Annual Report
and Accounts 2020
INNOVATE
COLLABORATE
SUSTAIN
125
Financial Statements
Directors and Other Information 114
Statement of Directors’
Responsibilities
115
Independent Auditors’ Report
116
Consolidated Income Statement 124
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
141
196
198
129
130
199
128
126
200
320
Strong Operational Team
Agrii UK employs
approximately 320
operational staff during
the peak of the season
to successfully support
its customers
+
See Agrii UK Case Study on page 33
103
Distribution
Centres
€64.3m
of free cash fl ow
demonstrating strong
cash generation
GLOBAL
COLLABORATION
CONTENTS
Strategic Report
Governance
Board of Directors
74
Directors’ Report
76
Chairman’s Overview
79
Corporate Governance Statement 81
Nomination and Corporate
Governance Committee Report
88
Audit and Risk Committee Report 91
Remuneration Committee Report 95
At a Glance
6
Our Segments
7
Chairman’s Statement
8
Chief Executive’s Review
10
Financial Review
12
Alternative Performance Measures 19
Our Business
20
Strategy
22
Business Model
26
Key Performance Indicators
28
Business Review
- Ireland and the United Kingdom 30
- Continental Europe
36
- Latin America
42
Sustainability Report
48
Risk Report
64
RISING
TO THE
CHALLENGE
We help farmers
optimise crop yield
and economic returns
on a sustainable basis.
+
More on page 48
+
More on page 45
HIGHLIGHTS
FY20 was a challenging
year for the Group, however
strong cash generation
and reduced net debt
leaves the Group in a solid
financial position.
> Group revenue decrease of 11.6% to
€1,589.1 million, and 11.7% on an
underlying1 basis
>
Strong cash generation with free cash
flow of €64.3 million (2019: €54.0 million)
> Reduction in net debt2 to €53.2 million
> Operating profit of €44.1 million, a decrease
(2019: €75.6 million)
of 46.4% and 44.6% on an underlying1 basis
> Working capital inflow of €30.3 million
> Group operating margin of 2.8%
(2019: Outflow of €12.7 million)
(2019: 4.6%)
> Adjusted diluted earnings per share
of 25.69 cent in line with guidance
>
Suspension of final dividend with total
dividend of 3.15 cent (2019: 21.32 cent)
> Disposal of the Group’s 20% stake
in Ferrari Zagatto, Brazil
Revenue
€1,589.1m
(11.6%)
(11.6%) at constant currency3
Operating Profit1
€44.1m
(46.4%)
(44.5%) at constant currency3
Adjusted Diluted EPS2
Free Cash Flow
25.69c
(51.2%)
(49.2%) at constant currency3
€64.3m
(2019: €54.0m)
ROCE
7.3%
(2019: 13.2%)
Dividend per Share
3.15c
(2019: 21.32 cent)
1. Excluding currency movements and the impact
of acquisitions.
2. Before the impact of IFRS 16 lease transition,
as defined for banking covenant purposes.
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 (2020: €7.7m, 2019: €7.1m) and exceptional items,
net of tax (2020: €5.2m, 2019: €7.0m).
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.
2
Origin Enterprises plc Annual Report and Accounts 2020
3
320
Agrii UK’s
Operations Team
+
More on page 33
STRATEGIC
REPORT
At a Glance
Our Segments
Chairman’s Statement
Chief Executive’s Review
Financial Review
Alternative Performance Measures
Our Business
Strategy
Business Model
Key Performance Indicators
Business Review
- Ireland and the United Kingdom
- Continental Europe
- Latin America
Sustainability Report
Risk Report
6
7
8
10
12
19
20
22
26
28
30
36
42
48
64
45,000
Crop Field Trials
4
Origin Enterprises plc Annual Report and Accounts 2020
Strategic Report
Governance
Financial Statements
5
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 inputs 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,
speciality nutrition 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.
Revenue
2%
2%
37%
61%
34%
64%
OUR SEGMENTS
Latin America
Ireland and the UK
Continental Europe
103
Distribution Points
70
Demonstration Farms
33
Input Formulation
and Processing Facilities
Latin America
Ireland and the UK
Continental Europe
This segment includes the
Group’s operations in Brazil.
This segment includes the
Group’s wholly-owned Irish
and UK based operations in
addition to the Group’s Irish
and UK based associates and
joint venture undertaking.
This segment includes the
Group’s operations in Poland,
Romania, Ukraine and
Belgium.
+
More on pages 42 to 47
+
More on pages 30 to 35
+
More on pages 36 to 41
>2,600
Employees
Operating Profit
16%
10%
17%
2020
€1.6bn
2019
€1.8bn
Ireland & the UK
Continental Europe
Latin America
2020
€44.1m
2019
€82.3m
Ireland & the UK
Continental Europe
Latin America
31%
53%
73%
6
Origin Enterprises plc Annual Report and Accounts 2020
Strategic Report
Governance
Financial Statements
7
2020Irl/UK: 53%CE: 31%LATAM: 16%2019Irl/UK: 73%CE: 17%LATAM: 10%2020Irl/UK: 53%CE: 31%LATAM: 16%2019Irl/UK: 73%CE: 17%LATAM: 10%2020:Irl/UK: 61% CE: 37% LATAM: 2% 2019:Irl/UK: 64%CE: 34%LATAM: 2%2020:Irl/UK: 61% CE: 37% LATAM: 2% 2019:Irl/UK: 64%CE: 34%LATAM: 2% CHAIRMAN’S STATEMENT
Resilient performance in
a very challenging year.
Our people successfully
sustained operations
to support primary
food producers through
COVID-19 pandemic.
Dear Shareholder
FY20 Overview
I am pleased to report that Origin
has delivered a resilient performance
in 2020, through what has been
a very challenging year due to the
COVID-19 pandemic and extreme
localised weather conditions in certain
countries in which we operate.
Group revenue was €1,589.1 million, a
decrease of 11.6% and Group operating
profit was €44.1 million, a decrease of
46.4%. The Group delivered free cash
flow of €64.3 million, a working capital
inflow of €30.3 million and a reduced
net debt position of €53.2 million.
Details of our financial performance
are set out in the Financial Review
on pages 12 to 18.
Leadership Changes
After 13 years at the helm of Origin
and 35 years with the Group, Chief
Executive Officer Tom O’Mahony
retired from his position on 30 June
2020. I would like to acknowledge
and extend our appreciation of Tom’s
leadership, dedication and unwavering
commitment to the Company during
his tenure. Tom led the Group through
its journey from an Irish-focused
business to an international agri-
services organisation with a stock
market listing.
Sean Coyle, who joined as the Group’s
Chief Financial Officer in September
2018, was appointed to the role of
CEO with effect from 1 July 2020. We
believe Sean is the right person to lead
the Group forward through its next
phase of growth and development and
wish Sean every success in his role.
I am pleased to welcome TJ Kelly as the
new Chief Financial Officer. TJ comes
from Hostelworld Group plc and will
join Origin no later than March 2021.
Strategy
The Group’s strategy remains a key
focus for the Board, particularly as
we navigate the business through
significant political, economic,
environmental and industry changes,
amidst the continuing COVID-19
pandemic and the uncertainties
created by Brexit. Priorities for the
year included driving forward our
sustainability agenda, focusing on
optimising our core businesses and
maintaining financial stability against
a backdrop of challenging weather
conditions and COVID-19.
Further illustrations on the
implementation of our strategic
priorities during the year are outlined
on pages 30 to 47 within the Business
Review section of this Annual Report.
Company of our commitment in this
area, we have nominated Kate Allum,
Non-Executive Director, as Board
sponsor to support the executive
team in overseeing the Company’s ESG
programme. Further details are set out
in the Sustainability Report on pages
48 to 63.
COVID-19
Good corporate governance at all
levels of the business becomes even
more important in challenging times.
The outbreak of COVID-19 during the
year tested our resilience and agility,
as it did many businesses, economies
and governments worldwide. As the
COVID-19 crisis rapidly escalated, it
demanded a swift and agile response
from the Group. The vast bulk of
Origin’s businesses were designated
as essential services. Origin’s ability to
quickly adapt and take decisive actions
was critical and set the foundation
for continued operations, ensuring
our farmers and growers continued to
receive the products they needed to
maintain a strong food supply chain
in each of our markets. In order to
do this, it was critical that the safety
and wellbeing of our workforce was
maintained through strict adherence
to government and health authority
guidance. In this context, on behalf
of the Board, I would like to thank all
of those employees who continued
to work diligently and professionally
through the pandemic and maintain
operations in such difficult
circumstances.
The robustness of our corporate
governance framework also came into
focus through the financial discipline
shown, the increased risk oversight
and the socially responsible decisions
made around Director compensation,
including an interim 20% reduction in
Director fees and salaries.
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 and the industry in which we
operate. We continued to expand our
sustainability agenda this year and
work to make sustainability integral
to our culture, our way of operating
and our decision-making. Emphasising
the importance to the Board and
Dividend
An interim dividend of 3.15 cent per
share was paid on 14 April 2020 to
shareholders on the register on 27
March 2020. However, as market
conditions became more challenging
and the Group faced increased
uncertainty due to the COVID-19
pandemic, the Board determined
that it was prudent to suspend the
final dividend for this year. This was
announced in our Q3 Trading Update
on 17 June 2020. Acknowledging the
decision to suspend the final dividend,
the Executive Directors voluntarily
waived their entitlement to any
unvested share options.
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 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 81 to 87.
I would 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.
Culture and People
Our employees are our most
important asset. The Group’s success
reflects the hard work of all our
talented people. We strive to cultivate
an open, collaborative, diverse, and
inclusive workplace. Throughout the
year we continued to invest in our
people and in fostering a culture built
on our vision, purpose and values.
Our employee engagement strategy
’Let’s Talk’ continued through
COVID-19 restrictions, as we adapted
how we communicated with our
employees and increased our
focus on their safety and wellbeing.
Following a visit by the Board to
the Group’s operations in Belgium
in December 2019 to meet with
employees, Board engagement moved
online with Non-Executive Directors
joining executive business update calls
with local senior management teams
in Ireland and the UK, Continental
Europe and Latin America.
Other initiatives underpinning our
people strategy include our diversity
and inclusion programme, annual
employee engagement surveys,
continuous learning and professional
development opportunities, and
workforce wellbeing activities.
On behalf of the Board, I would like
to thank both our retired CEO and
our new CEO, our management
team and all our employees for their
commitment and hard work in what
has been an extremely challenging
year for the Group.
Outlook
The Group enters FY21 in a solid
financial position with a strong
leadership team in place. We are
confident that our track record
of strong cash generation, the
robustness of our operating model
and our market-leading R&D and
innovation, position us well to respond
to ongoing COVID-19 disruptions,
Brexit and other challenges in the
year ahead as they unfold. We remain
focused on delivering the Group’s
long-term ambitions in a sustainable
and socially responsible manner.
On behalf of the Board, I would like
to thank you, our shareholders,
for your continued support.
Rose Hynes
Non-Executive Chairman
22 September 2020
€64.3m
Free Cash Flow generated in the year
+
Strategy on page 22
Sustainability on page 48
8
Origin Enterprises plc Annual Report and Accounts 2020
Strategic Report
Governance
Financial Statements
9
CHIEF EXECUTIVE’S REVIEW
Dear Shareholder,
THE PRINCIPAL HIGHLIGHTS ARE AS FOLLOWS:
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.
FY20 was a year of challenge and
change for Origin in an operating
environment that has never been
experienced by the Group in its history.
This is my first communication to you
as Group CEO following the retirement
of Tom O’Mahony in June 2020. Tom
was Group CEO for 13 years and his
dedication, commitment and leadership
of Origin over this time has resulted
in the development of the Group into
the leading international agri-services
provider it is today. I would like to
wish Tom well for the future and I look
forward to the challenge of leading
the Group in our next phase of growth
and development.
Subsequent to year end, and following
an extensive recruitment process, TJ
Kelly was appointed as my successor as
Group CFO. I would like to welcome TJ
to the Group and I am confident that he
will be successful in the role.
The Group delivered a robust
operational performance during the
year with operating profit of €44.1
million despite the many challenges
encountered during the year. FY20
brought some extreme weather
conditions, particularly in the UK and
Ireland. The first half of our financial
year was impacted by prolonged wet
conditions and consequently autumn
and winter planting was reduced by
40%, affecting the demand for inputs.
The second half of the year started with
our markets experiencing extremely
dry conditions, which persisted into
June, which negatively impacted crop
potential for farmers and reduced
overall investment on-farm. The Group
saw an overall reduction of 10.7% in
underlying agronomy services and crop
input volumes during the year.
COVID-19
The second half of our financial year
was further impacted by COVID-19
requiring our people to respond with
prompt planning, communication and
implementation of safety protocols
across the Group’s operations to
drive the actions necessary to mitigate
the risk of the virus spreading and
to ensure that we continued to serve
our customers.
Agriculture has been identified as
a key sector and the services we
Financial
› Free cash flow of €64.3 million
› Operating profit of €44.1 million
› Adjusted diluted EPS of 25.69c
› Suspension of final dividend
› Reduction in net debt to
€53.2 million
› Strong working capital
management with inflow
of €30.3 million
Operational
› Excellent operational
performance across all markets
despite COVID-19 restrictions
1.4m digital hectares on-boarded
Investment in seed plants in UK,
Romania and Poland
› Doubling of capacity at
›
›
Invergordon fertiliser plant
› Dry powder capacity trebled
at Fortgreen plant in Brazil
Strategic
› Divestment of 20% interest in
Ferrari Zagatto
› Re-branding of Romanian and
Ukrainian operations under the
Agrii banner
› Addition of Amenity R&D Centre
at Throws Farm
› Development of NUTRI CO2OL
carbon footprint calculator
provide are deemed essential to the
maintenance and continuity of the
food supply chain. Our number one
priority is the health of our people,
trading partners, customers and the
communities where we operate. The
Group continuously monitors the
advice and guidance of governments
and health authorities across our
markets, with ongoing audits at all
our operating facilities to ensure we
adhere to safe social distancing and
all other health and safety guidance.
Thanks to the professionalism and
dedication of our team, key logistics
and warehousing activities have been
maintained and agronomy advice
delivered, despite farm visits being
limited in accordance with social
distancing protocols.
The Group continues to monitor
developments closely across our
locations and is taking appropriate
actions to ensure we provide the
safest environment we can for our
stakeholders, while continuing to
serve the needs of the agricultural
community in a responsible manner.
A detailed overview of the impact of
COVID-19 and the Group’s response
has been set out in the Risk Report
on pages 64 to 71.
FY20 Progress
As I have already noted, a resilient
operational performance was
delivered in FY20, with the principal
highlights set out above.
Divisional Review
Ireland and the UK
Ireland and the UK delivered a
disappointing performance in
extremely challenging conditions,
recording a 17.0% decrease
in underlying revenue and a
61.4% decrease in underlying
operating profit.
A full business review of performance
in Ireland and the UK is set out on
pages 30 to 35.
Continental Europe
Continental Europe delivered a
satisfactory performance despite a
challenging operating environment
during the year. Our Romanian
and Ukrainian businesses adopted
the Group’s single brand identity,
Agrii, in common with Origin’s
other direct farm customer facing
business operations.
A full business review of performance
in Continental Europe is set out on
pages 36 to 41.
Latin America
LATAM delivered an excellent
operating performance with volume
development and underlying growth
delivered despite a delayed season
and start to in-field operations. The
weakening of the Brazilian Real in the
second half of the year has impacted
overall earnings in LATAM.
A full business review of performance
in LATAM is set out on pages 42 to 47.
Dividend
As a result of the uncertainty driven
by COVID-19, the Board determined
that it was prudent to suspend the
final dividend for FY20. As noted by
the Chairman in her Statement, in
acknowledgment of this decision, the
Executive Directors voluntarily waived
their entitlement to any unvested
share options.
Brexit
The Group continues to monitor
the trade negotiations between
the European Union and the United
Kingdom following the United
Kingdom’s formal exit from the EU on
31 January 2020, and is progressing
plans should no deal be concluded by
the end of the transition period on
31 December 2020. All appropriate
steps have been taken, and scenario
planning completed, to ensure the
Group is adequately prepared in the
event of no deal.
Summary and Outlook
FY20 was a challenging year for the
Group, and the financial discipline
shown has resulted in the Group
continuing to be in a solid financial
position. Against an uncertain
backdrop of Brexit and COVID-19,
the Group will continue to implement
a prudent approach to capital
allocation and risk management.
FY20 was defined by extreme
weather challenges that we hope will
normalise in FY21 returning the Group
to growth. FY21 will hold challenges
for the Group, however, our robust
integrated crop services business
model will help us address and
overcome these challenges.
I am confident that Origin has
the strong leadership team in
place required to address the
operating challenges faced by the
Group and to deliver on the Group’s
long-term ambitions.
Sean Coyle
Chief Executive Officer
22 September 2020
10
Origin Enterprises plc Annual Report and Accounts 2020
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Financial Statements
11
FINANCIAL REVIEW
This Financial Review
provides an overview of
the Group’s financial
performance for the year
ended 31 July 2020 and
of Origin’s financial
position at that date.
OVERVIEW OF RESULTS
+
Key Performance Indicators
on pages 28 and 29
+
Business Reviews on pages
30 to 47
› Group revenue decrease of 11.6% to €1,589.1
› Decrease in net debt to €53.2 million
million and 11.7% on an underlying basis
(2019: €75.6 million)
› Operating profit of €44.1 million, a decrease
of 46.4% and 44.6% on an underlying basis
› Working capital inflow of €30.3 million
(2019: Outflow of €12.7 million)
› Group operating margin of 2.8% (2019: 4.6%)
› Adjusted diluted earnings per share
of 25.69 cent in line with guidance
›
Strong cash generation with free cash flow
of €64.3 million (2019: €54.0 million)
›
Suspension of final dividend with total dividend
of 3.15 cent (2019: 21.32 cent)
› Appointment of Sean Coyle as Chief Executive
Officer and TJ Kelly as Chief Financial Officer
Results Summary
Revenue
Operating profit1
Associates and joint venture2, net
Total Group operating profit1
Finance expense, net
Profit before tax1
Income tax4
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.
2020
€’m
1,589.1
44.1
6.2
50.3
(11.3)
39.0
(6.2)
32.8
25.69
(53.2)
2020
€’m
19.8
9.4
(1.6)
5.2
32.8
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
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 undertaking.
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
2020
2019
Revenue
€’m
Operating profit1
€’m
Revenue
€’m
Operating profit1
€’m
967.9
590.1
31.1
1,589.1
23.3
13.7
7.1
44.1
1,159.4
605.2
33.6
1,798.2
60.0
14.2
8.1
82.3
The result from the Group’s associates and joint venture undertaking was €6.2 million (2019: €6.7 million).
Revenue
Group revenue decreased by 11.6% from €1,798.2 million in the prior year to €1,589.1 million. On an underlying basis
revenue decreased by 11.7% driven by reduced demand for crop protection, seeds and fertiliser, particularly in the UK.
12
Origin Enterprises plc Annual Report and Accounts 2020
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Governance
Financial Statements
13
Operating Profit1
Operating profit1 decreased by 46.4% to €44.1 million compared to €82.3 million in the previous year. On an underlying
basis, operating profit1 decreased by €36.7 million (44.6%) primarily driven by decreased volumes and margins in Ireland
and the UK.
Operating Profit Bridge
Taxation
The effective tax rate for the year ended 31 July 2020 was 18.5% (2019: 15.0%), and reflects the mix of geographies
where profits were earned in the year.
Exceptional Items
Exceptional items net of tax amounted to €5.2 million in the year. These principally relate to the non-cash write down of
intangible assets due to rebranding, fair value adjustment on the Group’s investment properties and transaction related
costs. Exceptional items are summarised in the table below:
€82.3m
(€36.7m)
85
80
75
70
65
60
0.1m
€45.7m
(€1.6m)
€44.1m
FY19
Underlying
Acquisitions
FY20
(excl. currency)
Currency
FY20
Seasonality
The Group’s operating profit1 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 profit1
FY20
Q1
€’m
371.2
(1 (1.3)
Q2
€’m
233.7
(1.5)
Q3
€’m
604.8
22.5
FY19
Q1
€’m
Q2
€’m
Q3
€’m
Q4
€’m
379.4
24.4
Q4
€’m
Total
€’m
1,589.1
44.1
Total
€’m
Revenue
Operating profit1
371. 430.0
233 271.6
60 595.4
379. 501.2
1,51,798.2
13.7
(1 (4.7)
22. 32.6
2 40.7
4 82.3
€46.9 million of operating profit1 was generated in the seasonally more important second half of the financial year,
a decrease of €26.4 million (36.0%) on the second half of 2019.
Associates and Joint Venture
Origin’s share of the profit after interest and taxation from associates and joint venture amounted to €6.2 million
in the period (2019: €6.7 million).
Finance Expense and Net Debt
Net debt5 at 31 July 2020 was €53.2 million (€93.9 million including IFRS 16 Lease debt) compared to net debt of
€75.6 million at the end of the previous year. The movement was driven by an inflow in working capital in the period,
following a sustained focus on working capital management across the Group.
Net finance costs amounted to €11.3 million, which represents a decrease of €0.6 million on the prior year.
Excluding the impact of IFRS 16, there was a reduction in net finance costs of €2.3m reflecting lower local debt levels
in our Continental European businesses and lower interest rates, year-on-year, across the Group.
Year ended 31 July
Write down of intangible assets due to rebranding
Loss on disposal of associate
Pension and rationalisation related costs
Fair value adjustment and related costs on investment properties
Transaction, other related costs and movements in contingent consideration, net
Total exceptional items, net of tax
Adjusted Diluted Earnings per Share3 (‘EPS’)
EPS amounted to 25.69 cent per share, a decrease of 51.2% on 2019.
The year-on-year decrease of 26.96 cent per share can be summarised as follows:
Impact of
Underlying reduction
Acquisitions
Currency
Total
Cent per share
(26.47)
0.60
(1.09)
(26.96)
2020
€’m
5.7
0.5
0.2
(0.7)
(0.5)
5.2
%
(50.3%)
1.1%
(2.0%)
(51.2%)
Dividends
In light of market conditions and uncertainty relating to the COVID-19 pandemic, in June 2020 the Board determined that
it would be prudent to suspend the final dividend for FY20. As a result, the total dividend for the year will be 3.15 cent
per ordinary share following the payment of the interim dividend in April 2020. Acknowledging the decision to suspend
the final dividend in June, the Executive Directors voluntarily waived their entitlement to any unvested share options.
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.
At 31 July 2020 the Group had unsecured committed banking facilities of €430.0 million (2019: €430.0 million), of which
€30.0 million will expire in September 2021, €100.0 million will expire in May 2022 and €300.0 million will expire in
June 2024.
Cash Flow and Net Debt
Net debt5 at 31 July 2020 was €53.2 million compared to net debt5 of €75.6 million 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 2020 included:
Covenant
Net debt: EBITDA
EBITDA: Net interest
Maximum 3.5x
Minimum 3.0x
2020
Full year
times
1.18
5.76
2020
Half year
times
3.24
7.57
2019
Full year
times
2019
Half year
times
0.87
8.06
2.57
9.25
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Origin Enterprises plc Annual Report and Accounts 2020
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15
A summary cash flow is presented below:
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
Lease payments
Other
Decrease in cash
Opening net debt
Translation
Closing net debt5
2020
€’m
63.8
30.3
(16.6)
77.5
(2.2)
75.3
5.8
(7.9)
(6.8)
(7.4)
1.0
(26.8)
(11.4)
0.4
22.2
(75.6)
0.2
(53.2)
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)
Working Capital
For the year ended 31 July 2020, there was a working capital inflow of €30.3 million following a sustained focus on
working capital management across the Group during the year. €14.6m of the inflow relates to UK COVID-19 VAT
deferrals which will reverse in the second half of FY21. Working capital allocation remains a key priority for the
Group. 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 7.3% in 2020
(2019: 13.2%), as follows:
Total assets
Total liabilities
Adjusted for:
Net debt (including IFRS 16 Lease liability)
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
2020
€’m
1,232.4
(920.0)
93.9
49.2
54.4
509.9
686.9
34.7
9.4
6.2
50.3
7.3%
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%
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.
Free Cash Flow
The Group generated free cash flow in the year of €64.3 million (2019: €54.0 million).
EBITDA (excluding associates and joint venture)
Interest paid
Tax paid
Routine capital expenditure
Working capital inflow / (outflow)
Dividends received
Free cash flow
2020
€’m
52.7
(8.6)
(8.0)
(7.9)
30.3
5.8
64.3
2019
€’m
90.6
(11.4)
(12.6)
(6.9)
(12.7)
7.0
54.0
Free cash flow means the total of earnings before interest, tax, depreciation (excluding depreciation of IFRS 16 Right
of Use leased assets), 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 2020 are as follows:
Non-current liabilities
Asset / (liability) in defined benefit schemes
The movement during the year can be summarised as follows:
2020
€’m
0.4
Net liability at 1 August 2019
Current and past service costs
Gain on settlement
Other finance expense, net
Contributions paid
Remeasurements
Translation
Net asset at 31 July 2020
2019
€’m
(1.5)
€’m
(1.5)
(0.5)
0.4
-
1.5
0.6
(0.1)
0.4
The remeasurements of €0.6 million principally relate to changes in financial assumptions together with remeasurement
gains on scheme assets.
16
Origin Enterprises plc Annual Report and Accounts 2020
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17
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 23 to the financial statements.
Share Price
The Group’s ordinary shares traded in the range of €1.77 to €5.20 during the year from 1 August 2019 to 31 July 2020.
The Group’s share price at 31 July 2020 was €3.17 (31 July 2019: €4.95).
Investor Relations
Our strategy aims to create long-term shareholder value and 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. In the second half of the financial year, all engagement
was facilitated remotely through the use of virtual conferences and video calls.
Contact with institutional shareholders is the responsibility of the executive management team including the
Chief Executive Officer, Chief Financial Officer and Head of Investor Relations.
During the year there were 152 meetings / conference calls with institutional investors across 8 financial centres.
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 Before amortisation of non-ERP intangible assets, net of related deferred tax (2020: €7.7m, 2019: €7.1m) and exceptional items,
net of tax (2020: €5.2m, 2019: €7.0m).
Income tax before tax impact of exceptional items and excluding tax on amortisation of non-ERP intangible assets.
4
5 Before impact of IFRS 16 Lease transition, as defined for banking covenant purposes.
ALTERNATIVE PERFORMANCE MEASURES
Certain financial information set out in this Annual Report is not defined under International Financial Reporting
Standards (‘IFRS’). These key Alternative Performance Measures (‘APMs’) represent additional measures in assessing
performance and for reporting both internally and to external users. APMs are presented to provide readers with
additional financial information that is regularly reviewed by management. The Group believes that the presentation
of these non-IFRS measurements provides useful supplemental information which, when viewed in conjunction with
IFRS financial information, provides stakeholders with a more meaningful understanding of the underlying financial and
operating performance of the Group.
The key APMs of the Group are set out below.
Operating Profit
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.
The reconciliation of Operating profit to the reported IFRS measure is as follows:
Operating profit
Operating profit (per Consolidated Income Statement)
Exceptional items
Amortisation of Non-ERP related intangible assets
Share of profit of associates and joint venture
TOTAL
2020
€’m
34.4
6.5
9.4
(6.2)
44.1
2019
€’m
73.2
7.0
8.8
(6.7)
82.3
Adjusted Diluted EPS
The definition and calculation of Adjusted Diluted EPS is set out in Note 11.
Free Cash Flow
The definition and calculation of Free Cash Flow is set out in the Financial Review on page 17.
Return on Capital Employed
The definition and calculation of Return on Capital Employed is set out in the Financial Review on pages 16 and 17.
EBITA
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.
The reconciliation of EBITA to the reported IFRS measure is as follows:
EBITA
Operating profit (per Consolidated Income Statement)
Exceptional items
Amortisation of Non-ERP related intangible assets
TOTAL
2020
€’m
34.4
6.5
9.4
50.3
2019
€’m
73.2
7.0
8.8
89.0
EBITDA
EBITDA is earnings before interest, tax, depreciation, amortisation of non- ERP related intangible assets and exceptional
items of wholly-owned businesses.
The reconciliation of EBITDA to the reported IFRS measure is as follows:
EBITDA
Operating profit (per Consolidated Income Statement)
Depreciation
Exceptional items
Amortisation of Non-ERP related intangible assets
Share of profit of associates and joint venture
TOTAL
2020
€’m
34.4
8.6
6.5
9.4
(6.2)
52.7
2019
€’m
73.2
8.3
7.0
8.8
(6.7)
90.6
18
Origin Enterprises plc Annual Report and Accounts 2020
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Financial Statements
19
OUR BUSINESS
A market leader through
acquisition, integration
and organic growth.
Origin is a recognised
leader in the Agri-Services
business with operations in
seven countries. The Group
supports primary producers
across all our markets.
What sets us apart
What is
Agronomy?
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.
What is an
Agronomist?
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.
What do
Agronomists do?
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
Our Approach to Integrated Agronomy:
Application Research
and Analysis
Prescription Development
Application and Delivery
›
Investment in research and
development to optimise
crop productivity.
› 45,000 trial units managed
› Advise primary producers on
all components of crop and
field management.
› Recommendation of customised
across the UK, Continental Europe
and Latin America.
solutions to optimise crop
yields and quality.
› Collaboration with key industry
› Ensuring environmental
partners and universities.
› Analysis of the needs of
primary producers.
and regulatory compliance
requirements are met.
› 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
Innovation and R&D
Supply Chain
› Well-established brands.
› Experienced and
committed people.
› Strong on-farm presence.
› Flexible production facilities
to cater for high seasonal
variation in demand.
› Leading bespoke fertiliser blender.
› Continuous and technically-led
product development.
› Strategic locations and
geographic spread.
› Well-invested blending
› Environmentally sustainable
and formulation facilities.
product offering.
› Continuing benchmarking
of production and plant
performance.
› Market share provides
supply chain flexibility.
› Strong supplier partnerships.
› Focus on health and safety.
Poland | Romania | Ukraine
20
Origin Enterprises plc Annual Report and Accounts 2020
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21
STRATEGY
Our
Vision
Our
Purpose
To be the leading and trusted
partner of choice to the
farmers, growers and amenity
professionals we serve.
Optimising sustainable
agriculture and food
production through innovation,
research & development and
agronomic expertise.
Our 2023 Ambition
Our strategic ambition is
to deliver agronomic led
solutions, that meet the
advancing needs of all
stakeholders, collectively
growing profitability and
returns in a sustainable
and socially responsible
manner. To achieve this
objective, we have set
ambitious financial and
non-financial targets, from a
2018 base year. Despite the
challenges that FY20
has brought, the targets
represent a balanced
assessment of expected
performance over time,
taking account of inter
year variances and timing
of acquisitions.
Our
Values
nity
u
m
m
o
C
P
a
r
t
n
erships
P eople
A balance of organic and acquisitive growth
I
n
n
o
v
a
t
i
o
n
I n t e grity
Organic
3-4%
EBIT CAGR
EBIT CAGR
5-9%
Acquired
2-5%
EBIT CAGR
Ireland / UK
1-2%
Continental Europe
3-5%
Latin America
5-10%
Focus on delivering
Return on Investment
Group ROCE
12-15%
Free Cash
Flow Ratio
70-100%
Optimising
existing routes
to market
Sourcing
Opportunities /
Product Mix Change
Digital Platform
4m Ha
Product Based
Capabilities
22
Origin Enterprises plc Annual Report and Accounts 2020
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Governance
Financial Statements
23
STRATEGY
Creating
value for all
stakeholders
› Long-term partnerships as
trusted advisors and input
providers to farmers, growers
and amenity professionals.
› Leading market positions
which support the essential
global agriculture and food
production sector.
