Origin Enterprises Annual Report 2021

Plain-text annual report

ANNUAL REPORT & ACCOUNTS 2021 Prescriptive Solutions, Sustainable Production Nurturing Growth For the first time, the Group has developed a standalone Sustainability Report for 2021. Highlights from the report are set out on pages 50 and 51 and the full report can be accessed at www.originenterprises.com 10.7m 38% hectares annually influenced by advice or products delivered by an Origin entity of the Group’s purchased electricity now supplied from renewable sources 11% decrease in fleet emissions since 2017 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 › › Continental Europe › Latin America Sustainability Report Risk Report Ireland and the United Kingdom 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 Financial Statements Directors and Other Information Statement of Directors’ Responsibilities Independent auditors’ report Consolidated Income Statement Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes In Equity Consolidated Statement of Cash Flows Group Accounting Policies Notes to the Group Financial Statements Company Accounting Policies Company Balance Sheet Company Statement of Changes in Equity Notes to the Company Financial Statements 6 7 8 10 12 18 20 24 28 30 32 34 40 46 50 52 62 64 67 69 76 79 83 100 101 102 109 110 111 113 114 115 123 180 183 184 185 Read about our progress in Continental Europe on pages 44 and 45 Read about Origin Amenity Solutions on page 37 Read about Our Business on page 20 1 Highlights FY21 was an improved year for the Group with solid earnings recovery and continued strong cash generation and reduced net bank debt1. Group revenue increase of 4.4% to €1,658.4 million, 6.6% on an underlying2 basis. Operating profit of €61.0 million, an increase of 38.3%, 42.1% on an underlying2 basis. Group operating margin of 3.7% (2020: 2.8%). Adjusted diluted earnings per share of 35.50 cent. Strong cash generation with free cash flow of €49.2 million (2020: €64.3 million). Working capital outflow of €4.0 million (2020: Inflow of €30.3 million). Proposed final dividend of 7.85 cent per share giving total dividend of 11.00 cent. Agronomy and Inputs volume growth of 4.9%, pricing improvements of 3.5% and an acquisition contribution of 0.7%, on a constant currency basis. Acquisition of Green-tech, the UK’s leading landscaping, forestry and ground maintenance equipment provider. Net bank debt1 of €14.4 million (2020: Divestment of Pillaert, the Group’s €53.2 million). Belgian fertiliser business. 1. Before the impact of IFRS 16 leases. 2. Excluding currency movements and the impact of acquisitions. 2 Origin Enterprises plc Annual Report and Accounts 2021 Revenue €1,658.4m Operating Profit1 €61.0m S T H G I L H G H I +4.4% +7.2% at constant currency3 +38.3% +44.2% at constant currency3 Adjusted Diluted EPS2 35.50C +38.2% +44.6% at constant currency3 Free Cash Flow €49.2m (2020: €64.3m) ROCE4 9.3% (2020: 7.3%) Dividend per Share 11.00C (2020: 3.15c) 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 (2021: €8.6m, 2020: €7.7m) and exceptional items, net of tax (2021: credit of €1.2m, 2020: expense of €5.2m). 3. Excluding currency movements. 4. The definition and calculation of ROCE is set out on page 19. Note: All references to constant currency in this Annual Report are due to the fact that the translation of non-euro denominated earnings are impacted by movements in local currency rates versus the euro, the Group’s presentation currency. In order to reflect underlying performance more accurately in the period, the Group calculates results on a constant currency basis by retranslating non-euro denominated current year earnings at prior year exchange rates. 3 Read our Corporate Governance Statement on page 69 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. 57,000 Crop Field Trials 4 Origin Enterprises plc Annual Report and Accounts 2021 Origin Enterprises plc Annual Report and Accounts 2021 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 › › Continental Europe › Latin America Sustainability Report Risk Report Ireland and the United Kingdom 6 7 8 10 12 18 20 24 28 30 32 34 40 46 50 52 T R O P E R C G E T A R T S I 5 STRATEGIC REPORT 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, growers, landscapers and amenity professionals 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 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. 94 Distribution Points 32 Input Formulation and Processing Facilities 60 Demonstration Farms 6 Origin Enterprises plc Annual Report and Accounts 2021 PhilipinnesOur Segments 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 and Ukraine. Ireland and the UK Continental Europe Latin America More on Latin America on pages 46 to 49 More on Ireland and the UK on pages 34 to 39 More on Continental Europe on pages 40 to 45 Revenue 2% 2% Operating Profit 35% 63% 37% 61% 10% 26% 64% 16% 31% 53% 2021 €1.7bn 2020 €1.6bn 2021 €61.0m 2020 €44.1m Ireland & the UK Continental Europe Latin America 7 STRATEGIC REPORTPhilipinnes Chairman’s Statement Dear Shareholder The Group has worked to restore growth to earnings in 2021, responding to the challenges of continuing COVID-19 disruptions to deliver an improved performance and a solid earnings recovery. FY21 Performance Financial highlights this year include an increase in Group revenue by 4.4% to €1,658.4 million, an operating profit rise of 38.3% to €61.0 million and adjusted diluted earnings per share of 35.50 cent, up 38.2% on last year and in line with guidance. Details of our financial performance are set out in the Financial Review on pages 12 to 17. Strategy As the Company was emerging from an extremely challenging trading year in 2020, it was an important time for a renewed, sharpened focus on strategic delivery across the Group. This year has seen important strategic investments with the acquisition of Greentech Limited ('Green-tech') in the UK, enhancing Origin’s amenity offering in a segment we expect will grow further in the coming years, and the construction of a second controlled release fertiliser plant in Brazil. We disposed of our Belgian fertiliser business, Pillaert, as we focus on opportunities and markets with strong growth and value-add potential. 11.00cent Dividend €1.7bn Revenue 8 Origin Enterprises plc Annual Report and Accounts 2021Executive Leadership We are pleased to have welcomed TJ Kelly to Origin in January 2021 as Group Chief Financial Officer, following the announcement last year of his appointment. Declan Giblin, CEO LATAM, stepped down from the Board at the end of the financial year. I would like to express our appreciation to Declan for his commitment to the Company, his vision for the Group and his valued contribution to the Board over the past 13 years. Declan continues in his role as CEO of the Company’s LATAM division. COVID-19 As the global pandemic continues to disrupt businesses, markets and governments globally, Origin continues to adapt to support the ongoing operation of production facilities and distribution networks to uphold its part in the food supply chain. We do this always remaining vigilant to protecting the health, safety and wellbeing of our workforce as a priority. Dividend Resumption With a continued adherence to financial discipline and a focus on strategic investments supporting an improved financial performance, the Board is pleased to be recommending a final dividend of 7.85 cent per share subject to approval at the Annual General Meeting ('AGM') on 25 November 2021. Together with the interim dividend of 3.15 cent per share paid in April, this will bring the total dividend per ordinary share for the financial year to 11.00 cent, an increase of 7.85 cent per share on 2020. Board and Governance The Board is committed to maintaining the highest standard of governance practices to ensure the effective stewardship and long-term sustainable success of the Group. The Board continues its commitment to applying the principles of the Quoted Companies Alliance Corporate Governance Code ('QCA Code') as the basis for its corporate governance framework. Full details of our approach to governance are set out in the Corporate Governance Statement on pages 69 to 75. As part of ongoing Board development and renewal, we are pleased to have announced two new Non-Executive Director appointments in the past year. Helen Kirkpatrick was appointed to the Origin Board in October 2020, with Aidan Connolly to join in October 2021. The combination of industry knowledge, technology expertise and international experience from these appointments will further diversify and strengthen the range of skills and experience on the Board. Non-Executive Directors Hugh McCutcheon and Kate Allum will retire from the Board at the conclusion of the Company’s 2021 AGM in November. Hugh and Kate have served 10 years and 6 years respectively and I would like to acknowledge our appreciation of their contributions, support and commitment over the course of their tenures. We wish them well in their future endeavours. I would like to extend this appreciation to 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. Sustainability Strong governance continues to be a key underlying foundation in building and delivering on our ESG strategy and integrating ESG into our organisational decision-making across all operations. This year saw a further acceleration of progress on our ESG agenda, with highlights including the establishment of a Board ESG Committee, commitments to the development of science-based targets and ISO standards and the publication of our inaugural standalone Sustainability Report. Culture and People The talent, adaptability and commitment of our workforce is reflected in our ability to successfully emerge from a very challenging trading environment in 2020 and drive a return to growth across the Group this year. On behalf of the Board, I would like to thank all our employees for the hard work and dedication to the success of the Group. We recognise the importance of supporting our employees and nurturing talent and capabilities. Key enablers of an engaged workforce include continuing learning and development opportunities, ongoing wellbeing initiatives and our employee voice and engagement programme. While COVID-19 travel and on-site restrictions remained in place, the Board continued its engagement with employees with the ‘Let’s Talk’ programme being conducted virtually. Board members participated in meetings with both Agrii Romania and Agrii UK senior management and employees and joined business update calls with teams in Ireland and the UK, Continental Europe and Brazil. We continue to champion equality, diversity and inclusion in the workplace. I am pleased to report that we achieved our target of a minimum of 33% female representation on the Board by the end of 2020 and scored in the top quartile in our 2021 employee opinion survey in the diversity and inclusion category. Looking Ahead We enter FY22 supported by solid financial management and a robust corporate governance framework. Together with a strong leadership team, we are confident in the Group’s ability to capitalise on its leading market positions and progress our strategic ambitions while continuing to drive sustainable long-term value for all our stakeholders. On behalf of the Board, I would like to thank you, our shareholders, for your continued support. Rose Hynes Non-Executive Chairman 28 September 2021 9 STRATEGIC REPORT Chief Executive’s Review Dear Shareholder I am pleased to report that FY21 saw a much-improved performance for the Group, compared to a challenging FY20 impacted by extreme weather and the onset of the COVID-19 pandemic. Although we experienced a delayed season in FY21 following prolonged cold weather in spring, more favourable conditions in the fourth quarter resulted in increased demand for agronomy services, crop inputs and amenity products. In FY21 the Group delivered a solid recovery across all its financial metrics. Group revenue increased by 4.4% to €1,658.4 million and Group operating profit increased by 38.3% to €61.0 million. The Group continues to maintain strong financial discipline with focus on improving its cash performance, delivering free cash flow of €49.2 million despite a modest working capital outflow of €4.0 million. Net bank debt at year end fell to €14.4 million representing a Debt:EBITDA ratio of 0.13x. COVID-19 COVID-19 and its impact in the markets in which the Group operates continues to be a significant area of focus for the Board and senior management teams. The Group implements the advice and guidance of governments and health authorities across our markets, with ongoing audits at all our operating facilities to ensure we adhere to safe social distancing and all other health and safety guidance. The Group continues to monitor developments closely across our locations and is taking appropriate actions to ensure we provide the safest environment we can for our stakeholders, while continuing to serve the needs of the agricultural community in a responsible manner. 35.50c Adjusted EPS €61.0m Operating Profit 10 Origin Enterprises plc Annual Report and Accounts 2021 The principal highlights are as follows: Financial > Agronomy and Inputs volume growth of 4.9%. > Operating profit of €61.0 million, an increase of 38.3%. > Free cash flow of €49.2 million (2020: €64.3 million). > Net bank debt of €14.4 million (2020: €53.2 million). > Reinstatement of final dividend. > Group operating margin of 3.7% (2020: 2.8%). > Launch of Origin Amenity Solutions and the Turf Science & Technology Centre in Throws Farm. > 1.7 million digital hectares now on-boarded (2020: 1.4 million). > Return of UK cropping area to normalised levels. > TJ Kelly commenced as CFO. Strategic > Acquisition of Green-tech in the UK. > Disposal of Belgian fertiliser business. > Investment in CRF manufacturing plant in Brazil. > Improved ESG ratings. > Publication of our inaugural standalone Sustainability Report. Operational FY21 Progress As I have already outlined, FY21 was an improved year for Origin, with the principal highlights set out above. Divisional Review Ireland and the UK Ireland and the UK delivered an improved performance in FY21 compared to a prior year which had been impacted by highly challenging weather conditions. Underlying revenue increased 7.8% while underlying operating profit increased 64.3%. A full business review of performance in Ireland and the UK is set out on pages 34 to 39. The Group continues to focus on strategic opportunities that complement our existing market positions and enhance our product capabilities. During the year we acquired Green-tech, the UK’s leading manufacturer and distributor of landscaping, forestry and ground maintenance equipment. Green-tech is an excellent strategic fit for Origin and I am delighted to welcome the team to the Group. Continental Europe Continental Europe delivered a good performance in FY21 with improved performances in all territories. During the year, the Group disposed of its Belgian fertiliser business, Pillaert. With the lack of scalable opportunities and consolidation options in the Belgian market, the Group decided to exit this market and redeploy capital in the Group’s core operations. Latin America Latin America delivered a strong underlying performance year-on- year with volume development and underlying growth driven by a significant increase in controlled release fertiliser sales, together with a double digit percentage increase in our core product range. The impact of foreign currency translation has significantly impacted Latin America’s contribution in the period and the weakening of the Brazilian Real has significantly impacted earnings. A full business review of performance in LATAM is set out on pages 46 to 49. Dividend In FY20, in light of market conditions and uncertainty relating to the COVID-19 pandemic, the Board determined that it would be prudent to suspend the final dividend for FY20. During the year, the Group’s improved performance allowed dividend payments to resume, with an interim dividend of 3.15 cent paid to shareholders in April 2021. The Directors are proposing a final dividend of 7.85 cent for approval at the AGM in November 2021, bringing the total dividend payment to 11.00 cent per ordinary share. Board Changes During the year TJ Kelly joined Origin as Group CFO and Helen Kirkpatrick joined the Board as an independent Non-Executive Director. I would like to welcome TJ and Helen to the Group and thank them for their valued contribution to date. A full business review of performance in Continental Europe is set out on pages 40 to 45. Also during the year, the Group announced the intention of Declan Giblin, our CEO LATAM, to retire in the next two years, and of his decision to step down from the Board at the end of FY21. Declan joined the Board of Origin following the acquisition of Masstock in 2007 and has been instrumental in the growth of the Group in the subsequent 14 years. I would like to thank Declan and acknowledge his contribution over that period. Sustainability I am pleased to announce that the Group will shortly publish its inaugural Sustainability Report where we will outline our vision to be the trusted partner of choice to achieve shared economic, social and environmental ambitions across our value chain partnerships. Summary and Outlook FY21 was an improved year for the Group and we continue to demonstrate the discipline required to maintain a strong financial position and deliver growth in line with our ambitions. The Group has a strong and experienced leadership team in place. Our integrated crop services business model, with scalable and diversified market positions, continues to demonstrate its resilience. I am confident we will progress our financial growth ambitions successfully in FY22 and beyond. Sean Coyle Chief Executive Officer 28 September 2021 T R O P E R C G E T A R T S I 11 Financial Review This Financial Review provides an overview of the Group’s financial performance for the year ended 31 July 2021 and of Origin’s financial position at that date. Overview of Results › Group revenue increase of 4.4% to €1,658.4 million, and 6.6% on an underlying basis. › Strong cash generation with free cash flow of €49.2 million (2020: €64.3 million). › Operating profit1 of €61.0 million, › Net bank debt5 of €14.4 million (2020: an increase of 38.3% and 42.1% on an underlying basis. €53.2 million). › Working capital outflow of €4.0 million › Group operating margin of 3.7% (2020: Inflow of €30.3 million). (2020: 2.8%). › Adjusted diluted earnings per share3 of 35.50 cent. › Proposed final dividend of 7.85 cent per share giving total dividend of 11.00 cent. 12 Origin Enterprises plc Annual Report and Accounts 2021 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 bank 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 2021 €’m 1,658.4 61.0 2.8 63.8 (8.6) 55.2 (9.6) 45.6 35.50 (14.4) 2021 €’m 38.2 8.6 - (1.2) 45.6 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 Reporting Segments The Group has three separate reporting segments as set out below. 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 and Ukraine. 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 Total 2021 2020 Revenue €’m 1,049.3 570.1 39.0 1,658.4 Operating profit1 €’m Revenue €’m Operating profit1 €’m 39.1 15.6 6.3 61.0 967.9 590.1 31.1 1,589.1 23.3 13.7 7.1 44.1 The result from the Group’s associates and joint venture undertaking was €2.8 million (2020: €6.2 million). Revenue Group revenue increased by 4.4% from €1,589.1 million in the prior year to €1,658.4 million. On an underlying basis revenue increased by 6.6% driven by increased demand for fertiliser, crop protection and seed, and global price movements in fertiliser. The underlying increase in agronomy services and crop input volumes, excluding crop marketing volumes, was 4.9% for FY21. T R O P E R C G E T A R T S I 13 Operating Profit1 Operating profit1 increased by 38.3% to €61.0 million compared to €44.1 million in the previous year. On an underlying basis, operating profit1 increased by €18.6 million (42.1%), primarily driven by recovering volumes and margins in Ireland and the UK. Group operating margin increased from 2.8% to 3.7% in FY21. This was principally driven by the Ireland and UK segment, which saw its operating margin increase from 2.4% in FY20 to 3.7% in FY21. Operating Profit Bridge €44.1m +42.1% €18.6m +2.1% €0.9m (5.9%) (€2.6m) +€16.9m +38.3% €61.0m FY20 Underlying Acquisitions Currency FY21 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 Revenue Operating profit1 Q1 €’m 318.3 1.8 Q1 €’m 371.2 (1.3) Q2 €’m 254.1 (0.6) Q2 €’m 233.7 (1.5) FY21 Q3 €’m 597.8 29.2 FY20 Q3 €’m 604.8 22.5 Q4 €’m 488.2 30.6 Q4 €’m 379.4 24.4 Total €’m 1,658.4 61.0 Total €’m 1,589.1 44.1 €59.8 million of operating profit1 was generated in the seasonally more important second half of the financial year, an increase of €12.9 million (27.5%) on the second half of 2020. Associates and Joint Venture Origin’s share of the profit after interest and taxation from associates and joint venture amounted to €2.8 million in the period (2020: €6.2 million). Finance Expense and Net bank Debt Net bank debt5 at 31 July 2021 was €14.4 million (€60.5 million including IFRS 16 lease debt) compared to net bank debt of €53.2 million (€93.9 million including IFRS 16 lease debt) at the end of the prior year, a reduction of €38.8 million. The reduction in net bank debt year-on-year reflects continued strong cash generation across the Group. Net finance costs amounted to €8.6 million, which represents a significant decrease of €2.7 million on the prior year. Excluding the impact of IFRS 16, there was a reduction in net finance costs of €2.8 million reflecting lower local debt levels in our businesses and lower interest rates, year-on-year, across the Group. 14 Origin Enterprises plc Annual Report and Accounts 2021Taxation The effective tax rate for the year ended 31 July 2021 was 18.5% (2020: 18.5%), and reflects the mix of geographies where profits were earned in the year. Exceptional Items Exceptional items net of tax amounted to a credit of €1.2 million in the year. These principally relate to the gain on disposal of our Belgian fertiliser business, rationalisation costs related to the closure of a UK seed plant, pension-related costs in our associate and joint venture and acquisition-related costs. Exceptional items are summarised in the table below: Year ended 31 July Gain on disposal of Belgian fertiliser business Pension and rationalisation-related costs Arising in associates and joint venture Transaction, other related costs and movements in contingent consideration, net Total exceptional items, net of tax Adjusted Diluted Earnings per Share3 (‘EPS’) Adjusted diluted EPS3 amounted to 35.50 cent per share, an increase of 38.2% from FY20. The year-on-year increase of 9.81 cent per share can be summarised as follows: Impact of Underlying increase Acquisitions Disposals Currency Total Cent per share 11.30c 0.52c (0.37c) (1.64c) 9.81c 2021 €’m (2.6) 0.7 0.4 0.3 (1.2) % +44.0% +2.0% (1.4%) (6.4%) +38.2% Dividends In FY20, in light of market conditions and uncertainty relating to the COVID-19 pandemic, the Board determined that it would be prudent to suspend the final dividend for FY20. During the year, the Group’s improved performance allowed dividend payments to resume, with an interim dividend of 3.15 cent paid to shareholders in April 2021. The Directors are proposing a final dividend of 7.85 cent for approval at the AGM in November 2021, bringing the total dividend payment to 11.00 cent per share. Subject to shareholder approval at the AGM, this final dividend will be paid on 4 February 2022 to shareholders on the register on 14 January 2022. 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 2021, the Group had unsecured committed banking facilities of €430 million (2020: €430 million), of which €30 million is scheduled to expire in September 2021, €100 million in May 2022, €34 million in June 2024 and €266 million in June 2025. Subsequent to year end, the Group extended the €100 million facility due to expire in May 2022 to June 2025. Consequent on this, the Group holds €400 million of committed banking facilities with pricing linked to ESG performance, of which €34 million will expire in 2024 and €366 million in 2025. Cash Flow and Net Bank Debt Net bank debt5 at 31 July 2021 was €14.4 million compared to net bank debt5 of €53.2 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 2021 included: Covenant 2021 Full year times 2021 Half year times 2020 Full year times 2020 Half year times Net bank debt: EBITDA Maximum 3.5x EBITDA: Net interest Minimum 3.0x 0.13 10.36 2.76 6.75 1.18 5.76 3.24 7.57 15 STRATEGIC REPORTA 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 subsidiary/equity investment Proceeds from investment properties Dividends paid Lease payments Other Increase in cash Opening net bank debt Translation Closing net bank debt5 2021 €’m 83.5 (4.0) (15.8) 63.7 (1.8) 61.9 4.5 (4.7) (10.7) (11.0) 15.3 5.9 (4.0) (12.6) (0.8) 43.8 (53.2) (5.0) (14.4) 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) Working Capital For the year ended 31 July 2021, there was a working capital outflow of €4.0 million, driven by the increased level of sales during the fourth quarter. Working capital management 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 9.3% in 2021 (2020: 7.3%), as follows: Capital employed – 31 July Average capital employed ('Group Net Assets' as defined on page 19) EBITA (as defined on page 19) Return on capital employed Free Cash Flow The Group generated free cash flow in the year of €49.2 million (2020: €64.3 million). A further analysis on the calculation of Free Cash Flow is set out on page 18. 2021 €’m 538.1 684.1 63.9 9.3% 2020 €’m 509.9 686.9 50.3 7.3% 16 Origin Enterprises plc Annual Report and Accounts 2021Post-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 2021 are as follows: Non-current assets Asset in defined benefit schemes The movement during the year can be summarised as follows: Net asset at 1 August 2020 Current service costs Other finance expense, net Contributions paid Remeasurements Translation Net asset at 31 July 2021 2021 €’m 5.9 2020 €’m 0.4 €’m 0.4 (0.5) - 1.3 4.7 - 5.9 The remeasurements of €4.7 million principally relate to experience gains, changes in financial assumptions and remeasurement gains on scheme assets. 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 €3.07 to €4.15 during the year from 1 August 2020 to 31 July 2021. The Group’s share price at 31 July 2021 was €3.44 (31 July 2020: €3.17). 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. Throughout 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, the Chief Financial Officer and the Head of Investor Relations. During the year there were 152 meetings / conference calls with institutional investors. TJ Kelly Chief Financial Officer 28 September 2021 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 (2021: €8.6m, 2020: €7.7m) and exceptional items, net of tax (2021: credit of €1.2m, 2020: expense of €5.2m). 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 Leases. 17 STRATEGIC REPORTAlternative 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 (per Consolidated Income Statement) Exceptional items Amortisation of non-ERP related intangible assets Share of profit after tax of associates and joint venture Total 2021 €’m 56.4 (1.1) 8.6 (2.8) 61.1 Adjusted Diluted EPS The definition and calculation of Adjusted Diluted EPS is set out in Note 11 to the financial statements. Free Cash Flow The Group generated free cash flow in the year of €49.2 million (2020: €64.3 million). EBITDA (excluding associates and joint venture) Interest paid Tax paid Routine capital expenditure Working capital (outflow) / inflow Dividends received Free cash flow 2021 €’m 69.3 (5.8) (10.1) (4.7) (4.0) 4.5 49.2 2020 €’m 34.4 6.5 9.4 (6.2) 44.1 2020 €’m 52.7 (8.6) (8.0) (7.9) 30.3 5.8 64.3 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. 18 Origin Enterprises plc Annual Report and Accounts 2021Return on Capital Employed Return on capital employed is a key performance indicator for the Group, with Origin delivering 9.3% in 2021 (2020: 7.3%), 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 Exceptional items Amortisation of non-ERP intangible assets EBITA (as defined below) Return on capital employed 2021 €’m 1,297.8 (936.8) 60.5 51.8 64.8 538.1 684.1 56.4 (1.1) 8.6 63.9 9.3% 2020 €’m 1,232.4 (920.0) 93.9 49.2 54.4 509.9 686.9 34.4 6.5 9.4 50.3 7.3% 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. 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: Operating profit (per Consolidated Income Statement) Exceptional items Amortisation of non-ERP related intangible assets Total 2021 €’m 56.4 (1.1) 8.6 63.9 2020 €’m 34.4 6.5 9.4 50.3 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: Operating profit (per Consolidated Income Statement) Depreciation Exceptional items Amortisation of non-ERP related intangible assets Share of profit after tax of associates and joint venture Total 2021 €’m 56.4 8.2 (1.1) 8.6 (2.8) 69.3 2020 €’m 34.4 8.6 6.5 9.4 (6.2) 52.7 19 STRATEGIC REPORTCrop Nutrition We develop science-led, innovative products and services which improve soil fertility, nutrient use efficiency and crop productivity, whilst also conserving the natural environment. Our Business Origin is a recognised leader in the Agri-Services sector with operations in six countries. The Group supports farmers, growers, landscapers and amenity professionals across all our markets. Read more about our ‘Own Product Capability’ in our Brazil Case Study on page 49 Agri-Services We provide a complete suite of agronomic advice and solutions on-farm, including seed, nutrients, crop protection products and digital tools. The advice and solutions provided incorporate environmental measures and proposals. 20 Origin Enterprises plc Annual Report and Accounts 2021 Amenity Solutions We manufacture and distribute landscaping, forestry and turf management solutions to the professional amenity sector in the UK and Europe, promoting opportunities to enhance biodiversity and green space use. Digital Agronomy We offer digital agronomy services and technology to support sustainable and profitable farming through our RHIZA digital agronomy business with its market-leading Contour platform. Read more about Sustainability on page 50 21 STRATEGIC REPORT Our Business continued 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. More on our Strategy on page 24 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. More on our Business Model on page 28 What do Agronomists do? Our Agronomists act as trusted advisers to farmers in the provision of a range of services and inputs including: > specialist advice; > seed inputs; > crop protection products; and > nutrition products. More on Our Business on page 20 Ireland and the UK Continental Europe Poland | Romania | Ukraine Latin America Our Brands 22 Origin Enterprises plc Annual Report and Accounts 2021 Our Approach to Integrated Agronomy: Application Research and Analysis > Investment in research and development to optimise crop productivity. > 57,000 trial units managed across the UK, Continental Europe and Latin America. > Collaboration with key industry partners and universities. > Analysis of the needs of primary producers. Prescription Development > Advise primary producers on all components of crop and field management. > Recommendation of customised solutions to optimise crop yields and quality. > Ensuring environmental and regulatory compliance requirements are met. Application and Delivery > Delivery of customised solutions to primary producers. > Supply of seed, nutrition and crop protection technology to farms. > Provision of ongoing advice and monitoring on the timing of the application of products. > Use of technology to optimise service delivery to primary producers. Our Approach to Business-to-Business Agri-Inputs: Foundations > Well-established brands in the Agri-Inputs and Amenity sectors. Innovation and R&D > Leading bespoke fertiliser blender. > Continuous and technically-led > Experienced and committed product development. Supply Chain > Strategic locations and geographic spread. > Well-invested blending people. > Environmentally sustainable and formulation facilities. > Strong on-farm presence. > Flexible operating facilities to cater for high seasonal variations in demand across our Agri-Input and Feed businesses. product offering. > Continuing benchmarking of production and plant performance. > Market share provides supply chain flexibility. > Strong supplier partnerships. > Focus on health and safety. 23 STRATEGIC REPORT Strategy Our Vision Our Purpose To be the leading and trusted partner of choice to the farmers, growers, landscapers and amenity professionals we serve. Optimising sustainable agriculture and food production through innovation, research and development and agronomic expertise. Our Values P eople nity u m m o C P a r t n erships I n n o v a t i o n g rity I n t e 24 Origin Enterprises plc Annual Report and Accounts 2021 I n n o v a t i o n Our 2019 Targets In 2019 the Group set out our strategic ambition 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. This ambition was built around a set of strategic targets to 2023, from a 2018 base. The achievement of these targets has been impacted by the unprecedented challenges of extreme weather conditions experienced across our operating geographies, in addition to COVID-19 disruptions impacting global economies. The new management team at Origin will continue to focus on the Group’s strategy to ensure continued success for all our stakeholders. A continued focus on delivering Target 12-15% Management Focus Current Year Progress Overall Progress Management continue to focus on ROCE as a key performance measure and look to improve the return. 70-100% Management will continue to focus on Free Cash Flow as a driver of success. Return on Investment – Group ROCE Free Cash Flow Ratio Digital Hectares 4.0m Geographical profit split 40% Outside Ireland & UK Ireland/UK EBIT CAGR 1-2% CE EBIT CAGR 3-5% LATAM EBIT CAGR 5-10% The Group continues to focus on growing our digital footprint including specific attention in Continental Europe. The Group’s aim is to continue to diversify earnings and grow the operating profit contribution from geographies outside of Ireland and the UK. A key focus of the new management team is to improve returns in Ireland and the UK. In line with this ambition, the Group extended its Amenity reach in the UK during the year through the acquisition of Green-tech. Following the launch of the Agrii brand across all of our CE operations in FY20, a key focus of management is on the development of our own product capabilities including specialised seed and nutrition products, with the goal of delivering an increased EBIT contribution. The underlying performance of the LATAM division has been strong. It has, however, been negatively impacted by the weakening of the Brazilian Real. Management continue to focus on areas of growth including investment in controlled release fertiliser facilities in Brazil. Improved Reduced On Target Behind Target 25 STRATEGIC REPORTStrategy continued Creating value for all stakeholders Strategic Priorities Detail 2021 Progress > Expanded the Group’s leading market share in the Amenity sector with the acquisition of Green-tech, the UK’s leading manufacturer and distributor of landscaping, forestry and grounds maintenance equipment. > Greater than 400% increase in controlled release fertiliser volumes in LATAM following the investment in our new controlled release fertiliser plant in Minas Gerais in Brazil. > Over 20% growth in active digital hectares on-boarded throughout FY21 including the continued roll-out across our CE markets. Areas of Focus > 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. 