Perform
Sus tain
Grow
Annual Report
and Accounts 2019
Origin Enterprises plc is
a leading Agri-Services group,
employing over 2,500 people
across seven countries.
From
Sky to
Soil
50,000
Trial Units
Perform
Sus tain
Grow
Origin delivered a strong
performance in FY19
with a 15.6% growth in
operating profit1.
See more in the Chief Financial
Officer’s Review on page 14
We aim to build a sustainable
business and deliver long-term
value to stakeholders in a
responsible and ethical manner.
See more in the Sustainability
Report on page 50
Origin’s strategic ambition is to
deliver a mix of organic growth
and growth by acquisition.
See more in the Strategy
section on page 24
1 Operating profit is stated before amortisation of non-ERP intangible assets and exceptional items and before the Group’s
share of profits of associates and joint venture.
>2,500
Employees
800
Sales Force
73 Demonstration Farms
12 m ha
Direct Farm Customer Footprint
112
Distribution Points
112
Distribution Points
Contents
Strategic Report
At a Glance
Chairman’s Statement
Chief Executive’s Review
Chief Financial Officer’s Review
Our Business
Strategy
Business Model
Key Performance Indicators
Business Review Ireland and the UK
Business Review Continental Europe
Business Review Latin America
Sustainability Report
Risk Report
Governance
Board of Directors
Directors’ Report
Chairman’s Overview
Corporate Governance Statement
Nomination and Corporate Governance
Committee Report
Audit and Risk Committee Report
Remuneration Committee Report
6
8
10
14
22
24
28
30
32
38
44
50
62
72
74
77
78
84
87
91
Financial Statements
Company Information
Statement of Directors’ Responsibilities
Independent Auditors’ Report
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Group Accounting Policies
Notes to the Group Financial Statements
Company Accounting Policies
Company Balance Sheet
Company Statement of Changes in Equity
Notes to the Company Financial Statements
110
111
112
120
121
122
124
125
126
137
192
194
195
196
Our objective is to grow a
sustainable agri-services
business which optimises
value for our stakeholders.
See Strategy on page 24
See Business Model on page 28
The Group operates in
seven countries across
Ireland, the UK, Continental
Europe and Latin America.
See Ireland and the UK on page 32
See Continental Europe on page 38
See Latin America on page 44
Highlights
Origin delivered a strong
performance in 2019
with 15.6% growth in
operating profit1.
> Group revenue increase of 10.5% to
€1,798.2 million, and up 7.2% on an
underlying basis.
> Operating profit1 of €82.3 million, an
increase of 15.6% and up 3.5% on an
underlying basis.
>
>
Strong cash conversion with free cash
flow generation of €54.0 million
(2018: €56.6 million).
Increase in net debt to €75.6 million
(2018: €38.4 million).
> Proposed 1.5% increase in total dividend
> Group operating margin1 of 4.6%, an
to 21.32 cent (2018: 21.0 cent).
increase of 20 basis points.
> Good first-time contribution from
> Adjusted diluted earnings per share2 up
Fortgreen acquisition in Latin America.
7.9% to 52.65 cent.
> Acquisitions contributed 3.2% to sales
growth and 12.0% to operating profit
growth in the year.
> Exceptional charge of €7.0 million,
principally due to a non-cash impairment
relating to our Ukrainian business.
9
1
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2
Revenue
€1,798.2m
+10.5%
+ 10.4% at constant
currency 3
Operating Profit1
€82.3m
+15.6%
+15.5% at constant
currency 3
Adjusted Diluted EPS2
52.65cent
+7.9%
+7.8% at constant
currency 3
ROCE
13.2%
(2018: 13.5%)
Free Cash Flow
€54.0m
(2018: €56.6m)
Dividend per Share
21.32cent
(2018: 21.00cent)
1. Before amortisation of non-ERP intangible assets and
exceptional items, and before the Group’s share of profits of
associates and joint venture.
2. Before amortisation of non-ERP intangible assets, net
of related deferred tax (2019: €7.1m, 2018: €4.9m) and
exceptional items, net of tax (2019: €7.0m, 2018: €Nil)
3. Excluding currency movements.
Note: All references to constant currency in this
Annual Report are due to the fact that the translation
of non-euro denominated earnings are impacted by
movements in local currency rates versus the euro, the
Group’s presentation currency. In order to reflect
underlying performance more accurately in the period,
the Group calculates results on a constant currency basis
by retranslating non-euro denominated current year
earnings at prior year exchange rates.
3
North Berwick, United Kingdom
Andreea Ailenei, on-farm with the Agrii team
assessing the progress of this season’s wheat crop
Find out more
Case Study: Transferring Knowledge on page 35
Case Study: RHIZA on page 36
4
Origin Enterprises plc Annual Report and Accounts 2019 Perform
Strategic Report
5
Strategic Report Philipinnes
At a Glance
A focused Agri-Services
group providing services
and technology.
Our businesses specialise in the
provision of independent and
innovative advice, inputs and
related services to farmers to
help them optimise crop yield
and economic returns on a
sustainable basis.
Business-to-Business
Agri-Inputs
Provides procurement and supply
chain solutions to the Irish, UK, Belgian
and Brazilian primary food production
sectors covering the macro inputs that
drive on-farm efficiency, i.e. prescription
blended fertilisers and animal feed
ingredients. In addition, Origin is a
market leader in advisory, service and
input provision to the professional
sports turf, landscaping and amenity
sectors in the UK.
Integrated Agronomy and
On-Farm Services
Provides agronomy advice, services
and inputs directly to arable, fruit and
vegetable growers in the UK, Poland,
Romania and Ukraine. Our customised
solutions ensure the delivery of crop
production systems that adhere to the
highest safety, quality, environmental and
sustainability standards.
Digital Agricultural Services
Provides bespoke digital agronomy
applications and agri-tech services to
primary producers, input manufacturers
and agri-service companies.
>2,500
Employees
34
Input Formulation and
Processing Facilities
112
Distribution Points
73
Demonstration Farms
6
Origin Enterprises plc Annual Report and Accounts 2019 Latin
America
This segment includes
the Group’s newly
acquired operations in
Brazil. Find out more on
pages 44 to 49.
Our Segments
Ireland and
the UK
This segment includes the
Group’s wholly-owned Irish
and UK-based operations
in addition to the Group’s
associates and joint venture
undertakings. Find out more
on pages 32 to 37.
Continental
Europe
This segment includes
the Group’s operations in
Poland, Romania, Ukraine
and Belgium. Find out
more on pages 38 to 43.
Philipinnes
Revenue
2019
2018
2%
€1.8bn
34%
64%
€1.6bn
36%
64%
Ireland & the UK
Continental Europe
Latin America
Operating Profit1
2019
2018
10%
€82.3m
17%
73%
€71.2m
23%
77%
Ireland & the UK
Continental Europe
Latin America
1. Before amortisation of non-ERP intangible assets and exceptional items, and before the Group’s share of profits of
associates and joint venture.
7
Strategic Report
Rose Hynes
Non-Executive Chairman
Chairman's Statement
One of the key strategic developments
in the current year has been our
first-time entry into Latin America.
Dear Shareholder
Group Performance
I am pleased to report that Origin delivered another
strong performance in 2019 as Group operating profit
increased 15.6% to €82.3 million and adjusted diluted
earnings per share increased 7.9% to 52.65 cent.
Our trading performance supports the strategic
decision last year to add regional diversity to
the Group’s portfolio, as an excellent first-time
contribution from our Latin American division
combined with strong underlying growth in Ireland
and the UK, more than offset a challenging operating
environment in Continental Europe. Details of our
financial performance are set out in the Chief Financial
Officer’s Review on pages 14 to 21.
Strategic Development
The Group’s strategy remains a fundamental focus for
the Board, particularly in the context of a rapidly evolving
technical and competitive landscape. In April, we held a
two-day strategic planning event, resulting in a collective
ambition to 2023 and a roadmap to achieve these goals.
In May, the Group hosted a Capital Markets Day in
London, providing greater insights into Origin’s leading
market positions, integrated supply chains and multiple
routes to market across strategic geographic locations.
At this event we published medium-term financial
targets to 2023 for the first time as follows:
> EBIT CAGR: 5 – 9%.
> Group ROIC: 12 – 15%.
>
Free Cash Flow Ratio: 70 – 100%.
> Digital Hectares: 4.0 million.
Further illustrations on the implementation of our
strategic priorities during the year are outlined on pages
32 to 49 within the Business Review sections of the
Annual Report.
One of the key strategic developments in the current
year has been our first-time entry into Latin America.
Our acquisition of Fortgreen, a Brazilian value-added
crop nutrition and speciality inputs business has
delivered in line with expectation and presents an
exciting vehicle for future growth. In Q4, we also
completed the previously announced acquisition of a
20% stake in the agronomy services and crop inputs
business Ferrari Zagatto.
8
Origin Enterprises plc Annual Report and Accounts 2019 €
€82.3m
Operating profit amounted to
€82.3m, an increase of 15.6%
21.32cent
1.5% increase in proposed
dividend to 21.32 cent
Find out more
Strategy on page 24
Sustainability on page 50
In July, we announced a conditional
agreement for the disposal of 31
acres of land in Cork, Ireland, owned
by the Group for a cash consideration
of up to €47.5 million. The transaction
remains subject to the satisfaction
of a number of conditions and will
require the relocation of our Cork
fertiliser facility.
Sustainability
As a Group, we recognise the valuable
role Origin plays in promoting
sustainable food production systems
and balancing economic growth with
environmental and social wellbeing.
Sustainability is central to our
business model however, our
sustainability programme is on a
journey of continuous improvement.
In 2019, we undertook a materiality
assessment, using an independent
external adviser, which included
consultations with internal and
external stakeholders. The analysis
of this materiality assessment has
helped us to prioritise key material
sustainability issues for Origin,
focus on critical areas of impact
and align our priorities with our
stakeholders’ expectations. We also
calculated our Scope 1 and Scope
2 greenhouse gas emissions for the
three financial years 2017, 2018 and
2019. Further details are set out in
the Sustainability Report on pages
50 to 61.
a distribution of 40.5% of adjusted
diluted earnings per share.
employees to listen to their views
first hand.
Board and Governance
The Board is committed to
maintaining the highest standard of
governance practices to ensure the
effective stewardship and long-
term success of the Group. The
Board continues its commitment
to applying the principles of
the Quoted Companies Alliance
Corporate Governance Code (‘QCA
Code’) as the basis for its corporate
governance framework. Full details
of our approach to governance are
set out in the Corporate Governance
Statement on pages 78 to 83.
I am delighted to welcome Barbara
Keane who joined as Group General
Counsel and Company Secretary in
May 2019.
I would also like to thank all members
of the Board for their continued
support for the business and their
consistent hard work and ongoing
contribution to the success of Origin.
Management and Employees
Our accomplishments are
primarily attributed to the hard
work, dedication and innovation
of our people, which allows us
to focus relentlessly on serving
our customers and to continually
improve our performance.
On behalf of the Board, I would like
to thank our CEO, our management
team and employees for their
ongoing commitment to the success
of the Group during the year.
Outlook
The Group enters FY20 in a position
of strength, with a strong cashflow
and balance sheet position. While
market sentiment remains broadly
positive across our respective
geographies, the political and
economic uncertainty of Brexit and
other regulatory developments may
present some near-term challenges
for agronomy services and crop
inputs in FY20.
Factoring in these immediate
challenges and the medium-term
outlook for agriculture and food
production, we look forward with
optimism and are well-positioned
to capitalise on the Group’s scalable
and diversified market positions,
integrated crop services business
model and strong balance sheet
to deliver strong growth, cash
generation and returns in line with
our 2023 targets.
On behalf of the Board, I would like
to thank you our shareholders, for
your continued support.
Dividend
The Board recommends a final
dividend of 18.17 cent per ordinary
share payable on 13 December 2019
to shareholders registered on the
record date 29 November 2019.
Subject to approval at the Annual
General Meeting, this will bring the
total dividend per ordinary share for
the year ended 31 July 2019 to 21.32
cent (an increase of 1.5% on the
2018 total dividend). This represents
In recognition of this commitment,
we progressed our employee
engagement programme ’Let’s
Talk’, to help us gain a greater
understanding of our employees’
experience working for Origin
and identify areas where we can
enhance this experience. As part
of the programme, the Board took
the opportunity in February to visit
the Group’s operations in Poland
and the UK where we met with
Rose Hynes
Non-Executive Chairman
24 September 2019
9
Strategic Report Tom O’Mahony
Chief Executive Officer
Chief Executive’s Review
Over the past decade, our
strategy has led us to market
leading positions, with crop
science and expert research
at the heart of our business.
Dear Shareholder
FY19 was a significant year of progress for Origin, with
the Group achieving a strong financial performance
in addition to delivering upon a number of important
strategic goals. The results reflect the successful
execution of our vision which is to be the leading and
trusted partner of choice to the farmers, growers and
amenity professionals we serve.
Sustainability is central to this vision. Origin is
committed to making a positive contribution through
our products, services and operations, to promoting
sustainable food production systems and helping to
meet growing food demand.
Over the past decade, our strategy has led us to market
leading positions, with crop science and expert research
at the heart of our business. In collaboration with our
technology and supply partners, we have developed
an integrated business model focused on delivering
customised crop production systems which optimise
profitability and competitiveness, environmental
sustainability and yield enhancement to over 50,000
farmers, growers and amenity professionals.
FY19 Progress
There has been a strong performance in FY19, with
the Group benefiting from favourable organic and
acquisition growth.
10
Origin Enterprises plc Annual Report and Accounts 2019 The principal highlights are as follows:
Financial
Operational
Strategic
15.6% growth in operating profit.
>
>
>
>
Strong contribution from
associates & JV.
7.9% increase in adjusted
diluted EPS to 52.65 cent.
>
Year-end leverage at 0.87x.
> Proposed 1.5% increase in
total dividend to 21.32 cent
per share.
Strong business and operational
execution in Ireland / UK
and LATAM.
>
Successful LATAM expansion
providing geographic and
portfolio diversification.
> Highly challenging market
dynamics in Ukraine drives
lower performance in
Continental Europe.
> Digital services enablement and
coverage progressing to plan
with over 1 million hectares
on-boarded.
> Enhanced product-
based capabilities driving
differentiation and
momentum in value-added
agronomy portfolios.
> Continued strengthening
of organisation and
leadership team.
Our FY19 results reflect a
commitment to maintaining a
diversified business portfolio with
an excellent first-time contribution
from our Latin America division
together with the benefit of strong
demand levels in Ireland and the
UK more than offsetting the impact
of a more challenging operating
environment in Continental Europe,
where highly competitive trading
conditions within the Ukrainian
market impacted profitability.
Divisional Review -
Sustain, Perform, Grow
Ireland and the UK - Sustain
Ireland and the UK achieved
a very good performance in
the period, recording an 8.6%
growth in underlying operating
profit at constant currency. The
performance reflects favourable
demand for agronomy services
and crop inputs together with
the benefit of strong operational
execution throughout the year.
A full business review of
performance in Ireland and the
UK is set out on page 32.
The key priority for growth is to
capitalise on our market leadership
through leveraging the Group’s
strong technical and application
focus to accelerate product and
service extension. We remain
focused on optimising farm
level gross margin and delivering
enhanced return on investment
to customers through establishing
leading digitally enabled crop
technology and advice models
and decision support tools
that complement our existing
agronomist-farmer service offers.
Over the medium-term, we
anticipate changes to existing farm
structures, in part accelerated by
Brexit. Origin is well placed to meet
the evolving needs of the industry.
Continental Europe – Perform
Continental Europe encountered a
challenging operating environment
during the year which resulted
in lower margins and operating
profits, primarily driven by the
under-performance of our
Ukrainian business.
A full business review of
performance in Continental
Europe is set out on page 38.
Our key focus is to drive and
implement performance through
the delivery of volume growth and
increased market share in the
value-added segments of agronomy
services and crop input distribution.
This strategy leverages Origin’s
central capabilities to build
value through the Group’s
input portfolios, research and
development capabilities and digital
agronomy platforms.
Latin America (‘LATAM’) – Grow
Origin made its first-time entry
into the Latin American market
in the current year following the
acquisition of Fortgreen in Brazil.
Fortgreen is a product-based
business with strong farm linkages
and is focused on the growing
value-added segments of speciality
crop inputs and bespoke nutrition.
A full business review of
performance in LATAM is set
out on page 44.
Business integration is progressing
to plan, reflected in an excellent
first-time contribution in line with
pre-acquisition expectations.
The acquisition of a 20%
shareholding in the Brazilian
business Ferrari Zagatto E Cia.
Ltda., (‘Ferrari’) announced in the
prior financial year, completed on
10 June 2019. Ferrari is a leading
provider of agronomy services,
inputs, crop handling and marketing
services. Ferrari provides an
important route-to-market for
Fortgreen’s speciality inputs and
nutrition offering.
11
Strategic Report
There has been a strong
Origin performance in
FY2019 driven by good
organic and acquisition
led growth.
>50,000
Delivering customised crop
production systems to over
50,000 farmers, growers and
amenity professionals
Digital Agricultural Services
The development and roll out of
Origin’s digital services offering
continued at pace this year, with
over 1 million hectares on-boarded
on our digital agronomy platform.
To meet the growing demand for
data-driven decision making at farm
level, Origin has developed a suite
of proprietary agronomist-farmer
enabled digital applications designed
to optimise crop performance and
input utilisation.
To further improve our customer
offering, the Group’s digital agronomy
and precision farming capabilities
were merged under a new digital
services brand called RHIZA. RHIZA
facilitates the delivery of advanced
adaptive agronomy to build micro
knowledge at field level. This data
driven and digitally enabled approach
utilises predictive diagnostic
capabilities to produce more
comprehensive agronomy advice to
sustainably maximise available soil
and crop genetic potential, delivering
enhanced long-term returns to
primary producers.
FY23 Ambition
In May this year at the Origin
Capital Markets Day in London,
we set out our five-year financial
and operational ambition for FY19
to FY23.
A summary of our ambition to FY23 is set out below:
Key Performance Indicator
> Group operating profit CAGR
Metric
5% - 9%
> % of operating profit derived from markets
+40%
outside of Ireland/UK
> Organic operating profit CAGR
> Acquisition enabled operating profit CAGR
> Group Return on Invested Capital
> Free Cash Flow ratio
> Digital hectares on-boarded
3% - 4%
2% - 5%
12% - 15%
70% - 100%
4 million
Summary and Outlook
FY19 was a progressive year for
Origin, reflecting our commitment
to maintaining a diversified business
portfolio. An excellent first-time
contribution from Latin America
together with the benefit of strong
demand levels in Ireland and the
UK more than offset the impact of a
challenging operating environment
in Continental Europe, where highly
competitive trading conditions with
the Ukrainian market impacted
profitability.
Demand for agronomy services and
crop inputs for Ireland and the UK
are expected to normalise in FY20
and to be lower than the above
average market demand levels
experienced in FY19. Fertiliser and
feed demand are not expected to
match the demand created by the
fodder crisis in the first half of FY19.
Our Continental European and Latin
American segments are expected to
grow in FY20 in line with our long-
term guidance. Against the backdrop
of the uncertain nature of Brexit,
and its timing and implementation,
we continue to prioritise a prudent
approach to risk management and
capital allocation.
Origin is well positioned to
capitalise on the Group’s scalable
and diversified market positions,
integrated crop services business
model and strong balance sheet to
deliver on our 2023 financial and
strategic objectives.
Tom O’Mahony
Chief Executive Officer
24 September 2019
12
Origin Enterprises plc Annual Report and Accounts 2019 Find out more
Strategy on page 24
Sustainability on page 50
Research trials being
undertaken at Fortgreen’s
technical facility
t
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p
e
R
c
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e
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a
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t
S
13
Sean Coyle
Chief Financial Officer
Chief Financial Officer’s Review
This Financial Review provides an overview
of the Group’s financial performance for
the year ended 31 July 2019 and of Origin’s
financial position at that date.
Overview of Results
> Group revenue increase of 10.5% to
€1,798.2 million, and 7.2% on an
underlying basis.
>
Strong cash conversion with free cash
flow generation of €54.0 million
(2018: €56.6 million).
> Operating profit1 of €82.3 million, an increase of
>
15.6% and up 3.5% on an underlying basis.
Increase in net debt to €75.6 million
(2018: €38.4 million).
> Group operating margin1 of 4.6%, an increase of
> Proposed 1.5% increase in total dividend
20 basis points.
to 21.32 cent (2018: 21.0 cent).
> Adjusted diluted earnings per share3 up
> Good first-time contribution from
7.9% to 52.65 cent.
Fortgreen acquisition in Latin America.
> Acquisitions contributed 3.2% to sales
growth and 12.0% to operating profit
growth in the year.
> Exceptional charge of €7.0 million, principally
due to a non-cash impairment relating to
our Ukrainian business.
14
Origin Enterprises plc Annual Report and Accounts 2019
Results Summary
Revenue
Operating profit 1
Associates and joint venture 2, net
Total Group operating profit 1
Finance expense, net
Profit before tax 1
Income tax 4
Adjusted net profit
Adjusted diluted EPS (cent) 3
Net debt5
Adjusted Net Profit Reconciliation
Reported net profit
Amortisation of non-ERP intangible assets
Tax on amortisation of non-ERP related intangible assets
Exceptional items (net of tax)
Adjusted net profit
Reporting Segments
The Group has three separate reporting segments as set out below.
2019
€’m
1,798.2
82.3
6.7
89.0
(11.8)
77.2
(10.4)
66.8
52.65
(75.6)
2019
€’m
52.7
8.8
(1.7)
7.0
66.8
2018
€’m
1,627.5
71.2
7.2
78.4
(8.1)
70.3
(8.6)
61.7
48.80
(38.4)
2018
€’m
56.8
5.7
(0.8)
-
61.7
Ireland and the UK
This segment includes the Group’s wholly-owned Irish and UK-based Business-to-Business Agri-Input operations,
Integrated Agronomy and On-Farm Service operations and the Digital Agricultural Services business. In addition, this
segment includes the Group’s associates and joint venture undertakings.
Continental Europe
This segment includes the Group’s operations in Poland, Romania, Ukraine and Belgium.
Latin America
This segment includes the Group’s operations in Brazil.
An analysis of segmental revenues and operating profit for the Group before the Group’s share of revenue / operating
profit from associates and joint venture is set out below:
Ireland and the UK
Continental Europe
Latin America
Revenue
€’m
1,159.4
605.2
33.6
1,798.2
2019
2018
Operating profit 1
€’m
Revenue
€’m
Operating profit 1
€’m
60.0
14.2
8.1
82.3
1,038.1
589.4
-
1,627.5
54.8
16.4
-
71.2
The result from the Group’s associates and joint venture undertakings was €6.7 million (2018: €7.2 million).
15
Strategic Report Revenue
Group revenue increased by 10.5% to €1,798.2 million from €1,627.5 million in the prior year. On an
underlying basis, at constant currency, revenue increased by €117.3 million driven by strong growth in
crop protection, seeds and fertiliser volumes, and an increase in fertiliser prices.
Operating Profit1
Operating profit1 increased by 15.6% to €82.3 million compared to €71.2 million in the previous year.
Acquisitions contributed €8.5 million to operating profit in the year, with our new Latin American
segment delivering €8.1 million. On an underlying basis, operating profit1 increased by €2.5 million
(3.5%) primarily driven by increased volumes and margins in Ireland and the UK.
Operating Profit Bridge
€8.5m
€82.2m
€0.1m
€82.3m
€’m
85
80
75
70
65
60
€2.5m
€71.2m
FY18
Underlying
Acquisitions
FY19
(excl. currency)
Currency
FY19
(incl. currency)
Seasonality
The Group’s operating profit1 profile is significantly weighted towards the latter half of the financial year.
An analysis of the quarterly revenue and operating profit1 is set out in the following table:
Revenue
Operating profit 1
Revenue
Operating profit 1
Q1
€’m
430.0
13.7
Q1
€’m
346.7
6.7
FY19
Q3
€’m
595.4
32.6
FY18
Q3
€’m
526.7
24.4
Q2
€’m
271.6
(4.7)
Q2
€’m
240.2
(4.4)
Q4
€’m
501.2
40.7
Q4
€’m
513.9
44.5
Total
€’m
1,798.2
82.3
Total
€’m
1,627.5
71.2
€73.3 million of operating profit1 was generated in the seasonally more important second half of the
current year, an increase of €4.4 million (6.4%) on the second half of 2018. The extended season
experienced in 2018 resulted in increased contributions in Q4 2018 and Q1 2019.
16
Origin Enterprises plc Annual Report and Accounts 2019
Associates and Joint Venture
Origin’s share of the profit after interest and taxation from associates and joint venture amounted to
€6.7 million in the period (2018: €7.2 million).
Finance Expense and Net Debt
Net debt at 31 July 2019 was €75.6 million5 compared to net debt of €38.4 million5 at the end of the
previous year, reflecting a €62.4m spend on acquisitions and investment capital expenditure. Average
net debt amounted to €270.6 million compared to €226.0 million last year.
Net finance costs amounted to €11.8 million, an increase of €3.7 million on the prior year level. The
higher finance costs were driven by the first time cost of financing the acquisition of the Brazil-based
Fortgreen business, additional cost of working capital financing due to an increase in the level of sales,
combined with increased financing rates in Continental Europe. The average and year end net debt
increase is principally attributable to the acquisition cost and working capital investment relating to
Fortgreen and an increased investment in Group working capital.
Taxation
The effective tax rate for the year ended 31 July 2019 was 15.0% (2018: 14.0%), and reflects the mix of
geographies where profits were earned in the year.
Disposal of Cork Dockland Properties
Origin announced during the year that it had reached conditional agreement for the disposal of up
to 31 acres of land owned by the Group in Ireland at South Docklands in Cork (‘Docklands’) for a cash
consideration of up to €47.5 million.
The transaction is subject to the satisfaction of a number of conditions necessary to realise the full
disposal proceeds including the granting of various permissions and approvals and the relocation of
the Group’s existing operating business in Docklands at an economically viable cost to an alternative
location in Cork.
Exceptional Items
Exceptional items net of tax amounted to a charge of €7.0 million in the year. These principally relate
to the impairment of goodwill and intangibles in Ukraine, acquisition and restructuring costs and
a fair value adjustment on the Group’s investment properties and property, plant and equipment
associated with the proposed sale of the Group’s Cork properties. Exceptional items are summarised
in the table below:
Year ended 31 July
Impairment of investment in Ukraine, net of put option gain
Fair value adjustment and related costs on investment properties
Impairment of property, plant and equipment
Arising on associates and joint venture
Pension and rationalisation related costs
Transaction, other related costs and movements in contingent consideration, net
Total exceptional items, net of tax
2019
€’m
7.3
(5.4)
4.1
0.4
0.3
0.3
7.0
Adjusted Diluted Earnings per Share3 (‘EPS’)
EPS amounted to 52.65 cent per share, an increase of 7.9% from 2018. The year-on-year increase
of 3.85 cent per share can be summarised as follows:
Impact of
Underlying growth
Acquisitions
Currency
Total
Cent per share
0.04
3.74
0.07
3.85
%
0.1%
7.7%
0.1%
7.9%
17
Strategic Report
Dividends
In line with the progressive dividend policy announced at the 2019 Capital Markets Day, the Board
recommends an increased final dividend of 18.17 cent per ordinary share which, when combined with
the interim dividend of 3.15 cent per ordinary share, brings the total dividend for the year to 21.32
cent per ordinary share (2018: 21.0 cent), an increase of 1.5%. Subject to shareholder approval at the
Annual General Meeting, this final dividend will be paid on 13 December 2019 to shareholders on the
register on 29 November 2019.
Capital Structure – Bank Facilities
The financial structure of the Group is managed to maximise shareholder value while providing the
Group with the flexibility to take advantage of opportunities to develop the business. The Group targets
acquisition and investment opportunities that are value enhancing and the Group’s policy is to fund
these transactions in the most efficient manner.
During the year the Group extended €300.0 million of its core syndicated facilities for a further two
years. At year end the Group had unsecured committed banking facilities of €430.0 million (2018:
€430.0 million), of which €30.0 million will expire in August 2021, €100.0 million will expire in May 2022
and €300.0 million will expire in June 2024.
Acquisitions
During the year, Origin acquired a 65% interest in Fortgreen and a 20% interest in Ferrari Zagatto in
Brazil. In addition, the Group made investments in the UK with the acquisition of Symbio and VCS.
Integration is progressing to plan and performance is at pre-acquisition expectation.
Total acquisition expenditure during the year amounted to €54.6 million.
Cash Flow and Net Debt
Actual net debt at 31 July 2019 was €75.6 million5 compared to €38.4 million5 at the end of the previous
year. The majority of Group borrowings are subject to financial covenants calculated in accordance with
lenders’ facility agreements. The Group’s balance sheet is in a strong position. Group Treasury monitors
compliance with all financial covenants which at 31 July 2019 included:
Covenant
Net debt: EBITDA
EBITDA: Net interest
Maximum 3.50
Minimum 3.00
A summary cash flow is presented below:
2019
Full year
times
0.87
8.06
2019
Half year
times
2.57
9.25
2018
Full year
times
0.54
9.81
2018
Half year
times
2.17
11.24
Cash flow from operating activities, before exceptional items
Change in working capital
Interest and taxation
Cash flow from ongoing operating activities
Exceptional items
Net cash flow from operating activities
Dividends received
Net capital expenditure
– Routine
– Investment
Acquisition expenditure (including debt acquired)
Cash consideration on disposal of equity investment
Dividends paid
Other
Decrease in cash
Opening net debt
Translation
Closing net debt5
18
2019
€’m
92.8
(12.7)
(23.9)
56.2
(3.1)
53.1
7.0
(6.9)
(7.8)
(54.6)
-
(26.4)
(0.6)
(36.2)
(38.4)
(1.0)
(75.6)
2018
€’m
80.0
0.7
(17.4)
63.3
(7.0)
56.3
2.5
(7.9)
(7.9)
(26.0)
5.3
(26.4)
(0.3)
(4.4)
(31.5)
(2.5)
(38.4)
Origin Enterprises plc Annual Report and Accounts 2019 Working Capital
For the year ended 31 July 2019, there was a working capital outflow of €12.7 million primarily due to an
investment in working capital in Fortgreen in Brazil and increased year-on-year sales across the Group.
Working capital allocation remains a key priority for the Group given the associated funding costs. The
year end represents the low point in the working capital cycle for the Group reflecting the seasonality
of the business.
Return on Capital Employed
Return on capital employed is a key performance indicator for the Group, with Origin delivering
13.2% in 2019 (2018: 13.5%), as follows:
Total assets
Total liabilities
Adjusted for:
Net debt5
Tax, put option and derivative financial instruments, net
Accumulated amortisation
Capital employed – 31 July
Average capital employed (Group Net Assets as defined below)
Operating profit (excluding exceptional items)
Amortisation of non-ERP intangible assets
Share of profit of associates and joint venture
EBITA (as defined below)
Return on capital employed
2019
€’m
1,305.5
(959.7)
75.6
60.0
54.9
536.3
675.3
73.5
8.8
6.7
89.0
13.2%
2018
€’m
1,204.1
(873.8)
38.4
30.5
48.0
447.2
581.6
65.5
5.7
7.2
78.4
13.5%
For the purposes of this calculation, ROCE represents Group earnings before interest, tax and
amortisation of non-ERP related intangible assets from continuing operations (‘EBITA’) taken as a
percentage of Group net assets:
(i) EBITA includes the net profit contribution from associates and joint venture (after interest and tax)
and excludes the impact of exceptional and non-recurring items.
(ii) Group Net Assets means total assets less total liabilities excluding net debt, derivative financial
instruments, put option liabilities, accumulated amortisation of non-ERP related intangible assets
and taxation related balances. Group Net Assets are also adjusted to reflect the average level of
acquisition investment spend and the average level of working capital for the accounting period.
19
Strategic Report Free Cash Flow
The Group generated free cash flow in the year of €54.0 million (2018: €56.6 million). Free cash flow
is an important metric as it indicates the amount of internally generated capital that is available for
re-investment in the business or for distribution to the shareholders.
EBITDA (excluding associates and joint venture)
Interest paid
Tax paid
Routine capital expenditure
Working capital (outflow) / inflow
Dividends received
Free cash flow
2019
€’m
90.6
(11.4)
(12.6)
(6.9)
(12.7)
7.0
54.0 54.0
2018
€’m
78.6
(6.9)
(10.4)
(7.9)
0.7
2.5
56.6
Free cash flow means the total of earnings before interest, tax, depreciation, amortisation of non-
ERP related intangible assets and exceptional items of wholly-owned businesses (‘EBITDA’) adjusted
to take account of interest, tax, routine capital expenditure, working capital cash-flows and
dividends received.
Post-Employment Benefit Obligations
The Group operates a number of defined benefit and defined contribution pension schemes with
assets held in separate trustee administered funds. All of the defined benefit schemes have been
closed to new members for a number of years and the majority are closed to future accrual.
Under IAS 19, ‘Employee Benefits’ the amounts recognised in the Consolidated Statement of
Financial Position as at 31 July 2019 are as follows:
Non-current liabilities
(Liability) / asset in defined benefit schemes
The movement during the year can be summarised as follows:
Net asset at 1 August 2018
Current and past service costs
Gain on settlement
Other finance expense, net
Contributions paid
Remeasurements
Translation
Net liability at 31 July 2019
2019
€’m
(1.5)
2018
€’m
0.7
€’m
0.7
(0.5)
0.5
-
1.3
(3.6)
0.1
(1.5)
The remeasurements of €3.6 million principally relate to changes in financial assumptions together with
remeasurement gains on scheme assets.
20
Origin Enterprises plc Annual Report and Accounts 2019 Risk Exposures
The Group’s international operations expose it to different financial risks that include currency risk,
credit risk, liquidity risk and interest rate risk. The Group has a risk management programme in place
which seeks to limit the impact of these risks on the financial performance of the Group. The Board has
determined the policies for managing these risks. It is the policy of the Board to manage these risks in
a non-speculative manner. Details of the Group’s risk exposures and the controls in place to monitor
such exposures are set out in Note 22 to the financial statements.
Share Price
The Group’s ordinary shares traded in the range of €6.12 to €4.80 during the year from 1 August 2018 to
31 July 2019. The Group’s share price at 31 July 2019 was €4.95 (31 July 2018: €6.04).
Investor Relations
Our corporate strategy aims to create long-term value. We support this strategy through regular and
open communication with all capital market participants. We engage with institutional investors in
numerous one-on-one meetings, as well as at roadshows and conferences worldwide.
Contact with institutional shareholders is the responsibility of the executive management team
including the Chief Executive Officer, Chief Financial Officer, Group Finance Director and Head of
Investor Relations.
During the year there were 150 meetings / conference calls with institutional investors across nine
financial centres. In addition, in May 2019 the Group held a Capital Markets Day in London with
presentations from the Chief Executive Officer and key divisional management, and a detailed overview
of our 2023 strategic ambition.
Sean Coyle
Chief Financial Officer
24 September 2019
1 Operating profit and total Group operating profit are stated before amortisation of non-ERP intangible assets
and exceptional items.
2 Share of profit of associates and joint venture represents profit after interest and tax before exceptional items.
3 Adjusted diluted earnings per share is stated before amortisation of non-ERP intangible assets, net of related deferred
tax (2019: €7.1m, 2018: €4.9m) and exceptional items, net of tax (2019: €7.0m, 2018: €Nil).
Income tax before tax impact of exceptional items and excluding tax on amortisation of non-ERP intangible assets.
Including restricted cash of €Nil (2018: €0.5m).
4
5
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Strategic Report Our Business
A market leader through
acquisition, integration
and organic growth.
Origin is a recognised leader
in the European Agri-Services
market with operations in six
countries and during the year
entered the Latin American market
with acquisitions in Brazil. The
Group supports primary producers
across all our markets.
What is Agronomy?
What is an Agronomist?
What do Agronomists do?
Agronomy combines crop science
and applied farming expertise to
enable growers to optimise the
productivity of crops, whilst
caring for the consumer, the soil
and the environment.
An Agronomist is a specialist plant
and soil scientist who works directly
with farmers to provide innovative
research-based advice and supply
inputs and other related services,
to optimise crop production, on a
sustainable basis.
Our Agronomists act as a
trusted adviser to farmers in
the provision of a range of services
and inputs including:
> specialist advice;
> seed inputs;
> crop protection products; and
> nutrition products.
Our Brands
Ireland and the UK
Continental Europe
Latin America
22
Origin Enterprises plc Annual Report and Accounts 2019 What sets us apart
Our Approach to Integrated Agronomy:
Application Research
and Analysis
> Investment in research and
development to optimise
crop productivity.
> 50,000 trial units managed
across the UK, Continental
Europe and Latin America.
> Collaboration with key industry
partners and universities.
> Analysis of the needs of
primary producers.
Prescription Development
> Advise primary producers on
all components of crop and
field management.
> Recommendation of customised
solutions to optimise crop
yields and quality.
> Ensuring environmental
and regulatory compliance
requirements are met.
Application and Delivery
> Delivery of customised
solutions to primary producers.
> Supply of seed, nutrition and
crop protection technology
to farms.
> Provision of ongoing advice
and monitoring on the
timing of the application of
these products.
> Use of technology to optimise
service delivery to primary
producers.
Our Approach to Business-to-Business Agri-Inputs:
Foundations
> Well-established brands.
> Experienced and
committed people.
> Strong on-farm presence.
> Flexible production
facilities to cater
for high seasonal
variation in demand.
Innovation and R&D
> Leading bespoke fertiliser
blender.
> Continuous and
technically-led
product development.
> Environmentally sustainable
product offering.
> Continuing benchmarking
of production and plant
performance.
Supply Chain
> Strategic locations and
geographic spread.
> Well-invested blending
and formulation facilities.
> Market share provides
supply chain flexibility.
> Strong supplier partnerships.
> Focus on health and safety.
23
Strategic Report
Strategy
Our Vision
To be the leading and trusted partner
of choice to the farmers, growers and
amenity professionals we serve.
Our Purpose
Optimising sustainable agriculture and
food production through innovation,
research & development and
agronomic expertise.
Our Values
People
Community
Innovation
Partnerships
Integrity
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Investment Case
Long-term relationships as trusted
adviser and input provider to
farmers, growers and amenity
professionals.
Leading market positions,
integrated supply chains and
multiple routes to market across
strategic geographic locations.
Pioneering agricultural R&D and
technical innovation delivering
customised agronomic solutions
which accelerate productivity and
maximise efficiency for customers.
Digital technology optimised
by expert agronomist-led
stewardship, providing localised
and prescriptive solutions to
farmers, growers and amenity
professionals.
Positioned to capitalise on evolving
structural market trends of
increasing farm commercialisation,
professionalisation and
specialisation.
Strong cash generation and
conversion capabilities.
Balance sheet strength to drive
organic growth, international
expansion and future M&A
opportunities.
Progressive dividend policy
delivering consistent shareholder
returns.
Our Ambition 2023
Perform, Sustain, Grow
Origin is pursuing a clear long-term
strategy which is based on our
purpose, vision and values. The
Group’s strategy seeks to retain
the culture and successful value-
add approach that differentiates
Origin, while strengthening our
routes to market.
Origin’s strategic ambition to 2023
emphasises the need for evolving
agronomic led solutions, that
meet the advancing needs of all
stakeholders, collectively growing
profitability in a sustainable and
socially responsible manner.
To achieve this, ambitious financial
and non-financial targets have been
set, which will be delivered through
a combination of organic and
acquisition driven growth.
A mix of organic growth and acquisition driven by growth
EBIT CAGR
5-9%
Organic
3-4%
EBIT
Acquired
2-5%
EBIT
Ireland / UK
1-2%
Continental Europe
3-5%
Latin America
5-10%
Focus on
Return on Investment
Group ROCE
12-15%
Free Cash
Flow Ratio
70-100%
Opportunity to use
existing Routes to Market
Sourcing Opportunities /
Product Mix Change
Digital Platform
4m Ha
Product Based
Capabilities
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Strategy
Strategic Priorities
Strategic
Priority
Scale
Market
Focus
> Concentrate on target geographies
with long-term growth potential.
> Build complementary product based
and distribution capabilities.
> Customisation and localisation.
> Investments in digital and agronomic
capabilities to promote sustainable
food production systems.
> Origin delivered revenue growth of
10.5% and operating profit growth
of 15.6% in FY19.
> First-time entry into Latin America
following the acquisition of Brazilian
speciality inputs business Fortgreen
and the purchase of a 20% interest
in the agronomy services and crop
inputs business Ferrari Zagatto.
> Increased digital agronomy footprint
to 1 million ha.
> During the year, the Group’s digital
agronomy and precision farming
capabilities were merged under a new
identity called RHIZA.
> The Group also launched the UK’s
first precision soil map and added
additional capabilities to our digital
platform Contour.
> Opened six new Digital Technology
Farms in the UK, providing farmers and
growers with an opportunity to attend
open days and observe digital best
practice on a commercial scale.
> The Group will continue to focus
on strategic opportunities to
complement our existing market
positions and enhance our product
capability through a combination of
organic and acquisition driven growth.
> We will continue to invest in strategic
capital expenditure opportunities to
maximise value-add opportunities
within our existing markets across
both our fertiliser blending and
product formulation plants in addition
to our digital platform.
> Near market product research,
development and innovation
via our technology centres and
demonstration farms remains
central to the Group’s strategy. Our
continued ability to provide our
customers with the most effective
and proven technologies will enable
us to strengthen our position as
market leaders.
2019
Progress
2020
Focus
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Portfolio
Positioning
People &
Organisations
> Maintain differentiated position as
specialist route-to-market for
crop technologies.
> Optimise Group position through
balanced business portfolio and
geographical diversification.
> Continued expansion of Origin’s
enhanced efficiency fertiliser range
across Ireland, the UK and Belgium.
> Acquisition of UK biological
crop input business Symbio,
strengthening the Group’s own
product-based capabilities.
> Geographic diversification
progressed, following entry into
Latin America. Operating profit
contribution from geographies
outside of Ireland and the UK
increased by 4% to 27% of Group
operating profit.
> Maintain focus on the development
of operations across our core
geographies and product areas which
are value enhancing, present future
growth opportunities and deliver on
the Group’s capital return targets.
> Expand operating profit contribution
from geographies outside of Ireland
and the UK in line with 2023 target
of >40%.
> Ongoing people and talent
development.
> Devolved accountability and autonomy
to execute growth agenda.
> The Group has over 2,500 employees,
800 of whom are customer facing
agronomists and sales staff.
> Launched an employee engagement
strategy ‘Let’s Talk’.
> Origin is a people-focused business,
recognising that the quality of our
people differentiates us within
the market place and is a key
competitive advantage for the
Group. We focused on the wellbeing
of our people and invested in their
ongoing development. We listened
to their opinions and implemented
changes when necessary to maintain
their full engagement.
> The Group will continue to invest in
our people, providing the necessary
support, development, infrastructure
and environment to deliver our
strategic agenda, drive performance
and grow our reputation as an
employer of choice for the very best
talent within the Agri and Amenity
services sectors. Focus will remain
on our employee engagement
programme, through ongoing Group
wide focus groups and business
unit visits.
27
Strategic Report What we do
and how we
add value
Our Offer:
Nutrition
Crop Protection
Seed
Digital
Expertise / Advice /
Prescription
Business Model
Inputs
People
Partnerships
Financial &
Strategic Planning
Knowledge & IP
Supply Chain
& Logistics
Sustainability
28
Origin Enterprises plc Annual Report and Accounts 2019
Our Brands:
Agrii
Goulding
Fortgreen
RHIZA
Rigby Taylor
Origin Fertilisers
Linemark
Our Channels:
Business-to-Business
Agronomist
Our End-User:
Farmers & Growers
Amenity Professionals
Outputs
Yield Enhancement
Find out more
Case Study in
Continental Europe
on page 42
Profitability &
Competitiveness
Find out more
Chief Financial
Officer’s Review
on page 14
Environmental
Stewardship
Find out more
Sustainability Report
on page 50
Maximise
Shareholder
Return
Find out more
KPI’s on page 30
29
Strategic Report
Key Performance Indicators
Measuring
Our Strategic
Progress
Origin employs financial and non-financial Key
Performance Indicators (‘KPIs’) which benchmark
progress towards our strategic priorities. KPIs are
reviewed and monitored on a regular basis and are
amended to reflect better the Group’s key performance
measures when required.
KPI
Adjusted Diluted
Earnings per
Share (‘EPS’)
Return on
Capital Employed
(‘ROCE’)
Geographic
Diversity
Description
Measures adjusted
diluted EPS in the
current year compared
to the prior year.
ROCE is defined as Group
earnings before interest,
tax and amortisation
of non-ERP related
intangible assets taken
as a percentage of Group
Net Assets.
Measures operating
profit contribution from
geographies outside
Ireland and the UK as
a percentage of total
operating profit.
Link to Strategy
Current Year
52.65c
13.2%
27%
+7.9%
(2018:13.5%)
(2018:23%)
Historic Result
2016 2017 2018 2019
2016 2017 2018 2019
2016 2017 2018 2019
44.5c 46.6c 48.8c 52.65c
13.6% 13.7% 13.5% 13.2%
22% 24% 23% 27%
Strategic
ambition
The Group’s aim is to
target growth in adjusted
diluted EPS, while
recognising that factors
outside our control may
cause inter-year variances.
A key element of the
Group’s strategic ambition
to 2023 is to deliver ROCE
of 12 – 15%.
The Group’s aim is to
grow the operating
profit contibution from
geographies outside of
Ireland and the UK to in
excess of 40% of total
operating profit by 2023.
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Strategic Priorities Key:
Scale
People & Organisations
Portfolio Positioning
Market Focus
Find out more
Chief Financial Officer’s
Review on page 14
Sustainability on page 50
Free Cash
Flow Ratio
Dividend
Number of
Agronomists and
Sales Staff
Digital
Hectares
Measures free cash flow
as a percentage of profit
after tax of wholly-owned
businesses, excluding
exceptional items and
amortisation on non-ERP
related intangible assets.
Measures the total
dividend per ordinary
share proposed in the
current financial year.
Measures the number of
agronomists and sales
representatives available
to customers to ensure
that the appropriate
mix of experience and
expertise is available.
Measures the number of
farm hectares uploaded
to the Group’s digital
platforms.
90.0%
21.32c
800
1m ha
(2018:106.0%)
+1.5%
2018:700
(2018:0.7m ha)
2016 2017 2018 2019
2016 2017 2018 2019
2016 2017 2018 2019
2016 2017 2018 2019
67.5% 59.7% 106.0% 90.0%
21.0c 21.0c 21.0c 21.32c
600 670 700 800
Nil 0.2m 0.7m 1.0m
A key element of the
Group’s strategic ambition
to 2023 is to deliver
a Free Cash Flow Ratio
of 70 – 100%.
The Group’s strategic
ambition to 2023 is to
deliver a progressive
dividend policy with a
payout ratio > 35%.
Our target is to remain
adequately resourced
with skilled agronomists
and sales representatives
who can meet our
customers’ needs.
The Group’s aim is to
grow the number of farm
hectares on our digital
platforms to in excess
of 4.0 million hectares
by 2023.
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Business Review
Ireland
and the UK
Origin has leading positions in the UK
Integrated Agronomy Services market,
the Irish and UK Fertiliser and Speciality
Nutrition markets and the UK Amenity
inputs market. These market positions
were achieved through a combination of
acquisitions and organic growth, enabling
us to support primary food producers and
influence food production across Ireland
and the UK.
32
UK
Ireland
iFarms
B2B Sites
Technology Centres
Origin Enterprises plc Annual Report and Accounts 2019 Operational Review
Revenue
Operating profit1
Operating margin1
Associates and joint venture2
2019
€m
2018
€m
1,159.4
1,038.1
60.0
5.2%
6.7
54.8
5.3%
7.2
Change
%
11.7%
9.5%
(10bps)
(7.0%)
Change on prior year
Underlying3
%
Constant Currency4
%
11.0%
8.6%
(10bps)
(7.2%)
11.2%
9.1%
(10bps)
(7.2%)
1 Before amortisation of non-ERP intangible assets and exceptional items
2 Profit after interest and tax before exceptional items
3 Excluding currency movements and the impact of acquisitions
4 Excluding currency movements
Ireland and the UK
in Numbers:
€
€1.2bn
Revenue
1,300+
Employees
€
€60m
Operating Profit
30,000+
Customers
Overview
Ireland and the UK delivered a very
strong performance, recording
an 11.0% increase in underlying
revenue and an 8.6% increase in
underlying operating profit.
Underlying volume growth for
agronomy services and crop inputs
was 6.8% in the period. Volume
development was supported by
strong demand for crop inputs
reflecting a combination of robust
activity in-field, early procurement
planning by primary producers
for crop protection products for
application in 2020 and higher
feed and fertiliser volumes in the
period following the impact of poor
grass growing conditions in 2018.
Market volumes are expected to
normalise in 2020 compared with
the above average demand levels
experienced in 2019.
Operating margin decreased by 10
basis points to 5.2% primarily due
to the impact of increased fertiliser
volumes and prices, offsetting the
favourable margin development
achieved across our agronomy
services and inputs portfolio.
