8.4%
Finance expense, net (8,082) (6,914) (16.9%) (21.7%)
Profit before tax(1) 70,329 67,461 4.3% 7.0%
Basic EPS (cent) 45.22 36.33 24.5% 28.0%
Adjusted diluted EPS (cent)(3) 48.80 46.62 4.7% 7.6%
Return on capital employed 13.5% 13.7% (20bps)
Group net debt(4) (38,356) (31,450) (22.0%)
Operating margin(1) 4.4% 4.6% (20bps)
Free cash flow 56,562 32,472 74.2%
Dividend per ordinary share
(cent) 21.00 21.00 -
(1) Before amortisation of non-ERP intangible assets and exceptional items
(2) Profit after interest and tax before amortisation of non-ERP
intangible assets and before exceptional items
(3) Before amortisation of non-ERP intangible assets, net of
related deferred tax (2018: EUR4.9m, 2017: EUR3.9m) and exceptional
items, net of tax (2018: EURNil, 2017: EUR9.3m)
(4) Including restricted cash of EUR0.5m (2017: EURNil)
Commenting on the results, Origin's Chief Executive Officer, Tom
O'Mahony said:
"Origin achieved a very satisfactory full year result, ahead of
guidance, recording a 4.7% increase in adjusted diluted earnings
per share and generating EUR56.6 million in free cash flow. The
business performed robustly while supporting our customers manage
the operational demands of a highly challenging growing season in
2018.
It has been a significant year in terms of strategic
developments including our entry into the Latin American market.
The agreement to acquire Fortgreen and Ferrari Zagatto in Brazil
provides tangible growth opportunity in markets that address the
Group's requirements for further geographical diversification and
seasonality balance.
We have seen steadily improving sentiment on-farm over recent
months which may be challenged in the UK by the uncertain nature of
Brexit and its timing. The Group is well positioned to capitalise
on its scalable and diversified business platforms, development
opportunities and strong cash generation."
S
The preliminary results statement is available on the company
website www.originenterprises.com. There will be a live conference
call at 8.30am (UK/Ireland time) today. To listen to this
conference call, please dial the number below. Participants are
requested to dial in 5 to 10 minutes prior to the scheduled start
time.
Confirmation Code: 6403607
Participant access number:
Dublin: Tel: +353 (0)1 246 5621
UK/International: Tel: +44 (0)330 336 9411
Replay:
A replay of this call will be
available for seven days.
Replay Access Code: 6403607
Replay Access Numbers:
Dublin: Tel: +353 (0)1 533 9810
UK/International: Tel: +44 (0)207 660 0134
Enquiries
Origin Enterprises plc
Sean Coyle
+353 (0)1 563
Chief Financial Officer Tel: 4959
Brendan Corcoran
Head of Investor Relations
and +353 (0)1 563
Group Planning Tel: 4900
Goodbody (ESM Adviser)
+353 (0)1 641
Siobhan Wall Tel: 6019
Davy (Nominated Adviser)
+353 (0)1 614
Anthony Farrell Tel: 9993
Numis Securities (Stockbroker)
+44 (0)20 7260
Stuart Skinner Tel: 1314
Powerscourt (Financial PR Advisers)
Jack Hickey / Eavan Gannon +353 (0)83 448
(Ireland) Tel: 8339
Rob Greening / Jana Tsiligiannis +44 (0)207 250
(UK) Tel: 1446
About Origin Enterprises plc
Origin Enterprises plc is a focused Agri-Services group
providing specialist On-Farm Agronomy Services, Digital
Agricultural Services and the supply of crop technologies and
inputs. The Group has leading market positions in Ireland, the
United Kingdom, Belgium, Brazil, Poland, Romania and Ukraine.
Origin is listed on the ESM and AIM markets of the Irish and London
Stock Exchanges.
ESM ticker symbol: OIZ
AIM ticker symbol OGN
Website: www.originenterprises.com
Financial Review - Summary
2018 2017
EUR'000 EUR'000
Group revenue 1,627,533 1,528,468
Operating profit(1) 71,190 70,009
Associates and joint venture, net(2) 7,221 4,366
Group operating profit(1) 78,411 74,375
Finance costs, net (8,082) (6,914)
Profit before tax(1) 70,329 67,461
Income tax (8,668) (8,636)
Adjusted net profit 61,661 58,825
Adjusted net profit reconciliation
Reported net profit 56,785 45,620
Amortisation of non-ERP intangible
assets 5,655 4,837
Tax on amortisation of non-ERP related
intangible assets (768) (934)
Exceptional items (net of tax) (11) 9,302
Adjusted net profit 61,661 58,825
Adjusted diluted EPS (cent)(3) 48.80c 46.62c
Operating margin(1) 4.4% 4.6%
Return on capital employed 13.5% 13.7%
Free cash flow (EUR'm) EUR56.6m EUR32.5m
Origin delivered a 4.7% increase in adjusted diluted earnings
per share(3) for the year ending 31 July 2018 to 48.80 cent. On a
constant currency basis, there was a 7.6% increase in adjusted
diluted earnings per share.
Group revenue
Group revenue comprises the totality of revenue from the Group's
wholly owned operations which are based in Ireland, the United
Kingdom, Belgium, Poland, Romania and Ukraine. These businesses
provide Integrated Agronomy and On-Farm Services,
Business-to-Business Agri-Inputs and Digital Agricultural
Services.
Group revenue increased to EUR1,627.5 million from EUR1,528.5
million in the prior year, an increase of 6.5%. On a constant
currency basis, revenue increased by EUR137.5m (9.0%) primarily
reflecting an increase in fertiliser and feed volumes and
fertiliser prices.
Underlying volume growth in agronomy services and crop inputs
(excluding crop marketing volumes) was 2.7% for the year.
Operating profit(1)
Operating profit(1) amounted to EUR71.2 million compared to
EUR70.0 million in the previous year, an increase of 1.7%. On a
constant currency basis, operating profit(1) increased by EUR3.2
million (4.6%). This was driven by increased fertiliser and feed
volumes being partially offset by a reduction in agronomy service
volumes in the period. The Group operating margin decreased from
4.6% to 4.4% principally due to higher fertiliser prices in the
year.
Associates and joint venture(2)
Origin's share of the profit after interest and taxation from
associates and joint venture amounted to EUR7.2 million in the
period (2017: EUR4.4m). The improved performance in the period was
principally supported by higher feed volumes.
