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RNS
Total Produce Plc  -  TOT   

Half-year Report

Released 07:00 31-Aug-2017

RNS Number : 3664P
Total Produce Plc
31 August 2017
 

TOTAL PRODUCE PLC
 

RESULTS TO 30 JUNE 2017

 

TOTAL PRODUCE CONTINUES STRONG GROWTH

 

 

Revenue up 12.2% to €2.15 billion 

 

Adjusted fully diluted EPS up 10.1% to 6.78 cent 

 

Adjusted EBITDA up 9.5% to €52.8m 

 

Adjusted EBITA up 12.0% to €42.5m 

 

Adjusted profit before tax up 11.8% to €39.0m 

 

Interim dividend up 10.0% to 0.8906 cent per share 

 

Continues to target increased full year adjusted earnings per share in the upper half of the previously announced range of 12.0 to 13.0 cent per share

 

 

Key performance indicators are defined overleaf

 

 

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

           

"Total Produce has delivered a strong first half-year performance in 2017. Revenue has increased by 12.2% to €2.15 billion and adjusted earnings per share has increased by 10.1% to 6.78 cent.

 

The Group has continued its international expansion with a number of significant North American transactions. It increased its shareholding in the Oppenheimer group ('Oppy') from 35% to 65%. In addition, Oppy concluded important strategic agreements with the New Zealand based T&G Global. The Group's Los Angeles headquartered Progressive Produce business increased its scale with the acquisition of Keystone Fruit Marketing. The Group is actively pursuing further investment opportunities.

 

We are pleased to announce a 10% increase in the interim dividend to 0.8906 cent per share. The Group continues to target increased full-year adjusted earnings per share in the upper half of the previously-announced range of 12.0 to 13.0 cent per share".

 

      31 August 2017

 

For further information, please contact:

Brian Bell, Wilson Hartnell PR - Tel: +353-1-669-0030, Mobile: +353-87-243-6130
 

TOTAL PRODUCE PLC INTERIM RESULTS FOR THE

  SIX MONTHS ENDED 30 JUNE 2017

 

 

2017

€'million

2016

€'million

% change

Total revenue (1)    

2,147

1,914

+12.2%

Group revenue

1,823

1,589

+14.8%

Adjusted EBITDA (1)  

52.8

48.2

+9.5%

Adjusted EBITA (1)

42.5

37.9

+12.0%

Operating profit (before exceptional credits)

33.4

28.4

+17.9%

Adjusted profit before tax (1)

39.0

34.9

+11.8%

Profit before tax

35.4

25.6

+38.6%

 

 

Euro cent

Euro cent

% change

 

Adjusted fully diluted earnings per share (1)  

6.78

6.16

+10.1%

 

Basic earnings per share

6.95

4.77

+45.7%

 

Diluted earnings per share

6.88

4.70

+46.4%

 

Interim dividend per share

0.8906

0.8096

+10.0%

 

(1)    Key performance indicators defined

 

Total revenue includes the Group's share of the revenue of its joint ventures and associates.

 

Adjusted EBITDA is earnings before interest, tax, depreciation, acquisition related intangible asset amortisation charges and costs, fair value movements on contingent consideration and exceptional items. It also excludes the Group's share of these items within joint ventures and associates.

 

Adjusted EBITA is earnings before interest, tax, acquisition related intangible asset amortisation charges and costs, fair value movements on contingent consideration and exceptional items. It also excludes the Group's share of these items within joint ventures and associates.

 

Adjusted profit before tax excludes acquisition related intangible asset amortisation charges and costs, fair value movements on contingent consideration and exceptional items. It also excludes the Group's share of these items within joint ventures and associates.

 

Adjusted fully diluted earnings per share excludes acquisition related intangible asset amortisation charges and costs, fair value movements on contingent consideration, exceptional items and related tax on such items. It also excludes the Group's share of these items within joint ventures and associates.


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. Total Produce's 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.
 

Overview

 

Total Produce (the 'Group') has delivered a strong performance in the first half of 2017. Total revenue, adjusted EBITA and adjusted fully diluted earnings per share grew by 12.2%, 12.0% and 10.1% respectively. The results benefited from the contribution of acquisitions in the period and a circa 4% like-for-like growth in revenue. The Group continues to be cash generative with operating cashflows of €33.3m (2016: €32.5m) before normal seasonal working capital outflows.    

 

The Board is pleased to announce a 10.0% increase in the interim dividend to 0.8906 (2016: 0.8096) cent per share.  

 

Operating review

 

Total revenue increased 12.2% to €2.15 billion (2016: €1.91 billion) with adjusted EBITA up 12.0% to €42.5m (2016: €37.9m). The results benefited from the contribution of recent acquisitions offset in part by a negative impact on the translation to Euro of the results of foreign currency denominated operations. The deconsolidation of a subsidiary to a joint venture interest had a marginal effect on revenue and adjusted EBITA and no effect on adjusted earnings per share. On a like-for-like basis, excluding acquisitions, divestments and currency translation, revenue was circa 4% higher driven by an increase in average prices with similar volumes.

 

Trading conditions overall were satisfactory. In the early part of year, unusual weather conditions in Southern Europe lead to temporary shortages of certain salad and vegetable lines. However given the Group's diversified business model this did not have a material impact. Our North American division experienced relatively less favourable trading conditions in the period. While overall volumes in this division have increased on a like-for-like basis from prior year, the result was impacted by lower pricing due to greater volumes of product in the market and weather conditions that negatively impacted quality.

 

The table below details a segmental breakdown of the Group's revenue and adjusted EBITA for the six months ended 30 June 2017. Each of the operating segments is primarily involved in the procurement, marketing and distribution of hundreds of lines of fresh produce. Both European divisions include businesses involved in the marketing and distribution of healthfoods and consumer products. Segment performance is evaluated based on revenue and adjusted EBITA.

 

 

(Unaudited)

6 months to 30 June 2017

(Unaudited)

6 months to 30 June 2016

 

Total

revenue

€'000

Adjusted

EBITA

€'000

Total

revenue

€'000

Adjusted

EBITA

€'000

Europe - Eurozone

903,194

13,772

869,802

13,252

Europe - Non-Eurozone

800,051

22,100

811,022

19,778

International 

471,362

6,619

261,347

4,899

Inter-segment revenue

(27,722)

-

(27,919)

-

Total revenue and adjusted EBITA

2,146,885

42,491

1,914,252

37,929

 

Europe - Eurozone

This segment includes the Group's businesses in France, Ireland, Italy, the Netherlands and Spain. Revenue increased by 3.8% to €903m (2016: €870m) with a 3.9% increase in adjusted EBITA to €13.8m (2016: €13.3m). Overall trading conditions were favourable despite challenging conditions in Holland. The results were also marginally impacted by the effect of a subsidiary being deconsolidated and treated as a joint venture interest. Excluding the effect of acquisitions and divestments, revenue on a like-for-like basis was up circa 5% on prior year due primarily to average price increases with a slight increase in volumes.  

 

Europe - Non-Eurozone

This segment includes the Group's businesses in the Czech Republic, Poland, Scandinavia and the UK. Revenue decreased by 1.4% to €800m (2016: €811m) with adjusted EBITA increasing by 11.7% to €22.1m (2016: €19.8m) helped by higher average prices and the incremental contribution of recent bolt-on acquisitions. The result was adversely impacted by the translation of the results of foreign currency denominated operations into Euro particularly the weakening of Sterling by 9.8% and Swedish Krona by 3.3%. 

 

On a like-for-like basis excluding acquisitions, divestments and currency translation, revenue was circa 2% ahead of the prior year with average price increases offsetting marginal volume decline.

 

International

This division includes the Group's businesses in North America and India. Revenue increased by 80% to €471m (2016: €261m) with adjusted EBITA increasing 35% to €6.6m (2016: €4.9m).  The results benefited from the incremental contribution of acquisitions. On 1 March 2017, the Group acquired a further 30% of the Oppenheimer Group ('Oppy') taking its interest to 65% and from this date it was fully consolidated as a subsidiary. Previously the original 35% shareholding interest was equity accounted for as an associate interest. In addition there was a further bolt-on acquisition in North America in the first half of the year. This was offset by relatively challenging trading conditions in North America. While overall volumes have increased from prior year particularly grapes, organics, potatoes and onions, the overall result was impacted by lower pricing with increased volumes of product in the market and weather conditions that negatively impacted quality particularly tomatoes, berries and potatoes. Oppy also incurred start-up losses in a new partnership for growing soft fruit.

 

Financial Review

 

Revenue and Adjusted EBITA

An analysis of the factors influencing the changes in revenue and adjusted EBITA are discussed in the operating review above.

 

Share of profits of joint ventures and associates

The share of after tax profits of joint ventures and associates decreased in the period to €4.4m (2016: €5.5m) largely due to Oppy Group becoming a subsidiary on 1 March 2017 with the acquisition of a further 30% to take the Group's interest to 65%. Prior to this the original 35% shareholding was accounted for as an associate interest. This was partly offset by a subsidiary interest being deconsolidated from January 2017 due to a change in nature of the shareholder arrangements and being treated as a joint venture interest. Cash dividends received from joint ventures and associates in the period amounted to €6.5m (2016: €7.8m).

 

Intangible asset amortisation

Acquisition related intangible asset amortisation in subsidiaries increased to €5.0m (2016: €3.9m) due to additional charges relating to recent acquisitions. The share of intangible asset amortisation within joint ventures and associates was €1.3m (2016: €1.3m).

 

Exceptional items

Exceptional items in the period amounted to a net credit of €5.1m (2016: €Nil) before tax. A gain of €12.4m arose on the remeasurement to fair value of the Group's original 35% associate investment in the Oppenheimer Group. A settlement credit of €1.7m was recognised as a result of an enhanced transfer value offer to members of one of the Irish defined benefit pension schemes. Offsetting this was a €9.1m goodwill impairment charge. A full analysis of these exceptional items is set out in Note 5 of the accompanying financial information.   

 

Operating Profit

Operating profit before exceptional items increased by 17.9% in the period to €33.4m (2016: €28.4m). Operating profit after these items amounted to €38.5m (2016: €28.4m).

 

Net Financial Expense

Net financial expense in the period increased to €3.1m (2016: €2.8m) with higher average net debt in the period due to acquisition expenditure and debt assumed on acquisition partly offset by lower cost of funding. The Group's share of the net interest expense of joint ventures and associates in the period was €0.4m (2016: €0.2m). Net interest cover for the period was 13.9 times based on adjusted EBITA.