26 Scale Market Focus Portfolio Positioning People & Organisations > Concentrate on target geographies with > Customisation and localisation. > Maintain differentiated position as specialist route- > Ongoing people and talent development. long-term growth potential. > Build complementary product-based and distribution capabilities. > Investments in digital and agronomic capabilities to promote sustainable food production systems. to-market for crop technologies. > Devolved accountability and autonomy to execute > Optimise Group position through balanced business growth agenda. portfolio and geographical diversification. > Launched Origin Amenity Solutions, combining four of our key Amenity brands under a single identity to better serve amenity professionals. > Created an industry-leading Turf Science & Technology Centre in the UK complementing the launch of Origin Amenity Solutions. > Continued the roll-out of our on-farm sustainability charter (Green Horizons) and our Fertile Future sustainability manifesto as we aim to: - help growers build business resilience to adapt to climate change; - sustainably increase agricultural production and incomes; and - reduce the carbon footprint of our industry and look after the natural environment. > 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. > Growth in higher margin proprietary crop protection, > Commencement of TJ Kelly as Group CFO and seed, micronutrient and fertiliser products through appointment of Helen Kirkpatrick as Non-Executive the development of in-house products, own- Director. registrations and supplier exclusives. > Expansion of in-house portfolio across Europe, and wellbeing throughout the on-going COVID-19 generating 44% in-house annual sales growth. pandemic. > Continued focus on employee and customer safety > Optimisation of the portfolio through greater > Established a Group-wide Health, Safety and Wellbeing alignment of product and supplier choice across forum to facilitate sharing of best practice. > Development of sustainable products and solutions employee survey illustrating our commitment to for growers, including customer-tailored nutrient our people and promoting a positive and inclusive > Sustainable engagement score of 88% in our annual the Group. blends. working environment. > Disposal of the Group’s Belgian fertiliser business driven by a lack of scalable opportunities and consolidation options. > Maintain focus on the development of operations > The Group will continue to invest in our people, across our core geographies and product areas providing the necessary support, development, which are value enhancing, present future growth infrastructure and environment to deliver our strategic opportunities and deliver on the Group’s capital agenda, drive performance and grow our reputation return targets. > Expand operating profit contribution from geographies outside of Ireland and the UK. 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. Origin Enterprises plc Annual Report and Accounts 2021Investment Case: Creating value for all Stakeholders > Long-term partnerships as trusted advisors and input providers to farmers, growers, landscapers 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. > Digital technology optimised by expert agronomist stewardship, providing localised and prescriptive solutions to farmers, growers, landscapers and amenity professionals. > Positioned to capitalise on evolving structural market trends of increasing farm commercialisation, professionalism and specialisation. > Strong cash generation and conversion capabilities. > Promoting opportunities to enhance biodiversity and green space use. Scale Market Focus Portfolio Positioning People & Organisations Detail > Concentrate on target geographies with > Customisation and localisation. > Maintain differentiated position as specialist route- > Ongoing people and talent development. long-term growth potential. > Investments in digital and agronomic to-market for crop technologies. > Devolved accountability and autonomy to execute > Build complementary product-based and capabilities to promote sustainable food > Optimise Group position through balanced business growth agenda. distribution capabilities. production systems. portfolio and geographical diversification. 2021 Progress > Expanded the Group’s leading market share > Launched Origin Amenity Solutions, in the Amenity sector with the acquisition of combining four of our key Amenity brands Green-tech, the UK’s leading manufacturer under a single identity to better serve and distributor of landscaping, forestry and amenity professionals. grounds maintenance equipment. > Created an industry-leading Turf Science & > Greater than 400% increase in controlled Technology Centre in the UK complementing release fertiliser volumes in LATAM following the launch of Origin Amenity Solutions. the investment in our new controlled release fertiliser plant in Minas Gerais in Brazil. > Continued the roll-out of our on-farm sustainability charter (Green Horizons) and > Over 20% growth in active digital hectares our Fertile Future sustainability manifesto as on-boarded throughout FY21 including the we aim to: continued roll-out across our CE markets. - help growers build business resilience to adapt to climate change; - sustainably increase agricultural production and incomes; and - reduce the carbon footprint of our industry and look after the natural environment. Areas of Focus > The Group will continue to focus on strategic > Near-market product research, opportunities to complement our existing development and innovation via our market positions and enhance our product technology centres and demonstration capability through a combination of organic farms remains central to the Group’s 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. 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. > Growth in higher margin proprietary crop protection, seed, micronutrient and fertiliser products through the development of in-house products, own- registrations and supplier exclusives. > Expansion of in-house portfolio across Europe, generating 44% in-house annual sales growth. > Commencement of TJ Kelly as Group CFO and appointment of Helen Kirkpatrick as Non-Executive Director. > Continued focus on employee and customer safety and wellbeing throughout the on-going COVID-19 pandemic. > Optimisation of the portfolio through greater > Established a Group-wide Health, Safety and Wellbeing alignment of product and supplier choice across the Group. > Development of sustainable products and solutions for growers, including customer-tailored nutrient blends. > Disposal of the Group’s Belgian fertiliser business driven by a lack of scalable opportunities and consolidation options. forum to facilitate sharing of best practice. > Sustainable engagement score of 88% in our annual employee survey illustrating our commitment to our people and promoting a positive and inclusive working environment. > 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. > 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. 27 STRATEGIC REPORTBusiness Model What we do: > Business-to-Business Agri-Inputs. > Integrated Agronomy and On-Farm Services. > Digital Agricultural Services. > Amenity Solutions. More on Our Approach to Integrated Agronomy on page 23 What sets us apart: > Our Approach to Integrated Agronomy. > Our Approach to Business-to-Business Agri-Inputs. More on Our Approach to Business-to-Business Agri-Inputs on page 23 Inputs People Partnerships Financial & Strategic Planning Knowledge & IP Supply Chain & Logistics Nurturing our environment, Nurturing our society 28 Origin Enterprises plc Annual Report and Accounts 2021 How we add value: Our Offer Nutrition Crop Protection Seed Digital Expertise / Advice / Prescription Amenity Solutions Our Brands Agrii Goulding Fortgreen RHIZA Origin Amenity Solutions Origin Fertilisers PB Kent Linemark Green-tech Our Channels Our End-Users Business-to-Business Agronomists Farmers & Growers Amenity Professionals & Landscapers Nurturing our environment, Nurturing our society Outputs Yield Enhancement Profitability & Competitiveness Environmental Stewardship Maximise Shareholder Return Read our Financial Review on page 12 Read our Sustainability Report on page 50 See our KPIs on page 30 29 STRATEGIC REPORT Key Performance Indicators 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 better reflect the Group’s key performance measures when required. KPI Adjusted Diluted Earnings per Share (‘EPS’) Return on Capital Employed (‘ROCE’) Geographic Diversity Free Cash Flow Ratio Dividend Number of Agronomists and Sales Staff* Digital Hectares Description Measures adjusted diluted EPS in the current year compared to the prior year. ROCE is defined as Group earnings before interest, tax and amortisation of non-ERP related intangible assets taken as a percentage of Group Net Assets. Measures operating profit contribution from geographies outside Ireland and the UK as a percentage of total operating profit. Measures free cash flow Measures the total Measures the number of Measures the number of as a percentage of profit dividend per ordinary agronomists and sales farm hectares uploaded after tax of wholly-owned share proposed in the representatives available to the Group’s digital current financial year. to customers to ensure platforms as at year end. businesses, excluding exceptional items and amortisation of non-ERP related intangible assets. that the appropriate mix of experience and expertise is available. Link to Strategy Current Year Historic Result Strategic Ambition 35.50C (2020: 25.69c) 9.3% (2020: 7.3%) 36% (2020: 47%) 114.9% (2020: 240.9%) 11.00C (2020: 3.15c) 743 (2020: 777) 1.7m ha (2020: 1.4m ha) 2018 2019 2020 2021 2018 2019 2020 2021 2018 2019 2020 2021 48.8c 52.65c 25.69c 35.50c 13.5% 13.2% 7.3% 9.3% 23% 27% 47% 36% 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 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. A key element of the The Group’s strategic Group’s strategic ambition ambition is to deliver a Our target is to remain adequately resourced The Group’s aim is to grow the number of farm is to deliver a Free Cash progressive dividend policy with skilled agronomists hectares on our digital Flow Ratio of 70 – 100%. with a payout ratio > 35%. and sales representatives platforms to in excess who can meet our customers’ needs. of 4.0 million hectares. 30 Origin Enterprises plc Annual Report and Accounts 2021 Strategic Priorities Key: Scale People & Organisations Portfolio Positioning Market Focus KPI Adjusted Diluted Return on Earnings per Share (‘EPS’) Capital Employed (‘ROCE’) Geographic Diversity Free Cash Flow Ratio Dividend Number of Agronomists and Sales Staff* Digital Hectares Description Measures adjusted diluted ROCE is defined as Group Measures operating profit EPS in the current year earnings before interest, contribution from compared to the prior year. tax and amortisation intangible assets taken as of total operating profit. geographies outside Ireland and the UK as a percentage of non-ERP related a percentage of Group Net Assets. 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 as at year end. Link to Strategy Current Year Historic Result 35.50C (2020: 25.69c) 9.3% (2020: 7.3%) 36% (2020: 47%) 114.9% (2020: 240.9%) 11.00C (2020: 3.15c) 743 (2020: 777) 1.7m ha (2020: 1.4m ha) 2018 2019 2020 2021 2018 2019 2020 2021 2018 2019 2020 2021 2018 2019 2020 2021 Strategic Ambition The Group’s aim is to A key element of the The Group’s aim is to target growth in adjusted Group’s strategic ambition grow the operating diluted EPS, while is to deliver ROCE of recognising that factors outside our control may cause inter-year variances. 12 – 15%. profit contribution from geographies outside of Ireland and the UK to in excess of 40% of total operating profit. 106.0% 90.0% 240.9% 114.9% 21.0c 21.32c 3.15c 11.00c 650 755 777 743 0.7m 1.0m 1.4m 1.7m A key element of the Group’s strategic ambition is to deliver a Free Cash Flow Ratio of 70 – 100%. The Group’s strategic ambition 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. * Note: In FY21 the definition of Sales Staff was updated, with all comparable periods restated to reflect this. T R O P E R C G E T A R T S I 31 Business Review Origin is a recognised market leader in the provision of Agronomy Services and Crop Inputs in Ireland and the UK, Continental Europe and Latin America. Ireland and the UK case studies on pages 37 to 39 Continental Europe case studies on pages 44 and 45 Latin America case studies on pages 48 and 49 Ireland and the UK Continental Europe Latin America €1,049.3m €570.1m €39.0m Revenue Revenue Revenue 32 Origin Enterprises plc Annual Report and Accounts 2021 T R O P E R C G E T A R T S I UK Ireland and the UK Ireland 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. More on Ireland and the UK on pages 34 to 39 iFarms B2B Sites Technology Centres Continental Europe Poland Ukraine Origin is a recognised market leader in the provision of Agronomy Services and Crop Inputs in our Continental European markets. Romania More on Continental Europe on pages 40 to 45 Technology Centres Demonstration Farms Latin America Origin has a controlling interest in Fortgreen. Based in Paraná State, Brazil, Fortgreen is an established leader in the development and marketing of value-added crop nutrition and speciality inputs. More on Latin America on pages 46 to 49 Brazil Minas Gerais State Paraná State 33 Business Review Ireland and the United Kingdom Ireland and the UK delivered an improved performance in FY21 compared to a prior year which had been impacted by highly challenging weather conditions. Underlying revenue increased 7.8% while underlying operating profit increased 64.3%. The underlying volume growth for agronomy services and crop inputs was 5.3% in the period. “ Volumes delivered in Q4 continue to demonstrate the robustness of the Group’s operational capabilities.” 34 Origin Enterprises plc Annual Report and Accounts 2021 Operational Review - Ireland and the United Kingdom Revenue Operating profit1 Operating margin1 Associates and joint venture2 2021 €'m 1,049.3 39.1 3.7% 2.8 Change on prior year 2020 €'m 967.9 23.3 2.4% 5.8 Change % 8.4% 67.5% 130bps (51.1%) Underlying3 % Constant Currency4 % 7.8% 64.3% 130bps (50.9%) 8.8% 68.2% 130bps (50.9%) 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. FY20 was impacted by prolonged unseasonal weather conditions in Ireland and the UK resulting in lower volumes and margins across the segment. In FY21, volume development in the UK was supported by a return to more normalised cropping levels with a 6.5% increase in total plantings. The improved result was delivered despite delayed in-field activities as a result of persistent cold weather continuing into Q3. Favourable on- farm conditions in Q4 allowed for significant catch-up activity with a 5.5% increase in crop protection volumes year-on-year. Operating margin increased to 3.7% from 2.4% driven by a higher intensity of crop input spend by farmers and growers following a more normalised cropping mix. Integrated Agronomy and On-Farm Services Integrated Agronomy and On-Farm Services delivered an improved result during the year, recording higher volumes, revenues and margins across its service and input portfolios. Demand for agronomy services and inputs improved in FY21 following a return to a more normalised cropping profile but was impacted by persistent cold conditions in Q3. Catch-up activity in Q4 was supported by improved on-farm sentiment and more favourable weather conditions resulting in an improved contribution year-on-year. Volumes delivered in Q4 continue to demonstrate the robustness of the Group’s operational capabilities. Agrii launched a sustainable seed rating offering during the year which assists farmers in choosing the best seed variety to cope with ever- changing weather demands and soil conditions. Integrated Agronomy and On-Farm Services continues to deliver an excellent operational performance despite the backdrop of COVID-19 -related constraints and has successfully implemented a range of measures to ensure continuity of service to farmers and growers. Ireland and UK in numbers: €1,049.3m Revenue 1,498 Employees €39.1m Operating Profit C.30,000 Customers 35 STRATEGIC REPORTProfit by Geography 2021 €61.0m Ireland & the UK Continental Europe Latin America 10% 26% 64% 100- 2,000ha Customer Profile Digital Agricultural Services The development and roll-out of Origin’s digital offering continued during the year, with over 1.7 million (FY20: 1.4 million) active hectares on- boarded by year end, including growth in Continental Europe. Enhancement of functionality remains a key priority for RHIZA, the Group’s digital agronomy and precision farming operation, and we continue to embed our digital decision support services across the Group’s established routes-to-market, to optimise crop performance and input utilisation for farmers and growers. Business-to-Business Agri-Inputs Business-to-Business Agri-Inputs had a strong financial year, recording increased volumes and an overall improved contribution. Fertiliser Fertiliser delivered a strong financial and operating performance in FY21, recording higher volumes and recovering margins in the period. The result was supported by the more normalised cropping profile in the UK with positive volume momentum continuing well into Q4 influenced by raw material price increases. The division rolled out its Fertile Future sustainability manifesto during the year and the development and promotion of enhanced efficiency fertiliser and bespoke nutrition ranges will continue to be a significant focus in FY22. Amenity The Group’s Amenity business delivered an improved performance in the period, benefitting from the easing of COVID-19 restrictions in the first quarter, which had severely impacted operations in FY20. In March 2021, Origin acquired Green-tech, the UK’s leading manufacturer and distributor of landscaping, forestry and ground maintenance equipment. Green-tech strengthens Origin’s amenity business offering with potential in the area of environmental land management and biodiversity enhancement for the Group’s agri-focused businesses. Since acquisition, Green-tech has performed in line with expectations and the integration of the business into the wider Amenity division is proceeding to plan. Feed Ingredients The Feed Ingredients result reflects a challenging trading and operating environment impacted by a fire in our animal feed business facility in R&H Hall, at the Port of Cork, Ireland and logistical challenges arising from commodity supply constraints. The Group’s animal feed manufacturing associate, John Thompson & Sons Limited, in which the Group has a 50% shareholding, delivered a satisfactory performance in the period. 36 Origin Enterprises plc Annual Report and Accounts 2021 Case Study Origin Amenity Solutions During the year, four of Origin’s leading amenity industry brand names - Headland Amenity, Rigby Taylor, Symbio and TurfKeeper - were brought together to form a consolidated business called Origin Amenity Solutions (‘OAS’). Following the launch of OAS, Origin is operating at the leading edge of plant science and turf technology in the UK amenity sector. Origin Amenity Solutions - Turf Science & Technology Centre In addition to the launch of OAS, the Group has invested in a dedicated amenity research and development facility based in Throws Farm, the Group’s industry-leading research and development facility. Following the investment in the facility, the campus comprises an extensive trial ground including fine grasses, ryegrass and sports pitch surfaces. The trial ground has a fully functioning Rain Bird irrigation system installed, Davis Weather monitoring and recording station, Soil Scout below ground ‘real time’ monitoring temperature, moisture and salinity and a low-invasive, ground water dynamics drainage system. Completing the extensive trials area are greenhouses, a fully equipped laboratory and a conference facility, all dedicated to identifying, developing and informing the industry on new and innovative products, techniques and practices. Turf maintenance at the Turf Science & Technology Centre at Throws Farm 37 STRATEGIC REPORT Case Study Green-tech In March 2021, the Group announced the acquisition of Greentech Limited (‘Green-tech’), the UK’s leading manufacturer and distributor of landscaping, forestry and ground maintenance equipment. Green-tech strengthens Origin’s amenity business offering with potential in the area of environmental land management and biodiversity enhancement for the Group’s agri-focused businesses. Based in its own purpose-built business park in Rabbit Hill, Arkendale in the UK, Green-tech is the UK's largest landscaping supplier. It provides professional grade landscaping materials and wholesale garden supplies for landscape contractors, architects, designers and landowners. Employing more than 80 people and stocking over 16,000 essential landscaping products, the Green-tech team supports a wide range of customer projects including maintenance of public open spaces, tree planting in woodlands, creation of urban landscapes and planting of biodiverse wildflower meadows. 16,000+ Essential landscaping products stocked 80+ Employees 38 Origin Enterprises plc Annual Report and Accounts 2021 T R O P E R C G E T A R T S I 39 The Green-tech team based in Rabbit Hill, Arkendale Business Review Continental Europe Continental Europe delivered a good performance in FY21 with improved performances in all territories. More on Agrii in Continental Europe on page 44 “ Underlying business volumes increased by 1.0% in the period, with an improved operating margin of 3.8% (FY20: 3.2%).” 40 Origin Enterprises plc Annual Report and Accounts 2021 Origin Enterprises plc Annual Report and Accounts 2021 Operational Review - Continental Europe1 Revenue Operating profit2 Operating margin2 Change on prior year 2021 €'m 415.7 15.7 3.8% 2020 €'m 417.5 13.2 3.2% Change % (0.4%) 18.3% 60bps Underlying3 % Constant Currency4 % 5.9% 21.6% 50bps 5.9% 21.6% 50bps 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 2021 crop marketing revenues and losses attributable to Continental Europe amounted to €154.4 million and €0.1 million respectively (2020: €172.7 million and €0.4 million profit 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. Underlying business volumes increased by 1.0% in the period, with an improved operating margin of 3.8% (FY20: 3.2%). Working capital investment levels reduced further in FY21 following continued management focus on ensuring the cash conversion cycle is optimised and an improving mix of cash sales. During the year, the Group disposed of its Belgian fertiliser business, Pillaert. With the lack of scalable opportunities and consolidation options in the Belgian market, the Group decided to exit this market and redeploy capital in the Group’s core operations. Poland Poland delivered an improved performance on the prior year. The improved overall result was supported by a cropping area in line with the prior year and performance benefitted from the ongoing focus on cost efficiencies and the further volume growth in Origin’s seed and speciality nutrition portfolios. During FY21, the nutrition portfolio continued to develop with a more favourable mix of speciality and strategic products positively impacting margin. The excellent operational performance delivered included improved overall operating margin and a reduced working capital investment. Continental Europe in numbers: €570.1m Revenue 994 Employees €15.6m Operating Profit C.18,000 Customers 41 STRATEGIC REPORT Profit by Geography 2021 €61.0m Continental Europe Ireland & the UK Latin America 10% 26% 64% 100- 50,000ha Customer Profile Romania Romania delivered a satisfactory result during the year, in line with the performance of FY20. Despite a slow start to the year as a result of dry conditions delaying in-field operations, more favourable conditions in the second half of the year were sufficient to allow catch- up activity on-farm, with a focus on improving the mix of higher margin speciality and strategic products. Working capital management continued to be an area of focus during the year resulting in a working capital inflow year-on-year. Ukraine While Ukraine delivered an improved contribution in FY21 and a further significant reduction in working capital levels, the operating profit delivered was disappointing. We continue to see improved performance in our strategic crop protection portfolio, however the market remains highly challenging. With the backdrop of this highly challenging market, the Group continues to prioritise the development of improved margin and higher service agronomy channels, together with delivering further operational and working capital efficiencies. 42 Read more about Agrii’s journey in Continental Europe on pages 44 and 45 Origin Enterprises plc Annual Report and Accounts 2021 43 STRATEGIC REPORTCase Study Agrii Continental Europe in Profile Following the launch in FY20 of the Agrii brand across Romania and Ukraine, in addition to Poland, Agrii in Continental Europe has gone from strength to strength in FY21. Servicing approximately 18,000 customers across 3 countries, Agrii in Continental Europe is a market leader in the supply of inputs and agronomy services, leveraging off a skilled workforce with direct on-farm access to deliver unrivalled expertise and support for sustainable and profitable farming systems across Poland, Romania and Ukraine. During FY21 Agrii held 53 Agrii Demos, an industry-leading initiative with a focus on demonstrating Origin’s world-class technologies including exclusive seed varieties, specialised crop nutrition products and tailored crop protection products. The aim of Agrii Demo is to illustrate the impact technology can bring and how on-farm yields can be optimised. Agrii’s 360-strong team of agronomists/sales staff across our Continental European geographies ensures that farmers receive the best advice and access to the correct inputs to enable them to optimise on-farm returns. In addition to this, Agrii’s customer base has access to RHIZA, Origin’s digital service providing the industry’s leading satellite imagery - now with over 800,000 active hectares on-boarded to the platform across Poland, Romania and Ukraine. 44 Origin Enterprises plc Annual Report and Accounts 2021 Timeline T R O P E R C G E T A R T S I 2008 2014 2016 2018 2020 > Origin enters the Polish market following the acquisition of Dalgeta Agra Polska (now Agrii Polska). > Origin enters the Ukranian market following the acquisition of Agroscope International, a leading provider of agronomy services. > Opening of > Launch of Agrii state-of-the-art Seed Processing and Input Formulation facility in Aleksandrów, Poland. brand in Ukraine and Romania in common with Origin’s other direct farm customer-facing businesses. > Dalgeta Agra Polska is rebranded as Agrii in line with Origin’s leading agronomy services business in the UK. > Origin enters the Romanian market following the acquisition of Comfert and Redoxim, suppliers of agronomy services and inputs. “ Agrii’s 360-strong team of agronomists/sales staff ensures that farmers receive the best advice and access to the correct inputs to enable them to optimise on-farm returns.” Agrii Demo in Romania demonstrating Agrii’s industry-leading technologies and agricultural developments 45 Business Review Latin America The Latin American (‘LATAM’) reporting segment incorporates the Group’s operations in Brazil. Read more on our Business Model on pages 28 and 29 46 Origin Enterprises plc Annual Report and Accounts 2021 Origin Enterprises plc Annual Report and Accounts 2021 Operational Review - Latin America Change on prior year Revenue Operating profit1 Operating margin1 Associates and joint venture2 2021 €'m 39.0 6.3 16.1% - 2020 €'m 31.1 7.1 Change % 25.4% (11.4%) 58.1% 16.9% 22.9% (680bps) (600bps) 0.4 (100.0%) - Underlying3 % Constant Currency4 % 58.1% 16.9% (600bps) (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 and disposals. 4 Excluding currency movements. LATAM delivered a strong underlying performance year-on-year with volume development and underlying growth driven by a double-digit percentage increase in our core product range, a more significant increase in controlled release fertiliser sales, together with a 3.5% increase in the total cropping area dedicated to soya. Underlying business volumes increased by 45.7% in the period with revenues increasing by 58.1% on an underlying basis at constant currency (25.4% on a reported basis). The impact of foreign currency translation has significantly impacted LATAM’s contribution in the period following the weakening of the Brazilian Real. Reported operating profit has decreased by 11.4% despite an increase in operating profit of 16.9% on a constant currency basis. The result was supported by the completion of our new controlled release fertiliser plant in Minas Gerais, which became operational in the second half of the financial year. Latin America in numbers: €39.0m Revenue 149 Employees €6.3m Operating Profit C.1,000 Customers 47 STRATEGIC REPORTProfit by Geography 2021 €61.0m Latin America Ireland & the UK Continental Europe Case Study 10% 26% 64% 50- 5,000ha Customer Profile Controlled Release Fertiliser Controlled Release Fertiliser (‘CRF’) is one of the most efficient crop nutrition technologies currently available to the agricultural community. Fortgreen has invested in a new technology based on thermoplastic resin-covered fertiliser, enabling the release of nutrients in a controlled manner - known as Controlled Release Fertiliser. Conventional fertilisers are immediately dissolved in the soil after application, providing nutrition for a short period of time only, requiring multiple fertiliser applications to ensure that the crop gets the required nutrition. This CRF technology can enhance nutrient efficiency, decreasing losses such as leaching and fertiliser volatility, enabling a better use of nutrients and also reducing the impact on the environment. Fortgreen has invested in its facility in the city of Varginha (Minas Gerais State, Brazil) to enhance its ability to deliver CRF product to its customers. The Varginha plant employs 25 people and can produce 25,000 tonnes of fertiliser annually. Fortgreen’s head office in Paraná State in Brazil 48 The CRF production line in Varginha, Brazil, which produces 25,000 tonnes of fertiliser annually Origin Enterprises plc Annual Report and Accounts 2021Case Study - Own Product Capability Fortgreen's CRF Offering Fortgreen’s CRF is an intelligent fertiliser that adjusts the release of nutrients in a controlled manner to match the requirement of the growing crop. Fortgreen's CRF has three different technologies: Fortcote, Fortblen and MaxxCote, designed for different environments and different crops: > Fortcote is a coated fertiliser developed to deliver nutrients over a period of up to 12 months. > Fortblen is another blend of CRF fertiliser with a coating designed to deliver nutrients over a 3 - 6 month period. > MaxxCote is designed to deliver nutrients up to a maximum of 3 months. Read more about Our Business on page 20 The determining factors for release include temperature and soil moisture, and an incorporated shield provides the controlled release of nutrients for the crop throughout its lifecycle. Effective use of CRF lowers on-farm operating costs as the product may be applied once in pre-planting for annual crops and early in the cycle of perennial crops, increasing efficiency and limiting the impact on the environment. Read more about our commitment to sustainability on page 50 49 STRATEGIC REPORT Sustainability Report 'Nurturing Growth' is Origin's long-term sustainability strategy to 2030, to deliver shared value for our stakeholders. Our sustainability journey is one of continuous evolution and progression. As we embed sustainability and target- setting across our Group operations, we are adopting a measured, phased approach - with an initial focus on establishing our emissions baseline and setting target reductions in line with accepted scientific evidence. To coincide with the release of Origin's 2021 Annual Report, the Group has published its inaugural stand- alone Sustainability Report. 'Nurturing Growth' details our strategic approach to sustainability, reflects progress made to date and charts the Group’s path forward, while profiling a selection of our international sustainability-related initiatives. To view the full report, please visit www.originenterprises.com Performance Highlights 2021 Nurturing our environment > Development of science-based climate targets. > Launch of our Net Zero iFarm programme. > Adoption of integrated pest management practices (IPM) throughout c.98% of UK field trials. > 11.5% increase in Enhanced Efficiency Fertiliser sales since 2017. 15% Absolute CO2 emissions reduction since 2017 11% decrease in fleet emissions since 2017 38% of the Group’s purchased electricity now supplied from renewable sources 22% decrease in water usage in FY21 compared to FY20 50 Origin Enterprises plc Annual Report and Accounts 2021Read more about Our Business on pages 20 and 21 Our Commitment > Lead in our role as an advisor to our customers. > Engage with the latest innovations and best practices, and align to best-in-class carbon removal initiatives. > Verify our GHG emissions through the development of science-based targets. > Deepen our commitment to health and safety, and to fostering a culture where all colleagues feel safe, valued and fully engaged. > Develop a formal Environmental Management System aligned to ISO14001, working to specific targets and KPI-based measurement of our progress. Nurturing our society > Active promotion of health, safety and wellbeing. > 38% female Board membership. > Adoption of the UN Global Compact principles. 88% Sustainable employee engagement score 79% Favourable diversity and inclusion category score 51 STRATEGIC REPORT 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.” Read our Corporate Governance Statement on page 69 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 support a focus on risk management. In the ensuing period, 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 2021 are as follows: › continually review the Group’s overall risk assessment processes and its capability to identify and mitigate new risks; › consider the output of the consolidated risk map 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 other Board Committees; › annually review the Audit and Risk Committee’s Terms of Reference and carry out a 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 help 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 regular audit programmes. The Group’s Risk Management Framework is set out diagrammatically on page 53 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 advisors who provide an additional level of independent assurance. 52 Origin Enterprises plc Annual Report and Accounts 2021 Risk Management Framework Origin Enterprises plc Board › Group and Business Unit Risk Registers and Maps › 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 Internal Audit / Other Assurance Providers 2nd Line of Defence Oversees risk and provides support 3rd Line of Defence Independent assurance T R O P E R C G E T A R T S I 53 Roles and Responsibilities The roles and responsibilities in respect of the key elements of the Risk Management Framework are set out below: Origin Enterprises plc Board > Set strategic objectives. > Set delegation of authority. > Continually review and monitor key risks of the Group. > Report on the effectiveness of the risk management and internal control systems. Audit and Risk Committee Executive Group Risk Committee (‘EGRC’) > 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. > Define risk appetite and tolerance for the most important risks. 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 > Oversee business unit and functional risk management. > Promote the importance of a strong control environment. > Provide expertise in areas such as Group finance, risk management, tax, treasury, legal, health and safety and information security. Group Internal Audit > Monitor the effectiveness of the Group Risk Management Framework. > Develop and execute 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 Senior Independent Director, Chairman of the Audit and Risk Committee), Helen Kirkpatrick (Non-Executive Director) and Hugh McCutcheon (Non-Executive Director). The length of tenure of the Directors on the Audit and Risk Committee as at 31 July 2021 is set out below: Length of tenure on Audit and Risk Committee* Gary Britton Helen Kirkpatrick Hugh McCutcheon Years 5.77 0.50 9.63 * 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 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. Risk appetite, tolerance and key risk indicators are defined for all major risks. 