Finance costs and net debt
Net finance costs amounted to EUR8.1 million, an increase of
EUR1.2 million (16.9%) on the prior year level. The finance cost
was primarily driven by gross debt balances with cash yields
negligible in the current environment. Average net debt amounted to
EUR226.0 million compared to EUR217.0 million last year. Actual net
debt at 31 July 2018 was EUR38.4 million(4) compared to net debt of
EUR31.5 million(4) at the end of the previous year.
Origin's financial position remains strong. At year end the
Group had unsecured committed banking facilities of EUR430 million
(2017: EUR430 million), of which EUR30 million will expire in
August 2021 and EUR400m million will expire in May 2022.
At year end the Group's key banking covenants were as
follows:
Banking 2018 2017
Covenant Times Times
Maximum
Net debt to EBITDA 3.5 0.54 0.49
Minimum
EBITDA to net interest 3.0 9.81 11.45
Working capital
For the year ended 31 July 2018, there was working capital
inflow of EUR0.7 million. Investment in working capital remains a
key area of focus for the Group given the associated funding costs.
The year end represents the low point in the working capital cycle
for the Group reflecting the seasonality of the business.
Adjusted diluted earnings per share ('EPS')(3)
EPS(3) amounted to 48.80 cent per share, an increase of 4.7%
from 2017. This movement was driven by an increase in like-for-like
underlying profits of 5.7%, along with the positive impact of
acquisitions of 1.9%, partly offset by a 2.9% reduction as a result
of foreign currency translation.
Free cash flow
2018 2017
EUR'm EUR'm
Free cash flow 56.6 32.5
The Group generated free cash flow in the year of EUR56.6
million (2017: EUR32.5 million). Free cash flow is an important
metric as it indicates the amount of internally generated capital
that is available for re-investment in the business or for
distribution to shareholders.
Free cash flow means the total of earnings before interest, tax,
depreciation, amortisation of non-ERP related intangible assets and
exceptional items of wholly owned businesses ('EBITDA') adjusted to
take account of interest, tax, routine capital expenditure, working
capital cash flows and dividends received.
Return on capital employed
2018 2017
Return on capital employed 13.5% 13.7%
Return on capital employed is a key performance indicator for
the Group and represents Group earnings before interest, tax and
amortisation of non-ERP related intangible assets from continuing
operations ('EBITA') taken as a percentage of the Group Net Assets.
For the purposes of this calculation:
(i) EBITA includes the net profit contribution from associates
and joint venture (after interest and tax) and excludes the impact
of exceptional and non-recurring items.
(ii) Group Net Assets means total assets less total liabilities
as shown in the annual report excluding net debt, derivative
financial instruments, put option liabilities, accumulated
amortisation of non-ERP related intangible assets and taxation
related balances. Net Assets are also adjusted to reflect the
average level of acquisition investment spend and the average level
of working capital for the accounting period.
Exceptional items
Exceptional items net of tax amounted to EURNil in the year.
These principally relate to acquisition, disposal and restructuring
costs and a fair value adjustment on the Group's investment
properties. Exceptional items are summarised in the table
below:
2018 2017
EUR'm EUR'm
Transaction, other related costs and put
option, net 2.3 (0.6)
Rationalisation costs, net 0.7 8.3
Gain on disposal of chemical business, (1.5) -
net
Fair value adjustment on investment properties (1.5) -
Organisational redesign costs - 1.6
Total exceptional items, net of tax - 9.3
Reporting segments
Following the changes made to our reporting segments in the
prior year, and in recognition of the agreement to acquire
Fortgreen and Ferrari Zagatto in Brazil, going forward the Group
will have three separate reporting segments as set out below.
Ireland and the United Kingdom
This segment includes the Group's wholly owned Irish and UK
based Business-to-Business Agri-Input operations, Integrated
Agronomy and On-Farm Service operations and Digital Agricultural
Services business. In addition, this segment includes the Group's
associates and joint venture undertakings.
Continental Europe
This segment includes the Group's operations in Belgium, Poland,
Romania and Ukraine.
Latin America
This segment includes the Group's operations in Latin America
including Fortgreen, the Brazil based crop nutrition and speciality
inputs business acquired subsequent to the year end.
Dividend
The Board recommends a final dividend of 17.85 cent per ordinary
share which, when combined with the interim dividend of 3.15 cent
per ordinary share, brings the total dividend for the year to 21.0
cent per ordinary share (2017: 21.0 cent). Subject to shareholder
approval at the Annual General Meeting, this final dividend will be
paid on 14 December 2018 to shareholders on the register on 30
November 2018.
Investor relations
The Group continues to focus on effective communications with
shareholders. Contact with institutional shareholders is the
responsibility of the executive management team including the Chief
Executive Officer, Chief Financial Officer, Group Finance Director
and Head of Investor Relations. During the year there were 170
meetings / conference calls with institutional investors across
seven financial centres.
Brendan Corcoran was appointed as Head of Investor Relations and
Group Planning during the year and joined the Group in September
2018.
Brexit
The UK's exit from the European Union continues to be an area of
focus for the Group. Regular updates on the potential impacts of
Brexit on Origin have been presented to the Board on a range of
areas including the implications for UK domestic agricultural
policy, regulation and the future trading relationship between the
UK and the European Union.
Given the Group's well-diversified business in the UK,
Continental Europe and Latin America, it is able to maintain a
flexible approach to dealing with the potential challenges that
will arise following Brexit. We believe that we are well prepared
for any short-term logistical disruption that may result from a
no-deal Brexit. The Board and senior management will continue to
closely monitor Brexit negotiations and adjust the Group's
strategic and operational plans as necessary.
Annual General Meeting (AGM)
The AGM will be held on 23 November 2018 at 11.00 a.m. in the
Merrion Hotel, Upper Merrion Street, Dublin 2.