› Pioneering R&D and technical
innovation delivering sustainable
agronomic solutions which
accelerate productivity and
maximise efficiency.
›
Integrated supply chains and
multiple routes to market across
strategic geographic locations.
Strategic Priorities
› Digital technology optimised by
expert agronomist stewardship,
providing localised and
prescriptive solutions to farmers,
growers and amenity professionals.
› Positioned to capitalise on evolving
structural market trends of
increasing farm commercialisation,
professionalism and specialisation.
› Strong cash generation and
conversion capabilities.
Scale
Market Focus
Portfolio Positioning
People & Organisations
> 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.
> Maintain differentiated position as specialist
> Ongoing people and talent development.
route-to-market for crop technologies.
> Devolved accountability and autonomy to execute
> Optimise Group position through balanced
growth agenda.
business portfolio and geographical diversification.
2020
Progress
> During the year, our Romanian and Ukrainian
businesses adopted the Group’s single brand
identity Agrii, in common with Origin’s direct
farm customer facing business operations in
the UK and Poland.
> Latin America division achieved underlying
volume growth of 4.3%.
> Increased digital agronomy footprint
to over 1.4 million active hectares
on-boarded to date.
> Doubled capacity at Invergordon fertiliser
plant in Scotland.
> Trebled Dry Powder capacity in Fortgreen’s
Brazilian facility.
> 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.
2021
-
2023
Focus
> Origin Fertilisers UK launched NUTRI-CO2OL,
its independently verified model that enables
us to quantify the carbon footprint for any
individual fertiliser product.
> Agrii UK launched its Green Horizon
sustainability manifesto, setting out a five point
plan to help growers works towards Net Zero
food production by 2040.
> Agrii Poland, Romania and UK benefited from the
ongoing capital investment to enhance both seed
and speciality nutrition portfolios during the year.
> The Group has over 2,600 employees, 805 of whom are
customer facing agronomists and sales staff.
> Appointment of Sean Coyle as Chief Executive Officer
> Intra group sales of in-house micro nutrition
and TJ Kelly as Chief Financial Officer.
products doubled during the year.
> Establishment of a new high value vegetable
seed treatment centre at Agrii’s Throws Farm
Technology Centre. The facility is the only one
of its type in the UK.
> Successful implementation of centrally-driven COVID-19
guidance and controls to safeguard the wellbeing of our
team and ensure service continuity to customers.
> Launched our commitment to Diversity and Inclusion
‘You make our difference’ strategy, policy and training.
> Addition of Amenity R&D centre at Throws Farm.
> 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.
> 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%.
> 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.
24
Origin Enterprises plc Annual Report and Accounts 2020
Strategic Report
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Financial Statements
25
BUSINESS MODEL
What we do:
> Business-to-Business
Agri-Inputs
What sets us apart:
> Our Approach to
Integrated Agronomy
> Integrated Agronomy
and On-Farm Services
> Our Approach to Business-
to-Business Agri-Inputs
> Digital Agricultural Services
+
See more:
Page 6
+
See more:
Page 21
How we add value:
Our
Offer
Our
Brands
Nutrition
Crop Protection
Seed
Digital
Expertise / Advice /
Prescription
Agrii
Goulding
Fortgreen
RHIZA
Rigby Taylor
Origin Fertilisers
Linemark
Our
Channels
Our
End-User
Business-to-Business
Agronomist
Farmers & Growers
Amenity Professionals
Inputs
Outputs
People
Partnerships
Financial &
Strategic
Planning
Knowledge
& IP
Supply Chain
& Logistics
Sustainability
Yield
Enhancement
Profitability &
Competitiveness
Environmental
Stewardship
Maximise
Shareholder
Return
26
Origin Enterprises plc Annual Report and Accounts 2020
Strategic Report
Governance
Financial Statements
27
Find out more
Case Study in LATAM
on page 46
Find out more
Financial Review
on page 12
Find out more
Sustainability Report
on page 48
Find out more
KPI’s on pages 28 and 29
KEY PERFORMANCE INDICATORS
Strategic Priorities Key:
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.
Scale
People &
Organisations
Portfolio
Positioning
Market Focus
KPI
Description
Link to
Strategy
Current
Year
Historic
Result
Strategic
Ambition
Adjusted Diluted
Earnings per
Share (‘EPS’)
Measures adjusted
diluted EPS in the
current year compared
to the prior year.
Return on Capital
Employed (‘ROCE’)
Geographic
Diversity
Free Cash
Flow Ratio
Dividend
Number of
Agronomists
and Sales Staff
Digital Hectares
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.
Measures free cash flow
as a percentage of profit
after tax of wholly-owned
businesses, excluding
exceptional items and
amortisation of 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.
25.69c
7.3%
47%
(51.2%)
(2019:13.2%)
(2019:27%)
240.9%
3.15c
805
(2019:90.0%)
(2019:21.32c)
(2019:800)
1.4m ha
(2019:1.0m ha)
2017
2018
2019 2020
2017
2018
2019 2020
2017
2018
2019 2020
2017
2018
2019 2020
2017
2018
2019 2020
2017
2018
2019 2020
2017
2018
2019 2020
46.6c
48.8c 52.65c 25.69c
13.7% 13.5% 13.2% 7.3%
24%
23%
27%
47%
59.7% 106.0% 90.0% 240.9%
21.0c
21.0c
21.32c
3.15c
670
700
800
805
0.2m
0.7m
1.0m
1.4m
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 contribution from
geographies outside of
Ireland and the UK to in
excess of 40% of total
operating profit by 2023.
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.
+
See more:
Financial Review on page 12
Sustainability on page 48
28
Origin Enterprises plc Annual Report and Accounts 2020
Strategic Report
Governance
Financial Statements
29
BUSINESS REVIEW
Ireland and the
United Kingdom
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.
Ireland
UK
FY20 was characterised
by adverse weather in
Ireland and the UK and
an excellent operational
performance despite the
challenges encountered.”
Operational Review
Change on prior year
Revenue
Operating profit1
Operating margin1
Associates and joint venture2
2020
€m
967.9
23.3
2.4%
5.8
2019
€m
1,159.4
60.0
5.2%
6.7
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.
Underlying3
%
Constant Currency4
%
Change
%
(16.5%)
(61.1%)
(17.0%)
(61.4%)
(280bps)
(280bps)
(13.4%)
(13.9%)
(16.8%)
(61.3%)
(280bps)
(13.7%)
Ireland and UK in Numbers:
€
Overview
Ireland and the UK delivered a
disappointing performance in
extremely challenging conditions,
recording a 17.0% decrease in
underlying revenue and a 61.4%
decrease in underlying operating profit.
€967.9m
Revenue
The underlying volume reduction
for agronomy services and crop
inputs was 14.4% in the period.
Prolonged unseasonal weather
conditions in Ireland and the UK
resulted in lower volumes and
margins across the segment. Volume
development in the UK was impacted
by a 10.7% reduction in total plantings,
and importantly, a significant shift
from winter cropping to spring
cropping within the year. Despite
spring planting ultimately progressing
well, a prolonged dry period from
March to early June resulted in
reduced crop yield expectations, in
addition to limited pest and disease
pressure, which resulted in a 20.3%
reduction in crop protection volumes.
Operating margin decreased to
2.4% from 5.2% driven by a lower
intensity of crop input spend by
farmers and growers as a result of
the change in cropping mix.
+1,400
Employees
€23.3m
Operating Profit
Integrated Agronomy and
On-Farm Services
Integrated Agronomy and On-Farm
Services delivered a disappointing
result during the year, recording
lower volumes, revenues and
margins across its service and
input portfolios.
Demand for agronomy services and
inputs was impacted by negative
on-farm sentiment driven by
extremely challenging operating
conditions as a result of sustained
unfavourable weather and the impact
of COVID-19 restrictions. Intense
and prolonged rainfall in the first
half of the year was followed by
unseasonably dry conditions which
impacted overall crop potential and
curtailed on-farm investment.
Despite these challenges, Integrated
Agronomy and On-Farm Services
delivered an excellent operational
performance against a backdrop
of COVID-19 related restrictions
and the implementation of a range
of measures to ensure continuity
of service to farmers and growers.
The volumes delivered on-farm
in the third and fourth quarter
demonstrated the robustness of the
Group’s operational capabilities.
+
See more: Case Studies on pages 33 to 35
iFarms
B2B Sites
Technology Centres
c.30,000
Customers
Agrii invests in industry leading research and
development, including over 40,000 trial plots
undertaken by Agrii annually across the UK.
30
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31
Digital Agricultural Services
During the year, the Group’s digital
agronomy and precision farming
operation, Rhiza, which has
developed a suite of agronomist-
farmer enabled digital applications
designed to optimise crop
performance and input utilisation,
continued to add increased
functionality for farmers.
The development and roll out of
Origin’s digital offering continued at
pace during the year, with over 1.4
million active hectares on-boarded
to date, including significant growth
in Continental Europe, and firmly
on track to deliver our target of 4.0
million hectares by 2023.
Business-to-Business Agri-Inputs
Business-to-Business Agri-Inputs had
a challenging financial year, impacted
by prolonged unseasonal weather
resulting in lower volumes and
margins for fertiliser and animal feed
ingredients albeit set against a strong
comparable prior year.
Fertiliser
Despite a solid operating performance,
fertiliser recorded lower volumes
and profits in the period. The adverse
weather resulted in a reduced
cropping profile in the UK which
impacted demand. Although activity
levels on-farm were more favourable
in the second half of the financial
year, full year demand was behind that
achieved in the prior year. Downward
movement in global fertiliser markets
as the year progressed was also
a factor in revenue and margin
performance in the period.
The development and promotion
of enhanced efficiency fertiliser
and bespoke nutrition ranges will
continue to be a significant focus
in FY21. During the year the Group
developed an independently
validated carbon calculator, Nutri
CO2OL, which will enable us to
precisely quantify the carbon
footprint for each of the 13,000+
fertiliser blends we offer.
Amenity
Amenity recorded lower volumes,
revenues and profits in the period.
The closure of all sporting venues
along with the significant reduction
in landscaping and local authority
channels at the height of the
COVID-19 restrictions significantly
curtailed demand during the year.
With a large proportion of its
customer base having to temporarily
close, our amenity businesses
furloughed members of their
teams, on a rotating basis, from
late March onwards.
Feed Ingredients
Feed Ingredients delivered a
reasonable result in the year
reflecting a good operational
performance despite a reduction
in volumes.
The Group’s animal feed
manufacturing associate, John
Thompson & Sons Limited, in which
the Group has a 50% shareholding,
delivered a satisfactory
performance in the period.
Profit1 by Geography
31%
16%
Case Study
Agrii Logistics
In the UK, Agrii are industry leaders
with their R&D led approach to agronomy.
However, Agrii’s agronomists, seed and
fertiliser managers and farmers are reliant
on the right products getting
on-farm in time.
Agrii employs approximately 320 operational staff during the peak of
the season to support its operations including drivers, administration
support, production operators and supervisors, site managers and central
support. Together this team ensures that 230,000 chemical and certified
seed deliveries are made every year.
At each logistical hub, each picker can prepare 50 or more orders on a daily
basis during peak season to deliver:
› 60,000 tonnes of certified seed each year
› 8,000 individual chemical deliveries each week at peak
› 30 farm visits per day by each driver in peak season
In Agrii’s larger hubs, planning software is used to link to in-cab navigation
aids to make optimum use of vehicles, carrying capacity, miles and time
to satisfy agronomist and customer demands.
Agrii’s National Distribution Centre in Alconbury is operational 24/7
facilitating the overnight restocking of logistics hubs across the UK
as required.
During the COVID-19 restrictions imposed in the UK at the height of the
pandemic, Agrii’s logistical capabilities continued to operate effectively
maintaining critical supply to farmers all across the UK, while observing
all appropriate safety and social distancing protocols.
2020
€44.1m
53%
Latin America
Ireland & the UK
Continental Europe
1. Operating profit before
amortisation of non-ERP intangible
items and exceptional items
100-
2,000ha
Customer Profile
>30
Farms per day visited
by each driver in
peak season.
Lee Curds
Lee is a Senior Manager
in Agrii responsible for
a number of depots.
Based at Larkwhistle
he travels to other
sites to assist with the
implementation of
best practice and new
initiatives. He is also
heavily involved in
Agrii retaining their
operators licence, which
is essential in operating
their own fleet.
Agrii’s logistical
capabilities are of
central importance
to agronomists and
farmers alike. For
chemical deliveries
there is an expectation
that orders will be
on-farm no later than
the day after ordering,
and in many cases the
requirement is that it is
on-farm same day due
to plant growth stages
or disease pressure
posing a threat to a
farmer’s yield.”
Lee Curds, Senior Manager, Agrii
32 Origin Enterprises plc Annual Report and Accounts 2020
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Case Study
RHIZA: Origin’s Digital
Service Offering
The COVID-19 pandemic has proved
extremely challenging to all sectors of life
across Ireland and the UK. Agriculture
has been recognised as an essential pillar
of the economy, and we are committed
to supporting our industry and the
communities in which we operate.
In order to make a greater contribution to the agricultural industry and
community, Agrii and RHIZA agreed to make many of their services available
to their customers at no charge, providing the industry’s highest resolution
satellite imagery to farmers and growers at zero cost for the duration of the
pandemic restrictions.
Agrii and RHIZA are committed to providing support to all of our farming
family at a time where communities need to come together.
1.4
million
Active digital hectares
on-boarded across
our geographies.
4.0
million
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.
Case Study
Supporting
Frontline Workers
With agriculture deemed a critical
industry during the COVID-19 pandemic,
key workers are working tirelessly to keep
communities across Ireland and the UK
healthy. On World Health Day, a satellite
used to support farm decision making
came across something a little different.
In April 2020, Agrii agronomist Matthew Alford and farmer John Govier went
to a field in Devon to mow a 360m x 130m ‘#NHS’ sign in the grass. Contour,
a RHIZA Digital tool, captured the tribute using optical satellite imagery.
Support for the NHS extended past this gesture of appreciation for frontline
workers. Inspired by the ‘Clap for Carers’ tribute across the UK, the Agrii
team in Perth, Perthshire in Scotland donated a consignment of respiratory
masks to the Perth Royal Infirmary to help fight against the coronavirus
outbreak in Scotland.
A consignment of
respirator masks
donated to the Perth
Royal Infirmary to
help fight against the
coronavirus outbreak
in Scotland.
Photo: Support for the
NHS as seen from the air.
34
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BUSINESS REVIEW
Continental Europe
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.
Belgium
Poland
Ukraine
Romania
+
See more: Case Studies on pages 39 to 41
Technology Centres
Demonstration Farms
B2B Site
Operational Review1
Change on prior year
2020
€m
417.5
13.2
3.2%
2019
€m
440.1
13.9
3.2%
Change
%
(5.1%)
(4.7%)
-
Underlying3
%
Constant Currency4
%
(5.9%)
(2.3%)
10bps
(5.9%)
(2.3%)
10bps
Revenue
Operating profit2
Operating margin2
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 2020 crop marketing revenues and profits attributable to Continental Europe amounted to €172.7 million and €0.4 million respectively
(2019: €165.1 million and €0.3m 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.
Continental Europe in Numbers:
€
€417.5m
Revenue
+1,000
Employees
€13.2m
Operating Profit
c.17,000
Customers
Overview
Continental Europe delivered a
satisfactory performance despite a
challenging operating environment
during the year. Our Romanian and
Ukrainian businesses adopted the
Group’s single brand identity, Agrii,
in common with Origin’s direct farm
customer facing business operations
in the UK and Poland. The common
identity supports the group-wide
framework for technically led and
integrated agronomy services.
Underlying business volumes
declined by 1.9% in the period with
operating margins in line with FY19
at 3.2%.
Belgium
Belgium delivered a reduced result
for the year, encountering volume
and price challenges primarily driven
by weather related challenges
and global raw material price
movements throughout the year.
Poland
Poland delivered an improved
performance on the prior period.
There was positive volume
development across all market
channels supported by a solid
cropping area broadly in line
with the prior year. Performance
benefited from the ongoing
enhancement of Origin’s seed
and speciality nutrition portfolios
during the year and an excellent
operational performance, including
improved operating margin and
working capital management.
Image: In Poland, Agrii leads the
way with investment in research,
innovation and infrastructure with its
state of the art facility in Alexandrów.
+
See more:
Origin at a Glance on page 6
Our Business on page 20
36
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Philipinnes
BUSINESS REVIEW (CONTINUED)
Continental Europe
Continental Europe in Numbers:
Case Study
Ukraine
Ukraine delivered a disappointing
result during the year, recording a
reduction in profitability driven by
a challenging operational backdrop
characterised by highly competitive
trading conditions and volatile
currency movements.
The Group continues to prioritise
operational and working capital
efficiencies in Ukraine along with the
further development of high service
agronomy channels and precision
digital offerings. In common with our
Romanian businesses, our operations
in Ukraine also rebranded to Agrii
during the year.
100 -
50,000ha
Customer Profile
Romania
Romania delivered a satisfactory
result during the year, in line with the
performance of FY19.
Romania’s contribution was impacted
by sustained periods of dry weather
from early spring which impacted
on-farm investment decisions and
resulted in lower volumes recorded
year-on-year.
Operational performance
continues to improve, with enhanced
commercial effectiveness during
the period resulting in improved
operating margins and lower working
capital in the business. The move to
amalgamate our Romanian businesses
was accelerated with the rebranding
of the Group’s operations in Romania
as Agrii, in line with the rest of the
Group’s direct farm facing businesses
in UK and Poland.
Profit1 by Geography
31%
16%
2020
€44.1m
53%
358
Sales Force
Latin America
Ireland & the UK
Continental Europe
1. Operating profit before
amortisation of non-ERP intangible
items and exceptional items
8
Input Facilities
Launch of Agrii CE
In common with Origin’s direct farm
customer facing business operations in
the UK and Poland, our Romanian and
Ukrainian businesses adopted the Group’s
single brand identity, Agrii, during the
year. The common identity supports the
group-wide framework for technically led
and integrated agronomy services.
Agrii was launched in December 2019 in Romania and Ukraine as the new
brand for Comfert, Redoxim and Agroscope, having been adopted in Poland
since January 2016. As a leading provider of agronomy services, technology
and strategic advice, Agrii combines excellence and innovation with the
latest research and development to ensure our customers can meet today’s
farming challenges with knowledge and confidence.
As Agrii, the power of skilled agronomists has been harnessed along with
the best agri-intelligence to deliver unrivalled expertise and support for
sustainable and profitable farming systems across Continental Europe.
The rebranding is also an important aid to driving cultural change in the
businesses, focusing our agronomy teams on the key aspects of technical
advice we provide and away from traditional sales practices.
We are called Agrii
because we deliver
agri-intelligence
and innovation:
our strengths and
skills are embodied
in our name. Agrii’s
people are core to
our operations, and
as Agrii our people
across Continental
Europe have access
to market leading
agri-intelligence and
innovation to share
with the agricultural
community we serve.”
Rafal Prendke,
CEO Continental Europe
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Case Study
Certified Seeds - Poland
In Poland, Agrii operates a state of the art
Seed Processing and Input Formulation
facility in Alexandrów, where they are
leading the way with investment in
research, innovation and infrastructure.
The facilty in Aleksandrów provides a defined competitive advantage that
has allowed Agrii Poland to secure a number of third party seed processing
contracts, as well as processing our own seed for sale. The seeds processed
in Aleksandrów are exported to 8 different European countries, with the
competitive advantage aided by:
› ESTA certification
›
›
Industry leading quality control
Investment in upgraded packing lines
Dalgety Seeds in Alexandrów,
Poland.
Agrii’s online e-commerce
presence in Romania followed the
strategic rebranding of the Group’s
customer facing operations across
Continental Europe.
Since its launch in
April 2020 over 250
individual orders have
been processed by
Agrii’s e-commerce
platform.
Case Study
E-commerce: Romania
In Romania, Agrii operates a network
of 50 retail stores which are vital to
ensure small farmers get access to Agrii’s
product portfolio.
Local restrictions imposed due to the spread of COVID-19 impacted small
producers’ ability to access the physical locations, and as a result Agrii
launched its first online store in Romania. This ensured access to product
for the smaller producers who are a vital part of the agricultural community.
Agrii’s online presence has been extremely successful both for large farmers
and small producers alike.
8
The seeds processed
in Aleksandrów
are exported to
8 different European
countries.
50
Retail stores
across Romania
40
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BUSINESS REVIEW
Latin America
In Brazil, Origin has a controlling
interest in Fortgreen. Based
in Paraná State, Fortgreen is
an established leader in the
development and marketing of
value added crop nutrition and
speciality inputs. Following the
decision to not complete the Ferrari
Zagatto transaction the founding
shareholders repurchased the 20%
shareholding in July 2020.
Brazil
Paraná State
Latin America
has delivered an
excellent operational
performance with
volume development
and underlying
profit growth.”
+
See more: Case Studies on pages 45 to 47
Operational Review
Change on prior year
Revenue
Operating profit1
Operating margin1
Associates and joint venture2
2020
€m
31.1
7.1
22.9%
0.4
2019
€m
33.6
8.1
24.1%
-
Change
%
(7.4%)
(11.9%)
(120bps)
100.0%
Underlying3
%
Constant Currency4
%
6.4%
4.8%
(40bps)
-
7.6%
4.9%
(60bps)
100.0%
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.
Latin America in Numbers:
€
€31.1m
Revenue
6
Research Laboratories
€7.1m
Operating Profit
Overview
The Latin American (`LATAM’)
reporting segment incorporates the
Group’s subsidiary and associate
operations in Brazil.
The Group completed the acquisition
of a 20% shareholding in Ferrari
Zagatto E Cia. Ltda. (`Ferrari’),
a leading provider of agronomy
services, inputs, crop handling and
marketing services in June 2019.
Following a review of the Group’s
M&A priorities, the Board decided
not to increase the shareholding in
Ferrari, and consequently to divest
of the Group’s 20% shareholding in
Ferrari to its existing shareholders,
a transaction that completed in
July 2020.
LATAM delivered an excellent
operating performance with the
volume development and underlying
growth delivered against a delayed
season and start to in-field
operations for Brazil’s principal
crop, soya.
Underlying business volumes
increased by 4.3% in the period
with revenues increasing by 6.4%
on an underlying basis and by
7.6% at constant currency. The
weakening of the Brazilian Real in
the second half of the year has
impacted earnings in the LATAM
segment. Reported operating profit
has decreased by 11.9% despite an
increase in operating profit of 4.9%
at constant currency.
+1,000
End Customers
Image: Fortgreen operates a
comprehensive research and
new product development
capability at its headquarters
in Paraná State, Brazil.
+
See more:
Origin at a Glance on page 6
Our Business on page 20
42
Origin Enterprises plc Annual Report and Accounts 2020
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Financial Statements
43
Philipinnes
BUSINESS REVIEW (CONTINUED)
Latin America
LATAM delivered an excellent
operating performance with
the volume development and
underlying growth delivered
against a delayed season and
start to in-field operations for
Brazil’s principal crop, soya.
Profit1 by Geography
31%
16%
2020
€44.1m
53%
Latin America
Ireland & the UK
Continental Europe
1. Operating profit before
amortisation of non-ERP intangible
items and exceptional items
Latin America in Numbers:
Case Study
10,000
Litres of hand
sanitiser produced
COVID-19 Efforts
COVID-19 has impacted communities
across the globe as the pandemic spread
worldwide from March 2020. South
America has been one of the regions
most severely impacted and Brazil in
particular has been badly hit.
Fortgreen, headquartered in Paraná State in southern Brazil, is focused on
the development and marketing of speciality inputs and value-added crop
nutrition. Fortgreen management quickly identified that their manufacturing
capability could be efficiently adapted, using spare capacity in the plant,
to produce hand sanitiser which was badly needed in the local community.
To support the communities in which they operate, Fortgreen, in
partnership with two other local companies, Usina Santa Terezinha and
Midiograf (who provided the raw materials), produced 10,000 litres of hand
sanitiser in April 2020. Fortgreen provided 80 litres to employees, donated
a number of litres to the Health Secretary for each of the ten cities where
they operate and supported four local hospitals in Maringá, as follows:
› Maringá’s Psychiatric Hospital
› Maringá’s Cancer Hospital
› University Hospital of Maringá
› Hospital of Maringá
Further, Ferrari Zagatto donated Personal Protective Equipment
to the Health Secretary of Marialva.
Production of hand sanitiser
commenced to support
Fortgreen’s employees and
local communities.
50 -
5,000ha
Customer Profile
2,700
Crop Field Trials
€
+4.3%
Underlying growth
in business volumes
44
Origin Enterprises plc Annual Report and Accounts 2020
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45
Case Study
Side by Side Trials
Central to Fortgreen’s business
proposition is a proven and industry
leading research and new product
development capability. With six
research laboratories operating across
Fortgreen’s operations, the investment
in research and development provides
a competitive advantage to Fortgreen
in the marketplace.
An example of an activity undertaken by the research team in Fortgreen is
the Side by Side trials that have been ongoing since 2004. These trials have
been undertaken across approximately 400 trial fields covering some 17,000
hectares. The growers operating on the 400 trial fields account for over
650,000 hectares alone.
The output of the trials illustrate the effectiveness of Fortgreen’s product
offerings when compared to the competition, with Fortgreen’s products
delivering a higher yield in 98% of cases.
DARK ROOM
Case Study
Fortgreen’s research
and development
infrastructure includes
a ‘Dark Room’ which
uses hi-tech lasers to
analyse the quality of
sprays, bars and nozzles
to assess optimal
application methods.
The infrastructure also
includes a wind tunnel to
replicate drift and other
in-field variables.
Products in Focus:
Adjuvants and Foliar
Plant Nutrition
Fortgreen’s plant nutrition portfolio
includes some of the most innovative
formulations in the Brazilian
marketplace.
The products in this portfolio are developed using Fortgreen’s Crop
Protection Prodcut Technologies, where additives, complexing
compounds and other polymers promote industry leading results including:
› High solubility
› High penetration
› High translocation on adverse situations
› Humectant effects
› Spreader with sticker effects, avoiding run-off
Fortgreen’s nutrition portfolio includes products such as Germinate,
SojaPlus Gold and Xcellence all of which have proven capabilities and
formed an integral part of Fortgreen’s Side-by-Side trial initiative as set
out on page 46.
Research Capability
Fortgreen’s research and
development capabilities are key
to the success of side-by-side
trials and are used in extensive
trial plots to illustrate the
effectiveness of their products.
46
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SUSTAINABILITY REPORT
The need to protect
our natural capital has
never been greater. Food
production and security
relies on the availability of
land, water and nutrients.
These precious resources need
to be managed carefully to help
combat the intensifying problems
of climate change, ecosystem
services degradation, and the
need to increase sustainable food
production to feed a growing
global population.
In 2020, the increased frequency
of extreme weather events and the
COVID-19 pandemic, highlight the
essential role of agriculture and
food production and the necessity
for collective action to achieve a
net-zero emissions economy for a
world that prioritises the health of
people and our planet.
Our sustainability journey is one of
continuous evolution and progression
based on the understanding that
effective decisions made today will
positively influence the way food
is produced and consumed by
future generations.
In 2020 we made a focused and
collective effort to accelerate our
Environmental, Social and Governance
(‘ESG’) initiatives to produce a
roadmap aimed at safeguarding
the environment, promoting
economic growth and supporting
social development.
This year, in addition to internal
projects and ongoing stakeholder
engagement, we have taken action
to increase our transparency and
improve our disclosures on material
ESG developments in the following
sustainability report. Kate Allum,
Non-Executive Director, has assumed
additional responsibility as Board
sponsor to support the executive team
in overseeing the Group’s sustainability
programme. Origin has also enhanced
its CDP disclosure and launched
sustainability manifestos across its
largest operating businesses. In tandem
we have drafted a blueprint code of
conduct of how our suppliers should
operate as partners and have begun the
process of adopting the Task Force on
Climate related Financial Disclosures
(TCFD) recommendations.
Materiality
In 2019, we engaged a broad range of
internal and external stakeholders to
undertake a materiality assessment, to
help us better understand the impact
Origin can have on the economy,
society and the environment.
Based on the collective input we
received from our stakeholder
groups, this year we developed a
roadmap to focus on the areas of
greatest impact and categorised
the activities under three strategic
pillars. The roadmap also underpins
and supports the advancement of
our purpose, vision and values.
Food security starts with a healthy soil. By
developing and providing the essential building
blocks for optimal soil and plant health, Origin is
committed to playing a leading role in shaping a
future that safeguards the environment, enhances
food production systems, promotes economic
growth and protects people’s health and wellness.”
Sean Coyle, CEO Origin Enterprises plc
SUSTAINABILITY ROADMAP
Pillar
1
Promoting
sustainable food
production systems
On-farm products and services
Product innovation
Engagement and partnerships
Pillar
2
Conducting
business
responsibly
Resource efficiency and environmental impacts
Conducting business with integrity
Empowering our people
Pillar
3
Integrating sustainability
into our decision making and
engagement with all stakeholders
Governance and processes
Reporting and transparency
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. Agreed
at international level in September 2015, the
achievement of these 17 goals by 2030 requires
broad participation and creates a key role for
businesses in delivering solutions that can help
meet these challenges.
As a leading provider of agri-inputs and
agronomic services, our biggest opportunity
to contribute to the SDG Goals is through
innovation, the promotion of best agronomic
practice and adoption of market leading
technologies that help farmers and growers
produce more food, safely and efficiently while
reducing potentially harmful emissions to land,
water and air.
Within our roadmap, we highlight the SDGs
we contribute to under each pillar. While our
activities touch on many of the global goals,
SDGs 2, 12 and 13 have particular strategic
relevance for our business and we see the
greatest potential for positive impact and
opportunity in helping meet these goals.
Goal 2: Zero Hunger
By sustainably optimising fruit and crop
yield potential, we are working with growers
to help end hunger, improve nutrition and
achieve food security.
Goal 12: Responsible Consumption
and Production
We are working closely with growers to
promote innovation and best agronomic
practices. We ensure sustainable sourcing
and production practices across our
operations.
Goal 13: Climate Action
We are committed to acting to combat
climate change, reducing greenhouse gases
within our own operations and helping
growers reduce emissions and maximise
soil potential to capture carbon.
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Pillar
1
Promoting sustainable
food production systems
Agriculture remains one of the most
exposed sectors to climate induced
changes and equally is best placed
to lead efforts in achieving a net
zero emissions economy, as both an
emissions source and carbon sink.
We believe our unique position as
a trusted advisor on farm, can help
growers be as profitable, sustainable
and biodiverse as possible in a manner
most appropriate to their individual
farming situation.
Our vision of sustainable food
production is about embracing a
future in which growers achieve
a decent standard of living from
efficiently producing the highest
quality food, that supports the health
of the planet and well-being of
people, leaving no-one hungry.
On-farm products
and services
We want to play our part in designing
food production systems that feed
people well, improve environmental
outcomes, mitigate climate change
and deliver reliable profit for our
customers and shareholders.
Our experienced team of
agronomists understand the unique
needs of each field and cropping
system. Availing of the support
provided by our research teams, our
agronomists are equipped with the
real time tools to adapt their advice
and product choices to optimise
yields, minimise and mitigate
environmental impact, and comply
with all regulations.
Our Agrii brand has a heritage
of serving growers with proven,
innovative, products and solutions
that are targeted at individual
customer needs. To ensure we
continue to honour this commitment,
we have set out a series of aims and
ambitions as part of our five-point
plan “Green Horizons” to fortify the
promotion of sustainable, safe and
profitable food production systems.
Agrii UK will officially launch its Green
Horizons sustainability manifesto in
October 2020. The Group intends
to roll out Green Horizons across
all of our Agrii operations in 2021,
tailored for individual market
requirements. The five point plan is
designed with farmers and growers at
heart, because ultimately it is their
decisions and practices that deliver
sustainable food production.