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 reviewed by the Board’s Audit and Risk Committee during the financial year. 54 Origin Enterprises plc Annual Report and Accounts 2021Deep 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. 2021 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 2021: › The EGRC met four times to discuss top risks and actions. › Risk deep dives were performed for all major business units. › Risk owners and action plans were identified for all major Group- wide risks. › Additional information was acquired for the most important and emerging risks, together with an initial assessment of risk appetite. › Additional focus brought to areas such as sustainability, information security, health and safety 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 59. As set out in the financial statements, the Group has generated net cash flow from operating activities of €61.9 million during the year and its net bank debt at 31 July 2021 is €14.4 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 a period of at least 12 months from the date of approval of the consolidated financial statements. 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 to have a significant impact on the Group’s business operations and strategy are set out on pages 56 to 59. 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 Similar to 2020, 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 56 to 59. While COVID-19 has caused disruption and uncertainty at societal level, 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 restrictions and health and safety measures at individual country level. All production plants and distribution centres have remained operational during the pandemic. 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. As countrywide vaccination programmes advance and restrictions are eased, the Group has defined return-to-work protocols for those support functions that had to fully or partially work from home. This varies country to country and depends on local government roadmaps and protocols. 55 STRATEGIC REPORTThe principal risks and uncertainties: Link to Strategic Priorities Key: Scale People & Organisations Portfolio Positioning Market Focus Impact Strategic / Commercial Mitigation Risk Movement Strategic Priority 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 an 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, which sources raw materials in local markets and internationally. 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. International commodity markets experienced higher-than-normal volatility in 2021. 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. 56 Origin Enterprises plc Annual Report and Accounts 2021 Risk Movement Key: Increased Risk Decreased Risk No Change Impact Mitigation Risk Movement Strategic Priority Strategic/Commercial (continued) Political The Group is a multinational organisation and may be negatively impacted by political decisions, civil unrest or other developments in the geographies in which it operates. This can negatively impact the supply chain process at country level. 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. During the prior year we witnessed first-hand agriculture’s vulnerability to climate-induced changes as disruptive weather events had a direct impact on our profitability. Operational 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. The long-term impact of climate change and the immediate consequence of abnormal weather events 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 Group's 2021 Sustainability Report. Also, the Group has incorporated recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). 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 implemented in 2020/21 as a consequence of the COVID-19 pandemic. 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 and compliance with upcoming regulation (particularly on government-driven environmental measures) 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. 57 STRATEGIC REPORT Link to Strategic Priorities Key: Scale People & Organisations Portfolio Positioning Market Focus 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 relies on the business and relationship with large manufacturers to source materials, sustain margins, recognise vendor-related income and jointly develop new products. 2021 has seen increased disruption in international trade affecting logistics and supply chain activities. 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, particularly on product knowledge and agronomic advice. IT / Disaster recovery / Cyber security The Group is a multinational business with operations in a number of countries. The Group’s IT strategy and its use of technology is key across the organisation and a robust IT disaster recovery plan is of high importance. Significant challenges would arise in the event there was a lack of access to the IT systems and environment or through cybercrime. The volume and variety of cyber-attacks against companies has increased in recent years, where actors attempt to gain access to systems through a variety of techniques to defraud, disrupt, hold to ransom or steal data. Post-Brexit impact 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 political and economic divergence between the UK and the EU 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. In 2021, the UK market experienced increased challenges in the logistics sector e.g. availability of personnel for farming, transportation and warehousing activities. 58 The Group endeavours to maintain close, formal and long-term 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. The Group mitigates this risk through succession planning, strong recruitment processes, training and development programmes and offering competitive and attractive remuneration and benefits packages. Monitoring and maintaining high employee engagement levels is paramount to the Group’s success. 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 cyber security controls have been strengthened to address the additional requirements from COVID-19 and increased volume of external attacks. Cyber security assessments across all countries and businesses have been performed and controls are regularly monitored. Awareness and training programmes are in place for all employees with systems access and key systems are backed up off-site. Management and the Board are continually monitoring short- and long-term impacts of Brexit on all of the Group’s operations. Any developments, including new information and policy indications from the UK Government and the EU, are reviewed on an ongoing basis and appropriate actions are taken to mitigate the consequences of Brexit and material divergences between the UK and the EU. Pre-Brexit contingency plans and measures (e.g. obtaining operator certifications, stock planning) have worked well to ensure the security of Origin’s supply chain and minimise commercial disruptions or imposition of tariffs, particularly for importation of raw materials. Origin Enterprises plc Annual Report and Accounts 2021 Risk Movement Key: Increased Risk Decreased Risk No Change Impact Financial 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. Fraud can result in financial losses, loss of assets, reputational damage and potential regulatory fines. Farm subsidy payments The Group has operations within and outside the European Union. The uncertainty in relation to EU and UK farm subsidy payments, 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) replaced by UK payments, gradually, until 2027. The level of funding will vary per farm size and will depend upon compliance with targets (e.g. environmental requirements). Mitigation Risk Movement Strategic Priority 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 and supply chain finance solutions are used to optimise working capital. 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 processes. 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. The Group has ensured appropriate financial controls are in place due to temporary work from home arrangements for part of its support staff. Management and the Board are monitoring the potential impact of changes in EU (CAP) and UK (DEFRA) 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. 59 STRATEGIC REPORT Read our Corporate Governance Statement on page 69 Green-tech, our latest acquisition, supports a wide range of customer projects including maintenance of public open spaces, tree planting in woodlands, creating urban landscapes and planting biodiverse wildflower meadows. 16,000+ Essential landscaping products stocked 60 Origin Enterprises plc Annual Report and Accounts 2021 Origin Enterprises plc Annual Report and Accounts 2021 E C N A N R E V O G 61 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 62 64 67 69 76 79 83 STRATEGIC REPORTBoard of Directors The Board of Origin comprises a Non-Executive Chairman, two Executive Directors and five Non-Executive Directors. Non-Executive Chairman Executive Directors Rose Hynes (64) Non-Executive Director Sean Coyle (48) Chief Executive Officer TJ Kelly (47) Chief Financial Officer Nationality: Irish Nationality: Irish Nationality: Irish Date of appointment: 1 October 2015 Date of appointment: 1 October 2018 Date of appointment: 18 January 2021 Committee membership: Chairman of the Nomination and Corporate Governance Committee and 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 Chairman of the Irish Aviation Authority and Non-Executive Director of Dole plc 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: TJ was appointed Group Chief Financial Officer and an Executive Director on 18 January 2021. TJ was previously at Hostelworld Group plc, where he held the role of Chief Financial Officer and was a member of the Board. Prior to this, TJ worked in the US and Ireland with Glanbia plc for 12 years, where he held a number of senior leadership roles, including Chief Financial Officer of the Performance Nutrition Business and Group Financial Controller with responsibility for Investor Relations. TJ has also held senior finance positions in Microsoft, GE Capital and eir. TJ is a Fellow of Chartered Accountants Ireland and completed his training with PwC. 62 Origin Enterprises plc Annual Report and Accounts 2021 Non-Executive Directors Kate Allum (56) Non-Executive Director Gary Britton (67) Non-Executive Senior Independent Director Helen Kirkpatrick (62) Non-Executive Director Nationality: British Nationality: Irish Nationality: British Date of appointment: 1 October 2015 Date of appointment: 1 October 2015 Date of appointment: 1 October 2020 Committee membership: Chairman of the Remuneration Committee. Skills and experience: Kate previously held a number of senior management positions in the food and agricultural sector, including Chief Executive of CeDo Limited and First Milk Limited and Head of European Supply Chain for McDonald’s Restaurants. Principal current directorships: Non- Executive Chairman of Anpario plc, Non-Executive Director of Cranswick plc, Stock Spirits Group plc and The Co-op and Chair of the Court of the University of the West of Scotland. Committee membership: Chairman of the Audit and Risk Committee and member of the Nomination and Corporate Governance Committee. Committee membership: Member of the Audit and Risk Committee and 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 and a member of the Institute of Directors in Ireland. Skills and experience: Helen previously served on the Boards of Kingspan Group plc, Dale Farm Co-operative and Wireless Group plc. She has held a number of senior positions in global professional services firms, including Ernst & Young and Deloitte and as a corporate finance executive with Invest Northern Ireland, the economic development agency for Northern Ireland. Helen is a Fellow of Chartered Accountants Ireland. Principal current directorships: Non- Executive Director of Cairn Homes plc. Principal current directorships: Non-Executive Director of NTR plc. Hugh McCutcheon (67) Non-Executive Director Christopher Richards (67) Non-Executive Director Nationality: Irish Nationality: British Date of appointment: 21 November 2011 Date of appointment: 1 October 2015 Committee membership: Member of the Audit and Risk Committee. Committee membership: Member of the Remuneration Committee. 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 range of corporate clients and with the Department of Finance. Past directorships include Non-Executive Director of IPL Plastics Inc. Hugh is a Fellow of Chartered Accountants Ireland having trained with PwC. Principal current directorships: Director at the Irish Takeover Panel 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. E C N A N R E V O G 63 Directors’ Report The Directors present their annual report together with the audited consolidated financial statements of the Group for the year ended 31 July 2021, which are prepared in accordance with International Financial Reporting Standards (‘IFRSs’) as adopted by the EU. Read our Corporate Governance Statement on page 69 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, Brazil, Poland, Romania and Ukraine. During the year under review, the Group resumed dividend payments and announced the acquisition of Greentech Limited in the UK and the sale of its Belgian fertiliser business, Pillaert Meststoffen. 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 17. 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 30 and 31. Results for the Year The results for the year are set out in the Consolidated Income Statement on page 109. Revenue for the financial year was €1,658.4 million (2020: €1,589.1 million). The profit after tax and exceptional items for the financial year was €38.2 million (2020: €19.9 million). (including treasury shares) comprised 126,396,184 ordinary shares of €0.01 each (2020: 126,396,184). At 31 July 2021, 800,330 securities were held as treasury shares (2020: 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. Future Developments Following resumption of dividend payments this year, the Group will continue to pursue sustainable growth to enhance shareholder value, through a combination of organic investment, strategic M&A and advancing the Company’s ESG agenda. Dividends The Board is recommending a final dividend of 7.85 cent per ordinary share, which combined with the interim dividend of 3.15 cent per ordinary share, brings the total dividend for the year to 11.00 cent per ordinary share (2020: 3.15 cent). Subject to shareholder approval, the final dividend is payable on 4 February 2022 to shareholders on the register on 14 January 2022. Share Capital and Treasury Shares At 31 July 2021, the Company’s total authorised share capital comprised 250,000,000 ordinary shares of €0.01 each (2020: 250,000,000) and the Company’s total issued share capital 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. 64 Origin Enterprises plc Annual Report and Accounts 2021 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 52 to 59. 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 69 to 75 sets out the Group’s application of corporate governance principles and the Group’s system of risk management and internal controls. The Corporate Governance Statement shall be treated as forming part of the Directors’ Report. The adoption of the going concern basis in preparing the financial statements is set out on page 55. Directors and Company Secretary Changes to the Board of Directors during the year: › Helen Kirkpatrick was appointed as a Non-Executive Director effective 1 October 2020; › TJ Kelly joined the Company as Chief Financial Officer and was appointed to the Board on 18 January 2021; and › Declan Giblin stepped down as Executive Director from the Board with effect from 31 July 2021. Changes to the Board of Directors subsequent to year end: In August 2021, the Company announced: › the appointment of Aidan Connolly as a Non-Executive Director with effect from 1 October 2021; and › the retirement of Non-Executive Directors Hugh McCutcheon and Kate Allum from the Board at the conclusion of the company’s next Annual General Meeting, scheduled for 25 November 2021. The names of the persons who are Directors are set out below. Directors: Rose Hynes (Non-Executive Chairman) Sean Coyle (Chief Executive Officer) TJ Kelly (Chief Financial Officer) Kate Allum (Non-Executive Director) Gary Britton (Non-Executive Senior Independent Director) Helen Kirkpatrick (Non-Executive Director) Hugh McCutcheon (Non-Executive Director) Christopher Richards (Non-Executive Director) Company Secretary: Barbara Keane The biographical details of the Directors are set out on pages 62 and 63 of this Annual Report. Directors’ Interests in Share Capital at 31 July 2021 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 90 to 96. Substantial Holdings As at 31 July 2021, the Directors have been notified of the following shareholdings which amount to 3% or more of the Company’s issued ordinary share capital (excluding treasury shares): Number of shares % 20,068,234 15.9% 12,633,404 10.1% 11,379,536 11,378,695 9.1% 9.1% 6,329,777 5.0% 6,203,016 4.9% 4,080,684 3.3% Artemis Investment Management LLP Setanta Asset Management Limited FIL Limited FMR LLC Janus Henderson Group plc Invesco Limited Bank of Montreal As at 28 September 2021, the Directors have been notified of the following shareholdings which amount to 3% or more of the Company’s issued ordinary share capital (excluding treasury shares): Number of shares % 20,068,234 15.9% 12,633,404 10.1% 11,379,536 11,378,695 9.1% 9.1% 6,329,777 5.0% 6,203,016 4.9% 4,080,684 3.3% Artemis Investment Management LLP Setanta Asset Management Limited FIL Limited FMR LLC Janus Henderson Group plc Invesco Limited Bank of Montreal “ Following resumption of dividend payments this year, the Group will continue to pursue sustainable growth to enhance shareholder value.” 65 GOVERNANCE 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 and prior financial periods 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 Sections 281 to 285 of the Companies Act 2014 with regard to accounting records by employing personnel with appropriate expertise and by providing adequate resources to the finance function. The accounting records of the Company are maintained at the Company’s registered office at: 4-6 Riverwalk, Citywest Business Campus, Dublin 24. Corporate Social Responsibility Origin recognises the importance of conducting its business in a socially responsible manner. The Group understands its responsibilities as an important member of the communities in which it operates and aims to not only provide employment opportunities to the local population but to earn a positive reputation in those communities by carrying out its commercial dealings and operations with integrity and in compliance with local and national regulations. The Directors believe that the Group’s long-term success will benefit from a motivated and committed workforce and, therefore, aims to provide its employees with an environment to work safely and develop their skills and practices in a well-structured manner. Health and safety in the workplace is given high priority across the Group and is driven internally by health and safety reviews and procedures. Non-Financial Statement For the purposes of Statutory Instrument S.I.360/2017 European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) Regulations 2017, the areas of environmental matters, social and employee matters, respect for human rights, and bribery and corruption are discussed in the following sections of the Strategic Report: Strategy on pages 24 to 27, Business Model on pages 28 and 29, Key Performance Indicators on pages 30 and 31, Sustainability Report on pages 50 and 51, and Risk Report on pages 52 to 59, and are deemed to be incorporated in this part of the Directors’ Report. 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 (2020: €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 28 September 2021 Sean Coyle Director 28 September 2021 Read more about the Directors on pages 62 to 63 66 Origin Enterprises plc Annual Report and Accounts 2021 Chairman’s Overview In Origin, we view high standards of corporate governance as a vital element of how we conduct our business, align the interests of stakeholders 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 continuing disruptions to businesses, economies and governments globally from the COVID-19 pandemic, it remains vital 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 69 to 75. There are detailed reports from our respective Audit and Risk, Remuneration, and Nomination and Corporate Governance Committees, on pages 76 to 96. A detailed Risk Report is outlined on pages 52 to 59. This year we established a new Board ESG Committee, chaired by Kate Allum, with Hugh McCutcheon and Helen Kirkpatrick as members. The Committee supports the Board in defining the Company’s ESG strategy and overseeing the Company’s development, implementation and long-term evolution of policies, programmes, targets and initiatives relating to ESG matters. A key focus for the Committee since formation has been supporting the Company’s development of its inaugural, stand- alone Sustainability Report. For a copy of the report, please see the website at: www.originenterprises.com. During the year, in line with best practice, we facilitated an external evaluation of the effectiveness of the Board and its principal Committees. The Board and I found this to be a hugely valuable process and I am pleased to report that the findings of this independent review were positive, and the Board continues to operate in an effective way. More information on this process is outlined on page 74 of this report. 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. These hallmarks of Board effectiveness and engagement were reflected in the outcome of the Board’s evaluation review. We welcomed TJ Kelly to the Group as Chief Financial Officer and Executive Director on 18 January 2021, following announcement of his appointment last year. D Giblin retired from the Board at the end of the financial year and remains with the Group to focus primarily on continued growth and development of our LATAM business. I would like to thank Declan for his commitment, dedication and contributions to the growth of the Group during his tenure on the Board. As part of ensuring regular Board refreshment alongside succession planning and the right balance of skills, experience, diversity and independence on the Board, the Board also oversaw the following developments: › the rotation of the role of Senior Independent Director from H McCutcheon to G Britton on 1 January 2021; › a refresh of the composition of Board Committees, also effective in January 2021; and 67 GOVERNANCERead more about the Directors on pages 62 and 63 “ The Board recognises the importance of maintaining a culture across the Group that promotes ethical behaviour and values and supports excellence in our business.” › the appointment of two new Non-Executive Directors, with Helen Kirkpatrick having commenced on 1 October 2020 and Aidan Connolly to commence on 1 October 2021. Looking ahead, the Board also considered the tenure and re- appointment of the other Non- Executive Directors, including the Chair. With four of the Non-Executive Directors reaching the end of their respective current 3-year terms in October 2021, the Board re- appointed each of Gary Britton, Christopher Richards and I for a further 1-year term, to run until the Company’s 2022 AGM. There was no change to Helen Kirkpatrick’s appointment, with Helen currently serving the first of the three years of her term. Hugh McCutcheon and Kate Allum will retire at the conclusion of the company’s next Annual General Meeting, scheduled for 25 November 2021. Hugh has served on the Board for almost 10 years, while Kate has been a Board member since 2015. The Board would like to extend its sincere appreciation to Hugh and Kate for the dedication, commitment and invaluable contribution that they made to the Company during their tenure. We wish them both all the best in the future. At the date of this report, the Board comprises six Non-Executive Directors and two Executive Directors. Biographies of the Directors are set out on pages 62 and 63. In accordance with the re- election policy adopted by the Board in 2018, Directors will retire at the 2021 AGM and offer themselves for election or re-election (as applicable), other than Kate Allum and Hugh McCutcheon. The Board recognises the importance and benefits of supporting all aspects of diversity throughout all layers of the organisation. In accordance with its Diversity Policy, the Board achieved its target of a minimum of 33% female representation on the Board by the end of 2020. Going forward, we will continue to promote an inclusive and diverse membership on the Board. Diversity more broadly is also a key consideration in the continuing development of our senior management succession planning and in talent management across the Group. For further details, see page 78 of the Nomination and Corporate Governance Committee Report. 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 and executive remuneration, while keeping up to date with best corporate governance practices and topical business concerns, including cyber security and ESG developments, through an internal programme of updates, briefings and reports. Rose Hynes Chairman 28 September 2021 Read more: Financial Statements on page 99 68 Origin Enterprises plc Annual Report and Accounts 2021 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 ESG Committee Internal Audit Executive Group Risk Committee Chief Executive Officer Executive Directors Sustainability Steering Committee 69 GOVERNANCEThe Board of Directors During the year, the Board of Origin comprised a Non-Executive Chairman, five 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 (‘CEO, LATAM’). The CFO joined the Board on 18 January 2021. The CEO, LATAM retired from the Board at the end of the year. 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 62 and 63. 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 76 to 96. A Risk Report is outlined on pages 52 to 59. 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 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, during the past year, 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 62 and 63. 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 70 Origin Enterprises plc Annual Report and Accounts 2021 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 76 to 78. 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 2021 are set out in the Nomination and Corporate Governance Committee Report on page 77. 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) and a training session by the Company’s Nominated Advisor. 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. 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 Christopher Richards is CEO. Following successful product trials over the past number of years, and as detailed in our 2020 Annual Report, Agrii UK and PHC intended to enter into a formal contractual agreement with an estimated average annual value of c. £200,000. This contract was concluded during 2021. In addition, Headland, a wholly owned subsidiary of Origin in the UK, made purchases of c. £70,000 from PHC for a single raw material product. The Board considered this relationship and concluded that Christopher Richards was fully independent, taking into account the following material factors: › the nature and scale of the contractual commitments; › the separation of discussions between PHC and Origin’s UK subsidiaries from the Origin Board and Christopher Richards in particular; and › the absence of any role of Christopher Richards in the selection of PHC as a service provider to any UK subsidiaries 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 Christopher 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 Non-Executive Directors agree to the time commitment 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. Each year, any external commitments of Directors are considered as part of the review of Board composition. The Board is satisfied that each of the Directors continues to dedicate sufficient time to their roles. As part of the review this year, there was particular regard for the external commitments of Christopher Richards. While acknowledging certain advisor guidelines governing evaluation of time commitments generally, the Board remains fully satisfied that taking into account the particular circumstances in 71 GOVERNANCErelation to Christopher Richards, he has the available time to dedicate to the Company and discharge his responsibilities. The depth of Christopher’s experience in the sector reduces the time commitment involved in serving on both the Origin Board and as CEO of PHC. The Board acknowledges that the time commitment needed to sit on another Board from the same industry is less burdensome. Furthermore, as highlighted last year, over the past 18 months the scope of Christopher Richards’ responsibilities at PHC reduced, following his resignation as Chairman. Given the similarities in business model and the overlap in sector, his role at PHC can be viewed as complementary to his role at Origin and he continues to provide valuable insight of his experience at other companies and in the Company’s relatively unique sector. Christopher Richards continues to demonstrate a high level of commitment to the Company 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 2021 the Board held a total of 11 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 2021 Directors Kate Allum* Gary Britton Sean Coyle Declan Giblin Rose Hynes TJ Kelly** Helen Kirkpatrick*** Hugh McCutcheon* Christopher Richards**** Board Audit and Risk Committee Remuneration Committee Nomination and Corporate Governance Committee 11/11 11/11 11/11 11/11 11/11 6/6 10/10 11/11 10/11 2/2 4/4 – – – – 3/3 4/4 – 3/3 – – – 3/3 – – – 3/3 – 6/6 – – 6/6 – 5/5 1/1 – The attendance statistics represent: Total number of meetings attended by the Director / Total number of meetings held during the year to which the Director was eligible to attend. * K Allum and H McCutcheon attended all meetings of the Audit and Risk Committee and the Nomination and Corporate Governance Committee, respectively, while they were members of those Committees during the financial year. ** TJ Kelly attended all Board meetings from the date of his appointment during the financial year. *** H Kirkpatrick attended all Board meetings from the date of her appointment during the financial year and all Committee meetings of which she was a member from the time of her appointment to those Committees. **** C Richards attended all Board meetings during the year, with the exception of a conference call in respect of which there had been a late scheduling update (and for which input was provided by him in advance). 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 › Environmental, Social and Governance (ESG) Committee These Committees operate under clearly defined, formal Terms of Reference and report to the Board at each Board meeting, as appropriate, via the relevant Committee’s Chairman. The Terms of Reference for the ESG Committee were developed and approved by the Board during the year, and for all other Committees, were reviewed during the year. The Terms of Reference continue to be subject to an annual review in future years. Any revisions will be proposed by the respective Committees and then proposed to the Board for approval. The Terms of Reference for the principal Board Committees 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 79 to 82. 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 83 to 96. 72 Origin Enterprises plc Annual Report and Accounts 2021 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 76 to 78. 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. Environmental, Social and Governance ('ESG') Committee The Environmental, Social and Governance Committee represents the Board in defining the Group’s ESG strategy and supporting, challenging and overseeing the Group’s development, implementation and long-term evolution of policies, programmes, practices, targets and initiatives relating to ESG matters. 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. 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 2021 AGM. 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 79 to 82. 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 83 to 96. The Board has adopted the Origin Enterprises plc Share Dealing Policy (the ‘Policy’). The Policy relates 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 delegations 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. 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 52 to 59. 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 73 GOVERNANCE principal business risks facing the Group, the methods for managing those risks, the controls that are in place to contain them and the procedures to monitor them. Consolidated Financial Statements The consolidated financial statements are prepared subject to the oversight and control of the CFO, 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 2021, this process was conducted externally by the Institute of Directors in Ireland (‘IoD’). The external review comprised of a confidential questionnaire completed by each Director while each Committee member completed a further confidential questionnaire. 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. IoD presented the findings of the evaluation to the Board at the June 2021 board meeting. The results of the review demonstrated that the Board was operating effectively. Actions were agreed which will be undertaken during the current 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’ is now into its third year of operation. The programme seeks to enable regular two-way dialogue between the Board and the Group’s employees. It 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. In light of continued COVID-19 restrictions, including in relation to travel, the programme this year was conducted online. Non-Executive Directors had a virtual visit to the Group’s business units in Romania and the UK. The Chairman and the Senior Independent Director also joined COVID-19 update calls with local senior management teams to continue direct engagement. 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. 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 trading updates 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. Our engagement programme continued this year with meetings taking place virtually in line with ongoing COVID-19 guidelines. The Company Secretary engages annually with proxy advisers in advance of the AGM. The Executive Directors and Head of Investor Relations maintain ongoing engagement with the investment community through a variety of different media including investor meetings and conferences, ongoing investor calls and correspondence. During FY21, meetings were held with over 150 investors and Origin participated at 8 investor conferences. Due to the ongoing imposition of COVID-19 related restrictions, all engagements throughout the year were conducted virtually. 