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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Origin Enterprises Plc | LSE:OGN | London | Ordinary Share | IE00B1WV4493 | ORD EUR0.01 (CDI) |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.15 | -4.84% | 2.95 | 2.90 | 3.00 | 3.10 | 2.95 | 3.10 | 775 | 08:01:52 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
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."
SThe 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.
SOrigin 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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September 26, 2018 02:01 ET (06:01 GMT)
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