Company name Origin Enterprises
Headline Preliminary Results Statement


RNS Number : 5803M
Origin Enterprises Plc
19 September 2012
 



 

Origin Enterprises plc 

 

Preliminary Results Statement

Year Ended 31 July 2012

 

Results Summary                                                                                                              

 


2012

€'000

2011

€'000

   %

      Change

Group revenue








Agri-Services

1,340,023

1,257,498

6.6%





Group operating profit *




Operating Profit - Agri-Services*

69,679

65,963

5.6%

Associates and joint ventures***

13,138

14,857

(11.6%)

Total group operating profit *

82,817

80,820

2.5%





Finance expense, net

(6,594)

(10,510)

(37.3%)

Profit before tax*

76,223

70,310

8.4%

Basic EPS (cent)

31.86c

34.43c

(7.5%)

Adjusted diluted EPS (cent)**

45.16c

43.34c

4.2%

Group net debt

67,808

92,120

(26.4%)

Dividend per ordinary share (cent)

15.0

11.0

36.4%

                                                                                               

*           Before intangible amortisation and exceptional items

**          Before acquisition related intangible amortisation, net of related deferred tax (2012: €4.1m, 2011: €2.6m) and exceptional items, net of tax (2012: €15.5m, 2011: €11.6m).

***     Profit after interest and tax before exceptional items

 

Highlights

 

·    Strong financial and operational performance in a year of significant business transformation and integration

·    5.6% increase in Agri-Services operating profit to €69.7m reflecting positive volume and margin development in integrated on-farm agronomy services

·    11.6% decline in associates and joint ventures profit after tax (excluding exceptional items) to €13.1m principally attributable to the anticipated lower marine proteins and oils profitability

·    8.4% increase in profit before tax from continuing operations

·    11.0% underlying increase in adjusted earnings per share to 45.16c

·    €24.3m reduction in net debt to €67.8m highlighting the continued strong cash generative nature of the business

·    36.4% increase in proposed dividend to 15.0 cent per ordinary share


Origin Enterprises plc

 

Chief Executive Officer's comment:

 

Commenting on the announcement of the 2012 results, Origin Chief Executive Officer, Tom O'Mahony said:

"Origin delivered a strong financial and operational performance in 2012 recording an 11 per cent increase in underlying adjusted earnings per share combined with excellent cash generation.

Sales of agronomy services and strategic inputs during the key second half period were excellent reflecting the benefit of an extended service offering and favourable investment momentum at farm level.

2012 was a year of significant business transformation and integration activity which will continue during 2013. The establishment of Agrii as the vehicle to build a scalable and advisory focused farm services platform uniquely positions Origin as the premier provider of total crop management systems in the UK and we are now ideally placed to meet farming's increasing demand for agri-intelligence.

 

Significant progress was also achieved through the integration of Carrs Fertiliser and Rigby Taylor with these businesses enhancing the Group's route-to-market profile for speciality input applications.

 

The Board is recommending a 36 per cent increase in the full year dividend to 15 cent per ordinary share reflecting our confidence in the future performance of the Group and the strong cash generative nature of the businesses. 

 

The impact of unprecedented and challenging weather conditions in the year highlights the volatile nature of the planning environment for primary producers. This underscores the strategic role of agronomic innovation to meet the challenge of sustainable intensification and ever increasing production risk.

 

During 2012 the Group made good progress in building an integrated, intelligence led and sustainable agricultural services business that is at the heart of influencing on-farm decision making.  Origin is focused on growing its technological capability to transform the breadth and scope of service support to primary producers. We are confident of delivering earnings growth in 2013."

 

 

ENDS

The Preliminary Results Statement is available on the company website www.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:                                            1928746

 

Participant access number:                   

                                                           

Dublin:                                                              Tel: +353 (0)1 659 0423               

UK/International:                                                Tel: +44 (0)20 7784 1036    

Switzerland:                                                      Tel: +41 (0)43 547 8000      

 

Replay:

A replay of this call will be available for seven days.

 

Replay Access Code:                                       1928746#

 

Replay Access Numbers:             

 

Dublin:                                                              Tel: +353 (0)1 486 0902 

UK/International:                                                Tel: +44 (0)20 7111 1244

Switzerland:                                                      Tel: +41 (0)22 592 7553 

 

Enquiries:

 

Origin Enterprises plc

Brendan Fitzgerald

Chief Financial Officer                                        Tel: +353 (0) 1 612 1259

 

Murray Consultants

Joe Murray                                                       Tel: +353 (0) 1 498 0300

Tel: +353 (0) 86 253 4950


Preliminary Results Statement

 

Financial Review

 

Origin Enterprises plc ('Origin' or 'the Group'), announces a 4.2 per cent increase in adjusted diluted earnings per share* for the year ending 31 July 2012 to 45.16 cent.  On a like-for-like basis (excluding the impact of the 2011 acquisitions, the dilutive impact of the Valeo and R&H Hall transactions and currency movements) the underlying increase in adjusted earnings per share was 11 per cent.

 

Revenue

 

Revenue from Agri-Services was €1,340.0 million compared to €1,257.5 million in the previous year, an increase of 6.6 per cent.  On a like for like basis (excluding the impact of 2011 acquisitions, the transition of R&H Hall to associates and joint ventures and currency movements) Agri-Services revenues increased by €92.6 million (7.4 per cent) principally reflecting higher global nutrition and feed prices offset by lower nutrition volumes.

 

Operating profit**

 

Operating profit from Agri-Services amounted to €69.7 million compared to €66.0 million in the previous year, an increase of 5.6 per cent.  Due to the seasonality of the businesses the 2011 acquisitions were earnings dilutive in the period by €0.6 million, the transitioning of R&H Hall to associates and joint ventures was dilutive by €1.6 million and currency translation had a favourable impact of €1.3 million.  Excluding these, operating profit ** from Agri-Services increased by €4.6 million (6.9 per cent) on a like-for-like basis.

