Origin Enterprises plc

Good morning and thank you for standing by. Welcome to the Origin Enterprises PLC Interim Results Call for 2023. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, you can please press star 1 and 1 again. Please note that today's conference is being recorded. I would now like to hand over the conference to Sean Coyle, CEO of Origin Enterprises PLC. Please go ahead, sir.

Thank you, Razia. So good morning, everybody, and welcome to the first half announcement for Origin Enterprises PLC. I'm joined this morning by TJ Kelly, our CFO, and Brendan Corcoran, our Head of Investor Relations. We're delighted to bring reasonably strong results to you this morning, characterized in particular by a standout performance from our Latin American operation. Since 2018, that business has continued to grow strongly in local currency terms. but the movement of the Brazilian REI relative to the Euro has always been a headwind for that business, and thankfully it's moved in the other direction in this current year. So the business delivered very significant revenue growth in the period, principally due to continued growth in commodity prices for both feed and fertilizer. That strong profit growth of €9.2 million largely down to significant growth in our Latin American operations in addition to some growth in our continental European operations and our Ireland UK businesses moving backwards. TJ will get into a number of the financial metrics later on so I won't dwell on those too much but generally speaking the business has performed well in the period with reasonably strong seed and crop protection volumes in the first half, excluding Ukraine, which was back quite significantly in the first half by about 66% in volume terms. That's set against a very tempered pre-season fertilizer demand as price volatility continues to be a challenge in the fertilizer market and higher prices has led to lower demand overall for fertilizer in the first half. Margin continued to improve through product mix, and we've been focusing on our own product range and also trending towards higher margin products where possible within our crop protection portfolio, particularly within Europe. And we continue to see capacity expansion across our businesses. Again, I'll touch on that a little bit later on. Generally speaking, the planting profile across all of our geographies has been very favourable. So ahead of the important second half of the season in the Northern Hemisphere, I'm glad to say that the planting profile in our key UK and Ireland markets is in good shape. Winter wheat at 1.8 billion hectares is broadly in line with previous years. The oilseed rape planted area at 400,000 hectares is roughly 10-11% up on the previous year, so a good crop in the ground, particularly in Ireland and UK, which as you know has tended to be a problematic area for us in any weather-challenged year. You can see there the individual growth rates across each of our geographies. Ireland-UK, as I said, is back. A mix of performances within the Ireland-UK portfolio, our agribusiness largely flat with seeds growing within the agribusiness by about 5% and growth in profitability in the seed portfolio, principally because of market share gain, we believe. Our feed business is relatively flat in the period, and then our amenity business has grown by north of 10%, but fertilizer is down significantly because of that lower level of demand and also lower margin year on year. The continental European business saw particularly strong growth in Poland and Romania, but our Ukrainian business did see a significant decline in volume and It's easy to forget, I suppose, the challenges that our business faces on the ground. We are still repatriating families out of Ukraine to our Romanian and Polish geographies and the intensification of fighting there means that there is still a significant amount of movement of people out of Ukraine into our other geographies and Thanks to the assistance of our teams in Poland and Romania, we continue to take care of anybody who is moving out of Ukraine. In relation to our strategic objectives, our investment and our M&A pipeline continues to see strong growth. In addition to the