fyffes reports positive first half result and reconfirms...

Fyffes reports positive first half result and reconfirms full year targets

Continuation of earnings growth in first half – adjusted EBITDA up 11.3%

Reconfirms strong full year target earnings ranges as follows:

o Adjusted EBITDA - €63m - €69m

o Adjusted EBITA - €49m - €55m

o Adjusted EPS – 12.8 cent – 14.5 cent

Completion of €99m acquisition of Highline Produce in period

10% increase in interim dividend

Commenting on the results, David McCann, Chairman, said:

“Fyffes is maintaining its strong full year target earnings ranges, which were increased in April 2016

following the Highline acquisition. The result for the first half of the year was satisfactory given the

difficult prevailing market conditions, including adverse currency movements as a result of the weakness

of Sterling and the euro against the US Dollar. The Group was very pleased to complete the purchase of

Canadian mushroom business, Highline Produce, during the period. Highline has performed in line

with our expectations for the three-month period post acquisition. The first half results in the Group’s

other product categories were in line with the same period last year in aggregate, with strong

performances in the pineapple and melon categories.”

The financial terms used above are defined below and exclude exceptional items.

2 September 2016

Forward looking statement Any forward looking statements made in this press release have been made in good faith based on the information available

as of the date of this press release and are not guarantees of future performance. Actual results or developments may differ

materially from the expectations expressed or implied in these statements, and the company undertakes no obligation to

update any such statements whether as a result of new information, future events, or otherwise. Fyffes Annual Report

contains and identifies important factors that could cause these developments or the company’s actual results to differ

materially from those expressed or implied in these forward-looking statements.

For further information, please view the 2016 interims results slide presentation at www.fyffes.com

or contact Brian Bell at Wilson Hartnell PR, Tel: +353-1-6690030.

http://www.fyffes.com/

Fyffes plc Interim Results for six months ended 30 June 2016

Financial highlights

6 months to

30 June 2016

€

6 months to

30 June 2015

€

Change %

Total revenue (incl share of joint ventures) 739.3m 644.3m +14.7%

Group revenue (excl share of joint ventures) 630.5m 540.6m +16.6%

EBITDA* 44.0m 39.5m +11.3%

EBITA* 36.6m 34.3m +6.6%

Diluted earnings per share* 10.01 cent 9.93 cent +0.8%

Interim dividend per share 0.9032 cent 0.8211 cent +10%

*Key performance measures:

Adjusted EBITDA is earnings before interest, tax, depreciation and amortisation, excluding the Group’s

share of Balmoral’s result and exceptional items where applicable

Adjusted EBITA is adjusted EBITDA less depreciation charges

Adjusted diluted earnings per share excludes exceptional items, amortisation charges and related tax

charges or credits, and in previous years, the Group’s share of Balmoral’s result

Copies of this announcement are available from the Company’s registered office, 29 North Anne Street,

Dublin 7 and on our website at www.fyffes.com.

http://www.fyffes.com/

Financial results and operating review

Revenue

Total revenue, including the Group’s share of its joint ventures, increased by 14.7% in the first half of the year to

€739.3m. Group revenue, excluding Fyffes’ share of its joint ventures, amounted to €630.5m in the period, an

increase of 16.6%. The increase in turnover in the period included the first time contribution from Highline, for

the three-months post acquisition. In addition, the Group achieved volume growth in each of its existing product

categories in the period, including the first time contribution from the additional melon farming assets acquired at

the end of 2015. There was also some price inflation in each of these product categories.

Operating profit

Fyffes has delivered another satisfactory performance in the first half, with Adjusted EBITDA in the period €4.5m

higher (+11.3%), at €44.0m, and Adjusted EBITA up €2.3m (+6.6%) to €36.6m. Excluding the first time

contribution from the Highline acquisition, Adjusted EBITA in the first half was in line with the same period last

year. This represents a good result for the period with strong performances in the pineapple and melon categories

offsetting the impact of the relatively difficult market conditions experienced in the banana category. The

calculations of Adjusted EBITA and Adjusted EBITDA are set out in note 3 of the accompanying financial

information.

Trading conditions in the banana category were challenging during the first half of 2016, mainly due to the further

strengthening of the US Dollar against Sterling and the euro. In response, Fyffes has secured some price increases

to date but this has been insufficient to offset the impact of the adverse exchange rates and the Group therefore

continues to pursue further price increases in all markets. Partly offsetting this, costs have been lower year on

year, particularly for fuel. The Group has also continued to grow its banana business organically, with a

satisfactory mid-single digit percentage increase in volumes in the period.

Fyffes pineapple operations achieved a strong result in the first six months of the year. As in the banana category,

exchange rates were a head wind in the period but, as a lower proportion of the Group’s pineapple volumes are

sold in the UK market compared to the banana category, the negative movement in the Sterling/US Dollar

exchange rate had a somewhat less adverse impact. The Group also secured price increases in some markets and

benefited from lower fuel costs. The Group’s pineapple farms performed well in the period, with higher yields

and lower production costs. Total volumes sold increased by a strong mid-teens in percentage terms in the period.

Fyffes US melon business delivered a strong result in the first half. Volumes increased by more than 20% as a

result of the successful integration of the additional farming assets in Guatemala which the Group acquired in late

2015. Costs were higher as a result of this expansion in business, including the hiring of additional shipping

capacity and the impact of wider sales distribution throughout the US market, including the West Coast.