 

Associates and joint ventures

 

Origin's share of the profit after interest and taxation (excluding exceptional items) from associates and joint ventures decreased by €1.7 million (11.6 per cent) to €13.1 million.  The decrease is principally attributable to a reduced share of profit from our 50 per cent interest in Welcon compared to very strong results from this business in the previous two years, offset by a full twelve months contribution from Valeo Foods (eight months in 2011).

 

Finance costs and net debt

 

Net finance costs amounted to €6.6 million, a decrease of €3.9 million (37.3 per cent) on the prior year reflecting the cash generative nature of the business and reduced interest costs on Group borrowings.  Average net debt amounted to €214 million compared to €166 million last year principally reflecting the timing of corporate development activity last year and a higher investment in working capital in the current year.

 

Net debt at 31 July 2012 was €67.8 million compared with €92.1 million at the end of the previous year and is 0.81 times EBITDA***.

 

Investment in working capital remains a key area of focus for the Group given the funding costs and the related risks in the current environment. 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 45.16 cent per share, an increase of 4.2 per cent from 2011.  The 4.2 per cent increase is driven by the dilutive impact of acquisitions (-3.1 per cent), the dilutive impact of disposals  (-5.6 per cent) offset by underlying growth from the core business (11.0 per cent) and currency (1.9 per cent).

 

Exceptional items

 

Exceptional items amounting to €15.5 million, net of tax, were incurred in the period principally relating to a write down in the carrying value of investment properties by €9.7 million to €13.3 million and our share of Valeo rationalisation costs (€6.4 million).

 

The Directors have reviewed the carrying value of investment properties and have considered the continuing decline in the Irish property market, a lack of transactions, restricted bank financing for property related deals and a generally difficult economic environment. In particular the value of development land in regional areas is converging to that of agricultural land.  This review resulted in a writedown in the carrying value of investment properties of €9.7 million.

 

Dividend

 

The Board is recommending an increase in the dividend of 4.0 cent per ordinary share to 15.0 cent per ordinary share, an increase of 36.4 per cent.  This represents a payout ratio of 35 per cent.  Subject to shareholder approval at the Annual General Meeting, the dividend will be paid on 7 January 2013 to shareholders on the register on 14 December 2012. 

 

Annual General Meeting (AGM)

 

The AGM will be held on Monday 26 November 2012 at 10.00am in the Westbury Hotel, Grafton Street, Dublin 2.

  

 

*Before acquisition related intangible amortisation, net of related deferred tax (2012: €4.1m, 2011: €2.6m) and exceptional items, net of tax (2012: €15.5m, 2011: €11.6m).

**Operating profit is stated before intangible amortisation and exceptional items.

***Earnings before interest, taxation, depreciation, amortisation and exceptional items.


Review of Operations

 

Agri-Services

 




Change on prior year


2012

€m

2011

€m

Change

€m

Underlying**

€m






Revenue

1,340.0

1,257.5

82.5

92.6






Operating profit*

69.7

66.0

3.7

4.6






Operating margin %*

5.2

5.2

-

-






Return on capital employed

23.4%

23.9%

(0.5%)




* Before intangible amortisation and exceptional items.

** Excluding the impact of acquisitions, disposals and currency movements.


 

Agri-Services comprises integrated on-farm agronomy services and business-to-business agri inputs (fertiliser, feed ingredients and amenity).  These businesses provide customised solutions that address the efficiency, quality and output requirements of primary food producers in Ireland, the UK and Poland. 

 

Revenue increased by 6.6 per cent to €1,340.0 million with strong volume growth in on-farm agronomy services offsetting the impact of lower volumes in business-to-business agri inputs.  Operating profit* increased by 5.6 per cent to €69.7 million or 6.9 per cent on a like for like basis (excluding the impact of the 2011 acquisitions , the impact of disposals (the full year impact of the transition of R&H Hall to associates and joint ventures and the Valeo transaction) and currency movements). 

 

Integrated On-Farm Agronomy

 

United Kingdom

 

Integrated on-farm agronomy services performed strongly recording higher revenues, profits and margins in the period.  Organic growth in strategic and full agronomy applications was strong with margins benefiting from extended service offerings.  Favourable investment momentum at primary producer level supported a 2.5 per cent and 8 per cent increase in the key winter wheat and oil seed rape planted areas respectively.  Farm management plans were significantly impacted by particularly challenging weather conditions during the year with the UK experiencing one of the wettest late spring and early summer growing periods on record following a very dry start to the year when potential drought conditions were the primary concern.  Adverse weather patterns require a rapid agronomy response and emphasise the central role of customised crop management programmes in securing grower profitability.

 

Significant business transformation and integration activity was undertaken during the year following the acquisition of United Agri Products ('UAP') in March 2011.  In January 2012 Masstock and UAP were combined to form 'Agrii'.  Agrii, as a new identity, communicates clearly and simply the focus of the enlarged business which is to deliver superior agri-intelligence and innovation to UK farming as the essential components underpinning sustainable returns to primary producers.  This approach brings together the most up-to-date agronomy capability, crop technologies and complementary expertise in specialist areas to deliver an 'Agronomy Plus' proposition to growers. Agrii defines the strong relationship that exists between farming and agronomy.  Internally Agrii establishes a renewed sense of relevance and acts as a strong unifying force for the enlarged organisation. 

 

The business is now operating under a single management team supported by a simplified and decentralised organisational structure which is focused on building regional leadership capabilities to drive an integrated approach to customer management.  There has been significant progress relating to commercial, technical and business process integration.  The roll out of the Group's new enterprise resource planning system was significantly advanced in the period and is on schedule to be completed by the end of this calendar year.

 

The design of relevant production systems to meet growers' requirements for the management of enterprise risk, crop yield and quality actively places agri-intelligence at the heart of Agrii's business proposition.  This approach connects high visibility science and research application with agronomy, farm inputs, farming systems and economics, ensuring early access to the latest crop technologies driving innovative product strategies in combination with the development of best practice crop establishment techniques.

