Good day and thank you for standing by. Welcome to the Origin Enterprises plc 2022 interim results. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Sean Coyle, Chief Executive. Please go ahead, sir.
Thank you, and good morning, everybody. Welcome to the first half of the FY 2022 results. I'm joined here by our CFO, TJ Kelly, and our Head of Investor Relations, Brendan Corcoran. Firstly, I'd like to open by acknowledging a very significant amount of work done by our teams in head office and in Central Europe to support what has been a humanitarian disaster for the people of Ukraine and more particularly our colleagues within Agrii Ukraine. We still have over 20 colleagues in high-risk areas such as Kyiv, Kharkiv, Kherson, and Sumy, and we're doing what we can to help. In particular, our own Agrii Romania and Agrii Polska colleagues have been directly involved in taking 19 families, approximately 60 people, across the border. Transportation, accommodation, food, and medical needs have been provided.
We're looking after and are in contact with a number of further Ukrainian colleagues and their families who are seeking to get out of Ukraine and get to safety in Poland and Romania and perhaps will go further thereafter. Our results are obviously very positive this morning, and we have good news to share, but it is quite insignificant in the context of the broader risk to the lives of our colleagues. I'd like to open, I suppose, with a note around the first half numbers. They have been very solid and do form a great basis on which to build for the rest of the year as a whole.
There are lots of challenges, both from a product availability perspective and a price volatility perspective, with supply chains in a huge state of flux. We are comfortable in saying that we expect full year profit growth for the year as a whole despite all of that challenge. The performance, as you can see on this slide on the left-hand side, was significant in terms of revenue increase, but approximately 80% of that revenue increase came from escalation in global fertilizer prices and escalation in global feed prices, as well as smaller growth in percentage terms in the price of crop protection products. Overall, we had about a 15% volume growth across the businesses.
Operating profit at 11.1 million was a significant increase on the prior year number and back more in line with our first half 2019 number. So back at a more normalized level compared to the FY 2019 year. Really significant work has continued to go into reducing net debt within the business and our net debt to EBITDA ratio is now down at 0.61. We're declaring an interim dividend this morning at 0.0315 in line with other years. You see there volume growth across each of the segments. Ireland, U.K. at 10%, the slowest growing, but most significant in terms of contribution to the overall group profit.
Continental Europe saw almost 19% growth, and Latin America 73% growth, roughly split 50-50 between organic growth in the core business and new CRF volumes from our plant in Minas Gerais, which has gone through its first kind of peak season. Generally speaking, we're very happy with the sentiment on farm. There are encouraging cropping profiles right across the group, and early season demand has been strong. We are, of course, focused on the well-being of our staff in Ukraine following the invasion by Russia, continuing to manage that supply chain volatility. We're announcing this morning a small acquisition, Envirofield U.K., which will enhance our R&D trials capability in a U.K. context, but it's relatively small in profit and EBITDA terms.
From a sustainability perspective, we'll continue to focus on setting science-based targets by year-end, which will form the basis of our strategy going forward and target setting for the longer term. We've launched a Soil Resilience Strategy through Agrii, which will involve greater work around soil analysis and developing variable rate plans for seed and fertilizer and soil nutrition. We are rolling out ISO 14001, a new environmental management system, across the group and hoping to have that in place by year-end as well. From a shareholder returns perspective, the previously announced disposal of the first of our Cork property sites, the Quayside sites in Cork, transacted and the cash was received in January.
We are launching on the back of that, a share buyback program of up to EUR 40 million over the coming months between now and our AGM date. We'll be sharing more information on that later on. We've also announced a Capital Markets Day, which will take place in London on the 10th of May. I'll just touch very briefly on some of the key points here. We've mentioned some of them already, but you can see that the operating profit in the bar chart is reasonably consistent with our 2019 number. The business has delivered strong underlying growth at both our revenue and profit level. Some of the highlights to call out within that are a very strong performance from Green-tech, our amenity business which was acquired last year.
A rebound in the cropping area and in the in-field conditions in the U.K. which sets us up favorably for the rest of the financial year. Also, the I suppose partnership around cloud-free imagery with ClearSky being available to our customers this year. A ground-breaking partnership. Within continental Europe, you can see continued growth in the businesses there. You know, Poland and Romania have benefited very strongly from strong on-farm sentiment, some significant early season demand and spending in anticipation of probably input price inflation as we go through the rest of the year. Very much an improved cash credit mix, including in the Ukraine.