Keystone acquisition, which we completed last September in the first half, We have announced today our AgriGem acquisition, and between those two businesses, that should add in the order of about 3 million euros of EBITDA to the group on an annualized basis. The AgriGem business is a strong business within the ground maintenance sector within our immunity sector, and we anticipate growing market share in that market and seeing continued organic growth from the immunity business in future periods. We continue to make strong progress on our sustainability agenda. During the period, we received revised ratings from CDP and MSCI. MSCI rating go from triple B to A, so continued improvement in that front. And continued progress again in relation to targets for science-based targets for validation, which have been submitted to STBI and see reductions planned in our scope one through three emissions over the coming nine years. And finally, then, we continue to see growth from an organic perspective through the foundation of a new biological business in Brazil, First Ag Biotech, which we announced earlier on in the year, but that business will bring six products to market in the second half of the year, and we see further product development in future years in that business. And we continue to make strong progress against the strategic financial and ESG objectives that we outlined at our Capital Markets Day last May. So looking at individual businesses in turn, Ireland and UK, you can see in the bar charts across the top, has had a reasonable trading period pretty much in line with previous good years from an agronomic perspective. The big negative year there in the first half of 2020 was characterised by the bad weather performance in Ireland's UK, but you can see that the performance of the business is pretty much in line with where it has been in a normalised trading year. We continue to see strong growth in the amenity sector and the business grew by north of 10% in the period, and Keystone and the addition of Keystone adds to our business from an ecological perspective, and we continue to see more businesses added in that segment in future years. Our joint venture line has grown slightly. That's our John Thompson feed mill business in Northern Ireland, and some of the challenges in relation to fertilizer application and dry weather in the autumn last year led to an increased demand for feed, so that business saw a little bit of additional growth. in the first half. Within continental Europe, business grew quite strongly and in particular that has come about in Poland and Romania where we've seen, I suppose, some early season demand and demand brought forward perhaps from the second half into the first half. We're seeing increased planting areas and we're also seeing a higher margin mix amongst the product areas that we are Ukraine, as I mentioned, is not material in profit size but has reduced its balance sheet quite significantly over the course of the last 12 months as we have moved to selling on a cash only basis. Latin America saw the strongest growth across the group, a significant portion of that was I suppose the favorable movement of currency, approximately 3.2 million of the 7.5 million increase in operating profit in the period came about through favorable currency movement. But the general market characteristics in Brazil have been very strong through the period. And we see that continuing to be the trend as Europe continues to move itself towards a bigger sustainability agenda Essentially, Brazil is going to be the market that takes up a lot of the slack in terms of growing crops for consumption right around the globe. The capacity of Brazil to grow significant amounts of crops certainly is there. The cropping area is growing by 4.5% roughly this year, and the total production and yield there will increase quite sharply. Yield is increasing by roughly 20%. per hectare in the year. We are investing a significant amount, about 3 million euros, in increased capacity in production there to cope with growth and demand and we'll touch on that a little bit later on. So I'll hand over to TJ who will take you through some of the detail on the financials. Thank you, Sean.