Fyffes was very pleased to complete the acquisition of 100% of the equity of Canadian mushroom business,

Highline Produce, in April 2016 for a consideration of c.€99m. Highline has performed in line with our

expectations to date and contributed EBITA of €2.3m in the first three-months post acquisition.

Balmoral International Land Holdings plc (“Balmoral”), in which the Group has a 40% shareholding, has not yet

reported its 2015 results. Fyffes share of its net assets therefore remain unchanged at €3.4m and the Group

continues to carry its investment in Balmoral €50,000. Fyffes may revisit this accounting approach if there is

evidence of a continued and sustained improvement in Balmoral’s performance when it publishes its 2015 results.

The total operating profit for the Group, which is Adjusted EBITA less the Group’s share of joint ventures interest

and tax, amortisation charges and exceptional items, amounted to €36.5m for the first half, 17.1% up on the same

period last year, mainly due to the exceptional credit in 2016 compared to an exceptional charge last year (see

below). The Group incurred amortisation charges of €1.3m in the period in respect of the intangible assets

recognised on recent acquisitions, including Highline. There were no amortisation charges in the prior year.

Exceptional items

As further explained below, the Group realised a €3.6m curtailment gain as a result of the agreement reached with

the trustees of its UK defined benefit pension scheme to close the scheme to future accrual. The Group incurred

professional and advisory fees amounting to €1.9m in the period arising from financial and commercial due

diligence and related work in connection with a number of acquisitions completed in the period, including

Highline. Net exceptional credits in the first half therefore amounted to €1.7m. A tax charge of €0.7m has been

recognised in relation to this net exceptional gain. The Group recognised a €2.9m exceptional charge in the first

half of 2015 in respect of a fine paid by a joint venture business following the conclusion of a long running EU

competition investigation relating to a period before Fyffes had invested in that business.

Financial expense

Net financial expense in the Group’s subsidiary companies in the first half amounted to €0.9m, compared to

€0.3m in the same period last year, reflecting the increase in net debt following the Highline acquisition. The

Group’s share of the net financial expense of its joint ventures in the period was €0.2m, compared to €0.1m in the

previous year.

Profit before tax

Adjusted profit before tax for the first half of the year amounted to €35.5m, 4.5% up on the same period last year.

As set out in note 3 of the accompanying financial information, adjusted profit before tax excludes exceptional

items, amortisation charges and the Group’s share of the tax charge of its joint ventures, which is reflected in

profit before tax under IFRS rules, and, in previous years, the Group’s share of Balmoral’s result. Profit before

tax, excluding these adjustments, amounted to €35.6m, up 15.4% on first half in 2015.

Taxation

The underlying tax charge for the first half has been calculated based on the tax rate expected to apply for the full

year 2016. An analysis of the tax charge for the period is set out in note 5 of the accompanying financial

information. The underlying tax charge for the period, including the Group’s share of the tax charge of its joint

ventures and excluding the tax impact of exceptional items, was €5.3m compared to €4.4m in the same period last

year, equivalent to a rate of 15% (2015 first half: 13%), when applied to the Group’s adjusted profit before tax.

This underlying rate is used for the purposes of calculating adjusted earnings per share. The equivalent

underlying tax rate for the full year in 2015 was 13.8%. The increase in the underlying tax rate in 2016 mainly

reflects the change in the geographic mix of the Group’s profits following the acquisition of Highline.

Non-controlling interests

The non-controlling interests’ share of profit after tax for the year amounted to a credit of €0.2m in the first half of

2016, compared to a credit of €0.3m in the same period last year.

Earnings per share

Adjusted diluted earnings per share amounted to 10.01 cent in the first half, an increase of 0.8% on the same

period last year. This reflects the 4.5% increase in adjusted profit before tax, less the impact of the higher tax

charge and a c.1% increase in the number of shares in issue in the period. The calculation of adjusted earnings per

share is set out in note 6 of the accompanying financial information. It excludes exceptional items, the

amortisation of intangible assets and the related tax impacts and, in previous years, the Group’s share of

Balmoral’s result. Diluted earnings per share after exceptional items and amortisation charges amounted to €9.94

cent, up 10.8% on the same period last year mainly due to there being a net credit on exceptional items in 2016

compared to an exceptional charge in the prior year.

Dividends and share buyback

The Board is proposing to pay an interim dividend for 2016 of 0.9032 cent per share, an increase of 10% on the

previous year, ahead of the increase in earnings per share in the period. This dividend, which will be subject to

Irish withholding tax rules, will be paid on 7 October 2016 to shareholders on the register on 16 September 2016.

In accordance with company law and IFRS, this dividend has not been provided for in the balance sheet at 30 June

2016. At its AGM in April 2016, shareholders renewed the Group’s authority to repurchase up to 10% of the

shares in issue. Subject to this authority and taking into account the Group’s financial position and other

investment opportunities, the Company may from time to time repurchase further Fyffes plc shares in the market.