There's been a very significant improvement in our working capital position right across the CE businesses, including Ukraine as we've headed into the spring period. We had ceased operations temporarily in Ukraine following the invasion, but we have reopened the business with limited localized operations in areas which are away from the conflict and when it is safe to do so. The management team are continuing to run the business as best they can in what are very trying circumstances for themselves. Our Latin American operation saw significant volume growth, and as I mentioned earlier, 50% of that has come from organic growth in the business, but also significant growth in the new CRF plant in Minas Gerais north of São Paulo.
We saw total cropping area in Brazil increased by a reasonably modest 4.4%, but harvest of the soy crop has been significantly depressed over the last few weeks and months as dry conditions have prevailed. Soy price increases, though, have offset much of that yield risk, and therefore the farmer is still in pretty good health. Overall, the harvest in Brazil is running significantly ahead of the average of the last five years. I'll hand over to TJ, who'll run through some of the financials.
Thanks, Sean. Just to focus on a few points here. Operating profit. Firstly, operating profit on a reported basis was EUR 11.1 million, an increase of EUR 9.9 million on a reported basis. Driven by a strong performance really across all three operating segments. Of that EUR 9.9 million increase, U.K. and Ireland contributed about 60% of that growth, through improved plantings, good early season volumes, and the fact we have no repeat of the overhang of volumes that we had last year in Agrii U.K. Of that operating profit then, our Latin America segment delivered about 20% of that growth of 9.9 million.
As Sean highlighted, you know, what we've seen there is a strong underlying performance across our product portfolio, underpinned by strong demand, plus the impact of the first time contribution of our new controlled release fertilizer plant in Minas Gerais. CE overall delivered a solid contribution to earnings in the period. To some extent, that is a pull forward of early season volumes, so that may impact to some extent our volume performance in the region in the second half. We are overall pleased with our net bank debt position at the half year, where as you can see our net debt to EBITDA reduced to an historic low of 0.61 times.
This strong cash flow and net debt reduction has been achieved through, as Sean mentioned, sustained focus on working capital management across all the businesses. We had the relative strength of farmers, just given the high priced commodity markets, led to an improved mix overall of cash versus credit sales. We did see the benefit of some early cash collections, just in the run-up to the half year as farmers, particularly in the U.K. and Ireland context, sought to secure volumes. We also had the benefit of the Cork property disposal proceeds of just under EUR 20 million.
In addition to the share buyback announcement this morning, we're also pleased to announce a dividend of 0.0315, which again, as you will see, is consistent with the amount that we would normally declare for the interims. Moving on. Just looking then at our group revenue. Our group revenue excluding crop marketing increased just over 61%. As you can see, we had a currency tailwind in there of about 6.3%. Then we had underlying growth of just over 54%. Pricing was the key driver of that at 39% of the 54%, and within that pricing dynamic, fertilizer and feed was the primary driver at over 80% of that pricing growth during the half.
From a volume perspective, 15%, roughly split 50% of that was delivered across our U.K. and Ireland segment, 30% across our CE segment, and 20% across our Latin America segment. Just touching on a couple of points on page 10. You will note that the group revenue increased 48% on a constant currency basis, with reported currency up 53%, and that's driven by the relative appreciation of euro to sterling in the period. You'll also note here that our interest charge was up marginally versus the prior year, and that's despite a significant reduction in the net debt position, net bank debt position.
That's really reflective of the mix of currency we trade, countries rather, that we trade in, such as Brazil, which saw a higher absolute interest rate in the period. Just moving to page 11, just looking again briefly at our revenue bridge. I'll just reference here our acquisition, our Green-tech acquisition, which was acquired on the fifth of March, FY 2021. This is the first time contribution of Green-tech. As Sean mentioned, Green-tech is performing ahead of expectations, and what we've seen is strong double-digit revenue on a like for like basis, albeit this is the first time contribution in our group numbers on a like for like basis, when you look at under prior ownership, we're seeing a very strong revenue growth, so very pleased with performance there.
