Origin Enterprises : 2022 Preliminary Results

Origin Enterprises plc

PRELIMINARY RESULTS STATEMENT

Full year adjusted EPS of 71.53 cent ahead of expectation

Strong operational performance in exceptionally volatile trading environment

Dublin, London, 27 September 2022: Origin Enterprises plc ('Origin' or 'the Group'), the international Agronomy-Services group, providing specialist advice, inputs and digital solutions to promote sustainable land use, today announces its full year results for the year ended 31 July 2022 ('FY22').

				Constant
Results Summary	2022	2021	Change	Currency
	€'000	€'000	%	%
Group revenue	2,342,102	1,658,367	41.2%	38.0%
Operating profit1	119,740	61,007	96.3%	89.7%
Associates and joint venture2	6,845	2,841	140.9%	134.0%
Total group operating profit1	126,585	63,848	98.3%	91.6%
Finance expense, net	(11,057)	(8,552)	29.3%	24.5%
Profit before tax1	115,528	55,296	108.9%	102.0%
Basic EPS (cent)	65.40	30.44	114.8%	106.4%
Adjusted diluted EPS (cent)3
- Excluding impact of buyback	69.62c	35.50c	96.1%	89.3%
- Including impact of buyback	71.53c	35.50c	101.5%	94.7%
Return on capital employed (%)	18.3%	9.3%	900bps
Group net cash/(bank debt)4 (€'000)	43,434	(14,406)	57,840
Operating margin1 (%)	5.1%	3.7%	140bps
Free cash flow (€'000)	108,489	49,168	59,321
Dividend per ordinary share (cent)	16.00c	11.00c	5.00c

Financial Highlights

• Group revenue increase of 41.2% to €2.3 billion, primarily reflecting commodity price growth
• Operating profit1 of €119.7 million, up 96.3% delivering an operating margin of 5.1% (FY21: 3.7%)
• Adjusted diluted earnings per share3 of 71.53 cent (FY21: 35.50 cent)
• Strong cash generation and conversion with free cash flow of €108.5 million (FY21: €49.2 million) and year end net cash4 position of €43.4 million
• Proposed final dividend of 12.85 cent per share with total FY22 dividend of 16.00 cent
• Completion of €40.0 million share buyback programme at average price of €3.97 per share
• Launch of new share buyback programme of up to €20.0 million

Operational and Strategic Highlights

• Generally very good conditions during the key planting and application periods in all markets provided a favourable backdrop for the business and allowed the Group to successfully navigate exceptional price volatility across its markets
• Strong volume performance across the Group's seed and crop protection portfolios were offset by reduced fertiliser demand due to significantly higher raw materials pricing
• Completion of the first phase of Cork property disposals, generating cash flow of €19.5 million
• Key medium-term strategic, financial, operational and ESG objectives launched at recent Capital Markets Day

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Commenting on FY22 performance, Origin's Chief Executive Officer, Sean Coyle said:

"FY22 saw strong agricultural commodity price growth and volatile trading conditions across all of the Group's three segments throughout the financial year. Despite these challenges, Origin delivered significantly improved financial returns and a strong operating performance supported by favourable conditions across all markets in the key planting and application periods of the year, in contrast to the previous two years, which were impacted by extreme weather and COVID-19.

The war in Ukraine and ongoing global energy and supply disruptions have resulted in exceptional price volatility for feed and fertiliser raw materials. Strong on-farm sentiment, bolstered by high crop prices, supported the Group in successfully navigating this price volatility across each segment.

The Group delivered strong increases in revenue, operating profit and EPS. Return on capital employed also grew to 18.3%, driven by the improved earnings performance. The Group also delivered strong free cash flow of €108.5 million including a working capital inflow of €16.2 million. Our net cash position of €43.4 million at year end, compares to a net debt position of €14.4 million in FY21. This strong net cash position reflects the impact of certain one-off items but was also delivered on top of the return of €40.0 million to shareholders during the year through our share buyback programme.

Following an interim dividend of 3.15 cent, the Board is proposing a final dividend of 12.85 cent per share; a total dividend payment per share of 16.00 cent. Following on from the €40.0 million share buyback programme in FY22, and consistent with our objectives outlined at the Capital Markets Day, we intend to return a further €20.0 million by way of share buyback launching on 28 September 2022 and which may continue until 31 March 2023.

During the year, we set out our key medium-term strategic, financial, operational and ESG objectives at our Capital Markets Day. Our FY22 results represent a strong foundation from which to achieve these targets.

In June 2022, the Group announced that Gary Britton was appointed Chair Designate to succeed Rose Hynes at the 2022 AGM. On behalf of the Origin management team, I sincerely thank Rose for her contribution to the Group during her tenure as Chairman, wish her well in her future endeavours and look forward to working with Gary to drive the next phase of growth and development of the business.

Current Trading and Outlook

FY22 was characterised by several challenging macro-economic factors, including significant inflation, increasing energy costs and disrupted supply chains, which led to an exceptionally volatile trading environment. While these conditions are likely to persist, with the Group's strong balance sheet, market positions, deep customer relationships, access to diverse sources of product supply, and established routes to market, Origin is well positioned to deliver the financial, strategic and ESG objectives as outlined in the recent Capital Markets Day.

Consistent with previous years, the Group will issue a Q1 Trading Update for FY23 on the date of the AGM, 22 November 2022.