Whatever complexities the future
holds, we believe that there has
never been a more exciting time for
agronomy to thrive.
PUTTING SUSTAINABLE AGRICULTURE INTO PRACTICE
s
e
g
n
e
l
l
a
h
C
y
r
t
s
u
d
n
I
i
s
m
A
r
u
O
Legislation
Loss of
Biodiversity
Climate
Change
Lack of Access
to New Breeding
Technology
Reduced
Farm
Profitability
Pest, Weed
& Disease
Resistance
Loss of Crop
Protection
Products
Public
Perception of
Food Production
Environmental
protection
policies, more
with less
Protect and
replenish
beneficial
species
EU and UK
lagging pace
of new variety
development
across other
continents
Increased
rainfall events
Prolonged
droughts
Growing policy
response to
help mitigate
climate change
Shift in
UK and
EU farm
payment
structures
placing
greater
emphasis
on farm
efficiency
Increasing
resistance
to plant
protection
products
Products
removed
from the
market and
increasing
development
costs for new
treatments
Lack of
understanding
of where food
comes from
and what
technologies
are required
to deliver
food security
Enhancing the
environment
Improving soil
health and fertility
Increasing farm
productivity and viability
Providing integrated
whole farm solutions
Increasing stakeholder
engagement
5-POINT PLAN
Our aim is to help farmers contribute towards seven relevant Sustainable Development Goals. These goals
are set by the United Nations to be achieved by 2030 and address many of the most urgent societal challenges.
AIMS
AMBITIONS
RELEVANT SUSTAINABLE
DEVELOPMENT GOALS
Enhancing the
environment
Collaborate with customers to learn how to achieve
Net Zero by 2040.
Develop accredited Agrii Environment training
programmes - public money for public goods.
‘Green Horizons Challenge’ - reduce plant protection
product inputs supported by bio-solutions.
Launch virtual Sprayer Operator Workshop to
maximise best practice.
Improving soil
health and fertility
Develop and adopt independently validated
measurements of soil health.
Improve soil health through value chain and
Increasing farm
productivity
and viability
Providing
integrated,
whole farm
solutions
Increasing
stakeholder
engagement
scientific collaborations.
Expand range and use of fertilisers with a low
carbon footprint.
Increase adoption of tailored nutrition programmes
through soil/tissue sampling and using RHIZA digital.
Maximise productivity in food production.
Embrace low impact research and modelling technologies
to facilitate sustainable research and development.
Lead the adoption of new technologies
which fast track climate and consumer benefit.
Encourage creative thinking.
Develop a new way to reward excellence in integrated
crop production through Agrii farm partnership.
Provide more resilient genetics through Agrii’s recently
launched Seed Variety Sustainability metrics.
Develop climate tolerant break crops
and associated agronomy advice.
Ensure all research is driven by Integrated
Pest Management principles.
Employ laboratory screening methods
to fast track bio-solutions.
Establish recognised metrics on plant
protection products to reduce negative
impacts whilst maintaining productivity.
Increase engagement with NGOs, food producers,
government and scientific bodies.
Digitally enable all customers via integrated
personalised portal including technical information.
Expansion of virtual iFarm events and trial tours.
Create crowd sourcing programme for innovation
sharing with customers.
50 Origin Enterprises plc Annual Report and Accounts 2020
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51
Case Study
First-ever Seed Variety
Sustainability Ratings
Established
Agrii has developed the first-ever
sustainability ratings for all of the UK’s
leading winter wheat and barley seed
varieties. Agrii’s Variety Sustainability
Rating, or VSR, was developed to
help growers choose cereals offering
them the greatest agronomic strength
with the least production risk and
environmental impact.
The VSR score ranges from 1* (low sustainability) to 3* (highly sustainable)
and considers many factors such as disease resistance, yield stability and
pest resistance.
The ratings are provided as part of the 2020 Agrii Advisory List which
complements the AHDB Recommended List with extra analyses,
independently validated, and statistically-robust data from Agrii’s
extensive national and regional variety testing programme. As well as
helping individual growers in their variety selection, the VSR score forms
part of a concerted effort to improve the sustainability of cereal-growing
in the UK as a whole.
The sustainability
ratings provide
an unbiased way
of comparing the
overall robustness
and resilience of
available crop genetics
to help growers and
their agronomists
narrow down their
initial winter wheat
and barley choices
from the plethora
of main varieties on
offer today.”
Colin Lloyd,
Head of Agronomy
Agrii UK
+
See more:
Origin at a Glance on page 6
Our Business on page 20
Product Innovation
CROP INPUTS
Soil and crop nutrition is pivotal to balancing the twin pillars of sustainable agriculture: food production and
environmental enhancement. Sufficient nutrients are needed to ensure economic yields of high quality, nutritious
food. Conversely, excess nutrients can adversely impact the environment, particularly air and water quality and
contribute to global warming.
Origin’s fertiliser businesses have developed a range of crop nutrition products and services that help farmers
achieve the right nutrient balance for optimum productivity and environmental protection: putting sustainable
agriculture into practice.
O2OL ®
NUTRI-CO2OL is Origin
Fertilisers’ independently
verified model that enables us
to quantify the carbon footprint
for any individual product. It
provides site-specific carbon
footprint for Origin’s 13,000+
grades from source to site gate.
›
› Quantifies a ‘real-time’
carbon footprint for any
individual product relating
to the specific raw materials
used and the production site
Independently verified by
ADAS against PAS 2050:2011
Specification for the
assessment of the life cycle
greenhouse gas emissions of
goods and services
› Enables farmers to
accurately quantify, measure
and report their actual
fertiliser carbon footprint,
rather than relying on
generic default values
› Enables agronomists and
farmers to compare the
GHG emissions of different
product options
Rig
Carbon
Footprint
Purchasing
Right r a t e
h
t f
e
r
t
ili
s
Measure to
manage
Fertiliser carbon
footprints to enable
informed choices
Encompassing
our operating
strategies for
sustainability
e
r
Production
Independently
verified
R I - CO
2OL
T
N U
Our
solutions
NUTRI - M A T CH
Product
stewardship
Nitrogen Use
Efficiency
Prescription fertilisers to
match soil and crop nutrient
requirements
R
i
g
h
t
p
la
c
Environmental
enhancement
e
Nutrition
agronomy
Right time
Optimal
nutrient
balance
NUTRI-CO2OL has been independently assessed by ADAS for relevance, completeness,
consistency, accuracy and transparency against PAS2050:2011 Spec ification for the assessment
of the life cycle greenhouse gas emis sions of goods and services.
The verification covers emissions from cradle-to-gate – including scope 1 direct emissions,
scope 2 indirect emissions and scope 3 indirect emissions associated with upstream activities.
NUTRI-MATCH is a range of enhanced
efficiency fertilisers to match soil
and crop nutrient requirements
determined from broad-spectrum
soil analyses and nutrient
management plans. NUTRI-MATCH
can help to:
›
Improve soil fertility, structure
and health and reduce the risk of
soil degradation.
› Avoid under or oversupply of
nutrients and increase Nitrogen
Use Efficiency (NUE).
› Reduce nitrous oxide and ammonia
emissions through urease
inhibitors, OEN and SUSTAIN.
› Reduce nitrate and phosphorous
›
losses to water through
nitrification inhibitor, OEN and
phosphorous protector, OEP.
Increase grass utilisation and
animal health through Sweetgrass
and Selenigrass to increase
productivity and reduce GHG
emissions.
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Engagement and
Partnerships
We actively partner with academic,
government and industry participants
to uncover solutions today to
preserve the natural environment.
We understand that the best way
to promote an action is leadership
by example. This is why we have
pioneered an innovative approach to
agronomic research which delivers
real value and quantifiable benefits.
To help our stakeholders get a better
understanding of how to apply
sustainable agricultural methods
in practice, we have introduced
best practice across our network
of demonstration farms (iFarms).
These farms shine a light on how
new agronomic innovations can be
adopted into real farming practice.
Each location facilitates a lively and
engaging events programme to keep
farmers and agronomists abreast
of the latest varieties, management
systems and technologies to aid
sustainable production.
To help protect our customers and
employees this year, we moved our
live events online and built a library
of content for our customers. Events
spanned all geographies and ranged
from weekly streams in Poland
including guest academic speakers
to virtual iFarm events in the UK.
2021 will see the official launch of
our new net zero iFarm in the UK.
Working alongside farmers and
suppliers we aim to explore best
practice in the race to reduce
on-farm carbon footprint and
achieve net zero farming.
Case Study
Origin’s NUTRI-CO2OL
reducing carbon
footprint of carrots
Food retailers are working closely
with farmers and growers to reduce
the environmental impact of the
average shopping basket.
An environmental audit between a major supermarket chain and
Alan Bartletts and Sons Limited, a leading UK farming enterprise,
highlighted fertiliser inputs as a significant part of the carbon
footprint of producing carrots. Agrii agronomist, Shaun Doncaster –
working with Steve Warwick, Bartletts technical manager –
used Origin Fertilisers’ NUTRI-CO2OL carbon calculator to identify
low-emission fertiliser options. Amending the raw material
formulation enabled Origin to produce a fertiliser that still matched
the nutrient requirements of the crop and reduced the carbon
footprint of the production of the fertiliser by up to 40%.
13,000+
Prescription
Fertiliser Grades
CO2-eq/kg product
Fertiliser grade
Carbon footprint kg
CO2-eq/kg product
Fertiliser production kg CO2-eq/ha
when applied at 900kg/ha
0.25
Carrot grade A
0.15
Carrot grade B
0.25
0.15
225kg CO2-eq/ha
135kg CO2-eq/ha
Carbon footprint saving 40% reduction
Reduction of 90kg CO2-eq/ha
Carrot grade A
Carrot grade B
30
The MBA will include
a group of 30 young
farmers from the
south and south-
east of Romania
Case Study
Agrii Romania supports
the first executive MBA
program for farmers.
September 2020 will see the launch of
the inaugural executive MBA program
(in Europe) for farmers.
The MBA is developed with the support of Agrii Romania and key industry
leaders, and in partnership with the University of Agronomic Sciences and
Veterinary Medicine Bucharest.
The program is structured to support the transformation of Romanian
farms into profitable and sustainable businesses. The Master’s in Business of
Agriculture (MBA) will include a group of 30 young farmers from the south and
south-east of Romania, who will participate free of charge for six months.
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Pillar
2
Conducting business
responsibly
As we look to the year ahead we
seek to build on the initiatives
already implemented such as the
utilisation of fleet management
software within our UK logistics
operations, fleet modernisation in
Continental Europe and increase the
number of sites purchasing power
from renewable sources. We plan to
determine and publish targets that
will support emissions reductions,
reduce waste and conserve fresh
water within our own operations.
Greenhouse Gas Emissions
In FY19 we published our first
year of consolidated data for
our Group Scope 1 (direct from
energy generation) and Scope 2
(indirect from purchased electricity)
greenhouse gas (‘GHG’) emissions.
In FY20 we recorded a 12% reduction
in our absolute carbon emissions and
an 18% reduction in carbon intensity
versus our 2017 base year.
While a portion of the reduction
can be attributed to reduced activity
within our Amenity operations
due to disruption of the COVID-19
pandemic, circa two thirds of the
reductions achieved directly relate
to internal carbon reduction
initiatives, with 42% of the Group’s
purchased electricity now supplied
from renewable sources. Allowing
for a return to more normalised
trading activity in the forthcoming
year, the Group will continue to
seek continuous improvement.
RESOURCE EFFICIENCY AND
ENVIRONMENTAL IMPACTS
As one of the leading providers of
agri-inputs and agronomic services,
we are aware of our impact on the
environment and recognise the
fundamental importance of making a
meaningful and positive contribution
towards maintaining the health of the
planet through the sustainable and
efficient use of resources.
Climate change represents both risk
and opportunity for our business.
Potential risks include both acute
and chronic weather events which
have a direct impact on agricultural
production. We equally recognise
and embrace the opportunity to
innovate and adapt both our product
offering and internal operations
to play a greater role in meeting
international commitments under
the Paris Accord.
Through Group monitoring and
governance, we are continuously
working to adopt and improve
reporting metrics. Focusing on
the efficiency of our operating
businesses, we undertake energy,
waste and water audits to identify
opportunities to further reduce
our footprint, exercise control of
environmental hazards and enhance
product traceability. The Group
adheres to strict principles of
environmental stewardship in all its
activities ensuring appropriate care
is taken throughout the product life-
cycle, utilising management systems,
processes and capital investment.
While encouraged by the progress
and expansion of our monitoring
activities to capture water and waste
usage this year, we recognise that
more work is required.
Absolute CO2 emissions
(000’s tonnes)
FY20 Waste by Disposal Method
25
20
15
10
5
0
4.3
4.1
3.8
2.4
18.3
19.6
19.3
17.5
FY18
FY19
FY20
FY17
Base Year
Scope 1
(Direct – transport and heating fuel)
Scope 2
(Indirect - electricity use)
FY17 – FY19 amounts have been
restated to reflect the updating of
estimates with actuals where available
3% 2%
45%
50%
50% Recycling & Recovery
45% Landfill
3% Incineration (with energy recovery)
2% Other
Carbon Intensity
(tonnes CO2-eq / Average no.
of employees)
Annual Water intensity
10
8
6
4
2
0
9.70
9.77
9.13
7.64
40
39
38
37
36
35
FY17
FY18
FY19
FY20
FY19
FY20
m3 per million Euro of revenue
Waste and packaging
This was the first year in which
consolidated data for the Group’s
waste disposal was collated. The
exercise has helped to identify key
areas of focus and is assisting the
Group in drafting an action plan to
tackle waste. Our aim is to maximise
the value of the resources we use
and rely on, 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 materials. We continue
to actively work with our packaging
suppliers to trial the strength and
protection of fertiliser bags to
increase the percentage of recycled
content used in their manufacture.
In the effort to reduce food waste
across the production cycle we
proudly participated in the European
Agrocycle project, through our
Agrii division, helping to research
approaches to address the recycling
and valorisation of waste from the
agri-food sector.
We continue to work closely
with the respective authorities
in the countries we operate in to
assist our customers in recycling
this packaging.
Water
While our water consumption is
low compared to manufacturing
industries, due to the nature of our
formulation and distribution model,
water is an essential component in
the application of certain products
we distribute to our customer base.
With increasing pressure on this
shared resource, we are mindful of
the importance of protecting water
sources and are committed to using
water as efficiently as possible.
We recognise the significance of
protecting water resources and
managing this scare resource in a
sustainable way to protect drinking
water supplies and water dependent
ecosystems. We exercise due care
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 such as spray
operator training courses.
In 2020, we commenced a process
of measuring and recording our
water usage across all Group
facilities, setting 2020 as a baseline.
We continuously look for ways to
conserve and reuse our water volumes
and are currently investigating
initiatives to further reduce our
reliance on water resources.
Summary Assurance Statement
Environmental consultants, Clearstream Solutions, have assured Origin’s
greenhouse gas performance data (Scope 1 and Scope 2 emissions) in
accordance with ISO 1466441. Clearsteam evaluated the systems and
processes used to collate and report the greenhouse gas performance
data. Clearstream has been able to obtain a reasonable assurance for
the data reported in the Group Annual Report 2020.
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The Origin Way - Living Our Values
We
contribute to
the success
of the
communities
where we
operate
We grow
futures
together
People
We shape
the future
Community
Our core
values:
Innovation
Partnerships
Integrity
Adding value
to lifelong
relationships
We do the
right thing
Conducting business
with integrity
Our core message is simple: being an
employee of the Origin Group means
striving towards the highest possible
standards of behaviour and ethical
business conduct.
Our five values which make up
‘The Origin Way’ define who we
are as an organisation and are our
guiding principles for how we should
all interact, every day. In 2019 we
defined the behaviours that we
expect from all our employees and
our leaders that help us demonstrate
our values in action.
Our Code of Conduct represents
our commitment to our values, to
doing the right thing, personally and
professionally, respecting the rights
of others and gives us guidelines for
our conduct. It makes our values and
conduct tangible.
The Code of conduct will be rolled out
to our employees in FY21 onwards and
made available in multiple languages
and applied to all aspects of business
across the Group.
We regard good governance as one
of the key elements of a sustainable
corporate growth strategy and have
adopted the Quoted Companies
Alliance Corporate Governance Code
(‘QCA Code’) as the basis for our
corporate governance arrangements.
We maintain the trust of our
customers and suppliers by
developing and providing high-quality
products and services in a fair,
ethical and legal manner. We ensure
that all business practices fully
comply with applicable competition
law wherever business is conducted
and we expect our employees to
comply fully with competition law.
Suppliers’ conduct
We believe that our sustainable
growth can only be achieved
through actively engaging with all
of our stakeholders. As suppliers
represent a key cohort of primary
stakeholders, we work with them to
integrate criteria into their purchase,
sale and production procedures
that address social, ethical and
environmental concerns.
Living our shared values
fosters a culture of
diversity, inclusiveness
and empowerment for
our people, which enables
us to deliver for our
customers, our partners
and the communities in
which we operate.”
In 2020, we drafted a code which will
be rolled out to suppliers as part of
our agreements for FY21 onwards,
outlining the expectations we have of
our suppliers and providing a blueprint
of how our suppliers should operate
as partners. The code will be updated
annually to reflect our progress on the
ESG journey and changing priorities
over time.
Anti-Bribery and
Corruption policy
We are transparent and responsible
with all applicable laws and we
ensure that our employees are aware
of the laws relevant to their roles.
We expect each individual acting
on Origin’s behalf to be responsible
for maintaining our reputation
by conducting business honestly,
transparently, professionally
and ethically.
Our Anti-Bribery and Corruption
policy and training outlines our zero
tolerance and articulates that no
employee or representative of any
Group business is to offer or accept
any bribe, including small facilitation
payments, or engage in any form of
corrupt practice.
Human Rights
We are committed to respecting
human rights and labour practices
in our operations and supply chains
and recognise the importance
of operating in an ethical and
responsible manner.
The Group has procedures including
a requirement for suppliers to read
and accept our stance in relation to
preventing Modern Slavery. A copy of
the UK Modern Slavery Act is available
to all employees and new starters as
part of their induction programme to
increase awareness of the Act.
We do not tolerate the use of forced
or child labour, in any operations
connected with the Group and
we respect all laws establishing a
minimum age for employment.
In our Supplier Code of Conduct, we
will demand that those who seek to
do business with the Group uphold
the rights of workers and expressly
forbid the use of child labour, or
forced or involuntary labour of
any type.
Whistleblower programme
It is our policy to encourage
colleagues to speak up if they have
any concerns about wrongdoing in
the workplace. Any employee who
raises their concerns in good faith
will be supported for doing so and
will be protected from retaliation.
We have a number of reporting
channels through which concerns
can be raised, such as informally
or formally through the grievance
procedure and also confidentially
through the whistleblowing hotline.
The hotline is an independent,
24/7 service available in different
languages across our business units.
The availability of the hotline is widely
communicated throughout the Group
by our local HR teams.
The total number of complaints
received across all geographies
this financial year was twenty-six.
The complaints varied in nature,
falling into such categories as policy
compliance, behavioural practices,
traffic violations and duty of care.
We take each case seriously and
carry out an initial investigation to
validate the complaint, following
which the relevant process is
implemented, with oversight and
reporting through to the case being
resolved or closed.
Gender diversity
29%
22%
28%
71%
78%
72%
29% female representation
at Origin Board
22% female representation
at management level
28% female representation
of Origin employees
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051015203536373839400510152025051015200510152002468100246810Gender diversity 051015203536373839400510152025051015200510152002468100246810Gender diversity 051015203536373839400510152025051015200510152002468100246810Gender diversity Empowering
Our People
We are a people-focused business
and we recognise that the quality of
our people differentiates us within
the marketplace, which gives us a key
competitive advantage.
Our integrated People strategy is
made up of six elements: ‘The Origin
Way’, ‘Let’s Talk’, ‘You Make Our
Difference’, ‘My Wellbeing’, ‘Origin
IQ’ and ‘LEAP’. The strategy combines
Group and local elements for the
delivery of each strategic pillar.
Employee Voice and Engaging
our People
We encourage a culture of open
communication through our
Employee Voice and Engagement
Strategy ‘Let’s Talk’. This allows us
to enhance our existing feedback
mechanisms, better understand
the employee experience, ensure
regular two-way, meaningful
feedback and provide our Board
and executive management with
the insights necessary to make
informed decisions.
Following our inaugural Group-wide
employee opinion survey in 2019,
the Group formulated action plans
as a result of employee feedback
and insights and has delivered key
initiatives against the identified
areas of focus.
Subsequently, we conducted our
second Group-wide employee
opinion survey in January 2020 to
review our progress against these
initiatives. We had an impressive rise
in response rates from 68% to 79%
and had a positive upward trend
across all twelve categories that
we measured. This demonstrates
that our employees believe there is
value in sharing their views and that
actions will be taken as a result of
their feedback. The most notable
increases in employee perception
were seen in the Communication,
Leadership and Diversity and
Inclusion categories.
At Origin we recognise there is a clear
relationship between high levels of
employee engagement and improved
performance and operational results.
Therefore, as part of our employee
opinion survey we measure our Group-
wide Sustainable Engagement score.
This covers two core elements: the
extent to which our employees are
engaged with the organisation and
the extent to which Origin provides
a work experience that supports
productivity and promotes wellbeing.
Our 2020 sustainable engagement
score increased versus our 2019
results due to our continued focus
in this area and our score continues
to be a strong result, ahead of the
sector benchmark scores produced
by our employee survey provider. We
will continue to develop our culture of
open communication and focus where
there are opportunities to improve.
We recognise the importance of
nurturing talent within our business
and growing our talent through
continuous learning and development,
which is a key part of our succession
planning and preparing our business
for the future. We operate both an
inclusive and exclusive approach
to Talent Management to ensure
that we retain key individuals, grow
future leaders, develop high potential
individuals and support change.
We provide in-country training
programmes to enhance employees’
current performance and prepare
them for future roles. Within this
we have our ‘LEAP’ programme for
leaders and emerging leaders which is
being rolled out across the Group.
Personal development and growth is
an important driver of our employee
engagement and we measure our
employees’ views and perspectives
in this respect. Overall over 70% of
our workforce believes that there are
opportunities within Origin to grow and
develop and we have seen an increase
in employee perception in this area
against our 2019 employee feedback.
My Wellbeing
As ever, supporting the physical and
mental health and wellbeing of our
employees is extremely important.
We continue to focus on the
wellbeing of our employees through
our ‘My Wellbeing’ strategy and we
take the welfare of our employees
very seriously.
We have been focused on staying
connected and adapting to a
completely new normal. This
brought with it a host of new
challenges: maintaining clear
lines of communication, getting
accustomed to remote digital
meetings, maintaining productivity
and supporting leaders.
We provided our employees with
advice and support though our Human
Resources Teams and have been
signposting employees to advice
and support through our Employee
Assistance Programmes, webinars,
online training, and other resources
in relation to promoting physical and
mental health and wellbeing. We
also have dedicated wellbeing and
COVID-19 sections on our intranet and
in-country communications channels.
Development agronomists participating in an IQ training
session to enhance their understanding of how cultivation
choice and timing affect soil composition and structure.
Building a robust health and
safety culture
The health and safety of our
employees, our products and
our services is one of Origin’s key
priorities. Each business unit has
a health and safety management
system integrated into business
operations which is steered by
competent health and safety
professionals. In January 2020 we
appointed a Head of Health & Safety
for Agrii UK, a new role which will
be instrumental in sharing best
practices globally.
Health and safety risks are included
in our governance processes and
meet the relevant national risk
management requirements, as well
as voluntary accreditation schemes
where applicable. In the UK and
Ireland, for example, we have a
number of higher and lower tier
COMAH sites (COMAH Regulations
control the risk from major accidents
involving dangerous substances)
and are BASIS registered for sites
with smaller chemical stores where
COMAH does not apply. We are also
part of the FIAS assurance scheme
for production, storage, supply and
transportation of fertilisers.
In February 2020 we undertook
an internal review of our health
and safety arrangements across
the Group and identified areas
where further improvements can
be implemented; these will be
our focus going into FY21. We will
continue to invest in the processes
and procedures required to ensure
continual improvement in our
health and safety standards and
will maintain the focus on building
robust and resilient health and
safety cultures.
Health and Safety Performance
There were no employee fatalities
during the reporting year. There
were 17 ‘reportable’ incidents;
these are events that are reportable
under the relevant health and safety
legislation for each country and
as such the criteria for inclusion
varies dependant on the location
of the business unit. There were no
prosecutions for health and safety
failings or any enforcement activity,
e.g. enforcement notices from
HSE/HSA.
One improvement identified in
the internal review was the need
to enhance reporting of our
health and safety performance
thereby increasing transparency
for our employees, customers and
stakeholders and providing evidence
of our commitment to health and
safety. Over time our reporting
criteria will evolve to provide a more
in-depth overview of health and
safety performance with broader
indicators; the performance
measures detailed below will become
the basis for this reporting structure
in future years.
Measure
Result Commentary
Fatality Rate*
-
There were no work-related fatalities.
Reportable Inci-
dent Rate (RIR)*
Lost Time Injury
Rate (LTI)*
5.02
8.6
Near Miss Rate*
(UK & NI)
73.71
There were 7 (RIR 4.96) reportable incidents from UK & Ireland, 4 (RIR 3.82) from
Continental Europe, and 3 (RIR 8.98) from Latin America.
In UK and Ireland there were 17 LTIs resulting in a total of 258 calendar days lost;
in Continental Europe there were 4 LTIs resulting in 190 calendar days lost; and in
Latin America there were 3 LTIs which resulted in 63 calendar days lost. An average
of 21.3 calendar days lost per LTI across the Group.
This indicator is used to track the prevalence of early identification of hazards. It is
used as a leading indicator as it enables proactive resolution of hazards and engages
the workforce in solving issues. Improvements in health and safety culture across
the organisation should initially result in an increase in the rate of Near Miss reports.
For FY20 we only have robust Near Miss data for the UK & Ireland businesses.
*All incidence rates are calculated as total number of incidents per 1,000 employees.
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Financial Statements
61
One of our core values is
Community
We believe in supporting
communities at a local level and
across the Group. Since the onset
of the COVID-19 pandemic, we have
undertaken employee-led initiatives
to help support local communities
such as:
> Fortgreen, in partnership with
two other companies, Usina
Santa Terezinha and Midiograf
(who provided the raw materials),
produced 10,000 litres of
Hand Sanitiser.
> Fortgreen provided 80 litres to
employees, donated a number of
litres to the Health Secretary for
each of the ten cities where they
operate, and supported four local
hospitals in Maringá.
Employees across the Origin Group
have been fundraising for a variety
of charities and looking after their
own health and wellbeing through
a variety of fitness challenges
and campaigns.
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.
Diversity, Inclusion and Equality
are championed at the highest
level in Origin starting with the
Chief Executive and the Board.
Our leaders and managers are
responsible for allowing diversity
to thrive and making inclusiveness
accessible to all. They live our
values, lead by example and
promote a culture of equality,
diversity and inclusion.
Beyond our leaders and
managers, we also expect the
commitment of all our employees
to embrace these principles,
ensure an environment free from
discrimination, harassment and
victimisation and bring this culture
of inclusion to life through their
behaviours, ways of working and ways
of interacting with each other.
Our Diversity, Inclusion & Equal
Opportunities policy clearly sets out
our commitment and responsibilities
to ensure we create an environment
free from discrimination, harassment
and victimisation.
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 as at year
end are outlined on page 59.
We are a member of the 30%
Club and support our Chairman,
Rose 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 88.
We continue to implement our
diversity, inclusion and equal
opportunities programmes as part
of our ‘You Make Our Difference’
strategy. These programmes focus
on online training and continue
to embed our principles into our
company culture.
Accordingly, we have seen a notable
increase in employee opinion in
respect of supporting diversity,
inclusion and equal opportunities
in the workplace and we will continue
to focus our action planning in
this area.
Fortgreen Nutrition
“Where we grow innovation”
Members of the Fortgreen Production team
Pillar
3
Integrating sustainability
into our decision making
and engagement with
all stakeholders
Governance
and processes
The Board has overall responsibility
for risk management and internal
control systems throughout the
Group including climate-related
risk. As part of the Board’s
oversight of sustainability initiatives,
Non-Executive Director, Kate Allum
has assumed additional responsibility
as Board sponsor to support the
executive team in overseeing the
Group’s sustainability programme.
An eleven-member sustainability
steering committee was established
under delegation from the Board of
Directors. Its membership consists
of senior representation from each
geography, operating division and
Group functions such as Risk, HR,
Legal, IT, Investor Relations and
Innovation.
The committee is tasked with
assessing the impact of the Group’s
operations on the environment
and the communities we operate
in. The expertise held within the
committee supports the sharing of
best practice, promotes innovation
and brings ongoing awareness of
global developments in sustainability
to the Group. Over the course of
the coming years, the committee
will review and recommend changes
as appropriate to the Company’s
Sustainability strategy/road-map
and oversee the required actions
necessary to drive this strategy.
In addition to the dedicated
sustainability committee,
management monitor climate-related
issues through day-to-day activities,
which is reported to Executive Group
management at monthly meetings, to
the Group Executive Risk Committee
at quarterly meetings and through
the risk management framework.
The Audit and Risk Committee
oversees the risk management
process across the Group.
Reporting and
transparency
UN Global Compact
In 2020, Origin signed up to the UN
Global Compact and committed to
The Ten Principles of the UN Global
Compact Corporate sustainability, in
the areas of human rights, labour, the
environment and anti-corruption.
Recommendations of the TCFD
The Taskforce on Climate-related
Financial Disclosures (TCFD)
established recommendations for
voluntary climate-related financial
disclosures to help financial
markets better understand the
material climate-related risks and
opportunities to which companies
are exposed, and how companies
oversee and manage them.
Origin supports the TCFD
recommendations and this year we
conducted our first high-level climate
risk assessment considering the
impact of 2 degrees Celsius global
warming on our UK business, initially
focused on the short to medium
term. We considered transitional
changes such as increased
legislation, as well as physical
changes such as increased water
stress, frequency of extreme weather
patterns and temperature rises.
We will continue to expand models
over the coming years to incorporate
a Group-wide assessment and
additional climate-related risks. The
overall climate change and adverse
weather risk is considered as part
of our integrated Enterprise Risk
Management process and reported in
the Risk Report section on page 69.
CDP
In August 2020, we submitted our
first Group-wide response to the
Carbon Disclosure Project (CDP)
climate change questionnaire for
FY20. Our engagement with CDP
will allow us to benchmark our
performance and to measure and
manage our environmental impacts.
It is our intention to evolve our
reporting in 2021 as part of our drive
for continuous improvement and
best practice.
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Financial Statements
63
RISK REPORT
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.
Identifying,
evaluating and
managing risks.”
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 five 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 2020 are listed below:
› continually review the Group’s
overall risk assessment processes
and its capability to identify and
mitigate new risk types;
› consider the output of the
›
consolidated risk map produced
and the appropriateness of the
positioning of individual risks;
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.
›
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;
the second line comprises Group
oversight functions who provide
specific functional expertise; and
the third line comprises Internal
Audit and external professional
advisers who provide an additional
level of independent assurance.
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
+
See more:
Corporate Governance Statement on page 81
Financial Statements on page 113
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Origin Enterprises plc Annual Report and Accounts 2020
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Governance
Financial Statements
65
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
Audit and
Risk Committee
Executive Group Risk
Committee (‘EGRC’)
> 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.
> 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.
> Meet, direct and support the Business Units on risk management.
> Develop the risk management and control environment.
> Perform risk deep dives for Group functions and Business Units.
