Origin Enterprises Plc · EURONEXT:OIZ
Origin Enterprises — Investor Day (May 2016)
135 slides from Origin Enterprises's investor day presentation, May 11, 2016
Slide 1: Capital Markets Day 11 May 2016
Capital Markets Day 11 May 2016
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements. These statements have been made by the Directors in good faith based on the information available to them up to the time of the preparation of this presentation. Due to the inherent uncertainties, including both econom
Slide 3: Welcome
Welcome Capital Markets Day Rose Hynes 11 May 2016 Chairman 3
Slide 4: Welcome | Agenda
Welcome | Agenda Capital Markets Day Tom O’Mahony 11 May 2016 Group CEO 4
Slide 5: 2016 Capital Markets Day Key objectives
2016 Capital Markets Day Key objectives » Background and Group overview » Current trading » Strategic perspective: sectoral dynamics and an evolving industry response » Farm services business overview – Deeper understanding of in-country markets and recent acquisitions » Development agenda » Financi
Slide 6: Board Leadership and Presentation Team
Board Leadership and Presentation Team Board Group Leads Senior Business Leadership Unit Management Rose Hynes Imelda Hurley Declan Giblin Liam Larkin Chairman Group CFO Head of Corporate Development CEO B2B In-Country Leads Hugh McCutcheon David Downie Rafal Prendke Iryna Ivanova Jim Rennie Senior
Slide 7: Agenda
Agenda Origin Development Finance Overview UK Poland Ukraine Romania Agenda Agenda / & Farm Farm Coffee Farm Farm Farm Closing / Buffet Positioning Services Services Break Services Services Services Questions Lunch Tom David Rafal Iryna Declan Declan Imelda All O'Mahony Downie Prendke Ivanova Giblin
Slide 8: Introductory Background & Group Overview
Introductory Background Capital Markets Day & Group Overview 11 May 2016 8
Slide 9: Our Business
Our Business » We support the primary crop production sectors of the food industry » Provider of agronomy services, inputs and crop technologies » Direct Farm and Business-to-Business customer channels » Ireland, UK, Poland, Romania and Ukraine » Focus on delivery of customised crop management syste
Slide 10: Transitioning to a Focused Agri-Services Group
Transitioning to a Focused Agri-Services Group B2C Model New Beginnings Development Extension Priorities › Separation from IAWS › Direct interface with › Research led agronomy › Simplification and Primary Producer services change management › Reducing complexity › Advisory centric, scalable & fixed
Slide 11: Group Overview: Geography and customer channel
Group Overview Geography and customer channel Geography * Customer Channel * Revenue EBIT Revenue EBIT 67% | 33% 73% | 27% 57% | 43% 62% | 38% █ Ireland / UK █ Direct Farm █ Central & Eastern Europe █ Business-to-Business 11 * The above profile breakdowns are pro-forma, approximate and are based on
Slide 12: Group Overview: Service application and gross margin profile
Group Overview Service application * | Gross margin profile * Revenue Gross Margin 57% | 14% | 6% 56% | 19% | 12% 3% | 20% 7% | 6% Combinable Crops Grassland Crop Protection Nutrition Roots & Veg Amenity Seed Amenity Crop Marketing / Other Crop Marketing / Other 12 * The above profile breakdowns are
Slide 13: Value Drivers
Value Drivers Evidencing Value Add Benchmarking and ROI Knowledge Transfer Guiding On-farm Decision Making and Product Specification / Fulfilment / Financing Segmentation Serviced Influenced Franchise Corporate Buying Agronomy Group Applications Crop Coordinated Research Solutions Science Growing Sy
Slide 14: Current Trading
Current Trading Capital Markets Day 11 May 2016 14
Slide 15: Q3 Pre-close Trading Update: Rainy days UK
Q3 Pre-close Trading Update Higher average rainfall and more rainy days – UK 20 2014 Average number of rainy days * 2015 4 weeks period from 28 March to 25 April 2016 Rainy days (daily rainfall ≥1mm) 2016 15 10 5 0 Scotland North West North East Anglia Central West Wales South West South East Midlan
Slide 16: Q3 Pre-close Trading Update: Poland
Q3 Pre-close Trading Update Poland – absence of spring growth in North and Central regions North & Central Poland Southern Poland 16
Slide 17: Principal executional focus points
Q3 Pre-close Trading Update Principal executional focus points » Prioritise high service and influenced channel – Less exposure to price sensitive sectors » Prioritise R&D and technical excellence – Provide very best guidance to farmers and agronomists in highly challenging year – Communicating risk
Slide 18: Earnings Development
Earnings Development » Short term inter-year earnings variation – We are directly exposed to weather – Indicative range of EBIT impact: +/- 10 to 15% » Context for medium term earnings development – No material shift in structure of crop plantings anticipated – Realignment of direct input cost sets
