Origin Enterprises plc
PRELIMINARY RESULTS STATEMENT
Strong underlying performance
27 September 2017
Origin Enterprises plc ('Origin' or 'the Group'), the Agri-Services group, today announces its full year results for the year ended 31 July 2017.
Highlights
· Adjusted diluted earnings per share up 4.7 per cent to 46.62 cent, ahead of guidance, and up 14.7 per cent on an underlying basis at constant currency
· Operating profit of €70.0 million, an increase of 4.1 per cent and up 12.3 per cent on an underlying basis at constant currency
· Group operating margin up 20 basis points to 4.6 per cent
· Dedicated research partnership with University College Dublin and acquisition of Digital Agricultural Services group, Resterra, providing complementary extension in crop technology transfer
· Completion of acquisition of fertiliser blending and nutrition business of Bunn Fertiliser in the UK in August 2017
· Proposed final dividend of 17.85 cent, giving a total dividend of 21.0 cent (2016: 21.0 cent)
Results Summary
2017 €'000 | 2016 €'000 | % Change | |
Group revenue | 1,528,468 | 1,521,256 | 0.5% |
Operating profit | 70,009 | 67,258 | 4.1% |
Associates and joint venture | 4,366 | 5,621 | (22.3%) |
Total group operating profit | 74,375 | 72,879 | 2.1% |
Finance expense, net | (6,914) | (7,367) | 6.1% |
Profit before tax | 67,461 | 65,512 | 3.0% |
Basic EPS (cent) | 36.33 | 46.03 | (21.1%) |
Adjusted diluted EPS (cent) | 46.62 | 44.51 | 4.7% |
Return on capital employed | 13.7% | 13.6% | 10bps |
Group net (debt)/cash | (31,450) | 3,122 | - |
Dividend per ordinary share (cent) | 21.00 | 21.00 | - |
Before amortisation of non-ERP intangible assets and exceptional items
Profit after interest and tax before amortisation of non-ERP intangible assets and before exceptional items
Before amortisation of non-ERP intangible assets, net of related deferred tax (2017: €3.9m, 2016: €3.1m) and exceptional items, net of tax (2017: €9.3m, 2016: €4.7m credit)
Includes restricted cash of €Nil (2016: €2.9m)
Commenting on the results, Origin's Chief Executive Officer, Tom O'Mahony said:
'Origin has delivered a solid financial result in 2017, recording a 4.7 per cent increase in adjusted diluted earnings per share. While market conditions were highly competitive, a combination of sustained volume growth and higher margins underpinned a strong underlying business performance which more than offset the adverse currency translation impact of sterling depreciation.
Demand for agronomy services and inputs was positively influenced by a more stable near term planning environment for primary producers together with the benefit of generally settled weather leading to good crop planting and growing conditions.
We continue to prioritise growth opportunity in Agri-Services while also focusing on operational and commercial effectiveness. The acquisition development and innovation investments made during the year will broaden the Group's service offer and capabilities in systemised crop technology transfer.
The Group is well positioned to capitalise on its scalable business platforms, development opportunities and strong balance sheet.'
ENDS
The preliminary results statement is available on the company websitewww.originenterprises.com. There will be a live conference call at 8.30am (GMT) 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: | 1203818 |
Participant access number:
Dublin:Tel: | +353 (0)1 486 0921 |
UK/International: | Tel: +44 (0)20 3427 1903 |
Replay:
A replay of this call will be available for seven days.