Just to note as well that Green-tech, this is the season, H1 will be the seasonally more important trading period for the business as it's in the tree planting timeframe and the disposal related to Pillaert-Mekoson, which we disposed of in the second half of last year. Just moving to the operating profit bridge. Again, just focusing on the impact of acquisitions and disposals. What we show here is the net impact of the Green-tech acquisition and Pillaert-Mekoson disposal, delivering a EUR 1.7 million benefit to group operating profit. Just to note here that Pillaert-Mekoson was marginally loss-making in H1 last year, which is embedded in that EUR 1.7 million number.
I'll take the next two pages together because we've already touched on our net debt and our working capital. When you look at our performance relative to covenants, clearly we're comfortably within our covenants and that performance really is driven by that improvement in working capital plus the benefit, as I said earlier, of the Cork property proceeds, receipts. You know, clearly benefiting overall from the relative financial strength that we've seen in H1 of our farmer base. We'd anticipate that you know, the question would be to the extent that's sustainable. Clearly, you know, delighted with the performance.
It is a result, you know, in part to the efforts made by the business over the last two years to focus and prioritize higher margin mix in our portfolio overall, and to reduce our absolute levels of investment in working capital. Clearly the benefit of that flowing through plus the benefit of just general financial well-being of the farming community, certainly in H1 of this year. With that, I'll hand it back to Sean.
Thanks, TJ. From a strategic perspective, a number of the things that we've been looking at in light of a changing regulatory environment, a changing legislative environment, across Europe and the U.K., has been how we turn a number of the challenges which face our business into opportunities for the longer term. To a certain extent, the challenges around reduced fertilizer usage, reduced pesticide usage, represent an industry-wide challenge, but we do believe that Origin is well positioned to take advantage of some of those legislative and regulatory changes and be a leading player in the change.
Things like climate change, soil degradation and water stress, loss of biodiversity and pesticide use, and food security and nutrition, trends in green space and sports turf solutions, the circular economy and consumer trends in nutrition and health will be topics that we touch upon at our upcoming Capital Markets Day. We'll give further color on how we think about those challenges for the business and how we feel we need to reshape our product set, our services, and potentially the composition of the group overall, to address the challenges that are being thrown at us from a regulatory perspective. We are importantly bucketing those into a number of key areas, a number of pillars around improving soil resilience and plant nutrition.
We see balancing the sustainable production of food with keeping soil healthy over the long term as being the foundation and pillar for how we operate our business. Coming up with innovative and integrated ways to protect crops over time, so reducing the reliance on traditional crop chemistry is a hugely important part of what we will have to do. Coming up with solutions for sustainable farming and productivity, addressing global food security concerns. If anything, the last couple of years, when it comes to things like Brexit, COVID, and indeed the current crisis in Ukraine, bring home the challenges around global food security and European food security. Then finally, there is, you know, significant new legislation in the U.K. in relation to protecting biodiversity and enhancing natural capital, both in an urban and a rural setting.
There's a requirement now on all developments to deliver a biodiversity net gain. The Environment Act that's been introduced there, I suppose, is something that we're conscious of and will be one of the drivers of how we invest further capital in acquisitions going forward. Because we believe we can make a connection between the significant on-farm presence that we have and the requirement from landowners, developers, and at a farming level to, I suppose, deliver biodiversity net gain through any new developments that they'll be conducting. Specifically on improving soil resilience and plant nutrition, you know, soil produces 95% of the world's food, and there's a very significant amount of ecosystem involved in the habitats that soil creates. It protects against flood risk and provides carbon storage.
Working together with our farm partners and farmer partners to deliver the optimum use of soil and deliver nutrition in the right way is hugely important. Across our individual businesses, we've developed programs that optimize the way in which we interact with our customers to improve soil resilience. Within our agri business, we've got a nitrogen use efficiency program. Across our fertilizer businesses, we have tailored products which match nutritional requirements of the land to the application of fertilizer. Within Fortgreen, for example, then we have specialist products, including our new controlled release range, which is a reasonably innovative product in the Brazilian market and is one which is contributing from an environmental perspective there.
In relation to the area of innovative ways of, I suppose, looking at crop protection, there is huge investment on an ongoing basis in our near market trials R&D capability, and we continue to monitor the market for regulatory change, and it's a very dynamic and evolving market. You know, using and finding new external products and new internal products within our product range, bringing those on board and developing a new product range that copes with the changing environment and the changing use of traditional chemistry is hugely important for us. Within the sustainable farming area, we continue to try and ensure food security across the businesses through best practice across each of our business units.