Slide 19: Sectoral Dynamics and an Evolving Industry Response
Sectoral Dynamics and an Capital Markets Day Evolving Industry Response 11 May 2016 19
Slide 20: Externalities
Externalities Input & Technology Primary Producers Global Grain Complex Providers Escalating Sustainability Elevated Grain & Cost of Innovation of Farm Incomes Oilseeds Production Speed of ROI Competitiveness of Emerging Markets & Product Lifecycle Production Systems & FX Volatility Manufacturing Re
Slide 21: Consolidation, Professionalisation and Technology are Centre Stage
Consolidation, Professionalisation and Technology are Centre Stage Stakeholders On-Farm Primary Manufacturers Technology Service Providers Producers » Consolidation » Multi disciplinary capability sets » Innovation in crop » Professionalisation management systems and » GTM approach » Advisory, syste
Slide 22: UK Farm Services | Agrii
UK Farm Services | Agrii Capital Markets Day David Downie 11 May 2016 CEO Agrii UK 22
Slide 23: Agrii UK: A history of successful acquisitions
Agrii UK A history of successful acquisitions and synergy growth » Agrii represents the unification of long established and highly respected agronomy service businesses » Provide very best agri-intelligence for agronomists and growers 2003 2008 2009 2011 2012 23
Slide 24: Agrii UK Overview
Agrii UK Overview » Market leader in the provision of strategic agronomy services and crop inputs » Employs c.800 staff in the UK, of which 280 are agronomists / field sales » Has a national seed, fertiliser and agrochemical distribution and storage business » Agrii agronomists service 1.4m ha of cr
Slide 25: Agrii UK Market Overview
Agrii UK Capital Markets Day Market Overview 11 May 2016 25
Slide 26: Agrii UK Cropping area
Agrii UK Cropping area Cropping Profile Total Arable Area * Ha (millions) 100% Wheat 1.93 90% 29% 30% 29% Barley 1.09 80% 70% Oil Seed Rape 0.57 60% Beans 0.14 50% Peas 0.03 40% 71% 70% 71% Oats 0.14 30% 20% Potatoes 0.13 10% Corn 0.17 0% 2014 2015 2016 Sugar Beet 0.09 Winter Spring Total 4.29 26 *
Slide 27: Agrii: UK's Largest Full Service Agronomy Provider
Agrii UK’s Largest Full Service Agronomy Provider 280 29% of all practicing agronomists 20,000 c.40% of farms engaged in cereal production 1.4m ha 33% of primary combinable crop advice » c.800 staff across 40 sites 16k ha 55% of primary fruit crop advice » Average farm size c.81Ha 60kt 17% of certif
Slide 28: Agrii UK Business Overview
Agrii UK Capital Markets Day Business Overview 11 May 2016 28
Slide 29: What is Agronomy?
What is Agronomy? Crop Marketing Agronomist Precision Agronomy visits farm (up to 25x per year) Business / Environment Analyse farmer’s needs Establishment Seed / Genetics Prescription creation Soil / Nutrition Transmission of Delivery to Crop Protection prescription farmer 29
Slide 30: Agrii UK: Why are we different?
Agrii UK Why are we different? Coordinated Knowledge Growing Communication Growers Systems Varietal Selection Growing Systems Soil Management Research & Agronomists Decision Making Development Nutrition Knowledge Application Transfer Partnership Crop Protection iFarms Deliver Benefits Approach Preci
Slide 31: Localised technology transfer
Agrii UK Localised technology transfer 5 TECHNOLOGY CENTRES 55,000 TRIAL PLOTS across the UK representing all regions and crops 400 REPLICATED TRIALS NATIONALLY 28 DEMONSTRATION iFARMS putting R&D into practice +Established across all main arable sectors +R&D experts qualified to the highest ORETO s
Slide 32: iFarm network – knowledge exchange
Agrii UK iFarm network – knowledge exchange 28 sites 150 events annually Autumn, Spring, Summer National network Lively, engaging, interactive Led by industry specialists Translating Know-How to Do-How 32
Slide 33: Precision Agronomy Services
Agrii UK Precision Agronomy Services Soil survey maps using in-field Soil variation maps using Whole field sampling, analysis scanning technology satellite technology and nutrient recommendations Soil Soil Whole Scan Reflection Field Multi depth soil survey Soil texture analysis, seed planning T(-1)
Slide 34: Decision Support
Agrii UK Decision Support ENTERPRISES PLC BY aetna S| 20 30| Mond Aegint | abel | «J } Co Nusient Management Plans ] tutrient Pian Detats Product Totats eo) : / 14 Agel Demonstration 1/5/2008 ee ‘sei = Product ame [Agr Demonsatan 1/2014 Cattle FYM [> £5 oo) snow 2 }) Zone Detaes Zone Details J Produ
Slide 35: Agrii organisation – three regions
Agrii UK Agrii organisation – three regions Regional Central North Management Teams Support Region Regional Regional Seed, Regional Team Commercial Nutrition & Technical Managers Soil Research & Managers Advisors Managers Development, Logistics & Customer Agronomists Service, HR, IT, Finance, Commer
Slide 36: Growth Agenda