(1) Before amortisation of non-ERP intangible assets and exceptional items
(2) Profit after interest and tax before amortisation of non-ERP
intangible assets and before exceptional items
(3) Before amortisation of non-ERP intangible assets, net of
related deferred tax (2018: EUR4.9m, 2017: EUR3.9m) and exceptional
items, net of tax (2018: EURNil, 2017: EUR9.3m)
(4) Including restricted cash of EUR0.5m (2017: EURNil)
Review of Operations
Group Overview
Change of prior year
Constant
Currency(4)
%
2018 2017 Change Underlying(3)
EURm EURm % %
----------------------------------- ------------- -------- -------- ----------------------- -------------
Revenue 1,627.5 1,528.5 6.5% 4.0% 9.0%
Operating profit(1) 71.2 70.0 1.7% 1.0% 4.6%
Operating margin(1) 4.4% 4.6% (20bps) (20bps) (20bps)
Adjusted diluted EPS
(cent)(2) 48.80 46.62 4.7% 5.7% 7.6%
(1) Before amortisation of non-ERP intangible assets and exceptional
items
(2) Before amortisation of non-ERP intangible assets, net
of related deferred tax (2018: EUR4.9m, 2017: EUR3.9m) and
exceptional items, net of tax (2018: EURNil, 2017: EUR9.3m)
(3) Excluding currency movements and the impact of acquisitions
(4) Excluding currency movements
--------------------------------------------------------------------------------------------------------------
Origin has delivered a strong operational performance in 2018
with growth in Group revenue, operating profit and adjusted fully
diluted earnings per share of 9.0%, 4.6% and 7.6% respectively on a
constant currency basis. Operating margin decreased by 20 basis
points to 4.4%. The overall performance benefited from the
contribution of acquisitions in the year, delivering a 5.0%
increase in revenue.
Ireland and the United Kingdom
Change on prior year
2018 2017 Change Underlying(3)
EURm EURm % %
---------------------------------- ------------- --------- --------------------- --------------
Revenue 1,038.1 955.0 8.7% 6.1%
Operating profit(1) 54.8 53.4 2.5% 1.4%
Operating margin(1) 5.3% 5.6% (30bps) (30bps)
Associates and joint
venture(2) 7.2 4.4 65.4% 70.0%
(1) Before amortisation of non-ERP intangible assets
and exceptional items
(2) Profit after interest and tax before amortisation
of non-ERP intangible assets and before exceptional
items
(3) Excluding currency movements and the impact of acquisitions
----------------------------------------------------------------------------------- --------------
Ireland and the UK delivered a satisfactory performance,
recording a 6.1% increase in underlying revenue and a 1.4% increase
in underlying operating profit against a backdrop of a very
challenging growing season for primary producers. Underlying volume
growth in agronomy services and inputs was 2.1% reflecting
increased fertiliser and feed volumes. Operating margin decreased
by 30 basis points to 5.3% due to higher fertiliser prices in the
year offset by an improved portfolio mix.
Integrated Agronomy and On-Farm Services
Integrated Agronomy and On-Farm Services performed in line with
last year with improved sales margins offset by lower agronomy
service revenues and crop protection volumes. Crop drillings and
input application were significantly curtailed in early spring as a
result of unseasonably cold weather. A return to more settled
weather conditions in the fourth quarter facilitated robust catch
up activity levels on-farm, which resulted in a substantial
recovery of shortfalls in third quarter volumes. There was a strong
operational performance for the period as a whole with Origin's
service orientated and customised agronomy model maintaining good
momentum with new applications designed to maximise the economic
potential of crops in a highly challenging growing season.
Improved farmer crop margins underpinned by the recent trend of
higher output prices will help offset the impact of lower yield
potential in 2018 resulting from the unseasonably dry conditions in
the fourth quarter. The backdrop of more favourable farm sentiment
is expected to positively influence growers crop planting
intentions in 2019.
Digital Agricultural Services
Digital Agricultural Services performed well in the period with
continued momentum in product adoption by both agronomists and
primary producers.
The roll out of the Group's digital platform, Contour, advanced
in the period, with further product enhancements set to be
delivered throughout 2019. Contour is a digital information service
for agronomists and farmers which incorporates an integrated suite
of whole farm and field level monitoring tools. Contour brings
farmers and agronomists closer together by providing highly
functional and shared applications which enable data driven
solutions to maximise the return for farmers. In addition to soil
and crop health information and localised weather data, Contour
provides a yield prediction capability that supports in season crop
performance analysis to evaluate agronomic decisions.
Over 700,000 hectares have now been on-boarded onto the Contour
platform, which provides a strong basis for further development in
2019.
Business-to-Business Agri-Inputs
Business-to-Business Agri-Inputs has performed strongly in the
period, delivering good growth in operating profits principally
supported by higher volumes of both fertiliser and feed
ingredients.
Fertiliser
Fertiliser achieved higher volumes, revenues and profits in 2018
with performance underpinned by strong operational delivery as the
business successfully met customers' demand requirements in a
highly concentrated and delayed application window due to the
challenging weather conditions experienced in the early part of the
year. Fertiliser benefitted from incremental volume growth in the
latter part of the season as farmers strived to replenish fodder
stocks following the extended drought conditions during much of the
late grass growing season.
Branded speciality nutrition continued to deliver strong growth
through the development of differentiated and bespoke applications
designed to be relevant to primary producers' crop specific and
growing system requirements.
Bunn Fertiliser, acquired in August 2017, was successfully
integrated into the UK and Group fertiliser platform in the year
and has contributed positively to the performance of the enlarged
business.
Amenity
Origin Amenity delivered a good performance across all sales
channels in 2018 against lower volumes due to the impact of poor
spring weather followed by unusually high temperatures. Performance
benefitted from the positive contribution from acquisitions that
were completed in 2016 and 2017 providing new and differentiated
product and service offerings.
The integration of Linemark, the UK based leader in advanced
sports and amenity-marking solutions, acquired in 2017, was
successfully completed in the period.
Feed Ingredients
Feed Ingredients achieved an excellent performance in the period
underpinned by strong volume growth and improved margins. Volume
development largely reflected the combination of a more favourable
demand backdrop for feed due to higher livestock numbers and lower
availability of substitute farm produced fodder supply due to very
poor grass growing conditions in the year.
The Group's animal feed manufacturing associate, John Thompson
& Sons Limited, in which the Group has a 50% shareholding,
delivered a very satisfactory performance in the period.
Continental Europe(1)
Change on prior year
2018 2017 Change Underlying(3)
EURm EURm % %
------------------------------------ ----------- ---------- --------------------- --------------
Revenue 431.0 397.3 8.5% 5.4%
Operating profit(2) 16.2 16.2 0.6% 0.9%
Operating margin(2) 3.8% 4.1% (30bps) (30bps)
(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 2018 crop marketing
revenues and profits attributable to Continental Europe amounted
to EUR158.4 million and EUR0.2 million respectively (2017:
EUR176.2 million and EUR0.4 million respectively). An analysis
of revenues, profits and margins attributable to agronomy
services and inputs more accurately reflects the underlying
drivers of business performance.