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 Thursday, 25 November 2021, subject to the prevailing government and health authority guidelines at the time. Any updates to the AGM 74 Origin Enterprises plc Annual Report and Accounts 2021 required to reflect the then-current COVID-19 situation will be duly notified in advance. The Board 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 authorising the Directors, for a period to expire no later than the conclusion of the next AGM, to allot relevant securities with a nominal value not exceeding the authorised but unissued share capital of the Company; (vi) generally authorising the Directors, for a period to expire no later than the conclusion of the next AGM, to allot equity securities non-pre-emptively; and (vii) generally authorising the Directors, for a period to expire no later than the conclusion of the next AGM, to exercise the power of the Company to make market purchases of the Company’s shares. Matters of Special Business All other business transacted at an AGM and all business transacted at an Extraordinary General Meeting (an ‘EGM’) are deemed by the Articles of Association to be special business. Matters which must be attended to by the Company in general meeting pursuant to the Companies Act 2014 include: (i) amending the Memorandum and Articles of Association; (ii) changing the name of the Company; (iii) increasing the authorised share capital, consolidating or dividing share capital into shares of larger or smaller amounts or cancelling shares which have not been taken by any person; (iv) reducing the issued share capital; (v) approving the holding of the AGM outside the State; (vi) commencing the voluntary winding up of the Company; (vii) re-registering the Company as a company of another type; (viii) approving a substantial property transaction between the Company and a Director; (ix) approving a guarantee or security for a loan or similar transaction made by the Company to a Director or connected person of a Director; and (x) approving the draft terms of a cross-border merger. During the year, an EGM was held at which shareholders approved resolutions relating to the replacement of CREST with a central securities depository operated by Euroclear Bank SA/NV for the electronic settlement of trading in the Company’s shares. The resolutions approved at the EGM included amendment of the Company’s Articles of Association associated with the migration. The full text of the approved resolutions can be found in the Notice of Extraordinary General Meeting available on the Company's website: www.originenterprises.com. Attendance at Meetings and Exercise of Voting Rights A quorum for an AGM or an EGM of the Company is constituted by three members entitled to vote and present in person, by proxy or duly authorised representative in the case of a corporate member. The passing of resolutions at a general meeting, other than special resolutions, requires a majority of more than 50% of the votes cast. To be passed, a special resolution requires a majority of at least 75% of the votes cast. Votes may be given either personally or by proxy or by a duly authorised representative of a corporate member. Subject to rights or restrictions for the time being attached to any class or classes of shares, on a show of hands, every member present in person and every proxy or duly authorised representative of a corporate body shall have one vote. No individual shall have more than one vote and, on a poll, every member present in person or by proxy, or a duly authorised representative of a corporate body, shall have one vote for every share carrying voting rights of which the individual is the holder. The instrument appointing a proxy must be deposited at the registered office of the Company or at another place specified for that purpose in the notice of the meeting, not less than 48 hours before the time for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote. Restrictions may be placed on specified shares such that their holder or holders will not be entitled to vote at any general meeting, in circumstances where the holder or holders of those shares has failed to pay any call at the time appointed for payment or the holder or holders has failed to comply, to the satisfaction of the Directors, with a notice to disclose beneficial ownership under the Articles of Association or under Chapter 4 of Part 17 of the Companies Act 2014. Shareholders have the right to attend, speak and vote at general meetings. In accordance with Irish company law, the Company specifies a record date for each general meeting, by which date shareholders must be registered in the Register of Members of the Company in order to be entitled to attend. D&O Insurance The Company maintains Directors’ and Officers’ liability insurance cover, the level of which is reviewed annually. 75 GOVERNANCE 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) › Gary Britton (Non-Executive Senior Independent Director) › Helen Kirkpatrick (Non-Executive Director) 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 2021. This report has been prepared by the Nomination and Corporate Governance Committee and approved by the Board. Corporate Governance Framework The Board of Origin operates under and applies 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 69 to 75. 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 and Non-Executive Directors, with a view to ensuring that the organisation is positioned to compete effectively in the marketplace and adapt as needed to strategic, regulatory and commercial changes affecting the Company and the environment in which it operates. The Committee is comprised solely of Non-Executive Directors. Executive Director Changes With the appointment of Sean Coyle as Chief Executive Officer on 1 July 2020, the recruitment of a successor to the role of Chief Financial Officer was an area of focus and culminated in the appointment of TJ Kelly in September 2020. TJ assumed the role of Chief Financial Officer on 18 January 2021 and was co-opted to the Board on the same date. As announced in our Interim Results Statement on 4 March 2021, Declan Giblin stepped down from the Board at the end of the financial year. On behalf of the Board, I would like to extend our appreciation to Declan and acknowledge his leadership in the growth and diversification of the Group over his 13 years as Executive Director. Declan remains in a senior management role continuing to focus on the growth and development of the Group’s LATAM division. Non-Executive Director Updates The Committee supported the Board with the recruitment of two additional Non-Executive Directors, with the appointment of Helen Kirkpatrick with effect from 1 October 2020 and, most recently, the appointment of Aidan Connolly, to take effect on 1 October 2021. Non-Executive Directors Hugh McCutcheon and Kate Allum will retire from the Board following the 2021 AGM, after tenures of 10 years and 6 years respectively. We would like to extend our appreciation to both Hugh and Kate for their contributions and commitment to the Board and wish them well in their future endeavours. Further in line with our commitment to high standards of corporate governance and the importance of regular Board refreshment and development, the role of Senior Independent Director rotated from Hugh McCutcheon to Gary Britton on 1 January 2021. This rotation was complemented by a refresh of the composition of the Board Committees during the year. 76 Origin Enterprises plc Annual Report and Accounts 2021 This included the Nomination and Corporate Governance Committee, which saw Hugh McCutcheon step down and Helen Kirkpatrick join. I would like to thank Hugh for his contributions to the work of the Committee over the past 5 years and to welcome Helen as a member of the Committee. External Evaluation During the year, the annual performance evaluation of the Board and its principal Committees was conducted externally by the Institute of Directors in Ireland, with the findings presented to the Board. I am pleased to report that the outcome of this review was positive. More information on this process is outlined on page 74 of this report. Committee Activities 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 28 September 2021 “ The Board recognises the benefits of a high quality and diverse Board in enhancing decision-making, effectiveness and supporting a culture of inclusion.” 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 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 and the Remuneration Committee, and 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 2021 is set out below. Length of tenure on Board Kate Allum Gary Britton Sean Coyle Rose Hynes TJ Kelly Helen Kirkpatrick Hugh McCutcheon Christopher Richards Average Tenure Length of tenure on Nomination and Corporate Governance Committee Gary Britton Rose Hynes Helen Kirkpatrick Years 5.83 5.83 2.83 5.83 0.54 0.83 9.69 5.83 4.65 Years 2.84 5.75 0.50 77 GOVERNANCEMeetings The Nomination and Corporate Governance Committee met six times during the year. Board Composition Appointment of Chief Financial Officer Further to the announcement last year of the appointment of a new Chief Financial Officer, TJ Kelly joined Origin on 18 January 2021, at which time he was also co-opted to the Board. Retirement of Executive Director Declan Giblin, the Company’s CEO, LATAM, stepped down from the Board with effect from 31 July 2021, while continuing in a senior management role focusing on the LATAM business. Appointment of Non-Executive Directors Following a comprehensive recruitment process last year for an additional Non-Executive Director, Helen Kirkpatrick was appointed to the Board with effect from 1 October 2020. The Company also recently announced the appointment of Aidan Connolly as Non-Executive Director with effect from 1 October 2021. Retirements, Elections and Re- elections at AGM In accordance with the Company’s Directors’ re-election policy and best practice corporate governance, Directors offer themselves for re- election on an annual basis. Kate Allum, Gary Britton, Sean Coyle, Declan Giblin, Rose Hynes, Hugh McCutcheon and Christopher Richards were re-elected, and Helen Kirkpatrick was elected, by the shareholders as Directors at the Company’s AGM on 18 November 2020. Kate Allum and Hugh McCutcheon will retire at the conclusion of the 2021 AGM and will not be offering themselves for re-election. All other Directors will retire at the 2021 AGM and offer themselves for election or re- election, as applicable. Chairman, Senior Independent Director and Non-Executive Directors Rose Hynes continues to serve as Chairman of the Board, following re- appointment by the Board this year for a further 1-year term up to the Company’s 2022 AGM. The position of Senior Independent Director rotated on 1 January 2021 from Hugh McCutcheon to Gary Britton, who along with Christopher Richards, is also serving an additional 1-year term up to the Company’s 2022 AGM, having been re-appointed by the Board. Helen Kirkpatrick is 1 year into her first 3-year term. Boardroom Diversity The Board recognises the benefits of a high quality and diverse Board in enhancing decision-making, effectiveness and supporting a culture of inclusion. Diversity at Board level is an important element to achieving our objectives in a sustainable, responsible way. All Board appointments are made on merit and objective criteria with due regard to diversity. In considering nominations to the Board and reviewing Board composition, the Committee will consider the benefits of all aspects of diversity in order to maintain an appropriate range and balance of skills, experience and knowledge on the Board. The Board currently comprises eight members in total, of which two are Executive and six are Non-Executive (including the Chairman). At year end, female Directors constituted 38% of the Board, having achieved the Board’s target of a minimum of 33% female representation by the end of 2020. At the date of this report, female representation on the Board is 38%. Succession Planning The Board, through the Nomination and Corporate Governance Committee, is committed to effectively managing leadership succession and assessing the senior executives’ talent pool in the Group. The Board proactively engages with senior executives, through regular contributions from the senior management team at Board and Committees meetings and interactions through the 'Let’s Talk' programme. Ongoing updates on succession planning are also provided to the Board by the Chief Executive Officer, including a comprehensive, formal deep dive presented to the Board during the year covering the Group’s senior leadership team. Annual Evaluation of Performance The Board conducts an annual evaluation of its own performance and effectiveness and that of its principal Committees and Committee Chairmen. In the year ended 31 July 2021, this process was externally facilitated by the Institute of Directors in Ireland. The conclusion from this process was that the Nomination and Corporate Governance Committee and the Chairman of the Committee operated effectively and to a high standard. Read our Financial Review on pages 12 to 17 78 Origin Enterprises plc Annual Report and Accounts 2021 Audit and Risk Committee Report About this Committee The Audit and Risk Committee comprises three independent Non-Executive Directors: › Gary Britton (Non-Executive Senior Independent Director, Chairman of the Audit and Risk Committee) › Helen Kirkpatrick (Non-Executive Director) › Hugh McCutcheon (Non-Executive Director) The members of the Committee have significant financial and business experience. Dear Shareholder I am pleased to present the report of the Audit and Risk Committee for the year ended 31 July 2021 which has been prepared by the Audit and Risk Committee and approved by the Board. This report provides an overview of the principal duties and responsibilities of the Audit and Risk Committee, its role in ensuring the integrity of the Group’s published financial information and an outline of its activities for the year. During the year, the Audit and Risk Committee had a change in membership, welcoming Helen Kirkpatrick as a new member and expressing appreciation to Kate Allum for all her work and contributions as she stepped down from the Committee. An area of focus for the Audit and Risk Committee this year has been a drive to further enhance the Company’s enterprise risk management model, including increased consideration of emerging risks and the development of a risk appetite framework. We continue to invest in our cyber security programme and remain vigilant to cyber risks, being mindful of the changing threat landscape brought about in the past year in particular by remote working and the COVID-19 pandemic. Building on our Health, Safety & Wellbeing agenda has been another highlight for the Audit and Risk Committee this year. We continue to both seek and see progress on compliance initiatives, upgrading of our data capture reporting tools and further embedding of a health and safety culture across the organisation. A key responsibility of the Audit and Risk Committee each year 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 52 to 59. The Terms of Reference of the Audit and Risk Committee are available on the Company’s website: www.originenterprises.com. Gary Britton Chairman of the Audit and Risk Committee 28 September 2021 “ We continue to invest in our cyber security programme and remain vigilant to cyber risks, being mindful of the changing threat landscape brought about in the past year.” Read our Corporate Governance Statement on page 69 79 GOVERNANCE 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 2021, and how these have been addressed, are listed on page 81. 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. Duties and Responsibilities The principal duties and responsibilities of the Audit and Risk Committee include to: › 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 › review annually the Audit and Risk Committee’s Terms of Reference and conduct a performance evaluation of the Audit and Risk Committee. Length of Tenure The length of tenure of the Directors on the Audit and Risk Committee as at 31 July 2021 is set out below: Length of tenure on Audit and Risk Committee* Gary Britton Helen Kirkpatrick Years 5.77 0.50 Hugh McCutcheon 9.63 * 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 four times during the year. Each Audit and Risk Committee meeting was attended by the Head of Risk and Internal Audit and by the Chief Financial Officer from the time of joining the Company. 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. Financial Reporting The primary role of the Audit and Risk Committee, in relation to financial reporting, is to review the appropriateness of the half-year and annual financial statements, with both management and the External Auditor, and to report to the Board. This review focuses on, amongst other matters: › › the quality and acceptability of accounting policies and practices; the clarity of the disclosures and compliance with financial reporting standards and relevant financial and governance reporting requirements; and › material areas in which significant judgements have been applied or there has been discussion with the External Auditor. 80 Origin Enterprises plc Annual Report and Accounts 2021 The significant areas of judgement that were discussed at the interim and year-end Audit and Risk Committee meetings included: Key Audit Areas Area Goodwill Discussion The Audit and Risk 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 Audit and Risk 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 Audit and Risk Committee. Following these discussions, the Audit and Risk Committee is satisfied that the approach to impairment reviews, key assumptions made and conclusions reached, are appropriate. Settlement Price Adjustments The Audit and Risk 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 Audit and Risk 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 Audit and Risk Committee is satisfied that the accounting treatment adopted is appropriate and that settlement price adjustments are accurately stated at year end. 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. The Audit and Risk 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 52 to 59. Included in this assessment is consideration of increasing cyber- attacks against organisations and global supply chain pressures. Risk Management The Audit and Risk 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 Executive Group Risk Committee continues to be an important and effective element of the Group’s Risk Management Framework. It acts as a key interface between the business units and the Audit and Risk Committee, supporting the alignment of risk management strategies on an enterprise-wide basis. Internal Control and Internal Audit The Audit and Risk Committee considers the results of internal control reviews and reviews the effectiveness of the Internal Audit function, ensuring it is adequately resourced and has conducted an annual review of its effectiveness, as part of its annual activities. The Group’s internal control systems are designed to manage, rather than eliminate, the risk of failure to achieve the Group’s objectives, and can only provide reasonable, and not absolute, assurance against material misstatement or loss. In assessing what constitutes reasonable assurance, the Audit and Risk Committee considers the materiality of financial 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 81 GOVERNANCE encourage both employees and business partners to raise issues of potential wrongdoing within the Company, without fear of retaliation. The Audit and Risk Committee also received updates on the Company’s anti-bribery and corruption training programme and plans. Annual Evaluation of Performance Every three years, the annual effectiveness review of the Board and its principal Committees is facilitated externally. Following the last external facilitation in 2018, this year’s review was facilitated by the Institute of Directors in Ireland. The review covered the Audit and Risk Committee’s 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 Audit and Risk Committee were satisfactory. Reporting Following each meeting of the Audit and Risk Committee, the Chairman of the Audit and Risk Committee reports to the Board 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. 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 and 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 2021. Appointment, Independence and Effectiveness The Audit and Risk Committee considers the re-appointment of the External Auditor each year, whilst assessing its independence on an ongoing basis. The 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 three 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 members of the Audit and Risk Committee complete the questionnaire and consider the outcome of the results. 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. Updates this year included the completion of the roll-out of the renewed Whistleblowing Policy across the Company’s business units and the migration of the Group’s whistleblowing platform to a new provider with enhanced functionality, 24/7/365 availability and additional reporting channels. The Policy and related procedures 82 Read the Risk Report on page 52 Origin Enterprises plc Annual Report and Accounts 2021 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 2021. 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 2021 Origin delivered a year of improved performance in FY21, following the challenges of COVID-19 and extreme weather conditions of 2020. Group Revenue was €1,658.4 million, an increase of 6.6% on an underlying basis, with Group operating profit of €61.0 million, an increase of 42.1% on an underlying basis. Adjusted diluted earnings per share was 35.50 cent, in line with guidance. Return on capital employed, a key metric for Origin, was 9.3%. Pay Outcomes for 2021 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 Executive Directors for the year ended 31 July 2021 were therefore deemed appropriate. Following the decision by the Executive Directors in 2020 to voluntarily waive their entitlement to all outstanding unvested share options under the LTIP awards granted in September 2017, 2018 and 2019, no Executive Director LTIP awards vested in the year ending 31 July 2021. New Chief Financial Officer Following announcement of the appointment in September 2020, TJ Kelly joined the Board on 18 January 2021 as Group Chief Financial Officer. The Committee supported the Board in agreeing an appropriate remuneration package for TJ. TJ’s base salary was set at €340,000 p.a. with a pension entitlement of 6.6% of salary. This level of pension contribution, together with the reduction of contributions for S Coyle last year from 15% of salary to 6.6%, means that the Company’s pension contributions for both Executive Directors are now fully aligned with the pension provision available to the workforce more generally. TJ was granted an LTIP award of an amount equal to 95% of his salary upon joining. Further details of this LTIP award are set out in the Annual Report on Remuneration and in Note 9 to the Group financial statements. Remuneration Arrangements Review As part of its ongoing assessment of remuneration arrangements against market good practice, the Committee undertook a review of the annual bonus and long-term incentive models. The outcome of this review included a recalibration of the bonus scheme for FY22, whereby the level of bonus payout for threshold performance is reduced from 50% to 20% of maximum. This level of payout is more in line with good and market practice. The Committee also considered the bonus measures and has adjusted the weightings slightly so that the financial and non- financial metrics are split 70%/30% and assessed independently. Consideration was also given to ensuring alignment of LTIP threshold vesting levels with typical market practice, resulting in an agreed reduction from 30% to 25% for threshold performance. The Committee believes that the recalibration of the short- and long- term schemes ensures payout levels are appropriate for achieving threshold levels of performance. 83 GOVERNANCE Other Activities in 2021 In support of its role in overseeing the matters set out above, the Committee reviewed remuneration trends and market practices with its remuneration consultants. Duties and Responsibilities The principal duties and responsibilities of the Remuneration Committee include the following: It also worked with the Institute of Directors in Ireland in carrying out an evaluation of its own effectiveness and performance this year. The conclusion from this process was positive, indicating that the Committee is considered to be effective in carrying out its duties. 2020 Remuneration Report and Looking Ahead The Remuneration Report was supported by 64% of voting shareholders at the 2020 AGM. While the Committee was pleased that the resolution was approved by shareholders, it also acknowledges the views of shareholders who opposed the resolution. As announced at the time of issuing the AGM voting results, the Board engaged with major shareholders and developed a clear understanding of the concerns raised. The Board provided an update following the AGM (see www.originenterprises.com/ investors) and continues to welcome engagement with shareholders on all issues relating to remuneration and governance. Further detail is set out in the Annual Report on Remuneration on page 96. 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 and incentive arrangements continue to take account of good practice and market standards and support the Company’s overall strategy, with ongoing 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 28 September 2021 84 › 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 2021 is set out below: Length of tenure on Remuneration Committee Kate Allum Rose Hynes Christopher Richards Years 5.77 5.77 5.75 Meetings and Committee Governance The Remuneration Committee met three times during the financial year. For full details on individual Remuneration Committee members’ attendance at meetings, see page 72. The principal activities carried out included: › review of design of annual bonus and long-term incentive models; › annual review of the Terms of Reference for the Committee; › consideration of the 2021 bonus scheme for Executives; › approval of the awards under the LTIP Scheme; › annual review of the Committee effectiveness; and › consideration and approval of TJ Kelly’s 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, in respect of the 2021 LTIP award to TJ Kelly and in respect of the amendments to the design of the bonus scheme and LTIP threshold vesting levels. 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 Origin Enterprises plc Annual Report and Accounts 2021 Remuneration Consultants in respect of Remuneration Committee matters over the financial year under review was £26,371. 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. No change has been made to the Group Chairman’s remuneration. Annual Evaluation of Performance The Board conducts an annual evaluation of its own performance and that of its principal Committees and Committee Chairmen. This evaluation is externally facilitated every three years, and having been conducted internally for the past two years, was externally facilitated by the Institute of Directors in Ireland for the year ended 31 July 2021. As noted on page 84, 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 policy 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 best 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. 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. The Committee is informed of best practice developments and takes this into account when setting pay. 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 96 together with an explanation of shareholder engagement in relation to the votes. Summary of the Remuneration Policy Element of Remuneration 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. Benefits To provide benefits consistent with the market. Approach Maximum Opportunity 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. 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. 85 GOVERNANCEElement of Remuneration Assignment Allowance To provide benefits to reflect additional responsibilities and personal disruption. Bonus Incentivises annual achievement of performance targets. Approach Maximum Opportunity £225,000 p.a. for 3 years commencing on 1 October 2018. 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, with any payment to be made after the three-year period. This additional element of fixed pay, as disclosed in previous reports, is payable for three years from 1 October 2018 to the Chief Executive Officer, Latin America ('CEO, LATAM'). This assignment allowance does not apply post 1 October 2021. It does not form part of the base salary for the purposes of pension, annual bonus, LTIP or other benefits. Bonus payments to the Chief Executive Officer and the Chief Financial Officer are based on the meeting of predetermined targets against financial measures, in addition to the attainment of corporate and personal objectives. These are approved by the Remuneration Committee annually. The CEO, LATAM resigned from the Board with effect from 31 July 2021. For the three years from financial year 2019, bonus payments to the CEO, LATAM were based on the meeting of predetermined targets against financial measures of the Group and performance in Latin America in addition to the attainment of corporate and personal objectives. Measures and targets were approved by the Remuneration Committee annually. Any payouts under the bonus scheme during the three-year period were to be deferred in their entirety and were subject to the CEO, LATAM 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 the targets. The Remuneration Committee can apply appropriate discretion in specific circumstances in determining the incentive payment to be awarded. For 2022, 70% of the bonus is based on financial metrics and 30% on corporate and strategic objectives. The measures, their weighting and the targets are reviewed on an annual basis. The measures and weightings for the financial metrics are set out on page 90. On the basis that the targets are commercially sensitive, they are not disclosed prospectively. The targets and outcomes for 2021’s bonuses are disclosed on page 93. A clawback provision is in operation. 86 Origin Enterprises plc Annual Report and Accounts 2021Maximum Opportunity Plan limits: › 100% (normal limit) of basic salary; and › 200% (exceptional limit e.g. recruitment) of basic salary. Element of Remuneration Approach 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. 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. Pension 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. 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 D Giblin only and relates to a historic arrangement. D Giblin stepped down from the Board with effect from 31 July 2021. 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. Read our Corporate Governance Statement on page 69 87 GOVERNANCE Element of Remuneration Approach Non-Executive Director fees Reflect time commitments and the responsibilities of each role. 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. Reflect fees paid by similarly sized companies. Maximum Opportunity 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 reflects 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. Service Contracts for Executive Directors The Remuneration Committee reviews the contractual terms for any new Executive Directors to ensure these reflect best market practice. This year, this included the remuneration terms for TJ Kelly on appointment as Group CFO. The current service agreements of the Executive Directors are not fixed term and in each case are terminable by either the Company giving twelve months’ notice or the Executive Director giving six months’ notice. 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. 88 Origin Enterprises plc Annual Report and Accounts 2021 Provision Notice period Payments in lieu of notice Incentive schemes Detailed terms 6 months’ notice from the CEO/CFO and 12 months’ notice from the Company. For any unexpired period of notice on termination, up to 12 months’ salary (and other remuneration) in respect of the CEO/CFO. In certain good leaver situations, annual bonus may be payable with respect to performance in the financial year of cessation (pro-rated for time, unless the Committee determines otherwise). In the case of the LTIP, the default treatment is that any unvested awards lapse on cessation of employment. In certain good leaver situations, participants’ awards would normally vest at their original vesting date and be subject to performance testing and a pro- rata reduction. 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. 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 charts below illustrate the potential future value and composition of the Executive Directors’ remuneration packages for 2022 in different performance scenarios, both as a percentage of total remuneration opportunity and as total value. S Coyle 2,000,000 €1,858,953 €1,603,953 32% 32% €966,453 13% €583,953 26% 100% 61% 36% 14% 27% 27% 32% 1,500,000 1,000,000 500,000 0 Minimum Target Maximum Maximum & Share Price Growth Fixed Annual Long-term Share Price Appreciation TJ Kelly 1,600,000 1,200,000 800,000 400,000 €390,641 €641,391 13% 26% 100% 61% 0 €1,053,641 €1,215,141 13% 31% 32% 37% 27% 28% 32% Minimum Target Maximum Maximum & Share Price Growth Fixed Annual Long-term Share Price Appreciation Notes: ‘Minimum’ includes the value of fixed pay. ‘Target’ includes fixed pay and ‘target’ annual bonus (50% of the maximum) and assumes threshold vesting of the maximum LTIP (25% of the maximum). ‘Maximum’ includes fixed pay and maximum annual bonus (100% of salary) and full vesting of LTIP awards (100% of salary for CEO and 95% of salary for CFO). ‘Maximum & Share Price Growth’ includes 'maximum' remuneration, with an assumed Company share price appreciation of 50%. 89 GOVERNANCE Annual Report on Remuneration Implementation of the Remuneration Policy for the year ending 31 July 2022 A summary of how the Remuneration Policy will be applied for the financial year ending 31 July 2022 is set out below. Basic Salary for Executive Directors The Remuneration Committee has maintained salary for Executive Directors at 2021 levels for the 2022 financial year with no increases to be awarded (see table below). The general workforce will, in the main, receive inflationary pay increases for the 2022 financial year. Executive Director (€’000) S Coyle TJ Kelly 2022 510 340 2021 510 340 % increase Nil Nil Annual Bonus The maximum bonus achievable in 2022 for S Coyle and TJ Kelly will remain at 100% 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. The measures, their weighting and the targets are reviewed on an annual basis. On the basis that the 2022 targets are commercially sensitive, they are not disclosed prospectively, consistent with prior years. The key metrics underlying the 2022 bonus plan for S Coyle and TJ Kelly are as follows: 30%30% 20% Underlying PBT Operating cash flow Strategic objectives 50% 20% “ 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.” 80% 90 Origin Enterprises plc Annual Report and Accounts 2021 Pension Arrangements S Coyle and TJ Kelly participate in the defined contribution section of the Group’s Irish pension scheme. Since S Coyle’s appointment as Chief Executive Officer and TJ Kelly’s appointment as Chief Financial Officer, the Company contributes 6.6% of salary to their respective pensions, which is in line with the general workforce rate. D Giblin participates in the Group’s UK defined benefit pension scheme, which relates to a historic arrangement. D Giblin stepped down from the Board with effect from 31 July 2021. 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 It is the Remuneration Committee’s intention to make a grant of LTIP awards during the financial year 2022, 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 2022, including performance measurements and targets, will be disclosed in the Remuneration Report for the financial year 2022. These will remain stretching relative to the internal forecast and outlook for the Company. 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. Non-Executive Director Fees Fees for the Non-Executive Directors for the 2021 and 2022 financial years are detailed below. Chairman Base fee Additional fees: Audit and Risk Committee Chair Remuneration Committee Chair Senior Independent Director* Committee Membership ESG/Sustainability Sponsor** 2022 € 130,000 62,000 13,000 8,000 5,000 3,000 3,000 2021 € 130,000 62,000 13,000 8,000 8,000 3,000 3,000 % Increase Nil Nil Nil Nil Nil Nil Nil * The Senior Independent Director role rotated on 1 January 2021 from H McCutcheon to G Britton. The supplementary fee associated with the Senior Independent Director Role was adjusted to account for existing responsibilities of G Britton as Chair of the Audit and Risk Committee. ** This supplementary fee will be discontinued at a point during the 2022 financial year, having regard to the ESG Committee being established and operational. 