 

The Group will make an investment of approximately €25 million over the next four years, expanding its applied agronomic research, development and technical support capability.  The programme comprises expenditure on new research and development technology centres, satellite trials investigation units as well as a significant upscaling of the infrastructure supporting mobile on-farm information and decision support systems. The investment aims to meet the growing demand by primary producers for innovation to address the challenges of sustainable intensification and ever increasing production risk. 

 

Poland

 

Dalgety Agra Polska ('Dalgety') recorded a strong performance.  Dalgety is primarily focused on supporting the larger scale intensive farming sector with exclusive input technologies together with a specialist grain marketing capability.  Differentiated service offerings are provided to smaller farm units and local service providers.

 

Demand for agronomy, certified seed and speciality nutrition applications benefitted from increased spring planting activity following the impact of significant winter crop losses resulting from a short but severe winter period.  Dalgety's recently expanded grain procurement and marketing activities into neighbouring geographies provides an important extension to its service offering.  

Business-to-business agri inputs - Ireland and the UK

 

Operating profit from business-to-business agri inputs was marginally behind last year due to lower fertiliser consumption and greater competitive intensity within feed ingredients.

The prioritisation of margin delivery within the Group's fertiliser activity remained a key focus point during the period.  Underlying volumes for Ireland and the UK were lower than last year reflecting a combination of advance buying in 2011, increased price volatility in the period impacting the timing of customer commitments and unseasonally wet weather reducing consumption relative to a normal application year.

The integration of Carrs Fertilisers ('Carrs') with the Group's existing fertiliser business in the UK was completed during the financial year.  The enlarged business is managed under a unified sales, operations and technical organisation facilitating the optimisation of manufacturing, logistical and procurement efficiencies.  Since 1 August 2012 the combined entity is now operating on a single enterprise resource planning platform.  The Group's nutrition offering has been enhanced with the Carrs acquisition through technologies which facilitate the effective delivery of key trace elements enhancing the nutrient value of fertilisers for the benefit of primary producers.

The Group's amenity business which delivers advice and input solutions to the professional sports turf, landscaping and amenity sectors performed well notwithstanding the backdrop of lower demand reflecting unseasonal weather conditions during the year.  Overall business performance was supported by the successful integration of Rigby Taylor along with favourable margin development and product extension within the speciality and niche amenity channels. 

Feed Ingredients performed satisfactorily in a highly competitive market environment.  Sales volumes were higher year-on-year reflecting increased demand as unseasonal weather required the housing of animals during normal summer grazing months.  Challenging trading conditions resulted in lower margins as sustained price volatility throughout the year provided little incentive to the market to execute forward volume commitments.  Increased demand for feed is expected in the coming year reflecting the depletion of winter fodder stocks due to weather.

Associates and joint ventures

 

Welcon Invest AS ('Welcon')

 

Welcon, in which Origin has a 50 per cent shareholding, is Europe's largest manufacturer of marine proteins and oils servicing the aquaculture, pig and poultry feed sectors.

 

In line with expectation Welcon recorded lower profits and margins in comparison to the very strong performance last year.  This principally reflects the impact of quota adjustments for North Atlantic raw material which resulted in reduced volume intake in the period and increased production from South America.  Performance improved during the year on the back of steadily increasing fishmeal and fish oil prices.

 

Current sentiment in global marine protein markets is positive reflecting strong growth in aquaculture production in Norway and Chile combined with firm demand from China.  Global unsold production remains limited due to lower than expected first season fishing quotas in South America with firm vegetable protein pricing also providing a positive influence to marine ingredients.

 

In February 2012, Welcon completed the acquisition of a 50 per cent interest in Hordafor AS.  Hordafor is a leading producer of fish oil and protein concentrate from salmon and pelagic trimmings.  The acquisition provides Welcon with strategic access to alternative raw material processing technologies in addition to new market outlets for marine by-products.

 

Valeo Foods Group Limited ('Valeo')

 

Valeo, in which Origin has a 32 per cent shareholding, is a leading consumer foods company with a portfolio of some of Ireland's most iconic food brands.  The business performed satisfactorily in what continues to be an extremely competitive trading environment.

 

The increasingly promoted nature of branded categories combined with a growing shift to private label consumption evidences consumers' ongoing requirement for value.  The business successfully expanded existing traditional categories in the period by introducing new innovative products which helped to improve category performance.  Category and promotional support programmes remained a key focus for Valeo in maintaining market position.

 

Following the completion of the acquisition of the Jacob Fruitfield Food Group in September 2011, its operations were successfully migrated to Valeo in the period and all operations are now centralised and operating under one management team.

 

Continental Farmers Group Plc ('Continental')

Continental, in which Origin holds a 24 per cent interest, is a diversified agricultural producer of value added crops with large scale farming operations in Western Ukraine and Northern Poland.  Continental's proven farming know-how together with the benefit of operational scale facilitates the application of diversified cropping plans that optimise yield and output price realisations.

 

The business achieved strong operational progress in the year with major crop expansion and is on track to have over 26,000 hectares and 2,400 hectares under crop in Ukraine and Poland respectively in 2012.  The outlook for the 2012 harvest remains positive notwithstanding some challenging weather conditions during the year.

 

Continental announced its Interim Results for the six months ending 30 June 2012 on 17 September 2012.

Outlook

 

During 2012 the Group made good progress in building an integrated, intelligence led and sustainable agricultural services business that is at the heart of influencing on-farm decision making.  Origin is focused on growing its technological capability to transform the breadth and scope of service support to primary producers. We are confident of delivering earnings growth in 2013.

 

ENDS

 

 

About Origin Enterprises plc

 

Origin Enterprises plc is a focused Agri-Services group providing on-farm advice and the supply of agri-inputs.  The Group also has investments in consumer foods and marine proteins and oils.  The Agri-Services business through its manufacturing and distribution operations in Ireland, the United Kingdom and Poland has leading market positions in the supply of specialist agronomy services, crop nutrition and feed ingredients.  The Group is listed on the ESM and AIM markets of the Irish and London Stock Exchanges. 