Replay Access Code: | 1203818 |
Replay Access Numbers:
Dublin: | Tel: +353 (0)1 533 9810 |
UK/International: | Tel: +44 (0)20 7984 7568 |
Enquiries:
Origin Enterprises plc | ||
Imelda Hurley | ||
Chief Financial Officer | Tel: | +353 (0)1 563 4959 |
Andrew Mills | ||
Investor Relations Officer | Tel: | +353 (0)1 563 4900 |
Goodbody (ESM Adviser) | ||
Siobhan Wall | Tel: | +353 (0)1 641 6019 |
Davy (Nominated Adviser) | ||
Anthony Farrell | Tel: | +353 (0)1 614 9993 |
Powerscourt | ||
Jack Hickey (Ireland) | Tel: | +353 (0)83 448 8339 |
Rob Greening (UK) | Tel: | +44 (0)207 250 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, 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
2017 €'000 | 2016 €'000 | ||
Group revenue | 1,528,468 | 1,521,256 | |
Operating profit | 70,009 | 67,258 | |
Associates and joint venture, net | 4,366 | 5,621 | |
Group operating profit | 74,375 | 72,879 | |
Finance costs, net | (6,914) | (7,367) | |
Pre-tax profits | 67,461 | 65,512 | |
Income tax | (8,636) | (9,393) | |
Adjusted net profit | 58,825 | 56,119 | |
Adjusted diluted EPS (cent) | 46.62 | 44.51 | |
Operating margin Return on capital employed | 4.6% 13.7% | 4.4% 13.6% | |
Adjusted net profit reconciliation | |||
Reported net profit | 45,620 | 57,801 | |
Amortisation of non-ERP intangible assets | 4,837 | 4,294 | |
Tax on amortisation of non-ERP related intangible assets | (934) | (1,242) | |
Exceptional items (net of tax) | 9,302 | (4,734) | |
Adjusted net profit | 58,825 | 56,119 | |
Adjusted diluted EPS (cent) | 46.62 | 44.51 |
Origin delivered a 4.7 per cent increase in adjusted diluted earnings per share for the year ending 31 July 2017 to 46.62 cent. On a like-for-like basis (adjusted for the impact of currency movements and acquisitions) there was an underlying increase in adjusted diluted earnings per share of 14.7per cent.
Group revenue
Group revenue comprises the totality of revenue from the Group's wholly owned operations which are based in Ireland, the United Kingdom, 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 €1,528.5 million from €1,521.3 million in the prior year, an increase of 0.5 per cent. On an underlying basis at constant currency, revenue increased by €51.6 million (3.4 per cent), with this movement principally reflecting increased service revenue and input volumes.
Underlying volume growth in agronomy services and inputs (excluding crop marketing volumes) was 5.11 per cent for the year.
Operating profit
Operating profit amounted to €70.0 million compared to €67.3 million in the previous year, an increase of 4.1 per cent. On an underlying basis at constant currency, operating profitincreased by €8.3 million (12.3 per cent). This increase was primarily driven by higher volumes in agronomy services and inputs together with improved year-on-year margins. The Group operating margin has increased from 4.4 per cent to 4.6 per cent.Associates and joint venture
Origin's share of the profit after interest and taxation from associates and joint venture amounted to €4.4 million in the period.
Finance costs and net debt
Net finance costs amounted to €6.9 million, a decrease of €0.5 million (6.1 per cent) on the prior year level. Average net debt amounted to €217.0 million compared to €190.0 million last year. Actual net debt at 31 July 2017 was €31.5 million compared to actual net cash of €3.1 million at the end of the previous year. The year-on-year movement in average net debt is driven largely by the timing of the 2016 acquisitions in Continental Europe. The year-on-year movement in year end net debt is driven primarily by the current year acquisition spend of €25.5 million and the timing of working capital movements.
Origin's financial position remains strong. At year end the Group had unsecured committed banking facilities of €430 million (2016: €430 million), of which €400m million will expire in May 2022 and €30 million will expire in September 2018.
At year end our key banking covenants are as follows:
Banking Covenant | 2017 Times | 2016 Times | |
Net debt to EBITDA | Maximum 3.5 | 0.49 | - |
EBITDA to net interest | Minimum 3.0 | 11.45 | 11.06 |
Working capital
For the year ended 31 July 2017, there was working capital outflow of €26.0 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')
EPS amounted to 46.62 cent per share, an increase of 4.7 per cent from 2016. This movement was driven by an increase in like-for-like underlying profits of 14.7 per cent, along with the positive impact of acquisitions of 1.4 per cent. This was partly offset by an 11.4 per cent reduction in EPS as a result of foreign currency translation, most notably the translation of sterling earnings into euro.