91 GOVERNANCE Remuneration Outcomes for the Year Ended 31 July 2021 Directors’ remuneration (audited) for the year ended 31 July 2021 was as follows: Salary and fees1 €’000 Taxable benefits2 €’000 Assignment allowance3 €’000 Pension4 €’000 Annual bonus5 €’000 Long-term incentives6 €’000 Total €’000 S Coyle 2021 2020 TJ Kelly* 2021 2020 R Hynes 2021 2020 G Britton 2021 2020 K Allum 2021 2020 H Kirkpatrick** 2021 2020 H McCutcheon 2021 2020 C Richards 2021 2020 Former Directors D Giblin*** 2021 2020 510 351 183 – 130 121 78 70 73 65 54 - 67 65 65 58 40 35 15 – 1 5 – – – – – – – – – – – – – – – – – – – – – – – – – – 34 53 12 – – – – – – – – – – – – – 425 380 45 73 – 187 39 26 - – - – – – – – – – – – – – – – - – - – - – – – – – – – – – – – – – - – 584 439 210 – 131 126 78 70 73 65 54 - 67 65 65 58 509 666 * TJ Kelly was appointed to the Origin Board on 18 January 2021. The amounts included in the table above represent emoluments for the period 18 January 2021 to 31 July 2021. ** H Kirkpatrick was appointed to the Origin Board on 1 October 2020. The amounts included in the table above represent emoluments for the period 1 October 2020 to 31 July 2021. *** D Giblin resigned from the Board with effect from 31 July 2021. No assignment allowance was payable for the year ended 31 July 2021, reflecting remote working during the period. 92 Origin Enterprises plc Annual Report and Accounts 2021 Notes: 1. Salary and Fees (audited) In 2021, D Giblin's sterling salary was £375,000, converted at an average exchange rate of 0.88236 (average GBP FX rate for the year). 2. Taxable Benefits (audited) Benefits include a company car or company car allowance (S Coyle, TJ Kelly and D Giblin) and private medical insurance (including immediate family members) (S Coyle, TJ Kelly and D Giblin). Benefits also include mileage claimed by Non- Executive Directors for travel to Board meetings, grossed up for Irish tax purposes. 3. Assignment Allowance (audited) No assignment allowance was paid to D Giblin in 2021, reflecting remote working during the period. The assignment allowance arrangement relates to the three-year period from 1 October 2018, concluding on 30 September 2021. 4. Pensions (audited) The Company contributes 6.6% of salary to S Coyle’s pension. TJ Kelly’s pension contribution was also set at 6.6% at his date of appointment, 18 January 2021. Figures for D Giblin represent the defined benefit provision for the year in respect of his membership of a UK scheme, as calculated in line with applicable legislation. Retirement benefits are accruing to the following number of Directors under: Defined contribution scheme Defined benefit scheme Number of Directors 2021 2020 2 1 2 1 5. Annual Bonus The financial measures applying to the CEO and CFO’s 2021 bonus were EPS (50% of salary) and Operating Cash Flow (‘OCF’) (30% of salary). For the CEO, LATAM, 60% of 2021 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 2021 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) Sean Coyle* TJ Kelly* Declan Giblin** 80% 80% 60% 37.73c 37.73c 37.73c 41.92c 35.50c 41.92c 35.50c 41.92c 35.50c Nil Nil Nil 79,291 79,291 79,291 88,101 60,528 88,101 60,528 88,101 60,528 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, LATAM, 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 since the 2018 Annual Report, the CEO, LATAM had an opportunity to earn an additional 50% of salary per annum based on Latin America related financial objectives for three years from financial year 2019. The financial measures for this bonus opportunity were EBIT growth CAGR, average annual free cash flow generation and average ROCE. Following a full evaluation after the end of the three-year period, final assessment shows that the targets for these measures have not been achieved. As a result, no bonus is payable in respect of the three-year performance period under this element of D Giblin’s bonus. Corporate and personal objectives For 2021, non-financial objectives included further advancing the Company’s sustainability agenda and embedding sustainability as an underlying foundation of the Group’s strategy, development and reporting of non-financial KPIs across the Group and implementation of employee engagement initiatives. Notwithstanding that a proportion of the non-financial objectives were met by Executive Directors, the Remuneration Committee did not award bonuses, reflecting the performance of the business with key threshold financial targets not being reached. 93 GOVERNANCE6. Long-Term Incentives LTIP awards vesting based on performance to 31 July 2021. All unvested share options held by Executive Directors under the September 2017, October 2018 and September 2019 LTIP awards were voluntarily waived in 2020. No Executive Director LTIP awards, therefore, were eligible to vest for the period ended 31 July 2021. LTIP awards granted during the year ended 31 July 2021. S Coyle and D Giblin were granted LTIP awards in September 2020. These awards are based on performance over the three-year period ending 31 July 2023. The number of shares awarded was calculated using the closing share price on 23 September 2020 of €3.09. TJ Kelly was granted an LTIP award on joining the Company in January 2021, based on performance over the three-year period ending 31 July 2023. The number of shares awarded was calculated using the closing share price on 15 January 2021 of €3.24. A summary of the performance conditions for these awards is set out below. Metric Adjusted Diluted Earnings per Share (‘EPS’) Free Cash Flow Ratio* 50% * The definition of Free Cash Flow Ratio is set out on page 31. An overall summary of the awards is set out below. Weighting Vesting at Threshold Condition 50% 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 payout. 30% An average annual free cash flow ratio of at least 50% (threshold) on a pro-rata basis to 100% (maximum stretch) for full payout. 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 TJ Kelly D Giblin 100% of salary 95% of salary 95% of salary 165,048 99,691 125,207 31 July 2023 24 September 2023 31 July 2023 18 January 2024 31 July 2023 24 September 2023 * Subject to satisfaction of performance conditions. CEO Single Figure History The table below illustrates total remuneration for the CEO position over the period 1 August 2017 to 31 July 2021. This reflects the actual outcomes under the annual bonus and LTIP schemes compared to their respective maximum opportunities. 2021 2020 * 2020 ** 2019 2018 2017 S Coyle S Coyle T O'Mahony T O'Mahony T O'Mahony T O'Mahony Total Remuneration €'000 Annual bonus as % of maximum bonus LTIP award against maximum opportunity 584 49 526 1,296 1,136 1,031 0% 0% 0% 78% 87% 66% - - - 52.5% 0% 0% * S Coyle was appointed CEO effective 1 July 2020. The remuneration above represents the amounts received for the period 1 July 2020 to 31 July 2020. ** T O'Mahony resigned as CEO on 30 June 2020. The remuneration above represents the amounts received for the period 1 August 2019 to 30 June 2020. 94 Origin Enterprises plc Annual Report and Accounts 2021 Outstanding Share Awards The table below sets out details of outstanding share awards held by Executive Directors. Plan Grant Date Exercise/ Option Price (€) Number of share awards 1 August 2020 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 2021 End of performance period Date from which exercisable Expiry date S Coyle 2015 LTIP 08/07/2020 2015 LTIP 24/09/2020 0.01 0.01 Total TJ Kelly 2015 LTIP 18/01/2021 0.01 Total D Giblin** 2015 LTIP 24/09/2020 0.01 Total*** 222,246 - - 165,048 222,246 165,048 - - - - 99,691 99,691 125,207 125,207 - - - - - - - - - - - - - - - - - - - - - 222,246 31/07/2023 08/07/2025* 08/07/2027 165,048 31/07/2023 24/09/2025 24/09/2027 387,294 99,691 31/07/2023 18/01/2026 18/01/2028 99,691 125,207 31/07/2023 24/09/2025 24/09/2027 125,207 * Subject to satisfaction of performance conditions. ** D Giblin resigned as an Executive Director with effect from 31 July 2021. *** In FY20, 31,751 share options vested for D Giblin but have not yet been exercised. 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 94. Non-Executive Directors do not participate in any Group share incentive or award scheme. Statement of Directors’ and Company Secretary’s Shareholdings and Share Interests (audited) Beneficially owned at 1 August 2020 Beneficially owned at 31 July 2021 Unvested LTIP awards at 31 July 2021 Outstanding share awards under all employee share plans S Coyle TJ Kelly R Hynes G Britton K Allum H Kirkpatrick H McCutcheon C Richards B Keane 75,000 – 3,875 5,000 - - 45,000 7,680 – 75,000 - 3,875 5,000 - 5,000 45,000 7,680 – 387,294 99,691 – - – – – – 8,910 – – – – – – – 81,671 7,485 S Coyle, having joined the Company in September 2018 and having forfeited 131,080 share options in 2020, holds 51% of his salary. The value of the shareholding held by S Coyle is based on his shares held at the share price of €3.44 on 31 July 2021. At the date of this report, TJ Kelly does not have a shareholding in the Company, having joined in January 2021. Details of share ownership guidelines are set out on page 87 of this report. 95 GOVERNANCE Statement of Voting at the AGM At the Company’s 2020 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 61,269,302 34,130,897 95,400,199 1,500 % 64.22 35.78 100.00 The Remuneration Committee acknowledges the 35.78% vote against the Remuneration Report at the 2020 AGM. The Committee’s policy is to pay fairly for the role being undertaken and the calibre of the individual. The base salary for the new CEO at the time was set to reflect the scale of responsibility of the role and the one-off LTIP award granted on appointment in July 2020 was to incentivise driving a sustained recovery for the business. The Remuneration Committee believes the terms of the appointment were in the best interests of the Company’s shareholders and wider set of stakeholders. The payment made to the departing CEO in June 2020 was in accordance with his contractual entitlements. The Remuneration Committee values the feedback received and welcomes continuing engagement with shareholders on issues of remuneration to further develop a mutual understanding of the best way to deliver the Group’s strategy in the interests of the business and our investors. 96 Origin Enterprises plc Annual Report and Accounts 2021 97 STRATEGIC REPORTRead our Business Reviews on pages 32 to 49 Throws Farm in Essex in the UK is home to the Group’s industry- leading Technology Centre and newly launched Turf Science & Technology Centre. 57,000 Crop Field Trials 98 Origin Enterprises plc Annual Report and Accounts 2021 Financial Statements Directors and Other Information Statement of Directors’ Responsibilities Independent Auditors’ Report Consolidated Income Statement Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Group Accounting Policies Notes to the Group Financial Statements Company Accounting Policies Company Balance Sheet Company Statement of Changes in Equity Notes to the CompanyFinancial Statements 100 101 102 109 110 111 113 114 115 123 180 183 184 185 S T N E M E T A T S L A I C N A N I F 99 Directors and Other Information Board of Directors R Hynes S Coyle TJ Kelly K Allum G Britton H Kirkpatrick H McCutcheon C Richards (Non-Executive Chairman) (Chief Executive Officer) (Executive Director) (Non-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 Continental Europe ING Bank NV Rabobank Dublin Auditors PricewaterhouseCoopers Chartered Accountants and Statutory Audit Firm One Spencer Dock North Wall Quay Dublin 1 Ireland Registrars Link Asset Services Shareholder Solutions (Ireland) 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 100 Origin Enterprises plc Annual Report and Accounts 2021Statement of Directors’ Responsibilities The Directors are responsible for preparing the Annual Report and the Group and Company financial statements, in accordance with Irish law. Irish law requires the Directors to prepare Group and Company financial statements for each financial year, giving a true and fair view of the assets, liabilities and financial position of the Group and the Company and the profit or loss of the Group for the period. Under that law and in accordance with the Rules of the AIM and ESM exchanges issued by the London and Euronext Growth Stock Exchanges, the Directors have prepared the Group financial statements in accordance with International Financial Reporting Standards (‘IFRSs’) as adopted by the EU (‘EU IFRS’) with those parts of the Companies Act 2014 applicable to companies reporting under EU IFRS. The Directors have prepared the Company financial statements in accordance with Irish Generally Accepted Accounting Practice (accounting standards issued by the UK Financial Reporting Council, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and Irish law). Under Irish law the Directors shall not approve the Group and Company financial statements unless they are satisfied that they give a true and fair view of the Group’s and Company’s assets, liabilities and financial position as at the end of the financial year and of the profit or loss of the Group for the financial year. In preparing the Group and Company financial statements, the Directors are required to: — select suitable accounting policies and then apply them consistently; — make judgements and estimates that are reasonable and prudent; — state whether the financial statements have been prepared in accordance with applicable accounting standards and identify the standards in question and ensure that they contain the additional information required by the Companies Act 2014; and — prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business. The Directors are responsible for keeping adequate accounting records that are sufficient to: — correctly record and explain the transactions of the Group and Company; — enable, at any time, the assets, liabilities and financial position of the Group and Company and profit or loss of the Group to be determined with reasonable accuracy; and — enable the Directors to ensure that the financial statements comply with the Companies Act 2014 and enable those financial statements to be audited. The Directors are also responsible for safeguarding the assets of the 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 28 September 2021 Sean Coyle Director 28 September 2021 101 FINANCIAL STATEMENTS 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 2021 and of the Group’s profit and cash flows for the year then ended; — the Group financial statements have been properly prepared in accordance with International Financial Reporting Standards (“IFRSs”) as adopted by the European Union; — the Company financial statements have been properly prepared in accordance with Generally Accepted Accounting Practice in Ireland (accounting standards issued by the Financial Reporting Council of the UK, including Financial Reporting Standard 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” and Irish law); and — the financial statements have been properly prepared in accordance with the requirements of the Companies Act 2014. We have audited the financial statements, included within the Annual Report and Accounts (the “Annual Report”), which comprise: — the Consolidated Statement of Financial Position as at 31 July 2021; — the Company Balance Sheet as at 31 July 2021; — the Consolidated Income Statement and Consolidated Statement of Comprehensive Income for the year then ended; — the Consolidated Statement of Cash Flows for the year then ended; — the Consolidated Statement of Changes in Equity for the year then ended; — the Company Statement of Changes in Equity for the year then ended; — the Group Accounting Policies and Company Accounting Policies; and — the Notes to the Group Financial Statements and the Notes to the Company Financial Statements. Certain required disclosures have been presented elsewhere in the Annual Report, rather than in the notes to the financial statements. These are cross-referenced from the financial statements and are identified as audited. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (Ireland) (“ISAs (Ireland)”) and applicable law. Our responsibilities under ISAs (Ireland) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in Ireland, which includes IAASA’s Ethical Standard as applicable to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. 102 Origin Enterprises plc Annual Report and Accounts 2021Independent auditors’ report to the members of Origin Enterprises Plc (continued) Our audit approach Overview Materiality — €2.3 million (2020: €2.7 million) - Group financial statements. — Based on c. 5% of profit before tax and exceptional items (2020: c. 5% of the 3 Materiality year average profit before tax and exceptional items). — €2.2 million (2020: €2 million) - Company financial statements. — Based on c. 0.75% of net assets (2020: c. 0.75% of net assets). Audit scope Key audit matters Audit scope — We conducted work on 11 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 11 components was performed. — Taken together, the reporting components where an audit of the full financial information was performed accounts for in excess of 90% of Group revenues, Group profit before tax and exceptional items and Group total assets. Key audit matters — Goodwill. — Settlement price adjustments. The scope of our audit As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we looked at where the directors made subjective judgements, for example in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits we also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud. Key audit matters Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit. 103 FINANCIAL STATEMENTS 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 €171.02m at 31 July 2021 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 budget for each CGU. The impairment models are based on a cash flow forecast for Year 1 extracted from the 2022 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. As set out in Note 15 to the financial statements the key assumptions used in the value in use calculations are sales growth and margin in Year 1 budgets, Year 2 and Year 3 growth rates, terminal value growth rates and discount rates. We determined the assessment of the carrying value of goodwill to be a key audit matter 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. 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. 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 weather, crop conditions and competitor activity. We assessed the Group’s long term forecast growth rate assumptions used to calculate terminal values by comparing them to independent sources, including publicly available information. 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 performed sensitivity analysis on the impact of changes in key assumptions on the impairment assessments for CGUs. Based on our procedures we determined that management’s conclusion that there was no goodwill impairment was reasonable. We assessed the appropriateness of the related disclosures within the financial statements and consider the disclosures included in Note 15 to be reasonable. 104 Origin Enterprises plc Annual Report and Accounts 2021Independent auditors’ report to the members of Origin Enterprises Plc (continued) Key audit matter How our audit addressed the key audit matter Settlement price adjustments See accounting policy in relation to revenue, Note 19 - Trade and other receivables and Note 34 – Accounting estimates and judgements. We considered the process undertaken by management in determining the settlement price adjustment. We also compared the method to that applied in the prior period and found it to be consistently applied. The estimation of final settlement prices for some customers of the Group is subject to considerable management judgement due to 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 key inputs to the calculation of the settlement price adjustments include invoice prices, estimated settlement prices and invoice quantities. We determined this to be a key audit matter given the level of judgement involved and the historical level of fluctuation in final settlement prices. 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 estimates to credit notes issued to the customer. We considered the results of this assessment and the current year factors impacting the settlement price adjustments estimates at year end. We agreed a sample of data inputs used in the calculation 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. Based on our procedures, we concluded the estimate of price settlement adjustments required at year end were reasonable. We reviewed the related disclosures within the financial statements and concluded that they were appropriate. 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. In establishing the overall approach to the Group audit, we determined the type of work that needed to be performed at the components by us, as the Group engagement team, or component auditors within PwC Ireland, 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 components to be able to conclude whether sufficient appropriate audit evidence had been obtained as a basis for our opinion on the Group financial statements as a whole. As part of our Group audit scoping we identified 11 components, 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 90% of Group turnover, Group profit before tax and exceptional items and Group total assets. Taken collectively these components represent the principal business units of the Group. The Group audit team organised planning conference calls with the component audit teams to discuss business developments, audit risks and approach. In addition to these calls at the planning stage, post audit conference calls were held to discuss component auditors’ key audit findings. We received a detailed memorandum of examination on work performed and relevant findings from each of the component audit teams in addition to the audit reports which supplemented our understanding of the individual components. In addition to this, the Group engagement team reviewed certain audit working papers of significant components. This, together with additional procedures over central functions, IT systems, treasury and areas of judgement including the key audit matters noted above, taxation, business combinations and post-retirement benefits performed at the Group level, gave us the evidence we needed for our opinion on the Group financial statements as a whole. 105 FINANCIAL STATEMENTS Independent auditors’ report to the members of Origin Enterprises Plc (continued) 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 €2.3 million (2020: €2.7 million). €2.2 million (2020: €2 million). Group financial statements Company financial statements How we determined it c. 5% of profit before tax and exceptional items (2020: c. 5% of the 3 year average profit before tax and exceptional items). c. 0.75% of net assets (2020: c. 0.75% of net assets). Rationale for benchmark applied We have applied this benchmark because in our view this is a metric against which the recurring performance of the Group is commonly measured by its stakeholders. We applied this benchmark as the Company is primarily an investment holding Company. We agreed with the Audit & Risk Committee that we would report to them misstatements, other than balance sheet-only misstatements, identified during our audit above €0.115 million (Group audit) (2020: €0.135 million) and €0.1 million (Company audit) (2020: €0.1 million) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons. We agreed with the Audit & Risk Committee that we would report to them balance sheet-only misstatements identified during our audit above €1 million (Group audit) (2020: €1 million). Conclusions relating to going concern Our evaluation of the directors’ assessment of the Group and Company’s ability to continue to adopt the going concern basis of accounting included: — Evaluating management’s budgets and forecasts for the going concern assessment period (being the period of twelve months from the date on which the financial statements are authorised for issue) and challenging the key assumptions. In evaluating these forecasts we considered the Group’s historic performance, its past record of achieving strategic objectives and management’s assessment of the likely impact which Covid-19 may have on its operations, its financial performance and liquidity for the going concern assessment period; — Testing the mathematical integrity of the budgets and forecasts and the models and reconciling these to Board approved budgets; — Considering whether the assumptions underlying the budget and forecasts were consistent with related assumptions used in testing for non-financial asset impairment; — Performing sensitivity analysis to assess appropriate downside scenarios; and — Considering the Group’s available financing and maturity profile of group debt and facilities to assess liquidity through the going concern assessment period. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group’s or the Company’s ability to continue as a going concern for a period of at least twelve months from the date on which the financial statements are authorised for issue. In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Group’s or the Company’s ability to continue as a going concern. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. 106 Origin Enterprises plc Annual Report and Accounts 2021Independent auditors’ report to the members of Origin Enterprises Plc (continued) Reporting on other information The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on these responsibilities. With respect to the Directors’ Report, we also considered whether the disclosures required by the Companies Act 2014 (excluding the information included in the “Non Financial Statement” as defined by that Act on which we are not required to report) have been included. Based on the responsibilities described above and our work undertaken in the course of the audit, ISAs (Ireland) and the Companies Act 2014 require us to also report certain opinions and matters as described below: — In our opinion, based on the work undertaken in the course of the audit, the information given in the Directors’ Report (excluding the information included in the “Non Financial Statement” on which we are not required to report) for the year ended 31 July 2021 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 101, 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. Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected. 107 FINANCIAL STATEMENTSIndependent auditors’ report to the members of Origin Enterprises Plc (continued) 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. Other required reporting Companies Act 2014 opinions on other matters — We have obtained all the information and explanations which we consider necessary for the purposes of our audit. — In our opinion the accounting records of the Company were sufficient to permit the Company financial statements to be readily and properly audited. — The Company Balance Sheet is in agreement with the accounting records. Other exception reporting Directors’ remuneration and transactions Under the Companies Act 2014 we are required to report to you if, in our opinion, the disclosures of directors’ remuneration and transactions specified by sections 305 to 312 of that Act have not been made. We have no exceptions to report arising from this responsibility. Prior financial year Non Financial Statement We are required to report if the Company has not provided the information required by Regulation 5(2) to 5(7) of the European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and Groups) Regulations 2017 in respect of the prior financial year. We have nothing to report arising from this responsibility. Paul O’Connor for and on behalf of PricewaterhouseCoopers Chartered Accountants and Statutory Audit Firm Dublin 28 September 2021 108 Origin Enterprises plc Annual Report and Accounts 2021 Consolidated Income Statement For the financial year ended 31 July 2021 Notes Pre- exceptional 2021 €’000 Exceptional 2021 Total 2021 €’000 €’000 Pre- exceptional 2020 €’000 Exceptional 2020 Total 2020 €’000 €’000 Revenue Cost of sales Gross profit 1 1,658,367 (1,412,936) 245,431 - - - 1,658,367 1,589,142 (1,412,936) (1,359,547) 245,431 229,595 - - - 1,589,142 (1,359,547) 229,595 Operating (costs) / income 2, 3 (193,001) 1,506 (191,495) (194,877) (6,505) (201,382) Share of profit of associates and joint venture 3, 7 2,841 (403) 2,438 6,154 - 6,154 Operating profit Finance income Finance expense 5 4 4 55,271 1,103 56,374 40,872 (6,505) 34,367 795 (9,347) - - 795 954 (9,347) (12,204) - - 954 (12,204) Profit before income tax 46,719 1,103 47,822 29,622 (6,505) 23,117 Income tax (expense)/credit 3,10 (9,712) 122 (9,590) (4,519) 1,261 (3,258) Profit for the year 37,007 1,225 38,232 25,103 (5,244) 19,859 Basic earnings per share Diluted earnings per share 11 11 2021 30.44 29.74 2020 15.81c 15.53c 109 FINANCIAL STATEMENTSConsolidated Statement of Comprehensive Income For the financial year ended 31 July 2021 Profit for the year Other comprehensive income/ (expense) 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 2021 €’000 2020 €’000 38,232 19,859 4,653 (1,112) 2,438 (610) 553 (70) (1,001) 190 — exchange difference on translation of foreign operations 6,840 (17,350) 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 (520) 2,651 (299) 1,166 (146) (1,976) (58) 311 (5,508) 689 Other comprehensive income/ (expense) for the year, net of tax 15,061 (24,220) Total comprehensive income/ (expense) for the year attributable to equity shareholders 53,293 (4,361) 110 Origin Enterprises plc Annual Report and Accounts 2021Consolidated Statement of Financial Position As at 31 July 2021 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 Notes 2021 €’000 2020 €’000 12 13 14 15 16 17 27 24 14 18 19 23 21 104,528 109,363 45,177 2,270 248,445 42,774 552 5,939 6,185 39,824 2,270 235,949 40,597 575 403 6,890 455,870 435,871 24,200 214,221 434,614 224 27,100 188,775 406,857 1,460 168,660 172,309 841,919 796,501 1,297,789 1,232,372 111 FINANCIAL STATEMENTSConsolidated Statement of Financial Position (continued) As at 31 July 2021 EQUITY Called up share capital presented as equity Share premium Retained earnings and other reserves TOTAL EQUITY LIABILITIES Non-current liabilities Interest-bearing borrowings Lease liabilities Deferred tax liabilities Put option liability Provision for liabilities 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 2021 €’000 2020 €’000 28 22 13 24 26 25 23 22 13 20 25 23 1,264 160,498 199,243 361,005 1,264 160,498 150,564 312,326 140,184 205,889 36,226 21,161 24,138 1,445 323 31,961 19,785 22,073 1,649 1,262 223,477 282,619 42,882 9,910 645,924 11,841 2,014 736 19,633 8,775 590,182 11,976 4,393 2,468 713,307 637,427 936,784 920,046 TOTAL EQUITY AND LIABILITIES 1,297,789 1,232,372 On behalf of the Board Rose Hynes Director 28 September 2021 Sean Coyle Director 28 September 2021 112 Origin Enterprises plc Annual Report and Accounts 2021 0 0 0 ’ € 0 0 0 ’ € 0 0 0 ’ € e v r e s e r n o i t a l s n a r t e v r e s e r e v r e s e r t n e m y a p i s g n n r a e y c n e r r u c n o i t a s i n a g r o d e s a b e v r e s e r e g d e h e v r e s e r e v r e s e r n o i t p m e d e r s e r a h s i m u m e r p l a t i p a c 0 0 0 ’ € 0 0 0 ’ € 0 0 0 ’ € 0 0 0 ’ € 0 0 0 ’ € 0 0 0 ’ € 0 0 0 ’ € 0 0 0 ’ € l a t o T d e n i a t e R n g i e r o F - e R - e r a h S n o i t a u l a v e R w o fl h s a C l a t i p a C y r u s a e r T e r a h S e r a h S y t i u q E n I s e g n a h C f o t n e m e t a t S d e t a d i l o s n o C l 1 2 0 2 y u J 1 3 d e d n e r a e y l i a c n a n i f e h t r o F 0 0 0 ’ € 0 0 0 ’ € 0 0 0 ’ € e v r e s e r 0 0 0 ’ € n o i t a l s n a r t e v r e s e r 0 0 0 ’ € e v r e s e r t n e m y a p i s g n n r a e y c n e r r u c n o i t a s i n a g r o d e s a b e v r e s e r 0 0 0 ’ € 0 0 0 ’ € 0 0 0 ’ € 0 0 0 ’ € 0 0 0 ’ € 0 0 0 ’ € e g d e h e v r e s e r e v r e s e r n o i t p m e d e r s e r a h s i m u m e r p l a t i p a c 2 3 2 , 8 3 2 3 2 , 8 3 - 1 6 0 , 5 1 9 6 3 , 5 0 4 8 , 6 6 1 0 , 1 - ) 4 7 6 , 1 ( ) 4 7 6 , 1 ( ) 6 5 9 , 3 ( ) 6 5 9 , 3 ( - - - 3 9 2 , 3 5 1 0 6 , 3 4 0 4 8 , 6 - - - - - - - - - - - 6 1 0 , 1 - - - - - - - 2 5 8 , 2 2 5 8 , 2 - - - - - - - - - - - - - - - - - - - - - - - - - - - 6 2 3 , 2 1 3 4 3 2 , 8 9 3 ) 6 7 1 , 0 6 ( ) 4 8 8 , 6 9 1 ( 1 3 1 , 1 3 4 8 , 2 1 ) 0 1 7 , 4 ( 4 3 1 ) 8 ( 8 9 4 , 0 6 1 4 6 2 , 1 5 0 0 , 1 6 3 5 0 2 , 6 3 4 ) 6 3 3 , 3 5 ( ) 4 8 8 , 6 9 1 ( 7 4 1 , 2 3 4 8 , 2 1 ) 8 5 8 , 1 ( 4 3 1 ) 8 ( 8 9 4 , 0 6 1 4 6 2 , 1 l a t o T d e n i a t e R n g i e r o F - e R - e r a h S n o i t a u l a v e R w o fl h s a C l a t i p a C y r u s a e r T e r a h S e r a h S r a e y e h t r o f e m o c n i e v i s n e h e r p m o c r e h t O r a e y e h t r o f e m o c n i e v i s n e h e r p m o c l a t o T e g r a h c t n e m y a p d e s a b e r a h S ) 6 2 e t o N ( n o i t p o t u p f o e u a v l r i a f n i e g n a h C l s r e d o h e r a h s o t d i a p d n e d i v i D 1 2 0 2 y l u J 1 3 t A 0 2 0 2 t s u g u A 1 t A r a e y e h t r o f t fi o r P 1 2 0 2 9 5 8 , 9 1 9 5 8 , 9 1 - ) 0 2 2 , 4 2 ( ) 8 2 3 ( ) 0 5 3 , 7 1 ( ) 6 0 4 ( - ) 6 6 9 , 1 ( ) 6 6 9 , 1 ( ) 0 8 7 , 6 2 ( ) 0 8 7 , 6 2 ( - - - ) 1 6 3 , 4 ( 1 3 5 , 9 1 ) 0 5 3 , 7 1 ( - - - - - - - - - - - ) 6 0 4 ( - - - - - - - - - - ) 2 4 5 , 6 ( ) 2 4 5 , 6 ( - - - - - - - - - - - - - - - - - - - - - - - - 9 3 8 , 5 4 3 9 4 4 , 7 0 4 ) 6 2 8 , 2 4 ( ) 4 8 8 , 6 9 1 ( 7 3 5 , 1 3 4 8 , 2 1 2 3 8 , 1 4 3 1 ) 8 ( 8 9 4 , 0 6 1 4 6 2 , 1 6 2 3 , 2 1 3 4 3 2 , 8 9 3 ) 6 7 1 , 0 6 ( ) 4 8 8 , 6 9 1 ( 1 3 1 , 1 3 4 8 , 2 1 ) 0 1 7 , 4 ( 4 3 1 ) 8 ( 8 9 4 , 0 6 1 4 6 2 , 1 r a e y e h t r o f e m o c n i / ) e s n e p x e ( e v i s n e h e r p m o c l a t o T ) 6 2 e t o N ( n o i t p o t u p f o e u a v l r i a f n i e g n a h C t i d e r c t n e m y a p d e s a b e r a h S l s r e d o h e r a h s o t d i a p d n e d i v i D 0 2 0 2 y l u J 1 3 t A r a e y e h t r o f e s n e p x e e v i s n e h e r p m o c r e h t O r a e y e h t r o f t fi o r P 9 1 0 2 t s u g u A 1 t A 0 2 0 2 113 FINANCIAL STATEMENTS Consolidated Statement of Cash Flows For the financial year ended 31 July 2021 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 charge/ (credit) Pension contributions in excess of service costs Payment of exceptional rationalisation costs Payment of exceptional disposal 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 disposal of held for sale properties Deposits received in advance for properties held-for-sale 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 Consideration relating to acquisition Payment of contingent acquisition consideration Net proceeds from disposal of subsidiary Repayment of 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 Payment of dividends to equity shareholders Cash (outflow)/ inflow from financing activities Net increase in cash and cash equivalents Translation adjustment Cash and cash equivalents at start of year Cash and cash equivalents at end of year 114 Notes 2021 €’000 2020 €’000 3 4 4 16 12 13 15 8 27 14 3 15 33 25 13 22 21,22 47,822 (1,103) (795) 9,347 (434) (2,841) 8,176 10,913 12,162 1,016 (790) (1,207) (344) (253) 81,669 (20,857) (17,983) 34,886 77,715 (5,755) (10,073) 61,887 2,900 3,000 - 2,842 (8,155) (10,073) (9,175) (1,844) 15,249 56 4,468 (732) 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) 137,665 (180,065) (12,553) (3,956) (58,909) 2,246 856 152,676 155,778 250,025 (209,528) (11,422) (26,780) 2,295 62,373 2,418 87,885 152,676 Origin Enterprises plc Annual Report and Accounts 2021Group Accounting Policies The Group is currently assessing the impact in relation to the adoption of the above standards and interpretations for future periods. The Directors assess that at this point they do not believe the standards will have a significant impact on the financial statements of the Group in future periods. New IFRS accounting standards and interpretations not yet effective The Group has not applied the following IFRS’s and International Financial Reporting Interpretations Committee (‘IFRIC’) Interpretations that have been issued and adopted by the EU but are not yet effective. — Amendments to IAS 1: ‘Presentation of Financial Statements: Classification of Liabilities as Current or Non-Current’. — Amendments to IAS 16: ‘Property, plant and equipment’: proceeds before intended use. — Amendments to IAS 37: ‘Provisions, Contingent Liabilities and Contingent Assets’: Onerous Contracts – Cost of Fulfilling a Contract — Amendments to IFRS 3 ‘Business Combinations’: Definition of a business. — Amendments to IAS 39, IFRS 4, IFRS 9 and IFRS 16 ‘Interest Rate Benchmark Reform’ – phase 2. — Annual Improvements to IFRS Standards 2018-2020. — IFRS 17 Insurance Contracts and Amendments to IFRS 17 Insurance Contracts. 