(2) Before amortisation of non-ERP intangible assets and
exceptional items
(3) Excluding currency movements and the impact of acquisitions
------------------------------------------------------------------------------------ --------------
Continental Europe achieved a satisfactory performance in line
with last year. The result was set against highly challenging
operating conditions experienced by primary producers in the period
arising from extreme weather conditions, which led to a condensed
spring growing season followed by sustained dry conditions
impacting yield development over the summer period.
Underlying business volumes grew 4.0% in the period due to
continued development of the Group's fertiliser and nutrition
portfolios. Operating margins declined 30 basis points to 3.8%
reflecting a combination of higher fertiliser prices and the impact
of more condensed seasonality in the period.
Belgium
During the year, the Group completed the acquisition of
Pillaert-Mekoson in Belgium, a new geography for the Group.
Headquartered in Ghent, Pillaert-Mekoson is a leading provider of
standard and prescription fertilisers in Belgium and surrounding
geographies. The business, which enjoys a brand heritage of over 50
years, markets an extensive range of technically based nutrition
applications and operates a strong business-to-business and retail
customer franchise.
Pillaert-Mekoson was successfully integrated into the Group
during the period and delivered a very satisfactory performance,
with positive volume momentum achieved. This was driven by
increased demand as a result of the impact of feed shortages during
the year and the promotion of grass production.
Poland
Poland delivered an improved result in the period against lower
business volumes with performance benefitting from a combination of
a favourable sales mix and efficiency gains. Trading conditions
were highly challenging as service and input applications were
significantly curtailed during the spring period due to
unseasonably cold weather, followed by drought conditions in large
areas of Poland, which adversely impacted crop yield.
Value added agronomy applications continued to drive overall
development in direct farm channels. The launch of 'Agrii Demo' was
favourably received in the period and helped to underscore the
importance of technically led and integrated crop management
solutions and approaches in delivering superior results for
farmers.
Romania
Romania achieved a good result in the period with solid growth
achieved across the principal sales channels. Crop development over
the course of the year was satisfactory other than the impact of
some localised drought conditions on yield. Total plantings were in
line with last year at 8.3 million hectares.
Nutrition portfolios continued to deliver strong growth in the
period as the Group capitalises on the market opportunity from
primary producers' demand for improved ranges and speciality
applications.
Strong momentum was achieved in relation to digital adoption in
the period. Over 150,000 hectares were on-boarded onto the Group's
Contour platform during the year, which provides an excellent
foundation for further development in 2019.
Ukraine
Ukraine recorded lower profits and margins in the period as
currency volatility and input price inflation drove heightened
competition. Although adverse weather conditions resulted in a
delayed season and a reduction in the underlying level of volume
application, total cropping remained in line with last year at
approximately 22.4 million hectares.
Good progress was achieved in the development of speciality crop
technology packages, which delivered solid growth in the
period.
The business continues to successfully drive market share gain
supported by a targeted expansion of the agronomy sales and
distribution footprint.
Acquisitions
Origin announced in June that it had reached an agreement to
acquire a 65% interest in the Brazilian business, Fortgreen
Commercial Agricola Ltda. ('Fortgreen'). As part of this
transaction, Origin has also agreed to acquire a 20% shareholding
in the Brazilian business, Ferrari Zagatto E Cia. Ltda. ('Ferrari
Zagatto').
Fortgreen, which is headquartered in Paraná State in southern
Brazil, and was founded in 2004, is focused on the development of
value added crop nutrition and speciality inputs. Ferrari Zagatto,
founded in 1988, and also headquartered in Paraná, is one of the
leading providers of agronomy services, crop inputs and crop
marketing support to grain and speciality crop growers in
Paraná.
In August 2018, Origin announced the completion of the
acquisition of the 65% interest in Fortgreen following the
satisfaction of the conditions of the transaction.
Management changes
Origin separately announces today that Declan Giblin, Executive
Director, with responsibility for Corporate Development, has been
appointed Chief Executive Officer for the Group's Latin American
Division effective 1 October 2018. The appointment follows the
completion of the acquisition of the Brazilian based speciality
nutrition and crop inputs business, Fortgreen, on 14 August 2018
and the agreement to acquire a 20% shareholding in Ferrari Zagatto
in Brazil.
Declan will remain an Executive Director of Origin and will
continue to retain responsibility for corporate development in
Latin America.
The appointment of a Head of Corporate Development for Europe
will be made in due course.
Also during the year, the Group announced the appointment of
Sean Coyle as Chief Financial Officer. Sean joined Origin on 1
September 2018 and will be appointed as a Director of the Company
with effect from 1 October 2018.
Outlook
We have seen steadily improving sentiment on-farm over recent
months which may be challenged in the UK by the uncertain nature of
Brexit and its timing. The Group is well positioned to capitalise
on its scalable and diversified business platforms, development
opportunities and strong cash generation.