I'll just focus on a few highlights on page 8. Operating profit up, as Sean said, in what is the seasonally quieter first half, up by €9.5 million on a reported basis, which can include that strong contribution underlying performance from LATAM, really reflecting the benefits of the counter-cyclical contribution from the Southern Hemisphere in our portfolio, in addition to an improved contribution from a continental Europe business on a constant currency basis. Operating profit grew €6.1 million, reflecting, again, that's just over €3 million of FX benefit. That, in turn, flows through to an adjusted EPS of 8.7 cents per share, up from 3.7.1 cents per share at the half year last year. Also, just to note, we are announcing an interim dividend of 3.15 cents. And just to note that in the 12-month period to the end of January 23, our cumulative returns to shareholders, including dividends paid and the share repurchase programs, are in the order of €66.5 million in that 12-month period. Finance costs, as you will note, increased year over year from €4.8 million to €8.6 million euro reflecting a combination of factors, one being higher interest costs in the jurisdictions we operate in, particularly sterling and particularly in Brazil. Plus, we have an underlying higher carrying value of working capital in that six-month period, really reflective of the inflationary impacts across the portfolio. As the value of fertiliser in particular drops, we'd expect to see some easing on working capital levels and therefore an easing on the interest cost in the second half, albeit higher interest rates are a feature that we will have to absorb out into the second half and beyond indeed. Looking then at working capital at the end of the period was 138.3 million. up from €59 million at the end of the prior period, again driven mainly by inflationary impacts, albeit we did have some targeted investments in our fourth green business to support the underlying growth in the profit delivery in the period. Last year, also just to note, we did have an exceptionally low level of working capital at the half year, really reflective of very strong cash sales. which is reflective of the market dynamics at the end of H1 last year. Looking then at net bank debt, while it's ahead of prior year, our bank debt at the end of January 23 was €130.9 million, comping with €53.7 million at the end of January 22. And that growth is really reflective, again, of commodity inflation across our working capital, The cumulative impact of share buybacks, which were just over €53 million, which, as I say, when combined with dividends, is €66.5 million in that 12-month period. Plus, we had some acquisition spend, primarily in the Keystone acquisition, reflected of €11.2 million. So, that said, we are very pleased with the net bank debt to covenant metric at just over one times, well within the banking covenant of €3.5 million. of two and a half times. And also, again, just to note that last year we did benefit from strong cash sales and we also had the one-off benefit last year, you may recall, of a cash inflow from the sale of one of our properties that was reflected in the half-year debt number. Moving then to revenue just briefly. Again, as Sean touched off, pricing is a significant feature of the revenue growth in H1. Volume's back. 4.6%, again, really driven by fertilizer and driven by the impact of higher pricing in the FERC portfolio, and also indeed reduced volumes in Ukraine reflected in that adverse volume number of 4.6%. Overall, FERC volumes, if we back out the CRF volumes in Fort Greene, which showed very strong growth in the half year, FERC across the rest of the portfolio was back about 7% in volume terms in the half year. Within that pricing growth piece then of just over 40%, as I said, inflation has been a key feature and it weights heavily towards fertilizer within the portfolio, which again weights heavily towards Q1 as we entered Q2 of the first half. The comps are getting a little bit more difficult as pricing was a feature of Q2 in FY22. And inflation has been a feature not just in fertilizer, but it's also been a feature across the crop protection and seed portfolios in all our markets. albeit it is in the relatively quieter part of the year, but we do see inflation being somewhat of a feature in crop protection into the second half of the year. Again, we have covered most of the points here, but again, maybe just to reference the operating profit, including JVs, our JV performance, again, up year and year, as Sean touched off, with lower fodder stocks, really, as a result of dry weather. and reduced fertilizer usage supported a solid feed volume performance in H1 of the year just past. And again, this is really just a graphical representation of the impact of currency and that 3.1 million euro is primarily reflective of an approximately 15% appreciation of the Brazil RAI in the half year, over half year FY22. From a cash flow perspective, again, the change in working capital in the underlying business really is reflective, as I said earlier, largely of inflationary impacts across the portfolio and some targeted investments that we have made, such as in Fort Greene in the first half of the year. There's also some timing pieces in that working capital flow, certain volumes of fertiliser, purchased and paid for a little bit earlier this year than in the comparative period last year, which is not unusual that you will get those type of timing impacts in cash and working capital. But I suppose the key piece for us as we look into the second half is that as inflation, we anticipate, and is indeed easing on fertilizers, that does take and alleviate some of the pressure on cash performance overall into the second half of the year. From a covenant perspective, then, as I touched off of our net back to Our net bank debt to EBITDA at just over one time has been well within the covenant of three and a half and comfortably within our own operating target leverage ratio of two and a half times equally. So with that, I'll hand it back to Sean.