ENDS

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Before amortisation of non-ERP intangible assets and exceptional items Profit after interest and tax before exceptional items

Before amortisation of non-ERP intangible assets, net of related deferred tax (2022: €13.0m, 2021: €8.6m) and

exceptional items, net of tax (2022: credit of €2.8m, 2021: credit of €1.2m) Group net bank debt before impact of IFRS 16 Leases

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Conference Call and Webcast details:

The management team will host a live conference call and webcast, for analysts and institutional investors today, 27 September 2022, at 08:30 (Irish/UK time). Registration details for the Conference Call and Webcast can be accessed at: www.originenterprises.com

Alternatively, please contact FTI Consulting by email at [e-mail]

Participants are requested to dial in 5 to 10 minutes prior to the scheduled start time.

Enquiries:
Origin Enterprises plc
TJ Kelly
Chief Financial Officer	Tel:	[phone]
Brendan Corcoran
Head of Investor Relations	Tel:	[phone]
Goodbody (Euronext Growth (Dublin) Adviser)
Joe Gill	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 Agronomy-Services group, providing specialist advice, inputs, services and digital solutions to promote sustainable land use. The Group has leading market positions in Ireland, the United Kingdom, 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
	2022	2021
	€'000	€'000
Group revenue	2,342,102	1,658,367
Operating profit1	119,740	61,007
Associates and joint venture, net2	6,845	2,841
Group operating profit1	126,585	63,848
Finance costs, net	(11,057)	(8,552)
Profit before tax1	115,528	55,296
Income tax	(25,509)	(9,657)
Adjusted net profit	90,019	45,639
Adjusted diluted EPS (cent)3
- Excluding the impact of buyback	69.62c	35.50c
- Including the impact of buyback	71.53c	35.50c
Adjusted net profit reconciliation
Reported net profit	79,899	38,232
Amortisation of non-ERP intangible assets	15,236	8,577
Tax on amortisation of non-ERP related intangible assets	(2,269)	55
Exceptional items (net of tax)	(2,847)	(1,225)
Adjusted net profit	90,019	45,639
Adjusted diluted EPS (cent)3
- Excluding the impact of buyback	69.62c	35.50c
- Including the impact of buyback	71.53c	35.50c
Operating margin1	5.1%	3.7%
Return on capital employed	18.3%	9.3%
Free cash flow	€108.5m	€49.2m

Adjusted diluted earnings per share3 increased by 101.5% to 71.53 cent. On a constant currency basis, adjusted diluted earnings per share increased by 94.7% when compared to the prior year.

Group revenue

Group revenue increased by 41.2% from €1,658.4 million in the prior year to €2,342.1 million. On an underlying basis revenue increased by 38.6%, driven by the exceptionally high fertiliser raw material pricing environment offset by reduced fertiliser demand and strong growth in both crop protection and seed volumes.

The underlying reduction in agronomy services and crop input volumes, excluding crop marketing volumes, was 5.4% for FY22.

Operating profit1

Operating profit1 increased by 96.3% to €119.7 million compared to €61.0 million in the previous year. On an underlying basis, operating profit1 increased by €54.0 million (88.5%), driven by strong contributions across all three segments.

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Group operating margin increased from 3.7% to 5.1% in FY22. This was principally driven by the Ireland and UK segment, which saw its operating margin increase from 3.7% in FY21 to 5.9% in FY22.

Associates and joint venture2

Origin's share of the profit after taxation from associates and joint venture amounted to €6.8 million in the period (2021: €2.8 million). This performance benefitted from exceptional operating and trading conditions and is set against a challenging prior year, which was impacted by a facility fire in our animal feed business R&H Hall, at the Port of Cork, Ireland and shipping challenges.

Finance costs and net bank debt4

Net cash4 at 31 July 2022 was €43.4 million (net debt4 of €5.1 million including IFRS 16 lease debt) compared to net bank debt4 of €14.4 million (€60.5 million including IFRS 16 lease debt) at the end of the prior year, an improvement of €57.8 million. The movement is primarily driven by the strong FY22 operating performance and a net working capital inflow in the year.

Net finance costs amounted to €11.1 million, which represents an increase of €2.5 million on the prior year. Excluding the impact of IFRS 16, there was an increase in net finance costs of €2.4 million reflecting increased interest rates, year-on-year, across the Group.

At 31 July 2022, the Group had unsecured committed banking facilities of €400.0 million (2021: €430.0 million), with pricing linked to ESG performance, of which €33.8 million will expire in 2024 and €366.2 million in 2026.

At year end the Group's key banking covenants were as follows:
	Banking
	Covenant	2022	2021
Net debt to EBITDA	Maximum 3.5	-	0.13
EBITDA to net interest	Minimum 3.0	13.83	10.36

Working capital

For the year ended 31 July 2022, there was a working capital inflow of €16.2 million. Improvements in the mix of cash versus credit sales and certain one-off items were partly offset by an underlying working capital outflow due to higher commodity prices. The year end working capital position includes the net impact of trade payables which have been suspended in accordance with international sanctions imposed by authorities in response to the Russian invasion of Ukraine in 2022 of approximately €40.0 million. We continue to closely monitor the situation with regard to sanctions and act accordingly. Excluding the impact of suspended payments, the Group would have had a modest net bank debt4 position at year end. 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 71.53 cent per share, an increase of 101.5% from FY21. This was driven by an increase in like-for-like underlying profits of 87.6%, the positive impact of acquisitions, foreign

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