Return on capital employed
2017 | 2016 | |
Return on capital employed | 13.7% | 13.6% |
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 €9.3 million in the year. These principally relate to restructuring costs in the UK, along with acquisition and integration costs and are summarised in the table below:
2017 €'m | ||
Rationalisation costs, net | 8.3 | |
Net transaction and other related costs | 2.1 | |
Organisation design costs | 1.6 | |
Fair value adjustment on put option liability | (2.7) | |
Total exceptional items, net of tax | 9.3 | |
New reporting segments
In recognition of the increased size of the Group's operations in Continental Europe, a series of changes have been made to internal reporting structures to reflect better how performance is managed, and the Group will now have two 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 Poland, Romania and Ukraine.
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 (2016: 21.0 cent). Subject to shareholder approval at the Annual General Meeting, this final dividend will be paid on 15 December 2017 to shareholders on the register on 1 December 2017.
Brexit
It is too early to assess the longer term implications of Brexit following the UK referendum vote in 2016 to leave the European Union. The Group recognises the period of uncertainty that currently exists until greater clarity on the final outcomes of the Brexit negotiations emerge, notably in relation to the implications for UK domestic agricultural policy, regulation and the future trading relationship between the UK and the European Union. The Group is planning a variety of scenarios which will be updated as Brexit outcomes become clearer. We continue to progress a number of strategic initiatives aimed at providing long term sustainable benefits to the Group. We are confident that our business model is well placed to address the challenges and opportunities that may arise.
Investor relations
The Group continues to focus on effective communications with shareholders. Contact with institutional shareholders is the responsibility of the Chief Executive Officer, Chief Financial Officer and Investor Relations Officer. During the year there were 165 meetings / conference calls with institutional investors across nine financial centres. A visit to Throws Farm Technology Centre in the UK took place, focusing on Origin's direct farm crop research and knowledge transfer capabilities, together with an overview of the Group's Business-to-Business Agri-Inputs business. This visit built on the Group's first Capital Markets Day in 2016.
Following a selection process the Group announces today the appointment of Numis as our London-based Broker.
Annual General Meeting (AGM)
The AGM will be held on 24 November 2017 at 11.00 a.m. in the Westbury Hotel, Grafton Street, Dublin 2.
Before amortisation of non-ERP intangible assets and exceptional items
Profit after interest and tax before amortisation of non-ERP intangible assets and before exceptional items
Before amortisation of non-ERP intangible assets, net of related deferred tax (2017: €3.9m, 2016: €3.1m) and exceptional items, net of tax (2017: €9.3m, 2016: €4.7m credit)
Includes restricted cash of €Nil (2016: €2.9m)
The Group was in a net cash position in 2016
Review of Operations
Commentary is on a constant currency basis throughout
Ireland and the United Kingdom
Change on prior year | |||||
2017 €m | 2016 €m | Change % | Underlying % | ||
Revenue | 955.0 | 1,023.6 | (6.7%) | 2.9% | |
Operating profit | 53.4 | 52.7 | 1.3% | 12.2% | |
Operating margin | 5.6% | 5.1% | 50bps | - | |
Associates and joint venture | 4.4 | 5.6 | (21.4%) | (14.3%) | |
Before amortisation of non-ERP intangible assets and exceptional items Profit after interest and tax before amortisation of non-ERP intangible assets and before exceptional items Excluding currency movements and the impact of acquisitions | |||||
Ireland and the UK delivered a satisfactory performance recording a 12.2 per cent increase in underlying operating profit in a competitive market environment. Underlying volume growth in agronomy services and inputs was 4.8 per cent reflecting favourable demand. Operating margin increased by 50 basis points to 5.6 per cent primarily driven by higher sales of value added technologies.
The positive impact of sterling depreciation on crop output values, along with a favourable year-on-year backdrop to global dairy markets, and lower unit costs for key macro inputs, were the principal drivers of an improvement in farm incomes in the period.
