TIDMTOT
RNS Number : 2621X
Total Produce Plc
27 August 2020
TOTAL PRODUCE PLC
HALF YEAR RESULTS TO 30 JUNE 2020
Total Produce records strong results in the first half of
2020
-- Very strong performance in the first half of 2020 in the
context of the unprecedented challenges posed by COVID-19 to the
global economy
-- Total revenue up 2.0% to EUR3.112 billion
-- Adjusted EBITDA up 0.9% to EUR118.2m
-- Adjusted EBITA down 1.5% to EUR91.5m
-- Adjusted profit before tax up 1.7% to EUR67.1m
-- Adjusted fully diluted EPS down 3.6% to 9.45 cent
-- The Group is in a strong financial position, Net debt of
EUR218.8m (June 2019: EUR294.3m )
-- 2019 final dividend of 2.577 cent per share to be paid in September 2020
-- Interim dividend of 0.9129 cent per share, unchanged on the
prior year, to be paid in January 2021
Commenting on the results, Carl McCann, Chairman, said:
"We are pleased with the very strong performance in the first
half of 2020 against the backdrop of the COVID-19 pandemic which
has posed unprecedented challenges to the global economy. The
health and wellbeing of our people is our number one priority while
at the same time recognising our role in supplying vital
foodstuffs, particularly during the pandemic. We are very proud of
the efforts of all our people. Their dedication, commitment and
hard work ensured the Group's supply chains and operations continue
to function and remain open across all our key markets.
In the first half of 2020, revenue and adjusted EBITDA have
increased by 2.0% and 0.9% respectively demonstrating the
robustness of the Group's business model. Demand from retail and
wholesale remained strong and helped offset reduced demand from the
food service sector.
The Group expects revenue and adjusted EBITDA to be slightly
ahead of 2019 on a full year basis with adjusted EPS slightly
behind subject to the prevailing uncertainties of COVID-19. The
Group intends to pay a 2020 interim dividend of 0.9129, unchanged
on the prior year. The Group remains in a very strong financial
position and continues to actively pursue the growth and expansion
of the business ".
27 August 2020
For further information, please contact:
Brian Bell, Wilson Hartnell PR - Tel: +353-1-669-0030, Mobile:
+353-87-243-6130
Interim Results
For the half year ended 30 June 2020
2020 EUR'million 2019 EUR'million change
============================================= ================= ================= ========
Total revenue 3,112 3,051 +2.0%
Group revenue 1,893 1,833 +3.3 %
Adjusted EBITDA 118.2 117.1 +0.9%
Adjusted EBITA 91.5 92.8 (1.5%)
Operating profit before exceptional items 52.9 52.4 +1.0%
Operating profit after exceptional items 47.6 60.9 (21.7%)
Adjusted profit before tax 67.1 65.9 +1.7%
Profit before tax (after exceptional items) 42.6 55.3 (23.1%)
============================================= ================= ================= ========
EUR'cent EUR'cent change
=========================================== ========= ========= ========
Adjusted fully diluted earnings per share 9.45 9.80 (3.6 %)
Basic earnings per share 6.91 11.23 (38.4%)
Diluted basic earnings per share 6.90 11.20 (38.4%)
Interim dividend per share 0.9129 0.9129 -
=========================================== ========= ========= ========
Overview
Total Produce (the 'Group') has delivered a very strong
performance in the first half of 2020 against the backdrop of the
unprecedented uncertainties and challenges in the global
marketplace arising from the ongoing COVID-19 pandemic. The
COVID-19 outbreak is an ongoing challenge for the Group and the
wider fresh produce industry. The health and wellbeing of our
people is the Group's number one priority while at the same time
recognising the vital role in continuing to keep the supply chains
open and supplying essential foodstuffs. The Group's strong
presence in the global fresh produce industry, the diversity of its
operations and products together with the exceptional response from
our people have enabled us to meet these challenges.
Total revenue in the period grew 2.0% to EUR3,112m (2019:
EUR3,051m) and adjusted EBITDA increased by 0.9% to EUR118.2m
(2019: EUR117.1m) with adjusted EBITA decreasing 1.5% to EUR91.5m
(2019: EUR92.8m). The increase in revenue was due to robust retail
and wholesale demand offsetting reduced levels of activity in the
food service sector. The Group also benefitted from the
contribution of bolt-on acquisitions made in the past twelve
months. Currency had a marginally positive impact on the
translation of the overall results of foreign currency denominated
operations to Euro in the period due principally to the
strengthening of the US Dollar. On a like-for like basis excluding
the impact of acquisitions, divestments and currency translation,
revenues were in line with the prior period with a marginal volume
decrease offset by increases in average price. The marginally 1.5%
lower adjusted EBITA was primarily due to lower earnings in Dole
benchmarked against a strong comparative period. This was partly
offset by good performance in the Eurozone and International
divisions.
Operating profit before exceptional items increased by 1.0% to
EUR52.9m (2019: EUR52.4m). The operating profit after exceptional
items was EUR47.6m (2019: EUR60.9m) with the decrease due to the
effect of exceptional items year on year. The 2019 prior year
period included exceptional gains of EUR8.4m compared to a current
year charge of EUR5.3m. The gain in the prior period was due in
large part to the Group's share of the gain on disposal of a
Swedish salad business in Dole.
Adjusted fully diluted earnings per share decreased by 3.6% to
9.45 cent (2019: 9.80 cent), with the decrease due to the 1.5%
reduction in adjusted EBITA and a higher non-controlling interest
charge.
The Group was cash-generative in the period with adjusted
operating cash flows of EUR33.1m (2019: EUR30.7m) before normal
seasonal working capital outflows. Net debt at 30 June 2020 of
EUR218.8 was lower than net debt of EUR294.3m at 30 June 2019 and
EUR221.2m at 31 December 2019. The decrease in net debt on the
prior period was helped by a EUR32.4m increase in non-recourse
trade receivables financing and initiatives and actions taken by
the Group to protect the business and militate against potential
effects due to COVID-19. The Group managed its liquidity by
curtailing some non-essential capital expenditure and discretionary
costs. The Group is in a strong financial position and in addition
to the measures outlined above, it has improved its borrowing
capacity by increasing the amount and tenor of its committed
borrowing facilities. The Group is operating comfortably within its
bank covenants.
The Group is also pleased to announce the payment of the final
2019 dividend of 2.5770 cent per share on 2 September 2020 subject
to approval of shareholders at the AGM on 28 August 2020. The Board
intends to pay the 2020 interim dividend of 0.9129 cent per share,
unchanged on the prior year in January 2021.
_______________________________________
Alternative performance measures 'APMs' The Group uses 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 30 to 33 of this statement
Operating Review
The table below details a segmental breakdown of the Group's
total revenue and adjusted EBITA for the six months ended 30 June
2020. 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
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.
(Unaudited) (Unaudited)
H1 2020 H1 2019**
===================== =====================
Total Adjusted Total Adjusted
revenue EBITA revenue EBITA
EUR'000 EUR'000 EUR'000 EUR'000
======================= ========== ========= ========== =========
Europe - Non-Eurozone 770,019 21,637 751,973 22,977
Europe - Eurozone 855,231 12,430 831,997 10,912
International 617,566 11,071 604,917 8,945
Dole (Group share) 902,866 46,334 891,021 49,987
Inter-segment revenue (33,446) - (28,557) -
======================= ========== ========= ========== =========
Total Group 3,112,236 91,472 3,051,351 92,821
======================= ========== ========= ========== =========
*Dole's financial calendar consists of thirteen 4 weekly
periods. The first half results are for the first six periods ended
13 June 2020. The comparative results are for the first six periods
of 2019 ended 15 June 2019. The Group's share of the adjusted EBITA
of Dole is after the deduction of the Group's share of the
non-controlling interests charge within Dole and an allocation of a
corporate overhead
** The 2019 segmental comparatives have been restated to conform
with the current year's presentation. See Note 3 of the
accompanying financial information.
Total revenue increased 2.0% to EUR3,112m (2019: EUR3,051m) with
robust demand from retailers and wholesalers offsetting reduced
levels of activity in the food service sector. The Group also
benefitted from bolt-on acquisitions made in the past twelve
months. Currency had a marginally positive impact on the
translation of the overall results of foreign currency denominated
operations to Euro in the period primarily due to the strengthening
of the US Dollar. On a like-for like basis excluding the impact of
acquisitions, divestments and currency translation, revenues were
in line with the prior period with a marginal volume decrease
offset by increases in average price.
Adjusted EBITA decreased by 1.5% to EUR91.5m (2019: EUR92.8m)
due primarily to lower earnings in Dole which was benchmarked
against a strong comparative period. This was offset by a good
performance in the Eurozone and International divisions of the core
Total Produce business. There were additional operating costs
incurred in the period relating to COVID-19 such as employee
personal protective equipment and costs of additional shifts in
warehouse to comply with physical distancing. These additional
costs were offset by reductions in other costs such as travel
expenses.
Europe - Non-Eurozone
This segment includes the Group's businesses in the Czech
Republic, Poland, Scandinavia and the UK. Revenue increased by 2.4%
to EUR770m (2019: EUR752m) helped by the incremental impact of
bolt-on acquisitions. On a like-for-like basis excluding
divestments, acquisitions and disposals, revenue was circa 0.5%
behind prior period with volume decreases offset by average price
increases. Volume decreases are due to reduced demand in the food
service sector in Scandinavia, the UK and the Czech Republic as a
result of restrictions imposed due to COVID-19. This was offset by
robust demand from retail, some growth in wholesale markets as well
as an element of organic growth. Adjusted EBITA decreased 5.8% to
EUR21.6m (2019: EUR23.0m) due to currency translation and an impact
on margin due to a change in customer mix.
Europe - Eurozone
This segment includes the Group's businesses in France, Ireland,
Italy, the Netherlands and Spain. Revenue increased by 2.8% to
EUR855m (2019: EUR832m). Excluding the effect of acquisitions and
divestments, revenue on a like-for-like basis was circa 2% ahead of
prior period with average price increases offsetting a decrease in
volumes. Throughout the Eurozone, robust retail and wholesale
demand offset lower demand from the food service sector. Adjusted
EBITA increased 13.9% to EUR12.4m (2019: EUR10.9m) with a resilient
performance across all divisions particularly Spain. The results in
the Netherlands were ahead of prior period with a good import
business while the horticultural division remains challenged.