 

 

 Profit Before Tax

Excluding acquisition related intangible asset amortisation charges and costs and fair value movements on contingent consideration, the adjusted profit before tax increased by 11.8% in the period to €39.0m (2016: €34.9m). Statutory profit before tax after these items was €35.4m (2016: €25.6m).  

 

Non-Controlling Interests

The non-controlling interests' share of after tax profits in the period was €5.9m (2016: €5.4m). Included in this was the non-controlling interests' share of acquisition related intangible asset amortisation charges and costs with related tax impact of €1.3m (2016: €0.8m). Excluding these non-trading items, the non-controlling interests' share of after tax profits increased by €1.0m. The increase in the period was due to the non-controlling interests' incremental share of profits in recent acquisitions and overall good trading conditions in certain non-wholly owned companies offset in part by the effect of a deconsolidation of a subsidiary in January 2017.  

 

Adjusted and Basic Earnings per Share

Adjusted fully diluted earnings per share increased 10.1% in the six month period to 6.78 cent per share (2016: 6.16 cent) assisted by the incremental contribution from new acquisitions. Management believes that adjusted earnings per share, which excludes exceptional items, acquisition related intangible asset amortisation charges and costs, fair value movements on contingent consideration and related tax on these items, provides a fairer reflection of the underlying trading performance of the Group.

 

Basic earnings per share and diluted earnings per share after these non-trading items amounted to 6.95 cent per share (2016: 4.77 cent) and 6.88 cent per share (2016: 4.70 cent) respectively.

 

Note 6 of the accompanying financial information provides details of the calculation of the respective earnings per share amounts.

 

Cash Flow and Net Debt

 

Net debt at 30 June 2017 was €153.3m compared to €95.7m at 30 June 2016 and €48.4m at 31 December 2016. The increase compared to 31 December 2016 is due to acquisitions (including debt assumed) and normal seasonal working capital outflows. Net debt relative to annualised adjusted EBITDA is 1.5 times and interest is covered 13.9 times by adjusted EBITA. Average net debt for the six months ended June 2017 was €139.6m compared to €106.5m for the six months ended 30 June 2016 and €95.9m for the twelve months ended 31 December 2016. In addition, the Group has trade receivables financing at 30 June 2017 of €48.4m (30 June 2016: €49.4m and 31 December 2016: €43.0m).

 

The Group generated €33.3m (2016: €32.5m) in operating cash flows in the period before seasonal working capital outflows of €45.9m (2016: €57.7m). Cash outflows on routine capital expenditure, net of disposals, were €10.4m (2016: €9.0m). Dividends received from joint ventures and associates in the period were €6.5m (2016: €7.8m) while dividends paid to non-controlling interests increased to €8.5m (2016: €3.8m).

 

Cash outflows on acquisitions amounted to €32.2m (2016: €34.9m) and there was €25.2m net debt (2016: €0.8m cash) assumed on acquisition.  Contingent and deferred consideration payments relating to prior period acquisitions were €8.8m (2016: €3.6m). There was a €6.7m cash effect following the change in accounting of an investee from a subsidiary interest to a joint venture interest. In the period there were cash outflows of €8.9m (2016: €4.7m) on non-routine capital expenditure. The Group distributed €7.2m (2016: €6.5m) in dividends to equity shareholders in the period representing the payment of the final 2016 dividend. There was a positive movement of €8.6m (2016: €2.6m) on the translation of foreign currency denominated debt into Euro at 30 June 2017 due primarily to the weaker Sterling, Swedish Krona, Canadian and US Dollar exchange rates at the period end compared to those prevailing at 31 December 2016.

 

 

 

 

 

 

(Unaudited)

6 months to 30 June 2017

(Unaudited)

6 months to 30 June 2016

(Audited)

Year-ended 31 Dec 2016

 

€'m

€'m

€'m

Adjusted EBITDA (Note 4)

52.8

48.2

94.8

Deduct adjusted EBITDA of joint ventures and associates

(9.2)

(10.8)

(22.1)

Net financial expense and tax paid

(10.2)

(4.8)

(17.3)

Other

(0.1)

(0.1)

(1.7)

Operating cash flows before working capital movements

33.3

32.5

53.7

Working capital movements

(45.9)

(57.7)

(9.5)

Operating cash flows

(12.6)

(25.2)

44.2

Routine capital expenditure net of routine disposal proceeds

(10.4)

(9.0)

(15.3)

Dividends received from joint ventures and associates

6.5

7.8

8.3

Dividends paid to non-controlling interests

(8.5)

(3.8)

(6.8)

Free cash flow

(25.0)

(30.2)

30.4

Cashflow from exceptional items

(1.7)

-

3.0

Acquisition payments, net 1

(32.2)

(34.9)

(44.2)

Net (debt)/cash assumed on acquisition of subsidiaries

(25.2)

0.8

0.8

Subsidiary now a joint venture

(6.7)

-

(0.5)

Contingent and deferred consideration payments

(8.8)

(3.6)

(4.8)

Disposal of trading assets

-

3.8

6.4

Non-routine capital expenditure/property additions

(8.9)

(4.7)

(7.8)

Dividends paid to equity shareholders

(7.2)

(6.5)

(9.1)

Buy-back of own shares

-

(6.0)

(6.0)

Proceeds from issue of share capital

2.1

1.3

1.8

Other

0.1

(0.2)

(0.7)

Total net debt movement in period

(113.5)

(80.2)

(30.7)

Net debt at beginning of period

(48.4)

(18.1)

(18.1)

Foreign currency translation

8.6

2.6

0.4

Net debt at end of period

(153.3)

(95.7)

(48.4)

 

1 Includes payments in period in respect of subsidiaries, non-controlling interests, joint ventures and associates and is net of contributions from non-controlling interests and proceeds on disposal of  shares to non-controlling interests.

 

Defined Benefit Pension Obligations

 

The net liability of the Group's defined benefit pension schemes (net of deferred tax) decreased to €21.4m at 30 June 2017 from €31.8m at 31 December 2016. The decrease in the liability is due to the positive effect of an enhanced transfer value offer made to members in one of the Irish schemes, an increase in the Eurozone discount rates underlying the calculations of the present value of the scheme's obligations and positive investment returns on pension scheme assets. This was offset by the effect of a decrease in the UK discount rates. Further details are outlined in Note 7 of the accompanying financial information.

 

Shareholders' Equity

 

Shareholders' equity has increased by €8.2m to €234.5m at 30 June 2017. Profit after tax of €22.4m attributable to equity shareholders, and remeasurement gains of €7.0m (net of deferred tax) on post-employment benefit schemes, were offset by a currency translation loss of €4.0m on the retranslation of the net assets of foreign currency denominated operations to Euro, a €14.1m increase in put-option liability reserve and the payment of dividends of €7.2m to equity shareholders of the Company.

 

 

Development Activity

 

A key part of the Group's strategy is growth by acquisition. In line with this strategy the Group made a number of acquisitions and investments during the six months ended 30 June 2017 with committed investment of €34.4m including €1.7m of deferred and contingent consideration payable on the achievement of future profit targets.

 

On 1 March 2017, the Group completed the purchase of a further 30% of the Oppenheimer Group which trades under the name of Oppy, for a consideration of €28.2m. Together with the initial 35% acquired in 2013, this brings the Group's shareholding in Oppy to 65%. Headquartered in Vancouver, Canada with annual sales of almost CAD$1 billion (€720m), Oppy is a leading provider of fresh produce to its strong base of retail, wholesale and foodservice customers throughout the United States and Canada. In addition to this, long term put and call options are in place for the remaining 35% shareholding, not exercisable before 2020.

 

In April 2017, Oppy entered strategically-important agreements with New Zealand based T&G Global Limited which will enable both parties to enhance their market positions as co-shareholders in two US produce businesses.

 

In February 2017, the Group's Los Angeles headquartered fresh produce business, Progressive Produce LLC, acquired the trade and business assets of Keystone Fruit Marketing Inc. The Group made a number of other bolt-on investments in Europe all of which complement the Group's existing activities.

 

Further details on 2017 development activity including details of consideration paid and assets and liabilities acquired are provided in Note 9 of the accompanying financial information.

 

The Group continues to actively pursue further investment opportunities in both new and existing markets.

 

Dividends

 

The Board has declared an interim dividend of 0.8906 (2016: 0.8096) cent per share, which represents a 10.0% increase on the comparative period. The dividend will be paid on 13 October 2017 to shareholders on the register at 15 September 2017 subject to dividend withholding tax.  In accordance with company law and IFRS, this dividend has not been provided for in the balance sheet at 30 June 2017.

 

Summary and Outlook

 

Total Produce has delivered a strong first half-year performance in 2017. Revenue has increased by 12.2% to €2.15 billion, and adjusted earnings per share has increased by 10.1% to 6.78 cent.

 

The Group has continued its international expansion with a number of significant North American transactions. It increased its shareholding in the Oppenheimer group ('Oppy') from 35% to 65%. In addition, Oppy concluded important strategic agreements with the New Zealand based T&G Global. The Group's Los Angeles headquartered Progressive Produce business increased its scale with the acquisition of Keystone Fruit Marketing. The Group is actively pursuing further investment opportunities.

 

We are pleased to announce a 10% increase in the interim dividend to 0.8906 cent per share. The Group continues to target increased full-year adjusted earnings per share in the upper half of the previously-announced range of 12.0 to 13.0 cent per share.