For example, we already know that the production levels across our CE businesses are well below that of Germany, for example, which, you know, has a very similar soil type. The capability of our CE businesses to produce more food for Europe on the basis of the yields that they're currently producing is there, and we continue to see our agronomists improving their interaction with farmers to try and drive production and drive yields, particularly in the CE geographies. The efficiency of our existing products being used and variable rate application are key tools in that regard. Finally, protecting biodiversity and enhancing natural capital. Our amenity businesses have already and have always been involved in this space, and obviously, Green-tech enhances our capability in that area.
If anything, COVID has taught us about the value of green spaces in the community and the value of amenity land, and that's now underpinned by the new biodiversity net gain legislation in the U.K. We see this as a strong growth area for the business, going forward. All of that then will be supported by our digital capabilities, supporting delivery of tools and assistance for our agronomists and advisors in making decisions about application of product, and we're delighted to announce the cloud-free imagery deal, around the ClearSky product. You know, the collaboration that we're seeing there is strong. From an M and A perspective, nothing new on this slide. These are the key areas that we are targeting.
We do see growth in the proprietary product area as continuing to be important for the business, and also growth in the amenity solution space around forestry, landscaping, environmental solutions, as being important for the business as well. We do intend acquiring more businesses alongside returning capital to shareholders as we are doing with this results announcement. The outlook overall is reasonably good for the business. We're happy, I suppose, that we are comfortable the profit will grow for the year. Aside from the normal weather risks that the business can experience from time to time, there are challenges around securing product supply and with price volatility overall. We believe that we have those under control and that we can work very effectively into the second half.
The cropping profile that we have across the group leads us to believe that the second half should be a good second half. We've referenced Ukraine already, and obviously it's hugely important that the people of Ukraine and our team within Ukraine are safeguarded as much as we can do so, and we'll be doing everything we can to help them. We are delighted to announce the share buyback this morning, which will take place over the coming months. We're reasonably comfortable with the outlook for the group as a whole this year. All in all, reasonably good news on the financial front, albeit tempered with some significant sadness in relation to the situation in Ukraine.
Happy to hand over to questions at this point in time, and hopefully we get to see some of you on the road over the coming days.
Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound hash key. Once again, if you would like to ask a question today, please press star and one on your telephone keypad. Your first question today comes from the line of Patrick Higgins from Goodbody. Please go ahead, your line is open.
Thanks. Good morning, everyone. Just two questions from me. Firstly, are you anticipating a significant, I guess, uplift in spring plantings in response to the likely shortfall in grain coming from the Ukraine, or how should we think about how farmers are gonna respond to the likely supply challenge to come out of there? Maybe could you just touch on, you mentioned, supply chain risks due to the Russian invasion. Could you maybe just give us a sense of your procurement network, your exposure to Russia in that context and what gives you confidence in, I guess, being able to meet demand, given the supply chain challenges? Thanks.
Thanks, Patrick. I'm not sure that we're going to see any significant change in spring planting as a result of the crisis in Ukraine. You know, it is going to lead to a challenge from a food security perspective at a European and potentially at a global level. I'm not sure that there's the capability to plant significant additional areas, certainly within our geography. You know, the winter planting was already in good shape and well ahead. We may see in Brazil significant additional corn planting as a result of the fact that Ukraine would be a significant maize producer. I'm not sure that within our own businesses or our own geographies, we will see any major deviation in what gets planted.
You know, the situation in Ukraine is very challenging at the moment. A lot of the grain originators have ceased operations in Ukraine for the time being. While the ports are operating, there are a number of vessels tied up at port which have not been moving in and out, so there's no product moving out into international markets as it stands. You can see a very clear ambition from the Russian military forces to secure the port areas. How long we would have a port challenge in that respect is unknown. Local banks have withdrawn local credit lines quite significantly. This has the capacity to turn into a very significant food security crisis for Europe and North Africa.
If spring planting doesn't happen in the next few weeks in Ukraine, it is going to cause problems. We are prepared, and you know, we would call on our partners in the Ukrainian context, so players like Syngenta and ADAMA, BASF, Bayer, and Limagrain would be our principal suppliers. We are prepared to give what is currently in our warehouses to local farmers to plant for free and forgo our margin on those products from a humanitarian perspective. We would need those five key suppliers to row in behind us and to support the sacrifice of their margin on those products.