International
This division includes the Group's businesses in North America,
South America and India. Revenue increased by 2.1% to EUR618m
(2019: EUR605m). The results were helped in part with the benefit
on translation of the results to Euro from the strengthening of the
average US Dollar rate by 2.5% and the benefit of an increase in
the shareholding in a joint venture which is now treated as a
subsidiary. On a like-for-like basis excluding effects of currency
and acquisitions, revenue decreased circa 1.5% with marginal
decreases in volume and average price. The International division
is largely retail focussed. There was an increase in demand for the
staple items of potatoes, vegetables and citrus with reduced demand
experienced for some more expensive soft fruit and certain
varieties of deciduous product. Adjusted EBITA increased 23.8% to
EUR11.1m (2019: EUR8.9m) with improved margins, lower operating
costs (primarily travel related), the benefit of a joint venture
becoming a subsidiary and the positive impact on the translation of
the results of US Dollar denominated earnings to Euro.
Dole
This segment includes the Group's share of the results of Dole.
The Group is equity accounting for its 45%
share of the results of Dole on an IFRS basis.
Dole's financial calendar consists of thirteen periods of four
weeks, and the first half results are for the first six periods
ended 13 June 2020 and the comparative results are for the first
six periods of 2019 ended 15 June 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. Hence the results for the period
ended are not indicative of the results of the operations for the
full 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.
Trading in Dole for the period has been robust in the context of
a challenging global environment due to COVID-19 and is benchmarked
against a strong comparative period in the Fresh Vegetable division
for some produce categories. On an IFRS basis, Dole has recorded
revenues of $2,210m ( EUR2,006m) for the period ended 13 June 2020
down 1.2% when compared to prior period of $2,236m (EUR1,980m).
Adjusted EBITDA for the period of $153.4m (EUR139.0m) was down 4.7%
compared to prior period of $161.0m (EUR142.9m) with adjusted EBITA
of $118.8m (EUR107.5m) behind 8.8% when compared to prior period
result of $130.3m (EUR115.6m).
The Fresh Fruit division remained strong with higher banana
volumes in Latin America and North America and improved pricing
offset by some lower European volumes. The results in this division
benefitted from lower fuel prices. This was offset by a general
decrease in pineapple volumes and prices due to the impact of
COVID-19 on the food service sector.
The overall results are behind primarily due to a decrease in
Fresh Vegetables against a very strong comparative period in some
categories. However, within this division, results from packaged
salad operations were ahead of prior period with favourable volumes
and pricing. Results in Chile were also impacted by timing
differences in the crop and harvest cycles of cherries as well as
lower grape volumes due to the drought.
Total Produce's 45% share of revenue for the period ended 13
June 2020 was EUR903m (2019: EUR891m) and its share of adjusted
EBITA was EUR46.3m (2019: EUR50.0m). There was a marginally
positive benefit on translation of the results to Euro due to
strength of the US Dollar when compared to the prior period.
Further details on the acquisition of Dole and its financial
performance and position for the period ended 13 June 2020 are
outlined in Note 6 of the accompanying financial information.
Financial Review
Revenue and adjusted EBITA
An analysis of the factors influencing the changes in revenue
and adjusted EBITA are discussed in the operating review above.
Share of profits of joint ventures - Dole
The Group's share of the after-tax profits of Dole for the
period amounted to EUR17.8m (2019: EUR18.6m) before exceptional
items. The decrease is due to the lower EBITA as noted earlier in
the operating review offset in part by lower interest costs due to
a decrease in the US Libor rate in the period. The Group's share of
exceptional items was a EUR3.8m charge in the period compared to a
EUR7.0m gain in the prior period primarily due to the gain on the
sale of a Swedish salad business. Post exceptional items the
Group's share of after-tax profits was EUR14.0m (2019: EUR25.6m).
Further details of the performance of Dole and its financial
position at the end of the period is outlined in the operating
review and in Note 6 of the accompanying financial information.
Share of profits of joint ventures and associates - excluding
Dole
Excluding the contribution from Dole the share of after-tax
profits of joint ventures and associates increased in the period to
EUR5.2m (2019: EUR4.9m). Dividends declared from joint ventures and
associates in the period amounted to EUR6.1m (2019: EUR6.0m) with
EUR6.4m (2019: EUR6.3m) 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 EUR5.1m (2019: EUR5.0m) in the period. The
share of intangible asset amortisation within joint ventures and
associates was EUR1.3m (2019: EUR1.3m).
Exceptional items
Exceptional items in the period amounted to a net charge after
tax of EUR6.3m (2019: EUR8.7m gain). The net charge in 2020
primarily relates to the Group's EUR3.8m share of the net charge
within Dole. In the comparative period the net gain primarily
related to the Group's EUR7.0m share of the net gain within Dole
primarily due to the profit on sale of the Swedish salad business.
A full analysis of exceptional items for both 2020 and 2019 are set
out in Note 4 of the accompanying financial information and have
been excluded from the calculation of the adjusted numbers.
Operating profit
Operating profit before exceptional items increased 1.0% to
EUR52.9m (2019: EUR52.4m) due primarily to the increased profits in
the Eurozone and International divisions offset by lower earnings
in Dole. Including exceptional items, operating profit decreased by
21.7% to EUR47.6m (2019: EUR60.9m) with the decrease due to the
impact of exceptional items in the period. The net impact of
exceptional items in the period on operating profit, was a charge
of EUR5.3m compared to a gain of EUR8.4m in 2019. The prior year
period included the Group's share of the gain in Dole on the sale
of a Swedish salad business. As noted earlier, a full analysis of
exceptional
items for both 2020 and 2019 are set out in Note 4 of the accompanying financial information.
Net financial expense
Net financial expense in the period decreased to EUR5.1m (2019:
EUR5.5m) primarily due to the fall in US Libor rates and lower
average net debt in the period.
The Group's share of the net interest expense of joint ventures
and associates in the period was EUR19.3m (2019: EUR21.4m) with the
decrease due to Group's share of a lower interest charge in Dole
due to reduction in US Libor rates in the period.
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 1.7% in the period to EUR67.1m
(2019: EUR65.9m) with increase in the adjusted EBITA and effect of
lower interest charges. Statutory profit before tax after these
items was EUR42.6m (2019: EUR55.3m) with the decrease due to the
impact of exceptional items in both periods. As noted earlier,
there was a net exceptional charge of EUR6.3m in the period after
tax (2019: net gain of EUR8.7m).
Taxation
The adjusted tax charge for the period, including the Group's
share of joint ventures and associates tax and before non-trading
items as set out on page 31 of the accompanying financial
information was EUR21.3m (2019: EUR20.7m) representing an
underlying tax rate of 31.7% (2019: 31.4%) when applied to the
Group's adjusted profit before tax.
Non-controlling interests
The non-controlling interests' share of after-tax profits in the
period was EUR7.3m (2019: EUR6.1m). 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 EUR1.7m (2019: EUR1.0m). Excluding these non-trading items,
the non-controlling interests' share of adjusted after tax profits
increased by EUR1.9m to EUR9.0m (2019: EUR7.1m) with the increase
due to the non-controlling interests' share of earnings in certain
non-wholly owned companies in Europe and North America.
Adjusted and basic earnings per share
Adjusted fully diluted earnings per share was 9.45 cent (2019:
9.80 cent), a decrease of 3.6% due to the marginally lower EBITA in
the period and the increase in the non-controlling interest charge
noted earlier.
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 6.91 cent per share (2019:
11.23 cent) and 6.90 cent per share (2019: 11.20 cent)
respectively. The decrease on prior year is due to the large
exceptional one-off gains in the 2019 comparative period compared
to the exceptional charges in the current period as noted
earlier.
Note 5 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 30 June 2020 is
EUR218.8m compared to EUR294.3m at 30 June 2019. Net debt at 31
December 2019 was EUR221.2m. Average net debt for the six-month
period was EUR253.7m compared to EUR285.9m for the six-month period
ended 30 June 2019 and EUR284.0m for the year ended 31 December
2019. In addition, the Group has non-recourse trade receivables
financing of EUR67.4m at 30 June 2020 (30 June 2019: EUR35.0m and
31 December 2019: EUR46.4m).
The decrease in net debt on the prior period was due to the
increase of EUR32.4m in non-recourse trades receivables financing
and to initiatives and actions taken by the Group to protect the
business and mitigate cash outflows due to COVID-19. Some
non-essential capital expenditure and discretionary costs were
deferred.
Adjusted operating cashflows increased in the period to EUR33.1m
(2019: EUR30.7m) before normal seasonal working capital outflows.
The normal seasonal working capital outflows for the period were
EUR24.7m compared to EUR62.2m in prior period with the decreased
outflows due to the increase in non-recourse trade receivables
financing as noted earlier. Continued strong working capital
management and a change in the customer mix also helped working
capital in the period. Cash outflows on routine capital
expenditure, net of disposals, were lower at EUR8.6m (2019:
EUR9.8m) due to the deferral of some non-essential capital
expenditure. Dividends received from joint ventures and associates
in the period were EUR6.4m (2019: EUR6.3m) representing the Group's
continued focus on cash returns from these investments. Dividends
paid to non-controlling interests decreased to EUR5.1m (2019:
EUR9.7m) due to the deferral of some dividends to non-controlling
interests until second half of the year.