> Identify and share best practices for managing risk.
> Review, assess and support the implementation of agreed risk mitigation
and control programmes.
Senior Management
Team Business Unit /
Functional Management
> Develop the risk management and control environment.
> Ownership and accountability for operational and cross-functional risks.
> 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, health & safety, 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 2020 is set out below:
Length of tenure on
Audit and Risk Committee*
Kate Allum
Gary Britton
Hugh McCutcheon
Years
4.75
4.77
8.63
* Following the amalgamation of the
Audit and Risk Committees in FY19,
the length of tenure for a Director
represents the longest tenure of
that Director on either Committee.
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.
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 consolidated 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.
2020 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 2020:
› The EGRC met five times to
discuss top risks and actions.
› Risk deep dives were performed
for all major Business Units and
key production sites.
› Risk owners and action plans
have been identified for all major
Group-wide risks.
› Additional focus has been
brought in 2020 to areas such
as information security, health
and safety, Brexit and COVID-19
related risks.
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.
Going concern
The Group’s business activities and
financial performance are set out in
the Strategic Report on pages 5 to 71.
As set out in the financial statements,
the Group has generated cash flows
from operating activities of €75.3
million during the year and its net
debt at 31 July 2020 is €53.2 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.
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.
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 68 to 71.
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.
COVID-19 Pandemic Impact
and Response
The COVID-19 pandemic and
the measures being taken to
mitigate its impact have resulted
in unprecedented change for the
Group’s employees, customers and
communities in which Origin operates.
The main risks associated with the
pandemic are those related to health
and safety, business continuity of key
sites, price volatility of raw materials,
IT security and new regulatory
requirements – as shown in the
principal risks and uncertainties
section on pages 68 to 71.
While the current situation is causing
disruption and uncertainty, it is
important to note that the Group’s
long-term business strategy remains
unchanged, as Origin is a market
leader in sectors which are providing
essential supports to critical
industries.
All Business Units have proven to be
resilient to COVID-19 disruptions,
and continuity of operations was
ensured while complying with
lockdown measures at country level.
All production plants and distribution
centres have remained operational
during the pandemic, with only
temporary closure being experienced
by a small number of regional depots
in the UK and Romania.
Our Amenity sports customers in the
UK have been significantly impacted
by COVID-19 restrictions, which
has resulted in lower sales to that
segment. As a mitigating response,
we have furloughed more than 100
employees for the April-July period.
From a Group perspective, the
highest priority has been given to
protect the health, safety and well-
being of all employees. Some of the
measures taken include proactive
implementation of government
guidance, ensuring additional
protective equipment, hygiene and
cleaning protocols are in place,
implementing working from home
arrangements where possible and
having in place specific protocols for
high-risk individuals.
All Business Units continue to
conduct risk assessments of the
potential impacts of the COVID-19
pandemic, at an operational site
level. Regular reviews are carried
out by Group and Business Unit
management of the risk picture,
mitigating actions and contingency
plans in place.
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The principal risks and uncertainties
Link to Strategic Priorities Key:
Scale
People & Organisations
Portfolio Positioning Market Focus
Link to Strategic Priorities Key:
Scale
People & Organisations
Portfolio Positioning Market Focus
Impact
Mitigation
Risk
Movement
Strategic
Priority
Impact
Mitigation
Risk
Movement
Strategic
Priority
Strategic / Commercial
Competitor activity, product innovation, pricing and margin erosion
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.
Underperformance or reduction in
projected earnings of acquired entities
could result in impairment of goodwill
amounts recorded at the time of the
acquisitions.
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. Goodwill values from
business acquisitions are reviewed on a
quarterly and annual basis to ensure they are
representative of expected future income
for the respective cash generating units.
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.
COVID-19 pandemic impact and Brexit
uncertainties have increased the risk of
volatility in the last months.
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.
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. New health and
safety requirements have been issued
because of the COVID-19 pandemic,
which has increased the likelihood of
related incidents materialising.
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 earnings 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. In 2020, we witnessed first-hand
agriculture’s vulnerability to climate
induced changes as disruptive weather
events had a direct impact on our
profitability.
The Group monitors closely all changes
to legislation and regulation. It operates
thorough hygiene and health and safety
systems across its businesses and 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.
Additional protective equipment, site access
restrictions, social distancing and isolation
measures and sanitising facilities have been
put in place to protect our personnel from
the COVID-19 impact. More information about
actions taken in the last months regarding
our health and safety management systems,
accreditations, assessments and performance
can be found on page 61.
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
and investment in working capital, along
with the monitoring of weather and climate
change by divisional and Group managers.
Actions taken by the Group to mitigate the
impact of short-term weather incidents and
longer term climate change challenges are
included in the Sustainability Report (pages
48 to 63). Also, the Group has incorporated
recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD)
(see page 63).
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Link to Strategic Priorities Key:
Scale
People & Organisations
Portfolio Positioning Market Focus
Link to Strategic Priorities Key:
Scale
People & Organisations
Portfolio Positioning Market Focus
Impact
Mitigation
Risk
Movement
Strategic
Priority
Impact
Mitigation
Risk
Movement
Strategic
Priority
Operational (continued)
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 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.
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.
Financial
Brexit uncertainty
The Group has operations within and
outside the European Union. The UK’s
exit from 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 and 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.
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. IT
infrastructure and cybersecurity controls have
been strengthened to address the additional
requirements from the COVID-19 scenario.
Management and the Board are continually
monitoring the potential impacts of the
UK’s exit from 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
commercial mitigation measures for
the imposition of tariffs, particularly
for importation of raw materials.
All impacted legal entities in the UK
have obtained the required certifications
(e.g. Authorised Economic Operator status)
needed for the transition period.
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 benefits 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.
UK farmers will see their direct EU
subsidies (GBP 3 billion per annum)
gradually replaced by UK payments,
between 2020 and 2027. The level of
funding will vary per farm size and will
depend upon compliance with targets
(e.g. environmental requirements).
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 and appropriate, credit
insurance is in place to mitigate credit risk.
Financial Risk Management objectives and
policies are further discussed in Note 23 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.
Credit risk management processes are
in place to enable early warnings of
customers who face potential financial
difficulties from reductions in farm subsidies.
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71
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
74
76
79
81
88
91
95
70
Demonstration
Farms
33
and Processing Facilities
Input Formulation
72 Origin Enterprises plc Annual Report and Accounts 2020
Strategic Report
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Financial Statements
73
BOARD OF DIRECTORS
The Board of Origin
comprises a Non-
Executive Chairman,
two Executive Directors
and four Non-Executive
Directors.
Non-Executive Chairman
Executive Directors
Rose Hynes (63)
Non-Executive Director
Sean Coyle (47)
Chief Executive Officer
Declan Giblin (64)
Executive Director
Nationality: Irish
Date of appointment: 1 October 2015
Nationality: Irish
Date of appointment: 1 October 2018
Nationality: Irish
Date of appointment: 15 October 2008
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:
Non-Executive Director of Total Produce
plc, IPL Plastic Inc. and Eircom Holdings
(Ireland) Limited.
Skills and experience: Sean joined the
Group as Chief Financial Officer in
September 2018 and was appointed
Chief Executive Officer on 1 July 2020.
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.
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.
Non-Executive Directors
Kate Allum (55)
Non-Executive Director
Hugh McCutcheon (66)
Non-Executive Senior
Independent Director
Nationality: British
Date of appointment: 1 October 2015
Nationality: Irish
Date of appointment: 21 November 2011
Committee membership: Chairman of the
Remuneration Committee and a member
of the Audit and Risk Committee.
Committee membership: Member of
the Audit and Risk and Nomination and
Corporate Governance Committees.
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 Group plc and SIG plc.
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 extensive capital markets experience
and mergers and acquisitions advisory
experience working 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
a Director at the Irish Takeover Panel.
Gary Britton (66)
Non-Executive Director
Christopher Richards (66)
Non-Executive Director
Nationality: Irish
Date of appointment: 1 October 2015
Nationality: British
Date of appointment: 1 October 2015
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.
Committee membership: Member of the
Remuneration Committee.
Skills and experience: Christopher is
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.
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DIRECTORS’ REPORT
The Directors present
their Annual Report
together with the audited
consolidated financial
statements of the Group
for the year ended 31
July 2020, which are
prepared in accordance
with International
Financial Reporting
Standards (‘IFRSs’) as
adopted by the EU.
During the year,
against highly
challenging conditions,
the Company paused
its strategic acquisition
programme and
focused on optimising
operational performance.”
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.
During the year, against highly
challenging conditions, the Company
paused its strategic acquisition
programme and focused on
optimising operational performance.
A comprehensive review of the
performance and development of
the Group is included in the Chief
Executive’s Review on pages 10 and
11 and the Financial Review on pages
12 to 18. 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 35 to
the Group financial statements.
The key performance indicators
relevant to the Group are set out
in the Strategic Report on pages 28
and 29.
Results for the Year
The results for the year are set
out in the Consolidated Income
Statement on page 124. Revenue for
the financial year was €1,589.1 million
(2019: €1,798.2 million). The profit
after tax and exceptional items for
the financial year was €19.9 million
(2019: €52.7 million).
Future Developments
The Group will continue to pursue
its growth ambitions to enhance
shareholder value, through a
combination of organic growth,
new initiatives and development
opportunities.
Dividends
As announced in the Company’s Q3
2020 Trading Update on 17 June
2020, the Board determined that
it was prudent to suspend the final
dividend for the year in light of
market conditions and uncertainty
relating to COVID-19. An interim
dividend of 3.15 cent per ordinary
share was paid on 14 April 2020.
Share Capital and Treasury Shares
At 31 July 2020, the Company’s total
authorised share capital comprised
250,000,000 ordinary shares of €0.01
each (2019: 250,000,000) and the
Company’s total issued share capital
(including treasury shares) comprised
126,396,184 ordinary shares of €0.01
each (2019: 126,396,184). At 31 July
2020, 800,330 securities were held
as treasury shares (2019: 800,330).
Details of the share capital of the
Company are set out in Note 28 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.
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 64 to 71.
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 23 to the
Group financial statements.
Corporate Governance
The Corporate Governance
Statement on pages 81 to 87 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:
› Tom O’Mahony resigned as
Director on 30 June 2020.
The names of the persons who are
Directors are set out below.
Directors:
Rose Hynes
(Non-Executive Chairman)
Sean Coyle
(Chief Executive 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 74 and
75 of this Annual Report.
Directors’ Interests in Share
Capital at 31 July 2020
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 104 to 111.
Substantial Holdings
As at 31 July 2020, the Directors
have been notified of the following
shareholdings which amount to 3%
or more of the Company’s issued
ordinary share capital:
Number
of shares
%
19,194,268 15.3%
16,583,027
13.2%
11,420,719
9.1%
11,378,695
9.1%
5,101,233
4.1%
3,961,348
3.2%
Artemis
Investment
Management
LLP
Setanta Asset
Management
Limited
Invesco
Limited
FMR LLC
FIL Limited
Janus
Henderson
Group plc
As at 22 September 2020, the
Directors have been notified of
the following shareholdings which
amount to 3% or more of the
Company’s issued ordinary share
capital:
Number
of shares
%
19,194,268 15.3%
16,583,027
13.2%
11,378,695
9.1%
11,268,336
8.9%
5,101,233
4.1%
3,961,348
3.2%
Artemis
Investment
Management
LLP
Setanta Asset
Management
Limited
FMR LLC
Invesco
Limited
FIL Limited
Janus
Henderson
Group plc
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77
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 (2019: €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
22 September 2020
Sean Coyle
Director
22 September 2020
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.
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 22 to 25,
Business Model on pages 26 and 27,
Key Performance Indicators on pages
28 and 29, Sustainability Report on
pages 48 to 63, and Risk Report on
pages 64 to 71, and are deemed to
be incorporated in this part of the
Directors’ Report.
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
As a Board of Directors, we 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. With
the emergence of the global COVID-19
pandemic during the year, it became
even more important for the Board
to maintain effective governance
and strong oversight of the business
through a robust governance
framework and principles.
Details of our compliance with
the QCA Code are outlined in our
Corporate Governance Statement
on pages 81 to 87. There are detailed
reports from our respective
Audit and Risk, Remuneration,
and Nomination and Corporate
Governance Committees, on pages
88 to 111. A detailed Risk Report is
outlined on pages 64 to 71.
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. This
was reaffirmed in the findings of this
year’s Board evaluation, which along
with the Committee evaluations, was
conducted internally. I am pleased
to report that the outcome of these
reviews was positive and the Board
continues to operate in an effective
way. More information on this process
is outlined on page 86 of this report.
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, through the Nomination and
Corporate Governance Committee,
is advancing the recruitment of an
additional Non-Executive Director
as part of ensuring regular Board
refreshment. The Board also continues
to work towards delivering its target
of achieving a minimum of 33%
female representation on the Board
by the end of 2020. Diversity more
broadly is also a key consideration
in the continuing development
and refreshment of our senior
management succession planning.
During the year, we announced a
change in leadership of the Company.
Tom O’Mahony retired as Group Chief
Executive Officer after 13 years in the
role. The Board would like to extend
its sincere appreciation to Tom for
his dedication, commitment and
leadership of Origin over this time. He
has made an invaluable contribution
to the growth and development of the
Group during his tenure. We wish him
all the best for the future.
The Board is committed
to continue to apply the
highest standards of
corporate governance
consistent with the
size and complexity
of the business.”
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79
agri-services industry knowledge
and international experience. The
increased time, attention and
consideration demanded of the
Board in facing the disruptions
brought by the global COVID-19
outbreak and the challenges resulting
from extreme weather conditions
this year was testament to the
commitment of Chris Richards (and
all the Non-Executive Directors).
During FY20, as with each year he
has been on the Board, Chris has
continued to devote sufficient time
to Origin throughout a challenging
year and we remain satisfied that he
is fully able to effectively discharge
his responsibilities to the Company
and shareholders.
As a Board, we continue to invest
time in the development of skills
and knowledge relevant to the
performance of our duties and taking
account of external political and
regulatory developments. During
the year we received presentations
from professional advisors on
developments in corporate
governance, including ESG, and
executive remuneration, and kept
up to date with best corporate
governance practices including
through briefings and reports.
Rose Hynes
Chairman
22 September 2020
We were pleased to announce
the appointment of Sean Coyle as
the new Chief Executive Officer,
effective 1 July 2020. Sean has been
with the Group since September
2018 when he joined Origin as Chief
Financial Officer. We are confident
in Sean’s leadership and his ability
to drive the Group forward in
the execution of its strategy and
delivering value for our shareholders.
Following a comprehensive search
and selection process, TJ Kelly has
been appointed as Chief Financial
Officer. TJ comes from Hostelworld
Group plc and will join Origin no
later than March 2021.
Following re-appointment of each
of the Non-Executive Directors in
2018 for a further term in office,
Hugh McCutcheon, Kate Allum, Gary
Britton and Christopher Richards are
currently serving their respective
additional 3-year terms. The Board
also undertook a similar process
in 2018 in respect of the Chair,
following which I was re-appointed
and continue to serve as Chairman
of the Board.
The Board currently comprises five
Non-Executive Directors and two
Executive Directors (TJ Kelly will be
co-opted to the Board as Executive
Director on joining the Company
in March 2021). Biographies of the
Directors are set out on pages 74
and 75. In accordance with the
re-election policy adopted by the
Board in 2018, Directors will retire at
the 2020 AGM and offer themselves
for re-election.
At our AGM in November 2019, there
was a vote of 24.58% against the
re-election of Christopher Richards
as Non-Executive Director. From
engagement at that time, and further
feedback since, we understand that
there was a concern among certain
shareholders that there was a risk
of insufficient capacity on Chris
Richards’ part due to his various
corporate commitments. Chris
brings valuable input and insight
to the Board with his decades of
As a Board, we continue
to invest time in the
development of skills
and knowledge relevant
to the performance of
our duties and taking
account of external
political and regulatory
developments.”
CORPORATE GOVERNANCE STATEMENT
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.
Corporate Governance Framework
Origin Enterprises plc Board
Audit and
Risk Committee
Acquisitions
and
Disposals
Committee
Nomination
and Corporate
Governance
Committee
Remuneration
Committee
Internal
Audit
Executive
Group
Risk
Committee
Chief
Executive
Officer
Executive
Directors
+
See more:
Corporate Governance Statement on page 81
Financial Statements on page 113
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Origin Enterprises plc Annual Report and Accounts 2020
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81
The Board of Directors
During the year, the Board of Origin
comprised 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. On 30 June 2020, the
CEO stepped down and the CFO was
appointed as CEO with effect from 1
July 2020. The new incoming CFO will
join the Board in March 2021. 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
Executive Directors, are responsible
for the day-to-day running of the
Group, carrying out an agreed strategy
and implementing specific Board
decisions. Detailed biographies of
Directors at year end are set out on
pages 74 and 75.
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 88 to
111. A Risk Report is outlined on pages
64 to 71.
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 reserved for the Board,
set out below, 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.
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 74 and 75.
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 88 to 90.
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
in 2018, 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
2020 are set out in the Nomination
and Corporate Governance
Committee Report on page 89.
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 advisors
advised the Board on developments in
corporate governance and executive
remuneration.
The Chairman and Company Secretary
review Directors’ training and
development needs on an ongoing
basis, as appropriate.
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.
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.
In determining the independence of
Christopher Richards, the Board had
particular regard to the commercial
relationship between Agrii UK, a
wholly-owned subsidiary of Origin,
and Plant Health Care (‘PHC’), of
which Chris Richards is CEO. Following
successful product trials over the
past number of years, Agrii UK and
PHC intend to enter into a formal
contractual agreement with an
estimated average annual value of
c. £200,000. The Board considered
this relationship and concluded that
Chris Richards was fully independent,
taking into account the following
material factors:
›
›
the nature and scale of the
proposed contract;
the separation of discussions
›
between Agrii UK and PHC from the
Origin Board and Chris Richards in
particular; and
the absence of any role of Chris
Richards in the selection of PHC
as a service provider to Agrii UK
or in any future discussions of a
similar nature.
In these circumstances, the Board
concluded that there was no material
relationship, financial or otherwise,
which might either directly or
indirectly influence the objectivity or
independence of Chris Richards.
More than half the Board comprises
Non-Executive Directors, in line with
the highest standards of governance.
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.
At our AGM in November 2019, there
was a vote of 24.58% against the re-
election of Christopher Richards as a
Non-Executive Director. At the time
of disclosure of this vote, we noted
that we had engaged extensively with
many shareholders and proxy advisory
agencies to understand and discuss
concerns around the level of Chris
Richards’ external commitments.
The Board is aware of the evolution
of shareholders’ expectations with
regard to the time commitments of
individual Directors, which is grounded
in governance risk relating to Directors
not being able to dedicate sufficient
time to their respective Boards,
particularly in times of crisis. In
this respect, the global COVID-19
pandemic and extreme weather
conditions that made FY20 such
a challenging year for the Group
put a spotlight on the capacity and
commitment of our individual Non-
Executive Directors. In addition to
our 10 scheduled Board meetings this
year, we held an additional 6 ad hoc
Board meetings, more Committee
meetings than other years and
numerous Non-Executive Director
meetings. There was also enhanced
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Origin Enterprises plc Annual Report and Accounts 2020
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Governance
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83
reporting from the executive team to
the Board outside formal meetings
as part of our risk management
framework and financial monitoring.
Chris Richards had a full attendance
record for all of these meetings
and made important contributions
throughout, including valuable insights
of his experience managing similar
challenges with other companies
navigating their way through the
COVID-19 crisis.
We note that following approval
and signing of our 2019 Annual
Report last year, the scope of Chris
Richards’ responsibilities at Plant
Health Care plc was reduced, when
he relinquished the role of Chairman.
We believe that this is a factor that
could appropriately be recognised
as an easing of any potential time
constraints, as a non-executive
Chair was appointed to lead the
Board. Given the similarities in
business model and the overlap in
sector, his role at Plant Health Care
can be viewed as complementary
to his role at Origin. Indeed, the
Board acknowledges that the time
commitment needed to sit on another
Board from the same industry is less
burdensome. The depth of Chris’
experience in the sector further
reduces the time commitment
involved in serving on both Boards.
We would also expect that the size
of Plant Health Care and the other
companies at which Chris Richards
serves could be taken into account in
assessing his time commitments, with
the other mandates being at Boards
of microcap companies (Plant Health
Care is on the FTSE AIM All-Share
Index with a market cap of £21.23m
and Nanoco Group plc is on the FTSE
AllSmall Index with a market cap of
£41.73m, based on market share
prices as at 18 September 2020).
In such a unique sector, Chris provides
hugely valuable experience which
contributes greatly to the Board’s
effectiveness and to ensuring an
appropriate balance of skills and
experience at Board level. He
continues to demonstrate a high
level of commitment to the Company
- in terms of attendance as well as
contribution - and the Board has
satisfied itself of his ongoing ability
to devote sufficient time to his role
at Origin.
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 2020
the Board held a total of 16 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.
Board of Directors:
Attendance at Meetings During the Year Ended 31 July 2020
Committees
The Board has delegated certain
responsibilities to Board Committees,
namely:
› 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 primary function of the 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 91 to 94.
Directors
Kate Allum
Gary Britton
Sean Coyle
Declan Giblin
Rose Hynes
Hugh McCutcheon
Tom O’Mahony*
Christopher Richards
Board
Audit and Risk
Remuneration
Nomination and
Corporate Governance
16/16
16/16
16/16
16/16
16/16
16/16
15/15
16/16
6/6
6/6
–
–
–
6/6
–
–
5/5
–
–
–
5/5
–
–
5/5
–
4/4
–
–
4/4
4/4
–
–
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.
* Tom O’Mahony attended all Board meetings during the financial year until his resignation on 30 June 2020.
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 95 to 111.
Nomination and Corporate
Governance Committee
The Nomination and Corporate
Governance 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. The
Committee is 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 88 to 90.
Acquisitions and Disposals Committee
The Acquisitions and Disposals
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 2020 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 95 to 111.
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 91 to 94.
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 the 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 and Anti–Bribery
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. In
further enhancing its whistleblowing
framework the Company refreshed its
Whistleblowing Policy during the year.
The Committee also reviewed the level
of compliance of employees across
the Group with Company anti-bribery
and corruption training.
Risk Management Framework
The Group has a robust Risk
Management Framework to identify,
manage and monitor risks.
Details of the operation of the Risk
Management Framework are outlined
in the Risk Report on pages 64 to 71.
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.
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Origin Enterprises plc Annual Report and Accounts 2020
Strategic Report
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85
Consolidated Financial
Statements
The consolidated financial statements
are prepared subject to the oversight
and control of the CFO (and this
year, by the CEO following S Coyle’s
appointment as CEO from 1 July
2020), 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,
operation and effectiveness 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 2020, this process was
conducted internally, having last had
an external facilitation in 2018. 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 July 2020 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 performance, operation and
effectiveness during the year.
Culture
Origin operates a decentralised
business model, where each
country and business have unique
elements in their culture. These
businesses, centered 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 receives 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
The employee engagement
programme ‘Let’s Talk’, which was
launched in 2019 to enable regular
two-way dialogue between the Board
and the Group’s employees, continued
in operation during the year and
adapted its form of engagement to
take account of COVID-19 lockdowns.
The 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, Non-
Executive Directors visited the Group’s
operations in Belgium. Once on-site
visits became temporarily suspended
due to COVID-19 restrictions, the
Chairman and the Senior Independent
Director joined calls with local senior
management teams to continue
direct engagement.
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. In line with our usual
engagement program, a number of
in-person meetings and calls were
held during the year. The Company
Secretary engages annually with proxy
advisers in advance of the AGM.
The Executive Directors and Head
of Investor Relations held over 150
separate meetings and conference
calls with existing and prospective
shareholders during the financial year,
including:
Date
Activity
September
2019
September/
October
2019
Preliminary Results
Announcement for
2019
Roadshows in Dublin,
London, Edinburgh,
Paris, Chicago,
Boston and Toronto
November
2019
Quarter 1 Trading
Update and AGM
March
2020
March 2020
June 2020
Interim Results
Announcement for
2020
Roadshows in Dublin,
New York, London
and Edinburgh
Quarter 3 Trading
Update
All shareholders are given the
opportunity to ask questions at the
AGM, which this year is scheduled to
take place at The Merrion Hotel, Upper
Merrion Street, Dublin 2 at 11.00am on
Wednesday, 18 November 2020. Any
changes to the AGM required to reflect
the evolving COVID-19 situation will be
duly notified in advance. 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 (including as
to date, time, venue or otherwise) will
be made available on publication of the
notice of the AGM and in any further
updates published by the Company.
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. In
the normal course, 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 authorizing 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.
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.
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,
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NOMINATION AND CORPORATE
GOVERNANCE COMMITTEE REPORT
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 2020. This report has
been prepared by the Nomination
and Corporate Governance
Committee and approved by
the Board.
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 Corporate
Governance Statement on pages
81 to 87. The Committee 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 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.
The Board, through the Nomination and
Corporate Governance Committee,
is advancing the recruitment of an
additional Non-Executive Director
as part of ensuring continuing Board
refreshment and development.
This year, Tom O’Mahony stepped down
and retired as Chief Executive Officer
and Executive Director, effective 30
June 2020. The Board would like to
extend its sincere appreciation to
Tom, for his dedication, commitment
and leadership of Origin over the
past thirteen years. He has made an
invaluable contribution to the growth
and development of the Group during
his tenure. We wish him all the best
for the future.
Further to an announcement in
June 2020, the Board appointed
Sean Coyle to the role of Chief
Executive Officer. Sean Coyle joined
Origin as Chief Financial Officer
on 1 September 2018. He took
office as Chief Executive Officer
on 1 July 2020.
Following a comprehensive
recruitment process to identify a
replacement Chief Financial Officer,
TJ Kelly was appointed as the Group’s
Chief Financial Officer with effect
from March 2021. TJ will be co-opted
to the Board at that time.
The Nomination and Corporate
Governance Committee is
solely comprised of Non-
Executive Directors.
The duties and responsibilities of the
Committee are summarised in this
report and are set out in full in the
Terms of Reference for the Nomination
and Corporate Governance Committee
which are available on the Company’s
website: www.originenterprises.com.
This report also includes an overview
of the Committee’s activities during
the year.
Rose Hynes
Chairman of the Nomination and
Corporate Governance Committee
22 September 2020
The Board of Origin
continues to be
committed to apply the
principles of the Quoted
Companies Alliance
Corporate Governance
Code (‘QCA Code’).”
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
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 2020 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
* Tom O’Mahony resigned as Director
on 30 June 2020.
Length of tenure
on Nomination and
Corporate Governance
Committee
Rose Hynes
Hugh McCutcheon
Gary Britton
Years
4.83
4.83
1.83
11.80
4.83
8.69
13.40
4.83
6.88
Years
4.75
4.75
1.84
Meetings
The Nomination and Corporate
Governance Committee met four
times during the year.
Board Composition
Resignation of Chief Executive
Officer and Appointment of
Successor
Tom O’Mahony resigned as Chief
Executive Officer and Executive
Director of the Company with effect
from 30 June 2020. Sean Coyle,
who joined Origin as Chief Financial
Officer on 1 September 2018,
was appointed by the Board as
his successor and assumed the
role of Chief Executive Officer on
1 July 2020.
Appointment of Chief
Financial Officer
Following the appointment of Sean
Coyle as Chief Executive Officer, a
comprehensive recruitment process
was carried out to find a new Chief
Financial Officer. The process,
which included the services of an
external recruitment consultancy
firm, considered candidates from a
wide range of backgrounds on merit
and against objective criteria. A
shortlist of potential appointees was
developed and following a thorough
interview process, TJ Kelly was
appointed to the role. TJ will join
Origin as Chief Financial Officer in
March 2021 and will be co-opted to
the Board at that time.
Elections and Re-elections
at AGM
In accordance with the Company’s
Directors’ re-election policy and
best practice corporate governance,
Directors now offer themselves for
re-election on an annual basis. Kate
Allum, Gary Britton, Sean Coyle,
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 20 November
2019. Directors will retire at the
2020 AGM and offer themselves for
re-election.
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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.”
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 effectiveness of the
Company’s succession planning has
most recently been manifested by
the orderly transition of the Chief
Executive Officer role to Sean Coyle
following Tom O’Mahony’s departure.
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 2020, 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.
Continuity of Chairman, Senior
Independent Director and
Non-Executive Directors
Rose Hynes continues to serve as
Chairman of the Board, following re-
appointment by the Board in 2019 for
a further 3-year term from 1 October
2018. Hugh McCutcheon, Senior
Independent Director, along with the
other Non-Executive Directors, Kate
Allum, Gary Britton and Christopher
Richards, are also serving their
respective additional 3-year terms.
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 knowledge on
the Board.
The Board currently comprises seven
members in total, of which two are
Executive and five are Non-Executive
(including the Chairman). TJ Kelly will
be appointed Executive Director on
joining the Company in March 2021.
Recruitment of an additional Non-
Executive Director is being supported
by the Nomination and Corporate
Governance Committee. At year end,
female Directors constituted 29% of
the Board. The Board continues to
work towards delivering its target of
achieving a minimum of 33% female
representation on the Board by the
end of 2020.
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.
The Executive Group Risk Committee
established in 2019 continues
to enhance the Company’s risk
management framework, and met
five times during the year, covering
both Group-wide and Business Unit-
level key risks and mitigating actions.
The Terms of Reference of the
Committee are available on
the Company’s website:
www.originenterprises.com.
Gary Britton
Chairman of the Audit
and Risk Committee
22 September 2020
During the year, the
Committee increased
its focus on risk
management against the
backdrop of the global
COVID-19 pandemic
and external political
and regulatory factors,
including Brexit and
climate action.”
Dear Shareholder
I am pleased to present the report
of the Audit and Risk Committee
for the year ended 31 July 2020
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, together with an
overview of its activities for the
year, are summarised in the
following report.
During the year, the Committee
increased its focus on risk
management against the backdrop
of the global COVID-19 pandemic
and external political and regulatory
factors, including Brexit and climate
action. As the full widespread
impact of these international
events emerges, the Committee
will continue to monitor
developments and manage its
risk exposure accordingly.
A key responsibility of the Audit and
Risk Committee for the year ended
31 July 2020 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 64 to 71.
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+
See more:
Corporate Governance Statement on page 81
Financial Statements on page 113
Duties and Responsibilities
The principal duties and
responsibilities of the Audit and Risk
Committee include the following:
Length of Tenure
The length of tenure of the Directors
on the Audit and Risk Committee as
at 31 July 2020 is set out below:
› material areas in which significant
judgements have been applied or
there has been discussion with the
External Auditor.
› 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.
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 34 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 2020, and
how these have been addressed,
are listed on page 93. 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.
Length of tenure
on Audit and Risk
Committee*
Kate Allum
Gary Britton
Hugh McCutcheon
Years
4.75
4.77
8.63
* Following the amalgamation of the Audit
and Risk Committees in FY19, the length
of tenure for a Director represents
the longest tenure of that Director on
either Committee.
Meetings
The Audit and Risk Committee
met six times during the year. Each
Committee meeting was attended
by the Chief Financial Officer and
the Head of Risk and Internal Audit.
The External Auditor also attended
these meetings as required. The
Audit and Risk Committee separately
met with both the Head of Risk and
Internal Audit and the External Audit
Lead Partner without executive
management being present.
During the year, the Committee
also met with the Group’s Chief
Information Officer on cyber
security and with the Group’s Head
of Health & Safety for UK/Ireland
for a discussion and update on
health, safety and wellbeing strategy
developments.
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
The significant areas of judgement that were discussed at the interim and year-end Audit and Risk Committee meetings
included:
Key Audit Areas
Area:
Discussion:
Goodwill
The Committee recognises that impairment reviews of goodwill involve 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 unit, including the forecasts and key assumptions used together with
a summary of the results. This analysis, together with the detail set out in Note 15 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.
