Interim Results Announcement

RNS Number : 6280B

Origin Enterprises Plc

06 March 2014

 



 Origin Enterprises plc

Interim Results Announcement

Half Year ended 31 January 2014

Results Summary                                            

	6 months ended 31 Jan 2014 €'000	6 months ended 31 Jan 2013 €'000	Change
Revenue - Agri Services	517,606	567,680	(8.8%)
Operating profit*
-   Agri-Services	4,012	2,386	68.1%
Share of profit of associates and joint ventures**	6,693	10,866	(38.4%)
Group operating profit*	10,705	13,252	(19.2%)
Adjusted diluted EPS (cent per share)***	5.93	7.59	(21.9%)
Return of capital to shareholders	100,000	-	€100.0m
Net debt	163,550	178,736	(€15.2m)

* Before amortisation of non-ERP intangible assets and exceptional items.

** Share of profit of associates and joint ventures represents profit after interest and tax before exceptional items.

*** Before amortisation of non-ERP intangible assets, net of related deferred tax (2014: €2.4 million, 2013: €2.3 million) and exceptional items (2014: €2.3 million, 2013: €1.5 million).

 

Highlights

·    Good performance from Agri-Services in seasonally quiet first half reflecting impact of delayed crop plantings in the prior period due to unseasonal weather.

·    Excellent winter cropping profile established providing strong foundation for full year result.

·    Satisfactory performance from the Group's strategic associate and joint venture interests against the backdrop of a highly competitive trading environment.

·    Adjusted diluted earnings per share of 5.93 cent reflecting an underlying increase of 12.1 per cent.

·    Completion of Agroscope acquisition on 30 January 2014.

·    Net debt reduction of €15.2 million to €163.6 million.

·    Increasing full year EPS guidance by 3 per cent to 53.5 cent per share.

Origin Enterprises plc

Chief Executive Officer's comment:

Commenting on the announcement of the 2014 Interim Results, Origin Chief Executive Officer, Tom O'Mahony said:

"Origin has delivered a solid operating and financial performance during the seasonally quiet first half of the financial year, recording a 12.1 per cent increase in underlying adjusted earnings per share.

Agri-Services has performed ahead of last year and is well positioned for the seasonally more significant second half of the year as near perfect autumn growing conditions, principally in the United Kingdom, supported a strong recovery in winter arable plantings.

The completion of the acquisition of Agroscope in the period underlines Origin's strategic priority to scale its technology and service portfolios in new markets providing meaningful agronomic extension opportunity.

The requirement of primary food producers for greater crop productivity whilst managing the environmental sustainability of their production systems underscores the urgent priority to reliably close the gap between optimum crop potential and what is credibly achievable.  The Group, through its comprehensive co-ordinated growing systems and knowledge translation capability, is committed to delivering practical and relevant information on-farm that can positively influence the competitiveness, profitability and sustainability of primary arable, vegetable and fruit enterprises.

We are increasing full year guidance in adjusted diluted earnings per share by 3 per cent to 53.5 cent."

ENDS

The 2014 Interim Results Announcement 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.

Participant access numbers:                             

Ireland:                                     Tel:         +353 (0)1        247 6528

UK/International:                        Tel:         +44   (0)20      3427 1904

Switzerland:                              Tel:         +41   (0)44      580 7215

Confirmation Code:                    1698978

Enquiries:

Brendan Fitzgerald                    Tel:         +353 (0)1        612 1259

Chief Financial Officer               

Origin Enterprises plc

Joe Murray/Joe Heron               Tel:         +353 (0)1        498 0315

Murray Consultants                    Mobile:   +353 (0)87       690 9735

6 March 2014

INTERIM RESULTS STATEMENT

Financial review - summary

	6 months ended 31 Jan 2014 €'000	6 months ended 31 Jan 2013 €'000
Group revenue	517,606	567,680
Operating profit*	4,012	2,386
Associates and joint ventures, net**	6,693	10,866
Group operating profit*	10,705	13,252
Finance costs, net	(2,374)	(3,034)
Pre tax profits	8,331	10,218
Income tax	(369)	290
Adjusted diluted net profit	7,962	10,508
Adjusted diluted EPS (cent)***	5.93	7.59
Adjusted net profit reconciliation
Reported net profit	3,353	6,701
Amortisation of non-ERP intangible assets	2,859	2,901
Tax on amortisation of non-ERP intangible assets	(509)	(586)
Net acquisition, disposal and restructuring costs and fair value adjustments	2,259	1,492
Adjusted diluted net profit	7,962	10,508
Adjusted diluted EPS (cent)***	5.93	7.59

Financial review

Origin Enterprises plc ('Origin' or 'the Group'), announces adjusted diluted earnings per share*** for the period of 5.93 cent compared to 7.59 cent in the corresponding period last year.  On a like for like basis (excluding the impact of currency movements, the dilutive impact of the Welcon disposal and the Tender Offer) the underlying increase was 12.1 per cent.  The Group's earnings profile is significantly weighted towards the second half of the financial year with c.90 per cent of earnings typically arising in the second half.

Revenue

Revenue from Agri-Services was €517.6 million compared to €567.7 million in the previous period, a decrease of 8.8 per cent.  On a like for like basis (excluding the impact of currency movements) revenues decreased by €30.7 million (5.4 per cent) principally reflecting a combination of lower global fertiliser and feed prices partially offset by increased fertiliser, crop protection and crop marketing volumes.

Operating profit*

Operating profit* from the Agri-Services business amounted to €4.0 million compared to €2.4 million in the previous period, an increase of €1.6 million.  On a like for like basis (excluding the impact of currency) the increase year on year was €1.9 million.  The increase in profits reflects a return to more normal winter cropping patterns after the extreme weather conditions in the prior period and more importantly provides a strong foundation for the second half of the year.