Growth Agenda Capital Markets Day 11 May 2016 36
Slide 37: Key enablers – Human Resource agenda
Agrii UK Key enablers – Human Resource agenda Delivery of our Vision, Values and Behaviours 1. Get 2. Grow 3. Keep Defined ‘People Journey’ underpinned by exceptional HR Service to support our workforce move through each stage “ Become an employer “ Develop innovative training “ Engage for Success”
Slide 38: HR support for strategic initiatives
Agrii UK HR support for strategic initiatives Recruitment Learning and Development Win Recruiting against each Adapting training offer to agreed vacancy as part equip existing employees Core of the plan with new skills to make Market each initiative a success Share Support in attracting top-talent A
Slide 39: Key enablers – Decision Support platform
Agrii UK Key enablers – Decision Support platform » Supporting business development and targeted performance management » Strengthening communications, simplification and team management development 39
Slide 40: Bringing It All Together: Complete Agronomy
Bringing It All Together Capital Markets Day Complete Agronomy 11 May 2016 40
Slide 41: World record wheat yield 2015
Agrii UK World record wheat yield 2015 Our relevance Agrii advised Beal Farm achieved a new world wheat yield record in 2015 » The integrated agronomy programme demonstrates the significance of – Working more closely with leading primary producers – Understanding the factors affecting yield – Those
Slide 42: Financial analysis – world record crop
Agrii UK Financial analysis – world record crop, Dickens Beal Farm High Performing Incremental Application Application Return Input Cost / Ha Cost / Ha Seed £91.76 £72.25 Fertiliser (N) £254.25 £202.89 Fertiliser (P&K) £150.00 £82.85 Sprays £257.75 £186.62 Total Variable Costs / Ha £753.76 £544.61 £
Slide 43: Poland Farm Services: Agrii Polska
Poland Farm Services Agrii Polska Capital Markets Day Rafal Prendke 11 May 2016 CEO Agrii Poland 43
Slide 44: Agrii Polska: Our history
Agrii Polska Our history – a long established Polish operation » Origin entered Poland in 2008 with the acquisition of Dalgety – Dalgety established in 1996 • Advisory, crop input, crop marketing and seed assembly • 2015: 3,500 farm customers, 1.8m Ha serviced, 65 agronomists / sales support » Organ
Slide 45: Agrii Polska Market Overview
Agrii Polska Capital Markets Day Market Overview 11 May 2016 45
Slide 46: Agrii Polska – Market Overview: Cropping area
Agrii Polska – Market Overview Cropping area Total Cropping Area Arable Cropping Ha millions Agriculture 14.6m Ha Wheat 2.6 Forests 1.0m Ha Barley 1.0 Others 0.9m Ha OSR 0.9 Total cropping area 16.5m Ha Beans 0.5 Spring cereals 2.3 Total Agricultural Area Potato 0.3 Arable 10.8 m Ha Maize 1.0 Meadow
Slide 47: Agrii Polska - Average farm size
Agrii Polska - Market Overview Average farm size - 10 Ha > 15 ha < 5 ha < 20 ha 20 - 50 ha 50 - 100 ha > 100 ha Total Number (‘000) 1,385 95 17 10 1,507 Area (Mln Ha) 7.4 2.8 1.3 3.1 14.6 47
Slide 48: Agrii Polska - Market size
Agrii Polska - Market Overview Market size (based on input spend per Ha) Spending / Ha < 20 Ha 20 - 50 Ha 50 - 100 Ha > 100 Ha Seed 50 74 134 304 Crop Protection 158 228 308 378 Nutrition 253 449 949 1,219 Total (PLN/Ha) 461 751 1,391 1,901 Land (Mln Ha) 5.3 2.3 1.0 2.2 10.8 Market Spend < 20 Ha 20
Slide 49: Agrii Polska - Distribution channels
Agrii Polska - Market Overview Distribution channels Farm Size Retail Direct Farm 1 - 20 Ha 100% 0% 20 - 50 Ha 80% 20% 50 - 100 Ha 50% 50% > 100 Ha 3% 97% » Approximately 50% of inputs are sold via retail channel » Approximately 1,000 retail outlets operate in Poland Retail Direct Farm % Seeds Crop
Slide 50: Market size and structure summary
Agrii Polska - Market Overview Market size and structure summary » Per hectare crop input spend development linked to farm consolidation » 30% of agricultural area comprised of farms > 50 hectares » Retail plays key role in service provision – Addressing c.50% of the market » Price exerts important
Slide 51: Increasing requirement for scale and differentiation
Agrii Polska - Market Overview Increasing requirement for scale and differentiation » Consolidation of service providers and farms » Product supply only players » Farm professionalisation drives demand for full service – Agronomy advice with prescription input packages – Investment and scale • Resea
Slide 52: Acquisition of Kazgod
Acquisition of Kazgod Capital Markets Day 2015 11 May 2016 52
Slide 53: Kazgod – key facts
Agrii Polska Kazgod – key facts » Founded in 1989 by Kazimierz Kuzminski » Group: Kazgod, Agro Bakałarzewo and Agro-Plus » Advisory crop input and crop marketing service provision » Micro nutrition formulation capability » High retail coverage » 2,600 farm customers » Developed service presence acro
Slide 54: Why Dalgety and Kazgod?