Integrated Agronomy and On-Farm Services
The Group's Integrated Agronomy and On-Farm Services business, Agrii, delivered a satisfactory performance following particularly difficult trading conditions in 2016. Higher output prices in local currency together with lower than expected input cost inflation supported increased agronomy services and input demand. The business responded well to the more challenging market dynamic with a renewed focus on high service channels and value added technologies resulting in higher volumes and improved margins across all service and input portfolios.
Agrii continues to extend the Group's position in the provision of systemised crop technology transfer direct to farm. This is supported by a comprehensive service offer, market leading agronomic research and technical support, and strong software based decision support capabilities.
Digital Agricultural Services
In March 2017 the Group completed the acquisition of Resterra, the Digital Agricultural Services group. Resterra specialises in the delivery of bespoke digital agronomy applications and is a leading provider of agri-tech services to primary producers, input manufacturers and agri-services companies.
Strong progress on integration in the period has complemented a very satisfactory financial performance from Digital Agricultural Services. Priority focus areas since the acquisition of Resterra have included the development of new agronomy applications, organisational design and the launch of precision farming services across Origin's Continental European footprint.
Business-to-Business Agri-Inputs
Business-to-Business Agri-Inputs delivered good growth in operating profits in the period with performance principally supported by higher volumes and margins in fertiliser.
Fertiliser
Strong early season demand drove higher volumes for the year as a whole as primary producers benefitted from greater certainty in raw material pricing and more favourable farm economics.
Speciality nutrition applications maintained solid development momentum and underpinnedimproved margins in the period. The businessis focused onaddressing the evolving requirements of primary producers for balanced nutrition planning to restore soil health and optimise crop productivity. Our branded presence on-farm continues to be enhanced, for example, through technologies that facilitate the effective delivery of essential trace elements to animals and arable crops using prescription fertiliser applications.
Amenity
Origin Amenity, which incorporates a market leading portfolio of brands focused on the provision of management and maintenance solutions to the professional sports turf, landscaping, general amenity and niche grassland sectors in the UK, achieved a very satisfactory performance in the year reflecting good underlying volume growth across all business channels.
New customer development continues to be supported through the formation of industry leading partnerships together with comprehensive product development and formulation capabilities, enabling the business to meet the requirements for new and innovative integrated turf improvement programmes.
The integration of Headland Amenity, acquired in 2016, was successfully completed in the period. In July 2017 the Group acquired Linemark in the UK. Linemark is an innovative market leader in advanced sports and amenity marking solutions. The acquisition enhances the existing service offer as well as providing new customer extension opportunity.
FeedIngredients
Feed Ingredients achieved a satisfactory performance underpinned by good volume growth in competitive trading conditions. Volume improvement largely reflects a more favourable demand backdrop resulting from a combinationof higher dairy cow numbers and improved returns for grassland farm enterprises that are seeking to maximise milk production following the abolition of production quotas in 2015.
There was an excellent operational performance from the business in the period including the successful implementation of a new Enterprise Resource Planning system and the commissioning of new grain handling and logistics capacity.
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 Europe
Change on prior year | |||||
2017 €m | 2016 €m | Change % | Underlying % | ||
Revenue | 397.3 | 320.3 | 24.0% | 12.2% | |
Operating profit | 16.2 | 14.9 | 8.7% | 10.3% | |
Operating margin | 4.1% | 4.6% | (50bps) | - | |
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 2017 crop marketing revenues and profits attributable to Continental Europe amounted to €176.2 million and €0.4 million respectively (2016: €177.3 million and a loss of €0.3 million respectively). An analysis of revenues, profits and margins attributable to agronomy services and inputs more accurately reflects the underlying drivers of business performance. Before amortisation of non-ERP intangible assets and exceptional items Excluding currency movements and the impact of acquisitions | |||||
Continental Europe performed satisfactorily in 2017 delivering a 10.3 per cent increase in underlying operating profit. Underlying agronomy services and input volumes (excluding crop marketing volumes)increased by 6.2 per cent reflecting positive growth momentum in the sales of value added technologies. Market conditions were generally highly competitive as farmers responded to volatile output markets and the impact of the challenging growing season in 2016. Operating margin has reduced from 4.6 percent to 4.1 percent in the period primarily reflecting the timing of acquisitions in 2016.