Associates and joint ventures**

Origin's share of the profit after interest and taxation from associates and joint ventures decreased by €4.2 million from €10.9 million to €6.7million.  The decrease is principally attributable to the disposal of the Group's marine proteins and oils business, which was finalised in July 2013.

Financing costs, net debt and working capital

Net finance costs amounted to €2.4 million, a decrease of €0.7 million on the prior period.  Average net debt amounted to €129 million compared to €205 million last year reflecting the timing of the receipt of the proceeds from the disposal of our interest in Welcon and the return of capital to shareholders.  Net debt at 31 January 2014 was €163.6 million compared with €178.7 million at 31 January 2013 and is 1.97 times**** EBITDA for the twelve months to 31 January 2014.

Following the seasonal investment in working capital the net cash outflow from operating activities was €88.2 million (2013: €94.7 million) reflecting the impact of lower prices and a more normal season in the current year.  Year on year there was a reduction of €3.3 million in working capital.

Exceptional items

Exceptional items amounting to €2.3 million were incurred in the period principally relating to rationalisation costs arising from a restructuring of Agri-Services in the UK (€0.7 million), our share of Valeo rationalisation costs (€0.7 million) and costs associated with the Agroscope acquisition (€0.9m).

Return of Capital - Tender Offer

Following approval from shareholders at the Extraordinary General Meeting held on 18 November 2013, Origin completed a Tender Offer in December 2013.  The total number of Ordinary Shares purchased by the Company pursuant to the Tender Offer was 13,333,249 for a total consideration, before expenses, of approximately €100.0 million.

Dividend

On 2 December 2013 a dividend of 17.25 cent per share was paid in respect of the year ended 31 July 2013 totalling €23.2 million.  As in prior years, reflecting the seasonality of the business, the Group will declare an annual dividend at the time of the preliminary results announcement in September 2014.

* Operating profit and Group operating profit are stated before amortisation of non-ERP intangible assets and exceptional items.

** Share of profit of associates and joint ventures represents profit after interest and tax before exceptional items.

*** Adjusted diluted earnings per share is stated before amortisation of non-ERP intangible assets, net of related deferred tax (2014: €2.4 million, 2013: €2.3 million) and exceptional items (2014: €2.3 million, 2013: €1.5 million).

**** Net debt/EBITDA ratio as per the requirements of the syndicated bank loan agreement.

Review of Operations

Agri-Services

			Change on prior period
	2014 €m	2013 €m	Change €m	Underlying €m
Revenue	517.6	567.7	(50.1)	(30.7)
Operating profit*	4.0	2.4	1.6	1.9

*before amortisation of non-ERP intangible assets and exceptional items.

Agri-Services comprises on-farm integrated agronomy services and business-to-business agri-inputs.  These businesses provide customised solutions that address the efficiency, quality and output requirements of primary food producers in Ireland, the UK, Poland and Ukraine.  The Group's earnings profile is significantly weighted towards the second half of the financial year.

Revenue decreased by 8.8 per cent to €517.6 million reflecting lower global fertiliser and feed prices partially offset by increased fertiliser, crop protection and crop marketing volumes.  Operating profit increased by €1.6 million to €4.0 million.  On a like for like basis (excluding the impact of currency movements) operating profit increased by €1.9 million.

Integrated On-Farm Agronomy Services

United Kingdom

Agrii delivered a strong result in the period, recording higher revenues and profits as near perfect conditions on farm in the first quarter supported the early drilling of crops leading to a return to more normal winter cropping patterns.  In the same period last year adverse weather conditions significantly curtailed in-field operations resulting in reduced cropping and lower levels of agronomy sales.  The strengthening of Agrii's agronomy portfolio through integration was reflected in favourable serviced margins in the period which, along with increased sales of high performing seed varieties, helped to support the overall result.

Winter planting programmes are now complete with a total wheat area of approximately 2 million hectares, an increase of 23 per cent on last year.  Oil seed rape plantings are some 15 per cent lower than the prior year at approximately 640,000 hectares, principally due to the impact of rotational disruption encountered last year due to unseasonal weather.  This reduction is being more than offset by the increased planted area for wheat and other arable crops.  The higher level of winter plantings combined with crops that are well established provides a strong foundation for the full year result.

Agrii has now established a single business and operational platform reflecting strong organisational and strategic alignment around the priorities for on-farm service provision.  A fully integrated crop advisory and management system capability places on-farm knowledge transfer at the heart of the business today.  New leadership and cross functional support capabilities are well embedded and are helping to support closer customer engagement and collaboration through providing the very best levels of agri-intelligence for agronomists and growers.

The implementation of a comprehensive decision support capability continued during the period.  This development supports the integration of modern electronic decision support within the overall service offer to incorporate systematic soil scanning, whole field sampling with nutrient recommendations, targeted input application, pest and disease forecasting and performance analysis.

Maximising crop potential is identified as fundamentally strategic in supporting primary producers to optimise competitive advantage and to positively influence their highly demanding planning and operating environment.  A significant gap exists today between the outcomes of scientific research and their practical application on farm.

Agrii's on-going commitment to drive for sustainable yields is reflected in the establishment of a focused scientific capability within the business.  An independently chaired scientific strategy board is now guiding overall direction and development for applied research in cooperation with highly respected specialists and scientific organisations to create relevant research and knowledge transfer that is targeted and focused on growers' needs.

Genetics, nutrition and soils, precision agronomy, crop protection and emerging technologies form the central pillars of a five year research strategy underpinning Agrii's €25 million investment for an expansion in applied research, development and technical support for UK growers.  Through building excellence in research to the highest international standards, knowledge outcomes are transferred into practical information to support the competitiveness, profitability, productivity and sustainability of crop enterprises.

