TIDMTOT
RNS Number : 0556F
Total Produce Plc
05 March 2020
TOTAL PRODUCE PLC
2019 PRELIMINARY RESULTS
Total Produce continues strong growth in 2019
-- Total Revenue up 22.4% to EUR6.2 billion
-- Adjusted EBITDA up 52.1% to EUR202.8m
-- Adjusted EBITA up 53.1% to EUR150.1m
-- Adjusted profit before tax up 27.9% to EUR98.3m
-- Adjusted fully diluted EPS (pre-IFRS 16 Leases) up 41.4% to 14.86
cent
-- Adjusted fully diluted EPS (post-IFRS 16 Leases) up 34.3% to
14.12 cent
-- Final dividend up 2.5%
Key performance measures are defined on pages 33 to 37
Commenting on the results, Carl McCann, Chairman, said:
"We are pleased that the Group has delivered a strong
performance in 2019 with a 41.4% increase in adjusted fully diluted
earnings per share. This is the first year to include twelve months
contribution from Dole Food Company, Inc. The Group acquired 45% of
Dole for $300m on 31 July 2018.
The Group is monitoring Covid-19 and, while it is too early to
form a definitive view, any disruption is not expected to be
material.
Trading in early 2020 has been satisfactory and the Group is
targeting continued growth.
The Group is also pleased to report a 2.5% increase in the final
dividend to 2.5770 cent per share"
5 March 2020
For further information, please contact:
Brian Bell, Wilson Hartnell PR - Tel: +353-1-669-0030, Mobile:
+353-87-243-6130
TOTAL PRODUCE PLC PRELIMINARY RESULTS FOR THE
YEARED 31 DECEMBER 2019
2019 2018
EUR'million EUR'million change
Total Revenue(1) 6,173 5,043 +22.4%
Group Revenue 3,729 3,728 0.0%
Adjusted EBITDA(1) (after add back of right
of use asset depreciation) 251.2 133.3 +88.4%
Adjusted EBITDA(1) 202.8 133.3 +52.1%
Adjusted EBITA(1) 150.1 98.0 +53.1%
Operating profit after intangible asset
amortisation 87.5 77.9 +12.4%
Adjusted profit before tax(1) 98.3 76.9 +27.9%
Profit before tax 76.5 69.8 +9.6%
EUR'cent EUR'cent
Adjusted fully diluted earnings per share
(pre-IFRS 16 Leases)(1) 14.86 10.51 +41.4%
Adjusted fully diluted earnings per share
(post-IFRS 16 Leases) (1) 14.12 10.51 +34.3%
Basic earnings per share 13.72 9.37 +46.4%
Diluted basic earnings per share 13.69 9.34 +46.6%
Final dividend per share 2.5770 2.5140 +2.5%
Total dividend per share 3.4899 3.4269 +1.8%
(1) Alternative Performance Measures
The Group uses a number of alternative performance measures ('APMs'),
which are non-IFRS measures to monitor financial performance. These
measures are referred to throughout the discussion of our reported
operating performance and financial position and are measures which
are regularly reviewed by Group management in assessing Group performance.
The APMs are defined together with calculations in pages 33 to 37 of
this statement.
Forward-looking statement
Any forward-looking statements made in this announcement have
been made in good faith based on the information available as of
the date of this announcement 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 good performance in 2019.
The results for the year include the Group's 45% share of Dole Food
Company ('Dole') for the full year. The comparative 2018 period included
the Group's share of the results of Dole for five months from the
date of completion of the transaction on 31 July 2018 after receiving
regulatory approval.
Total revenue in the year grew 22.4% to EUR6,173m (2018: EUR5,043m),
adjusted EBITDA increased by 52.1% to EUR202.8m (2018: EUR133.3m)
with adjusted EBITA increasing 53.1% to EUR150.1m (2018: EUR98.0m).
The increase was due to the incremental benefit of the acquisition
of Dole, the improvement of the Fresh Vegetable Division in Dole,
good trading in the International division offset in part by competitive
conditions in certain markets in the Eurozone.
Adjusted fully diluted earnings per share pre the effect of the new
lease accounting standard (IFRS 16 Leases) was 14.86 cent, an increase
of 41.4%. The increase is due to the incremental impact of the acquisition
of Dole for the full year in 2019 when compared to 2018. The 2018
results for Dole were included for five months from 31 July 2018.
Including the effect of IFRS 16 Leases, adjusted fully diluted earnings
per share grew 34.3% to 14.12 cent (2018: 10.51 cent).
The Group is cash-generative with adjusted operating cash flows of
EUR59.4m (2018: EUR52.9m) and free cashflow increasing to EUR35.0m
(2018: EUR31.2m).
The Board is pleased to announce a 2.5% increase in the final dividend
to 2.5770 (2018: 2.5140) cent per share subject to the approval of
shareholders at the forthcoming AGM. If approved, the total dividend
for 2019 will amount to 3.4899 (2018: 3.4269) cent per share which
represents an increase of 1.8% on 2018.
Operating Review
The table below details a segmental breakdown of the Group's total
revenue and adjusted EBITA for the year ended 31 December 2019. The
European and International operating segments are primarily involved
in the procurement, marketing and distribution of hundreds of lines
of fresh fruit and vegetables. The Group's 45% share of the results
of Dole is included as a separate operating segment. Dole is one
of the world's leading fresh producers, marketers and distributors
of fresh fruit and vegetables which they sell and distribute through
a wide network in North America, Europe, Latin America, the Middle
East and Africa. Segment performance is evaluated based on total
revenue and adjusted EBITA.
Year-ended Year-ended
31 December 2019 31 December 2018
Total Adjusted Total Adjusted
revenue EBITA revenue EBITA
EUR'000 EUR'000 EUR'000 EUR'000
Europe - Non-Eurozone 1,502,653 40,610 1,511,780 41,593
Europe - Eurozone 1,638,341 21,780 1,716,584 27,252
International 1,271,566 22,284 1,175,297 18,880
Dole (Group share)* 1,821,400 65,440 692,239 10,297
Inter-segment revenue (60,765) - (52,410) -
---------------- -------------- ------------------ ---------
Total Group 6,173,195 150,114 5,043,490 98,022
================ ============== ================== =========
*Dole's financial calendar consists of thirteen 4 weekly periods.
The results for 2019 are for the 52-week period ended 28 December
2019. The Group's share of the adjusted EBITA of Dole above is after
the deduction of the Group's share of the non-controlling interests
charge within Dole and an allocation of a corporate overhead.
Total revenue increased 22.4% to EUR6,173m (2018: EUR5,043m) with
adjusted EBITA increasing by 53.1% to EUR150.1m (2018: EUR98.0m)
due to the incremental impact of the acquisition of Dole, the improvement
of the Fresh Vegetable division in Dole and good trading in the International
division offset in part by the competitive conditions in certain
markets in the Eurozone. On a like-for-like basis, excluding acquisitions,
divestments and currency translation, revenues were 2% behind the
prior year with a small decrease in volume partially offset by price
increases.
Fresh produce markets in 2019 were particularly competitive in certain
parts of Europe. The International division performed strongly in
the year helped by good pricing and margins in some key categories.
This was offset in part by the poor weather in California in April
to June which led to less optimal growing conditions and weaker trading
in the strawberry growing operation. The uncertainty surrounding
international trade led to a small reduction of exported goods from
the US to India and China due to higher tariffs.
Europe - Non-Eurozone
This segment includes the Group's businesses in the Czech Republic,
Poland, Scandinavia and the UK. Revenue decreased by 0.6% to EUR1,503m
(2018: EUR1,512m). This was due in particular to the adverse impact
of the translation of the results of foreign currency denominated
operations into Euro, the cessation of a small distribution business
in the second half of 2018, offset in part by the incremental contribution
of bolt-on acquisitions. On a like-for-like basis excluding divestments,
acquisitions and disposals, revenue decreased by circa 0.5% with
a small decrease in volumes offset in part by marginal average price
increases. Adjusted EBITA decreased 2.4% to EUR40.6m (2018: EUR41.6m)
due to currency translation and reduced earnings in some joint ventures
and associates.
Europe - Eurozone
This segment includes the Group's businesses in France, Ireland,
Italy, the Netherlands and Spain. Revenue decreased by 4.6% to EUR1,638m
(2018: EUR1,717m) with a 20.1% decrease in adjusted EBITA to EUR21.8m
(2018: EUR27.3m). Trading conditions were challenging, particularly
in the Netherlands in the vegetable and salad categories where the
market remains very competitive. Trading was satisfactory in southern
Europe but lower compared to a particularly strong year in 2018.
Excluding the effect of acquisitions and divestments, revenue on
a like-for-like basis was circa 5% behind prior year due to volume
decreases partially offset by marginal price increases.
International
This division includes the Group's businesses in North America,
South America and India. Revenue increased by 8.2% to EUR1,272m
(2018: EUR1,175m) with the benefit on translation of the results
to Euro from the stronger US and Canadian Dollar which strengthened
by 5.2% and 2.8% respectively. On a like-for-like basis excluding
effects of currency, revenue increased circa 3% due to higher average
pricing with volumes similar to prior year. Domestic US volumes
have marginally increased offset by a small drop in US export volumes
to India and China due to increased tariffs. Adjusted EBITA increased
18.0% to EUR22.3m (2018: EUR18.9m) with a particularly good performance
in the second half of the year with favourable trading conditions,
pricing and margins in many product categories. The reported result
also benefitted from the stronger US and Canadian Dollars which
benefitted the results on translation to Euro. This was partially
offset by the effect of the poor weather in California in April
to June which led to weakness in the results of a strawberry growing
operation.
Dole
This segment includes the Group's share of the results of Dole.
As noted earlier, the Group completed the acquisition of the initial
tranche of 45% of Dole on 31 July 2018 and is equity accounting
for its 45% share of the results of Dole on an IFRS basis with effect
from 1 August 2018. T he 2019 financial year is therefore the first
full year to reflect this transaction with the comparative 2018
year reflecting the results of Dole for 5 months from 1 August 2018
to 29 December 2018.
Dole's financial calendar consists of thirteen periods of four weeks,
and the 2019 results reflected the 52-week period ended 28 December
2019. Dole's o verall business is seasonal, with the greater share
of adjusted EBITA earned in the f irst half of the financial year.
As Dole is vertically integrated its operations are sensitive to
a number of factors including weather related phenomena and the
effects on industry volumes, prices, produce quality and growing
costs.
On an IFRS basis, Dole has recorded revenues of $4,566m (EUR4,048m)
for the year ended 28 December 2019. Adjusted EBITDA was $245.0m
(EUR217.2m) with adjusted EBITA of $173.8m (EUR154.0m). For the
five-month period ended 29 December 2018, Dole recorded revenues
of $1,767m (EUR1,538m), adjusted EBITDA of $59.5m (EUR51.8m) and
adjusted EBITA of $27.3m (EUR23.7m).
Trading for the year ended 28 December 2019 has been strong with
a good recovery in adjusted EBITDA. Revenues on a like-for-like
basis, excluding the disposal of the salad business in Sweden, was
1.5% ahead of the prior year. Adjusted EBITDA and adjusted EBITA
increased, led by a recovery in the Fresh Vegetable division which
was impacted by two industry-wide safety notices in 2018, not directly
linked to Dole, which affected romaine lettuce. The Fresh Fruit
division remained strong in 2019.
For the full year 2019, the Group's 45% share of revenue and adjusted
EBITA was EUR1,821m and EUR65.4m respectively. For the five-month
period ending 29 December 2018, the Group's 45% share of revenue
and adjusted EBITA was EUR692m and EUR10.3m respectively with the
net result reflecting that earnings are weighted towards the first
half of the year and the impact of the industry wide safety notices
in the second half of 2018.
Further details on the acquisition of Dole and its financial performance
and position for the year ended 28 December 2019 are outlined in
Note 7 of the accompanying financial information.
Financial Review
Impact of IFRS 16 Leases
As explained in detail in Note 1 of the accompanying financial information,
the Group has adopted IFRS 16 Leases (IFRS 16) with effect from 1 January
2019.
As a result of initially applying IFRS 16 in relation to leases that
were previously classified as operating leases, the Group recognised
EUR111.2m of right of use assets and EUR118.6m of lease liabilities
at 31 December 2019.
The incremental impact of adoption of IFRS 16 in the income statement
in the year is a reduction in operating expenses of EUR1,201,000 and
an increase in the net financial expense of EUR2,957,000. Profit after
tax of joint ventures and associates, which includes the Group's 45%
share of the results of Dole has decreased by EUR1,940,000. The incremental
impact of IFRS 16 on the Group's diluted and adjusted fully diluted
earnings per share for the year was a reduction of 0.74 cent per share.
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 Group's share of after-tax profits of Dole for the year amounted
to EUR19.3m before exceptional items. Post exceptional items the Group's
share of after-tax profits was EUR26.4m. Further details of the performance
of Dole and its financial position at the end of the year is outlined
in Note 7 of the accompanying financial information.
Excluding the contribution from Dole the share of after-tax profits
of joint ventures and associates increased in the period to EUR11.3m
(2018: EUR10.8m). Dividends declared from joint ventures and associates
in the year amounted to EUR11.1m (2018: EUR11.2m) with EUR10.7m (2018:
EUR10.9m) received in cash reflecting the Group's continued focus on
the cash contributions from these investments.