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.
Settlement
price
adjustments
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.
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 consolidated
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
68 to 71. Included in this assessment
is consideration of the impact of the
COVID-19 pandemic, developments in
climate action and the exit of the UK
from the European Union (‘Brexit’).
The Group’s risk management
framework continues to be enhanced
by the finalisation of the in-sourcing
of the Internal Audit function in
FY19 and the establishment of an
Executive Group Risk Committee,
which has now been in operation
for the full current financial year.
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.
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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 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 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.
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 2020.
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. PwC was re-appointed
as External Auditor for FY20, pursuant
to a competitive tender process in
2019. The Audit and Risk Committee
continues to consider PwC to be
independent in the role of Auditor. The
External Auditor is required to rotate
the Audit Partner every five years. The
current Audit Partner has completed
two years 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.
Accordingly, the Audit and Risk
Committee has provided the Board
with a recommendation to re-appoint
PwC as External Auditor.
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 and Anti-Bribery
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. In
further enhancing its whistleblowing
framework, the Company refreshed
its Whistleblowing Policy during the
year, oversight of which lies with the
Audit and Risk Committee. The Policy
and related procedures encourage
both employees and business
partners to raise issues of potential
wrongdoing within the Company,
without fear of retaliation.
The Committee also reviewed the level
of compliance of employees across
the Group with Company anti-bribery
and corruption training.
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 2020, the Audit and Risk
Committee carried out an evaluation
of its own performance, operation and
effectiveness. 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 is available at 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.
+
See more:
Origin at a Glance on page 6
Financial Statements on page 113
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 2020. 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
Origin recognises 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 seek to ensure a
demonstrable link between reward
and long-term value creation, with
Executive remuneration 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 2020
Origin delivered a robust operational
performance this year, having regard
to the challenges of COVID-19 and
extreme weather conditions.
Reflecting these challenges,
Group revenue was €1,589.1 million,
a decrease of 11.6% and Group
operating profit was €44.1 million,
a decrease of 46.4%. Adjusted
diluted earnings per share was 25.69
cent, down on last year but in line
with market guidance. Return on
invested capital, a key metric for
Origin, was 7.3%.
Pay Outcomes for 2020
The global COVID-19 crisis and
the extreme weather conditions
this year had a significant impact
on our business and management
took timely and decisive steps to
align our compensation measures
with a broader set of stakeholders.
Beginning 1 April 2020, the Board
took a voluntary 20% reduction in
fees and base salaries, through to the
end of the financial year on 31 July
2020. These reductions are reflected
in the remuneration figures for
Directors on page 107.
Annual bonuses are based on a
combination of financial and non-
financial metrics. Whilst certain
objectives were met this year, key
threshold financial targets were
not reached. No bonus payouts for
the year ended 31 July 2020 were
therefore deemed appropriate
in the current environment for
Executive Directors.
Following the outbreak of COVID-19
and in further acknowledgement
of the decision to suspend a
final dividend in June 2020, the
Executive Directors voluntarily
waived their entitlement to all
outstanding unvested share options
(being the LTIP awards granted in
September 2017, October 2018
and September 2019).
Leadership Changes
With the retirement of Tom
O’Mahony from the Board and his
role as Chief Executive Officer,
the Committee supported the
Board in agreeing an appropriate
remuneration package for Sean Coyle
to reflect his new role as CEO. Sean’s
base salary has been set at €510,000
and his pension entitlement has
been reduced from 15% of salary
to 6.6%, which is aligned with the
provision available to the workforce
more generally.
To reflect Sean’s appointment to CEO
and to align him with the recovery
of the business over the medium-
term, Sean was granted a once-off
LTIP award in July 2020. This is Sean’s
only current award having waived his
2018 and 2019 grants. This award will
vest based on stretching EPS and FCF
ratio measures.
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Origin delivered a robust
operational performance
this year, having regard
to the challenges of
COVID-19 and extreme
weather conditions.”
2020 was a challenging year for
Origin brought on by the adverse
weather conditions and the global
pandemic. The 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
forthcoming AGM.
Kate Allum
Chairman of the
Remuneration Committee
22 September 2020
Details of Sean’s arrangements and
the terms of the LTIP award are
set out in the Annual Report on
Remuneration and in Note 9 to the
Group financial statements.
Tom O’Mahony stepped down from
the Board on 30 June 2020 after
35 years with the Group, the last
13 of which were as CEO. In line
with his contractual arrangements,
Tom received a payment in lieu of
notice, he retained no interest in
unvested share awards (having by
that stage waived his 2018 and 2019
LTIP awards) and he did not receive a
bonus for the 2020 financial year. Full
details of his leaving arrangements
are set out in the Annual Report
on Remuneration.
We are pleased that TJ Kelly will
be joining the Board as the new
Chief Financial Officer later this
year. His remuneration will be in
line with our Remuneration Policy
and will be disclosed in next year’s
Remuneration Report.
Activities in 2020
Other key activities of the
Committee this year included the
rollout of the changes to the 2015
LTIP rules approved by shareholders
at last year’s AGM, an external
benchmarking exercise of Executive
Directors’ remuneration, a review
of current remuneration practice
against other comparable listed
peers and good practice guidelines,
and a review of the performance
measures applying to the company’s
annual bonus scheme in FY21.
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 management 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 to the Company,
and that failure is not rewarded;
› oversee any major changes in
employee benefit 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 2020 is set out below:
Length of tenure
on Remuneration
Committee
Kate Allum
Rose Hynes
Christopher Richards
Years
4.77
4.77
4.75
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 84.
The principal activities carried out
included:
› annual review of the Terms of
Reference for the Committee;
›
review of the remuneration policy;
› consideration of the 2020 bonus
scheme for Executives;
› approval of the awards under the
LTIP and SAYE schemes;
› annual review of the Committee
effectiveness;
› consideration of T O’Mahony’s
leaving arrangements; and
review of S Coyle’s CEO
remuneration package.
›
The Committee has access to
independent advice and consults
with shareholders where it considers
it appropriate to do so. During the
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 July 2020 LTIP award to
S Coyle.
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 £42,283.
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 2020, 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.
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97
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 111.
Summary of the Remuneration Policy
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.
To attract and retain
skilled and experienced
Executives.
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 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.
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.
This additional element of fixed pay, as
disclosed in previous reports, will be paid for
three years from 1 October 2018 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.
Element of Remuneration
Approach
Maximum Opportunity
Bonus
Incentivises annual
achievement of
performance targets.
CEO & CFO: Maximum bonus of 100%
of basic salary in cash.
CEO, LATAM: 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; and
› 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 against
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 2020 bonus, 80%
of the maximum Group bonus potential was
based on financial targets (namely adjusted
diluted earnings per share (‘EPS’) and Group
Operating Cash Flow) and 20% was 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 disclosed prospectively. The
targets and outcomes for 2020’s bonuses are
disclosed on page 108 and 109.
A clawback provision is in operation.
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99
Element of Remuneration
Approach
Maximum Opportunity
Element of Remuneration
Approach
Maximum Opportunity
Plan limits:
›
100% (normal limit) of basic salary;
and
› 200% (exceptional limit –
e.g. recruitment) of basic salary.
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.
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
based on the business’s medium-term
priorities which could include measures
relating to 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.
Changes to the 2015 LTIP rules were approved
by shareholders at last year’s AGM. Further
details of the changes introduced are
provided on page 106.
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.
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 only and relates
to an historic arrangement.
For Executive Directors receiving
a defined contribution pension (or
cash amount in lieu), the maximum
pension contribution is up to 6.6%
of basic salary.
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.
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 than applies
for the Executive Directors and certain senior management;
› 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 27 to the financial statements);
› participation in the LTIP is currently limited to the Executive Directors and selected senior management
(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 management (excluding
Executive Directors).
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 that, in the case of the Executive Directors and senior
management, 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 that apply to awards made under the 2015 LTIP are 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 Group’s objective of sustainable long-term value to shareholders.
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.
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101
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 new Chief
Executive Officer (‘CEO’) is terminable by either the Company giving 12 months’ notice or the CEO 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.
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 2021 at different
levels of performance, both as a percentage of total remuneration opportunity and as total value.
Sean Coyle:
Sean Coyle:
S Coyle
The service contracts make provision, at the Board’s discretion, for early termination by way of payment 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
Detailed terms
1600000
1200000
Notice period
Payments in lieu of notice
Incentive schemes
6 months’ notice from the CEO and 12 months’ notice from the Company.
800000
24 months’ notice from the Chief Executive Officer, Latin America and from
the Company.
400000
For any unexpired period of notice on termination, up to 12 months’ salary
(and other remuneration) in respect of the CEO and 24 months’ salary in
respect of the Chief Executive Officer, Latin America.
0
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).
Declan Giblin
In the case of the LTIP, the default treatment is that any unvested awards
lapse on cessation of employment.
1,600,000
1,200,000
800,000
400,000
0
€1,598,660
€986,660
15%
26%
32%
32%
€578,660
100%
59%
36%
Minimum
Target
Maximum
D Giblin
Declan Giblin
Fixed
Annual
Long-term
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.
1600000
1200000
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. Directors retire annually and offer themselves for re-election at the AGM.
400000
800000
0
2,000,000
1,200,000
1,000,000
1,500,000
800,000
1,000,000
600,000
400,000
500,000
200,000
0
0
Remaining
figures to
be supplied
€781,054
33%
67%
Remaining
figures to
be supplied
€1,222,681
10%
26%
21%
43%
Minimum
Target
Maximum
€1,826,453
Remaining
figures to
22%
be supplied
35%
14%
29%
Fixed
Assignment Allowance
Annual
Long-term
Notes:
‘Minimum’ includes the value of fixed pay and in the Chief Executive, Latin America’s case, his assignment allowance.
‘Target’ includes ‘minimum’ and ‘target’ annual bonus (50% of the maximum) and threshold vesting of the maximum
LTIP (30% of the maximum).
‘Maximum’ includes ‘minimum’ 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) for CEO and 95% of salary for CFO and
Chief Executive, Latin America.
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ANNUAL REPORT ON REMUNERATION
The key metrics underlying the 2020 bonus plan were as follows:
Implementation of the Remuneration Policy for the Year Ending 31 July 2021
A summary of how the Remuneration Policy will be applied for the financial year ending 31 July 2021 is set out below.
Basic Salary for Executive Directors
Sean Coyle was appointed Chief Executive on 1 July 2020. The Remuneration Committee set S Coyle’s salary at
€510,000 which it believes is in line with the market rate for the role. While the Committee is aware of the limitations of
relying on market data, the Committee is satisfied that the external benchmarking undertaken shows S Coyle’s salary to
be appropriate against external market data.
Given S Coyle’s salary was set close to the year end, his salary will next be reviewed in 2021/22. No increase was
awarded to D Giblin’s base salary.
Executive Director (€’000)
S Coyle1
D Giblin2
2021
510
427
2020
510
427
%
-
-
1 S Coyle was appointed CEO from 1 July 2020. His 2020 annual salary as CFO was €366,000.
2 Remuneration in respect of D Giblin is set in Sterling and has been translated to Euro at an average exchange rate (0.87885) for 2020. For the purposes
of the above table, the average exchange rate for 2020 has also been used to translate the related salary for 2021. In Sterling, Declan Giblin’s salary
amounts to £375,000.
Assignment Allowance
The Assignment Allowance, as disclosed in previous reports, will remain at the same level for the three financial years
2019 to 2021 (any fluctuations in the Assignment Allowance are due to exchange rate conversions).
Key metrics underlying the 2020 bonus plan – T O’Mahony and S Coyle (100% of salary)
20%
80%
32%
68%
Financial and
non-financial
bonus metrics
Analysis of
financial bonus
metrics
Financial targets
EPS
Corporate/personal objectives
Operating cash flow
Key metrics underlying the 2020 bonus plan – D Giblin (100% of salary)
Executive Director (€’000)
D Giblin 1
2021
256
2020
256
20%
80%
40%
25%
1 Remuneration in respect of D Giblin is set in Sterling and has been translated to Euro at an average exchange rate (0.87885) for 2020. The assignment
allowance applied from 1 October 2018. For the purposes of the above table, the average exchange rate for 2020 has also been used to translate the
related assignment allowance for 2021. In Sterling, Declan Giblin’s assignment allowance amounts to £225,000.
Annual Bonus
The maximum bonus achievable in 2021 for S Coyle will remain at 100% of basic salary. The maximum bonus achievable
in 2021 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.
Financial and
non-financial
bonus metrics
Analysis of
financial bonus
metrics
Financial targets
EPS
Operating cash flow
35%
Corporate/personal objectives
Latin America financial targets
Corporate objectives included the successful conclusion of a number of key commercial supply relationship contracts,
driving increased employee engagement and further refining organisational structures across various functions and
business units.
The above charts exclude the additional 50% of salary bonus opportunity which applies for financial years 2019 to 2021
in relation to D Giblin. Any bonus under this arrangement is paid after the end of the 2021 financial year.
The measures, their weighting and the targets are reviewed on an annual basis. On the basis that the 2021 targets are
commercially sensitive, they are not being disclosed prospectively, consistent with prior years.
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Pension Arrangements
S Coyle participates in the defined contribution section of the Group’s Irish pension scheme. Since his appointment as
Chief Executive Officer, the Company contributes 6.6% of salary to his pension, which is line with the general workforce
rate. His pension contribution rate was reduced from 15% of salary which applied while he was in his role as CFO.
D Giblin participates in the UK defined benefit section of the Group’s UK pension scheme, which relates to an historic
arrangement.
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 member’s 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
Changes to the current 2015 LTIP rules became effective following approval by the Company’s shareholders at last year’s
AGM. The changes received 98.91% support. These changes are summarised below:
›
inclusion of the ability for the Committee to reduce the formulaic vesting outcome if it is not reflective of a participant’s
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 management participants.
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.
It is the Remuneration Committee’s intention to make a grant of LTIP awards during the financial year 2021, but before
doing so it will, as is normal, consider the performance metrics and the related targets for awards. Details of any LTIP
awards made in the financial year 2021, including performance measurements and targets, will be disclosed in the
Remuneration Report for the financial year 2021. These will remain stretching relative to the internal forecast and outlook
for the Company.
Non-Executive Director Fees
Fees for the Non-Executive Directors for the 2020 and 2021 financial years are detailed below.
Position
Chairman
Base fee
Additional fees:
Audit and Risk Committee Chair
Remuneration Committee Chair
Senior Independent Director
Committee Membership2
ESG/Sustainability Sponsor3
2021
€
20201
€
% increase
€130,000
€130,000
€62,000
€62,000
€13,000
€13,000
€8,000
€8,000
€3,000
€3,000
€8,000
€8,000
N/A
N/A
Nil
Nil
Nil
Nil
Nil
N/A
N/A
These are the scheduled fees. Actual fees paid in 2020 were lower (see page 107).
1
2 Fee applicable for Committee membership provided Non-Executive Director is not entitled to another additional fee.
3 Additional annual fee for nominated Board sponsor role for interim period of 2 years, commencing in 2021 financial year.
The nominated Non-Executive Director is Kate Allum.
Remuneration Outcomes for the Year Ended 31 July 2020
All Directors voluntarily agreed a 20% reduction in base fees/salary for the 4-month period from 1 April 2020 to 31 July
2020, which is reflected in the Directors’ remuneration (audited) for the year ended 31 July 2020 which was as follows:
Salary and
fees1
€’000
Taxable
benefits2
€’000
Assignment
allowance3
€’000
Pension4
€’000
Annual
bonus5
€’000
Long-term
incentives6
€’000
53
46
26
26
–
–
–
–
–
–
–
–
–
–
–
-
238
-
334
–
–
–
–
–
–
–
–
–
–
–
–
–
168
–
–
–
–
–
–
–
–
–
–
Total
€’000
439
611
666
1,238
126
137
65
71
65
70
70
74
58
62
S Coyle*
2020
2019
D Giblin**
2020
2019
R Hynes
2020
2019
H McCutcheon
2020
2019
K Allum
2020
2019
G Britton
2020
2019
C Richards
2020
2019
Former Directors
T O’Mahony***
2020
2019
351
305
380
425
121
130
65
71
65
70
70
74
58
62
35
22
73
73
5
7
–
–
–
–
–
–
–
–
433
500
24
26
–
–
187
212
–
–
–
–
–
–
–
–
–
–
–
–
69
175
–
391
–
204
526
1,296
* S Coyle was appointed Chief Executive Officer with effect from 1 July 2020. The amounts included in the table above represent emoluments in his role
as CFO from 1 August 2019 to 30 June 2020 and in his role as CEO from 1 July 2020 to 31 July 2020.
** Remuneration in respect of D Giblin is paid in Brazilian Real (BRL) at an agreed GBP/BRL rate of 5.16 set at the beginning of the year. The amounts
included in the table represent the BRL amounts paid retranslated at the BRL/EUR average rate for the year of 5.09412. In Sterling, D Giblin’s salary
amounts to £375,000 and his assignment allowance amounts to £225,000.
*** T O’Mahony resigned as CEO and from the Board on 30 June 2020. The amounts included in the table above represent emoluments for the period
1 August 2019 to 30 June 2020. T O’Mahony was paid a payment in lieu of notice as set out in his service contract. The total amount was €1,092,400,
comprising 12 months’ base salary, bonus (based on his prior year’s bonus in accordance with his contractual entitlements), benefits and pension.
Notes:
1 Salary and Fees (audited)
All Directors took a voluntary 20% reduction in respective fees and base salaries for the period 1 April 2020 to
31 July 2020.
D Giblin’s salary is paid in BRL at an agreed GBP/BRL rate of 5.16 set at the beginning of the year. The above amounts
represent the BRL amounts paid retranslated at the BRL/EUR average rate for the year of 5.09412.
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.
106
Origin Enterprises plc Annual Report and Accounts 2020
Strategic Report
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Financial Statements
107
3 Assignment Allowance (audited)
In 2020, D Giblin received an assignment allowance of €187,393. This allowance applied from 1 October 2018 and
will run to 30 September 2021.
D Giblin’s assignment allowance is paid in BRL at an agreed GBP/BRL rate of 5.16 set at the beginning of the
year. The above amount represents the BRL amount paid retranslated at the BRL/EUR average rate for the year
of 5.09412.
4 Pensions (audited)
Up to 30 June 2020, when T O’Mahony retired and S Coyle was appointed as CEO, the Company contributed 15%
of salary to T O’Mahony’s pension (down from 35% previously) and 15% of salary to S Coyle’s pension. From 1 July
2020, upon his appointment as CEO, the contribution to S Coyle’s pension was reduced to 6.6% to be in line with
the general workforce rate.
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
5 Annual Bonus
Number of Directors
2020
2019
2
1
2
1
The financial measures applying to the CEO and CFO’s 2020 bonus were EPS (50% of salary) and Operating Cash Flow
(‘OCF’) (30% of salary). For the CEO, Latin America, 60% of 2020 bonus was based on EPS (37.5% of salary) and OCF
(22.5% of salary) and 20% was based on Latin America financial measures. For all Executive Directors, 20% of the
bonus is based on personal and corporate objective measures over the course of the 2020 financial year.
Financial measures
Executive Director
Financial
Measures
Weighting
(% of
salary)
EPS
required
for
threshold
bonus
EPS
required
for
maximum
bonus
Actual
Diluted
adjusted
EPS
Outcome
(% of
salary)
OCF
required for
threshold
bonus
€’000
OCF
required for
maximum
bonus
€’000
Actual
OCF
€’000
Outcome
(% of
salary)
Tom O’Mahony*
80%
47.52c
52.80c
25.69c
Sean Coyle*
80%
47.52c
52.80c
25.69c
Declan Giblin**
60%
47.52c
52.80c
25.69c
Nil
Nil
Nil
70,109
77,899 64,288
70,109
77,899 64,288
70,109
77,899 64,288
Nil
Nil
Nil
* 29% of salary is payable for achieving threshold EPS and 13% of salary is payable for achieving threshold Operating Cash Flow.
** 22% of salary is payable for achieving threshold EPS and 10% of salary is payable for achieving threshold Operating Cash Flow.
The CEO, Latin America, earned a bonus of Nil% out of a possible 20% of salary based on the Latin America EBIT and
Latin America OCF financial measures.
In addition, and as disclosed in the 2018 annual 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 was strong and bonus has accrued as a result; for the second year, Latin America delivered
an excellent operating performance but this was offset against the weakening of the Brazilian Real which impacted
overall earnings. 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 2020, non-financial objectives included the successful conclusion of a number of key commercial supply
relationship contracts, driving increased employee engagement and further refining organisational structures across
various functions and business units. Notwithstanding that a number of the non-financial objectives were partially met
by the CEO and CFO, the Remuneration Committee did not award bonuses, reflecting the performance of the business
and challenging operating conditions during the year.
Similarly, in relation to Latin America objectives, the CEO, Latin America met a number of his objectives but the
Committee determined that it was not appropriate to award a bonus in respect of this financial year.
The Remuneration Committee believes that the use of negative discretion is appropriate to align bonus outcomes with
the Group’s performance during the 12-month period ended 31 July 2020.
6 Long-Term Incentives
LTIP awards vesting based on performance to 31 July 2020.
During the year, reflecting the performance of the business, the Executive Directors voluntarily waived their
September 2017, October 2018 and September 2019 LTIP awards. No LTIP awards, therefore, vested based on
performance to 31 July 2020.
For information, the September 2017 award had a performance period ending 31 July 2020. Had the Executive
Directors not waived this award, whilst the EPS and the ROIC measures would not have been met as growth was less
than the 5% p.a. EPS threshold and the 12.5% ROIC threshold, the Free Cash Flow ratio would have been achieved in
full as the maximum target of 100% was exceeded.
LTIP awards granted during the year ended 31 July 2020.
To reflect his appointment as Chief Executive and to provide alignment with the recovery of the business, S Coyle
was granted an LTIP award in July 2020 which is due to vest in July 2023 subject to satisfaction of the relevant
performance conditions. The award is based on performance over the three-year period ending 31 July 2023.
A summary of the performance conditions for this award is set out below:
Metric
Weighting
Vesting at Threshold
Condition
Adjusted Diluted
Earnings per Share
(‘EPS’)
Free Cash
Flow Ratio 1
50%
50%
30%
30%
Adjusted Diluted EPS at the end of the three-year
period of 46c (threshold) on a pro-rata basis to 50c
(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 full pay-out.
1 The definition of Free Cash Flow Ratio is set out in the Financial Review on page 17.
An overall summary of the award is set out below. The award is less than the 200% exceptional limit set out in the policy
and LTIP rules that can be made in cases of recruitment/promotion.
Executive Director
Face value of
award at grant
Number of
shares awarded
End of performance
period
Date from which
exercisable subject to
holding period
S Coyle
132% of salary
222,246
31 July 2023
8 July 2023*
* Subject to satisfaction of performance conditions.
The number of shares awarded was calculated using the closing share price of €3.03 on 7 July 2020.
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Origin Enterprises plc Annual Report and Accounts 2020
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Governance
Financial Statements
109
Outstanding Share Awards
The table below sets out details of outstanding share awards held by Executive Directors.
Statement of Directors’ and Company Secretary’s Shareholdings and Share Interests (audited)
Granted
during
the year
Vested/
exercised
during
the year
Lapsed
during
the year
Cancelled/
waived
during the
year
Number
of share
awards at
31 July
2020
End of
performance
period
Date from
which
exercisable
Expiry
date
Plan
Grant
Date
Exercise/
Option
Price
T O'Mahony*
2015 LTIP
10/03/17
2015 LTIP
28/09/17
2015 LTIP
02/10/18
2015 LTIP
26/09/19
0.01
0.01
0.01
0.01
No. of
share
awards at
1 August
2019
38,615
77,519
88,496
-
-
-
38,615
-
-
-
-
100,000
Total
204,630
100,000
38,615
S Coyle
2015 LTIP
02/10/18
2015 LTIP
26/09/19
2015 LTIP
08/07/20
0.01
0.01
0.01
61,540
-
-
-
69,540
222,246
Total
61,540
291,786
D Giblin
2015 LTIP
10/03/17
2015 LTIP
28/09/17
2015 LTIP
02/10/18
2015 LTIP
26/09/19
0.01
0.01
0.01
0.01
31,751
63,076
70,784
-
-
-
-
80,356
-
-
-
-
31,751
-
-
-
Total
165,611
80,356
31,751
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
77,519 **
88,496 **
100,000 **
266,015
61,540 **
69,540 **
-
-
-
-
-
-
-
31/07/19
10/03/20 09/03/24
31/07/20
28/09/20 27/09/24
31/07/21
02/10/21
01/10/25
31/07/22
26/09/22 25/09/26
31/07/21
02/10/21
01/10/25
31/07/22
26/09/22 25/09/26
131,080
222,246
-
63,076 **
70,784 **
80,356 **
214,216
-
-
-
-
-
31/07/19
10/03/20 09/03/24
31/07/20
28/09/20 27/09/24
31/07/21
02/10/21
01/10/25
31/07/22
26/09/22 25/09/26
*
**
***
T O’Mahony resigned as an Executive Director on 30 June 2020.
During the year ended 31 July 2020 the Directors voluntarily waived their entitlement to any unvested share options. Based on performance of the
business up to 31 July 2020 and forecasted performance for FY2021 and FY2022 these options were expected to vest which the Directors have
waived their entitlement to.
Subject to satisfaction of performance conditions.
LTIP awards are subject to the performance conditions outlined in the Long-Term Incentives section of the Annual
Report on Remuneration, set out on page 109.
Non-Executive Directors do not participate in any Group share incentive or award scheme.
T O’Mahony
S Coyle
D Giblin
R Hynes
H McCutcheon
K Allum
G Britton
C Richards
B Keane
Beneficially
owned at
1 August 2019
Beneficially
owned at
31 July 2020
Unvested LTIP
awards at
31 July 2020
Outstanding share
awards under
all employee
share plans
1,646,373
14,000
302,735
3,875
45,000
-
5,000
3,405
–
1,656,593
75,000
362,735
3,875
45,000
–
5,000
7,680
–
-
222,246
-
–
–
–
–
–
–
8,910
–
–
–
–
–
–
36,364
7,485
S Coyle, having joined the Company in September 2018, holds 47% of his salary.
The value of shareholdings held by the Executive Directors is based on their shares held at the share price of €3.17 on
31 July 2020. Details of share ownership guidelines are set out on page 100 of this report.
Statement of Voting at the AGM
At the Company’s 2019 AGM, the following votes were received from shareholders:
Votes cast in favour*
Votes cast against
Total votes cast
Abstentions
* Does not include Chairman’s discretionary votes.
Remuneration Report
102,930,238
463,533
103,393,771
%
99.55
0.45
100.00
–
–
-
222,246
31/07/23 08/07/25***
07/07/27
The shareholdings held by T O’Mahony and D Giblin are substantially in excess of the share ownership guidelines in place.
110
Origin Enterprises plc Annual Report and Accounts 2020
Strategic Report
Governance
Financial Statements
111
FINANCIAL
STATEMENTS
Directors and Other Information
Statement of Directors’ Responsibilities
Independent Auditors’ Report
Consolidated Income Statement
114
115
116
124
Consolidated Statement of Comprehensive Income 125
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
126
128
129
130
141
196
198
199
Notes to the Company Financial Statements
200
>2,600
People Employed in
7
Countries
112 Origin Enterprises plc Annual Report and Accounts 2020
112
Strategic Report
Governance
Financial Statements
113
DIRECTORS AND OTHER INFORMATION
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
Board of Directors
R Hynes
S Coyle
D Giblin
K Allum
G Britton
H McCutcheon
C Richards
(Non-Executive Chairman)
(Chief Executive Officer)
(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
Auditors
PricewaterhouseCoopers
Chartered Accountants and Statutory Audit Firm
One Spencer Dock
North Wall Quay
Dublin 1
Ireland
Registrars
Link Registrars Limited
2 Grand Canal Square
Dublin 2
Ireland
Euronext Growth (Dublin) Advisor and Stockbroker
Goodbody
Ballsbridge Park
Ballsbridge
Dublin 4
Ireland
Nominated Advisor
Davy
Davy House
49 Dawson Street
Dublin 2
Ireland
Stockbroker
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
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 Group and Company 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
22 September 2020
Sean Coyle
Director
22 September 2020
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Origin Enterprises plc Annual Report and Accounts 2020
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Governance
Financial Statements
115
We have audited the financial statements, included within the Annual Report and Accounts (the ‘Annual Report’), which
comprise:
Key audit
matters
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF ORIGIN ENTERPRISES PLC
Report on the audit of 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 2020 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.
— the Consolidated Statement of Financial Position as at 31 July 2020;
— the Company Balance Sheet as at 31 July 2020;
— 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 and Accounts, 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.
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF ORIGIN ENTERPRISES PLC (continued)
Our audit approach
Overview
Materiality
Materiality
— €2.7 million (2019: €3.4 million) - Group financial statements.
— Based on 5% of the 3 year average profit before tax and exceptional items
(2019: 5% of profit before tax and exceptional items).
— €2 million (2019: €2 million) - Company financial statements.
— Based on 0.75% of net assets (2019: 0.75% of net assets).
Audit
scope
Audit scope
— We conducted audit work on 13 reporting components. We paid particular
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 13 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,
90% of Group profit before tax and exceptional items and 85% of total assets.
Key audit matters
— Goodwill.
— Settlement price adjustments.
— Rebates receivable.
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.
116
Origin Enterprises plc Annual Report and Accounts 2020
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Governance
Financial Statements
117117
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF ORIGIN ENTERPRISES PLC (continued)
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF ORIGIN ENTERPRISES PLC (continued)
Key audit matter
Goodwill
See accounting policy in relation to impairment, Note 15 –
Goodwill and intangible assets and Note 34 – Accounting
estimates and judgements.
The Group has goodwill of €162.68m at 31 July 2020
representing approximately 13% 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 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 2021
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 and margin in Year 1 budgets,
Year 2 and Year 3 growth rates, terminal value growth rates
and discount rates.
How our audit addressed the key audit matter
Key audit matter
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. We evaluated the growth rates applied for Years
2 & 3 and considered the Group’s past record of achieving its
forecasts over time, taking into account the impact of factors
such as the adverse impact of weather in the current year,
crop conditions and competitor activity and found the key
assumptions to be reasonable.
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 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 performed sensitivity analysis on the impact of changes in
key assumptions on the impairment assessments for CGUs.
We assessed the appropriateness of the related disclosures
within the financial statements and consider the disclosures
included in Note 15 to be reasonable.
Settlement price adjustments
See accounting policy in relation to revenue and Note 34 –
Accounting estimates and judgements.
The estimation of final settlement prices for some
customers of 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.
The key inputs to the calculation of the settlement price
adjustment include invoice prices, estimated settlement
prices and invoice quantities.
As set out in Note 34, 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.
We considered the process undertaken by management in
determining the settlement price adjustment to revenue
and trade receivables and compared it to that applied
in the prior period and found it to be appropriate and
consistently applied.
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 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 price
adjustments. 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 considered the results of that test
alongside the current year factors impacting settlement as set
out in the preceding paragraph.
We reviewed the related disclosures within the financial
statements and concluded that they were appropriate.
118
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Financial Statements
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119
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF ORIGIN ENTERPRISES PLC (continued)
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF ORIGIN ENTERPRISES PLC (continued)
Key audit matter
Rebates receivable
See accounting policy in relation to rebates. See also Note
19 – Trade and other receivables and Note 34 – 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
rebates receivable have been included within trade and
other receivables in Note 19.
How our audit addressed the key audit matter
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, tested the inputs to
the calculation to source documentation and assessed the
assumptions regarding full year purchases where rebate rates
are linked to volume targets.