Poland

Dalgety Agra Polska delivered a solid performance in the first half, recording higher agronomy sales and margins.  Lower crop marketing revenues in the period reflected slower export opportunities as customers largely focused on covering their immediate requirements only.

Good autumn weather has facilitated optimal crop drilling conditions underpinning robust activity levels on-farm.  Combinable winter plantings at some 6 million hectares are broadly in line with last year.  This, in addition to an anticipated area for spring maize of 1 million hectares, supports a solid platform for the second half.

Dalgety has continued to make good progress in strategically positioning its product and service offer across all customer channels.  A realignment of the business under specific market focused segments is enabling more effective customer engagement and improved execution.  Dalgety's franchise offering to the independent shops channel performed well with its solutions based approach for larger growers, focused on integrating seed variety, high specification inputs and advice also gaining further momentum in the period.

Ukraine

On 30 January 2014, the Group completed the acquisition of a controlling interest in the business of Agroscope.  Based in Ukraine and founded in 2002, Agroscope, which employs 150 people, is a leading provider of agronomy services, high specification inputs and advisory support to arable and root crop growers.  The business representsan excellent strategic fit for Origin adding complementary expertise and strong brand reputation on-farm with a dedicated commitment to excellence in customer fulfilment.

The business is now actively engaged with customers on planning their requirements for the key spring period where an early season is anticipated.

Business-to-business Agri Inputs - Ireland and the UK

Operating profit in the period was ahead of last year, principally reflecting the benefit of higher fertiliser volumes and an improved feed performance partially offset by lower fertiliser margins.

Higher fertiliser volumes in Ireland were supported by favourable weather in late summer and early autumn with dairy enterprises continuing to invest in nutrition programmes to maximise grass and silage production for their winter fodder requirements.  In the United Kingdom sluggish margin and volume development in the first quarter was countered by improved demand in the second quarter as greater visibility on raw material pricing provided confidence to customers to fix a portion of their commitments ahead of the main application season.

We are optimistic in relation to full year fertiliser volumes in Ireland and the UK.  In particular strong output prices in the case of the dairy enterprise combined with a return to a full cropping area following last year's extreme weather conditions are expected to support consumption in the seasonally more important second half of the year.  Prescription based and bespoke nutrition applications continue to provide value added growth opportunity and, importantly, address the requirements of primary producers for high yielding and cost efficient output.

The business has developed a comprehensive sourcing and distribution capability which together with the benefit of well invested facilities leaves it well placed to fulfil customer off-take requirements in what is expected to be a concentrated volume off-take period in the second half of the financial year.

The Group's amenity business performed ahead of the prior year largely reflecting customers' renewed confidence of increased activity levels in the key second half period following lower demand last year due to the impact of poor weather.  Building upon the successful integration of Rigby Taylor, acquired in 2011, the business has strengthened its market positioning across the landscaping, sports turf and broad based amenity channels through a combination of greater focus on core branded offerings and innovative new product development that is principally dedicated to the professional sectors.

Feed ingredients achieved a good result in the period benefiting from improved margins.  A combination of favourable primary producer returns, principally in the case of dairy and the requirement to supplement winter feeding with high energy diets helped support a robust volume performance following last year's very strong feed demand.  The outlook for volumes for the second half of the financial year is stable with greater visibility on raw material pricing providing support to customers to plan their forward commitments with greater confidence.

Associates and joint ventures

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.  Valeo performed in line with expectations during the period and continues to maintain leadership positions across its core categories through programmes that prioritise value to consumers.

The grocery market in Ireland remains challenging as consumers seek to manage spend through shopping in discounters and buying into private label.  Whilst Valeo continues to build its presence in both these channels, the business has further developed its offer through the successful launch of several new products and the pack renovation of key brands.  These initiatives have been supported by a highly visible consumer communications programme.  Valeo has also been successful in building its  presence in the professional and business-to-business channels.

On 28 February, Valeo completed the acquisition of Rowse Honey which is the UK's leading honey producer and category brand.  The acquisition strongly complements Valeo's existing categories and provides important geographic diversification to the business.

John Thompson & Sons Limited ('John Thompson')

John Thompson, the largest single site multi species animal feed mill in the European Union, in which Origin has a 50 per cent shareholding, delivered a satisfactory performance during the period.

Outlook

Origin has made good progress in building an integrated and intelligence led agri-services business capability which is well positioned to capitalise on the provision of innovation and technology transfer for the sustainable development of primary crop enterprises.

The current cropping profile provides a strong platform for the seasonally more important second half of the financial year.  Following the completion of the acquisition of Agroscope on 30 January 2014 we are increasing full year guidance in adjusted diluted earnings per share by 3 per cent to 53.5 cent.  Origin will provide a further update on the outlook for the year in its next Trading Update on 28 May 2014.