 

 

Carl McCann, Chairman

On behalf of the Board

31 August 2017

 

Total Produce plc

Condensed Group Income Statement

for the half-year ended 30 June 2017

 

 

(Unaudited)

6 months to

30 June 2017

Pre-

Exceptional

 

€'000

(Unaudited)

6 months to

30 June 2017

Exceptional items

(Note 5)

€'000

(Unaudited)

6 months to

30 June 2017

Total

 

 

€'000

(Unaudited)

6 months to

30 June 2016

Pre-

Exceptional

 

€'000

(Unaudited)

6 months to

30 June 2016

Exceptional items

(Note 5)

€'000

(Unaudited)

6 months to

30 June 2016

Total

 

 

€'000

(Audited)

Year ended

31 Dec 2016

Pre-

Exceptional

 

€'000

(Audited)

Year ended

31 Dec 2016

Exceptional items

(Note 5)

€'000

(Audited)

Year ended

31 Dec 2016

Total

 

 

€'000

Revenue, including Group share of joint ventures and associates

2,146,885

-

2,146,885

      1,914,252

-

      1,914,252

3,762,405

-

3,762,405

 

 

 

 

 

 

 

 

 

 

Group revenue

1,823,461

-

1,823,461

1,588,839

-

1,588,839

3,105,475

-

3,105,475

Cost of sales

(1,578,359)

-

(1,578,359)

(1,368,448)

-

(1,368,448)

(2,672,585)

-

(2,672,585)

Gross profit

245,102

-

245,102

220,391

-

220,391

432,890

-

432,890

 

 

 

 

 

 

 

 

 

 

Operating expenses

(211,061)

5,063

(205,998)

(193,614)

-

(193,614)

(379,924)

(1,409)

(381,333)

 Share of profit of joint ventures and associates

4,405

-

4,405

5,483

-

5,483

12,270

-

12,270

 Operating profit before acquisition related intangible asset amortisation

38,446

5,063

43,509

32,260

-

32,260

65,236

(1,409)

63,827

Acquisition related intangible asset amortisation

(4,998)

-

(4,998)

(3,884)

-

(3,884)

(7,675)

-

(7,675)

 Operating profit after acquisition related intangible asset amortisation

33,448

5,063

38,511

28,376

 

28,376

57,561

(1,409)

56,152

Net financial expense

(3,066)

-

(3,066)

(2,804)

-

(2,804)

(5,524)

-

(5,524)

Profit before tax

30,382

5,063

35,445

25,572

-

25,572

52,037

(1,409)

50,628

Income tax expense

(6,957)

(214)

(7,171)

(4,898)

-

(4,898)

(10,638)

(686)

(11,324)

Profit for the period

23,425

4,849

28,274

20,674

-

20,674

41,399

(2,095)

39,304

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

 

 

Equity holders of the parent

 

 

22,382

 

 

15,240

 

 

28,536

Non-controlling interests

 

 

5,892

 

 

5,434

 

 

10,768

 

 

 

28,274

 

 

20,674

 

 

39,304

Earnings per ordinary share

 

 

 

 

 

 

 

 

 

Basic

 

 

6.95

 

 

4.77

 

 

8.91

Fully diluted

 

 

6.88

 

 

4.70

 

 

8.80

Adjusted fully diluted

 

 

6.78

 

 

6.16

 

 

12.07

 

Total Produce plc

Condensed Group Statement of Comprehensive Income

for the half-year ended 30 June 2017

 

 

(Unaudited)

6 months to 30 June 2017

€'000

(Unaudited)

6 months to 30 June 2016

€'000

(Audited)

Year ended 31 Dec 2016

€'000

 

 

 

 

Profit for the period

28,274

20,674

39,304

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

Items that may be reclassified to profit or loss:

 

 

 

Foreign currency translation effects:

 

 

 

- foreign currency net investments - subsidiaries

(7,366)

(11,176)

(12,189)

- foreign currency net investments - joint ventures and associates

 

(2,201)

 

202

629

- foreign currency borrowings designated as net investment hedges

 

6,521

 

4,667

3,496

- foreign currency recycled to income statement on associate becoming a subsidiary (net of currency movements on net investment hedges)

 

(1,137)

 

-

-

Effective portion of changes in fair value of cash flow hedges, net

 

(119)

 

(145)

(43)

Deferred tax on items above

39

19

11

 

(4,263)

(6,433)

(8,096)

 

 

 

 

Items that will not be reclassified to profit or loss:

 

 

 

Remeasurement gains/(losses) on post-employment benefit schemes

 

8,944

 

(23,241)

(23,769)

Revaluation gains on property, plant and equipment

-

-

1,421

Revaluation losses on property, plant and equipment

-

-

(292)

Deferred tax on items above

(1,662)

3,346

4,679

Share of joint ventures and associates remeasurement gains/(losses) on post-employment benefit schemes

 

709

 

(707)

(824)

Share of joint ventures and associates deferred tax on items above

 

-

 

-

4

 

7,991

(20,602)

(18,781)

Other comprehensive income for the period

3,728

(27,035)

(26,877)

 

 

 

 

Total comprehensive income for the period

32,002

(6,361)

12,427

 

 

 

 

Attributable to:

 

 

 

Equity holders of the parent

28,781

(10,856)

1,643

Non-controlling interests

3,221

4,495

10,784

 

32,002

(6,361)

12,427

 

 

Total Produce plc

Condensed Group Balance Sheet

as at 30 June 2017

 

(Unaudited)

30 June 2017

€'000

(Unaudited)

30 June 2016

€'000

(Audited)

31 Dec 2016

€'000

Assets

 

 

 

Non-current assets

 

 

 

Property, plant and equipment

151,939

147,327

145,184

Investment property

8,375

8,784

8,585

Goodwill and intangible assets

292,028

238,978

220,490

Investments in joint ventures and associates

87,155

76,293

92,910

Other financial assets

625

664

649

Other receivables

9,508

8,768

7,761

Employee benefit assets

124

-

-

Deferred tax assets

16,813

11,951

15,458

Total non-current assets

566,567

492,765

491,037

 

 

 

 

Current assets

 

 

 

Inventories

103,638

80,359

61,195

Biological assets

4,540

-

194

Trade and other receivables

468,157

395,865

317,530

Corporation tax receivable

1,634

1,822

1,472

Derivative financial instruments

173

969

187

Bank deposits

3,700

4,700

2,500

Cash and cash equivalents

93,660

103,282

127,280

Total current assets

675,502

586,997

510,358

Total assets

1,242,069

1,079,762

1,001,395

 

 

 

 

Equity

 

 

 

Share capital

3,460

3,422

3,429

Share premium

150,247

255,793

148,204

Other reserves

(132,431)

(113,694)

(113,707)

Retained earnings

213,244

70,511

188,396

Total equity attributable to equity holders of the parent

234,520

216,032

226,322

Non-controlling interests

74,391

75,230

72,600

Total equity

308,911

291,262

298,922

 

 

 

 

Liabilities

 

 

 

Non-current liabilities

 

 

 

Interest-bearing loans and borrowings

200,236

127,518

130,162

Deferred government grants

274

1,268

481

Other payables

1,397

2,314

2,021

Contingent consideration

26,791

41,925

36,746

Put option liability

41,958

17,071

21,215

Corporation tax payable

5,836

6,319

5,836

Deferred tax liabilities

33,398

25,003

17,915

Employee benefit liabilities

31,757

39,310

37,777

Total non-current liabilities

341,647

260,728

252,153

 

 

 

 

Current liabilities

 

 

 

Interest-bearing loans and borrowings

50,449

76,172

47,984

Trade and other payables

526,398

439,730

389,708

Contingent consideration

9,902

8,066

9,629

Derivative financial instruments

617

215

569

Corporation tax payable

4,145

3,589

2,430

Total current liabilities

591,511

527,772

450,320

Total liabilities

933,158

788,500

702,473

Total liabilities and equity

1,242,069

1,079,762

1,001,395

 

Total Produce plc

Condensed Group Statement of Changes in Equity

for the half-year ended 30 June 2017

 

Attributable to equity holders of the parent

 

 

 

 

 

For the half-year ended 30 June 2017 (Unaudited)

Share

capital

€'000

Share

premium

€'000

 

Undeno-minated capital

€'000

De-merger

Reserve

€'000

Own shares reserve

€'000

Currency

translation

reserve

€'000

Reval-uation

reserve

€'000

Other equity

reserves*

€'000

Retained

earnings

€'000

Total

€'000

Non- controlling interests

€'000

Total

equity

€'000

 

 

 

 

 

 

 

 

 

 

 

 

 

As at 31 December 2016 as presented in balance sheet

3,429

148,204

140

(122,521)

(8,580)

(7,675)

24,088

841

188,396

226,322

72,600

298,922

Adjust for NCI subject to put option transferred for presentation purposes

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(20,259)

 

-

 

(20,259)

 

20,259

 

-

As at 1 January 2017

3,429

148,204

140

(122,521)

(8,580)

(7,675)

24,088

(19,418)

188,396

206,063

92,859

298,922

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the period

-

-

-

-

-

-

-

-

22,382

22,382

5,892

28,274

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

Items that may be reclassified to profit or loss:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation effects, net

-

-

-

-

-

(4,038)

-

2,738

-

(1,300)

(2,883)

(4,183)

Effective portion of cash flow hedges, net

-

-

-

-

-

-

-

(53)

-

(53)

(66)

(119)

  Deferred tax on items above

-

-

-

-

-

-

-

18

-

18

21

39

Items that will not be reclassified to profit or loss:

 

 

 

 

 

 

 

 

 

 

 

 

Remeasurement gains on post-employment benefit schemes

-

-

-

-

-

-

-

-

8,678

8,678

266

8,944

Deferred tax on items above

-

-

-

-

-

-

-

-

(1,653)

(1,653)

(9)

(1,662)

Share of joint ventures and associates remeasurement gains on post-employment benefit schemes

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

709

709

 

-

 

709

Total other comprehensive income

-

-

-

-

-

(4,038)

-

2,703

7,734

6,399

(2,671)

3,728

Total comprehensive income

-

-

-

-

-

(4,038)

-

2,703

30,116

28,781

3,221

32,002

Transactions with equity holders 

 

 

 

 

 

 

 

 

 

 

 

 

New shares issued

31

2,043

-

-

-

-

-

(773)

773

2,074

-

2,074

NCI arising on acquisition

-

-

-

-

-

-

-

-

-

-

4,634

4,634

NCI arising on  acquisition subject to put options

-

-

-

-

-

-

-

-

-

-

6,149

6,149

  Recognition of put option liability at acquisition

-

-

-

-

-

-

-

(25,072)

-

(25,072)

-

(25,072)

Remeasurement of put option liability  in period

-

-

-

-

-

-

-

1,591

-

1,591

-

1,591

Subsidiary becoming a joint venture

-

-

-

-

-

-

-

-

-

-

(6,668)

(6,668)

Disposal of shareholding to NCI

-

-

-

-

-

-

-

-

1,136

1,136

7,495

8,631

Capital contribution by NCI

-

-

-

-

-

-

-

-

-

 

1,996

1,996

Dividends

-

-

-

-

-

-

-

-

(7,177)

(7,177)

(8,447)

(15,624)

Share-based payment transactions

-

-

-

-

-

-

-

276

-

276

-

276

  Total transactions with equity holders

31

2,043

-

-

-

-

-

(23,978)

(5,268)

(27,172)

5,159

(22,013)

Balance as at 30 June 2017

3,460

150,247

140

(122,521)

(8,580)

(11,713)

24,088

(40,693)

213,244

207,672

101,239

308,911

Transfer of NCI subject to put option for presentation purposes

-

-

-

-

-

-

-

26,848

-

26,848

(26,848)

-

Balance as at 30 June 2017

3,460

150,247

140

(122,521)

(8,580)

(11,713)

24,088

(13,845)

213,244

234,520

74,391

308,911

* Other equity reserves comprise the cash flow hedge reserve, the share option reserve and the put option reserve.
 