Integrated Agronomy and
On-Farm Services
Integrated Agronomy and On-
Farm Services delivered a good
performance during the year,
recording higher volumes,
revenues and margins across its
service and input portfolios.
operating conditions and was
supported by the beneficial impact
of sterling weakness on growers’
crop margins.
Performance in the period also
benefited, in part, from early
procurement planning by farmers
and growers to secure supply
of specific crop technologies
for in-field application in 2020
whose product registrations are
scheduled to expire after 2019.
Good progress was achieved in the
further development of the Group’s
agronomy portfolio across high
value and speciality crop sectors.
Digital Agricultural Services
Origin has developed a suite of
agronomist-farmer enabled digital
applications designed to optimise
crop performance and input
utilisation.
During the year, the Group’s
digital agronomy and precision
farming capabilities were merged
under a new identity called
RHIZA. RHIZA facilitates novel
and enhanced engagement with
farmers through offering real-
time and prescriptive digital
agronomy solutions which address
complex requirements relating
to environmental stewardship,
compliance, risk management and
field level crop performance.
Demand for agronomy services and
inputs was driven by favourable
The development and roll-out of
Origin’s digital offering continued
at pace during the year, with over
33
Strategic Report Business Review
Ireland and the UK
1.0 million hectares on-boarded to
date and firmly on track to deliver
our target of 4.0 million hectares
by 2023.
Margins continue to be positively
supported by growth in volumes of
enhanced efficiency fertiliser and
bespoke nutrition applications.
Amenity
Amenity recorded lower revenues
and profits in the period.
Find out more
See RHIZA case study on page 36
See Linemark case study on page 37
Feed Ingredients
Feed Ingredients delivered a very
satisfactory result in the year
reflecting the benefit of strong
operational execution and a robust
volume performance following the
exceptional demand experienced
in 2018.
The residual impact of unseasonal
weather conditions in 2018 was
reflected in elevated carryover
stockholdings at customer level which
led to lower demand in the period.
Volume development in the
period was positively supported
by higher livestock numbers and
generally stable returns for primary
dairy producers.
Performance was favourably
supported through new customer
gains in Home & Garden and by
the first-time contribution from
Symbio, the speciality biological
crop technology business acquired
in November 2018.
The Group’s animal feed
manufacturing associate, John
Thompson & Sons Limited, in which
the Group has a 50% shareholding,
delivered a very satisfactory
performance in the period.
Business-to-Business
Agri-Inputs
Business-to-Business Agri-Inputs
performed strongly in the period,
delivering good growth in operating
profits, supported by favourable
volume development.
Fertiliser
Fertiliser recorded higher
volumes and profits in the period.
Performance reflected the benefit of
favourable weather conditions and
a stable pricing environment which
positively influenced purchasing
decisions on-farm.
The successful integration of the
UK based Bunn Fertiliser, acquired
in 2018, was a key enabler of an
enhanced supply chain and customer
service capability to meet higher
demand in the period and to address
farmers’ increasingly sophisticated
requirements relating to soil fertility
and crop nutrition.
Profit by Geography1
10%
17%
73 %
Origin is a leading international
agri-services group providing
crop inputs, specialist agronomy
advice and digital agricultural
solutions to farmers, growers and
amenity professionals.
Ireland & the UK
Continental Europe
Latin America
1. Operating profit before amortisation of non-ERP
intangible items and exceptional items
34
Origin Enterprises plc Annual Report and Accounts 2019
Case Study
Andreea Ailenei
Transferring Knowledge
Read more on our
Strategic Priorities
on page 26
Andreea is the Digital Programme Manager for RHIZA
UK. Based in Berwickshire, in the Scottish Borders,
Andreea works with Agrii UK’s regional directors
and Origin’s digital team to develop and promote
differentiated product offerings to support the
adoption of Origin’s digital technologies on-farm.
Andreea, a qualified electronics, telecommunication
and IT engineer, joined Origin’s Romanian Digital
division in 2017, where she applied her expertise to
the discovery, promotion and development of digital
technologies in agriculture.
As part of Origin’s team in Romania, Andreea
supported the creation of the Group’s digital and
precision offering adapted for the Romanian market
and the adoption of Contour, the Digital platform
developed by Origin.
After 18 months working with the team in Romania,
Andreea availed of the opportunity to join Agrii UK
where she has played a key role in the launch of
the RHIZA brand.
On a daily basis, Andreea’s role highlights how
the agricultural industry benefits from digital and
technology innovations and how Origin as a Group can
benefit from transfer of knowledge and people across
the geographies in which we operate.
100-2,000ha 385
Customer Profile
Sales Force
35
Strategic Report Business Review
Ireland and the UK
Case Study
RHIZA
The Future of Farming
in Your Hands
During the year, the Group’s digital agronomy
and precision farming capabilities were merged under
a new identity called RHIZA. RHIZA delivers solutions
to farmers and growers addressing environmental
stewardship, compliance and risk management
together with field level data driven decision support
tools to manage crop performance. RHIZA is built on
a deep understanding of both farming and the new
opportunities of digital agriculture and agronomy.
The range of services offered by RHIZA include field
level imaging, nutrient planning applications, pest
and disease models, yield prediction models and
soil sampling.
The application of RHIZA technologies improves
profitability and productivity in every field and is
already in use on over 500,000 hectares in the UK
alone, and over 1,000,000 hectares across Europe
and Africa. RHIZA is designed for all farms providing
unique satellite data, crop growth models, hyper
local weather data and pest and disease models and
soil sampling capabilities allowing the creation of
management zones and improved in-field decision
making. Within the RHIZA portfolio, the Contour web
app and interface allows farmers to create nutrient
plans, seed rate maps and identify areas requiring
cultivation management – RHIZA helps farmers make
more informed and accurate decisions and has put
the future of farming in their hands.
See non-financial
KPI’s on page 30
RHIZA is in use on over
500,000ha
in the UK
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Case Study
Linemark
exports to
34
Countries
worldwide
Linemark
The Choice of Champions
Over the past 20 years, Linemark has become a
world leader in providing line-marking products
and sports advertising solutions to the professional
sports and amenity sector in the UK and beyond,
currently exporting to 34 countries worldwide.
Linemark uses innovative grass-marking technology,
promoting sustainability by reducing paint
consumption by up to 75%, cutting energy and
water consumption, and using recycled packaging.
Linemark also supplies paint for use in sports
advertising, including on-field branding at televised
sporting events such as football and rugby matches.
Linemark’s products have been used at some of the
most prestigious stadiums in the world, including Old
Trafford (Manchester), Wembley Stadium (London),
Anfield Stadium (Liverpool), Etihad Stadium
(Manchester), Borrusia Dortmund (Germany) and
Barcelona (Spain).
See our Sustainability
Report on page 50
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Find out more
See case study
on page 42
Business Review
Promoting Knowledge Transfer
Continental
Europe
Poland
Ukraine
Belgium
Origin is a recognised market leader in
the provision of Agronomy Services and
Crop Inputs in our Continental European
markets. Through our agri-services
businesses in Poland, Romania, Ukraine
and our fertiliser operation in Belgium,
the Group has extensive experience
supporting primary food producers
throughout these markets.
Romania
38
Technology Centres
Demonstration Farms
B2B Site
Origin Enterprises plc Annual Report and Accounts 2019 Operational Review1
Revenue
Operating profit2
Operating margin2
2019
€m
440.1
13.9
3.2%
2018
€m
431.0
16.2
3.8%
Change on prior year
Underlying3
%
Constant Currency4
%
(1.3%)
(14.1%)
(50bps)
2.3%
(12.7%)
(50bps)
Change
%
2.1%
(14.5%)
(60bps)
1 Excluding crop marketing. While crop marketing has a significant impact on revenue, its impact on operating profit is insignificant. For the
year ending 31 July 2019 crop marketing revenues and profits attributable to Continental Europe amounted to €165.1 million and €0.3 million
respectively (2018: €158.4 million and €0.2m respectively). An analysis of revenues, profits and margins attributable to agronomy services
and inputs more accurately reflects the underlying drivers of business performance.
2 Before amortisation of non-ERP intangible assets and exceptional items
3 Excluding currency movements and the impact of acquisitions
4 Excluding currency movements
Poland
Poland performed in line with the
prior period.
While volume development in the
period was impacted by lower
demand due to a reduction in
early autumn crop plantings,
performance benefited from the
ongoing enhancement of Origin’s
seed and speciality nutrition
portfolios through the further
development of the Group’s
product based capabilities.
Overview
Continental Europe encountered a
challenging operating environment
during the year which resulted
in lower margins and operating
profits primarily driven by the
under-performance of our
Ukrainian business.
Underlying business volumes
declined by 2.9% in the period and
operating margins reduced by 60
basis points to 3.2%.
Belgium
Belgium delivered a strong
performance in the year,
recording solid volume and margin
development. Margins were
favourably supported by growth
in sales of speciality and bespoke
nutrition applications.
Continental Europe
in Numbers1:
€
€440.1m
Revenue
1,100+
Employees
€
€13.9m
Operating Profit
19,000+
Customers
1. Revenue and Operating profit excluding
crop marketing.
39
Strategic Report
Business Review
Continental Europe
Romania
Romania achieved higher revenues
and profits in challenging operating
conditions.
Good volume momentum was
achieved across all market channels
against lower demand due to the
impact of extended dry conditions
on winter oilseed rape plantings.
Performance benefited from
improved commercial effectiveness
together with good progress
achieved in the period relating to
customer channel integration and
business portfolio alignment.
Ukraine
Ukraine recorded a significant
reduction in profitability in the
period. Business performance
reflected a market characterised
by lower liquidity and excess
inventories which drove highly
competitive trading conditions.
In the context of this challenging
market backdrop, the Group
continues to prioritise operational
and working capital efficiencies
along with the further development
of high service agronomy channels
and precision digital offerings.
Origin is a recognised leader in the
provision of Agronomy Services and
Crop Inputs across our Continental
European markets in Poland,
Romania, Ukraine and Belgium.
Profit by Geography1
17 %
10%
73%
Continental Europe
Ireland & the UK
Latin America
1. Operating profit before amortisation of non-ERP
intangible items and exceptional items
40
Find out more
See Agricultura Plus case study on page 42
See FoliQ case study on page 43
Origin Enterprises plc Annual Report and Accounts 2019
Case Study
Valerian Istoc
Business Development Director
Valerian reviewing maize
trials with Mihnea Pojoga
of Agriculture Plus
A qualified agronomist and MBA graduate, Valerian
holds a MSc in Sustainable Agriculture from the
Faculty of Agriculture in Bucharest and a PhD in plant
physiology from Uni Hohenheim, Stuttgart, Germany.
Under Valerian’s stewardship Agricultura Plus is
emulating the successes of Origin’s UK research
facilities, demonstrating value to farmers via the
adoption of classical and digital crop technologies.
Valerian joined Origin in December 2014 to
support the Group’s entry into the Romanian
market. Following the acquisitions of Comfert and
Redoxim, Valerian was the ideal candidate to assume
responsibility for the creation of Agricultura Plus,
Origin’s R&D and Digital structure tailored for the
Romanian market.
See more on our
Digital offering
on page 36
100-50,000ha
Customer Profile
335
Sales Force
41
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Continental Europe
Case Study
Agricultura Plus
Leading by example
Agricultura Plus was established in 2017 to facilitate
the knowledge transfer and rapid deployment of crop
technologies and field management strategies into
the Romanian market.
Building on the success of our UK based R&D
programmes, Agricultura Plus uses an integrated
approach to investigate all components of successful
crop production systems in localised conditions. As a
result, our local agronomists are equipped with the
latest information to deliver bespoke recommendations,
inputs and intelligent agricultural solutions to maximise
farmers’ production returns.
“ Based on the size of my farm, I thought it was
too small for a precision advice service.
I first engaged the service across several
fields that I considered of ‘low potential’
yielding 1,700-1,800 kg of sunflower / ha. A
soil analysis identified a low pH level in
addition to Phosphorus and Zinc deficiency.
Based on the findings, my agronomist Alin
prescribed a customised soil nutrition
programme, prompting a change to the range
of fertilisers used in order to match the
crops’ nutritional requirements. As a result
the fields delivered a 1.2 tonnes increase in
yield, one of the highest sunflower yields in
my area. The trial convinced me to engage the
services across the whole farm”.
– Miclescu Radu, Botosani, Romania, Farm Area 350 ha
See more on our
Digital offering
on page 36
Building on the success of our UK
based R&D programmes, Agricultura
Plus uses an integrated approach
to investigate all components of
successful crop production systems
in localised conditions.
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Case Study
FoliQ developed
over the past
25yrs
FoliQ
Own Product
Based Capability
FoliQ is a range of liquid foliar fertilisers
containing the optimum composition of macro
and micronutrients to promote plant nutrition
and health. Its primary innovation lies in
fragmentation of incorporated nutrients to the
size of nanoparticles.
Developed over the past 25 years, FoliQ is one of
the strongest brands of foliar fertiliser within the
Polish market, maximizing crop performance and
therefore yield through the delivery of:
> efficient nutrient uptake;
> quick and efficient plant nutrition;
> more intensive growth of plants;
> increased tolerance of plants to stress
conditions; and
> enhancement of plant resistance to diseases.
Having successfully proven the product efficacy
through localised trials, Origin exports FoliQ to
nine countries to meet a growing demand for foliar
nutrition products.
Read more on our
Strategic Priorities
on page 26
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Fortgreen: Enhancing Origin’s
product based capabilities
Find out more
Case study
page 49
Business Review
Latin
America
In June 2018, Origin announced it had
reached agreement to acquire a 65%
controlling interest in Fortgreen and a
20% shareholding in Ferrari Zagatto.
Both entities are based in Paraná State
in Brazil and represent the Group’s first
entry into the Latin American market.
The 65% controlling interest in Fortgreen
was completed in August 2018, with
the 20% shareholding in Ferrari Zagatto
completed in June 2019.
44
Brazil
Paraná State
Fortgreen Sites
Ferrari Zagatto Sites
Origin Enterprises plc Annual Report and Accounts 2019 Operational Review
Revenue
Operating profit1
Operating margin1
2019
€m
33.6
8.1
24.1%
2018
€m
-
-
-
Change
%
100.0%
100.0%
-
Change on prior period
Underlying2
%
Constant Currency3
%
-
-
-
-
-
-
1 Before amortisation of non-ERP intangible assets and exceptional items
2 Excluding currency movements and the impact of acquisitions
3 Excluding currency movements
Latin America
in Numbers:
€
€33.6m
Revenue
80
Sales Force
€
€8.1m
Operating Profit
118
Resellers
Overview
Origin made its first-time entry into
the Brazilian agri-services market
following the completion of the
acquisition of Fortgreen in August
2018. Fortgreen, headquartered in
Paraná State in southern Brazil, is
focused on the development and
marketing of speciality inputs and
value-added crop nutrition.
Latin America has delivered an
excellent first-time contribution
in the period, with performance
in line with pre-acquisition
expectations. Integration is
progressing to plan, including
the development of partnerships
with other Origin entities to
enhance the Group’s own product
based capabilities.
Brazil
Performance in the year was
supported by good growth in
soluble nutrition technologies
for grain and speciality crop
applications and aided by a strong
harvest for Brazil’s principal spring
crop, soya. The Group has invested
in additional production and
storage capability to support
this growth.
The acquisition of a 20%
shareholding in the Brazilian
business Ferrari Zagatto E Cia.
Ltda., (‘Ferrari’) announced in the
prior financial year, completed on
10 June 2019. Also headquartered
in Paraná State, Ferrari is a
leading provider of agronomy
services, inputs, crop handling
and marketing services. Ferrari
provides an important route-to-
market for Fortgreen’s speciality
inputs and nutrition offering. As
Ferrari was acquired close to the
year end, its contribution to the
overall result was immaterial.
Find out more
Origin at a glance on page 6
Our Business on page 22
45
Strategic Report
Business Review
Latin America
Latin America has delivered an
excellent first-time contribution
in the period. Integration
is progressing to plan, with
performance in line with
pre-acquisition expectations.
Profit by Geography1
17%
73%
10 %
Latin America
Ireland & the UK
Continental Europe
1. Operating profit before amortisation of non-ERP
intangible items and exceptional items
Research trials being
undertaken at Fortgreen’s
technical facility
46
Origin Enterprises plc Annual Report and Accounts 2019
Case Study
Read more on our Strategic
Priorities on page 26
Leonardo Pereira
In Profile
Leonardo on-farm in Paraná state
A qualified agronomic engineer and MBA graduate,
Leonardo holds a MSc in Plant Nutrition where he
specialised in production management.
Leonardo joined Origin through the acquisition
of Fortgreen in 2018. As Head of Technical and
Operations in Fortgreen he holds strategic
responsibility for new product development
within local and international markets. Leonardo and
his team are an integral part of the Group’s plans to
transfer formulation expertise into existing European
markets, bringing extensive formulation and
production knowledge across both fertiliser and
speciality inputs.
50-5,000ha
Customer Profile
2,000
Crop Field Trials
47
Strategic Report
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Latin America
Case Study
Extensive trials
across Brazil have
demonstrated
yield increases
versus the market
standard products,
averaging between
5-8 additional bags of
soya bean per hectare.
ZC Full Patriot
Own Product Based
Capability
Zinc is one of the most widespread micronutrient
deficiencies in crops, resulting in stunted plant
growth, an elongated crop maturity period and
inferior harvest quality. ZC Full Patriot is a seed
treatment formulation developed in-house by
Fortgreen using Zinc Complex technology.
ZC Full Patriot works to physiologically
stimulate plants delivering:
> greater germination and emergence;
> higher germination and emergence speed
in stressful situations; and
> better crop establishment.
Extensive on-farm trials across Brazil have
demonstrated yield increases versus the market
standard products, delivering 4 – 6% additional
yield in soya crops. ZC Full Patriot is one of a range
of in-house product formulations developed by
Fortgreen, with broader application use across
Origin Group markets, to address localised
agronomic challenges.
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Fortgreen services
approximately
1,200
customers through an established
Business-to-Business and retail
distribution network
Case Study
Fortgreen
In Profile
During the year, the Group completed the
acquisition of Fortgreen in Brazil which was the
Group’s first-time entry into the Brazilian
agri-services market. Fortgreen, headquartered
in Paraná State in southern Brazil, is focused
on the development and marketing of speciality
inputs and value-added crop nutrition.
Fortgreen was founded in 2004 and is an
established leader in the manufacture and
marketing of a complete portfolio of related
crop technologies covering foliar fertilisers,
bio stimulants, adjuvants and control release
and slow release fertilisers. Fortgreen operates
a comprehensive research and new product
development capability and services approximately
1,200 customers through an established business-
to-business and retail distribution network.
See Origin at a glance on page 6
See Our Business on page 22
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Sustainability Report
At Origin, our strategic objective is to
build a sustainable business and deliver
long term value to shareholders in a
responsible and ethical manner, in line
with evolving societal expectations.
Introduction
In a world facing global challenges of unprecedented
levels, such as food insecurity, resource scarcity and
climate change, Origin as a leading Agri-Services
Group knows that the current food production system
needs to adapt and change, and we have a role to play
in that transformation.
With sustainability at the centre of our business model,
we are focused on making a positive contribution,
through our products, services and operations, to
promoting sustainable food production systems and
helping to meet the growing food demand.
During the year, we formalised our vision and purpose as
we seek to embed sustainability in everything we do. Our
vision is to be the leading and trusted partner of choice
to the farmers, growers and amenity professionals we
serve. Our purpose is to sustain land and lives through
our expertise, innovation and research and development.
Activities we engaged in during the year included;
concluding our first stakeholder driven materiality
assessment, mapping our strategic priorities to the UN
Sustainable Development Goals, calculating our Scope 1
and Scope 2 greenhouse gas emissions and developing a
diversity, inclusion and equal opportunities strategy. We
also continued to develop our reporting in line with the EU
Non-Financial Reporting Directive (2014/95/EU). Details
of these activities are outlined later in this report.
Materiality
Origin’s sustainability journey is one of continuous
development. In 2018, we identified, prioritised and
validated 23 distinct sustainability factors which we
considered to be relevant to our organisation. In 2019,
we undertook a materiality validation assessment, using
an independent external adviser, to further understand
the expectations of our key stakeholders and refine our
own priorities. Details of the materiality process are
outlined as follows:
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Materiality Process
Defining the sustainability factors
Definitions for each of the 23
sustainability factors were set out
for the stakeholders.
Engaging with stakeholders
Stakeholder groups were engaged through
the following means:
> Interviews were held with
Customers, Suppliers,
Regulators, Industry Associations,
Academics, Research Professionals,
Shareholders and Lenders.
> Surveys were completed by employees.
Prioritising results
Ratings of high, medium or low were
assigned against each sustainability
factor based on the results from the
internal and external stakeholder
engagement. A sustainability factor
register was developed.
Validating the results
Results were validated by our
Sustainability Steering Group.
Outcomes
Informed the Sustainability Report
content and structure. Provided
a structure and valuable insight to
continuously improve the Group’s
sustainability programme and the
stakeholder engagement processes.
Find out more
IQ case study on page 53
Gender Diversity on page 54
The outcome of this assessment has confirmed good alignment among internal and external
stakeholders, with certain sustainability factors being more relevant to different stakeholder
groups. The assessment has identified key themes which will be central to the development of the
Group’s Sustainability Programme as we seek to ensure continued alignment with the business and
stakeholders needs. It has also enabled us to identify the UN Sustainable Development Goals most
closely aligned to Origin’s business. The topics covered in this report are designed to reflect the
outputs of this materiality assessment.
Materiality Matrix
High
Medium
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> Health, nutrition and
food safety.
> Wildlife and biodiversity.
> Water stewardship.
> Community education
and support.
> Genetic enhancement.
> Industry leadership and
collaboration.
> Local socio-economic
impact.
> Business integrity.
> Climate-smart agriculture.
> Long-lasting relationships and quality of service.
> Product research and innovation.
> People’s health and safety.
> Soil and crop health.
> Promoting sustainable food production systems.
> Cyber-security and data protection.
> Diversity, Inclusion and Equality.
> Digital transformation (local solutions).
> Employee attraction, development and engagement.
> Geopolitical and regulatory developments.
> Financial stability and sustainable growth.
> Supplier relationships.
> Respecting human rights in the value chain.
Low
> Organic farming.
Low
Medium
High
Importance to Origin Enterprises
UN Sustainable
Development Goals (‘SDGs’)
The UN Sustainable Development
Goals provide a globally accepted
roadmap for addressing many of
the most urgent global, economic,
environmental and social
challenges. The success of SDGs
will be determined by business
action and we believe that Origin
as a leading Agri-Services Group
has an important part to play.
Using the findings of the
materiality validation exercise,
we mapped our sustainable
priorities and strategic goals to
the UN SDGs. We believe Origin’s
products and services contribute
to transformation towards
sustainable food production as
underpinned by SDGs 2, 6, 12,
13 and 15. These interconnected
goals provide us with significant
business opportunities but we
also recognise that a lack of
progress on delivering these goals
will challenge the sustainability of
agriculture. Further details of our
product and service offerings are
outlined in the Business Review
on pages 32 to 49.
Through our operations and supply
chain we can actively support the
delivery of SDGs 8, 9, 17 as these
goals are closely aligned with our
strategic priorities and will enable
us to develop and deliver more
sustainable products and services
to customers, and society at large.
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Strategic Report
People
Origin is a business centred around
people, where strong working
relationships form the basis of
our success. We believe that by
attracting motivated, highly skilled
employees, and nurturing their talent
and individuality, we can create
opportunities to fulfil their potential
and provide our business with a
strong competitive advantage.
Our core values describe the culture
Origin aspires to, the beliefs we hold
and the behaviours expected of
all employees.
Attracting and developing
our people
Origin recognises the importance
of attracting the best talent into
our business, particularly in the
highly competitive agri-food sector,
where superb global leadership
opportunities lie. To attract the
most talented candidates in the
industry, we invest in cultivating
long-term partnerships with
potential candidates, forming
relationships with industry
and leading universities and
demonstrating the potential for
career growth in the Group.
Attracting young, enthusiastic,
talented professionals, and growing
our talent through continuous
learning and development is a key
part of our succession planning
and preparing our business for
the future.
We
contribute to
the success
of the
communities
where we
operate
We grow
futures
together
People
We shape
the future
Community
Our core
values are
as follows:
Innovation
Partnerships
Integrity
Adding value
to lifelong
relationships
We do the
right thing
We provide in-country IQ
programmes which enhance
employees’ current performance
and prepare them for future roles.
Through the Personal Development
Plans we also develop personal,
academic, technical and digital
skillsets of our employees.
The IQ programmes include
classroom and online training
solutions from industry-leading
educational institutions and internal
industry experts, together with
mentoring from senior agronomists
and management within the business.
During the year, employees
participated in 1,475 training
courses across the Group.
There are four elements to the IQ programme as follows:
IQ Programme Elements
Establish
> BASIS / FACTS certification.
> Mentoring from senior
agronomists and management.
Educate
> BASIS advanced certification.
Personal Effectiveness /
Complementary Courses
> Training in project management,
consultative sales, communication
and presentation skills.
> Technical training.
Management Development Training
> Leadership training.
> Team Management.
> Strategy and financial management.
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Origin Enterprises plc Annual Report and Accounts 2019
Case Study
Kathryn Styan
Agronomist at
Agrii UK
Kathryn’s passion and appreciation for farming and
food production goes back to her family roots where
she was born and raised on a fruit and vegetable
farm in the Vale of Evesham. After completing a
BSc in Geography from the University of Leicester
and an MSc in Agronomy and Crop Production from
the University of Warwick, Kathryn joined Agrii
UK in August 2015 where she has worked with the
agronomy, sales and technical teams.
In January 2016, she commenced the IQ Establish
and Educate programmes, where she received
FACTS certification through the internal training
programme in March 2016, and completed the
BASIS training with Harper Adams University in July
2016. In April 2016, she commenced the IQ personal
effectiveness / complementary training which
includes modules on sales and communication,
time management, environmental legislation,
seed genetics, soil management and farm business
management. As part of the IQ programme she also
completed several sessions with representatives
of the main crop protection manufacturers which
has provided her with greater insight into the active
ingredient development processes.
The IQ programme has benefitted Kathryn and
Agrii UK by increasing her confidence and skills
to take on new customers from both competitors
and retiring Agrii agronomists. To date Kathryn has
achieved a 100% customer retention rate. The IQ
training programme has also given Kathryn skills
to increase her profile in the industry, where she
presents courses to farmers and sprayer operators on
behalf of the National Register of Sprayer Operators.
Finally, it has provided her with the knowledge and
tools to advise on agronomic matters such as soil
management and environmental legislation ensuring
the highest standards of services are provided to Agrii
UK customers, and help future proof the role of an
agronomist in a rapidly changing industry.
“ The IQ programme has provided me with
the knowledge and tools to develop my
agronomic and management skills for the
benefit of Agrii and its customers.”
See more on
Our Business
on page 22
Origin believes that by attracting
motivated, highly skilled employees,
and nurturing their talent and
individuality, we can create
opportunities to fulfil their potential
and provide our business with a
strong competitive advantage.
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Engaging our people
At Origin we recognise the value of
sharing our ideas and information
with each other and our stakeholders,
and aim to create a workplace where
our people have an opportunity to
make a meaningful contribution to
the success of the business.
To develop our culture of open
communication we launched our
Employee Engagement Strategy ‘Let’s
Talk’ during 2018. The purpose of the
strategy is to allow us to enhance
our existing feedback mechanisms,
better understand the employee
experience across the Group, bring
greater awareness and alignment to
our vision and values and provide our
Board and Executive Management
with the insights necessary to make
informed decisions. During 2019, our
Chairman, Chief Executive Officer,
Chief Financial Officer and designated
Non-Executive Directors visited sites
in Poland and the UK. During these
visits, they received guided tours of
the sites and held focus groups and
Q&A sessions with the employees.
As outlined in last year’s Annual
Report, we undertook an employee
engagement survey in two of our
business units in 2018. In 2019, as
part of our ‘Let’s Talk’ strategy, we
conducted the inaugural Group-
wide employee engagement
survey to provide us with a better
understanding of how our employees
view the organisation. Employees
across the Group were given the
opportunity to participate in the
survey, where a 68% response rate
was achieved. The overall employee
engagement score was 86%.
The results from the employee
engagement survey and the site
visits have provided confirmation of
areas where we are doing well and
insights into areas where there is an
opportunity to improve, with action
plans being developed by our Human
Resources Teams across the Group. In
2020, we will conduct a Group-wide
survey to help assess the outcomes of
action plans, in our effort to continue
to improve engagement with our
people and their experience at
Origin. Our Chairman, Chief
Executive Officer, Chief Financial
Officer and designated Non-Executive
Directors will continue to visit sites
throughout the Group as part of the
‘Let’s Talk’ strategy.
Building a culture of
Health and Safety
Health and Safety of our employees
is a primary responsibility of Origin,
where we demand the highest
safety standards in everything we
do. The importance of Health and
Safety aligns with the views of our
internal and external stakeholders,
as determined from our materiality
assessment. Led by our local
Health and Safety Officers, each
business unit has a health and safety
management system reflecting the
specific risks from their operations.
We continuously invest in and refine
our processes and procedures to
ensure high safety standards in each
business unit. We also share best
practice among our business units
to ensure consistent performance
across the Group.
We measure performance on
an ongoing basis and reports
are presented to business unit
management at every meeting.
Reports are also presented at regular
intervals to the Origin Board.
One of our key measures is Lost
Time Injuries (‘LTIs’), defined as an
accident resulting in at least one day
lost after the date of the accident. A
total of 20 LTIs were recorded in the
Group during the financial year ended
31 July 2019.
Nurturing Diversity and Inclusion
Origin is committed to the principles
of diversity, inclusion and equal
opportunities as we understand
these principles are essential
elements to our success. We aim to
foster a diverse and inclusive culture,
that attracts and develops diverse
talent and creates a workforce that
mirrors society and understands its
diverse needs.
In 2019, we continue to develop and
implement diversity, inclusion and
equal opportunities programmes
as part of our strategy. These
programmes will focus on areas such
as developing new communication
channels to embed the diversity and
inclusion principles, launching on-
line training modules, engaging with
external groups and advisory bodies,
and improving internal reporting to
measure and monitor the diversity
profile of our workforce.
We welcome a greater
representation of female talent
across all functions in our business
particularly at management level
and we are committed to extending
equal opportunities to all individuals
in line with our policies. Details of
female representation at Origin
Board, management level and in
the wider employee population are
outlined below.
We are a member of the 30% Club,
and support our Chairman, R Hynes
as a Member of the Advisory Group
of the Balance for Better Business;
both of which are committed to
achieving better gender balance at
all levels of organisations.
Further details of the Board Diversity
Policy are outlined in the Nomination
and Corporate Governance Report on
page 84.
25%
Gender diversity
21%
27%
75%
79%
73%
25% female representation at Origin Board
21% female representation at management level
27% female representation of Origin employees
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Origin Enterprises plc Annual Report and Accounts 2019
Business Ethics and Integrity
At Origin, doing business with
integrity is a core value of the Group
and a foundation for our long-term
success. Business results must
always be achieved ethically and in a
responsible manner.
Anti-Bribery and Corruption
Origin operates an Anti-Bribery and
Corruption policy which states that
no employees or representatives
of any Group business is to offer or
accept any bribe, including small
facilitation payments, or engage in
any form of corrupt practice. The
policy is designed to ensure that
each business unit within the Group,
applies appropriate steps to comply
with Origin’s ethical standards so
that the Company and its employees
are protected from any penalties,
fines and / or reputational damage.
Origin launched an e-learning
training programme in 2018 which
has been rolled out to employees
across the Group to help them
understand their obligations.
Respect for Human Rights
We conduct our business in a
manner that respects the rights
and dignity of all people. Origin has
suitable Human Resources policies
and procedures which apply to each
business in the Group.
Origin is also committed to
upholding human and labour
rights in its supply chain and
welcomed the introduction of
the UK Modern Slavery Act. Origin
published its statement in response
to the Act in 2017 which can be
found on the Company’s website
www.originenterprises.com. The
Group has procedures including the
issuing of supplier questionnaires
to assess the risk of human rights
abuses taking place within its supply
chain. A copy of the UK Modern
Slavery Act is issued to all new
starters as part of their induction
programme to increase awareness
of the Act.
Environment
As one of the leading providers
of agri-inputs and agronomic
services, we have a responsibility
to manage the activities within
our own operating businesses to
support long-term environmental
sustainability through the adoption of
environmental stewardship practices
amongst our customer base.
Origin is focused on the energy
efficiency of our own operating
businesses, where we undertake
energy audits to identify
opportunities to reduce consumption.
Origin also adheres to strict principles
of environmental stewardship in all
our activities ensuring appropriate
care is taken throughout the
product life cycle, through the use
of appropriate management systems
and processes and continuous
investment in infrastructure. These
management systems encompass
environmental matters including
control of major accident hazards
and product traceability.
Greenhouse Gas Emissions
This is the first year in which
consolidated data for our Group
Scope 1 (transport and heating
fuel) and Scope 2 (electricity use)
greenhouse gas (‘GHG’) emissions
has been collated. Origin’s absolute
Scope 1 and Scope 2 GHG emissions
increased by approximately 3%
and 1% in 2018 and 2019 compared
to the base year 2017, driven by
the addition of new businesses
in the UK, Belgium and Brazil. We
are actively seeking to reduce our
energy consumption through the
introduction of various initiatives.
Waste
Minimising waste is an important
part of reducing our direct impact
on the environment. We aim to
reduce all waste being generated
across the Group and divert waste
away from landfill.
We place specific emphasis on the
type of packaging used for our crop
nutrition and protection products,
with all packaging made from 100%
recyclable material. We continue
to work closely with the respective
authorities in the countries we
operate in to assist our customers
in recycling this packaging.
Absolute CO2 emissions
(000’s tonnes)
Carbon Intensity
(tonnes CO2E / Average no. of employees)
20
15
10
5
0
4.3
4.1
3.8
15.4
16.2
16.1
FY17
FY18
FY19
Scope 1
(Direct – transport
and heating fuel)
Scope 2
(Indirect -
electricity use)
Estimates included in the
calculations are as follows
(21% – FY17), (20% – FY18)
and (24% – FY19)
10
8
6
4
2
0
8.44
8.38
7.86
FY17
FY18
FY19
55
Strategic Report
Promoting
Sustainable Food
Production Systems
Evolution of
Agronomy
11
1 ha fed
11 people
1 ha fed
6 people
6
Crop yields relatively
static since 1900’s
Modernisation
> Seed genetics.
> Fertiliser application.
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1940s
1960s
*Comparative figures based on MAP Yields 2014 – 2018 compared to DEFRA average for England and DEFRA South West.
Graphical illustration is management’s estimate of average adult daily calorie intake provided through wheat
consumption. Yield data sourced from Department for Environment Food and Rural Affairs (DEFRA) using United
Kingdom cereal yields from 1885 onwards.
Top 25%*
*
24 1 ha feeds
24 people
35+
Potential
to feed
35+ people
per ha
Average*
21 people
21 1 ha feeds
18 1 ha feeds
18 people
16 1 ha fed
16 people
Improving Potential
> Crop quality.
> Pest & disease control.
Integrated Agronomy
> Risk management.
> Precision applications.
> Environmental stewardship.
> Influencing farm business.
Advanced Adaptive
Agronomy
> Digitally enabled.
> Hyper localisation.
> Bespoke prescriptions.
> Climate sensitive practices.
1980s
Today
Potential
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Water
Our water consumption is low
compared to manufacturing
industries due to the nature of our
formulation and distribution model.
The potential impact associated
with a product spillage represents
a risk for our business. Due care
is exercised to ensure that all
waste water complies with relevant
legislation and the Group continues
to invest in infrastructure and
management systems to minimise
potential spillages or other forms of
water contamination. In addition the
Group invests significant effort in
the education of our customers on
best practice.
Promoting sustainable food
production systems
We recognise the unique contribution
Origin can make in strengthening the
sustainable agricultural community.
We are mindful not only of the
decisions taken within our own
organisation, but equally our ability
to promote best practice through
the responsible use of crop inputs
and the adoption of sustainable food
production systems.
Our agronomists constantly
challenge the status quo and create
a platform through a knowledge-led
approach, that delivers increased
yields, resilience to climate
instability and higher health and
vitality for farming. It is widely
recognised that agriculture has
a unique role to play in climatic
change and equally, we witness
opportunities where agricultural
practices play a significant role
in helping to mitigate the effects
of climate change. In our bid
to promote sustainable food
production and an enhanced
environment, Origin employs the
skills and local knowledge of its
highly skilled agronomist workforce
to bridge the gap between formal
scientific research and the
experience of farmers, growers
and amenity professionals to adopt
the most appropriate practices
tailored for individual field, crop and
landscape requirements.
Case Study
Nutri-Match®
Origin has developed a range of prescription
blended compound fertilisers in which the
analysis is formulated to match specific soil and
crop nutrition requirements.
programme. Data from the Professional Agricultural
Analysis Group identified that 90% of UK soils have
sub-optimal fertility, highlighting a clear need for
more targeted nutrition.
Nutri-Match® offers:
> unlimited choice of fertiliser analyses;
> up to 14 essential nutrients; and
> targeted nutrition to match individual
soil types and crops.
A broad-spectrum soil analysis provides the
essential information to build a nutrient
Based on the soil results, a qualified crop nutrition
adviser interprets the results and an Origin
NUTRI-MATCH® prescription fertiliser is formulated
to optimise soil fertility, crop yield and crop quality.
NUTRI-MATCH® delivers:
> increased Nutrient Use Efficiency;
> optimum environmental protection; and
> increased return on investment.
Read more on our
Business Model
on page 28
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Developing Solutions for
climate-smart agriculture
Through ongoing near market
research and product formulation
programmes, Origin places significant
emphasis on soil regeneration,
biodiversity and crop health. In
doing so we also acknowledge the
immense role nutritional products
play in strengthening soil health
and vitality.
Responsible Approach
to Stewardship
Origin’s agronomist led advisory
model is based on the premise of
increasing yields on the existing
agricultural land base whilst
protecting biodiversity and
the environment.
To support this practice, our
agronomists adopt an integrated
approach to land and crop
stewardship through the practice
of Integrated Pest Management
(‘IPM’). IPM is a holistic approach
to sustainable crop protection
that focuses on managing insects,
weeds and diseases through
a combination of cultural,
physical, biological and chemical
methods that are cost-effective,
environmentally sound and
socially acceptable.
IPM comprises three main activities:
> management of pests, weeds
and diseases through the use
of biological, physical and
cultivation means as well as crop
protection chemistry;
> monitoring of crops to observe
levels of both pests and beneficial
species that can provide natural
control mechanisms; and
> using pest prediction models and
economic thresholds, to better
judge the requirement and timing
of interventions.
These techniques include
crop rotations, variety choice
management, appropriate cultivation
method, target product dose rates
and environmental biotechnology
where benefits have been verified
through in-house R&D trials.
Our agronomists constantly challenge
the status quo and create a platform
through a knowledge-led approach,
that delivers increased yields,
resilience to climate instability and
higher health and vitality for farming.
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Case Study
Case Study
Symbio
The environmental
biotechnology
company
Symbio, acquired during the current year, is
an environmental biotechnology company that
specialises in the identification, selection and
use of soil bacteria, fungi and the organisms
found in healthy soil to maximise plant growth
and strength whilst optimising chemical
use within cost effective Integrated Pest
Management Programmes (‘IPM’).
Through collaborative partnerships with
global researchers, biotech laboratories
and agronomists, Symbio has successfully
developed innovative sustainable technologies
addressing the needs of:
> sports pitches and fine turf;
> arboriculture & forestry;
> horticulture;
> vegetable and arable crops; and
> the bio-organic garden.
Using a balanced combination of biology,
chemistry and physics, Symbio’s product range
consists of natural biotechnical products
such as mycorrhizae, compost teas, soil
bacteria and fungi, which complement and
in certain instances replace conventional
plant management techniques as part of an
effective IPM programme.
Black-grass
Control
Black-grass control is one of the biggest
agronomic challenges to face arable farmers
across much of Europe. The weed, which is
entirely spread by seed, can spread ten-fold
in a single year and severely limit a crop’s
yield potential.
The application of herbicides alone is not
sufficient to control the spread of black-grass.
To address the challenge, we have conducted
extensive trials for over two decades to find
an effective solution for black-grass using an
integrated approach now known as the Stow
Longa model. This management model, delivers
up to 98% control of black-grass within a
field achieving yield benefits of greater than
5.5 tonnes per ha through a combination of
management decisions based on cultivation
methods, crop rotation, seed rates, nutrition,
variety and modifying drilling date.
Read more on the
Evolution of Agronomy
on page 56
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Case Study
Project
Pollin-8
Rigby Taylor has undertaken a major initiative to
help reverse the national decline in pollinating
insects by introducing an urban flower seed mixture
named Euroflor Banquet to the landscape industry
that contains the best species for pollinators, whilst
delivering high performance flower displays.
The research revealed that no one mix would meet
the complex ecological demands of the diverse
pollinator groups throughout the different stages in
their life cycles – from early to late flowering, native
and horticultural species, plants for egg laying,
nectar for energy and pollen for protein.
Banquet mixture is the result of information
obtained from independent research by the Urban
Pollinators Group, a national research programme
run by Bristol, Edinburgh, Leeds and Reading
Universities (2010-2013).
Ten Euroflor Pollin-8 mixtures are now available
that ensures a longer seasonal supply of nectar
and pollen and a more diverse range of habitats
whilst at the same time providing attractive
flower displays.
Case Study
GRID digital solution
to support access
to finance in
developing countries
In Africa, farmers and finance providers partner
through RHIZA’s GRID and Contour services, helping
farmers grow successful crops and building trust
between them.
makes them more efficient. It also helps us monitor
the farmers’ progress and gives us great insight into
the season the farmers are experiencing,” said Leon
Kotze, Stanbic Bank Head of Agriculture.
Contour’s satellite imagery allowed Derek Nicolle,
General Manager of Mkushi Estates, Zambia to
increase water efficiency through early detection.
“The irrigation error we experienced was invisible to
the naked eye,” says Mr Nicolle. “With cutting-edge
digital agronomy tools, we were able to pick up on
the error early enough in the growing cycle to fix the
problem”. “The Contour app is a great tool both
for the bank and the farmers. It helps the farmers
save money through improved decision making that
Together with crop performance monitoring, yield
forecasts and nutrition recommendations, farmers
illustrate their output potential, while financial
institutions mitigate risk in lending, support their
customers with agronomic information, and reduce the
cost of monitoring and lending to farmers.
See more on our
Digital offering
on page 36
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Risk Report
Identifying,
evaluating and
managing risks
The Board, supported by the Audit and
Risk Committee, has overall responsibility
to ensure the principal risks faced by the
Group are identified, evaluated and
adequately managed.
Risk Management
The Board has overall responsibility for risk management
and internal control systems throughout the Group.
The Audit and Risk Committee assists the Board by
taking delegated responsibility for risk identification
and assessment and for reviewing the Group’s risk
management and internal control systems, along with
making recommendations to the Board regarding the
operation of the Group’s Risk Management Framework.
In 2015, the Board established a Risk Committee
to ensure focus on risk management. During the
past four years, the Risk Committee strengthened
risk management systems and promoted a strong
risk management culture throughout the Group. In
September 2018, the Board approved the amalgamation
of the Audit and Risk Committees.
The detailed Terms of Reference of the Audit and Risk
Committee are available on the Company’s website:
www.originenterprises.com. The principal duties and
responsibilities of the Audit and Risk Committee related
to risk management for the year ended 31 July 2019 are
listed below:
> continually review the Group’s overall risk
assessment processes and its capability to identify
and mitigate new risk types;
Risk Management Framework
The Group has an enterprise-wide Risk Management
Framework and a formal risk assessment process in
place through which risks are identified and mitigating
controls are evaluated. The Risk Management
Framework and the formal risk assessment process
helps to reduce the possibility of the Group failing to
achieve its strategic objectives.
The risk assessment process is driven by business
unit management who are best placed to identify the
significant ongoing and emerging risks facing their
businesses. The outputs of these risk assessment
processes are subject to review and the risks identified,
together with associated mitigating controls, are also
subject to audit as part of operational / financial
audit programmes.
The Group’s Risk Management Framework is set out
diagrammatically below and incorporates the ‘three lines
of defence’ approach as follows:
> the first line comprises business unit and functional
management who have day-to-day responsibility
for anticipating, identifying and managing risk along
with devising, implementing and upholding effective
internal controls in each respective business unit and
functional area;
> consider the output of the consolidated risk map
> the second line comprises Group oversight functions
produced and the appropriateness of the positioning
of individual risks;
who provide specific functional expertise; and
> the third line comprises Internal Audit and external
> review and approve the statements to be included in
the Annual Report concerning risk management.
> work and liaise as necessary with all other Board
committees;
> annually review the Audit and Risk Committee’s
Terms of Reference and carry out its performance
evaluation review; and
> report to the Board on how it has discharged
its responsibilities.
professional advisers who provide an additional level of
independent assurance.
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Risk Management Framework
Origin Enterprises plc Board
• Group and Business
Unit Risk Maps
• Risk Register
• Financial Reporting
Audit & Risk
Committee
•
Internal Control Systems
• Whistleblowing and Fraud
•
Internal Audit
Executive
Group Risk
Committee
Senior
Management
Team
Business Unit /
Functional
Management
1st Line of Defence
Owns and
manages risk
Group Oversight
Function
2nd Line of Defence
Oversees risk and
provides support
Internal Audit /
Other Assurance
Providers
3rd Line of Defence
Independent
assurance
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63
Roles and Responsibilities
The roles and responsibilities in respect of the key elements of the Risk Management Framework are set
out below:
Origin Enterprises plc Board
> Set strategic objectives.
> Set delegation of authority.
> Continually review and monitor key risks of the Group.
> Report on the effectiveness of the risk management and internal
control systems.
Audit and Risk Committee
> Review the Group’s overall risk assessment processes.
> Review and monitor the key risks of the Group and the mitigating
actions in place.
> Review and consider reports from Internal and External Audit.
> Review internal control systems.
> Review whistleblowing arrangements and concerns raised through
this channel.
> Review procedures for identifying and preventing fraud and bribery.
> Liaise with other Board Committees.
> Report to the Board on how it has discharged its responsibilities.
> Meets, directs and supports the business units on risk management.
> Develop the risk management and control environment.
> Perform risk deep dives for Group functions and units.
> Identify and share best practices for managing risk.
> Review, assess and support the implementation of agreed risk mitigation and
control programmes.
Executive Group Risk
Committee
Senior Management Team
> Develop the risk management and control environment.
> Review, assess and support the implementation of agreed risk mitigation and
control programmes.
Group Oversight Function
Group Internal Audit
> Oversee business unit and functional risk management.
> Promote the importance of a strong control environment.
> Additional focus in respect of Group finance, risk management, tax, treasury,
legal, information technology and security.
> Monitor the effectiveness of the Group Risk Management Framework.
> Develop risk based internal audit plans.
> Identify areas for improvement and assess status of mitigating controls.
> Provide independent and objective assurance on risk matters to the Audit
and Risk Committee.
The Audit and Risk Committee comprises three Independent Non-Executive Directors, Gary Britton
(Non-Executive Director, Chairman of the Audit and Risk Committee), Hugh McCutcheon (Senior Independent
Director) and Kate Allum (Non-Executive Director).
The length of tenure of the Directors on the Audit and Risk Committee as at 31 July 2019 is set out below:
Length of tenure on Audit and Risk Committee*
Kate Allum
Gary Britton
Hugh McCutcheon
Years
3.75
3.77
7.63
* Following the amalgamation of the Audit and Risk Committees, the length of tenure for a Director represents the longest tenure of
that Director on either Committee.
64
Origin Enterprises plc Annual Report and Accounts 2019
Risk Register and Risk
Mapping Process
The Group’s risk management
process requires risk registers and
risk maps that reflect the current
risk profile of the Group and its units
and functions.
2019 Highlights
In order to continuously improve
the risk management framework
and integrate it into day-to-day
operations, a number of activities
were carried out during the year
ended 31 July 2019:
Each business unit is required
to maintain a risk register, which
is reviewed and updated for
submission to the Head of Risk
and Internal Audit on a quarterly
basis. A risk register template,
pre-populated with a number of
relevant risks covering strategic,
operational, financial and compliance
areas has been developed. This
template is then completed by each
business unit, with the impact and
probability of occurrence for each
risk determined and scored. A risk
scoring matrix is issued to ensure
a consistent approach is taken
when completing the probability
and impact assessments. New or
emerging risks are added to the risk
register as they are identified.
From these risk registers a risk
map is created for each business.
This requires input from senior
management in each business unit.
The Group risk register and risk
map is prepared and maintained
by the Head of Risk and Internal
Audit and is updated to reflect
any significant changes noted
during the reviews of business
unit risk registers.
The Group and business unit risk
maps are reviewed quarterly by the
Executive Group Risk Committee
before principal risks are reported
to the Board’s Audit and Risk
Committee during the financial year.
Deep dives of key risks and feedback
to business leaders are performed
by both the Executive Group Risk
Committee and the Audit and Risk
Committee during the financial year.
Viability statement
The Directors have assessed the
Group’s viability over a three year
period as part of the Group’s
strategic planning activities.