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 2020/2021 During the year ended 31 July 2021, 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 interpretations and standard amendments became effective as of 1 August 2020: — Amendments to IAS 1: ‘Presentation of Financial Statements’ and Amendments to IAS 8: ‘Accounting Policies, Changes in Accounting Estimates and Errors’: Definition of material. — Amendments to IFRS 16 ‘Leases’: COVID-19-Related Rent Concessions. — Amendments to References to Conceptual Framework in IFRS Standards. — Amendments to IFRS 9, IAS 39, and IFRS 7: ‘Interest Rate Benchmark Reform’. These standards did not have a material impact on the entity in the current financial year. 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. 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 2021 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 28 September 2021. Statement of compliance As permitted by Company law and as required by the Rules of the AIM and Euronext Growth (Dublin) exchanges, the Group financial statements have been prepared in accordance with International Financial Reporting Standards (‘IFRSs’) and their interpretations issued by the International Accounting Standards Board (‘IASB’) as adopted by the EU. The IFRSs adopted by the EU applied by the Group in the preparation of these financial statements are those that were effective for accounting periods beginning on or after 1 August 2020. New IFRS accounting standards and interpretations not yet adopted by the EU and not yet effective The Group has not applied the following IFRS’s and International Financial Reporting Interpretations Committee (‘IFRIC’) Interpretations that have not yet been adopted by the EU. — Amendments to IAS 8: ‘Accounting Policies, Changes in Accounting Estimates and Errors’. — Amendments to IAS 1: ‘Presentation of Financial Statements’ and IFRS Practice Statement 2 — Amendments to IFRS 17 ‘Insurance Contracts’. 115 FINANCIAL STATEMENTSGroup Accounting Policies (continued) 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. Having evaluated the 2022 budget and the long-term strategy plan, the Directors are satisfied that the Group has adequate resources to meet obligations, having regard to debt maturities, for a period of at least 12 months from the date of approval of the consolidated financial statements. Therefore, it is considered appropriate to adopt the going concern basis in the preparation of the consolidated financial statements. At 31 July 2021, the Group had cash and cash equivalents of €155.8 million (2020: €152.7m) and had total unsecured committed banking facilities of €430 million (2020: €430 million), of which €30 million will expire in September 2021, €100 million will expire in May 2022, €34m will expire in June 2024 and €266 million will expire in June 2025, as disclosed in Note 22. After year end, the Group extended the €100 million facility due to expire in May 2022 to June 2025. Given the amount of cash and cash equivalents as at 31 July 2021, the available undrawn banking facilities and the maturity dates of the borrowings indicate that the Group will be able to meet its obligations as they fall due within the next 12 months from the approval of the consolidated financial statements. The Group employs two key target ratios to monitor equity and to be compliant with its bank covenants, as disclosed in Note 30. Having considered the 2022 budget, significant headroom is expected against the bank covenants for at least 12 months from the approval of the consolidated financial statements. 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. 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. Basis of consolidation The Group financial statements reflect the consolidation of the results, assets and liabilities of the parent undertaking, the Company and all of its subsidiaries, together with the Group’s share of profits/losses of associates and joint ventures. Where a subsidiary, associate or joint venture is acquired or disposed of during the financial year, the Group financial statements include the attributable results from, or to, the effective date when control passes, or, in the case of associates and joint ventures, when joint control or significant influence is obtained or ceases. 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. 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. Anticipated acquisition accounting is applied in relation to option arrangements entered into with minority shareholders, whereby the non-controlling interest is not recognised but rather treated as already acquired by the Group both in the Consolidated Statement of Financial Position and the Consolidated Statement of Comprehensive Income. This treatment has been adopted as the Directors have formed the view that, based on the structure, pricing and timing of option contracts, significant risks and rewards are deemed to have transferred to Origin. Associates and joint ventures Associates are those entities in which the Group has significant influence over, but not control of, the financial and operating policy decisions. Joint ventures are those entities over which the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic, financial and operating decisions. Investments in associates and joint ventures are accounted for using the equity method of accounting. 116 Origin Enterprises plc Annual Report and Accounts 2021Group Accounting Policies (continued) Under the equity method of accounting, the Group’s share of the post-acquisition profits or losses of its associates and joint ventures is recognised in the Consolidated Income Statement. The income statement reflects, in profit before tax, the Group’s share of profit after tax of its associates and joint ventures in accordance with IAS 28, ‘Investments in Associates and Joint Ventures’. The Group’s interest in their net assets is included as investments in associates and joint ventures in the Consolidated Statement of Financial Position at an amount representing cost at acquisition plus the Group’s share of post acquisition retained income and expenses. The Group’s investment in associates and joint ventures includes goodwill on acquisition. The amounts included in the financial statements in respect of the post acquisition income and expenses of associates and joint ventures are taken from their latest financial statements prepared up to their respective year ends, together with management accounts for the intervening periods to the Group’s year end. The fair value of any investment retained in a former subsidiary is regarded as a cost on initial recognition of an investment in an associate or joint venture. Where necessary, the accounting policies of associates and joint ventures have been changed to ensure consistency with the policies adopted by the Group. Transactions eliminated on consolidation Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group transactions are eliminated in preparing the Group financial statements. Unrealised gains and income and expenses arising from transactions with associates and joint ventures are eliminated to the extent of the Group’s interest in the entity. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that they do not provide evidence of impairment. Revenue recognition Rebates 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. Revenue from contracts for the provision of Digital Agricultural Services is recognised over the term of the contract in the accounting period in which the services are provided. 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. 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. 117 FINANCIAL STATEMENTSGroup Accounting Policies (continued) 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. Segmental reporting An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. All operating segments’ operating results are reviewed regularly by the Group’s Chief Operating Decision Maker, being the Origin Executive Directors, to make decisions about resources to be allocated to segments and to assess performance, and for which discrete financial information is available. The Group has three operating segments: Ireland and UK, Continental Europe and Latin America (see Note 1 for further information). Segment assets and liabilities consist of property, plant and equipment, goodwill and intangible assets and other assets and liabilities that can be reasonably allocated to the reported segment. Unallocated assets and liabilities principally include current and deferred income tax balances together with financial assets and liabilities. Taxation Income tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the Consolidated Income Statement except to the extent that it relates to items recognised directly in other comprehensive income, in which case the related tax is also recognised in the Consolidated Statement of Comprehensive Income. Current tax is the expected tax payable on the taxable income for the year, using tax rates and laws that have been enacted or substantially enacted at the year end date, and any adjustment to tax payable in respect of previous years. The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the Group’s provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and tax provisions in the period in which such determination is made. Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the year end date. 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. 118 Origin Enterprises plc Annual Report and Accounts 2021Group Accounting Policies (continued) 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. 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 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. 119 FINANCIAL STATEMENTSGroup Accounting Policies (continued) 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. 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 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 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. Payments made under operating leases are charged to the Consolidated Income Statement on a straight line basis over the lease term. Business combinations and goodwill All business combinations are accounted for by applying the acquisition method. Goodwill represents amounts arising on acquisition of subsidiaries, associates and the joint venture. In respect of acquisitions that have occurred since 1 August 2005, goodwill represents the difference between the cost of the acquisition and the fair value of the net identifiable assets acquired. In respect of acquisitions prior to this date, goodwill is included on the basis of its deemed cost, i.e. original cost less accumulated amortisation from the date of acquisition up to 31 July 2005, which represents the amount recorded under Irish GAAP. Goodwill is now stated at cost or deemed cost less any accumulated impairment losses. In respect of associates and the joint venture, the carrying amount of goodwill is included in the carrying amount of the investment. Contingent acquisition consideration Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date and classified as a financial liability or as equity in accordance with IAS 32. Subsequent changes to the fair value of the contingent consideration that is deemed to be a liability are recognised in accordance with IFRS 9 in profit or loss. Contingent consideration that is classified as equity is not remeasured and its subsequent settlement is accounted for within equity. 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, — the intention to complete the development, — the ability to use or sell the intangible asset, — the ability to generate future economic benefits, — the availability of resources to complete the development; and — the 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: up to 20 years Brands Customer related up to 20 years Developed technology up to 10 years Computer and ERP related 3 to 10 years Subsequent to initial recognition, intangible assets are stated at cost less accumulated amortisation and impairment losses incurred. 120 Origin Enterprises plc Annual Report and Accounts 2021Group Accounting Policies (continued) 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. 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. 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. 121 FINANCIAL STATEMENTSGroup Accounting Policies (continued) 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 retained earnings. Cash flow hedges In accordance with IFRS 9 and 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. 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 and disposal 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, settlement gains or losses on defined benefit plans, claims and significant impairment of assets. Judgement is used by the Group in assessing the particular items, which by virtue of their scale and nature, should be disclosed in the Consolidated Income Statement and related notes as exceptional items. Borrowing costs Finance expenses comprise interest expense on borrowings. All borrowing costs are recognised in the Consolidated Income Statement using the effective interest method. Provisions A provision is recognised in the Consolidated Statement of Financial Position when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre- tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Finance income Finance income is recognised using the effective interest method. 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. 122 Origin Enterprises plc Annual Report and Accounts 2021Notes to the Group Financial Statements 1 Segment information IFRS 8, ‘Operating Segments’, requires operating segments to be identified on the basis of internal reports that are regularly reviewed by the Chief Operating Decision Maker (‘CODM’) in order to allocate resources to the segments and to assess their performance. The Group has three operating segments as follows: Ireland and the United Kingdom This segment includes the Group’s wholly owned Irish and UK-based Business-to-Business Agri-Inputs operations, Integrated Agronomy and On-Farm Services operations and Digital Agricultural Services business. In addition, this segment includes the Group’s associate and joint venture undertakings. Continental Europe This segment includes the Group’s Business-to-Business Agri-Inputs operations, Integrated Agronomy and On-Farm Services operations in Poland, Romania, Belgium and the Ukraine. Latin America Origin entered the Latin American market in August 2018 through the acquisition of Fortgreen, a business which is focused on the development and marketing of value added crop nutrition and speciality inputs and which is headquartered in Paraná State in southern Brazil. Information regarding the results of each reportable segment is included below. Performance is measured based on segment operating profit as included in the internal management reports that are reviewed by the Group’s CODM, being the Origin Executive Directors. Segment operating profit is used to measure performance, as this information is the most relevant in evaluating the results of the Group’s segments. Segment results, assets and liabilities include all items directly attributable to a segment. Segment capital expenditure is the total amount incurred during the period to acquire segment assets that are expected to be used for more than one accounting period. (a) Analysis by segment (i) Segment revenue and result Ireland and the UK Continental Europe Latin America Total Group 2021 €’000 2020 €’000 2021 €’000 2020 €’000 2021 €’000 2020 €’000 2021 €’000 2020 €’000 Total revenue 1,406,528 1,284,946 570,131 590,181 38,966 50,435 2,015,625 1,925,562 Less revenue from associates and joint venture (357,258) (317,057) - - - (19,363) (357,258) (336,420) Revenue 1,049,270 967,889 570,131 590,181 38,966 31,072 1,658,367 1,589,142 Segment result 39,137 23,302 15,587 13,686 6,283 7,111 61,007 44,099 Profit from associates and joint venture Amortisation of non-ERP intangible assets Operating profit before exceptional items Exceptional items Operating profit 2,841 5,808 - - - 346 2,841 6,154 (5,302) (5,035) (1,529) (2,145) (1,746) (2,201) (8,577) (9,381) 36,676 (1,496) 35,180 24,075 14,058 11,541 4,537 5,256 (2,670) 2,599 (3,555) - (280) 21,405 16,657 7,986 4,537 4,976 55,271 1,103 56,374 40,872 (6,505) 34,367 123 FINANCIAL STATEMENTS1 Segment information (continued) (ii) Segment earnings before financing costs and tax is reconciled to reported profit before tax and profit after tax as follows: Operating profit Finance income Finance expense Reported profit before tax Income tax Reported profit after tax (iii) Segment assets Assets excluding investment in associates and joint venture Investment in associates and joint venture (including other financial assets) 2021 €’000 2020 €’000 56,374 795 (9,347) 47,822 (9,590) 38,232 34,367 954 (12,204) 23,117 (3,258) 19,859 Ireland and the UK Continental Europe Latin America Total Group 2021 €’000 2020 €’000 2021 €’000 2020 €’000 2021 €’000 2020 €’000 2021 €’000 2020 €’000 631,831 553,253 359,636 382,905 87,927 74,383 1,079,394 1,010,541 43,326 41,172 - - - - 43,326 41,172 Segment assets 675,157 594,425 359,636 382,905 87,927 74,383 1,122,720 1,051,713 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 168,660 172,309 224 6,185 1,460 6,890 1,297,789 1,232,372 Ireland and the UK Continental Europe Latin America Total Group 2021 €’000 2020 €’000 2021 €’000 2020 €’000 2021 €’000 2020 €’000 2021 €’000 2020 €’000 Segment liabilities 407,155 369,177 273,687 257,115 38,815 32,741 719,657 659,033 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 183,066 225,522 1,059 33,002 3,730 31,761 936,784 920,046 124 Origin Enterprises plc Annual Report and Accounts 2021Notes to the Group Financial Statements (continued)1 Segment information (continued) (v) Other segment information Depreciation Intangible amortisation Exceptional items (Note 3) Capital expenditure – property, plant and equipment Capital expenditure – ERP and computer intangibles Ireland and the UK Continental Europe Latin America Total Group 2021 €’000 2020 €’000 2021 €’000 2020 €’000 2021 €’000 2020 €’000 2021 €’000 2020 €’000 14,608 14,151 8,887 1,496 7,955 2,670 4,211 1,529 (2,599) 4,335 2,145 3,555 270 262 1,746 2,201 - 280 19,089 12,162 (1,103) 18,748 12,301 6,505 4,726 11,351 1,172 1,446 1,476 1,050 7,374 13,847 7,804 1,930 539 369 6 2 Total capital expenditure 12,530 13,281 1,711 1,815 1,482 1,052 (b) Analysis by geography and revenue lines 8,349 15,723 2,301 16,148 Ireland and the UK Continental Europe Latin America Total Group 2021 €’000 2020 €’000 2021 €’000 2020 €’000 2021 €’000 2020 €’000 2021 €’000 2020 €’000 Revenue 1,049,270 967,889 570,131 590,181 38,966 31,072 1,658,367 1,589,142 Total segment assets 675,157 594,425 359,636 382,905 87,927 74,383 1,122,720 1,051,713 IFRS 8 non-current assets* 331,258 303,602 63,111 76,063 49,377 48,913 443,746 428,578 *The total non-current assets in the UK are €286.3 million (2020: €262.4million). The following table disaggregates revenue by significant revenue lines: Integrated Agronomy and Digital Agricultural Services Business-to-Business Agri-Inputs Total Group 2021 €’000 2020 €’000 2021 €’000 2020 €’000 2021 €’000 2020 €’000 Revenue 984,192 995,128 674,175 594,014 1,658,367 1,589,142 No one individual customer accounts for more than 10% of total revenue. 2 Operating costs Distribution expenses Administration expenses Amortisation of non-ERP related intangible assets Exceptional items (Note 3) 2021 €’000 2020 €’000 102,308 103,792 82,116 8,577 193,001 (1,506) 191,495 81,704 9,381 194,877 6,505 201,382 125 FINANCIAL STATEMENTSNotes to the Group Financial Statements (continued)3 Exceptional items Exceptional items are those that, in management’s judgement, should be separately presented and disclosed by virtue of their nature or amount. Such items are included within the Consolidated Income Statement caption to which they relate. The following exceptional items arose during the year: Gain on disposal of subsidiary (i) Transaction related (costs) / credit (ii) Pension and rationalisation related costs (iii) Write down of intangible assets arising from re-branding (iv) Fair value adjustment of investment properties and properties held for sale (v) Loss on disposal of associate (vi) Total exceptional credit / (charge) before tax and before associates and joint venture Arising in associates and joint venture (vii) Total exceptional credit / (charge) before tax Tax credit on exceptional items 2021 €’000 2,599 (253) (840) - - - 1,506 (403) 1,103 122 2020 €’000 - 379 (202) (6,853) 730 (559) (6,505) - (6,505) 1,261 Total exceptional credit / (charge) after tax 1,225 (5,244) (i) Gain on disposal of subsidiary Following the disposal of the Group’s Pillaert business operated in Belgium a disposal gain of €2.6 million was recorded. Identified net assets on disposal of Pillaert: Property, plant and equipment Goodwill and intangible assets Working capital Cash & cash equivalents Deferred tax liabilities Consideration received, net of transaction costs Gain on disposal of subsidiary 2021 €’000 5,209 3,351 4,900 269 (1,323) 12,406 (15,005) 2,599 The tax impact of this exceptional item in the current year was a tax charge of €Nil. (ii) Transaction related (costs) / credit Transaction related costs in the current year principally comprise of costs incurred in relation to the acquisition completed during the year. In the prior year, 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 prior year was a tax credit of €0.1 million. 126 Origin Enterprises plc Annual Report and Accounts 2021Notes to the Group Financial Statements (continued)3 Exceptional items (continued) (iii) Pension and rationalisation related costs Rationalisation costs relate to termination payments from restructuring programmes across the Group. This exceptional charge in the prior year also includes past service costs in respect of the defined benefit pension scheme. The tax impact of this exceptional item in the current year is a tax credit of €0.1 million (2020: €Nil). (iv) Write down of intangible assets arising from re-branding During the prior 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 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 prior year was a tax credit of €1.2 million. (v) Fair value adjustment of investment properties and properties held for sale During the prior year, investment properties valued at €2.9 million (Note 14) were reclassified as held for sale as it was expected these properties would be sold within 12 months. There was a fair value uplift on these properties of €1.0 million prior to reclassification to held-for-sale (Note 14). Also included are costs relating to the disposal of the properties. The tax impact of this exceptional item in the prior year was a charge of €Nil. (vi) Loss on disposal of associate On 31 July 2020, the Group disposed of its 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. (vii) Arising in associates and joint venture 2020 €’000 904 (1,308) (155) (559) The exceptional charge in the current 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 year was a tax credit of €0.1 million. 127 FINANCIAL STATEMENTSNotes to the Group Financial Statements (continued)4 Finance income and expense Recognised in the Consolidated Income Statement Finance income Interest income on bank deposits Defined benefit pension obligations: net interest income (Note 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 Effective portion of changes in fair value of interest rate swaps 5 Statutory and other information Group operating profit before exceptional items is stated after charging: Raw materials and consumables used Amortisation of intangible assets (Note 15) Depreciation of property, plant and equipment (Note 12) Depreciation of right of use assets (Note 13) Operating lease rentals (i) Foreign exchange expense 2021 €’000 2020 €’000 787 8 795 (7,518) (1,829) - (9,347) (8,552) 954 - 954 (10,429) (1,766) (9) (12,204) (11,250) 700 (351) 2021 €’000 2020 €’000 1,402,363 1,349,771 12,162 8,176 10,913 3,758 9 12,301 8,564 10,184 4,277 3,008 (i) The operating lease rentals charge 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 Group by the auditors is as follows: Audit of the consolidated financial statements Other non-audit services 2021 €’000 2020 €’000 624 43 595 7 128 Origin Enterprises plc Annual Report and Accounts 2021Notes to the Group Financial Statements (continued)6 Directors’ emoluments Emoluments Emoluments include the following contributions to retirement benefit schemes: — Defined contribution — Defined benefit 2021 €’000 2020 €’000 1,771 3,107 46 39 85 122 26 148 Further details are shown in the Remuneration Committee Report on pages 83 to 96. Retirement benefits are accruing to one Director (2020: one Director) under a defined benefit scheme and to two Directors (2020: two Directors) under a defined contribution scheme. 7 Share of profit after tax of associates and joint venture Total Group share of: Revenue Profit after tax, before exceptional items (Note 16) Share of exceptional items, net of tax (Note 3) 8 Employment 2021 €’000 2020 €’000 357,258 336,420 2,841 (403) 6,154 - 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 2021 Number 2020 Number 1,626 420 595 2,641 1,606 402 603 2,611 2021 Number 2020 Number 6 3 5 3 129 FINANCIAL STATEMENTSNotes to the Group Financial Statements (continued)8 Employment (continued) Aggregate employment costs of the Group are analysed as follows: Wages and salaries (1) Social insurance costs Retirement benefit costs (Note 27) included in Consolidated Income Statement: — defined benefit schemes – current service cost — defined benefit schemes – past service cost/ (credit) — defined benefit schemes – net interest (income)/ expense — defined contribution schemes Share based payment charge/ (credit) 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 (Note 27) 2021 €’000 2020 €’000 112,776 10,578 108,125 11,520 526 17 (8) 4,113 1,016 146 840 624 (151) 9 4,125 (406) 35 202 130,004 124,083 (4,653) 125,351 (553) 123,530 (1) includes furlough payments to UK employees of €Nil (2020: €636,000) under the UK Coronavirus Job Retention Scheme 130 Origin Enterprises plc Annual Report and Accounts 2021Notes to the Group Financial Statements (continued)9 Long Term Incentive Plans Executive Directors and other senior management participate in the following Long Term Incentive Plans: 2015 LTIP Plan The 2015 Origin Long Term Incentive Plan (‘2015 LTIP Plan’) is a share-based payment plan which was approved by the shareholders on 27 November 2015. The details of awards under the plan are as follows: Awards 2017 Awards 2018 Awards On 10 March 2017, under the terms of the 2015 LTIP Plan, T O’Mahony, I Hurley and D Giblin were granted 73,529, 48,897 and 60,459 share options respectively. On the departure of I Hurley in 2018, options granted to her lapsed with immediate effect. 52.70% 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. In the prior year, the Executive Directors have voluntarily waived their entitlement to any unvested share options under the 2018 awards. 2019 Awards - Directors On 2 October 2018, under the terms of the 2015 LTIP Plan, T O’Mahony, S Coyle and D Giblin were granted 88,496, 61,540 and 70,784 share options respectively. In the prior year, 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 111,614 share options vested and a further 338,058 were not awarded. During the year three employees (2020: two employees) ceased employment resulting in the forfeiture of 53,160 share options (2020: 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. In the prior year, the Executive Directors have voluntarily waived their entitlement to any unvested share options under the 2020 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 per cent of the shares subject to the award will vest depending on the growth in the Group’s consolidated Adjusted Earnings per Share (“Adjusted EPS”) over a three-year performance period starting on the first day of the financial year in which the award is granted, determined in accordance with the table below. Annualised Adjusted Diluted EPS growth Below 5 per cent 5 per cent Between 5 per cent and 10 per cent 10 per cent and above Proportion of the Adjusted Diluted EPS award vesting 0 per cent 30 per cent 30 per cent- 100 per cent pro rata 100 per cent Vesting under the EPS performance condition is also contingent on the Group’s annualised EPS over the three year performance period being positive. — Up to 40 per cent of the shares subject to an award will vest depending on the Group’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 per cent 12.5 per cent Between 12.5 per cent and 17.5 per cent 17.5 per cent and above Proportion of the ROIC award vesting 0 per cent 30 per cent 30 per cent- 100 per cent pro rata 100 per cent 131 FINANCIAL STATEMENTSNotes to the Group Financial Statements (continued)9 Long Term Incentive Plans (continued) Awards Targets & Thresholds - continued — Up to 30 per cent of the shares subject to an award will vest depending on the Group’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 per cent 50 per cent Between 50 per cent and 100 per cent 100 per cent and above Proportion of the FCFR award vesting 0 per cent 30 per cent 30 per cent- 100 per cent pro rata 100 per cent 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 Group is granted an award, the Remuneration Committee at its discretion may determine that a maximum of 40 per cent of an award will be subject to divisional financial or other performance conditions related to the business division. 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 Group’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 Group following the adoption of the Plan will be determined by the performance conditions set out above. Transfer of Ownership / Vesting In July 2020, September 2020 and January 2021 a number of share options were issued to S Coyle, D Giblin, TJ Kelly and Senior Management under the 2015 Origin Long Term Incentive Plan. The details of awards under the Plan are as follows: Awards 2020 Awards On 8 July 2020 under the terms of the 2015 LTIP Plan, S Coyle was granted 222,246 share options. 2021 Awards - Directors On 24 September 2020 under the terms of the 2015 LTIP Plan, S Coyle and D Giblin were granted 165,048 and 125,207 share options respectively. On 18 January 2021, TJ Kelly was granted 99,691 share options under the terms of the 2015 LTIP Plan. 2021 Awards - Senior Management Targets & Thresholds On 24 September 2020 under the terms of the 2015 LTIP Plan, Senior Management were granted 1,174,944 share options. During the year 91,953 share options were forfeited due to two employees ceasing employment with the Group. Vesting of share options and transfer of ownership of resulting shares is determined by reference to the following conditions: Up to 50 per cent of the shares subject to the award will vest depending on the Group’s consolidated Adjusted Earnings per Share (“Adjusted EPS”) determined in accordance with the table below. 132 Origin Enterprises plc Annual Report and Accounts 2021Notes to the Group Financial Statements (continued)9 Long Term Incentive Plans (continued) Awards Targets & Thresholds - continued Adjusted Diluted EPS Below 46 cent 46 cent Between 46 cent and 50 cent 50 cent and above Proportion of the Adjusted Diluted EPS award vesting 0 per cent 30 per cent 30 per cent – 100 per cent pro rata 100 per cent — Up to 50 per cent of the shares subject to an award will vest depending on the Group’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 per cent 50 per cent Between 50 per cent and 100 per cent 100 per cent and above Proportion of the FCFR award vesting 0 per cent 30 per cent 30 per cent- 100 per cent pro rata 100 per cent 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 Group is granted an award, the Remuneration Committee at its discretion may determine that a maximum of 40 per cent of an award will be subject to divisional financial or other performance conditions related to the business division. 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 Group 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 Group following the adoption of the Plan will be determined by the performance conditions set out above. Transfer of Ownership / Vesting Movement in the number of share options outstanding is as follows: At 1 August Vested (i) Not awarded (i) Forfeiture Waived (ii) Granted At 31 July Number of share options 2021 Number of share options 2020 761,442 (111,614) (338,058) (145,113) - 1,564,890 1,731,547 1,088,139 (70,366) (63,622) (53,540) (611,311) 472,142 761,442 (i) The amounts vested and not awarded relate to the 2019 awards as detailed on page 131. The total share options awarded were 592,736 of which 111,614 have vested but none of which have yet been exercised. (ii) These share options 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 prior year. 133 FINANCIAL STATEMENTSNotes to the Group Financial Statements (continued) 9 Long Term Incentive Plans (continued) Grant date Expiry date 2 October 2018 (i) 17 July 2019 (ii) 8 July 2020 (iii) 24 September 2020 (iv) 18 January 2021 (v) 1 October 2025 1 October 2025 8 July 2027 24 September 2027 18 January 2028 Exercise price Number of share options 2021 Number of share options 2020 €0.01 €0.01 €0.01 €0.01 €0.01 36,364 - 222,246 1,373,246 99,691 225,861 313,335 222,246 - - 1,731,547 761,442 (i) The fair value of the share options granted was €5.01 derived using the Black Scholes valuation model. The significant inputs into the model were weighted average share price of €5.65 at the grant date, exercise price of €0.01 and dividend yield of 3.7 per cent. (ii) The fair value of the share options granted was €4.49 derived using the Black Scholes valuation model. The significant inputs into the model were weighted average share price of €5.13 at the grant date, exercise price of €0.01 and dividend yield of 4.1 per cent. (iii) 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 per cent. (iv) The fair value of the share options granted was €2.45 using the Black Scholes valuation model. The significant inputs into the model were weighted average share price of €3.09 at the grant date, exercise price of €0.01 and dividend yield of 6.8 per cent. (v) The fair value of the share options granted was €2.60 using the Black Scholes valuation model. The significant inputs into the model were weighted average share price of €3.24 at the grant date, exercise price of €0.01 and dividend yield of 6.5 per cent. Cash based long term incentive plan During the 2018 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 2018 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 Capital and Earnings before interest and tax) over a three-year period to 31 July 2020. The amount paid under this scheme during 2021 was €0.9m. This amount was charged to the income statement within payroll costs in the years ended 31 July 2018, 31 July 2019 and 31 July 2020 in line with the accounting policy on page 117. 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 2019 financial year a further 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 balance payable at the end of the three years is €0.3 million which has been charged to the income statement within payroll costs in the years ending 31 July 2019, 31 July 2020 and 31 July 2021. This will be paid to the relevant employees in the year ended 31 July 2022. 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 2021. 