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 an investment in consumer foods.  The Agri-Services business through its manufacturing and distribution operations in Ireland, the United Kingdom, Poland and Ukraine 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

Website:                       www.originenterprises.com

Origin Enterprises plc

Consolidated income statement     

for the six months ended 31 January 2014

					Six months
					ended				Six months			Six months		Six months			Year
						January			ended		ended			ended			ended
					2014				January		January			January			July
					Pre-				2014		2014			2013			2013
					Exceptional				Exceptional		Total			Total			Total
					€'000				€'000		€'000			€'000			€'000
		Notes							(Note 4)					(Note 6)			(Note 6)
					(Unaudited)				(Unaudited)		(Unaudited)			(Unaudited)			(Audited)
Revenue		3			517,606				-		517,606			567,680			1,418,173
Cost of sales					(456,418)				-		(456,418)			(506,901)			(1,225,557)
Gross profit					61,188				-		61,188			60,779			192,616
Operating costs					(60,035)				(1,746)		(61,781)			(62,633)			(126,647)
Share of profit of associates and joint ventures					6,693				(663)		6,030			10,414			21,545
Operating profit		3			7,846				(2,409)		5,437			8,560			87,514
Finance income		2			1,349				-		1,349			1,369			2,699
Finance expenses		2			(3,723)				-		(3,723)			(4,403)			(8,842)
Profit before tax					5,472				(2,409)		3,063			5,526			81,371
Income tax credit/(expense)					140				150		290			1,175			(8,359)
Profit attributable to equity shareholders					5,612				(2,259)		3,353			6,701			73,012
												Six months			Six months			Year
												ended			ended			ended
												January 2014			January  2013			July 2013
Basic earnings per share	5											2.50c			4.86c			52.84c
Diluted earnings per share               5												2.50c			4.84c			52.72c

Origin Enterprises plc

Consolidated statement of profit or loss and other comprehensive income

for the six months ended 31 January 2014

	Six months		Six months		Year
	ended		ended		ended
	January		January		July
	2014		2013		2013
	€'000		€'000		€'000
	(Unaudited)		(Unaudited)		(Audited)
Profit for the period	3,353		6,701		73,012
Other comprehensive income
Items that will not be reclassified to profit or loss:
Group/associate defined benefit pension obligations
-actuarial gain/(loss) on Group's defined benefit pension schemes	2,419		(663)		(5,258)
-deferred tax effect of actuarial gain/(loss)	(400)		253		711
-actuarial gain/(loss) on associate's defined benefit pension scheme, net of deferred tax	2,153		(3,255)		(4,552)
Deferred tax effect of change in tax rates	-		(495)		(462)
Items that may be reclassified subsequently to  profit or loss:
Group/associate foreign exchange translation details
-foreign currency net investments	5,192		(6,336)		(8,280)
-share of associate and joint ventures foreign exchange translation effects	-		-		(2,035)
-recycling on disposal of joint venture	-		-		(3,653)
Group/associate cash flow hedges
-effective portion of changes in fair value to cash flow hedges	(102)		1,729		2,487
-fair value of cash flow hedges transferred to income statement	(678)		522		(535)
-deferred tax effect of cash flow hedges	246		(496)		(344)
-share of associates and joint ventures cash flow hedges, net of deferred tax	(122)		214		339
Other comprehensive income/( expenses) for the period, net of tax	8,708		(8,527)		(21,582)
Total comprehensive income/(expense) for the period attributable to equity shareholders	12,061		(1,826)		51,430

Origin Enterprises plc

Consolidated statement of financial position

as at 31 January 2014

		January		January		July
		2014		2013		2013
	Notes	€'000		€'000		€'000
		(Unaudited)		(Unaudited)		(Audited)
				Restated
ASSETS				(Note 13)
Non-current assets
Property, plant and equipment	7	86,012		88,899		80,647
Investment properties		7,575		13,308		7,575
Goodwill and intangible assets	8	149,471		131,953		129,812
Investments in associates and joint ventures	9	50,721		127,607		45,235
Receivables		40,452		38,329		39,433
Deferred tax assets		4,902		4,240		4,504
Total non-current assets		339,133		404,336		307,206
Current assets
Inventory		155,117		155,460		108,366
Trade and other receivables		118,489		101,223		261,980
Amount due from disposal of joint venture		-		-		94,002
Derivative financial instruments		17		1,426		492
Cash and cash equivalents		66,266		49,135		125,484
Total current assets		339,889		307,244		590,324
TOTAL ASSETS		679,022		711,580		897,530

Origin Enterprises plc

Consolidated statement of financial position (continued)

as at 31 January 2014

			January		January		July
			2014		2013		2013
	Notes		€'000		€'000		€'000
			(Unaudited)		(Unaudited)		(Audited)
					Restated
					(Note 13)
EQUITY
Called up share capital	15		1,264		1,397		1,397
Share premium			160,399		160,399		160,399
Retained earnings and other reserves			872		58,415		112,790
TOTAL EQUITY			162,535		220,211		274,586
LIABILITIES
Non-current liabilities
Interest-bearing borrowings			227,537		226,111		150,503
Deferred tax liabilities			17,721		19,643		15,238
Other payables			3,598		939		3,549
Put option in respect of Agroscope	14		15,784		-		-
Post employment benefit obligations	10		10,057		9,454		12,385
Derivative financial instruments			721		2,519		2,136
Total non-current liabilities			275,418		258,666		183,811
Current liabilities
Interest-bearing borrowings			2,279		1,760		4,540
Trade and other payables			222,546		213,905		417,985
Corporation tax payable			11,474		5,010		13,228
Provision for liabilities	11		2,979		11,609		3,309
Derivative financial instruments			1,791		419		71
Total current liabilities			241,069		232,703		439,133
TOTAL LIABILITIES			516,487		491,369		622,944
TOTAL EQUITY AND LIABILITIES			679,022		711,580		897,530

Origin Enterprises plc

Consolidated statement of changes in equity

for the six months ended 31 January 2014

														Share-				Foreign
								Capital		Cashflow				based				currency
		Share		Share		Treasury		redemption		hedge		Revaluation		payment		Reorganisation		translation		Retained
		capital		premium		shares		reserve		reserve		reserve		reserve		reserves		reserve		earnings		Total
		€'000		€'000		€'000		€'000		€'000		€'000		€'000		€'000		€'000		€'000		€'000
	At 1 August 2013	1,397		160,399		(12)		1		(2,947)		12,843		1,061		(196,884)		(22,312)		321,040		274,586
	Profit for the period	-		-		-		-		-		-		-		-		-		3,353		3,353
	Total comprehensive income for the period	-		-		-		-		(656)		-		-		-		5,192		4,172		8,708
	Share buyback (Note 15 (iii))	(133)		-		-		133		-		-		-		-		-		(100,221)		(100,221)
	Dividend paid to shareholders (Note 16)	-		-		-		-		-		-		-		-		-		(23,891)		(23,891)
	At 31 January 2014	1,264		160,399		(12)		134		(3,603)		12,843		1,061		(196,884)		(17,120)		204,453		162,535