 

Total Produce plc

 

Condensed Group Statement of Changes in Equity

 

for the half-year ended 30 June 2017 (Continued)

 

Attributable to equity holders of the parent

Non- controlling interests

€'000

Total

equity

€'000

 

 

 

 

For the half-year ended 30 June 2016 (Unaudited)

Share

capital

€'000

Share

premium

€'000

 

Undeno-minated capital

€'000

De-merger

Reserve

€'000

Own shares reserve

€'000

Currency

translation

reserve

€'000

Reval-uation

reserve

€'000

Other equity

reserves*

€'000

Retained

earnings

€'000

Total

€'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at 1 January 2016

3,446

254,512

99

(122,521)

(8,580)

70

22,178

2,027

87,589

238,820

74,959

313,779

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income

-

-

-

-

-

-

-

-

15,240

15,240

5,434

20,674

 

Profit for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Items that may be reclassified to profit or loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation effects, net

-

-

-

-

-

(6,016)

-

421

-

(5,595)

(712)

(6,307)

 

Effective portion of cash flow hedges, net

-

-

-

-

-

-

-

(190)

-

(190)

45

(145)

 

  Deferred tax on items above

-

-

-

-

-

-

-

29

-

29

(10)

19

 

Items that will not be reclassified to profit or loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

Remeasurement losses on post-employment benefit schemes

-

-

-

-

-

-

-

-

(22,941)

(22,941)

(300)

(23,241)

 

Deferred tax on items above

-

-

-

-

-

-

-

-

3,308

3,308

38

3,346

 

Share of joint ventures and associates remeasurement losses on post-employment benefit schemes

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(707)

(707)

 

-

 

(707)

 

Total other comprehensive income

-

-

-

-

-

(6,016)

-

260

(20,340)

(26,096)

(939)

(27,035)

 

Total comprehensive income

-

-

-

-

-

(6,016)

-

260

(5,100)

(10,856)

4,495

(6,361)

 

Transactions with equity holders

 

 

 

 

 

 

 

 

 

 

 

 

 

New shares issued

17

1,281

-

-

-

-

-

(477)

477

1,298

-

1,298

 

NCI arising on acquisition

-

-

-

-

-

-

-

-

-

-

165

165

 

NCI arising on  acquisition subject to put options

-

-

-

-

-

-

-

-

-

-

15,940

15,940

 

  Recognition of put option liability at acquisition

-

-

-

-

-

-

-

(17,155)

-

(17,155)

-

(17,155)

 

Remeasurement of put option liability  in period

-

-

-

-

-

-

-

(337)

-

(337)

-

(337)

 

Dividends

-

-

-

-

-

-

-

-

(6,482)

(6,482)

(3,766)

(10,248)

 

Own shares acquired and cancelled

(41)

-

41

-

-

-

-

-

(5,973)

(5,973)

-

(5,973)

 

Share-based payment transactions

-

-

-

-

-

-

-

154

-

154

-

154

 

Total transactions with equity holders

(24)

1,281

41

-

-

-

-

(17,815)

(11,978)

(28,495)

12,339

(16,156)

 

Balance as at 30 June 2016

3,422

255,793

140

(122,521)

(8,580)

(5,946)

22,178

(15,528)

70,511

199,469

91,793

291,262

 

Transfer of NCI subject to put for presentation purposes

-

-

-

-

-

-

-

16,563

-

16,563

(16,563)

-

 

Balance as at 30 June 2016

3,422

255,793

140

(122,521)

(8,580)

(5,946)

22,178

1,035

70,511

216,032

75,230

291,262

 

                             

* Other equity reserves comprise the cash flow hedge reserve, the share option reserve and the put option reserve .
 

Total Produce plc

 

 

 

 

 

Condensed Group Statement of Changes in Equity

 

 

for the half-year ended 30 June 2017 (Continued)

 

 

 

 

 

 

 

 

Attributable to equity holders of the parent

 

 

 

 

 

 

For the year ended 31 December 2016 (Audited)

 

 

Share

capital

€'000

 

 

Share

premium

€'000

Un-
denom
inated capital

€'000

 

 

De-merger

reserve

€'000

 

Own shares

reserve

€'00

 

Currency

translation

reserve

€'000

 

Reval-uation

reserve

€'000

 

Other equity

Reserves*

€'000

 

 

Retained

earnings

€'000

 

 

 

Total

€'000

 

Non-controlling

interests

€'000

 

 

Total

equity

€'000

As at 1 January 2016

3,446

254,512

99

(122,521)

(8,580)

70

22,178

2,027

87,589

238,820

74,959

313,779

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the year

-

-

-

-

-

-

-

-

28,536

28,536

10,768

39,304

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

Items that may be reclassified  to profit or loss:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation effects, net

-

-

-

-

-

(7,745)

-

(514)

-

(8,259)

195

(8,064)

Effective portion of cash flow hedges, net

-

-

-

-

-

-

-

(19)

-

(19)

(24)

(43)

Deferred tax on items above

-

-

-

-

-

-

-

4

-

4

7

11

Items that will not be reclassified subsequently to profit or loss:

 

 

 

 

 

 

 

 

 

 

 

 

Revaluation gains/(losses) on property, plant and equipment, net

-

-

-

-

-

-

1,138

-

-

1,138

(9)

1,129

Remeasurement losses on post-employment benefit schemes

-

-

-

-

-

-

-

-

(23,584)

(23,584)

(185)

(23,769)

Deferred tax on item above

-

-

-

-

-

-

772

-

3,875

4,647

32

4,679

Share of joint ventures and  associates remeasurement losses on post-employment benefit schemes

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(824)

 

(824)

 

-

 

(824)

Share of joint ventures and associates deferred tax on items above

-

-

-

-

-

-

-

-

4

4

-

4

Total other comprehensive income

-

-

-

-

-

(7,745)

1,910

(529)

(20,529)

(26,893)

16

(26,877)

Total comprehensive income

-

-

-

-

-

(7,745)

1,910

(529)

8,007

1,643

10,784

12,427

Transactions with equity holders

 

 

 

 

 

 

 

 

 

 

 

 

New shares issued

24

1,763

-

-

-

-

-

(651)

651

1,787

-

1,787

Own shares acquired and cancelled

(41)

-

41

-

-

-

-

-

(5,973)

     (5,973)

-

(5,973)

Capital Reduction

-

(108,071)

 

 

 

 

 

 

107,963

(108)

-

(108)

NCI  arising on acquisition

-

-

-

-

-

-

-

-

-

-

15,215

15,215

Recognition of put option liability at acquisition

-

-

-

-

-

-

-

(17,155)

-

(17,155)

-

(17,155)

Put option granted to NCI

-

-

-

-

-

-

-

(3,367)

-

(3,367)

-

(3,367)

Fair value movements on put option liability

-

-

-

-

-

-

-

(179)

-

(179)

-

(179)

Acquisition of NCI

-

-

-

-

-

-

-

-

(692)

(692)

(3,796)

(4,488)

Disposal of shareholding to NCI

-

-

-

-

-

-

-

-

-

-

3,993

3,993

Contribution by NCI

-

-

-

-

-

-

-

-

-

-

5

5

Share of buyback within associate company

-

-

-

-

-

-

-

-

(73)

(73)

-

(73)

Subsidiary becoming a joint venture

-

-

-

-

-

-

-

-

-

-

(1,503)

(1,503)

Dividends paid

-

-

-

-

-

-

-

-

(9,076)

(9,076)

(6,798)

(15,874)

Share-based payment transactions

-

-

-

-

-

-

-

436

-

436

-

436

Total transactions with equity holders

(17)

(106,308)

41

-

-

-

-

(20,916)

92,800

(34,400)

7,116

(27,284)

As at 31 December 2016

3,429

148,204

140

(122,521)

(8,580)

(7,675)

24,088

(19,418)

188,396

206,063

92,859

298,922

Transfer of NCI subject to put for presentation purposes

-

-

-

-

-

-

-

20,259

-

20,259

(20,259)

-

Balance as at 31 December 2016

3,429

148,204

140

(122,521)

(8,580)

(7,675)

24,088

841

188,396

226,322

72,600

298,922

                               

*Other equity reserves comprise the cash flow hedge reserve, the share option reserve and the put option reserve.
 

 

Total Produce plc

 

Condensed Group Statement of Cash Flows

 

for the half-year ended 30 June 2017

 

 

(Unaudited)

6 months to

30 June 2017

€'000

(Unaudited)

6 months to

30 June 2016

€'000

(Audited)

Year ended

31 Dec 2016

€'000

Net cash flows from operating activities (Note 11)

(14,300)

(25,184)

44,148

Investing activities

 

 

 

Acquisition of subsidiaries

(33,117)

(32,855)

(32,887)

Cash/(overdrafts), assumed on acquisition of subsidiaries, net

(556)

1,921

1,940

Acquisition of, and investment in  joint ventures and associates

(8,133)

(2,071)

(8,620)

Payments of contingent consideration

(8,830)

(1,689)

(1,976)

Payments of deferred consideration

-

(1,871)

(2,778)

Proceeds from disposal of trading assets

-

3,827

6,419

Disposal of investment in subsidiary to non-controlling interests

8,631

-

273

Acquisition of property, plant and equipment

(18,538)

(13,798)

(24,378)

Acquisition of intangible assets - computer software

(834)

(546)

(1,344)

Acquisition of intangible assets - brands

(481)

-

-

Development expenditure capitalised

(158)

(172)

(253)

Proceeds from disposal of property, plant and equipment

61

680

2,651

Proceeds from exceptional items

-

-

3,030

Dividends received from joint ventures and associates

6,452

7,826

8,339

Net cash flows from investing activities

(55,503)

(38,748)

(49,584)

Financing activities

 

 

 

Drawdown of borrowings

152,825

48,305

68,144

Repayment of borrowings

(128,937)