You know, we would call on those five key suppliers to support an effort to get crops into the ground at this stage because there's simply no liquidity in the market. There is nothing moving there, and if something doesn't get planted soon, we're certainly going to have a food crisis in Europe and also in North Africa, where a significant amount of Ukrainian crops end up in North Africa. Unless something happens soon from a planting perspective, we really run the risk of a famine in North Africa and a food security crisis in Europe. We're prepared to give our product away for free in that context, but we would need our manufacturer partners to row in behind us and to support that. That's the position there.
In relation to fertilizer and other product supply, we generally speaking, I think are well set up for a spring application season. There may be longer term consequences in terms of product flow internationally and where product moves to and from. We traditionally would have bought about 10% of our fertilizer from the Russian or Belarusian manufacturers and producers and we're not entering into any new contracts with Russian or Belarusian entities. You know, we have to find alternative supplies and an alternative supply base, but we've done that in the past. We haven't been trading with Belarus since sanctions were imposed there a couple of years ago following the grounding of a Ryanair aircraft.
We will continue to look for further alternative product sources for the raw material that we're looking for. On the crop protection side, we're in good shape. We believe that generally speaking, all of the major product categories and product areas that we would need are in place for the spring season. Obviously, COVID has brought its own challenges in terms of product movement from traditional manufacturing bases such as China and India.
Great. Thank you very much. Thank you. Your next question comes from the line of Roland French from Davy Stockbrokers. Please go ahead. Your line is open.
Hi. Thanks and morning, everybody. Well done on a good start. Obviously in context of ongoing events, extend support and thoughts with those Ukrainian colleagues. Three questions maybe on my part. Just firstly on inventory and stock availability, do you wanna maybe walk us through how much stock cover you have in place, I guess kinda dialing into H1 really here. Then how does your sourcing, purchasing strategy shift in context of that potential availability pinch points? Secondly, on volumes, just on the 15% H1 print, maybe your thoughts around how much of that was forward buying. Then I guess the corollary, what's your expectations for H2, taking into account that forward buying and potentially some elasticity. Then finally, just on leverage.
Clearly the 0.6 net debt is materially lower than what you've kind of previously guided to at the end of the three-year period. Just wondering, you know, is there an element of working capital exceptional items here? You know, are you maintaining that prior corridor or does it shift to a lower potentially? Maybe linking that to your M and A strategy in terms of how the current events might be shaping that in terms of the pipeline and timing. I'll leave it there. Thanks.
Yeah. Maybe I'll answer the question on volumes, and I'll let TJ give you the detail on stock cover, inventory and net debt. You know, I suppose our thoughts on the forward buying, it has particularly been in the CE businesses. It has been very limited in an Ireland, U.K. context, and certainly quite limited in a Brazilian context. Most of the accelerated forward buying that we have seen has been in a CE context. Of the growth which we saw there in volume terms, which ran at about 19%, I would say, probably 12 points out of the 19 is forward buying. We certainly are experiencing underlying market share growth in the market, I would say.
We're seeing strong growth across both Poland and Romania. The business is performing well there. The farmer, excuse me, from a fiscal perspective, would've obtained a good grain or output price in harvest last year and not experienced quite the same high levels of input costs over the course of the spring and summer last year, had a good year, has money in his pocket and her pocket and is more than prepared to spend on early season volume to secure volumes. We took the decision, I suppose, to take that volume rather than restrict sales because the farmer was cash rich and was prepared to spend the money.
We took the decision to take a cash sale rather than let that cash sale go to our competitors. We're happy, I suppose, with the dynamics in the market from a volume perspective. I don't know how much it'll impact the second half. I mean, ideally we'll gain more market share and the second half would be good, but we just can't tell, I'm afraid at this stage. We'll wait and see how the second half pans out.
Hi, Roland. In terms of volumes, as you said, 15% up in H1. I mean, within that then to your specific point on fertilizers, that's been down about 5% overall. Pricing clearly has had an impact on demand, both in particular in Ireland and U.K. context, but it's slightly more severe in an Ireland context than a U.K. context. In terms of how that's gonna play out in the second half, you know, clearly pricing is being exacerbated by virtue of where energy markets are going. We'd anticipate and are seeing already further pricing inflationary pressure, which is gonna have a natural tapering effect on demand, as I said.