Agrii Polska Why Dalgety and Kazgod? » Material expansion in scale and added value service capability – Doubling of historical market share position under Dalgety » Complementary regional coverage » Minimal customer overlap » Balanced customer channel fit (retail vs direct farm) » Excellent service
Slide 55: Favourable customer distribution profile
Agrii Polska Favourable customer distribution profile Customer locations 55
Slide 56: Service reach
Agrii Polska Service reach HQ 56
Slide 57: Complementary channel profile
Agrii Polska Complementary channel profile Poland – Total Market Agrii Poland Retail 15% Direct Farm 85% Direct Farm Retail 48% 52% Direct Farm 35% Retail 65% 57
Slide 58: Agrii Polska: Bringing it all Together
Agrii Polska Capital Markets Day Bringing it all Together 11 May 2016 58
Slide 59: Agrii Polska Key facts
Agrii Polska Key facts » Established 1996 – Joint Dalgety / Kazgod Group re-launched as Agrii in January 2016 » Second largest agri-services company in Poland » Annual turnover – PLN1.4bn » 6,100 direct farm customers, 700 retail customers, servicing 3m Ha » 27 retail outlets – 13 owned, 14 franchis
Slide 60: Business integration and change management achieved
Agrii Polska Significant business integration and change management achieved to date » 2 regions with teams » 4 regions with teams » "Key Account" team » "1,000Ha+" team » Own retail outlets 60
Slide 61: Own brand technologies and added value applications
Agrii Polska Own brand technologies and added value applications » Exclusive Crop Protection » Dalgety Seed portfolios » FoliQ foliar nutrition 61
Slide 62: Catalyst for transformational change in Polish market
Agrii Polska Catalyst for transformational change in Polish market » Integrated R&D approach » Skills development for agronomists and sales specialists – Strong product competence » Professional marketing » After-sales service » Retail merchandising » Customer loyalty programs » Manufacturing partne
Slide 63: Strategic priorities
Agrii Polska Strategic priorities » Agrii as market consolidator » Leverage the Group’s knowledge transfer systems capabilities » Organic growth » Reliable partner to manufacturers » Multichannel access to the market » Lean organisation with good IT infrastructure 63
Slide 64: Ukraine Farm Services: Agroscope International
Ukraine Farm Services Agroscope International Capital Markets Day Iryna Ivanova 11 May 2016 CEO Agroscope International 64
Slide 65: Agroscope successful years in Ukrainian agriculture market
Agroscope 14 successful years in Ukrainian agriculture market 2002 » Foundation of Agroscope Ukraine as official distributor and importer of seeds, crop protection and nutrition systems from global manufacturers 2002 - 2013 » Agroscope became one of the leading and most dynamic companies in the Ukra
Slide 66: Agroscope Overview
Agroscope Overview Our mission » Providing agrarian intelligence technology and inputs to enhance crop performance and support stability and profitability of agricultural producers » To facilitate progressive development of the Ukrainian agro-industrial sector Our values » Doing business based on tr
Slide 67: Agroscope Overview cont'd
Agroscope Overview cont’d … » Employs c.280 staff » Services 1,360 farms with a footprint of over 4.5m Ha » Our core business is to act as agronomy advisor and distributor of – Crop protection – Seed – Nutrition products » Additional services – Crop marketing – Soil audit – Satellite monitoring – Se
Slide 68: Agroscope Market Overview
Agroscope Capital Markets Day Market Overview 11 May 2016 68
Slide 69: Agroscope Market overview: Cropping Profile
Agroscope Market overview Cropping Profile Total Cropping Area Ha (millions) 100% Wheat 5.28 90% Barley 2.62 80% Oil Seed Rape 0.59 70% 63% 66% 71% Peas 0.19 60% Oats 0.22 50% Spring Sunflower 6.00 40% Winter Potatoes 0.06 30% Corn 4.10 20% 37% 34% Soya 2.20 29% 10% Sugar Beet 0.28 0% Fruit & Veg 0.