Intangible asset amortisation
Acquisition related intangible asset amortisation within subsidiaries
amounted to EUR10.3m (2018: EUR10.3m) in the year with additional amortisation
charges due to recent acquisitions offset by other assets becoming fully
amortised. The share of intangible asset amortisation within joint ventures
and associates was EUR2.7m (2018: EUR2.7m).
Exceptional items
Exceptional items in the year amounted to a net gain after tax of EUR5.2m
(2018: EUR3.7m gain). The net gain in 2019 primarily relates to the
Group's share of EUR7.0m of the net gains within Dole. A full analysis
of exceptional items for both 2019 and 2018 are set out in Note 5 of
the accompanying financial information and have been excluded from the
calculation of the adjusted numbers.
Operating profit
Operating profit before exceptional items increased 14.2% to EUR82.3m
(2018: EUR72.1m) due primarily to the incremental impact from the Dole
acquisition offset by reduced profits in some subsidiaries in the Eurozone.
Including exceptional items operating profits increased by 12.4% to
EUR87.5m (2018: EUR77.9m).
Net financial expense
Net financial expense (before exceptional items) in the year increased
to EUR11.0m (2018: EUR7.4m). The first-time application of IFRS 16
Leases from 1 January 2019 accounted for EUR3.0m of this increase along
with the effect of higher average net debt in the year due to the acquisition
of Dole. This was partly offset by the lower cost of funding. The Group's
share of the net interest expense of joint ventures and associates
in the year was EUR40.8m (2018: EUR13.8m) due to the incremental impact
of Dole.
Profit before tax
Excluding acquisition related intangible asset amortisation charges
and costs, fair value movements on contingent consideration and share
of joint venture interest and tax which is netted in profit before
tax in the statutory income statement, the adjusted profit before tax
increased by 27.9% in the year to EUR98.3m (2018: EUR76.9m) due primarily
to the increased contribution from Dole partly offset by a reduction
in profits in some entities in the Eurozone and higher interest charges
as referred to above. Statutory profit before tax after these items
increased 9.6% to EUR76.5m (2018: EUR69.8m)
Taxation
The adjusted tax charge for the year, including the Group's share of
joint ventures and associates tax and before non-trading items, as
set out on page 35 of the accompanying financial information, was EUR27.5m
(2018: EUR18.6m) representing an underlying tax rate of 28.0% (2018:
24.2%) when applied to the Group's adjusted profit before tax. The
increase is primarily due to the inclusion of the higher underlying
tax rate in Dole.
Non-controlling interests
The non-controlling interest's share of after-tax profits in the
year was EUR12.9m (2018: EUR18.0m). Included in this was the non-controlling
interests' share of the net charge on exceptional items, amortisation
charges and acquisition related costs (net of tax) of EUR2.9m (2018:
EURnil). Excluding these non-trading items, the non-controlling interests'
share of adjusted after tax profits was decreased by EUR2.2m to EUR15.8m
(2018: EUR18.0m) with the decrease due to the non-controlling interests
share of earnings in certain non-wholly owned companies in Europe.
Adjusted and basic earnings per share
Adjusted fully diluted earnings per share (pre-IFRS 16 Leases) was
14.86 cent, an increase of 41.4% due to the benefit of the Dole acquisition
offset in part by higher interest charges to fund the Dole transaction
and challenging conditions is some markets in the Eurozone. Including
the effect of IFRS 16, adjusted fully diluted earnings per share
increased by 34.3% to 14.12 cent per share (2018: 10.51 cent).
Management believes that adjusted fully diluted earnings per share,
which excludes acquisition related intangible asset amortisation
charges and costs, fair value movements on contingent consideration,
unrealised gains or losses on derivative financial instruments, gains
and losses on foreign currency denominated intercompany borrowings,
exceptional items and the 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 13.72 cent per share (2018: 9.37 cent)
and 13.69 cent per share (2018: 9.34 cent) respectively.
Note 6 of the accompanying financial information provide details
of the calculation of the respective earnings per share amounts.
Cash flow and net debt
Net debt (which excludes lease liabilities) at 31 December 2019 of
EUR221.2m (2018: EUR219.7) marginally increased in the year. Average
net debt for the year was EUR284.0m compared to EUR217.1m in 2018
with the increase due to the incremental impact of financing the
acquisition of the initial 45% interest in Dole on 31 July 2018.
In addition, the Group has non-recourse trade receivables financing
of EUR46.4m at 31 December 2019 (2018: EUR30.0m).
The Group generated EUR52.8m (2018: EUR68.1m) in adjusted operating
cash flows before working capital outflows with the decrease due
to lower earnings in subsidiaries and higher finance costs due to
the funding of the Dole acquisition. The working capital inflow in
2019 was EUR6.6m (2018: EUR15.2m outflow) assisted by the incremental
increase in non-recourse trade receivables financing. After working
capital movements, adjusted operating cash flows were EUR59.4m (2018:
EUR52.9m). Cash outflows on routine capital expenditure, net of disposals,
were EUR19.0m (2018: EUR22.1m). Dividends received from joint ventures
and associates in the year were EUR10.7m (2018: EUR10.9m) representing
the Group's continued focus on cash returns from these investments.
Dividends paid to non-controlling interests increased to EUR16.1m
(2018: EUR10.5m) which reflects dividends on increased prior year
profits and the non-controlling interests' share of prior year exceptional
items.
Free cashflow generated by the Group increased to EUR35.0m (2018:
EUR31.2m) with the benefit of the higher working capital inflows
offset in part by higher dividends to non-controlling interests.
Free cashflow is the measure of the funds available after outflows
relating to routine capital expenditure, dividends to non-controlling
interests but before acquisition related expenditure, development
capital expenditure and the payment of dividends to equity shareholders.
Cash outflows on acquisitions and investments amounted to EUR14.5m
(2018: EUR259.6m) with the payments in 2019 due to investments in
bolt-on acquisitions and the final payment of the Dole transaction
costs. Contingent and deferred consideration payments relating to
prior period acquisitions were EUR11.1m (2018: EUR7.0m). Payments
for non-routine property and plant additions amounted to EUR4.5m
(2018: EUR7.4m). The Group distributed EUR13.3m (2018: EUR13.1m)
in dividends to equity shareholders in the year representing payment
of final 2018 dividend and the 2019 interim dividend. Proceeds from
share issue were EUR0.1m in the year (2018: EUR141.4m) of which EUR141.0m
in 2018 related to the proceeds of the share placing in February
2018 to fund the 45% investment in Dole. At 31 December 2019, there
was a EUR2.7m loss (2018: EUR1.7m gain) on the translation of foreign
currency denominated net debt to Euro due primarily to the stronger
US Dollar and Sterling partly offset by a weaker Swedish Krona.
2019 2018
EUR'million EUR'million
Adjusted EBITDA( (1) 202.8 133.3
Deduct adjusted EBITDA of joint ventures and associates (121.1) (44.5)
Net financial expense and tax paid (26.3) (20.5)
Other (2.6) (0.2)
------------- -------------
Adjusted operating cash flows before working capital
movements 52.8 68.1
Working capital movements 6.6 (15.2)
------------- -------------
Adjusted operating cash flows( (1) 59.4 52.9
Routine capital expenditure net of routine disposal
proceeds (19.0) (22.1)
Dividends received from joint ventures and associates 10.7 10.9
Dividends paid to non-controlling interests (16.1) (10.5)
------------- -------------
Free cash flow( (1) 35.0 31.2
Cashflows from exceptional items 5.8 3.0
Acquisition payments, net ( (1) (14.5) (259.6)
Net cash assumed/disposed on acquisition/disposal
of subsidiaries 2.1 3.8
Contingent and deferred consideration payments (11.1) (7.0)
Non-routine capital expenditure (4.5) (7.4)
Dividends paid to equity shareholders (13.3) (13.1)
Proceeds from issue of share capital 0.1 141.4
Other - (0.6)
------------- -------------
Total net debt movement in year (0.4) (108.3)
------------- -------------
Net debt (1) at beginning of year (219.7) (113.1)
Finance leases reclassified to lease liabilities 1.6 -
Foreign currency translation (2.7) 1.7
Net debt (1) at end of year (221.2) (219.7)
============= =============
( (1) Key metrics including net debt are defined on pages 33 to
37.
Defined benefit pension obligations
The net liability of the Group's defined benefit pension schemes
(net of deferred tax) was EUR9.3m at 31 December 2019 (2018: EUR9.1m).
There was an 11% average return on pension scheme assets in 2019
offset by the impact of a reduction in the discount rates for the
Irish and UK schemes which result in an increase in the net present
value of the schemes obligations. Other post-employment benefit obligations
increased to EUR5.9m (2018: EUR5.0m). Further details are outlined
in Note 8 of the accompanying financial information.
Shareholders' equity
Shareholders' equity increased by EUR18.0m to EUR451.1 m (2018: EUR433.1m).
On adoption of IFRS 16 Leases, the net impact to Shareholders' equity
at 1 January 2019 was a reduction of EUR6.8m. The increase was due
to profit after tax of EUR53.3 m attributable to equity shareholders
and the currency translation gain of EUR3.9m on the retranslation
of the net assets of foreign currency denominated operations into
Euro. This was offset by remeasurement losses of EUR5.7m (net of
deferred tax) on post-employment benefit schemes, effective portions
of cashflow hedges movements (net of deferred tax) of EUR4.6m, a
EUR10.3m movement in the put option reserve and the payment of dividends
of EUR13.3m to equity shareholders of the Company.
Development Activity
The Group made some bolt-on acquisitions in 2019 in the fresh produce
sector in Europe as well as investments in existing joint ventures.
The total committed investment was EUR10.m including EUR1.6m of deferred
and contingent consideration payable on the achievement of future
profit targets.
Dividends
The Board is proposing a 2.5% increase in the final dividend to 2.5770
(2018: 2.5140) cent per share subject to the approval of shareholders
at the forthcoming AGM. If approved, this dividend will be paid on
20 May 2020 to shareholders on the register at 14 April 2020 subject
to dividend withholding tax. The total dividend for 2019 will amount
to 3.4899 (2018: 3.4269) cent per share and represents an increase
of 1.8% on 2018. The total dividend represents a pay-out of almost
25% of the adjusted earnings per share.
Post Balance Sheet Events
There have been no material events subsequent to 31 December 2019
which would require disclosure or adjustment in the financial statements.
Environmental, Social and Governance (ESG)
As sustainability becomes increasingly important to all of us, we
continue to recognise, as a global Group, our responsibilities in
relation to environmental & social issues. Sustainability has always
been central to our Group's strategy and business model with Sustainable
Business Practices, The People Behind our Produce and Responsible
Fiscal Oversight being three of our core strategic priorities. We
are committed to building a better business in a responsible and
sustainable way for all of our stakeholders.
It is very encouraging to report upon the work undertaken by our
Sustainability Steering and Working Group ('SSWG') and our local
operations during 2019 on ESG matters. We operate in an industry
known for its health benefits and the low environmental impact of
its products. We have therefore chosen the UN Sustainable Development
Goal 3 "Good Health and Well-Being" as our pillar goal, with our
aim being to increase the consumption of healthy fruit and vegetables.
The introduction of new formalised structures includes a panel who
will meet regularly to share ideas and adopt new policies and practices
which will be established by the committee and approved by the Board.
The SSWG have developed their sustainability agenda for 2020 and
the Board will be updated on their progress at each scheduled meeting.
Brexit and International Trade
The result of the UK's exit from the European Union ('Brexit') on
31 January 2020 and its impact in terms of the exit deal including
tariffs and trade agreements remain unclear. Brexit committees, set
up in relevant areas of the business continue to assess and prepare
for the risks and opportunities that may arise.
With continuing uncertainty surrounding global trade, the impact
of any tariffs on international trade will continue to be monitored
by the Group.
COVID-19 Outbreak
The Group is monitoring COVID-19. With a broad spread of sources
and operations, the Group does not expect any disruption to be material.
Going Concern
The Directors are satisfied that the Group has adequate resources to
continue in operational existence for the foreseeable future. Accordingly,
they have adopted the going concern basis in preparing the financial
statements.
Board Changes
As part of a planned transition to provide orderly board refreshment
and succession and as previously announced, Imelda Hurley, CEO of Coillte
and former Director and CFO of Origin Enterprises plc and Helen Nolan,
former Company Secretary of Bank of Ireland have joined the Board.
Frank Gernon, Executive Director, and Jerome Kennedy, Non-Executive
Director have advised the Board that they will retire as Directors
on 31 March 2020. From this date the Board will comprise six independent
Non-Executive Directors and three Executive Directors.
Commenting on these Board changes, Total Produce's Chairman Carl McCann
said;
"Frank has been an integral part of our Group for over 45 years and
has served as an Executive Director of Total Produce since 2007. His
outstanding service, dedication and accomplishments have been invaluable.
During his tenure he has played a key role in the stewardship and development
of the Group.
Jerome has served as a Non-executive Director on the Board and its
Committees since the formation of Total Produce Plc. The Group has
benefitted greatly from his business acumen, professionalism and wise
counsel over the years.
I join the Board in extending to Frank and Jerome our sincerest appreciation
for their dedication and commitment. Their valuable contributions have
added greatly to the success of Total Produce. We wish them the very
best for the future".
Summary and Outlook
We are pleased that the Group has delivered a strong performance in
2019 with a 41.4% increase in adjusted fully diluted earnings per share.
This is the first year to include twelve months contribution from Dole
Food Company, Inc. The Group acquired 45% of Dole for $300m on 31 July
2018.
The Group is monitoring Covid-19 and, while it is too early to form
a definitive view, any disruption is not expected to be material.