It's further complicated then by the disruption in the supply chain, through, you know, the shipping challenges coming out of the Russia and Ukraine. You know, it's difficult to call. I mean, it is possible that overall volumes will be back more than that 5% in fertilizer on a full year basis. The real challenge is securing supply. I suppose that's the primary focus now, as the supply chains are being rebalanced, that creates its own challenges, as you'd expect. We're typically looking at longer lead times in terms of shipments. As we get into the peak application period now, we'd estimate we probably have about one-third of our volumes still to do.
That's a material volume to be procured off the market, and particularly as in the context of the disruption that's happening across the supply chain. You know, on the plus side, we are a scale player in the market. As a result of that, we have buying power and leverage, and we have, you know, deep and long relationships with a range of manufacturers. We're leveraging those at the moment. It is volatile. It is dynamic, as you can imagine, just given what's happening on the global markets. That's how we're thinking about it. There's likely to be some further downward pressure in volumes, and it's all about securing supply at the moment.
In terms of your question on leverage, yes, it is materially lower than we certainly would have anticipated this time last year. I suppose there's a few pieces playing into it that you could characterize as somewhat one-off in nature. I think we've had the Cork property proceeds clearly of about 20 million, which clearly would be a one-off. The level of prepayment business that we saw on the run-up to the half year in January was also, you know, I suppose material in and in the context, again, of farmers trying to secure supply and putting cash effectively on the table to ensure they had volumes.
You know, that dynamic has been interesting through H1 as farmers were kind of particularly in an Ireland-U.K. context, probably more so in an Ireland context, were staying out of the market in anticipation of prices coming back. When they realized that that wasn't happening, then there was a flurry of activity to put cash on the table to secure those volumes. Again, I would say that's somewhat one-off in nature. The other dynamic is that generally there is, and it's linked to that point, but generally across all our markets, there's strong farm liquidity. In a CE context that has led to a higher mix of cash versus credit sales.
Again, you could argue, Roland, that that's somewhat one-off and exceptional in nature, in the context of the extent of the high soft commodity markets that we saw in H1. Input costs, you know, fertilizer, fuel, while rising, are nowhere near the levels they're currently at or likely to be at in H2. Again, you could characterize that as somewhat exceptional, and that's more likely to normalize as input costs for farmers squeeze. We're likely to be extending, you know, in time back to more normalized levels of credit extension. That proportion of cash versus credit is likely to reduce. Certainly there are elements of one-off in it.
As I said earlier, though, I think the focus of the business over the last two years has been to reduce the dependence on investment and working capital levels, focus on a higher profit mix in our portfolio and our product portfolio. We're certainly seeing the benefits of that come through as well. I think we'll certainly bank and maintain some of that benefit as we go out into the future and some of it we will give up by virtue of those one-off type items that we had in the first half. Linking that to the M and A strategy, I suppose, you know, we have a continuous hopper. We're continually assessing, you know, the landscape, Roland.
Obviously we're looking at, you know, in the context of our share buyback and dividend announcements today, we're looking at, you know, all our options in terms of capital distribution. You know, obviously having the firepower at that level of net debt to EBITDA puts us in a strong position going into the second half. I mean, that's ultimately been the objective and the goal of the business over the last two years, as I say, is to get that debt EBITDA level down and maintain it at a level that gives us some capacity and firepower to do M and A in time, and also to look after our shareholders as we are announcing today. That's great, Colin. Thanks.
Thank you. As a reminder, if you would like to ask a question, please press star and one on your telephone keypad. Star and one if you would like to ask a question today. Your next question comes from the line of Kevin Fogarty from Numis. Please go ahead. Your line is open.
Morning, guys. Thanks for taking my questions. A couple for me if I could. One was just picking up in terms of working capital management. You've obviously given a bit of color in terms of the kind of prepayments that have sort of gone on during the period. I guess if you sort of back that out, you know, from a general kind of housekeeping point of view, do you still have potential there, do you think, to sort of improve kind of working capital efficiency? And then secondly, just in terms of LatAm, I mean, obviously some of the performance there has been driven by your own sort of product range and bringing that facility on.