Balance sheet

Net debt

Net debt increased by c.€60m in the first half of 2016 to €99.1m. The Group invested €92.2m on acquisitions

completed in the period, including Highline, net of cash in these businesses. Cash generated by operations

amounted to €38.2m, representing Adjusted EBITDA of €44.0m less the share of joint ventures earnings and after

acquisition costs treated as exceptional items. Regular capital expenditure in the period amounted to a relatively

high €14.3m as the Group bought out a significant number of shipping containers which it had previously been

leasing. Other significant outflows in the period included dividend payments of €5.7m, tax payments of €3.6m

and deferred acquisition consideration of €1.1m. There was a €22.8m inflow from working capital in the first half

mainly related to the timing of the ending of the US melon import season. As usual, this will reverse in the second

half of the year as the Group reinvests in planting new product ahead of the start of the next melon import season

which commences towards the end of the year. As a result, net debt at year end will be significantly higher than at

the end of the half year. The Group has sufficient committed financial resources available to fund its operations

into the future.

Pension obligations

During the first half of the year, following agreement with the trustees and members, the Group closed its defined

benefit pension scheme in the UK to future accrual. This gave rise to a €3.6m curtailment gain, which has been

included in the income statement as an exceptional item. The aggregate deficit in the Group’s defined benefit

pension schemes has now reduced to €21.3m, before deferred tax, at 30 June 2016 from €32.1m at the previous

year end. This reduction in the deficit also reflects an increase in asset values in the period, a positive translation

impact and is net of an increase in scheme liabilities arising from the further decrease in international bond rates.

The Group has made significant progress in limiting and reducing its exposure in relation to its pension

obligations, having also closed its defined benefit pension scheme in Ireland to future accrual in 2015 and

subsequently eliminating the full deficit in that scheme.

Shareholders’ funds

Shareholders’ funds increased by €27.3m (12.8%) in the first half to €241.2m. This increase included retained

profits after tax and non-controlling interests of €30.1m, translation losses on the Group’s non-euro denominated

net assets of €6.7m, gains of €6.6m on revaluing the Group’s outstanding currency and fuel hedging instruments

at 30 June 2016 and a €2.5m actuarial gain on the Group’s pension schemes, less dividend payments of €5.7m.

Outlook

The Group is pleased to reconfirm its target full year 2016 earnings ranges, which represent strong increases in

respect of each of the following key measures of performance:

Adjusted EBITDA €63m-€69m (2015: €56.1m)

Adjusted EBITA €49m-€55m (2015: €45.8m)

Adjusted EPS 12.8 cent – 14.5 cent (2015: €12.73 cent)

Fyffes continues to pursue increases in selling prices in all markets to offset continuing adverse exchange rates.

The Group remains confident about its future prospects and is well placed to compete strongly in its key markets.

David McCann, Chairman 2 September 2016

on behalf of the Board

Fyffes plc

Condensed Group Income Statement

(Unaudited)

6 months to

30 June 2016

€’000

(Unaudited)

6 months to

30 June 2015

€’000

(Audited)

Year ended

31 Dec 2015

€’000

Revenue including share of joint ventures 739,343 644,339 1,222,549

Group revenue 630,512 540,578 985,292

Group operating profit 32,208 33,836 44,156

Share of profit of joint ventures after tax 3,838 199 356

Intangible amortisation (1,254) - -

Share of profit/(loss) of associates after tax (Balmoral) - - -

Exceptional items (incl share of joint ventures) 1,689 (2,875) (11,978)

Operating profit 36,481 31,160 32,534

Net financial expense – Group (897) (318) (748)

Profit before tax 35,584 30,842 31,786

Income tax expense (5,638) (4,193) (4,246)

Profit for the period 29,946 26,649 27,540

Attributable as follows:

Equity shareholders 30,136 26,917 27,425

Non-controlling interests (190) (268) 115

29,946 26,649 27,540

Earnings per share

Basic 10.12 9.13 9.28

Diluted 9.94 8.97 9.10

Adjusted diluted 10.01 9.93 12.73

Fyffes plc

Condensed Group Statement of Comprehensive Income

(Unaudited)

6 months to

30 June 2016

€’000

(Unaudited)

6 months to

30 June 2015

€’000

(Audited)

Year ended

31 Dec 2015

€’000


Other comprehensive income

Items that may subsequently be classified to profit or loss

Translation of net assets of equity investments (6,677) 14,116 17,132

Effective portion of cashflow hedges 7,493 36 (10,282)

Deferred tax on effective portion of cashflow hedges (936) (4) 1,285

Items that will not be classified to profit or loss

Actuarial gain recognised on defined benefit pension schemes 3,205 2,206 2,521

Deferred tax movements related to pension schemes (694) (374) (922)

Share of actuarial loss on joint ventures pension schemes (368) (135) (356)

Deferred tax movement related to joint ventures pension schemes 11 - 49

Other comprehensive income (net of tax) 2,034 15,845 9,427

Total comprehensive income 31,980 42,494 36,967

Attributable as follows:

Equity shareholders 32,150 42,762 36,852

Non-controlling interests (170) (268) 115

Total comprehensive income 31,980 42,494 36,967

Fyffes plc

Condensed Group Statement of Movement in Equity

Half year ended 30 June 2016

Share

capital

€’000

Share

premium

€’000

Other

reserves

(Note 10)

€’000

Retained

earnings

€’000

Shareholders’

funds

€’000

Non-

controlling

interests

€’000

Total

equity

€’000

Balance at beginning of period 19,698 100,414 72,287 21,495 213,894 1,675 215,569

Profit for the period - - - 30,136 30,136 (170) 29,966

Translation of net equity investments including joint ventures - - (6,677) - (6,677) - (6,677)

Effective portion of cash flow hedges net of deferred tax - - 6,557 - 6,557 - 6,557