Thanks, TJ. So the business has continued to deliver on a number of the strategic priorities outlined just last May at our capital markets day. We did suggest that we were going to make a number of acquisitions in the amenity and ecology and environmental space. We've executed on two of those, Keystone Environmental, which is the first in the ecology space, and Agrigem, which broadens our amenity offering. And I guess the pipeline of opportunity within that sector remains strong. So we do intend to make further acquisitions in both the immunity and ecological environmental space in the coming years to try and broaden I suppose the base of earnings away from just agriculture and away from a reliance in particular on UK agriculture which I suppose has characterized a number of the challenging periods which we've seen in the last 10 years and in particular the fiscal 2020 year and the fiscal 2016 year which were challenging years because of bad weather in the UK market. In addition to that we are investing in organic growth within our line mark business and a relatively modest capital spend is going to see us increase capacity within our line mark business by about 30% and that business exports line marking and pitch marking paint right around the globe and that is doing really well at the moment. Our continental European business is seeing investment across a number of areas. We're calling out specifically here the investment in the Folic plant in Poland which will double our production capacity and give us a state-of-the-art facility adjacent to our seed plant in Aleksandro in the center of Poland. But the other businesses are also seeing some investment. So we are investing in our micropack production facility within the Romanian business and continuing to invest in blending capability from a fertilizer And I mentioned earlier on the expansion of our Latin American operations, both in terms of the development of a new biological business within the unit, the first ag biotech business, which is bringing new products to launch in the second half of the current fiscal year. But also, for a relatively modest, I suppose, in the scheme of profit opportunity within Latin America, investment of about €3 million, we will see expansion of our CRF plant by about 75%, which will just allow us service next year's demand, we believe. It will require further capital investment in future years to drive demand. Investment in our liquid production capacity there by 26%, which should see us through to about 2027. And dry production capacity to service demand until about 2025. So continuing to invest in organic growth in the businesses as well as M&As. We've been pretty active on the sustainability front as well. In addition to setting targets for ourselves around changing the product set and changing the way we provide services, so increasing the nitrogen use efficiency of crops by 20%, changing some of our fertilizer production methodologies to introduce fertilizers which have a lower nitrogen content and try and push that agenda with our farm customers, with our merchant customers, changing the product sets within Agri in addition to introducing sustainability ratings on our seed portfolio, which we did a number of years ago. We're now also looking at our biological products and product sets within the crop protection portfolio to introduce ratings on those. And we set ourselves an ambition of introducing a thousand miles of wildlife corridors across the group in the course of the next four to five years. Apart from that though, we have been focused on the standard measurement techniques used by the ESG industry and have submitted targets for the business to reduce our scope one and scope two emissions by close to 55% over the next nine years. And our scope three emissions by close to 33% over the same period. And they have been submitted to SBTI for validation. We'd expect to hear back from them soon. So continuing to try and progress the sustainability agenda within the organization. So to wrap up very quickly, it's been a very solid start to the year. It does provide a good foundation for performance in the second half. Planting generally and crop establishment has been good. The business has delivered, particularly in Latin America, where we've had a very strong volume-led result, as well as, I suppose, favorable movement in currency, contributing to the performance of that division relative to the rest of the group. and encouraging performance from continental Europe in our Ireland and UK operating profit. The challenges within our fertilizer business are likely to persist into the second half. It is a downward moving market at the moment from a fertilizer perspective, so the challenges of managing the business in a downward moving market are not insignificant. It does mean running with lower levels of stock than you ordinarily would like to do, but we continue to manage through that position as we progress into the second half of the year. The acquisition of AgriGem as well as the earlier acquisition of Keystone in the first half of the year will continue to strengthen our offering in the amenity and environmental segment. And we're making good progress, as we've just mentioned, on our sustainability agenda, including those upgrades to our CDP and MSCI ratings. So overall, we think the group is well positioned to deliver on the targets set out at our capital markets day from last May. The leverage within the group is well managed and at a reasonable position at just one turn of EBITDA. We continue to invest in both organic growth in the business through strategic capex and also have a reasonably active M&A pipeline, which will continue to broaden the base of earnings within the group. And we've returned a reasonably significant sum of 66 and a half million to shareholders over the last 12 months through both dividend and share buybacks. And as outlined at our capital markets day, there is intentionality to try and increase those sums in the coming 40 years. We don't normally give guidance at this time of the year. I mean, we can say that the planting profile gives us good encouragement, but we don't normally give guidance at this time of the year and tend to reserve guidance until our Q3 trading update, which will come on the 15th of June. But generally speaking, the business is in good shape and absent any major weather drama in the second half of the year, we're reasonably comfortable that the performance of the business is on track for a good outcome for the year as a whole. So I think, Rai, at this stage we'll hand over to questions from the participants in the call, if that's okay with you.