Slide 70: Agroscope - Market size
Agroscope - Market Overview Market size (based on input spend per Ha) Spending / Ha < 50 Ha 50 - 100 Ha 100 - 500 Ha > 500 Ha Per Ha Unit Spend Influencers Seed 15.3 20.6 15.8 15.5 » Input intensity Crop Protection 31.8 42.3 33.7 30.6 – vegetable vs. arable Nutrition 10.1 13.2 4.2 4.1 » Purchasing p
Slide 71: Agroscope Business Overview
Agroscope Capital Markets Day Business Overview 11 May 2016 71
Slide 72: Technology and decision support
Agroscope Technology and decision support Soil audit » Zones management (soil heterogeneity maps) » Soil analysis and GPS-navigation of sampling » Fertilizer recommendations depending on zones’ heterogeneity » Plants analysis on micro, macro and mezzo elements content Services Satellite monitoring o
Slide 73: Farm management finance solutions support
Agroscope Farm management finance solutions support » Partner programs with banks and technology partner suppliers – Aimed at funding of crop protection, seed and nutrition products – Promissory notes, agrarian receipts » Partner programs with IFC and global manufacturers – Aimed at funding on-farm
Slide 74: IFC Bayer Master Class – 2016 program
Agroscope “IFC Bayer Master Class” – features of 2016 program » Global experience for those who aspire to be the best! – Improving farm efficiency through improved knowledge in correct identification of yield limiting factors and how to manage them » Value proposition – Access to the best global agr
Slide 75: Crop technology centres
Agroscope Crop technology centres Base for learning, researching, and getting practical experience in the implementation of new technologies 1 and the use of new products as well as adapting them in local conditions Possibility to create new business environment by 2 gathering innovation oriented cu
Slide 76: Agroscope Macro Environment
Agroscope Capital Markets Day Macro Environment 11 May 2016 76
Slide 77: Macro environment
Agroscope Macro environment Political » Military conflict at ZTO zone Political » New cabinet as of April 2016, factors parliament coalition unstable » Uneven success of reforms Social Agroscope » Population 42.3 million Technological International Economic factors factors LLC » Unemployment rate: 9
Slide 78: Economic background - GDP vs. high frequency indicators
Agroscope Economic background - GDP vs. high frequency indicators, y/y change (%) 10 10 5 5 0 0 -5 -5 -10 -10 -15 -15 -20 -25 -20 -30 -25 -35 Jan-13 Jun-13 Nov-13 Apr-14 Sep-14 Feb-15 Jul-15 Dec-15 Quarterly GDP, y/y Industrial production (RHS) Retail sales (RHS) 78
Slide 79: Economic background - GDP per capita
Agroscope Economic background - GDP per capita (USD) IMF estimate 25,000 20,000 Czech Republic Georgia Lithuania 15,000 Moldova Poland 10,000 Romania Russia Slovakia 5,000 Turkey Ukraine 0 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 79
Slide 80: Economic background – Consumer inflation is normalising
Agroscope Economic background – Consumer inflation is normalising 65.0% 26.0% 60.0% 24.0% 55.0% 22.0% 50.0% Forecast 20.0% 45.0% 18.0% 40.0% 16.0% 35.0% 14.0% 30.0% 12.0% 25.0% 10.0% 20.0% 8.0% 15.0% 6.0% 10.0% 4.0% 5.0% 2.0% 0.0% 0.0% -5.0% -2.0% Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul
Slide 81: Risk management protocols
Agroscope Risk management protocols » Sales structure – 55% contracted customer commitments on prepayment and documentary finance basis – 45% contracted customer commitments on credit basis » Credit Management – Rigorous risk review – First charge on crop and output collections » Foreign currency ex
Slide 82: Agriculture has significant long term potential
Agroscope Agriculture has significant long term potential 32m Ha of 25% of the world’s arable land “Black Earth” Accounts for 14% Equivalent to one third Producing c.70m tns of Ukraine’s GDP of the arable land in the entire European Union Worldwide Exports Drives 17% of 3rd largest exporter #1 in su
Slide 83: Competitive Positioning and Strategic Agenda
Competitive Positioning Capital Markets Day and Strategic Agenda 11 May 2016 83
Slide 84: Agroscope Strategic priorities
Agroscope Strategic priorities » Sales network expansion, increased by 15% in 2016 » Increasing market share in distribution of crop protection, seeds and nutrition » Focusing on exclusive technology portfolio development to support competitive advantage and margin objectives » Development of servic
Slide 85: Customer segment balance