Cash inflows from exceptional items were EUR1.6m (2019: EUR0.6m
outflow) primarily as a result of sale of farming investments. Cash
inflows from disposals net of acquisitions amounted to EUR1.9m
(2019: EUR9.9m outflow) with proceeds from disposals of equity
investments in the period offset by the costs of some bolt-on
acquisitions primarily in the Eurozone. Contingent and deferred
consideration payments relating to prior period acquisitions were
EUR0.1m (2019: EUR7.2m) with some payments deferred until second
half of the year. Payments for non-routine property and plant
additions amounted to EUR1.3m (2019: EUR3.8m). The Group did not
make any dividend payments to equity shareholders in the period due
to deferral of the date for the 2020 AGM. The 2020 dividend is
expected to be paid in September 2020 subject to approval at the
AGM on 28 August 2020. In the comparative period the 2018 final
dividend of EUR9.8m was paid. At 30 June 2020, there was a EUR0.3m
gain (2019: EUR0.7m loss) on the translation of foreign currency
denominated net debt to Euro due primarily to the weaker Sterling
and Canadian Dollar. The US Dollar and Swedish Krona rates at the
period end were in line with the rates at 31 December 2019.
(Unaudited) (Unaudited) (Audited)
H1 2020 H1 2019 FY 2019
EUR'million EUR'million EUR'million
================================================= ============ ============ ============
Adjusted EBITDA (1) 118.2 117.1 202.8
Deduct adjusted EBITDA of joint ventures
and associates (73.3) (74.6) (121.1)
Net financial expense and tax paid (10.4) (11.2) (26.3)
Other (1.4) (0.6) (2.6)
================================================= ============ ============ ============
Adjusted operating cash flows before
working capital movements 33.1 30.7 52.8
Working capital movements (24.7) (62.2) 6.6
================================================= ============ ============ ============
Adjusted operating cash flows (1) 8.4 (31.5) 59.4
Routine capital expenditure net of
routine disposal proceeds (1) (8.6) (9.8) (19.0)
Dividends received from joint ventures
and associates 6.4 6.3 10.7
Dividends paid to non-controlling interests (5.1) (9.7) (16.1)
================================================= ============ ============ ============
Free cash flow (1) 1.1 (44.7) 35.0
Cashflows from exceptional items 1.6 (0.6) 5.8
Cashflow receipts/(payments) from acquisitions,
net of disposals (1) 1.9 (9.9) (14.5)
Net (debt)/cash assumed on acquisition
of subsidiaries (1.0) 0.4 2.1
Contingent and deferred consideration
payments (0.1) (7.2) (11.1)
Non-routine capital expenditure (1.3) (3.8) (4.5)
Dividends paid to equity shareholders - (9.8) (13.3)
Proceeds from issue of share capital - - 0.1
Other (0.1) 0.1 -
================================================= ============ ============ ============
Total net debt movement in period 2.1 (75.5) (0.4)
Net debt (1) at beginning of period (221.2) (219.7) (219.7)
Finance leases reclassified to lease
liabilities - 1.6 1.6
Foreign currency translation 0.3 (0.7) (2.7)
================================================= ============ ============ ============
Net debt (1) at end of period (218.8) (294.3) (221.2)
================================================= ============ ============ ============
(1) The APMs are defined together with calculations in pages 30
to 33 of this statement
Liquidity
It has always been the policy of the Group to have adequate
facilities available providing the Group with sufficient headroom
in addition to the flexibility to take advantage of opportunities
to develop the business. As the pandemic hit global markets in
mid-March, the Group took a number of steps to protect its
liquidity and financial position. As described earlier, the Group
postponed or deferred some non-essential capital expenditure and
discretionary costs.
The Group has increased both the amount and tenor of its
corporate borrowing facilities providing additional headroom. At 30
June 2020, the Group has approved committed and uncommitted bank
borrowings of up to EUR646m (December 2019: EUR623m) in addition to
approved overdrafts of EUR116m (31 December 2019: EUR109m). The
Group has utilised 46% (31 December 2019: 46%) of these available
facilities at 30 June 2020. At 30 June 2020, the Group also has
cash and deposit balances of EUR131m (31 December 2019:
EUR116m).
Post 30 June 2020, the Group renewed a three-year private
placement facility of US$66m (EUR59m) which gives the Group the
ability to draw down long term funding for periods of up to twelve
years.
The Group is in a strong financial position with significant
financial capacity. The Group is operating comfortably within its
bank covenants and enjoys the support of its banking partners.
Defined benefit pension obligations
The net liability of the Group's defined benefit pension schemes
(net of deferred tax) was EUR7.9m at 30 June 2020 (31 December
2019: EUR9.3m). The decrease in the liability was due to a 2.3%
average return on pension scheme assets in the period together with
the impact of an increase in the discount rates for the Irish
schemes which decreased the net present value of these scheme
obligations. This was partly offset by the effect of a decrease in
the UK discount rate which increased the net present value of UK
scheme obligations. Other post-employment benefit obligations
increased to EUR6.4m at 30 June 2020 (31 December 2019: EUR5.9m).
Further details are outlined in Note 7 of the accompanying
financial information.
Shareholders' equity
Shareholders' equity increased by EUR12.1m in the six-month
period to EUR463.2m. The increase was due to profit after tax of
EUR26.9m attributable to equity shareholders. This was offset by
currency translation loss of EUR10.0m on the retranslation of the
net assets of foreign currency denominated operations into Euro,
remeasurement losses of EUR4.8m (net of deferred tax) on
post-employment benefit schemes, and effective portions of cashflow
hedges movements (net of deferred tax) of EUR1.3m.
Development Activity
The Group made some bolt-on acquisitions during the six months
ended 30 June 2020 as well as investments in existing joint
ventures. The investments were in the Eurozone and International
divisions. The total committed investment was EUR2.2m including
EUR0.8m of deferred consideration of EUR0.6m contingent
consideration payable on the achievement of future profit
targets.
Dividends
Having regard to Government guidelines on the holding of
meetings, the Board decided to postpone the AGM which was due to be
held on 15 May 2020, to 28 August 2020. Subject to the
shareholders' approval at the AGM, the 2019 final dividend of
2.5770 cent per share will be paid on 2 September 2020 to
shareholders on the Register of Members as at 7 August 2020.
The Board intends to pay the 2020 interim dividend of 0.9129
cent per share, unchanged on the prior year in January 2021.
In accordance with company law and IFRS, these dividends have
not been provided for in the balance sheet at 30 June 2020.
Post Balance Sheet Events
There have been no material events subsequent to 30 June 2020
which would require disclosure or adjustment in the financial
statements.
Environmental, Social and Governance (ESG)
Total Produce marked the World Environment Day 2020 by launching
the first, Group wide Sustainability Report. The report details
Total Produce's strategic approach to sustainability, progress made
to date, charts the Group's path forward and profiles a selection
of our international sustainability related initiatives. We are
working to use the collective strengths of our Group to bring about
real and demonstrable change in environmental matters.
Our approach has involved communicating shared sustainability
principles and values throughout our international organisation and
targets to embed these principles into our everyday trading
practices, both locally and at Group level. It has entailed putting
in place new Group-wide reporting structures extending from our
global operating companies to the Group Board of Directors
heightening the awareness and placing sustainability at the very
heart of our operations and strategic decision making.
In setting of Group-wide targets; measuring and managing core
issues collectively and collaboration across the supply chain, the
adoption of renewable energy or the application of environmentally
friendly packaging is contributing to our global efforts and
initiatives.
Our primary function is the marketing and distribution of fresh
fruits and vegetables. The heath promoting properties of fresh
produce makes a positive contribution to public diet and general
wellbeing. The products we market and distribute are associated
with the lowest environmental impact of all the primary
foodstuffs.
The ESG section of our website details Total Produce's
commitment to the responsible and sustainable production of our
broad portfolio of fresh fruits and vegetables. Our Group wide
Sustainability Report that was launched in June 2020 is available
on the website at www.totalproduce.com.
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. Post the
exit, the UK entered an 11-month transition period. Brexit
committees set up in relevant areas of the business continue to
monitor and assess the risks and opportunities that may arise post
the transition period.
COVID-19 Outbreak
Since the outbreak of COVID-19 all parts of our business have
continued to work tirelessly to safely supply fresh produce to our
customers. It is due to the efforts of our people that we have been
able to support frontline workers and help feed consumers The
health and safety of all colleagues across the business is at the
forefront of our thinking with the introduction of safe working
practices. We have participated in helping communities, examples
include supplying food packages to frontline healthcare workers,
providing fruit to those in need, loaning spare vehicles to
transport meals to the homeless and donating fresh produce to local
food banks.
Going Concern
The Directors have reviewed forecasts and projected cashflows
for a period not less than 12 months from the date of these interim
financial statements. Consumer demand for fresh produce has
remained robust through the pandemic and this is expected to
continue. As highlighted earlier, when the pandemic hit in
mid-March, the Group took a number of steps to protect its
liquidity and financial position. The Group has also increased both
the amount and tenor of its corporate borrowing facilities
providing additional headroom. Taking all these factors into
consideration, 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
Frank Gernon, Executive Director, and Jerome Kennedy,
Non-Executive retired as Directors on 31 March 2020. From this
date, the Board comprises of six independent Non-Executive
Directors and three Executive Directors.
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 with the very strong performance in the first
half of 2020 against the backdrop of the COVID-19 pandemic which
has posed unprecedented challenges to the global economy. The
health and wellbeing of our people is our number one priority while
at the same time recognising our role in supplying vital
foodstuffs, particularly during the pandemic. We are very proud of
the efforts of all our people. Their dedication, commitment and
hard work ensured the Group's supply chains and operations continue
to function and remain open across all our key markets.
In the first half of 2020, revenue and adjusted EBITDA have
increased by 2.0% and 0.9% respectively demonstrating the
robustness of the Group's business model. Demand from retail and
wholesale remained strong and helped offset reduced demand from the
food service sector.
The Group expects revenue and adjusted EBITDA to be slightly
ahead of 2019 on a full year basis with adjusted EPS slightly
behind subject to the prevailing uncertainties of COVID-19. The
Group intends to pay a 2020 interim dividend of 0.9129, unchanged
on the prior year. The Group remains in a very strong financial
position and continues to actively pursue the growth and expansion
of the business .
Carl McCann, Chairman
On behalf of the Board
27 August 2020
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.