Actuarial gain recognised on defined benefit pension schemes net of deferred tax - - - 2,511 2,511 - 2,511

Share of actuarial loss on joint ventures pension schemes net of deferred tax - - - (357) (357) - (357)

Non-controlling interests arising on acquisition - - - - - 7 7

Share options exercised 74 651 - - 725 - 725

Share based payments - - 110 - 110 - 110

Dividends paid to equity shareholders - - - (5,730) (5,730) - (5,730)

Total at end of period 19,772 101,065 72,277 48,055 241,169 1,512 242,681


Share

capital

€’000

Share

premium

€’000

Other

reserves

(Note 10)

€’000

Retained

earnings

€’000

Shareholders’

funds

€’000

Non-

controlling

interests

€’000

Total

equity

€’000

Balance at beginning of period 19,546 99,117 64,230 (209) 182,684 1,560 184,244

Profit for the period - - - 26,917 26,917 (268) 26,649

Translation of net equity investments including joint ventures - - 14,116 - 14,116 - 14,116

Effective portion of cash flow hedges net of deferred tax - - 32 - 32 - 32



Share options exercised 30 239 - - 269 - 269



Total at end of period 19,576 99,356 78,505 23,466 220,903 1,292 222,195

Fyffes plc

Condensed Group Statement of Movement in Equity (continued)

Full year ended 31 December 2015

Share

capital

€’000

Share

premium

€’000

Other

reserves

(Note 10)

€’000

Retained

earnings

€’000

Shareholders’

funds

€’000

Non-

controlling

interests

€’000

Total

equity

€’000

Balance at beginning of year 19,546 99,117 64,230 (209) 182,684 1,560 184,244

Profit for the period - - - 27,425 27,425 115 27,540

Translation of net equity investments including joint ventures and associates - - 17,132 - 17,132 - 17,132

Effective portion of cash flow hedges net of deferred tax - - (8,997) - (8,997) - (8,997)



Share options exercised 152 1,297 (351) 351 1,449 - 1,449



Total at end of year 19,698 100,414 72,287 21,495 213,894 1,675 215,569

Fyffes plc

Condensed Group Balance Sheet

(Unaudited)

30 June 2016

€’000

(Unaudited)

30 June 2015

€’000

(Audited)

31 Dec 2015

€’000

Non-current assets

Property, plant and equipment 158,985 106,182 123,099

Investment property 4,850 5,742 5,524

Goodwill and intangible assets 103,729 26,718 39,851

Other receivables 5,925 5,098 -

Investment in joint ventures 38,948 35,229 36,326

Investment in associate – Balmoral 50 50 50

Equity investments 19 16 16

Deferred tax assets 7,226 11,995 11,044

Total non-current assets 319,732 191,030 215,910

Current assets

Inventories 48,118 43,023 60,198

Biological assets 3,684 2,305 21,314

Trade and other receivables 105,179 101,965 119,149

Hedging instruments 6,917 7,348 3,118

Corporation tax recoverable 5,671 2,184 1,222

Cash and cash equivalents 39,573 38,353 22,759

Total current assets 209,142 195,178 227,760

Total assets 528,874 386,208 443,670

Equity

Called-up share capital 19,772 19,576 19,698

Share premium 101,065 99,356 100,414

Other reserves 72,277 78,505 72,287

Retained earnings 48,055 23,466 21,495

Total shareholders’ equity 241,169 220,903 213,894

Non-controlling interests 1,512 1,292 1,675

Total equity and non-controlling interests 242,681 222,195 215,569

Non-current liabilities

Interest bearing loans and borrowings 125,804 9,879 1,337

Other payables 3,367 8,390 3,780

Provisions 1,471 1,930 1,864

Employee benefits 21,337 41,785 32,148

Corporation tax payable 9,421 10,330 9,508

Deferred tax liabilities 8,304 4,074 3,922

Total non-current liabilities 169,704 76,388 52,559

Current liabilities

Interest bearing loans and borrowings 12,914 9,842 60,703

Trade and other payables 93,989 70,036 104,611

Corporation tax payable 5,882 3,713 815

Hedging instruments 3,234 1,964 7,786

Provisions 470 2,070 1,627

Total current liabilities 116,489 87,625 175,542

Total liabilities 286,193 164,013 228,101

Total liabilities and equity 528,874 386,208 443,670

Fyffes plc

Condensed Group Cash Flow Statement

(Unaudited)

6 months to

30 June 2016

€’000

(Unaudited)

6 months to

30 June 2015

€’000

(Audited)

Year ended

31 Dec 2015

€’000

Cash flows from operating activities (note 9.1) 54,243 39,139 16,509

Cash flows from investing activities (note 9.2) (107,151) (3,337) (36,708)

Cash flows from financing activities (note 9.3) 72,172 (15,371) 24,558

Net movement in cash and cash equivalents 19,264 20,431 4,359

Cash and cash equivalents, including bank overdrafts at start of period 22,134 16,730 16,730

Effect of foreign exchange movements on cash and cash equivalents (2,279) 1,047 1,045

Cash and cash equivalents, including bank overdrafts at end of period 39,119 38,208 22,134

Reconciliation of total net debt

Increase in cash and cash equivalents 19,264 20,431 4,359

Net (increase)/decrease in debt (78,000) 10,000 (32,000)

Capital element of finance lease payments 823 701 1,527

New finance leases (6) (870) (1,238)