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 calculated appropriately based on the contracted
rates in the supplier agreements we obtained and the
estimates were reasonable.
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 20 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.
The Group audit team organised planning conference calls with key components to discuss business developments with the
component, audit risks and approach. In addition to these calls at the planning stage, post audit conference calls were held to
discuss component auditor’s key audit findings.
As part of our Group audit scoping we identified 13 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, 90% of Group profit before tax and exceptional items and 85% of total assets. Taken collectively these reporting
units represent the principal business units of the Group.
This, together with additional procedures over central functions, IT systems, treasury and areas of judgement including the
key audit matters noted above, taxation 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
€2.7 million (2019: €3.4 million).
€2 million (2019: €2 million).
Group financial statements
Company financial statements
How we determined it
Rationale for benchmark
applied
5% of the 3 year average profit before tax and
exceptional items (2019: 5% of profit before tax
and exceptional items).
0.75% of net assets.
We applied this benchmark as the Company is
primarily an investment holding Company.
We have applied this benchmark taking a 3 year
average because in our view this is a metric
against which the recurring performance of the
Group can be measured by its stakeholders.
We determined that a three year average is a
more appropriate benchmark given the one off
impact on profitability of weather factors in the
current year and consequently we believe an
average is a more appropriate benchmark of
the underlying performance over time.
We agreed with the Audit & Risk Committee that we would report to them misstatements identified during our audit above
€0.135 million (Group audit) (2019: €0.17 million) and €0.1 million (Company audit) (2019: €0.1 million) as well as misstatements
below that amount that, in our view, warranted reporting for qualitative reasons.
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 and Accounts 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.
120
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121
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF ORIGIN ENTERPRISES PLC (continued)
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF ORIGIN ENTERPRISES PLC (continued)
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.
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.
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.
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
22 September 2020
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’ on which we are not required to report) for the year
ended 31 July 2020 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’ on which we are not required to report).
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 115, 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.
122
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123
CONSOLIDATED INCOME STATEMENT
FOR THE FINANCIAL YEAR ENDED 31 JULY 2020
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 31 JULY 2020
Notes
Pre-
exceptional
2020
Exceptional
2020
Total
2020
Pre-
exceptional
2019
Exceptional
2019
Total
2019
€’000
€’000
€’000
€’000
€’000
€’000
Revenue
Cost of sales
Gross profit
1
1,589,142
(1,359,547)
229,595
-
-
-
1,589,142
1,798,197
(1,359,547)
(1,527,363)
229,595
270,834
-
-
-
1,798,197
(1,527,363)
270,834
Operating costs
2, 3
(194,877)
(6,505)
(201,382)
(197,340)
(6,574)
(203,914)
Share of profit of associates and
joint venture
3, 7
6,154
-
6,154
6,717
(423)
6,294
Operating profit
Finance income
Finance expense
5
4
4
40,872
(6,505)
34,367
80,211
(6,997)
73,214
954
(12,204)
-
-
954
1,519
(12,204)
(13,327)
-
-
1,519
(13,327)
Profit before income tax
29,622
(6,505)
23,117
68,403
(6,997)
61,406
Income tax (expense)/credit
3,10
(4,519)
1,261
(3,258)
(8,730)
44
(8,686)
Profit for the year
25,103
(5,244)
19,859
59,673
(6,953)
52,720
Basic earnings per share
Diluted earnings per share
11
11
2020
15.81c
15.53c
2019
41.98c
41.60c
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
Items that may be reclassified subsequently to the Group income statement:
Group foreign exchange translation details
2020
€'000
2019
€'000
19,859
52,720
553
(70)
(1,001)
190
(3,599)
450
(1,668)
284
— exchange difference on translation of foreign operations
(17,350)
(3,507)
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
(1,976)
(58)
311
(5,508)
689
100
(2,783)
369
727
(91)
Other comprehensive expense for the year, net of tax
(24,220)
(9,718)
Total comprehensive (expense) / income for the year attributable to equity shareholders
(4,361)
43,002
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Origin Enterprises plc Annual Report and Accounts 2020
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Financial Statements
125
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 JULY 2020
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 JULY 2020 (continued)
Notes
2020
€’000
2019
€’000
ASSETS
Non-current assets
Property, plant and equipment
Right of use asset
Investment properties
Goodwill and intangible assets
Investments in associates and joint venture
Other financial assets
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
Cash and cash equivalents
Total current assets
TOTAL ASSETS
12
13
14
15
16
17
27
24
14
18
19
23
21
109,363
108,411
Retained earnings and other reserves
EQUITY
Called up share capital presented as equity
Share premium
39,824
2,270
235,949
40,597
575
403
6,890
-
4,221
271,085
47,140
607
-
3,620
435,871
435,084
27,100
188,775
406,857
1,460
24,135
202,806
529,328
2,345
172,309
111,830
796,501
870,444
1,232,372
1,305,528
TOTAL EQUITY
LIABILITIES
Non-current liabilities
Interest-bearing borrowings
Lease liabilities
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
Lease liabilities
Trade and other payables
Corporation tax payable
Provision for liabilities
Derivative financial instruments
Total current liabilities
TOTAL LIABILITIES
Notes
2020
€’000
2019
€’000
28
22
13
24
26
25
27
23
22
13
20
25
23
1,264
160,498
150,564
312,326
1,264
160,498
184,077
345,839
205,889
163,236
31,961
19,785
22,073
1,649
-
1,262
-
23,143
29,607
4,166
1,476
912
282,619
222,540
19,633
8,775
590,182
11,976
4,393
2,468
24,190
-
686,175
11,845
14,452
487
637,427
737,149
920,046
959,689
TOTAL EQUITY AND LIABILITIES
1,232,372
1,305,528
On behalf of the Board
Rose Hynes
Director
22 September 2020
Sean Coyle
Director
22 September 2020
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Origin Enterprises plc Annual Report and Accounts 2020
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CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2020
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
Depreciation of right of use assets
Amortisation of intangible assets
Employee share-based payment (credit)/ 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 disposal of investment in associate
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
Payment of put option liability
Restricted cash
Disposal of / loan to equity investment
Dividends received from associates
Cash outflow from investing activities
Cash flows from financing activities
Drawdown of bank loans
Repayment of bank loans
Lease liability payments
Shares issued
Payment of dividends to equity shareholders
Cash inflow/(outflow) from financing activities
Net increase/ (decrease) in cash and cash equivalents
Translation adjustment
Cash and cash equivalents at start of year
Cash and cash equivalents at end of year
Notes
2020
€’000
2019
€’000
23,117
6,505
(954)
12,204
(533)
(6,154)
8,564
10,184
12,301
(406)
(1,007)
(726)
(1,439)
61,656
6,622
104,366
(80,663)
91,981
(8,628)
(7,947)
75,406
-
904
991
(12,056)
(3,670)
-
(7,386)
-
-
113
5,776
(15,328)
250,025
(209,528)
(11,422)
-
(26,780)
2,295
62,373
2,418
87,885
152,676
61,406
6,997
(1,519)
13,327
(292)
(6,717)
8,300
-
11,059
999
(741)
(1,342)
(1,775)
89,702
(2,408)
(50,450)
40,118
76,962
(11,349)
(12,572)
53,041
750
-
1,005
(12,049)
(4,346)
(36,554)
(1,705)
(3,594)
500
(4,671)
7,037
(53,627)
228,996
(238,491)
-
76
(26,371)
(35,790)
(36,376)
(2,298)
126,559
87,885
16
12
13
15
8
27
3
33
25
26
13
22
21,22
128
Origin Enterprises plc Annual Report and Accounts 2020
Strategic Report
Governance
Financial Statements
129
GROUP ACCOUNTING POLICIES
GROUP ACCOUNTING POLICIES (continued)
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 2020 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 Group and Company financial statements were authorised for issue by the Directors on 22 September 2020.
Statement of compliance
New IFRS accounting standards and interpretations adopted in 2019/2020 (continued)
Transition to IFRS 16 ‘Leases’
The Group had to change its accounting policies as a result of adopting IFRS 16. 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
transition to IFRS 16 impacts the measurement of many components in the Group’s consolidated financial statements including
operating profit, finance costs, earnings per share, net debt and return on capital employed.
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 Group adopted IFRS 16 on the transition date of 1 August 2019 using the modified retrospective approach. The
comparative information for prior periods has not been re-stated and is presented as previously reported under IAS 17 and
related interpretations.
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 2019.
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 IFRS 3 ‘Business Combinations’.
— IFRS 17 ‘Insurance Contracts’.
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
At transition date, the lease liability was initially measured as the present value of the outstanding lease commitments that are
payable for the lease term, discounted using the Group’s incremental borrowing rate. A weighted average rate of 4.0% was
applied. In calculating the lease liability, the Group has applied judgement in determining the lease term for those leases with
termination or extension options and an appropriate discount rate, which is based on the borrowing rate. These judgements
significantly impact on the right-of-use asset and the lease liability to be recognised.
A corresponding right-of-use leased asset was recognised on the Group’s Balance Sheet which was adjusted for any
prepayments, accruals and onerous lease provisions. Had this not been introduced, there would be an additional operating
lease cost of €11,422,000 associated with these leases as an adjustment to opening retained earnings. The right-of-use asset
is depreciated on a straight line basis over the lower of the lease term and the useful life of the asset. Right-of-use assets are
subject to impairment testing.
The Group previously recognised operating lease rentals in operating expenses in the Income Statement. Under IFRS 16, a
right-of-use leased asset is capitalised and depreciated over the term of the lease as an operating expense with an associated
finance cost applied annually to the lease creditor. During the financial year, the Group recognised €10,184,000 of depreciation
costs and €1,766,000 of interest costs from these leases.
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.
The table below reconciles the Group’s operating lease obligations at 31 July 2019 to the lease obligations recognised on
initial application of IFRS 16 at 1 August 2019.
— Amendments to IAS 1: ‘Presentation of Financial Statements: Classification of Liabilities as Current or Non-Current’.
— Amendments to IAS 1 and IAS 8 ‘Definition of Material’.
— Amendments to IFRS 9, IAS 39 and IFRS 7 ‘Interest Rate Benchmark Reform’.
— Amendments to references to the Conceptual Framework in IFRS standards.
These standards are not expected to have a material impact on the entity in the current or future reporting periods and on
foreseeable future transactions.
New IFRS accounting standards and interpretations adopted in 2019/2020
During the year ended 31 July 2020, 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. The following new standards, interpretations and standard amendments became effective as of 1
August 2019:
— IFRS 16 ‘Leases’.
— IFRIC 23 ‘Uncertainty over Income Tax Treatments’.
— Amendments to IFRS 9: Applying IFRS 9 ‘Prepayment Features with Negative Compensation’.
— 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’.
The new standards, interpretations and amendments did not have a significant effect on the financial statements of the Group,
with the exception of IFRS 16 ‘Leases’ which is detailed below.
Operating lease commitment at 31 July 2019
Extension options reasonably certain to be exercised
Commitments relating to low value and short-term leases
Effect of discounting
Discounted operating leases
Finance lease liability at 31 July 2019
Lease liabilities at 1 August 2019
€’000
42,275
5,299
(942)
(6,965)
39,667
910
40,577
The overall impact on the Income Statement of adopting IFRS 16 will be neutral over the life of a lease but will result in a higher
charge in the earlier years following implementation and a lower charge in the later years. It will not change overall cash flows
or the economic effect of the leases. The impact of this in the current financial year is an additional cost of €528,000. There is
no effect on the Group’s existing banking covenants as a result of the implementation of IFRS 16.
The Group has elected to use the following practical expedients when applying IFRS 16 to leases previously classified as
operating leases under IAS 17:
— accounting for short-term leases (leases less than 12 month) or low value asset leases (where the relevant criteria are met)
by recognising the lease payments as an operating expense on a straight-line basis over the term of the lease;
— apply a single discount rate to a portfolio of leases with reasonably similar characteristics; and
— used hindsight in determining the lease term if the contract contained options to extend or terminate the lease.
130
Origin Enterprises plc Annual Report and Accounts 2020
Strategic Report
Governance
Financial Statements
131131
GROUP ACCOUNTING POLICIES (continued)
GROUP ACCOUNTING POLICIES (continued)
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.
In considering going concern, the directors have had regard to the underlying trading in the Group’s key markets and the
continuing impact of COVID-19 restrictions. They are satisfied that the Group has adequate resources to meet obligations,
having regard to debt maturities, for the foreseeable future from the date of approval of these accounts.
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 34.
Basis of consolidation (continued)
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.
Basis of consolidation
Transactions eliminated on 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.
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.
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.
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 19.
Revenue recognition
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 or services. 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 19. Further details of the estimation involved in determining settlement price adjustments at year
end is included in Note 34.
132
132
Origin Enterprises plc Annual Report and Accounts 2020
Strategic Report
Governance
Financial Statements
133
133
GROUP ACCOUNTING POLICIES (continued)
GROUP ACCOUNTING POLICIES (continued)
Segmental reporting
Taxation
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.
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.
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. 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.
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.
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GROUP ACCOUNTING POLICIES (continued)
GROUP ACCOUNTING POLICIES (continued)
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.
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.
Properties held for sale are not used in the ordinary course of business and are available for immediate sale in their present
condition subject to terms that are usual and customary for such properties of this nature. The carrying amount of these
properties will be recovered principally through a sale transaction rather than through continuing use. The properties have
been actively marketed and the Group is committed to its plan to sell these properties.
Leased assets – prior to application of IFRS 16 Leases (effective for periods before 1 August 2019)
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.
Leased assets–post application of IFRS 16 Leases (effective from 1 August 2019)
At inception of a lease contract, the Group assesses whether a contract is, or contains, a lease. If the contract conveys the
right to control the use of an identified asset for a period of time in exchange for consideration, it is recognised as a lease. At
the commencement date of the lease, the Group recognises a right-of-use asset and a lease liability on the balance sheet. The
right-of-use asset is measured at cost, which consists of the initial measurement of the lease liability, any initial direct costs
incurred by the Group in setting up/entering into the lease, an estimate of any costs to dismantle and remove the asset at the
end of the lease and any payments made in advance of the lease commencement date.
Right-of-use assets are depreciated on a straight-line basis from the lease commencement date to the earlier of the end of
the useful life or the end of the lease term. The carrying amounts of right-of-use assets are reviewed at each balance sheet
date to determine whether there is any indication of impairment. An impairment loss is recognised when the carrying value of
an asset exceeds its recoverable amount.
The lease liability is measured as the present value of the lease payments unpaid at that date, discounted using the interest
rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Lease payments
included in the measurement of the lease liability comprises of fixed or variable payments (based on an index or rate),
amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to
be exercised.
Leased assets–post application of IFRS 16 Leases (effective from 1 August 2019) (continued)
Subsequent to the initial measurement, the liability will be reduced for payments made and increased for the interest applied
and it is remeasured to reflect any reassessment or contract modifications. When the lease liability is remeasured, the
corresponding adjustment is reflected in the right-of-use asset or in the Consolidated Income Statement if the right-of-use
asset is already reduced to zero.
The Group has elected to record short-term leases of less than 12 months and leases of low-value assets as defined in IFRS 16
as an operating expense in the Consolidated Income Statement on a straight-line basis over the lease term.
The Group has also elected not to separate non-lease components from lease components, and instead account for each
lease component and any associated non-lease components as a single lease component further increasing the lease liability.
The Group adopted IFRS 16 ‘Leases’ using the modified retrospective approach. Accordingly, the comparative information
has not been restated and continues to be accounted for in accordance with the Group’s previous accounting policy under
IAS 17 ‘Leases’.
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.
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.
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GROUP ACCOUNTING POLICIES (continued)
GROUP ACCOUNTING POLICIES (continued)
Intangible assets (continued)
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 3 to 10 years
up to 20 years
up to 20 years
up to 20 years
up 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. 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.
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.
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
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less loss allowance.
Financial assets and liabilities (continued)
Trade and other receivables - continued
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.
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.
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GROUP ACCOUNTING POLICIES (continued)
NOTES TO THE GROUP FINANCIAL STATEMENTS
Financial assets and liabilities (continued)
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.
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.
Borrowing costs
Latin America
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.
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.
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.
Segment results, assets and liabilities include all items directly attributable to a segment.
Finance income
Finance income is recognised using the effective interest method.
Government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will
be received and the Group will comply with all attached conditions. Government grants relating to costs are deferred and
recognised in profit or loss over the period necessary to match them with the costs that they are intended to compensate.
Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as
deferred income and they are credited to profit or loss on a straight-line basis over the expected lives of the related assets.
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.
(a) Analysis by segment
(i) Segment revenue and result
Ireland and the UK
Continental
Europe
Latin America
Total Group
2020
€’000
2019
€’000
2020
€’000
2019
€’000
2019
2020
€’000 €’000
2020
€’000
2019
€’000
Total revenue
1,284,946 1,563,259
590,181 605,204
50,435 33,556
1,925,562 2,202,019
Less revenue from associates and joint
venture
(317,057)
(403,822)
-
-
(19,363)
-
(336,420)
(403,822)
Revenue
967,889 1,159,437
590,181 605,204
31,072 33,556
1,589,142 1,798,197
Segment result
23,302
59,976
13,686
14,212
7,111
8,075
44,099
82,263
Profit from associates and joint venture
5,808
6,717
-
-
346
-
6,154
6,717
Amortisation of non-ERP intangible assets
(5,035)
(4,328)
(2,145)
(1,884)
(2,201)
(2,557)
(9,381)
(8,769)
Operating profit before exceptional items
24,075
62,365
11,541
12,328
5,256
5,518
40,872
80,211
Exceptional items
Operating profit
(2,670)
1,509
(3,555)
(7,604)
(280)
(902)
(6,505)
(6,997)
21,405
63,874
7,986
4,724
4,976
4,616
34,367
73,214
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141
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
1 Segment information (continued)
1 Segment information (continued)
(ii) Segment earnings before financing costs and tax is reconciled to reported profit before tax and profit after tax as follows:
(v) Other segment information
Operating profit
Finance income
Finance expense
Reported profit before tax
Income tax
Reported profit after tax
(iii) Segment assets
Total Group
34,367
73,214
954
1,519
(12,204)
(13,327)
23,117
61,406
(3,258)
(8,686)
19,859
52,720
Ireland and the UK
Continental
Europe
Latin America
Total Group
2020
€’000
2019
€’000
2020
€’000
2019
€’000
2020
€’000
2019
€’000
2020
€’000
2019
€’000
Depreciation
Intangible amortisation
Exceptional items (Note 3)
14,151
7,955
2,670
5,251
6,607
(1,509)
4,335
2,145
3,555
2,778
1,884
7,604
262
271
18,748
8,300
2,201
2,568
12,301
11,059
280
902
6,505
6,997
Assets excluding investment in
associates and joint venture
Investment in associates and joint
venture (including other financial assets)
Ireland and the UK
Continental
Europe
Latin America
Total Group
2020
€’000
2019
€’000
2020
€’000
2019
€’000
2020
€’000
2019
€’000
2020
€’000
2019
€’000
553,253
604,267
382,905 430,743
74,383 104,976
1,010,541 1,139,986
41,172
46,588
-
-
-
1,159
41,172
47,747
Segment assets
594,425
650,855
382,905 430,743
74,383 106,135
1,051,713 1,187,733
Reconciliation to total assets as reported in Consolidated Statement of Financial Position
Cash and cash equivalents
Derivative financial instruments
Deferred tax assets
Total assets as reported in Consolidated Statement of Financial Position
(iv) Segment liabilities
172,309
111,830
1,460
6,890
2,345
3,620
1,232,372 1,305,528
Ireland and the UK
Continental
Europe
Latin America
Total Group
2020
€’000
2019
€’000
2020
€’000
2019
€’000
2020
€’000
2019
€’000
2020
€’000
2019
€’000
Segment liabilities
369,177
405,557
257,115 279,675
32,741 50,644
659,033
735,876
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
225,522
187,426
3,730
1,399
31,761
34,988
920,046
959,689
Capital expenditure –
property, plant and equipment
Capital expenditure –
ERP and computer intangibles
11,351
8,905
1,446
2,472
1,050
561
13,847
11,938
Total capital expenditure
13,281
11,701
1,815
3,023
1,052
(b) Analysis by geography and revenue lines
1,930
2,796
369
551
2
5
566
2,301
3,352
16,148
15,290
Ireland and the UK
Continental
Europe
Latin America
Total Group
2020
€’000
2019
€’000
2020
€’000
2019
€’000
2020
€’000
2019
€’000
2020
€’000
2019
€’000
Revenue
967,889 1,159,437
590,181 605,204
31,072 33,556
1,589,142 1,798,197
Total segment assets
594,425
650,855
382,905 430,743
74,383 106,135
1,051,713 1,187,733
IFRS 8 non-current assets*
303,602
277,841
76,063
79,849
48,913 73,774
428,578
431,464
*The total non-current assets in the UK are €262.4 million (2019: €236.2 million).
The following table disaggregates revenue by significant revenue lines:
Integrated Agronomy
and Digital Agricultural
Services
Business-to-Business
Agri-Inputs
Total Group
2020
€’000
2019
€’000
2020
€’000
2019
€’000
2020
€’000
2019
€’000
Revenue
995,128
1,091,667
594,014
706,530
1,589,142
1,798,197
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143
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
2 Operating costs
Distribution expenses
Administration expenses
Amortisation of non-ERP related intangible assets
Exceptional items (Note 3)
3 Exceptional items
2020
€’000
2019
€’000
103,792
103,523
81,704
9,381
85,048
8,769
194,877
197,340
6,505
6,574
201,382
203,914
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:
Write down of intangible assets arising from re-branding (i)
Transaction related credit / (costs) (ii)
Fair value adjustment of investment properties and properties held for sale (iii)
Pension and rationalisation related costs (iv)
Loss on disposal of associate (v)
Impairment in Ukraine investment, net of put option settlement (vi)
Write down on property, plant and equipment (iii)
Total exceptional charge before tax before associates and joint venture
Arising in associates and joint venture (vii)
Total exceptional charge before tax
Tax credit on exceptional items
2020
€’000
(6,853)
379
730
(202)
(559)
-
-
(6,505)
-
(6,505)
1,261
2019
€’000
-
(273)
5,680
(426)
-
(7,455)
(4,100)
(6,574)
(423)
(6,997)
44
Total exceptional charge after tax
(5,244)
(6,953)
(i) Write down of intangible assets arising from re-branding
During the year, the Group completed a re-branding of the businesses in Continental Europe. As a result, legacy intangible
assets relating to the branding of these businesses were written down by €3.6 million (Note 15) and charged to the
Consolidated Income Statement as an exceptional item. In addition legacy brands within the Ireland/UK segment attributable
to bolt on acquisitions were also written down by €3.3 million as the business is now fully integrated under the Origin brand.
The tax impact of this in the current year was a tax credit of €1.2 million (2019: €Nil).
(ii) Transaction related credit / (costs)
The transaction related credit arose on the movement in contingent consideration for both Fortgreen and Resterra (Note 25),
and is net of transaction related costs incurred in relation to the acquisitions completed during the prior year and potential
acquisitions in the current year. The tax impact of this item in the current year was a tax credit of €0.1 million (2019: €Nil).
3 Exceptional items (continued)
(iii) Fair value adjustment of investment properties and properties held for sale
During the year, investment properties valued at €2.9 million (Note 14) were reclassified as held for sale as it is expected
these properties will be sold within 12 months. There was a fair value uplift on these properties of €1.0 million (Note 14). Also
included are costs relating to the disposal of the properties.
In the prior year, a credit of €5.7 million was recognised comprising €5.5 million of an uplift in the value of the Group’s Cork
properties and investment properties, 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.
In the prior year a write-down of €4.1 million was also reflected in the value of the Group’s property, plant and equipment
(Note 12).
The tax impact of this exceptional item in the current year is a charge of €Nil (2019: €0.4 million).
(iv) Pension and rationalisation related costs
Rationalisation costs relate to 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 €Nil (2019: €0.1 million).
(v) Loss on disposal of associate
On 31 July 2020, the Group disposed of it’s 20% shareholding in Ferrari Zagatto E Cia Ltda, a Brazilian based agronomy services
and crop input distribution business. A loss of €0.6 million arose on the disposal as follows:
Consideration received from disposal of interest in Ferrari Zagatto
Carrying value of investment (Note 16)
Foreign exchange differences previously taken to comprehensive income
Loss arising on disposal of associate
The tax impact of this exceptional item is a tax charge of €Nil.
(vi) Impairment in Ukraine investment, net of put option settlement
2020
€’000
904
(1,308)
(155)
(559)
In the prior year, the Directors re-assessed the valuation of goodwill and intangible assets based on the trading results for the
financial year and the forecasted 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 15) and a write down of €1.5 million of
part of the Agroscope brand was recorded (Note 15). Also included was a credit arising on the settlement of the Agroscope put
option liability of €1.9 million (Note 26). This resulted in a total charge of €7.5 million being recorded. The net tax impact of this
exceptional item in the prior year was a tax credit of €0.2 million.
(vii) Arising in associates and joint venture
The exceptional charge in the prior year 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 prior year was a tax credit of €0.1 million.
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Financial Statements
145
145
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
4 Finance income and expense
6 Directors’ emoluments
Recognised in the Consolidated Income Statement
Finance income
Interest income on bank deposits
Defined benefit pension obligations: net interest income (Note 27)
Total finance income
Finance expenses
Interest payable on bank loans and overdrafts
Interest on lease liabilities (Note 13)
Defined benefit pension obligations: net interest cost (Note 27)
Total finance expenses
Finance costs, net
Recognised directly in Other Comprehensive Income
2020
€’000
2019
€’000
954
-
954
(10,429)
(1,766)
(9)
(12,204)
(11,250)
1,495
24
1,519
(13,327)
-
-
(13,327)
(11,808)
Emoluments
Emoluments include the following contributions to retirement benefit schemes:
— Defined contribution
— Defined benefit
2020
€’000
2019
€’000
3,107
3,187
122
26
148
221
26
247
Further details are shown in the Remuneration Committee Report on pages 95 to 111.
Retirement benefits are accruing to one Director (2019: one Director) under a defined benefit scheme and to one Director
(2019: two Directors) under a defined contribution scheme.
7 Share of profit after tax of associates and joint venture
Effective portion of changes in fair value of interest rate swaps
(351)
(1,701)
5 Statutory and other information
2020
€’000
2019
€’000
Profit after tax, before exceptional items (Note 16)
Share of exceptional items, net of tax (Note 3)
Total Group share of:
Revenue
Group operating profit before exceptional items is stated after charging:
8 Employment
2020
€’000
2019
€’000
336,420
403,822
6,154
-
6,717
(423)
Raw materials and consumables used
Amortisation of intangible assets (Note 15)
Depreciation of property, plant and equipment (Note 12)
Depreciation of right of use assets (Note 13)
Operating lease rentals (i)
Foreign exchange expense
1,349,771
1,517,230
12,301
8,564
10,184
4,277
3,008
11,059
8,300
-
14,297
248
(i) On adoption of IFRS 16 ‘Leases’ at 1 August 2019, the operating lease rentals charge in the current financial year relates to
short-term and low-value leases.
Auditors’ remuneration
Remuneration (including expenses) for the statutory audit of the entity financial statements and other services carried out for
the Company by the auditors is as follows:
Audit of the consolidated financial statements
Other assurance services
Other non-audit services
2020
€’000
2019
€’000
560
35
7
555
51
5
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
2020
Number
2019
Number
1,445
481
685
2,611
1,471
371
693
2,535
2020
Number
2019
Number
5
3
5
3
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Origin Enterprises plc Annual Report and Accounts 2020
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Governance
Financial Statements
147
147
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
8 Employment (continued)
Aggregate employment costs of the Group are analysed as follows:
9 Long Term Incentive Plans (continued)
Wages and salaries (i)
Social insurance costs
Retirement benefit costs (Note 27) included in Consolidated Income Statement:
— defined benefit schemes – current service cost
— defined benefit schemes – past service (credit)/cost
— defined benefit schemes – net interest expense/(income)
— defined contribution schemes
Share based payment (credit)/charge
Cash based long term incentive plan
Pension and rationalisation related costs (Note 3)
Retirement benefit costs (Note 27) included in Other Comprehensive Income:
— defined benefit schemes – remeasurements
2020
€’000
2019
€’000
108,125
11,520
113,386
10,695
624
(151)
9
4,125
(406)
35
202
527
30
(24)
3,521
999
1,120
426
124,083
130,680
(553)
3,599
123,530
134,279
(i)
includes furlough payments to UK employees of €636,000 under the UK Coronavirus Job Retention Scheme
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
2019 Awards–Directors
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. 52.50% of the remaining options for
T O’Mahony and D Giblin vested in March 2020.
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. The Executive Directors have voluntarily
waived their entitlement to any unvested share options under the 2018 awards.
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. The Executive Directors have
voluntarily waived their entitlement to any unvested share options under the 2019 awards.
2019 Awards – Senior
management
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. During the year two employees
ceased employment resulting in the forfeiture of 53,540 share options.
2020 Awards–Directors
On 26 September 2019, under the terms of the 2015 LTIP Plan, T O’Mahony, S Coyle and D Giblin
were granted 100,000, 69,540 and 80,356 share options respectively. The Executive Directors have
voluntarily waived their entitlement to any unvested share options under the 2020 awards.
Transfer of
Ownership /
Vesting
2019 Awards
Targets &
Thresholds
Vesting of share options and transfer of ownership of resulting shares is determined by reference to the
following conditions:
— Up to 30% 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%
5% 30%
Between 5% and 10%
10% and above
Proportion of the Adjusted Diluted
EPS award vesting
0%
30%-100% pro rata
100%
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% of the shares subject to an award will vest depending on the Company’s consolidated 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%
12.5% 30%
Between 12.5% and 17.5%
17.5% and above
Proportion of the ROIC award vesting
0%
30%-100% pro rata
100%
— Up to 30% of the shares subject to an award will vest depending on the Company’s consolidated 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%
50%
Between 50% and 100%
100% and above
30%
Proportion of the FCFR award vesting
0%
30%-100% pro rata
100%
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% of an award will be subject to divisional financial or other performance conditions
related to the business division.
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.
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Origin Enterprises plc Annual Report and Accounts 2020
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149
149
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
9 Long Term Incentive Plans (continued)
In July 2020 a number of share options were issued to S Coyle under the 2015 Origin Long Term Incentive Plan. The details of
awards under the Plan are as follows:
9 Long Term Incentive Plans (continued)
Movement in the number of share options outstanding is as follows:
Awards
2020 Awards
Targets & Thresholds
On 8 July 2020 under the terms of the 2015 LTIP Plan, S Coyle was granted 222,246 share options.
Vesting of share options and transfer of ownership of resulting shares is determined by reference
to the following conditions:
Up to 50% of the shares subject to the award will vest depending on the Company’s consolidated
Adjusted Earnings per Share (‘Adjusted EPS’) for the financial year ended 31 July 2023, determined
in accordance with the table below.
Adjusted Diluted EPS
Year ended 31 July 2023
Below 46 cent
46 cent
Between 46 cent and 50 cent
50 cent and above
Proportion of the Adjusted Diluted
EPS award vesting
0%
30%
30%–100% pro rata
100%
Up to 50% of the shares subject to an award will vest depending on the Company’s consolidated
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%
50%
Between 50% and 100%
100% and above
Proportion of the FCFR award vesting
0%
30%
30%-100% pro rata
100%
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; and
— 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.
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.
Number
of share
options
2020
Number of
share
options
2019
1,088,139
274,583
(70,366)
(63,622)
(53,540)
(611,311)
-
-
-
-
472,142
813,556
761,442
1,088,139
At 1 August
Vested (i)
Not awarded (i)
Forfeiture (ii)
Waived (iii)
Granted
At 31 July
(i)
(ii)
The amounts vested and not awarded relate to the 2017 awards as detailed on page 148. The total share options awarded
were 133,988 of which 70,366 have vested but none of which have yet been exercised.