(20,638)

(40,671)

Increase in bank deposits

(1,200)

(2,200)

-

Proceeds from the issue of share capital

2,074

1,298

1,787

Buyback of own shares

-

(5,973)

(5,973)

Costs of capital reduction

-

-

(108)

Capital element of finance lease repayments

(488)

(1,066)

(2,175)

Subsidiary becoming a joint venture

(6,660)

-

(491)

Acquisition of non-controlling interests

-

-

(3,044)

Capital contribution by non-controlling interests

936

-

5

Dividends paid to non-controlling interests

(8,447)

(3,766)

(6,798)

Dividends paid to equity holders of the parent

(7,177)

(6,482)

(9,076)

Net cash flows from financing activities

2,926

9,478

1,600

Net decrease in cash, cash equivalents and overdrafts

(66,877)

(54,454)

(3,836)

Cash, cash equivalents and overdrafts at start of period

117,087

123,205

123,205

Net foreign exchange difference

(438)

(1,384)

(2,282)

Cash, cash equivalents and overdrafts at end of

  the period (Note 12)

49,772

67,367

117,087

         
 

 

Total Produce plc

 

Condensed Summary Group Reconciliation of Net Debt

 

for the half-year ended 30 June 2017

 

 

 

 

(Unaudited)

6 months to

30 June 2017

€'000

(Unaudited)

6 months to

30 June 2016

€'000

(Audited)

Year ended

31 Dec 2016

€'000

Net decrease in cash, cash equivalents and overdrafts

(66,877)

(54,454)

(3,836)

Repayment of borrowings

128,937

20,638

40,671

Drawdown of borrowings

(152,825)

(48,305)

(68,144)

Increase in bank deposits

1,200

2,200

-

Interest-bearing loans and borrowings arising on acquisition

(24,478)

(474)

(474)

Capital element of finance lease repayments

488

1,066

2,175

Finance leases arising on acquisition

(149)

(683)

(673)

Other movements on finance leases

161

(275)

(419)

Foreign exchange movement

8,584

2,634

389

Movement in net debt

(104,959)

(77,653)

(30,311)

Net debt at beginning of the period

(48,366)

(18,055)

(18,055)

Net debt at end of the period (Note 12)

(153,325)

(95,708)

(48,366)

         
 

 

Total Produce plc

Notes to the Interim Results for the half-year ended 30 June 2017

 

1.

Basis of preparation

 

 

The condensed consolidated interim financial statements of Total Produce plc as at, and for the six months ended 30 June 2017, have been prepared in accordance with IAS 34 Interim Financial Reporting, as adopted by the EU. The accounting policies and methods of computation adopted in the preparation of the financial information are consistent with those set out in the Group's consolidated financial statements for the year ended 31 December 2016, with the exception of those disclosed below, which were prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.

 

The interim financial information for both the six months ended 30 June 2017 and the comparative six months ended 30 June 2016 is unaudited. The financial information for the year ended 31 December 2016 represents an abbreviated version of the Group's statutory financial statements for that year. Those statutory financial statements contained an unqualified audit report and have been filed with the Registrar of Companies.

 

The preparation of interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these condensed consolidated interim financial statements, the significant judgments made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended 31 December 2016.

 

Changes in accounting policy

There are no new standards or amendments that are effective for the Group's financial year ending on 31 December 2017 and there have been no changes in accounting policy from those for the financial year ending the 31 December 2016.

 

New standards not yet effective

The following new standards are not yet effective but the impact of these standards on the Total Produce Group are currently under review.

 

IFRS 9 Financial Instruments  which is effective from 1 January 2018 and replaces IAS 39 Financial Instruments: Recognition and Measurement.  The standard includes requirements for the recognition, measurement and derecognition of financial instruments, introduces new hedge accounting rules and a new expected credit loss model for calculating impairment of financial assets. Total Produce is still assessing the impact of this new standard on the Group Financial Statements.

 

IFRS 15 Revenue from Contracts with Customers  which is effective from 1 January 2018 and replaces IAS 18 Revenue, IAS 11 Construction Contracts and associated interpretations.  The standard provides a single model to be applied to all contracts with customers. Total Produce is still assessing the impact of this new standard but it is not expected to have a material impact on the Group Financial Statements.

 

IFRS 16 Leases  which is effective from 1 January 2019 and replaces IAS 17 Leases. It introduces a single lessee accounting model to be adopted and accordingly the majority of all lease agreements will now result in the recognition in the balance sheet of a right-of-use asset and a lease liability. The income statement charge in relation to all leases will now comprise a depreciation element relating to the right-of-use asset and also an interest expense relating to the lease liability. The Group is currently performing a detailed assessment of the impact of the adoption of IFRS 16 and expects to disclose its transition approach and quantitative information before adoption.

  

2.

Translation of foreign currencies

 

The reporting currency of the Group is Euro. The exchange rates used for the translation of the results and balance sheets into Euro are as follows:

 

 

Average rate

6 months to

Closing rate

 

 

30 June

2017

30 June

2016

% change

30 June

2017

31 Dec 

2016

% change

 

 

 

 

 

 

 

 

 

Brazilian Real

3.4393

4.1318

16.8%

3.7600

3.5879

(4.8%)

 

Canadian Dollar

1.4444

1.4853

2.8%

1.4830

1.4389

(3.1%)

 

Czech Koruna

26.6938

27.0395

1.3%

26.1970

27.0999

3.3%

 

Danish Kroner

7.4372

7.4501

0.2%

7.4362

7.4386

0.0%

 

Indian Rupee

74.0575

76.3884

3.1%

73.9411

74.9906

1.4%

 

Polish Zloty

4.3057

4.3663

1.4%

4.2339

4.4129

4.1%

 

Pound Sterling

0.8611

0.7844

(9.8%)

0.8785

0.8292

(5.9%)

 

Swedish Krona

9.6027

9.2985

(3.3%)

9.6559

9.4118

(2.6%)

 

US Dollar

1.0853

1.1163

2.8%

1.1423

1.1105

(2.9%)

 

                 

 

3.

Segmental Analysis

 

 

The table below details a segmental breakdown of the Group's total revenue and adjusted EBITA for the six months ended 30 June 2017, the six months ended 30 June 2016 and the full year ended 31 December 2016.

 

In accordance with IFRS 8, the Group's reportable operating segments based on how performance is currently assessed and resources are allocated are as follows:

 

 

-

Europe - Eurozone: This reportable segment is an aggregation of thirteen operating segments principally in France, Ireland, Italy, the Netherlands and Spain primarily involved in the procurement, marketing and distribution of fresh produce and some healthfoods and consumer goods products. These operating segments have been aggregated because they have similar economic characteristics.

 

-

Europe - Non-Eurozone: This operating segment is an aggregation of six operating segments in Scandinavia, United Kingdom, Poland and the Czech Republic primarily involved in the procurement, marketing and distribution of fresh produce and some healthfoods and consumer goods products. These operating segments have been aggregated because they have similar economic characteristics.

 

-

International: This segment is an aggregation of six operating segments in North America and India primarily involved in the procurement, marketing and distribution of fresh produce. The North American sports nutrition business was disposed of in April 2016.

 

Segment performance is evaluated based on revenue and adjusted EBITA. Management believe that adjusted EBITA, while not a defined term under IFRS, provides a fair reflection of the underlying trading performance of the Group. Adjusted EBITA represents earnings before interest, tax, acquisition related intangible asset amortisation charges and costs, fair value movements on contingent consideration and exceptional items. It also excludes the Group's share of these items within joint ventures and associates. Adjusted EBITA is therefore measured differently from operating profit in the Group financial statements as explained and reconciled in detail in the analysis below.

 

Finance costs, finance income and income taxes are managed on a centralised basis. These items are not allocated between operating segments for the purpose of the information presented to the Chief Operating Decision Maker ('CODM') and are accordingly omitted from the detailed segmental analysis that follows.

       

 

 

 

(Unaudited)

6 months to

30 June 2017

(Unaudited)

6 months to

30 June 2016

(Audited)

Year ended

31 Dec 2016

 

Total

revenue

€'000

Adjusted

EBITA

€'000

Total

revenue

€'000

Adjusted

EBITA

€'000

Total

revenue

€'000

Adjusted

EBITA

€'000

 

 

 

 

 

 

 

Europe - Eurozone

903,194

13,772

869,802

13,252

1,753,328

25,953

Europe - Non-Eurozone

800,051

22,100

811,022

19,778

1,521,936

38,769

International 

471,362

6,619

261,347

4,899

543,713

9,020

Inter-segment revenue

(27,722)

(27,919)

(56,572)

-

Total revenue and adjusted EBITA

2,146,885

42,491

1,914,252

37,929

3,762,405

73,742

                                                                                                             

All inter-segment revenue transactions are at arm's length.

 

Reconciliation of segmental profit to operating profit

 

Below is a reconciliation of adjusted EBITA per the Group's management reports to operating profit and profit before tax as presented in the Group income statement:

 

 

Note

(Unaudited)

6 months to

30 June 2017

€'000

(Unaudited)

6 months to 30 June

2016

€'000

(Audited)

Year ended 31 Dec

2016

€'000

 

 

 

 

 

Adjusted EBITA per management reporting

 

42,491

37,929

73,742

 

 

 

 

 

Acquisition related intangible asset amortisation within subsidiaries

(i)

 

(4,998)

 

(3,844)

 

(7,675)

Share of joint ventures and associates acquisition related intangible asset amortisation 

 

(i)

(1,282)

(1,268)

 

(2,557)

Fair value movements on contingent consideration

(ii)

(172)

(767)

(73)

Acquisition related costs within subsidiaries

(iii)

(715)

(840)

(922)

Share of joint ventures and associates net financial expense

 

(iv)

 

(382)

 

(203)

 

(481)

Share of joint ventures and associates tax

(iv)

(1,494)

(2,631)

(4,473)

Operating profit before exceptional items

 

33,448

28,376

57,561

Exceptional items (Note 5)

(v)

5,063

-

(1,409)

Operating profit after exceptional items

 

38,511

28,376

56,152

Net financial expense

(vi)

(3,066)

(2,804)

(5,524)

Profit before tax

 

35,445

25,572

50,628

 

 

 

(i)

Acquisition related intangible asset amortisation charges are not allocated to operating segments in the Group's management reports.

 

(ii)

Fair value movements on contingent consideration are not allocated to operating segments in the Group's management reports.