Thank you, sir. As a reminder, to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, you can please press star one and one again. Once again, to ask a question, please press star one and one on your telephone and wait for your name to be announced. Thank you. We are now going to proceed with our first question. And the questions come from the line of Patrick Higgins from GoodBody. Please ask a question. Your line is opened.

Thanks, and good morning, everyone. I guess a couple of questions from my side. Firstly, could you just speak a bit more on, I guess, farmer sentiment? I appreciate there's a good crop in the ground, so they're obviously incentivized from that perspective, but how much has the retrenchment in grain prices impacted sentiment and I guess, how are their balance sheets now? I appreciate, again, good grain, good harvest, strong commodity prices last year. So are they in still a good position from that perspective? And then the second question is just around the fertilizer business. And forgive me if you've kind of gone through this. I just couldn't fully follow it. But you mentioned there's a lower level of fertilizer trading more recently, and that's going to impact the supply chains or cause supply chain challenges. Could you just elaborate a little bit on that? And then finally, I guess on fertilizers, maybe just again, speak around the competitive landscape, particularly in the UK, in the fertilizer part of the business as well, please.

Okay, Patrick.

We'll take those. I mean, perhaps we'll take them front to back or back to front. The competitive landscape in the UK at the moment is, I suppose, not significantly different from where it was this time last year. CF Industries are producing a significant amount of domestic fertilizer because gas prices still leave it uneconomic for them to do so domestically. They are producing fertilizer from imported materials, so they are bringing material from their U.S., production facilities to the UK and and producing material from that imported stock reasonably competitive in the UK UK market is slightly different from the Irish market in that there's always a continuous drawdown of material right through the winter the application period closing doesn't really in demand and fertilizer gets built up in stock terms on a continuous basis. So, stock moves relatively quickly through the UK operations and I would say that that's trading reasonably normally. In overall terms, the challenge, I guess, with the downward-moving market is that our current merchants can be reticent to buy stock in a market which they perceive as being downward-moving, and therefore, product doesn't necessarily move out onto farm as quickly as it might. Equally, then, importers are left in a situation where if the product is not moving off the production there's not much point in ordering the material to come in because to store the material and b it's very hard to gauge what level overall demand you will get for the year we do anticipate probably For the year, there was a similar level of demand as we had last year. Now, that was down in volume terms, kind of roughly 7% to 20%, depending on the market, from the previous year's operations. Because of the higher prices of fertilizer over the course of 2022, did reduce usage, many taking... yeah so applying straight nitrogen products in the main uh that can't be done forever i mean the reality is that uh written in the uh the use of p and k leads to less absorption of nitrogen over time so you've got to uh continue to rebalance um the um material used on farm to to get the best efficiency from fertilizer over the long term. So, we're probably expecting a reasonable increase in volume terms this year, but from our perspective, a downward moving market just means that we've got to keep reasonably stocks of product so that we don't get caught with holding inventory in a downward moving market. You know, that's the context for that. TJ, do you want to talk about farm sentiments and farmer balance sheets?

Yeah. Patrick, yes. I mean, grain prices have been retrenching, but still are high relative to the average. And I suppose we look at a few different factors. There's an affordability index that we look at, which compares the relative pricing of commodity output prices And that still reflects the fact that the affordability is relatively strong, albeit obviously, as I said, grain prices have been generally trend. I think one of the pieces that we are looking at is inflation in the crop protection portfolio, looking into the second half of the year. Farmers obviously have an importance against inflation in fertilizer over the last 12, 18 months. So in the context of grain prices, still relatively high as I said compared to long-term averages another hit in terms of CP inflation is something I suppose we're monitoring carefully and it is a risk I would say for the second half of the year you know that said given that the crop establishment in the ground is good generally across all our markets the propensity for farmers to you know but the relative pricing of commodities is still strong. And that's looking at the tillage sector, obviously from an Irish context, while the sentiment is softening on milk prices and co-ops are pulling back milk prices. Again, relative to the long-term average, milk prices are very strong. So that affordability piece from a farm perspective is still there. So certainly farmer balance, have been retracting to some extent from where we were, but we'd still remain confident for this half in terms of .

That's great. Thank you.

Once again, as a reminder, to ask a question, please press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, you can please press star 1 and 1 again. Once again, please press star one and one if you have any question or comment.

Thank you. We are now going to proceed with our next question.

And the questions come from the line of case of Kenny from Davie. Please ask your question. Your line is opened.