I just wondered, how does that sort of transition going forward in terms of that kind of product portfolio and?
Mm-hmm.
Just to understand, are these kind of replacing existing sort of products or are they kind of accretive? Just finally, if I can ask a third one, Sean, just in your part of the presentation where you talked about sort of biodiversity, soil resilience, sustainable farming, and to just ask the question, how does this kind of shape your approach to M and A or am I jumping the gun ahead of the CMD on that question?
Thanks, Kevin. I'll let TJ take the working capital question perhaps, and then I'll come back on the other two.
Sure. Yeah, I mean as I outlined, Kevin. You know, obviously there's been a lot of work done on working capital to get it reduced. Earlier, I suppose the focus has been across CE businesses, but in reality that's been across all our businesses probably more pronounced in the CE context. You know, I think we
Mm-hmm.
In terms of, you know, getting more out of the system from working capital, you know, I'm very slow to commit to any further reductions. I think by virtue of those one-off type benefits we've seen in H1, there's likely to be some rebalancing of that, I think as markets normalized whenever that happens out over the next 12-18 months or so. I think it's a continued focus, I suppose. If I put it that way, it's part of the DNA of how we operate now. As I said earlier, our focus very much is around optimizing the product portfolio mix in terms of, you know, improving the margin profile and hand-in-hand with that goes our reducing our dependence on working capital. So I would say it's ongoing.
I wouldn't commit to any further significant reductions. I think we have quite a bit out now, some of it will naturally unwind, as I said, and very tight management.
Great. Thank you.
Okay. In LatAm, Kevin, it hasn't really been swapping one part of our product range for another. I mean, the growth has come pretty evenly balanced between organic growth in our existing product range and growth in the controlled-release fertilizer in terms of that overall 70% plus number. You know, roughly 50/50 from a growth perspective split between organic growth and existing products and the controlled-release fertilizer growth. We would probably have to build out more capacity in order to achieve that kind of growth rate on a go-forward basis. You know, physically, the Minas Gerais plant is not quite operating at full capacity, but what I would imagine will get topped out pretty soon. It was a relatively small capital investment.
You might remember it was about EUR 1.5 million. You know, the return on that capital has been good, and there is the scope to build further plants in other geographic locations. Given the fact that this is a heavy product, it's sold in the one-ton bag rather than the smaller bottled product traditional business which we would have been involved in there. We're looking at the opportunity there. Our team are very keen on extending the small bottled product range into the biological area and we're looking at some investments around that as well. We do see continued growth in Brazil, albeit at a slower rate.
From an M and A perspective, I would say that environmental and ecology-focused businesses are one of the product areas or one of the business sets that we're looking at. I mean, we continue to be interested in investment in proprietary products. We continue to be interested in investment in the biological space and in the traditional immunity space as well. You know, we're looking across that kind of range of breadth of areas of faster growing, higher margin product areas and service areas for the business. They're the areas that we're looking at businesses. Typically the EBITDA size of the businesses we'd be looking at would be in the range of 1 million-5 million. There aren't any extraordinarily large businesses that we'd be looking at in that space.
Great. Okay, that's very helpful. Thanks for the color. Thank you.
Thank you. As a reminder, if you would like to ask a question today, please press star and one on your telephone keypad. Once again, star and one on your telephone keypad if you would like to ask a question. Your next question comes from the line of Dan Aharon from Kepler. Please go ahead. Your line is open.
Thank you. I have two questions on the share buyback, if I may. You said that you will decide at a later point whether you will cancel or reissue the shares. Can you walk us through this process? When will you decide, in November, or when, and what metrics will you be looking at to decide one way or another? Secondly, if I look at the average daily volume of the shares and the fact that European regulation lets you buy 25% of that for share buybacks, it seems to me that you need 400 days to buy back EUR 40 million of shares at the current levels. You have said the program will run from March to November. Am I missing something there or? Thank you.
Good morning, Dan. Nice to speak to you. Maybe just taking your second point first. I mean, we have obviously assessed the historic volumes and run rates to understand the potential time period within which that level of buyback could be consumed. The reality is you have to look at it through a few different lenses, Dan. You have to look at it in the context of the typical volumes that would happen around our reporting periods, which do tend to spike, which you would naturally expect. There's a few different views we've taken. There is a scenario where depending on the volume of activity in the share, that buyback could happen actually in theory in the space of a few months.