 

(iii)

Acquisition related costs are transaction costs directly related to the acquisition of subsidiaries and are not allocated to operating segments in the Group's management reports.

 

(iv)

Under IFRS, included within profit before tax is the Group's share of joint ventures and associates profit after acquisition related intangible amortisation charges and costs, tax and interest. In the Group's management reports these items are excluded from the adjusted EBITA calculation.

 

(v)

Exceptional items (Note 5) are not allocated to operating segments in the Group's management reports.

 

(vi)

Financial income and expense is primarily managed at Group level, and is therefore not allocated to individual operating segments in the Group's management reports.

 

             

 

4.

Adjusted profit before tax, adjusted EBITA and adjusted EBITDA

 

For the purpose of assessing the Group's performance, Total Produce management believe that adjusted EBITDA, adjusted EBITA, adjusted profit before tax and adjusted earnings per share (Note 6) are the most appropriate measures of the underlying performance of the Group.

 

 

(Unaudited)

6 months to 30 June 2017

€'000

(Unaudited)

6 months to 30 June 2016

€'000

(Audited)

Year ended 31 Dec 2016

€'000

 

 

 

 

Profit before tax per income statement

35,445

25,572

50,628

 

 

 

 

Adjustments

 

 

 

Exceptional items (Note 5)

(5,063)

-

1,409

Fair value movements on contingent consideration

172

767

73

Share of joint ventures and associates tax

1,494

2,631

4,473

Acquisition related intangible asset amortisation within subsidiaries

 

4,998

 

3,844

7,675

Share of joint ventures and associates acquisition related intangible asset amortisation 

1,282

1,268

2,557

Acquisition related costs within subsidiaries

715

840

922

Adjusted profit before tax

39,043

34,922

67,737

 

 

 

 

Exclude

 

 

 

Net financial expense -  subsidiaries

3,066

2,804

5,524

Net financial expense - share of joint ventures and associates

382

203

481

Adjusted EBITA

42,491

37,929

73,742

 

 

 

 

Exclude

 

 

 

Amortisation of software costs

692

605

1,356

Depreciation -  subsidiaries

7,953

8,435

17,423

Depreciation - share of joint ventures and associates

1,665

1,234

2,301

Adjusted EBITDA

52,801

48,203

94,822

 

 

5.

Exceptional items

 

(Unaudited)

6 months to 30 June 2017

€'000

(Unaudited)

6 months to 30 June 2016

€'000

(Audited)

Year ended 31 Dec 2016

€'000

 

 

 

 

Fair value uplift on associate investment (a)

12,428

-

-

Credit arising from settlement of the Group's defined benefit pension arrangements (b)

 

1,710

 

-

 

-

Impairment of goodwill (c)

(9,075)

-

(5,183)

Profit on disposal of property and leasehold interests (d)

-

-

3,774

Total exceptional items

5,063

-

(1,409)

Net tax charge on exceptional items (e)

(214)

-

(686)

Total

4,849

-

(2,095)

         

 

(a)   Fair value uplift on associate investment

As outlined in detail in Note 9, On 1 March 2017 the Group acquired a further 30% shareholding in the Oppenheimer Group ('Oppy') to take its total shareholding to 65%. As a result of this increased shareholding, Oppy became a subsidiary from this date and in accordance with IFRS, the Group's previously held 35% associate interest was remeasured to fair value resulting in a fair value gain of €11,291,000. This gain, together with the reclassification of €1,137,000 of currency translation gains from the currency translation reserve, were reclassified to the income statement resulting in an exceptional gain of €12,428,000.
               

(b)   Credit arising from settlement of the Group's defined benefit pension arrangements

An Enhanced Transfer Value ('ETV') offer was made to members of one of the Irish defined benefit pension schemes during the period. As a result of members taking up this ETV offer, settlement credits of €1,839,000, net of associated costs of €129,000, an exceptional gain of €1,710,000 was recognised in the income statement. See Note 7 for further details.

 

(c)   Impairment of goodwill

In 2017 the Group recognised a non-cash impairment charge of €9,075,000 in relation to a fresh produce business in the Netherlands which had experienced a difficult trading environment resulting in a slower recovery than had been anticipated. In 2016 the Group recognised a non-cash impairment charge of €5,183,000 in relation to a sports nutrition business in the UK as a result of a reduction in the forecasted profitability due to a more competitive trading environment.  

(d)   Profit on disposal of property and leasehold  interests

During 2016 the Group received compensation for the exit of a leasehold interest. The compensation of €1,889,000 net of associated costs was recognised within other operating income. Also during 2016, the Group received compensation for costs arising from a fire in a facility in Europe which caused damage to buildings, plant and machinery, motor vehicles and small amounts of inventory. The facility has been repaired and was fully operational from mid-2016 onwards. The insurance income, net of associated costs and impairment, recognised in 2016 was €1,885,000 and was disclosed as an exceptional item in the income statement.  

(e)   Tax charge on exceptional items

The net tax effect on the exceptional items above was a charge of €214,000 in the period. The net tax charge on exceptional items for the year ended 31 December 2016 was an €868,000 charge offset by a deferred tax credit of €182,000 on reassessment of deferred tax on prior year fair value movements on investment property. 

Effect on exceptional items on cashflow statements

The net effect of the items above was a cash outflow of €1,672,000 for the six month period to 30 June 2017. The net effect of exceptional items for the year ended 31 December 2016 was a cash inflow of €3,030,000.

 

6.

Earnings per share

 

Basic earnings per share

Basic earnings per share is calculated by dividing the profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year, excluding shares purchased by the company which are held as treasury shares.

 

 

(Unaudited)

6 months to  30 June 2017

€'000

 

(Unaudited)

6 months to 30 June 2016

€'000

 

(Audited)

Year ended 31 Dec 2016

€'000

 

Profit attributable to equity holders of the parent

22,382

15,240

28,536

 

 

 

 

 

'000

'000

'000

Shares in issue at beginning of period

 

343,015

 

344,609

344,609

New shares issued (weighted average)

838

810

1,417

Shares repurchased by Company (weighted average)

--

(3,705)

(3,891)

Effect of treasury shares held

(22,000)

(22,000)

(22,000)

Weighted average number of shares at end of period

321,853

319,714

320,135

 

 

 

 

Basic earnings per share - cent

6.95

4.77

8.91

 

 

 

 

Diluted earnings per share

 

 

 

Diluted earnings per share is calculated by dividing the profit per share attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding after adjustment for the effects of all ordinary shares and options with a dilutive effect.

 

 

(Unaudited)

6 months to  30 June 2017

€'000

 

(Unaudited)

6 months to 30 June 2016

€'000

 

(Audited)

Year ended 31 Dec 2016

€'000

 

Profit attributable to equity holders of the parent

22,382

15,240

28,536

 

 

 

 

 

'000

'000

'000

Weighted average number of shares at end of period

 

321,853

 

319,714

320,135

Effect of share options with a dilutive effect

3,357

4,200

4,005

Weighted average number of shares at end of period (diluted)

 

325,210

 

323,914

324,140

 

 

 

 

Diluted earnings per share - cent

6.88

4.70

8.80

 

 

 

 

The average market value of the Company's shares for the purpose of calculating the dilutive effect of share options was based on the quoted market prices for the period during which the options were outstanding.

         

 

Adjusted fully diluted earnings per share

Management believe that adjusted fully diluted earnings per share as set out below provides a fairer reflection of the underlying trading performance of the Group after eliminating the effect of acquisition related intangible asset amortisation charges and costs, fair value movements on contingent consideration , property revaluations and exceptional items and the related tax on these items.

 

Adjusted fully diluted earnings per share is calculated by dividing the adjusted profit attributable to ordinary equity holders of the parent (as calculated below)  by the weighted average number of ordinary shares outstanding after adjustment for the effects of all ordinary shares and options with a dilutive effect.

 

 

(Unaudited)

6 months to  30 June 2017

€'000

(Unaudited)

6 months to 30 June 2016

€'000

(Audited)

Year ended

 31 Dec 2016

€'000

 

 

 

 

Profit attributable to equity holders of the parent

22,382

15,240

28,536

Adjustments:

 

 

 

Exceptional items - net of tax (Note 5)

(4,849)

-

2,095

Acquisition related intangible asset amortisation within subsidiaries

 

4,998

 

3,844

7,675

Share of joint ventures and associates acquisition related intangible asset amortisation

1,282

1,268

2,557

Acquisition related costs within subsidiaries

715

840

922

Fair value movements on contingent consideration

172

767

73

Tax effect of amortisation of intangible assets

(1,335)

(1,238)

(1,607)

Non-controlling interests share of items above

(1,309)

(774)

(1,128)

Adjusted fully diluted earnings

22,056

19,947

39,123

 

 

 

 

 

'000

'000

'000

Weighted average number of shares at end

of period (diluted)

 

325,210

 

323,914

324,140

 

 

 

 

Adjusted fully diluted earnings per share - cent

6.78

6.16

12.07

 

 

 

 

 

7.

Post-employment benefit obligation

 

 

 

 

Employee defined benefit pension scheme

 

 

 

 

 

 

 

 

(Unaudited)

6 months to   30 June 2017

€'000

(Unaudited)

6 months to

30 June 2016

€'000

(Audited)

Year ended

31 Dec 2016

€'000

Pension assets

184,467

182,251

 189,008

Pension obligations

(209,909)

(221,561)

(226,785)

Net liability

(25,442)

(39,310)

(37,777)

Net related deferred tax asset

4,053

5,767

5,956

Net liability after tax

(21,389)

(33,543)

(31,821)

Movement in period

 

 

 

 

Net liability at beginning of period

(37,777)

(17,174)

(17,174)

Net interest expense and current service cost recognised in the income statement

 

(1,776)

 

(2,213)

(3,237)

Settlement credit recognised in the income statement

1,839

-

-

Employer contributions to schemes - normal

1,985

2,351

5,010

Employer contributions to schemes - exceptional

1,672

-

-

Remeasurement gains/(losses) recognised in other comprehensive income

 

8,381

 

(23,241)

(23,769)

Arising on acquisition

(252)

-

-

Translation adjustment

486

967

1,393

Net liability at end of period before deferred tax

(25,442)

(39,310)

(37,777)

 

 

 

 

The table above summarises the movements in the net liability of the Group's various defined benefit pension schemes in Ireland, the UK, Continental Europe and North America in accordance with IAS 19 Employee Benefits (2011).

