Origin Regulatory News (OGN)

Origin Enterprises plc

INTERIM RESULTS STATEMENT

Improved operating profit and strong working capital performance in seasonally quieter first half

4 March 2021

Origin Enterprises plc ('Origin' or 'the Group'), the international Agri-Services group, providing specialist agronomy advice, crop inputs and digital agricultural solutions to farmers, growers and amenity professionals, today announces its interim results for the half year ended 31 January 2021.

Financial and Operational Highlights

· Group revenue decreased by 5.4% to €572.4 million. Excluding adverse foreign currency translation impacts, revenue was broadly consistent with H1 2020

· Operating profit of €1.2 million in the first half of the year (H1 2020: loss of €2.8m)

· Increase in underlying1 operating profit of €5.7 million, driven by improved performance in Ireland and the UK, due to a return to more normalised autumn and winter crop plantings

· Continental Europe and Latin America divisions performed in line with expectations, with adverse foreign currency translation impacting Latin America's contribution

· Investment in second CRF manufacturing plant in Brazil near completion

· Adjusted diluted loss per share of 1.53 cent (H1 2020: adjusted diluted loss per share of 4.53 cent)

· Strong working capital performance across all business units, delivering a reduction of €88.0 million

· Decrease in net bank debt5 by €105.9 million to €158.3 million delivered Net Debt/EBITDA ratio improvement from 3.24x to 2.76x

· TJ Kelly joined the Group as Chief Financial Officer on 18 January 2021

· Continued progress on the Group's sustainability agenda; improved ESG rating and became a signatory of the United Nations Global Compact

· Interim dividend of 3.15 cent per share (H1 2020: 3.15 cent per share)

1 Excluding currency movements and the impact of acquisitions

2 Before amortisation of non-ERP intangible assets and exceptional items

3 Profit after interest and tax

4 Before amortisation of non-ERP intangible assets, net of related deferred tax (2021: €3.4 million, 2020: €3.9 million) and exceptional items, net of tax (2021: charge of €0.4 million, 2020: gain of €0.3 million)

5 Net bank debt excludes IFRS16 Lease liabilities

Origin Enterprises plc

Commenting on the results, Origin Chief Executive Officer, Sean Coyle said:

"While continuing to navigate the challenges caused by COVID-19, weaker currencies in certain of the Group's geographies, and Brexit, the Group delivered an improved performance in the first half of the year. Operating profit of €1.2 million in the period compared favourably to a loss of €2.8 million in H1 2020. This was largely as a result of a more normalised cropping profile across the Group, set against last year's highly unseasonal and prolonged weather conditions which materially impacted business performance in H1 2020.

Group revenue was €572.4 million for the first half, a decline of 5.4% on a reported basis, but in line with the corresponding period last year on a constant currency basis. Revenue performance reflects underlying volume growth of 2.0%, driven primarily by fertiliser tonnes, offset by pricing declines of 2.1%. Fertiliser prices were lower than last year for most of H1 2020 but increased towards the end of the period, while pricing of other crop inputs remained stable or increased in the period.

The Group delivered a strong working capital performance across all business units, with a significant reduction in working capital and net bank debt, driven by enhanced management of our inventory levels, debt recovery, and the one-off benefit of COVID-19 related UK VAT deferrals. Our improved balance sheet allows us to resume dividend payments, and pursue further M&A activity, in the second half of the year.

Despite the unprecedented disruption experienced during the period as a result of COVID-19, our businesses continued to operate effectively, while meeting the needs of the agricultural communities we serve. The uncertainty created by the pandemic continues and in this challenging environment for everyone, the Group's priority remains keeping our employees safe and well. Thanks to the collective efforts of all of our people we continue to serve our customers and deliver solid profitability and strong operating cash flow.

During the first half we advanced our sustainability agenda with an improved Sustainalytics rating and CDP awarded us a positive first-time climate score. We also became a signatory of the United Nations Global Compact and committed to making its core principles an integral part of our strategy, culture and day-to-day operations.