There's another extreme that says the buyback may not fully complete by November, but it really is dependent on the volume of shares that are trading. Looking at it through one lens of an average isn't quite sufficient. You have to look at it through the lens of what happens volumes, you know, at reporting periods and obviously in terms of the standard program it is looked at as the average over the previous 20 days in terms of, you know, the volumes that we can trade. We have, you know, as you would expect, we've run that analysis a number of different ways. It is ultimately down to the volumes that trade in the shares, as I say, and they do tend to peak around reporting periods.
I mean, after that, we will have to wait and see, frankly, in terms of how it progresses, but that's our ambition. In terms of the opportunity to, you know, your question around, you know, canceling and subsequently canceling. You know, I mean, we will wait and see how the buyback program itself progresses. You know, in the first instance, we will hold those shares and take a view in due course then in terms of how the volumes are proceeding as to what quantum, if any, we retain and what quantum we ultimately cancel. But I mean, you know, we haven't formally launched that program yet.
It's happening tomorrow, so we'll see in due course how it progresses.
Okay, that's clear. Thank you very much.
Thank you. As a reminder, please press star and one if you would like to ask a question. Star and one to ask a question. Your next question comes from the line of William Larwood from Liberum. Please go ahead. Your line is open.
Yeah, morning, guys. Thanks for taking my questions. Just one on the exclusive partnership you've signed in sort of the radar-based cloud imagery. Just wondering if you could provide some, a bit more detail on that. Is there any additional partnerships in the technology space that you're looking to supplement your sort of existing technology portfolio? Then just, secondly, in terms of M and A, how are you seeing sort of valuation metrics falling? Is there anything that's sort of imminently in the pipeline now, given the fall in those valuations? Thanks.
Hi, Will. Thanks for the question. Brendan here. Will, in relation to the cloud imagery, we have, I suppose, looked at collaborations and continued to look at collaborations. When we think about our digital business, how we view ourselves is very much about bringing the capabilities to our customers as well as our agronomists. One of the key areas, I suppose, that has been a challenge, particularly in the Irish and U.K. market, has been the availability of imagery that hasn't been distorted by clouds. The technology that we have now gone into collaboration with allows us to penetrate those clouds with radar in order then to get more frequent and better quality images out for our farmers, which then enables them to make better decisions throughout the year.
Essentially what it means is farmers now will get 6 images pretty much through a week, where previously they might have been disrupted by the clouds and the clarity. In terms of wider collaborations, as you could underline, absolutely, we're 100% open. What we have as a platform here, we have a presence on the ground with our customers, and it's about building out those capabilities in future years. Given the size of Origin, we see collaboration as being an excellent and efficient way of bringing those technologies to our customers, and remain open and in constant dialogue with new partners around us. I suppose the wider piece is that is not new to how Origin operates. That is how we operate in both seed and crop protection products. It's all about collaboration with wider manufacturers to bring the best solutions there.
I'll hand over maybe to TJ. Sure. Good morning, Will. Just to your question on M and A, I mean, as Sean said, I mean, the nature of businesses we're looking at are typically in that EUR 1 million-EUR 5 million EBITDA range. Typically, I would say owner-managed type businesses. You know, probably don't see maybe the type of, you know, inflationary expectations on multiples that you would in larger scale businesses. Kind of multiples in that kind of mid-single digit range is what we would typically see.
I suppose, you know, ultimately our objective is to be, you know, disciplined buyers, look at businesses that fit with the strategic intent of where we want to take the business ultimately, but do that in a disciplined way in terms of M and A, and that's very much how we're thinking about it. Multiples in that range is typically what we're seeing. I think it's probably a function really of the nature of the seller to a large extent, in that they're more owner-managed type businesses. That's what we're seeing.
As I say, we are patient, and we are both patient and prudent in the context of M and A activity that we're looking at, and that's how we'll remain.
Thank you. There are no further questions. I will hand the call back for closing comments.
Okay. Just like to thank everybody for joining us this morning. Obviously, while we're pleased with the results, we are deeply concerned about the situation in Ukraine and the safety of our colleagues in Ukraine. We look forward to seeing any of you that we have one-to-one meetings with over the next couple of weeks. Thank you for joining us this morning. Okay.
Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.