Origin Enterprises : 2019 Preliminary Results Announcement

Origin Enterprises plc

PRELIMINARY RESULTS STATEMENT

Strong performance in FY19

15.6% growth in operating profit

Adjusted diluted EPS up 7.9% to 52.65 cent

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

Highlights

• Group revenue increase of 10.5% to €1,798.2 million, and 7.2% on an underlying basis
• Operating profit of €82.3 million, an increase of 15.6% and up 3.5% on an underlying basis
• Group operating margin of 4.6%, an increase of 20 basis points
• Adjusted diluted earnings per share3 up 7.9% to 52.65 cent
• Acquisitions contributed 3.2% to sales growth and 12.0% to operating profit growth in the year
• Strong cash generation with free cash flow of €54.0 million (2018: €56.6 million)
• Increase in net debt to €75.6 million (2018: €38.4 million)
• Proposed 1.5% increase in total dividend to 21.32 cent (2018: 21.0 cent)
• Good first-time contribution from Fortgreen acquisition in Latin America
• Exceptional charge of €7.0 million, principally due to a non-cash impairment relating to our Ukrainian business
• Conditional agreement to dispose of Cork Docklands property for cash consideration of up to €47.5 million

Results Summary				Constant
	2019	2018	Change	Currency
	€'000	€'000	%	%
Group revenue	1,798,197	1,627,533	10.5%	10.4%
Operating profit1	82,263	71,190	15.6%	15.5%
Associates and joint venture2	6,717	7,221	(7.0%)	(7.2%)
Total group operating profit1	88,980	78,411	13.5%	13.4%
Finance expense, net	(11,808)	(8,082)	(46.1%)	(45.0%)
Profit before tax1	77,172	70,329	9.7%	9.7%
Basic EPS (cent)	41.98	45.22	(7.2%)	(7.3%)
Adjusted diluted EPS (cent)3	52.65	48.80	7.9%	7.8%
Return on capital employed	13.2%	13.5%	(30bps)
Group net debt4 (€'000)	(75,596)	(38,356)	(37,240)
Operating margin1	4.6%	4.4%	20bps
Free cash flow	54,039	56,562	(2,523)
Dividend per ordinary share (cent)	21.32	21.00	1.5%

1. Before amortisation of non-ERP intangible assets and exceptional items
2. Profit after interest and tax before exceptional items
3. Before amortisation of non-ERP intangible assets, net of related deferred tax (2019: €7.1m, 2018: €4.9m) and exceptional items,
   net of tax (2019: €7.0m, 2018: €Nil)
4. Including restricted cash of €Nil (2018: €0.5m)

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

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

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

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

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

ENDS

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

Conference Call:
Confirmation Code:	7075732
Participant access number:
Dublin:	Tel: [phone]
UK/International:	Tel: [phone]
Replay:
A replay of this call will be available for seven days.
Replay Access Code:	7075732
Replay Access Numbers:
Dublin:	Tel: [phone]
UK/International:	Tel: [phone]

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Enquiries
Origin Enterprises plc
Sean Coyle
Chief Financial Officer	Tel:	[phone]
Brendan Corcoran
Head of Investor Relations and Group Planning	Tel:	[phone]
Goodbody (Euronext Growth (Dublin) Adviser)
Siobhan Wall	Tel:	[phone]
Davy (Nominated Adviser)
Anthony Farrell	Tel:	[phone]
Numis Securities (Stockbroker)
Stuart Skinner	Tel:	[phone]
FTI Consulting (Financial Communications Advisers)
Jonathan Neilan/ Patrick Berkery	Tel:	[phone]

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

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Financial Review - Summary
	2019	2018
	€'000		€'000
Group revenue	1,798,197	1,627,533
Operating profit1	82,263	71,190
Associates and joint venture, net2	6,717	7,221
Group operating profit1	88,980	78,411
Finance costs, net	(11,808)	(8,082)
Profit before tax1	77,172	70,329
Income tax	(10,439)	(8,668)
Adjusted net profit	66,733	61,661
Adjusted diluted EPS (cent)3	52.65c	48.80c
Adjusted net profit reconciliation
Reported net profit	52,720	56,785
Amortisation of non-ERP intangible assets	8,769	5,655
Tax on amortisation of non-ERP related intangible assets	(1,709)	(768)
Exceptional items (net of tax)	6,953	(11)
Adjusted net profit	66,733		61,661
Adjusted diluted EPS (cent)3	52.65c	48.80c
Operating margin1	4.6%	4.4%
Return on capital employed	13.2%	13.5%
Free cash flow (€'m)	€54.0m	€56.6m

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

Group revenue

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

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

Operating profit1

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

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

Associates and joint venture2

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

Finance costs and net debt

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

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

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

At year end the Group's key banking covenants were as follows:
	Banking	2019	2018
	Covenant	Times	Times
Net debt to EBITDA	Maximum 3.5	0.87	0.54
EBITDA to net interest	Minimum 3.0	8.06	9.81

Working capital

For the year ended 31 July 2019, there was a working capital outflow of €12.7 million primarily due to an investment in working capital in Fortgreen in Brazil and increased year on year sales across the Group. Working capital allocation remains a key priority for the Group given the associated funding costs. The year end represents the low point in the working capital cycle for the Group reflecting the seasonality of the business.

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