During the period we welcomed TJ Kelly, the Group's new Chief Financial Officer. TJ joined the Group in January and I would like to wish him every success in his role. I would also like to thank Declan Giblin for his valued contribution as a Board member, as he steps down from the Board at the end of the financial year to focus primarily on the growth and development of our LATAM platform.

While our H1 2021 performance sets a positive foundation for the full year, with an encouraging cropping profile across our geographies, continued wet and cold conditions in the UK and Ireland have meant that our expectation of 1.7 million hectares for the total winter wheat planted area in the UK is now lower than the 1.8 million hectares anticipated at our Q1 trading update, and may delay the spring application period. That, together with the renewed COVID-19 restrictions across all of our geographies, means that trading uncertainties remain heading into the seasonally more significant second half.

The Group is well placed to deliver good growth in earnings for the full year, and consistent with prior years, we will provide an update on full year guidance at the time of the Q3 Trading Update on 16 June 2021."

ENDS

Conference Call

Origin will host a live conference call and webcast, for analysts and institutional investors today, 4 March 2021, at 08:30 (Irish/UK time). Dial-in details are set out below for the conference call and the webcast can be accessed on the Group website: www.originenterprises.com. Participants are requested to dial in 5 to 10 minutes prior to the scheduled start time.

Participant access numbers:

Replay

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

Enquiries

About Origin Enterprises plc

Origin Enterprises plc is a focused Agri-Services group providing specialist on-farm agronomy services, digital agricultural services and the supply of crop technologies and inputs. The Group has leading market positions in Ireland, the United Kingdom, Belgium, Brazil, Poland, Romania and Ukraine. Origin is listed on the Euronext Growth (Dublin) and AIM markets of the Irish and London Stock Exchanges.

Euronext Growth (Dublin) ticker symbol: OIZ

AIM ticker symbol: OGN

Website: www.originenterprises.com

INTERIM RESULTS STATEMENT

Financial Review - Summary

Origin delivered an adjusted diluted loss per share3 in H1 2021 of 1.53 cent compared to an adjusted diluted loss per share of 4.53 cent in H1 2020. On a like-for-like basis (excluding the impact of currency movements and acquisitions/disposals) the underlying increase was 4.27 cent.

Group revenue

Group revenue was €572.4 million in H1 2021 compared to €604.9 million in the corresponding period last year, a reduction of 5.4%. On an underlying basis at constant currency, revenues decreased by €0.5 million (0.1%).

The underlying increase in agronomy services and crop input volumes, excluding crop marketing, was 6.8% in H1 2021 compared to H1 2020 (and 2.0% including crop marketing).

Operating profit/(loss)1

Operating profit1 in H1 2021 was €1.2 million compared to a loss of €2.8 million in H1 2020. On an underlying basis at constant currency, the increase year-on-year was €5.7 million.

Associates and joint venture2

Origin's share of the profit after interest and taxation from associates and joint venture amounted to €0.8 million, a €0.3 million decrease on the prior year, principally due to the disposal of the Group's interest in Ferrari Zagatto.

Net bank debt and financing costs

Net bank debt5 at 31 January 2021 was €158.3 million compared with €264.2 million at 31 January 2020, and is 2.76 times EBITDA4 for the twelve months to 31 January 2021. The period end net bank debt reduction is principally attributable to a continued focus on working capital efficiencies across the Group. Net finance costs amounted to €4.5 million compared to €5.5 million in the corresponding period last year. The reduction in net finance costs of €1.0 million in the period reflected reduced levels of net bank debt across the period including in higher interest geographies like Ukraine.

At period end our key banking covenants are as follows:

Working capital

Following the seasonal investment in working capital in the period, the net cash outflow from operating activities was €94.3 million (H1 2020: €141.2 million) and there was a decrease in working capital at period end to €101.2 million (H1 2020: €189.2 million). The year-on-year net working capital reduction includes a more normalised working capital profile in the UK which was elevated in FY 20 due to higher inventory levels in advance of the possible hard Brexit on 31 October 2019. It also reflects a continued focus on working capital efficiencies across the Group, improved debtor recovery and enhanced inventory planning and management protocols in Continental Europe together with the positive impact of COVID-19 VAT deferrals in the UK, amounting to €13.9 million, the benefit of which will flow out over the coming twelve months.