Origin Enterprises plc

Consolidated statement of changes in equity

for the six months ended 31 January 2013

														Share-				Foreign
								Capital		Cashflow				based				currency
		Share		Share		Treasury		redemption		hedge		Revaluation		payment		Reorganisation		translation		Retained
		capital		premium		shares		reserve		reserve		reserve		reserve		reserves		reserve		earnings		Total
		€'000		€'000		€'000		€'000		€'000		€'000		€'000		€'000		€'000		€'000		€'000
	At 1 August 2012	1,385		160,399		-		1		(4,894)		14,836		1,332		(196,884)		(8,344)		274,759		242,590
	Issue of shares	12		-		(12)		-		-		-		-		-		-		-		-
	Share-based payments	-		-		-		-		-		-		150		-		-		-		150
	Total comprehensive expense for the period	-		-		-		-		1,969		-		-		-		(6,336)		2,541		(1,826)
	Dividend paid to shareholders	-		-		-		-		-		-		-		-		-		(20,703)		(20,703)
	At 31 January 2013	1,397		160,399		(12)		1		(2,925)		14,836		1,482		(196,884)		(14,680)		256,597		220,211

Origin Enterprises plc

Consolidated statement of cash flows 

for the six months ended 31 January 2014

	Six months		Six months		Year
	ended		ended		ended
	January 2014		January 2013		July 2013
	€'000		€'000		€'000
	(Unaudited)		(Unaudited)		(Audited)
Cash flows from operating activities
Profit before tax	3,063		5,526		81,371
Exceptional items	2,409		1,791		(2,458)
Finance income	(1,349)		(1,369)		(2,699)
Finance expenses	3,723		4,403		8,842
Share of profit of associates and joint ventures	(6,693)		(10,866)		(21,856)
Depreciation of property, plant and equipment	2,582		2,669		5,369
Amortisation of intangible assets	4,053		3,482		7,366
Employee share-based payment charge	-		150		1,269
Pension contributions and payments in excess of service costs	-		-		(1,834)
Payment of exceptional rationalisation costs	(1,876)		(1,339)		(5,152)
Operating cashflow before changes in working capital	5,912		4,447		70,218
Increase in inventory	(31,574)		(57,558)		(10,709)
Decrease/(increase) in trade and other receivables	155,559		159,618		(10,404)
(Decrease)/increase in trade and other payables	(213,386)		(193,583)		17,635
Cash (absorbed)/generated from operating activities	(83,489)		(87,076)		66,740
Interest paid	(2,740)		(2,987)		(7,410)
Income tax paid	(2,008)		(4,622)		(9,664)
Net cash (outflow)/inflow from operating activities	(88,237)		(94,685)		49,666

Origin Enterprises plc

Consolidated statement of cash flows (continued)

for the six months ended 31 January 2014

	Six months		Six months		Year
	Ended		ended		Ended
	January 2014		January 2013		July  2013
	€'000		€'000		€'000
	(Unaudited)		(Unaudited)		(Audited)
Cash flows from investing activities
Proceeds from sale of property, plant and equipment	112		59		367
Purchase of property, plant and equipment	(6,131)		(3,964)		(7,893)
Additions to intangible assets	(791)		(2,906)		(6,121)
Disposal of associate undertaking	-		-		16,319
Payment of contingent acquisition consideration	-		(1,873)		(8,846)
Cash consideration received on disposal of joint venture	94,002		-		-
Cash consideration paid for acquisition of Agroscope	(7,259)		-		-
Dividends received/loans to associates and joint ventures	1,703		2,220		6,908
Net cash inflow/(outflow) from investing activities	81,636		(6,464)		734
Cash flows from financing activities
Drawdown of bank loans	70,572		84,358		10,517
Share buyback (see note 15)	(100,221)		-		-
Dividend paid to equity shareholders (see note 16)	(23,891)		(20,703)		(20,703)
Decrease in finance lease obligations	(96)		(219)		(352)
Net cash (outflow)/inflow from financing activities	(53,636)		63,436		(10,538)
Net (decrease)/increase in cash and cash equivalents	(60,237)		(37,713)		39,862
Translation adjustment	3,286		(3,612)		(7,624)
Cash and cash equivalents at start of period	121,060		88,822		88,822
Cash and cash equivalents at end of period (note 12)	64,109		47,497		121,060

Origin Enterprises plc

Notes to the group condensed interim financial information

for the six months ended 31 January 2014

1      Basis of preparation

The Group condensed interim financial information has been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting (IAS 34). The condensed interim financial information does not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual financial statements in respect of the year ended 31 July 2013, which have been prepared in accordance with IFRSs. The financial statements for the year ended 31 July 2013 were filed with the Registrar of Companies and are available on the company's website www.originenterprises.com. Those financial statements contained an unqualified audit report.

The group condensed interim financial information for the six months ended 31 January 2014 and the comparative figures for the six months ended 31 January 2013 are unaudited and have not been reviewed by the Auditors. The financial information for the year ended 31 July 2013 represents an abbreviated version of the Group's full accounts for that year.

The Group condensed financial information is presented in euro, rounded to the nearest thousand, which is the functional currency of the Parent.