Condensed Group Income Statement
for the half year ended 30 June 2020
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) (Audited) (Audited)
H1 2020 H1 2020 H1 2020 H1 2019 H1 2019 H1 2019 FY 2019 FY 2019 FY 2019
Pre-Exceptional Exceptional Total Pre-Exceptional Exceptional Total Pre-Exceptional Exceptional Total
(Note 4) (Note 4) (Note 4)
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
================= ================ ============ ============ ================ ============ ============ ================ ============ ============
Revenue,
including Group
share of joint
ventures and
associates 3,112,236 - 3,112,236 3,051,351 - 3,051,351 6,173,195 - 6,173,195
================= ================ ============ ============ ================ ============ ============ ================ ============ ============
Group revenue 1,893,164 - 1,893,164 1,832,598 - 1,832,598 3,729,346 - 3,729,346
Cost of sales (1,632,116) - (1,632,116) (1,582,218) - (1,582,218) (3,212,057) - (3,212,057)
================= ================ ============ ============ ================ ============ ============ ================ ============ ============
Gross profit 261,048 - 261,048 250,380 - 250,380 517,289 - 517,289
Operating
expenses (225,979) (1,449) (227,428) (216,556) 1,447 (215,109) (455,371) (1,816) (457,187)
Share of profit
of joint
venture - Dole 17,817 (3,849) 13,968 18,638 6,997 25,635 19,327 7,048 26,375
Share of profit
of joint
ventures -
Other 4,211 - 4,211 4,568 - 4,568 10,658 - 10,658
Share of profit
of associates 967 - 967 366 - 366 666 - 666
================= ================ ============ ============ ================ ============ ============ ================ ============ ============
Operating profit
before
acquisition
related
intangible
asset
amortisation 58,064 (5,298) 52,766 57,396 8,444 65,840 92,569 5,232 97,801
Acquisition
related
intangible
asset
amortisation (5,129) - (5,129) (4,986) - (4,986) (10,301) - (10,301)
================= ================ ============ ============ ================ ============ ============ ================ ============ ============
Operating profit
after
acquisition
related
intangible
asset
amortisation 52,935 (5,298) 47,637 52,410 8,444 60,854 82,268 5,232 87,500
Net financial
expense (5,070) - (5,070) (5,515) - (5,515) (10,967) - (10,967)
================= ================ ============ ============ ================ ============ ============ ================ ============ ============
Profit before
tax 47,865 (5,298) 42,567 46,895 8,444 55,339 71,301 5,232 76,533
Income tax
expense (7,427) (973) (8,400) (5,964) 304 (5,660) (10,282) (47) (10,329)
================= ================ ============ ============ ================ ============ ============ ================ ============ ============
Profit for the
period 40,438 (6,271) 34,167 40,931 8,748 49,679 61,019 5,185 66,204
================= ================ ============ ============ ================ ============ ============ ================ ============ ============
Attributable to
Equity holders
of the parent 26,853 43,620 53,302
Non-controlling
interests 7,314 6,059 12,902
================= ================ ============ ============ ================ ============ ============ ================ ============ ============
34,167 49,679 66,204
================= ================ ============ ============ ================ ============ ============ ================ ============ ============
Earnings per
ordinary share
Basic 6.91 cent 11.23 cent 13.72 cent
Fully diluted 6.90 cent 11.20 cent 13.69 cent
================= ================ ============ ============ ================ ============ ============ ================ ============ ============
Condensed Group Statement of Comprehensive Income
for the half year ended 30 June 2020
(Unaudited) (Unaudited) (Audited)
H1 2020 H1 2019 FY 2019
EUR'000 EUR'000 EUR'000
============================================================== ============ ============ ==========
Profit for the period 34,167 49,679 66,204
============================================================== ============ ============ ==========
Other comprehensive income:
Items that may be reclassified subsequently
to profit or loss:
Foreign currency translation effects:
* foreign currency net investments - subsidiaries (13,650) (1,255) 5,664
* foreign currency net investments - joint ventures and
associates (903) (373) 3,274
* foreign currency recycled to income statement on (102) - -
joint venture becoming a subsidiary
* foreign currency borrowings designated as net
investment hedges 1,895 (376) (3,397)
Effective portion of changes in fair value
of cash flow hedges, net 819 (78) (149)
Changes in fair value of cost of hedging,
net of recycling (191) 145 137
Deferred tax on items above (124) (2) (9)
Share of joint ventures and associates
effective portion of cash flow hedges (1,266) (1,708) (5,101)
Share of joint ventures and associates
deferred tax on items above (431) 265 497
============================================================== ============ ============ ==========
(13,953) (3,382) 916
============================================================== ============ ============ ==========
Items that will not be reclassified to
profit or loss:
Remeasurement loss on employee benefit
schemes (166) (1,188) (3,009)
Revaluation gain on property, plant and
equipment, net - - 2,095
Deferred tax on items above 238 (128) (966)
Share of joint venture gain on revaluation
of property, plant and equipment 135 - 1,369
Share of joint ventures loss on employee
benefit schemes (6,196) (1,881) (2,601)
Share of joint ventures deferred tax on
items above 1,091 547 (75)
============================================================== ============ ============ ==========
(4,898) (2,650) (3,187)
============================================================== ============ ============ ==========
Other comprehensive (expense)/income for
the period (18,851) (6,032) (2,271)
============================================================== ============ ============ ==========
Total comprehensive income for the period 15,316 43,647 63,933
============================================================== ============ ============ ==========
Attributable to:
Equity holders of the parent 10,738 37,021 49,417
Non-controlling interests 4,578 6,626 14,516
============================================================== ============ ============ ==========
15,316 43,647 63,933
============================================================== ============ ============ ==========
Condensed Group Balance Sheet
as at 30 June 2020
(Unaudited) (Unaudited) (Audited)
30 Jun 2020 30 Jun 2019 31 Dec 2019
EUR'000 EUR'000 EUR'000
=========================================================== ============= ============= =============
Assets
Non-current
Property, plant and equipment 173,900 176,573 175,485
Right of use assets 123,738 109,793 113,032
Investment property 11,604 7,369 11,843
Goodwill and intangible assets 258,973 267,112 268,462
Investments in joint ventures and associates - Dole 272,078 264,426 264,893
Investments in joint ventures and associates - Other 98,321 104,968 104,050
Other investments 326 4,968 2,743
Other receivables 23,254 24,181 19,796
Deferred tax assets 13,397 12,370 13,497
=========================================================== ============= ============= =============
Total non-current assets 975,591 971,760 973,801
=========================================================== ============= ============= =============
Current
Inventories 113,368 84,134 98,031
Biological assets 2,783 4,215 3,965
Trade and other receivables 443,879 481,996 380,791
Other investments 150 8,629 2,306
Corporation tax receivables 1,294 2,765 2,439
Derivative financial instruments 4,966 4,584 4,489
Cash and cash equivalents 131,493 78,876 115,529
=========================================================== ============= ============= =============
Total current assets 697,933 665,199 607,550
=========================================================== ============= ============= =============
Total assets 1,673,524 1,636,959 1,581,351
=========================================================== ============= ============= =============
Equity
Share capital 4,105 4,105 4,105
Share premium 295,487 295,454 295,487
Other reserves (141,165) (131,604) (131,309)
Retained earnings 304,760 281,148 282,816
=========================================================== ============= ============= =============
Total equity attributable to equity holders of the parent 463,187 449,103 451,099
Non-controlling interests 98,939 95,484 98,768
=========================================================== ============= ============= =============
Total equity 562,126 544,587 549,867
=========================================================== ============= ============= =============
Liabilities
Non-current
Interest-bearing loans and borrowings 281,018 217,611 250,572
Lease liabilities 110,406 99,276 99,770
Other payables 2,803 1,768 2,904
Contingent consideration and other provisions 4,462 12,499 7,957
Put option liability 13,163 25,297 23,083
Corporation tax payable 6,714 6,658 6,541
Deferred tax liabilities 27,028 30,196 27,731
Employee benefits 16,098 16,140 16,736
=========================================================== ============= ============= =============
Total non-current liabilities 461,692 409,445 435,294
=========================================================== ============= ============= =============
Current
Interest-bearing loans and borrowings 69,319 155,558 86,150
Lease liabilities 20,261 17,280 20,306
Trade and other payables 530,668 500,017 475,202
Contingent consideration and other provisions 11,156 7,253 8,534
Put option liability 13,270 - 3,529
Derivative financial instruments 391 405 305
Corporation tax payable 4,641 2,414 2,164
=========================================================== ============= ============= =============
Total current liabilities 649,706 682,927 596,190
=========================================================== ============= ============= =============
Total liabilities 1,111,398 1,092,372 1,031,484
=========================================================== ============= ============= =============
Total liabilities and equity 1,673,524 1,636,959 1,581,351
=========================================================== ============= ============= =============
Condensed Group Statement of Changes in Equity
For the half year ended 30 June 2020
Attributable to equity holders of the parent
====================================================================================================
Own Currency Other
Share Share Undenomi-nated share translation Revaluation equity Retained Non-controlling Total
capital premium capital reserve reserve reserve reserves(1) earnings Total interests equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ========
Balance at 1
January 2020 as
presented in
the Balance
Sheet 4,105 295,487 140 (8,580) (18,699) 30,809 (134,979) 282,816 451,099 98,768 549,867
Adjust for
transfer of NCI
subject to put
option for
presentation
purposes - - - - - - (16,038) - (16,038) 16,038 -
================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ========
As at 1 January
2020 4,105 295,487 140 (8,580) (18,699) 30,809 (151,017) 282,816 435,061 114,806 549,867
================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ========
Comprehensive
income
Profit for the
period - - - - - - - 26,853 26,853 7,314 34,167
Other
comprehensive
income
Items that may
be reclassified
subsequently to
profit or loss:
Foreign currency
translation
effects, net - - - - (10,108) - 30 - (10,078) (2,682) (12,760)
Effective
portion of cash
flow hedges,
net of
recycling - - - - - - 596 - 596 223 819
Changes in fair
value of cost
of hedging, net
of recycling - - - - - - (150) - (150) (41) (191)
Deferred tax on
items above - - - - - - (86) - (86) (38) (124)
Share of joint
ventures and
associates
effective
portion of
cashflow hedges - - - - - - (1,266) - (1,266) - (1,266)
Share of joint
ventures and
associates