Good morning all and thanks for taking my questions. First question is on Latin America. Can you just break down the volume growth number, 35% underlying, just the drivers of that? And then the related question to Latin America, if you look at your investment over the next couple of years, what's a credible volume growth number we should think about for that region? My next question centers on amenity. One, can you just remind us of the size of that business today and how significant the opportunity set is around that in the context of organic growth as well as M&A? And my final question then just relates to working capital in terms of the full year outflow. How should we think about that in the context of the H1 investment? There are my three questions. Thank you.

Thanks, Cahill. Maybe I'll address the immunity piece in reverse or maybe the working capital. In the season still, Cahill, as you know, at this point, we would say that our net bank debt, maybe as a proxy in terms of what it's likely to be in the second half is we'd anticipate that it would come in, you know, circa maybe a half turn of EBITDA on a full year basis. That would be reflective of a working capital outflow of probably somewhere in the region of 60, 50 million euro. And I'm speaking in very broad ranges because it is down early in the season. and it does really depend on what happens in fertilizer. It depends on the offtake pattern, and it depends, obviously, on the basics of when we replenish stock and when we have to pay for that stock at a very basic level. So, I mean, they are the component parts of working capital, obviously, but it is still a volatile piece on the fertilizer space and the timing of Cash flows can move considerably depending on what your credit terms are with certain suppliers, for example, and when those offtakes are drawn down. But our moment is around that half turn, which, as I say, would reflect that level or that quantum of working capital outflow in the order of 60 to 80 million in the full year. From a CRF perspective and an overall volume performance in LATAM, that volume growth of just over 35% splits roughly equally between CRF and PNN, the traditional adjuvant biostimulant space, which is, I suppose, very pleasing for us, that very good underlying growth in the core business. Again, as you know, we have been adding capacity in from a CRF perspective. and we're now starting to bounce up against that capacity. Hence, you know, Sean's commentary earlier on putting additional capital investment in to support CRF growth. We're also looking at doing some additional relatively modest CapEx investments to support the P&N business also, which is a very underlying growth. Growth out into the future, I suppose, is... It's difficult for us to call. I mean, certainly once we had built the capacity for CRF, we were able to deliver volumes. That's a function of good underlying demand in the market. We're activating with more sales people on the ground, more feet on the ground. And that's really delivering in terms of trapping that volume growth. I'm slow to call a volume number into the kind of medium term Carl, as you can appreciate, we are intent on putting some more Catholics into the business to follow up what we see is growth. And bear in mind, the CRS business is a very small portion of the overall fertilizer market in Brazil. It is a growing space, but it is coming off a very low base. So there is that initial, if you'd like to call it, first mover opportunity that we see But trying to calibrate that is difficult, but we will put the capital on the ground to create some more capacity and continue to execute behind that then. Okay.

Coming back to your question then, Cahal, on profitability and the amenity business, we don't typically break that out, but the business has gone from in 2019 And this is pre any allocation of central costs from roughly 7 million euros in size to about 11 million euros in size. And the acquisitions of Keystone and AgriGem would probably bring that to 14 million before the allocation of any central costs. in a full year. So, you know, 2023 should see the business running at that kind of level. The opportunity for further growth within that sector is reasonably strong. Approximately a 30% market share within the sports market and the sports pitches side of the market. So I think the opportunity for further consolidation there will be quite limited. However, the forestry and landscaping side of the market, our market share following the acquisition of Green Tech and through some of our existing businesses, including AgriGem, servicing part of the grounds maintenance and landscaping market, we probably only have about a 10% market share of available . We could see that through consolidation lifting to 30 to 35%. And again, that could add another 5 million euros, 6 million euros depending on the acquisitions. to profitability within the amenity segment. The ecology segment is really quite different and the opportunity there can be quite infrastructure-based, so the Keystone Environmental Business is particularly focused on translocation of endangered species during infrastructure projects as well as particular projects around ecological surveys and other . So it's quite dependent, I guess, on primary contractors on these major infrastructure projects utilizing subcontractors that they trust and know will do a good job for them in this particular space. We see ourselves acquiring more businesses in that area and more businesses in the overall environmental and ecological segment. The potential size of that market is very significant. The opportunity is really growing at pace and all of the legislative framework in the UK be it biodiversity net gain, be it planning regulations around the various challenges that need to be overcome in developing infrastructure or housing or commercial property. All of the legislative framework in the UK context is pointing to growth in this sector. So we do see ourselves in the environmental and ecology space. It does tend to be a reasonably flat seasonality picture, so forestry and planting tends to be strong in our winter period, so you will have a good winter season in any parts of those businesses that have exposure to forestry, and landscaping and ecological surveys and translocation of species tend to take place outside of their nesting periods as well. So there are particular works that need to be done in winter and particular works that need to be done in summer when the weather is appropriate. So the businesses tend not to be as seasonal as our agricultural businesses. So that's the kind of scale and size of the opportunity. I think in landscaping and forestry, there's probably another 5 to 6 million euros of profit to go after if we want to consolidate. But in the ecological and environmental sector, significantly more than that. But again, it's a very early stage in terms of our investment into that area.