Trading in early 2020 has been satisfactory and the Group is targeting
continued growth.
The Group is also pleased to report a 2.5% increase in the final dividend
to 2.5770 cent per share.
Carl McCann, Chairman
On behalf of the Board
5 March 2020
Total Produce plc
Extract from the Group Income Statement
for the year ended 31 December 2019
Note Before Before
Exceptional Exceptional
exceptional items exceptional items
items (Note 5) Total items (Note 5) Total
2019 2019 2019 2018 2018 2018
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Revenue,
including
Group share
of joint
ventures
and associates 3 6,173,195 - 6,173,195 5,043,490 - 5,043,490
Group revenue 3 3,729,346 - 3,729,346 3,727,591 - 3,727,591
Cost of sales (3,212,057) - (3,212,057) (3,220,805) - (3,220,805)
---------------- ------------ ----------------- ---------------- ------------ -----------------
Gross profit 517,289 - 517,289 506,786 - 506,786
Operating
expenses (net) (455,371) (1,816) (457,187) (432,618) 9,450 (423,168)
Share of
profit/(loss)
of joint
ventures - Dole 7 19,327 7,048 26,375 (2,697) (3,658) (6,355)
Share of profit
of joint
ventures
- Other 10,658 - 10,658 8,685 - 8,685
Share of profit
of associates 666 - 666 2,183 - 2,183
Operating profit
before
acquisition
related
intangible
asset
amortisation 92,569 5,232 97,801 82,339 5,792 88,131
Acquisition
related
intangible
asset
amortisation (10,301) - (10,301) (10,281) - (10,281)
---------------- ------------ ----------------- ---------------- ------------ -----------------
Operating profit
after
acquisition
related
intangible
asset
amortisation 82,268 5,232 87,500 72,058 5,792 77,850
Net financial
expense (10,967) - (10,967) (7,365) (667) (8,032)
---------------- ------------ ----------------- ---------------- ------------ -----------------
Profit before
tax 71,301 5,232 76,533 64,693 5,125 69,818
Income tax
expense (10,282) (47) (10,329) (14,619) (1,395) (16,014)
---------------- ------------ ----------------- ---------------- ------------ -----------------
Profit for the
year 61,019 5,185 66,204 50,074 3,730 53,804
================ ============ ================= ================ ============ =================
Attributable to:
Equity holders
of the parent 53,302 35,793
Non-controlling
interests 12,902 18,011
----------------- -----------------
66,204 53,804
================= =================
Earnings per
ordinary share
Basic 6 13.72 9.37
Fully diluted 6 13.69 9.34
Total Produce plc
Extract from the Group Statement of Comprehensive Income
for the year ended 31 December 2019
2019 2018
EUR'000 EUR'000
Profit for the year 66,204 53,804
--------- ---------
Other comprehensive income:
Items that may be reclassified subsequently to
profit or loss:
Foreign currency translation effects:
* foreign currency net investments - subsidiaries 5,664 (6,416)
* foreign currency net investments - joint ventures and
associates 3,274 3,236
* foreign currency recycled to income statement on
joint venture/associate becoming a subsidiary --- 90
* foreign currency borrowings designated as net
investment hedges (3,397) (4,387)
Effective portion of changes in fair value of
cash flow hedges, net (149) 340
Changes in fair value of cost of hedging, net
of recycling 137 23
Deferred tax on items above (9) (97)
Share of joint ventures and associates effective
portion of cash flow hedges (5,101) 51
Share of joint ventures and associates deferred
tax on items above 497 696
--------- ---------
916 (6,464)
--------- ---------
Items that will not be reclassified to profit
or loss:
Remeasurement (loss)/gain on employee benefit
schemes (3,009) 6,677
Revaluation gain on property, plant and equipment,
net 2,095 475
Deferred tax on items above (966) (1,172)
Share of joint venture gain on revaluation of
property, plant and equipment 1,369 -
Share of joint ventures loss on employee benefit
schemes (2,601) (1,867)
Share of joint ventures deferred tax on items
above (75) 854
(3,187) 4,967
--------- ---------
Other comprehensive (expense)/income for the
year (2,271) (1,497)
========= =========
Total comprehensive income for the year 63,933 52,307
========= =========
Attributable to:
Equity holders of the parent 49,417 33,071
Non-controlling interests 14,516 19,236
--------- ---------
63,933 52,307
========= =========
Total Produce plc
Extract from the Group Balance Sheet
As at 31 December 2019
2019 2018
Assets EUR'000 EUR'000
Non-current
Property, plant and equipment 175,485 175,825
Right of use assets 113,032 -
Investment property 11,843 7,344
Goodwill and intangible assets 268,462 266,950
Investments in joint ventures and associates -
Dole 264,893 245,881
Investments in joint ventures and associates -
Other 104,050 105,172
Other investments 2,743 3,465
Other receivables 19,796 18,724
Deferred tax assets 13,497 12,393
Total non-current assets 973,801 835,754
---------- ----------
Current
Inventories 98,031 90,295
Biological assets 3,965 5,066
Trade and other receivables 380,791 392,786
Other investments 2,306 6,612
Corporation tax receivables 2,439 4,523
Derivative financial instruments 4,489 4,388
Cash and cash equivalents 115,529 102,299
---------- ----------
Total current assets 607,550 605,969
---------- ----------
Total assets 1,581,351 1,441,723
========== ==========
Equity
Share capital 4,105 4,104
Share premium 295,487 295,421
Other reserves (131,309) (123,057)
Retained earnings 282,816 256,654
---------- ----------
Total equity attributable to equity holders of
the parent 451,099 433,122
Non-controlling interests 98,768 82,483
---------- ----------
Total equity 549,867 515,605
---------- ----------
Liabilities
Non-current
Interest-bearing loans and borrowings 250,572 263,356
Lease liabilities 99,770 -
Other payables 2,904 1,611
Contingent consideration and other provisions 7,957 12,931
Put option liability 23,083 34,975
Corporation tax payable 6,541 6,676
Deferred tax liabilities 27,731 31,140
Employee benefits 16,736 15,964
Total non-current liabilities 435,294 366,653
---------- ----------
Current
Interest-bearing loans and borrowings 86,150 58,686
Lease liabilities 20,306 -
Trade and other payables 475,202 482,934
Contingent consideration and other provisions 8,534 14,333
Put option liability 3,529 -
Derivative financial instruments 305 296
Corporation tax payable 2,164 3,216
---------- ----------
Total current liabilities 596,190 559,465
---------- ----------
Total liabilities 1,031,484 926,118
---------- ----------
Total liabilities and equity 1,581,351 1,441,723
========== ==========
Total Produce plc
Extract from the Group Statement of Changes in Equity
for the year ended 31 December 2019
Attributable to equity holders of the parent
Undenom-inated Own Currency Reval-uation Other Non-controlling
Share Share capital shares translation reserve equity Retained interests Total
capital premium EUR'000 reserve reserve EUR'000 reserves* earnings Total EUR'000 equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
As at 1 January
2019 as
presented in
the Balance
Sheet 4,104 295,421 140 (8,580) (22,721) 28,336 (120,232) 256,654 433,122 82,483 515,605
-------- -------- --------------- -------- ------------ ------------- ---------- ---------- --------- ---------------- ---------
Adjust for
impact of
transition to
IFRS 16 net of
tax - - - - 159 - - (6,937) (6,778) (1,337) (8,115)
-------- -------- --------------- -------- ------------ ------------- ---------- ---------- --------- ---------------- ---------
Balance at 1
January 2019 as
presented
in the Balance
Sheet 4,104 295,421 140 (8,580) (22,562) 28,336 (120,232) 249,717 426,344 81,146 507,490
-------- -------- --------------- -------- ------------ ------------- ---------- ---------- --------- ---------------- ---------
Adjust for NCI
subject to put
option
transferred for
presentation
purposes - - - - - - (34,673) - (34,673) 34,673 -
-------- -------- --------------- -------- ------------ ------------- ---------- ---------- --------- ---------------- ---------
As at 1 January
2019 4,104 295,421 140 (8,580) (22,562) 28,336 (154,905) 249,717 391,671 115,819 507,490
-------- -------- --------------- -------- ------------ ------------- ---------- ---------- --------- ---------------- ---------
Comprehensive
income
Profit for the
year - - - - - - - 53,302 53,302 12,902 66,204
Other
comprehensive
income:
Items that may
be reclassified
subsequently
to profit or
loss:
Foreign currency
translation
effects,
net - - - - 3,863 - 33 - 3,896 1,645 5,541
Effective
portion of cash
flow hedges,
net of
recycling - - - - - - (148) - (148) (1) (149)
Changes in fair
value of cost
of hedging,
net of
recycling - - - - - - 155 - 155 (18) 137
Deferred tax on
items above - - - - - - - - - (9) (9)
Share of joint
ventures &
associates
effective
portion of
cashflow hedges - - - - - - (5,101) - (5,101) - (5,101)
Share of joint
ventures &
associates
deferred tax on
cashflow hedges - - - - - - 497 - 497 - 497
Items that will
not be
reclassified
subsequently to
profit or loss:
Revaluation gain
on property,
plant
and equipment,
net - - - - - 1,624 - - 1,624 471 2,095
Remeasurement
loss on
employee
benefit
schemes - - - - - - - (2,955) (2,955) (54) (3,009)
Deferred tax on
items above - - - - - (520) - (26) (546) (420) (966)
Share of joint
ventures
remeasurement
loss on
employee
pension schemes - - - - - - - (2,601) (2,601) - (2,601)
Share of joint
ventures
revaluation
gains on
property, plant
and equipment - - - - - 1,369 - - 1,369 - 1,369
Share of joint
ventures
deferred tax
on items above - - - - - - - (75) (75) - (75)
Total other
comprehensive
income - - - - 3,863 2,473 (4,564) (5,657) (3,885) 1,614 (2,271)
-------- -------- --------------- -------- ------------ ------------- ----------
Total
comprehensive
income - - - - 3,863 2,473 (4,564) 47,645 49,417 14,516 63,933
-------- -------- --------------- -------- ------------ ------------- ---------- ---------- --------- ---------------- ---------
Transactions
with equity
holders of
the parent
New shares
issued 1 66 - - - - (20) 20 67 - 67
Non-controlling
interest
arising on
acquisition of
subsidiaries - - - - - - - - - 959 959
Put option
liability
extinguished - - - - - - 11,657 - 11,657 - 11,657
Fair value
movement on put
option
liability - - - - - - (3,294) - (3,294) - (3,294)
Acquisition of
non-controlling
interests - - - - - - - (1,102) (1,102) (554) (1,656)
Acquisition of
non-controlling
interests
by a joint
venture - - - - - - - (151) (151) - (151)
Disposal of
subsidiary - - - - - - - - - 121 121
Dividends paid - - - - - - - (13,313) (13,313) (16,055) (29,368)
Share-based
payment
transactions - - - - - - 109 - 109 - 109
-------- -------- --------------- -------- ------------ ------------- ---------- ---------- --------- ---------------- ---------
Total
transactions
with equity
holders
of the parent 1 66 - - - - 8,452 (14,546) (6,027) (15,529) (21,556)
-------- -------- --------------- -------- ------------ ------------- ---------- ---------- --------- ---------------- ---------
As at 31
December 2019 4,105 295,487 140 (8,580) (18,699) 30,809 (151,017) 282,816 435,061 114,806 549,867
======== ======== =============== ======== ============ ============= ========== ========== ========= ================ =========
Transfer of NCI
subject to put
option
for
presentation
purposes - - - - - - 16,038 - 16,038 (16,038) -
-------- -------- --------------- -------- ------------ ------------- ---------- ---------- --------- ---------------- ---------
As at 31
December 2019 4,105 295,487 140 (8,580) (18,699) 30,809 (134,979) 282,816 451,099 98,768 549,867
======== ======== =============== ======== ============ ============= ========== ========== ========= ================ =========
*Other equity reserves comprise the demerger reserve, share option reserve, cash flow hedge reserve, cost
of hedging reserve and the put option reserve.