deferred tax on
cashflow hedges - - - - - - (431) - (431) - (431)
Items that will
not be
reclassified
subsequently to
profit or loss:
Remeasurement
loss on
employee
benefit schemes - - - - - - - 31 31 (197) (166)
Deferred tax on
items above - - - - - - - 239 239 (1) 238
Share of joint
ventures
remeasurement
loss on
employee
pension schemes - - - - - - - (6,196) (6,196) - (6,196)
Share of joint
ventures
revaluation
gains on
property, plant
and equipment - - - - - 135 - - 135 - 135
Share of joint
ventures
deferred tax on
items above - - - - - - - 1,091 1,091 - 1,091
================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ========
Total other
comprehensive
income - - - - (10,108) 135 (1,307) (4,835) (16,115) (2,736) (18,851)
================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ========
Total
comprehensive
income - - - - (10,108) 135 (1,307) 22,018 10,738 4,578 15,316
================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ========
Transactions
with equity
holders of the
parent
Non-controlling
interest
arising on
acquisition of
subsidiaries - - - - - - - - - 1,816 1,816
Fair value
movement on put
option
liability - - - - - - 179 - 179 - 179
Acquisition of
non-controlling
interests - - - - - - - (74) (74) (423) (497)
Dividends paid - - - - - - - - - (4,555) (4,555)
Total
transactions
with equity
holders of the
parent - - - - - - 179 (74) 105 (3,162) (3,057)
================ ======= ======= ============== ======= =========== =========== =========== ========
As at 30 June
2020 4,105 295,487 140 (8,580) (28,807) 30,944 (152,145) 304,760 445,904 116,222 562,126
================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ========
Transfer of NCI
subject to put
option for
presentation
purposes - - - - - - 17,283 - 17,283 (17,283) -
================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ========
As at 30 June
2020 4,105 295,487 140 (8,580) (28,807) 30,944 (134,862) 304,760 463,187 98,939 562,126
================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ========
(1) Other equity reserves comprise the demerger reserve, share
option reserve, cash flow hedge reserve, cost of hedging reserve
and the put option reserve
Condensed Group Statement of Changes in Equity
For the half year ended 30 June 2019
Attributable to equity holders of the parent
====================================================================================================
Own Currency Other
Share Share Undenomi-nated share translation Revaluation equity Retained Non-controlling Total
capital premium capital reserve reserve reserve reserves(1) earnings Total interests equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ========
Balance 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 - - - - 159 - - (6,937) (6,778) (1,337) (8,115)
Adjust for
transfer of NCI
subject to put
option 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
period - - - - - - - 43,620 43,620 6,059 49,679
Other
comprehensive
income
Items that may
be reclassified
subsequently to
profit or loss:
Foreign currency
translation
effects, net - - - - (1,730) - (1,069) - (2,799) 795 (2,004)
Effective
portion of cash
flow hedges,
net of
recycling - - - - - - (49) - (49) (29) (78)
Changes in fair
value of cost
of hedging, net
of recycling - - - - - - 135 - 135 10 145
Deferred tax on
items above - - - - - - (11) - (11) 9 (2)
Share of joint
ventures and
associates
effective
portion of
cashflow hedges - - - - - - (1,708) - (1,708) - (1,708)
Share of joint
ventures and
associates
deferred tax on
cashflow hedges - - - - - - 265 - 265 - 265
Items that will
not be
reclassified
subsequently to
profit or loss:
Remeasurement
loss on
employee
benefit schemes - - - - - - - (972) (972) (216) (1,188)
Deferred tax on
items above - - - - - - - (126) (126) (2) (128)
Share of joint
ventures
remeasurement
loss on
employee
pension schemes - - - - - - - (1,881) (1,881) - (1,881)
Share of joint
ventures
deferred tax on
items above - - - - - - - 547 547 - 547
================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ========
Total other
comprehensive
income - - - - (1,730) - (2,437) (2,432) (6,599) 567 (6,032)
================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ========
Total
comprehensive
income - - - - (1,730) - (2,437) 41,188 37,021 6,626 43,647
================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ========
Transactions
with equity
holders of the
parent
New shares
issued 1 33 - - - - (10) 10 34 - 34
Non-controlling
interest
arising on
acquisition of
subsidiaries - - - - - - - - - 1,537 1,537
Put option
liability
extinguished - - - - - - 11,657 - 11,657 - 11,657
Fair value
movement on put
option
liability - - - - - - (891) - (891) - (891)
Dividends paid - - - - - - - (9,767) (9,767) (9,229) (18,996)
Share-based
payment
transactions - - - - - - 109 - 109 - 109
================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ========
Total
transactions
with equity
holders of the
parent 1 33 - - - - 10,865 (9,757) 1,142 (7,692) (6,550)
================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ========
As at 30 June
2019 4,105 295,454 140 (8,580) (24,292) 28,336 (146,477) 281,148 429,834 114,753 544,587
================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ========
Transfer of NCI
subject to put
option for
presentation
purposes - - - - - - 19,269 - 19,269 (19,269) -
================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ========
As at 30 June
2019 4,105 295,454 140 (8,580) (24,292) 28,336 (127,208) 281,148 449,103 95,484 544,587
================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ========
(1) Other equity reserves comprise the demerger reserve, share option reserve, cash flow hedge reserve, cost of hedging reserve and the put option reserve
Condensed Group Statement of Changes in Equity
For the full year ended 31 December 2019
Attributable to equity holders of the parent
====================================================================================================
Own Currency Other
Share Share Undenomi-nated share translation Revaluation equity Retained Non-controlling Total
capital premium capital reserve reserve reserve reserves(1) earnings Total interests equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ========
Balance 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 - - - - 159 - - (6,937) (6,778) (1,337) (8,115)
Adjust for
transfer of NCI
subject to put
option 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 and
associates
effective
portion of
cashflow hedges - - - - - - (5,101) - (5,101) - (5,101)
Share of joint
ventures and
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
================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ========
(1) Other equity reserves comprise the demerger reserve, share
option reserve, cash flow hedge reserve, cost of hedging reserve
and the put option reserve
Condensed Group Statement of Cashflows
for the half year ended 30 June 2020
(Unaudited) (Unaudited) (Audited)
H1 2020 H1 2019 FY 2019
EUR'000 EUR'000 EUR'000
=============================================================================== =========== =========== =========
Net cash flows from operating activities before working capital movements 44,096 35,579 67,249
Movement in working capital (24,657) (62,149) 6,527
=============================================================================== =========== =========== =========
Net cash flows from operating activities (Note 11) 19,439 (26,570) 73,776
=============================================================================== =========== =========== =========
Investing activities
Acquisition of subsidiaries (71) (2,200) (6,683)
Cash assumed on acquisition of subsidiaries, net 1,524 401 2,308
Acquisition of, and investment in joint ventures and associates (504) (7,715) (7,145)
Payments of contingent consideration (86) (7,205) (11,103)
Acquisition of equity investments - - (150)
Proceeds from disposal of joint ventures and associates 98 48 48
Proceeds from disposal of investments for resale 2,632 - 1,043
Cash/(bank overdraft) derecognised on disposal of subsidiaries - - (191)
Acquisition of property, plant and equipment (6,835) (11,916) (19,518)
Expenditure on computer software (3,333) (1,904) (4,621)
Development expenditure capitalised (96) (56) (62)
Proceeds from disposal of property, plant and equipment and software - routine 267 301 678
Proceeds from exceptional item 2,073 2,396 9,307
Dividends received from joint ventures and associates 6,356 6,282 10,652
Government grants received - - 106
=============================================================================== =========== =========== =========
Net cash flows from investing activities 2,025 (21,568) (25,331)
=============================================================================== =========== =========== =========
Financing activities
Drawdown of borrowings 87,562 135,062 345,764
Repayment of borrowings (102,988) (111,788) (333,211)
Lease payments (11,508) (7,959) (17,902)
Proceeds from the issue of share capital, net - 34 67
Acquisition of non-controlling interests (300) - (1,656)
Dividends paid to non-controlling interests (5,044) (9,687) (16,055)
Dividends paid to equity holders of the parent - (9,767) (13,313)
=============================================================================== =========== =========== =========
Net cash flows from financing activities (32,278) (4,105) (36,306)
=============================================================================== =========== =========== =========
Net decrease in cash, cash equivalents and bank overdrafts (10,814) (52,243) 12,139
Net foreign exchange movement (2,447) (79) 1,149
Cash, cash equivalents and bank overdrafts at beginning of the period 106,027 92,739 92,739
=============================================================================== =========== =========== =========
Cash, cash equivalents and overdrafts at end of period 92,766 40,417 106,027
=============================================================================== =========== =========== =========
Condensed summary group reconciliation of net debt
(Unaudited) (Unaudited) (Audited)
H1 2020 H1 2019 FY 2019
EUR'000 EUR'000 EUR'000
======================================================================= =========== =========== =========
Net (decrease)/ increase in cash, cash equivalents and bank overdrafts (10,814) (52,243) 12,139
Drawdown of borrowings (87,562) (135,062) (345,764)
Repayment of borrowings 102,988 111,788 333,211
Loans arising on acquisition (2,550) - -
Foreign exchange movement 287 (669) (2,672)
======================================================================= =========== =========== =========
Movement in net debt 2,349 (76,186) (3,086)
Finance lease reclassified from net debt on adoption of IFRS 16 - 1,636 1,636
Net debt at beginning of the period (221,193) (219,743) (219,743)
======================================================================= =========== =========== =========
Net debt at end of the period (218,844) (294,293) (221,193)
======================================================================= =========== =========== =========
Net debt is a non-IFRS measure which comprises bank deposits,
cash and cash equivalents and current and non-current borrowings.
It excludes lease liabilities. The calculation is outlined on Note
12.
Notes to the Interim Results
for the half year ended 30 June 2020
1. Basis of preparation
The condensed consolidated interim financial statements of Total
Produce plc as at, and for the six months ended 30 June 2020, have
been prepared in accordance with IAS 34 Interim Financial
Reporting, as adopted by the EU. The accounting policies and
methods of computation adopted in the preparation of the financial
information are consistent with those set out in the Group's
consolidated financial statements for the year ended 31 December
2019, with the exception of those disclosed below, which were
prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the EU.