 

ESM ticker symbol:       OIZ

AIM ticker symbol:        OGN

 

 

Origin Enterprises plc

 

Consolidated income statement

for the year ended 31 July 2012

 



Pre-






Pre-







exceptional


Exceptional


Total


exceptional


Exceptional


Total



2012


   2012


   2012


2011


   2011


2011



€'000


€'000


€'000


€'000


€'000


€'000


Notes



(Note 3)






(Note 3)
















Continuing operations













Revenue

2

1,340,023


-


1,340,023


1,257,498


-


1,257,498

Cost of sales


(1,148,965)


-


(1,148,965)


(1,092,830)


-


(1,092,830)



























Gross profit


191,058


-


191,058


164,668


-


164,668














Operating costs

3

(128,235)


(12,073)


(140,308)


(102,764)


1,790


(100,974)














Share of profit of associates and joint ventures

 

 

3

 

 

13,138


 

 

(6,384)


 

 

6,754


 

 

14,857


 

 

(761)


 

 

14,096














Gain/(loss) on dilution of interest in associate

 

3

 

-


 

2,305


 

2,305


 

-


 

(4,738)


 

(4,738)



























Operating profit


75,961


(16,152)


59,809


76,761


(3,709)


73,052














Finance income


7,285


-


7,285


6,106


-


6,106

Finance expense


(13,879)


-


(13,879)


(16,616)


-


(16,616)



























Profit before tax


69,367


(16,152)


53,215


66,251


(3,709)


62,542














Income tax (expense)/credit


(10,929)


623


(10,306)


(13,013)


(625)


(13,638)



























Profit/(loss) from continuing operations


58,438


 

(15,529)


 

42,909


53,238


 

(4,334)


 

48,904














Discontinued operations













Profit/(loss) from discontinued operations

4

 

 

-


 

-


 

-


 

4,195


 

(7,301)


 

(3,106)



























Profit attributable to equity shareholders


 

58,438


 

(15,529)


 

42,909


 

57,433


 

(11,635)


 

45,798




























Origin Enterprises plc

 

Consolidated income statement -continued

for the year ended 31 July 2012

 





Notes


2012



2011































Earnings per share for the year




















Basic earnings per share










Continuing operations




5


31.86c



36.77

Discontinued operations




5


-



(2.34c)







31.86c



34.43c











Diluted earnings per share










Continuing operations




5


30.98c



35.33c

Discontinued operations




5


-



(2.24c)







30.98c



33.09c

Basic earnings per share- adjusted








Continuing operations




5


46.44c



41.79c

Discontinued operations




5


-



3.31c







46.44c



45.10c

Diluted earnings per share- adjusted








Continuing operations




5


45.16c



40.16c

Discontinued operations




5


-



3.18c







45.16c



43.34c

 

 

 

 

 

 

 

 

 

 

 

 


Origin Enterprises plc

 

Consolidated statement of comprehensive income

for the year ended 31 July 2012


2012


2011


€'000


€'000





Result for the year

42,909


45,798





Other comprehensive income








Group/associate foreign exchange translation effects




-foreign currency net investments

8,008


(2,507)

-recycling on disposal of subsidiary undertakings

-


379

-share of associates and joint ventures foreign exchange translation effects

1,639


1,170





Group/associate defined benefit pension obligations




-actuarial (loss)/gain on Group's defined benefit pension schemes

(6,039)


221

-deferred tax effect of actuarial (loss)/gain

1,143


(307)

-actuarial loss on associate's defined benefit scheme, net of deferred tax

(4,379)


(490)





Deferred tax effect of increase in Irish capital gains tax in relation to revalued properties

 

(858)


 

-





Group/associate cash flow hedges




-effective portion of changes in fair value to cash flow hedges

(1,683)


828

-fair value of cash flow hedges transferred to income statement

(1,033)


3,007

-deferred tax effect of cash flow hedges

313


(442)

-share of associates and joint ventures cash flow hedges, net of deferred tax

(1,275)


(607)









Other comprehensive (expense)/income for the year, net of tax

(4,164)


1,252









Total comprehensive income for the year attributable to equity shareholders

 

38,745


 

47,050









 


Origin Enterprises plc

 

Consolidated statement of financial position

as at 31 July 2012

 



2012


2011


Notes

€'000


€'000






ASSETS










Non current assets





Property, plant and equipment

6

91,148


94,256

Investment properties

7

13,308


16,002

Goodwill and intangible assets

8

142,642


130,506

Investments in associates and joint ventures

9

124,839


119,081

Receivables


37,223


35,013

Deferred tax assets


4,720


4,812











Total non current assets


413,880


399,670











Current assets





Inventory


106,316


103,341

Trade and other receivables


273,239


220,368

Derivative financial instruments


95


311

Cash and cash equivalents


95,299


55,496











Total current assets


474,949


379,516











TOTAL ASSETS


888,829


779,186











 

 

 

                                                          

 


Origin Enterprises plc

 

Consolidated statement of financial position -continued

as at 31 July 2012

 



2012


2011


Notes

€'000


€'000

EQUITY










Called up share capital


1,385


1,385

Share premium


160,399


160,399

Retained earnings and other reserves


80,806


56,034











TOTAL EQUITY


242,590


217,818






LIABILITIES










Non current liabilities





Interest bearing borrowings


156,245


141,748

Deferred tax liabilities


20,703


21,252

Contingent acquisition consideration


-


7,792

Other payables


-


1,075

Employee benefit obligations

10

8,977


5,683

Derivative financial instruments


2,008


115











Total non current liabilities


187,933


177,665






Current liabilities





Interest bearing borrowings


6,862


5,868

Trade and other payables


427,325


358,666

Corporation tax payable


10,464


9,949

Contingent acquisition consideration


9,170


5,262

Employee  benefit obligations


2,039


2,856

Other payables


596


-

Derivative financial instruments


1,850


1,102











Total current liabilities


458,306


383,703











TOTAL LIABILITIES


646,239


561,368











TOTAL EQUITY AND LIABILITIES


888,829


779,186







Origin Enterprises plc

 