Dividend

Due to the market challenges and uncertainty caused by COVID-19, the Board determined that it was prudent to suspend the final dividend for FY 20. We are pleased to announce that an interim dividend of 3.15 cent per share will be paid on 30 April 2021 to shareholders on the register on 9 April 2021.

Executive and Non-Executive Director changes

On 18 January 2021, TJ Kelly joined Origin as Group Chief Financial Officer. TJ was also appointed as a Director of the Company at that time.

Declan Giblin, our CEO LATAM, has informed the Board of his intention to retire in the next two years, and has decided he will step down from the Board at the end of FY 21, to focus primarily on the continued growth and development of our LATAM platform. Declan joined the Board of Origin following the acquisition of Masstock in 2007, and has been instrumental in the growth of the Group in the subsequent 14 years. He initially led the creation of the Agrii group in the UK and subsequently led the diversification of the Group internationally with further acquisitions in the UK, Europe and LATAM.

In October the Group also announced the appointment of Ms Helen Kirkpatrick to the Board as an independent Non-Executive Director.

COVID-19

COVID-19 and its impact in the markets in which the Group operates continues to be a significant area of focus for the Board and senior management teams. The Group actively monitors the advice and guidance of governments and health authorities across our markets, with ongoing audits at all our operating facilities to ensure we adhere to safe social distancing and all other health and safety guidance.

The Group continues to monitor developments closely across our locations and is taking appropriate actions to ensure we provide the safest environment we can for our stakeholders, while continuing to serve the needs of the agricultural community in a responsible manner. The Group will repay the £0.2 million of furlough support payments claimed by our Amenity business in the period.

Brexit

Following the conclusion of the trade deal between the European Union and the United Kingdom, the Brexit transition period officially concluded on 31 December 2020. The Group had taken all appropriate steps to ensure we were adequately prepared in the event of a no deal scenario. All appropriate protocols are currently being adhered to and the Group is monitoring all advice and guidance issued by the European Union and the United Kingdom authorities to ensure our supply chain continues to operate effectively and our customers are served in an efficient and effective manner.

Origin currently utilises the UK-based CREST settlement system for electronic trades made in the Company's ordinary shares. As a consequence of Brexit it will no longer be possible for Irish public companies to use the CREST system after 30 June 2021. In common with all other affected Irish incorporated and traded PLCs, the Company will have to migrate settlement to another system based within the EU, through Euroclear Bank in Belgium. Origin held an Extraordinary General Meeting on 28 January 2021 where all three resolutions required to enable the migration to the Euroclear Bank settlement system were approved. It is expected that the migration will take place in mid-March 2021.

1 Operating profit/(loss) and Group operating profit/(loss) are stated before amortisation of non-ERP intangible assets and exceptional items

2 Profit after interest and tax

3 Before amortisation of non-ERP intangible assets, net of related deferred tax (2021: €3.4 million, 2020: €3.9 million) and exceptional items, net of tax (2021: charge of €0.4 million, 2020: gain of €0.3 million)

4 Net debt/EBITDA ratio as per the requirements of the Group's syndicated bank loan agreement

5 Net bank debt excludes IFRS16 Lease liabilities

Review of Operations

Group Overview

Origin delivered an improved financial performance in the first half of the year compared to a challenging H1 2020 which was impacted by extreme, mainly weather related, operating conditions for farmers and growers in Ireland and the UK. This resulted in an increase in operating profit and adjusted fully diluted loss per share to €1.2 million and 1.53 cent, respectively. While Group revenue reduced by 5.4% to €572.4 million on a reported basis, when negative currency impacts are excluded, revenue was broadly flat compared to H1 2020. The improved performance was supported by a positive cropping profile across the Group with planting returning to more normalised levels compared with FY 20.