Foreign exchange movement (1,945) 89 (210)

Movement in net debt (59,864) 30,351 (27,562)

Net (debt) at start of period (39,281) (11,719) (11,719)

Net (debt)/funds at the end of period (99,145) 18,632 (39,281)

Fyffes plc

Notes supporting 2016 Interim condensed consolidated financial statements

1. Basis of preparation

The condensed consolidated interim financial statements of Fyffes plc, its subsidiaries and joint ventures (“the

Group”) for the half year ended 30 June 2016 are unaudited. These financial statements do not constitute the

statutory financial statements that are required by Irish Company law to be annexed to the annual return of the

company. The statutory consolidated financial statements for the year ended 31 December 2015 have been

annexed to the 2016 annual return and filed with the Registrar of Companies. The audit report on those statutory

financial statements was unqualified and did not include a reference to any matters by way of emphasis.

During the period, a number of amendments to existing International Financial Reporting Standards (IFRS) as

adopted by the EU Commission became effective. These have been considered by the directors and have not had a

significant impact on the Group’s condensed consolidated interim financial statements. Therefore, the financial

information contained in these interim financial statements has been prepared in accordance with the accounting

policies set out in the last annual report for the year ended 31 December 2015, prepared in accordance with the

recognition and measurement principles of IFRS as adopted by the EU. Fyffes is not required to apply IAS 34

Interim Financial Reporting as adopted by the EU, as it is listed on the secondary AIM and ESM markets in

London and Dublin, and has not applied the presentation and disclosure requirements of that standard.

The financial information is presented in euro, rounded to the nearest thousand. Given the seasonality of the

tropical produce sector, the Group’s profits are typically significantly weighted towards the first half of the year.

In addition, the Group’s biological asset valuation peaks at its year end date due to the seasonality in the melon

category in particular.

30 June 2016 30 June 2015 31 Dec 2015

Average (euro 1 =)

US Dollar 1.1164 1.1224 1.1100

Pound Sterling 0.7789 0.7272 0.7258

Closing (euro 1 =)

US Dollar 1.1138 1.1149 1.0859

Pound Sterling 0.8389 0.7086 0.7365

The condensed consolidated interim financial statements were authorised by the Board on 1 September 2016.

2. Segmental analysis

Segment information below is presented in accordance with IFRS 8 Operating Segments. IFRS 8 requires

segment information to be presented in the format reviewed by the Chief Operating Decision Maker (“CODM”)

of the Group. In Fyffes, this function is carried out by the executive director team comprising the Executive

Chairman, the Chief Operating Officer and the Finance Director.

Fyffes is currently organised into two separate operating divisions – its Produce activities and its Property

activities, which comprises its 40% investment in Balmoral International Land Holdings plc (“Balmoral”).

Fyffes Produce division is a fully integrated distributor of fresh produce, comprising four product categories –

bananas, pineapples, melons and mushrooms, with bananas being the largest category both in terms of revenues

and profits. The primary activities of this division include the production, procurement, shipping, ripening,

distribution and marketing of these products. Bananas, pineapples and melons are produced in broadly the same

geographic areas in Central and South America and distributed to the Group’s customers in Europe and the US.

The Group’s new mushroom business is based in Canada with customers in Canada and the US. Fyffes directly

farms a significant portion of the produce it distributes, particularly in the mushroom, pineapple and melon

categories. The procurement, shipping, distribution and marketing activities for the banana and pineapple

categories are managed centrally on a combined basis. As a result, the Group’s Produce activities are regarded as

a single reporting segment for the purposes of IFRS 8. The CODM reviews the performance of the Produce

division based on Adjusted EBITA, which is believed to be the most appropriate measure of underlying

performance.

Following a number of years of significant losses due to the difficulties in the international property sector, Fyffes

wrote down its investment in Balmoral to a nominal value of €50,000 in 2011. Balmoral has not yet reported its

2015 results. Based on its 2014 results, Fyffes share of its net equity value of €3,389,000 remained in excess of

the Group’s €50,000 carrying value. In recent years, while Fyffes has recognised its share of Balmoral’s profit, it

has also recognised a matching impairment provision on the basis that there has not yet been a sustained or

prolonged recovery in Balmoral’s performance and the carrying value of its investment has therefore remained

unchanged at €50,000. Fyffes will reconsider the appropriateness of this approach following publication by

Balmoral of its 2015 accounts.

The only inter-segment transactions between the Group’s Produce division and Balmoral arise because Fyffes

rents a number of its distribution centres in the UK and Ireland from Balmoral. Fyffes in turn sublets space in its

corporate head office to Balmoral.

In the analysis below, reconciling items included in Adjusted EBITA represent central costs not allocated to the

operating divisions, including the cost of the Board of directors, together with legal and other costs connected

with the corporate head office of the Group.