Consolidated statement of changes in equity

for the year ended 31 July 2012

 
















Foreign










Capital


Cashflow




Share-based




currency






Share


Share


redemption


hedge


Revaluation


payment


Reorganisation


translation


Retained




capital


premium


reserve


reserve


reserve


reserve


reserves


reserve


earnings


Total


€'000


€'000


€'000


€'000


€'000


€'000


€'000


€'000


€'000


€'000





















At 1 August 2011

1,385


160,399


            1  


(1,216)


16,741


3,665


(196,884)


(17,991)


251,718


217,818





















Result for the year

         -  


            -  


-  


-  


                 -  


                  -  


                       -  


             -  


42,909


42,909

Other comprehensive expense

         -  


            -  


-  


(3,678)


                 -  


                  -  


                       -  


9,647


(10,133)


(4,164)

Share-based payments

         -  


            -  


            -  


            -  


                 -  


659 


                       -  


               -  


            -


659

Dividend paid to shareholders

         -  


            -  


            -  


            -  


                 -  


                  -  


                       -  


               -  


(14,632)


(14,632)

Transfer of revaluation reserve to revenue reserve

-


-


-


-


(1,905)


-


-


-


1,905


-

Transfer of share-based payment reserve to retained earnings

         -  


            -  


            -  


            -  


-  


(2,992)


                       -  


               -  


2,992


-









































At 31 July 2012

1,385


160,399


            1  


(4,894)


14,836


1,332


(196,884)


(8,344)


274,759


242,590










































Origin Enterprises plc

 

Consolidated statement of cash flows

for the year ended 31 July 2012

 

 


2012


2011


€'000


€'000





Cash flows from operating activities




Profit before tax- continuing operations

53,215


62,542

Profit before tax- discontinued operations

-


4,815

Exceptional items

16,152


3,709

Finance income

(7,285)


(6,106)

Finance expense

13,879


16,616

Share of profit of associates and joint ventures

(13,138)


(14,857)

Depreciation of property, plant and equipment

5,189


5,276

Amortisation of intangible assets

6,856


4,295

Amortisation of government grants

-


(56)

Employee share-based payment charge

659


917

Pension contributions and payments  in excess of service costs

(2,719)


(11,874)









Operating cash flow before changes in working capital

72,808


65,277

Decrease/(increase) in inventory

6,866


(33,383)

(Increase) in trade and other receivables

(29,204)


(47,036)

Increase in trade and other payables

36,477


78,116









Cash generated from operating activities

86,947


62,974

Interest paid

(7,532)


(13,030)

Income tax paid

(11,459)


(12,242)









Cash inflow from operating activities

67,956


37,702









 

 


Origin Enterprises plc

 

Consolidated statement of cash flows -continued

for the year ended 31 July 2012

 

2012


2011

€'000


€'000





Cash flows from investing activities




Proceeds from sale of property, plant and equipment

441


1,405

Proceeds from sale of investment property

485


-

Purchase of property, plant and equipment

(5,584)


(6,624)

Additions to intangible assets

(6,667)


(3,001)

Acquisition of subsidiary undertakings

(279)


(79,266)

Disposal of subsidiary undertakings

-


74,639

Payment of contingent acquisition consideration

(6,099)


-

Investment/loans to associates and joint ventures, net

(7,742)


(419)

Dividends received from associates and joint ventures

10,340


7,002









Cash outflow from investing activities

(15,105)


(6,264)





Cash flow from financing activities




Redemption of  share capital

-


(1)

Repayment of bank loans

(5,490)


(40,918)

Dividends paid to equity shareholders

(14,632)


(11,992)

(Decrease)/increase in finance lease obligations

(519)


78









Cash outflow from financing activities

(20,641)


(52,833)









Net increase/(decrease) in cash and cash equivalents

32,210


(21,395)





Translation adjustment

6,485


(1,103)





Cash and cash equivalents at start of year

50,127


72,625









Cash and cash equivalents at end of year

88,822


50,127









 

 


Origin Enterprises plc

 

Notes to the preliminary results statement

for the year ended 31 July 2012

 

 

1              Basis of preparation

 

The financial information included on pages 11 to 33 of this preliminary results statement has been extracted from the Group financial statements for the year ended 31 July 2012 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 2012 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 and majority of the Group's operations.

 

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. Two operating segments have been identified; Agri-Services and Associates and joint ventures.

 

Origin's Agri-Services segment comprises integrated agronomy services and agri-inputs.  The Associates and joint ventures operating segment is comprised of our existing investments in Welcon Invest AS, Continental Farmers Group Plc, John Thompson & Son Limited, R&H Hall Limited and Valeo Foods Group Limited.

 

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 Board of 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 year ended 31 July 2012

 

2              Segment information- continued

(i) Segment revenue and results


Agri-Services

 


Associates & joint ventures


Food-

discontinued operations

Total-Group


2012


2011


2012


2011


2012


2011


2012


2011


€'000


€'000


€'000


€'000


€'000


€'000


€'000


€'000

















Total revenue

1,340,023


1,257,498


475,611


359,417


-


44,240


1,815,634


1,661,155

Less revenue from associates and joint ventures

-


-


(475,611)


(359,417)


-


-


(475,611)


(359,417)

Less revenue from discontinued operations

-


-


-


-


-


(44,240)


-


(44,240)

Revenue- continuing operations

1,340,023


1,257,498


-


-


             -  


             -  


1,340,023


1,257,498

















Segment result

 

69,679


 

65,963


 

13,138


 

14,857


 

-


 

5,051


 

82,817


 

85,871

















Amortisation of intangible assets













(6,856)


(4,295)

Less: operating profit from discontinued operations












 

-


 

(4,815)

















Total operating profit before exceptional items












 

 

75,961


 

 

76,761

















Exceptional items













(16,152)


(3,709)

















Operating profit- continuing  operations













59,809


73,052


















Origin Enterprises plc

 

Notes to the preliminary results statement -continued

for the year ended 31 July 2012

 

2       Segment information- continued

 

(ii) Segment earnings before financing costs and tax for continuing operations is reconciled to reported profit before tax and profit after tax for continuing operations as follows:


2012


2011


€'000


€'000





                Segment earnings before financing costs and tax - continuing operations

         59,809


         73,052





                Finance income

        7,285


        6,106

                Finance expense

           (13,879)


           (16,616)









 Reported profit before tax - continuing operations

           53,215


62,542





                Income tax expense

           (10,306)


           (13,638)









               Reported profit before tax - continuing operations

           42,909


           48,904





 

         Finance income, finance expense and income taxes are not allocated to segments as this type of activity is driven

         by the central treasury and taxation functions, which manage the cash and taxation position of the Group.