134 Origin Enterprises plc Annual Report and Accounts 2021Notes to the Group Financial Statements (continued)9 Long Term Incentive Plans (continued) Save As You Earn (‘SAYE’) scheme-UK and Ireland The Save As You Earn (SAYE) scheme (‘the scheme’) is a share based savings plan which was approved by the shareholders on 27 November 2015. The details of awards under the plan are as follows: Award Conditions Transfer of Ownership/ Vesting A HMRC/Revenue approved plan under which regular monthly savings are made over a three year period which can be used to fund the exercise of an option, the exercise price being discounted by up to 20 per cent. The maximum permitted savings of £500/€500 per month across all on- going sharesave contracts for any individual. Conditions attaching to the transfer of ownership of the equity entitlements and vesting of the share options include the following: — in general, the employee must remain in service throughout the three year savings period; — the option may not be granted if the result would be that the aggregate number of shares issuable pursuant to options granted under the Scheme or under any other share award or share option plan operated by the Group in the preceeding ten years exceeding 10 per cent of the Group’s issued ordinary share capital at the date of grant; and — the option may not be granted if the result would be that the aggregate number of shares issuable pursuant to options granted under the Scheme or under any other share award or share option plan operated by the Group in the preceeding three years exceeding 3 per cent of the Group’s issued ordinary share capital at the date of grant. Under the terms of the SAYE scheme, the eligible employee will have a choice at the end of the three year period (representing the term of the scheme), to cash in their total savings or alternatively purchase shares at the discounted price agreed at the time of entry into the SAYE scheme. Ownership of shares will not transfer until this time. The value of the SAYE scheme at 31 July 2021 is as follows: At 1 August Charge/ (credit) At 31 July Grant date Expiry date Option Price Exercise price 1 June 2018 1 June 2019 1 June 2020 1 June 2021 1 June 2022 1 June 2023 €1.40 €1.42 €0.51 €4.20 €4.32 €2.02 2021 €’000 246 308 554 2020 €’000 595 (349) 246 Share options No of shares 2021 Share options No of shares 2020 39,629 66,555 96,768 63,395 1,823,169 1,740,655 1,929,353 1,900,818 135 FINANCIAL STATEMENTSNotes to the Group Financial Statements (continued)9 Long Term Incentive Plans (continued) The main variable inputs used to calculate the SAYE schemes are as follows: Scheme 2018 Scheme 2019 Scheme 2020 €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% 2020 €’000 8,001 (4,743) 3,258 23,117 (6,154) 16,963 2,120 175 1,893 2,348 (696) 78 (2,660) 3,258 70 24 117 (311) (100) 2021 €’000 9,513 77 9,590 47,822 (2,438) 45,384 5,673 589 2,799 4,434 (2,989) 90 (1,006) 9,590 (1,112) - 20 (298) (1,390) Share price Exercise price Term Share price volatility Discount rate 10 Income tax Current tax expense Deferred tax charge/ (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 per cent Effect of deferred tax rate change Expenses not deductible for tax purposes Higher rates of tax on overseas earnings Changes in estimate/adjustment in respect of previous periods: — Current tax — Deferred tax 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 136 Origin Enterprises plc Annual Report and Accounts 2021Notes to the Group Financial Statements (continued)10 Income tax (continued) The effective tax rate is 18.5% compared to 18.5% in the prior year and is calculated as follows: Effective tax rate reconciliation Profit before exceptional items and income tax Add-back: amortisation of non-ERP related intangible assets (Note 15) Add-back: tax on associates Total adjusted profit before tax Income tax expense before exceptional items Add-back: tax (expense)/ credit on non-ERP amortisation Add-back: tax on associates Total adjusted income tax expense 2021 €’000 46,719 8,577 703 55,999 9,712 (55) 703 10,360 2020 €’000 29,622 9,381 1,299 40,302 4,519 1,638 1,299 7,456 Effective tax rate 18.5% 18.5% A deferred tax asset of €6.2 million (2020: €6.9 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 €34.0 million (2020: €25.1 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. 137 FINANCIAL STATEMENTSNotes to the Group Financial Statements (continued) 11 Earnings per share Basic earnings per share 2021 €’000 2020 €’000 Profit for the financial year attributable to equity shareholders 38,232 19,859 ‘000 ‘000 Weighted average number of ordinary shares for the year 125,595 125,595 Basic earnings per share Diluted earnings per share Cent Cent 30.44 15.81 2021 €’000 2020 €’000 Profit for the financial year attributable to equity shareholders 38,232 19,859 Weighted average number of ordinary shares used in basic calculation Impact of shares with a dilutive effect Impact of the SAYE scheme (Note 9) with a dilutive effect Weighted average number of ordinary shares (diluted) for the year Diluted earnings per share ‘000 ‘000 125,595 125,595 1,019 1,929 373 1,901 128,543 127,869 Cent Cent 29.74 15.53 138 Origin Enterprises plc Annual Report and Accounts 2021Notes to the Group Financial Statements (continued)11 Earnings per share (continued) Adjusted basic earnings per share Weighted average number of ordinary shares for the year 125,595 125,595 2021 ‘000 2020 ‘000 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 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) a dilutive effect Weighted average number of ordinary shares (diluted) for the year Adjusted earnings (as above) Adjusted diluted earnings per share 2021 €’000 2020 €’000 38,232 19,859 8,577 55 (1,225) 45,639 9,381 (1,638) 5,244 32,846 Cent Cent 36.34 26.15 2021 ‘000 2020 ‘000 125,595 125,595 1,019 1,929 373 1,901 128,543 127,869 2021 €’000 2020 €’000 45,639 32,846 Cent Cent 35.50 25.69 139 FINANCIAL STATEMENTSNotes to the Group Financial Statements (continued)12 Property, plant and equipment Cost At 1 August 2020 Additions Transfers from under construction Arising on acquisition (Note 33) Arising on disposal of subsidiary Disposals Translation adjustments At 31 July 2021 Accumulated depreciation At 1 August 2020 Depreciation charge for year Arising on disposal of subsidiary Disposals Translation adjustments At 31 July 2021 Net book amounts At 31 July 2021 Land and buildings €'000 Plant and machinery €'000 Motor vehicles €'000 Assets under construction €'000 Total €'000 94,157 75,229 1,051 1,212 - (7,436) (1,624) 2,179 89,539 17,874 2,155 (2,716) (684) 585 17,214 2,862 4,104 393 (1,019) (3,177) 2,664 81,056 49,482 5,005 (577) (1,983) 1,589 53,516 6,885 593 - 88 (1,135) (329) 139 6,241 4,583 1,016 (1,088) (313) 120 4,318 5,031 2,868 (5,316) - - - 157 181,302 7,374 - 481 (9,590) (5,130) 5,139 2,740 179,576 - - - - - - 71,939 8,176 (4,381) (2,980) 2,294 75,048 72,325 27,540 1,923 2,740 104,528 At 31 July 2020 76,283 25,747 2,302 5,031 109,363 140 Origin Enterprises plc Annual Report and Accounts 2021Notes to the Group Financial Statements (continued)12 Property, plant and equipment (continued) 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 13 Leases 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 (729) 5,850 - (937) (218) 75,229 15,880 44,859 2,051 (199) 142 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 With effect from 1 August 2019, IFRS 16 ‘Leases’ introduced a single lessee accounting model, and the majority of all lease agreements 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. The movement in the Group’s right-of-use leased assets during the period is as follows: At 1 August Arising on adoption of IFRS 16 at 1 August 2019 Reclassification of assets held under IAS 17 finance leases on adoption of IFRS 16 Additions in period Arising on acquisition (Note 33) Termination of leases Leased assets purchased and transferred to property, plant and equipment Depreciation charge Translation adjustments Right-of-use leased assets at 31 July 2021 €’000 39,824 - - 14,772 189 (821) - 2020 €’000 - 39,667 1,230 9,499 - (43) (208) (10,913) (10,184) 2,126 45,177 (137) 39,824 141 FINANCIAL STATEMENTSNotes to the Group Financial Statements (continued)13 Leases (continued) Right of use assets include land and buildings, vehicles, machinery and IT software, and is comprised as: At 31 July 2021 Depreciation expense Right-of-use leased assets At 31 July 2020 Land and buildings €’000 Plant and machinery €’000 Motor Vehicles €’000 IT software Total €’000 €’000 4,867 31,027 2,781 6,921 3,242 7,229 23 - 10,913 45,177 Land and buildings €’000 Plant and machinery €’000 Motor Vehicles €’000 IT software Total €’000 €’000 Depreciation expense Right-of-use leased assets 3,386 25,565 4,259 8,771 2,520 5,465 19 23 10,184 39,824 The amounts recognised in the Consolidated Income Statement include: 2021 €’000 10,913 1,829 3,758 2021 €’000 40,736 - 189 14,772 (785) 2020 €’000 10,184 1,766 4,277 2020 €’000 - 40,577 - 9,499 (43) (12,553) (11,422) 1,829 1,948 46,136 9,910 36,226 46,136 1,766 359 40,736 8,775 31,961 40,736 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 (Note 5) The movement in the Group’s related lease liabilities during the period is as follows: At 1 August Arising on adoption of IFRS 16 at 1 August 2019 Arising on acquisition New leases arising in the period Termination of leases Lease payments Interest on lease liabilities Translation adjustments Lease liabilities at 31 July Current Non-current Lease liabilities at 31 July See Note 23 for contractual cash flows relating to lease liabilities. 142 Origin Enterprises plc Annual Report and Accounts 2021Notes to the Group Financial Statements (continued)14 Investment properties and properties held for sale At 1 August Additions Disposal of held-for-sale properties (i) Fair value adjustment (ii) At 31 July 2021 Properties held for sale €’000 2021 Investment properties €’000 2021 Total 2020 Total €’000 €’000 27,100 2,270 29,370 28,356 - (2,900) - - - - - (2,900) - 64 - 950 24,200 2,270 26,470 29,370 (i) In the current year, held-for-sale properties were disposed and proceeds of €2.9 million were received. (ii) Measurement of fair value Properties held for sale Properties held for sale are carried at the lower of their carrying value and fair value less any costs to sell. Where carried at fair value, it is regarded as a Level 3 fair value. At 31 July 2021 and 2020 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 a third parties for the properties which were completed in the 2021 financial year. Investment properties Investment property is carried at fair value and regarded as a Level 3 fair value. Valuations have been based on a market approach and have been undertaken having regard to comparable market transactions between informed market participants. 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: Properties held for sale Investment properties Total 2021 €’000 2020 €’000 Offers from third parties 24,200 27,100 Comparable market transactions: level 3 - - Total 24,200 27,100 2021 €’000 - 2,270 2,270 2020 €’000 - 2,270 2,270 2021 €’000 2020 €’000 24,200 2,270 26,470 27,100 2,270 29,370 143 FINANCIAL STATEMENTSNotes to the Group Financial Statements (continued)14 Investment properties and properties held for sale (continued) (iii) 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 2021 €’000 2020 €’000 2021 €’000 2020 €’000 2021 €’000 2020 €’000 At 1 August Additions Transfers from level 2 Disposal of held-for-sale properties Held for sale reclassification Fair value adjustment Total 27,100 24,135 2,270 - - (2,900) 64 - - - - 2,901 - - - - - - 24,200 27,100 2,270 - - 4,221 (2,901) 950 2,270 - (2,900) 29,370 24,135 - - - - 64 4,221 - - 950 26,470 29,370 Valuation Techniques and Significant Unobservable Inputs 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. Properties held for sale – valuation technique & unobservable inputs Valuation technique Unobservable inputs 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 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) 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). 144 Origin Enterprises plc Annual Report and Accounts 2021Notes to the Group Financial Statements (continued)15 Goodwill and intangible assets Goodwill Brand (ii) Customer related €’000 €’000 €’000 Intangible assets Developed Technology €’000 Computer related €’000 ERP (i) Related €’000 Total €’000 Cost At 1 August 2020 Additions Arising on acquisition (Note 33) Arising on disposal of subsidiary Translation adjustment At 31 July 2021 Accumulated Amortisation At 1 August 2020 Amortisation Arising on disposal of subsidiary Translation adjustment At 31 July 2021 Net book value At 31 July 2021 162,681 9,542 82,273 - 4,390 (2,017) 5,968 17 1,516 (547) 303 - 3,645 (1,322) 3,367 19,677 1,707 113 - 478 10,396 24,885 309,454 3,511 4,838 10,073 52 (179) 538 - - 9,716 (4,065) 186 10,840 171,022 10,831 87,963 21,975 14,318 29,909 336,018 - - - - - 2,735 41,513 506 (159) 127 3,810 (386) 1,858 5,047 2,199 - 262 5,118 2,062 (169) 273 19,092 3,585 - 100 73,505 12,162 (714) 2,620 3,209 46,795 7,508 7,284 22,777 87,573 171,022 7,622 41,168 14,467 7,034 7,132 248,445 At 31 July 2020 162,681 6,807 40,760 14,630 5,278 5,793 235,949 145 FINANCIAL STATEMENTSNotes to the Group Financial Statements (continued)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 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 - (26) 16,204 2,920 - (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 Material individual intangible assets are as follows: Customer Lists with a carrying value of €7.9 million, €4.1 million and €3.6 million respectively that have remaining residual lives of 11 years, 8 years and 10 years respectively. Developed technologies with a carrying value of €5.8 million that have remaining residual lives of 6 years. (i) ERP related amortisation is charged within operating costs in the Consolidated Income Statement. (ii) A rebranding of the Group’s Continental European business was completed during the prior 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 acquisitions were also written down. (iii) Developed technology relates to acquired accumulated knowledge and applied know-how. 146 Origin Enterprises plc Annual Report and Accounts 2021Notes to the Group Financial Statements (continued)15 Goodwill and intangible assets (continued) Cash generating units (CGUs) Goodwill acquired through business combination activity has been allocated to cash-generating units (‘CGUs’) that are expected to benefit from the business combination. The carrying amount of goodwill allocated to cash generating units across the Group and the key assumptions used in the impairment calculations are summarised as follows: Pre-tax discount rate Pre-tax discount rate Projection Period EBIT Growth rate in Year 2 & 3 Terminal Value Growth Rate 2021 2020 For financial years 2021 and 2020 Goodwill carrying amount 2021 €’000 Goodwill carrying amount 2020 €’000 Agronomy – UK Amenity Fertiliser Latin America Poland Belgium Romania 8.6% 8.6% 8.6% 13.5% 8.7% N/a 10.3% 8.9% 8.9% 8.9% 13.7% 9.2% 9.8% 10.6% 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% 80,532 13,512 14,528 32,444 8,146 - 21,860 75,875 8,446 13,687 32,029 8,455 2,017 22,172 171,022 162,681 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 2022 (Year 1) are extracted from the 2022 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 flows are discounted using appropriate risk adjusted discount rates as disclosed in the table above. The range of discount rates applied ranged from 8.6% to 13.5%. 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 based on sales and margin, growth rates and discount rates. These assumptions are based on management’s past experience. Profitability is based on the Group’s budgets and broadly assumes that historic investment patterns will be maintained. 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 147 FINANCIAL STATEMENTSNotes to the Group Financial Statements (continued)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 income / (expense) Disposal of interest in Ferrari Zagatto (Note 3) Disposal of equity investment Translation adjustment At 31 July 2021 €’000 40,597 2,841 (403) (4,468) 2,848 - - 1,359 42,774 2020 €’000 47,140 6,154 - (5,776) (5,630) (1,308) (113) 130 40,597 On 31 July 2020, the Group disposed of its 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 2021 €’000 2020 €’000 24,178 18,596 42,774 21,194 19,403 40,597 The information below reflects the amounts presented in the financial statements of the associates and the joint venture (and not Origin’s share of those amounts) adjusted for differences in accounting policies between the Group and those applied by its associates and joint venture. Associates and joint venture income statement (100%): Revenue Other comprehensive income / (expense) Dividends received by Group Exchange differences arising on consolidation The investment in associates and joint venture as at 31 July 2021 is analysed as follows: 2021 €’000 2020 €’000 714,515 5,696 (4,468) 1,359 672,840 (11,260) (5,776) 130 Non-current assets Current assets Non-current liabilities Current liabilities At 31 July 2021 148 Associates €’000 Joint venture €’000 Total €’000 11,469 40,237 (5,683) (21,845) 24,178 12,518 28,118 (6,575) (15,465) 18,596 23,987 68,355 (12,258) (37,310) 42,774 Origin Enterprises plc Annual Report and Accounts 2021Notes to the Group Financial Statements (continued)16 Investments in associates and joint venture (continued) 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 Associates €’000 Joint venture €’000 Total €’000 9,151 29,814 (5,310) (12,461) 21,194 12,915 36,578 (6,160) (23,930) 19,403 22,066 66,392 (11,470) (36,391) 40,597 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 At 1 August Repayments during the year Translation adjustments At 31 July 18 Inventory Raw materials Finished goods Consumable stores 19 Trade and other receivables Trade receivables (i) Amounts due from related parties (Note 32) Value added tax Other receivables Prepayments and accrued income (i) Includes rebates from suppliers 2021 €’000 2020 €’000 575 (56) 33 552 607 (42) 10 575 2021 €’000 2020 €’000 74,054 137,267 2,900 52,802 134,734 1,239 214,221 188,775 2021 €’000 2020 €’000 381,610 30,013 3,450 5,867 13,674 434,614 362,108 26,715 1,911 4,399 11,724 406,857 149 FINANCIAL STATEMENTSNotes to the Group Financial Statements (continued)20 Trade and other payables Trade payables (i) Accruals and other payables Deposits received in advance for assets-for-sale Amounts due to other related parties (Note 32) Income tax and social insurance Value added tax 2021 €’000 2020 €’000 510,533 69,910 3,000 12,691 8,960 40,830 645,924 478,918 58,614 - 9,002 8,168 35,480 590,182 (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 2021 approximately €43.5 million (2020: €17.9 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 at bank and in hand Bank overdrafts (Note 22) Included in the Consolidated Statement of Cash Flows 2021 €’000 2020 €’000 168,660 (12,882) 155,778 172,309 (19,633) 152,676 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. 150 Origin Enterprises plc Annual Report and Accounts 2021Notes to the Group Financial Statements (continued)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 Non-current interest-bearing loans and borrowings Included in current liabilities: Bank loans Bank overdrafts Leases liabilities Current interest-bearing loans and borrowings Total interest-bearing loans and borrowings Analysis of net debt Cash Overdraft Cash and cash equivalents Loans Net debt Lease liabilities Net debt including lease creditors 2021 €’000 2020 €’000 140,184 36,226 176,410 205,889 31,961 237,850 30,000 12,882 9,910 52,792 - 19,633 8,775 28,408 229,202 266,258 2020 Cash flow €’000 €’000 Non-cash movement €’000 Translation adjustment €’000 2021 €’000 172,309 (19,633) 152,676 (205,889) (53,213) (40,736) (93,949) (4,735) 6,981 2,246 42,400 44,646 12,553 57,199 - - - 1,086 (230) 168,660 (12,882) 856 155,778 (847) (5,848) (170,184) (847) (15,816) (16,663) (4,992) (2,137) (7,129) (14,406) (46,136) (60,542) 151 FINANCIAL STATEMENTSNotes to the Group Financial Statements (continued)22 Interest-bearing loans and borrowings (continued) Analysis of net debt 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. Currency Nominal value €’000 Carrying amount €’000 The details of outstanding loans are as follows: 2021 Unsecured loan facility: — term facility maturing in June 2025 — term facility maturing in June 2025 — term facility maturing in June 2025 — term facility maturing in June 2024 — term facility maturing in June 2024 — term facility maturing in June 2024 — term facility maturing in September 2021 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 EUR STG PLN EUR STG PLN EUR EUR STG PLN EUR 28,400 88,531 8,145 3,601 11,222 1,033 30,000 28,249 88,061 8,102 3,581 11,164 1,027 30,000 170,932 170,184 57,000 56,615 110,558 109,812 9,526 30,000 9,462 30,000 207,084 205,889 At 31 July 2021, the average interest rate being paid on the Group’s borrowings was 1.38 per cent (2020: 1.58 per cent). At 31 July 2021, the Group had unsecured committed banking facilities of €430 million (2020: €430 million), of which €30 million will expire in September 2021, €100 million will expire in May 2022, €34m will expire in June 2024 and €266 million will expire in June 2025. Subsequent to year end, the Group extended the €100 million facility due to expire in May 2022 to June 2025. 152 Origin Enterprises plc Annual Report and Accounts 2021Notes to the Group Financial Statements (continued)22 Interest-bearing loans and borrowings (continued) Repayment schedule – loans and overdrafts Within one year Between one and five years Loans and overdrafts Repayment schedule – lease liabilities and finance leases Within one year Greater than one year Lease liabilities and finance leases Guarantees 2021 €’000 2020 €’000 42,882 140,184 183,066 19,633 205,889 225,522 9,910 36,226 46,136 8,775 31,961 40,736 Group borrowings are secured by guarantees from Origin Enterprises plc and certain principal operational entities of the Group. 23 Financial instruments and financial risk The following table outlines the financial assets and liabilities held by the Group at the balance sheet date: Fair value hierarchy Financial Instruments at fair value through other comprehensive income €’000 Financial Instruments at fair value through income statement €’000 Financial assets/ (liabilities) at amortised cost Fair value Total carrying value €’000 €’000 €’000 Level 2 Level 3 Level 2 Level 3 Level 2 - - 224 - 224 - - - - - (24,138) (1,059) (25,197) - - - - - - 552 552 552 417,490 417,490 417,490 - 224 224 168,660 168,660 168,660 586,702 586,926 586,926 (596,134) (596,134) (596,134) (1,695) - (1,695) (1,695) - - - - - (12,882) (12,882) (12,882) (170,184) (170,184) (170,184) (46,136) (46,136) (46,136) - - (24,138) (24,138) (1,059) (1,059) (1,695) (825,336) (852,228) (852,228) 2021 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 Bank borrowings Lease liabilities Put option liability Derivative financial liabilities Total financial liabilities 153 FINANCIAL STATEMENTSNotes to the Group Financial Statements (continued)23 Financial instruments and financial risk (continued) Fair value hierarchy Financial Instruments at fair value through other comprehensive income €’000 Financial Instruments at fair value through income statement €’000 Financial assets/ (liabilities) at amortised cost Fair value Total carrying value €’000 €’000 €’000 Level 2 Level 3 Level 2 Level 3 Level 2 - - 1,460 - 1,460 - - - - - (22,073) (3,730) (25,803) - - - - - - (3,404) - - - - - (3,404) 575 393,222 - 172,309 566,106 (546,534) - (19,633) (205,889) (40,736) - - (812,792) 575 393,222 1,460 172,309 567,566 (546,534) (3,404) (19,633) (205,889) (40,736) (22,073) (3,730) (841,999) 575 393,222 1,460 172,309 567,566 (546,534) (3,404) (19,633) (205,889) (40,736) (22,073) (3,730) (841,999) 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 Bank borrowings Lease liabilities Put option liability Derivative financial liabilities Total financial liabilities Estimation of fair values Set out below are the major methods and assumptions used in estimating the fair values of the financial assets and liabilities disclosed in the preceding table. Trade and other receivables/payables For any receivables and payables with a remaining life of less than six months or demand balances, the carrying value less impairment provision, where appropriate, is deemed to reflect fair value. All other receivables and payables are discounted to fair value on initial recognition. Contingent consideration The fair value of the contingent consideration has been determined based on an agreed earnings before interest and tax based formula which includes an expectation of future trading performance (‘EBIT’). 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. Derivatives - forward foreign exchange contracts Forward foreign exchange contracts are marked to market using quoted forward exchange rates at the reporting date. The absolute principal amount of the outstanding forward foreign exchange contracts at 31 July 2021 was €64,023,000 (2020: €82,888,000). 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 2021 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. 154 Origin Enterprises plc Annual Report and Accounts 2021Notes to the Group Financial Statements (continued)23 Financial instruments and financial risk 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 2021 were €94,579,000 (2020: €102,459,000). At 31 July 2021, the average fixed interest rate on the swap portfolio was 0.67% 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 2021 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 six months, 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. Fair value hierarchy The tables at the beginning of this note summarise the financial instruments carried at fair value, by valuation method, as of 31 July 2021. Fair value classification levels have been assigned to the Group’s financial instruments carried at fair value. The different levels assigned are defined as follows: Level 1: Price quoted in active markets Level 2: Valuation techniques based on observable market data Level 3: Valuation techniques based on unobservable input Risk exposures The Group’s international operations expose it to different financial risks that include currency risk, credit risk, liquidity risk, commodity price risk and interest rate risk. The Group has a risk management programme in place which seeks to limit the impact of these risks on the financial performance of the Group. The Board has determined the policies for managing these risks. It is the policy of the Board to manage these risks in a non-speculative manner. The Group has exposure to the following risks from its use of financial instruments: — Credit risk — Liquidity risk — Market risk This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing the risk. Further quantitative disclosures are included throughout this note. The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. 155 FINANCIAL STATEMENTSNotes to the Group Financial Statements (continued)23 Financial instruments and financial risk (continued) Risk exposures (continued) 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 156 Carrying amount 2021 €’000 Carrying Amount 2020 €’000 552 417,490 168,660 224 575 393,222 172,309 1,460 586,926 567,566 Origin Enterprises plc Annual Report and Accounts 2021Notes to the Group Financial Statements (continued)23 Financial instruments and financial risk (continued) Trade receivables The Group has detailed procedures for monitoring and managing the credit risk related to its trade receivables. Trade receivables are monitored by geographic region and by largest customers. The maximum exposure to credit risk for trade receivables at the reporting date by geographic region based on location of customers was as follows: Ireland and United Kingdom Continental Europe Latin America Carrying amount 2021 €’000 138,449 222,531 20,630 381,610 Carrying amount 2020 €’000 111,453 234,679 15,976 362,108 At 31 July 2021 trade receivables of €315,834,000 (2020: €304,415,000) 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 2021 2020 Gross €'000 Impairment €'000 Gross €'000 Impairment €'000 317,598 48,307 13,237 30,216 409,358 (1,764) (2,500) (625) (22,859) (27,748) 306,073 32,876 16,223 29,919 385,091 (1,658) (234) (2,863) (18,228) (22,983) An analysis of movement in loss allowance in respect of trade receivables was as follows: 1 August Charge to Consolidated Income Statement Arising on acquisition Receivables written off as uncollectable Translation adjustments 31 July 2021 €’000 2020 €’000 (22,983) (4,968) (151) 265 89 (21,689) (2,539) - 659 586 (27,748) (22,983) 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 €46.7 million as at 31 July 2021 (2020: €44.2 million). 157 FINANCIAL STATEMENTSNotes 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 per cent of bank facilities should mature in the twelve-month period following the year end. As at 31 July 2021, 93 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 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 2021 Variable rate bank loans (170,184) (177,826) (31,035) (967) (1,931) (143,893) (12,882) (12,882) (12,882) - (596,134) (596,134) (582,148) (13,646) (1,695) (1,695) (145) (105) - (319) (106) - (21) (1,339) (46,136) (52,179) (5,230) (4,918) (9,275) (18,459) (14,297) (24,138) (26,921) - - (26,921) - Bank overdrafts Trade and other payables Contingent consideration Lease liabilities Put option liability Derivative financial liabilities Interest rate swaps used for hedging (468) (468) (56) (89) (246) (77) Currency forward contracts used for hedging — Inflows — Outflows 54,174 54,174 54,072 (54,765) (54,765) (54,662) (1,059) (1,059) (646) 102 (103) (90) - - - - (246) (77) 158 - - - - - - - - - Origin Enterprises plc Annual Report and Accounts 2021Notes to the Group Financial Statements (continued)23 Financial instruments and financial risk (continued) 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 (205,889) (216,504) (1,517) (1,517) (32,601) (180,869) Bank overdrafts Trade and other payables Contingent consideration Lease liabilities Put option liability (19,633) (19,633) (19,633) (546,534) (546,534) (546,534) - - - - - - (3,404) (40,736) (22,073) (25,746) (3,404) (1,596) (310) (100) (1,398) (44,915) (5,198) (4,994) (8,301) (14,429) (11,993) - - - - 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) - - - - - (25,746) - - - - (1,262) - - (1,262) - - - - - 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 2021 2020 Assets €’000 Liabilities €’000 Assets €’000 Liabilities €’000 224 - 224 (591) (468) (1,059) 1,460 - 1,460 (2,468) (1,262) (3,730) 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. 159 FINANCIAL STATEMENTSNotes to the Group Financial Statements (continued)23 Financial instruments and financial risk (continued) 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. Moreover, purchases are also denominated in US dollars. As a result the Consolidated Statement of Financial Position is exposed to currency fluctuations from subsidiaries with a functional currency different from the group’s presentation currency. 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, to 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. Exposure to currency risk The Group’s exposure to transactional foreign currency risk at the year end date is as follows: 2021 Trade receivables Cash and cash equivalents Trade and other payables 2020 Trade receivables Cash and cash equivalents Trade and other payables Ron €'000 Euro €'000 Sterling €'000 US Dollar €'000 Total €'000 - 80 - 80 - (438) - (438) 3,712 15,876 (31,142) (11,554) 4,180 15,006 (34,798) (15,612) - 410 (153) 257 - 359 (146) 213 2,418 3,445 (7,201) (1,338) 6,130 19,811 (38,496) (12,555) 2,083 7,438 (10,265) (744) 6,263 22,365 (45,209) (16,581) Hedged items are excluded from the tables above. Currency sensitivity analysis A 10 per cent strengthening/weakening of the euro against the following currencies at 31 July 2021 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 2020. A positive number below indicates an increase in profit where the euro strengthens or weakens 10 per cent against the relevant currency. 160 Origin Enterprises plc Annual Report and Accounts 2021Notes to the Group Financial Statements (continued)23 Financial instruments and financial risk (continued) 2021 Dollar Sterling Romanian Leu At 31 July 2021 2020 Dollar Sterling Romanian Leu At 31 July 2020 Interest rate risk 10% strengthening income statement €'000 10% weakening income statement €'000 134 (26) (8) 100 74 (21) 43 96 (134) 26 8 (100) (74) 21 (43) (96) 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. The London Interbank Offered Rate (LIBOR) and other benchmark interest rates are expected to be replaced by alternative risk-free rates by the end of 2021 as part of inter-bank offer rate (IBOR) reform. As at 31 July 2021, the Group is in communication with swap and debt counterparties to manage the transition to these new benchmark interest rates. There will be amendments to the contractual terms of IBOR-referenced interest rates and the corresponding update of the hedge designations. However, it is not anticipated that these changes will impact the Group’s financing or interest rate hedging strategies, nor would they have a material financial impact. Cash pooling is availed of across the Group in order to reduce interest costs, however no overdraft balances have been offset. At 31 July, the interest rate profile of the Group’s interest bearing financial instruments was as follows: Variable rate instruments Interest-bearing borrowings Bank overdraft Cash and cash equivalents At 31 July Total interest-bearing financial instruments Cash flow sensitivity analysis for variable rate instruments Carrying amount 2021 €’000 Carrying amount 2020 €’000 (170,184) (205,889) (12,882) 168,660 (14,406) (19,633) 172,309 (53,213) (14,406) (53,213) 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 2020. 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. 161 FINANCIAL STATEMENTSNotes to the Group Financial Statements (continued)23 Financial instruments and financial risk (continued) 2021 Unhedged variable rate instruments Bank overdraft Cash flow sensitivity (net) 2020 Unhedged variable rate instruments Bank overdraft Cash flow sensitivity (net) Principal amount €’000 Income statement 50 bp increase €’000 (75,605) (12,882) (88,487) (103,431) (19,633) (123,064) (378) (64) (442) (517) (98) (615) A 50 basis points decrease in interest rates at the reporting date would have had the equal but opposite effect on the above. 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: 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 Net deferred tax liability 162 2021 €’000 2020 €’000 663 183 112 75 130 5,022 6,185 779 101 - 373 70 5,567 6,890 (4,531) (1,193) (13,424) (2,013) (21,161) (3,953) (226) (12,117) (3,489) (19,785) (14,976) (12,895) Origin Enterprises plc Annual Report and Accounts 2021Notes to the Group Financial Statements (continued)24 Deferred tax (continued) Movements in deferred tax assets and liabilities, during the year, were as follows: Property, plant and equipment €’000 IFRS 16 Hedge related Pension related Intangibles Other Total €’000 €’000 €’000 €’000 €’000 €’000 2021 At 1 August 2020 Recognised in the Consolidated Income Statement Arising on acquisition (Note 33) Arising on disposal of subsidiary Recognised in Other Comprehensive Income Foreign exchange and other (3,852) (779) (132) 588 - (173) 70 53 - - - 7 373 - - - 553 57 1 - (12,117) 2,078 (12,895) (30) 620 (79) (1,244) 21 (1,354) 450 285 1,323 (298) (1,112) - 20 (1,390) - (29) (371) (15) (581) At 31 July 2021 (4,348) 130 75 (530) (13,312) 3,009 (14,976) 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 - 70 - - 62 - 311 759 (26) (70) (16,349) (27) (19,523) 2,088 2,982 4,743 - (117) (760) 100 1,785 - (110) 2,144 At 31 July 2020 (3,852) 70 373 553 (12,117) 2,078 (12,895) 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 and liabilities relates to losses carried forward and timing differences. 163 FINANCIAL STATEMENTSNotes to the Group Financial Statements (continued)25 Provision for liabilities The estimate of provisions is a judgement in the preparation of the financial statements. 