The Directors concluded that a
three year period was the most
appropriate period to undertake this
assessment, and the Directors have
no reason to believe the Group will
not be viable over a longer period.
As part of the exercise to assess
viability, a review of the principal
risks and uncertainties facing the
Group was undertaken and the
potential impact on the Group’s
strategic plan, financial performance
and liquidity was considered. Based
on the results of the analysis the
Board has a reasonable expectation
that the Group will be able to
continue in operation and meet its
liabilities as they fall due over the
three year period.
> Creation of the Executive Group
Risk Committee (members include
senior management who meet on
a quarterly basis).
> Appointment of Risk Champions
at Group and business unit level to
ensure adequate risk ownership
and actions.
> Appointment of key leaders to
the Group to support the risk
management process (Head of
Risk and Internal Audit and Group
General Counsel).
> Presentation of key risks and
challenges for each business unit
at the 2019 Strategy Day.
Viability Statement
Going concern and the viability
statement
Details on the Directors’ assessment
of the Group’s viability and ability to
continue as a going concern are set
out below.
Principal Risks and Uncertainties
The principal risks and uncertainties
which have the potential, in the
short to medium-term, to have a
significant impact on the Group’s
business operations and strategy are
set out on pages 66 to 69.
Going concern
The Group’s business activities
and financial performance are
set out in the Strategic Report on
pages 6 to 69. As set out in the
financial statements, the Group
has generated cash flows from
operating activities of €53.1 million
during the year and its net debt at
31 July 2019 is €75.6 million. Having
assessed the relevant business risks,
the Directors believe the Group is
well placed to manage its business
risks successfully.
The Directors have a reasonable
expectation, having made
appropriate enquiries, that the
Group and the Company have
adequate resources to continue
in operational existence for the
foreseeable future. For this reason,
they continue to adopt the going
concern basis in preparing the
financial statements.
The risks outlined are not listed in
order of importance. In addition, the
principal mitigation measures are
outlined. These mitigation measures
are designed to give reasonable
but not absolute protection against
the impact of each of the potential
events in question.
These risks represent the Board’s
view of the principal risks and
uncertainties at this point in time,
though it should be noted that
this is not an exhaustive list of all
relevant risks and uncertainties.
Matters which are not known to the
Board or events which the Board
currently considers to be of low
likelihood or low financial impact
could emerge and give rise to
material consequences.
65
Strategic Report The principal risks and uncertainties
Link to Strategic Priorities Key:
Scale
People & Organisations Portfolio Positioning Market Focus
Impact
Mitigation
Strategic / Commercial
Competitor activity, product innovation, pricing and margin erosion
Risk
Movement
Strategic
Priority
The Group operates in a competitive
environment where the pace of
innovation, changes in regulatory
requirements including chemical
product revocations and the impact
of competitors’ activity, could have an
adverse impact on margin and on the
Group’s results, including the risk of
impairment of assets.
Acquisitions and corporate development
The Group faces risks and challenges
associated with acquiring new
businesses including the failure to
identify suitable acquisitions, to
integrate acquisitions properly and to
identify accurately all potential liabilities
at the time of acquisition.
Commodity price volatility
The Group is exposed to commodity
price risk, particularly in its Agri-Inputs
business. It is also indirectly exposed
to output price volatility in commodity
markets which impacts on the value of
outputs to the Group’s end customer.
The business operates Group-wide
product forums, undertakes extensive
application research and innovation
and focuses on sales, marketing and
distribution targeted at ensuring the
Group is at the forefront of application
methodologies, product innovation and the
delivery of superior advisory and inputs
offerings. In addition, the Group actively
monitors competitor activity and develops
strategies to maintain its competitive
advantage. The business also employs
experienced teams who track potential or
actual changes in regulatory requirements,
such that they can be managed and, where
possible, mitigated against.
All significant acquisitions must be
approved by the Board. Financial, legal,
commercial and operational due diligence
is performed both by external consultants
and in-house resources in advance of
all acquisitions. There is substantial
experience within the Group which lends
itself to strong project management
capability in the area of acquisitions,
transaction completion and integration.
The Group prioritises margin delivery and
cost management as key focus points in
mitigating input commodity price risk.
From an output perspective the business
is focused on maximising yield for the
end customer by providing value added
services, technologies and inputs that
address the quality, efficiency and output
requirements of primary food producers.
66
Origin Enterprises plc Annual Report and Accounts 2019
Risk Movement Key:
Increased risk
No Change
Impact
Mitigation
Risk
Movement
Strategic
Priority
Strategic/Commercial continued
Political
The Group is a multinational organisation
and may be negatively impacted by
political decisions, civil unrest or other
developments in the geographies in
which it operates.
Political decisions and civil unrest are not
within the control of the Group nor have
they had a major impact on the Group’s
performance to date. Nevertheless, the
Group monitors these risks and actively
manages its businesses to ensure minimum
disruption to its operations.
Operational
Compliance with legislation and regulations including environmental and health and safety matters
Compliance with laws and regulations
is of critical importance to the Group.
The business is subject to legislation in
many areas including Health and Safety,
emissions and effluent controls. Failure
to comply with applicable legislation
or regulatory obligations could result
in enforcement action, legal liabilities,
costs and damage to the Group’s
reputation. Product availability and
potential changes in the regulatory
environment and legislation could also
have a material impact on the Group’s
results and reputation.
Adverse weather and climate change
Adverse weather conditions, changes
in weather patterns and the impact of
climate change affect farming conditions
and yields. The environment in which the
Group operates is highly seasonal. As a
result, the Group’s earning’s profile is
significantly weighted towards the second
half of the financial year. This seasonality
and the inherent uncertainty of weather
conditions has an ongoing impact on
working capital requirements and can
significantly impact the Group’s results.
Procurement and supply chain
The Group sources its products from a
number of significant suppliers. The loss
of any, or a number, of these suppliers
could have a material impact on the
Group’s profitability and the ability to
meet customer requirements.
The Group monitors closely all changes
to legislation and regulation. It operates
thorough hygiene and health and safety
systems across its businesses, has well-
established product, environmental and
discharge controls which ensure product
traceability. The Group also develops new
products, diverse sources of supply and
distribution capability for its products to
ensure it continues to compete effectively
and to anticipate and meet customer
requirements on a continuing basis.
Weather conditions and climate change
are not within the control of the Group.
Nevertheless, the Group monitors these
risks and focuses on the management of
the earnings profile, geographical diversity,
investment in working capital, along with
the monitoring of weather and climate
change by divisional and Group managers.
The Group endeavours to maintain close
commercial relationships with all its
suppliers, the most significant of whom
are large multinational organisations which
supply across the Group’s geographical
markets. The Group through its research
and development capabilities, in
collaboration with suppliers, customers
and research bodies, is well positioned to
develop innovative solutions to meet its
customer needs.
67
Strategic Report
Link to Strategic Priorities Key:
Scale
People & Organisations Portfolio Positioning Market Focus
Impact
Mitigation
Risk
Movement
Strategic
Priority
Recruitment and retention of key personnel
The ongoing success of the Group is
dependent on attracting and retaining
high quality senior management and
front-line employees who can effectively
implement the Group’s strategy.
The Group mitigates this risk through
succession planning, strong recruitment
processes, training programmes and
offering competitive and attractive
remuneration and benefits packages.
IT / Disaster recovery / Cyber security
The Group is a multinational business
with operations in a number of countries.
The Group’s IT strategy and its use of
technology is key across the organisation
and a robust IT disaster recovery plan is
of high importance. Significant challenges
would arise in the event there was a
lack of access to the IT systems and
environment or through cybercrime.
The Group ensures the presence of a
robust IT strategy together with a related
disaster recovery plan, both of which
are frequently reviewed and updated.
The Group’s IT strategy and disaster
recovery plan is overseen by the Group
Chief Information Officer. Cyber security
controls are in place, which are managed
by external technical experts.
Financial
Brexit uncertainty
The Group has operations within and
outside the European Union. The UK’s
referendum decision to leave the EU
(‘Brexit’) has increased uncertainty,
particularly in relation to foreign
exchange rates, interest rates and the
short to medium-term outlook for the
UK economy. There is a risk that this
uncertainty could reduce demand in the
Group’s UK market, in other markets
where there is currently a significant
trade relationship with the UK and
could adversely impact the financial
performance of the Group. There is also
a risk that any continuing and sustained
weakening of sterling will impact the
Group’s translation of its sterling
earnings with consequential impacts on
the reported performance and results of
the Group.
Management and the Board are continually
monitoring the potential impacts of the
UK’s referendum decision to leave the
EU on all of the Group’s operations. Any
potential developments, including new
information and policy indications from
the UK Government and the EU, will be
reviewed on an ongoing basis with a view
to taking appropriate actions targeted at
managing and, where possible, mitigating
the consequences of Brexit.
This includes contingency planning to
ensure security of supply chain and the
obtaining of required certifications in the
case of a limited transition period and / or
the imposition of tariffs.
68
Origin Enterprises plc Annual Report and Accounts 2019
Risk Movement Key:
Increased risk
No Change
Impact
Mitigation
Risk
Movement
Strategic
Priority
Financial continued
Banking, credit, liquidity and market risk
The Group is a multinational organisation
with interests both within and outside the
Eurozone. As a result, Origin is subject
to the risk of adverse movements in
foreign exchange rates, fluctuations in
interest rates and other market risks
(including movements in the market value
of investments which impact the funding
levels of our defined benefit pension
schemes). The Group is also exposed
to credit risk arising on customer
receivables and financial assets.
Fraud
The Group, like all businesses, is at
risk of fraudulent activities from both
internal and external sources.
EU Farm Subsidy Payments
The Group has operations within and
outside the European Union. The
uncertainty in relation to EU farm
subsidy payments in the UK and in other
EU countries, in the medium-term,
could reduce demand in the Group’s
European markets which could adversely
impact the financial performance of
the Group.
The Group Treasury Department mitigates
such risks under the supervision of
the CFO. Foreign exchange rate and
interest rate exposures are managed
through appropriate derivative financial
instruments. Where available / appropriate
credit insurance is in place to mitigate
credit risk. Financial Risk Management
objectives and policies are further
discussed in Note 22 to the financial
statements. The Group closely monitors
the ongoing costs of its defined benefit
schemes and has closed all such schemes
to new members.
The Group places a high importance on
the design and ongoing effectiveness of
its internal control process. Physical and
IT-based security measures are in place
across the Group’s subsidiaries to mitigate
such risk. There are whistleblowing
arrangements in place throughout the
Group. In addition, where economically
available, the Group has appropriate
insurances in place to provide cover
against such an event.
Management and the Board are monitoring
the potential impact of changes in EU farm
subsidy payments with a view to taking the
appropriate actions targeted at managing
and where possible mitigating the risk in
the event it occurs.
69
Strategic Report
Senoiu, Calarasi County, Romania
Members of the Agricultura Plus team on site
in Calarasi County, Romania reviewing the
progress of maize trials
Find out more
Case study on page 42
Origin at a glance on page 6
70
Origin Enterprises plc Annual Report and Accounts 2019 Sustain
Governance
71
Governance Board of Directors
The Board of Origin comprises a
Non-Executive Chairman, three
Executive Direc tors and four
Non-Executive Direc tors.
Non-Executive Chairman Executive Directors
Rose Hynes (62)
Non-Executive Director
Tom O’Mahony (57)
Chief Executive Officer
Nationality: Irish
Nationality: Irish
Date of appointment:
1 October 2015
Date of appointment:
9 February 2007
Sean Coyle (46)
Chief Financial Officer
Nationality: Irish
Date of appointment:
1 October 2018
Skills and experience:
Tom has been Chief Executive
Officer of Origin since its
formation in 2006. Prior to
his appointment he was Chief
Operations Officer of IAWS
Group plc having previously
held a number of senior
management positions at IAWS,
spanning functional areas
including corporate
development, business
integration and financial
control within the Group.
Skills and experience:
Sean joined the Group as
Chief Financial Officer in
September 2018. Sean was
previously at UDG Healthcare
plc where he held a number
of roles, including Group
Finance Director and Managing
Director of its Healthcare
Supply Chain Division. Prior
to UDG Healthcare, Sean was
Chief Financial Officer and
an Executive Director of Aer
Lingus plc. He also spent over
10 years at Ryanair Holdings
plc where he held a number of
senior management positions.
Sean is a fellow of Chartered
Accountants Ireland having
trained with KPMG in Dublin.
Committee membership:
Chairman of the Nomination
and Corporate Governance
Committee and a member of
the Remuneration Committee.
Skills and experience:
Rose previously held a number
of senior executive positions
with GPA Group plc in the
period 1988-2002, including
General Counsel and Head of
the Commercial Department.
Rose is an Associate of the
Irish Institute of Taxation and
of the Chartered Institute
of Arbitrators. She is a law
graduate of University College
Dublin and a lawyer.
Principal current
directorships:
Chairman of Shannon Group
plc and Non-Executive
Director of Total Produce plc,
IPL Plastic Inc. and Eircom
Holdings (Ireland) Limited.
Declan Giblin (63)
Executive Director
Nationality: Irish
Date of appointment:
15 October 2008
Skills and experience:
Declan is Chief Executive
Officer, Latin America,
having previously held the
role of Head of Corporate
Development of Origin.
He was formerly Chief
Executive of Masstock
and has been the driving
force behind the
development of Agrii
over a 25-year period.
Declan is a fellow of the
Chartered Institute of
Management Accountants
having previously worked
with PwC.
72
Origin Enterprises plc Annual Report and Accounts 2019
Non-Executive Directors
Kate Allum (54)
Non-Executive Director
Gary Britton (65)
Non-Executive Director
Nationality: British
Nationality: Irish
Date of appointment:
1 October 2015
Date of appointment:
1 October 2015
Committee membership:
Chairman of the Remuneration
Committee and a Member of
the Audit and Risk Committee.
Skills and experience:
Kate previously held a number
of senior management
positions in the food and
agricultural sector, including
Chief Executive of CeDo
Limited and First Milk Limited
and Head of European
Supply Chain for McDonald’s
Restaurants.
Principal current
directorships:
Non-Executive Director of
Cranswick plc, Stock Spirits
plc and SIG plc.
Committee membership:
Chairman of the Audit and Risk
Committee and a Member of
the Nomination and Corporate
Governance Committee.
Skills and experience:
Gary was previously a partner
in KPMG where he served in
a number of senior positions,
including the firm’s Board,
the Remuneration and Risk
Committees and as head of
its Audit Practice. Gary was
formerly a Non-Executive
Director of The Irish Stock
Exchange plc and KBC Bank
Ireland plc.
Gary is a fellow of Chartered
Accountants Ireland, the
Institute of Directors and the
Institute of Banking. He is also
a Certified Bank Director as
designated by the Institute
of Banking.
Principal current
directorships:
Non-Executive Director
of Cairn Homes plc.
Hugh McCutcheon (65)
Non-Executive Senior
Independent Director
Nationality: Irish
Date of appointment:
21 November 2011
Committee membership:
Member of the Audit and Risk
and Nomination and Corporate
Governance Committees.
Skills and experience:
Hugh spent over 20 years with
Davy and was for more than 10
years the Head of Corporate
Finance and a member of
the firm’s Board. Hugh has
worked with a whole range
of corporate clients and with
the Department of Finance.
Hugh is a fellow of Chartered
Accountants Ireland having
trained with PwC.
Principal current
directorships:
Non-Executive Director of
IPL Plastics Inc. and an
Alternate Director at the
Irish Takeover Panel.
Christopher Richards (65)
Non-Executive Director
Nationality: British
Date of appointment:
1 October 2015
Committee membership:
Member of the
Remuneration Committee.
Skills and experience:
Christopher is Executive
Chairman and Interim Chief
Executive Officer of Plant
Health Care plc. He has more
than 30 years international
experience in the agriculture
industry and currently farms
in the West of England.
Christopher previously spent
20 years in various leadership
roles with Syngenta and its
predecessor companies
before serving as Chief
Executive Officer and, later,
Non-Executive Chairman of
Arysta Life Science.
Principal current
directorships:
Non-Executive Chairman of
Nanoco Group plc and
Non-Executive Director of
Volac International Limited.
73
Governance
Directors’ Report
The Directors present their Annual Report together with the
audited consolidated financial statements of the Group for the
year ended 31 July 2019, which are prepared in accordance with
International Financial Reporting Standards (‘IFRSs’) as adopted
by the EU.
Principal Activity and Business Review
The Group’s principal activities comprise the provision
of value added services, technologies and inputs that
address the quality, efficiency and output requirements
of primary food producers. The manufacturing, research
and development, trading, distribution and digital services
operations are based in Ireland, the UK, Belgium, Brazil,
Poland, Romania and Ukraine.
Dividends
The Board is recommending a final dividend of 18.17
cent per ordinary share which, when combined with the
interim dividend of 3.15 cent per ordinary share, brings
the total dividend for the year to 21.32 cent per ordinary
share (2018: 21.0 cent). Subject to shareholder approval,
the final dividend is payable on 13 December 2019 to
shareholders on the register on 29 November 2019.
During the year under review, the Group completed the
acquisition of a 65% interest in Fortgreen and a 20%
interest in Ferrari Zagatto in Brazil.
A comprehensive review of the performance and
development of the Group is included in the Chief
Executive’s Review on pages 10 to 13 and the Chief
Financial Officer’s Review on pages 14 to 21. The
Directors consider the state of affairs of the Company
and the Group to be satisfactory. A list of the Group’s
principal subsidiaries and associates is set out in Note
34 to the Group financial statements.
The key performance indicators relevant to the Group are
set out in the Strategic Report on pages 30 and 31.
Results for the Year
The results for the year are set out in the Consolidated
Income Statement on page 120. Revenue for the financial
year was €1,798.2 million (2018: €1,627.5 million). The
profit after tax and exceptional items for the financial year
was €52.7 million (2018: €56.8 million).
Future Developments
The Group will continue to pursue new developments
to enhance shareholder value, through a combination
of organic growth, acquisitions and development
opportunities.
Share Capital and Treasury Shares
At 31 July 2019, the Company’s total authorised share
capital comprised 250,000,000 ordinary shares of €0.01
each (2018: 250,000,000), and the Company’s total
issued share capital (including treasury shares) comprised
126,396,184 ordinary shares of €0.01 each (2018:
126,382,206). At 31 July 2019, 800,330 securities were
held as treasury shares (2018: 800,330). Details of the
share capital of the Company are set out in Note 27 to
the Group financial statements and are deemed to form
part of this report.
In respect of share transfers, the Directors may refuse
to register any share transfer unless: (i) it is in respect
of a share on which the Company does not have a
lien; (ii) it is in respect of only one class of shares; (iii)
it is in favour of not more than four joint holders as
transferees; (iv) no restriction has been imposed and
is in force on the transferor or transferee in default
of complying with a notice to disclose beneficial
ownership under the Articles of Association or under
Chapter 4 of Part 17 of the Companies Act 2014; and (v)
the required formalities for the registration of transfers
have been satisfied. With the exception of transfers of
shares through a stock exchange on which the shares
are traded, the Directors may also decline to register:
(i) any transfer of a share which is not fully paid; or
(ii) any transfer to or by a minor or person of unsound
mind but this shall not apply to a transfer of such a
share resulting from a sale of the share through a stock
exchange on which the share is traded.
The rights and obligations of the ordinary shares are set
out in the Articles of Association of the Company which
are available on the Company’s website:
www.originenterprises.com.
74
Origin Enterprises plc Annual Report and Accounts 2019 Directors’ Interests in Share Capital at 31 July 2019
The interests of the Directors and the Company Secretary
in the shares of the Company are set out in the Annual
Report on Remuneration on pages 99 to 106.
Substantial Holdings
As at 24 September 2019, the Directors have been notified
of the following shareholdings which amount to 3% or
more of the Company’s issued ordinary share capital:
Artemis Investment
Management LLP
Setanta Asset
Management Limited
FMR LLC
Invesco Limited
DNCA Finance
Bank of Montreal
Prudential plc
Number
of shares
%
17,135,975
13.6%
16,868,628
13.4%
11,378,695
9,990,594
5,627,688
4,221,360
3,929,351
9.1%
7.9%
4.5%
3.4%
3.1%
Directors’ Compliance Statement
The Directors acknowledge that they are responsible
for securing compliance by the Company with its
relevant obligations as defined in the Companies Act
2014 (hereinafter called the Relevant Obligations).
The Directors confirm that they have drawn up and
adopted a compliance policy statement setting out
the Company’s policies that, in the Directors’ opinion,
are appropriate to the Company in respect of its
compliance with its Relevant Obligations.
The Directors further confirm that the Company has put
in place appropriate arrangements or structures that are,
in the Directors’ opinion, designed to secure material
compliance with its Relevant Obligations and that they
have reviewed the effectiveness of these arrangements or
structures during the financial period to which this Annual
Report relates.
Audit and Risk Committee
Pursuant to the Company’s Articles of Association, the
Board has established an Audit and Risk Committee
that in all material respects meets the requirements of
Section 167 of the Companies Act 2014. The Audit and
Risk Committee was fully constituted and active during
the current financial period under review in this Annual
Report. Separate Audit and Risk Committees were active
during the Company’s prior financial year.
Principal Risks and Uncertainties
Under Irish Company law (Section 327(1)(b) of the
Companies Act 2014), the Directors are required to give a
description of the principal risks and uncertainties facing
the business. These are set out in the Risk Report on
pages 62 to 69.
Financial Instruments and Financial Risk
The financial risks of the Group include market risks,
liquidity risks and credit risks. Details of the financial
instruments used, along with the financial management
objectives and policies to which they relate, are set out in
Note 22 to the Group financial statements.
Corporate Governance
The Corporate Governance Statement on pages 78 to 83
sets out the Group’s application of corporate governance
principles, the Group’s system of risk management and
internal control and the adoption of the going concern
basis in preparing the financial statements. The Corporate
Governance Statement shall be treated as forming part of
the Directors’ Report.
Directors and Company Secretary
Changes to the Board of Directors during the year:
> Sean Coyle was appointed to the Board as an
Executive Director on 1 October 2018.
> Peter Dunne resigned as Company Secretary on
28 May 2019.
> Barbara Keane was appointed as Company Secretary
on 28 May 2019.
The names of the persons who are Directors are
set out below.
Directors:
Rose Hynes
(Non-Executive Chairman)
Tom O’Mahony
(Chief Executive Officer)
Sean Coyle
(Chief Financial Officer)
Declan Giblin
(Executive Director)
Kate Allum
(Non-Executive Director)
Gary Britton
(Non-Executive Director)
Hugh McCutcheon
(Non-Executive Senior Independent Director)
Christopher Richards
(Non-Executive Director)
Company Secretary:
Barbara Keane
The biographical details of the Directors are set out on
pages 72 and 73 of this Annual Report.
75
Governance
Research and Development
Certain Group companies are involved in research and
development activities which are focused on improving
the quality, capabilities and range of technologies available
to support our businesses.
Political Donations
No political donations were made in the current year
(2018: €Nil).
Events since the end of the Financial Year
There were no material events since the end of the
financial year to report.
Auditors
The auditors, PricewaterhouseCoopers, will continue
in office in accordance with Section 383(2) of the
Companies Act 2014.
On behalf of the Board
Rose Hynes
Director
24 September 2019
Tom O’Mahony
Director
24 September 2019
Disclosure of Information to Auditors
The Directors in office at the date of this report have
each confirmed that:
• as far as he / she is aware, there is no relevant audit
information of which the Company’s statutory auditors
are unaware; and
• he / she has taken all the steps that he / she ought
to have taken as a Director in order to make himself
/ herself aware of any relevant audit information and
to establish that the Company’s statutory auditors are
aware of that information.
Accounting Records
The Directors believe that they have complied with the
requirements of Section 281 to 285 of the Companies
Act 2014 with regard to accounting records by employing
personnel with appropriate expertise and by providing
adequate resources to the finance function. The
accounting records of the Company are maintained at the
Company’s registered office at: 4-6 Riverwalk, Citywest
Business Campus, Dublin 24.
Corporate Social Responsibility
Origin recognises the importance of conducting its
business in a socially responsible manner. The Group
understands its responsibilities as an important member
of the communities in which it operates and aims to
not only provide employment opportunities to the local
population but to earn a positive reputation in those
communities by carrying out its commercial dealings and
operations with integrity and in compliance with local and
national regulations.
The Directors believe that the Group’s long-term
success will benefit from a motivated and committed
workforce and, therefore, aims to provide its employees
with an environment to work safely and develop their
skills and practices in a well-structured manner. Health
and Safety in the workplace is given high priority across
the Group and is driven internally by health and safety
reviews and procedures.
Non-Financial Statement
For the purposes of Statutory Instrument S.I.360 /
2017 European Union (Disclosure of Non-Financial and
Diversity Information by certain large undertakings and
groups) Regulations 2017, the areas of environmental
matters, social and employee matters, respect for
human rights, and bribery and corruption are discussed
in the following sections of the Strategic Report: Strategy
on pages 24 to 27, Business Model on pages 28 and
29, Key Performance Indicators on pages 30 and 31,
Sustainability Report on pages 50 to 61, and Risk Report
on pages 62 to 69, and are deemed to be incorporated in
this part of the Directors’ Report.
76
Origin Enterprises plc Annual Report and Accounts 2019 Chairman’s Overview
In Origin, we view high
standards of corporate
governance as a vital element
of how we conduct our
business and achieve long-
term success for the Group.
Dear Shareholder
We, as a Board of Directors, regard
strong governance as one of
the foundations of a sustainable
corporate growth strategy. The
Board applies the principles of
the Quoted Companies Alliance
Corporate Governance Code (‘QCA
Code’) as the basis for its corporate
governance framework. In doing so,
the Board is committed to continue
to apply the highest standards of
corporate governance consistent
with the size and complexity of
the business.
Details of our compliance with
the QCA Code are outlined in our
Corporate Governance Statement
on pages 78 to 83. There are
detailed reports from our respective
Audit and Risk, Remuneration,
and Nomination and Corporate
Governance Committees, on pages
84 to 106. Developments on our
Committee structures during the
year included an amalgamation
of the Audit Committee and Risk
Committee, a replacement of
the Chief Executive Officer, Tom
O’Mahony, on the Nomination and
Corporate Governance Committee,
so that it now solely comprises
Non-Executive Directors, and
the formalisation of the ad-
hoc Acquisitions and Disposals
Committee to a standard Board
Committee. A detailed Risk Report is
outlined on pages 62 to 69.
The Board recognises the
importance of maintaining a culture
across the Group that promotes
ethical behaviour and values and
supports excellence in our business.
We also have a strong boardroom
culture, with constructive challenge
flowing freely from the Non-
Executive Directors, underpinned
by a mutual respect between
all Directors.
On an ongoing basis, I seek to ensure
that we have the right balance of
skills, experience, diversity and
independence on the Board. The
Board recently set a target of
achieving a minimum of 33% female
representation on the Board by the
end of 2020.
We are pleased to welcome a new
Executive Director to the Board this
year. Sean Coyle commenced as
Chief Financial Officer in September
2018 and was appointed to the Board
on 1 October 2018. We also welcome
Barbara Keane who joined as Group
General Counsel and was appointed
by the Board as Company Secretary
on 28 May 2019.
Following the completion of a three-
year term on the Board in 2018, Kate
Allum, Gary Britton and Christopher
Richards were each considered for
a second term as Non-Executive
Directors and re-appointed on 1
October 2018. The Board also
undertook a similar process in
respect of the Chair, following which
I was re-appointed as Chairman on
1 October 2018.
The Board currently comprises five
Non-Executive Directors and three
Executive Directors. Biographies of
the Directors are set out on pages
72 and 73. In accordance with the
new re-election policy adopted by
the Board in 2018, all Directors will
retire at the 2019 AGM and offer
themselves for re-election.
During the year, the annual
performance evaluation of the Board
and its Committees was conducted
internally. I am pleased to report
that the findings of this review were
positive. More information on this
process is outlined on page 82 of
this report.
The Board continues to invest
time in the development of
skills and knowledge relevant to
the performance of our duties.
During the year we received
presentations from professional
advisers on developments in
corporate governance, anti-bribery
and corruption, and executive
remuneration.
Rose Hynes
Chairman
24 September 2019
77
Governance Corporate Governance Statement
Corporate Governance Framework
Origin Enterprises plc Board
Audit
and Risk
Committee
Acquisitions
and Disposals
Committee
Nomination
and Corporate
Governance
Committee
Remuneration
Committee
Internal
Audit
Group
Executive
Risk
Committee
Chief
Executive
Officer
Executive
Directors
The Board has delegated some of
its duties and responsibilities to the
various Committees of the Board
whose composition and activities are
set out in their reports on pages 84
to 106. A Risk Report is outlined on
pages 62 to 69.
Directors have access to
independent professional advice
in the furtherance of their duties
should they think it necessary.
Schedule of Matters
Reserved for the Board
There are certain matters that are
deemed sufficiently significant to be
reserved for the Board. A schedule
of matters, set out below, reserved
for the Board, has been reviewed by
the Board during the year to ensure
it continues to be appropriate for
the Company.
Matters reserved for the
Board include:
Setting of Group strategy and
long-term objectives.
Approval of the Annual Report,
annual and interim results,
interim management statements
and any non-routine stock
exchange announcements.
Approval of the annual budget.
Approval of the dividend policy.
Changes to the Company’s capital
structure.
Policy on remuneration for
Executive Directors and senior
management team.
Approval of significant acquisitions.
Approval of significant capital
expenditure.
The Board of Origin is
committed to applying
the principles of the QCA
Code. This statement
details the Company’s
key governance principles
and practices, how it
has complied with the
principles of the QCA Code
and how the application of
the QCA Code supports the
Company’s medium to
long-term success. A
copy of the QCA Code
can be obtained from the
Quoted Companies Alliance
website, www.theqca.com.
The Board of Directors
The Board of Origin currently
comprises a Non-Executive
Chairman, four Non-Executive
Directors and three Executive
Directors, namely the Chief
Executive Officer (‘CEO’), the
Chief Financial Officer (‘CFO’) and
the Chief Executive Officer, Latin
America. The role of the Board is to
provide leadership and the Directors
are collectively responsible for the
long-term success of the Group.
The offices of the Chairman and
the CEO are separate and clearly
distinct. The division of their
responsibilities is set out in writing
and has been approved by the Board.
The CEO, together with the other two
Executive Directors is responsible for
the day-to-day running of the Group,
carrying out an agreed strategy
and implementing specific Board
decisions. Detailed biographies of
current Directors are set out on
pages 72 and 73.
78
Origin Enterprises plc Annual Report and Accounts 2019 Chairman
The Chairman is responsible for
the leadership of the Board and
ensuring it is effective in carrying
out all aspects of its duties and
responsibilities. The Chairman is also
responsible for setting the Board’s
agenda and ensuring that adequate
time is available for the consideration
of all agenda items, in particular
strategic issues. The Chairman is
the link between the Board and
the Company. She is specifically
responsible for establishing and
maintaining an effective working
relationship with the Chief Executive
Officer and promotes a culture
of open dialogue between the
Executive and Non-Executive
Directors. She has the responsibility
to ensure that there is ongoing
and effective communication with
shareholders and to ensure that
members of the Board develop and
maintain an understanding of the
views of the shareholders.
Chief Executive Officer
The Chief Executive Officer
is responsible for the day-to
-day management of the
Group’s operations and for the
implementation of Group strategy
and policies agreed by the Board. The
Chief Executive also has a key role in
the process of setting and reviewing
strategy. The Chief Executive instils
the Company’s culture and standards
which include appropriate corporate
governance throughout the Group.
In executing his responsibilities, the
Chief Executive is supported by the
Chief Financial Officer and the Chief
Executive Officer, Latin America, who
together are responsible for ensuring
that high quality, timely information is
provided to the Board on the Group’s
financial and strategic performance.
Non-Executive Directors
The Non-Executive Directors’
main responsibilities are to
review the performance of senior
management and the Group’s
financial information, assist
in strategy development, and
ensure appropriate and effective
systems of internal control and
risk management are in place. The
Non-Executive Directors review the
relationship with external auditors
and monitor the risk management
framework through the Audit
and Risk Committee, monitor
the remuneration structures and
policy through the Remuneration
Committee and consider the Board
composition, succession planning
and best corporate governance
practices through the Nomination
and Corporate Governance
Committee. The Non-Executive
Directors provide a valuable breadth
of experience and independent
judgement to Board discussions.
Details of the Non-Executive
Directors are set out on pages 72
and 73.
Senior Independent Director
The Senior Independent Director
is responsible for providing advice
to the Chairman as necessary,
serving as an intermediary to the
other Directors when necessary,
supporting the Chairman with the
annual Board evaluation if required,
leading an annual performance
review of the Chairman, and being
available to shareholders should they
have any matters for discussion other
than through the normal channels.
Company Secretary
All Directors have access to the
advice and services of the Company
Secretary, who is responsible for
ensuring compliance with Board
procedures. The Company Secretary
is also responsible for supporting
the Chairman and other Board
members as necessary, including
the management of Board and
Committee meetings, advising on
Directors’ duties and facilitating
appropriate, quality and timely
information flows between the
business and the Board. Both the
appointment and removal of the
Company Secretary are matters for
the Board as a whole.
Appointment of Directors
The Nomination and Corporate
Governance Committee is
responsible for reviewing the
structure, size and composition
(including the skills, knowledge,
experience and diversity) of the
Board and making recommendations
to the Board with regard to
any new appointments of Non-
Executive Directors. The report
of the Nomination and Corporate
Governance Committee is set out on
pages 84 to 86.
The Board may appoint a person
willing to act as a Director, either
to fill a vacancy or as an additional
Director, provided that the
appointment does not cause the
number of Directors to exceed 15
as set out in the Company’s Articles
of Association. Such new Directors
will hold office only until the next
AGM, at which the new Director will
be subject to election by ordinary
resolution of the Company.
The terms of appointment of each
of the Non-Executive Directors are
set out in the Directors’ Letters
of Appointment and are available
for inspection at the Company’s
registered office during normal
office hours and at the AGM of
the Company. New Non-Executive
Directors are appointed to serve an
initial three-year term of office
which may be extended, subject to
Board approval.
Re-election of Directors
The Company’s Articles of
Association provide that one third
of the Directors shall retire by
rotation each year. New Directors are
subject to election by shareholders
at the next AGM following their
appointment. Following a change to
the Directors’ re-election policy last
year, all Directors now retire annually
and offer themselves for re-election
at the AGM.
Details of the length of tenure
of each Director on the Board
as at 31 July 2019 are set out in
the Nomination and Corporate
Governance Committee Report
on page 85.
Induction and Training
All new Directors are
comprehensively briefed on the
Group and its operations upon
joining the Board. They also receive
extensive induction materials (via the
Directors’ electronic boardroom).
Training requirements are considered
as part of the annual Board
evaluation process.
During the year professional advisers
advised the Board on developments
in corporate governance, anti-
bribery and corruption, and
executive remuneration.
79
Governance The Chairman and Company
Secretary review Directors’ training
and development needs on an
ongoing basis, as appropriate.
More than half of the Board
comprises Non-Executive Directors,
in line with the highest standards
of governance.
Committees
The Board has delegated
certain responsibilities to Board
Committees, namely:
Independence
The Board has carried out its annual
evaluation of the independence of
each of its Non-Executive Directors
and has given regard to the highest
standards in governance in doing
so. Non-Executive Directors should
be independent in character
and judgement and free from
relationships or circumstances which
are likely to affect, or could appear
to affect, the Directors’ judgement.
Commitment
Under the terms of their
appointment, all Directors agreed
to the time commitment schedule
which requires them to allocate
sufficient time to discharge
their responsibilities effectively.
This matter is considered by
the Nomination and Corporate
Governance Committee on an
ongoing basis in accordance with its
terms of reference.
Since their appointment, all
current Non-Executive Directors,
including the Chairman, have been
considered by the Board to be
independent and free from any
business or other relationship
which could materially affect their
judgement. The Board notes that
Rose Hynes and Hugh McCutcheon
serve together on the board of IPL
Plastics Inc. The Board remains
satisfied that they are able to
apply objective, unfettered and
independent judgement and act in
the best interest of the Company
regardless of this relationship.
Board Meetings
A schedule of Board and Committee
meetings is circulated to all
Board members annually setting
out the dates on which Board
and Committee meetings will be
held. Board papers are circulated
electronically at least three days in
advance of the meetings.
During the year ended 31 July
2019 the Board held a total of ten
scheduled meetings. There is regular
contact between meetings in order
to progress the Company’s business.
Individual attendance at Board
meetings and Committee meetings
is set out in the table below.
> Audit and Risk Committee.
> Remuneration Committee.
> Nomination and Corporate
Governance Committee.
> Acquisitions and Disposals
Committee.
These Committees operate under
clearly defined, formal Terms of
Reference and report to the Board
at each Board meeting via the
relevant Committee’s Chairman.
The Terms of Reference for the
Committees were reviewed during
the year and will continue to be
subject to an annual review in future
years. Any revisions will be proposed
by the respective Committees and
then approved by the Board. The
Terms of Reference for each Board
Committee are available to view on
the Company’s website:
www.originenterprises.com.
Audit and Risk Committee
The Audit Committee and the Risk
Committee were amalgamated
in September 2018. The primary
function of the amalgamated Audit
and Risk Committee is to assist the
Board in fulfilling its financial and risk
oversight responsibilities. Further
details of the activities of the Audit
and Risk Committee are set out in
the report on pages 87 to 90.
Board of Directors:
Attendance at Meetings During the Year Ended 31 July 2019
Board
Audit and
Risk
Remuneration
Nomination
and
Corporate
Governance
Audit
Risk
Directors
Kate Allum
Gary Britton
Sean Coyle
Declan Giblin
Rose Hynes
Hugh McCutcheon
Tom O’Mahony
Christopher Richards
10/10
10/10
9/9
10/10
10/10
10/10
10/10
10/10
4/4
4/4
–
–
–
4/4
–
–
5/5
–
–
–
5/5
–
–
5/5
–
2/2
–
–
3/3
3/3
1/1
–
1/1
1/1
–
–
–
1/1
–
–
1/1
1/1
–
–
–
1/1
–
–
The attendance statistics represent:
Total number of meetings attended by the Director / Total number of meetings held during the year to which the Director was eligible to attend.
The Audit and Risk Committees each held a meeting in September, after which the two Committees were amalgamated.
80
Origin Enterprises plc Annual Report and Accounts 2019
Remuneration Committee
The Remuneration Committee is
responsible for determining the
remuneration policy for the Executive
Directors, Chairman and the Senior
Management Team. Further details
of the activities of the Remuneration
Committee are set out in the report
on pages 91 to 106.
Nomination and Corporate
Governance Committee
The role of the Nomination and
Corporate Governance Committee
was expanded during the year to
include corporate governance
matters. The Committee is
responsible for reviewing the
structure, size and composition of
the Board, including with respect to
diversity of background and gender
and having regard to the Group’s
businesses and strategic objectives,
and for considering any corporate
governance developments that may
affect the Company. Tom O’Mahony,
Executive Director and Chief
Executive Officer, stepped down
from the Nomination and Corporate
Governance Committee on 26
September 2018 and was replaced
by Gary Britton. The Nomination and
Corporate Governance Committee
is now comprised solely of Non-
Executive Directors. Further details
of the activities of the Nomination
and Corporate Governance
Committee are set out in the report
on pages 84 to 86.
Acquisitions and Disposals
Committee
The pre-existing ad-hoc Acquisitions
and Disposals Committee was
formalised to a standard Board
Committee in September 2019
in recognition of the continuing
importance and value of the
Committee. The Committee is
responsible for providing guidance
when sought by management on
the search for acquisitions and
acquisition related matters, and for
considering any recommendations
from management in regard to
specific divestments.
Remuneration
It has been the Company’s practice
since 2015 to put the Remuneration
Report to an advisory, non-binding
shareholder vote at the AGM.
Accordingly, the Annual Report
on Remuneration will be put to an
advisory, non-binding shareholder
vote at the Company’s 2019 AGM.
Share Ownership and Dealing
Details of each of the Directors’
interests in Origin’s shares are set
out in the Remuneration Committee
Report on pages 91 to 106.
The Board has adopted the Origin
Enterprises plc Share Dealing Policy
(the ‘Policy’). The Policy relates
to the dealings in shares of the
Company by Directors and certain
employees of the Group and is
designed to ensure that these
individuals neither abuse, nor set
themselves under suspicion of
abusing, information held about
the Group which is not in the public
domain. It is also designed to ensure
compliance with the EU Market
Abuse Regulation (596 / 2014) which
came into effect on 3 July 2016.
The Policy requires Directors
and certain employees to obtain
clearance from the Company
Secretary and the Non-Executive
Chairman prior to dealing in the
shares of the Company and prohibits
them outright from dealing in shares
during prohibited periods and when
in possession of inside information.
Risk Management and Internal
Control Procedures
The Board is responsible for
identifying, evaluating and managing
the principal risks faced by the
Group in achieving its strategic
objectives. It is ultimately
responsible for monitoring risk
management systems including
financial controls, controls in
respect of the financial reporting
process and controls of an
operational and compliance nature.
The Group’s internal control systems
are designed to manage, rather
than eliminate, the risk of failure to
achieve the Group’s objectives and
can only provide reasonable, and not
absolute, assurance against material
misstatement or loss.
The Board has delegated
responsibility for the ongoing
monitoring of the effectiveness of
the risk management and internal
control systems to the Audit and Risk
Committee. Details in relation to the
Audit and Risk Committee’s work in
this regard are set out in the Audit
and Risk Committee Report on pages
87 to 90.
The Directors have established
a number of key procedures
designed to provide an effective
system of internal control and risk
management. The key procedures
which are supported by detailed
controls and processes include:
Internal Audit
A Group internal audit function,
led by a newly appointed Head of
Risk and Internal Audit, undertakes
examinations of business processes
on a risk basis and reports to the
Audit and Risk Committee on
controls throughout the Group.
Control Environment
Maintaining an organisation structure
with defined lines of responsibility
and specified delegation of authority
within which the Group’s activities
can be planned and monitored. The
control environment is overseen by
experienced Group and divisional
management teams.
Financial Reporting
A comprehensive financial reporting
system involving setting of annual
budgets and plans, timely monthly
reporting and variance analysis
and ongoing review, supported by
information systems developed for
this purpose.
Whistleblowing Arrangements
The Audit and Risk Committee
is responsible for the review of
the Company’s whistleblowing
arrangements and for ensuring that
these arrangements are suitable for
the Group’s employees. The Audit
and Risk Committee reviewed these
arrangements during the year and
satisfied itself that they are adequate
for the needs of the Group.
Risk Management Framework
The Group has a robust Risk
Management Framework to identify,
manage and monitor risks. The Group
established an Executive Group Risk
Committee to further strengthen the
Group’s focus on risk management
and internal control systems.
Details of the operation of the Risk
Management Framework are outlined
in the Risk Report on pages 62 to 69.
81
Governance Annual Review of Internal
Controls and Risk
Management Systems
The Directors confirm that they have
conducted an annual review of the
effectiveness of internal control
and risk management systems as
operated up to and including the
date of approval of the financial
statements. This has had regard to
the processes for identifying the
principal business risks facing the
Group, the methods for managing
those risks, the controls that are
in place to contain them and the
procedures to monitor them.
Consolidated Financial
Statements
The consolidated financial
statements are prepared subject
to the oversight and control of the
Chief Financial Officer, ensuring
correct data is captured and all
information that is required to
be provided is disclosed. The
consolidated financial statements
are reviewed by the Audit and
Risk Committee and approved
by the Board.
Board Evaluation
The Board conducts an annual
evaluation of its performance
and that of each of its principal
committees, the Audit and Risk,
Remuneration, and Nomination and
Corporate Governance Committees,
with the evaluation being externally
facilitated every three years. In the
year ended 31 July 2019, this process
was conducted internally following
last year’s external facilitation. The
internal review led by the Chairman,
comprised of a self-assessment
questionnaire completed by each
Director and a Board discussion on
the outcome at the June 2019 Board
meeting. The review considered
a range of factors, including the
balance of skills and experience of
the Board members, independence
of the Board, Board diversity, the
Board agenda and relations between
the Executive and Non-Executive
Directors. The results of the review
demonstrated that the Board was
operating effectively. Actions were
agreed which will be implemented by
the Chairman during the current year.
The Chairman met with the other
Non-Executive Directors without
the Executive Directors present on a
number of occasions during the year.
Executive Directors’ performance
is reviewed by the Remuneration
Committee in conjunction with the
Chief Executive Officer, except in the
case of his own performance review.
The Committees of the Board
followed a similar process in
assessing their effectiveness
during the year.
Culture
Origin operates a decentralised
business model, where each country
and business have unique elements
in their culture. These businesses,
centred on employees and
customers, operate within a group
culture, that strives for innovation
and operational and people
excellence. The close involvement of
the Executive Directors and senior
executives with the businesses
continues to foster a culture of
excellence across the Group.
Through the Group’s principles and
policies, the Directors are committed
to ethical behaviours and values. The
Board receive regular contributions
from senior executives, including
updates on culture, principles and
policies, at meetings of the Board
and Committees to assess that
ethical values and behaviours are
recognised and respected through
the Group.
Employee Engagement
During the year, the Board
launched an employee engagement
programme ‘Let’s Talk’ to enable
regular two-way dialogue between
the Board and the Group’s
employees. This programme allows
Non-Executive Directors to meet
management and employees on site
visits, where the Chairman, CEO,
CFO and designated Non-Executive
Directors are informed of local
market conditions and operations
as well as relevant local matters.
During the year, the Non-Executive
Directors visited sites in Poland and
the UK. Further details of the site
visits are outlined in the Sustainability
Report on pages 50 to 61.
Relations with Shareholders
The Board has responsibility
for ensuring that satisfactory
engagement with the Company’s
shareholders takes place.
Presentations are made to both
existing and prospective institutional
shareholders, principally after the
release of the interim and annual
results. Origin issues an interim
management statement twice
yearly. Information is disseminated
to shareholders and the
market generally, via regulatory
information services, as well as
the Company’s website:
www.originenterprises.com,
which provides the full text of
press releases and all regulatory
announcements. All current and
historical Annual and Interim
Reports and investor presentations
are also made available on the
Company’s website.
The Board is kept informed of the
views of shareholders through
the Chief Executive Officer, Chief
Financial Officer and Head of
Investor Relations’ attendance at
investor meetings, capital market
days and results presentations.
Furthermore, relevant feedback
from such meetings, investor
relations reports and broker notes
are provided to the entire Board
on a regular basis. The Chairman
is also readily available to meet
institutional shareholders as and
when appropriate. The Senior
Independent Director and other
Non-Executive Directors will attend
meetings with major shareholders
if requested. No such meetings
were requested during the year.
The Company Secretary engages
annually with proxy advisers in
advance of the AGM.
The Executive Directors have held
over 150 separate meetings and
conference calls with existing and
prospective shareholders during the
financial year, including:
Date
Activity
September
2018
Preliminary Results
Announcement
for 2018
September
2018
Roadshows in
Dublin, London,
Paris, Edinburgh,
New York and
Boston
November
2018
Quarter 1 Trading
Update and AGM
January
2019
Roadshows in New
York and Boston
82
Origin Enterprises plc Annual Report and Accounts 2019
Date
March
2019
March
2019
Activity
Interim Results
Announcement
for 2019
Roadshows in
Dublin, London,
Edinburgh,
Frankfurt,
Amsterdam and
Copenhagen
May
2019
June
2019
Capital Markets Day
2019
Quarter 3
Trading Update
All shareholders are given the
opportunity to ask questions at
the AGM, which this year will take
place at The Merrion Hotel, Upper
Merrion Street, Dublin 2 at 11.00am
on Wednesday, 20 November 2019.
The Group Chairman along with
the Chairs of the Audit and Risk,
Remuneration, and Nomination and
Corporate Governance Committees,
will be available to answer questions
at that meeting. Further information
on the AGM will be made available on
publication of the notice of the AGM.
A copy of the Memorandum and
Articles of Association of the
Company may be inspected at the
registered office of the Company
or on the Company’s website:
www.originenterprises.com.
General Meetings
Matters of Ordinary Business
General meetings of the Company
are convened in accordance with,
and governed by, the Articles of
Association and the Companies Act
2014. The Company is required to
hold an AGM at intervals of no more
than 15 months from the previous
AGM, provided that an AGM is held
in each calendar year. The AGM has
the power to consider the following
matters, which are deemed by the
Articles of Association to be items
of ordinary business: (i) declaring a
dividend; (ii) the consideration of the
financial statements and reports of
the Directors and Auditor; (iii) the
election of Directors in the place
of those retiring by rotation or
otherwise; (iv) the re-appointment
of the retiring Auditor and the
fixing of the remuneration of the
Auditor; (v) generally authorising
the Directors, for a period to expire
no later than the conclusion of the
next AGM, to allot relevant securities
with a nominal value not exceeding
the authorised but unissued share
capital of the Company; (vi) generally
authorising the Directors, for a
period to expire no later than the
conclusion of the next AGM, to allot
equity securities non-pre-emptively;
and (vii) generally authorising the
Directors, for a period to expire no
later than the conclusion of the next
AGM, to exercise the power of the
Company to make market purchases
of the Company’s shares.