Great. Thanks for the details. Thank you.

We are now going to proceed with our next question. And the questions come from the line of Filippo Migliorezzi from TPI-CAP Mid-Cap. Please ask your question.

Good morning, Sean and TJ. Thank you for your presentation and congratulations on your results. I apologize in advance if I have any overlapping questions. My line cut out before. Anyway, my first question today concerns your new Agrogem limited acquisition. Now that you've given us some visibility in terms of contribution going forward, could you give us some visibility in terms of the overall transaction cost? And follow-up question to that, you've mentioned a few times that you might in the future extend your immediate offer to other Western European markets. If that were to take place, when would that potentially happen?

Thank you. Felipe, on AgriGem, I don't think I've given you the figure on AgriGem alone. In relation to profitability, I think AgriGem and Keystone together will account for about €3 million of additional operating profit. in the year, but the multiple paid on both transactions is not dissimilar. We're talking about six to seven times EBITDA multiples on both transactions. So that's the kind of the range that we're talking about in relation to EBITDA on a cash-free, debt-free basis. So that's Agrogem. Do you want to take the other question on Europe?

Yeah, I suppose we are working on a broader assessment of the opportunity across the amenity, environmental and ecology sector and getting a deeper understanding of the European market. We do export from our amenity businesses into mainland Europe at the moment. And there certainly are potential opportunities in the European, particularly in the Western European belt of countries, so Nordics down through to mainland Western Europe that we see. That said, we are continuing to focus on the UK market in the short term, particularly as Sean mentioned, we see potential opportunities. significant growth opportunities in the environmental ecological space as well as filling out more in the immunity sector in the UK. So it's an ongoing piece of work that we're doing, Filippo. Again, we won't commit to timeframes on it in terms of any potential acquisitions in a European context, but it is certainly part of the analysis and assessment that we're working through at the moment. and it isn't in any way preventing us or slowing us down in terms of executing on transactions. We have plenty in the M&A hopper at the moment. So I'd say we'll continue to monitor the EU piece, build up a deeper understanding of the various different players in that market, and in due course then may execute as we get deeper into that understanding.

Perfect. Thank you very much.

We have no further questions at this time. I will now hand back the call to Sean Coyle for closing remarks. Thank you.

Thanks very much. So we're extremely happy with the performance across the business and in particular our Latin American performance in the first half. that we're in a good situation in respect of the second half and a good foundation in respect of the second half of the year. We will be back in June to give an update on prospective outcomes and the business is progressing well on the strategic intent outlined at our capital markets day. So, you know, the cumulative earnings targets that we've set ourselves The growth in the business remains intact in our view and we're pleased to say that progression is happening across a number of strategic fronts as well in terms of diversification of earnings away from the dependency on UK and Ireland weather risk and indeed growing the business into faster growth and higher margin areas across the group. I'm very pleased with the progress over the last six months and indeed nine months, I guess, since the Capital Markets Day. We look forward to meeting you on the road in the coming days. So thank you very much, everybody, for joining this morning's call and hopefully we'll catch up with you in the coming days. Thank you.

This concludes today's conference call. Thank you for participating in our Disconnect Your Lines. Thank you.