(Unaudited)

6 months to

30 June 2016

€’000

(Unaudited)

6 months to

30 June 2015

€’000

(Audited)

Year ended

31 Dec 2015

€’000

Total revenue

Produce 739,343 644,339 1,222,549

Property - - -

Total 739,343 644,339 1,222,549

Adjusted EBITA

Produce 38,673 36,060 51,477

Property - - -

Reconciling items (2,057) (1,726) (5,658)

Total Adjusted EBITA 36,616 34,334 45,819

Share of joint ventures’ net interest charge (246) (85) (447)

Share of joint ventures’ tax charge (324) (214) (860)

Amortisation of intangible assets (1,254) - -

Exceptional items 1,689 (2,875) (11,978)

Operating profit 36,481 31,160 32,534

Net interest charge – Group (897) (318) (748)

Profit before tax 35,584 30,842 31,786

Income tax expense (5,638) (4,193) (4,246)

Profit for the financial period 29,946 26,649 27,540

Geographical analysis

Total revenue incl share of joint ventures

Ireland 29,247 26,996 54,921

UK 227,436 202,552 408,047

Eurozone 229,480 221,040 475,054

Other – mainly North America 253,180 193,751 284,527

739,343 644,339 1,222,549

3. Adjusted profit before tax, EBITA and EBITDA

(Unaudited)

6 months to

30 June 2016

€’000

(Unaudited)

6 months to

30 June 2015

€’000

(Audited)

Year ended

31 Dec 2015

€’000

Profit before tax per Income Statement 35,584 30,842 31,786

Adjustments

Amortisation of intangible assets 1,254 - -

Exceptional items (note 4 below) (1,689) 2,875 11,978

Group share of tax charge of joint ventures 324 214 860

Adjusted profit before tax 35,473 33,931 44,624

Exclude

Financial expense – Group 897 318 748

Financial expense – share of joint ventures 246 85 447

Adjusted EBITA 36,616 34,334 45,819

Depreciation 7,393 5,209 10,322

Adjusted EBITDA 44,009 39,543 56,141

Fyffes believes that Adjusted profit before tax, Adjusted EBITDA, Adjusted EBITA and Adjusted earnings per

share (note 6 below) are the appropriate measures of the underlying performance of the Group, excluding

exceptional items and amortisation charges, if any.

4. Exceptional items

(Unaudited)

6 months to

30 June 2016

€’000

(Unaudited)

6 months to

30 June 2015

€’000

(Audited)

Year ended

31 Dec 2015

€’000

Gain on closure of UK defined benefit pension scheme to

future accrual 3,634 - -

Professional and advisory fees and other costs related to

acquisition activity (1,945) - 2,048

Share of fine paid by joint venture in connection with EU

Competition case - (2,875) (2,882)

Costs on closure of Irish defined benefit pension scheme - - (11,144)

Total exceptional items 1,689 (2,875) (11,978)

During the first half of 2016, the Group implemented a number of changes to its defined benefit pension scheme

in the UK including closing it to future accrual. This gave rise to a €3.6m curtailment gain (see note 7 below).

The Group incurred €1.9m of professional and advisory fees arising from due diligence carried out in relation to a

number of acquisitions it completed during the period, including the purchase of Highline Produce Limited.

A net tax charge of €0.7m has been recognised in relation to these exceptional items.

5. Taxation

(Unaudited)

6 months to

30 June 2016

€’000

(Unaudited)

6 months to

30 June 2015

€’000

(Audited)

Year ended

31 Dec 2015

€’000

Tax charge per Income Statement 5,638 4,193 4,246

Group share of tax charge of its joint ventures netted in

profit before tax 324 214 860

Total tax charge 5,962 4,407 5,106

Adjustments

Tax effect on exceptional items (654) - 1,053

Tax charge on underlying activities 5,308 4,407 6,159

Including the Group’s share of the tax charge of its joint ventures of €0.3m (2015 first half: €0.2m), which is

netted in operating profit in accordance with IFRS, the total tax charge for the period amounted to €6.0m (2015

first half: €4.4m). Excluding the tax effect of exceptional items, the underlying tax charge for the period was

€5.3m (2015 first half: €4.4m), equivalent to a rate of 15% (2015 first half: 13%) when applied to the Group’s

Adjusted Profit before Tax.

The Group’s underlying tax rate for the first half of the year is based on the estimated tax rate that is expected to

apply for the full year. The equivalent underlying charge for the full year in 2015 was a charge of €6.2m, equal to

a rate of 13.8%. This increase in the underlying tax rate in 2016 reflects the change in geographic mix of the

Group’s profit following the acquisition of Canadian mushroom business, Highline Produce Limited, during the

period.

6. Earnings per share

(Unaudited)

6 months to

30 June 2016

€’000

(Unaudited)

6 months to

30 June 2015

€’000

(Audited)

Year ended

31 Dec 2015

€’000

Profit attributable to equity shareholders 30,136 26,917 27,425

No. of shares

‘000

No. of shares

‘000

No. of shares

‘000

Weighted average number of ordinary shares outstanding 328,800 326,045 326,505

Deduct: weighted average own shares held (31,075) (31,075) (31,075)

Weighted average number of shares for calculation of basic

earnings per share 297,725 294,970 295,430

Weighted average number of options with dilutive effect 5,525 4,956 5,787

Weighted average number of shares for calculation of diluted

earnings per share 303,250 299,926 301,217

€ Cent € Cent € Cent

Basic earnings per share 10.12 9.13 9.28

Diluted earnings per share 9.94 8.97 9.10

€’000 €’000 €’000

Calculation of adjusted earnings per share

Profit attributable to equity shareholders 30,136 26,917 27,425

Adjustments

Exceptional items (1,689) 2,875 11,978


Tax impact of exceptional items 654 - (1,053)

Earnings for calculation of adjusted diluted earnings per share 30,355 29,792 38,350

€ Cent € Cent € Cent

Adjusted diluted earnings per share 10.01 9.93 12.73

Adjusted diluted earnings per share excludes, where applicable, the Group’s share of Balmoral’s result and, the

impact of exceptional items after tax and non-controlling interests, once-off tax credits and amortisation charges

on intangible assets and related deferred tax credits.