S
Origin Enterprises plc
Consolidated Statement of Comprehensive Income
For the financial year ended 31 July 2018
Pre- Pre-
exceptional Exceptional Total exceptional Exceptional Total
2018 2018 2018 2017 2017 2017
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Notes (Note 3) (Note 3)
Revenue 2 1,627,533 - 1,627,533 1,528,468 - 1,528,468
Cost of sales (1,389,926) - (1,389,926) (1,297,009) - (1,297,009)
Gross profit 237,607 - 237,607 231,459 - 231,459
Operating costs (172,072) 663 (171,409) (166,287) (12,524) (178,811)
Share of profit
of associates
and joint
venture 7,221 - 7,221 4,366 - 4,366
Operating profit 72,756 663 73,419 69,538 (12,524) 57,014
Finance income 1,432 - 1,432 703 - 703
Finance expense (9,514) - (9,514) (7,617) - (7,617)
Profit before
income tax 64,674 663 65,337 62,624 (12,524) 50,100
Income tax
(expense)/credit (7,900) (652) (8,552) (7,702) 3,222 (4,480)
Profit for the
year 56,774 11 56,785 54,922 (9,302) 45,620
2018 2017
Earnings per share for the year
Basic earnings per share 4 45.22c 36.33c
------- -------
Diluted earnings per share 4 44.94c 36.15c
------- -------
Origin Enterprises plc
Consolidated Statement of Comprehensive Income
For the financial year ended 31 July 2018
2018 2017
EUR'000 EUR'000
Profit for the year 56,785 45,620
Other comprehensive income/(expense)
Items that are not reclassified subsequently to the Group income statement:
Group/Associate defined benefit pension obligations
-remeasurements on Group's defined benefit pension schemes 3,628 3,407
-deferred tax effect of remeasurements (504) (519)
-share of remeasurements on associate's defined benefit pension schemes 5,865 (614)
-share of deferred tax effect of remeasurements - associates (997) 135
Items that may be reclassified subsequently to the Group income statement:
Group foreign exchange translation details
-exchange difference on translation of foreign operations (1,243) (10,674)
Group/Associate cash flow hedges
-effective portion of changes in fair value of cash flow hedges 1,396 (2,025)
-fair value of cash flow hedges transferred to operating costs and other income 888 1,754
-deferred tax effect of cash flow hedges (333) 86
-share of associates and joint venture cash flow hedges 4,827 (4,289)
-deferred tax effect of share of associates and joint venture cash flow hedges (603) 536
Other comprehensive income/(expense) for the year, net of tax 12,924 (12,203)
Total comprehensive income for the year attributable to equity shareholders 69,709 33,417
Origin Enterprises plc
Consolidated Statement of Financial Position
As at 31 July 2018
2018 2017
Notes EUR'000 EUR'000
ASSETS
Non-current assets
Property, plant and equipment 5 117,929 105,271
Investment properties 11,825 9,675
Goodwill and intangible assets 6 216,334 205,961
Investments in associates and joint venture 7 48,171 34,206
Other financial assets 450 531
Derivative financial instruments 835 169
Deferred tax assets 3,280 3,475
Post employment benefit surplus 9 725 -
Total non-current assets 399,549 359,288
--------- ---------
Current assets
Inventory 194,192 159,245
Trade and other receivables 461,199 401,303
Derivative financial instruments 1,399 560
Restricted cash 500 -
Cash and cash equivalents 147,212 162,631
Total current assets 804,502 723,739
--------- ---------
TOTAL ASSETS 1,204,051 1,083,027
Origin Enterprises plc
Consolidated Statement of Financial Position (continued)
As at 31 July 2018
2018 2017
Notes EUR'000 EUR'000
EQUITY
Called up share capital presented as equity 12 1,264 1,264
Share premium 160,422 160,422
Retained earnings and other reserves 168,561 125,043
TOTAL EQUITY 330,247 286,729
---------- ----------
LIABILITIES
Non-current liabilities
Interest-bearing borrowings 165,232 177,854
Deferred tax liabilities 22,171 17,553
Put option liability 5,531 5,450
Provision for liabilities 8 8,045 8,072
Post employment benefit obligations 9 - 3,646
Derivative financial instruments 46 204
Total non-current liabilities 201,025 212,779
---------- ----------
Current liabilities
Interest-bearing borrowings 20,836 16,227
Trade and other payables 638,161 548,130
Corporation tax payable 8,143 11,090
Provision for liabilities 8 5,467 7,392
Derivative financial instruments 172 680
Total current liabilities 672,779 583,519
---------- ----------
TOTAL LIABILITIES 873,804 796,298
TOTAL EQUITY AND LIABILITIES 1,204,051 1,083,027
---------- ----------
Origin Enterprises plc
Consolidated Statement of Changes in Equity
For the financial year ended 31 July 2018
Share- Foreign
Capital Cashflow based currency
Share Share Treasury redemption hedge Revaluation payment Re-organisation translation Retained
capital premium shares reserve reserve reserve reserve reserve reserve earnings Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
At 1 August 2017 1,264 160,422 (8) 134 (2,665) 12,843 358 (196,884) (38,076) 349,341 286,729
Profit for the
year - - - - - - - - - 56,785 56,785
Other
comprehensive
income/(expense)
for the year - - - - 6,175 - - - (1,243) 7,992 12,924
--------- ------------ ------------ ------------ -------- ----------------- ------- ----------------------- ----------- -------- --------
Total
comprehensive
income/(expense)
for the year - - - - 6,175 - - - (1,243) 64,777 69,709
Share-based
payment charge - - - - - - 180 - - - 180
Dividend paid to
shareholders - - - - - - - - - (26,371) (26,371)
At 31 July 2018 1,264 160,422 (8) 134 3,510 12,843 538 (196,884) (39,319) 387,747 330,247
Origin Enterprises plc
Consolidated Statement of Cash Flows
For the financial year ended 31 July 2018
2018 2017
EUR'000 EUR'000
Cash flows from operating activities
Profit before tax 65,337 50,100
Exceptional items (663) 12,524
Finance income (1,432) (703)
Finance expense 9,514 7,617
Profit on disposal of property, plant and equipment (285) (229)
Share of profit of associates and joint venture (7,221) (4,366)
Depreciation of property, plant and equipment 7,451 7,099
Amortisation of intangible assets 7,946 6,718
Employee share-based payment charge 180 358
Pension contributions in excess of service costs (852) (576)
Payment of exceptional rationalisation costs (3,334) (10,145)
Payment of exceptional acquisition costs (3,688) (1,532)
Operating cash flow before changes in working capital 72,953 66,865
Movement in inventory (28,505) (2,706)
Movement in trade and other receivables (58,469) 13,765
Movement in trade and other payables 87,713 (37,115)
Cash generated from operating activities 73,692 40,809
Interest paid (6,927) (6,336)
Income tax paid (10,428) (8,166)
Cash inflow from operating activities 56,337 26,307
Origin Enterprises plc
Consolidated Statement of Cash Flows (continued)
For the financial year ended 31 July 2018
2018 2017
EUR'000 EUR'000
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 1,410 409
Proceeds from sale of equity investment - 306
Purchase of property, plant and equipment (11,602) (11,206)
Additions to intangible assets (5,645) (3,566)
Arising on acquisition (23,857) (20,305)
Payment of contingent acquisition consideration (1,627) (3,408)
Proceeds from sale of Chemicals division 5,250 -
Payment of put option liability - (1,746)
Restricted cash (500) 2,948
Repayment from/loans to associates and joint venture 85 -
Dividends received from associates 2,483 3,822
Cash outflow from investing activities (34,003) (32,746)
Cash flows from financing activities
Drawdown of bank loans 141,775 113,471
Repayment of bank loans (158,155) (89,440)
Payment of dividends to equity shareholders (26,371) (26,371)
Cash outflow from financing activities (42,751) (2,340)
Net decrease in cash and cash equivalents (20,417) (8,779)
Translation adjustment 261 (3,963)
Cash and cash equivalents at start of year 146,715 159,457
Cash and cash equivalents at end of year (Note 11) 126,559 146,715
Origin Enterprises plc
Notes to the preliminary results statement
For the financial year ended 31 July 2018
1 Basis of preparation
The financial information included on pages 15 to 36 of this
preliminary results statement has been extracted from the Group
financial statements for the year ended 31 July 2018 on which the
auditor has issued an unqualified audit opinion.