Poland
Poland delivered a solid performance in 2017. Higher margins in the period were underpinned by an improved portfolio mix of value added technologies. On-farm activity showed positive momentum against a weak 2016 comparative, however service and input demand was largely subdued reflecting a delayed start to spring seasonal activity in 2017 and the impact on primary producers of poor harvest yield and quality in 2016. Total winter and spring plantings for the main arable, root and vegetable crops were broadly in line with 2016 levels at approximately 7.4 million hectares.
The new €6 million seed processing and input formulation facility is on target to be operational early in the 2018 financial year. This facility will enhance the product capabilities of the business and extend its market leadership in the provision of high performing certified seed varieties to Polish farmers.
Romania
Romania delivered a strong performance in the period with good growth achieved across the principal sales channels. Demand was resilient in the case of the main cropping enterprises underpinned by a 2 per cent increase in the total arable, root and vegetable cropping area to approximately 6.6 million hectares. Crop development was satisfactory, notwithstanding the impact of intermittent unseasonal weather patterns in the third quarter.
Nutrition portfolios performed strongly in 2017 reflecting the focus on meeting demand from primary producers for improved ranges and speciality applications.
Good progress was achieved in business integration with the continued development of trial demonstration farms and knowledge transfer infrastructure supporting the delivery of enhanced technical support on-farm.
Ukraine
Ukraine delivered a good performance in the period, achieving higher revenues and margins underpinned by a favourable portfolio mix of services and input technologies.
An improved macro-economic backdrop contributed to a more favourable financing environment for primary producers. Total winter and spring plantings for the main arable, root and vegetable crops were broadly in line with 2016 levels at approximately 22.0 million hectares.
Soil fertility and seed technology applications maintained good growth momentum with new customer gains supported through an expansion of the agronomy sales force together with an extension of the regional distribution footprint of the business.Solid progress has been made during the year leveraging the Group's supply chain partnerships to secure access to high specification technologies.Other Developments
During the year, Origin continued its investments in innovation with the appointment of Professor Jimmy Burke as Head of Research and Knowledge Transfer.
The Group also announced the establishment of a dedicated digital, precision agriculture and crop science collaborative research partnership with University College Dublin, supported by Science Foundation Ireland ('SFI'). This five year development programme underpinning the research partnership is being financed by a €17.6 million investment which is co-funded by Origin and SFI.
Origin announced in March that it had reached agreement to acquire the fertiliser blending and nutrition business of Bunn Fertiliser in the UK. Bunn is a leading provider of prescription fertiliser blends and nutrition management systems servicing arable, grassland and horticultural enterprises. In August 2017, Origin announced the completion of this transaction following the acceptance by the Competition and Markets Authority of a number of undertakings provided by Origin, including the disposal of one Bunn fertiliser blending facility.
Outlook
While we anticipate a stable operating environment for primary producers in 2018, farm sentiment is expected to remain cautious reflecting general volatility in output markets. Origin remains focused on capturing growth opportunity in systemised crop technology transfer and is well positioned to capitalise on its scalable business platforms, development opportunities and strong balance sheet.