Matters of Special Business
All other business transacted at an
AGM and all business transacted at
an Extraordinary General Meeting (an
‘EGM’) are deemed by the Articles of
Association to be special business.
Matters which must be attended
to by the Company in general
meeting pursuant to the Companies
Act 2014 include: (i) amending
the Memorandum and Articles of
Association; (ii) changing the name
of the Company; (iii) increasing
the authorised share capital,
consolidating or dividing share
capital into shares of larger or smaller
amounts or cancelling shares which
have not been taken by any person;
(iv) reducing the issued share capital;
(v) approving the holding of the AGM
outside the State; (vi) commencing
the voluntary winding up of the
Company; (vii) re-registering the
Company as a company of another
type; (viii) approving a substantial
property transaction between
the Company and a Director; (ix)
approving a guarantee or security for
a loan or similar transaction made
by the Company to a Director or
connected person of a Director; and
(x) approving the draft terms of a
cross-border merger.
Attendance at Meetings and
Exercise of Voting Rights
A quorum for an AGM or an EGM
of the Company is constituted by
three members entitled to vote
and present in person, by proxy or
duly authorised representative in
the case of a corporate member.
The passing of resolutions at a
general meeting, other than special
resolutions, requires a majority of
more than 50% of the votes cast.
To be passed, a special resolution
requires a majority of at least 75%
of the votes cast.
Votes may be given either
personally or by proxy or by a
duly authorised representative
of a corporate member. Subject
to rights or restrictions for the
time being attached to any class
or classes of shares, on a show
of hands, every member present
in person and every proxy or duly
authorised representative of a
corporate body shall have one
vote. No individual shall have
more than one vote and, on a poll,
every member present in person
or by proxy, or a duly authorised
representative of a corporate body,
shall have one vote for every share
carrying voting rights of which the
individual is the holder.
The instrument appointing a proxy
must be deposited at the registered
office of the Company or at another
place specified for that purpose in
the notice of the meeting, not less
than 48 hours before the time for
holding the meeting or adjourned
meeting at which the person named
in the instrument proposes to vote.
Restrictions may be placed on
specified shares such that their
holder or holders will not be entitled
to vote at any general meeting, in
circumstances where the holder or
holders of those shares has failed to
pay any call at the time appointed for
payment or the holder or holders has
failed to comply, to the satisfaction
of the Directors, with a notice
to disclose beneficial ownership
under the Articles of Association or
under Chapter 4 of Part 17 of the
Companies Act 2014.
Shareholders have the right to
attend, speak and vote at general
meetings. In accordance with
Irish company law, the Company
specifies a record date for each
general meeting, by which date
shareholders must be registered
in the Register of Members of the
Company in order to be entitled
to attend.
D&O Insurance
The Company maintains Directors’
and Officers’ liability insurance
cover, the level of which is
reviewed annually.
83
Governance Nomination and
Corporate Governance
Committee Report
Further biographical details of the
members of the Nomination and
Corporate Governance Committee are
set out on pages 72 and 73.
About this Committee
The Nomination and Corporate Governance Committee comprises
three independent Non-Executive Directors:
• Rose Hynes (Non-Executive Chairman).
• Hugh McCutcheon (Non-Executive Senior Independent Director).
• Gary Britton (Non-Executive Director, Chairman of
the Audit and Risk Committee).
Dear Shareholder
As Chairman of the Nomination and
Corporate Governance Committee
I am pleased to present the report
of the Nomination and Corporate
Governance Committee for the year
ended 31 July 2019. This report has
been prepared by the Nomination
and Corporate Governance
Committee and approved by
the Board.
The role of the Committee was
expanded during the year to include
corporate governance matters.
The Terms of Reference were
accordingly reviewed and updated
to include governance related
matters in line with best practice. The
responsibilities of the Committee are
summarised in the following report
and are set out in full in the Terms of
Reference for the Nomination and
Governance Committee which are
available on the Company’s website:
www.originenterprises.com.
The Board of Origin continues to be
committed to apply the principles
of the Quoted Companies Alliance
Corporate Governance Code (‘QCA
Code’). Details of the Company’s
compliance with the QCA Code
are outlined in the Governance
Section of the Annual Report on
pages 78 to 83. The Committee
also keeps under review corporate
governance developments with the
aim of ensuring that the Company’s
corporate governance policies and
practices continue to be in line with
best practice.
The Committee is responsible
for reviewing the structure, size
and composition of the Board,
including with respect to diversity
of background and gender, having
regard to the Group’s businesses and
strategic objectives.
The Committee also keeps under
review the leadership needs of
the organisation, both Executive
Directors and Non-Executive
Directors, with a view to ensuring the
continued ability of the organisation
to compete effectively in the market
place, having regard to strategic and
commercial changes affecting the
Company and the environment in
which it operates.
Further to announcements in
2018, Sean Coyle assumed the
role of Chief Financial Officer on 1
September 2018 and was appointed
to the Board on 1 October 2018 as
Executive Director. During the year,
the Board appointed Barbara Keane
to the role of Group General Counsel
and Company Secretary, further
underpinning the Company’s focus
on corporate governance.
The Committee, excluding the
Chairman, undertook a process
which led to the recommendation
to the Board that Rose Hynes be
re-appointed as Non-Executive
Chairman of the Board for an
additional three-year term
commencing on 1 October 2018.
The Committee also undertook
a process which led to the
recommendations to the Board
that Kate Allum, Gary Britton and
Christopher Richards each be re-
appointed as Non-Executive Director
for an additional three-year term
commencing on 1 October 2018.
Tom O’Mahony, Executive Director
and Chief Executive Officer, stepped
down from the Nomination and
Corporate Governance Committee
on 26 September 2018 and was
replaced by Gary Britton.
The Nomination and Corporate
Governance Committee is
now solely comprised of
Non-Executive Directors.
This report sets out further details of
the duties and responsibilities of the
Committee, as well as an overview of
its activities during the year.
Rose Hynes
Chairman of the Nomination and
Corporate Governance Committee
24 September 2019
84
Origin Enterprises plc Annual Report and Accounts 2019 Duties and Responsibilities
The principal duties and
responsibilities of the Nomination
and Corporate Governance
Committee include the following:
> regularly review the structure, size
and composition (including the
skills, knowledge, experience and
diversity) of the Board and make
recommendations to the Board
with regard to any changes;
> consider succession planning
for Directors and other senior
executives, taking into account
the challenges and opportunities
facing the Company, and the skills
and expertise needed on the
Board in the future;
> keep under review the leadership
needs of the organisation, both
Executive Directors and Non-
Executive Directors, with a view
to ensuring the continued ability
of the organisation to compete
effectively in the marketplace;
> review annually the time required
of each of the Non-Executive
Directors in discharging their
responsibilities;
> before any appointment is
made to the Board, evaluate the
balance of skills, knowledge,
experience and diversity on the
Board, and, in the light of this
evaluation, prepare a description
of the role and capabilities
required for a particular
appointment;
> be responsible for identifying and
nominating, for the approval of
the Board, candidates to fill Board
vacancies as and when they arise;
> make recommendations to
the Board as regards the
re-appointment of any
Non-Executive Director at the
conclusion of their specified
term of office;
> make recommendations to
the Board concerning suitable
candidates for the role of Senior
Independent Director and the
appointment of any Director to
Executive or other office;
> make recommendations to the
Board as regards membership
of each of the Audit and Risk
Committee, the Remuneration
Committee, the Acquisitions
and Disposals Committee and
any other Board Committees as
appropriate;
> conduct an annual Committee
evaluation process and additionally
review the results of the Board’s
performance evaluation process
that relate to the composition of
the Board;
> keep under review corporate
governance developments that
might affect the Company, with
the aim of ensuring that the
Company’s corporate governance
policies and practices continue to
be in line with best practice;
> ensure that the principles set out
in the QCA Code are observed;
and
> review the disclosures and
statements made in the report
to shareholders on corporate
governance contained in the
Annual Report.
Length of Tenure
The length of tenure of the Directors
on the Board and on the Nomination
and Corporate Governance
Committee as at 31 July 2019 is set
out below.
Length of tenure
on Board
Kate Allum
Gary Britton
Sean Coyle
Declan Giblin
Rose Hynes
Hugh McCutcheon
Tom O’Mahony
Christopher Richards
Average tenure
Length of tenure
on Nomination and
Corporate Governance
Committee
Rose Hynes
Hugh McCutcheon
Gary Britton
Years
3.83
3.83
0.83
10.80
3.83
7.69
12.48
3.83
5.89
Years
3.75
3.75
0.84
Meetings
The Nomination and Corporate
Governance Committee met three
times during the year.
Board Composition
Appointment of Chief
Financial Officer
Sean Coyle assumed the role
of Chief Financial Officer on 1
September 2018 and was appointed
to the Board on 1 October 2018.
Appointment of Group General
Counsel and Company Secretary
Barbara Keane assumed the role of
Group General Counsel on 13 May
2019 and was appointed as Company
Secretary on 28 May 2019.
Elections and Re-elections
at AGM
Sean Coyle was elected by
the shareholders as a Director
at the Company’s AGM on
23 November 2018.
In accordance with the Company’s
Directors’ re-election policy and
best practice corporate governance,
all Directors now offer themselves
for re-election on an annual
basis. Kate Allum, Gary Britton,
Declan Giblin, Rose Hynes, Hugh
McCutcheon, Tom O’Mahony and
Christopher Richards were elected
by the shareholders as Directors at
the Company’s AGM on 23 November
2018. All Directors will retire at the
2019 AGM and offer themselves for
re-election.
Re-appointment of Chairman
During the year, Rose Hynes
completed her first three-year
term as Non-Executive Chairman.
Following a comprehensive
review of her skills, experience,
independence and knowledge, the
Committee, excluding the Chairman,
recommended to the Board and
the Board concluded, that Rose
Hynes continues to be effective and
independent and make a valuable
contribution to the Board, and in
order to maintain continuity on the
Board and its Committees, she be
re-appointed to serve an additional
term of Chairman.
85
Governance
Succession Planning
The Board, through the Nomination
and Corporate Governance
Committee, is committed to
effectively managing leadership
succession and assessing the
senior executives’ talent pool in
the Group. The Board proactively
engages with senior executives,
through regular contributions from
the senior management teams at
Board and Committees meetings
and by their own attendance at
staff conferences. Ongoing updates
on succession planning are also
provided to the Board by the Chief
Executive Officer.
Annual Evaluation
of Performance
The Board conducts an annual
evaluation of its own performance
and that of its Committees and
Committee Chairmen. In the year
ended 31 July 2019, the Nomination
and Corporate Governance
Committee carried out an
evaluation of its own performance.
The conclusion from this process
was that the performance of
the Nomination and Corporate
Governance Committee and of
the Chairman of the Committee
were satisfactory.
Re-appointment of
Non-Executive Directors
During the year, Kate Allum,
Gary Britton and Christopher
Richards each completed their
first three-year term as Non-
Executive Directors. Following a
comprehensive review of their
respective skills, experience,
independence and knowledge, the
Committee recommended to the
Board and the Board concluded,
that as each of Kate Allum, Gary
Britton and Christopher Richards
individually continue to be effective
and independent and make a
valuable contribution to the Board,
and in order to maintain continuity
on the Board and its Committees,
they be re-appointed to serve an
additional term.
Boardroom Diversity
The Board is keen to ensure the
Group benefits from the existence
of a high quality and diverse Board
comprising of individuals with an
appropriate balance of skills and
experience. In accordance with
our Board Diversity Policy, diversity
in background, skills, experience,
race, gender and other attributes
are considered in determining
the optimum composition of the
Board with an aim to balance
it appropriately. All Board
appointments are made on merit
with due regard to diversity.
In reviewing Board composition, the
Committee will consider the benefits
of all aspects of diversity including,
but not limited to, those described
above, in order to maintain an
appropriate range and balance of
skills, experience and background on
the Board.
The Board currently comprises eight
members in total, of which three
are Executive and five are Non-
Executive (including the Chairman).
Female Directors constitute 25%
of the Board. The Board has set a
target of achieving a minimum of
33% female representation on the
Board by the end of 2020.
86
Origin Enterprises plc Annual Report and Accounts 2019 Audit and Risk
Committee Report
About this Committee
The Audit and Risk Committee comprises three independent
Non-Executive Directors:
> Gary Britton (Non-Executive Director, Chairman of the Audit
and Risk Committee).
> Hugh McCutcheon (Non-Executive Senior Independent Director).
> Kate Allum (Non-Executive Director, Chairman of the
Remuneration Committee).
The members of the Committee have significant financial
and business experience.
Dear Shareholder
I am pleased to present the report
of the Audit and Risk Committee for
the year ended 31 July 2019 which
has been prepared by the Audit and
Risk Committee and approved by
the Board. The principal duties and
responsibilities of the Audit and Risk
Committee as well as an overview
of its activities for the year ended
31 July 2019 are summarised in the
following report.
The Audit and Risk Committees
were amalgamated in September
2018 and the Terms of Reference of
the amalgamated Committee are
available on the Company’s website:
www.originenterprises.com. I would
like to thank Hugh McCutcheon for
his dedication and professionalism in
conducting his role as Chairman of
the Audit Committee prior to
the amalgamation.
During the year, the Committee
appointed a new Head of Risk and
Internal Audit and established an
Executive Group Risk Committee to
further strengthen the Group’s focus
on risk management and internal
control systems. A key responsibility
of the Audit and Risk Committee
for the year ended 31 July 2019
is to review the Company’s risk
management and internal control
systems. Details in regard to these
matters are set out in the Risk Report
on pages 62 to 69.
Also this year, the Committee
conducted a competitive tender
process for the appointment of an
External Auditor. Pursuant to this
tender, PricewaterhouseCoopers
(‘PwC’), the current External Auditor
to the Group, was appointed for the
year ending 31 July 2020.
Gary Britton
Chairman of the Audit
and Risk Committee
24 September 2019
87
Governance Duties and Responsibilities
The principal duties and
responsibilities of the Audit
and Risk Committee include
the following:
> monitor the integrity of the
financial statements (including
the Annual Report, Interim
Report and preliminary results
announcements);
> monitor and review the financial
reporting process, reviewing and
challenging the judgements of
management in relation to interim
and annual financial statements;
> review the effectiveness of the
Company’s internal financial
controls and internal control and
risk management systems, along
with reviewing and approving the
statements to be included in the
Annual Report concerning internal
control and risk management
systems;
> review the Company’s
whistleblowing arrangements;
> review the Company’s procedures
for detecting and preventing
fraud;
> review the Company’s systems and
controls for the prevention
of bribery;
> review the effectiveness of the
Internal Audit function;
> review and monitor management’s
responsiveness to the findings and
recommendations of the
Internal Auditor;
> oversee the relationship with
the External Auditor, including
(but not limited to) monitoring
all matters associated with the
appointment, terms, remuneration
and performance of the External
Auditor and reviewing the scope
and results of the audit and the
effectiveness of the process; and
> annually review the Audit and Risk
Committee’s Terms of Reference
and conduct a performance
evaluation of the Committee.
Length of Tenure
The length of tenure of the Directors
on the Audit and Risk Committee as
at 31 July 2019 is set out below:
Length of tenure
on Audit and Risk
Committee*
Kate Allum
Gary Britton
Hugh McCutcheon
Years
3.75
3.77
7.63
* Following the amalgamation of the Audit
and Risk Committees, the length
of tenure for a Director represents
the longest tenure of that Director on
either Committee.
Meetings
The Audit and Risk Committee met
five times during the year. Each
Committee meeting was attended by
the Chief Financial Officer. The Head
of Risk and Internal Audit and the
External Auditor also attended these
meetings as required. The Audit and
Risk Committee also met with both
the Head of Risk and Internal Audit
and the External Audit Lead Partner
without executive management
being present.
Financial Reporting
The primary role of the Audit and
Risk Committee, in relation to
financial reporting, is to review the
appropriateness of the half-year and
annual financial statements, with
both management and the External
Auditor, and to report to the Board.
This review focuses on, amongst
other matters:
> the quality and acceptability of
accounting policies and practices;
> the clarity of the disclosures
and compliance with financial
reporting standards and relevant
financial and governance reporting
requirements; and
> material areas in which significant
judgements have been applied or
there has been discussion with the
External Auditor.
As part of this review, the Audit and
Risk Committee considers reports
from the Chief Financial Officer
and the reports from the External
Auditor on the outcomes of its
annual audit. The Audit and Risk
Committee assesses the External
Auditor annually in respect of its
independence and objectivity, taking
into account relevant professional
and regulatory requirements and the
relationship with the Auditor as a
whole. In addition, the Audit and Risk
Committee reviews and considers
the Company’s draft Annual Report
and the Group’s financial statements
in advance of final approval.
Ahead of final approval of the Annual
Report and the financial statements,
the Audit and Risk Committee
discussed with management the key
sources of estimation and critical
accounting judgements outlined
in Note 33 to the Group’s financial
statements. The significant areas
of focus considered by the Audit
and Risk Committee in relation to
the Group’s financial statements for
the year ended 31 July 2019, and
how these have been addressed,
are listed on page 89. In concluding
that the list represents the primary
areas of judgement, the Audit
and Risk Committee considered a
detailed report which referenced
both quantitative and qualitative
judgement factors across each
significant account balance,
assessing the impact on the user of
the financial statements. These are
also areas of higher audit risk and,
accordingly, the External Auditor
reported to the Audit and Risk
Committee on these judgements
which were then duly considered by
the Audit and Risk Committee.
88
Origin Enterprises plc Annual Report and Accounts 2019 The significant areas of judgement that were discussed at the interim and year-end Audit and Risk Committee
meetings included:
Key Audit Judgements
Area of Judgement Discussion
Goodwill
The Committee recognises that impairment reviews of goodwill involves a range of
judgemental assumptions.
These assumptions typically include business plans and projections, cash flow forecasts and
associated discount rates. Management provided the Committee with an analysis of the
impairment reviews undertaken by cash-generating units, including the forecasts and key
assumptions used together with a summary of the results. Following the results of these
impairment reviews, an impairment of €7.9 million was recognised in relation to the goodwill
in respect of the Group’s Ukrainian business. This analysis, together with the detail set out
in Note 14 to the financial statements, was reviewed and challenged by the Committee.
Following these discussions, the Committee is satisfied that the approach to impairment
reviews, the key assumptions made and conclusions reached, are appropriate.
Settlement price
adjustments
payable
The Committee acknowledges the level of judgement required in estimating settlement
price adjustments payable given the complexity of such arrangements in addition to the
timing of payment.
The Committee discussed the basis used for calculating settlement price adjustments, the
historical accuracy of settlement price adjustment calculations, the level of judgement
required and the expected settlement date of related payments, with management. Following
these discussions, the Committee is satisfied that the accounting treatment adopted is
appropriate and that settlement price adjustments are accurately stated at year end.
Rebates
receivable
The Committee considered the basis used for calculating rebates receivable, the historical
accuracy of rebate calculations, the level of judgement required and the settlement date of
rebate payments. This was achieved through a review of the calculation and discussion with
management.
In addition, the Committee considered the value of rebates received after the year end
relating to the current financial year to support the judgements taken in the financial
statements. The Committee is satisfied that the accounting treatment adopted is appropriate
and that rebates receivable at the year end are recoverable.
Risk Management, Internal
Control and Internal Audit
The Audit and Risk Committee
has been delegated responsibility
by the Board for reviewing the
effectiveness of the Company’s
internal financial controls
and internal control and risk
management systems.
The Chairman of the Audit and Risk
Committee reports to the Board
on the Audit and Risk Committee’s
activities and how it has discharged
its responsibilities in this regard.
During the year, the Committee
appointed a new Head of Risk and
Internal Audit and established an
Executive Group Risk Committee to
further strengthen the Group’s focus
on risk management and internal
control systems.
Risk Management
The Committee’s main duties from
a risk management perspective
encompass the review of the
Group’s overall risk assessment
processes, including the ability
to identify and manage new risks.
Additionally, it is responsible for
considering the appropriateness
of the Group’s risk review process
and advising the Board in respect
of the current risk exposures of
the Group.
The Committee has responsibility for
reviewing the Group’s risk register
and ensuring that the processes for
identifying, managing and mitigating
risks are operating effectively. The
principal risks facing the Group and
the processes and steps taken to
mitigate these risks are set out in
the Risk Report on pages 62 to 69.
Internal Control and
Internal Audit
The Audit and Risk Committee
considers the results of internal
control reviews and reviews the
effectiveness of the Internal Audit
function, ensuring it is adequately
resourced and has conducted an
annual review of its effectiveness,
as part of its annual activities.
The Group’s internal control
systems are designed to manage,
rather than eliminate, the
risk of failure to achieve the
Group’s objectives, and can
only provide reasonable, and
not absolute, assurance against
material misstatement or loss.
In assessing what constitutes
reasonable assurance, the Audit
and Risk Committee considers
the materiality of financial
89
Governance and operational risks and the
relationship between the costs
of, and benefit from, internal
control systems.
The Head of Risk and Internal Audit
has responsibility for all Internal
Audit matters and ensuring the
effective operation of the Internal
Audit function. The transition of
the internal audit activities from
the third party outsourced service
provider EY to the Head of Risk
and Internal Audit is ongoing and
expected to be completed in FY20.
The new Head of Risk and Internal
Audit independently reports to
the Audit and Risk Committee in
relation to the work and findings of
the Internal Audit function.
Each year, the Internal Audit
function sets out a rolling
programme of Internal Audit
reviews to be carried out across
the Group’s businesses throughout
Ireland, the UK, Continental
Europe and Latin America. The
Internal Audit review programme is
tailored to focus attention on the
particular financial reporting and
operational risks at each location,
which may have a material financial
impact on the Group’s results.
The Audit and Risk Committee
receives this annual audit plan in
advance, reviews the adequacy of
the plan and considers whether
it represents an appropriate
allocation of Internal Audit
resources given its knowledge of
the Group’s risk profile.
The Internal Audit function
reports its findings to the Audit
and Risk Committee with each
report comprising findings and
detailed recommendations as to
processes and controls which
could be implemented or improved
in order to reduce the level of
financial reporting and operating
risk. It also updates the Audit and
Risk Committee on processes
and improvements made, where
appropriate, at each location since
its previous Internal Audit review.
Non-Audit Services
During the year, the Audit and Risk
Committee undertook its annual
review of the policy on engagement
of the External Auditor to provide
non-audit services. This policy is
designed to further safeguard the
independence and objectivity of
the External Auditor. Details of
the amounts paid to the External
Auditor for non-audit services are
set out in Note 5 to the Group’s
financial statements.
Whistleblowing Arrangements
The Audit and Risk Committee
is responsible for the review of
the Company’s whistleblowing
arrangements and for ensuring
that these are suitable for the
Group’s employees. The Audit and
Risk Committee reviewed these
arrangements during the year
and satisfied itself that they
are adequate for the needs of
the Group.
Annual Evaluation
of Performance
The Board conducts an annual
evaluation of its own performance
and that of its Committees and
Committee Chairmen. In the year
ended 31 July 2019, the Audit and
Risk Committee carried out an
evaluation of its own performance.
The conclusion from this process
was that the performance of the
Audit and Risk Committee and of
the Chairman of the Committee
were satisfactory.
Reporting
The Chairman of the Audit and Risk
Committee reports to the Board
at each meeting on the activities
and key discussion areas of the
Audit and Risk Committee. The
Chairman of the Audit and Risk
Committee attends the Company’s
AGM to answer questions on
the report on the Audit and Risk
Committee’s activities and matters
within the remit of the Audit
and Risk Committee’s role and
responsibilities.
External Auditor
The Audit and Risk Committee
oversees the relationship with the
External Auditor, including approval
of the External Auditor’s fees.
PwC conducted the external audit
in respect of the year ended
31 July 2019.
Appointment, Independence
and Effectiveness
The Audit and Risk Committee
considers the re-appointment of the
External Auditor each year, whilst
assessing its independence on an
ongoing basis. The External Auditor
is required to rotate the Audit
Partner every five years. The current
Audit Partner has completed one
year as Auditor for the Company.
In addition, the Audit and
Risk Committee considers the
effectiveness of the external
audit process on an annual basis,
reporting its findings to the Board
as part of its recommendations.
This process is carried out with
the completion of a detailed
questionnaire which includes
consideration of the Audit
Partner, the audit approach,
communication, independence,
objectivity and reporting.
The questionnaire is completed
and the results are considered
by members of the Audit and
Risk Committee.
External Audit Services Tender
PwC has been the Group’s External
Auditor since 2010. Pursuant to the
Committee’s Terms of Reference,
which require an external audit
tendering process to be conducted
at least once every ten years, a
competitive tender process was
conducted during the year for the
External Audit service commencing
in the year ending 31 July 2020.
The process involved a Request for
Proposal, extensive submissions by
a number of leading audit firms, and
presentations to the Audit and Risk
Committee and senior management,
and concluded in May 2019.
Following evaluation of the bids, the
Audit and Risk Committee provided
the Board with its recommendation
to appoint PwC as External Auditors
for FY20 onwards.
90
Origin Enterprises plc Annual Report and Accounts 2019 Remuneration
Committee Report
About this Committee
The Remuneration Committee comprises
three independent Non-Executive Directors:
• Kate Allum (Non-Executive Director,
Chairman of the Remuneration Committee).
• Rose Hynes (Non-Executive Chairman).
• Christopher Richards (Non-Executive Director).
Dear Shareholder
On behalf of the Board, I am pleased
to present the Remuneration
Committee Report for the year
ended 31 July 2019. The objective of
the report is to provide shareholders
with information on the Company’s
remuneration policy to enable them
to understand the link between
remuneration structures and the
Group’s financial performance.
The responsibilities of the
Remuneration Committee are
summarised in this report and
are set out in full in the Terms of
Reference for the Remuneration
Committee which are available
on the Company’s website:
www.originenterprises.com.
Governance Structure
As an Irish incorporated company,
Origin is not subject to UK legislation
on the disclosure of Directors’
remuneration. That said, we
recognise the importance of having
remuneration policies, practices
and reporting that reflect best
corporate governance practices,
having regard to the Company’s size
and the markets on which its shares
are traded.
We are ensuring that there is a
demonstrable link between reward
and long-term value creation.
Origin’s remuneration policy seeks
to incentivise Executives to create
shareholder value and consequently
their remuneration is weighted
towards performance-related
elements with targets to incentivise
the delivery of strategy over the
short and long-term.
Performance for the Year
Ended 31 July 2019
Origin achieved a year of strong
underlying performance. Operating
profit increased by 15.6% in the
year, an increase of 15.5% on
an underlying basis at constant
currency. Adjusted diluted earnings
per share were 52.65 cent, an
increase of 7.9% on a reported basis
and 7.8% on an underlying basis
at constant currency. Return on
invested capital, a key metric for
Origin, was 13.2%.
Pay Outcomes for 2019
Annual bonus is based on a
combination of financial and non-
financial metrics. Details of the
financial and non-financial metrics
are set out on pages 103 and 104.
The performance for the year ended
31 July 2019 has been reflected in
bonus outcomes of 78% to 78.5%
of the maximum.
The long-term incentives granted
in March 2017 had a performance
period for the three years ended
31 July 2019, with 52.5% expected
to vest. During the year a further
share award was made to Executive
Directors under the Company’s 2015
Long-Term Incentive Plan (‘2015
LTIP’). Details of the individual awards
made under the 2015 LTIP and the
relevant performance conditions for
these awards are set out later in this
report. The Committee is satisfied
that the incentive outcomes are a fair
reflection of performance over the
relevant performance periods.
Activities in 2019
As well as overseeing the matters
detailed as the Committee’s
principal duties and responsibilities
in the year, the Committee also
reviewed and proposed changes
to the 2015 LTIP for shareholder
approval at the Company’s Annual
General Meeting on 20 November
2019. The changes include the
inclusion of a clause to reduce
formulaic vesting outcomes,
broadening of clawback and malus
provisions, greater flexibility to tailor
metrics in line with the Company’s
evolving strategy and formalising the
policy on leavers. Further details are
available on page 100.
The Remuneration Committee
believes that all of the actions
which it has taken on remuneration
matters in the last year are in the
best interest of shareholders.
Remuneration at Origin remains
appropriate, with incentive
arrangements which are well
designed and support the Company’s
overall strategy, and which are
subject to rigorous oversight by
the Committee.
We hope that we will continue
to receive your support at the
forthcomming AGM.
Kate Allum
Chairman of the
Remuneration Committee
24 September 2019
91
Governance Duties and Responsibilities
The principal duties and
responsibilities of the Remuneration
Committee include the following:
> set an appropriate remuneration
policy for Executive Directors and
the Group’s Chairman;
> recommend and monitor the level
and structure of remuneration for
senior management;
> determine the total individual
remuneration package of each
Executive Director, the Group
Chairman and other designated
Senior Executives including
bonuses, incentive payments,
share options and other awards;
> approve the design of, and
determine targets for, any
performance related pay schemes
operated by the Company and
approve the total annual payments
made under such schemes;
> determine the policy for, and
scope of, pension arrangements
for each Executive Director;
> review the design of all share
incentive plans for approval by the
Board and shareholders;
> ensure that contractual terms on
termination of any Director, and
any payments made, are fair to the
individual, and the Company and
that failure is not rewarded;
> oversee any major changes in
employee benefits structures
throughout the Group; and
> ensure the Company maintains
contact as required with its
principal shareholders regarding
remuneration matters.
Length of Tenure
The Remuneration Committee
comprises three Independent
Non-Executive Directors,
Kate Allum (Non-Executive
Director and Chairman of the
Remuneration Committee), Rose
Hynes (Non-Executive Chairman)
and Christopher Richards (Non-
Executive Director). The quorum
for Committee meetings is two
and only members are entitled
to attend. The Remuneration
Committee may extend an invitation
to other persons to attend meetings
to be present for particular agenda
items as required.
The Company Secretary is secretary
to the Remuneration Committee.
The length of tenure of the current
Remuneration Committee members
as at 31 July 2019 is set out below:
Length of tenure
on Remuneration
Committee
Kate Allum
Rose Hynes
Christopher Richards
Years
3.77
3.77
3.75
Meetings and Committee
Governance
The Remuneration Committee
met five times during the financial
year. For full details on individual
Remuneration Committee members’
attendance at meetings, see page
80. The principal activities carried
out included:
> annual review of the Terms of
Reference for the Committee;
> review of the remuneration policy;
> consideration of the 2019 bonus
scheme for Executives;
> approval of the awards under the
2015 LTIP and SAYE scheme;
> consideration of proposed
changes to 2015 LTIP; and
> annual review of the Committee
effectiveness.
The Committee has access to
independent advice and consults
with shareholders where it considers
it appropriate to do so. During the
current year, FIT Remuneration
Consultants advised the Company
on the impact of legislative and
corporate governance changes on
remuneration policy and reporting,
and in respect of the proposed
changes to the 2015 LTIP.
FIT Remuneration Consultants are
members of the Remuneration
Consultants Group and abide by the
Remuneration Consultants Group
Code of Conduct, which requires
its members’ advice to be objective
and impartial. The fees paid to
FIT Remuneration Consultants in
respect of Remuneration Committee
matters over the financial year under
review was £20,536.
The remuneration of the Group
Chairman and the Executive
Directors is determined by the
Board on the advice of the
Remuneration Committee, with
the Group Chairman absenting
herself from all discussions relating
to her remuneration.
Annual Evaluation of
Performance
The Board conducts an annual
evaluation of its own performance
and that of its Committees and
Committee Chairmen. In the
year ended 31 July 2019, the
Remuneration Committee carried
out an evaluation of its own
performance. The conclusion
from this process was that the
performance of the Remuneration
Committee and of the Chairman of
the Committee were satisfactory.
Directors’ Remuneration Policy
The Directors’ remuneration policy
(the ‘Remuneration Policy’) is set
out below. As an Irish incorporated
company, Origin is not required
to comply with UK legislation
which requires UK companies
to submit their remuneration
policies to a binding shareholder
vote. However, we recognise the
importance of having remuneration
policies, practices and reporting
that reflect best corporate
governance practices. In formulating
our Remuneration Policy, full
consideration has been given to
good practice, having regard to the
Company’s size and the markets on
which its shares are traded.
The Company aims to provide a
remuneration structure that is
aligned with shareholders’ interests,
is competitive in the marketplace,
and motivates Executive Directors
to deliver sustainable value for
shareholders. The Group’s policy
is that performance-related
components should form a
significant portion of the Directors’
overall remuneration package,
with maximum total potential
rewards being earned through
the achievement of challenging
performance targets based on
measures that represent the
best interests of shareholders.
92
Origin Enterprises plc Annual Report and Accounts 2019
Consideration of
Shareholder Views
The Remuneration Committee
considers shareholder feedback
received at each year’s AGM.
This feedback, in addition to
any feedback received during
any meetings held from time to
time, is considered as part of the
Remuneration Committee’s annual
review of the Remuneration Policy.
In addition, the Remuneration
Committee will seek to engage
directly with major shareholders and
their representative bodies, should
any material changes be proposed to
the prevailing Remuneration Policy.
Details of votes cast for and
against the resolution at last year’s
AGM to approve the Company’s
Remuneration Report are set out in
the Annual Report on Remuneration
on page 106.
Summary of the Remuneration Policy
The table below summarises the Remuneration Policy for 2019 onwards:
Element of Remuneration
Approach
Maximum opportunity
Salary
To provide competitive
fixed remuneration and
to motivate Executive
Directors of superior
calibre in order to deliver
for the business.
The basic salary for each Executive
Director is reviewed annually by the
Remuneration Committee.
Individual salary adjustments take into account:
> each Executive Director’s performance against
To attract and retain
skilled and experienced
Executives.
agreed challenging objectives;
> the Group’s financial circumstances; and
> competitive market practice.
There is no prescribed
maximum annual increase.
The Remuneration Committee
is guided by general increases
in the market for the functional
roles held by the respective
Executive Directors along
with general increases for the
broader employee population
of the Group. On occasion, the
Remuneration Committee may
need to recognise, for example,
an increase in the scale, scope
or responsibility of a role.
Salary will be benchmarked
against market rates at least
every three years.
Current salary levels are set out
on page 99.
Benefits
To provide benefits
consistent with
the market.
Assignment Allowance
To provide benefits
to reflect additional
responsibilities and
personal disruption.
Current benefit provision may include a company
car or car allowance and private health insurance.
Other benefits may be payable, where appropriate.
Specifically, these may include payments
related to relocation, accommodation and
travel allowances.
Not applicable.
As disclosed in last year’s report, this additional
element of fixed pay will be paid for three years
from financial year 2019 to the Chief Executive
Officer, Latin America.
It does not form part of the base salary for the
purposes of pension, annual bonus, LTIP or
other benefits.
£225,000 p.a. for 3 years
commencing on 1 October 2018.
93
Governance Element of Remuneration
Approach
Maximum opportunity
Bonus
Incentivises annual
achievement of
performance targets.
Maximum bonus of 100% of
basic salary in cash.
Maximum bonus of 150% of
basic salary, deferred in cash,
as follows:
> 100% of basic salary relates to
a mix of both Group and Latin
America financial measures
and corporate / personal
objectives.
> 50% of basic salary relates
solely to Latin America
financial measures. These
are assessed annually and
any payment will be made
after the completion of 2021
financial year.
Bonus payments to the Chief Executive Officer
and the Chief Financial Officer are based on
the meeting of pre-determined targets against
financial measures, in addition to the attainment
of corporate and personal objectives. These are
approved by the Remuneration Committee annually.
Bonus payments to the Chief Executive Officer,
Latin America are based on the meeting of
pre-determined targets for financial measures
of the Group and performance in Latin America
in addition to the attainment of corporate and
personal objectives. This arrangement is expected
to apply for three years from financial year
2019. Measures and targets are approved by the
Remuneration Committee annually. Any pay-
outs under the bonus scheme during the three-
year period will be deferred in their entirety
and will remain subject to the Chief Executive
Officer, Latin America serving the full three-year
assignment term.
Bonus payments are not pensionable.
Annual incentive payments are determined by the
Remuneration Committee after the year end based
on actual performance achieved against these
targets. The Remuneration Committee can apply
appropriate discretion in specific circumstances in
determining the incentive payment to be awarded.
For the CEO’s and CFO’s 2019 bonus, 80% of the
maximum Group bonus potential is based on
financial targets (namely adjusted diluted earnings
per share (‘EPS’) and Group Operating Cash Flow )
and 20% is based on other corporate and personal
objectives.
The measures, their weighting and the targets are
reviewed on an annual basis. On the basis that the
targets are commercially sensitive, they are not
being disclosed prospectively. The targets and
outcomes for 2019’s bonuses are disclosed on
page 103 and 104.
A clawback provision is in operation.
94
Origin Enterprises plc Annual Report and Accounts 2019 Element of Remuneration
Approach
Maximum opportunity
Long-Term Incentive Plan (2015) (‘LTIP’)
Designed to align the
interests of Executives
with the delivery
of sustainable earnings
growth and the interests
of shareholders.
Grant of options at a set €Nil or nominal option
price, conditional on the achievement of
challenging performance targets over a
three-year period. A two-year holding period
follows the testing period, ensuring Executives’
interests are aligned with those of shareholders
over the five-year period.
Plan limits:
> 100% (normal limit) of
basic salary.
> 200% (exceptional limit
– e.g. recruitment) of
basic salary.
Clawback provisions apply in any circumstance in
which the Remuneration Committee believes they
are appropriate. The clawback provisions apply
throughout the overall five-year period.
Performance is measured over three years and is
currently based on a combination of adjusted
diluted EPS growth, return on invested capital
(‘ROIC’) performance and free cash flow ratio
(‘FCFR’) performance.
The Committee has discretion to use different or
additional performance measures to ensure that
LTIP awards remain appropriately aligned to the
business strategy and objectives. The Committee
will consider the Group’s overall performance
before determining the final vesting level.
Shareholder approval is being sought for
amendments to the 2015 LTIP and further details
of the changes are provided on page 100.
Further detail of the 2019 grant and long-term
incentive schemes are operated is included in
Note 9 to the Group’s financial statements.
All employee share plans
To encourage employee
share ownership and
therefore increase
alignment with
shareholders’ interests.
2015 UK / Ireland Sharesave Scheme
A HMRC / Irish Revenue approved plan under which
regular monthly savings are made over a three-year
period which can be used to fund the exercise of
an option, the exercise price being discounted by
up to 20%.
2015 UK / Ireland Sharesave Plan
Maximum permitted savings of
£500 / €500 per month across
all ongoing Sharesave contracts
for any individual.
Performance conditions are not applicable to
any employee share plans.
Share ownership guidelines
To increase alignment of
Executives’ interests with
shareholders’ interests.
Executive Directors are required to retain
50% of the net-of-tax amount vested in LTIP
shares until the guideline is met.
LTIP retention guideline applies
until the Executive Director
holds shares to the value of
100% of salary.
95
Governance Element of Remuneration
Approach
Maximum opportunity
Pension
To provide retirement
benefits.
The Group operates defined benefit, defined
contribution and / or salary supplement
arrangements.
Life cover of up to four times salary is
also provided.
The defined benefit arrangement applies to
one Executive Director and relates to an
historic agreement.
Defined contribution benefit
of up to 15% of basic salary,
including for the most recent
Executive Director appointment
(35% for the Chief Executive
Officer in connection with
historic arrangements).
Non-Executive Director fees
Reflect time commitments
and the responsibilities of
each role.
Reflect fees paid by
similarly sized companies.
Fees are reviewed on an annual basis and are
intended to be in line with the general market.
The remuneration for each Non-Executive Director
is set by a subcommittee of the Board, comprising
Executive Directors only.
As with Executive Directors, there
is no prescribed maximum annual
increase. General increases in
the Non-Executive Director
market and general increases
received by the broader
employee population are taken
into account. On occasion, an
increase in the scale, scope or
responsibility of a role may need
to be recognised.
Current fee levels are set out
on page 101.
Notes:
A description of how the Company intends to implement the Remuneration Policy is set out in the
Annual Report on Remuneration.
Differences between the Group’s policy for the remuneration of Executive Directors (as set out
above) and its approach to the remuneration of employees generally include:
> a lower level of maximum annual bonus opportunity (or zero bonus opportunity) may apply to
employees other than the Executive Directors and certain Senior Executives;
> benefits offered to certain employees generally comprise the provision of healthcare and company
car benefits where required for the role or to meet market norms;
> the majority of employees participate in local defined contribution pension arrangements
(post-employment benefits are detailed in Note 26 to the financial statements);
> participation in the LTIP is currently limited to the Executive Directors and selected Senior
Executives (other employees are eligible to participate in the Company’s Sharesave Scheme); and
> participation in a cash-based long-term incentive is limited to certain selected
Senior Executives.
In general, these differences arise from the development of remuneration arrangements that
are market competitive for the various categories of individuals. They also reflect the fact, in the
case of the Executive Directors and Senior Executives, a greater emphasis tends to be placed on
performance-related pay.
The choice of performance metrics applicable to the annual bonus scheme reflect the
Remuneration Committee’s belief that any incentive compensation should be appropriately
stretching and tied to the delivery of earnings, other financial KPIs and specific corporate and
individual objectives.
The performance conditions applicable to the 2015 LTIP were selected by the Remuneration
Committee on the basis that they reward the delivery of long-term returns to shareholders and the
Group’s financial growth and are consistent with the Company’s objective of sustainable long-term
value to shareholders.
96
Origin Enterprises plc Annual Report and Accounts 2019 The Remuneration Committee operates share plans in accordance with their respective rules and
in accordance with the Rules for Euronext Growth companies, the Rules for AIM companies and
the rules of Irish Revenue and HMRC, where relevant. The Remuneration Committee, consistent
with market practice, retains discretion over a number of areas relating to the operation and
administration of the plans.
Details of remuneration received by the Directors including salary and fees, taxable benefits,
assignment allowances, pension contributions, annual bonuses and long-term incentive awards are
set out in the Annual Report on Remuneration.
Service Contracts for Executive Directors
The Remuneration Committee reviews the contractual terms for any new Executive Directors to
ensure these reflect best market practice.
The current service agreements of the Executive Directors are not fixed term and in the case of the
Chief Executive Officer (‘CEO’) / Chief Financial Officer (‘CFO’) are terminable by either the Company
giving 12 months’ notice or the respective Executive Director giving six months’ notice and, in the
case of the Chief Executive Officer, Latin America, 24 months’ notice by either party (arising as a
result of his historical contract arrangements). The notice periods for all future appointments will be
no longer than 12 months.
The service contracts make provision, at the Board’s discretion, for early termination by way of
payment of salary in lieu of notice. Incidental expenses may also be payable where appropriate.
In calculating the amount payable to an Executive Director on termination of employment, the
Board would take into account the commercial interests of the Company.
Provision
Notice period
Detailed terms
Six months’ notice from the CEO / CFO and 12 months’ notice
from the Company.
Payments in lieu of notice
Incentive schemes
24 months’ notice from the Chief Executive Officer, Latin America
and from the Company.
For any unexpired period of notice on termination, up to 12
months’ salary (and other remuneration) in respect of the CEO
/ CFO and 24 months’ salary in respect of the Chief Executive
Officer, Latin America.
In certain good leaver situations, annual bonus may be payable
with respect to performance in the financial year of cessation
(pro-rated for time, unless the Committee determines otherwise).
In the case of the LTIP, the default treatment is that any unvested
awards lapse on cessation of employment.
In certain good leaver situations, participants’ awards would
normally vest at their original vesting date and be subject to
performance testing and a pro-rata reduction.
Change of control
No Executive Director’s contract contains additional provisions in
respect of change of control.
Non-Executive Directors
Each of the Non-Executive Directors are appointed under a letter of appointment, detailing
arrangements that may generally be terminated at will, by either party, without compensation.
Their appointment is reviewed on a three-year basis. All Directors retire annually and offer
themselves for re-election at the AGM.
97
Governance Remuneration Outcomes in Different Performance Scenarios
Remuneration consists of fixed pay (salary, pension and benefits), short-term variable pay and
long-term variable pay. A significant portion of Executive Directors’ remuneration is linked to the
delivery of key business goals over the short and long-term and the creation of shareholder value.
The chart below illustrates the composition of the Executive Directors’ remuneration packages for
2020 at different levels of performance, both as a percentage of total remuneration opportunity
and as total value.
T O’Mahony
1,600,000
1,200,000
800,000
400,000
0
€1.50m
€0.90m
16%
28%
33%
33%
€0.50m
100%
56%
34%
Minimum
Target
Maximum
D Giblin
1,800,000
1,500,000
1.200,000
900,000
600,000
300,000
0
€1.74m
24%
37%
15%
24%
€1.13m
11%
28%
23%
38%
€0.68m
37%
63%
Minimum
Target
Maximum
Fixed
Annual
Long-term
Fixed
Assignment Allowance
Annual
Long-term
S Coyle
1,200,000
1,000,000
800,000
600,000
400,000
€0.37m
€1.10m
33%
33%
€0.66m
17%
28%
200,000
0
100%
55%
34%
Minimum
Target
Maximum
Fixed
Annual
Long-term
Notes:
‘Minimum’ includes the value of fixed pay and assignment allowance.
‘Target’ includes fixed pay and ‘target’ annual bonus (50% of the maximum) and threshold vesting of
the maximum LTIP (30% of the maximum).
‘Maximum’ includes fixed pay and maximum annual bonus (100% of salary for CEO and CFO and 150%
of salary for Chief Executive, Latin America) and full vesting of LTIP awards (100% of salary).
98
Origin Enterprises plc Annual Report and Accounts 2019 Annual Report on Remuneration
Implementation of the Remuneration Policy for the Year Ending 31 July 2020
A summary of how the Remuneration Policy will be applied during the financial year ending
31 July 2020 is set out below.
Basic Salary for Executive Directors
The Remuneration Committee has maintained salary at 2019 levels for the 2020 financial year
with no increases to be awarded.
Executive Director (€’000)
T O’Mahony
S Coyle1
D Giblin2
2020
500
366
425
2019
500
366
425
% increase
Nil
Nil
Nil
1 The salary included for S Coyle represents his annual salary.
2 Remuneration in respect of D Giblin is set in Sterling and has been translated to Euro at an average exchange rate (0.88272)
for 2019. For the purposes of the above table, the average exchange rate for 2019 has also been used to translate the related
salary for 2020. In Sterling, Declan Giblin’s salary amounts to £375,000.
Assignment Allowance
The Assignment Allowance will remain at the same level for the three financial years 2019 to 2021.
Executive Director (€’000)
D Giblin 1
2020
255
2019
255
1 Remuneration in respect of D Giblin is set in Sterling and has been translated to Euro at an average exchange rate (0.88272)
for 2019. The assignment allowance applied from 1 October 2018. For the purposes of the above table the average exchange
rate for 2019 has also been used to translate the related assignment allowance for 2020. In Sterling, Declan Giblin’s assignment
allowance amounts to £225,000.
Annual Bonus
The maximum bonus achievable in 2020 for T O’Mahony will remain at 100% of basic salary, and for
S Coyle will be 100% of basic salary. The maximum bonus achievable in 2020 for Declan Giblin will
remain at 150% of basic salary. The performance measures have been chosen to provide alignment
with the Group’s strategy. The targets are appropriately stretching and tied to the delivery of earnings
targets, other financial KPIs and specific corporate and individual objectives.
ROIC is an important key performance measure for the Group, however, given that it is included
as a long-term incentive measure it is no longer included as part of the annual bonus performance
measures.
The key metrics underlying the 2019 bonus plan were as follows:
Key metrics underlying the 2019 bonus plan –
T O’Mahony and S Coyle (100% of salary)
20%
37%
Financial and
non-financial
bonus metrics
80%
Analysis of
financial bonus
metrics
63%
Corporate/personal objectives
Financial targets
EPS
Operating cash flow
99
Governance
Key metrics underlying the 2019 bonus plan – D Giblin (100% of salary)
47%
20%
Financial and
non-financial
bonus metrics
80%
25%
Analysis of
financial bonus
metrics
Corporate / personal objectives
Financial targets
28%
EPS
Operating cash flow
Latin America financial targets
Corporate objectives include the successful completion of a number of acquisitions, the rollout of
an employee engagement strategy and the development of a Group-wide five-year strategic plan and
for the CEO, Latin America include Latin America strategic objectives.
The above charts exclude the additional 50% of salary bonus opportunity which applies for 2019-
2021 and was disclosed last year. Any bonus under this arrangment is paid after financial year 2021.
The measures, their weighting and the targets are reviewed on an annual basis. On the basis that the
2020 targets are commercially sensitive, they are not being disclosed prospectively.
Pension Arrangements
D Giblin participates in the UK defined benefit section of the Group’s UK pension scheme, which
relates to a historic arrangement.
T O’Mahony and S Coyle each participate in the defined contribution section of the Group’s Irish
pension scheme. Whilst the Company contributes 35% of salary to T O’Mahony’s pension, this is
in connection with historic arrangements. For the most recent Executive Director appointment,
S Coyle, the Company contributes 15% of salary to his pension.
Members of the Irish and UK pension schemes are entitled to life assurance cover of up to four times
salary and a retirement pension subject to the scheme rules. If a member dies whilst in pensionable
service, the value of the members’ retirement account will be used by the trustees to provide a lump
sum and / or a pension payable to dependents.
