Interim Results March 2015

Transcription

1 Interim Results March 2015

2 2015 Interim Highlights Adjusted diluted EPS of 5.80c underlying increase of 7.1% Group Revenue Agri-Services Operating Profit Share of Profit of Associates and JV Adjusted EPS Net Debt 531.6m +2.7% 4.1m +2.4% 6.3m (6.1%) 5.80c (2.2%) 161.2m Satisfactory performance in seasonally quiet H1 in weaker market conditions Excellent planting and growing conditions supporting robust activity levels on farm Favourable early season demand for agronomy services and inputs Well established winter cropping base providing key platform for seasonally important H2 Ukraine: good early season activity against challenging backdrop reflecting current political unrest Associates and joint venture satisfactory in context of highly competitive market Full year outlook Maintaining full year adjusted diluted EPS guidance at 60.0 cent per ordinary share 2

3 Agri-Services 3

4 2015 Backdrop for Primary Producers A more challenging market environment Weaker output values following record global production in 2014 Input cost inflation and currency Pressure on cash flow and returns Greater competitive intensity in consumption markets Farming s response Emphasis on flexible production systems that are focused on risk management Targeted investment for yield as essential driver of profitability Demand for value added technologies and decision support to drive efficiency 4

5 Agri-Services Financial summary January 2015 January 2014 Change on prior year Agri Services Change Underlying Revenue (27.9) Operating profit* Operating margin* 0.8% 0.8% - Return on capital employed 23.6% 23.2% +40bps * Before amortisation of non-erp intangible assets and exceptional items 5

6 Integrated On-Farm Agronomy Review United Kingdom UK Agrii Satisfactory performance in seasonally quiet first half Higher serviced agronomy volumes and margins Greater competitive intensity across input portfolios Well established cropping profile providing strong foundation for full year result Total winter plantings at approximately 3.1m hectares, some 3% behind the prior period Combined winter and spring planted area to be broadly equivalent to 2014 Re-focused service offer positively influencing performance Agronomisation of product portfolios High output variety management Developing decision support capabilities 6

7 Integrated On-Farm Agronomy Review Eastern Europe Poland Dalgety Ukraine Agroscope Positive development momentum in period Higher agronomy revenues and profits Strong performance in direct farm channel Lower crop marketing volumes and margins Developing capabilities and multi-product offers dedicated to the large scale and intensive sector Excellent autumn weather supporting robust activity levels on farm in H1 Increased winter cereals area Lower spring cropping anticipated Highly challenging economic and political backdrop Currency weakness and liquidity delaying customer decision making Reduced spending programmes on farm Resilient result in seasonally quiet H1 Rigorous management of working capital Prioritising cash flow and currency exposure management Strong cooperation with manufacturing partners Robust early season activity ahead of main application period in H2 Increased level of customer commitments Well positioned for key H2 demand period 7

8 B2B Agri Inputs Review Business-to-business Agri Inputs Fertiliser Higher volumes underpinning improved result in the period Earlier timing of sales reflecting strong supply chain execution Near term visibility on pricing providing confidence to customer buying decisions Bespoke nutrition offers maintain solid momentum in the period Expanded blending capacity to further support servicing of peak demand requirements in H2 Feed Ingredients Satisfactory result on back of lower volumes Plentiful fodder supplies Ingredient price volatility Lower output prices Stable volume outlook for H2 Amenity Higher revenues and margins Timing related volume increases ahead of main H2 season Strong product formulation capability and improved customer service execution positively supporting performance 8

9 Associates & Joint Venture 9

10 Associates and Joint Venture January 2015 January 2014 Change on prior year Share of revenue m Share of profits after tax* (0.4) Consumer Foods Feed Milling 32% Robust performance in period Consumer purchasing behaviour largely unchanged Flat household spend Focused on promotions Integration of Rowse Honey substantially progressed in period Completion of acquisition of Robert Roberts, Findlater Wines & Spirits and Kelkin in February 2015 Further extension into health and wellness and hot beverage categories Largest single site multispecies animal feed mill in EU Result in line with expectations on back of lower volume performance 50% * Before amortisation of non-erp intangible assets and exceptional items 10

11 Financial Review 11

12 2015 Interim Financial Highlights Revenue January 2015 January 2014 % Change Agri-Services % Group Operating Profit* Agri-Services % Associates and joint venture** (6.1%) (2.9%) Financing cost, net (2.8) (2.4) (17.5%) Profit before tax* (8.7%) Adjusted diluted EPS*** 5.80c 5.93c (2.2%) Net debt m reduction *Before amortisation of non-erp intangible assets and exceptional items **Profit after interest and tax before amortisation of non-erp intangible assets and before exceptional items *** Before amortisation of non-erp intangible assets, net of related deferred tax (2015: 4.0m, 2014: 2.4m) and exceptional items, net of tax (2015: 1.3m, 2014: 2.3m) 12

13 Revenue Agri-Services m +3.4% m +4.7% ( 27.9m) (5.4%) +2.7% m 531.6m FY14 Acquisitions Currency Underlying FY15 13

14 Operating Profit Agri-Services m + 1.1m +27.0% +2.4% 4.1m ( 1.3m) (31.5%) + 0.3m +6.9% FY14 Acquisitions Currency Underlying FY15 14

15 EPS Year-on-year Movement Underlying increase of 7.1% cent per share 5.00 (1.10c) 5.93c (18.5%) +0.42c +0.37c +7.1% +0.18c +6.2% +3.0% (2.2%) 5.80c FY14 Acquisitions Currency Tender Offer Underlying FY15 15