7. Post employment benefits

(Unaudited)

6 months to

30 June 2016

€’000

(Unaudited)

6 months to

30 June 2015

€’000

(Audited)

Year ended

31 Dec 2015

€’000

Deficit at beginning of period (32,148) (41,448) (41,448)

Current/past service cost less finance income recognised

in Income Statement (1,041) (2,178) (3,786)

Actuarial gain/(loss) recognised in Statement of

Comprehensive Income 3,205 2,206 2,521

Curtailment gains on closure of schemes to future accrual 3,634 - 2,721

Employer contributions to schemes 1,761 2,619 9,626

Exchange movement 3,252 (2,984) (1,782)

Deficit at end of period (21,337) (41,785) (32,148)

Related deferred tax asset 4,534 7,680 6,466

Net deficit after deferred tax (16,803) (34,105) (25,682)

This table summarises the movements in the net deficit on the Group’s various defined benefit pension schemes.

The current service cost is charged in the Income Statement, net of finance income on scheme assets. The

actuarial gain or loss is recognised in the Statement of Comprehensive Income, in accordance with the amendment

to IAS 19, Actuarial Gains and Losses, Group Plans and Disclosures. The measurement of the Group’s pension

obligations is based on a number of assumptions which are determined in consultation with independent actuaries.

One key assumption is the appropriate interest rate to use in discounting the estimated future cash flows of the

schemes. At 30 June 2016, the Group used a rate of 1.7% (30 June 2015: 2.5%) in respect of its euro denominated

scheme and 2.9% (30 June 2014: 3.7%) in respect of its UK scheme.

During the second half of 2015, the Group closed its defined benefit pension scheme in Ireland to future accrual

and settled the outstanding liabilities in full. During the first half of 2016, the Group closed its UK defined benefit

scheme to future accrual. This gave rise to a curtailment gain of €3.6m which has been treated as an exceptional

item in the Income Statement (note 4 above).

8. Dividends paid to equity shareholders

(Unaudited)

6 months to

30 June 2016

€’000

(Unaudited)

6 months to

30 June 2015

€’000

(Audited)

Year ended

31 Dec 2015

€’000

Cash dividends paid on Ordinary €6 cent shares

Final dividend for 2015 of 1.924 cent 5,730 - -

Interim dividend for 2015 of 0.8211 cent - - 2,425

Final dividend for 2014 of 1.673 cent - 4,939 4,939

Total cash dividends paid in the period 5,730 4,939 7,364

The final dividend for 2015 of 1.924 cent per share, approved by the shareholders at the Annual General Meeting

on 29 April 2016, gave rise to a distribution of €5.7m in the period.

The directors have proposed an interim dividend for 2016 of €0.9032 cent per share (2015: €0.8211 cent per

share). This dividend, which will be subject to Irish withholding tax rules, will be paid on 7 October 2016 to

shareholders on the register at 16 September 2016. In accordance with company law and IFRS, this dividend has

not been recognised as a liability in the balance sheet at 30 June 2016.

At 30 June 2016, the company and subsidiary companies held 31,075,000 Fyffes plc ordinary shares (31

December 2015: 31,075,000). No dividends are payable on these treasury shares and they are excluded from the

calculation of earnings per share.

9. Notes supporting cash flow statement

9.1 Cash flows from operating activities (Unaudited)

6 months to

30 June 2016

€’000

(Unaudited)

6 months to

30 June 2015

€’000

(Audited)

Year ended

31 Dec 2015

€’000


Income tax expense 5,638 4,193 4,246

Tax paid (3,624) (2,675) (4,313)

Depreciation of property, plant and equipment 7,393 5,209 10,322


Gain on disposal of investment in joint venture - - (687)

Equity settled compensation 110 127 273

Payments in connection with MNOPF and MNRPF (251) (266) (5,171)

Contributions to defined benefit pension schemes less charge in

Income Statement (4,354) (441) (8,561)

Net interest paid less net interest expense in Income Statement 73 20 124

Share of profits of joint ventures (after tax & exceptional items) (3,838) (199) 2,526

Exceptional charge in joint venture - 2,875 -

Movement in working capital incl fair value of biological assets 22,776 3,680 (9,279)

Other (880) (33) (511)

Cash flows from operations 54,243 39,139 16,509

9.2 Cash flows from investing activities €’000 €’000 €’000

Acquisition of subsidiaries net of cash acquired (92,221) - (26,790)

Joint venture becoming a subsidiary - - 5

Proceeds on partial disposal of investment in joint venture - - 271

Dividends paid by joint ventures 300 1,589 1,533

Deferred consideration payments (1,104) (90) (92)

Acquisition of property, plant and equipment excluding

leased assets (14,254) (4,943) (12,268)

Proceeds on disposal of property, plant and equipment 128 107 633

Cash flows from investing activities (107,151) (3,337) (36,708)

9.3 Cash flows from financing activities

€’000 €’000 €’000

Proceeds from issue of shares (including premium) 725 269 1,449

Net increase/(reduction) in borrowings 78,000 (10,000) 32,000

Capital element of lease payments (823) (701) (1,527)

Dividends paid to equity shareholders (5,730) (4,939) (7,364)