Agroscope Customer segment balance Customers categories Holdings Groups Mid-size Small-size Strategy for growing in customers categories – balanced growth in volumes and margin Holdings Mid- and small size and Groups companies Large » Pros Small » Pros volumes – Big volumes of orders volumes – Highe
Slide 86: Summary: Key Success Factors and Risks
Agroscope Summary Key Success Factors Principal Challenges and Risks » Imminent agronomy expertise » Currency volatility enhancement to support existing and » Competitive intensity new farmer relationships » Farmer cash flow pressures » Exclusive seed portfolio » Appetite of farmers to invest strate
Slide 87: Agroscope 2020 Vision
Agroscope Summary cont’d … Agroscope 2020 Vision » To be both a powerful Agri-inputs and Agri-services supplier and an expert in Agri-intelligence technology, associated with: – High level of professionalism in agronomy and agricultural management, proven performance of technologies and approaches i
Slide 88: Romania Farm Services
Romania Farm Services Capital Markets Day Declan Giblin 11 May 2016 Head of Corporate Development 88
Slide 89: Origin Romania: Our history
Origin Romania Our history » Farm services presence established in 2015 Sept 2015 Dec 2015 ROMANIA 2016 89
Slide 90: Origin Romania Market Overview
Origin Romania Capital Markets Day Market Overview 11 May 2016 90
Slide 91: Origin Romania Market overview
Origin Romania Market overview Cropping Profile Total Cropping Area Ha (millions) 100% Wheat 2.10 90% Barley 0.35 80% Oil Seed Rape 0.54 70% 54% 54% 54% Beans & Peas 0.05 60% Oats 0.18 50% Spring Sunflower 1.00 40% Winter Potatoes 0.18 30% Corn 2.50 20% 46% 46% 46% Soya 0.14 10% Sugar Beet 0.03 0% F
Slide 92: Origin Romania - Market size
Origin Romania - Market Overview Market size (based on input spend per Ha) Spending / Ha < 20 Ha 20 - 50 Ha 50 - 100 Ha > 100 Ha Seed 87.0 123.2 269.2 344.9 Crop Protection 145.1 205.5 342.2 409.9 Nutrition 140.2 198.6 425.1 660.1 Total (RONm / Ha) 372.3 527.3 1,036.5 1,414.9 Land (Mln Ha) 2.8 0.5 0
Slide 93: Input spend – Romania vs EU
Origin Romania Input spend – Romania vs EU Romania vs EU Input Romania (€/Ha) EU average (€/Ha) Seeds 55.45 57.98 Fertilizers 50.32 93.47 CPP 21.21* 64.95 Source: Eurostat, 2016 * Total utilised agricultural area including pasture Crop Protection (Cereals) Cultivated CPP Total Herbicides Fungicides
Slide 94: Farm structure
Origin Romania Farm structure Farm’s size Number of farms Ha Owners > 1 ha* 33,584 Promoter and 1 – 5 Ha 776,421 Retail Model 5 – 10 Ha 125,016 3.8m Ha 1m 1,600 Retail Outlets 10 – 50 Ha 64,918 50 – 100 Ha 8,556 100 – 1000 Ha 12,233 Advisor Model 1000 – 5000 Ha 853 4.2m Ha 13,000 > 5000 Ha 33 Total
Slide 95: Why go there?
Origin Romania Why go there? » Agriculture represents 4.4% of GDP in 2015, EU average is 2% » Cereals and Oilseeds represent 80% of cropping » Yields are less than 50% of EU average » In receipt of EU agricultural and structural subsidies – Subsidy €150 per Ha and set to increase » Land price €5K pe
Slide 96: Market penetration
Origin Romania Market penetration Total Farm Units (No.) 3,859,000 Total Cropping Area 8.0m Ha Opportunity % of Agriculture Area for Farm Units > 50 Ha 59% Identified Average Wheat Yield / Ha 3.0 tons Grain and Oil Seeds Production 22.4m tons Access Vehicle Agronomy / Sales Force (No.) 120 Customers
Slide 97: Origin Romania Business Overview
Origin Romania Capital Markets Day Business Overview 11 May 2016 97
Slide 98: Who we are and what we do
Origin Romania Who we are and what we do » Headquartered in Timisoara (West Romania) » Leader in micro packaged seed dressing and crop protection application » Average farm size 100-400 Has » 3,000 customers » Sales strategy – Direct to farm 70% - 55 agronomists (including sales support) – Retail 30
Slide 99: Who we are and what we do cont'd
Origin Romania Who we are and what we do cont’d … » Headquartered in Bacau (East Romania) » Leading broad acre crop input and advisory service provider » Leader in retail nutrition distribution » Average Farm size 300-600Has » 1,700 customers » Sales strategy – Direct to farm 100% - 65 sales / agron
Slide 100: Market structure
Origin Romania Market structure » 10 Main players for each market - Plant Protection Products and Importer Seeds - Subsidiaries of Multinational companies » National Distributors - active throughout Romania - 10 Companies Distributor » Regional Distributors - active locally – > 150 companies » 1,013
Slide 101: Market structure cont'd