Total Produce plc
Extract from the Group Statement of Changes in Equity
for the year ended 31 December 2019
Attributable to equity holders of the parent
Undenom-inated Own Currency Reval-uation Other Non-controlling
Share Share capital shares translation reserve equity Retained interests Total
capital premium EUR'000 reserve reserve EUR'000 reserves* earnings Total EUR'000 equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
As at 1 January
2018 as
presented in
the Balance
Sheet 3,468 150,763 140 (8,580) (14,168) 28,035 (133,481) 233,632 259,809 79,774 339,583
---------- ---------- ---------------- --------- ------------- -------------- ----------- ------------ ---------- ----------------- ---------------------
Adjust for NCI
subject to put
option
transferred for
presentation
purposes - - - - - - (26,788) - (26,788) 26,788 -
---------- ---------- ---------------- --------- ------------- -------------- ----------- ------------ ---------- ----------------- ---------------------
As at 1 January
2018 3,468 150,763 140 (8,580) (14,168) 28,035 (160,269) 233,632 233,021 106,562 339,583
---------- ---------- ---------------- --------- ------------- -------------- ----------- ------------ ---------- ----------------- ---------------------
Comprehensive
income
Profit for the
year - - - - - - - 35,793 35,793 18,011 53,804
Other
comprehensive
income:
Items that may be
reclassified
subsequently
to profit or
loss:
Foreign currency
translation
effects,
net - - - - (8,553) - 154 - (8,399) 922 (7,477)
Effective portion
of cash flow
hedges,
net - - - - - - 248 - 248 92 340
Changes in fair
value of cost of
hedging,
net - - - - - - (14) - (14) 37 23
Deferred tax on
items above - - - - - - (63) - (63) (34) (97)
Share of joint
ventures &
associates
effective
portion of
cashflow hedges - - - - - - 51 - 51 - 51
Share of joint
ventures &
associates
deferred tax on
cashflow hedges - - - - - - 696 - 696 - 696
Items that will
not be
reclassified
subsequently to
profit or loss:
Revaluation gain
on property,
plant
and equipment,
net - - - - - 409 - - 409 66 475
Remeasurement
gain on employee
benefit
schemes - - - - - - - 6,536 6,536 141 6,677
Deferred tax on
items above - - - - - (108) - (1,065) (1,173) 1 (1,172)
Share of joint
ventures
remeasurement
loss on employee
benefit schemes - - - - - - - (1,867) (1,867) - (1,867)
Share of joint
ventures and
associates
deferred tax on
items above - - - - - - - 854 854 - 854
---------- ---------- ---------------- --------- ------------- -------------- ----------- ------------ ---------- ----------------- ---------------------
Total other
comprehensive
income - - - - (8,553) 301 1,072 4,458 (2,722) 1,225 (1,497)
---------- ---------- ---------------- --------- ------------- -------------- ----------- ------------ ---------- ----------------- ---------------------
Total
comprehensive
income - - - - (8,553) 301 1,072 40,251 33,071 19,236 52,307
---------- ---------- ---------------- --------- ------------- -------------- ----------- ------------ ---------- ----------------- ---------------------
Transactions with
equity holders of
the parent
New shares issued 636 144,658 - - - - (97) (3,790) 141,407 - 141,407
Non-controlling
interest arising
on
acquisition of
subsidiaries - - - - - - - - - 2,314 2,314
Recognition of
put option
liability
on acquisition - - - - - - (896) - (896) - (896)
Fair value
movement on put
option liability - - - - - - 4,728 - 4,728 - 4,728
Acquisition of
non-controlling
interests - - - - - - - (388) (388) (723) (1,111)
Disposal of
shareholding to
non-controlling
interest - - - - - - - 11 11 275 286
Contribution by
non-controlling
interest - - - - - - - - - 130 130
Dividends paid - - - - - - - (13,062) (13,062) (10,638) (23,700)
Share-based
payment
transactions - - - - - - 557 - 557 - 557
---------- ---------- ---------------- --------- ------------- -------------- ----------- ------------ ---------- ----------------- ---------------------
Total
transactions
with equity
holders
of the parent 636 144,658 - - - - 4,292 (17,229) 132,357 (8,642) 123,715
---------- ---------- ---------------- --------- ------------- -------------- ----------- ------------ ---------- ----------------- ---------------------
As at 31 December
2018 4,104 295,421 140 (8,580) (22,721) 28,336 (154,905) 256,654 398,449 117,156 515,605
========== ========== ================ ========= ============= ============== =========== ============ ========== ================= =====================
Transfer of NCI
subject to put
option
for presentation
purposes - - - - - - 34,673 - 34,673 (34,673) -
---------- ---------- ---------------- --------- ------------- -------------- ----------- ------------ ---------- ----------------- ---------------------
As at 31 December
2018 as
presented
in the Balance
Sheet 4,104 295,421 140 (8,580) (22,721) 28,336 (120,232) 256,654 433,122 82,483 515,605
========== ========== ================ ========= ============= ============== =========== ============ ========== ================= =====================
*Other equity reserves comprise the demerger reserve, share
option reserve, cash flow hedge reserve, cost of hedging reserve
and the put option reserve.
Total Produce plc
Extract from the Group Statement of Cash Flows
for the year ended 31 December 2019
2019 2018
EUR'000 EUR'000
Net cash flows from operating activities before
working capital movements 67,249 65,208
Movements in working capital 6,527 (20,265)
------------ -------------
Net cash flows from operating activities (Note
11) 73,776 44,943
Investing activities
Acquisition of subsidiaries (6,683) (2,496)
Cash assumed on acquisition of subsidiaries, net 2,308 3,833
Acquisition of, and investment in joint ventures
and associates (7,145) (251,949)
Payments of contingent consideration (11,103) (7,009)
Acquisition of equity investments (150) -
Proceeds from disposal of joint ventures and associates 48 -
Proceeds from disposal of investments for resale 1,043 -
Cash derecognised on subsidiary becoming a joint
venture (191) -
Disposal of investment in subsidiary to non-controlling
interests - 286
Acquisition of property, plant and equipment (19,518) (25,942)
Expenditure on computer software (4,621) (4,352)
Acquisition of intangible assets - brands - (19)
Development expenditure capitalised (62) (121)
Proceeds from disposal of property, plant and equipment
and software - routine 678 797
Proceeds from disposal of investments and property
- exceptional item 9,307 5,876
Dividends received from joint ventures and associates 10,652 10,908
Government grants received 106 11
Net cash flows from investing activities (25,331) (270,177)
------------ -------------
Financing activities
Drawdown of borrowings 345,764 436,319
Repayment of borrowings (333,211) (329,766)
Lease payments (17,902) -
Proceeds from the issue of share capital, net 67 141,408
Capital element of finance lease repayments - (681)
Acquisition of non-controlling interests (1,656) (490)
Capital contribution by non-controlling interests - 130
Dividends paid to non-controlling interests (16,055) (10,535)
Dividends paid to equity holders of the parent (13,313) (13,062)
Net cash flows from financing activities (36,306) 223,323
------------ -------------
Net decrease in cash, cash equivalents and bank
overdrafts 12,139 (1,911)
Net foreign exchange movement 1,149 5,671
Cash, cash equivalents and bank overdrafts at 1
January 92,739 88,979
------------ -------------
Cash, cash equivalents and overdrafts at end of
year (Note 12) 106,027 92,739
============ =============
Total Produce plc
Extract from the Summary Group Reconciliation of Net Debt
for the year ended 31 December 2019
2019 2018
EUR'000 EUR'000
Net decrease in cash, cash equivalents and bank
overdrafts 12,139 (1,911)
Drawdown of borrowings (345,764) (436,319)
Repayment of borrowings 333,211 329,766
Capital element of finance lease repayments - 681
Other movements on finance leases - (500)
Foreign exchange movement (2,672) 1,666
---------- ----------
Movement in net debt (3,086) (106,617)
Finance lease reclassified from net debt on
adoption of IFRS 16* 1,636 -
Net debt at beginning of the year (219,743) (113,126)
---------- ----------
Net debt at end of the period (221,193) (219,743)
========== ==========
Net debt is a non-IFRS measure which comprises bank deposits,
cash and cash equivalents and current and non-current borrowings.
For 2019 it excludes lease liabilities. The calculation is outlined
on Note 12.
*As described in accounting policy and disclosures changes on
pages 16 to 18, the Group has adopted IFRS 16 Leases with effect
from 1 January 2019.
Total Produce plc
Selected explanatory notes for the Preliminary Results for the year
ended 31 December 2019
1. Basis of preparation
The financial information included in this preliminary results statement
has been extracted from the Group's Financial Statements for the
year ended 31 December 2019 and is prepared based on the accounting
policies set out therein, which are consistent with those applied
in the prior year with the exception of the effect of the new accounting
standards listed below. As permitted by European Union (EU) law and
in accordance with AIM/ESM rules, the Group Financial Statements
have been prepared in accordance with International Financial Reporting
Standards (IFRSs) and their interpretations issued by the International
Accounting Standards Board (IASB) as adopted by the EU.
The financial information prepared in accordance with IFRSs as adopted
by the EU included in this report does not include all the information
and disclosures required in the full statutory financial statements.
The Group Financial Statements will be filed with the Company's annual
return in the Companies Registration Office and circulated to shareholders
in due course.
The information included has been derived from the Group Financial
Statements which were approved by the Board of Directors on 4 March
2020. The auditors have reported on the financial statements for
the year ended 31 December 2019 and their report was unqualified
and did not contain any matters to which attention was drawn by way
of emphasis. The financial information for the year ended 31 December
2018 represents an abbreviated version of the Group's statutory financial
statements on which an unqualified audit report was issued and which
have been filed with the Companies Registration Office. The financial
information is presented in Euro, rounded to the nearest thousand
where applicable.
Changes in accounting policy and disclosures
IFRS 16 Leases
The Group has initially adopted IFRS 16 Leases with effect from 1
January 2019.
IFRS 16 introduces a single lessee accounting model to be adopted
and accordingly the majority of all lease agreements will now result
in the recognition of a right of use asset and a lease liability
on the balance sheet. This will increase the Group's recognised assets
and liabilities. The income statement charge in relation to all leases
will now comprise a depreciation element relating to the right of
use asset and also a financing charge relating to the lease liability.
Lessor accounting remains similar to previous accounting policies.
The Group has applied IFRS 16 using the modified retrospective approach
on transition, under which the cumulative effect of initial application
is recognised in equity as an adjustment to the opening balance of
retained earnings, non-controlling interest and currency translation
reserve at 1 January 2019. The comparative information for prior
periods has not been re-stated. It is presented as previously reported
under IAS 17 and related interpretations. The details of the changes
in accounting policies are disclosed below:
Definition of a lease
Under IFRS 16 a contract is, or contains a lease if the contract
conveys the right to control the use of an identified asset for a
period of time in exchange for consideration. On transition to IFRS
16, the Group used the practical expedient to grandfather the assessment
of which contracts were leases and therefore applied IFRS 16 on transition
only to those contracts that had previously been identified as leases.
Changes as a lessee
As a lessee, the Group previously classified leases as operating
or finance leases based on whether the lease transferred substantially
all of the risks and rewards of ownership. Under IFRS 16, the Group
recognises right of use assets and lease liabilities for most leases
on its balance sheet. However, the Group has elected not to recognise
right of use assets and lease liabilities for some short-term leases
and leases of low-value assets. The Group recognises the lease payments
for these leases as an expense on a straight-line basis over the
lease term.
Accounting policies applied in respect of leases
The Group recognises a right of use asset and a lease liability at
the lease commencement date.
The right of use asset is initially measured at cost and subsequently
at cost less accumulated depreciation and impairments and adjusted
for certain remeasurements of the lease liability. The cost of the
right of use asset includes the lease liability recognised, any initial
direct costs, restoration costs and payments made on or before the
lease commencement date less any lease incentives received. The right
of use asset is depreciated on a straight line basis over the lower
of the lease term and the useful life of the asset. Where the lease
contains a purchase option and the lessee is reasonably certain to
exercise the purchase option the asset is depreciated over the useful
life of the asset. Right of use assets are subject to impairment
testing.
The lease liability is initially measured as the present value of
the lease payments to be made over the term of the lease, discounted
using the rate implicit in the lease or, where this is not available,
the Group's incremental borrowing rate. Lease payments include fixed
and variable lease payments and amounts expected to be paid under
residual value guarantees. Lease payments also include the exercise
price of a purchase option where the Group is reasonably certain
that they will exercise the option and also any termination costs
associated with a lease where the lease term reflects the termination
of the lease.
The lease liability is subsequently increased by the interest cost
of the lease liability and decreased by lease payments made. The
lease liability is remeasured when there is a change in future lease
payments as a result of a change in an index or rate, a change in
the amount expected to be paid under a residual value guarantee,
or a change in the assessment of whether a purchase or termination
option is reasonably expected to be exercised or not exercised. The
Group has availed of the practical expedient not to separate lease
components from any associated non-lease components for leases of
plant and equipment and motor vehicles.
The Group has applied judgement in determining the lease term for
leases where it is the lessee and the lease contract contains renewal
and/or termination options. The assessment of whether the Group is
reasonably certain to exercise such options impacts the lease term
which in turn impacts the right of use asset and lease liability
to be recognised.
Transition
At transition, for leases previously classified as operating leases
under IAS 17, lease liabilities were measured as the present value
of the remaining lease payments, discounted at the incremental borrowing
rate at 1 January 2019. Right of use assets were measured at either:
* their carrying amount if IFRS 16 had been applied
since the commencement date, discounted using the
incremental borrowing rate at 1 January 2019. The
Group applied this approach for certain property
leases; or
* an amount equal to the lease liability, adjusted by
the amount of any prepaid or accrued lease payments.
The Group applied this approach to all other leases.
The Group used the following practical expedients when applying IFRS
16 to leases previously classified as operating leases under IAS
17:
* Applied the exemption not to recognise right of use
assets and lease liabilities for leases with less
than 12 months of a lease term.
* Excluded initial direct costs from measuring the
right of use asset at the date of initial
application.
* Used hindsight when determining the lease term if the
contract contained options to extend or terminate the
lease.
At transition, for leases previously classified as finance leases
under IAS 17, the carrying amount of the right of use asset and lease
liability at 1 January 2019 were determined at the carrying amount
of the lease asset and lease liability under IAS 17 immediately before
that date.
Impact on the financial statements
Impact on transition
On transition to IFRS 16, the Group recognised additional right of
use assets, lease liabilities and restoration provisions with the
difference being recognised in reserves. The impact on transition
is summarised below:
1 January 2019
EUR'000
Right of use assets 115,336
Lease liabilities (121,101)
Restoration provisions (905)
Investment in joint ventures and associates - Dole (3,326)
Prepayments/accruals (net) 1,513
Deferred tax asset 368
Retained earnings 6,937
Non-controlling interests 1,337
Currency translation reserve (159)
When measuring lease liabilities for leases that were classified as
operating leases, the Group discounted lease payments using its incremental
borrowing rate at 1 January 2019. The weighted average rate applied
was 2.6%.