Cash flows from financing activities 72,172 (15,371) 24,558

9.4 Analysis of movement in net debt in the period

Opening

1 Jan

2016

€’000

Cash

flow

€’000

Acquisitions

€’000

Non-cash

movement

€’000

Translation

€’000

Closing

30 June

2016

€’000

Bank balances 20,545 13,940 7,367 - (2,279) 39,573

Call deposits 2,214 (2,214) - - - -

Cash & cash equivalents per balance sheet 22,759 11,726 7,367 - (2,279) 39,573

Overdrafts (625) 171 - - - (454)

Cash & cash equivalents per cash flow

statement 22,134 11,897 7,367 - (2,279) 39,119

Bank loans – current (58,288) (3,000) - 50,000 208 (11,080)

Bank loans – non current - (75,000) - (50,000) - (125,000)

Finance leases (3,127) 823 - (6) 126 (2,184)

Total net debt (39,281) (65,280) 7,367 (6) (1,945) (99,145)

10. Reconciliation of other reserves

Capital

Reserves

€’000

Share

Options

Reserve

€’000

Currency

Translation

Reserve

€’000

Revaluation

Reserve

€’000

Treasury

Shares

Reserve

€’000

Hedging

Reserve

€’000

Total

Other

Reserves

€’000


Balance at beginning of period 74,107 1,706 18,817 2,380 (20,407) (4,316) 72,287

Total comprehensive income - - (6,677) - - 6,557 (120)

Share based payments - 110 - - - - 110

Total at end of period 74,107 1,816 12,140 2,380 (20,407) 2,241 72,277


Balance at beginning of period 74,107 1,784 1,737 2,328 (20,407) 4,681 64,230

Total comprehensive income - - 14,116 - - 32 14,148


Total at end of period 74,107 1,911 15,853 2,328 (20,407) 4,713 78,505

Full year ended 31 December 2015

Balance at beginning of year 74,107 1,784 1,737 2,328 (20,407) 4,681 64,230

Total comprehensive income - - 17,132 - - (8,997) 8,135

Currency movements in revaluation reserves - - (52) 52 - - -

Share options exercised - (351) - - - - (351)


Total at end of year 74,107 1,706 18,817 2,380 (20,407) (4,316) 72,287

11. Acquisition of subsidiaries

The Group acquired Highline Produce Limited, a Canadian mushroom producer, in April 2016. The Group also

completed the acquisition of a number of other smaller businesses towards the end of the first half of 2016.

The provisional fair values of the assets acquired and consideration paid and payable in respect of these

transactions is summarised in the table below.

€’000

Provisional fair value of assets acquired

Property, plant and equipment 34,931

Intangible assets 34,975

Cash and cash equivalents acquired 7,367

Working capital (2,728)

Deferred tax liability (5,014)

Total fair value of assets acquired 69,531

Non-controlling interest in acquired net assets (7)

Consideration

Cash paid 99,588

Consideration recoverable (339)

Fair value of consideration 99,249

Goodwill arising 29,725

The post acquisition profit contribution of these businesses were:

€’000

EBITDA 3,077

EBITA 2,274

Profit before tax 1,246

Profit after tax 935

12. Financial instruments

The fair values of financial assets and financial liabilities, together with the carrying amounts in the Condensed

Group Balance Sheet at 30 June 2016, are as follows:

Carrying value

€’000

Fair value

€’000

Assets

Equity investments 19 19

Trade and other receivables 104,770 104,770

Cash and cash equivalents 39,573 39,573

Hedging instruments 6,917 6,917

Total assets 151,279 151,279

Liabilities

Trade and other payables (97,356) (97,436)

Interest bearing loans and borrowings (138,718) (138,718)

Deferred consideration (90) (90)

Hedging instruments (3,234) (3,234)

Total liabilities (239,398) (239,478)

Fair value of financial instruments carried at fair value

Financial instruments recognised at fair value are analysed between those based on quoted prices in active

markets for identical assets or liabilities (Level 1); those involving inputs other than quoted prices that are

observable for the assets or liabilities, either directly or indirectly (Level 2); and those involving inputs for the

assets or liabilities that are not based on observable market data (Level 3). The following table sets out the fair

value of all financial instruments whose carrying value is at fair value at 30 June 2016:

Total

€’000

Level 1

€’000

Level 2

€’000

Level 3

€’000

Assets measured at fair value

Designated as hedging instruments

Foreign exchange and fuel forward purchase contracts 6,917 - 6,917 -

Liabilities at fair value

At fair value through profit or loss

Deferred consideration (90) - - (90)

Designated as hedging instruments

Foreign exchange and fuel forward purchase contracts (3,234) - (3,234) -

All derivatives entered into by the Group are included in Level 2 and consist of foreign currency and fuel forward

purchase contracts. Where derivatives are traded either on exchanges or liquid over-the-counter markets, the

Group uses the closing prices at the reporting date. Normally, the derivatives entered into by the Group are not

traded on active markets. The fair values of these contracts are estimated using a valuation technique that

maximises the use of observable market inputs, eg market exchange.

Deferred consideration is included in Level 3. Details of movements in the period are set out below.

Additional disclosures for Level 3 fair value measurements

2016

€’000

Deferred consideration

At 1 January 2016 1,194

Paid (1,104)

At 30 June 2016 90

fyffes reports positive first half result and reconfirms...

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