The interim financial information for both the six months ended
30 June 2020 and the comparative six months ended 30 June 2019 is
unaudited. The financial information for the year ended 31 December
2019 represents an abbreviated version of the Group's statutory
financial statements for that year, which contained an unqualified
audit report and have been filed with the Registrar of
Companies.
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates. In preparing these
condensed consolidated interim financial statements, the
significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty
were the same as those applied to the consolidated financial
statements as at and for the year ended 31 December 2019, with the
addition of assessing the impact of the COVID-19 pandemic as set
out below.
Changes in accounting policy and disclosures
Except as described below, the accounting policies applied in
these interim financial statements are the same as those applied in
the Group's consolidated financial statements as at 31 December
2019.
A number of new standards are effective from 1 January 2020 and
they have not had a material impact on the Group's consolidated
financial statements. Any changes in accounting policy will be
disclosed in the Group's consolidated financial statements as at 31
December 2020.
The Group has considered the impact of COVID-19 with respect to
the judgements and estimates it makes in the application of its
accounting policies. The financial statements as at 30 June 2020
incorporate these considerations on the recoverability of
inventory, trade receivables and other assets. The Group continues
to actively manage its working capital including inventory and
trade receivables. COVID-19 has increased the credit risk from
customers in the food service sector as demand has significantly
decreased as a result of government-imposed restrictions.
Outstanding customer balances are actively monitored and reviews
for indicators of impairment are done on an ongoing basis.
Furthermore, trade credit is extended to customers after careful
consideration and thereafter continuously monitored. Where the
extension of credit is considered inappropriate, payment plans are
put in place. A significant element of credit risk is covered by
credit insurance. Whilst expected credit losses from some food
service customers have increased, the impact of COVID-19 on the
recoverability of inventory and trade receivables is not considered
significant.
The impairment testing of goodwill and indefinite life
intangibles at the reporting date is based on the key assumptions
disclosed in the 2019 Annual Report, updated to take account of
future potential trading scenarios as a result of this pandemic.
Where indicators of impairment were present in a Cash Generating
Unit, the Group performed detailed testing using updated forecasts.
The testing did not result in any impairment at the balance sheet
date and will be reassessed in December 2020.
Land and Buildings and Investment Property are stated at fair
value. Investment Property is revalued at each reporting period by
registered independent appraisers with Land and Buildings valued by
registered independent appraisers every three to five years.
Further details are outlined in the Group's 2019 Annual Report. At
30 June 2020, the Group performed a desktop review of Investment
Property and Land and Buildings and identified two properties in
the Non-Eurozone division where fair value was below historic cost
resulting in a EUR1.1m impairment charge in the period.
2. Translation of foreign currencies
The reporting currency of the Group is Euro. The rates used in
the translation of results and balance sheets into Euro were as
follows:
Average rate Closing rate
============================================================== ==============================================================
H1 H1
30 Jun 31 Dec
2020 2019 % change 2020 2019 % change
====================== =================== =================== ==================== ============== =================== =================== ====================
Brazilian
Real 5.9287 4.3410 (36.6%) 6.1118 4.5157 (35.3%)
Canadian
Dollar 1.5185 1.5066 (0.8%) 1.5319 1.4599 (4.9%)
Czech
Koruna 26.6368 25.6785 (3.7%) 26.7400 25.4080 (5.2%)
Danish
Kroner 7.4613 7.4661 0.1% 7.4523 7.4717 0.3%
Indian
Rupee 81.4880 79.0941 (3.0%) 84.5415 79.9301 (5.8%)
Polish
Zloty 4.4138 4.2915 (2.8%) 4.4524 4.2551 (4.6%)
Pound
Sterling 0.8842 0.8712 (1.5%) 0.9109 0.8506 (7.1%)
Swedish
Krona 10.6653 10.5308 (1.3%) 10.4824 10.4778 (0.0%)
US
Dollar(1) 1.1016 1.1296 2.5% 1.1229 1.1216 (0.1%)
====================== =================== =================== ==================== ============== =================== =================== ====================
(1) For period ended 13 June 2020, the average rate used in
translating the revenues of Dole to Euro was 1.1016 (2019: 1.1267)
and equity accounted profit after tax of Dole to Euro in 2020 was
1.1047 (2019: 1.1267).
3. Segmental Analysis
The table below details a segmental breakdown of the Group's
total revenue and adjusted EBITA for the six months ended 30 June
2020, the six months ended 30 June 2019 and the full year ended 31
December 2019.
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. 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 number three
positions respectively for bananas in North American and Europe and
are number two and number 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 and is 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.
(Unaudited) (Unaudited) (Unaudited)
H1 2020 H1 2019 (3) FY 2019 (3)
=================== =================== ===================
Total Adjusted Total Adjusted Total Adjusted
revenue EBITA revenue EBITA revenue EBITA
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
========================= ========= ======== ========= ======== ========= ========
Europe - Non-Eurozone 770,019 21,637 751,973 22,977 1,481,657 41,913
Europe - Eurozone 855,231 12,430 831,997 10,912 1,661,446 20,477
International 617,566 11,071 604,917 8,945 1,271,566 22,284
Dole (Group share)(1) 902,866 46,334 891,021 49,987 1,821,400 65,440
Inter-segment revenue(2) (33,446) - (28,557) - (62,874) -
========================= ========= ======== ========= ======== ========= ========
Total Group 3,112,236 91,472 3,051,351 92,821 6,173,195 150,114
========================= ========= ======== ========= ======== ========= ========
(1) Dole's financial calendar consists of thirteen 4 weekly
periods. The first half results are for the first six periods ended
13 June 2020. The comparative results are for the first six periods
of 2019 ended 15 June 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
corporate overhead.
(2) All inter-segment revenue transactions are at arm's
length.
(3) In 2020 there was a realignment in the reporting of small
businesses in Europe due to change in divisional management
responsibility. The comparative 2019 financial information for both
European divisions has been restated to conform with the current
presentation.
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:
(Unaudited) (Unaudited) (Audited)
H1 2020 H1 2019 FY 2019
EUR'000 EUR'000 EUR'000
================================================================================= =========== =========== =========
Adjusted EBITA per management reporting 91,472 92,821 150,114
Acquisition related intangible asset amortisation within subsidiaries(1) (5,129) (4,986) (10,301)
Share of joint ventures and associates acquisition related intangible asset
amortisation (1,328) (1,349) (2,696)
Fair value movements on contingent consideration(2) 681 1,067 204
Acquisition related costs within subsidiaries(3) (348) (23) (177)
Share of joint ventures and associates net financial expense(4) (19,335) (21,359) (40,817)
Share of joint ventures and associates tax (before tax on exceptional items) (13,078) (13,761) (14,059)
================================================================================= =========== =========== =========
Operating profit before exceptional items 52,935 52,410 82,268
Net financial expense before exceptional items(5) (5,070) (5,515) (10,967)
================================================================================= =========== =========== =========
Profit before tax before exceptional items 47,865 46,895 71,301
Exceptional items(6) (5,298) 8,444 5,232
================================================================================= =========== =========== =========
Profit before tax after exceptional items 42,567 55,339 76,533
================================================================================= =========== =========== =========
(1) Acquisition related intangible asset amortisation charges
are not allocated to operating segments in the Group's management
reports.
(2) Fair value movements on contingent consideration are not
allocated to operating segments in the Group's management
reports.
(3) 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.
(4) 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.
(5) 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.
(6) Exceptional items (Note 4) are not allocated to operating
segments in the Group's management reports.
4. Exceptional items
(Unaudited) (Unaudited) (Audited)
H1 2020 H1 2019 FY 2019
EUR'000 EUR'000 EUR'000
============================================================================ =========== =========== =========
Gain/(Loss) on disposal of investment(1) - 1,447 (670)
Restructuring costs and costs associated with termination of a business(2) (348) - (1,146)
Share of joint venture and associates exceptional items - Dole(3) (4,788) 6,199 5,523
Impairment of PPE(4) (1,101) - -
Total exceptional items (before share of joint ventures and associates tax) (6,237) 7,646 3,707
Share of joint venture and associates tax on exceptional items - Dole(3) 939 798 1,525
============================================================================ =========== =========== =========
Exceptional items within profit before tax (5,298) 8,444 5,232
Net tax (charge)/credit on exceptional items(5) (973) 304 (47)
============================================================================ =========== =========== =========
Total net of tax (6,271) 8,748 5,185
============================================================================ =========== =========== =========
Attributable as follow:
Equity holders of the parent (6,271) 8,135 5,246
Non-controlling interests - 613 (61)
============================================================================ =========== =========== =========
(6,271) 8,748 5,185
============================================================================ =========== =========== =========
Of the EUR5.3m net exceptional cost in H1 2020, EUR1.4m has been
recognised as a net charge within operating expenses, and EUR3.9m
as a net exceptional charge within share of profits of joint
ventures and associates. Of the EUR8.4m net exceptional credit in
H1 2019, EUR1.4m has been recognised as a credit within net
operating expenses and EUR7.0m as a net exceptional gain has within
share of profits of joint ventures and associates. Of the EUR5.2m
net exceptional credit in FY 2019, EUR1.8m has been recognised as a
charge with net operating expenses and a EUR7.0m net exceptional
gain has been recognised within share of profits of joint ventures
and associates.
(1) Gain/(Loss) 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 gain
of EUR1.5m for the period ended 30 June 2019 and exceptional loss
of EUR0.7m for the year ended 31 December 2019 represented the
gain/loss on the disposals of the investment in those periods and
the fair value movements of the remaining investment held in escrow
at that period end.
(2) Restructuring costs and costs associated with termination
and disposal of businesses
Restructuring charges of EUR0.3m were incurred in the period on
ongoing structuring programs in Europe. 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 as
well as charges of EUR0.5m incurred in 2019 on ongoing
restructuring programs in Europe
(3) Share of exceptional items within joint ventures and
associates - Dole
The share of the exceptional items in Dole for the 6 month
period to 13 June 2020 was a charge of EUR4.8m with a related tax
credit of EUR0.9m. Included in these were a net charge of EUR2.4m
on mark to market of derivative financial instruments (including
ineffectiveness on interest rate swap hedging instrument) and
foreign currency gains/losses on long term foreign currency
denominated intercompany borrowings, net restructuring charges of
EUR1.4m and EUR1.0m due to COVID-19 costs (costs of employee
protective equipment, double shifts etc).