The lease liabilities recognised at 1 January 2019 can be reconciled
to the operating lease commitments as at 31 December 2018 as follows:
EUR'000
Operating lease commitment at 31 December 2018 86,583
Extension options reasonably certain to be exercised 59,416
Non-lease components 3,360
Commitments relating to low value and short-term leases (997)
Lease contracts not commenced at 1 January 2019 (5,635)
Effect of discounting (21,626)
Finance lease liabilities recognised at 31 December
2018 1,636
---------
Lease liabilities at 1 January 2019 122,737
=========
Impact on the income statement in 2019
For subsidiaries in relation to those leases previously classified
as operating leases, under IFRS 16, the Group has recognised depreciation
and interest costs instead of an operating lease expense. During the
year to 31 December 2019 the Group recognised EUR18,576,000 of depreciation
costs and EUR2,957,000 of interest costs from these leases. Under
IAS 17 the operating lease cost associated with these leases would
have been EUR19,777,000.
The Group's share of depreciation costs and of interest costs of joint
ventures and associates from leases that would previously have been
classified as operating leases amounted to EUR28,843,000 and EUR7,847,000
respectively. Under IAS 17 the Group's share of the operating lease
cost associated with these leases would have been EUR34,482,000.
The net incremental impact on Group's profit after tax and non-controlling
interests in the year was a decrease of EUR2,911,000.
The incremental impact of IFRS 16 on fully diluted and adjusted fully
diluted earnings per share for 2019 was a decrease of EUR0.74 cent.
Impact on the balance sheet in 2019
As a result of initially applying IFRS 16, in relation to leases that
were previously classified as operating leases, the Group recognised
EUR111.2m of right of use assets and EUR118.6m of lease liabilities
at 31 December 2019.
The carrying amount of right of use assets are as follows;
Land and Plant Motor
and
buildings equipment vehicles Total
2019 2019 2019 2019
EUR'000 EUR'000 EUR'000 EUR'000
Carrying value at 1 January - - - -
2019
Arising on adoption of IFRS
16 105,372 5,920 4,044 115,336
Reclassification from PPE on
adoption of IFRS 16 - 379 1,521 1,900
Arising on acquisition of subsidiaries 3,256 245 63 3,564
Arising on disposal of a business (645) - - (645)
Additions 8,095 1,070 2,925 12,090
Disposals (427) - (370) (797)
Depreciation (15,003) (1,822) (2,428) (19,253)
Exchange adjustment 826 (43) 54 837
----------- ----------- ---------- ---------
Carrying value at 31 December
2019 101,474 5,749 5,809 113,032
=========== =========== ========== =========
The carrying amount of lease liabilities are as follows:
2019
EUR'000
Reclassification of finance leases on adoption of IFRS 16 1,636
Arising on adoption of IFRS 16 121,101
New leases arising in year 12,090
Arising on acquisition of a business 3,553
Arising on business disposals (654)
Leases terminated (610)
Lease payments (20,897)
Interest 2,995
Foreign exchange movement 862
---------
Balance at 31 December 2019 120,076
=========
2. Translation of foreign currencies
The reporting currency of the Group is Euro. Group results are impacted
by fluctuations in exchange rates year-on-year versus the Euro. The
rates used in the translation of results and balance sheets into
Euro were as follows:
Average rate Closing rate
2019 2018 % change 2019 2018 % change
Brazilian Real 4.4996 4.4162 (1.9%) 4.5157 4.4440 (1.6%)
Canadian Dollar 1.4864 1.5288 2.8% 1.4599 1.5601 6.4%
Czech Koruna 25.6150 25.7000 0.3% 25.4080 25.7240 1.2%
Danish Kroner 7.4647 7.4530 (0.2%) 7.4717 7.4668 (0.1%)
Indian Rupee 78.7716 80.6220 2.3% 79.9301 79.5453 (0.5%)
Polish Zloty 4.2969 4.2601 (0.9%) 4.2551 4.2973 1.0%
Pound Sterling 0.8743 0.8849 1.2% 0.8506 0.8986 5.3%
Swedish Krona 10.5858 10.2695 (3.1%) 10.4778 10.2188 (2.5%)
US Dollar* 1.1173 1.1784 5.2% 1.1216 1.1445 2.0%
-------- -------- --------- -------- -------- ---------
*The average rate used in translating the results of Dole to
Euro in 2019 was 1.1282.
3. Revenue
Revenue
2019 2018
EUR'000 EUR'000
Group Revenue 3,729,346 3,727,591
-------------- --------------
Plus:
Share of revenue of joint ventures - Dole 1,821,400 692,239
Share of revenue of joint ventures - Other 632,934 622,295
Share of revenue of associates 75,687 74,447
Total share of revenue of joint ventures and associates 2,530,021 1,388,981
-------------- --------------
Less:
Elimination of proportionate share of transactions
between Group subsidiaries and joint ventures and
associates (1) (86,172) (73,082)
-------------- --------------
Total Revenue 6,173,195 5,043,490
============== ==============
(1) For calculation of Total Revenue which includes the Group's
share of joint ventures and associates, the Group eliminates the
proportionate share of revenue transactions between Group
subsidiaries and joint ventures and associates.
4. Segmental Analysis
The table below details a segmental breakdown of the Group's total
revenue and adjusted EBITA for the years ended 31 December 2019 and
31 December 2018.
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 the Czech Republic, Poland,
Scandinavia
and the United Kingdom primarily involved in the
procurement,
marketing and distribution of fresh produce. Up to the
middle
of 2019 it also included a small healthfoods business
that has
been discontinued. These operating segments have been
aggregated
because they have similar economic characteristics.
- International : This segment is an aggregation of five
operating
segments in North America, one in South America and one
in India
primarily involved in the procurement, marketing and
distribution
of fresh produce. These operating segments have been
aggregated
because they have similar customer profiles and primarily
transact
in US Dollar.
- Dole: This operating segment represents the Group's 45%
interest
in Dole. Dole is one of the world's leading producers,
marketers
and distributors of fresh fruit and vegetables. It has an
iconic
brand and leading market positions. It is one of the
world's
largest producers of bananas and pineapples and a leader
in other
fresh fruits, value added and fresh-packed vegetables and
berries.
In terms of market share they hold the number one and
three positions
respectively for bananas in North American and Europe and
are
number two and three respectively for pineapples in North
America
and Europe. They sell and distribute throughout a wide
network
in North America, Europe, Latin America, the Middle East
and
Africa.
Segment performance is evaluated based on revenue and adjusted EBITA.
Management believes that adjusted EBITA, while not a defined term
under IFRS, gives 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, unrealised
gains or losses on derivative financial instruments, gains and losses
on foreign currency denominated intercompany borrowings 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 full detail in the analysis that follows.
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.
Year ended Year ended
31 December 2019 31 December 2018
Segmental Third party Adjusted Segmental Third party Adjusted
revenue revenue EBITA revenue revenue EBITA
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Europe - Non-Eurozone 1,502,653 1,477,276 40,610 1,511,780 1,482,600 41,593
Europe - Eurozone 1,638,341 1,614,081 21,780 1,716,584 1,695,773 27,252
International 1,271,566 1,271,566 22,284 1,175,297 1,175,297 18,880
Dole ( (1) 1,821,400 1,810,272 65,440 692,239 689,820 10,297
Inter-segment revenue (60,765) - - (52,410) - -
------------ ------------ --------- ------------ ------------ ---------
Total Group 6,173,195 6,173,195 150,114 5,043,490 5,043,490 98,022
============ ============ ========= ============ ============ =========
All inter-segment revenue transactions are at arm's length
( (1) The Group's share of the adjusted EBITA of Dole above is after
the deduction of the Group's share of the non-controlling interests
charge within Dole and an allocation of corporate overhead.
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:
2019 2018
Note EUR'000 EUR'000
Adjusted EBITA per management reporting 150,114 98,022
Acquisition related intangible asset amortisation
in subsidiaries (i) (10,301) (10,281)
Share of joint ventures and associates acquisition
related intangible asset amortisation (i) (2,696) (2,684)
Fair value movements on contingent consideration (ii) 204 4,043
Acquisition related costs within subsidiaries (iii) (177) (105)
Share of joint ventures and associates net
financial expense (iv) (40,817) (13,784)
Share of joint ventures and associates tax
(before tax on exceptional items) (iv) (14,059) (3,153)
---------- ----------
Operating profit before exceptional items 82,268 72,058
Net financial expense before exceptional
items (v) (10,967) (7,365)
---------- ----------
Profit before tax before exceptional items 71,301 64,693
Exceptional items (Note 5) (vi) 5,232 5,125
---------- ----------
Profit before tax 76,533 69,818
========== ==========
(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) 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.
(vi) Exceptional items (Note 5) are not allocated to operating segments
in the Group's management reports.
5. Exceptional items
2019 2018
EUR'000 EUR'000
(Loss)/gain on disposal of investment (a) (670) 14,728
Restructuring costs and costs associated with termination
of a business (b) (1,146) (4,891)
Share of exceptional items within joint ventures
& associates - Dole (c) 5,523 (4,580)
Foreign currency gains arising on foreign currency
denominated intercompany borrowings relating to
proceeds from share placing (d) - 12,535
Impairment of goodwill (e) - (9,060)
Costs associated with the Dole transactions, net
(f) - (3,225)
Charge on employee defined benefit obligations (g) - (1,304)
Total exceptional items (before share of joint ventures
and associates' tax) 3,707 4,203
Share of joint ventures and associates' tax on exceptional
items - Dole (c) 1,525 922
--------- ---------
Exceptional items within profit before tax* 5,232 5,125
Net tax charge on exceptional items (h) (47) (1,395)
--------- ---------
Total net of tax 5,185 3,730
========= =========
Attributable as follows:
Equity holders of the parent 5,246 560
Non-controlling interests (61) 3,170
--------- ---------
5,185 3,730
========= =========
*Of the EUR5.2m net exceptional credit in 2019, EUR1.8m has been recognised
as net operating expense and EUR7.0m a net exceptional gain has been
recognised within profits of joint ventures and associates. Of the
EUR5.1m net exceptional gain in 2018, EUR9.5m has been recognised
as net operating income, EUR3.7m has been recognised as a loss within
joint ventures and associates and EUR0.7m recognised as an exceptional
financial expense.
(a) (Loss)/gain on disposal of equity/farming investment
In 2018 a subsidiary of the Group disposed of an interest in a farming
entity for consideration of shares in an equity investment which was
to be realised over a period of two to three years and could vary
depending on certain circumstances. The exceptional loss of EUR0.7m
in 2019 represents the gain on the equity investments sold in the
year less the fair value movement on the remaining equity investment
and any associated costs. The exceptional gain of EUR14.7m in 2018
represented the gain on the disposal of the investments that were
received at that date, the fair value movement on the investment held
in escrow at 31 December 2018 and net of all associated costs.
(b) Restructuring costs and costs associated with termination and
disposal of businesses
In the second half of 2019, the Group incurred losses of EUR0.6m on
the disposal of and termination of two small businesses in the Non-Eurozone
Division. Restructuring charges of EUR0.5m were incurred in the year
on ongoing restructuring programs in the Eurozone Division.
In the second half of 2018, the Group ceased operations in a non-performing
sports supplements business in the UK. The total costs associated
with the termination of this business were EUR2.3m including the write
off of fixed assets, intangible assets, other assets and redundancies.
The Group implemented restructuring programmes in a number of entities
primarily within the Eurozone Division in late 2018 with the EUR2.6m
of costs associated with these programmes being recorded as an exceptional
cost in the income statement.
(c) Share of exceptional items within joint ventures and associates
- Dole
The Group's share of the exceptional items in Dole in 2019 was a net
gain of EUR5.5m (5 month period ended 29 December 2018 was a loss
of EUR4.6m). The share of the associated tax credit was EUR1.5m (2018:
EUR0.9m).
Included in these exceptional items are net gains of EUR11.8m (2018:
EURnil) on disposals of businesses/assets, net gains of EUR0.1m (2018:
EURnil) on mark to market of derivative financial instruments and
foreign currency gains/losses on long term foreign currency denominated
intercompany borrowings, net restructuring charges of EUR4.1m (2018:
EUR2.5m), transaction costs of EUR0.6m (2018: EUR0.6m) and costs of
EUR1.7m (2018: EUR1.5m) associated with industry wide product recalls.
(d) Foreign currency gains on foreign currency intercompany borrowings
relating to proceeds from share placing
In February 2018 the Group issued 63 million new ordinary shares,
raising proceeds of EUR141m (net of associated costs) to finance the
Dole transaction. The net proceeds from this share placing were used,
via an intercompany loan, to purchase US Dollars in February. The
strengthening of the US Dollar from the date of purchase to when the
intercompany loan was converted to equity in August 2018 following
the completion of the acquisition of Dole resulted in a foreign currency
gain of EUR12.5m.
(e) Impairment of goodwill
In December 2018 the Group recognised a non-cash impairment charge
of EUR9.1m in relation to its fresh produce business in the Netherlands
which have experienced a difficult trading environment resulting in
a slower recovery than had been anticipated.
(f) Costs associated with the Dole transactions, net
Costs associated with the committed financing and other transaction
costs associated with Dole net of interest income on the proceeds
of share placing were EUR0.9m in the period to 30 June 2018 and totalled
EUR3.2m in the year ended 31 December 2018.