A comprehensive review of the group's performance for the six months ended 31 January 2014 is included in the financial highlights section included on pages 1 to 10. The group's business is seasonal and is heavily weighted towards the second half of the financial year.

2      Accounting policies

Except as described below, the group interim financial information has been prepared on the basis of the accounting policies as set out on pages 48 to 54 of the Group's Annual Report for the year ended 31 July 2013.

The following standards and interepretations, issued by the International Accounting Standards Board ('IASB') and the International Financial Reporting Interpretations Committee ('IFRIC'), are effective for the Group for the first time in the current financial period and where relevant have been adopted by the Group:

·      IAS 19 (revised)- Employee Benefits

·      IFRS 13- Fair Value Measurement

Adoption of the standards above have had no significant impact on the results or financial position of the Group during the period. IAS 19 (revised) ‐Employee Benefits amends the accounting for employment benefits. The Group has applied the standard retrospectively in accordance with the transition provisions of the standard. The impact on the Group's result is as follows:

The standard replaces the interest cost on the defined benefit obligation and the expected return on plan assets with a net interest cost which is calculated based on the net defined benefit liability and the discount rate, measured at the beginning of the year. The adoption of IAS 19 (revised) ‐Employee Benefits has resulted in a decrease in both finance income and finance expense. However the effect on the net interest expense is immaterial.

The pension deficit, 'post employment benefit obligations' as previously reported on the balance sheet has not changed as a result of the above.

The Group has not applied early adoption of any standards for which the effective date is not yet required.

Origin Enterprises plc

Notes to the group condensed interim financial information (continued)

for the six months ended 31 January 2014

3	Segment information
	Segment revenue and result	Agri-Services				Associates & Joint Ventures				TOTAL
		Six months		Six months		Six months		Six months		Six months		Six months
		ended		ended		ended		ended		ended		ended
		31/01/14		31/01/13		31/01/14		31/01/13		31/01/14		31/01/13
		€'000		€'000		€'000		€'000		€'000		€'000
	Total revenue	517,606		567,680		207,604		298,550		725,210		866,230
	Less revenue from associates and joint ventures	-		-		(207,604)		(298,550)		(207,604)		(298,550)
	Revenue	517,606		567,680		-		-		517,606		567,680
	Segment result	4,012		2,386		6,693		10,866		10,705		13,252
	Amortisation of non-ERP intangible assets									(2,859)		(2,901)
	Total operating profit before exceptional items									7,846		10,351
	Exceptional items									(2,409)		(1,791)
	Operating profit									5,437		8,560

Origin Enterprises plc

Notes to the group condensed interim financial information (continued)

for the six months ended 31 January 2014

4        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 in the period;

	Six months		Six months
	ended		ended
	January		January
	2014		2013
	€'000		€'000
Rationalisation costs (i)	834		1,339
Agroscope related transaction costs	912		-
Arising in associates and joint ventures (ii)	663		452
Total exceptional items	2,409		1,791
Tax on exceptional items	(150)		(299)
Total exceptional items, net of tax	2,259		1,492

(i)   Rationalisation costs include termination payments arising from a restructuring of Agri-Services in the UK.

(ii)  During the current and prior period, the exceptional loss arising in associates and joint ventures related to the Group's share of rationalisation costs arising in Valeo.

Origin Enterprises plc

Notes to the group condensed interim financial information (continued)

for the six months ended 31 January 2014

5      Earnings per share

Basic earnings per share

	Six months		Six months
	ended		ended
	January		January
	2014		2013
	€'000		€'000
Profit for the financial period attributable to equity shareholders	3,353		6,701
	'000		'000
Weighted average number of ordinary shares for the period	134,296		138,019
	Cent		Cent
Basic earnings per share	2.50		4.86

        Diluted earnings per share

	Six months		Six months
	ended		ended
	January		January
	2014		2013
	€'000		€'000
Profit for the financial period attributable to equity shareholders	3,353		6,701
	'000		'000
Weighted average number of ordinary shares used in basic calculation	134,296		138,019
Effect of convertible shares with a dilutive effect	-		480
Weighted average number of ordinary shares (diluted) for the period	134,296		138,499
	Cent		Cent
Diluted earnings per share	2.50		4.84

Origin Enterprises plc

Notes to the group condensed interim financial information (continued)

for the six months ended 31 January 2014

5      Earnings per share (continued)

         Adjusted earnings per share

						Six months		Six months
						ended		ended
						January		January
						2014		2013
						€'000		€'000
	Profit for the financial period attributable to equity shareholders					3,353		6,701
	Amortisation of non-ERP intangible assets					2,859		2,901
	Tax on amortisation of non-ERP intangible assets					(509)		(586)
	Exceptional items, net of tax					2,259		1,492
	Total adjusted basic earnings					7,962		10,508
						cent		cent
	Total adjusted basic earnings per share					5.93		7.61
	Total adjusted  earnings- as above					7,962		10,508
						cent		cent
	Total adjusted diluted earnings per share					5.93		7.59

The calculation of basic adjusted earnings per share is based on the weighted average number of shares in issue during the period of 134,296,257 (31 January 2013:  138,018,810).  The weighted average number of shares used in the calculation of adjusted diluted earnings per share is 134,296,257 (31 January 2013: 138,499,155).