 

The Group's balance sheet at 30 June 2017 reflects pension assets of €0.1m in respect of schemes in surplus and pension liabilities of €25.5m in respect of schemes in deficit, resulting in a net deficit of €25.4m and a net deficit of €21.4m after deferred tax.

 

The current and past service costs, settlement credits and the net finance expense on the net scheme liabilities are charged to the income statement. Remeasurement gains and losses are recognised in other comprehensive income.

 

In determining the valuation of pension obligations, consultation with independent actuaries is required. The estimation of employee benefit obligations requires the determination of appropriate assumptions such as discount rates, inflations rates and mortality rates.

 

In 2017 the Group initiated an Enhanced Transfer Value (ETV) program whereby an offer above the minimum statutory transfer value was made to all active and deferred members in one of the Irish defined benefit pension schemes to transfer their accumulated accrued benefits from the defined benefit pension scheme and receive an ETV. For those members who elected to avail of the offer, the Group transferred €1.7m to the defined pension scheme to fund the ETV and €7.3m was paid from the pension scheme's assets in a full and final settlement of defined benefit obligations of €9.1m. The ETV program resulted in a net accounting credit of €1.7m in 2017, representing the net settlement of the defined benefit obligations of employees who elected for the ETV option of €1.8m, net of professional fees incurred of €0.1m. This credit has been disclosed as an exceptional item in the Group's income statement (Note 5). The net effect of the program was to improve the funding position and reduce future volatility.

 

The decrease in the net liability during the period was primarily due to the effects of the ETV offer, as described above, and an increase in discount rates in the Eurozone, which results in a decrease in the net present value of the schemes' obligations and positive returns of 2.7% on pension scheme assets in the six month period. This was offset in part by a reduction in the discount rate for the UK schemes. The discount rate in Ireland and the Eurozone increased to 2.20% (31 December 2016: 1.90% and 30 June 2016: 1.70%) and in the UK decreased to 2.60% (31 December 2016: (2.75 - 2.80% and 30 June 2016: 3.10%).

         

 

Other post-employment obligation

 

 

 

 

 

 

 

 

(Unaudited)

6 months to   30 June 2017

€'000

(Unaudited)

6 months to

30 June 2016

€'000

(Audited)

Year ended

31 Dec 2016

€'000

 

 

 

 

Net liability at beginning of period

-

-

-

Arising on acquisition

(6,913)

-

-

Net expense recognised in the income statement

(221)

-

-

Remeasurement gains recognised in other comprehensive income

 

563

 

-

-

Employee contributions to schemes

(25)

-

-

Benefits paid

33

-

-

Translation adjustment

372

-

-

Net liability at end of period

(6,191)

-

-

 

 

 

 

The table above summarises the movements in the net liability of the Group's other post-employment benefit obligations.

 

Certain employees in one of the Group's North American subsidiaries hold non-voting shares in the subsidiary. The Company has a contractual arrangement in place to pay holders of these shares an agreed benefit on retirement, based on profit levels in the company, to redeem these shares.

 

In accordance with IAS 19 Employee Benefits (2011), the net liability of the obligation is measured as the net present value of the amounts that are expected to be paid to employees for the shares at retirement.

 

The interest expense, which represents the unwinding of the net present value of the liabilities, is charged to the income statement. Remeasurement gains and losses, representing all other changes to the estimate of the liability, are recognised in other comprehensive income.

 

Determining the valuation of the obligations requires the determination of appropriate assumptions such as projected growth in profits, forfeiture rates and retirement dates.

 

8.

Dividends

 

The Board has approved an interim dividend of 0.8906 (2016: 0.8096) cent per share which represents a 10.0% increase on the comparative period. This dividend, which will be subject to Irish withholding tax rules, will be paid on 13 October 2017 to shareholders on the register at 15 September 2017. In accordance with company law and IFRS, this dividend has not been provided for in the balance sheet at 30 June 2017. The final dividend for 2016 of €7,177,000 was paid in May 2017.

 

During the period, the Group paid dividends of €8,447,000 (2016: €3,766,000) to non-controlling shareholders in certain of the Group's non wholly-owned subsidiaries.

 

 

 

9.

Businesses acquired and other developments

 

 

 

 

A key part of the Group's strategy is to grow by acquisition. In line with this strategy the Group made a number of acquisitions and investments in the six month period as explained below.

 

Investments in subsidiaries

During the six month period, the Group made a number of acquisitions in the fresh produce sector in North America and in Europe. On 1 March 2017, the Group completed the purchase of a further 30% of the Oppenheimer Group ('Oppy') for consideration of €28.2m. In addition to the initial 35% acquired in 2013, this brings the Group's shareholding in GVL to 65%. Headquartered in Vancouver, Canada with annual sales of almost CAD$ 1 billion (€720m), Oppy is a leading provider of fresh produce to its strong base of retail, wholesale and foodservice customers throughout the United States and Canada. In addition to this, long term put and call options are in place for the remaining 35% shareholding, exercisable from early 2020.

 

In February 2017, the Group's Los Angeles headquartered fresh produce business, Progressive Produce LLC acquired the trade and business assets of Keystone Fruit Marketing Inc. The Group made a number of other bolt-on investments in Europe all of which complement the Group's existing activities.

 

Details of consideration and assets and liabilities arising on acquisition of subsidiaries, the largest being Oppy is as follows:

         

 

 

Total

(Unaudited)

6 months to

 30 June 2017

€'000

 

Consideration paid and payable on all subsidiary acquisitions in period

 

 

Cash consideration

33,117

 

Contingent consideration

1,336

 

Deferred consideration

376

 

Settlement of pre-existing relationship with acquiree

4,384

 

Non-cash contribution by non-controlling shareholder

1,060

 

Total fair value of consideration

40,273

 

 

 

 

Identifiable assets acquired and liabilities assumed

 

 

Property, plant and equipment

4,430

 

Intangible assets

55,373

 

Investment in associates

1,112

 

Biological assets

2,384

 

Inventories

22,578

 

Trade and other receivables

78,752

 

Cash, cash equivalents and bank overdrafts

(556)

 

Bank borrowings

(24,478)

 

Finance leases

(149)

 

Trade and other payables including corporation tax

(84,452)

 

Employee benefits

(7,165)

 

Deferred tax liabilities - net

(15,000)

 

Fair value of net identifiable assets and liabilities acquired

32,829

 

 

 

 

Non-controlling interests arising on acquisition

 

 

Non-controlling interests measured at net asset value

10,783

 

 

 

 

Goodwill calculation

 

 

Fair value of consideration

40,273

 

Fair value of pre-existing interest in acquiree

24,684

 

Fair value of net identifiable assets and liabilities acquired

(32,829)

 

Non-controlling interest arising  on acquisition

10,783

 

Goodwill arising

42,911

 

The principal factor contributing to the recognition of goodwill of €42,911,000 is the value and skills of the assembled workforce in the acquired entities along with the anticipated cost savings and synergies arising from the integration into the Group's existing business.

 

The Group incurred acquisition related costs of €715,000 on legal and professional fees and due diligence in respect of completed acquisitions. These costs have been included in operating expenses in the period.

 

The initial assignment of fair values to net assets for all investments has been performed on a provisional basis in respect of these acquisitions given the timing of the completion of these transactions and will be finalised within twelve months from the acquisition date, as permitted by IFRS 3 (Revised) Business Combinations.

 

Disposal of shareholding to non-controlling interests and investment in associate

On 6 April 2017, Oppy entered strategically-important agreements with the New Zealand based T&G Global Limited ('T&G') which will enable both parties to enhance their market positions as co-shareholders in two US produce businesses.

 

T&G, through its wholly owned subsidiary Enza Fresh, previously held a 15% shareholding in Oppy's largest subsidiary, the US focussed marketer David Oppenheimer & Company LLC ('DOC') and a US transport company David Oppenheimer Transport ('DOT'). On 6 April 2017, Enza Fresh merged with Grandview Brokerage LLC ('GBLLC') and as part of this agreement obtained a 39.4% shareholding in GBLLC with the right thereafter to match the effective share of GBLLC held by Total Produce. As GBLLC owns 100% of DOC and 15% of DOT, the transaction resulted in T&G increasing its shareholding in DOC from 15% to 39.4% and reducing its interest in DOT from 15% to 6%. The net proceeds received by Oppy for the disposal of the shareholding in GBLLC were €8,631,000.

 

Separately Oppy acquired from T&G a 50% share of a T&G Californian headquartered US export business known in the market as Delica North America ('Delica NAM') for a cash consideration of €8,085,000. Delica NAM is focussed on exporting a wide range of fresh produce from the US predominantly to the important Chinese and south east Asian markets. Under the terms of the shareholders agreement, Oppy is considered to have significant influence rather than joint control of this investment and therefore has accounted for it as an associate in accordance with IAS 28 Investments in Associates and Joint Ventures (2011).

 

Put option liability

Within certain current year transactions, non-controlling shareholders have an option to put their shareholding to Total Produce. Up to the point of exercise of these put options, the non-controlling shareholder continues to have a right to dividends and voting rights on the shareholdings that are subject to the put option. Where the holder of the put retains a present ownership interest in the shares, the Group applies the partial recognition of non-controlling interest method for put options. The non-controlling interest is therefore recognised in the traditional manner but is transferred against the put liability reserve for presentation purposes in the balance sheet.

 

The estimated fair value at date of acquisition for the consideration on exercise of these put options was €25,072,000. This put option liability has been recognised in a put option reserve attributable to the equity holders of the parent. The valuation method applied for the purposes of this fair value assessment was the option price formula in the share purchase agreements with the inputs based on the budget plan for 2017 and an application of a steady growth rate, discounted to a net present value with the assumption that the put option would be exercised at the earliest possible date. In accordance with the Group accounting policy for put options (partial recognition of NCI method), and for presentation purposes in the balance sheet, the carrying value of the NCI relating to these shareholdings with a put option at period end has been transferred to the put option reserve.

 

Payment of contingent consideration

During the period, the Group paid €8,830,000 of contingent consideration relating to prior period acquisitions. 

 

The Group continues to actively pursue further investment opportunities in both new and existing markets.