Long-Term Incentives Share-Based
2015 LTIP
The Committee is proposing certain changes to the current 2015 Long-Term Incentive Plan which will
require shareholder approval at the AGM on 20 November 2019. The changes take into account good
and typical market practice and are summarised below:
> inclusion of the ability for the Committee to reduce the formulaic vesting outcomes if it is not
reflective of a participants contribution or Origin’s performance;
> alignment of the treatment of good leavers’ vested and unvested awards so that a 2 year holding
period applies in both cases; and to give the Committee discretion to accelerate vesting;
> broadening of clawback and malus triggers to include material misstatement, error, gross
misconduct, insolvency and reputational damage; and
> removal of the hard wired performance criteria to enable the Committee to set different conditions
if appropriate including divisional measures for senior executive participants.
100
Origin Enterprises plc Annual Report and Accounts 2019 In addition to the three-year performance period under the LTIP, all awards are subject to an
additional two-year holding period ensuring that the LTIP has a five-year time horizon in line with
best practice.
A summary of the awards made under the 2015 LTIP is set out on page 104.
A summary of the performance conditions applicable to awards that have been granted to date
under the LTIP is set out below.
Metric
Weighting
Vesting at
threshold
Condition
Adjusted Diluted
Earnings per
Share (‘EPS’)
Return on
Invested Capital
(‘ROIC’) (i)
Free Cash
Flow Ratio) (ii)
30%
30%
40%
30%
30%
30%
Adjusted Diluted EPS growth over the three-
year period in excess of 5% on a pro-rata
basis (straight-line) to 10% (maximum stretch)
for full pay-out.
An average annual ROIC of at least 12.5%
(threshold) on a pro-rata basis to 17.5%
(maximum stretch) for full pay-out.
An average annual free cash flow
ratio of at least 50% (threshold) on a
pro-rata basis to 100% (maximum stretch) for
a full pay-out.
(i) For the purposes of these calculations, the definition of ROIC used is consistent with the definition of ROCE as set out in the
Chief Financial Officer’s Review on page 19.
(ii) The definition of Free Cash Flow Ratio is set out in the Chief Financial Officer’s Review on page 20.
The Remuneration Committee will consider further LTIP awards during the financial year 2020, but
before doing so will, as is normal, review the continued appropriateness of the performance metrics
and the related targets for awards. Details of any LTIP awards made in the financial year 2020,
including performance measurements and targets, will be disclosed in the Remuneration Report for
the financial year 2020.
Non-Executive Director Fees
Fees for the Non-Executive Directors for the 2019 and 2020 financial years are detailed below.
Position
Chairman
Base fee
Additional fees:
Audit and Risk Committee Chair
Remuneration Committee Chair
Senior Independent Director
2020
€
2019
€
130,000
130,000
62,000
62,000
13,000
13,000
8,000
8,000
8,000
8,000
% increase
Nil
Nil
Nil
Nil
Nil
101
Governance Remuneration Outcomes
for the Year Ended 31 July 2019
Directors’ remuneration (audited) for the year ended 31 July 2019 was as follows:
Salary and
fees1
€’000
Taxable
benefits2
€’000
Assignment
Allowance3
€’000
Pension4
€’000
Annual
bonus5
€’000
Long-term
incentives6
€’000
Total
€’000
T O’Mahony
2019
2018
S Coyle*
2019
2018
D Giblin
2019
2018
R Hynes
2019
2018
H McCutcheon
2019
2018
K Allum
2019
2018
G Britton
2019
2018
C Richards
2019
2018
Former Directors
I Hurley**
2019
2018
R McHugh***
2019
2018
500
500
305
–
425
423
130
130
71
75
70
70
74
70
62
62
–
204
–
52
26
26
22
–
73
24
7
2
–
–
–
–
–
–
–
–
–
-
–
4
–
–
–
–
212
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
175
175
46
–
26
26
–
–
–
–
–
–
–
–
–
–
–
44
–
–
391
435
238
–
334
368
–
–
–
–
–
–
–
–
–
–
–
135
–
–
204
–
–
–
1,296
1,136
611
–
168
1,238
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
841
137
132
71
75
70
70
74
70
62
62
–
383
–
56
* S Coyle was oppointed to the Board on 1 October 2018. The amounts included in the table above represents emoluments for
the period 1 October 2018 to 31 July 2019.
** I Hurley resigned from the Board on 28 February 2018. The amounts included in the table above represents emoluments for the
period 1 August 2017 to 28 February 2018.
*** R McHugh retired from the Board on 17 May 2018. The amounts included in the table above represents emoluments for the
period 1 August 2017 to 17 May 2018.
102
Origin Enterprises plc Annual Report and Accounts 2019
Notes:
1 Salary and Fees (audited)
In 2019, D Giblin received a salary of £375,000, converted at an average exchange rate of 0.88272
(2018: 0.88677). The amount charged and disclosed in the 2018 accounts was €423,000, based on a
sterling salary of £375,000.
2 Taxable Benefits (audited)
Benefits include a company car or company car allowance (D Giblin, T O’Mahony and S Coyle) and
private medical insurance (including immediate family members) (D Giblin and S Coyle). Benefits also
include mileage claimed by Non-Executive Directors for travel to Board meetings, which has been
grossed up for Irish tax purposes.
3 Assignment Allowance (audited)
In 2019, D Giblin received an assignment allowance of £187,500, converted at an average exchange
rate of 0.88272. This allowance applied from 1 October 2018.
4 Pensions (audited)
The Company contributes 35% of salary to T O’Mahony’s pension and 15% of salary to S Coyle’s
pension.
Figures for D Giblin represent the defined benefit provision for the year in respect of his membership
of a UK scheme, as calculated in line with applicable legislation.
Retirement benefits are accruing to the following number
of Directors under:
Defined contribution scheme
Defined benefit scheme
Number of Directors
2019
2018
2
1
1
1
5 Annual Bonus
The financial measures applying to the CEO’s and CFO’s 2019 bonus were EPS (50% of salary) and
Operating Cash Flow (‘OCF’) (30% of salary), along with the achievement of specified corporate
and personal objectives measures over the course of the 2019 financial year.
Financial measures – CEO / CFO
Executive
Director
Financial
Measures
Weighting (%
of salary)
EPS required
for threshold
bonus1
Tom O’Mahony
Sean Coyle
80%
80%
48.55
48.55
Actual
Diluted
adjusted
EPS
52.65
52.65
Outcome
(% of
salary)
OCF required
for threshold
bonus1
€’000
Actual OCF
€’000
Outcome
(% of
salary)
49.2%
49.2%
70,785
70,785
70,924
70,924
13.4%
13.4%
1. 30% of salary is payable for achieving threshold EPS and 15% of salary is payable for achieving threshold Operating Cash Flow.
For the CEO, Latin America, 60% of 2019 bonus was based on EPS (37.5% of salary), OCF (22.5% of
salary) and 20% was based on Latin America financial measures.
Financial measures – CEO, Latin America
Executive
Director
Financial
Measures
Weighting
(% of salary)
EPS required
for threshold
bonus1
Actual
Diluted
adjusted
EPS
Outcome
(% of
salary)
OCF required
for threshold
bonus1
€’000
Actual OCF
€’000
Outcome
(% of
salary)
Declan Giblin
60%
48.55
52.65
37.0%
70,785
70,924
10.2%
1. 23% of salary is payable for achieving threshold EPS and 11% of salary is payable for achieving threshold Operating Cash Flow.
The CEO, Latin America, earned a bonus of 17.1% out of a possible 20% of salary based on the Latin
America EBIT and Latin America OCF financial measures.
103
Governance
In addition, and as disclosed in last year’s report, the CEO, Latin America can earn an additional 50%
of salary per annum based on Latin America related financial objectives for three years commencing
1 October 2018. Latin America performance for the first year has been strong and bonus has accrued
as a result. However, a full, rounded assessment of performance over the full three year period
will be undertaken after the end of the three year performance period (i.e. in October 2021) to
determine the total bonus payable.
Corporate and personal objectives
For 2019, non-financial objectives included the successful completion and integration of a number
of acquisitions, the rollout of an employee engagement strategy and the development of a Group-
wide five-year strategic plan. In relation to the above objectives, the CEO and CFO earned 15.5% and
15.4% respectively out of maximum of 20% of salary.
In relation to Latin America objectives, the CEO, Latin America earned 14.2% out of a maximum of
20% of salary.
In total the CEO, CFO and the CEO, Latin America earned bonuses to the value of 78.1%, 78% and
78.5% respectively out of a possible 100% of salary.
The Remuneration Committee believes that this combination of financial and personal objectives
strongly aligns with the Group’s strategic goals and the determination of bonus outcomes elsewhere
in the Group.
6 Long-Term Incentives
LTIP awards vesting based on performance to 31 July 2019.
The Directors were granted LTIP awards in March 2017 which are due to vest in March 2020. These
awards are based on performance over the three-year period ending 31 July 2019.
The performance criteria applying to these awards and achievement is set out in the table below:
T O’Mahony / D Giblin
Metric
Weighting
Threshold
Maximum
Actual
performance
Outcome
(% vesting)
Adjusted Diluted EPS
Return on Invested Capital
Free Cash Flow ratio
30%
40%
30%
5%
12.5%
50%
10%
17.5%
100%
5.8%
13.5%
82.9%
40.6%
43.8%
76.0%
Overall 52.50% of the 2017 LTIP is expected to vest in March 2020.
A summary of the awards made during the year, on 2 October 2018, under the LTIP is set out below.
Executive Director
Face value of
award at grant
Number of
shares awarded
T O’Mahony
100% of salary
88,496
S Coyle
D Giblin
95% of salary
95% of salary
61,540
70,784
End of
performance
period
31/07/2021
31/07/2021
31/07/2021
Date from which
exercisable
2/10/2021
2/10/2021
2/10/2021
The number of shares awarded under the 2015 LTIP was calculated using the closing share price of
€5.65 on 1 October 2018. The performance measures applying to these awards is set out on page 101.
104
Origin Enterprises plc Annual Report and Accounts 2019
Outstanding Share Awards
The table below sets out details of outstanding share awards held by Executive Directors.
Plan
Grant date
Exercise/
No. of
Granted
Vested/
Lapsed
No. of
End of
Date from
Expiry date
Option
share
during
Exercised
during
share
performance
which
price
awards at
the year
during the
the
awards at
period
exercisable
1 August
2018
year
year
31 July
2019
–
–
T O’Mahony
2015 LTIP
10/03/2017
0.01
73,529
2015 LTIP
28/09/2017
2015 LTIP
2/10/2018
0.01
0.01
77,519
–
88,496
Total
151,048
88,496
S Coyle
2015 LTIP
2/10/2018
0.01
Total
D Giblin
–
–
61,540
61,540
2015 LTIP
10/03/2017
0.01
60,459
2015 LTIP
28/09/2017
0.01
63,076
–
-
2015 LTIP
2/10/2018
0.01
–
70,784
Total
123,535
70,784
–
–
–
–
–
–
–
–
–
–
34,914
38,615
31/07/2019
10/03/2020
9/03/2024
–
–
77,519
31/07/2020 28/09/2020
27/09/2024
88,496
31/07/2021
2/10/2021
1/10/2025
34,914
204,630
–
–
61,540
31/07/2021
2/10/2021
1/10/2025
61,540
28,708
31,751
31/07/2019
10/03/2020
9/03/2024
–
–
63,076
31/07/2020 28/09/2020
27/09/2024
70,784
31/07/2021
2/10/2021
1/10/2025
28,708
165,611
LTIP awards are subject to the performance conditions outlined in the Long-Term Incentives section
of the Annual Report on Remuneration, set out on pages 100 and 101.
Non-Executive Directors do not participate in any Group share incentive or award scheme.
Statement of Directors’ and Company Secretary’s Shareholdings and
Share Interests (audited)
Beneficially
owned at 1
August 2018
Beneficially
owned at 31
July 2019
Unvested LTIP
awards at 31
July 2019
Outstanding share
awards under all
employee share plans
T O’Mahony
1,646,373
1,646,373
S Coyle
D Giblin
R Hynes
H McCutcheon
K Allum
G Britton
C Richards
B Keane
7,000
302,735
3,875
45,000
–
5,000
3,405
–
14,000
302,735
3,875
45,000
–
5,000
3,405
–
204,630
61,540
165,611
–
–
–
–
–
–
–
4,166
–
–
–
–
–
–
–
The shareholdings held by T O’Mahony and D Giblin are substantially in excess of the share ownership
guidelines in place.
S Coyle, having joined the Company in September 2018, holds 19% of his salary.
The value of shareholdings held by the Executive Directors is based on their shares held at the
share price of €4.95 at 31 July 2019. Details of share ownership guidelines are set out on page 95
of this report.
105
Governance
Statement of Voting at the AGM
At the Company’s 2018 AGM, the following votes were received from shareholders:
Votes cast in favour 1
Votes cast against
Total votes cast
Abstentions
1 Does not include Chairman’s discretionary votes.
Remuneration Report
88,648,129
1,546
88,649,675
2,690,390
%
99.998
0.002
100.00
3.03
106
Origin Enterprises plc Annual Report and Accounts 2019 Our Purpose
Optimising sustainable agriculture
and food production through
innovation, research & development
and agronomic expertise.
Find out more
Sustainability on page 50
e
c
n
a
n
r
e
v
o
G
107
Paraná State, Brazil
Fortgreen operates a comprehensive research
and new product development facility, enhancing
the Origin Group’s own product capability
Grow
Find out more
Business Review Latin America on page 44
Fortgreen case study on page 49
108
Origin Enterprises plc Annual Report and Accounts 2019 Financial Statements
109
Financial Statements Company Information
Board of Directors
R Hynes
T O’Mahony
S Coyle
D Giblin
K Allum
G Britton
H McCutcheon
C Richards
(Non-Executive Chairman)
(Chief Executive Officer)
(Executive Director)
(Executive Director)
(Non-Executive Director)
(Non-Executive Director)
(Non-Executive Director)
(Non-Executive Director)
Secretary and
Registered Office
B Keane
4-6 Riverwalk
Citywest Business Campus
Dublin 24
Ireland
Syndicate Bankers
Allied Irish Banks plc
Bank of Ireland plc
Barclays Bank Ireland plc
HSBC Bank plc
ING Bank NV
Rabobank Ireland plc
Registrars
Link Registrars Limited
2 Grand Canal Square
Dublin 2
Ireland
Euronext Growth (Dublin)
Adviser and Stockbroker
Goodbody
Ballsbridge Park
Ballsbridge
Dublin 4
Ireland
Nominated Adviser
Davy
Davy House
49 Dawson Street
Dublin 2
Ireland
Auditors
Stockbroker
PricewaterhouseCoopers
Chartered Accountants and Statutory Audit Firm
One Spencer Dock
North Wall Quay
Dublin 1
Ireland
Numis Securities Limited
The London Stock Exchange Building
10 Paternoster Square
London
EC4M 7LT
United Kingdom
Media Relations
FTI Consulting
The Academy Building
Pearse Street
Dublin 2
Ireland
9
1
0
2
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a
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O
110
Statement of Directors’ Responsibilities
The Directors are responsible for
preparing the Annual Report and the
Group and Company financial statements,
in accordance with Irish law.
Irish law requires the Directors to prepare Group and
Company financial statements for each financial year,
giving a true and fair view of the assets, liabilities and
financial position of the Group and the Company and the
profit or loss of the Group for the period. Under that law
and in accordance with the Rules of the AIM and ESM
exchanges issued by the London and Euronext Growth
Stock Exchanges, the Directors have prepared the Group
financial statements in accordance with International
Financial Reporting Standards (‘IFRSs’) as adopted by
the EU (‘EU IFRS’) with those parts of the Companies
Act 2014 applicable to companies reporting under EU
IFRS. The Directors have prepared the Company financial
statements in accordance with Irish Generally Accepted
Accounting Practice (accounting standards issued by
the UK Financial Reporting Council, including Financial
Reporting Standard 102 The Financial Reporting Standard
applicable in the UK and Republic of Ireland and Irish law).
Under Irish law the Directors shall not approve the
Group and Company financial statements unless they are
satisfied that they give a true and fair view of the Group’s
and Company’s assets, liabilities and financial position as
at the end of the financial year and of the profit or loss
of the Group for the financial year.
In preparing the Group and Company financial
statements, the Directors are required to:
>
select suitable accounting policies and then apply
them consistently;
> make judgements and estimates that are reasonable
and prudent;
>
state whether the financial statements have been
prepared in accordance with applicable accounting
standards and identify the standards in question and
ensure that they contain the additional information
required by the Companies Act 2014; and
> prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the Group and the Company will continue in
business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to:
>
correctly record and explain the transactions of the
Group and Company;
> enable, at any time, the assets, liabilities and
financial position of the Group and Company and
profit or loss of the Group to be determined with
reasonable accuracy; and
> enable the Directors to ensure that the financial
statements comply with the Companies Act 2014
and enable those financial statements to be audited.
The Directors are also responsible for safeguarding the
assets of the Company and the Group and hence for
taking reasonable steps for the prevention and detection
of fraud and other irregularities.
Under applicable law and the requirements of the AIM
and ESM Rules, the Directors are also responsible for
preparing a Directors’ report that complies with that law
and those rules.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information
included on the Group’s website. Legislation in the
Republic of Ireland governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
On behalf of the Board
Rose Hynes
Director
24 September 2019
Tom O’Mahony
Director
24 September 2019
111
Financial Statements
Independent Auditors’ Report to the
Members of Origin Enterprises plc
Report on the financial statements
Opinion
In our opinion:
> Origin Enterprises plc’s Group financial statements and Company financial statements (the “financial
statements”) give a true and fair view of the Group’s and the Company’s assets, liabilities and financial position
as at 31 July 2019 and of the Group’s profit and cash flows for the year then ended;
>
>
the Group financial statements have been properly prepared in accordance with International Financial
Reporting Standards (“IFRSs”) as adopted by the European Union;
the Company financial statements have been properly prepared in accordance with Generally Accepted
Accounting Practice in Ireland (accounting standards issued by the Financial Reporting Council of the UK,
including Financial Reporting Standard 102 “The Financial Reporting Standard applicable in the UK and
Republic of Ireland” and Irish law); and
>
the financial statements have been properly prepared in accordance with the requirements of the Companies
Act 2014.
We have audited the financial statements, included within the Annual Report and Accounts (the “Annual Report”),
which comprise:
>
>
>
>
>
>
>
>
the Consolidated Statement of Financial Position as at 31 July 2019;
the Company Balance Sheet as at 31 July 2019;
the Consolidated Income Statement and Consolidated Statement of Comprehensive Income for the year
then ended;
the Consolidated Statement of Cash Flows for the year then ended;
the Consolidated Statement of Changes in Equity for the year then ended;
the Company Statement of Changes in Equity for the year then ended;
the Group Accounting Policies and Company Accounting Policies; and
the Notes to the Group Financial Statements and the Notes to the Company Financial Statements.
Certain required disclosures have been presented elsewhere in the Annual Report, rather than in
the Notes to the financial statements. These are cross-referenced from the financial statements and are identified
as audited.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (Ireland) (“ISAs (Ireland)”) and
applicable law. Our responsibilities under ISAs (Ireland) are further described in the Auditors’ responsibilities for
the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit
of the financial statements in Ireland, which includes IAASA’s Ethical Standard as applicable to listed entities, and we
have fulfilled our other ethical responsibilities in accordance with these requirements.
112
Origin Enterprises plc Annual Report and Accounts 2019
Independent Auditors’ Report to the
Members of Origin Enterprises plc - continued
Our audit approach
Overview
Materiality
Materiality
> €3.4 million (2018: €3.2 million) - Group financial statements
> Based on 5% of profit before tax and exceptional items.
> €2 million (2018: €2.5 million) - Company financial statements
> Based on 0.75% of net assets (2018: 1% of net assets).
Audit
scope
Audit scope
> We conducted audit work on 14 reporting components. We paid particular
Key audit
matters
>
attention to these components due to their size or risk characteristics and to
ensure appropriate audit coverage. An audit of the full financial information of
these 14 components was performed.
Taken together, the reporting components where an audit of the full financial
information was performed accounts for in excess of 95% of Group revenues,
95% of Group profit before tax and exceptional items and 90% of total assets.
Key audit matters
> Goodwill.
>
> Rebates receivable.
Settlement price adjustments.
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
financial statements. In particular, we looked at where the directors made subjective judgements, for example in
respect of significant accounting estimates that involved making assumptions and considering future events that are
inherently uncertain. As in all of our audits we also addressed the risk of management override of internal controls,
including evaluating whether there was evidence of bias by the directors that represented a risk of material
misstatement due to fraud.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the
audit of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect
on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement
team. These matters, and any comments we make on the results of our procedures thereon, were addressed in
the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit.
113
Financial Statements
Independent Auditors’ Report to the
Members of Origin Enterprises plc - continued
How our audit addressed the key audit matter
We obtained the Group’s impairment models and evaluated the
methodology used. We tested the mathematical accuracy of the
underlying calculations in the models and found them to be correct.
We evaluated management’s expected future cash flows for Year 1 and
the process by which they were developed, including comparing them
to the latest board approved budgets. We assessed the underlying
key assumptions in the Year 1 budget, and the growth rates applied
for Years 2 & 3 by considering the Group’s past record of achieving its
forecasts over time, taking into account the impact of factors such
as changes in weather, crop conditions, product mix and competitor
activity and found the key assumptions to be reasonable.
We used PwC specialists in assessing management’s calculation of
discount rates. Our specialists developed a range of discount rates
for each CGU that in their view of various economic indicators would
be appropriate in estimating the value in use of the CGUs. We are
satisfied that the discount rate used by the Group for each CGU falls
within those ranges.
We considered the appropriateness of the Group’s long term forecast
growth rate assumptions used to calculate terminal values by
comparing them to independent sources, including publicly available
information and concluded that they fell within a reasonable range for
each CGU.
We performed sensitivity analysis on the impact of changes in key
assumptions on the impairment assessments for CGUs. For the
UK CGUs we considered more adverse scenarios to take account
of potential impacts of Brexit on future cash flows. Across our
sensitivities, no impairment was identified.
We assessed the appropriateness of the related disclosures within the
financial statements, in particular the disclosure of the reduction in
the actual and projected cash flows which resulted in the impairment
in relation to the Ukraine CGU and we consider the disclosures
included in Note 14 to be reasonable.
Key audit matter
Goodwill
See accounting policy in relation to
impairment, Note 14 – Goodwill and intangible
assets and Note 33 – Accounting estimates and
judgements.
The Group has goodwill of €176.29m at 31 July
2019 representing approximately 13.5% of the
Group’s total assets at year end. Identified
cash generating units (CGUs) containing
goodwill are subject to impairment testing on
an annual basis or more frequently if there
are indicators of impairment. The Group
recognised an impairment in the current year
of €7.9m in respect of the full amount of the
Ukraine CGU.
The value in use calculations used in the
impairment testing have been prepared using
the board approved budgets and forecasts for
each CGU. The impairment models are based
on a cash flow forecast for Year 1 extracted
from the 2019 budgets approved by the board.
Growth rates are then applied to the Year 1
forecasted cash flows to forecast Years 2 &
3. The terminal value growth rates used for
periods beyond Year 3 are based on the long
term growth for the country of operation of
each CGU.
We focused on this area given the scale of
the assets and because the determination
of whether an impairment charge for
goodwill was necessary involves significant
judgement in estimating the future
performance of the CGUs.
We determined the key assumptions used in
the value in use calculations as sales growth &
product mix in Year 1 budgets, Year 2 and Year
3 growth rates, terminal value growth rates
and discount rates.
In particular, we focused on the Ukraine
CGU which had the lowest headroom in the
prior period, and where second half trading
and forecasts led to a potential impairment
indicator being identified by management.
114
Origin Enterprises plc Annual Report and Accounts 2019
Independent Auditors’ Report to the
Members of Origin Enterprises plc - continued
Key audit matter
Settlement price adjustments
See accounting policy in relation to revenue
and Note 33 – Accounting estimates and
judgements.
The estimation of final settlement prices for
some customers in the Group is subject to
considerable management judgement due to
an absence of contractual arrangements and
the fact that negotiations with customers are
not normally concluded until several months
after year end.
As set out in Note 33, the estimation of the
final settlement price adjustment is impacted
by commodity prices, competitor pricing
pressures, prevailing market conditions and
the timing of the Group’s financial year end as
it is non coterminous with the year end of its
main customers.
We focused on this area given the level
of judgement involved and the level of
fluctuation in final settlement prices
historically.
Rebates receivable
See accounting policy in relation to rebates.
See also Note 18 – Trade and other receivables
and Note 33 – Accounting estimates and
judgements.
The Group has entered into a number of
rebate and incentive arrangements with
some of its suppliers. Although a significant
portion of rebates receivable are contractual
and are based on net settlement prices, for
some rebate arrangements the amount of the
rebate is dependent on the level of purchase
volumes. The processes used to estimate
rebates receivable also require an element of
manual calculation.
We focused on this area as due to the
number of arrangements in place, the
range of contractual terms and the manual
calculations, there is an increased risk of error
in the calculation of rebates receivable at the
year end. The rebate receivable have been
included within trade and other receivables in
Note 18.
How our audit addressed the key audit matter
We compared the process undertaken by management in compiling
the settlement price adjustment to revenue and trade receivables
to that applied in the prior period and found it to be consistent.
The key inputs to the calculation of the settlement price
adjustment include invoice prices, estimated settlement prices
and invoice quantities. For a sample of transactions, we tested
the accuracy of the calculation and agreed the invoice prices and
quantities to underlying documentation.
We obtained an understanding from management of the significant
judgements exercised in estimating the final settlement price
and we evaluated those judgements in the context of known
market developments, including trends in commodity prices. We
determined that management applied a reasonable approach,
taking into account the level of inherent estimation uncertainty
given the nature of these settlement priceadjustments. Based on
our procedures, we concluded the price settlement adjustments
were reasonable.
We also performed a look back test designed to assess the accuracy
of the prior year estimate by comparing a sample of prior year
settlement price adjustments to credit notes issued to the customer.
We reviewed the related disclosures within the financial statements
and concluded that they were appropriate.
We obtained and read copies of relevant supplier rebate
agreements and met with relevant members of management in
order to understand the impact of these arrangements on the
financial statements.
For rebates related to net settlement prices, we tested a sample of
rebates receivable at the year end by agreeing the quantities and
gross price to the original invoices and the net settlement prices to
contractual agreements, which were independently confirmed by
suppliers.
For a sample of volume related rebates receivable, we confirmed
rebate terms with suppliers and tested the inputs to the
calculation to source documentation.
For rebates earned and received during the year, we tested a
sample of these against credit notes received. We independently
confirmed these credit notes with relevant suppliers.
We performed a look back test designed to assess the accuracy
of the prior year estimate by comparing a sample of prior year
rebates receivable to credit notes received from the supplier
for net settlement and volume based rebates. We independently
confirmed these credit notes with relevant suppliers.
Based on these procedures we determined that the amounts had
been recognised in the correct period, calculated appropriately
based on the contracted rates in the supplier agreements we
obtained and the estimates were reasonable.
115
Financial Statements
Independent Auditors’ Report to the
Members of Origin Enterprises plc - continued
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the
financial statements as a whole, taking into account the structure of the Group, the accounting processes and
controls, and the industry in which the Group operates.
The Group is structured along three operating segments: Ireland and the United Kingdom, Continental Europe and
Latin America. The Group financial statements are a consolidation of 19 reporting units, comprising the Group’s
operating businesses and centralised functions.
In establishing the overall approach to the Group audit, we determined the type of work that needed to be
performed at the reporting units by us, as the Group engagement team, or component auditors within PwC ROI,
from other PwC network firms and from one non-PwC firm operating under our instruction. Where the work was
performed by component auditors, we determined the level of involvement we needed to have in the audit work at
those reporting units to be able to conclude whether sufficient appropriate audit evidence had been obtained as a
basis for our opinion on the Group financial statements as a whole.
As part of our Group audit scoping we identified 14 Origin reporting units, which in our view, required an audit of
their full financial information due to their size or risk characteristics. These operations accounted for in excess
of 95% of Group turnover, 95% of Group profit before tax and exceptional items and 90% of total assets. Taken
collectively these reporting units represent the principal business units of the Group.
The Group audit team follows a programme of planned site visits that is designed so that senior team members visit
the reporting components on a rotational basis. In addition to these visits at the planning stage, post audit conference
calls or onsite visits were held to discuss component auditor’s key audit findings.
This, together with additional procedures over central functions, IT systems, treasury and areas of judgement including
the key audit matters noted above, taxation, business combinations and post-retirement benefits performed at the
Group level, gave us the evidence we needed for our opinion on the Group financial statements as a whole.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the
nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and
in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall materiality
How we determined it
Rationale for benchmark applied
Group financial statements
€3.4 million (2018: €3.2 million).
Company financial statements
€2 million (2018: €2.5 million).
5% of profit before tax and exceptional
items.
0.75% of net assets (2018: 1% of
net assets).
We have applied this benchmark because
in our view this is a metric against
which the recurring performance of
the Group is commonly measured by its
stakeholders.
We applied this benchmark,
as the Company is primarily an
investment holding Company.
We agreed with the Audit & Risk Committee that we would report to them misstatements identified during our audit
above €0.17 million (Group audit) (2018: €0.3 million) and €0.1 million (Company audit) (2018: €0.3 million) as well as
misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
9
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116
Independent Auditors’ Report to the
Members of Origin Enterprises plc - continued
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which ISAs (Ireland) require us to report to
you where:
>
>
the Directors’ use of the going concern basis of accounting in the preparation of the financial statements
is not appropriate; or
the Directors have not disclosed in the financial statements any identified material uncertainties that may
cast significant doubt about the Group’s or the Company’s ability to continue to adopt the going concern basis
of accounting for a period of at least twelve months from the date when the financial statements are authorised
for issue.
However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the
Group’s or the Company’s ability to continue as a going concern.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and
our auditors’ report thereon. The Directors are responsible for the other information. Our opinion on the financial
statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to
the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material
inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a
material misstatement of the financial statements or a material misstatement of the other information. If, based on
the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report based on these responsibilities.
With respect to the Directors’ Report, we also considered whether the disclosures required by the Companies Act
2014 (excluding the information included in the “Non-Financial Statement” as defined by that Act on which we are not
required to report) have been included.
Based on the responsibilities described above and our work undertaken in the course of the audit, ISAs (Ireland) and
the Companies Act 2014 require us to also report certain opinions and matters as described below:
>
In our opinion, based on the work undertaken in the course of the audit, the information given in the Directors’
Report (excluding the information included in the “Non-Financial Statement” as defined by that Act on which
we are not required to report) for the year ended 31 July 2019 is consistent with the financial statements and
has been prepared in accordance with the applicable legal requirements.
> Based on our knowledge and understanding of the Group and Company and their environment obtained in
the course of the audit, we have not identified any material misstatements in the Directors’ Report (excluding
the information included in the “Non-Financial Statement” as defined by that Act on which we are not required
to report).
117
Financial Statements
Independent Auditors’ Report to the
Members of Origin Enterprises plc - continued
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ Responsibilities set out on page 111, the Directors are
responsible for the preparation of the financial statements in accordance with the applicable framework and for
being satisfied that they give a true and fair view.
The Directors are also responsible for such internal control as they determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Company’s
ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going
concern basis of accounting unless the Directors either intend to liquidate the Group or the Company or to cease
operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (Ireland) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the IAASA
website at: https://www.iaasa.ie/getmedia/b2389013-1cf6-458b-9b8f-a98202dc9c3a/Description_of_auditors_
responsibilities_for_audit.pdf
This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the Company’s members as a body in
accordance with section 391 of the Companies Act 2014 and for no other purpose. We do not, in giving these
opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown
or into whose hands it may come save where expressly agreed by our prior consent in writing.
118
Origin Enterprises plc Annual Report and Accounts 2019
Independent Auditors’ Report to the
Members of Origin Enterprises plc - continued
Other required reporting
Companies Act 2014 opinions on other matters
> We have obtained all the information and explanations which we consider necessary for the purposes of
our audit.
>
In our opinion the accounting records of the Company were sufficient to permit the Company financial
statements to be readily and properly audited.
>
The Company Balance Sheet is in agreement with the accounting records.
Other exception reporting
Directors’ remuneration and transactions
Under the Companies Act 2014 we are required to report to you if, in our opinion, the disclosures of directors’
remuneration and transactions specified by sections 305 to 312 of that Act have not been made. We have no
exceptions to report arising from this responsibility.
Prior financial year Non-Financial Statement
We are required to report if the company has not provided the information required by Regulation 5(2) to 5(7) of the
European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups)
Regulations 2017 in respect of the prior financial year. We have nothing to report arising from this responsibility.
Paul O’Connor
for and on behalf of PricewaterhouseCoopers
Chartered Accountants and Statutory Audit Firm
Dublin
24 September 2019
119
Financial Statements
Consolidated Income Statement
For the financial year ended 31 July 2019
Notes
1
Revenue
Cost of sales
Gross profit
Pre- exceptional
2019
€’000
Exceptional
2019
€’000
Total
2019
€’000
Pre- exceptional
2018
€’000
Exceptional
2018
€’000
Total
2018
€’000
1,798,197
(1,527,363)
270,834
-
1,798,197
- (1,527,363)
-
270,834
1,627,533
(1,389,926)
237,607
-
1,627,533
- (1,389,926)
-
237,607
Operating costs
2, 3
(197,340)
(6,574)
(203,914)
(172,072)
663
(171,409)
Share of profit of
associates and
joint venture
Operating profit
Finance income
Finance expense
Profit before
income tax
Income tax
(expense)/credit
7
5
4
4
6,717
(423)
6,294
7,221
-
7,221
80,211
(6,997)
73,214
72,756
663
73,419
1,519
(13,327)
-
-
1,519
(13,327)
1,432
(9,514)
-
-
1,432
(9,514)
68,403
(6,997)
61,406
64,674
663
65,337
3,10
(8,730)
44
(8,686)
(7,900)
(652)
(8,552)
Profit for the year
59,673
(6,953)
52,720
56,774
11
56,785
Basic earnings
per share
Diluted earnings
per share
11
11
2019
41.98c
41.60c
2018
45.22c
44.94c
120
Origin Enterprises plc Annual Report and Accounts 2019
Consolidated Statement of Comprehensive Income
For the financial year ended 31 July 2019
Profit for the year
Other comprehensive (expense)/ income Items that are not reclassified
subsequently to the Group income statement:
Group/Associate defined benefit pension obligations
- remeasurements on Group’s defined benefit pension schemes
- deferred tax effect of remeasurements
- share of remeasurements on associate’s defined benefit pension schemes
- share of deferred tax effect of remeasurements - associates
2019
€’000
2018
€’000
52,720
56,785
(3,599)
450
(1,668)
284
3,628
(504)
5,865
(997)
Items that may be reclassified subsequently to the Group income statement:
Group foreign exchange translation details
- exchange difference on translation of foreign operations
(3,507)
(1,243)
Group/Associate cash flow hedges
- effective portion of changes in fair value of cash flow hedges
- fair value of cash flow hedges transferred to operating costs and other income
- deferred tax effect of cash flow hedges
- share of associates and joint venture cash flow hedges
- deferred tax effect of share of associates and joint venture cash flow hedges
100
(2,783)
369
727
(91)
1,396
888
(333)
4,827
(603)
Other comprehensive (expense) / income for the year, net of tax
(9,718)
12,924
Total comprehensive income for the year attributable to equity shareholders
43,002
69,709
121
Financial Statements Consolidated Statement of Financial Position
As at 31 July 2019
ASSETS
Non-current assets
Property, plant and equipment
Investment properties
Goodwill and intangible assets
Investments in associates and joint venture
Other financial assets
Derivative financial instruments
Post employment benefit surplus
Deferred tax assets
Total non-current assets
Current assets
Properties held for sale
Inventory
Trade and other receivables
Derivative financial instruments
Restricted cash
Cash and cash equivalents
Total current assets
TOTAL ASSETS
Notes
2019
€’000
2018
€’000
12
13
14
15
16
22
26
23
13
17
18
22
20
108,411
4,221
271,085
47,140
607
-
-
3,620
117,929
11,825
216,334
48,171
450
835
725
3,280
435,084
399,549
24,135
202,806
529,328
2,345
-
111,830
-
194,192
461,199
1,399
500
147,212
870,444
804,502
1,305,528
1,204,051
122
Origin Enterprises plc Annual Report and Accounts 2019
Consolidated Statement of Financial Position - continued
As at 31 July 2019
EQUITY
Called up share capital presented as equity
Share premium
Retained earnings and other reserves
TOTAL EQUITY
LIABILITIES
Non-current liabilities
Interest-bearing borrowings
Deferred tax liabilities
Put option liability
Provision for liabilities
Post employment benefit obligations
Derivative financial instruments
Total non-current liabilities
Current liabilities
Interest-bearing borrowings
Trade and other payables
Corporation tax payable
Provision for liabilities
Derivative financial instruments
Total current liabilities
Notes
2019
€’000
2018
€’000
27
21
23
25
24
26
22
21
19
24
22
1,264
160,498
184,077
1,264
160,422
168,561
345,839
330,247
163,236
23,143
29,607
4,166
1,476
912
165,232
22,171
5,531
8,045
-
46
222,540
201,025
24,190
686,175
11,845
14,452
487
737,149
20,836
638,161
8,143
5,467
172
672,779
TOTAL LIABILITIES
959,689
873,804
TOTAL EQUITY AND LIABILITIES
1,305,528
1,204,051
On behalf of the Board
Rose Hynes
Director
24 September 2019
Tom O’Mahony
Director
24 September 2019
123
Financial Statements
Consolidated Statement of Changes in Equity
For the financial year ended 31 July 2019
Share
capital
€’000
Share
premium
€’000
Treasury
shares
€’000
Capital
redemption
reserve
€’000
Cashflow
hedge
reserve
€’000
Revaluation
reserve
€’000
Share-
based
payment
reserve
€’000
Re-
organisation
reserve
€’000
Foreign
currency
translation
reserve
€’000
Retained
earnings
€’000
Total
€’000
2019
At 1 August 2018
Profit for the year
Other comprehensive
expense for the year
Total comprehensive
expense for the year
Share based
payment charge
Shares issued
Change in fair value of
put option (Note 25)
Dividend paid to
shareholders
1,264 160,422
(8)
134
3,510
12,843
538
(196,884)
(39,319)
387,747 330,247
-
-
-
-
-
-
-
-
-
-
-
76
-
-
-
-
-
-
-
-
-
-
-
-
(1,678)
-
(1,678)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
999
-
-
-
-
-
-
-
-
-
-
-
52,720 52,720
(3,507)
(4,533)
(9,718)
(3,507)
48,187 43,002
-
-
-
-
-
999
-
(2,114)
76
(2,114)
(26,371)
(26,371)
At 31 July 2019
1,264 160,498
(8)
134
1,832
12,843
1,537
(196,884)
(42,826) 407,449 345,839
Share
capital
€’000
Share
premium
€’000
Treasury
shares
€’000
Capital
redemption
reserve
€’000
Cashflow
hedge
reserve
€’000
Revaluation
reserve
€’000
Share-
based
payment
reserve
€’000
Re-
organisation
reserve
€’000
Foreign
currency
translation
reserve
€’000
Retained
earnings
€’000
Total
€’000
2018
At 1 August 2017
1,264 160,422
(8)
134
(2,665)
12,843
358
(196,884)
(38,076)
349,341 286,729
Profit for the year
Other comprehensive
income/ (expense) for
the year
Total comprehensive
income/ (expense)
for the year
Share based payment
charge
Dividend paid to
shareholders
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,175
-
6,175
-
-
-
-
-
-
-
-
-
-
-
-
180
-
-
-
-
56,785
56,785
(1,243)
7,992
12,924
-
(1,243)
64,777
69,709
-
-
-
-
-
180
(26,371)
(26,371)
At 31 July 2018
1,264 160,422
(8)
134
3,510
12,843
538
(196,884)
(39,319)
387,747 330,247
124
Origin Enterprises plc Annual Report and Accounts 2019 Consolidated Statement of Cash Flows
For the financial year ended 31 July 2019
Cash flows from operating activities
Profit before tax
Exceptional items
Finance income
Finance expenses
Profit on disposal of property, plant and equipment
Share of profit of associates and joint venture
Depreciation of property, plant and equipment
Amortisation of intangible assets
Employee share-based payment charge
Pension contributions in excess of service costs
Payment of exceptional rationalisation costs
Payment of exceptional acquisition costs
Operating cash flow before changes in working capital
Movement in inventory
Movement in trade and other receivables
Movement in trade and other payables
Cash generated from operating activities
Interest paid
Income tax paid
Cash inflow from operating activities
Cash flows from investing activities
Proceeds from sale of investment property
Proceeds from sale of property, plant and equipment
Purchase of property, plant and equipment
Additions to intangible assets
Arising on acquisitions
Payment of contingent acquisition consideration
Proceeds from sale of Chemicals division
Payment of put option liability
Restricted cash
Acquisition / loan to associate
Dividends received from associates
Cash outflow from investing activities
Cash flows from financing activities
Drawdown of bank loans
Repayment of bank loans
Shares issued
Payment of dividends to equity shareholders
Cash outflow from financing activities
Net decrease in cash and cash equivalents
Translation adjustment
Cash and cash equivalents at start of year
Notes
15
12
14
8
26
14
24
25
21
2019
€’000
61,406
6,997
(1,519)
13,327
(292)
(6,717)
8,300
11,059
999
(741)
(1,342)
(1,775)
89,702
2018
€’000
65,337
(663)
(1,432)
9,514
(285)
(7,221)
7,451
7,946
180
(852)
(3,334)
(3,688)
72,953
(2,408)
(50,450)
40,118
(28,505)
(58,469)
87,713
76,962
73,692
(11,349)
(12,572)
(6,927)
(10,428)
53,041
56,337
750
1,005
(12,049)
(4,346)
(36,554)
(1,705)
-
(3,594)
500
(4,671)
7,037
-
1,410
(11,602)
(5,645)
(23,857)
(1,627)
5,250
-
(500)
85
2,483
(53,627)
(34,003)
228,996
(238,491)
76
(26,371)
(35,790)
(36,376)
(2,298)
126,559
141,775
(158,155)
-
(26,371)
(42,751)
(20,417)
261
146,715
Cash and cash equivalents at end of year
20,21
87,885
126,559
125
Financial Statements
Group Accounting Policies
Origin Enterprises plc (the ‘Company’) is a company domiciled and incorporated in Ireland. The Company registration
number is 426261 and the Company address is 4-6 Riverwalk, Citywest Business Campus, Dublin 24, Ireland. The
Group’s financial statements for the year ended 31 July 2019 consolidate the individual financial statements of the
Company and its subsidiaries (together referred to as the ‘Group’) and show the Group’s interest in associates and
joint venture using the equity method of accounting.
The Company and Group financial statements of the Company were authorised for issue by the Directors on
24 September 2019.
Statement of compliance
As permitted by Company law and as required by the Rules of the AIM and ESM exchanges, the Group financial
statements have been prepared in accordance with International Financial Reporting Standards (‘IFRSs’) and their
interpretations issued by the International Accounting Standards Board (‘IASB’) as adopted by the EU.
The IFRSs adopted by the EU applied by the Group in the preparation of these financial statements are those that
were effective for accounting periods beginning on or after 1 August 2018.
New IFRS accounting standards and interpretations not yet adopted by the EU and not yet effective
The Group has not applied the following IFRS’s and International Financial Reporting Interpretations Committee
(‘IFRIC’) Interpretations that have not yet been adopted by the EU.
- Amendments to IAS 19 ‘Employee benefits’.
- Amendments to IAS 28 ‘Investments in associates’.
- Annual Improvements to IFRS’s 2015-2017 Cycle.
The Group is currently assessing the impact in relation to the adoption of the above standards and interpretations for
future periods. The Directors assess that at this point they do not believe the standards will have a significant impact
on the financial statements of the Group in future periods.
New IFRS accounting standards and interpretations not yet effective
The Group has not applied the following IFRS’s and International Financial Reporting Interpretations Committee
(‘IFRIC’) Interpretations that have been issued and adopted by the EU but are not yet effective.
- IFRS 16 ‘Leases’.
- IFRIC 23 ‘Uncertainty over Income Tax Treatments’.
- Annual Improvements 2015-2017 Cycle.
- Amendments to IAS 19 ‘Plan Amendment, Curtailment or Settlement’.
- Amendments to IAS 28 ‘Long-term Interests in Associates and Joint Ventures’.
- Amendments to IFRS 9: Applying IFRS 9 ‘Prepayment Features with Negative Compensation’.
None of these will have a significant effect on the financial statements of the Group or parent company, except for
the following:
IFRS 16 ‘Leases’
IFRS 16 ‘Leases’ replaces the existing guidance in IAS 17 ‘Leases’. IFRS 16 eliminates the classification of leases as
either operating leases or finance leases. It introduces a single lessee accounting model, which requires a lessee to
recognise assets and liabilities for all leases with a term of more than 12 months and to recognise depreciation of
lease assets separately from interest on lease liabilities in the income statement. The Group will apply the standard
from its mandatory adoption date of 1 August 2019.
As a result of the transition to IFRS 16, the fair value of these leases representing the present value of the lease
payments over the expected lease contract period will be recognised as a Right of Use Asset with a corresponding value
recognised as a lease liability. The Group is currently assessing the impact of IFRS 16 and estimates that the value of right-
of-use assets and the corresponding lease liability will be approximately €39.0 million to €43.0 million at transition date
on 1 August 2019.
126
Origin Enterprises plc Annual Report and Accounts 2019 Group Accounting Policies - continued
New IFRS accounting standards and interpretations not yet effective - continued
IFRS 16 ‘Leases’ - continued
The Group has decided to reduce the complexity of implementation by availing of a number of practical expedients,
including expedients for low value and short term leases, on transition on 1 August 2019. The Group will apply
the simplified transition approach and will not restate comparative amounts for the year prior to first adoption.
Information on the Group’s leases currently classified as operating leases is provided in Note 30.
New IFRS accounting standards and interpretations adopted in 2018/19
During the year ended 31 July 2019, the Group adopted the below amendments to International Financial Reporting
Standards (‘IFRS’), International Accounting Standards (‘IAS’) and the International Financial Reporting Interpretation
Committee (‘IFRIC’) pronouncements.
None of these have a material impact on the consolidated results or financial position of the Group:
- IFRS 9 ‘Financial Instruments’.
- IFRS 15 ‘ Revenue from Contracts with Customers’.
- IFRIC Interpretation 22 ‘Foreign Currency Translations and Advance Consideration’.
- Annual Improvements to IFRS’s 2014-2016 Cycle– Amendments to IFRS 1 and IAS 28.
- Amendments to IFRS 2 ‘Classification and Measurement of Share-based Payment Transactions’.
- Amendments to IFRS 4: Applying IFRS 9 ‘Financial Instruments’ with IFRS 4 ‘Insurance Contracts’.
- Amendments to IAS 40 ‘Transfers of Investment Property’.
None of these have had a significant effect on the financial statements of the Group, except for the following:
IFRS 9 ‘Financial Instruments’
From 1 August 2018, the Group has adopted IFRS 9 ‘Financial Instruments’ (‘IFRS 9’), which replaces the existing
guidance in IAS 39 ‘Financial Instruments: Recognition and Measurement’, from 1 August 2018. This standard replaces
IAS 39 that relates to the recognition, classification and measurement of financial assets and financial liabilities, de-
recognition of financial instruments, impairment of financial assets and hedge accounting.
IFRS 9 eliminates the previous IAS 39 categories for financial assets of held-to-maturity, loans and receivables and
available-for-sale. Under IFRS 9, on initial recognition, a financial asset is classified as measured at amortised cost
or fair value through other comprehensive income (“FVTOCI”), or fair value through profit or loss (“FVTPL”). This
classification is dependent on the business model for managing the financial assets and on whether the cash flows
represent solely the payment of principal and interest. The Group has quantified the impact on its consolidated
financial statements resulting from the application of IFRS 9. The vast majority of financial assets held by the Group
are trade receivables and cash.
On adoption of IFRS 9 ‘Financial Instruments’ at 1 August 2018, the Group’s management assessed the impact to the
financial assets held by the Group and classified its financial instruments into the appropriate IFRS 9 categories as follows:
Trade and other receivables
Cash and cash equivalents
Other financial assets
Previous classification
as per IAS 39
Loans and receivables
Loans and receivables
Loans and receivables
Updated classification
as per IFRS 9
Amortised cost
Amortised cost
Amortised cost
Value at 1 Aug 2018
€’000
440,703
147,212
450
Trade receivables and cash will be accounted for at amortised cost as the Group’s business model is to hold the
financial asset to collect contractual cash flows. IFRS 9 introduces a forward looking expected credit losses model,
rather than the current incurred loss model, when assessing the impairment of financial assets in the scope of IFRS
9. Given historic loss rates and normal receivable ageing, the move from an incurred loss model to an expected loss
model has not had a material impact.
The adoption of IFRS 9 ‘Financial Instruments’ has not had a significant impact on the Group’s accounting policies
related to financial liabilities and derivative financial instruments. IFRS 9 - ‘Financial Instruments’ requires that when
a financial liability measured at amortised cost is modified without being derecognised, a gain or loss should be
recognised in the income statement. This change in accounting policy did not have a material impact on the Group’s
financial results.