The financial information has been prepared in accordance with
the accounting policies set out in the Group's consolidated
financial statements for the year ended 31 July 2018, which were
prepared in accordance with International Financial Reporting
Standards as adopted by the EU.
The consolidated financial information is presented in Euro,
rounded to the nearest thousand which is the functional currency of
the parent.
2 Segment information
IFRS 8, 'Operating Segments' requires operating segments to be
identified on the basis of internal reports that are regularly
reviewed by the Chief Operating Decision Maker ('CODM') in order to
allocate resources to the segments and to assess their
performance.
The Group has two operating segments as follows:
Ireland and the United Kingdom
This segment includes the Group's wholly owned Irish and UK
based Business-to-Business Agri-Inputs operations, Integrated
Agronomy and On-Farm Services operations and Digital Agricultural
Services business. In addition, this segment includes the Group's
Associates and joint venture undertakings.
Continental Europe
This segment includes the Group's Business-to-Business
Agri-Inputs operations, Integrated Agronomy and On-Farm Services
operations in Belgium, Poland, Romania and the Ukraine.
Information regarding the results of each reportable segment is
included below. Performance is measured based on segment operating
profit as included in the internal management reports that are
reviewed by the Group's CODM, being the Origin Executive Directors.
Segment operating profit is used to measure performance, as this
information is the most relevant in evaluating the results of the
Group's segments. Segment results include all items directly
attributable to a segment.
Origin Enterprises plc
Notes to the preliminary results statement (continued)
For the financial year ended 31 July 2018
2 Segment information (continued)
(i) Segment revenue and results
Ireland & the UK Continental Europe Total Group
---------------------- --------------------- ----------------------
2018 2017 2018 2017 2018 2017
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Total revenue 1,395,377 1,266,159 589,480 573,483 1,984,857 1,839,642
Less revenue from associates and
joint venture (357,324) (311,174) - - (357,324) (311,174)
Revenue 1,038,053 954,985 589,480 573,483 1,627,533 1,528,468
---------- ---------- ---------- --------- ---------- ----------
Segment result 54,752 53,431 16,438 16,578 71,190 70,009
Profit from associates and joint
venture 7,221 4,366 - - 7,221 4,366
Amortisation of non- ERP intangible
assets (3,863) (3,071) (1,792) (1,766) (5,655) (4,837)
---------- ---------- ---------- --------- ---------- ----------
Total operating profit before
exceptional items 58,110 54,726 14,646 14,812 72,756 69,538
Exceptional items (17) (12,145) 680 (379) 663 (12,524)
Operating profit 58,093 42,581 15,326 14,433 73,419 57,014
---------- ---------- ---------- --------- ---------- ----------
Origin Enterprises plc
Notes to the preliminary results statement (continued)
For the financial year ended 31 July 2018
2 Segment information (continued)
(ii) Segment earnings before financing costs and tax is
reconciled to reported profit before tax and profit after tax as
follows:
2018 2017
EUR'000 EUR'000
Segment earnings before financing costs and tax 73,419 57,014
Finance income 1,432 703
Finance expense (9,514) (7,617)
Reported profit before tax 65,337 50,100
Income tax expense (8,552) (4,480)
Reported profit after tax 56,785 45,620
Origin Enterprises plc
Notes to the preliminary results statement (continued)
For the financial year ended 31 July 2018
3 Exceptional items
Exceptional items are those that, in management's judgement,
should be separately presented and disclosed by virtue of their
nature or amount. Such items are included within the Consolidated
Income Statement caption to which they relate. The following
exceptional items arose during the year:
2018 2017
EUR'000 EUR'000
Rationalisation costs (i) (876) (10,990)
Gain on disposal of business (ii) 1,870 -
Transaction and strategy related costs (iii) (2,560) (2,460)
Organisational redesign costs (iv) - (1,740)
Fair value adjustment on investment properties (v) 2,150 -
Fair value adjustment on put option liability (vi) 79 2,666
------- --------
Total exceptional credit/(charge) before tax 663 (12,524)
Tax (charge)/credit on exceptional items (652) 3,222
------- --------
Total exceptional credit/(charge) after tax 11 (9,302)
------- --------
(i) Rationalisation costs
Rationalisation costs comprise the compensation and termination
payments arising from the restructuring of our agronomy services
businesses in the UK, net of unutilised accruals relating to
previous restructuring programmes of EUR0.6 million. The tax impact
of this exceptional item in the current year is a tax credit of
EUR0.2 million (2017: EUR2.1 million).
(ii) Gain on disposal of business
Following the disposal of the Groups Chemicals business operated
through Goulding Chemicals Limited and the closure of a seed plant
in the UK, a gain of EUR2.6 million and a loss of EUR0.7 million
respectively were recorded. The tax impact of this exceptional item
in the current year was a tax charge of EUR0.4 million.
(iii) Transaction and strategy related costs
Transaction related costs principally comprise costs incurred in
relation to the acquisitions completed during the year and post
year end. Strategy related costs relate to once off consultancy
costs in the prior year associated with the Groups' Agri-Services
five-year strategy review. The tax impact of this item in the
current year was a tax credit of EUR0.2 million (2017: EUR0.9
million).
(iv) Organisational redesign costs
During the prior year the Group incurred costs relating to the
commencement of an organisation redesign project, the purpose of
which was to enhance the Origin Group's central capabilities to
enable it to continue to support the Group as it grows. The primary
areas of focus were on how the reporting and management structures,
in addition to centralised functions, need to evolve as the Group
continues to integrate existing businesses and expand its
footprint. The tax impact of this exceptional item in the prior
year was a tax credit of EUR0.2 million.
(v) Fair value adjustment of investment properties
At 31 July 2018 the valuation of the Group's investment
properties was determined by the Directors using a market approach
with reference to local knowledge and judgement. As part of the
Director's assessment, guidance was obtained from an independent
valuation expert. Following this assessment an uplift of EUR2.2
million was reflected in the value of the Group's investment
properties as at 31 July 2018. The tax impact of this exceptional
item in the current year is EUR0.6 million.
(vi) Fair value of put option liability
This gain relates to the movement in fair value of the put
option liability in respect of the Agroscope acquisition. The tax
impact of this exceptional item in the current year is nil.