The share of the exceptional items in Dole for the 6 month
period to 15 June 2019 was a credit of EUR6.2m with a related tax
credit of EUR0.8m. Included in these were net gains of EUR11.0m on
disposals of businesses/assets, net charges of EUR0.9m 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 EUR2.2m, transaction costs
of EUR0.9m and costs of EUR0.8m associated with industry wide
product recalls.
The Group's share of the exceptional items in Dole for the year
ended 28 December 2019 was a net gain of EUR5.5m with a related tax
credit of EUR1.5m. Included in these exceptional items are net
gains of EUR11.8m on disposals of businesses/assets, net gains of
EUR0.1m 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, transaction costs of EUR0.6m and costs of EUR1.7m
associated with industry wide product recalls.
(4) Impairment of property, plant and equipment
All property is recognised in the financial statements at fair
value. As part of the Group's bi-annual review of carrying value of
property, the Group identified two properties in the Non-Eurozone
division where fair value exceeded historic cost resulting in an
exceptional income statement charge of EUR1.1m.
(5) Tax credit/(charge) on exceptional items
The net tax effect on the exceptional items above for the half
year ended June 2020 was a net charge of EUR1.0m (year ended 31
December 2019: a charge of less than EUR0.1m and a gain of EUR0.3m
for the half year ended 30 June 2019).
Effect of exceptional items on cash flow statement
The net effect of exceptional items including prior period
exceptional items was a net cash inflow of EUR1.6m for the period
to 30 June 2020 (2019: outflow of EUR0.6m). The net effect of
exceptional items for the year ended 31 December 2019 was a cash
inflow of EUR5.8m.
5. Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit
for the period attributable to ordinary equity holders of the
parent by the weighted average number of ordinary shares
outstanding during the period, excluding shares purchased by the
Company which are held as treasury shares.
(Unaudited) (Unaudited) (Audited)
H1 2020 H1 2019 FY 2019
EUR'000 EUR'000 EUR'000
==================================================================== =========== =========== =========
Profit attributable to equity holders of the parent 26,853 43,620 53,302
==================================================================== =========== =========== =========
'000 '000 '000
Shares in issue at beginning of period 410,525 410,429 410,429
New shares issued from exercise of share options (weighted average) - 47 51
Shares repurchased by company (weighted average) - - (2)
Effect of treasury shares held (22,000) (22,000) (22,000)
==================================================================== =========== =========== =========
Weighted average number of shares at end of period 388,525 388,476 388,478
==================================================================== =========== =========== =========
Basic earnings per share - cent 6.91 11.23 13.72
==================================================================== =========== =========== =========
Diluted earnings per share
Diluted earnings per share is calculated by dividing the profit
for the period attributable to ordinary equity holders of the
parent by the weighted average number of ordinary shares
outstanding after adjustment for the effects of all ordinary shares
and options with a dilutive effect.
(Unaudited) (Unaudited) (Audited)
H1 2020 H1 2019 FY 2019
EUR'000 EUR'000 EUR'000
============================================================= =========== =========== =========
Profit attributable to equity holders of the parent 26,853 43,620 53,302
============================================================= =========== =========== =========
'000 '000 '000
Weighted average number of shares at end of period 388,525 388,476 388,478
Effect of share options with a dilutive effect 583 867 817
Weighted average number of shares at end of period (diluted) 389,108 389,343 389,295
============================================================= =========== =========== =========
Diluted earnings per share - cent 6.90 11.20 13.69
============================================================= =========== =========== =========
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 equity holders of the
parent (as calculated below) by the weighted average number of
ordinary shares outstanding during the period, 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 equity
holders of the parent (as calculated below) by the weighted average
number of ordinary shares outstanding after adjustment for the
effects of all ordinary shares and options with a dilutive
effect.
(Unaudited) (Unaudited) (Audited)
H1 2020 H1 2019 FY 2019
EUR'000 EUR'000 EUR'000
================================================================================= =========== =========== =========
Profit attributable to equity holders of the parent 26,853 43,620 53,302
Adjustments:
Exceptional items - net of tax (Note 4) 6,271 (8,748) (5,185)
Acquisition related intangible asset amortisation within subsidiaries 5,129 4,986 10,301
Share of joint ventures and associates acquisition related intangible asset
amortisation 1,328 1,349 2,696
Acquisition related costs within subsidiaries 348 23 177
Fair value movements on contingent consideration (681) (1,067) (204)
Tax effect of amortisation of goodwill, intangible assets and fair value
movements on contingent
consideration (759) (1,006) (3,188)
Non-controlling interests share of items above (1,718) (1,002) (2,915)
Adjusted profit attributable to equity holders of the parent 36,771 38,155 54,984
'000 '000 '000
================================================================================= =========== =========== =========
Weighted average number of shares 388,525 388,476 388,478
Weighted average number of shares (diluted) 389,108 389,343 389,295
================================================================================= =========== =========== =========
Adjusted basic earnings per share - cent 9.46 9.82 14.15
================================================================================= =========== =========== =========
Adjusted fully diluted earnings per share - cent 9.45 9.80 14.12
================================================================================= =========== =========== =========
6. Investment in Dole
As disclosed previously, on 31 July 2018 the Group completed the
transaction to acquire a 45% shareholding 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 $312m.
From 31 July 2020, 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 historical three year
average Dole adjusted EBITDA less net debt. However, in no event
shall the Third Tranche purchase price be less than $250m or exceed
$450m (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 which of the
acquisition of the First Tranche, which is 31 July 2023 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. A price protection
mechanism is in place in favour of Total Produce around the
proceeds from such a sale.
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. As part of the Securities Purchase
Agreement, Dole agreed to contribute $15m to cover professional and
advisory fees relating to the transaction.
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.
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
The following is the summarised financial information of Dole
for the period ended 13 June 2020 (H1 2020) and the period ended 15
June 2019 (H1 2019) 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 Dole (in USD '000)
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) (Audited) (Audited)
H1 2020 H1 2020 H1 2020 H1 2019 H1 2019 H1 2019 FY 2019 FY 2019 FY 2019
Pre-Exceptional Exceptional Total Pre-Exceptional Exceptional Total Pre-Exceptional Exceptional Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
================= ================ ============ ============ ================ ============ ============ ================ ============ ==========
Revenue 2,210,322 - 2,210,322 2,236,182 - 2,236,182 4,566,354 - 4,566,354
================= ================ ============ ============ ================ ============ ============ ================ ============ ==========
Operating profit 118,775 (8,371) 110,404 130,290 15,607 145,897 173,790 13,846 187,636
Net financial
expense (35,579) (3,480) (39,059) (38,631) - (38,631) (78,369) - (78,369)
Leasing interest
expense (9,097) - (9,097) (12,449) - (12,449) (19,284) - (19,284)
================= ================ ============ ============ ================ ============ ============ ================ ============ ==========
Profit before
tax 74,099 (11,851) 62,248 79,210 15,607 94,817 76,137 13,846 89,983
Income tax
expense (28,899) 2,313 (26,586) (31,288) 1,991 (29,297) (25,477) 3,823 (21,654)
================= ================ ============ ============ ================ ============ ============ ================ ============ ==========
Profit for the
period 45,200 (9,538) 35,662 47,922 17,598 65,520 50,660 17,669 68,329
Non-controlling
interests (1,460) - (1,460) (1,255) - (1,255) (2,205) - (2,205)
================= ================ ============ ============ ================ ============ ============ ================ ============ ==========
Profit for the
period
attributable to
equity
shareholders 43,740 (9,538) 34,202 46,667 17,598 64,265 48,455 17,669 66,124
================= ================ ============ ============ ================ ============ ============ ================ ============ ==========
Group 45% share
of profit
attributable to
equity
shareholders 19,683 (4,292) 15,391 21,000 7,919 28,919 21,805 7,951 29,756
================= ================ ============ ============ ================ ============ ============ ================ ============ ==========
Summary of other comprehensive income statement Dole (in USD
'000)
(Unaudited) (Unaudited) (Audited)
H1 2020 H1 2019 FY 2019
$'000 $'000 $'000
================================================================ ============ ============ ==========
Effective portion of cashflow hedges, net of recycling (3,111) (4,417) (12,753)
Remeasurement loss on employee benefit schemes (15,167) (4,725) (6,459)
Revaluation gain on property, plant and equipment 339 - 3,411
Deferred tax on items above 1,612 2,069 1,048
Foreign currency translation effects 842 (5,903) (8,015)
Other comprehensive expense for the period (net of tax) (15,485) (12,976) (22,768)
Non-controlling interests share - - -
================================================================ ============ ============ ==========
Attributable to equity shareholders (15,485) (12,976) (22,768)
================================================================== ============ ============ ==========
Group's 45% share of other comprehensive expense attributable to
equity shareholders (6,968) (5,839) (10,246)
================================================================== ============ ============ ==========
Key performance indicators Dole (in USD '000)
(Unaudited) (Unaudited) (Audited)
H1 2020 H1 2019 FY 2019
$'000 $'000 $'000
================================================================ ============ ============ ==========
Adjusted EBITDA (adding back depreciation of right-of-use assets) 185,412 202,395 307,724
Adjusted EBITDA 153,354 161,044 245,013
Adjusted EBITA 118,775 130,290 173,790
================================================================== ============ ============ ==========
Summary income statement Dole (in Euro '000)
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) (Audited) (Audited)
H1 2020 H1 2020 H1 2020 H1 2019 H1 2019 H1 2019 FY 2019 FY 2019 FY 2019
Pre-Exceptional Exceptional Total Pre-Exceptional Exceptional Total Pre-Exceptional Exceptional Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