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Financial Statements
Group Accounting Policies - continued
New IFRS accounting standards and interpretations adopted in 2018/19 - continued
IFRS 9 ‘Financial Instruments’ - continued
The Group has elected to adopt the new general hedge accounting model in IFRS 9. The new hedge accounting
does not have an impact on the Group’s accounting for hedging instruments. On this basis, the classification and
measurement changes do not have a material impact on the Group’s consolidated financial statements.
The impact of adopting IFRS 9 on the consolidated financial statements was not material for the Group and there was
no adjustment to retained earnings on application at 1 August 2018. In line with the transition guidance in IFRS 9 the
Group has not restated the 2018 prior year results on adoption.
IFRS 15 ‘Revenue from Contracts with Customers’
The Group has adopted IFRS 15 ‘Revenue from Contracts with Customers’ (“IFRS 15”), which replaces the existing
guidance in IAS 18 ‘Revenue’, from 1 August 2018. The core principle of IFRS 15 is that an entity should recognise
revenue to depict the transfer of promised goods or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in exchange for those goods or services. Under IFRS 15,
an entity recognises revenue when (or as) a performance obligation is satisfied i.e. when ‘control’ of the goods
underlying the particular performance obligation is transferred to the customer.
Legal title of goods sold is transferred on agreed contracted terms between parties, and generally, there is one
performance obligation in each of the Group’s sale contracts resulting in the recognition of revenue at a point in
time. Based on the Group’s contractual and trading relationships, the impact of adopting IFRS 15 on the consolidated
financial statements was not material for the Group and there was no adjustment to retained earnings on application
at 1 August 2018.
The Group adopted IFRS 15 using the modified retrospective approach on 1 August 2018. The Group carried out
a review of existing contractual arrangements and determined that there was no material impact for the Group’s
revenue streams. The adoption of IFRS 15, ‘Revenue from contracts with customers’ resulted in a change to the
Group’s accounting policy for revenue recognition which is outlined below.
Basis of preparation
The consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS) and IFRS Interpretation Committee (IFRS IC) interpretations as adopted by the European Union and
those parts of the Companies Act 2014 applicable to companies reporting under IFRS.
The Directors have elected to prepare the Company financial statements in accordance with FRS 102, The Financial
Reporting Standard applicable in the UK and Republic of Ireland.
The financial statements have been prepared on the going concern basis of accounting and under the historical
cost convention, as modified by the revaluation of investment properties, and certain financial assets and financial
liabilities (including derivative instruments) at fair value through profit or loss.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Company’s and
Group’s accounting policies. Areas involving a higher degree of judgement or complexity, or areas where assumptions
and estimates are significant to the consolidated financial statements are disclosed in Note 33.
Basis of consolidation
The Group financial statements reflect the consolidation of the results, assets and liabilities of the parent
undertaking, the Company and all of its subsidiaries, together with the Group’s share of profits/losses of associates
and joint ventures. Where a subsidiary, associate or joint venture is acquired or disposed of during the financial year,
the Group financial statements include the attributable results from, or to, the effective date when control passes,
or, in the case of associates and joint ventures, when joint control or significant influence is obtained or ceases.
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Origin Enterprises plc Annual Report and Accounts 2019 Group Accounting Policies - continued
Basis of consolidation - continued
Subsidiary undertakings
Subsidiaries are all entities (including special purpose entities) over which the Group has control. The Group controls
an entity when the Group is exposed to, or has right to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power over the entity. Subsidiaries are consolidated from the date on
which control is transferred to the Group and are deconsolidated at the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the Group. The consideration
transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and
the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability
resulting from a contingent consideration arrangement. Acquisition related costs are expensed as incurred.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date. On an acquisition by acquisition basis, the Group recognises any
non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of
the acquiree’s net assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the
acquisition date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net
assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in
the case of a bargain purchase, the difference is recognised directly in the Consolidated Income Statement
The anticipated acquisition method of accounting is applied in relation to option arrangements entered into with
minority shareholders whereby the non-controlling interest is not recognised but rather treated as already acquired by
the Group 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, pricing
and timing of option contracts, significant risks and rewards are deemed to have transferred to Origin.
Associates and joint ventures
Associates are those entities in which the Group has significant influence over, but not control of, the financial and
operating policy decisions. Joint ventures are those entities over which the Group has joint control, established by
contractual agreement and requiring unanimous consent for strategic, financial and operating decisions. Investments
in associates and joint ventures are accounted for using the equity method of accounting.
Under the equity method of accounting, the Group’s share of the post-acquisition profits or losses of its associates
and joint ventures is recognised in the Consolidated Income Statement. The income statement reflects, in profit
before tax, the Group’s share of profit after tax of its associates and joint ventures in accordance with IAS 28,
‘Investments in Associates and Joint Ventures’.
The Group’s interest in their net assets is included as investments in associates and joint ventures in the Consolidated
Statement of Financial Position at an amount representing cost at acquisition plus the Group’s share of post
acquisition retained income and expenses. The Group’s investment in associates and joint ventures includes goodwill
on acquisition. The amounts included in the financial statements in respect of the post acquisition income and
expenses of associates and joint ventures are taken from their latest financial statements prepared up to their
respective year ends, together with management accounts for the intervening periods to the Group’s year end.
The fair value of any investment retained in a former subsidiary is regarded as a cost on initial recognition of an
investment in an associate or joint venture. Where necessary, the accounting policies of associates and joint ventures
have been changed to ensure consistency with the policies adopted by the Group.
Transactions eliminated on consolidation
Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group
transactions, are eliminated in preparing the Group financial statements. Unrealised gains and income and expenses
arising from transactions with associates and joint ventures are eliminated to the extent of the Group’s interest in the
entity. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that they do not
provide evidence of impairment.
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Financial Statements Group Accounting Policies - continued
Rebates
Rebates are a feature of commercial arrangements with certain suppliers. Rebates received and receivable are
deducted from cost of sales in the income statement at the year end and the group is required to calculate rebates
receivable due from suppliers for volume based rebates. The calculation takes into account current performance,
historical data for prior years and a review of the terms contained within supplier contracts. Rebates receivable are
included within trade and other receivables in Note 18.
Revenue recognition applicable after 1 August 2018
Revenue represents the fair value of the sale consideration received for the goods supplied to third parties, after
deducting discounts and settlement price adjustments estimated based on individual customer arrangements and
historical experience and exclusive of value added tax.
Revenue is recognised when control of the products has transferred, which is usually upon shipment, or in line with
terms agreed with individual customers. In general, revenue is recognised to the extent that the Group has satisfied
its performance obligations to the buyer and the buyer has obtained control of the goods. Revenues are recorded
when there is no unfulfilled obligation on the part of the Group.
Revenues are recorded based on the price specified in the sales invoices/ contracts net of actual and estimated
returns, settlement price adjustments, rebates and any discounts granted and in accordance with the terms of sale.
Accumulated experience is used to estimate returns, rebates and discounts using the expected value method and
revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. Estimated
settlement price adjustments and discounts granted to customers are classified as a reduction of revenues and
netted off the related trade receivable balances in Note 18. Further details of the estimation involved in determining
settlement price adjustments at year end is included in Note 33.
Revenue recognition applicable before 1 August 2018
Revenue represents the fair value of the sale consideration received for the goods supplied to third parties, after
deducting discounts and settlement price adjustments estimated based on individual customer arrangements and
historical experience and exclusive of value added tax. Revenue is recognised when the significant risks and rewards
of ownership of the goods have passed to the buyer, it is probable that the economic benefits will flow to the Group
and the amount of revenue can be measured reliably. Estimated settlement price adjustments and discounts granted
to customers are classified as a reduction of revenues and netted off the related trade receivable balances in Note 18.
Further details of the estimation involved in determining settlement price adjustments at year end is included in Note 33.
Segmental reporting
An operating segment is a component of the Group that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s
other components. All operating segments’ operating results are reviewed regularly by the Group’s Chief Operating
Decision Maker, being the Origin Executive Directors, to make decisions about resources to be allocated to segments
and to assess performance, and for which discrete financial information is available.
The Group has three operating segments: Ireland and UK, Continental Europe and Latin America (see Note 1 for further
information). Segment assets and liabilities consist of property, plant and equipment, goodwill and intangible assets
and other assets and liabilities that can be reasonably allocated to the reported segment. Unallocated assets and
liabilities principally include current and deferred income tax balances together with financial assets and liabilities.
Employee benefits
Group companies operate various pension schemes. The schemes are generally funded through payments to
insurance companies or trustee administered funds, determined by periodic actuarial calculations.
Pension obligations / surplus
Obligations for contributions to defined contribution pension plans are recognised as an expense in the Consolidated
Income Statement as the related employee service is received. The Group’s net obligation in respect of defined
benefit pension plans is calculated, separately for each plan, by estimating the amount of future benefit that
employees have earned in return for their service in the current and prior periods; that benefit is discounted to
determine the present value, and the fair value of any plan assets is deducted.
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Origin Enterprises plc Annual Report and Accounts 2019 Group Accounting Policies - continued
Employee benefits - continued
Pension obligations / surplus - continued
The discount rate is the yield at the year end date on high quality corporate bonds that are denominated in the
currency in which the benefits will be paid and that have maturity dates approximating the terms of the Group’s
obligations. The calculation is performed by a qualified actuary using the projected unit credit method. Fair value is
based on market price information, and in the case of quoted securities is the published bid price.
Defined benefit costs are categorised as: (1) service costs; (2) net interest expense or income; and (3)
remeasurement. Service cost includes current and past service cost as well as gains and losses on curtailments and
settlements; it is included in operating profit. Past service cost is recognised in profit or loss in the period of a plan
amendment. Net interest, is calculated by applying the discount rate to the net defined benefit asset or liability at the
beginning of the year; it is included in finance costs.
Remeasurement is comprised of the return on plan assets other than interest at the discount rate and actuarial gains
and losses; it is recognised in other comprehensive income in the period in which it arises and is not subsequently
reclassified to profit or loss. Settlement gains or losses, where they arise, are recognised in the Consolidated Income
Statement as exceptional items.
Long-Term Incentive Plans
The Group has established the ‘2015 Origin Long Term Incentive Plan’ (‘the 2015 LTIP Plan’).
All equity instruments issued under the 2015 LTIP Plan are equity settled share-based payments as defined in IFRS 2,
‘Share-based Payments’. The fair value of equity instruments issued is recognised as an expense with a corresponding
increase in equity. The fair value is measured at grant date and spread over the period during which the employees
become unconditionally entitled to the equity instrument. The fair value of the equity instruments issued is measured
taking into account the market related vesting conditions under which the equity instruments were issued. The plans
are subject to non-market vesting conditions and, therefore, the amount recognised as an expense is adjusted to
reflect the actual number of equity instruments that are expected to vest.
As explained further in Note 9, the Group has implemented a long term incentive plan which operates in a similar way
to a long-term cash bonus. At each balance sheet date, the related provision is calculated based on the estimated
fair value of the obligation resulting from applying a straight line charge approach to the estimated final cash
obligation over the term of the award (3 years). Remeasurements are recognised immediately through profit or loss.
Taxation
Income tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the
Consolidated Income Statement except to the extent that it relates to items recognised directly in other
comprehensive income, in which case the related tax is also recognised in the Consolidated Statement of
Comprehensive Income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates and laws that have been
enacted or substantially enacted at the year end date, and any adjustment to tax payable in respect of previous years.
The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining
the Group’s provision for income taxes. There are many transactions and calculations for which the ultimate tax
determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated
tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these
matters is different from the amounts that were initially recorded, such differences will impact the income tax and
tax provisions in the period in which such determination is made.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying
amount of assets and liabilities, using tax rates enacted or substantively enacted at the year end date.
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Financial Statements
Group Accounting Policies - continued
Taxation - continued
If a temporary difference arises from initial recognition of an asset or liability in a transaction other than a business
combination that at the time of the transaction does not affect accounting or taxable profit or loss, no deferred tax
is recognised. Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates
and joint venture, except where the timing of the reversal of the temporary difference is controlled by the Group and
it is probable that the temporary difference will not reverse in the foreseeable future.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available
against which the asset can be recovered. Deferred tax assets are reduced to the extent that it is no longer probable
that the related tax benefit will be realised.
Foreign currency
Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies at the year end date are translated to functional
currency at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are
recognised in the Consolidated Income Statement.
The assets and liabilities of foreign operations, including goodwill and fair value adjustments, are translated to euro
at the foreign exchange rates ruling at the year end date. The revenues and expenses of foreign operations are
translated to euro at the average exchange rates. Foreign exchange differences arising on translation of the net
assets of a foreign operation are recognised directly in the Consolidated Statement of Comprehensive Income, in
a translation reserve. Exchange gains or losses on long-term intra-Group loans that are regarded as part of the net
investment in non-euro denominated operations, are taken to the translation reserve to the extent that they are
neither planned nor expected to be repaid in the foreseeable future.
Dividends
Dividends are recognised in the period in which they are approved by the Company’s shareholders, or in the case of
an interim dividend, when it has been approved by the Board of Directors and paid.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and impairment losses. Other
subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the item
of property, plant and equipment. All other expenditure including repairs and maintenance costs is recognised in
the income statement as an expense as incurred. Depreciation is calculated to write off the cost less estimated
residual value of property, plant and equipment, other than freehold land, on a straight line basis, by reference to the
following estimated useful lives:
Buildings
Plant and machinery
Motor vehicles
20 to 50 years
3 to 15 years
3 to 7.5 years
The residual value of assets, if significant, and the useful life of assets is reassessed annually.
Gains and losses on disposals of property, plant and equipment are recognised on the completion of sale. Gains and
losses on disposals are determined by comparing the proceeds received with the carrying amount and are included in
operating profit.
Investment properties
Investment property, principally comprising land, is held for capital appreciation. Investment property is stated at fair
value. The fair value is based on the price that would be received to sell the asset in an orderly transaction between
market participants at the measurement date. Any gain or loss arising from a change in fair value is recognised in the
Consolidated Income Statement. When property is transferred to investment property following a change in use, any
difference arising at the date of transfer between the carrying amount of the property immediately prior to transfer
and its fair value is recognised in equity if it is a gain unless the increase reverses a previous impairment loss in that
property in which case the increase is recognised in profit or loss.
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Origin Enterprises plc Annual Report and Accounts 2019
Group Accounting Policies - continued
Investment properties - continued
Upon disposal of the property, the gain would be transferred to retained earnings in equity. Any loss arising in this
manner, unless it represents the reversal of a previously recognised gain, would be recognised immediately in the
Consolidated Income Statement. Investment properties are disclosed as a Level 3 fair value if one or more of the
significant inputs is not based on observable market data and as a Level 2 fair value where all significant inputs
required to fair value the investment properties are observable.
Properties held for sale
Non-current assets that are expected to be recovered principally through sale rather than continuing use and meet
the IFRS 5 criteria are classified as held for sale. These assets are shown in the balance sheet at the lower of their
carrying amount and fair value less any costs to sell. Impairment losses on initial classification as non-current assets
held for sale and subsequent gains or losses on re-measurement are recognised in the income statement.
Leased assets
Leases, where a significant portion of the risks and rewards of ownership are retained by the lessor, are classified as
operating leases. Payments made under operating leases are charged to the Consolidated Income Statement on a
straight line basis over the lease term.
Leases, where the Group has substantially all the risks and rewards of ownership, are classified as finance leases.
Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased asset or
the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges,
are included in interest-bearing loans and borrowings. The interest element of the payments is charged to the
Consolidated Income Statement over the lease period so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period. The asset acquired under the finance lease is depreciated over the
shorter of the useful life of the asset or the lease term.
Business combinations and goodwill
All business combinations are accounted for by applying the acquisition method. Goodwill represents amounts
arising on acquisition of subsidiaries, associates and the joint venture. In respect of acquisitions that have occurred
since 1 August 2005, goodwill represents the difference between the cost of the acquisition and the fair value of
the net identifiable assets acquired. In respect of acquisitions prior to this date, goodwill is included on the basis
of its deemed cost, i.e. original cost less accumulated amortisation from the date of acquisition up to 31 July 2005,
which represents the amount recorded under Irish GAAP. Goodwill is now stated at cost or deemed cost less any
accumulated impairment losses. In respect of associates and the joint venture, the carrying amount of goodwill is
included in the carrying amount of the investment.
Contingent acquisition consideration
Any contingent consideration to be transferred by the group is recognised at fair value at the acquisition date and
classified as a financial liability or as equity in accordance with IAS 32. Subsequent changes to the fair value of the
contingent consideration that is deemed to be a liability are recognised in accordance with IFRS 9 in profit or loss.
Contingent consideration that is classified as equity is not remeasured and its subsequent settlement is accounted
for within equity.
Deferred acquisition consideration
To the extent that deferred acquisition consideration is payable after more than one year from the date of
acquisition, it is discounted at an appropriate loan interest rate and accordingly, carried at net present value on
the Consolidated Statement of Financial Position. An appropriate interest charge, using the Group’s incremental
cost of capital, at a constant rate on the carrying amount adjusted to reflect market conditions, is reflected in the
Consolidated Income Statement over the earnout period, increasing the carrying amount so that the obligation will
reflect its settlement at the time of maturity.
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Financial Statements Group Accounting Policies - continued
Intangible assets
Intangible assets acquired as part of a business combination are initially recognised at fair value being their deemed
cost as at the date of acquisition. These generally include brand and customer related intangible assets. Computer
software that is not an integral part of an item of computer hardware is also classified as an intangible asset. Where
intangible assets are separately acquired, they are capitalised at cost. Cost comprises purchase price and other
directly attributable costs.
Internally generated intangible assets are recognised when the following can be demonstrated;
- the technical feasibility of completing the intangible asset so that it will be available for use or sale,
- its intentions to complete the development,
- its ability to use or sell the intangible asset,
- its ability to generate future economic benefits,
- the availability of resources to complete the development; and
- its ability to measure reliably the expenditure attributable to the intangible asset during its development.
Intangible assets with finite lives are amortised over the period of their expected useful lives in equal annual
instalments, as follows:
Brands
Customer related
Supplier agreements
Developed technology
Computer and ERP related
up to 20 years
up to 20 years
up to 20 years
up to 10 years
3 to 10 years
Subsequent to initial recognition, intangible assets are stated at cost less accumulated amortisation and impairment
losses incurred.
Impairment
The carrying amounts of the Group’s assets, other than inventories (which are carried at the lower of cost and net
realisable value), deferred tax assets (which are recognised based on recoverability), investment properties (which
are carried at fair value), and financial instruments (which are carried at fair value), are reviewed to determine
whether there is an indication of impairment when an event or transaction indicates that there may be. If any such
indication exists, an impairment test is carried out and the asset is written down to its recoverable amount. An
impairment test is carried out annually on goodwill.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its
recoverable amount. Impairment losses are recognised in the Consolidated Income Statement. Impairment losses
recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill
allocated to the cash-generating unit and then, to reduce the carrying amount of the other assets in the unit on a
pro rata basis. An impairment loss, other than in the case of goodwill, is reversed if there has been a change in the
estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the
asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation
or amortisation, if no impairment loss had been recognised.
Inventory
Inventory is stated at the lower of cost and net realisable value. Cost is determined at either the first-in, first-out
(FIFO) method or the weighted average method, depending on the inventory type. Cost includes all expenditure,
which has been incurred in the normal course of business in bringing the products to their present location and
condition. Net realisable value is the estimated selling price of inventory on hand less all further costs to completion
and all costs expected to be incurred in marketing, distribution and selling.
Cash and cash equivalents
Cash and cash equivalents in the Consolidated Statement of Financial Position comprise cash at bank and in hand and
call deposits.
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Origin Enterprises plc Annual Report and Accounts 2019 Group Accounting Policies - continued
Cash and cash equivalents - continued
Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are
included as a component of cash and cash equivalents for the purpose of the Consolidated Statement of Cash Flows.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown
in equity as a deduction from the proceeds.
Financial assets and liabilities
Trade and other receivables (before 1 August 2018)
Trade and other receivables are initially measured at fair value and are, thereafter, measured at amortised cost
using the effective interest method, less any provision for impairment. Trade and other receivables are discounted
when the time value of money is considered material. A provision is established for irrecoverable amounts when
there is objective evidence (including a customer going into liquidation or receivership, the commencement of legal
proceedings or poor payment history) that amounts due under the original payment terms will not be collected.
Financial assets are derecognised when the rights to receive cashflows from the investments have expired or
have been transferred and the group have transferred substantially all risks and rewards of ownership. Where
risks associated with receivables are transferred out of the Group under receivables purchase agreements, such
receivables are recognised in the Statement of Financial Position to the extent of the Group’s continued involvement
and retained risk.
Trade and other receivables (after 1 August 2018)
From 1 August 2018 trade and other receivables are recognised initially at fair value and subsequently measured at
amortised cost using the effective interest method, less loss allowance.
The group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected
loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have been grouped
based on shared credit risk characteristics and the days past due. The expected loss rates are based on payment
profiles of sales and the corresponding historical credit loss experience.
Short-term bank deposits
Short-term bank deposits of greater than three months maturity which do not meet the definition of cash and
cash equivalents are classified as loans and receivables within current assets and stated at amortised cost in the
Consolidated Statement of Financial Position.
Trade and other payables
Trade and other payables are recognised initially at fair value and are subsequently measured at amortised cost, using
the effective interest method.
Derivatives
All derivatives are initially recorded at fair value on the date the contract is entered into and subsequently, at
reporting dates remeasured to their fair value. Fair value is the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at the measurement date. The gain or
loss arising on remeasurement is recognised in the income statement except where the instrument is a designated
hedging instrument.
Derivative financial instruments are used to manage the Group’s exposure to foreign currency risk and interest
rate risk through the use of forward currency contracts and interest rate swaps. These derivatives are generally
designated as cash flow hedges, as the purpose is to hedge a particular risk associated with a highly probable
forecast transaction. The Group does not enter into speculative derivative transactions.
Put option liability
Where put/call option agreements are in place in respect of shares held by non-controlling shareholders, the liability
is measured in accordance with the requirements of IAS 32 and IFRS 9 and is stated at fair value. Such liabilities are
shown as current or non-current financial liabilities in the Consolidated Statement of Financial Position.
135
Financial Statements Group Accounting Policies - continued
Financial assets and liabilities - continued
Put option liability - continued
At the time of acquisitions, and where the group has issued a put option over shares held by a non-controlling interest,
the group derecognises the non-controlling interests and instead recognises a contingent deferred consideration
liability for the estimated amount likely to be paid to the non-controlling interest on the exercise of those options.
Movements in the estimated liability in respect of put options are recognised in other comprehensive income.
Cash flow hedges
Subject to the satisfaction of certain criteria, relating to the documentation of the risk, objectives and strategy for
the hedging transaction and the ongoing measurement of its effectiveness, cash flow hedges are accounted for under
hedge accounting rules. In such cases, any unrealised gain or loss arising on the effective portion of the derivative
instrument is recognised in the cash flow hedging reserve, a separate component of equity. Unrealised gains or losses
on any ineffective portion of the derivative are recognised in the income statement. When the hedged transaction
occurs the related gains or losses in the hedging reserve are transferred to the Consolidated Income Statement.
Hedge accounting is discontinued when a hedging instrument expires or is sold, terminated or exercised, or no
longer qualifies for hedge accounting. The cumulative gain or loss at that point remains in equity and is recognised
in accordance with the above policy when the transaction occurs. If a hedged transaction is no longer expected
to occur, the net cumulative gain or loss recognised in other comprehensive income is transferred to the income
statement in the period.
Interest-bearing loans and borrowings
Interest-bearing loans and borrowings are recognised initially at fair value less attributable transaction costs.
Subsequent to initial recognition, interest-bearing loans and borrowings are stated at amortised cost using an
effective interest rate method.
Finance lease liabilities
Fair value for disclosure purposes is based on the present value of future cash flows discounted at appropriate
current market rates.
Exceptional items
The Group has adopted an income statement format which seeks to highlight significant items within the Group
results for the year. The Group believes that this presentation provides a more informative analysis as it highlights
one off items. Such items may include significant restructuring costs, acquisition related costs, organisation redesign
costs, profit or loss on disposal or termination of operations, profit or loss on disposal of property, plant and
equipment, profit or loss on disposal of investments, changes in fair value of investment properties, changes in fair
value of put option liabilities, settlement gains or losses on defined benefit plans, claims and significant impairment
of assets. Judgement is used by the Group in assessing the particular items, which by virtue of their scale and nature,
should be disclosed in the Consolidated Income Statement and related Notes as exceptional items.
Borrowing costs
Finance expenses comprise interest expense on borrowings. All borrowing costs are recognised in the Consolidated
Income Statement using the effective interest method.
Provisions
A provision is recognised in the Consolidated Statement of Financial Position when the Group has a present legal or
constructive obligation as a result of a past event, it is probable that an outflow of economic benefits will be required
to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate
that reflects current market assessments of the time value of money and, where appropriate, the risks specific to
the liability.
Finance income
Finance income is recognised using the effective interest method.
136
Origin Enterprises plc Annual Report and Accounts 2019 Notes to the Group Financial Statements
1 Segment information
IFRS 8, ‘Operating Segments’, requires operating segments to be identified on the basis of internal reports that
are regularly reviewed by the Chief Operating Decision Maker (‘CODM’) in order to allocate resources to the
segments and to assess their performance.
The Group has three operating segments as follows:
Ireland and the United Kingdom
This segment includes the Group’s wholly owned Irish and UK based Business-to-Business Agri-Inputs operations,
Integrated Agronomy and On-Farm Services operations and Digital Agricultural Services business. In addition, this
segment includes the Group’s associate and joint venture undertakings.
Continental Europe
This segment includes the Group’s Business-to-Business Agri-Inputs operations, Integrated Agronomy and On-
Farm Services operations in Poland, Romania, Belgium and the Ukraine.
Latin America
Origin entered the Latin American market in August 2018 through the acquisition of Fortgreen, a business which
is focused on the development and marketing of value added crop nutrition and speciality inputs and which is
headquartered in Paraná State in southern Brazil.
Information regarding the results of each reportable segment is included below. Performance is measured based
on segment operating profit as included in the internal management reports that are reviewed by the Group’s
CODM, being the Origin Executive Directors. Segment operating profit is used to measure performance, as this
information is the most relevant in evaluating the results of the Group’s segments.
Segment results, assets and liabilities include all items directly attributable to a segment.
Segment capital expenditure is the total amount incurred during the period to acquire segment assets that are
expected to be used for more than one accounting period.
137
Financial Statements Notes to the Group Financial Statements
1 Segment information – continued
(a) Analysis by segment
(i) Segment revenue and result
Ireland and the UK
Continental Europe
Latin America
Total Group
2019
€’000
2018
€’000
2019
€’000
2018
€’000
2019
€’000
2018
€’000
2019
€’000
2018
€’000
Total revenue
1,563,259
1,395,377
605,204
589,480
33,556
- 2,202,019 1,984,857
Less revenue from
associates and joint
venture
(403,822)
(357,324)
-
-
-
Revenue
1,159,437 1,038,053 605,204
589,480
33,556
Segment result
59,976
54,752
14,212
16,438
8,075
Profit from
associates and joint
venture
Amortisation of non-
ERP intangible assets
Operating profit
before exceptional
items
Exceptional items
Operating profit
6,717
7,221
-
-
-
(4,328)
(3,863)
(1,884)
(1,792)
(2,557)
62,365
1,509
63,874
58,110
(17)
58,093
12,328
(7,604)
4,724
14,646
680
15,326
5,518
(902)
4,616
-
-
-
-
-
-
-
-
(403,822)
(357,324)
1,798,197
1,627,533
82,263
71,190
6,717
7,221
(8,769)
(5,655)
80,211
(6,997)
73,214
72,756
663
73,419
(ii) Segment earnings before financing costs and tax is reconciled to reported profit before tax and profit after
tax as follows:
Operating profit
Finance income
Finance expense
Reported profit before tax
Income tax
Reported profit after tax
73,214
1,519
(13,327)
61,406
(8,686)
52,720
73,419
1,432
(9,514)
65,337
(8,552)
56,785
138
Origin Enterprises plc Annual Report and Accounts 2019
Notes to the Group Financial Statements
1 Segment information – continued
(a) Analysis by segment - continued
(iii) Segment assets
Ireland and the UK
Continental Europe
Latin America
Total Group
2019
€’000
2018
€’000
2019
€’000
2018
€’000
2019
€’000
2018
€’000
2019
€’000
2018
€’000
604,267
582,718
430,743
419,486
104,976
-
1,139,986 1,002,204
Assets excluding
investment in
associates and joint
venture
Investment in
associates and joint
venture (including
other financial
assets)
Segment assets
650,855
631,339
430,743
419,486
106,135
46,588
48,621
-
-
1,159
-
-
47,747
48,621
1,187,733 1,050,825
Reconciliation to total assets as reported in Consolidated Statement of Financial Position
Cash and cash equivalents
Restricted cash
Derivative financial instruments
Deferred tax assets
111,830
147,212
-
2,345
3,620
500
2,234
3,280
Total assets as reported in Consolidated Statement of Financial Position
1,305,528 1,204,051
(iv) Segment liabilities
Ireland and the UK
Continental Europe
Latin America
Total Group
2019
€’000
2018
€’000
2019
€’000
2018
€’000
2019
€’000
2018
€’000
2019
€’000
2018
€’000
Segment liabilities
405,557
405,631
279,675
251,573
50,644
-
735,876
657,204
Reconciliation of total liabilities as reported in Consolidated Statement of Financial Position
Interest-bearing loans and liabilities
Derivative financial instruments
Current and deferred tax liabilities
Total liabilities as reported in Consolidated Statement of Financial Position
187,426
186,068
1,399
218
34,988
30,314
959,689
873,804
139
Financial Statements
Notes to the Group Financial Statements
1 Segment information – continued
(a) Analysis by segment – continued
(v) Other segment information
Ireland and the UK
Continental Europe
Latin America
Total Group
2019
€’000
5,251
2018
€’000
5,225
2019
€’000
2,778
2018
€’000
2,226
2019
€’000
271
6,607
6,155
1,884
1,791
2,568
1,509
(17)
(7,604)
680
(902)
8,905
5,314
2,472
6,314
561
2,796
2,689
551
519
5
11,701
8,003
3,023
6,833
566
2018
€’000
-
-
-
-
-
-
2019
€’000
8,300
2018
€’000
7,451
11,059
7,946
(6,997)
663
11,938
11,628
3,352
3,208
15,290
14,836
Depreciation
Intangible
amortisation
Exceptional items
(Note 3)
Capital expenditure
– property, plant and
equipment
Capital expenditure
– ERP and computer
intangibles
Total capital
expenditure
(b) Analysis by geography
Ireland and the UK
Continental Europe
Latin America
Total Group
2019
€’000
2018
€’000
2019
€’000
2018
€’000
2019
€’000
2018
€’000
2019
€’000
2018
€’000
Revenue
Assets
1,159,437 1,038,053
605,204
589,480
33,556
651,693
631,339
430,743
419,486 105,297
IFRS 8 non-current
assets*
277,841
303,160
79,849
91,549
73,774
-
-
-
1,798,197
1,627,533
1,187,733 1,050,825
431,464
394,709
*The total non-current assets in the UK are €236.2 million (2018: €239.6 million).
140
Origin Enterprises plc Annual Report and Accounts 2019
Notes to the Group Financial Statements
2 Operating costs
Distribution expenses
Administration expenses
Amortisation of non-ERP related intangible assets
Exceptional items (Note 3)
2019
€’000
103,523
85,048
8,769
197,340
6,574
203,914
2018
€’000
89,923
76,494
5,655
172,072
(663)
171,409
3 Exceptional items
Exceptional items are those that, in management’s judgement, should be separately presented and disclosed by
virtue of their nature or amount. Such items are included within the Consolidated Income Statement caption to
which they relate. The following exceptional items arose during the year:
Pension and rationalisation related costs (i)
Transaction related costs (ii)
Impairment in Ukraine investment, net of put option settlement (iii)
Write down on property, plant and equipment (iv)
Fair value adjustment of investment properties and properties held for sale (iv)
Gain on disposal of business (vi)
Total exceptional (charge)/credit before tax before associates and joint venture
Arising in associates and joint venture (v)
Total exceptional (charge)/credit before tax including associates and joint venture
Tax credit /(charge) on exceptional items
Total exceptional (charge)/credit after tax
2019
€’000
(426)
(273)
(7,455)
(4,100)
5,680
-
(6,574)
(423)
(6,997)
44
(6,953)
2018
€’000
(876)
(2,560)
79
-
2,150
1,870
663
-
663
(652)
11
(i) Pension and rationalisation related costs
Rationalisation costs include the compensation and termination payments from restructuring programmes across
the Group. This exceptional charge also includes past service costs in respect of the defined benefit pension
scheme. The tax impact of this exceptional item in the current year is a tax credit of €0.1 million (2018: €0.2 million).
(ii) Transaction related costs
Transaction related costs principally comprise costs incurred in relation to the acquisitions completed during the
year, net of a credit relating to a movement in contingent consideration of €1.1 million. The tax impact of this item
in the current year was a tax credit of €nil (2018: €0.2 million).
(iii) Impairment in Ukraine investment, net of put option settlement
At 31 July 2019 the Directors re-assessed the valuation of goodwill and intangible assets based on the trading results
for the financial year and the forecast trading environment for the Ukrainian business. Following the re-assessment,
an impairment of €7.9 million was booked against the carrying value of the Ukraine investment (Note 14) and a write
down of €1.5 million of part of the Agroscope brand was recorded (Note 14). Also included is a credit arising on
the settlement of the Agroscope put option liability of €1.9 million (Note 25). This resulted in a total charge of
€7.5 million being recorded. The net tax impact of this exceptional item in the current year is a tax credit of
€0.2 million (2018: nil).
141
Financial Statements
Notes to the Group Financial Statements
3 Exceptional items - continued
(iv) Write down of properties and fair value of investment properties and properties held for sale
At 31 July 2019 the valuation of the Group’s Cork properties and investment properties was determined
by the Directors using a market approach with reference to local knowledge and judgement supported by
the consideration agreed with a third party for the Cork property transaction announced to the market on
9 July 2019.
The Directors also commissioned an independent valuations expert to conduct a valuation of the Group’s non-
Cork docklands investment properties. The valuation was on the basis of fair value using a market approach
with inputs including sales of similar properties in the surrounding area and complies with the requirement of
the Royal Institution of Chartered Surveyors (“RICS”) Valuation – Global Standards 2017 (the “RICS Red Book”)
published in June 2017.
Following these assessments, an uplift of €5.5 million was reflected in the value of the Group’s properties held
for sale and investment properties (Note 13) and a write-down of €4.1 million was reflected in the value of the
Group’s property, plant and equipment (Note 12) as at 31 July 2019. This also includes an exceptional gain of €0.5
million arising from the disposal of six acres of an investment property during 2019, partially offset by property
re-organisation costs. The tax impact of this exceptional item in the current year is a charge of
€0.4 million (2018: €0.6 million).
(v) Arising in associates and joint venture
This exceptional charge relates to past service costs in respect of the defined benefit pension scheme of associates
and joint venture. The net tax impact of this exceptional item in the current year is a tax credit of €0.1 million.
(vi) Gain on disposal of business
Following the disposal of the Group’s Chemicals business operated through Goulding Chemicals Limited and the
closure of a seed plant in the UK in 2018, a gain of €2.6 million and a loss of €0.7 million respectively were recorded
in the prior year. The tax impact of this exceptional item in the prior year was a tax charge of €0.4 million.
4 Finance income and expense
Recognised in the Consolidated Income Statement
Finance income
Interest income on bank deposits
Defined benefit pension obligations: net interest income (Note 26)
Total finance income
Finance expenses
Interest payable on bank loans and overdrafts
Unwinding of discount rate on put option liability (Note 25)
Defined benefit pension obligations: net interest cost (Note 26)
Total finance expenses
Finance costs, net
2019
€’000
2018
€’000
1,495
24
1,519
(13,327)
-
-
(13,327)
(11,808)
1,432
-
1,432
(9,274)
(160)
(80)
(9,514)
(8,082)
Recognised directly in Other Comprehensive Income
Effective portion of changes in fair value of interest rate swaps
(1,701)
825
142
Origin Enterprises plc Annual Report and Accounts 2019
Notes to the Group Financial Statements
5 Statutory and other information
Group operating profit before exceptional items is stated after charging:
Raw materials and consumables used
Amortisation of intangible assets (Note 14)
Depreciation of property, plant and equipment (Note 12)
Operating lease rentals
Foreign exchange expense
2019
€’000
2018
€’000
1,517,230
1,381,227
11,059
8,300
14,297
248
7,946
7,451
13,110
685
Auditors’ remuneration
Remuneration (including expenses) for the statutory audit of the entity financial statements and other services
carried out for the company by the company’s auditors is as follows:
Audit of the consolidated financial statements
Other assurance services
Other non-audit services
6 Directors’ emoluments
Emoluments
Emoluments above include the following contributions to retirement benefit schemes:
- Defined contribution
- Defined benefit
2019
€’000
555
51
5
2019
€’000
3,187
221
26
247
2018
€’000
511
70
-
2018
€’000
2,825
219
26
245
Details of LTIP awards to Directors are disclosed in Note 9. Further details are shown in the Remuneration
Committee Report on pages 91 to 106.
Retirement benefits are accruing to one director (2018: one director) under a defined benefit scheme and to two
directors (2018: two directors) under a defined contribution scheme.
7 Share of profit after tax of associates and joint venture
Total
Group share of:
Revenue
Profit after tax, before exceptional items (Note 15)
Share of exceptional items, net of tax (Note 15)
2019
€’000
2018
€’000
403,822
357,324
6,717
(423)
7,221
-
143
Financial Statements
Notes to the Group Financial Statements
8 Employment
The average number of persons (including Executive Directors) employed by the Group
during the year was as follows:
Sales and distribution
Production
Management and administration
Average number of Non-Executive Directors
Average number of Executive Directors
Aggregate employment costs of the Group are analysed as follows:
Wages and salaries
Social insurance costs
Retirement benefit costs (Note 26) included in Consolidated Income Statement:
- defined benefit schemes – current service cost
- defined benefit schemes – past service cost
- defined benefit schemes – net interest (income)/cost
-defined contribution schemes
Share based payment charge
Cash based long term incentive plan
Termination benefits (Note 3)
Retirement benefit costs (Note 26) included in Other Comprehensive Income:
- defined benefit schemes – remeasurements
2019
Number
2018
Number
1,471
371
693
2,535
1,383
376
671
2,430
2019
Number
2018
Number
5
3
6
3
2019
€’000
113,386
10,695
2018
€’000
103,502
11,069
527
30
(24)
3,521
999
1,120
426
552
-
80
2,957
180
1,016
876
130,680
120,232
3,599
134,279
(3,628)
116,604
144
Origin Enterprises plc Annual Report and Accounts 2019
Notes to the Group Financial Statements
9 Long Term Incentive Plans
Executive Directors and other senior employees participate in the following Long Term Incentive Plans:
2015 LTIP Plan
The 2015 Origin Long Term Incentive Plan (‘2015 LTIP Plan’) is a share-based payment plan which was approved by
the shareholders on 27 November 2015. The details of awards under the plan are as follows:
Awards
2017 Awards
2018 Awards
On 10 March 2017, under the terms of the 2015 LTIP Plan, T O’Mahony, I Hurley and
D Giblin were granted 73,529, 48,897 and 60,459 share options respectively. On the departure
of I Hurley in 2018, options granted to her lapsed with immediate effect.
On 28 September 2017, under the terms of the 2015 LTIP Plan, T O’Mahony, I Hurley and D Giblin
were granted 77,519, 51,550 and 63,076 share options respectively. On the departure of I Hurley
in 2018 options granted to her lapsed with immediate effect.
2019 Awards -
Directors
On 2 October 2018, under the terms of the 2015 LTIP Plan, T O’Mahony, S Coyle and
D Giblin were granted 88,496, 61,540 and 70,784 share options respectively.
2019 Awards
– Senior
management
Targets &
Thresholds
On 2 October 2018, and 17 July 2019 under the terms of the 2015 LTIP Plan, senior management
were granted 279,401 and 313,335 share options respectively.
Vesting of share options and transfer of ownership of resulting shares is determined by
reference to the following conditions:
- Up to 30 per cent of the shares subject to the award will vest depending on the growth in
the Company’s consolidated Adjusted Earnings per Share (“Adjusted EPS”) over a three-year
performance period starting on the first day of the financial year in which the award is granted,
determined in accordance with the table below.
Annualised Adjusted Diluted
EPS growth
Below 5 per cent
5 per cent
Between 5 per cent and 10 per cent
10 per cent and above
Proportion of the Adjusted Diluted
EPS award vesting
0 per cent
30 per cent
30 per cent- 100 per cent pro rata
100 per cent
Vesting under the EPS performance condition is also contingent on the Company’s annualised
EPS over the three year performance period being positive.
- Up to 40 per cent of the shares subject to an award will vest depending on the Company’s
Return On Investment Capital (“ROIC”) over a three year performance period starting on the
first day of the financial year in which the award is granted, determined in accordance with the
table below.
Average Annual ROIC Return
Below 12.5 per cent
12.5 per cent
Between 12.5 per cent and 17.5 per cent
17.5 per cent and above
Proportion of the ROIC award vesting
0 per cent
30 per cent
30 per cent- 100 per cent pro rata
100 per cent
- Up to 30 per cent of the shares subject to an award will vest depending on the Company’s Free
Cash Flow Ratio (“FCFR”) over a three year performance period starting on the first day of the
financial year in which the award is granted, determined in accordance with the table below.
Average Annual FCFR
Below 50 per cent
50 per cent
Between 50 per cent and 100 per cent
100 per cent and above
Proportion of the FCFR award vesting
0 per cent
30 per cent
30 per cent- 100 per cent pro rata
100 per cent
145
Financial Statements
Notes to the Group Financial Statements
9 Long Term Incentive Plans - continued
Awards
Additional
Conditions
Additional conditions attaching to the vesting of the share options and transfer of ownership of
resulting shares include the following:
- as a general rule, the participant must remain in service throughout the performance period,
except in certain pre-determined circumstances;
- the Committee will specify a minimum retention period during which either vested options
cannot be exercised or if vested options can be exercised there will be a restriction on the
disposal of the shares acquired for the period. This period must be for a minimum of two
years; and
- where a participant whose primary management responsibility is in respect of a business
division of the Company is granted an award, the Remuneration Committee at its discretion
may determine that a maximum of 40 per cent of an award will be subject to divisional
financial or other performance conditions related to the business division.
Transfer of
Ownership /
Vesting
Under the terms of the 2015 LTIP Plan, awards will vest no earlier than the third anniversary
of the award date and in the case of options cannot be exercised later than the seventh
anniversary of the award date.
An award will not vest unless the Committee is satisfied that the Company’s underlying financial
performance has shown a sustained improvement in the period since the award date. If this
condition is met, the extent of vesting for awards granted to employees of the Company following
the adoption of the Plan will be determined by the performance conditions set out above.
Movement in the number of share options outstanding is as follows:
At 1 August
Forfeiture
Granted
At 31 July
Grant date
Number of share
options 2019
Number of share
options 2018
274,583
-
813,556
1,088,139
182,885
(100,447)
192,145
274,583
Expiry date
Exercise price
Number of share
options 2019
Number of share
options 2018
10 March 2017 (i)
9 March 2024
28 September 2017 (ii)
27 September 2024
2 October 2018 (iii)
17 July 2019 (iv)
1 October 2025
1 October 2025
€0.01
€0.01
€0.01
€0.01
133,988
140,595
500,221
313,335
133,988
140,595
-
-
(i)
The fair value of the share options granted was €6.16 derived using the Black Scholes valuation model.
The significant inputs into the model were weighted average share price of €6.80 at the grant date,
exercise price of €0.01 and dividend yield of 3.1 per cent.
(ii) The fair value of the share options granted was €5.81 derived using the Black Scholes valuation model.
The significant inputs into the model were weighted average share price of €6.45 at the grant date,
exercise price of €0.01 and dividend yield of 3.3 per cent.
(iii) The fair value of the share options granted was €5.01 derived using the Black Scholes valuation model.
The significant inputs into the model were weighted average share price of €5.65 at the grant date,
exercise price of €0.01 and dividend yield of 3.7 per cent.
(iv) The fair value of the share options granted was €4.49 derived using the Black Scholes valuation model.
The significant inputs into the model were weighted average share price of €5.13 at the grant date,
exercise price of €0.01 and dividend yield of 4.1 per cent.
146
Origin Enterprises plc Annual Report and Accounts 2019
Notes to the Group Financial Statements
9 Long Term Incentive Plans - continued
Cash based long term incentive plan
During the 2017 financial year a cash based Long Term Incentive Plan (‘LTIP’) for key employees was
implemented. The LTIP is intended to enable the retention and reward of key employees who are central
to the achievement of the Group’s growth strategy in the coming years. The implementation of the scheme
commenced in 2017 when certain employees were granted awards which have the characteristics of a long
term cash bonus based on a maximum fixed amount with vesting of cash bonuses based on the achievement of
non-market performance conditions (Adjusted earnings per share, Free cash flow ratio, Return on Investment
and Earnings before interest and tax) over a three-year period to 31 July 2019. The balance payable at the end of
the three year period in 2020, based on awards outstanding at year end is €1.4 million which has been booked
within current provisions in the balance sheet and charged to the income statement within payroll costs in the
years ended 31 July 2017, 31 July 2018 and 31 July 2019 in line with the accounting policy on page 131. In order
to calculate the fair value of the obligation at the end of the term of the Plan, the Group has used the actual
results for 2017, 2018 and 2019.
During the prior year a second cash based Long Term Incentive Plan for key employees was implemented with
similar terms to the 2017 LTIP. The performance conditions for this new scheme are evaluated over a three year
period to 31 July 2020. The potential balance payable at the end of the three years is €1.3 million, of which
€0.9 million has been booked within non-current provisions in the balance sheet and charged to the income
statement within payroll costs in the years ended 31 July 2018 and 31 July 2019. In order to calculate the fair
value of the obligation at the end of the term of the plan the Group has used the actual results for 2018 and
2019 and the budget for 2020, resulting in a 41 per cent probability that the performance conditions over the
three years will be achieved and have also assumed that no members of the scheme will leave the company
before the end of the service period
During the current year a new cash based Long Term Incentive Plan for key employees was implemented with
similar terms to the 2017 LTIP. The performance conditions for this new scheme are evaluated over a three year
period to 31 July 2021. The potential balance payable at the end of the three years is €0.8 million of which €0.1
million has been booked in non-current provisions in the balance sheet and charged to the income statement
within payroll costs in the year ended 31 July 2019. In order to calculate the fair value of the obligation at the
end of the term of the plan the Group has used the actual results for 2019, the budget for 2020 and a forecast
for 2021, resulting in a 50 per cent probability that the performance conditions over the three years will be
achieved and have also assumed that no members of the scheme will leave the company before the end of the
service period.
147
Financial Statements Notes to the Group Financial Statements
9 Long Term Incentive Plans - continued
Save As You Earn (‘SAYE’) scheme-UK and Ireland
The Save As You Earn (SAYE) scheme (‘the scheme’) is a share based savings plan which was approved by the
shareholders on 27 November 2015. The details of awards under the plan are as follows:
Award
Conditions
A HMRC/Revenue approved plan under which regular monthly savings are made over a three
year period which can be used to fund the exercise of an option, the exercise price being
discounted by up to 20 per cent. The maximum permitted savings of £500/€500 per month
across all on-going sharesave contracts for any individual.
Conditions attaching to the transfer of ownership of the equity entitlements and vesting of the
share options include the following:
- in general, the employee must remain in service throughout the three year savings period;
- the option may not be granted if the result would be that the aggregate number of shares
issuable pursuant to options granted under the Scheme or under any other share award or
share option plan operated by the Group in the preceeding ten years exceeding 10 per cent
of the Group’s issued ordinary share capital at the date of grant; and
- the option may not be granted if the result would be that the aggregate number of shares
issuable pursuant to options granted under the Scheme or under any other share award or
share option plan operated by the Group in the preceeding three years exceeding 3 per cent
of the Group’s issued ordinary share capital at the date of grant.
Transfer of
Ownership/
Vesting
Under the terms of the SAYE scheme, the eligible employee will have a choice at the end of
the three year period (representing the term of the scheme), to cash in their total savings
or alternatively purchase shares at the discounted price agreed at the time of entry into the
SAYE scheme. Ownership of shares will not transfer until this time.