Origin Romania Market structure cont’d … Importer / Producer Products Cash Secure money collection Distributors Products Crops Cash Crops Cash End users / farmer Crops Cash Crop marketing 101
Slide 102: Development plan
Origin Romania Development plan » To promote yield enhancement and return on investment amongst its farming customer base in Romania – Technical support function – Demonstration farms • Integrated approach to R&D – Information exchange with other Origin businesses – Education » To develop a differen
Slide 103: Model – uplift and development
Origin Romania Model – uplift and development Techno-Marketing Development In Romania 103
Slide 104: Model – uplift and development cont'd
Origin Romania Model – uplift and development cont’d … 104
Slide 105: Developing Farm Services
Developing Farm Services Capital Markets Day Declan Giblin 11 May 2016 Head of Corporate Development 105
Slide 106: Origin ownership and continued expansion of the UK B2C model
Developing Farm Services Origin ownership and continued expansion of the UK B2C model 35,000 30,000 25,000 20,000 15,000 10,000 xx 25 25 5,000 0 1988 1990 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 106 Masstock Bridgepoint Vision Origin Capital Capital
Slide 107: Development strategy – UK example
Developing Farm Services Development strategy – UK example » Secure market entry – Access direct ‘on farm’ presence » Buy and build ‘modular’ – Modular acquisition UK (30 acquisitions into Masstock) Ultimate objective » Buy and build ‘larger competitors’ » Increase output levels for the grower – Acq
Slide 108: Development strategy – UK example
Developing Farm Services Development strategy – UK example Establish on-farm presence Develop integrated trials infrastructure (local) Market penetration 108
Slide 109: Our USP – integrated and local approach to agronomy research
Developing Farm Services Our USP – integrated and local approach to agronomy research » Research and development is at the heart of our development strategy – Practised by others? • Less and less ‘in country’ investment • Few (if any) look to an ‘integrated trials’ approach » How relevant are UK tri
Slide 110: Taking the model elsewhere – resultant outcome
Developing Farm Services Development strategy – taking the model elsewhere » How do we identify a target destination? – Resultant outcome United Kingdom Poland Romania Czech Hungary Belgium France Ukraine Netherlands Germany Russia Sweden Lithuania Slovakia Ireland Austria Finland Spain Portugal Den
Slide 111: Taking the model elsewhere – where can we engage
Developing Farm Services Development strategy – taking the model elsewhere » How do we identify a target destination? – Where can we engage United Kingdom Poland Romania Czech Hungary Belgium France Ukraine Netherlands Germany Russia Sweden Lithuania Slovakia Ireland Austria Finland Spain Portugal D
Slide 112: Taking the model elsewhere – opportunity to increase yield
Developing Farm Services Development strategy – taking the model elsewhere » How do we identify a target destination? – The opportunity to increase yield 112
Slide 113: Low input spend per Ha represents opportunity
Developing Farm Services Development strategy – taking the model elsewhere » How do we identify a target destination? – Low input spend per Ha represents opportunity Input spend per Ha (as a % of the EU average spend of 100) 180 160 140 120 100 80 60 40 20 0 EU BG CY CZ DK DE EL ES EE FR HU IE IT LT
Slide 114: Low input spend per Ha represents opportunity
Developing Farm Services Development strategy – taking the model elsewhere » How do we identify a target destination? – Low input spend per Ha represents opportunity Input spend per Ha (as a % of the EU average spend of 100) 180 160 140 120 100 80 60 40 20 0 EU BG CY CZ DK DE EL ES EE FR HU IE IT LT
Slide 115: EU cropping profile
Developing Farm Services EU cropping profile » How do we identify a target destination? EU Cropping Profile – Where input spend is important (Ha) Spring barley Grain maize 8,163 Rape 8,760 6,534 Green maize Just under 75% of input 5,016 value for seed, crop Winter barley protection and fertiliser 9,
Slide 116: Output improvement aligned with input spend
Developing Farm Services Development strategy – taking the model elsewhere » How do we identify a target destination? – Output improvement is closely aligned with input spend CPP (€/ha) Average Wheat Production (tons/ha) 250.0 10.0 9.0 Average Wheat yield (t/ha) Crop Protection (EUR/ha) 200.0 8.0 7.