Origin Enterprises plc

Notes to the group condensed interim financial information (continued)

for the six months ended 31 January 2014

6      Consolidated Income Statements for the six months ended 31 January 2013 and year ended 31 July 2013

        Six months ended 31 January 2013

			Six months
			ended		Six months		Six months
			January		ended		ended
			2013		January		January
			Pre-		2013		2013
			Exceptional		Exceptional		Total
			€'000		€'000		€'000
			(Unaudited)		(Unaudited)		(Unaudited)
	Revenue		567,680		-		567,680
	Cost of sales		(506,901)		-		(506,901)
	Gross profit		60,779		-		60,779
	Operating costs		(61,294)		(1,339)		(62,633)
	Share of profit of associates and joint ventures		10,866		(452)		10,414
	Operating profit		10,351		(1,791)		8,560
	Finance income (note 2)		1,369		-		1,369
	Finance expenses (note 2)		(4,403)		-		(4,403)
	Profit before tax		7,317		(1,791)		5,526
	Income tax credit		876		299		1,175
	Profit attributable to equity shareholders		8,193		(1,492)		6,701

Origin Enterprises plc

Notes to the group condensed interim financial information (continued)

for the six months ended 31 January 2014

6      Consolidated Income Statements for the six months ended 31 January 2013 and year ended 31 July 2013 (continued)

        Year ended 31 July 2013

			Year
			Ended		Year		Year
			July		Ended		Ended
			2013		July		July
			Pre-		2013		2013
			Exceptional		Exceptional		Total
			€'000		€'000		€'000
			(Audited)		(Audited)		(Audited)
	Revenue		1,418,173		-		1,418,173
	Cost of sales		(1,225,557)		-		(1,225,557)
	Gross profit		192,616		-		192,616
	Operating costs		(129,416)		2,769		(126,647)
	Share of profit of associates and joint ventures		21,856		(311)		21,545
	Operating profit		85,056		2,458		87,514
	Finance income (note 2)		2,699		-		2,699
	Finance expenses (note 2)		(8,842)		-		(8,842)
	Profit before tax		78,913		2,458		81,371
	Income tax charge		(10,555)		2,196		(8,359)
	Profit attributable to equity shareholders		68,358		4,654		73,012

Origin Enterprises plc

Notes to the group condensed interim financial information (continued)

for the six months ended 31 January 2014

7      Property, plant and equipment

	January		July
	2014		2013
	€'000		€'000
At beginning of period	80,647		91,148
Acquisitions (note 14)	483		-
Additions	5,704		7,964
Disposals	(111)		(367)
Transfer to investment property	-		(600)
Impairment of property, plant and equipment	-		(8,612)
Depreciation charge	(2,582)		(5,369)
Translation adjustments	1,871		(3,517)
At end of period	86,012		80,647

8      Goodwill and intangible assets

	January		July
	2014		2013
	€'000		€'000
At  beginning of period	129,812		142,642
Acquisitions (note 14)	17,572		-
Additions	791		6,121
Amortisation of non-ERP intangible assets	(2,859)		(5,689)
ERP intangible amortisation	(1,194)		(1,677)
Translation adjustments	5,349		(11,585)
At end of period	149,471		129,812

        Included in the total goodwill and intangible assets above is goodwill of €85,145,000 (July 2013: €74,570,000).

Origin Enterprises plc

Notes to the group condensed interim financial information (continued)

for the six months ended 31 January 2014

9      Investments in associates and joint ventures

	January		July
	2014		2013
	€'000		€'000
At beginning of period	45,235		124,839
Share of profits after tax and before exceptional items	6,693		21,856
Share of exceptional items, net of tax	(663)		(311)
Dividends received from associates	(2,119)		(6,908)
Disposal of interest in Continental Farners Group	-		(16,587)
Disposal of interest in Welcon	-		(73,873)
Share of other comprehensive income/(expense)	2,031		(6,248)
Translation adjustments and other	(456)		2,467
At end of period	50,721		45,235

10     Post employment benefit obligations

        The Group operates a number of defined benefit pension schemes and defined contribution schemes with assets held in separate trustee administered funds.  All of the defined benefit schemes are closed to new members.

        The valuations of the defined benefit schemes used for the purposes of the following disclosures are those of the most recent actuarial review carried out effective 31 January 2014 by an independent, qualified actuary.  The valuations have been performed using the projected unit method.

Origin Enterprises plc

Notes to the group condensed interim financial information (continued)

for the six months ended 31 January 2014

10     Post employment benefit obligations (continued)

        Movement in net liability recognised in the Consolidated Statement of Financial Position

		January		July
		2014		2013
		€'000		€'000
	Net liability in schemes at beginning of the period	(12,385)		(8,559)
	Current service cost	(247)		(441)
	Negative past service cost	65		536
	Contributions	327		1,739
	Other finance expense	(298)		(358)
	Actuarial gain/(loss)	2,419		(5,258)
	Translation adjustments	62		(44)
	Net liability in schemes at end of the period	(10,057)		(12,385)

11     Provision for liabilities 

        The estimate of provisions is a key judgement in the preparation of the financial statements.

	Rationalisation                     €'000 (i)		Other                     €'000  (ii)		Total                     €'000
2014
At beginning of period	387		2,922		3,309
Provided in period	1,746		-		1,746
Paid in period	(1,876)		(222)		(2,098)
Currency translation adjustment	15		7		22
At end of period	272		2,707		2,979

(i)     Rationalisation and redundancy costs relate to termination payments and property exit costs primarily arising from a restructuring of Agri Services in the UK.

(ii)     Other provisions relate to various operating and employment related costs.

Origin Enterprises plc

Notes to the group condensed interim financial information (continued)

for the six months ended 31 January 2014

12	Analysis of net debt
		31 July				Non cash		Translation		31 January
		2013		Cashflow		movements		Adjustment		2014
		€'000		€'000		€'000		€'000		€'000
	Cash	125,484		(62,571)		-		3,353		66,266
	Overdrafts	(4,424)		2,334		-		(67)		(2,157)
	Cash and cash equivalents	121,060		(60,237)		-		3,286		64,109
	Finance lease obligations	(394)		96		-		(17)		(315)
	Loans	(150,225)		(70,572)		(315)		(6,232)		(227,344)
	Net Debt	(29,559)		(130,713)		(315)		(2,963)		(163,550)

          The loans included above are unsecured and the facility extends to July 2016.