Ireland and the United Kingdom

Ireland and the United Kingdom recorded increased revenues and overall contribution in an improved performance in the seasonally quiet first half.

The increase in revenues and performance in the period largely reflected more normalised activity levels and a positive cropping profile set against prolonged unseasonal weather conditions in H1 2020. On an underlying basis, at constant currency, there was a €6.1 million reduction in operating loss. The increase in underlying business volumes was 10.1%, primarily driven by fertiliser and feed ingredient volumes.

Integrated On-Farm Agronomy Services

Integrated Agronomy and On-Farm Services recorded lower revenues in the period, however an increased contribution was delivered against the comparable period in H1 2020. The reduction in crop input volumes was primarily driven by a delayed harvest which impacted oil seed rape plantings, which were back 6.0% on H1 2020, and the impact of carried-over stock on-farm. Set against a challenging comparable period, farm sentiment has improved in H1 2021 with a more normalised cropping profile across the UK resulting in increased profitability.

Total autumn and winter plantings for principal crops are estimated to be 49.9%, or 0.8 million hectares, ahead of last year at 2.5 million hectares. The area of winter wheat is estimated to be up 68.1% to 1.7 million hectares (1.0 million hectares in FY 20), lower than the area expected at the time of our Q1 trading update (1.8 million hectares). As a result of the increased area of winter crops, the area of spring cropping in H1 2021 is expected to be back 9.1% on H1 2020, where an element of the winter shortfall was transferred to spring.

Total autumn, winter and spring plantings for the 2021 growing season are forecast to be 10.4% ahead of last year, at 4.4 million hectares. Although farm sentiment has improved with this more normalised cropping profile, farmers are facing challenges across the UK with prolonged cold and wet weather, which may delay the start of in-field operations for the second half of the year.

Digital Agricultural Services

Digital Agricultural Services has maintained the positive momentum of FY 20, with over 1.4 million active hectares on-boarded to the Group's digital platform by the end of H1 2021, compared to 1.2 million hectares at end of H1 2020. As we continue to embed our digital decision support services across the Group's established routes-to-market, enhancement of functionality remains a key priority which is being rolled out to farmers ahead of the main spring input application period in 2021.

Business-to-Business Agri-Inputs

Our Business-to-Business Agri-Inputs division had an improved start to the financial year, recording higher volumes and operating profit.

Fertiliser

With more positive on-farm sentiment, volumes in the period increased, resulting in an improved contribution compared to H1 2020. The more normalised autumn and winter cropping profile across the UK provides a solid foundation for an improved outlook for the remainder of the year.

Focus continues to be given to the Group's speciality and bespoke nutrition ranges, which maintained the positive momentum achieved to date.

Amenity

The Group's Amenity business delivered an improved performance in the period, benefitting from the easing of COVID-19 restrictions in the first quarter, and the recovery of some of the volume lost in the second half of FY 20 as a result of the pandemic. This positive momentum will be impacted by the extent to which COVID-19 restrictions, which were reintroduced across the UK in the second quarter, persist into the spring, impacting the key selling period.

Feed Ingredients

Feed Ingredients achieved a satisfactory performance in H1 2021, recording higher volumes compared to H1 2020. During the period, operations were temporarily impacted by a fire in the facility of our animal feed business, R&H Hall, at the Port of Cork, Ireland. Given the insurance cover in place, the financial impact from the fire is expected to be minimal. For the second half of the year volumes are expected to be lower, due to logistical challenges arising from commodity supply side constraints.

The Group's animal feed manufacturing associate, John Thompson & Sons Limited, in which the Group has a 50% shareholding, delivered a satisfactory performance in the period.

Continental Europe1

Continental Europe recorded a €0.7 million decrease in underlying operating profit at constant currency in the seasonally quieter first half. Underlying business volumes reduced by 5.7% in H1 2021, compared to H1 2020, with a solid start to the year in Poland set against a slower start in Romania and Ukraine. The overall winter and spring cropping area across our CE markets is expected to be marginally ahead of last year.