These shares were voluntarily waived and have been accounted for as forfeited shares which resulted in a credit of
€39,000 in the Income Statement in the current year.
(iii) The amounts waived relate to the 2018, 2019 and 2020 Executive Director awards as detailed on page 148.
Grant date
Expiry date
Exercise price
10 March 2017 (i)
9 March 2024
28 September 2017 (ii)
27 September 2024
2 October 2018 (iii)
17 July 2019 (iv)
26 September 2019 (v)
8 July 2020 (vi)
1 October 2025
1 October 2025
1 October 2025
7 July 2027
€0.01
€0.01
€0.01
€0.01
€0.01
€0.01
Number of
share options
2020
Number of
share options
2019
-
-
225,861
313,335
-
222,246
761,442
133,988
140,595
500,221
313,335
-
-
1,088,139
(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%.
(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%.
(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%.
(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%.
(v) The fair value of the share options granted was €4.36 derived using the Black Scholes valuation model. The significant
inputs into the model were weighted average share price of €5.00 at the grant date, exercise price of €0.01 and dividend
yield of 4.2%.
(vi) The fair value of the share options granted was €2.39 using the Black Scholes valuation model. The significant inputs into
the model were weighted average share price of €3.03 at the grant date, exercise price of €0.01 and dividend yield of 6.9%.
150
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Financial Statements
151
151
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
9 Long Term Incentive Plans (continued)
Cash based long term incentive plan
9 Long Term Incentive Plans (continued)
The value of the SAYE scheme at 31 July 2020 is as follows:
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 amount paid under
this scheme during 2020 was €1.4m. This amount was 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 134. 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 2018 financial 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 balance payable under this scheme at the end of the three year period in 2021 is €0.9 million, which has been
booked in current provisions in the balance sheet and charged to the income statement within payroll costs in the years ending
31 July 2018, 31 July 2019 and 31 July 2020 in line with the accounting policy on page 134 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, 2019 and 2020.
During the prior year a third 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 €0.4 million of which €0.3 million has been booked in non-current
provisions in the balance sheet and charged to the income statement within payroll costs in the years ended 31 July 2019 and
31 July 2020. 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, 2020 and the budget for 2021, resulting in a 23% 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 Group before the end of the
service period.
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% 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% 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.
At 1 August
(Credit)/ charge
At 31 July
2020
€’000
2019
€’000
595
(349)
246
383
212
595
Grant date
Expiry date
Option
Price
Exercise
price
Share options
No of shares
2020
Share options
No of shares
2019
1 June 2016
1 June 2017
1 June 2018
1 June 2019
1 June 2020
1 June 2019
1 June 2020
1 June 2021
1 June 2022
1 June 2023
€1.78
€1.93
€1.40
€1.42
€0.51
€5.48
€5.64
€4.20
€4.32
€2.02
-
-
96,768
63,395
1,740,655
1,900,818
65,951
48,298
378,146
184,697
-
677,092
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
Scheme 5
€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%
€2.53
€2.02
3 years
30.4%
3.0%
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Financial Statements
153
153
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
10 Income tax
Current tax expense
Deferred tax credit
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%
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
Recognition of previously unrecognised deferred tax assets
Other
Movement on deferred tax (liability)/asset recognised directly in the Consolidated Statement of
Comprehensive Income (Note 24):
Relating to Group employee benefit schemes
Property, plant and equipment
Foreign exchange
Hedge related
Recognised in the Consolidated Statement of Comprehensive Income
2020
€’000
8,001
(4,743)
3,258
23,117
(6,154)
16,963
2,120
175
1,893
2,348
(696)
78
(2,930)
270
3,258
70
24
117
(311)
(100)
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
(450)
262
150
(369)
(407)
The applicable tax rate is 18.5% compared to 15% in the prior year. The increase is primarily driven by movements in the mix of
profits and changes in estimates in respect of prior periods.
A deferred tax asset of €6.9 million (2019: €3.6 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 €25.1 million (2019: €16.1 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 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.
11 Earnings per share
Basic earnings per share
2020
€’000
2019
€’000
Profit for the financial year attributable to equity shareholders
19,859
52,720
Weighted average number of ordinary shares for the year
125,595
125,583
‘000
‘000
Basic earnings per share
Diluted earnings per share
Cent
Cent
15.81
41.98
2020
€’000
2019
€’000
Profit for the financial year attributable to equity shareholders
19,859
52,720
Weighted average number of ordinary shares used in basic calculation
Impact of shares with a dilutive effect
Impact of the SAYE scheme (Note 9)
Weighted average number of ordinary shares (diluted) for the year
Diluted earnings per share
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 15)
Tax on amortisation of non-ERP related intangible assets
Exceptional items, net of tax
Adjusted earnings
Adjusted basic earnings per share
‘000
‘000
125,595
125,583
373
1,901
478
677
127,869
126,738
Cent
Cent
15.53
41.60
2020
‘000
2019
‘000
125,595
125,583
2020
€’000
2019
€’000
19,859
52,720
9,381
(1,638)
5,244
32,846
8,769
(1,709)
6,953
66,733
26.15
53.14
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155
155
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
11 Earnings per share (continued)
Adjusted diluted earnings per share
Weighted average number of ordinary shares used in basic calculation
Impact of shares with a dilutive effect
Impact of the SAYE scheme (Note 9)
Weighted average number of ordinary shares (diluted) for the year
2020
‘000
2019
‘000
125,595
125,583
373
1,901
478
677
127,869
126,738
2020
€’000
2019
€’000
32,846
66,733
Cent
Cent
25.69
52.65
Land and
buildings
€’000
Plant and
machinery
€’000
Motor
vehicles
€’000
Assets under
construction
€’000
Total
€’000
94,152
71,263
(18)
1,322
-
(222)
(1,077)
94,157
15,880
2,051
(199)
142
(729)
5,850
-
(937)
(218)
75,229
44,859
5,255
(777)
145
17,874
49,482
7,721
(483)
1,312
208
(1,233)
(640)
6,885
3,986
1,258
(992)
331
4,583
-
-
5,363
-
-
(332)
5,031
-
-
-
-
-
173,136
(1,230)
13,847
208
(2,392)
(2,267)
181,302
64,725
8,564
(1,968)
618
71,939
76,283
25,747
2,302
5,031
109,363
78,272
26,404
3,735
-
108,411
Adjusted earnings (as above)
Adjusted diluted earnings per share
12 Property, plant and equipment
Cost
At 1 August 2019
Reclassification on IFRS 16 adoption
Additions
Leased assets purchased
Disposals
Translation adjustments
At 31 July 2020
Accumulated depreciation
At 1 August 2019
Depreciation charge for year
Disposals
Translation adjustments
At 31 July 2020
Net book amounts
At 31 July 2020
At 31 July 2019
12 Property, plant and equipment (continued)
Cost
At 1 August 2018
Additions
Arising on acquisition (Note 33)
Transfers to properties held for sale (Note 14)
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
Assets held under finance leases
Land and
buildings
€’000
Plant and
machinery
€’000
Motor
vehicles
€’000
Total
€’000
104,777
65,403
3,037
3,585
(11,215)
(4,100)
(481)
(1,451)
7,838
560
-
-
(1,147)
(1,391)
7,436
1,063
326
-
-
(1,255)
151
177,616
11,938
4,471
(11,215)
(4,100)
(2,883)
(2,691)
94,152
71,263
7,721
173,136
14,354
1,979
(153)
(300)
41,703
4,972
(1,019)
(797)
3,630
1,349
(999)
6
59,687
8,300
(2,171)
(1,091)
15,880
44,859
3,986
64,725
78,272
26,404
3,735
108,411
90,423
23,700
3,806
117,929
The net book value in respect of assets held under finance leases and accordingly capitalised in property, plant and equipment
is as follows:
Land and
buildings
€’000
Plant and
machinery
€’000
Motor
Vehicles
€’000
Total
€’000
At 31 July 2019
18
729
483
1,230
On transition to IFRS 16 ‘Leases’ at 1 August 2019, the carrying amount of leased assets included in property, plant and
equipment of €1,230,000 was transferred to right of use assets.
13 Leases
As described in accounting policy on pages 136 to 137, the Group has adopted IFRS 16 ‘Leases’ with effect from 1 August 2019.
IFRS 16 introduces a single lessee accounting model, and the majority of all lease agreements will now result in the recognition
of a right of use asset and a lease liability on the balance sheet. The income statement charge in relation to all leases will now
comprise a depreciation element relating to the right of use asset and also a financing charge relating to the lease liability.
In the previous year, the Group only recognised lease assets and lease liabilities in relation to leases that were classified as
‘finance leases’ under IFRS 16 ‘Leases’. The assets were presented in property, plant and equipment and the liabilities as part
of the Group’s borrowings.
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NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
13 Leases (continued)
The movement in the Group’s right-of-use leased assets during the period is as follows:
14 Investment properties and properties held for sale
Arising on adoption of IFRS 16 at 1 August 2019
Reclassification of assets held under IAS 17 as finance leases on adoption of IFRS 16
Additions in period
Termination of leases
Leased assets purchased and transferred to property, plant and equipment
Depreciation charge
Foreign exchange movement
Right-of-use leased assets at 31 July 2020
Right of use assets include land and buildings, vehicles, machinery and IT software, and is comprised as:
€’000
39,667
1,230
9,499
(43)
(208)
(10,184)
(137)
39,824
At 31 July 2020
Depreciation expense
Right-of-use assets
Land and
buildings
€’000
Plant and
machinery
€’000
Motor
Vehicles
€’000
IT
software
€’000
Total
€’000
3,386
25,565
4,259
8,771
2,520
5,465
19
23
10,184
39,824
At 1 August
Additions
Held for sale reclassification (i)
Transfer from property, plant & equipment (i)
Disposal of investment properties (ii)
Fair value adjustment (iii)
At 31 July
2020
Properties
held for sale
€’000
2020
Investment
properties
€’000
2020
Total
2019
Total
€’000
€’000
24,135
64
2,901
-
-
-
27,100
4,221
28,356
11,825
-
(2,901)
-
-
950
2,270
64
-
-
-
950
29,370
-
-
11,215
(211)
5,527
28,356
(i) During the year, investment properties valued at €2.9 million were reclassified as held for sale as it is expected these
properties will be sold within 12 months. There was a fair value uplift on these properties of €1.0 million. In the prior year,
a number of properties were reclassified as held for sale following the Cork property transaction. It is expected these
properties will be sold within the first six months of the 2021 financial year.
(ii) During the prior year, six acres of an investment property were disposed of and resulted in an exceptional gain of
€0.5 million
(iii) Measurement of fair value
Properties held for sale
The amounts recognised in the Consolidated Income Statement include:
Properties held for sale are carried at fair value and regarded as a Level 3 fair value.
Depreciation expense on right-of-use assets (Note 5)
Interest expense on lease liabilities (Note 4)
Expense relating to short-term leases and leases of low-value assets
The movement in the Group’s related lease liabilities during the period is as follows:
Arising on adoption of IFRS 16 at 1 August 2019
New leases arising in the period
Termination of leases
Lease payments
Interest on lease liabilities
Foreign exchange movement
Lease liabilities at 31 July 2020
Current
Non-current
Lease liabilities at 31 July 2020
See Note 23 for contractual cash flows relating to lease liabilities.
€’000
10,184
1,766
4,277
€’000
40,577
9,499
(43)
(11,422)
1,766
359
40,736
8,775
31,961
40,736
At 31 July 2020 and 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 third parties 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.
At 31 July 2020 the valuation of the Group’s other properties held for sale was also determined by the Directors using a market
approach with reference to local knowledge and judgement supported by the consideration agreed with third parties for the
properties which is expected to complete within the first six months of the 2021 financial year.
Investment properties
Investment property is carried at fair value and regarded as a Level 3 fair value.
At the start of the year the Group transferred all investment properties from a level 2 to a level 3 fair value as the nature of the
measurement inputs changed. In the prior year the Group commissioned an independent valuation of the property whereas
in the current year the Group valued the property based on comparable market transactions rather than an independent
valuation. As an independent valuation of the investment property is not required under accounting standards the Directors
are happy to rely on the valuation from prior year, in conjunction with their own judgement.
In general, valuations have been based on a market approach and have been undertaken having regard to comparable market
transactions between informed market participants. Due to very limited transactions for properties of a similar nature in
Ireland, the valuations were determined internally with reference to local knowledge, valuation techniques and the exercise
of judgement.
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NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
14 Investment properties and properties held for sale (continued)
The following is a summary of valuation methods used in relation to the Group’s held for sale and investment properties which
are carried at fair value:
14 Investment properties and properties held for sale (continued)
Properties held for sale – valuation technique & unobservable inputs
Valuation technique
Unobservable inputs
Properties held
for sale
Investment
properties
Total
2020
€’000
2019
€’000
2020
€’000
2019
€’000
2020
€’000
2019
€’000
Offers from third parties
Third party valuation: level 2
Comparable market transactions: level 3
Total
27,100
24,135
-
-
-
-
27,100
24,135
-
-
2,270
2,270
-
27,100
24,135
4,221
-
-
4,221
2,270
-
4,221
29,370
28,356
Fair value measurements using significant unobservable inputs (level 3)
The below table outlines the changes in level 3 investment properties for fair value measurement:
Properties held
for sale
Investment
properties
Total
2020
€’000
2019
€’000
2020
€’000
2019
€’000
2020
€’000
2019
€’000
At 1 August
Additions
Transfers from level 2
Transfer from property, plant & equipment
Held for sale reclassification
Fair value adjustment
Total
24,135
64
-
-
2,901
-
-
-
-
11,215
8,250
4,670
27,100
24,135
-
-
4,221
-
(2,901)
950
2,270
-
-
-
-
-
-
-
24,135
64
4,221
-
-
950
-
-
-
11,215
8,250
4,670
29,370
24,135
Valuation Techniques and Significant Unobservable Inputs
At the start of the year the Group transferred all investment properties from a level 2 to a level 3 fair value as the nature of
the measurement inputs changed. The following tables show the valuation techniques used in measuring the fair value of
properties held for sale and investment properties and the significant unobservable inputs used. Where market transactions
are present, the comparable market transaction method is used for land and buildings held for sale or capital appreciation.
Offers from third parties:
This valuation is used for properties that have formal
offer documentation received by the Group from third
parties intending to purchase with a reasonable possibility
of a sale being concluded.
Offers from third parties:
This valuation is used for properties that have formal
offer documentation received by the Group from third
parties intending to purchase with a reasonable possibility
of a sale being concluded.
Offers from third parties:
This valuation is used for properties that have formal
offer documentation received by the Group from third
parties intending to purchase with a reasonable possibility
of a sale being concluded.
One offer for 31 acres of land
at South Docklands in Cork for
a cash consideration of up to
€1.5 million an acre
One offer for industrial
and office facilities for
€26 per square foot
One offer for industrial
and office facilities for
€421,000 per acre
Investment Properties – valuation technique & unobservable inputs
Valuation technique
Unobservable inputs
Comparable market transactions
Comparable land 211 acres at
€50,000 an acre
The value is based on comparable market transactions
after discussion with independent agents and/or with
reference to other information sources.
Comparable market transactions
The value is based on comparable market transactions
after discussion with independent agents and/or with
reference to other information sources.
Comparable land 44 acres at
€50,000 an acre
Inter-relationship between key
unobservable inputs and fair value
measurement
The estimated fair value would
increase/(decrease) if:
Final offer price
increased/(decreased)
The estimated fair value would
increase/(decrease) if:
Final offer price
increased/(decreased)
The estimated fair value would
increase/(decrease) if:
Final offer price
increased/(decreased)
Inter-relationship between key
unobservable inputs and fair value
measurement
The estimated fair value would
increase/(decrease) if: Comparable
market prices per square acre were
higher/(lower).
The estimated fair value would
increase/(decrease) if: Comparable
market prices per square acre were
higher/(lower).
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NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
15 Goodwill and intangible assets
15 Goodwill and intangible assets (continued)
Goodwill Brand (ii) Customer
related
€’000
€’000
€’000
Intangible assets
Developed
Technology
€’000
Computer
related
€’000
ERP (i)
Related
€’000
Total
€’000
Goodwill
€’000
Brand Customer
related
€’000
€’000
Supplier
agreements
€’000
Developed
Technology
€’000
Computer
related
€’000
ERP (i)
Related
€’000
Total
€’000
Intangible assets
Cost
At 1 August 2019
Additions
Retirement of brand
Write off (Note 3)
Translation adjustment
At 31 July 2020
Accumulated Amortisation
At 1 August 2019
Amortisation
Retirement of brand
Translation adjustment
At 31 July 2020
Net book value
At 31 July 2020
176,292
26,276
83,166
-
-
-
289
(8,962)
(6,853)
-
-
-
(13,611)
(1,208)
(893)
162,681
9,542
82,273
-
-
-
-
-
10,180
37,686
1,376
3,910
(8,962)
141
-
(83)
2,735
41,513
23,497
1,094
-
-
(4,914)
19,677
3,490
2,540
-
(983)
5,047
8,491
1,968
24,512
342,234
333
3,684
-
-
-
-
(8,962)
(6,853)
(63)
40
(20,649)
10,396
24,885
309,454
3,589
1,555
16,204
2,920
-
(26)
-
(32)
71,149
12,301
(8,962)
(983)
5,118
19,092
73,505
162,681
6,807
40,760
14,630
5,278
5,793
235,949
At 31 July 2019
176,292
16,096
45,480
20,007
4,902
8,308
271,085
(i) ERP related amortisation is charged within operating costs in the Consolidated Income Statement.
(ii) A rebranding of the Group’s Continental European business completed during the year resulting in a write down of the
carrying value of the respective brands. In addition legacy brands within the Ireland/UK segment attributable to bolt on
acquisition were also written down.
Material individual intangible assets are as follows:
Customer Lists with a carrying value of €8.1 million and €4.7 million respectively that have remaining residual lives of 12 and 8
years. Developed technologies with a carrying value of €8.1 million that have remaining residual lives of 6 years.
Cost
At 1 August 2018
138,112
22,851
80,571
Additions
-
50
40
Arising on acquisition
47,873
5,071
4,191
Disposals
Impairment
-
-
(7,949)
(1,480)
-
-
Translation adjustment
(1,744)
(216)
(1,636)
At 31 July 2019
176,292
26,276
83,166
AccumulatedAmortisation
At 1 August 2018
Amortisation
Disposals
Translation adjustment
At 31 July 2019
Net book value
At 31 July 2019
-
-
-
-
-
9,197
1,191
-
34,661
3,775
-
(208)
(750)
10,180
37,686
176,292
16,096
45,480
At 31 July 2018
138,112
13,654
45,910
Cash generating units (CGUs)
670
-
-
(649)
-
(21)
-
670
-
(649)
(21)
-
-
-
6,256
904
15,821
-
-
516
23,497
643
2,840
-
7
5,877
2,668
327
(150)
-
(231)
23,907
278,244
684
-
-
-
4,346
73,283
(799)
(9,429)
(79)
(3,411)
8,491
24,512
342,234
2,875
13,864
963
(150)
(99)
2,290
-
50
61,910
11,059
(799)
(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
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
2020
Pre-tax
discount
rate
2019
Projection
Period
EBIT Growth
rate in
Year 2 & 3
Terminal
Value
Growth Rate
2020
2019
For financial years 2020 and 2019
€’000
€’000
Agronomy – UK
Amenity
Fertiliser
Latin America
Poland
Belgium
Romania
8.9%
8.9%
8.9%
13.7%
9.2%
9.8%
10.6%
10.2%
10.2%
10.2%
14.3%
10.8%
11.7%
11.1%
3 years
3 years
3 years
3 years
3 years
3 years
3 years
2%
2%
2%
5%
4%
4%
4%
2%
2%
2%
2%
2%
2%
2%
75,875
8,446
13,687
32,029
8,455
2,017
22,172
162,681
74,842
8,331
13,500
46,399
8,677
2,017
22,526
176,292
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NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
15 Goodwill and intangible assets (continued)
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 2021 (Year 1) are extracted from the 2021 budget document formally approved by the Board. 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 flow projections take into account the
global spread of COVID-19. Although, the full financial impact of the crisis is difficult to predict with a high degree of certainty,
the risk of impairment of goodwill due to the impact of COVID-19 was considered in the valuation model.
The cash flows are discounted using appropriate risk adjusted discount rates as disclosed in the table above. The range of
discount rates applied ranged from 8.9% to 13.7% and reflect the fact that the forecasting risk associated with COVID-19 was
included in the adjusted cash flows. 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.
Key assumptions include management’s estimates of future profitability, growth 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.
Sensitivity Analysis
— If the Group experienced no growth in years 2 and 3, there would have been no impairment charge across any CGU
— If the Group increased the pre-tax discount rate by one percentage point, there would have been no impairment charge
across any CGU
16 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 3)
Dividends received
Share of other comprehensive expense
Disposal of interest in Ferrari Zagatto (Note 3)
(Disposal)/acquisition of equity investment
Translation adjustment
At 31 July
2020
€’000
2019
€’000
47,140
6,154
-
(5,776)
(5,630)
(1,308)
(113)
130
48,171
6,717
(423)
(7,037)
(748)
-
1,117
(657)
40,597
47,140
16 Investments in associates and joint venture (continued)
Associates and joint venture income statement (100%):
Revenue
Other comprehensive expense
Dividends received by Group
Exchange differences arising on consolidation
The investment in associates and joint venture as at 31 July 2020 is analysed as follows:
Non-current assets
Current assets
Non-current liabilities
Current liabilities
At 31 July 2020
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
2020
€’000
2019
€’000
672,840
807,644
(11,260)
(5,776)
130
(1,496)
(7,037)
(657)
Associates
€’000
9,151
29,814
Joint
venture
€’000
12,915
36,578
(5,310)
(6,160)
(12,461)
(23,930)
21,194
19,403
Associates
€’000
6,174
33,623
(2,857)
Joint
venture
€’000
13,937
32,506
(4,349)
Total
€’000
22,066
66,392
(11,470)
(36,391)
40,597
Total
€’000
20,111
66,129
(7,206)
(13,979)
(17,915)
(31,894)
22,961
24,179
47,140
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.
17 Other financial assets
On 31 July 2020, the Group disposed of it’s 20% shareholding in Ferrari Zagatto E Cia Ltda, a Brazilian based agronomy services
and crop input distribution business.
Split as follows:
Total associates
Total joint venture
21,194
19,403
40,597
22,961
24,179
47,140
At 1 August
(Repayments)/advances during the year
Translation adjustments
At 31 July
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.
2020
€’000
2019
€’000
607
(42)
10
575
450
178
(21)
607
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NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
18 Inventory
Raw materials
Finished goods
Consumable stores
19 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
20 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
2020
€’000
2019
€’000
52,802
134,734
1,239
188,775
64,698
122,813
15,295
202,806
2020
€’000
2019
€’000
362,108
26,715
1,911
4,399
11,724
406,857
475,884
32,207
2,966
3,419
14,852
529,328
2020
€’000
2019
€’000
478,918
58,614
9,002
8,168
35,480
590,182
557,994
83,583
8,164
9,046
27,388
686,175
21 Cash and cash equivalents (continued)
Cash at bank and in hand
Bank overdrafts (Note 22)
Included in the Consolidated Statement of Cash Flows
2020
€’000
2019
€’000
172,309
111,830
(19,633)
152,676
(23,945)
87,885
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.
22 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
Leases liabilities
Finance leases
Non-current interest-bearing loans and borrowings
Included in current liabilities:
Bank overdrafts
Leases liabilities
Finance leases
Current interest-bearing loans and borrowings
Total interest-bearing loans and borrowings
Analysis of net debt
2020
€’000
2019
€’000
205,889
31,961
-
162,571
-
665
237,850
163,236
19,633
8,775
-
28,408
266,258
23,945
-
245
24,190
187,426
(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 2020 approximately €17.9 million (2019: €25.7 million)
of the Origin Enterprises plc trade payables were known to have been sold onward. 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.
21 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
Overdraft
Cash and cash equivalents
Loans
Net debt
Lease liabilities
2019
€’000
IFRS 16
transition
€’000
111,830
(23,945)
87,885
(162,571)
(74,686)
-
-
-
-
-
(910)
(39,667)
Net debt including lease creditors
(75,596)
(39,667)
Cash flow
€’000
62,709
(336)
62,373
(40,497)
21,876
11,422
33,298
Non-cash
movement
€’000
Translation
adjustment
€’000
2020
€’000
-
-
-
(2,230)
4,648
172,309
(19,633)
2,418
152,676
(609)
(2,212)
(205,889)
(609)
(11,222)
(11,831)
206
(359)
(153)
(53,213)
(40,736)
(93,949)
Opening lease liabilities as at 31 July 2019 relate to finance lease obligations as classified under IAS 17.
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Financial Statements
167
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NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
22 Interest-bearing loans and borrowings (continued)
Analysis of net debt
22 Interest-bearing loans and borrowings (continued)
(8,179)
(667)
1,264
(162,571)
Repayment schedule – lease liabilities and finance leases
Repayment schedule – loans and overdrafts
Within one year
Between one and five years
Loans and overdrafts
Within one year
Greater than one year
Lease liabilities and finance leases
Guarantees
Group borrowings are secured by guarantees from Origin Enterprises plc and certain principal operational entities of
the Group.
Currency
Nominal
value
€’000
Carrying
amount
€’000
23 Financial instruments and financial risk
The following table outlines the financial assets and liabilities held by the Group at the balance sheet date:
2020
€’000
2019
€’000
19,633
205,889
225,522
23,945
162,571
186,516
2020
€’000
2019
€’000
8,775
31,961
40,736
245
665
910
2018
Cash flow Acquisition
€’000
€’000
€’000
Non-cash
movement
€’000
Translation
adjustment
€’000
2019
€’000
Cash
Overdraft
Cash and cash equivalents
Finance lease obligations
Loans
147,212
(20,653)
(38,334)
(2,102)
4,060
-
126,559
(40,436)
4,060
(862)
(164,553)
(67)
9,564
-
-
-
-
-
(1,108)
(1,190)
111,830
(23,945)
(2,298)
87,885
19
(910)
Net debt
Restricted cash
(38,856)
(30,939)
(4,119)
(667)
(1,015)
(75,596)
500
(500)
-
-
-
-
Net debt including restricted cash
(38,356)
(31,439)
(4,119)
(667)
(1,015)
(75,596)
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.
The Group has unsecured committed banking facilities of €430m, of which the following amounts are drawn:
2020
Unsecured loan facility:
— term facility maturing in June 2024
— term facility maturing in June 2024
— term facility maturing in June 2024
— term facility maturing in September 2021
2019
Unsecured loan facility:
— term facility maturing in June 2024
— term facility maturing in June 2024
— term facility maturing in June 2024
— term facility maturing in September 2021
EUR
STG
PLN
EUR
EUR
STG
PLN
EUR
57,000
56,615
110,558
109,812
9,526
30,000
9,462
30,000
207,084
205,889
59,000
65,431
9,777
30,000
58,280
64,633
9,658
30,000
164,208
162,571
Fair value
hierarchy
Financial
Instruments
at fair value
through OCI
€’000
Financial
Instruments
at fair value
through PL
€’000
Financial
assets/
(liabilities) at
amortised cost
€’000
Fair value
Total
carrying
value
€’000
€’000
2020
Other financial assets
Trade and other receivables
Derivative financial assets
Cash and cash equivalents
Total financial assets
Trade and other payables
Contingent consideration
Bank overdrafts
Level 2
Level 3
Bank borrowings (greater than one year)
Level 2
-
-
1,460
-
1,460
-
-
-
-
-
-
-
-
-
-
-
575
575
575
393,222
393,222
393,222
-
1,460
1,460
172,309
172,309
172,309
566,106
567,566
567,566
(546,534)
(546,534)
(546,534)
(3,404)
-
(3,404)
(3,404)
-
-
-
-
-
(19,633)
(19,633)
(19,633)
(205,889)
(205,889)
(205,889)
(40,736)
-
-
(40,736)
(22,073)
(3,730)
(40,736)
(22,073)
(3,730)
(3,404)
(812,792)
(841,999)
(841,999)
At 31 July 2020, the average interest rate being paid on the Group’s borrowings was 1.47% (2019: 1.58%).
Lease liabilities
Put option liability
Derivative financial liabilities
Total financial liabilities
Level 3
Level 2
(22,073)
(3,730)
(25,803)
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Financial Statements
169
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NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
23 Financial instruments and financial risk (continued)
Fair value
hierarchy
Financial
Instruments
at fair value
through OCI
€’000
Financial
Instruments
at fair value
through PL
€’000
Financial
assets/
(liabilities) at
amortised cost
€’000
Fair value
Total
carrying
value
€’000
€’000
2019
Other financial assets
Trade and other receivables
Derivative financial assets
Cash and cash equivalents
Total financial assets
Trade and other payables
Contingent consideration
Bank overdrafts
Level 2
Level 3
Bank borrowings (greater than one year)
Level 2
Finance lease liabilities
Put option liability
Derivative financial liabilities
Total financial liabilities
Estimation of fair values
-
-
2,345
-
2,345
-
-
-
-
-
-
-
-
-
-
-
(13,431)
-
-
-
-
-
607
607
607
511,510
511,510
511,510
-
2,345
2,345
111,830
111,830
111,830
623,947
626,292
626,292
(649,741)
(649,741)
(649,741)
-
(23,945)
(13,431)
(23,945)
(13,431)
(23,945)
(162,571)
(162,571)
(162,571)
(910)
(910)
(910)
-
-
(29,607)
(29,607)
(1,399)
(1,399)
(31,006)
(13,431)
(837,167)
(881,604)
(881,604)
Level 3
Level 2
(29,607)
(1,399)
23 Financial instruments and financial risk (continued)
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 2020 were €102,459,000 (2019:
€101,716,000).
At 31 July 2020, the average fixed interest rate on the swap portfolio was 0.71% 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 2020 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.
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 26.
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.
Fair value hierarchy
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 25.
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.
The tables at the beginning of this note summarise the financial instruments carried at fair value, by valuation method, as of
31 July 2020. 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:
Derivatives–forward foreign exchange contracts
Forward foreign exchange contracts are marked to market using quoted forward exchange rates at the reporting date.
— Credit risk
— Liquidity risk
— Market risk
The absolute principal amount of the outstanding forward foreign exchange contracts at 31 July 2020 was €82,888,000 (2019:
€85,462,000).
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 2020 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.
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.
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Financial Statements
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NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
23 Financial instruments and financial risk (continued)
23 Financial instruments and financial risk (continued)
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework.
Trade receivables
The Group has established an internal audit function under the direction of the Audit and Risk 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 and Risk Committee.
The Board, through its Audit 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.
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
expected credit 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
2020
€’000
575
393,222
172,309
1,460
Carrying
Amount
2019
€’000
607
511,510
111,830
2,345
567,566
626,292
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
Carrying
amount
2020
€’000
111,453
234,679
15,976
362,108
Carrying
amount
2019
€’000
181,676
273,621
20,587
475,884
At 31 July 2020 trade receivables of €304,415,000 (2019: €391,960,000) 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:
Not past due
Past due 0-30 days
Past due 31-120 days
Past due +121 days
At 31 July
2020
2019
Gross
€’000
Impairment
€’000
Gross
€’000
Impairment
€’000
306,073
32,876
16,223
29,919
385,091
(1,658)
(234)
(2,863)
(18,228)
(22,983)
395,218
49,930
25,378
27,047
497,573
(3,258)
(765)
(3,133)
(14,533)
(21,689)
An analysis of movement in loss allowance in respect of trade receivables was as follows:
1 August
Charge to the Consolidated Income Statement
Receivables written off as uncollectable
Translation adjustments
31 July
2020
€’000
2019
€’000
(21,689)
(2,539)
659
586
(16,334)
(6,502)
1,023
124
(22,983)
(21,689)
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
€44.2 million as at 31 July 2020 (2019: €25.4 million). The Group has continued to recognise an asset of €3,091,000 (2019:
€2,539,000) representing the extent of its continuing involvement.