(g) Charge on employee benefit obligations
In December 2018, a charge of EUR1.3m relating to the UK defined benefit
pension schemes was recognised in the income statement as a result
of the UK High Court ruling that pension benefits must be equalised
in respect of Guaranteed Minimum Pensions (GMPs) accrued between 17
May 1990 and 5 April 1997.
(h) Tax credit / (charge) on exceptional items
The net tax effect on the exceptional items above was a net charge
of less than EUR0.1m (2018: a charge of EUR1.4m).
Effect of exceptional items on cash flow statement
The net effect of the items above was a net cash inflow of EUR5.8m
in the year (2018: EUR3.0m) including cashflows relating to prior
period exceptional items.
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.
2019 2018
EUR'000 EUR'000
Profit attributable to equity holders of the
parent 53,302 35,793
=================== =========
'000 '000
Shares in issue at beginning of year 410,429 346,829
New shares issued from exercise of share options
(weighted average) 51 275
New shares issued from share placing (weighted
average) - 56,786
Shares repurchased by company (weighted average) (2) -
Effect of treasury shares held (22,000) (22,000)
------------------- ---------
Weighted average number of shares 388,478 381,890
=================== =========
Basic earnings per share - cent 13.72 9.37
=================== =========
Diluted earnings per share
Diluted 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 after adjustment
for the effects of all ordinary shares and options with a dilutive
effect.
2019 2018
EUR'000 EUR'000
Profit attributable to equity holders of the parent 53,302 35,793
========== =========
'000 '000
Weighted average number of shares 388,478 381,890
Effect of share options with a dilutive effect 817 1,257
---------- ---------
Weighted average number of shares (diluted) 389,295 383,147
========== =========
Diluted earnings per share - cent 13.69 9.34
========== =========
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 basic earnings per share and 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, unrealised gains or losses on
derivative financial instruments, gains and losses on foreign currency
denominated intercompany borrowings and exceptional items and the related
tax on these items.
Adjusted basic earnings per share is calculated by dividing the adjusted
profit attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year, excluding shares
purchased by the company which are held as treasury shares.
Adjusted fully diluted earnings per share is calculated by dividing
the adjusted profit attributable to ordinary shareholders by the weighted
average number of ordinary shares outstanding after adjustment for
the effects of all ordinary shares and options with a dilutive effect.
2019 2018
EUR'000 EUR'000
Profit attributable to equity holders of the parent 53,302 35,793
Adjustments:
Exceptional items - net of tax (Note 5) (5,185) (3,730)
Acquisition related intangible asset amortisation
within subsidiaries 10,301 10,281
Share of joint ventures and associates acquisition
related intangible asset amortisation 2,696 2,684
Acquisition related costs within subsidiaries 177 105
Fair value movements on contingent consideration (204) (4,043)
Tax effect of amortisation of goodwill, intangible
assets and fair value movements on contingent
consideration (3,188) (805)
Non-controlling interests share of the items above (2,915) 1
Adjusted profit attributable to equity holders
of the parent 54,984 40,286
=========== =========
'000 '000
Weighted average number of shares 388,478 381,890
Weighted average number of shares (diluted) 389,295 383,147
Adjusted basic earnings per share - cent 14.15 10.55
=========== =========
Adjusted fully diluted earnings per share - cent 14.12 10.51
=========== =========
Adjusted fully diluted earnings per share (pre-IFRS
16 leases) - cent (calculation presented
on page 35) 14.86 10.51
=========== =========
Memo item for 2018
Adjusted fully diluted earnings per share - cent
(excluding the effect of the Dole acquisition
and related share placing n/a 13.50
=========== =========
*The calculation presented here is the adjusted fully diluted
earnings per share calculating excluding the impact of the Dole
acquisition and the related 63 million related share placing in
early February 2018.
7. Investment in Dole
As disclosed previously, on 31 July 2018 the Group completed the transaction
to acquire a 45% stake in Dole Food Company ('Dole') for $300m.
In addition, and at any time after closing of the First Tranche, the
Group has the right, but not the obligation, to acquire (in any one
or more tranches of 1%) up to an additional 6% of Dole common stock
(the 'Second Tranche'). In the event the Group exercises the right to
acquire the additional 6%, the total consideration for the 51% stake
shall be $312 million.
Following the second anniversary of the closing of the First Tranche,
the Group has the right, but not the obligation, to acquire the balance
of Dole common stock (the 'Third Tranche'), whereby the consideration
for the Third Tranche is to be calculated based on nine times the preceding
three year average historical Dole Adjusted EBITDA less net debt. However,
in no event shall the Third Tranche purchase price be less than $250
million or exceed $450 million (such cap subject to increase after six
years). The Third Tranche consideration is payable in cash or, if the
parties mutually agree, Total Produce stock.
From the fifth anniversary of completion of the acquisition of the First
Tranche, in the event the Group has not exercised its right to acquire
100% of Dole, Mr. David H. Murdock is permitted to cause a process to
market and sell 100% of Dole common stock.
On completion of the acquisition of the First Tranche on 31 July 2018,
the Group and Mr. David H. Murdock have balanced governance rights with
respect to Dole. The Board of Directors of Dole comprises of six members,
three of which are appointed by Total Produce and three by Mr. David
H. Murdock. Mr. David H. Murdock remains Chairman of Dole and Mr. Carl
McCann was appointed Vice Chairman. Major decisions require consent
of at least one Board Member appointed by each of Total Produce and
Mr. David H. Murdock.
The investment in Dole and its financial contribution is being treated
as a joint venture and accounted for under the equity method in accordance
with IFRS in the consolidated Group accounts following completion of
the acquisition of the First Tranche on 31 July 2018 and until an exercise
of the Third Tranche.
Total Produce is therefore equity accounting for its 45% share of the
results of Dole with effect from 1 August 2018. The overall business
is seasonal with the greater share of EBITDA in the first half of the
financial year. The 2019 financial year is therefore the first full
year reflecting this transaction.
The table below summarises the consideration paid and fair value of
the net identifiable assets of Dole on acquisition as prepared in accordance
with IFRS. The initial assignment of fair values to net assets for this
investment was performed on a provisional basis in respect of this acquisition
given the timing of completion of the transaction and could be finalised
within twelve months from the acquisition date. A number of adjustments
were identified and are presented in the table below. There was no income
statement impact from these adjustments in the period from date of acquisition
to 31 December 2018. Given that the adjustments are all equity accounted
for within investment in joint ventures and associates on the Balance
Sheet, no adjustment was required in the Total Produce Group Balance
Sheet.
Updated within Provisional
12-month period acquisition
accounting
2018 2018 2018 2018
Consideration paid US$'000 EUR'000 US$'000 EUR'000
Cash consideration 300,000 256,208 300,000 256,208
Acquisition fees (net of contribution
from Dole) (a) 1,605 1,370 1,605 1,370
Fair value of Second Tranche Option
(b) (4,940) (4,218) (4,940) (4,218)
------------ ------------ ------------- ------------
Total cost of acquisition 296,665 253,360 296,665 253,360
------------ ------------ ------------- ------------
Fair value of indemnification assets
on acquisition(c) (4,106) (3,507) (4,106) (3,507)
------------ ------------ ------------- ------------
Total deemed cost of acquisition 292,559 249,853 292,559 249,853
------------ ------------ ------------- ------------
Fair value identifiable assets and
liabilities on acquisition
Intangible assets - Brand 287,033 245,135 287,033 245,135
Property, plant and equipment 1,007,623 860,539 1,007,623 860,539
Assets held for sale / Actively marketed
property 185,178 158,148 185,178 158,148
Other non-current assets 104,541 89,281 104,541 89,281
Other current assets 868,558 741,774 868,558 741,774
Net debt (1,342,601) (1,146,621) (1,342,601) (1,146,621)
Employee benefit obligations (183,532) (156,742) (183,532) (156,742)
Other current liabilities (599,132) (511,676) (599,132) (511,676)
Other non-current liabilities (282,197) (241,005) (286,085) (244,325)
Non-controlling interests (7,978) (6,813) (7,978) (6,813)
------------ ------------ ------------- ------------
Fair value of identifiable assets and
liabilities on acquisition 37,493 32,020 33,605 28,700
------------ ------------ ------------- ------------
Group 45% share of identifiable assets
& liabilities on acquisition 16,872 14,409 15,122 12,915
------------ ------------ ------------- ------------
Goodwill arising 275,687 235,444 277,437 236,938
------------ ------------ ------------- ------------
(a) As part of the Securities Purchase Agreement, Dole agreed to contribute
$15m to cover professional and advisory fees relating to the transaction.
(b) As part of the provisions of acquisition accounting, a fair value
was determined for the Second Tranche Option which is recognised as
a current derivative financial asset in the Total Produce Group balance
sheet and correspondingly reduces the deemed cost of the acquisition
of the First Tranche. The fair value of the Third Tranche Option was
not deemed material at the date of acquisition.
(c) As part of the Securities Purchase Agreement, the seller provided
indemnities against certain liabilities outstanding at the date of
acquisition. The fair value of these indemnities was recognised as
a long-term asset in the Total Produce Group balance sheet with a corresponding
reduction in the deemed cost of the acquisition.
Summary of financial information for year ended 28 December 2019
The following is the summarised financial information of Dole for the
year ended 28 December 2019 and the 5-month period ended 29 December
2018 based on consolidated financial statements prepared under IFRS,
modified for fair value adjustments on acquisition and differences
in the Group's accounting policies.
Summary income statement for year ended 28 December 2019 (in USD'000)
Year ended 28 December 5 months ended 29 December
2019 2018
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Pre-exceptional Exceptional Pre-exceptional Exceptional
Items Total Items Total
Revenue 4,566,354 - 4,566,354 1,766,625 - 1,766,625
Operating profit 173,790 13,846 187,636 27,252 (11,689) 15,563
Net finance
expense (78,369) - (78,369) (32,349) - (32,349)
Leasing interest
-IFRS
16 (19,284) - (19,284) - - -
---------------- ------------ ------------------ ---------------- ------------ -------------
Profit/(loss)
before
tax 76,137 13,846 89,983 (5,097) (11,689) (16,786)
Income tax (25,477) 3,823 (21,654) (812) 2,352 1,540
---------------- ------------ ------------------ ---------------- ------------ -------------
Profit/(loss) for
period 50,660 17,669 68,329 (5,909) (9,337) (15,246)
Non-controlling
interests (2,205) - (2,205) (974) - (974)
---------------- ------------ ------------------ ---------------- ------------ -------------
Profit/(loss) for
period
attributable to
equity
shareholders 48,455 17,669 66,124 (6,883) (9,337) (16,220)
================ ============ ================== ================ ============ =============
Groups' 45% share
of
profit/(loss)
attributable
to equity
shareholders 21,805 7,951 29,756 (3,097) (4,202) (7,299)
================ ============ ================== ================ ============ =============
Summary of other comprehensive income statement for the for year ended
28 December 2019 (in USD'000)
2019 2018
US$'000 US$'000
Effective portion of cashflow hedges,
net of recycling (12,753) 239
Remeasurement loss on employee benefit
schemes (6,459) (4,764)
Revaluation gain on property, plant 3,411 -
and equipment
Deferred tax on items above 1,048 3,927
Foreign currency translation effects (8,015) (7,908)
------------------ -----------
Remeasurement loss on employee benefit
schemes (22,768) (8,506)
Non-controlling interests share - -
------------------ -----------
Attributable to equity shareholders (22,768) (8,506)
================== ===========
Group's 45% share of other comprehensive
expense attributable to equity shareholders (10,246) (3,828)
================== ===========
Summary income statement for year ended 28 December 2019 (in EUR'000)
12 months ended 28 December 5 months ended 29 December
2019 2018
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Pre-exceptional Exceptional Pre-exceptional Exceptional
Items Total items Total
Revenue 4,047,555 - 4,047,555 1,538,309 - 1,538,309
Operating profit 154,044 12,274 166,318 23,730 (10,178) 13,552
Net finance expense (69,465) - (69,465) (28,168) - (28,168)
IFRS 16 leasing interest (17,093) - (17,093) - - -
---------------- ------------ ---------- ---------------- ------------ -----------
Profit/(loss) before
tax 67,486 12,274 79,760 (4,438) (10,178) (14,616)
Income tax (22,582) 3,388 (19,194) (707) 2,048 1,341
---------------- ------------ ---------- ---------------- ------------ -----------
Profit/(loss) for period 44,904 15,662 60,566 (5,145) (8,130) (13,275)
Non-controlling interests (1,954) - (1,954) (848) - (848)
---------------- ------------ ---------- ---------------- ------------ -----------
Profit/(loss) for period
attributable to equity
shareholders 42,950 15,662 58,612 (5,993) (8,130) (14,123)
================ ============ ========== ================ ============ ===========
Groups' 45% share of
profit/(loss)
attributable
to equity shareholders 19,327 7,048 26,375 (2,697) (3,658) (6,355)
================ ============ ========== ================ ============ ===========
Summary of other comprehensive income statement for year ended 28 December
2019 (in EUR'000)
2019 2018
EUR'000 EUR'000
Effective portion of cashflow hedges,
net of recycling (11,414) 208
Remeasurement loss on employee benefit
schemes (5,781) (4,148)
Revaluation gain on property, plant 3,041 -
and equipment
Deferred tax on items above 938 3,419
Foreign currency translation effects (7,174) (6,885)
----------- ---------
Effective portion of cashflow hedges,
net of recycling (20,389) (7,406)
Non-controlling interests share - -
----------- ---------
Attributable to equity shareholders (20,390) (7,406)
=========== =========
Group's 45% share of other comprehensive
expense attributable to equity shareholders (9,175) (3,333)
=========== =========
Key performance indicators for the year ended 28 December 2019
5 months 5 months
Year-ended ended Year-ended ended
28 December 29 December 28 December 29 December
2019 2018 2019 2018
US$'000 US'000 EUR'000 EUR'000
Adjusted EBITDA (adding back depreciation
of right of use assets) 307,724 n/a 272,762 n/a
Adjusted EBITDA 245,013 59,449 217,176 51,675
Adjusted EBITA 173,790 27,252 154,045 23,730
Impact of IFRS 16 on Dole
Impact on transition
As explained in Note 1, the Group has adopted IFRS 16 Leases using
the modified retrospective approach, with the date of initial application
of 1 January 2019. On transition to IFRS 16, the Group recognised additional
right of use assets, lease liabilities and restoration provisions with
the difference being recognised in reserves. The impact on transition
in Dole is summarised as follows:
2019
US$'m
Right of use assets 315
Lease liabilities (325)
Prepaid/deferred rent (net) (1)
Deferred tax asset 3
Retained earnings 8
Impact for the period ended 28 December 2019
As a result of applying IFRS 16 to leases that were previously classified
as operating leases, the Group has recognised depreciation and interest
costs instead of an operating lease expense. During the year ended
28 December 2019, Dole recognised US$63m of depreciation costs and
US$18m of interest costs from these leases. Under IAS 17 the operating
lease costs associated with these leases would have been US$76m.