The value of the SAYE scheme at 31 July 2019 is as follows:
At 1 August
Charge
At 31 July
Grant date
Expiry date
Option price
Exercise Price
1 June 2016
1 June 2017
1 June 2018
1 June 2019
1 June 2019
1 June 2020
1 June 2021
1 June 2022
€1.78
€1.93
€1.40
€1.42
€5.48
€5.64
€4.20
€4.32
2019
€’000
383
212
595
2018
€’000
330
53
383
Share options
No of shares
2019
Share options
No of shares
2018
65,951
48,298
378,146
184,697
677,092
234,584
65,818
364,358
-
664,760
The main variable inputs used to calculate the SAYE schemes are as follows;
Share price
Exercise price
Term
Share price volatility
Discount rate
Scheme 1
Scheme 2
Scheme 3
Scheme 4
€6.85
€5.48
3 years
27.3%
3.0%
€7.05
€5.64
3 years
30.1%
3.0%
€5.25
€4.20
3 years
28.9%
3.0%
€5.40
€4.32
3 years
27.9%
3.0%
148
Origin Enterprises plc Annual Report and Accounts 2019
Notes to the Group Financial Statements
10 Income tax
Current tax
Deferred tax
Income tax expense
Reconciliation of average effective tax rate to Irish corporate tax rate:
Profit before income tax
Share of profits of associates and joint venture
Taxation based on Irish corporate rate of 12.5 per cent
Effect of deferred tax rate change
Expenses not deductible for tax purposes
Higher rates of tax on overseas earnings
Changes in estimate/adjustment in respect of previous periods:
- Current tax
- Deferred tax
Non-taxable income
Other
2019
€’000
15,335
(6,649)
8,686
61,406
(6,294)
55,112
6,889
(46)
1,645
2,143
(2,633)
132
-
556
8,686
Movement on deferred tax (liability)/asset recognised directly in the Consolidated Statement of
Comprehensive Income (Note 23):
Relating to Group employee benefit schemes
(450)
Property, plant and equipment
Foreign exchange
Hedge related
Recognised in the Consolidated Statement of Comprehensive Income
262
150
(369)
(407)
2018
€’000
7,077
1,475
8,552
65,337
(7,221)
58,116
7,265
98
1,377
2,208
(3,321)
805
(690)
810
8,552
504
375
(55)
333
1,157
As a multinational group operating in a number of jurisdictions, the group is subject to regular audits by tax
authorities on an ongoing basis. Certain audits were closed out during the year and the majority of the move in
the current tax change in estimate figure represents the relevant adjustment.
The applicable tax rate is 15% compared to 14% in the prior year. The increase is primarily driven by movements
in profits and changes in estimates in respect of prior periods.
A deferred tax asset of €3.6 million (2018: €3.3 million) has been recognised on the basis that the realisation of
the related tax benefit through future taxable profits is probable. This includes deferred tax assets which are
recognised for tax losses carried forward to the extent that realisation of the related tax benefit through future
taxable profits is probable.
The total deductible temporary differences which have not been recognised are €16.1 million (2018: €13.7 million).
Deferred tax has not been recognised in respect of withholding taxes and other taxes that would be payable on
the unremitted earnings of foreign subsidiaries, as the Group is in a position to control the timing of reversal of
the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable
future. As the Group can rely on participations exemptions and tax credits that would be available in the context
of the Group’s investments in subsidiaries in the majority of the jurisdictions in which the Group operates,
the aggregate amount of temporary differences in respect of which deferred tax liabilities have not been
recognised would not be material.
149
Financial Statements Notes to the Group Financial Statements
11 Earnings per share
Basic earnings per share
Profit for the financial year attributable to equity shareholders
52,720
56,785
2019
€’000
2018
€’000
Weighted average number of ordinary shares for the year
Basic earnings per share
Diluted earnings per share
Profit for the financial year attributable to equity shareholders
Weighted average number of ordinary shares used in basic calculation
Impact of shares with a dilutive effect
Impact of the SAYE scheme (Note 9)
’000
125,583
Cent
41.98
2019
€’000
52,720
’000
125,583
478
677
’000
125,582
Cent
45.22
2018
€’000
56,785
’000
125,582
120
665
Weighted average number of ordinary shares (diluted) for the year
126,738
126,367
Diluted earnings per share
Cent
41.60
Cent
44.94
150
Origin Enterprises plc Annual Report and Accounts 2019
Notes to the Group Financial Statements
11 Earnings per share - continued
Adjusted basic earnings per share
Weighted average number of ordinary shares for the year
Profit for the financial year
Adjustments:
Amortisation of non-ERP related intangible assets (Note 14)
Tax on amortisation of non-ERP related intangible assets
Exceptional items, net of tax
Adjusted earnings
Adjusted basic earnings per share
Adjusted diluted earnings per share
2019
’000
2018
’000
125,583
125,582
2019
€’000
52,720
8,769
(1,709)
6,953
66,733
Cent
53.14
2019
’000
2018
€’000
56,785
5,655
(768)
(11)
61,661
Cent
49.10
2018
’000
Weighted average number of ordinary shares used in basic calculation
125,583
125,582
Impact of shares with a dilutive effect
Impact of the SAYE scheme (Note 9)
478
677
120
665
Weighted average number of ordinary shares (diluted) for the year
126,738
126,367
Adjusted earnings (as above)
Adjusted diluted earnings per share
2019
€’000
66,733
Cent
52.65
2018
€’000
61,661
Cent
48.80
151
Financial Statements
Notes to the Group Financial Statements
12 Property, plant and equipment
Cost
At 1 August 2018
Additions
Arising on acquisition (Note 32)
Transfers to properties held for sale (Note 13)
Write down of properties (Note 3)
Disposals
Translation adjustments
At 31 July 2019
Accumulated depreciation
At 1 August 2018
Depreciation charge for year
Disposals
Translation adjustments
At 31 July 2019
Net book amounts
At 31 July 2019
At 31 July 2018
Land and
buildings
€’000
Plant and
machinery
€’000
Motor
vehicles
€’000
104,777
3,037
3,585
(11,215)
(4,100)
(481)
(1,451)
94,152
14,354
1,979
(153)
(300)
65,403
7,838
560
-
-
(1,147)
(1,391)
71,263
41,703
4,972
(1,019)
(797)
15,880
44,859
7,436
1,063
326
-
-
(1,255)
151
7,721
3,630
1,349
(999)
6
3,986
Total
€’000
177,616
11,938
4,471
(11,215)
(4,100)
(2,883)
(2,691)
173,136
59,687
8,300
(2,171)
(1,091)
64,725
78,272
90,423
26,404
23,700
3,735
3,806
108,411
117,929
152
Origin Enterprises plc Annual Report and Accounts 2019
Notes to the Group Financial Statements
12 Property, plant and equipment - continued
Cost
At 1 August 2017
Additions
Arising on acquisition
Disposals
Translation adjustments
At 31 July 2018
Accumulated depreciation
At 1 August 2017
Depreciation charge for year
Disposals
Translation adjustments
At 31 July 2018
Net book amounts
At 31 July 2018
Land and
buildings
€’000
Plant and
machinery
€’000
Motor
vehicles
€’000
92,279
4,816
8,837
(1,087)
(68)
104,777
12,836
1,708
(218)
28
14,354
60,850
5,796
1,020
(2,492)
229
65,403
38,775
4,804
(1,974)
98
41,703
7,108
1,016
230
(819)
(99)
7,436
3,355
939
(635)
(29)
3,630
Total
€’000
160,237
11,628
10,087
(4,398)
62
177,616
54,966
7,451
(2,827)
97
59,687
90,423
23,700
3,806
117,929
At 31 July 2017
79,443
22,075
3,753
105,271
Assets held under finance leases
The net book value in respect of assets held under finance leases and accordingly capitalised in property, plant
and equipment is as follows:
At 31 July 2019
At 31 July 2018
Land and
buildings
€’000
Plant and
machinery
€’000
Motor
vehicles
€’000
Total
€’000
18
-
729
327
483
1,230
1,079
1,406
153
Financial Statements
Notes to the Group Financial Statements
13 Investment properties and properties held for sale
2019
Properties
held for sale
€’000
2019
Investment
properties
€’000
At 1 August
Held for sale reclassification (i)
Transfer from property, plant and equipment (i) (ii) (Note 12)
Disposal of investment properties (iii)
Fair value adjustment (iv)
At 31 July
-
8,250
11,215
-
4,670
24,135
11,825
(8,250)
-
(211)
857
4,221
28,356
2019
2018
Total
€’000
11,825
-
11,215
(211)
5,527
Total
€’000
9,675
-
-
-
2,150
11,825
(i)
Following the Cork property transaction announced on 9 July 2019, a number of properties were reclassified
as held for sale as it is expected these properties will be sold within 12 months.
(ii) During the year, the Group conducted a review of the property portfolio (Note 12) and transferred sites
with a carrying value of €11,215,000 to properties held for sale. The group determined that these properties
have significant development potential and are located in areas designated for future development and
regeneration.
(iii) During the year, six acres of an investment property were disposed of and resulted in an exceptional gain of
€0.5 million
(iv) Measurement of fair value
Properties held for sale
Properties held for sale are carried at fair value and regarded as a Level 3 fair value.
At 31 July 2019 the valuation of the Group’s Cork properties and investment properties was determined
by the Directors using a market approach with reference to local knowledge and judgement supported by the
consideration agreed with a third party for the Cork property transaction announced to the market on 9 July
2019. The conditional agreement is subject to the satisfaction of a number of conditions necessary to realise
the full disposal proceeds including the granting of various permissions and approvals and the relocation of
the Group’s existing operating business at an economically viable cost to an alternative location.
The fair value adjustment consists of a write down of the sites transferred from property, plant and
equipment to properties held for sale, offset by an uplift in investment properties transferred to held for
sale, resulting in a net gain of €4.7 million
Investment properties
Investment property is carried at fair value and regarded as a Level 2 fair value.
The Directors also commissioned an independent valuations expert to conduct a valuation of the Group’s
non-Cork docklands investment properties. The valuation was on the basis of fair value using a market
approach with inputs including sales of similar properties in the surrounding area and complies with the
requirement of the Royal Institution of Chartered Surveyors (“RICS”) Valuation – Global Standards 2017
(the “RICS Red Book”) published in June 2017.
Following these assessments, an uplift of €857,000 was reflected in the value of the Group’s
investment properties.
154
Origin Enterprises plc Annual Report and Accounts 2019
Notes to the Group Financial Statements
14 Goodwill and intangible assets
Intangible assets
Goodwill
€’000
Brand (ii)
€’000
Customer
related
€’000
Supplier
agreements
€’000
Developed
technology
€’000
Computer
related
€’000
ERP (i)
related
€’000
Total
€’000
Cost
At 1 August 2018
138,112
22,851
80,571
670
Additions
Arising on
acquisition
(Note 32)
Disposals
Impairment
Translation
adjustment
-
50
40
47,873
5,071
4,191
-
-
(7,949)
(1,480)
(1,744)
(216)
-
-
(1,636)
83,166
34,661
3,775
-
(750)
37,686
At 31 July 2019
176,292
26,276
Accumulated
Amortisation
At 1 August 2018
Amortisation
Disposals
Translation
adjustment
At 31 July 2019
Net book value
-
-
-
-
-
9,197
1,191
-
(208)
10,180
At 31 July 2019
176,292
16,096
45,480
At 31 July 2018
138,112
13,654
45,910
-
-
(649)
-
(21)
-
670
-
(649)
(21)
-
-
-
6,256
904
5,877
2,668
23,907 278,244
684
4,346
15,821
-
-
516
23,497
643
2,840
-
7
327
(150)
-
-
-
-
73,283
(799)
(9,429)
(231)
8,491
(79)
(3,411)
24,512 342,234
2,875
963
(150)
13,864
2,290
-
61,910
11,059
(799)
(99)
50
(1,021)
3,490
3,589
16,204
71,149
20,007
4,902
8,308 271,085
5,613
3,002
10,043 216,334
(i)
ERP related amortisation is charged to administration expenses within operating costs in the
income statement.
(ii) A rebranding of the Group’s Ukrainian business commenced during the year resulting in a write down of the
carrying value of the Agroscope brand.
Material individual intangible assets are as follows;
Customer Lists with a carrying value of €8.6 million and €5.5 million respectively that have remaining residual
lives of 13 and 9 years. Developed technologies with a carrying value of €11.6 million that have remaining residual
lives of 7 years.
155
Financial Statements
Notes to the Group Financial Statements
14 Goodwill and intangible assets - continued
Intangible assets
Goodwill
€’000
Brand
€’000
Customer
related
€’000
Supplier
agreements
€’000
Developed
technology
€’000
Computer
related
€’000
ERP (i)
related
€’000
Total
€’000
Cost
At 1 August 2017
128,701
22,029
Additions
Arising on
acquisition
Disposals
Translation
adjustment
-
8,933
-
478
212
546
-
64
77,276
449
2,518
-
328
665
-
-
-
5
4,446
1,776
-
-
34
3,777
2,263
-
(167)
4
22,940 259,834
945
-
-
22
5,645
11,997
(167)
935
At 31 July 2018
138,112
22,851
80,571
670
6,256
5,877
23,907 278,244
Accumulated
Amortisation
At 1 August 2017
Amortisation
Disposals
Translation
adjustment
At 31 July 2018
Net book value
-
-
-
-
-
8,233
905
-
59
30,973
3,505
-
183
665
-
-
5
89
554
-
-
2,340
11,573
53,873
691
(167)
11
2,291
7,946
-
-
(167)
258
9,197
34,661
670
643
2,875
13,864
61,910
At 31 July 2018
138,112
13,654
45,910
At 31 July 2017
128,701
13,796
46,303
-
-
5,613
3,002
10,043 216,334
4,357
1,437
11,367 205,961
156
Origin Enterprises plc Annual Report and Accounts 2019
Notes to the Group Financial Statements
14 Goodwill and intangible assets - continued
Cash generating units (CGUs)
Goodwill acquired through business combination activity has been allocated to cash-generating units
(‘CGUs’) that are expected to benefit from the business combination. The carrying amount of goodwill
allocated to cash generating units across the Group and the key assumptions used in the impairment
calculations are summarised as follows:
Pre-tax
discount
rate
2019
Pre-tax
discount
rate
2018
Projection
Period
2020/2019
EBIT Growth
rate in Year 2 &
3 of Projection
Period
2020/2019
Terminal
Value
Growth
Rate
2020/2019
Agronomy – UK
Amenity
Fertiliser
Latin America
Ukraine
Poland
Belgium
Romania
10.2%
10.2%
10.2%
14.3%
17.5%
10.8%
11.7%
11.1%
10.5%
10.5%
10.5%
-
15.4%
10.9%
11.6%
11.4%
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
2%
2%
2%
5%
7%
4%
4%
4%
2%
2%
2%
2%
2%
2%
2%
2%
2019
€’000
74,842
8,331
13,500
46,399
-
8,677
2,017
22,526
176,292
2018
€’000
74,566
8,257
13,936
-
7,763
8,686
2,013
22,891
138,112
Impairment testing of goodwill
The recoverable amounts of cash generating units (‘CGUs’) are based on value in use computations. The cash
flow forecasts used for 2020 (Year 1) are extracted from the 2020 budget document formally approved by senior
management. The cash flow projections are based on current operating results of the individual CGUs and a
conservative assumption regarding future organic growth. For the purposes of the calculation of value in use, the
cash flows are projected over a three-year period with additional cash flows in subsequent years calculated using a
terminal value methodology.
The cash flows are discounted using appropriate risk adjusted discount rates as disclosed in the table above. Any
significant adverse change in the expected future operational results and cash flows may result in the value in use
being less than the carrying value of a CGU and would require that the carrying value of the CGU be impaired and
stated at the greater of the value in use or the fair value less costs to sell of the CGU. However, the results of the
impairment testing undertaken in the current year indicates sufficient headroom, with the exception of Ukraine
(see below).
Key assumptions include management’s estimates of future profitability, growth rates, foreign exchange rates,
discount rates, replacement capital expenditure requirements and trade working capital investment needs. These
assumptions are based on management’s past experience. Capital expenditure requirements and profitability are
based on the Group’s budgets and broadly assume that historic investment patterns will be maintained. Working
capital requirements are forecast to increase in line with activity.
During the year ended 31 July 2019, an impairment was recorded against the carrying value of the goodwill which
arose on the acquisition of Agroscope in the Ukraine. The total value of the impairment recorded against goodwill
was €7.9 million and was treated as an exceptional item in the Consolidated Group Accounts. The recoverable
amount of Agroscope was based on a value in use computation and whilst the trading performance of Agroscope
over the last number of years has been challenging, historically the results have supported the carrying value held.
Trading conditions in FY2019 deteriorated resulting in a reduction in the Agroscope reported earnings before
interest and taxation which in turn has impacted the value in use computation resulting in this year the Group
fully impairing the value of the goodwill. Management believe this is a reasonable valuation based on prior year
performance and the current trading conditions that prevail in the Ukraine.
157
Financial Statements
Notes to the Group Financial Statements
15 Investments in associates and joint venture
At 1 August
Share of profits after tax, before exceptional items (Note 7)
Share of exceptional items, net of tax (Note 7)
Dividends received
Share of other comprehensive (expense)/income
Acquisition of equity investment (i)
Translation adjustment
At 31 July
Split as follows:
Total associates
Total joint venture
2019
€’000
48,171
6,717
(423)
(7,037)
(748)
1,117
(657)
47,140
22,961
24,179
47,140
2018
€’000
34,206
7,221
-
(2,483)
9,092
-
135
48,171
23,265
24,906
48,171
(i) On 12 June 2019, the Group acquired a 20% shareholding in Ferrari Zagatto E Cia Ltda, a Brazilian based
agronomy services and crop input distribution business.
The information below reflects the amounts presented in the financial statements of the associates and the
joint venture (and not Origin’s share of those amounts) adjusted for differences in accounting policies between
the Group and those applied by its associates and joint venture.
Associates and joint venture income statement (100%):
Revenue
Other comprehensive income
Dividends received by Group
Exchange differences arising on consolidation
2019
€’000
807,644
(1,496)
(7,037)
(657)
The investment in associates and joint venture as at 31 July 2019 is analysed as follows:
Non-current assets
Current assets
Non-current liabilities
Current liabilities
At 31 July 2019
Associates
€’000
6,174
33,623
(2,857)
(13,979)
22,961
Joint venture
€’000
13,937
32,506
(4,349)
(17,915)
24,179
The investment in associates and joint venture as at 31 July 2018 is analysed as follows:
Non-current assets
Current assets
Non-current liabilities
Current liabilities
At 31 July 2018
Associates
€’000
11,623
32,028
(8,104)
(12,282)
23,265
Joint venture
€’000
10,781
34,326
(4,669)
(15,532)
24,906
2018
€’000
714,648
18,184
(2,483)
135
Total
€’000
20,111
66,129
(7,206)
(31,894)
47,140
Total
€’000
22,404
66,354
(12,773)
(27,814)
48,171
The amounts included in these financial statements in respect of the income and expenses of associates and the
joint venture are taken from their latest financial statements prepared up to their respective year ends together
with management accounts for the intervening periods to the Group’s year end.
158
Origin Enterprises plc Annual Report and Accounts 2019
Notes to the Group Financial Statements
16 Other financial assets
Non-current
Other financial assets
At 1 August
Advances/(repayments) during the year
Translation adjustments
At 31 July
17 Inventory
Raw materials
Finished goods
Consumable stores
18 Trade and other receivables
Trade receivables (i)
Amounts due from related parties
Value added tax
Other receivables
Prepayments and accrued income
(i) Includes rebates from suppliers
19 Trade and other payables
Trade payables (i)
Accruals and other payables
Amounts due to other related parties
Income tax and social insurance
Value added tax
2019
€’000
2018
€’000
450
178
(21)
607
2019
€’000
64,698
122,813
15,295
202,806
2019
€’000
475,884
32,207
2,966
3,419
14,852
529,328
2019
€’000
557,994
83,583
8,164
9,046
27,388
686,175
531
(85)
4
450
2018
€’000
54,967
126,044
13,181
194,192
2018
€’000
417,462
14,003
4,136
9,238
16,360
461,199
2018
€’000
534,223
70,582
6,027
5,103
22,226
638,161
(i) Certain Origin Enterprises plc subsidiary suppliers factor their trade payables from Origin Enterprises plc
subsidiaries with third parties through supplier finance arrangements. At 31 July 2019 approximately €25.7
million (2018: €15.2 million) of the Origin Enterprises plc trade payables were known to have been sold onward
under such arrangements whereby Origin Enterprises plc subsidiary confirms invoices. Origin Enterprises plc
continues to recognise these liabilities as trade payables and will settle the liabilities in line with the original
payment terms of the related invoices.
159
Financial Statements
Notes to the Group Financial Statements
20 Cash and cash equivalents
In accordance with IAS 7, ‘Cash Flow Statements’, cash and cash equivalents comprise cash balances held
for the purposes of meeting short-term cash commitments and investments which are readily convertible to
a known amount of cash and are subject to an insignificant risk of changes in value. Where investments are
categorised as cash equivalents, the related balances have a maturity of three months or less from the date of
acquisition. Bank overdrafts are classified as current interest-bearing borrowings in the Consolidated Statement
of Financial Position.
Cash at bank and in hand
Bank overdrafts (Note 21)
Included in the Consolidated Statement of Cash Flows
2019
€’000
111,830
(23,945)
87,885
2018
€’000
147,212
(20,653)
126,559
Cash at bank earns interest at floating rates based on daily deposit bank rates.
Short-term deposits are made for varying periods of between one day and three months depending on the
immediate cash requirements of the Group and earn interest at the respective short-term deposit rates.
21 Interest-bearing loans and borrowings
This Note provides information about the contractual terms of the Group’s interest-bearing loans and
borrowings, which are measured at amortised cost.
Included in non-current liabilities:
Bank loans
Finance leases
Non-current interest-bearing loans and borrowings
Included in current liabilities:
Bank overdrafts
Finance leases
2019
€’000
162,571
665
163,236
2018
€’000
164,553
679
165,232
23,945
245
20,653
183
Current interest-bearing loans and borrowings
24,190
20,836
Total interest-bearing loans and borrowings
187,426
186,068
160
Origin Enterprises plc Annual Report and Accounts 2019
Notes to the Group Financial Statements
21 Interest-bearing loans and borrowings - continued
Analysis of net debt
2018
€’000
Cash flow
€’000
Acquisition
€’000
Non-cash
movements
€’000
Translation
adjustment
€’000
2019
€’000
Cash
Overdraft
147,212
(38,334)
(20,653)
(2,102)
Cash and cash equivalents
126,559
(40,436)
Finance lease obligations
(862)
Loans
(164,553)
(67)
9,564
4,060
-
4,060
-
(8,179)
-
-
-
-
(1,108)
(1,190)
111,830
(23,945)
(2,298)
19
87,885
(910)
(667)
1,264
(162,571)
Net debt
Restricted cash
(38,856)
(30,939)
(4,119)
500
(500)
-
(667)
-
(1,015)
(75,596)
-
-
Net debt including
restricted cash
(38,356)
(31,439)
(4,119)
(667)
(1,015)
(75,596)
Cash
Overdraft
Cash and cash equivalents
Finance lease obligations
Loans
Net debt
Restricted cash
2017
€’000
162,631
(15,916)
Cash flow
€’000
(15,432)
(4,985)
146,715
(739)
(177,426)
(31,450)
-
(20,417)
(7)
16,387
(4,037)
500
Non-cash
movements
€’000
Translation
adjustment
€’000
2018
€’000
147,212
(20,653)
126,559
(862)
13
248
261
12
(2,837)
(164,553)
(2,564)
(38,856)
-
500
-
-
-
(128)
(677)
(805)
-
Net debt including restricted cash
(31,450)
(3,537)
(805)
(2,564)
(38,356)
Cash pooling is availed of across the Group in order to reduce interest costs, however no overdraft balances
have been offset in the Statement of Financial Position at the year end.
161
Financial Statements
Notes to the Group Financial Statements
21 Interest-bearing loans and borrowings - continued
The details of outstanding loans are as follows:
Currency
Nominal
value
€’000
Carrying
amount
€’000
2019
Unsecured loan facility:
- term facility maturing in May 2024
- term facility maturing in May 2024
- term facility maturing in May 2024
- term facility maturing in September 2021
2018
Unsecured loan facility:
- term facility maturing in May 2022
- term facility maturing in May 2022
- term facility maturing in May 2022
- term facility maturing in May 2022
- term facility maturing in September 2021
EUR
STG
PLN
EUR
EUR
STG
RON
PLN
EUR
59,000
65,431
9,777
30,000
164,208
32,000
67,545
26,684
9,787
30,000
166,016
At 31 July 2019, the average interest rate being paid on the Group’s borrowings was 1.58 per cent
(2018: 1.94 per cent).
Repayment schedule – loans, overdrafts and finance leases
Within one year
Between one and five years
Loans and overdrafts
2019
€’000
24,190
163,236
187,426
58,280
64,633
9,658
30,000
162,571
31,656
66,818
26,398
9,681
30,000
164,553
2018
€’000
20,836
165,232
186,068
Guarantees
Group borrowings are secured by guarantees from Origin Enterprises plc and certain principal operational
entities of the Group.
162
Origin Enterprises plc Annual Report and Accounts 2019
Notes to the Group Financial Statements
22 Financial instruments and financial risk
The effect of initially applying IFRS 9 on the Group’s financial instruments is described in the Accounting Policies
Note on page 127. The following table outlines the financial assets and liabilities held by the Group at the balance
sheet date:
Financial
Instruments
at fair value
through OCI
€’000
Financial
Instruments
at fair value
through PL
€’000
Fair value
hierarchy
2019
Other financial assets
Trade and other receivables
Derivative financial assets
Level 2
Cash and cash equivalents
Total financial assets
Trade and other payables
Contingent consideration
Level 3
Bank overdrafts
Bank borrowings (greater than
one year)
Level 2
-
-
2,345
-
2,345
-
-
-
-
-
Finance lease liabilities
Put option liability
Derivative financial liabilities
Total financial liabilities
Level 3
Level 2
(29,607)
(1,399)
(31,006)
Financial
assets/
(liabilities) at
amortised
cost
€’000
607
511,510
-
111,830
Total
carrying
value
€’000
607
511,510
2,345
111,830
Fair
value
€’000
607
511,510
2,345
111,830
623,947
626,292
626,292
(649,741)
(649,741)
(649,741)
-
-
-
-
-
-
(13,431)
-
(13,431)
(13,431)
-
-
-
-
-
(23,945)
(23,945)
(23,945)
(162,571)
(162,571)
(162,571)
(910)
(910)
(910)
-
-
(29,607)
(29,607)
(1,399)
(1,399)
(13,431)
(837,167)
(881,604)
(881,604)
Fair value
hierarchy
Financial
Instruments
at fair value
€’000
-
Loans and
receivables
€’000
450
Financial
assets/
(liabilities) at
amortised
cost
€’000
-
Total
carrying
value
€’000
450
Fair
value
€’000
450
2018
Other financial assets
Trade and other receivables
-
440,703
Derivative financial assets
Level 2
2,234
-
Cash and cash equivalents
Total financial assets
-
147,212
2,234
588,365
-
-
-
-
440,703
440,703
2,234
147,212
2,234
147,212
590,599
590,599
Trade and other payables
-
Contingent consideration
Level 3
(7,591)
Bank overdrafts
Bank borrowings (greater than
one year)
Level 2
Finance lease liabilities
Put option liability
Derivative financial liabilities
Total financial liabilities
Level 3
Level 2
(5,531)
(218)
(13,340)
-
-
-
-
-
-
-
-
-
-
-
(613,795)
(613,795)
(613,795)
-
(7,591)
(7,591)
(20,653)
(20,653)
(20,653)
(164,553)
(164,553)
(164,553)
(862)
-
-
(862)
(5,531)
(218)
(862)
(5,531)
(218)
(799,863)
(813,203)
(813,203)
163
Financial Statements
Notes to the Group Financial Statements
22 Financial instruments and financial risk - continued
Estimation of fair values
Set out below are the major methods and assumptions used in estimating the fair values of the financial assets
and liabilities disclosed in the preceding table.
Trade and other receivables/payables
For any receivables and payables with a remaining life of less than six months or demand balances, the carrying
value less impairment provision, where appropriate, is deemed to reflect fair value. All other receivables and
payables are discounted to fair value on initial recognition.
Contingent consideration
The fair value of the contingent consideration has been determined based on an agreed earnings before
interest and tax based formula which includes an expectation of future trading performance (‘EBIT’)
discounted to present day value using a cost of debt rate of 3 per cent. A reconciliation from opening to
closing balance has been included in Note 24.
Cash and cash equivalents including short-term bank deposits and restricted cash
For short-term bank deposits and cash and cash equivalents, all of which have a remaining maturity of less than
three months, the carrying amount is deemed to reflect fair value.
Derivatives - forward foreign exchange contracts
Forward foreign exchange contracts are marked to market using quoted forward exchange rates at the
reporting date.
The absolute principal amount of the outstanding forward foreign exchange contracts at 31 July 2019 was
€85,462,000 (2018: €100,012,000).
The hedged highly probable forecast transactions denominated in foreign currency are expected to occur
at various dates during the next 12 months. Gains and losses recognised in the hedging reserve in equity on
forward foreign exchange contracts as of 31 July 2019 are recognised in the Consolidated Income Statement in
the period or periods during which the hedged transaction affects the Consolidated Income Statement. This is
generally within 12 months of the end of the reporting period.
Derivatives – interest rate swaps
The fair value of interest rate swaps is calculated as the present value of the expected future cash flows based
on observable yield curves.
The notional principal amounts of the outstanding interest rate swap contracts at 31 July 2019 were €101,716,000
(2018: €103,836,000).
At 31 July 2019, the average fixed interest rate on the swap portfolio was 0.72 per cent. The main floating rates
are EURIBOR and LIBOR. Gains and losses recognised in the hedging reserve in equity on interest rate swap
contracts as of 31 July 2019 will be continually released to the Consolidated Income Statement within finance
cost until the maturity of the relevant interest rate swap.
Interest-bearing loans and borrowings
For interest-bearing loans and borrowings with a contractual repricing date of less than one year, the nominal
amount is deemed to reflect fair value. For loans with repricing dates of greater than six months, the fair value
is calculated based on the present value of the expected future principal and interest cash flows discounted at
interest rates effective at the year end date and adjusted for movements in credit spreads.
Finance lease liabilities
Fair value is based on the present value of future cash flows discounted at market rates at the year end date.
164
Origin Enterprises plc Annual Report and Accounts 2019
Notes to the Group Financial Statements
22 Financial instruments and financial risk - continued
Estimation of fair values - continued
Put option liability
The fair value of the put option liability has been determined based on an agreed earnings before interest and
tax based formula that is not capped which includes an expectation of future trading performance (‘EBIT’) and
timing of when the options are expected to be exercised, discounted to present day value using an appropriate
discount rate. The valuation technique applied to fair value the put option liability was the income approach. A
reconciliation from opening to closing balance has been included in Note 25.
Fair value hierarchy
The tables at the beginning of this note summarise the financial instruments carried at fair value, by valuation
method, as of 31 July 2019. Fair value classification levels have been assigned to the Group’s financial
instruments carried at fair value. The different levels assigned are defined as follows:
Level 1: Price quoted in active markets
Level 2: Valuation techniques based on observable market data
Level 3: Valuation techniques based on unobservable input
Risk exposures
The Group’s international operations expose it to different financial risks that include currency risk, credit
risk, liquidity risk, commodity price risk and interest rate risk. The Group has a risk management programme in
place which seeks to limit the impact of these risks on the financial performance of the Group. The Board has
determined the policies for managing these risks. It is the policy of the Board to manage these risks in a non-
speculative manner.
The Group has exposure to the following risks from its use of financial instruments:
> Credit risk
>
Liquidity risk
> Market risk
This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives,
policies and processes for measuring and managing the risk. Further quantitative disclosures are included
throughout this note.
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk
management framework.
The Group has established an internal audit function under the direction of the Audit Committee. Internal audit
undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which
are reported to the Audit Committee.
The Board, through its Audit Committee and Risk Committee, has reviewed the process for identifying and
evaluating the significant risks affecting the business and the policies and procedures by which these risks
will be managed effectively. The Board has embedded these structures and procedures throughout the Group
and considers these to be a robust and efficient mechanism for creating a culture of risk awareness throughout
the business.
Credit risk
Exposure to credit risk
Credit risk arises from credit to customers arising on outstanding receivables and outstanding transactions
as well as cash and cash equivalents, derivative financial instruments and deposits with banks and financial
institutions. The Group uses credit insurance where appropriate to limit the exposure.
165
Financial Statements
Notes to the Group Financial Statements
22 Financial instruments and financial risk - continued
Credit risk - continued
Trade and other receivables
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer.
There is no concentration of credit risk by dependence on individual customers or geographically. While a
high proportion of receivables are located in the UK and Continental Europe, the risk is mitigated due to the
geographic spread throughout, rather than an isolated geographic region.
The Group has detailed procedures for monitoring and managing the credit risk related to its trade receivables
based on experience, customers’ track record and historic default rates. Individual risk limits are generally
set by customer and risk is only accepted above such limits in defined circumstances. The utilisation of credit
limits is regularly monitored and credit insurance is used where appropriate. Impairment provisions are used to
record impairment losses unless the Group is satisfied that no recovery of the amount owing is possible. At that
point the amount is considered irrecoverable and is written off directly against the trade receivable. The Group
establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and
other receivables and other financial assets.
Cash and short-term bank deposits and restricted cash
Group surplus cash is invested in the form of short-term bank deposits with financial institutions. Deposit terms
are for a maximum of three months. Cash and short-term deposits are invested with institutions within Origin’s
bank financing syndicate, with limits on amounts held with individual banks or institutions at any one time.
Exposure to credit risk
The carrying amount of financial assets, net of impairment provisions represents the Group’s maximum credit
exposure. The maximum exposure to credit risk at year end was as follows:
Other financial assets
Trade and other receivables
Cash and cash equivalents
Derivative financial assets
Carrying amount
2019
€’000
Carrying amount
2018
€’000
607
511,510
111,830
2,345
626,292
450
440,703
147,212
2,234
590,599
Trade receivables
The Group has detailed procedures for monitoring and managing the credit risk related to its trade receivables.
Trade receivables are monitored by geographic region and by largest customers. The maximum exposure to
credit risk for trade receivables at the reporting date by geographic region based on location of customers
was as follows:
Ireland and United Kingdom
Continental Europe
Latin America
166
Carrying amount
2019
€’000
Carrying amount
2018
€’000
181,676
273,621
20,587
475,884
174,868
242,594
-
417,462
Origin Enterprises plc Annual Report and Accounts 2019
Notes to the Group Financial Statements
22 Financial instruments and financial risk - continued
Credit risk - continued
At 31 July 2019 trade receivables of €391,960,000 (2018: €355,280,000) were not past due and were not
impaired. These receivable balances relate to customers for which there is no recent history of default.
The following table details the ageing of gross trade receivables, and the related loss allowances in respect
of specific amounts expected to be irrecoverable;
2019
2018
Gross
€’000
Impairment
€’000
Gross
€’000
Impairment
€’000
Not past due
Past due 0-30 days
Past due 31-120 days
Past due +121 days
At 31 July
395,218
49,930
25,378
27,047
497,573
(3,258)
(765)
(3,133)
(14,533)
(21,689)
355,280
50,846
14,010
13,660
433,796
An analysis of movement in loss allowances in respect of trade receivables was as follows:
-
(3,379)
(2,535)
(10,420)
(16,334)
2018
€’000
(12,036)
(4,389)
18
73
2019
€’000
(16,334)
(6,502)
1,023
124
(21,689)
(16,334)
1 August
Charge to the Consolidated Income Statement
Receivables written off as uncollectable
Translation adjustments
31 July
The Group also manages credit risk through the use of a receivable purchase agreement with a financial
institution. Under the terms of this non-recourse agreement, the Group has transferred credit risk of certain
trade receivables amounting to €25.4 million as at 31 July 2019 (2018: €22.5 million). The Group has continued to
recognise an asset of €2,539,000 (2018: €2,425,000) representing the extent of its continuing involvement.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The
Group’s approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity
to meet its liabilities when due, under both normal and stressed conditions without incurring unacceptable
losses or risking damage to the Group’s reputation.
The Group’s objective is to maintain a balance between flexibility and continuity of funding. Short-term flexibility
is achieved through the availability of overdraft facilities. The Group’s policy is that not more than 40 per cent of
bank facilities should mature in the twelve-month period following the year end. As at 31 July 2019, 100 per cent
of bank facilities mature after one year.
The contractual maturities of the Group’s loans and borrowings are set out in Note 21.
167
Financial Statements
Notes to the Group Financial Statements
22 Financial instruments and financial risk - continued
Liquidity risk - continued
The contractual maturities of the other financial liabilities are set out below:
Carrying
amount
€’000
Contractual
cash flows
€’000
6 months
or less
€’000
6 - 12
months
€’000
1 - 2
years
€’000
2 - 5
years
€’000
2019
Variable rate bank loans
Trade and other payables
Contingent consideration
Put option liability
(162,571)
(649,741)
(13,431)
(29,607)
Derivative financial liabilities
Interest rate swaps used
for hedging
Currency forward contracts
used for hedging
- Inflows
- Outflows
(173,835)
(1,284)
(1,284)
(2,569)
(168,698)
(649,741)
(649,741)
-
-
(10,020)
(408)
(2,250)
-
(982)
(13,660)
(37,297)
-
-
-
-
-
(37,297)
(83)
(829)
(912)
(912)
15,723
(16,210)
(1,399)
15,723
(16,210)
(1,399)
15,490
(15,972)
(482)
233
(238)
(5)
-
-
-
-
(83)
(829)
Carrying
amount
€’000
Contractual
cash flows
€’000
6 months
or less
€’000
6 - 12
months
€’000
1 - 2
years
€’000
2 - 5
years
€’000
2018
Variable rate bank loans
(164,553)
(176,121)
(1,596)
(1,596)
(3,192)
(169,737)
Trade and other payables
(613,795)
(613,795)
(613,795)
Contingent consideration
Put option liability
(7,591)
(5,531)
(7,870)
(5,531)
(1,093)
-
-
-
(726)
-
-
(46)
(46)
-
(3,068)
(5,531)
-
(2,983)
-
-
-
-
-
(46)
-
-
(46)
25,515
(25,687)
(218)
25,515
23,690
(25,687)
(23,857)
(218)
(167)
1,825
(1,830)
(5)
Derivative financial liabilities
Interest rate swaps used
for hedging
Currency forward contracts
used for hedging
- Inflows
- Outflows
168
Origin Enterprises plc Annual Report and Accounts 2019
Notes to the Group Financial Statements
22 Financial instruments and financial risk - continued
Accounting for derivatives and hedging activities
The fair value of derivative financial assets and liabilities at the year end date is set out in the following table:
Cash flow hedges
Currency forward contracts
Interest rate swaps
At 31 July
2019
2018
Assets
€’000
Liabilities
€’000
Assets
€’000
Liabilities
€’000
2,345
-
2,345
(487)
(912)
(1,399)
1,399
835
2,234
(172)
(46)
(218)
Cash flow hedges
Cash flow hedges are those of highly probable forecasted future income or expenses. In order to qualify for
hedge accounting, the Group is required to document the relationship between the item being hedged and the
hedging instrument and demonstrate, at inception, that the hedge relationship will be highly effective on an
ongoing basis. The hedge relationship must be tested for effectiveness on subsequent reporting dates.
There is no significant difference between the timing of the cash flows and income statement effect of cash
flow hedges.
Market risk
Market risk is the risk that changes in market prices and indices, such as foreign exchange rates, and interest
rates will affect the Group’s income or the value of its holdings of financial instruments. The objective of
the Group’s risk management strategy is to manage and control market risk exposures within acceptable
parameters, while optimising the return earned by the Group. The Group has two types of market risk being
currency risk and interest rate risk, each of which is dealt with as follows:
Currency risk
In addition to the Group’s operations carried out in eurozone economies, it also has significant operations
in the United Kingdom and certain operations in Brazil, Poland, Romania and Ukraine. In addition, purchases
are also denominated in US dollars. As a result the Consolidated Statement of Financial Position is exposed to
currency fluctuations on foreign denominated subsidiaries. The Group manages its Consolidated Statement of
Financial Position having regard to the currency exposures arising from its assets being denominated in different
currencies. To this end, where foreign currency assets are funded by borrowing, such borrowing is generally
sourced in the currency of the related assets.
Transactional exposures arise from sales or purchases by an operating unit in currencies other than the unit’s
functional currency. The Group uses forward currency contracts to eliminate the currency exposures on certain
foreign currency purchases. The Group requires all its operating units, where possible, use forward currency
contracts to eliminate the currency exposures on certain foreign currency purchases. The forward currency
contracts must be in the same currency as the hedged item.
169
Financial Statements
Notes to the Group Financial Statements
22 Financial instruments and financial risk - continued
Currency risk - continued
Exposure to currency risk
The Group’s exposure to transactional foreign currency risk at the year end date is as follows:
2019
Trade receivables
Cash and cash equivalents
Other payables
2018
Trade receivables
Cash and cash equivalents
Other payables
Ron
€’000
Euro
€’000
Sterling
€’000
US Dollar
€’000
Total
€’000
-
(182)
-
(182)
-
9
-
9
1,135
7,789
(38,965)
(30,041)
3,787
3,359
(11,606)
(4,460)
-
15,652
(603)
15,049
-
3,668
(662)
3,006
2,332
1,722
(18,226)
(14,172)
185
3,764
(4,229)
280
3,467
24,981
(57,794)
(29,346)
3,972
10,800
(16,497)
(1,725)
Hedged items are excluded from the tables above.
Currency sensitivity analysis
A 10 per cent strengthening/weakening of the euro against the following currencies at 31 July 2019 would have
affected profit or loss on a transactional basis by the amounts shown below. This analysis assumes that all other
variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2018.
A positive number below indicates an increase in profit where the euro strengthens or weakens 10 per cent
against the relevant currency.
10%
strengthening
income
statement
€’000
10%
weakening
income
statement
€’000
1,417
(1,505)
18
(70)
28
301
1
330
(1,417)
1,505
(18)
70
(28)
(301)
(1)
(330)
2019
Dollar
Sterling
Romanian Leu
At 31 July 2019
2018
Dollar
Sterling
Romanian Leu
At 31 July 2018
170
Origin Enterprises plc Annual Report and Accounts 2019
Notes to the Group Financial Statements
22 Financial instruments and financial risk - continued
Interest rate risk
The Group’s debt bears both floating and fixed rates of interest per the original contracts. Fixed rate debt is
achieved through the use of interest rate swaps.
At 31 July, the interest rate profile of the Group’s interest bearing financial instruments was as follows:
Fixed-rate instruments
Finance lease liabilities
At 31 July
Variable rate instruments
Interest-bearing borrowings
Bank overdraft
Cash and cash equivalents
At 31 July
Carrying
amount
2019
€’000
(910)
(910)
(162,571)
(23,945)
111,830
(74,686)
Carrying
amount
2018
€’000
(862)
(862)
(164,553)
(20,653)
147,212
(37,994)
Total interest-bearing financial instruments
(75,596)
(38,856)
Cash flow sensitivity analysis for variable rate instruments
The sensitivity analysis below is based on the exposure to interest rates for both derivatives and non-derivative
instruments. A change of 50 basis points in interest rates at the reporting date would have increased/decreased
profit and loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign
currency rates, remain constant. The analysis is performed on the same basis for 2018.
A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management
personnel and represents management’s assessment of the possible change in interest rates.
2019
Unhedged variable rate instruments
Bank overdraft
Cash flow sensitivity (net)
2018
Unhedged variable rate instruments
Bank overdraft
Cash flow sensitivity (net)
Income
statement
50 bp
increase
€’000
(304)
(120)
(424)
(304)
(103)
(407)
Principal
amount
€’000
(60,855)
(23,945)
(84,800)
(60,717)
(20,653)
(81,370)
A 50 basis points decrease in interest rates at the reporting date would have had the equal but opposite effect
on the above.
171
Financial Statements
Notes to the Group Financial Statements
23 Deferred tax
The deductible and taxable temporary differences at the year end dates in respect of which deferred tax has
been recognised are analysed as follows:
Deferred tax assets (deductible temporary differences)
Pension related
Property, plant and equipment
Intangibles
Hedge related
Other deductible temporary differences
Total
Deferred tax liabilities (taxable temporary differences)
Property, plant and equipment
Investment property
Pension related
Intangibles
Hedge related
Other
Total
2019
€’000
860
110
1
62
2,587
3,620
(4,078)
-
(101)
(16,350)
-
(2,614)
(23,143)
2018
€’000
480
30
-
-
2,770
3,280
(5,734)
(2,264)
(91)
(9,926)
(316)
(3,840)
(22,171)
Net deferred tax liability
(19,523)
(18,891)
172
Origin Enterprises plc Annual Report and Accounts 2019
Notes to the Group Financial Statements
23 Deferred tax - continued
Movements in deferred tax assets and liabilities, during the year, were as follows:
2019
At 1 August 2018
Recognised in the
Consolidated Income
Statement
Acquisitions related
Recognised in Other
Comprehensive Income
Foreign exchange and other
At 31 July 2019
2018
At 1 August 2017
Recognised in the Consolidated
Income Statement
Acquisitions related
Recognised in Other
Comprehensive Income
Foreign exchange and other
Property,
plant and
equipment
€’000
Investment
property
€’000
Hedge
related
€’000
Pension
related
€’000
Intangibles
€’000
Other
€’000
Total
€’000
(5,704)
(2,264)
(316)
389
(9,926)
(1,070)
(18,891)
1,440
494
(262)
64
(3,968)
2,264
-
-
-
-
9
-
369
-
62
(64)
-
450
(16)
759
1,893
1,107
6,649
(8,304)
-
(7,810)
-
(150)
(12)
86
407
122
(16,349)
(27)
(19,523)
(4,592)
(1,620)
17
1,454
(9,831)
494
(14,078)
91
(815)
(375)
(13)
(644)
-
-
-
-
-
(563)
-
768
(1,107)
(1,455)
(811)
(428)
(2,054)
(333)
(504)
-
2
389
-
(52)
55
(84)
(1,157)
(147)
(9,926)
(1,070)
(18,891)
At 31 July 2018
(5,704)
(2,264)
(316)
Deferred tax has not been recognised in respect of withholding taxes and other taxes that would be payable on
the unremitted earnings of foreign subsidiaries, as the Group is in a position to control the timing of reversal of
the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable
future. As the Group can rely on participation exemptions and tax credits that would be available in the context
of the Group’s investments in subsidiaries in the majority of the jurisdictions in which the Group operates,
the aggregate amount of temporary differences in respect of which deferred tax liabilities have not been
recognised would not be material.
Other deferred tax assets relate mainly to losses forward.
173
Financial Statements
Notes to the Group Financial Statements
24 Provision for liabilities
The estimate of provisions is a key judgement in the preparation of the financial statements.
Contingent
acquisition
consideration
€’000
(i)
Rationalisation
€’000
(ii)
7,591
8,508
-
(1,705)
(1,111)
148
13,431
10,410
3,021
9,289
500
-
(1,627)
(622)
51
7,591
1,494
-
-
(979)
(263)
(1)
251
251
-
3,902
-
991
(3,334)
(115)
50
1,494
Other
€’000
(iii)
4,427
-
1,120
(587)
-
(24)
4,936
Total
€’000
13,512
8,508
1,120
(3,271)
(1,374)
123
18,618
3,791
14,452
1,145
4,166
2,273
2,495
1,016
(3)
(1,400)
46
4,427
15,464
2,995
2,007
(4,964)
(2,137)
147
13,512
1,817
1,494
2,156
5,467
5,774
-
2,271
8,045
2019
At beginning of year
Arising on acquisition (Note 32)
Provided in year
Paid in year
Released in year
Currency translation adjustment
At end of year
Current
Non-current
2018
At beginning of year
Arising on acquisition (Note 32)
Provided in year
Paid in year
Released in year
Currency translation adjustment
At end of year
Current
Non-current
(i)
Contingent acquisition consideration relates to the acquisition of Comfert SRL (‘Comfert’) in December
2015, R&T Liming in March 2016, Resterra Group (‘Resterra’) in March 2017, Fortgreen in August 2018,
Symbio in November 2018 and Vegetable Consulting Services Ltd (VCS) in March 2019. The amount
attributable to Comfert is €0.5 million, R&T Liming €0.2 million, Resterra €4.1 million, Fortgreen
€6.9 million, Symbio €0.1 million and VCS €1.6 million.
(ii)
Rationalisation costs relate to termination payments arising from the restructuring of Agri-Services in the UK.
(iii) Other provisions relate to various onerous leases, operating and employment related costs.
174
Origin Enterprises plc Annual Report and Accounts 2019
Notes to the Group Financial Statements
25 Put option liability
At 1 August
Fair value adjustment (i)
Arising on acquisition (Note 32)
Interest payable (Note 4)
Change in fair value of put option (ii)
Repayments
Translation adjustment
At 31 July
2019
€’000
5,531
(1,937)
26,433
-
2,114
(3,594)
1,060
29,607
2018
€’000
5,450
(79)
-
160
-
-
-
5,531
(i) During the year, the put option which arose on the acquisition of Agroscope was exercised and resulted in
the Group acquiring 100% of the business. The Agroscope put option was accounted for in substance as
contingent consideration and resulted in a credit to exceptional items in the income statement (Note 3).
(ii) As part of the Fortgreen acquisition, the Group entered into an arrangement with the minority shareholder,
under which the minority shareholder has the right at various dates to sell the remaining 35 per cent interest
to Origin based on an agreed formula. In the event that this is not exercised, Origin has a similar right to
acquire the 35 per cent interest. Origin recognised an option liability of €26.4 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.
The assumption is that the holder of the Put Option will exercise this option during 2022.