 

 

Subsidiary becoming a joint venture

In 2017, as a result of changes in the nature of a shareholder relationship it was determined that the Group no longer held a controlling influence in an investee and that the Group jointly controlled this investee. Thereafter the investee was equity accounted as a joint venture interest. The following is a summary of the assets and liabilities derecognised:

 

Identifiable assets and liabilities derecognised

€'000

Intangible assets

66

Property, plant and equipment

7,131

Trade investments

3

Inventories

1,401

Trade and other receivables

12,741

Cash and cash equivalents

6,660

Corporation tax liabilities

(328)

Deferred tax liabilities, net

(404)

Deferred government grants

(177)

Trade and other payables

(14,108)

Net assets derecognised

12,985

Non-controlling interest

(6,668)

Net assets derecognised

6,317

 

 

Investment in joint venture

6,317

     

 

The carrying value of the net assets derecognised in relation to this subsidiary closely approximates to fair value.

 

  

10.

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 2017, 30 June 2016 and 31 December 2016 are as follows:

 

 

(Unaudited)

30 June 2017

(Audited)

31 Dec 2016

 

 

Carrying

value

€'000

Fair

value

€'000

Carrying

value

€'000

Fair

value

€'000

Carrying

value

€'000

Fair

value

€'000

 

 

 

 

 

 

 

Other financial assets1

625

625

664

664

649

649

Trade and other receivables - current1*

 

448,928

 

n/a

 

381,205

 

n/a

 

305,518

 

n/a

Trade and other receivables - non- current1*

 

9,508

 

9,508

 

8,768

 

8,768

 

7,761

 

7,761

Bank deposits1

3,700

n/a

4,700

n/a

2,500

n/a

Cash and cash equivalents1

93,660

n/a

103,282

n/a

127,280

n/a

Derivative financial assets

173

173

969

969

187

187

 

556,594

 

499,588

 

443,895

 

 

 

 

 

 

 

 

Trade and other payables - current1

 

526,398

 

n/a

 

439,730

 

n/a

 

389,708

 

n/a

Trade and other payables - non-current1

 

1,397

 

1,397

 

2,314

 

2,314

 

2,021

 

2,021

Bank overdrafts1

43,888

n/a

35,915

n/a

10,193

n/a

Bank borrowings

204,364

205,386

163,818

165,148

165,005

165,336

Finance lease liabilities1

2,433

2,666

3,957

4,153

2,948

3,232

Derivative financial liabilities

617

617

215

215

569

569

Contingent consideration

36,693

36,693

49,991

49,991

46,375

46,375

Put option liability

41,958

41,958

17,071

17,071

21,215

21,215

 

857,748

 

713,011

 

638,034

 

 

1.  The Group has availed of the exemption under IFRS 7 Financial Instruments: Disclosure for additional disclosures where fair value closely approximates carrying value.

 

* For the purposes of this analysis prepayments have not been included within other receivables. Carrying value of other financial assets, trade receivables and other receivables are stated net of impairment provisions where appropriate and consequently fair value is considered to approximate to carrying value.

 

A number of other put and call options arising from acquisitions are of immaterial fair value.

 

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

·   Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;

·   Level 2: other  techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly;

·   Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

  

 

 

 

At 30 June 2017, 30 June 2016 and 31 December 2016 the Group recognised and measured the following instruments at fair value:

 

 

(Unaudited)

(Unaudited)

(Audited)

 

 30 June

2017

Level 2

 30 June

2017

Level 3

 30 June

2016

Level 2

 30 June

2016

Level 3

31 Dec

2016

Level 2

31 Dec

2016

Level 3

 

€'000

€'000

€'000

€'000

€'000

€'000

Assets measured at fair value

 

 

 

 

 

 

At fair value through profit or loss

 

 

 

 

 

 

Foreign exchange contracts

73

-

-

-

1

-

 

 

 

 

 

 

 

Designated as hedging instruments

 

 

 

 

 

 

Foreign exchange contracts

100

-

969

-

186

-

 

 

 

 

 

 

 

Liabilities measured at fair value

 

 

 

 

 

 

At fair value through profit or loss

 

 

 

 

 

 

Foreign exchange contracts

(49)

-

-

-

(24)

-

Interest rate swaps

(86)

-

(110)

-

(91)

-

Contingent consideration

-

(36,693)

-

(49,991)

-

(46,375)

 

 

 

 

 

 

 

Designated as hedging instruments

 

 

 

 

 

 

Foreign exchange contracts

(399)

-

(90)

-

(444)

-

Interest rate swaps

(83)

-

(15)

-

(10)

 

 

 

 

 

 

 

 

At  fair value  through equity

 

 

 

 

 

 

Put option liability

-

(41,958)

-

(17,071)

-

(21,215)

 

 

 

 

 

 

 

 

 

 

Additional disclosures for Level 3 fair value measurements

 

Contingent consideration and put option liability

 

 

 

 

 

 

(Unaudited)

Contingent consideration

€'000

(Unaudited)

Put option liability

€'000

 

 

 

 

 

At 1 January 2017

46,375

21,215

 

Paid during the period

(8,830)

-

 

Arising on acquisition of subsidiaries

1,336

25,072

 

Fair value movement on put option recognised directly within equity

-

(1,591)

 

Foreign exchange movements

(2,360)

(2,738)

 

Included in the income statement

 

 

 

- Fair value movements

172

-

 

At 30 June 2017

36,693

41,958

 

 

 

 

 

Presented on Balance Sheet as follows:

 

 

 

Current liability

9,902

-

 

Non-current liability

26,791

41,958

 

 

36,693

41,958

 

 

 

 

 

 

 

 

 

Contingent consideration

 

Contingent consideration represents the provision for the net present value of the amounts expected to be payable in respect of acquisitions which are subject to earn-out arrangements. Contingent consideration for each individual transaction is valued internally by the Group Finance team in consultation with Senior Management and updated as required at each reporting period.

 

Put option liability

 

The Group has a number of contractual put options  and forward commitments in place in relation to non-controlling interest ('NCI') shares in subsidiaries whereby the NCI shareholder can require the Group, or the group has agreed to acquire ('forward commitment') the shares in these subsidiaries at various future dates. The value of the put option or forward commitment liability recognised represents management's best estimate of the fair value of the amounts which may be payable discounted to net present value. The put option or forward commitment for each individual transaction is valued internally by the Group Finance team in consultation with Senior Management and updated as required at each reporting period.

                   

 

 

11.

Cash flows generated from operations

 

(Unaudited)

6 months to

30 June 2017

€'000

(Unaudited)

6 months to

30 June 2016

€'000

(Audited)

Year ended

31 Dec 2016

€'000

 

 

 

 

Operating activities

 

 

 

Profit for the period 

28,274

20,674

39,304

Adjustments for non-cash items:

 

 

 

Income tax expense

7,171

4,898

11,324

Income tax paid

(7,435)

(1,715)

(11,531)

Depreciation of property, plant and equipment

7,953

8,435

17,423

Exceptional items (Note 5)

(5,063)

-

1,409

Fair value movements on contingent consideration

172

767

73

Amortisation of intangible assets - acquisition related

4,998

3,844

7,675

Amortisation of intangible assets - development costs capitalised

153

103

407

Amortisation of intangible assets - computer software

692

605

1,356

Amortisation of government grants

(30)

(531)

(602)

Share-based payment expense

276

154

436

Defined benefit pension scheme expense - normal

1,776

2,213

3,237

Contributions to defined benefit pension schemes - normal

 

(1,985)

 

(2,351)

(5,010)

Contributions to defined benefit pension schemes - exceptional

 

(1,672)

 

-

-

Other employee benefit scheme expense

221

-

-

Payments relating to other employee benefit scheme, net

(8)

-

-

Net gain on disposal of property, plant and equipment

(198)

(27)

(416)

Net finance expense

3,066

2,804

5,524

Net financial expense paid

(2,746)

(3,045)

(5,744)

Net (gain)/loss on non-hedging derivative financial instruments

(57)

(98)

31

Loss on disposal of trading assets

-

927

943

Share of profits of joint ventures and associates

(4,405)

(5,483)

(12,270)

Fair value movement in biological assets

449

308

128

Cash flows from operations before working capital movements

31,602

32,482

53,697

Movements in working capital:

 

 

 

-   Movements in inventories

(23,839)

(17,144)

1,695

-   Movements in biological assets

(4,564)

-

-

-   Movements in trade and other receivables

(93,523)

(101,374)

(24,537)

-   Movement in trade and other payables

76,024

60,852

13,293

Total movements in working capital

(45,902)

(57,666)

(9,549)

Cash flows from operating activities

(14,300)

(25,184)

44,148

         

 

 

12.

Analysis of Net Debt and Cash and Cash Equivalents

 

Net debt is a non-IFRS measure which comprises bank deposits, cash and cash equivalents and current and non-current interest-bearing loans and borrowings. The calculation of net debt at 30 June 2017, 30 June 2016 and 31 December 2016 is as follows:

 

 

(Unaudited)

30 June 2017

€'000

(Unaudited)

30 June 2016

€'000

(Audited)

31 Dec 2016

€'000

Current assets

 

 

 

Bank deposits

3,700

4,700

2,500

Cash and cash equivalents

74,594

85,391

111,261

Call deposits (demand balances)

19,066

17,891

16,019

Current liabilities

 

 

 

Bank overdrafts

(43,888)

(35,915)

(10,193)

Current bank borrowings

(5,591)

(38,759)

(36,276)

Current finance leases

(970)

(1,498)

(1,515)

Non-current liabilities

 

 

 

Non-current bank borrowing

(198,773)

(125,059)

(128,729)

Non-current finance leases

(1,463)

(2,459)

(1,433)

Net debt at end of period

(153,325)

(95,708)

(48,366)

 

Reconciliation of cash and cash equivalents per balance sheet to cashflow statement

 

 

 

(Unaudited)

6 months to   30 June 2017

€'000

(Unaudited)

6 months to 30 June 2016

€'000

(Audited)

Year ended 31 Dec 2016

€'000

Cash and cash equivalents per balance sheet

93,660

103,282

127,280

Bank overdrafts

(43,888)

(35,915)

(10,193)

Cash, cash equivalents and bank overdrafts per

 cash flow statement

 

49,772

 

67,367

 

117,087

 

13.

Post balance sheet events

 

 

There have been no material events subsequent to 30 June 2017 which would require disclosure or adjustment in this report.  

 

14.

Related party transactions

 

 

There have been no related party transactions or changes to related party transactions other from those as described in the 2016 Annual Report that materially affect the financial position or affect the performance of the Group for the six month period ended 30 June 2017.

 

15.

Board approval

 

 

This interim results statement was approved by the Board of Directors of Total Produce plc on 30 August 2017.

 


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