2021 At beginning of year Provided in year Paid in year Translation adjustment At end of year Current Non-current 2020 At beginning of year Provided in year Paid in year Released in year Translation adjustment At end of year Current Non-current Contingent acquisition consideration €’000 (i) Rationalisation Other Total €’000 (ii) €’000 (iii) €’000 3,404 - (1,844) 135 1,695 250 1,445 13,431 109 (7,386) (1,738) (1,012) 3,404 1,906 1,498 - - - - - - - 251 - - (262) 11 - - - 2,638 146 (1,027) 7 1,764 1,764 - 4,936 35 (2,364) - 31 2,638 2,487 151 6,042 146 (2,871) 142 3,459 2,014 1,445 18,618 144 (9,750) (2,000) (970) 6,042 4,393 1,649 (i) Contingent acquisition consideration relates to the acquisition of Comfert SRL (‘Comfert’) in December 2015 and Vegetable Consulting Services Ltd (VCS) in March 2019. During the 2021 financial year, the Romania subsidiaries, including Comfert SRL, were legally merged to form Agrii Romanai SRL. The amount attributable to Comfert is €0.1 million and the amount attributable to VCS is €1.6 million. (ii) Rationalisation costs in the prior year 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. 26 Put option liability At 1 August Change in fair value of put option (i) Translation adjustment At 31 July 164 2021 €’000 22,073 1,674 391 24,138 2020 €’000 29,607 1,966 (9,500) 22,073 Origin Enterprises plc Annual Report and Accounts 2021Notes to the Group Financial Statements (continued)26 Put option liability (continued) (i) 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 2021 was €5,939,000 (2020: surplus of €403,000). At 31 July 2021, the Group’s Irish scheme is in surplus of €2,473,000 and the Group’s UK scheme is in surplus of €3,466,000. In the event of a wind-up of either the Irish or UK 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. Employee benefits included in the Consolidated Statement of Financial Position comprises the following: Surplus in defined benefit schemes 2021 €’000 2020 €’000 5,939 403 The pension charge included in the Consolidated Income Statement for the year in respect of the Group’s defined benefit schemes was €535,000 (2020: credit of €95,000) and a charge of €4,113,000 (2020: €4,125,000) in respect of the Group’s defined contribution schemes. 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 2021 by an independent, qualified actuary. The valuations have been performed using the projected unit method. Employee benefit plan risks The employee benefit plans expose the Group to a number of risks, the most significant of which are: Asset volatility The plan liabilities are calculated using a discount rate set with reference to corporate bond yields. If assets underperform this yield, this will create a deficit. Through its investment fund assets, 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. 165 FINANCIAL STATEMENTSNotes to the Group Financial Statements (continued)27 Post employment benefit obligations (continued) Changes in bond yields A decrease in corporate bond yields will increase the plans’ liabilities, although this will be partially offset by an increase in the value of the plans’ bond holdings. Inflation risk In certain schemes the plans’ benefit obligations are linked to inflation, with the result that higher inflation will lead to higher liabilities (although caps on the level of inflationary increases are in place). The majority of the assets are either unaffected by or only loosely correlated with inflation, meaning that an increase in inflation will also increase the deficit. Life expectancy In the event that members live longer than assumed a further deficit will emerge in the Schemes. The Group targets that the investment positions are managed with an overall asset-liability matching (‘ALM’) framework that has been developed to achieve long-term investments that are in line with the obligations under the pension schemes. Within this framework, the Group’s ALM objective is to match assets to the pension obligations. Most of the plans are closed and therefore, under the projected unit credit method, the current service cost is expected to increase as the members approach retirement and to decrease as members retire or leave service. The expected employee and employer contributions for the year ending 31 July 2022 are €125,000 and €1,441,000 respectively. Financial assumptions - scheme liabilities The significant long-term assumptions used by the Group’s actuaries in the computation of scheme liabilities as at 31 July 2021 and 31 July 2020 are as follows: Republic of Ireland schemes Rate of increase in salaries Discount rate on scheme liabilities Inflation rate UK scheme Rate of increase in salaries Rate of increases in pensions in payment and deferred benefits Discount rate on scheme liabilities Inflation rate 2021 2020 0.00%-2.45% 0.00%-1.95% 1.30% 1.60% 1.40% 1.10% 0.00%-3.50% 0.00%-3.20% 0.00%-3.80% 0.00%-3.60% 1.60% 2.90% 1.60% 2.40% 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: 2021 ROI 23.6 25.5 2021 UK 23.3 25.3 2020 ROI 24.3 26.3 2020 UK 23.1 25.2 Male Female 166 Origin Enterprises plc Annual Report and Accounts 2021Notes to the Group Financial Statements (continued)27 Post employment benefit obligations (continued) The mortality assumptions imply the following life expectancies in years of an active member, aged 65, retiring now: Male Female 2021 ROI 22.3 24.0 2021 UK 22.0 23.8 2020 ROI 22.5 24.4 2020 UK 21.8 23.7 Sensitivity analysis for principal assumptions used to measure scheme liabilities There are inherent uncertainties surrounding the financial assumptions adopted in calculating the actuarial valuation of the Group’s defined benefit pension schemes. The following table analyses (for the Group’s Irish and UK pension schemes) the estimated impact on plan liabilities resulting from changes to key actuarial assumptions, whilst holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the pension liability recognised in the statement of financial position. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period. Republic of Ireland schemes Assumption Discount rate Price inflation Salary Mortality UK scheme Assumption Discount rate Price inflation Salary Mortality Change in assumption Increase/decrease 0.50% Increase/decrease 0.50% Increase/decrease 0.50% Impact on plan liabilities Decrease by 7.9% / increase by 9.0% Increase by 0.6% / decrease by 0.7% Increase / decrease by 0.1% Increase/decrease by one year Decrease / increase by 3.2% Change in assumption Impact on plan liabilities Increase/decrease 0.50% Decrease by 7.5% / increase by 8.1% Increase/decrease 0.50% Increase by 3.6% / decrease by 3.5% Increase/decrease 0.50% Increase by 0.5% / decrease by 0.3% Increase/decrease by one year Decrease / increase by 3.8% 167 FINANCIAL STATEMENTSNotes to the Group Financial Statements (continued)27 Post employment benefit obligations (continued) Net pension asset Market value of scheme assets: Bonds Property Investment funds Insurance policy and insurance annuity Other Total market value of assets Present value of scheme obligations Surplus 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 Surplus/ (deficit) in the schemes The majority of equity securities and bonds have quoted prices in active markets. 2021 ROI €’000 2021 UK €’000 2021 Total €’000 11,762 - - 704 11,762 704 3,672 76,159 79,831 - 501 8,798 1,072 15,935 86,733 (13,462) (83,267) 8,798 1,573 102,668 (96,729) 2,473 3,466 5,939 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) 403 168 Origin Enterprises plc Annual Report and Accounts 2021Notes to the Group Financial Statements (continued)27 Post employment benefit obligations (continued) The major categories of scheme assets are as follows: Split of scheme assets: — Equities Bonds — Government Property - Ireland and UK Other Investment funds Insurance policy and insurance annuity Movement in the fair value of scheme assets 2021 ROI 2021 UK 2020 ROI 2020 UK 0% 74% 0% 3% 23% 0% 100% 0% 0% 1% 1% 88% 10% 100% 21% 64% 11% 2% 2% 0% 100% 0% 0% 1% 1% 89% 9% 100% 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 2021 and 2020 the pension schemes held no shares in Origin Enterprises plc. 2021 €’000 2020 €’000 94,559 1,502 105,581 1,918 3,070 1,333 123 (4) (2,879) - 4,964 102,668 3,349 1,480 131 (23) (8,829) (10,528) 1,480 94,559 169 FINANCIAL STATEMENTSNotes to the Group Financial Statements (continued)27 Post employment benefit obligations (continued) Movement in the present value of scheme obligations Value of scheme obligations at 1 August Current service costs Past service (costs)/ credit 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 Movement in net asset / (liability) recognised in the Consolidated Statement of Financial Position: Net asset/ (liability) in schemes at 1 August Current service costs Past service (costs)/ credit Gain on settlement Employer contributions Other finance income/ (expense) Remeasurements Translation adjustments Net asset in schemes at 31 July Analysis of defined benefit expense recognised in the Consolidated Income Statement: Current service cost Past service (costs)/ credit Gain on settlement Total recognised in operating profit Net interest income/ (cost) (included in finance costs Note 4) Net charge to Consolidated Income Statement 170 2021 €’000 2020 €’000 (94,156) (107,057) (526) (17) - (1,494) (123) 4 2,879 - 5,826 (2,014) (2,229) (4,879) (624) 151 387 (1,927) (131) 23 8,829 10,528 427 179 (3,402) (1,539) (96,729) (94,156) 2021 €’000 403 (526) (17) - 1,333 8 4,653 85 5,939 2020 €’000 (1,476) (624) 151 387 1,480 (9) 553 (59) 403 2021 €’000 2020 €’000 (526) (17) - (543) 8 (535) (624) 151 387 (86) (9) (95) Origin Enterprises plc Annual Report and Accounts 2021Notes to the Group Financial Statements (continued)27 Post employment benefit obligations (continued) Maturity analysis The maturity profile of the Group’s defined benefit obligation (on a discounted basis) is as follows: Within one year Between one and two years Between two and three years Between three and four years Between four and five years After five years Total Within one year Between one and two years Between two and three years Between three and four years Between four and five years After five years Total Average duration and scheme composition Average duration of defined benefit obligation (years) Average duration of defined benefit obligation (years) 2021 ROI €’000 338 343 352 365 388 11,676 13,462 2020 ROI €’000 335 343 353 370 394 11,713 13,508 2021 UK €’000 2,795 2,844 2,816 2,946 3,025 68,841 83,267 2020 UK €’000 2,543 2,662 2,765 2,919 3,019 66,740 80,648 2021 Total €’000 3,133 3,187 3,168 3,311 3,413 80,517 96,729 2020 Total €’000 2,878 3,005 3,118 3,289 3,413 78,453 94,156 2021 ROI 2021 UK 17.0 16.0 2020 ROI 2020 UK 18.0 16.0 171 FINANCIAL STATEMENTSNotes to the Group Financial Statements (continued)27 Post employment benefit obligations (continued) Allocation of defined benefit obligation by participant: Active plan participants Deferred plan participants Retirees Allocation of defined benefit obligation by participant: Active plan participants Deferred plan participants Retirees Defined benefit pension credit recognised in Other Comprehensive Income 2021 ROI €’000 2021 UK €’000 2021 Total €’000 1,043 6,685 5,734 13,462 2020 ROI €’000 1,018 6,500 5,990 13,508 21,935 21,720 39,612 83,267 2020 UK €’000 20,815 23,699 36,134 80,648 22,978 28,405 45,346 96,729 2020 Total €’000 21,833 30,199 42,124 94,156 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 Defined benefit pension credit recognised in the Consolidated Statement of Comprehensive Income 2021 €’000 2020 €’000 3,070 3,349 5,826 (4,243) 4,653 (1,112) 3,541 427 (3,223) 553 (70) 483 172 Origin Enterprises plc Annual Report and Accounts 2021Notes to the Group Financial Statements (continued)28 Share capital Authorised 250,000,000 ordinary shares of €0.01 each (i) Allotted, called up and fully paid 2021 €’000 2020 €’000 2,500 2,500 126,396,184 (2020: 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 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 The Board is recommending a final dividend of 7.85 cent per ordinary share (2020: nil) which when combined with the interim dividend of 3.15 cent per ordinary share brings the total dividend for the year to 11.00 cent per share (total dividend of €13.8 million) (2020: 3.15 cent per share). Subject to shareholders’ approval at the Annual General Meeting, the dividend will be paid on 4 February 2022 to shareholders on the register on 14 January 2022. In accordance with IFRS, this dividend has not been provided for in the Consolidated Statement of Financial Position as at 31 July 2021. 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. 173 FINANCIAL STATEMENTSNotes to the Group Financial Statements (continued)30 Consolidated statement of changes in equity (continued) 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: — 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 support a prudent capital base and ensure a long term sustainable business; — to comply with covenants as determined by debt providers; — to achieve an adequate return for investors; and — to apply a dividend policy which takes into account the level of peer group dividends, the Group’s financial performance and position, the Group’s future outlook and other relevant factors including tax and other legal considerations. The Group employs two key target ratios to monitor equity and to be compliant with its bank covenants: — the Group’s net debt to EBITDA ratio is below 3.50. The ratio is 0.13 times at 31 July 2021 (2020: 1.18 times), 31 January 2021 2.76 times (2020: 3.24 times); and — the Group’s interest cover (EBITDA to interest) is above 3.00. The ratio is 10.36 times at 31 July 2021 (2020: 5.76 times), 31 January 2021 6.75 times (2020: 7.57 times). 31 Commitments Future purchase commitments for property, plant and equipment At 31 July 2021 Contracted for but not provided for Land and buildings €’000 Plant and machinery €’000 Other €’000 Total 2021 €’000 - 616 3 619 Land and buildings €’000 Plant and machinery €’000 Other €’000 Total 2020 €’000 At 31 July 2020 Contracted for but not provided for 66 - - 66 Future purchase commitments: Software Development Contracted for but not provided for Total Total 2021 €’000 Total 2020 €’000 33 33 73 73 The Group has a financial commitment of €4.4 million attributable to a strategic partnership with University College Dublin (‘UCD’). The commitment was originally over a five year period and was extended to January 2023. 174 Origin Enterprises plc Annual Report and Accounts 2021Notes to the Group Financial Statements (continued)32 Related party transactions In the normal course of business, the Group undertakes trading transactions with its associates, joint venture and other related parties. A summary of transactions with these related parties during the year is as follows: 2021 Sale of goods €’000 Purchase of goods €’000 Receiving services from €’000 Rendering services to €’000 Total €’000 Transactions with joint venture Transactions with associates - (143,050) 70,828 (228) - (806) 169 295 (142,881) 70,089 2020 Sale of goods €’000 Purchase of goods €’000 Receiving services from €’000 Rendering services to €’000 Total €’000 Transactions with joint venture Transactions with associates - (110,752) 61,341 (200) - (849) 222 303 (110,530) 60,595 The trading balances with related parties were: Trading balances with associates Trading balances with joint ventures Total Due from related parties Due to related parties 2021 €’000 22,630 7,383 30,013 2020 €'000 19,525 7,190 26,715 2021 €’000 (9,222) (3,469) (12,691) 2020 €'000 (6,410) (2,592) (9,002) Other financial assets on the Consolidated Statement of Financial Position primarily comprise of €552,000 (2020: €520,000) in relation to a loan to West Twin Investments Limited, an associate of the Group. 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 payment charge/ (credit) Other long term employee benefits Total 2021 €’000 1,589 85 125 - 1,799 2020 €’000 3,123 148 (360) 24 2,935 175 FINANCIAL STATEMENTSNotes to the Group Financial Statements (continued)33 Acquisition of subsidiary undertakings On 5 March 2021, the Group acquired 100% of the share capital of Greentech Limited (‘Green-tech’), the UK’s leading manufacturer and distributor of landscaping, forestry and grounds maintenance equipment. Green-tech is expected to enhance the offering of Origin’s Amenity businesses and offers potential in the area of environmental land management and bio-diversity enhancement for the Group’s agri-focused businesses. Details of the net assets acquired and goodwill arising from the business combinations are as follows: Assets Non-current Property, plant & equipment Right of use asset Intangible assets Total non-current assets Current assets Inventory Trade receivables (i) Other receivables Total current assets Liabilities Trade and other payables Corporation tax Deferred tax liability Total liabilities Total identifiable net assets at fair value (excluding cash acquired) Goodwill arising on acquisition Total net assets acquired (excluding cash acquired) Consideration satisfied by: Cash consideration Cash acquired Total consideration related to acquisitions Fair value €’000 481 189 5,326 5,996 1,834 3,145 202 5,181 (4,805) (233) (1,354) (6,392) 4,785 4,390 9,175 10,789 (1,614) 9,175 (i) Trade receivables acquired were €3.1 million. All amounts are deemed to be recoverable. Goodwill recognised on the acquisition 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. None of the goodwill recognised is expected to be deductible for income tax purposes. 176 Origin Enterprises plc Annual Report and Accounts 2021Notes to the Group Financial Statements (continued)33 Acquisition of subsidiary undertakings (continued) Post acquisition revenues and net profit relating to the current year acquisition amounted to €9.2 million and €0.8 million respectively. If the acquisition had occurred on 1 August 2020, management estimates that the total consolidated revenue would have been €1,672.0 million and the consolidated net profit (excluding exceptional items) would have been €38.1 million. In determining these amounts management has assumed that the fair value adjustments that arose on the dates of acquisition would have been the same if the acquisition occurred on 1 August 2020. There were no acquisitions in the year ending 31 July 2020. 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 and intangible assets 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. 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 give the nature 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 per cent interest to Origin. In the event that this is not exercised, Origin has a similar right to acquire the 35 per cent interest. Origin has recognised an option liability of €26.4 million which is the fair value of the future estimated amount payable to exercise the option. The valuation of the put option liability has been determined based on an agreed formula which includes an expectation of future trading performance and an estimated timing of when the options are expected to be exercised, discounted to present day value. 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. 177 FINANCIAL STATEMENTSNotes to the Group Financial Statements (continued)35 Principal subsidiaries and associated undertakings Name of undertaking Nature of business % of ordinary shares Registered office Agrii Polska sp.Z.O.O Agrii Romania S.R.L. Agroscope International LLC Agspace Agriculture Limited BHH Limited (i) Specialist agronomy products and services Specialist agronomy products and services Specialist agronomy products and services Digital agricultural services group Provender milling FortGreen Comercial Agrícola Ltda Goulding Chemicals Limited Greentech Limited Hall Silos Limited Specialist agronomy products and services Fertiliser blending and distribution Manufacturer and distributor of landscaping, forestry and maintenance equipment Grain handling Headland Amenity Limited Turf management services 100 100 100 100 50 65 100 100 100 100 Linemark UK Limited Sports and amenity provider 100 Masstock Group Holdings Limited Origin Amenity Solutions Limited (previously Rigby Taylor Limited) Origin NI Limited Origin Riverwalk Property Trading Limited Origin Secretarial Limited Origin Treasury Limited Origin UK Operations Limited Specialist agronomy products and services Turf management services Agricultural and construction inputs Property trading IT implementation, maintaining and licensing of software Provides finance facilities and funding to group companies Fertiliser blending and distribution R&H Hall Limited 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 Obornicka street 233, 60-650 Poznan, Poland 3 Calea Lugojului St., Ghiroda Village, Ghiroda Commune Timis County, Romania 25B Sahaydachnoho Street, Kyiv 04070, Ukraine Unit 5, Dorcan Business Village, Murdock Road, Swindon, SN3 5HY, England 35/39 York Road, Belfast BT15 3GW, Northern Ireland R. Curitiba, 805 - Zona Indl. II, Paiçandu - PR, 87140-000, Brazil 4-6 Riverwalk, Citywest Business Campus, Dublin 24, Ireland Rabbit Hill Business Park, Great North Road, Arkendale, Knaresborough, HG5 0FF, UK 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 4-6 Riverwalk, Citywest Business Campus, Dublin 24, Ireland 4-6 Riverwalk, Citywest Business Campus, Dublin 24, Ireland 4-6 Riverwalk, Citywest Business Campus, Dublin 24, Ireland 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 (i) BHH Limited owns 100% of the shareholding in John Thompson and Sons Limited. The country of registration is also the principal location of activities in each case. The full list of subsidiaries and associates will be annexed to the Annual Return of the Group to be filed with the Irish Registrar of Companies. 178 Origin Enterprises plc Annual Report and Accounts 2021Notes to the Group Financial Statements (continued)36 Subsequent events At 31 July 2021, the Group had unsecured committed banking facilities of €430 million (2020: €430 million), of which €30 million will expire in September 2021, €100 million will expire in May 2022, €34m will expire in June 2024 and €266 million will expire in June 2025. Subsequent to year end, the Group extended the €100 million facility due to expire in May 2022 to June 2025. There have been no other material events subsequent to 31 July 2021 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 28 September 2021. 179 FINANCIAL STATEMENTSNotes to the Group Financial Statements (continued)Company Accounting Policies The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the Company’s financial statements. Basis of preparation The Company financial statements have been prepared on a going concern basis and in accordance with Irish GAAP (accounting standards issued by the UK Financial Reporting Council and the Companies Act 2014). The entity financial statements comply with Financial Reporting Standard 102, The Financial Reporting Standard applicable to in the UK and Republic of Ireland (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 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. 180 Origin Enterprises plc Annual Report and Accounts 2021Company Accounting Policies (continued) 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. Financial instruments The company has chosen to adopt Sections 11 and 12 of FRS 102 in respect of financial instruments. Financial assets Basic financial assets, including trade and other receivables, cash and bank balances and amounts owed from other group undertakings, are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. At the end of each reporting period financial assets measured at amortised cost are assessed for objective evidence of impairment. If an asset is impaired the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original interest rate. The impairment loss is recognised in profit or loss. If there is decrease in the impairment loss arising from an event occurring after the impairment was recognised the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss. Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party or (c) control of the asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions. Financial liabilities Basic financial liabilities, including trade and other payables and amounts owed to group undertakings, are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method. 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. 181 FINANCIAL STATEMENTSCompany Accounting Policies (continued) Leased assets Leases, where a significant portion of the risks and rewards of ownership are retained by the lessor, are classified as operating leases. Payments made under operating leases are charged to the Consolidated Income Statement on a straight line basis over the lease term. Leases, where the Group has substantially all the risks and rewards of ownership, are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased asset or the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in interest-bearing loans and borrowings. The interest element of the payments is charged to the Consolidated Income Statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The asset acquired under the finance lease is depreciated over the shorter of the useful life of the asset or the lease term. 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; — the intention to complete the development; — the ability to use or sell the intangible asset; — the ability to generate future economic benefits; — the availability of resources to complete the development; and — the 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. 182 Origin Enterprises plc Annual Report and Accounts 2021Company Balance Sheet As at 31 July 2021 Fixed assets Tangible assets Intangible assets Post employment benefit surplus Financial assets Current assets Debtors Cash at bank and in hand Notes 2021 €’000 2020 €’000 1 2 7 3 898 5,451 2,473 151,500 160,322 886 4,039 1,809 33,107 39,841 4 251,053 82,314 333,367 522,355 58,227 580,582 Creditors (amounts falling due within one year) 5 (188,971) (334,523) 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 144,396 246,059 304,718 285,900 8 1,264 164,850 138,604 1,264 164,850 119,786 304,718 285,900 The profit for the year attributable to shareholders dealt with in the financial statements of the holding company for the year ended 31 July 2021 was €21,427,000 (2020: €44,656,000). 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 28 September 2021 Sean Coyle Director 28 September 2021 183 FINANCIAL STATEMENTS Company Statement of Changes in Equity As at 31 July 2021 Share capital Treasury shares Share premium €’000 €’000 €’000 Capital redemption reserve €’000 LTIP reserve Profit and loss Total €’000 €’000 €’000 2021 At 1 August 2020 Profit for the year Remeasurement gain on post employment benefit asset Deferred tax on remeasurement Total comprehensive income for the year Share-based payment charge Dividend paid to shareholders 1,264 (8) 164,850 134 1,131 118,529 285,900 - - - - - - - - - - - - - - - - - - - - - - - - - - - - 21,427 21,427 407 (51) 407 (51) 21,783 21,783 1,016 - 1,016 - (3,981) (3,981) At 31 July 2021 1,264 (8) 164,850 134 2,147 136,331 304,718 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 At 31 July 2020 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) 1,264 (8) 164,850 134 1,131 118,529 285,900 184 Origin Enterprises plc Annual Report and Accounts 2021Notes to the Company Financial Statements 1 Tangible fixed assets Cost At 1 August 2020 Additions Disposals At 31 July 2021 Accumulated depreciation At 1 August 2020 Depreciation charge for year At 31 July 2021 Net book amounts At 31 July 2021 At 31 July 2020 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 Fixtures & fittings €’000 Total €’000 1,392 1,392 112 (30) 112 (30) 1,474 1,474 506 70 576 898 886 506 70 576 898 886 1,377 15 1,392 1,377 15 1,392 430 76 506 886 947 430 76 506 886 947 185 FINANCIAL STATEMENTS2 Intangible assets Cost At 1 August 2020 Additions At 31 July 2021 Amortisation At 1 August 2020 Charge for year At 31 July 2021 Net book amounts At 31 July 2021 At 31 July 2020 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 3 Financial assets Investment in subsidiaries At 1 August Additions At 31 July 186 Developed Technology €’000 Brand Software Total €’000 €’000 €’000 3,164 1,753 4,917 222 142 364 4,553 2,942 2,232 - 2,232 1,276 62 1,338 894 956 383 - 383 242 137 379 5,779 1,753 7,532 1,740 341 2,081 4 5,451 141 4,039 Developed Technology €’000 Brand Software Total €’000 €’000 €’000 2,090 1,074 3,164 111 111 222 2,211 21 2,232 1,083 193 1,276 383 - 383 182 60 242 4,684 1,095 5,779 1,376 364 1,740 2,942 956 141 4,039 1,979 1,128 201 3,308 2021 €’000 2020 €’000 33,107 118,393 151,500 33,107 - 33,107 Origin Enterprises plc Annual Report and Accounts 2021Notes to the Company Financial Statements (continued)3 Financial assets (continued) During the current financial year, the Company subscribed for share capital in Origin Agronomy Holdings Limited, a 100% subsidiary company. Investment in subsidiaries comprised as: Origin Agronomy Holdings Limited Origin Holdings Ukraine BV Goulding Chemicals Limited (a) Torrox Limited (b) 2021 €’000 2020 €’000 120,406 31,094 - - 2,013 31,094 - - 151,500 33,107 (a) The Company holds one ‘A’ share in Goulding Chemicals Limited, which has a carrying value of €20. (b) The Company holds 100 ordinary shares of €0.02 each in Torrox Limited. In the opinion of the directors, the value of the investments is not less than the book values shown above. The principal subsidiaries are set out on Note 35 to the Group financial statements. 4 Debtors Amounts owed by subsidiary undertakings Corporation tax Other debtors Deferred tax Amounts owed by subsidiary undertakings 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 (i) Amounts owed to subsidiary undertakings are unsecured and are payable on demand. (ii) Trade creditors, accruals and other payables are measured at amortised cost. 2021 €’000 2020 €’000 250,051 520,748 548 454 - 554 648 405 251,053 522,355 2021 €’000 2020 €’000 180,014 326,121 1,603 6,143 843 368 1,161 5,710 843 688 188,971 334,523 187 FINANCIAL STATEMENTSNotes to the Company Financial Statements (continued)6 Deferred tax At 1 August Charge/ (credit) for the year At 31 July 2021 €’000 2020 €’000 283 85 368 316 (33) 283 7 Post employment benefit asset The Company operates a defined benefit pension scheme which is closed to new members. Under FRS 102, the total surplus in the Company’s defined benefit scheme at 31 July 2021 was €2,473,000 (2020: surplus of €1,809,000). There was a charge in the profit and loss account for the period in respect of the Company’s defined benefit scheme of €23,000 (2020: charge of €69,000). The expected employer contributions from the Company for the year ending 31 July 2022 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 2021 by an independent, qualified actuary. The valuations have been performed using the projected unit method. Post employment benefits included in the Company Balance Sheet comprises the following: Surplus in defined benefit scheme (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 Investment funds Other Total market value of assets Present value of scheme liabilities Surplus in the scheme 188 2021 €’000 2,473 2,473 2021 % 2020 €’000 1,809 1,809 2020 % 0% - 2.45% 0% - 1.95% 1.30% 1.60% 2021 €’000 1.40% 1.10% 2020 €’000 - 11,762 - 3,672 501 15,935 (13,462) 2,473 3,208 9,753 1,650 386 320 15,317 (13,508) 1,809 Origin Enterprises plc Annual Report and Accounts 2021Notes to the Company Financial Statements (continued)7 Post employment benefit asset (continued) 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 Movement in the present value of scheme obligations Value of scheme obligations at 1 August Current service costs Settlement payment Interest on scheme obligations Remeasurement (loss)/ gain Benefit payment Employee contributions Value of scheme obligations at 31 July Movement in net asset recognised in the balance sheet At 1 August Current service cost Employer contributions Other finance income Remeasurement gain Net asset in scheme at 31 July 2021 €’000 2020 €’000 15,317 214 - 471 280 (357) 10 18,243 182 (2,234) 261 531 (1,678) 12 15,935 15,317 2021 €’000 2020 €’000 (13,508) (17,431) (50) - (187) (64) 357 (10) (80) 2,234 (171) 274 1,678 (12) (13,462) (13,508) 2021 €’000 2020 €’000 1,809 (50) 280 27 407 812 (80) 531 11 535 2,473 1,809 189 FINANCIAL STATEMENTSNotes to the Company Financial Statements (continued)7 Post employment benefit asset (continued) Defined benefit expense recognised in the profit and loss account: Current service cost Total recognised in operating profit Interest income on scheme assets Interest cost on scheme liabilities Included in finance income Net charge to Company’s profit and loss account Net defined benefit surplus 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 Changes in demographical and financial assumptions Remeasurements Deferred tax charge Gain recognised in statement of comprehensive income 8 Share capital Authorised 250,000,000 ordinary shares of €0.01 each (i) Allotted, called up and fully paid 2021 €’000 2020 €’000 (50) (50) 214 (187) 27 (23) (80) (80) 182 (171) 11 (69) 2021 €’000 2020 €’000 (13,462) (13,508) 15,935 2,473 2021 €’000 471 (108) 44 407 (51) 356 15,317 1,809 2020 €’000 261 (296) 570 535 (67) 468 2021 €’000 2020 €’000 2,500 2,500 126,396,184 (2020: 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. 190 Origin Enterprises plc Annual Report and Accounts 2021Notes to the Company Financial Statements (continued)9 Contingent liabilities In order to avail of the exemption under Section 357 of the Companies Act 2014 the Company has guaranteed the liabilities and commitments of all of its subsidiaries registered in Ireland. The Company has given guarantees to secure the obligations of its subsidiaries in respect of total committed bank facilities to the value of €430 million. 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 Profit for the financial year 2021 €’000 2020 €’000 26 435 26 386 21,427 44,656 All of the Group audit fee was recharged by the Company to its subsidiaries in the current year. 12 Employment The average number of persons employed by the Company (excluding Non-Executive Directors) during the year was as follows: Management and administration Aggregate employment costs of the Company are analysed as follows: Wages and salaries Social welfare costs Cash based long term incentive plan Pension costs: — defined benefit schemes - profit and loss account Share-based payment charge/ (credit) 2021 Number 2020 Number 21 22 2021 €’000 2020 €’000 7,640 362 146 23 1,016 9,187 5,099 342 35 69 (406) 5,139 191 FINANCIAL STATEMENTSNotes to the Company Financial Statements (continued)13 Operating lease commitments Non-cancellable operating lease rentals are payable as set out below. These amounts represent minimum future lease payments, in aggregate, that the Company are required to make under existing lease agreements. Within one year In two to five years After more than five years 14 Related party transactions 2021 €'000 185 45 - 230 In the normal course of business, the Company undertakes trading transactions with its associates and other related parties. A summary of transactions with these related parties during the year is as follows: 2021 Sale of goods €’000 Purchase of goods €’000 Rendering services to €’000 Receiving services from €’000 Transactions with joint venture Transactions with associates - - 169 295 - - - - 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 - - Total €’000 169 295 Total €’000 222 278 For the purposes of the disclosure requirements of FRS 102, the term ‘key management personnel’ (i.e. those persons having authority and responsibility for planning, directing and controlling the activities of the Company), comprises the management team who have responsibility for managing the business and affairs of the Company. Comparatives are presented on a consistent basis. Salaries and other short term employee benefits Post employment benefits Share-based payment charge/ (credit) Other long-term employee benefits 15 Approval of financial statements These financial statements were approved by the Board on 28 September 2021. 192 2021 €’000 1,160 46 82 - 1,288 2020 €’000 2,609 122 (159) 24 2,596 Origin Enterprises plc Annual Report and Accounts 2021Notes to the Company Financial Statements (continued)e i . g o d d e r : n g i s e D 4-6 Riverwalk Citywest Business Campus Dublin 24 Ireland T: +353 1 563 4900 F: +353 1 563 4916 Registered in Ireland Registration no. 426261 www.originenterprises.com

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