Right of use assets
The following is a reconciliation of the total right of use
lease assets in the year in Dole;
2019
US$'m
Opening balance at 29 December 2018 -
Reclassification of assets held under finance leases
from property, plant and equipment on adoption
of IFRS 16 21
Arising on adoption of IFRS 16 315
Additions, disposals, foreign exchange (net) 14
Depreciation charge to income statement (62)
Depreciation capitalised as crop growing costs (9)
Closing value at 28 December 2019 279
=======
Lease liabilities
The following is a reconciliation of the total right of use
liabilities in the year in Dole.
2019
US$'m
Opening balance at 29 December 2018 -
Reclassification of finance leases on adoption of IFRS
16 22
Arising on adoption of IFRS 16 325
Payments during period (90)
Interest charge to income statement 20
Interest expense capitalised as crop growing costs 3
Additions, disposals, foreign currency (net) 14
Closing value at 28 December 2019 294
======
Summary Balance Sheet of Dole at 28
December 2019
2019 2018* 2019 2018*
US$'000 US$'000 EUR'000 EUR'000
Intangible assets - Brand 285,540 286,299 254,592 250,155
Property, plant and equipment 1,069,546 1,045,465 953,622 913,477
Right of use assets 279,068 - 248,821 -
Assets held for sale / Actively marketed
property 64,760 102,730 57,741 89,760
Other non-current assets 107,753 113,058 96,074 98,784
Other current assets 862,588 863,439 769,096 754,431
Net debt (1,287,328) (1,349,976) (1,147,800) (1,179,545)
Lease liabilities (294,034) - (262,165) -
Employee benefit obligations (175,059) (185,734) (156,085) (162,286)
Other non-current liabilities (238,636) (261,258) (212,771) (228,275)
Other current liabilities (617,365) (592,726) (550,452) (517,892)
Non-controlling interests (9,170) (8,531) (8,176) (7,454)
------------ ------------ ------------ ------------
Fair value of net assets attributable
to equity shareholders 47,663 12,766 42,497 11,155
------------ ------------ ------------ ------------
Group 45% share of net assets 21,448 5,745 19,124 5,020
Goodwill 275,687 275,687 245,769 240,861
------------ ------------ ------------ ------------
Total carrying amount of 45% interest
in Dole 297,135 281,432 264,893 245,881
------------ ------------ ------------ ------------
*As explained on page 24, the fair value of the net identifiable
assets on Dole were revised and finalised with twelve months from
the acquisition date.
Reconciliation of Group's carrying value of investment
in Dole
2019 2018 2019 2018
US$'000 US$'000 EUR'000 EUR'000
Opening carrying value of 45% interest
in Dole at start of year 281,432 - 245,881 -
Retained earnings adjustment on transition
to IFRS 16 (3,807) - (3,326) -
Arising on acquisition - 292,559 - 249,853
Group share of profit for period attributable
to equity shareholders 29,756 (7,299) 26,375 (6,355)
Group share of other comprehensive expense
for period attributable to equity shareholders (10,246) (3,828) (9,175) (3,333)
Foreign exchange movement - - 5,138 5,716
----------- ----------
Total carrying value of 45% interest
in Dole at end of year 297,135 281,432 264,893 245,881
----------- ---------- ---------- ----------
8. Employee benefit obligations
2019 2018
EUR'000 EUR'000
Employee defined benefit pension schemes obligations (10,828) (10,941)
Other post-employment obligations (5,908) (5,023)
-------------------- --------------------
(16,736) (15,964)
==================== ====================
Employee defined benefit pension schemes
2019 2018
EUR'000 EUR'000
Pension assets 192,227 168,766
Pension obligations (203,055) (179,707)
---------- ----------
Net liability at end of year (10,828) (10,941)
Net related deferred tax asset 1,479 1,889
---------- ----------
Net liability after tax at end of year (9,349) (9,052)
========== ==========
Analysis of movement in the year
Net liability at beginning of year (10,941) (16,707)
Net interest expense and service costs recognised
in the income statement (1,677) (2,035)
Exceptional charge in the income statement - (1,304)
Employer contributions to schemes - normal 4,866 2,693
Remeasurement gains recognised in other comprehensive
income (2,683) 6,323
Translation adjustment (393) 89
---------- ----------
Net liability at end of year before deferred tax (10,828) (10,941)
========== ==========
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 31 December 2019 reflects net pension
liabilities of EUR10.8m (2018: EUR10.9m) in respect of schemes in
deficit, resulting in a net deficit of EUR9.3m (2018: EUR9.1m) after
deferred tax.
The current and past service costs 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.
On 26 October 2018, the UK High Court ruled (in a landmark case relating
to the Lloyds Banking Group's pension schemes) that pension benefits
must be equalised in respect of Guaranteed Minimum Pensions (GMPs)
accrued between 17 May 1990 and 5 April 1997. The calculation of the
GMP equalisation adjustment required is complex with each pension
having to be equalised. In 2018, the Group engaged the services of
an actuary to perform a preliminary estimate of the impact of GMP,
and the estimated charge of EUR1.3m was recognised as a past service
cost in the 2018 income statement and classified as an exceptional
item.
The pension deficit of EUR10.8m at 31 December 2019 was a marginal
reduction on the deficit of EUR10.9m at 31 December 2018. There was
an 11% average return on pension scheme assets in the year and a reduction
in both the Irish and UK inflation assumptions which decreases the
net present value of the scheme's obligations. This was offset by
the impact of a reduction in the discount rates for the Irish and
UK schemes which results in an increase in the net present value of
the schemes' obligations. The discount rate in Ireland and the Eurozone
decreased to 1.4% (2018: 2.1%) and in the UK decreased to 2.0% (2018:
2.9% - 3.0%). The inflation assumption for Ireland and the Eurozone
decreased to 1.4% (2018: 1.60%) and in the UK decreased to 2.7% (2018:
3.2%).
9. Dividends
2019 2018
EUR'000 EUR'000
Dividends paid on Ordinary Euro 1 cent shares
Final dividend for 2018 of 2.5140 cent (2017: 2.4527
cent) 9,767 9,517
Interim dividend for 2019 of 0.9129 cent per share
(2018: 0.9129 cent) 3,546 3,545
Total dividend paid in the year 13,313 13,062
========== =========
Total dividend per share paid in the year 3.4269 3.3656
========== =========
The Board is proposing a 2.5% increase in the final dividend to 2.5770
cent per share (2018: 2.5140 cent), subject to approval at the forthcoming
AGM. If approved, this dividend will be paid on 20 May 2020 to shareholders
on the register at 14 April 2020 subject to dividend withholding tax.
The total dividend for 2019 will amount to 3.4899 (2018: 3.4269) cent
per share and represents an increase of 1.8% on 2018. In accordance
with IFRS, this dividend has not been provided for in the Balance
Sheet at 31 December 2019.
During the year dividends of EUR16,055,000 (2018: EUR10,535,000) were
paid to non-controlling interests.
10. Businesses acquired and other developments in 2019
Investments in subsidiaries
A key part of the Group's strategy is to grow by acquisition. During
the year, the Group made a number of bolt-on acquisitions and investments
in the fresh produce sector in Europe with committed investment of
EUR8.3m including EUR1.5m of contingent consideration payable on the
achievement of future profit targets and deferred consideration of
EUR0.1m. Goodwill arising on these acquisitions amounts to EUR3.6m.
The principal factor contributing to the recognition of the goodwill
is the realisation of costs savings and synergies expected to be achieved
for integrating the acquired entities, and the value and skills of
the assembled workforce in the acquired entities.
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 .
2019 2018
EUR'000 EUR'000
Consideration paid and payable
Cash consideration 6,683 2,496
Contingent consideration 1,461 1,126
Deferred consideration 114 -
Total fair value of consideration 8,258 3,622
============== =====================================
Identifiable assets acquired and liabilities assumed
Property, plant and equipment 1,054 2,422
Right of use assets 3,564 -
Investment property - 223
Intangible assets 3,015 904
Inventories 590 945
Trade and other receivables 9,859 9,794
Cash, and cash equivalents 2,308 3,833
Lease liabilities (3,553) -
Corporation tax 58 (92)
Trade and other payables (10,921) (11,007)
Deferred tax asset 74 55
Deferred tax liability (398) (130)
Fair value of net identifiable assets and liabilities
acquired 5,650 6,947
============== =====================================
Non-controlling interests arising on acquisition
Non-controlling interests measured at fair value - 157
Non-controlling interests measured at share of
net assets 959 2,157
-------------- -------------------------------------
Total value of non-controlling interests arising
on acquisition 959 2,314
============== =====================================
Goodwill calculation
Fair value of consideration 8,258 3,622
Fair value of pre-existing interest in acquiree - 2,760
Fair value of net identifiable assets and liabilities
acquired (5,650) (6,947)
Non-controlling interest arising on acquisition 959 2,314
-------------- -------------------------------------
Goodwill arising 3,567 1,749
============== =====================================
Cash flows relating to acquisition of subsidiaries
2019 2018
EUR'000 EUR'000
Cash consideration for acquisition of subsidiary
undertakings (6,683) (2,496)
Cash, cash equivalents and bank overdrafts acquired 2,308 3,833
-------------- -------------------------------------
Cash (outflow)/inflow per statement of cash flows (4,375) 1,337
============== =====================================
The Group incurred acquisition related costs of EUR177,000 on legal
and professional fees and due diligence in respect of completed acquisitions.
These costs have been included within operating expenses in the year.
Payment of contingent and deferred consideration
In 2019, the Group paid EUR11.1m contingent consideration relating
to prior period acquisitions.
Investments in joint ventures and associates
In 2019, the Group invested EUR1.7m in existing joint ventures and
associates.
11. Cash generated from operations
2019 2018
EUR'000 EUR'000
Operating activities
Profit for the year 66,204 53,804
Non-cash adjustments to reconcile profit to net
cash flows:
Income tax expense 10,329 16,014
Income tax paid (15,154) (13,349)
Depreciation of property, plant and equipment 17,773 17,194
Depreciation of right of use assets 19,253 -
Exceptional items 1,816 (9,450)
Exceptional cash flow (3,489) (2,884)
Fair value movements on contingent consideration (204) (4,043)
Amortisation of intangible assets - acquisition
related 10,301 10,281
Amortisation of intangible assets - development
costs capitalised 238 267
Amortisation of intangible assets - computer
software 2,046 1,397
Amortisation of government grants (63) (75)
Defined benefit pension scheme expense - normal 1,677 2,035
Contributions to defined benefit pension schemes
- normal (4,866) (2,693)
Other post-employment benefit scheme expense 451 442
Contributions - other employee benefit schemes (249) (168)
Share-based payment expense 109 557
Net gain on disposal of property, plant and equipment (313) (492)
Currency recycled to income statement on joint
venture becoming subsidiary - 90
Movement in provisions (489) -
Fair value gain on investments (854) -
Financial income (2,754) (3,704)
Financial expense 13,721 11,736
Financial income received excluding exceptional
items 2,005 2,245
Financial expense paid excluding exceptional
items (13,149) (9,418)
Gain on non-hedging derivative financial instruments (115) (59)
Loss on termination of IFRS 16 leased assets 146 -
Gain on disposal of joint venture (88) -
Fair value movements on biological assets 666 (6)
Share of profit of joint ventures (37,033) (2,330)
Share of profit of associates (666) (2,183)
Net cash flows from operating activities before
working capital movements 67,249 65,208
-------------------- --------------------
Movements in working capital:
Movements in inventories (6,091) 1,179
Movements in biological assets 530 (851)
Movements in trade and other receivables 27,342 (23,571)
Movements in trade and other payables (15,254) 2,978
-------------------- --------------------
Total movements in working capital 6,527 (20,265)
-------------------- --------------------
Net cash flows from operating activities 73,776 44,943
-------------------- --------------------
12. Analysis of Net Debt and Cash and Cash Equivalents
Net debt is a non-IFRS measure which comprises cash and cash equivalents
and current and non-current interest-bearing loans and borrowings.