      

 


Origin Enterprises plc

 

Notes to the preliminary results statement- continued

for the year ended 31 July 2012

 

3        Exceptional items

 

Exceptional items are those that, in management's judgement, should be 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;

 


2012


2011


€'000


€'000





        Continuing operations




        Fair value adjustment on investment properties (i)

               9,665


                        -

        Arising in associates and joint ventures (ii)

6,384


761

        (Gain)/loss on dilution of interest in associate (iii)

(2,305)


4,738

        Rationalisation costs (iv)

2,408


-

        Gain on disposal of operation (v)

                       -


               (3,168)

        Acquisition costs (vi)

                       -


                  1,378





        Total continuing operations before tax

              16,152


                  3,709

      

        Tax on exceptional items

                (623)


                     625





        Total continuing operations after tax

              15,529


                  4,334





        Discontinued operations           




        Loss on disposal of operation (vii)

                       -


                  7,301





        Total discontinued operations

                       -


                  7,301

        Total exceptional items

              15,529


                11,635

 

 

(i)    Fair value adjustment on investment properties

The Directors have reviewed the carrying value of investment properties and have considered the continuing decline in the Irish property market, a lack of transactions, restricted bank financing for property related transactions and a generally difficult economic environment. In particular the value of development land in regional areas is converging to that of agricultural land.  This review resulted in a write down in the carrying value of investment properties of €9.7 million.

 

(ii)   Arising in associates and joint ventures

During the year, the exceptional loss arising in associates and joint ventures resulted from a charge relating to the Group's share of acquisition costs €1.4 million and rationalisation costs €5.0 million arising in Valeo (principally relates to asset write downs and redundancy costs).

 

The exceptional loss arising in associates and joint ventures in the prior year results primarily from the expensing of acquisition costs and gains recorded on property, plant and equipment.


Origin Enterprises plc

 

Notes to the preliminary results statement- continued

for the year ended 31 July 2012

 

 

3            Exceptional items -continued

 

(iii) (Gain)/loss on dilution of interest in associate

During the current year, the Group recorded a gain of €2.3 million on the dilution of its investment in Valeo Foods Group Limited ("Valeo") from 44.1 per cent to 32 per cent as a result of the issue of equity by Valeo to part finance an acquisition.

 

On 23 June 2011, Continental Farmers Group Plc ("CFG") raised €16.7 million upon its flotation on ESM and AIM markets of the Dublin and London Stock exchanges.  As a result Origin's shareholding reduced from 38.7% to 24.2%.  This gave rise to a loss of €4.7m on the dilution of the holding.

 

(iv)  Rationalisation costs

Rationalisation costs include termination payments and property exit costs arising from a restructuring of Agri-services in the UK.

 

(v)    Gain on disposal of operation

During the prior year Origin reached agreement with W&R Barnett Limited ('Barnett') to establish an all Ireland grain and feed handling logistics and trading business. The all Ireland business was formed through the integration of the R&H Hall business in the Republic of Ireland, which formed part of the Agri-Services operating segment, and the business of Origin and Barnett in Northern Ireland. The transaction was completed on 28 January 2011. Under the terms of the transaction, Barnett acquired a 50 per cent interest in R&H Hall mirroring the economic interests of Origin and Barnett in the Northern Ireland business. A gain of €3,168,000 arose on the transaction.

 

(vi)  Acquisition costs

Transaction costs arising on the three acquisitions during 2011 net of a provision for an indemnity no longer required.

 

(vii) Loss on disposal of operation

                On 10 September 2010, the Group reached an agreement with CapVest Limited ('CapVest') to establish Valeo, to facilitate consolidation of Irish consumer food brands.  On 28 November 2010, Valeo completed the simultaneous acquisitions of the branded food businesses of Origin and the Irish food company Batchelors.  The Group transferred its 100 per cent shareholding in Origin Foods to Valeo Foods, in which the Group then had a 44.1 per cent shareholding.  Net assets transferred to Valeo Foods were €83.3m.  A loss of €7,301,000 arose on the transaction.


Origin Enterprises plc

 

Notes to the preliminary results statement- continued

for the year ended 31 July 2012

 

4        Discontinued operations

 

The Group disposed of its interest in Origin Food on 26 November 2010.  These operations are considered, in management's judgement, to be discontinued in accordance with IFRS 5 'Non-Current Assets Held for Sale and Discontinued Operations'.  The respective loss on the disposal of this operating segment was recognised in the Group Income Statement within discontinued operations.  The details of the profits to the date of disposal are set out in Note 2.  Further details are set out in Note 3.