Slide 117: Taking the model elsewhere: Poland, Romania, Ukraine
Developing Farm Services Taking the model elsewhere So opportunities in Poland, Romania and Ukraine? UK Poland Romania Ukraine Total Farm Units (No.) 187,000 1,507,000 3,859,000 43,000 Total Cropping Area 4.3m Ha 10.8m Ha 8.0m Ha 22.3m Ha Opportunity % of Agriculture Area identified for Farm Units >
Slide 118: Development strategy – knowledge transfer
Developing Farm Services Development strategy – knowledge transfer “Know-how”, “Do-how” and best practise 118
Slide 119: Knowledge transfer – progress to date
Developing Farm Services Development strategy – knowledge transfer Progress to date Poland Advisors Polska Farmers Ukraine Techno- Advisors Marketing Resource Farmers Romania Advisors Farmers 119
Slide 120: Acquisition landscape and potential
Developing Farm Services Development strategy – acquisition landscape and potential Where will Origin look to next? Focus 1 Existing territories Focus 2 New territories 120
Slide 121: Acquisition landscape – Poland
Developing Farm Services Development strategy – acquisition landscape and potential Where will Origin look to next? » Existing business footprint – Poland • Improve ‘on-farm’ penetration • Improve no. of input sales per Target farming relationship (WIP) 2 • Market is consolidating Target • Sub scale
Slide 122: Acquisition landscape – Ukraine
Developing Farm Services Development strategy – acquisition landscape and potential Where will Origin look to next? » Existing business footprint – Ukraine • Improve market penetration (recent resourcing) • Expand on the number of input sales per farming relationship • Prioritise model differentiati
Slide 123: Acquisition landscape – Ukraine targets
Developing Farm Services Development strategy – acquisition landscape and potential Where will Origin look to next? » Existing business footprint – Ukraine • Improve market penetration (recent resourcing) • Expand on the number of input sales per farming relationship Target 2 • Prioritise model diff
Slide 124: Acquisition landscape – Romania
Developing Farm Services Development strategy – acquisition landscape and potential Where will Origin look to next? » Existing business footprint – Romania • Win new business, win new sales people • Prioritise model differentiation Target • Market is consolidating 2 • Sub scale and fragmented distri
Slide 125: Acquisition landscape – UK
Developing Farm Services Development strategy – acquisition landscape and potential Where will Origin look to next? » Existing business footprint – UK • Win new business – More Ha – More inputs per Ha Target 2 – More sales people • Another wave of consolidation? Target 1 • Origin is logical referenc
Slide 126: Acquisition landscape and potential
Developing Farm Services Development strategy – acquisition landscape and potential Where will Origin look to next? Focus 1 Existing territories Focus 2 New territories 126
Slide 127: In Summary …
Developing Farm Services Development strategy – acquisition landscape and potential » In Summary … – Focus is on existing territories – Primarily CEE – Actively exploring opportunities – UK still offers opportunity – Not forgetting organic growth push 127
Slide 128: Financial Overview
Financial Overview Capital Markets Day Imelda Hurley 11 May 2016 Group CFO 128
Slide 129: Origin – A cash generative model which delivers strong ROI
Overview Origin – A cash generative model which delivers strong ROI Strong Harvest Flexible Credit Control Timing Input Management Strong Dynamic Finance Continued Timing of & Processes History of CAPEX Focus on Single Farm Cash Payment Spend Cash Generation CEE – Working Generation Working Harvest
Slide 130: History of Strong Cash Generation
History of Strong Cash Generation Free Cash Flow (€m) 80.0 70.0 82.2 74.2 60.0 50.0 56.5 57.0 40.0 50.3 30.0 20.0 10.0 0.0 2011 2012 2013 2014 2015 EBITA 71.0 69.2 68.9 79.5 78.9 Working capital (2.3) 14.1 (3.5) 11.5 (9.7) Interest (13.0) (7.5) (7.4) (7.4) (6.8) Tax (12.3) (11.5) (9.7) (4.4) (9.4) D
Slide 131: Cash Generation & Allocation
Cash Generation & Allocation Maintaining a disciplined approach 5 Year History Forward Looking Cash Generation Cash Allocation Cash Allocation Priorities Capex (Investment) €27 m Capex & Normal Business Requirements Free Cash Acquisitions €187 m * Flow €320 m Dividends Acquisitions Total €110 m ** €
Slide 132: Balance Sheet Metrics
Balance Sheet Metrics Net Debt/EBITDA – 31 January Covenant = <3.5 times 2.81 Times 2.43 2.18 1.97 1.74 1.17 2011 2012 2013 2014 2015 2016 Average ROI Net Debt/EBITDA – 31 July 18.8% Covenant = <3.5 times Times 1.17 0.81 0.38 0.14 0.00 2011 2012 2013 2014 2015 * 2011 2012 2013 2014 2015 132 * Net ca
Slide 133: Closing Summary
Closing Summary Capital Markets Day Tom O’Mahony 11 May 2016 Group CEO 133
Slide 134: Strategies to deliver growth
Strategies to deliver growth Organic and Acquisition » Expand service footprint in existing and broader relevant geographies – Origin positioned as principal consolidator in existing markets » Progress localisation of value added service offer in new markets through knowledge transfer roll out » Lev
Slide 135: Capital Markets Day 11 May 2016
Capital Markets Day 11 May 2016