ENDS
Origin Enterprises plc
Consolidated Income Statement
For the financial year ended 31 July 2017
Pre- | Pre- | |||||||||||
exceptional | Exceptional | Total | exceptional | Exceptional | Total | |||||||
2017 | 2017 | 2017 | 2016 | 2016 | 2016 | |||||||
€'000 | €'000 | €'000 | €'000 | €'000 | €'000 | |||||||
Notes | (Note 3) | (Note 3) | ||||||||||
Revenue | 2 | 1,528,468 | - | 1,528,468 | 1,521,256 | - | 1,521,256 | |||||
Cost of sales | (1,297,009) | - | (1,297,009) | (1,300,712) | - | (1,300,712) | ||||||
Gross profit | 231,459 | - | 231,459 | 220,544 | - | 220,544 | ||||||
Operating costs | (166,287) | (12,524) | (178,811) | (157,580) | 4,955 | (152,625) | ||||||
Share of profit of associates and joint venture | 4,366 | - | 4,366 | 5,621 | - | 5,621 | ||||||
Operating profit | 69,538 | (12,524) | 57,014 | 68,585 | 4,955 | 73,540 | ||||||
Finance income | 703 | - | 703 | 453 | - | 453 | ||||||
Finance expense | (7,617) | - | (7,617) | (7,820) | - | (7,820) | ||||||
Profit before income tax | 62,624 | (12,524) | 50,100 | 61,218 | 4,955 | 66,173 | ||||||
Income tax (expense)/credit | (7,702) | 3,222 | (4,480) | (8,151) | (221) | (8,372) | ||||||
Profit for the year | 54,922 | (9,302) | 45,620 | 53,067 | 4,734 | 57,801 | ||||||
2017 | 2016 | ||||
Earnings per share for the year | |||||
Basic earnings per share | 4 | 36.33c | 46.03c | ||
Diluted earnings per share | 4 | 36.15c | 45.85c |
Origin Enterprises plc
Consolidated Statement of Comprehensive Income
For the financial year ended 31 July 2017
2017 | 2016 | ||
€'000 | €'000 | ||
Profit for the year | 45,620 | 57,801 | |
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 | 3,407 | (4,881) | |
-deferred tax effect of remeasurements | (519) | 926 | |
-share of remeasurements on associate's defined benefit pension schemes | (614) | (356) | |
-share of deferred tax effect of remeasurements - associates | 135 | 71 | |
Items that may be reclassified subsequently to the Group income statement: | |||
Group foreign exchange translation details | |||
-exchange difference on translation of foreign operations | (10,674) | (29,008) | |
Group/Associate cash flow hedges | |||
-effective portion of changes in fair value of cash flow hedges | (2,025) | 1,633 | |
-fair value of cash flow hedges transferred to operating costs and other income | 1,754 | (473) | |
-deferred tax effect of cash flow hedges | 86 | (243) | |
-share of associates and joint venture cash flow hedges | (4,289) | 2,405 | |
-deferred tax effect of share of associates and joint venture cash flow hedges | 536 | (301) | |
Other comprehensive expense for the year, net of tax | (12,203) | (30,227) | |
Total comprehensive income for the year attributable to equity shareholders | 33,417 | 27,574 | |
Origin Enterprises plc
Consolidated Statement of Financial Position
As at 31 July 2017
2017 | 2016 | |||
Notes | €'000 | €'000 | ||
ASSETS | ||||
Non-current assets | ||||
Property, plant and equipment | 5 | 105,271 | 102,796 | |
Investment properties | 9,675 | 9,675 | ||
Goodwill and intangible assets | 6 | 205,961 | 192,696 | |
Investments in associates and joint venture | 7 | 34,206 | 39,008 | |
Other financial assets | 531 | 2,550 | ||
Derivative financial instruments | 169 | - | ||
Deferred tax assets | 3,475 | 7,376 | ||
Total non-current assets | 359,288 | 354,101 | ||
Current assets | ||||
Inventory | 159,245 | 163,438 | ||
Trade and other receivables | 401,303 | 430,026 | ||
Derivative financial instruments | 560 | 1,337 | ||
Restricted cash | 10 | - | 2,948 | |
Cash and cash equivalents | 162,631 | 168,199 | ||
Total current assets | 723,739 | 765,948 | ||
TOTAL ASSETS | 1,083,027 | 1,120,049 | ||
Origin Enterprises plc
As at 31 July 2017
2017 | 2016 | |||
Notes | €'000 | €'000 | ||
EQUITY | ||||
Called up share capital presented as equity | 13 | 1,264 | 1,264 | |
Share premium | 160,422 | 160,399 | ||
Retained earnings and other reserves | 125,043 | 117,639 | ||
TOTAL EQUITY | 286,729 | 279,302 | ||
LIABILITIES | ||||
Non-current liabilities | ||||