 

The revenue and results of the Group's discontinued operations were as follows;

 


2012


       *2011


€'000


€'000





        Revenue

-


44,240

        Expenses

-


(39,189)

       








        Operating profit before amortisation of intangibles

-


5,051

        Intangible amortisation

-


(236)

       




        Profit before tax

                        -

                                    


                4,815

                                    

        Attributable income tax expense

                        -


                (620)

       

 

 


 

 

        Profit after tax for the period

                        -

                                    


                4,195

                                    





        Loss on disposal of operation

                        -


             (7,301)

       

                          

                                    


                          

                                    

Loss for the period from discontinued operations

                        -


             (3,106)





 

*Results of Origin Foods for the period from 1 August 2010 to 26 November 2010


Origin Enterprises plc

 

Notes to the preliminary results statement- continued

for the year ended 31 July 2012

 

5      Earnings per share

 

 


2012


2011


€'000


€'000

        Profit  for the financial year attributable to equity shareholders




-  Continuing operations

42,909


48,904

-  Discontinued operations

-


(3,106)

        Total profit for financial year attributable to equity shareholders

42,909


45,798






'000


'000

        Weighted average number of ordinary shares for the year

134,683


133,016


Cent


Cent

        Basic earnings per share




-  Continuing operations

31.86


36.77

-  Discontinued operations

-


(2.34)

        Total basic earnings per share

31.86


34.43

 

        Diluted earnings per share

         

 


2012


2011


€'000


€'000

        Profit  for the financial year attributable to equity shareholders




-  Continuing operations

42,909


48,904

-  Discontinued operations

-


(3,106)

        Total profit for financial year attributable to equity shareholders

42,909


45,798






'000


'000





        Weighted average number of ordinary shares used in basic calculation

134,683


133,016

        Effect of convertible shares with a dilutive effect

3,816


5,400

        Weighted average number of ordinary shares (diluted) for the year

138,499


138,416


Cent


Cent

        Diluted earnings per share




Continuing operations

30.98


35.33

Discontinued operations

-


(2.24)

        Total diluted earnings per share

30.98


33.09

 

 


Origin Enterprises plc

 

Notes to the preliminary results statement- continued

for the year ended 31 July 2012

 

5      Earnings per share- continued

 


2012


2011


€'000


€'000

       Adjusted basic earnings per share




       












        Weighted average number of ordinary shares for the year

134,683


              133,016

 

 

 


2012


2011


€'000


€'000





        Profit for the financial year - continuing operations

42,909


48,904





        Adjustments - continuing operations:




        Amortisation of acquisition related intangible assets

6,401


 

3,988

        Amortisation of related deferred tax

(2,288)


(1,634)

        Exceptional items, net of tax

15,529


4,334

        Adjusted basic earnings - continuing operations

62,551


55,592





        Loss for the financial year - discontinued operations

-


(3,106)





        Adjustments - discontinued operations:




        Amortisation of acquisition related intangible assets

 

-


 

236

        Amortisation of related deferred tax

-


(29)

        Exceptional items, net of tax

-


7,301

        Adjusted basic earnings - discontinued operations

-


4,402





        Total adjusted basic earnings

62,551


59,994

 


Cent


Cent





        Total adjusted basic earnings per share

46.44


45.10

 

 

 

 

 

 

Origin Enterprises plc

 

Notes to the preliminary results statement- continued

for the year ended 31 July 2012

 

5      Earnings per share- continued

 


2012


2011


€'000


€'000





        Adjusted diluted earnings per share




        Weighted average number of ordinary shares used in basic calculation

            134,683


             133,016

        Effect of convertible shares with a dilutive effect

3,816


                 5,400

        Weighted average number of ordinary shares (diluted) for the year

138,499


             138,416

 

 

 


2012


2011


€'000


€'000





        Profit for the financial year - continuing operations

42,909


48,904





        Adjustments - continuing operations:




        Amortisation of acquisition related intangible assets

6,401


 

3,988

        Amortisation of related deferred tax

(2,288)


(1,634)

        Exceptional items, net of tax

15,529


4,334

        Adjusted diluted earnings - continuing operations

62,551


55,592





        Loss for the financial year - discontinued operations

-


(3,106)





        Adjustments - discontinued operations:




        Amortisation of acquisition related intangible assets

 

-


 

236

        Amortisation of related deferred tax

-


(29)

        Exceptional items, net of tax

-


7,301

        Adjusted diluted earnings - discontinued operations

-


4,402





        Total adjusted diluted earnings  

62,551


59,994

 


Cent


Cent





        Total adjusted diluted earnings per share

45.16


43.34


Origin Enterprises plc

 

Notes to the preliminary results statement- continued

for the year ended 31 July 2012

 

6      Property, plant and equipment

 


2012


2011


€'000


€'000





At 1 August

94,256


129,182

Additions

5,768


6,425

Arising on acquisition

-


12,733

Arising on disposal of subsidiary undertakings

-


(46,664)

Transfer to investment properties (note 7)

(7,456)


-

Disposals

(440)


(937)

Depreciation charge

(5,189)


(5,276)

Translation adjustments

4,209


(1,207)













At 31 July

91,148


94,256








 

7      Investment properties

 


2012


2011


€'000


€'000





At 1 August

16,002


16,002

Disposals

(485)


-

Fair value adjustment

(9,665)


-

Transfer from property, plant and equipment (note 6)

7,456


-













At 31 July

13,308


16,002








 

        Investment property principally comprises land located in Ireland in areas originally destined for future development and regeneration.  The directors have reviewed the carrying value of investment properties and have considered the continuing decline in the Irish property market, a lack of transactions, restricted bank financing for property related transactions and a generally difficult economic environment.  In particular, the value of development land in regional areas is converging to that of agricultural land.  The determination of fair value was based on market evidence, to the extent available. T his review resulted in a writedown in the carrying value of investment properties of €9.7 million and a release of the related deferred tax liability of €330,000.  This net non-cash charge has been shown as an exceptional item in the consolidated income statement for the year ended 31 July 2012.

 

        As a result of a change in use of some of the group's property, plant and equipment the directors concluded that these items should be transferred to investment property.