Belgium

Belgium achieved a satisfactory performance in the period delivering an increase in underlying business volumes. Performance is set against a challenging comparative period last year where demand was impacted by wet in-field conditions and an uncertain pricing environment for fertiliser raw materials.

Poland

Poland delivered an improved overall contribution while recording lower underlying business volumes in the seasonally quiet first half supported by a favourable business mix.

A late harvest and wet in-field conditions resulted in some delays to in-field operations. Autumn and winter plantings are estimated to be marginally behind last year at 4.6 million hectares with an increase in winter barley offsetting a 1.6% reduction in the oil seed rape area. The shortfall in autumn and winter plantings are expected to largely transfer to spring, with the total cropping area for the 2021 growing season expected to be 0.9% behind the prior year at 8.1 million hectares.

Romania

Romania has had a slow start to the year, recording lower underlying business volumes and a reduced contribution in H1 2021. This reflected the impact of dry conditions early in the period which resulted in some delays to in-field operations. In the second quarter, most of the cropped area received sufficient rainfall to allow soil moisture levels to return to more normalised levels.

The total sown area for autumn and winter plantings is forecast to be 1.7% behind last year at 3.0 million hectares. Combined winter and spring plantings for the growing season are currently anticipated to be 1.1% behind last year at 8.3 million hectares.

Mild weather conditions at the end of the period allowed late sown crops to develop in good condition.

Ukraine

Ukraine recorded a satisfactory result in the period in line with expectations. There was a reduction in volumes and overall contribution driven by prolonged dry conditions early in the period, followed by subsequent wetter in-field conditions which curtailed planting activities. Overall crop establishment in the period is satisfactory, with sufficient snow cover in place to limit crop damage.

Total autumn and winter plantings are anticipated to be marginally behind last year at 8.1 million hectares, with combined autumn and spring plantings currently forecast to be 1.9% ahead of last year at 24.2 million hectares.

Latin America

Latin America achieved higher underlying revenues and operating profits in the seasonally significant first half. Underlying business volumes grew by 37.8% compared with the corresponding period last year. This performance was driven by a significant increase in controlled release fertiliser sales in H1 2021, together with a 3.5% increase to 38.3 million hectares in the total cropping area dedicated to soya, Brazil's principal crop. The cropping area dedicated to Brazil's secondary crop, maize is also expected to increase in the current year by 2.3% to 13.2 million hectares.

The impact of foreign currency translation has significantly impacted Latin America's contribution in the period and although reported operating profit has reduced by €1.8m (31.6%), underlying profit at constant currency has increased by €0.3m (6.2%) in H1 2021.

Fortgreen have almost completed the construction of a new controlled release fertiliser plant in Minas Gerais and it is expected to become operational in the second half of the financial year.

Outlook

Origin's H1 2021 performance sets a positive foundation for the full year, based on the encouraging cropping profile across our geographies. Uncertainties remain heading into the seasonally more important second half, including the impact of ongoing COVID-19 restrictions, a slightly reduced area for winter cropping in the UK, and persistent cold and damp conditions in the UK and Ireland, which may delay the spring application period.

The Group is well placed to deliver good growth in earnings for the full year and will provide a further update on the expected FY 21 outcome at the time of the Q3 Trading Update on 16 June 2021.

ENDS

Origin Enterprises plc

Condensed Interim Consolidated Income Statement

for the six months ended 31 January 2021

Origin Enterprises plc

Condensed Interim Consolidated Statement of Comprehensive Income

for the six months ended 31 January 2021

Origin Enterprises plc

Condensed Interim Consolidated Statement of Financial Position

as at 31 January 2021

Origin Enterprises plc

Condensed Interim Consolidated Statement of Financial Position (continued)

as at 31 January 2021

Origin Enterprises plc

Condensed Interim Consolidated Statement of Changes in Equity

for the six months ended 31 January 2021

Origin Enterprises plc

Condensed Interim Consolidated Statement of Changes in Equity

for the six months ended 31 January 2020

Origin Enterprises plc

Condensed Interim Consolidated Statement of Cash Flows 

for the six months ended 31 January 2021