26 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 trustees of the various pension funds are required by law to act in the best interests of the
scheme participants and are responsible for investment strategy and scheme administration. The majority of the
Group’s defined benefit pension schemes are closed to future benefits accrual with a small minority accruing
benefits. The level of benefits available to members depends on length of service and either their average salary
over their period of employment, their salary in the final years leading up to retirement and in some cases
historical salaries depending on the rules of the individual scheme. Under IAS 19, ‘Employee Benefits’, the total
deficit in the Group’s defined benefit schemes at 31 July 2019 was €1,476,000 (2018: surplus of €725,000).
The pension credit included in the Consolidated Income Statement for the year in respect of the Group’s
defined benefit schemes was €15,000 (2018: charge of €632,000) and a charge of €3,635,000 (2018:
€2,957,000) in respect of the Group’s defined contribution schemes.
Employee benefits included in the Consolidated Statement of Financial Position comprises the following:
(Deficit)/surplus in defined benefit schemes
2019
€’000
(1,476)
2018
€’000
725
175
Financial Statements
Notes to the Group Financial Statements
26 Post employment benefit obligations - continued
The valuations of the defined benefit schemes used for the purposes of the following disclosures are those
of the most recent actuarial reviews carried out at 31 July 2019 by an independent, qualified actuary. The
valuations have been performed using the projected unit method.
Employee benefit plan risks
The employee benefit plans expose the Group to a number of risks, the most significant of which are:
Asset volatility
The plan liabilities are calculated using a discount rate set with reference to corporate bond yields. If assets
underperform this yield, this will create a deficit. The plans hold a significant proportion of equities which,
though expected to outperform corporate bonds in the long-term, create volatility and risk. The allocation to
equities is monitored to ensure it remains appropriate given the plans long-term objectives.
Changes in bond yields
A decrease in corporate bond yields will increase the plans’ liabilities, although this will be partially offset by an
increase in the value of the plans’ bond holdings.
Inflation risk
In certain schemes the plans’ benefit obligations are linked to inflation, with the result that higher inflation will
lead to higher liabilities (although caps on the level of inflationary increases are in place). The majority of the
assets are either unaffected by or only loosely correlated with inflation, meaning that an increase in inflation will
also increase the deficit.
Life expectancy
In the event that members live longer than assumed a further deficit will emerge in the Schemes.
The Group targets that the investment positions are managed with an overall asset-liability matching (‘ALM’)
framework that has been developed to achieve long-term investments that are in line with the obligations
under the pension schemes. Within this framework, the Group’s ALM objective is to match assets to the
pension obligations.
Most of the plans are closed and therefore, under the projected unit credit method, the current service cost
is expected to increase as the members approach retirement and to decrease as members retire or leave
service. The expected employee and employer contributions for the year ending 31 July 2020 are €142,000 and
€1,232,000 respectively.
Financial assumptions - scheme liabilities
The significant long-term assumptions used by the Group’s actuaries in the computation of scheme liabilities as
at 31 July 2019 and 31 July 2018 are as follows:
Republic of Ireland schemes
Rate of increase in salaries
Discount rate on scheme liabilities
Inflation rate
UK scheme
Rate of increase in salaries
Rate of increases in pensions in payment and deferred benefits
Discount rate on scheme liabilities
Inflation rate
2019
2018
0.00%-2.35% 0.00%-2.35%
1.20%
1.50%
2.10%
1.75%
0.00%-3.50% 0.00%-3.40%
0.00%-3.80%
0.00%-3.70%
2.10%
2.70%
2.70%
2.60%
176
Origin Enterprises plc Annual Report and Accounts 2019
Notes to the Group Financial Statements
26 Post employment benefit obligations - continued
Assumptions regarding future mortality are set based on actuarial advice in accordance with published statistics
and experience in both geographic regions. The mortality assumptions imply the following life expectancies in
years of an active member on retiring at age 65, 20 years from now:
Male
Female
2019
ROI
24.2
26.2
2019
UK
22.9
25.0
2018
ROI
24.1
26.1
The mortality assumptions imply the following life expectancies in years of an active member,
aged 65, retiring now:
Male
Female
2019
ROI
22.5
24.3
2019
UK
21.8
23.7
2018
ROI
22.4
24.3
2018
UK
23.1
25.0
2018
UK
21.9
23.8
Sensitivity analysis for principal assumptions used to measure scheme liabilities
There are inherent uncertainties surrounding the financial assumptions adopted in calculating the actuarial
valuation of the Group’s defined benefit pension schemes. The following table analyses (for the Group’s Irish
and UK pension schemes) the estimated impact on plan liabilities resulting from changes to key actuarial
assumptions, whilst holding all other assumptions constant. In practice, this is unlikely to occur, and changes in
some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation
to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated
with the projected unit credit method at the end of the reporting period) has been applied as when calculating
the pension liability recognised in the statement of financial position.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to
the previous period.
Republic of Ireland schemes
Assumption
Discount rate
Price inflation
Salary
Mortality
Change in assumption
Increase/decrease 0.50%
Increase/decrease 0.50%
Increase/decrease 0.50%
Increase/decrease by one year
Impact on plan liabilities
Decrease by 7.4% / increase by 8.5%
Increase / decrease by 0.8%
Increase / decrease by 0.0%
Increase / decrease by 2.7%
UK scheme
Assumption
Discount rate
Price inflation
Salary
Mortality
Change in assumption
Increase/decrease 0.50%
Increase/decrease 0.50%
Increase/decrease 0.50%
Increase/decrease by one year
Impact on plan liabilities
Decrease by 7.4% / increase by 8.4%
Increase by 4.3% / decrease by 4.5%
Increase by 0.7% / decrease by 0.2%
Decrease / increase by 3.9%
177
Financial Statements
Notes to the Group Financial Statements
26 Post employment benefit obligations - continued
Net pension asset/(liability)
Market value of scheme assets:
Equities
Bonds
Property
Investment funds
Insurance policy and insurance annuity
Other
Total market value of assets
Present value of scheme obligations
Asset/(liability) in the schemes
Net pension asset/(liability)
Market value of scheme assets:
Equities
Bonds
Property
Investment funds
Insurance policy and insurance annuity
Other
Total market value of assets
Present value of scheme obligations
Asset/(liability) in the schemes
2019
ROI
€’000
2,810
10,661
2,210
-
-
2,562
18,243
(17,431)
812
2018
ROI
€’000
2,635
8,975
4,806
-
-
53
16,469
(15,525)
944
The majority of equity securities and bonds have quoted prices in active markets.
The major categories of scheme assets are as follows:
Split of scheme assets:
Equities
- Developed
- Emerging
Bonds
- Government
Property - Ireland and UK
Other
Investment funds
Insurance policy and insurance annuity
178
2019
UK
€’000
2019
Total
€’000
-
-
713
73,631
7,130
5,864
87,338
(89,626)
(2,288)
2018
UK
€’000
16,203
-
676
58,373
6,750
677
82,679
2,810
10,661
2,923
73,631
7,130
8,426
105,581
(107,057)
(1,476)
2018
Total
€’000
18,838
8,975
5,482
58,373
6,750
730
99,148
(82,898)
(98,423)
(219)
725
2019
ROI
14.0%
1.0%
59.0%
12.0%
14.0%
0.0%
0.0%
100.0%
2019
UK
0%
0%
0%
1.0%
7.0%
84.0%
8.0%
100.0%
Origin Enterprises plc Annual Report and Accounts 2019
Notes to the Group Financial Statements
26 Post employment benefit obligations - continued
The major categories of scheme assets are as follows:
Split of scheme assets:
Equities
- Developed
- Emerging
Bonds
- Government
Property - Ireland and UK
Investment funds
Insurance policy and insurance annuity
Movement in the fair value of scheme assets
Fair value of assets at 1 August
Interest income
Remeasurements:
- Return on plan assets excluding amounts included in interest income
Employer contributions
Employee contributions
Settlement payments
Benefit payments
Translation adjustments
Fair value of assets at 31 July
2018
ROI
2018
UK
15.0%
1.0%
55.0%
29.0%
0.0%
0.0%
100.0%
2019
€’000
99,148
2,571
8,350
1,298
153
(24)
(3,042)
(2,873)
105,581
19.0%
1.0%
0.0%
1.0%
71.0%
8.0%
100.0%
2018
€’000
96,880
2,350
2,253
1,404
161
(845)
(3,674)
619
99,148
As at 31 July 2019 and 2018 the pension schemes held no shares in Origin Enterprises plc
Movement in the present value of scheme obligations
Value of scheme obligations at 1 August
Current service costs
Past service costs
Gain on settlement
Interest on scheme obligations
Employee contributions
Settlement payments
Benefit payments
Remeasurements:
- Experience gain/(loss)
- Effect of changes in demographic assumptions
- Effect of changes in financial assumptions
Translation adjustments
Value of scheme obligations at 31 July
2019
€’000
2018
€’000
(98,423)
(100,526)
(527)
(30)
548
(2,547)
(153)
24
3,042
388
(813)
(11,524)
2,958
(107,057)
(552)
-
-
(2,430)
(161)
845
3,674
(274)
1,172
477
(648)
(98,423)
179
Financial Statements
Notes to the Group Financial Statements
26 Post employment benefit obligations - continued
Movement in net (liability)/asset recognised in the Consolidated Statement of Financial Position:
Net liability in schemes at 1 August
Current service cost
Past service cost
Gain on settlement
Employer contributions
Other finance income/(expense)
Remeasurements
Translation adjustments
Net (liability)/asset in schemes at 31 July
2019
€’000
725
(527)
(30)
548
1,298
24
(3,599)
85
(1,476)
Analysis of defined benefit expense recognised in the Consolidated Income Statement:
Current service cost
Past service cost
Gain on settlement
Total recognised in operating profit
Net interest income/(cost) (included in financing costs Note 4)
Net credit/(charge) to Consolidated Income Statement
2019
€’000
(527)
(30)
548
(9)
24
15
Maturity analysis
The maturity profile of the Group’s defined benefit obligation (on a discounted basis) is as follows:
Within one year
Between one and two years
Between two and three years
Between three and four years
Between four and five years
After five years
Total
Within one year
Between one and two years
Between two and three years
Between three and four years
Between four and five years
After five years
Total
180
2019
ROI
€’000
322
348
372
397
443
15,549
17,431
2018
ROI
€’000
273
304
361
390
422
13,775
15,525
2019
UK
€’000
2,289
2,450
2,553
2,638
2,772
76,924
89,626
2018
UK
€’000
2,238
2,387
2,609
2,776
2,929
69,959
82,898
2018
€’000
(3,646)
(552)
-
-
1,404
(80)
3,628
(29)
725
2018
€’000
(552)
-
-
(552)
(80)
(632)
2019
Total
€’000
2,611
2,798
2,925
3,035
3,215
92,473
107,057
2018
Total
€’000
2,511
2,691
2,970
3,166
3,351
83,734
98,423
Origin Enterprises plc Annual Report and Accounts 2019
Notes to the Group Financial Statements
26 Post employment benefit obligations - continued
Average duration and scheme composition
Average duration of defined benefit obligation (years)
Average duration of defined benefit obligation (years)
Allocation of defined benefit obligation by participant:
Active plan participants
Deferred plan participants
Retirees
Allocation of defined benefit obligation by participant:
Active plan participants
Deferred plan participants
Retirees
2019
ROI
€’000
3,890
7,896
5,645
17,431
2018
ROI
€’000
3,655
7,521
4,349
15,525
Defined benefit pension credit recognised in Other Comprehensive Income
Remeasurement gain on scheme assets
Remeasurement (loss)/gain on scheme liabilities:
Effect of experience gains/(losses) on scheme liabilities
Effect of changes in demographical and financial assumptions
Remeasurements
Deferred tax
2019
ROI
17.7
2018
ROI
18.3
2019
UK
€’000
18,787
35,121
35,718
89,626
2018
UK
€’000
16,130
31,457
35,311
82,898
2019
€’000
8,350
388
(12,337)
(3,599)
450
2019
UK
17.0
2018
UK
17.0
2019
Total
€’000
22,677
43,017
41,363
107,057
2018
Total
€’000
19,785
38,978
39,660
98,423
2018
€’000
2,253
(274)
1,649
3,628
(504)
Defined benefit pension credit recognised in the Consolidated Statement
of Comprehensive Income
(3,149)
3,124
The cumulative loss recognised in the Consolidated Statement of Comprehensive Income is €29,804,000
(2018: €26,655,000). The actual return on the plan assets was €10,921,000 (2018: €4,603,000).
181
Financial Statements
Notes to the Group Financial Statements
27 Share capital
Authorised
2019
€’000
2018
€’000
250,000,000 ordinary shares of €0.01 each (i)
2,500
2,500
Allotted, called up and fully paid
126,396,184 (2018: 126,382,206) ordinary shares of €0.01 each (i) (ii) (iii)
1,264
1,264
(i)
Ordinary shareholders are entitled to dividends as declared and each ordinary share carries equal voting
rights at meetings of the Company.
(ii) In December 2012, the issued ordinary share capital was increased by the issue of 1,212,871 ordinary shares
of nominal value of €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 Origin Long Term Incentive Plan 2012 ( “2012 LTIP Plan”).
Under the terms of the 2012 LTIP Plan, 412,541 of these shares were transferred to the directors and senior
management as a result of certain financial targets having been achieved in the three years to 31 July 2015.
The remaining 800,330 ordinary shares continue to be held as treasury shares.
(iii) In July 2019, the issued ordinary share capital was increased by the issue of 13,978 ordinary shares of
nominal value €0.01 each, at an issue price of €5.48 each pursuant to the terms of the Origin Save As You
Earn Scheme.
28 Dividends
The Board is recommending a final dividend of 18.17 cent per ordinary share which when combined with the
interim dividend of 3.15 cent per ordinary share brings the total dividend for the year to 21.32 cent per share
(total dividend of €26.9 million) (2018: 21.0 cent per share), an increase of 1.5%. Subject to shareholders’
approval at the Annual General Meeting, the dividend will be paid on 13 December 2019 to shareholders on
the register on 29 November 2019. In accordance with IFRS, this dividend has not been provided for in the
Consolidated Statement of Financial Position as at 31 July 2019.
182
Origin Enterprises plc Annual Report and Accounts 2019
Notes to the Group Financial Statements
29 Consolidated statement of changes in equity
Capital redemption reserve
The capital redemption reserve was created in the year ending 31 July 2011 and arose on the redemption of
deferred convertible ordinary shares
Cash flow hedge reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow
hedging instruments related to hedged transactions that have not yet occurred.
Revaluation reserve
The revaluation reserve relates to revaluation surpluses arising on revaluations of property, plant and equipment.
Share-based payment reserve
This reserve comprises amounts credited to reserves in connection with equity awards less the effect of any
exercises of such awards.
Reorganisation reserve
The difference between the fair value of the investment recorded in the Company balance sheet and the
carrying value of the assets and liabilities transferred in 2007 on the formation of Origin has been recognised
as a reorganisation reserve in other reserves within equity together with the currency translation reserve, cash
flow reserve and revaluation reserve.
Foreign currency translation reserve
The translation reserve comprises all foreign exchange differences from 1 August 2005, arising from the
translation of the net assets of the Group’s non-euro denominated operations, including the translation of the
profits of such operations from the average exchange rate for the year to the exchange rate at the year end
date. Exchange gains or losses on long-term intra-group loans that are regarded as part of the net investments
in non-euro denominated operations, are taken to the translation reserve to the extent that they are neither
planned nor expected to be repaid in the foreseeable future.
Capital management
The capital managed by the Group consists of the consolidated equity and net debt. The Group has set the
following goals for the management of its capital:
>
>
>
>
to maintain a prudent net debt (as set out in Note 21) to EBITDA and interest cover ratio (interest as a
percentage of EBIT) to support a prudent capital base and ensure a long term sustainable business;
to comply with covenants as determined by debt providers;
to achieve an adequate return for investors; and
to apply a dividend policy which takes into account the level of peer group dividends, the Group’s financial
performance and position, the Group’s future outlook and other relevant factors including tax and other
legal considerations.
The Group employs two key target ratios to monitor equity and to be compliant with its bank covenants:
>
the Group’s net debt to EBITDA ratio is below 3.50. The ratio is 0.87 times at 31 July 2019
(2018: 0.54), 31 January 2019 2.57 times (2018: 2.17 times); and
>
the Group’s interest cover (EBITDA to interest) is above 3.00. The ratio is 8.06 times at 31 July 2019
(2018: 9.81), 31 January 2019 9.25 times (2018: 11.24 times).
183
Financial Statements
Notes to the Group Financial Statements
30 Commitments
Non-cancellable operating lease rentals are payable as set out below. These amounts represent minimum future
lease payments, in aggregate, that the Group are required to make under existing lease agreements.
Within one year
In two to five years
After more than five years
2019
€’000
7,511
14,989
19,775
42,275
2018
€’000
7,686
15,507
15,316
38,509
The Group leases a number of properties under operating leases. The leases typically run for periods of 15 to 25
years. Rents are generally reviewed every five years.
Future purchase commitments for property, plant and equipment
At 31 July 2019
Contracted for but not provided for
137
444
139
720
Land and
buildings
€’000
Plant and
machinery
€’000
Other
€’000
Total
2019
€’000
At 31 July 2018
Contracted for but not provided for
–
583
–
583
Land and
buildings
€’000
Plant and
machinery
€’000
Other
€’000
Total
2018
€’000
Future purchase commitments: Software Development
Contracted for but not provided for
Total
Total
2019
€’000
25
25
Total
2018
€’000
-
-
The Group has a financial commitment of €6.9 million attributable to a strategic partnership with University
College Dublin (‘UCD’). The commitment is over a five year period.
184
Origin Enterprises plc Annual Report and Accounts 2019
Notes to the Group Financial Statements
31 Related party transactions
In the normal course of business, the Group undertakes trading transactions with its associates, joint venture
and other related parties. A summary of transactions with these related parties during the year is as follows:
2019
Sale of
goods
€’000
Purchase of
goods
€’000
Receiving
services from
€’000
Rendering
services to
€’000
Transactions with joint venture
-
(117,985)
-
Transactions with associates
68,321
(316)
(728)
214
768
Total
€’000
(117,771)
68,045
2018
Sale of
goods
€’000
Purchase of
goods
€’000
Receiving
services from
€’000
Rendering
services to
€’000
Total
€’000
Transactions with joint venture
-
(114,339)
-
446
(113,893)
Transactions with associates
62,832
(562)
(718)
1,101
62,653
Transactions with other
106
-
-
-
106
The trading balances owing to the Group from related parties were €32,207,000 (2018: €14,003,000) and
the trading balances owing from the Group to these related parties were €8,164,000 (2018: €6,027,000).
Other financial assets on the Consolidated Statement of Financial Position primarily comprise of €546,000
(2018: €450,000) in relation to a loan to West Twin Investments Limited.
Compensation of key management personnel
For the purposes of the disclosure requirements of IAS 24, ‘Related Party Disclosures’, the term ‘key
management personnel’ (i.e. those persons having authority and responsibility for planning, directing and
controlling the activities of the Group), comprises the Board of Directors and their management team who have
responsibility for managing the business and affairs of the Group and its reporting segments. Comparatives are
presented on a consistent basis.
Salaries and other short term employee benefits
Post employment benefits
Share-based payments
Other long term employee benefits
Total
2019
€’000
3,390
251
573
80
4,294
2018
€’000
3,073
245
123
105
3,546
185
Financial Statements
Notes to the Group Financial Statements
32 Acquisition of subsidiary undertakings
During the period, the Group completed the acquisition of Fortgreen Commercial Agricola Ltda (‘Fortgreen’)
in Brazil, the acquisition of Symbio Group (‘Symbio’) in the United Kingdom and the acquisition of Vegetable
Consulting Services Limited (‘VCS’). These acquisitions complement the Group’s prescription fertilisers and
speciality nutrition business.
Details of the acquisitions are as follows:
(i)
On 14 August 2018 the Group acquired a 65 per cent controlling interest in the Brazilian based speciality
nutrition and crop inputs business, Fortgreen Commercial Agricola Ltda.
(ii) On 20 November 2018 the Group completed the acquisition of 100 per cent of Eco Solutions (C & R) Limited
trading as Symbio. Based in the United Kingdom, Symbio specialises in biological based crop technologies.
(iii) On 31 March 2019 the Group completed the acquisition of 100 per cent of Vegetable Consulting Services
(UK) Limited. Based in the United Kingdom, VCS provides agronomy consultancy services.
The acquisition method has been used to account for businesses acquired in the Group’s financial statements.
Given that the valuation of the fair value of assets and liabilities recently acquired for Symbio and VCS is still in
progress, the following values included for these are determined provisionally. The valuation of these assets and
liabilities will be completed within the measurement period.
For the acquisitions completed in 2018, there have been no material revisions of the provisional fair value
adjustments since the initial values were established.
Details of the net assets acquired and goodwill arising from the business combinations are as follows:
186
Origin Enterprises plc Annual Report and Accounts 2019 Notes to the Group Financial Statements
32 Acquisition of subsidiary undertakings - continued
Assets
Non-current
Property, plant & equipment
Intangible assets
Deferred tax asset
Total non-current assets
Current assets
Inventory
Trade receivables
Total current assets
Liabilities
Trade payables and other
Corporation tax
Deferred tax liability
Interest-bearing borrowings
Total liabilities
Total identifiable net assets at fair value (excluding cash acquired)
Goodwill arising on acquisition
Total net assets acquired (excluding cash acquired)
Consideration satisfied by:
Cash consideration
Cash acquired
Net cash outflow
Put option arising from acquisition
Contingent consideration arising from acquisition
Consideration
Fair
value
€’000
4,471
25,410
830
30,711
6,078
16,082
22,160
(11,425)
(1,005)
(8,640)
(8,179)
(29,249)
23,622
47,873
71,495
40,614
(4,060)
36,554
26,433
8,508
71,495
187
Financial Statements
Notes to the Group Financial Statements
32 Acquisition of subsidiary undertakings - continued
Origin acquired a 65 per cent interest in Fortgreen for cash consideration on 14 August 2018. The Group has
also entered into an arrangement with the minority shareholder, under which the minority shareholder has
the right at various dates to sell the remaining 35 per cent interest to Origin based on an agreed formula. In
the event that this is not exercised, Origin has a similar right to acquire the 35 per cent interest. Origin has
recognised an option liability of €26.4 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.
Origin has elected to apply the anticipated acquisition method in accounting for the option whereby the non-
controlling interest is not recognised 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 35 per cent interest will be presented as attributable to the
equity shareholders of Origin and not as attributable to minority interests. The €26.4 million financial liability
recognised by the Group forms part of the contingent consideration for the acquisition. For all new liabilities
recognised in respect of shares held by non-controlling shareholders, all movements in the fair value of such
options will be recognised in retained earnings.
Goodwill recognised on acquisitions is attributable to the skills and technical talent of the acquired business’
workforce and the synergies expected to be achieved from integrating the companies into the Group’s
existing business.
Contingent consideration of €6.9 million arose on the acquisition of Fortgreen. This is based on an agreed
earnings before interest tax, depreciation and amortisation based formula.
Contingent consideration arrangements require the Group to make future payments in relation to a number
of acquisitions. The expected amounts of all future payments that the Group could be required to make under
these arrangements for all current year acquisitions range from zero to €8.5 million.
Post acquisition revenues and operating profit relating to the current year acquisitions amounted to €35.9
million and €10.7 million (2018: €76.1 million and €3.3 million). If the acquisitions had occurred on 1 August 2018,
management estimates that consolidated revenue would have been €39.8 million (2018: €88.3 million) and
consolidated operating profit for the year would have been €11.8 million (2018: €4.5 million). In determining
these amounts management has assumed that the fair value adjustments that arose on the dates of acquisition
would have been the same if the acquisition occurred on 1 August 2018 (2018: 1 August 2017).
33 Accounting estimates and judgements
The preparation of financial statements in conformity with IFRSs requires management to make judgements,
estimates and assumptions that affect the application of accounting policies and reported amounts of assets
and liabilities, income and expenses.
In particular, information about significant areas of estimation, uncertainty and critical judgements in applying
accounting policies that have the most significant effect on the amount recognised in the financial statements
are described below:
188
Origin Enterprises plc Annual Report and Accounts 2019
Notes to the Group Financial Statements
33 Accounting estimates and judgements - continued
Note 3
Note 10
Note 13
Note 14
Note 18
Note 25
Note 26
Exceptional items
Income Tax
Investment properties and properties held for sale
Goodwill and intangible assets- measurement of the recoverable amounts of CGUs,
useful lives of intangibles
Trade and other receivables
Put option liability
Post employment benefit obligations
The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining
the Group’s provision for income taxes. There are many transactions and calculations for which the ultimate
tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for
anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax
outcome of these matters is different from the amounts that were initially recorded, such differences will
impact the income tax and tax provisions in the period in which such determination is made.
Investment properties and properties held for sale are based on fair values derived from current estimated
market values for the properties, being the amount that would be received from a sale of the assets in an
orderly transaction between market participants. The valuation of investment properties and properties held
for sale is inherently subjective and is based on macro-economic factors which are outside of the Group’s
control or influence.
Impairment testing of assets, particularly of goodwill, involves estimating the future cash flows for a cash
generating unit and an appropriate discount rate to determine a recoverable value as set out in Note 14.
An element of judgement is required in estimating a portion of the rebates receivable from suppliers in
certain agricultural chemicals and fertiliser products at year end given the number and complexity of rebate
arrangements in addition to the timing of payments. There are numerous contractual terms and requirements
that must be met in order to obtain certain rebates.
The Group acknowledges the level of judgement required in estimating settlement price adjustments payable
to certain customers given the complexity of such arrangements in addition to the timing of payment. The
estimation of the final settlements payable is impacted by commodity prices, competitor pricing pressures,
prevailing market conditions and the timing of the Group’s financial year end as it is non-coterminous with
the year end of its main customers. The Group records the estimated settlement price adjustments when the
related sales are made based on market conditions and historical experience.
As part of the Fortgreen acquisition, the Group entered into an arrangement with the minority shareholder,
under which the minority shareholder has the right at various dates to sell the remaining 35 per cent interest
to Origin. In the event that this is not exercised, Origin has a similar right to acquire the 35 per cent interest.
Origin has recognised an option liability of €26.4 million which is the fair value of the future estimated amount
payable to exercise the option. The valuation of the put option liability has been determined based on an
agreed formula which includes an expectation of future trading performance and an estimated timing of when
the options are expected to be exercised, discounted to present day value.
The estimation of employee benefit costs requires the use of actuaries and the determination of appropriate
assumptions such as discount rates and expected future rates of return as set out in Note 26.
Exceptional items are those which are separately disclosed to highlight significant items, by virtue of their
scale and nature, within the Group results for the year in order to aid the user’s understanding of underlying
performance of the Group. Management exercises judgement in assessing which items are classified as
exceptional in order to ensure that the treatment of exceptional items is consistent with the accounting policy.
189
Financial Statements
Notes to the Group Financial Statements
34 Principal subsidiaries and associated undertakings
% of
ordinary
shares
Registered
office
Name of
undertaking
Agrii Polska sp.Z.O.O
Nature of
business
Specialist agronomy
products and services
Agroscope International LLC Specialist agronomy
products and services
BHH Limited
Provender milling
Comfert S.R.L.
FortGreen Comercial
Agrícola Ltda
Goulding Chemicals
Limited
Specialist agronomy
products and services
Specialist agronomy
products and services
Fertiliser blending and
distribution
Hall Silos Limited
Grain handling
Headland Amenity
Limited
Linemark UK
Limited
Masstock Group
Holdings Limited
Origin UK Operations
Limited
Origin NI
Limited
Pillaert Meststoffen
Redoxim S.R.L.
Resterra Group
Turf management
services
Sports and amenity
provider
Specialist agronomy
products and services
Fertiliser blending and
distribution
Agricultural and
construction inputs
Wholesaler of mineral
Fertiliser
Specialist agronomy
products and services
Digital agricultural
services group
Rigby Taylor Limited
Turf management
services
100
100
50
100
65
100
100
100
100
100
100
100
100
100
100
100
R&H Hall
Grain and feed trading
50
R&H Hall Trading Limited
Grain and feed trading
100
United Agri Products
Limited
Specialist agronomy
products and services
West Twin Silos Limited
Silo operation
100
50
Obornicka street 233, 60-650 Poznan,
Poland
25B Sahaydachnoho Street, Kyiv 04070,
Ukraine
35/39 York Road, Belfast BT15 3GW,
Northern Ireland
34 Calea Moinesti Str.
Bacau, Romania
R. Curitiba, 805 - Zona Indl. II, Paiçandu -
PR, 87140-000, Brazil
4-6 Riverwalk, Citywest Business Campus,
Dublin 24, Ireland
4A Campsie Real Estate, McLean Road,
Londonderry, BT47 3PF, Northern Ireland
Orchard Road, Royston, Hertfordshire, SG8
5HW, UK
Orchard Road, Royston, Hertfordshire, SG8
5HW, UK
Andoversford, Cheltenham,
Gloucestershire, GL54 4LZ, UK
Orchard Road, Royston, Hertfordshire, SG8
5HW, UK
Orchard Road, Royston, Hertfordshire, SG8
5HW, UK
Scheldekanaaltragel 3, 9052,
Gent Belgium
3 Calea Lugojului St., Ghiroda Village,
Ghiroda Commune Timis County, Romania
Unit 5, Dorcan Business Village, Murdock
Road, Swindon,
SN3 5HY, England
Orchard Road, Royston, Hertfordshire, SG8
5HW, UK
La Touche House, Custom House Dock,
IFSC, Dublin 1, Ireland
4A Campsie Real Estate, McLean Road,
Londonderry, BT47 3PF, Northern Ireland
Andoversford, Cheltenham,
Gloucestershire, GL54 4LZ, UK
McCaughey Road, Belfast BT3 9AG,
Northern Ireland
The country of registration is also the principal location of activities in each case.
190
Origin Enterprises plc Annual Report and Accounts 2019 Notes to the Group Financial Statements
35 Subsequent events
There have been no material events subsequent to 31 July 2019 that would require adjustment to or disclosure
in this report.
36 Approval of financial statements
The Group financial statements were approved by the Board on 24 September 2019.
191
Financial Statements
Company Accounting Policies
The following accounting policies have been applied consistently in dealing with items which are considered material
in relation to the Company’s financial statements.
Basis of preparation
The Company financial statements have been prepared on a going concern basis and in accordance with Irish GAAP
(accounting standards issued by the UK Financial Reporting Council and the Companies Act 2014). The entity financial
statements comply with Financial Reporting Standard 102, The Financial Reporting Standard applicable to in the UK
and Republic of Ireland (FRS102).
The entity financial statements have been prepared under historical cost convention, as modified by the
measurement of certain financial assets and liabilities at fair value through profit or loss, and the measurement of
freehold land and buildings at their deemed cost on transition to FRS 102 on 1 August 2014.
Tangible fixed assets
Tangible fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses.
Depreciation is calculated to write off the cost or valuation of tangible assets, other than freehold land, on a straight
line basis, by reference to the following estimated useful lives:
Fixtures and fittings
25 years
Investment properties
Investment properties are stated at open market value. Changes in the fair value of the investment properties are
shown in the profit and loss account for the year.
Financial assets
Investments in subsidiaries are carried at cost less accumulated impairment losses. Dividends shall be recognised
when the shareholder’s right to receive payment is established.
Retirement benefits
For the Company’s defined benefit schemes, the difference between the market value of the scheme’s assets and the
actuarially assessed present value of the scheme’s liabilities, calculated using the projected unit credit method, is
disclosed as an asset/liability in the balance sheet, to the extent that it is deemed to be recoverable.
The amount charged to operating profit is the actuarially determined cost of pension benefits promised to employees
and earned during the year plus the cost of any benefit improvements granted to members during the period.
The net interest cost on the net defined benefit liability is determined by multiplying the net defined benefit liability
by the discount rate, both as determined at the start of the financial year, taking account of any changes in the net
defined benefit liability during the financial year as a result of contribution and benefit payments. This net interest
cost is recognised in profit or loss as ‘finance expense’ and presented within ‘interest payable and similar charges’.
Actuarial gains and loss arising from experience adjustments and charges in actuarial assumptions are recognized
in other comprehensive income. These amounts together with the return on plan assets less the interest income on
plan assets included in the net interest cost, are presented in ‘remeasurement of a defined benefit liability’ in other
comprehensive income.
Foreign currencies
Transactions in foreign currencies are recorded at the rate ruling at the date of the transactions or at actual rates.
The resulting monetary assets and liabilities are translated at the balance sheet rate or the transaction rate and the
exchange differences are dealt with in the profit and loss account.
Cash flow statement
The Company has taken advantage of the exemption, under FRS 102 paragraph 1.12 (b), from preparing a statement of
cash flows, on the basis that it is a qualifying entity and published Group financial statements, in which the Company’s
results are consolidated, include a cash flow statement.
192
Origin Enterprises plc Annual Report and Accounts 2019
Company Accounting Policies
Taxation
Current tax is provided on the Company’s taxable profits, at amounts expected to be paid (or recovered) using the tax
rates and laws that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet
date, as required by FRS 102. Provision is made at the rates expected to apply when the timing differences reverse.
A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available
evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future
reversal of the underlying timing differences can be deducted.
Long-Term Incentive Plan
The Company has granted Equity Entitlements under the Origin Enterprises Long-Term Incentive Plan 2015. All
disclosures relating to the plan are made in Note 9 to the Group financial statements.
Put option liability
Where a put/call option agreement is in place in respect of shares held by non controlling shareholders, the put
element of the liability is present valued. Such liabilities are shown as current or non-current liabilities in the
Company balance sheet. All disclosures relating to the put option liability are made in Note 25 to the Group financial
statements. All disclosures relating to the put option liability are made in Note 25 to the Group financial statements.
Related party disclosures
The Company discloses transactions with related parties that are not wholly owned within the Group. In accordance
with FRS 102 33.1A, it does not disclose transactions with members of the same group that are wholly owned.
Intangible assets
Computer software that is not an integral part of an item of computer hardware is also classified as an intangible
asset. Where intangible assets are separately acquired, they are capitalised at cost. Cost comprises purchase price
and other directly attributable costs.
Internally generated intangible assets are recognised when the following can be demonstrated;
- the technical feasibility of completing the intangible asset so that it will be available for use or sale;
- its intentions to complete the development;
- its ability to use or sell the intangible asset;
- its ability to generate future economic benefits;
- the availability of resources to complete the development; and
- its ability to measure reliably the expenditure attributable to the intangible asset during its development.
Intangible assets with finite lives are amortised over the period of their expected useful lives in equal annual
instalments, as follows:
Brands
Intellectual property
Developed technology
Computer software
up to 20 years
up to 20 years
up to 10 years
3 to 10 years
Subsequent to initial recognition, intangible assets are stated at cost less accumulated amortisation and impairment
losses incurred.
General
Origin Enterprises plc (the ‘Company’) is a company domiciled and incorporated in Ireland. The Company registration
number is 426261 and the Company address is 4-6 Riverwalk, Citywest Business Campus, Dublin 24, Ireland.
193
Financial Statements
Company Balance Sheet
As at 31 July 2019
Fixed assets
Investment properties
Tangible assets
Intangible assets
Post employment benefit asset
Financial assets
Current assets
Debtors
Cash at bank and in hand
Creditors (amounts falling due within one year)
Net current assets
Total assets less current liabilities
Put option liability
Net assets
Capital and reserves
Called up share capital - presented as equity
Share premium
Profit and loss account and other reserves
Shareholders’ funds
Notes
1
2
3
8
4
5
6
9
2019
€’000
-
947
3,308
812
33,107
38,174
2018
€’000
1,925
12,181
2,675
944
34,472
52,197
591,218
20,778
611,996
474,124
23,668
497,792
(382,041)
(290,108)
229,955
207,684
268,129
259,881
-
(5,531)
268,129
254,350
1,264
164,850
102,015
1,264
164,774
88,312
268,129
254,350
The profit for the year attributable to shareholders dealt with in the financial statements of the holding company for
the year ended 31 July 2019 was €40,100,000 (2018: €28,194,000). As permitted by Section 304 of the Companies
Act 2014, the income statement of the Company has not been separately presented in these financial statements.
On behalf of the Board
Rose Hynes
Director
Tom O’Mahony
Director
194
Origin Enterprises plc Annual Report and Accounts 2019
Company Statement of Changes in Equity
As at 31 July 2019
Share
capital
€’000
Treasury
shares
€’000
Share
premium
€’000
Capital
redemption
reserve
€’000
LTIP
reserve
€’000
Profit
and loss
€’000
Total
€’000
1,264
(8)
164,774
134
538
87,648
254,350
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
76
-
-
-
-
-
-
-
-
-
-
-
-
-
-
999
40,100
40,100
(977)
(977)
122
122
39,245
39,245
-
-
76
999
-
(26,541)
(26,541)
2019
At 1 August 2018
Profit for the year
Remeasurement loss on post
employment liabilities
Deferred tax on
remeasurement loss
Total comprehensive income
for the year
Shares issued
Share-based payment
Dividend paid to shareholders
At 31 July 2019
1,264
(8)
164,850
134
1,537
100,352
268,129
2018
At 1 August 2017
Profit for the year
Remeasurement gain on post
employment liabilities
Deferred tax on
remeasurement gain
Total comprehensive income
for the year
Share-based payment
Dividend paid to shareholders
1,264
(8)
164,774
134
358
84,971
251,493
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
28,194
28,194
1,168
1,168
(146)
(146)
29,216
29,216
180
-
180
-
(26,539)
(26,539)
At 31 July 2018
1,264
(8)
164,774
134
538
87,648
254,350
195
Financial Statements Notes to the Company Financial Statements
1
Investment properties
At 1 August
Disposal
Transfer
At 31 July
2019
€’000
1,925
(211)
(1,714)
-
2018
€’000
1,925
-
-
1,925
During the year, six acres of an investment property were disposed of and resulted in a gain of €0.5 million.
The remainder of the property was transferred at its book value of €1.7 million to Origin Riverwalk Property Trading
Limited, a wholly-owned subsidiary.
2 Tangible fixed assets
Cost
At 1 August 2018
Additions
Disposals
Transfer
At 31 July 2019
Accumulated depreciation
At 1 August 2018
Depreciation charge for year
Disposals
At 31 July 2019
Net book amounts
At 31 July 2019
At 31 July 2018
Cost
At 1 August 2017
Additions
At 31 July 2018
Accumulated depreciation
At 1 August 2017
Depreciation charge for year
At 31 July 2018
Net book amounts
At 31 July 2018
At 31 July 2017
196
Land
€’000
Fixtures & fittings
€’000
11,215
-
-
(11,215)
-
-
-
-
-
11,215
1,762
59
(444)
-
1,377
796
78
(444)
430
947
966
Land
€’000
Fixtures & fittings
€’000
11,215
-
11,215
-
-
-
11,215
11,215
1,745
17
1,762
695
101
796
966
1,050
Total
€’000
12,977
59
(444)
(11,215)
1,377
796
78
(444)
430
947
12,181
Total
€’000
12,960
17
12,977
695
101
796
12,181
12,265
Origin Enterprises plc Annual Report and Accounts 2019
Notes to the Company Financial Statements
3
Intangible assets
Cost or valuation
At 1 August 2018
Additions
At 31 July 2019
Amortisation
At 1 August 2018
Charge for year
At 31 July 2019
Net book amounts
At 31 July 2019
At 31 July 2018
Cost or valuation
At 1 August 2017
Additions
At 31 July 2018
Amortisation
At 1 August 2017
Charge for year
At 31 July 2018
Net book amounts
At 31 July 2018
At 31 July 2017
Developed
Technology
€’000
Brand
€’000
Intellectual
property
€’000
Software
€’000
1,186
904
2,090
-
111
111
1,979
1,186
383
50
433
39
13
52
381
344
1,778
-
1,778
870
161
1,031
747
908
358
25
383
121
61
182
201
237
Developed
Technology
€’000
Brand
€’000
Intellectual
property
€’000
Software
€’000
-
1,186
1,186
-
-
-
1,186
-
184
199
383
29
10
39
344
155
1,778
-
1,778
709
161
870
908
1,069
338
20
358
73
48
121
237
265
Total
€’000
3,705
979
4,684
1,030
346
1,376
3,308
2,675
Total
€’000
2,300
1,405
3,705
811
219
1,030
2,675
1,489
197
Financial Statements
Notes to the Company Financial Statements
4 Financial assets
At 1 August
Impairment
At 31 July
The principal subsidiaries are set out on Note 34 to the Group financial statements.
5 Debtors
Amounts owed by subsidiary undertakings
Corporation tax
Other debtors
Deferred tax- revaluation of properties
Amounts owed by subsidiaries are unsecured and are repayable on demand.
6 Creditors (amounts falling due within one year)
Amounts owed to subsidiary undertakings (i)
Trade creditors (ii)
Accruals and other payables (ii)
Retirement benefit and related liabilities
Deferred tax- revaluation of properties
(i) Amounts owed to subsidiaries are unsecured and are payable on demand.
(ii) Trade creditors, accruals and other payables are measured at amortised cost.
7 Deferred tax- net
At 1 August
(Credit)/charge for the year
At 31 July
198
2019
€’000
34,472
(1,365)
33,107
2018
€’000
34,472
-
34,472
2019
€’000
589,571
435
807
405
2018
€’000
472,096
1,004
615
409
591,218
474,124
2019
€’000
369,561
1,297
9,619
843
721
2018
€’000
277,683
1,714
8,022
843
1,846
382,041
290,108
2019
€’000
1,437
(1,121)
316
2018
€’000
929
508
1,437
Origin Enterprises plc Annual Report and Accounts 2019
Notes to the Company Financial Statements
8 Post employment benefit asset
The Company operates a defined benefit pension scheme which is closed to new members.
Under FRS 102 calculations, the total surplus in the Company’s defined benefit scheme at 31 July 2019 was
€812,000 (2018: surplus of €944,000). There was a gain in the profit and loss account for the period in respect
of the Company’s defined benefit scheme of €450,000 primarily due to a settlement gain of €548,000 during
the year (2018: charge of €128,000).
The expected contributions from the Company for the year ending 31 July 2020 are €354,000. 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 2019 by an independent, qualified actuary. The valuations have been
performed using the projected unit method.
Post employment benefits included in the Company Balance Sheet comprises the following:
Surplus in defined benefit schemes (see analysis below)
Total
The main assumptions used by the actuary were as follows:
Rate of increase in salaries
Discount rate in scheme liabilities
Inflation rate
Net pension asset
Market value of scheme assets:
Equities
Bonds
Property
Other
Total market value of assets
Present value of scheme liabilities
Surplus in the scheme
Movement in value of scheme assets
Value of assets at 1 August
Interest income
Settlement payment
Remeasurement gain
Employer contributions
Benefit payment
Charge for the year
At 31 July
2019
€’000
812
812
2019
%
2018
€’000
944
944
2018
%
0.00% - 2.35% 0.00%-2.35%
1.20%
1.50%
2019
€’000
2,810
10,661
2,210
2,562
18,243
(17,431)
812
2019
€’000
2.10%
1.75%
2018
€’000
2,635
8,975
4,806
53
16,469
(15,525)
944
2018
€’000
16,469
15,872
348
-
1,382
395
(377)
26
335
(821)
923
395
(266)
31
18,243
16,469
199
Financial Statements
Notes to the Company Financial Statements
8 Post employment benefit asset - continued
Movement in the present value of scheme obligations
Value of scheme obligations at 1 August
Current service costs
Settlement gain
Settlement payment
Interest on scheme obligations
Remeasurement (loss)/gain
Benefit payment
Employee contributions
2019
€’000
2018
€’000
(15,525)
(16,363)
(121)
548
-
(325)
(2,359)
377
(26)
(121)
-
821
(342)
245
266
(31)
Value of scheme obligations at 31 July
(17,431)
15,525
Movement in net asset recognised in the balance sheet
At 1 August
Current service cost
Settlement gain
Employer contributions
Other finance income/(expense)
Remeasurement (loss)/gain
Net asset in scheme at 31 July
Defined benefit expense recognised in the profit and loss account:
Current service cost
Settlement gain
Total recognised in operating profit
Interest income on scheme assets
Interest cost on scheme liabilities
Included in financing income/(costs)
Net credit/(charge) to Company’s profit and loss account
2019
€’000
2018
€’000
944
(121)
548
395
23
(977)
812
(491)
(121)
-
395
(7)
1,168
944
2019
€’000
2018
€’000
(121)
548
427
348
(325)
23
450
(121)
-
(121)
335
(342)
(7)
(128)
200
Origin Enterprises plc Annual Report and Accounts 2019
Notes to the Company Financial Statements
8 Post employment benefit asset - continued
Historical information
Present value of the scheme obligation
Fair value of plan assets
Surplus in scheme
Actual return less expected return on scheme assets
Experience adjustment on scheme liabilities
Interest cost on scheme liabilities
Remeasurements
Deferred tax credit/(charge)
2019
€’000
(17,431)
18,243
2018
€’000
(15,525)
16,469
812
944
2019
€’000
1,382
244
(2,603)
(977)
122
2018
€’000
923
67
178
1,168
(146)
(Loss)/gain recognised in statement of comprehensive income
(855)
1,022
9 Share capital
Authorised
2019
€’000
2018
€’000
250,000,000 ordinary shares of €0.01 each (i)
2,500
2,500
Allotted, called up and fully paid
126,396,184 (2018: 126,382,206) ordinary shares of €0.01 each (i) (ii) (iii)
1,264
1,264
(i)
Ordinary shareholders are entitled to dividends as declared and each ordinary share carries equal voting
rights at meetings of the Company.
(ii) In December 2012, the issued ordinary share capital was increased by the issue of 1,212,871 ordinary shares
of nominal value of €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 Origin Long Term Incentive Plan 2012 ( “2012 LTIP Plan”).
Under the terms of the 2012 LTIP Plan, 412,541 of these shares were transferred to the Directors and senior
management as a result of certain financial targets having been achieved. The remaining 800,330 ordinary
shares continue to be held as treasury shares.
(iii) In July 2019, the issued ordinary share capital was increased by the issue of 13,978 ordinary shares of
nominal value €0.01 each, at an issue price of €5.48 each pursuant to the terms of the Origin Save As You
Earn Scheme.
201
Financial Statements
Notes to the Company Financial Statements
10 Contingent liabilities
In order to avail of the exemption under Section 357 of the Companies Act 2014 the Company has
guaranteed the liabilities and commitments of all of its subsidiaries registered in Ireland. The Company
has given guarantees to secure the obligations of its subsidiaries in respect of total committed bank
facilities to the value of €430 million.
11 Share-based payment
All disclosures relating to the Long-Term Incentive Plan are set out in Note 9 to the Group financial statements.
12 Statutory and other information
Auditors’ remuneration:
- statutory audit of entity financial statements
- other assurance services
- other non-audit services
Profit for the financial year
2019
€’000
2018
€’000
25
581
5
23
558
-
40,100
28,194
All of the Group audit fee was recharged by the Company to its subsidiaries in the current year
13 Employment
The average number of persons employed by the Company
during the year was as follows:
Management and administration
Aggregate employment costs of the company are analysed as follows:
Wages and salaries
Social welfare costs
Cash based long term incentive plan
Pension costs:
- defined benefit schemes - statement of total recognised gains and losses
- defined benefit schemes - profit and loss account
Share-based payment charge
2019
Number
2018
Number
21
19
2019
€’000
2018
€’000
6,647
330
1,120
977
(450)
999
9,623
6,116
484
1,016
(1,168)
128
180
6,756
202
Origin Enterprises plc Annual Report and Accounts 2019
Notes to the Company Financial Statements
14 Related party transactions
In the normal course of business, the Company undertakes arms-length transactions with its associates and
other related parties. A summary of transactions with these related parties during the year is as follows:
2019
Sale of
goods
€’000
Purchase
of goods
€’000
Rendering
services to
€’000
Transactions with joint venture
Transactions with associates
-
-
-
-
214
289
2018
Transactions with joint venture
Transactions with associates
Sale of
goods
€’000
Purchase
of goods
€’000
Rendering
services to
€’000
-
-
-
-
446
310
Receiving
services
from
€’000
-
-
Receiving
services
from
€’000
-
-
Total
€’000
214
289
Total
€’000
446
310
For the purposes of the disclosure requirements of FRS 102, the term ‘key management personnel’ (i.e.
those persons having authority and responsibility for planning, directing and controlling the activities of the
Company), comprises the management team who have responsibility for managing the business and affairs of
the Company. Comparatives are presented on a consistent basis.
Salaries and other short term employee benefits
Post employment benefits
Share-based payments
Other long-term employee benefits
15 Approval of financial statements
These financial statements were approved by the Board on 24 September 2019.
2019
€’000
2,419
225
338
80
2018
€’000
2,283
219
67
105
3,062
2,674
203
Financial Statements
204
Origin Enterprises plc Annual Report and Accounts 2019 e
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The Edixion Offset paper and board (Supplier: www.antalis.co.uk)
used for this report was produced using paper pulp sourced from
sustainably managed forests.
4-6 Riverwalk
Citywest Business Campus
Dublin 24
Ireland
T: +353 1 563 4900
F: +353 1 563 4916
Registered in Ireland
Registration no. 426261
www.originenterprises.com