For 2019 it excludes leases liabilities. For 2018 it includes finance
lease liabilities. The calculation of net debt at 31 December 2019
and 31 December 2018 is as follows:
2019 2018
EUR'000 EUR'000
Current assets
Cash and cash equivalents 99,445 91,099
Call deposits (demand balances) 16,084 11,200
Current liabilities
Bank overdrafts (9,502) (9,560)
Current bank borrowings (76,648) (48,658)
Current finance leases - (468)
Non-current liabilities
Non-current bank borrowing (250,572) (262,188)
Non-current finance leases - (1,168)
------------------------------------------------ ------------
Net debt at end of year (221,193) (219,743)
================================================ ============
Average net debt
Average net debt for 2019 was EUR284,019,000 (2018: EUR217,114,000).
Trade receivables financing
The Group has a number of sales of receivables arrangements. Under
the terms of these agreements, the Group has transferred substantially
all of the credit risk of these trade receivables which are subject
to these agreements. Accordingly EUR46,409,000 (2018: EUR29,967,000)
has been derecognised at 31 December 2019.
Reconciliation of cash and cash equivalents per balance sheet to cash
flow statement
2019 2018
EUR'000 EUR'000
Cash and cash equivalents per balance sheet 115,529 102,299
Bank overdrafts (9,502) (9,560)
------------------------------------------------ ----------
Cash, cash equivalents and bank overdrafts per
cash
flow statement 106,027 92,739
================================================ ==========
13. Post balance sheet events
There have been no other material events subsequent to 31 December
2019 which would require disclosure or adjustment in the financial
statements.
14. Related party transactions
There have been no related party transactions or changes to related
party transactions other than those described in the 2018 Annual Report
that materially affect the financial position or the performance of
the Group for the year ended 31 December 2019.
15. Board approval
This announcement was approved by the Board of Directors of Total
Produce plc on 4 March 2020.
Alternative Performance Measures (APM's)
The Group uses a number of alternative performance measures
('APMs') that are not required under International Financial
Reporting Standards ('IFRS') which represent the generally accepted
accounting principles ('GAAP') under which the Group reports. These
measures are referred to throughout the discussion of our reported
operating performance and financial position and are measures which
are regularly reviewed by Group management. The Group believes that
the presentation of these APM's provide useful supplementary
information which, when viewed with the IFRS financial information
provides investors with a more meaningful understanding of the
underlying financial and operating performance of the Group.
These APM's may not be uniformly defined by all companies and
accordingly they may not be directly comparable with similarly
titled measures and disclosures by other companies. These APM's
should not be viewed in isolation or as an alternative to the
equivalent GAAP measures.
The principal APM's used by the Groups together with the
reconciliation where the non-GAAP measures are not readily
identifiable from the financial statements are as follows;
Total revenue
Definition
Total revenue includes the Group's share of the revenue of its
joint ventures and associates. The calculation is presented in Note
3 of the accompanying financial information.
Adjusted EBITDA
Definition
Earnings before interest, tax, depreciation on property, plant
and equipment, acquisition related intangible asset amortisation
charges and costs, fair value movements on contingent
consideration, unrealised gains or losses on derivative financial
instruments, gains and losses on foreign currency denominated
intercompany borrowings and exceptional items. It also excludes the
Group's share of these items within joint ventures and associates.
The calculation is presented in the table below.
Adjusted EBITDA (after add back of right of use asset
depreciation)
Definition
E arnings before interest, tax, depreciation on property, plant
and equipment, depreciation on right of use assets, acquisition
related intangible asset amortisation charges and costs, fair value
movements on contingent consideration, unrealised gains or losses
on derivative financial instruments, gains and losses on foreign
currency denominated intercompany borrowings and exceptional items.
It also excludes the Group's share of these items within joint
ventures and associates. The calculation is presented in the table
below.
Adjusted EBITA
Definition
E arnings before interest, tax, acquisition related intangible
asset amortisation charges and costs, fair value movements on
contingent consideration, unrealised gains or losses on derivative
financial instruments, gains and losses on foreign currency
denominated intercompany borrowings and exceptional items. It also
excludes the Group's share of these items within joint ventures and
associates. The calculation is presented in the table below.
Adjusted profit before tax
Definition
E xcludes acquisition related intangible asset amortisation
charges and costs, fair value movements on contingent
consideration, unrealised gains or losses on derivative financial
instruments, gains and losses on foreign currency denominated
intercompany borrowings and exceptional items. It also excludes the
Group's share of these items within joint ventures and associates.
The calculation is presented in the table below.
Alternative Performance Measures (APM's) (continued)
Calculation Reference 2019 2018
in Preliminary
FS
EUR'000 EUR'000
Profit before tax per income statement Income Statement 76,533 69,818
Adjustments
Exceptional items Note 5 (5,232) (5,125)
Fair value movements on contingent consideration Note 4 (204) (4,043)
Share of joint ventures and associates'
tax (before tax on exceptional items) Note 4 14,059 3,153
Acquisition related intangible asset amortisation
within subsidiaries Note 4 10,301 10,281
Share of joint ventures and associates acquisition
related intangible asset amortisation Note 4 2,696 2,684
Acquisition related costs within subsidiaries Income Statement 177 105
-------- --------
Adjusted profit before tax 98,330 76,873
-------- --------
Exclude
Net financial expense - subsidiaries before
exceptional items Income Statement 10,967 7,365
Net financial expense - share of joint ventures
and associates Note 4 40,817 13,784
-------- --------
Adjusted EBITA 150,114 98,022
-------- --------
Exclude
Amortisation of software costs 2,046 1,397
Depreciation of property, plant and equipment
- subsidiaries 17,773 17,194
Depreciation of property, plant and equipment
- share of joint ventures and associates 32,870 16,679
-------- --------
Adjusted EBITDA 202,803 133,292
-------- --------
Exclude
Depreciation of right of use assets - subsidiaries 19,253 -
Depreciation of right of use assets - share 29,115 -
of joint ventures and associates
-------- --------
Adjusted EBITDA (before depreciation on
right of use assets) 251,171 133,292
-------- --------
Adjusted fully diluted earnings per share
Definition
E xcludes acquisition related intangible asset amortisation
charges and costs, fair value movements on contingent
consideration, unrealised gains or losses on derivative financial
instruments, gains and losses on foreign currency denominated
intercompany borrowings, exceptional items and related tax on such
items. It also excludes the Group's share of these items within
joint ventures and associates. The calculation is outlined in Note
6.
Alternative Performance Measures (APM's) (continued)
Adjusted fully diluted earnings per share (pre-IFRS 16 Leases
)
Definition
As noted in changes in accounting policies on pages 16 to 18,
the Group adopted IFRS 16 Leases with effect from 1 January
2019.
The Group has applied IFRS 16 using the modified retrospective
approach on transition, under which the cumulative effect of
initial application is recognised in equity as an adjustment to the
opening balance of retained earnings, non-controlling interest and
currency translation reserve at 1 January 2019. The comparative
information for prior periods has not been re-stated. It is
presented as previously reported under IAS 17 and related
interpretations. Therefore, for ensure comparability, the Group
presents below the calculation of adjusted fully diluted earnings
per share, as if IFRS 16 had not been applied for the current
year.
Reference 2019 2018
Calculation in Preliminary
FS
EUR'000 EUR'000
Adjusted profit attributable to equity
holders of the parent Note 6 54,984 40,286
Effect of IFRS 16 Leases on adjusted profits Note (a) 2,882 -
on equity holders of the parent
-------- --------
Adjusted profit attributable to equity
holders of the parent (pre-IFRS 16 Leases) 57,866 40,286
-------- --------
Weighted average number of shares (diluted) Note 6 389,295 383,147
-------- --------
Adjusted profit attributable to equity
holders of the parent (pre-IFRS 16 Leases) 14.86 10.51
-------- --------
(a) See change in accounting policies on pages 16 and 18 for
quantification of impact of application of IFRS 16 on the reported
results in 2019.
Effective tax rate calculation
Definition
The Group's effective tax rate expresses the Group's income tax
expense (including the share of joint ventures and associates)
before tax impact of exceptional items and goodwill and intangible
asset amortisation as a percentage of the Group's adjusted profit
before tax.
Calculation Reference 2019 2018
in Preliminary
FS
EUR'000 EUR'000
Income tax expense Income Statement 10,329 16,014
Group share of tax charge of joint ventures
and associates 12,534 2,231
------------ --------
Total tax charge 22,863 18,245
Adjustments
Deferred tax credit on amortisation of
intangible assets - subsidiaries 2,623 (1,190)
Deferred tax credit on amortisation of
intangible assets - share of joint ventures
and associates 565 460
Deferred tax charge on fair value movements
on contingent consideration - 1,535
Tax charge on exceptional items in subsidiaries Note 5 (47) (1,395)
Group share of tax charge on exceptional
items within joint ventures and associates Note 5 1,525 922
------------ --------
Tax charge on underlying activities 27,529 18,577
------------ --------
Adjusted profit before tax See above 98,330 76,873
------------ -------
Effective tax on underlying activities 28.0% 24.2%
------------ -------
Net debt
Definition
Net debt is a non-IFRS measure which comprises bank deposits,
cash and cash equivalents and current and non-current borrowings.
For 2019 it excludes lease liabilities. For 2018 it also includes
finance leases liabilities. The calculation is outlined in Note
12.
Alternative Performance Measures (APM's) (continued)
Routine capital expenditure and non-routine capital
expenditure
Definition
Routine capital expenditure is cash spend on property, plant,
and equipment and software (which under IFRS is classified within
intangible assets) less proceeds on disposal of property, plant and
equipment and any expenditure classified as non-routine or
development capital expenditure
Calculation Reference in 2019 2018
Preliminary FS
EUR'000 EUR'000
Acquisition of property, plant and
equipment Cashflow statement 19,518 25,942
Acquisition of intangible assets -
computer software Cashflow statement 4,621 4,352
Proceeds on disposal of property, plant
and equipment - routine Cashflow statement (678) (797)
Non-routine (development capital expenditure) Note (a) (4,470) (7,376)
------------ --------
Routine capital expenditure 18,991 22,121
============ ========
(a) Non-routine capital expenditure is expenditure on projects
to grow the business and generally relate to fit out of new
facilities or extending the capacity of existing facilities.
Adjusted operating cashflow
Definition
Adjusted operating cashflow is the operating cashflow generated
from operations as reported in the Group Cashflow Statement before
cash outflows associated with exceptional items less lease
liability payments and development loans provided to joint ventures
and associates.
Calculation Reference in 2019 2018
Preliminary FS
EUR'000 EUR'000
Net cashflow from operating activities
per cashflow statement Cashflow Statement 73,776 44,943
Cash impact of exceptional items in
operating cashflows Note 11 3,489 2,884
Loans to joint ventures and associates Note (a) - 5,111
Less lease liability payments Cashflow Statement (17,902) -
------------ --------
Adjusted operating cashflow 59,363 52,938
============ ========
Note (a) - in 2018, the Group provided a loan of EUR5,111,000 to
a joint venture of the Group to fund a development project. In the
statutory cashflow statement this was recorded as a trade and other
receivables outflow.
Free Cash Flow
Definition
Free Cash flow is defined by the Group as the funds available
after outflows relating to routine capital expenditure, dividends
paid to non-controlling interests but before acquisition related
expenditure (including loans advanced to joint ventures an
associates), development capital expenditure and the payment of
dividends to equity shareholders.
Calculation Reference in 2019 2018
Preliminary FS
EUR'000 EUR'000
Net cashflow from operating activities
per cashflow statement Cashflow Statement 73,776 44,943
Cash impact of exceptional items in
operating cashflows Note 11 3,489 2,884
See previous
Loans to joint ventures and associates note - 5,111
Less lease liability payments Cashflow Statement (17,902) -
Dividends received from joint ventures
and associates Cashflow Statement 10,652 10,908
Dividends paid to non-controlling interests Cashflow Statement (16,055) (10,535)
Routine capital expenditure Cashflow Statement (18,991) (22,121)
--------- ---------
Free Cashflow 34,969 31,190
--------- ---------
Alternative Performance Measures (APM's) (continued)
Acquisition related expenditure, net
Definition
Acquisition related expenditure is cash outflows in respect of
acquisition and investment in subsidiaries, joint ventures and
associates, non-controlling interests and is net of contributions
from non-controlling interests and proceeds on disposal of shares
to non-controlling interests.
Calculation Reference 2019 2018
in Preliminary
FS
EUR'000 EUR'000
Cash outflow relating to investment
in joint ventures and associates Cashflow Statement 7,145 251,949
Investment in subsidiaries Note 10 6,683 2,496
Proceeds from disposal of joint venture Cashflow Statement (48) -
Loans to joint ventures and associates Note (a) - 5,111
Disposal of investment in subsidiary
to non-controlling interest Cashflow Statement - (286)
Acquisition of non-controlling interests Cashflow Statement 1,656 490
Capital contribution by non-controlling
interests Cashflow Statement - (130)
Proceeds on disposal of equity investments Cashflow Statement (1,043) -
Acquisition of equity investments Cashflow Statement 150 -
---------- -----------
Acquisition related expenditure 14,543 259,630
========== ===========
Note (a) - in 2018, the Group provided a loan of EUR5,111,000 to
a joint venture of the Group to fund a development project. In the
statutory cashflow statement this was recorded as a trade and other
receivables outflow.
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END
FR KKQBPCBKDFNK
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