Origin Enterprises plc

 

Notes to the preliminary results statement- continued

for the year ended 31 July 2012

 

8      Goodwill and intangibles

 


2012


2011


€'000


€'000





At  1 August

130,506


114,595

Arising on acquisition- goodwill

219


26,548

Arising on acquisition- other intangibles

-


37,844

Arising on disposal of subsidiary undertakings

-


(42,732)

Additions

6,782


3,001

Amortisation

(6,856)


(4,295)

Disposals

-


(447)

Translation adjustments

11,991


(4,008)









At 31 July

142,642


130,506









 

9      Investments in associates and joint ventures

 


2012


2011


€'000


€'000





        At 1 August

119,081


89,741

        Share of profits after tax, before exceptional items

13,138


14,857

        Dividends received

(10,340)


(7,002)

        Investment in Valeo Foods and R&H Hall (note 3)

7,815


28,163

        Loans/interest to associates

(70)


(889)

        Investment in Continental (ii)

-


1,100

        Loss on dilution of investment in Continental (ii)

   -


(4,738)

        Gain on dilution of investment in Valeo (i)

2,305


-

        Group share of acquisition costs and rationalisation costs, net of tax

(6,384)


(761)

        Arising on acquisition

-


232

        Share of other comprehensive (expense)/income

(4,015)


73

        Translation adjustment

3,309


(1,695)


            


            

        At 31 July

            124,839


              119,081





 

        Split as follows;




        Total associates

              52,042


                49,571

        Total joint ventures

              72,797


                69,510

       

              124,839


              119,081

 

(i)    In September 2011 Valeo issued equity to part finance its acquisition of Jacob Fruitfield Food Group.  As a result Origin's shareholding reduced from 44.1 per cent to 32 per cent.  This gave rise to a gain of €2.3 million arising on the dilution of the holding.


Origin Enterprises plc

 

Notes to the preliminary results statement- continued

for the year ended 31 July 2012

 

9      Investments in associates and joint ventures - continued

 

(ii)     On 23 June 2011, Continental raised €16.7 million upon its flotation on the Dublin and London Stock exchanges.  As a result Origin's shareholding reduced from 38.7 per cent to 24.2 per cent.  This gave rise to a loss of €4.7 million on the dilution of the holding, which is recorded in the income statement as an exceptional loss for the year ended 31 July 2011.

 

The Groups' holding in Continental has a market value at the balance sheet date of  €10.6  million compared to its carrying amount of  €16.8  million.  As a result the Group tested the carrying value of the investment for impairment.  As the recoverable amount exceeded the carrying amount of the investment, no impairment losses were recognised in the current financial year.

 

10   Employee 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.

 

        Employee benefits included in the Consolidated Statement of Financial Position comprises the following:

 


2012


2011


€'000


€'000





        Deficit in defined benefit schemes

                 8,559


               5,257

        Provision to meet unfunded pensions

                    418


                  426





        Total

                 8,977


               5,683





 

        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 2012 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

 



2012


2011



€'000


€'000







Net liability in schemes at 1August

(5,257)


(7,498)


Current service cost

(362)


(430)


Employer contributions

3,081


2,457


Acquisitions

-


444


Other finance expense

(137)


(191)


Actuarial (loss)/gain

(6,039)


221


Settlement and curtailment (losses)

-


(191)


Translation adjustments

155


(69)




 








At 31 July

(8,559)


(5,257)






 


Origin Enterprises plc

 

Notes to the preliminary results statement- continued

for the year ended 31 July 2012

                                                                                                                                                               

11   Analysis of net debt

 







Non-cash


Translation


  



2011


Cashflow


movements


Adjustment


2012



€'000


€'000


€'000


€'000


€'000













Cash

55,496


33,290


-


6,513


95,299


Overdrafts

(5,369)


(1,080)


-


(28)


(6,477)
























Cash and cash equivalents

50,127


32,210


-


6,485


88,822













Finance lease obligations

(1,218)


519


-


(106)


(805)


Loans

(141,029)


5,490


(790)


(19,496)


(155,825)
























Net Debt

(92,120)


38,219


(790)


(13,117)


(67,808)












 

 


Origin Enterprises plc

 

Notes to the preliminary results statement- continued

for the year ended 31 July 2012

 

 

12   Share capital

2012


2011


€'000


€'000





        Authorised




        Ordinary shares of €0.01 each

                 2,450


2,400

        Deferred convertible ordinary shares of €0.01 each

                       50


100





        Total

                 2,500


2,500









        Allotted, called up and fully paid




        Ordinary shares of €0.01 each (i)

                 1,380


1,330

        Deferred convertible ordinary shares of €0.01 each (ii)

                         5


55





        Total

                 1,385


1,385





 

 

        Allotted, called up and fully paid

No of ordinary shares

'000


Ordinary

shares

€'000


No of deferred convertible

ordinary shares

'000


        Deferred

convertible

ordinary

shares

€'000


Total

€'000

 











 

        At 1 August 2011

       133,015,572


               1,330


           5,483,583


                    55


1,385

 

        Converted during the year

           5,003,238

      


                    50

      


       (5,003,238)

      


                 (50)

      


-

 

 











 

        At 31 July 2012

       138,018,810


               1,380


              480,345


                      5


1,385

 











 





















 

 

(i)    Ordinary shareholders are entitled to dividends as declared and each ordinary share carries equal voting rights at meetings of the Company.

 

(ii)   The deferred convertible ordinary shares, which do not rank for dividend, were issued to directors and senior management of Origin as part of the Origin Long-Term Incentive Plan.  During the year 5,003,238 deferred convertible ordinary shares were converted on a one for one basis into ordinary shares.  The remaining deferred convertible ordinary shares are expected to convert into ordinary shares in 2013.

 

 

 

 

Origin Enterprises plc

 

Notes to the preliminary results statement- continued

for the year ended 31 July 2012

 

13    Related party transactions

 

Related party transactions occurring in the year were similar in nature to those described in the 2011 Annual Report.

 

 

14   Dividend

 

        The Board is recommending a dividend of 15 cent per ordinary share (2011: 11 cent per ordinary share).  Subject to shareholders' approval at the Annual General Meeting, the dividend will be paid on 7 January 2013 to shareholders on the register on 14 December 2012.  In accordance with IFRS this dividend has not been provided for in the Statement of Financial Position as at 31 July 2012.

 

 

 


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FR MMGMLNRGGZZM