Origin Enterprises plc
Notes to the preliminary results statement (continued)
For the financial year ended 31 July 2018
4 Earnings per share
Basic earnings per share
2018 2017
EUR'000 EUR'000
Profit for the financial year attributable to equity shareholders 56,785 45,620
------- -------
'000 '000
Weighted average number of ordinary shares for the year 125,582 125,582
------- -------
Cent Cent
Basic earnings per share 45.22 36.33
------- -------
Diluted earnings per share
2018 2017
EUR'000 EUR'000
Profit for the financial year attributable to equity shareholders 56,785 45,620
------- -------
'000 '000
Weighted average number of ordinary shares used in basic calculation 125,582 125,582
Impact of shares with a dilutive effect 120 77
Impact of the SAYE scheme 665 531
Weighted average number of ordinary shares (diluted) for the year 126,367 126,190
------- -------
Cent Cent
Diluted earnings per share 44.94 36.15
------- -------
(i)
Origin Enterprises plc
Notes to the preliminary results statement (continued)
For the financial year ended 31 July 2018
4 Earnings per share (continued)
2018 2017
'000 '000
Adjusted basic earnings per share
Weighted average number of ordinary shares for the year 125,582 125,582
------- -------
2018 2017
EUR'000 EUR'000
Profit for the financial year 56,785 45,620
Adjustments:
Amortisation of non-ERP related intangible assets (Note 6) 5,655 4,837
Tax on amortisation of non-ERP related intangible assets (768) (934)
Exceptional items, net of tax (11) 9,302
------- -------
Adjusted earnings 61,661 58,825
------- -------
Cent Cent
Adjusted basic earnings per share 49.10 46.84
------- -------
Adjusted diluted earnings per share
2018 2017
'000 '000
Weighted average number of ordinary shares used in basic calculation 125,582 125,582
Impact of shares with a dilutive effect 120 77
Impact of the SAYE scheme 665 531
Weighted average number of ordinary shares (diluted) for the year 126,367 126,190
------- -------
2018 2017
EUR'000 EUR'000
Adjusted earnings (as above) 61,661 58,825
------- -------
Cent Cent
Adjusted diluted earnings per share 48.80 46.62
------- -------
Origin Enterprises plc
Notes to the preliminary results statement (continued)
For the financial year ended 31 July 2018
5 Property, plant and equipment
2018 2017
EUR'000 EUR'000
At 1 August 105,271 102,796
Arising on acquisition (Note 10) 10,087 388
Additions 11,628 11,816
Disposals (1,571) (180)
Depreciation charge for the year (7,451) (7,099)
Translation adjustments (35) (2,450)
At 31 July 117,929 105,271
--------- ---------
6 Goodwill and intangible assets
2018 2017
EUR'000 EUR'000
At 1 August 205,961 192,696
Arising on acquisition (Note 10) 11,997 25,602
Additions 5,645 3,566
Amortisation of non-ERP intangible assets (5,655) (4,837)
ERP intangible amortisation (2,291) (1,881)
Translation adjustments 677 (9,185)
At 31 July 216,334 205,961
------- -------
Origin Enterprises plc
Notes to the preliminary results statement (continued)
For the financial year ended 31 July 2018
7 Investments in associates and joint venture
2018 2017
EUR'000 EUR'000
At 1 August 34,206 39,008
Share of profits after tax 7,221 4,366
Dividends received (2,483) (3,822)
Share of other comprehensive income/(expense) 9,092 (4,232)
Translation adjustment 135 (1,114)
At 31 July 48,171 34,206
------- -------
Split as follows:
Total associates 23,200 17,620
Total joint venture 24,971 16,586
------ ------
48,171 34,206
------ ------
8 Provision for liabilities
The estimate of provisions is a key judgement in the preparation
of the financial statements.
2018 2017
EUR'000 EUR'000
At 1 August 15,464 13,778
Arising on acquisition 2,995 5,129
Provided in year 2,007 11,590
Paid in year (4,964) (13,560)
Released in year (2,137) (977)
Currency translation
adjustment 147 (496)
---------------------------------- ----------------------------------
At 31 July 13,512 15,464
---------------------------------- ----------------------------------
Provisions primarily relate to contingent acquisition
consideration arising on a number of acquisitions completed during
the current and prior year and rationalisation costs comprising
termination payments arising from the restructuring of
Agri-Services in the UK.
Origin Enterprises plc
Notes to the preliminary results statement (continued)
For the financial year ended 31 July 2018
9 Post employment benefit surplus/(obligations)
The Group operates a number of defined benefit pension schemes
and defined contribution schemes with assets held in separate
trustee administered funds. All of the defined benefit schemes are
closed to new members.
In 2016 the Origin UK Defined Benefit Pension Schemes were
merged into one scheme with assets and liabilities transferred to a
new single Defined Benefit Scheme. The assets of the scheme
continue to be managed under the pre-existing investment
arrangements and the liabilities have not changed.
The valuations of the defined benefit schemes used for the
purposes of the following disclosures are those of the most recent
actuarial valuations carried out at 31 July 2018 by an independent,
qualified actuary. The valuations have been performed using the
projected unit method.
Movement in net asset/(liability) recognised in the Consolidated
Statement of Financial Position
2018 2017
EUR'000 EUR'000
At 1 August (3,646) (7,713)
Current service cost (552) (758)
Past service cost - (131)
Contributions 1,404 1,465
Other finance expense (80) (170)
Remeasurements 3,628 3,407
Translation adjustments (29) 254
At 31 July 725 (3,646)
------- -------
Origin Enterprises plc
Notes to the preliminary results statement (continued)
For the financial year ended 31 July 2018
10 Acquisition of subsidiary undertakings
During the period, the Group completed the acquisition of the
fertiliser activities and certain assets of Bunn Fertilisers
Limited ('Bunn') in the United Kingdom and the acquisition of
Pillaert-Mekoson Group ('Pillaert-Mekoson') in Belgium. These
acquisitions complement the Group's prescription fertilisers and
speciality nutrition business. Details of the acquisitions are as
follows:
1. On 10 August 2017 the Group completed the acquisition of the
fertiliser activities and certain assets of Bunn. Based in the
United Kingdom, Bunn is a leading producer of prescription
fertiliser blends and nutrition management systems servicing the
arable grassland and horticulture sector
2. On 23 January 2018 the Group announced it had acquired 100%
of Pillaert-Mekoson. Based in Belgium, Pillaert-Mekoson markets an
extensive range of technically based nutrition applications and
operates a strong business and retail customer franchise
Origin Enterprises plc
Notes to the preliminary results statement (continued)
For the financial year ended 31 July 2018
10 Acquisition of subsidiary undertakings (continued)
Details of the net assets acquired and goodwill arising from the
business combinations are as follows:
Provisional*
Fair
value
Assets EUR'000
Non-current
Property, plant and equipment 10,087
Intangible assets 3,064
-------------
Total non-current assets 13,151
-------------
Current assets
Inventory 6,718
Trade receivables (i) 4,578
Other receivables 508
Total current assets 11,804
-------------
Liabilities
Trade payables (1,430)
Onerous lease provision (2,495)
Other payable (3,181)
Corporation tax (371)
Deferred tax liability (2,054)
-------------
Total liabilities (9,531)
-------------
Total identifiable net assets at fair value 15,424
Goodwill arising on acquisition 8,933
-------------
Total net assets acquired (excluding cash acquired) 24,357
-------------
Consideration satisfied by:
Cash consideration 29,985
Cash acquired (6,128)
-------------
Net cash outflow 23,857
Contingent consideration 500
Total consideration related to acquisitions 24,357
-------------
(i) Gross trade receivables acquired were EUR4.6 million. All
amounts are deemed to be recoverable.