16 Cash Flow/Net Debt 2.4m reduction in debt Year to July 2014 Period ended 31 January Jan 2015 Jan months to January Cashflow from operating activities Change in working capital (115.5) (89.5) (14.5) (11.8) Interest and tax (5.5) (4.7) (12.6) 75.3 Net cash flow from operating activities (115.8) (88.2) Dividends received (7.1) (7.6) Capital expenditure, net - Routine - Investment (13.4) Acquisition expenditure - (7.7) (5.7) 94.0 Cash consideration on disposal of associates and JV (100.2) Return of capital to shareholders - (100.2) - (23.9) Dividends to shareholders (25.0) (23.9) (25.0) (0.6) Other (0.3) (0.3) (0.6) 18.8 (Increase)/decrease in debt (143.0) (131.0) 6.8 (29.6) Opening net debt (11.9) (29.6) (163.6) (1.1) Translation (6.3) (3.0) (4.4) (11.9) Closing net debt (161.2) (163.6) (161.2) (3.5) (1.6) (3.2) (3.6) (7.4) (5.6) 16

17 Banking Facilities and Covenants Committed banking facilities of 330 million Weighted average debt maturity in years 2015: 1.26 years January 2015 January 2014 Net Debt to EBITDA Covenant < 3.50 < 3.50 EBITDA to Net Interest Covenant >3.00 > 3.00 All terms as defined for bank covenant testing purposes 17

18 Balance Sheet January 2015 January 2014 Tangible assets Intangibles / Goodwill Associates and joint venture Working capital Provisions for liabilities, including pension (38.5) (28.8) Net debt (161.2) (163.6) Taxation - incl. deferred tax (27.4) (24.3) Other (7.8) (6.2) Shareholders funds

19 Our Progress Since Establishment Year Ended July CAGR EBITA* % 12.1% Adjusted diluted EPS ** (cent) % 16.6% Acquisition expenditure (cumulative) Cashflow after Capex (cumulative) Annual dividend (cumulative) Return of capital (cumulative) Year end net debt Net debt / EBITDA (times) Return on investment % 16.8% 19.8% 21.0% 19.8% 20.4% 18.5% 19.5% 21.5% * Earnings before interest, tax and amortisation includes our share of the profit before tax from associates and joint ventures before exceptional items and amortisation of non-erp intangible assets so as to compare year-on-year on a like-for-like basis. ** Before amortisation of non-erp intangible assets, net of related deferred tax and exceptional items adjusted to reflect the current capital structure of the Group. 19

20 Group Positioning & Strategy 20

21 Focused Platform Dedicated to Supporting the Primary Crop Production Sectors of the Food Industry Integrated Approach Seed Soil & Water Climate Disease Environment Data & Insight Multi- Factor Trials Crop Technology Centres Coordinated Growing Systems Data Analysis Competitiveness Applications Serviced Agronomy Nutrition Management Decision Support Environmental Stewardship Inputs Crop Marketing Customer Channels Direct to Farm Influenced Franchise Corporate Buying Groups Knowledge Transfer Seed Genetics Nutrition & Soils Precision Agronomy Crop Protection Emerging Technologies ifarms Agronomists Fulfilment Trust Relationship Analyse Growers Needs Customised Recommendation Prescription Creation Prescription Delivery Performance Monitoring Integrated System and Technology Portfolio Optimising Crop Productivity 21

22 Growth Trends Supported by Ever Increasing Complexity of Farming and its Planning Environment Price / cost squeeze Harder to find novel modes of action Managing risk and volatility Product quality and safety Greater efficiency of production systems Loss of active ingredients Professionalisation Common Agricultural Policy Environmental sustainability of production systems Legislation and greening Age profile and succession Disease resistance Group is Ideally Positioned to Guide Farming's Strategic Choices 22

23 Strategic Priorities Aligned to core capabilities and market opportunities Continued investment to enhance the quality of crop management systems Less emphasis on traditional technologies Greater reliance on genetics and seed traits to deliver results Integration of digital technologies and product solutions Prioritise customisation Acquisitions Leverage existing product portfolios and knowledge transfer systems Improve geographical spread Organisation Enable closer integration and alignment of commercial and technical teams Deployment of new capability and resources to drive growth Improved customer engagement Alliances and Partnerships Closer collaboration promoting early access to new technologies Facilitate enhanced knowledge transfer on farm 23

24 2015 Performance Priorities and Focus Points Drive growth and performance through managed led sales teams Team-centric approach to guide acres expansion and service extension Leverage local market insights to create more focused selling strategies Develop new consolidation opportunities Capacity to scale existing technologies and service sets Optimise research application and knowledge transfer advantage Decentralised technical approach aligning producers requirements with local growing conditions Central resource acting as key messaging and communication hub to wider farming community Decision Support Key agronomist support for efficient transmission of service and advice Focus on digital integration of precision agronomy, monitoring services and data analytical capabilities 24

25 Summary and Outlook 25

26 Summary and Outlook Focused business with established capability sets capitalising on sustainable agricultural services model More challenging demand year for services and farm inputs Record global supply driving output price volatility Agri-Services well positioned for key H2 earnings period Strong winter cropping base Total cropping expected to be broadly equivalent to last year Good demand levels experienced in H1 Concentrated on new development opportunity Sustained performance from associates and joint venture Expect to achieve diluted adjusted EPS of c.60c from existing business Further update at time of third quarter Trading Update on 27 May

27 Interim Results March 2015