Interest-bearing borrowings | 177,854 | 159,124 | ||
Deferred tax liabilities | 17,553 | 19,109 | ||
Put option liability | 5,450 | 10,358 | ||
Provision for liabilities | 8 | 8,072 | 4,010 | |
Post employment benefit obligations | 9 | 3,646 | 7,713 | |
Derivative financial instruments | 204 | 628 | ||
Total non-current liabilities | 212,779 | 200,942 | ||
Current liabilities | ||||
Interest-bearing borrowings | 16,227 | 8,901 | ||
Trade and other payables | 548,130 | 604,404 | ||
Corporation tax payable | 11,090 | 16,140 | ||
Provision for liabilities | 8 | 7,392 | 9,768 | |
Derivative financial instruments | 680 | 592 | ||
Total current liabilities | 583,519 | 639,805 | ||
TOTAL LIABILITIES | 796,298 | 840,747 | ||
TOTAL EQUITY AND LIABILITIES | 1,083,027 | 1,120,049 | ||
5 Property, plant and equipment
2017 | 2016 | ||
€'000 | €'000 | ||
At 1 August | 102,796 | 97,889 | |
Arising on acquisition (Note 11) | 388 | 14,804 | |
Additions | 11,816 | 6,780 | |
Disposals | (180) | (990) | |
Depreciation charge for the year | (7,099) | (7,073) | |
Translation adjustments | (2,450) | (8,614) | |
At 31 July | 105,271 | 102,796 | |
6 Goodwill and intangible assets
2017 | 2016 | ||
€'000 | €'000 | ||
At 1 August | 192,696 | 161,401 | |
Arising on acquisition (Note 11) | 25,602 | 51,216 | |
Additions | 3,566 | 7,859 | |
Amortisation of non-ERP intangible assets | (4,837) | (4,294) | |
ERP intangible amortisation | (1,881) | (2,506) | |
Translation adjustments | (9,185) | (20,980) | |
At 31 July | 205,961 | 192,696 | |
7 Investments in associates and joint venture
2017 | 2016 | ||
€'000 | €'000 | ||
At 1 August | 39,008 | 38,537 | |
Share of profits after tax | 4,366 | 5,621 | |
Dividends received | (3,822) | (2,942) | |
Share of other comprehensive (expense)/income | (4,232) | 1,819 | |
Translation adjustment | (1,114) | (4,027) | |
At 31 July | 34,206 | 39,008 | |
Split as follows: | |||
Total associates | 17,620 | 18,693 | |
Total joint venture | 16,586 | 20,315 | |
34,206 | 39,008 | ||
8 Provision for liabilities
The estimate of provisions is a key judgement in the preparation of the financial statements.
2017 €'000 | 2016 €'000 | ||||
At 1 August | 13,778 | 11,470 | |||
Arising on acquisition | 5,129 | 7,585 | |||
Provided in year | 11,590 | 4,253 | |||
Paid in year | (13,560) | (8,229) | |||
Released in year | (977) | (210) | |||
Currency translation adjustment | (496) | (1,091) | |||
At 31 July | 15,464 | 13,778 | |||
Provisions primarily relate to contingent acquisition consideration arising on a number of acquisitions completed during the current year and rationalisation costs comprising termination payments arising from the restructuring of Agri-Services in the UK.
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.
During the prior year 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 2017 by an independent, qualified actuary. The valuations have been performed using the projected unit method.
Movement in net liability recognised in the Consolidated Statement of Financial Position
2017 | 2016 | |||
€'000 | €'000 | |||
At 1 August | 7,713 | 7,373 | ||
Current service cost | 758 | 589 | ||
Past service cost | 131 | 107 | ||
Contributions | (1,465) | (4,674) | ||
Other finance expense | 170 | 91 | ||
Remeasurements | (3,407) | 4,881 | ||
Translation adjustments | (254) | (654) | ||
At 31 July | 3,646 | 7,713 | ||
10 Restricted cash
On 28 July 2015, Origin announced that it had reached agreement to acquire Romanian based Redoxim SRL. On that date, Origin placed in escrow an amount of €29,358,000 being the total consideration payable less local withholding tax. The completion of the acquisition was dependent on an approval process which required notification to the Official Gazette of Romania. This approval process was subsequently finalised and the acquisition of Redoxim SRL completed on 17 September 2015. On this date, 90 per cent of the funds in escrow were released to the sellers of Redoxim. The balance of €2,948,000 was paid post year end on 17 September 2016.