* The acquisition accounting for Bunn Fertilisers Limited has
been finalised.
Origin Enterprises plc
Notes to the preliminary results statement (continued)
For the financial year ended 31 July 2018
11 Analysis of net debt
Non-cash Translation
2017 Cashflow movements adjustment 2018
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Cash 162,631 (15,432) - 13 147,212
Overdrafts (15,916) (4,985) - 248 (20,653)
Cash and cash equivalents 146,715 (20,417) - 261 126,559
Finance lease obligations (739) (7) (128) 12 (862)
Loans (177,426) 16,387 (677) (2,837) (164,553)
Net debt (31,450) (4,037) (805) (2,564) (38,856)
Restricted cash - 500 - - 500
Net debt including restricted cash (31,450) (3,537) (805) (2,564) (38,356)
Origin Enterprises plc
Notes to the preliminary results statement (continued)
For the financial year ended 31 July 2018
12 Share capital 2018 2017
EUR'000 EUR'000
Authorised
250,000,000 ordinary shares of EUR0.01 each (i) 2,500 2,500
Allotted, called up and fully paid
126,382,206 (2017: 126,382,206) ordinary shares of EUR0.01 each (i) (ii) (iii) 1,264 1,264
(i) Ordinary shareholders are entitled to dividends as declared
and each ordinary share carries equal voting rights at meetings of
the Company.
(ii) In December 2012, the issued ordinary share capital was
increased by the issue of 1,212,871 ordinary shares of nominal
value of EUR0.01 each, at an issue price of EUR4.04 each, pursuant
to a share subscription by a wholly owned subsidiary for the
purposes of the Origin Long Term Incentive Plan 2012 ( "2012 LTIP
Plan"). Under the terms of 2012 LTIP Plan, 412,541 of these shares
were transferred to the directors and senior management as a result
of certain financial targets having been achieved. The remaining
800,330 ordinary shares continue to be held as treasury shares.
(iii) In July 2017, the issued ordinary share capital was
increased by the issue of 3,429 ordinary shares of nominal value
EUR0.01 each, at an issue price of EUR5.48 each pursuant to the
terms of the Origin Save As You Earn Scheme 2016.
Origin Enterprises plc
Notes to the preliminary results statement (continued)
For the financial year ended 31 July 2018
13 Return on capital employed
Return on capital employed is a key performance indicator for
the Group and represents Group earnings before interest, tax and
amortisation of non-ERP related intangible assets taken as a
percentage of Group net assets and is consistent with the
definition approved as part of the 2015 Long Term Incentive
Plan.
2018 2017
EUR'000 EUR'000
Total assets 1,204,051 1,083,027
Total liabilities (873,804) (796,298)
Adjusted for:
Net debt 38,356 31,450
Tax, put option and derivative financial
instruments, net 30,549 30,773
Accumulated amortisation of non-ERP
related intangible assets 48,046 42,300
Capital employed 447,198 391,252
Average capital employed 581,598 543,812
Operating profit (excluding exceptional
items) 65,535 65,172
Amortisation of non-ERP intangible
assets 5,655 4,837
Share of profit of associates and joint
venture 7,221 4,366
Return 78,411 74,375
Return on capital employed 13.5% 13.7%
In years where the Group makes significant acquisitions or
disposals, the return on invested capital calculation is adjusted
accordingly to ensure that the impact of the acquisition or
disposal is time apportioned appropriately.
14 Related party transactions
Related party transactions occurring in the year were similar in
nature to those described in the 2017 Annual Report.
15 Dividend
The Board is recommending a final dividend of 17.85 cent per
ordinary share which when combined with the interim dividend of
3.15 cent per ordinary share brings the total dividend for the year
to 21.0 cent per share (total dividend of EUR26.4 million) (2017:
21.0 cent per share). Subject to shareholders' approval at the
Annual General Meeting, the dividend will be paid on 14 December
2018 to shareholders on the register on 30 November 2018. In
accordance with IFRS, this dividend has not been provided for in
the Consolidated Statement of Financial Position as at 31 July
2018.
Origin Enterprises plc
Notes to the preliminary results statement (continued)
For the financial year ended 31 July 2018
16 Financial commitments
The Group has a financial commitment of EUR7.7 million
attributable to a strategic partnership with University College
Dublin ('UCD'). The commitment is over a five year period.
17 Subsequent events
On 14 August 2018 Origin announced it had completed the
acquisition of a 65% controlling interest in the Brazilian based
speciality nutrition and crop inputs business, Fortgreen Commercial
Agricola Ltda. ('Fortgreen').
Due to the short time frame between completion date and the date
of issuance of this report, it was not possible to reliably
estimate the fair values of assets and liabilities or the goodwill
amount associated with this acquisition.
The separate transaction to acquire a 20% shareholding in the
Brazilian based agronomy services and crop input distribution
business, Ferrari Zagatto E Cia. Ltda., ('Ferrari Zagatto'), is
expected to complete during the first half of FY2019 financial
year.
Origin has agreed a put and call option with the Founders to
acquire the remaining 35% shareholding in Fortgreen on specified
dates, with the purchase price based on an agreed formula linked to
future profitability. Separately Origin has been granted an option
to purchase an additional 40% interest in Ferrari Zagatto in 2020
which, if exercised, will lead to the acquisition of the balance of
the Founders' shareholding on specified dates with the purchase
price based on an agreed formula linked to future profitability
There have been no other material events subsequent to 31 July
2018 that would require adjustment to or disclosure in this
report.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR UVVWRWAAKUAR
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