13      Reclassifications and adjustments

Certain amounts in the 31 January 2013 Group condensed interim financial information have been reclassified or adjusted to conform to the 31 January 2014 presentation. These reclassifications or adjustments were made for presentation purposes and have no effect on total revenues, expenses, profit for the year, total assets, total liabilities, equity or cash flow classifications as previously reported.

Origin Enterprises plc

Notes to the group condensed interim financial information (continued)

for the six months ended 31 January 2014

14     Acquisition of subsidiary undertaking

On 30 January 2014 the Group completed the acquisition of a controlling interest in the business of Agroscope. Based in the Ukraine, Agroscope is a leading provider of agronomy services, high specification inputs and advisory support to arable and root crop growers.

Details of the net assets acquired and goodwill arising from the business combination are as follows;

		Fair value €'000
Net assets acquired:
Property, plant and equipment		483
Intangible assets		10,564
Inventory		11,216
Other receivables		1,724
Deferred tax liabilities		(2,002)
Net assets acquired		21,985
Goodwill arising on acquisition		7,008
Consideration		28,993
Satisfied by:
Cash consideration		7,259
Cash consideration payable (payable within one year)		5,950
Put option liability		15,784
Total Consideration		28,993

         The goodwill recognised on acquisition is attributable to the skills and technical talent of the acquired business's workforce, and the synergies expected to be achieved from integrating the company into the Group's existing business. None of the goodwill recognised is expected to be deductible for income tax purposes.

Origin acquired a 60 percent interest in the business of Agroscope for cash consideration on 30 January 2014.  The Group have also entered into an arrangement with the minority shareholder of Agroscope, under which the minority shareholder has the right at various dates to sell the remaining 40 percent interest to Origin based on an agreed formula.  In the event that this is not exercised Origin has a similar right to acquire the 40 percent interest.  Origin has recognised an option liability of €15.8 million which is the fair value of the future estimated amount payable to exercise the option.  This has been determined based on an agreed formula which includes an expectation of future trading performance and timing of when the options are expected to be exercised, discounted to present day value using a cost of debt rate of 3%.

Origin has elected to apply the anticipated acquisition method in accounting for the option whereby the non-controlling interest is not recognized but rather treated as already acquired by Origin both in the Consolidated Statement of Financial Position and the Consolidated Statement of Comprehensive Income.  This treatment has been adopted as the Directors have formed the view that based on the structure and timing of the option contracts sufficient risks and rewards are deemed to have transferred to Origin.  Profits and losses attributable to the minority shareholder in respect of their 40 percent interest will be presented as attributable to the equity shareholders of Origin and not as attributable to minority interests.  The €15.8 million financial liability recognised by the Group forms part of the contingent consideration for the acquisition.  All components of contingent consideration will be carried at fair value in future accounting periods and any adjustments arising will be reflected in the income statement.

The fair values presented in this note are based on provisional valuations due to the close proximity of the transaction to the end of the half year period.

Origin Enterprises plc

Notes to the group condensed interim financial information (continued)

for the six months ended 31 January 2014

15	Share capital	January		July
		2014		2013
		€'000		€'000
	Authorised
	Ordinary shares of €0.01 each (i)	2,500		2,400
	Deferred convertible ordinary shares of €0.01 each (ii)	-		100
	Total	2,500		2,500
	Allotted, called up and fully paid
	Ordinary shares of €0.01 each (i)	1,264		1,397

Allotted, called up and fully paid	No of ordinary shares		Ordinary shares €'000
At 1 August 2013 (iv)	139,712,026		1,397
Share buyback (iii)	(13,333,249)		(133)
At 31 January 2014 (iv)	126,378,777		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)    Following the conversion and redesignation of all the issued deferred convertible shares as ordinary shares all of the unissed deferred convertible shares were converted to and redesignated as ordinary shares at the annual general meeting on 18 November 2013.

(iii)    Following approval from shareholders at an extraordinary general meeting on 18 November 2013 Origin completed a Tender Offer in December 2013. The total number of ordinary shares purchased by Origin at €7.50 per share pursuant to the tender offer was 13,333,249 for a total consideration before expenses of €100 million.

(iv)   In December 2012, the issued ordinary share capital was increased by the issue of 1,212,871 ordinary shares of nominal value of €0.01 each, at an issue price of €4.04 each, pursuant to a share subscription by a wholly owned subsidiary for the purposes of the Long Term Incentive Plan 2012 ("2012 LTIP plan"). Under the terms of the 2012 LTIP plan, Directors and senior management of Origin have an interest in these shares which is subject to certain financial targets being achieved over the three years to 31 July 2015 and their remaining in employment with the group during that period. These shares are classified as treasury shares for accounting purposes pending satisfaction of the applicable terms of the 2012 LTIP plan.

Origin Enterprises plc

Notes to the group condensed interim financial information (continued)

for the six months ended 31 January 2014

16       Dividends

On 2 December 2013 a dividend of 17.25 cent per ordinary share was paid in respect of the year ended 31 July 2013 totalling €23,891,104. The dividend was approved by shareholders at the Annual General Meeting on 18 November 2013.

17      Contingent liabilities

The group is not aware of any major changes with regard to contingent liabilities in comparison with the situation as of 31 July 2013.

18      Related party transactions

 Related party transactions occurring in the period were similar in nature to those described in the 2013 Annual Report.

19      Release of half yearly condensed financial statements

The group condensed financial information was approved for release by the Board on 5 March 2014.

 

END

 

 

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