11 Acquisition of subsidiary undertakings
During the year the Group completed a number of acquisitions. These acquisitions improved the strategic position of the Groups integrated agronomy services business and further the Groups focus on building new capability, systems and process development. Details of the acquisitions are as follows:
1. On 11 November 2016 the Agrii Group completed the acquisition of 100 per cent of David Dumosch Limited. David Dumosch is an agricultural and horticultural merchant.
2. On 9 March 2017 the Group completed the acquisition of 100 per cent of the Resterra Group ('Resterra'). Resterra is a digital agricultural services group that provides an important enhancement to Origin's growing digital technology capabilities with a particular emphasis on expanding the Group's data driven group management solutions framework for the benefit of existing and potential new customers and agronomists.
3. On 1 July 2017 the Group completed the acquisition of 100 per cent of Linemark UK Limited ('Linemark'). Linemark is a sports and amenity paint manufacturer supplying line marking paint, grass marking machines and accessories.
Details of the net assets acquired and goodwill arising from the business combinations are as follows:
Provisional Fair | ||
value | ||
Assets | €'000 | |
Non-current | ||
Property, plant and equipment | 388 | |
Intangible assets | 9,870 | |
Total non-current assets | 10,258 | |
Current assets | ||
Inventory | 864 | |
Trade receivables (i) | 1,118 | |
Other receivables | 159 | |
Total current assets | 2,141 | |
Liabilities | ||
Trade payables | (588) | |
Other payable | (374) | |
Corporation tax | (111) | |
Deferred tax liability | (1,666) | |
Total liabilities | (2,739) | |
Total identifiable net assets at fair value | 9,660 | |
Goodwill arising on acquisition | 15,732 | |
Total net assets acquired (excluding debt acquired) | 25,392 | |
Consideration satisfied by: | ||
Cash consideration | 22,249 | |
Cash acquired | (2,378) | |
Net cash outflow | 19,871 | |
Final cash settlement due | 392 | |
Contingent consideration | 5,129 | |
Consideration | 25,392 |
(i) Gross trade receivables acquired were €1.1 million. All amounts are deemed to be recoverable.
During the prior year the Group completed a number of acquisitions in Romania and Poland, with some additional bolt on acquisitions in the United Kingdom. Details of the acquisitions are as follows:
1. On 17 September 2015 the Group completed the acquisition of 100 per cent of Redoxim SRL. Based in Romania, Redoxim SRL is a leading provider of agronomy services, macro and micro inputs to arable, vegetable and horticulture growers.
2. On 23 November 2015 the Group completed the acquisition of 100 per cent of the Kazgod Group. Based in Poland, the Kazgod Group is a leading provider of agronomy services, inputs, crop marketing solutions as well as a manufacturer of micro nutrition applications.
3. On 16 December 2015 the Group completed the acquisition of 100 per cent of Comfert SRL. Based in Romania, Comfert SRL is a leading provider of agronomy services, integrated inputs and crop marketing support to arable and vegetable growers.
4. On 20 August 2015 the Group completed the acquisition of 100 per cent of ReSo Seeds Limited. Based in the United Kingdom, ReSo Seeds Limited is a leading mobile seed cleaning and processing specialist company.
5. On 1 July 2016 the Group completed the acquisition of 100 per cent of Headland Amenity Limited. Based in the United Kingdom, Headland Amenity Limited is a technically advanced supplier of products and synergistic programmes to improve sports turf surfaces.
Origin Enterprises plc published this content on 27 September 2017 and is solely responsible for the information contained herein.
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