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Financial Statements
173
173
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
23 Financial instruments and financial risk (continued)
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% of bank facilities should mature in the
twelve-month period following the year end. As at 31 July 2020, 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 22.
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
+ 5
years
€’000
2020
Variable rate bank loans
Trade and other payables
Bank overdrafts
Contingent consideration
Lease liabilities
Put option liability
(205,889)
(216,504)
(1,517)
(1,517)
(32,601)
(180,869)
(546,534)
(546,534)
(546,534)
(19,633)
(19,633)
(19,633)
-
-
-
-
-
-
(3,404)
(40,736)
(22,073)
(3,404)
(1,596)
(310)
(100)
(1,398)
(44,915)
(5,198)
(4,994)
(8,301)
(14,429)
(11,993)
(25,746)
-
(25,746)
Derivative financial liabilities
Interest rate swaps used for hedging
(1,262)
(1,262)
Currency forward contracts used for hedging
— Inflows
— Outflows
52,810
52,810
47,920
4,890
(55,278)
(55,278)
(50,240)
(5,038)
(3,730)
(3,730)
(2,320)
(148)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,262)
-
-
(1,262)
2–5
years
€’000
Carrying
amount
€’000
Contractual
cash flows
€’000
6 months
or less
€’000
6–12
months
€’000
1–2
years
€’000
(162,571)
(173,835)
(1,284)
(1,284)
(2,569)
(168,698)
(649,741)
(649,741)
(649,741)
(23,945)
(23,945)
(23,945)
-
-
-
-
-
-
(13,660)
(10,020)
(408)
(2,250)
(982)
(13,431)
(29,607)
(37,297)
-
-
-
-
-
(37,297)
(83)
(829)
2019
Variable rate bank loans
Trade and other payables
Bank overdrafts
Contingent consideration
Put option liability
Derivative financial liabilities
Interest rate swaps used for hedging
(912)
(912)
Currency forward contracts used for hedging
23 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
Cash flow hedges
2020
2019
Assets
€’000
Liabilities
€’000
Assets
€’000
Liabilities
€’000
1,460
-
1,460
(2,468)
(1,262)
(3,730)
2,345
-
(487)
(912)
2,345
(1,399)
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.
— Inflows
— Outflows
15,723
15,723
15,490
(16,210)
(16,210)
(15,972)
(1,399)
(1,399)
(482)
233
(238)
(5)
-
-
-
-
(83)
(829)
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Governance
Financial Statements
175
175
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
23 Financial instruments and financial risk (continued)
Exposure to currency risk
The Group’s exposure to transactional foreign currency risk at the year end date is as follows:
2020
Trade receivables
Cash and cash equivalents
Other payables
2019
Trade receivables
Cash and cash equivalents
Other payables
Ron
€’000
Euro
€’000
Sterling
€’000
US Dollar
€’000
Total
€’000
-
(438)
-
(438)
-
(182)
-
(182)
4,180
15,006
(34,798)
(15,612)
1,135
7,789
(38,965)
(30,041)
-
359
(146)
213
2,083
7,438
(10,265)
(744)
6,263
22,365
(45,209)
(16,581)
-
15,652
(603)
15,049
2,332
1,722
(18,226)
(14,172)
3,467
24,981
(57,794)
(29,346)
Hedged items are excluded from the tables above.
Currency sensitivity analysis
A 10% strengthening/weakening of the euro against the following currencies at 31 July 2020 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 2019.
A positive number below indicates an increase in profit where the euro strengthens or weakens 10% against the
relevant currency.
2020
Dollar
Sterling
Romanian Leu
At 31 July 2020
2019
Dollar
Sterling
Romanian Leu
At 31 July 2019
Interest rate risk
10% strengthening
income statement
€’000
10% weakening
income statement
€’000
74
(21)
43
96
1,417
(1,505)
18
(70)
(74)
21
(43)
(96)
(1,417)
1,505
(18)
70
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.
23 Financial instruments and financial risk (continued)
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
2020
€’000
Carrying amount
2019
€’000
-
-
(910)
(910)
(205,889)
(19,633)
172,309
(53,213)
(162,571)
(23,945)
111,830
(74,686)
Total interest-bearing financial instruments
(53,213)
(75,596)
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 2019.
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.
2020
Unhedged variable rate instruments
Bank overdraft
Cash flow sensitivity (net)
2019
Unhedged variable rate instruments
Bank overdraft
Cash flow sensitivity (net)
Principal
amount
€’000
Income
statement
50 bp
increase
€’000
(103,431)
(19,633)
(123,064)
(60,855)
(23,945)
(84,800)
(517)
(98)
(615)
(304)
(120)
(424)
A 50 basis points decrease in interest rates at the reporting date would have had the equal but opposite effect on the above.
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177
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
24 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:
24 Deferred tax (continued)
Movements in deferred tax assets and liabilities, during the year, were as follows:
Deferred tax assets (deductible temporary differences)
Pension related
Property, plant and equipment
Intangibles
Hedge related
IFRS 16
Other deductible temporary differences
Total
Deferred tax liabilities (taxable temporary differences)
Property, plant and equipment
Pension related
Intangibles
Other
Total
2020
€’000
779
101
-
373
70
5,567
6,890
(3,953)
(226)
(12,117)
(3,489)
(19,785)
2019
€’000
860
110
1
62
-
2,587
3,620
(4,078)
(101)
(16,350)
(2,614)
(23,143)
Property,
plant and
equipment
€’000
IFRS 16 Hedge
related
Pension
related
Intangibles Other
Total
€’000 €’000
€’000
€’000 €’000
€’000
2020
At 1 August 2019
Recognised in the Consolidated Income Statement
Recognised in Other Comprehensive Income
Foreign exchange and other
(3,968)
(371)
(24)
511
62
-
311
-
70
-
-
759
(16,349)
(27)
(19,523)
(26)
(70)
(110)
2,088 2,982
4,743
-
2,144
(117)
(760)
100
1,785
At 31 July 2020
(3,852)
70
373
553
(12,117) 2,078 (12,895)
2019
At 1 August 2018
Recognised in the Consolidated Income Statement
Property,
plant and
equipment
€’000
(5,704)
1,440
494
(262)
64
(3,968)
Investment
property
Hedge
related
Pension
related
Intangibles Other
Total
€’000 €’000
€’000
€’000 €’000
€’000
(2,264)
(316)
389
(64)
-
450
(16)
(9,926)
(1,070)
(18,891)
1,893
1,107
6,649
(8,304)
-
(7,810)
-
(150)
(12)
86
407
122
9
-
369
-
2,264
-
-
-
-
62
759
(16,349)
(27)
(19,523)
Net deferred tax liability
(12,895)
(19,523)
Acquisitions related
Recognised in Other Comprehensive Income
Foreign exchange and other
At 31 July 2019
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.
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NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
25 Provision for liabilities
26 Put option liability
The estimate of provisions is a key judgement in the preparation of the financial statements.
2020
At beginning of year
Provided in year
Paid in year
Released in year
Currency translation adjustment
At end of year
Current
Non-current
2019
At beginning of year
Arising on acquisition (Note 33)
Provided in year
Paid in year
Released in year
Currency translation adjustment
At end of year
Current
Non-current
Contingent
acquisition
consideration
€’000
(i)
Rationalisation
Other
Total
€’000
(ii)
€’000
(iii)
€’000
13,431
109
(7,386)
(1,738)
(1,012)
3,404
1,906
1,498
7,591
8,508
-
(1,705)
(1,111)
148
13,431
10,410
3,021
251
-
-
(262)
11
-
-
-
1,494
-
-
(979)
(263)
(1)
251
251
-
4,936
35
(2,364)
-
31
2,638
2,487
151
4,427
-
1,120
(587)
-
(24)
4,936
3,791
1,145
18,618
144
(9,750)
(2,000)
(970)
6,042
4,393
1,649
13,512
8,508
1,120
(3,271)
(1,374)
123
18,618
14,452
4,166
(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 and Vegetable Consulting Services Ltd (VCS) in March 2019. The
amount attributable to Comfert is €0.1 million, R&T Liming €0.1 million, Resterra €1.6 million (which was paid in August
2020) and VCS €1.6 million.
(ii) Rationalisation costs related to termination payments arising from the restructuring of Agri-Services in the UK.
(iii) Other provisions relate to various dilapidation provisions, operating and employment related costs.
At 1 August
Fair value adjustment (i)
Arising on acquisition (Note 33)
Change in fair value of put option (ii)
Repayments
Translation adjustment
At 31 July
2020
€’000
29,607
-
-
1,966
-
(9,500)
22,073
2019
€’000
5,531
(1,937)
26,433
2,114
(3,594)
1,060
29,607
(i) During the prior 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 at the date of acquisition which was 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.
27 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 surplus in the Group’s defined benefit schemes at 31 July 2020 was €403,000 (2019: deficit of €1,476,000).
At 31 July 2020, the Group’s Irish scheme is in surplus in the amount of €1.8 million. In the event of a wind-up of the Irish
scheme, following the full settlement of scheme liabilities by the Trustees, the pension scheme rules provide the Group with an
unconditional right to a refund of any remaining surplus. In the ordinary course of business, the Trustees have no rights to wind up
or change the benefits due to members of the scheme. As a result, any net surplus in the pension scheme is recognised in full.
The pension charge included in the Consolidated Income Statement for the year in respect of the Group’s defined benefit
schemes was €95,000 (2019: credit of €15,000) and a charge of €4,125,000 (2019: €3,521,000) in respect of the Group’s
defined contribution schemes.
Employee benefits included in the Consolidated Statement of Financial Position comprises the following:
Surplus / (deficit) in defined benefit schemes
2020
€’000
2019
€’000
403
(1,476)
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 2020 by an independent, qualified actuary. The valuations have been performed using
the projected unit method.
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NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
27 Post employment benefit obligations (continued)
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.
Male
Female
27 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
2020
ROI
24.3
26.3
2020
UK
23.1
25.2
2019
ROI
24.2
26.2
The mortality assumptions imply the following life expectancies in years of an active member, aged 65, retiring now:
2019
UK
22.9
25.0
2019
UK
21.8
23.7
2020
ROI
22.5
24.4
2020
UK
21.8
23.7
2019
ROI
22.5
24.3
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 2021 are €132,000 and €1,138,000 respectively.
Financial assumptions–scheme liabilities
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.
The significant long-term assumptions used by the Group’s actuaries in the computation of scheme liabilities as at 31 July 2020
and 31 July 2019 are as follows:
Republic of Ireland schemes
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
2020
2019
0.00%-1.95%
0.00%-2.35%
1.40%
1.10%
1.20%
1.50%
0.00%-3.20%
0.00%-3.50%
0.00%-3.60%
0.00%-3.80%
1.60%
2.40%
2.10%
2.70%
Assumption
Discount rate
Price inflation
Salary
Mortality
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
Change in assumption
Increase/decrease 0.50%
Increase/decrease 0.50%
Increase/decrease 0.50%
Impact on plan liabilities
Decrease by 8.2%/increase by 9.4%
Increase by 0.7%/decrease by 0.8%
Increase/decrease by 0.0%
Decrease/increase by 3.0%
Impact on plan liabilities
Decrease by 7.2%/increase by 8.1%
Increase by 4.2%/decrease by 3.9%
Increase by 0.5%/decrease by 0.3%
Increase/decrease by one year
Decrease/increase by 2.5%
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183
183
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
27 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
2020
ROI
€’000
2020
UK
€’000
2020
Total
€’000
3,208
9,753
1,650
386
-
320
-
-
641
3,208
9,753
2,291
70,754
71,140
7,055
792
7,055
1,112
15,317
79,242
94,559
(13,508)
(80,648)
(94,156)
1,809
(1,406)
403
2019
ROI
€’000
2019
UK
€’000
2019
Total
€’000
2,810
10,661
2,210
-
-
2,562
18,243
-
-
713
73,631
7,130
5,864
2,810
10,661
2,923
73,631
7,130
8,426
87,338
105,581
(17,431)
(89,626)
(107,057)
812
(2,288)
(1,476)
The majority of equity securities, bonds and investments funds have quoted prices in active markets.
27 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
Other
Investment funds
Insurance policy and insurance annuity
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
2020
ROI
2020
UK
21.0%
0.0%
64.0%
11.0%
2.0%
2.0%
0.0%
0.0%
0.0%
0.0%
1.0%
1.0%
89.0%
9.0%
100.0%
100.0%
2019
ROI
2019
UK
14.0%
1.0%
59.0%
12.0%
14.0%
0.0%
0.0%
0.0%
0.0%
0.0%
1.0%
7.0%
84.0%
8.0%
100.0%
100.0%
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185
185
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
27 Post employment benefit obligations (continued)
Movement in the fair value of scheme assets
27 Post employment benefit obligations (continued)
Movement in net asset/(liability) recognised in the Consolidated Statement of Financial Position:
Fair value of assets at 1 August
Interest income
Remeasurements:
— Return on plan assets excluding amounts included in interest income
Employer contributions
Employee contributions
Insurance risk premium
Benefit payments
Settlement payments from plan assets
Translation adjustments
Fair value of assets at 31 July
As at 31 July 2020 and 2019 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 (credit)/ costs
Gain on settlement
Interest on scheme obligations
Employee contributions
Insurance risk premium
Benefit payments
Settlement payments from plan assets
Remeasurements:
— Experience gain
— Effect of changes in demographic assumptions
— Effect of changes in financial assumptions
Translation adjustments
Value of scheme obligations at 31 July
2020
€’000
105,581
1,918
3,349
1,480
131
(23)
(8,829)
(10,528)
1,480
94,559
2019
€’000
99,148
2,571
8,350
1,298
153
(24)
(3,042)
-
(2,873)
105,581
2020
€’000
2019
€’000
(107,057)
(98,423)
(624)
151
387
(527)
(30)
548
(1,927)
(2,547)
(131)
23
8,829
10,528
427
179
(3,402)
(1,539)
(153)
24
3,042
-
388
(813)
(11,524)
2,958
(94,156)
(107,057)
Net (liability)/asset in schemes at 1 August
Current service cost
Past service (credit)/costs
Gain on settlement
Employer contributions
Other finance (expense)/income
Remeasurements
Translation adjustments
Net asset/(liability) in schemes at 31 July
Analysis of defined benefit expense recognised in the Consolidated Income Statement:
Current service cost
Past service (credit)/costs
Gain on settlement
Total recognised in operating profit
Net interest (cost)/income (included in financing costs Note 4)
Net (charge)/credit to Consolidated Income Statement
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
2020
ROI
€’000
335
343
353
370
394
11,713
13,508
2020
€’000
(1,476)
(624)
151
387
1,480
(9)
553
(59)
403
2019
€’000
725
(527)
(30)
548
1,298
24
(3,599)
85
(1,476)
2020
€’000
2019
€’000
(624)
151
387
(86)
(9)
(95)
2020
UK
€’000
2,543
2,662
2,765
2,919
3,019
66,740
80,648
(527)
(30)
548
(9)
24
15
2020
Total
€’000
2,878
3,005
3,118
3,289
3,413
78,453
94,156
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187
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NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
27 Post employment benefit obligations (continued)
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
Average duration and scheme composition
Average duration of defined benefit obligation (years)
2019
ROI
€’000
322
348
372
397
443
15,549
17,431
2019
UK
€’000
2,289
2,450
2,553
2,638
2,772
76,924
89,626
2020
ROI
18.0
2019
ROI
2019
Total
€’000
2,611
2,798
2,925
3,035
3,215
92,473
107,057
2020
UK
16.0
2019
UK
Average duration of defined benefit obligation (years)
17.7
17.0
2020
ROI
€’000
2020
UK
€’000
2020
Total
€’000
27 Post employment benefit obligations (continued)
Defined benefit pension credit recognised in Other Comprehensive Income
Remeasurement gain on scheme assets
Remeasurement gain/(loss) on scheme liabilities:
Effect of experience gains on scheme liabilities
Effect of changes in demographical and financial assumptions
Remeasurements
Deferred tax (expense)/credit
Defined benefit pension credit recognised in the Consolidated Statement of Comprehensive Income
2020
€’000
2019
€’000
3,349
8,350
427
(3,223)
553
(70)
483
388
(12,337)
(3,599)
450
(3,149)
The cumulative loss recognised in the Consolidated Statement of Comprehensive Income is €29,321,000 (2019: €29,804,000).
The actual return on the plan assets was €5,267,000 (2019: €10,921,000).
28 Share capital
Authorised
250,000,000 ordinary shares of €0.01 each (i)
Allotted, called up and fully paid
2020
€’000
2019
€’000
2,500
2,500
126,396,184 (2019: 126,396,184) 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
Allocation of defined benefit obligation by participant:
of the Company.
Active plan participants
Deferred plan participants
Retirees
Allocation of defined benefit obligation by participant:
Active plan participants
Deferred plan participants
Retirees
1,018
6,500
5,990
13,508
2019
ROI
€’000
3,890
7,896
5,645
17,431
20,815
23,699
36,134
80,648
2019
UK
€’000
18,787
35,121
35,718
89,626
21,833
30,199
42,124
94,156
2019
Total
€’000
22,677
43,017
41,363
107,057
(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 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.
29 Dividends
An interim dividend of 3.15 cent (2019: 3.15 cent) per ordinary share was paid to shareholders on 14 April 2020. The Board
determined that it was prudent to suspend the final dividend for the 2020 financial year (2019: 18.17 cent per share).
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189
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
30 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. Please refer to Note 22 for an analysis of
net debt. The Group has set the following goals for the management of its capital:
31 Commitments
On 1 August 2019, the Group applied IFRS 16 ‘Leases’ using the modified retrospective approach without restatement of the
comparative information. Details of the right-of-use asset and lease liabilities are set out in Note 13.
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. Total commitments payable
under non-cancellable operating leases in 2019 were as follows:
Within one year
In two to five years
After more than five years
Future purchase commitments for property, plant and equipment
At 31 July 2020
Contracted for but not provided for
2019
€’000
7,511
14,989
19,775
42,275
Land and
buildings
€’000
Plant and
machinery
€’000
Other
€’000
Total
2020
€’000
66
-
-
66
Land and
buildings
€’000
Plant and
machinery
€’000
Other
€’000
Total
2019
€’000
At 31 July 2019
Contracted for but not provided for
137
444
139
720
— to maintain a prudent net debt (as set out in Note 22) to EBITDA and interest cover ratio (interest as a percentage of EBIT) to
Future purchase commitments: Software Development
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 1.18 times at 31 July 2020 (2019: 0.87 times), 31 January 2020
3.24 times (2019: 2.57 times); and
— the Group’s interest cover (EBITDA to interest) is above 3.00. The ratio is 5.76 times at 31 July 2020 (2019: 8.06 times),
31 January 2020 7.57 times (2019: 9.25 times).
Contracted for but not provided for
Total
Total
2020
€’000
73
73
Total
2019
€’000
25
25
The Group has a financial commitment of €5.6 million attributable to a strategic partnership with University College Dublin
(‘UCD’). The commitment is over a five year period.
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NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
32 Related party transactions
33 Acquisition of subsidiary undertakings
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:
2020
Sale of
goods
Purchase of
goods
€’000
€’000
Receiving
services
from
€’000
Rendering
services to
Total
€’000
€’000
Transactions with joint venture
Transactions with associates
-
(110,752)
61,341
(200)
-
(849)
222
303
(110,530)
60,595
2019
Sale of
goods
Purchase of
goods
€’000
€’000
Receiving
services
from
€’000
Rendering
services to
Total
€’000
€’000
Transactions with joint venture
Transactions with associates
-
(117,985)
68,321
(316)
-
(728)
214
768
(117,771)
68,045
The trading balances owing to the Group from related parties were €26,715,000 (2019: €32,207,000) and the trading
balances owing from the Group to these related parties were €9,002,000 (2019: €8,164,000). Other financial assets on the
Consolidated Statement of Financial Position primarily comprise of €520,000 (2019: €546,000) 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 (credit)/charge
Other long term employee benefits
Total
2020
€’000
2019
€’000
3,123
3,390
148
(360)
24
251
573
80
2,935
4,294
During the prior 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”) in the United Kingdom. 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. For the
acquisitions completed in 2019, there have been no material revisions of the fair value adjustments since the initial values
were established.
Origin acquired a 65% 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% 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% interest. Origin recognised an option liability of €26.4 million at the date of acquisition which was 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% 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.
34 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 as follows:
Accounting estimates
Note 15 Goodwill and intangible assets- measurement of the recoverable amounts of CGUs, useful lives of intangibles
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 15.
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193
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
NOTES TO THE GROUP FINANCIAL STATEMENTS (continued)
34 Accounting estimates and judgements (continued)
Note 19 Trade and other receivables
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.
Note 26 Put option liability
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% interest to Origin. In the event that this is not
exercised, Origin has a similar right to acquire the 35% interest. Origin has recognised an option liability of €22.1 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.
Note 27 Post employment benefit obligations
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 27.
Accounting judgements
Note 3 Exceptional items
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.
35 Principal subsidiaries and associated undertakings
Name of undertaking
Nature of business
Agrii Polska sp.Z.O.O
Agroscope International LLC
BHH Limited
Comfert S.R.L.
FortGreen Comercial Agrícola Ltda
Goulding Chemicals Limited
Hall Silos Limited
Specialist agronomy products
and services
Specialist agronomy products
and services
Provender milling
Specialist agronomy products
and services
Specialist agronomy products
and services
Fertiliser blending and
distribution
Grain handling
Headland Amenity Limited
Turf management services
% of
ordinary
shares
100
100
50
100
65
100
100
100
Linemark UK Limited
Sports and amenity provider
100
Masstock Group Holdings Limited
Origin UK Operations Limited
Origin NI Limited
Pillaert Meststoffen
Redoxim S.R.L.
Resterra Group
Rigby Taylor Limited
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
Turf management services
R&H Hall
Grain and feed trading
R&H Hall Trading Limited
Grain and feed trading
United Agri Products Limited
West Twin Silos Limited
Specialist agronomy products
and services
Silo operation
100
100
100
100
100
100
100
50
100
100
50
Registered office
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.
36 Subsequent events
There have been no material events subsequent to 31 July 2020 that would require adjustment to or disclosure in this report.
37 Approval of financial statements
The Group financial statements were approved by the Board on 22 September 2020.
194
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Origin Enterprises plc Annual Report and Accounts 2020
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195
COMPANY ACCOUNTING POLICIES
COMPANY ACCOUNTING POLICIES (continued)
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 (FRS 102).
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 recognised 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.
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 26 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.
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COMPANY BALANCE SHEET
AS AT 31 JULY 2020
COMPANY STATEMENT OF CHANGES IN EQUITY
AS AT 31 JULY 2020
Fixed assets
Tangible assets
Intangible assets
Post employment benefit surplus
Financial assets
Current assets
Debtors
Cash at bank and in hand
Notes
2020
€’000
2019
€’000
1
2
7
3
886
4,039
1,809
33,107
39,841
947
3,308
812
33,107
38,174
4
522,355
58,227
580,582
591,218
20,778
611,996
Creditors (amounts falling due within one year)
5
(334,523)
(382,041)
Net current assets
Net assets
Capital and reserves
Called up share capital–presented as equity
Share premium
Profit and loss account and other reserves
Shareholders’ funds
246,059
229,955
285,900
268,129
8
1,264
164,850
119,786
1,264
164,850
102,015
285,900
268,129
The profit for the year attributable to shareholders dealt with in the financial statements of the holding company for the year
ended 31 July 2020 was €44,656,000 (2019: €40,100,000). 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
Sean Coyle
Director
Share
capital
Treasury
shares
Share
premium
Capital
redemption
reserve
LTIP
reserve
Profit
and loss
Total
€’000
€’000
€’000
€’000
€’000
€’000
€’000
2020
At 1 August 2019
Profit for the year
Remeasurement gain on post employment
benefit asset
Deferred tax on remeasurement
Total comprehensive income for the year
Share-based payment credit
Dividend paid to shareholders
1,264
(8) 164,850
134
1,537
100,352
268,129
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
44,656
44,656
535
(67)
535
(67)
45,124
45,124
(406)
-
(406)
-
(26,947)
(26,947)
At 31 July 2020
1,264
(8) 164,850
134
1,131
118,529
285,900
2019
At 1 August 2018
Profit for the year
Remeasurement loss on post employment
benefit asset
Deferred tax on remeasurement
Total comprehensive income for the year
Shares issued
Share based payment charge
Dividend paid to shareholders
1,264
(8) 164,774
134
538
87,648
254,350
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
76
-
-
-
-
-
-
-
-
-
-
-
-
-
-
999
40,100
40,100
(977)
122
(977)
122
39,245
39,245
-
-
76
999
-
(26,541)
(26,541)
At 31 July 2019
1,264
(8) 164,850
134
1,537
100,352
268,129
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NOTES TO THE COMPANY FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS (continued)
1 Tangible fixed assets
2
Intangible assets
Cost
At 1 August 2019
Additions
At 31 July 2020
Accumulated depreciation
At 1 August 2019
Depreciation charge for year
At 31 July 2020
Net book amounts
At 31 July 2020
At 31 July 2019
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
Land
€’000
Fixtures &
fittings
€’000
Total
€’000
-
-
-
-
-
-
-
-
1,377
15
1,392
1,377
15
1,392
430
76
506
886
947
430
76
506
886
947
Land
€’000
Fixtures &
fittings
€’000
Total
€’000
11,215
1,762
12,977
-
-
59
(444)
59
(444)
(11,215)
-
(11,215)
-
-
-
-
-
11,215
1,377
1,377
796
78
(444)
430
796
78
(444)
430
947
966
947
12,181
Cost
At 1 August 2019
Additions
At 31 July 2020
Amortisation
At 1 August 2019
Charge for year
At 31 July 2020
Net book amounts
At 31 July 2020
At 31 July 2019
Cost
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
3 Financial assets
Investment in subsidiaries
At 1 August
Impairment
At 31 July
Developed
Technology
€'000
Brand
€'000
Intellectual
property
€'000
Software
Total
€'000
€'000
2,090
1,074
3,164
111
111
222
2,942
1,979
433
21
454
52
32
84
370
381
1,778
-
1,778
1,031
161
1,192
586
747
383
-
383
182
60
242
4,684
1,095
5,779
1,376
364
1,740
141
4,039
201
3,308
Developed
Technology
€'000
Brand
€'000
Intellectual
property
€'000
Software
Total
€'000
€'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
3,705
979
4,684
1,030
346
1,376
201
3,308
237
2,675
2020
€’000
2019
€’000
33,107
-
33,107
34,472
(1,365)
33,107
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Origin Enterprises plc Annual Report and Accounts 2020
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201201
The principal subsidiaries are set out on Note 35 to the Group financial statements.
NOTES TO THE COMPANY FINANCIAL STATEMENTS (continued)
NOTES TO THE COMPANY FINANCIAL STATEMENTS (continued)
4 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.
5 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.
6 Deferred tax- net
At 1 August
Credit for the year
At 31 July
2020
€’000
2019
€’000
520,748
589,571
554
648
405
435
807
405
522,355
591,218
2020
€’000
2019
€’000
326,121
369,561
1,161
5,710
843
688
1,297
9,619
843
721
334,523
382,041
2020
€’000
316
(33)
283
2019
€’000
1,437
(1,121)
316
7 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 2020 was €1,809,000 (2019:
surplus of €812,000). There was a loss in the profit and loss account for the period in respect of the Company’s defined benefit
scheme of €69,000 (2019: gain of €450,000).
The expected contributions from the Company for the year ending 31 July 2021 are €280,000. 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 2020 by an independent, qualified actuary. The valuations have been performed using the projected
unit method.
7 Post employment benefit asset (continued)
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
Employee contributions
At 31 July
2020
€’000
1,809
1,809
2020
%
2019
€’000
812
812
2019
%
0%–1.95% 0%–2.35%
1.40%
1.10%
2020
€’000
1.20%
1.50%
2019
€’000
3,208
9,753
1,650
706
15,317
(13,508)
1,809
2,810
10,661
2,210
2,562
18,243
(17,431)
812
2020
€’000
2019
€’000
18,243
182
(2,234)
261
531
(1,678)
12
16,469
348
-
1,382
395
(377)
26
15,317
18,243
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NOTES TO THE COMPANY FINANCIAL STATEMENTS (continued)
NOTES TO THE COMPANY FINANCIAL STATEMENTS (continued)
7 Post employment benefit asset (continued)
7 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 gain/(loss)
Benefit payment
Employee contributions
Value of scheme obligations at 31 July
2020
€’000
2019
€’000
(17,431)
(15,525)
(80)
-
2,234
(171)
274
1,678
(12)
(121)
548
-
(325)
(2,359)
377
(26)
(13,508)
(17,431)
2020
€’000
2019
€’000
Net defined benefit surplus/(obligation)
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 (charge)/credit
Movement in net asset recognised in the balance sheet
Gain/(loss) recognised in statement of comprehensive income
At 1 August
Current service cost
Settlement gain
Employer contributions
Net finance income
Remeasurement gain/(loss)
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
Net (charge)/credit to Company’s profit and loss account
812
(80)
-
531
11
535
1,809
2020
€’000
(80)
-
(80)
182
(171)
11
(69)
944
(121)
548
395
23
(977)
812
2019
€’000
(121)
548
427
348
(325)
23
450
8 Share capital
Authorised
250,000,000 ordinary shares of €0.01 each (i)
Allotted, called up and fully paid
126,396,184 (2019: 126,396,184) 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
(ii)
of the Company.
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.
2020
€’000
2019
€’000
(13,508)
15,317
1,809
2020
€’000
261
(296)
570
535
(67)
468
(17,431)
18,243
812
2019
€’000
1,382
244
(2,603)
(977)
122
(855)
2020
€’000
2019
€’000
2,500
2,500
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NOTES TO THE COMPANY FINANCIAL STATEMENTS (continued)
NOTES TO THE COMPANY FINANCIAL STATEMENTS (continued)
9 Contingent liabilities
13 Related party transactions
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.
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:
10 Share-based payment
All disclosures relating to the Long-Term Incentive Plan are set out in Note 9 to the Group financial statements.
11 Statutory and other information
Auditors’ remuneration:
- statutory audit of entity financial statements
- other assurance services
- other non-audit services
Profit for the financial year
All of the Group audit fee was recharged by the Company to its subsidiaries in the current year
12 Employment
2020
€’000
2019
€’000
26
569
7
25
581
5
44,656
40,100
2020
Number
2019
Number
The average number of persons employed by the Company during the year was as follows:
Management and administration
22
21
2020
Sale
of goods
€’000
Purchase
of goods
€’000
Rendering
services to
€’000
Receiving
services from
€’000
Transactions with joint venture
Transactions with associates
-
-
222
278
-
-
-
-
2019
Sale
of goods
€’000
Purchase
of goods
€’000
Rendering
services to
€’000
Receiving
services from
€’000
Transactions with joint venture
Transactions with associates
-
-
-
-
214
289
-
-
Total
€’000
222
278
Total
€’000
214
289
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.
2020
€’000
2019
€’000
2,555
2,419
122
(206)
24
225
338
80
2,495
3,062
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 (credit)/charge
2020
€’000
5,099
342
35
(535)
69
(406)
2019
€’000
6,647
330
1,120
977
(450)
999
4,604
9,623
Salaries and other short term employee benefits
Post employment benefits
Share-based payments (credit)/charge
Other long-term employee benefits
14 Approval of financial statements
These financial statements were approved by the Board on 22 September 2020.
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207