================= ================ ============ ============ ================ ============ ============ ================ ============ ==========
Revenue 2,006,367 - 2,006,367 1,980,046 - 1,980,046 4,047,555 - 4,047,555
================= ================ ============ ============ ================ ============ ============ ================ ============ ==========
Operating profit 107,521 (7,497) 100,024 115,615 13,782 129,397 154,044 12,274 166,318
Net financial
expense (32,210) (3,150) (35,360) (34,272) - (34,272) (69,465) - (69,465)
Leasing interest
expense (8,235) - (8,235) (11,047) - (11,047) (17,093) - (17,093)
================= ================ ============ ============ ================ ============ ============ ================ ============ ==========
Profit before
tax 67,076 (10,647) 56,429 70,296 13,782 84,078 67,486 12,274 79,760
Income tax
expense (26,161) 2,094 (24,067) (27,764) 1,767 (25,997) (22,582) 3,388 (19,194)
================= ================ ============ ============ ================ ============ ============ ================ ============ ==========
Profit for the
period 40,915 (8,553) 32,362 42,532 15,549 58,081 44,904 15,662 60,566
Non-controlling
interests (1,322) - (1,322) (1,114) - (1,114) (1,954) - (1,954)
================= ================ ============ ============ ================ ============ ============ ================ ============ ==========
Profit for the
period
attributable to
equity
shareholders 39,593 (8,553) 31,040 41,418 15,549 56,967 42,950 15,662 58,612
================= ================ ============ ============ ================ ============ ============ ================ ============ ==========
Group 45% share
of profit
attributable to
equity
shareholders 17,817 (3,849) 13,968 18,638 6,997 25,635 19,327 7,048 26,375
================= ================ ============ ============ ================ ============ ============ ================ ============ ==========
Summary of other comprehensive income statement Dole (in Euro
'000)
(Unaudited) (Unaudited) (Audited)
H1 2020 H1 2019 FY 2019
EUR'000 EUR'000 EUR'000
================================================================ ============ ============ ==========
Effective portion of cashflow hedges, net of recycling (2,824) (3,920) (11,414)
Remeasurement loss on employee benefit schemes (13,768) (4,193) (5,781)
Revaluation gain on property, plant and equipment 302 - 3,041
Deferred tax on items above 1,463 1,836 938
Foreign currency translation effects 764 (5,237) (7,173)
Other comprehensive expense for the period (net of tax) (14,063) (11,514) (20,389)
Non-controlling interests share - - -
================================================================ ============ ============ ==========
Attributable to equity shareholders (14,063) (11,514) (20,389)
================================================================== ============ ============ ==========
Group's 45% share of other comprehensive expense attributable to
equity shareholders (6,328) (5,182) (9,175)
================================================================== ============ ============ ==========
Key performance indicators Dole (in Euro '000)
(Unaudited) (Unaudited) (Audited)
H1 2020 H1 2019 FY 2019
EUR'000 EUR'000 EUR'000
================================================================ ============ ============ ==========
Adjusted EBITDA (adding back depreciation of right-of-use assets) 167,845 179,599 272,762
Adjusted EBITDA 138,825 142,905 217,176
Adjusted EBITA 107,521 115,615 154,044
================================================================== ============ ============ ==========
Summary Balance Sheet of Dole (in USD '000)
(Unaudited) (Unaudited) (Audited)
13 Jun 2020 15 Jun 2019 28 Dec 2019
$'000 $'000 $'000
============================================================== ============= ============= =============
Intangible assets - Brand 285,119 286,267 285,540
Property, plant and equipment 1,081,324 1,024,228 1,069,546
Right of use assets 243,705 288,858 279,068
Assets held for sale/Actively marketed property 60,848 80,114 64,760
Other non-current assets 108,623 119,173 107,753
Other current assets 910,469 857,816 862,588
Net debt (1,269,270) (1,271,781) (1,287,328)
Employee benefit obligations (190,397) (187,013) (175,059)
Lease liabilities (256,501) (303,336) (294,034)
Other non-current liabilities (235,826) (258,743) (238,636)
Other current liabilities (661,982) (571,011) (617,365)
Non-controlling interests (9,732) (8,976) (9,170)
============================================================== ============= ============= =============
Fair value of net assets attributable to equity shareholders 66,380 55,596 47,663
============================================================== ============= ============= =============
Total Produce's 45% share of net assets 29,871 25,018 21,448
============================================================== ============= ============= =============
Goodwill 275,687 275,687 275,687
============================================================== ============= ============= =============
Total carrying value of 45% interest in Dole 305,558 300,705 297,135
============================================================== ============= ============= =============
Reconciliation of Group's carrying value of investment in Dole
(in USD '000)
(Unaudited) (Unaudited) (Audited)
13 Jun 2020 15 Jun 2019 28 Dec 2019
$'000 $'000 $'000
========================================================================= ============= ============= =============
Opening carrying value of 45% investment in Dole 297,135 281,432 281,432
Retained earnings adjustment on transition to IFRS 16 - (3,807) (3,807)
Group share of profit/(loss) for period attributable to equity
shareholders 15,391 28,919 29,756
Group share of other comprehensive expense for period attributable to
equity shareholders (6,968) (5,839) (10,246)
Closing carrying value of 45% interest in Dole 305,558 300,705 297,135
========================================================================= ============= ============= =============
Summary Balance Sheet of Dole (in Euro '000)
(Unaudited) (Unaudited) (Audited)
13 Jun 2020 15 Jun 2019 28 Dec 2019
EUR'000 EUR'000 EUR'000
============================================================== ============= ============= =============
Intangible assets - Brand 253,914 251,753 254,592
Property, plant and equipment 962,977 900,742 953,622
Right of use assets 217,032 254,032 248,821
Assets held for sale/Actively marketed property 54,188 70,455 57,741
Other non-current assets 96,735 104,805 96,074
Other current assets 810,822 754,393 769,096
Net debt (1,130,353) (1,118,449) (1,147,800)
Employee benefit obligations (169,559) (164,466) (156,085)
Lease liabilities (228,428) (266,764) (262,165)
Other non-current liabilities (210,016) (227,548) (212,771)
Other current liabilities (589,529) (502,167) (550,452)
Non-controlling interests (8,667) (7,894) (8,176)
============================================================== ============= ============= =============
Fair value of net assets attributable to equity shareholders 59,116 48,892 42,497
============================================================== ============= ============= =============
Total Produce's 45% share of net assets 26,602 22,001 19,124
============================================================== ============= ============= =============
Goodwill 245,476 242,425 245,769
============================================================== ============= ============= =============
Total carrying value of 45% interest in Dole 272,078 264,426 264,893
============================================================== ============= ============= =============
Reconciliation of Group's carrying value of investment in Dole
(in EUR '000)
(Unaudited) (Unaudited) (Audited)
13 Jun 2020 15 Jun 2019 28 Dec 2019
EUR'000 EUR'000 EUR'000
========================================================================= ============= ============= =============
Opening carrying value of 45% investment in Dole 264,893 245,902 245,881
Retained earnings adjustment on transition to IFRS 16 - (3,326) (3,326)
Group share of profit/(loss) for period attributable to equity
shareholders 13,968 25,635 26,375
Group share of other comprehensive expense for period attributable to
equity shareholders (6,328) (5,182) (9,175)
Foreign exchange movement (455) 1,397 5,138
========================================================================= ============= ============= =============
Closing carrying value of 45% interest in Dole 272,078 264,426 264,893
========================================================================= ============= ============= =============
7. Post-employment obligations
(Unaudited) (Unaudited) (Audited)
H1 2020 H1 2019 FY 2019
EUR'000 EUR'000 EUR'000
===================================================== =========== =========== =========
Employee defined benefit pension schemes obligations (9,650) (9,955) (10,828)
Other post-employment defined benefit obligations (6,448) (6,185) (5,908)
===================================================== =========== =========== =========
(16,098) (16,140) (16,736)
===================================================== =========== =========== =========
Employee defined benefit pension schemes
(Unaudited) (Unaudited) (Audited)
H1 2020 H1 2019 FY 2019
EUR'000 EUR'000 EUR'000
================================================================================= =========== =========== =========
Pension assets 189,277 185,179 192,227
Pension obligations (198,927) (195,134) (203,055)
================================================================================= =========== =========== =========
Net liability (9,650) (9,955) (10,828)
Net related deferred tax asset 1,798 1,557 1,479
================================================================================= =========== =========== =========
Net liability after tax (7,852) (8,398) (9,349)
================================================================================= =========== =========== =========
Movement in period
Net liability at beginning of period (10,828) (10,941) (10,941)
Net interest expense and current service cost recognised in the income statement (923) (872) (1,677)
Employer contributions to schemes 1,254 2,537 4,866
Remeasurement gain/(loss) recognised in other comprehensive income 407 (523) (2,683)
Translation adjustment 440 (156) (393)
================================================================================= =========== =========== =========
Net liability at end of period before deferred tax (9,650) (9,955) (10,828)
================================================================================= =========== =========== =========
The table above summarises the movements in the net liability of
the Group's various defined benefit pension schemes in Ireland, the
UK, Continental Europe and North America in accordance with IAS 19
Employee Benefits (2011).
The Group's balance sheet at 30 June 2020 reflects net pension
liabilities of EUR9.7m in respect of schemes in deficit, resulting
in a net deficit of EUR7.9m after deferred tax. There was a 2.3%
average return on pension scheme assets in 2020 (10% in H1
2019).
The below table shows the discount rates and inflation
rates:
Jun 2020 Jun 2019 Dec 2019
================ ======== ======== ========
Eurozone
Discount rates 1.55% 1.40% 1.40%
Inflation rates 1.10% 1.20% 1.40%
UK
Discount rates 1.60% 2.30% 2.00%
Inflation rates 2.60% 3.20% 2.70%
================ ======== ======== ========
8. Dividends
Having regard to Government guidelines on the holding of
meetings, the Board decided to postpone the AGM which was due to be
held on 15 May 2020, to 28 August 2020. Subject to the
shareholders' approval at the AGM, the 2019 final dividend of
2.5770 cent per share will be paid on 2 September 2020 to
shareholders on the Register of Members as at 7 August 2020.
The Board intends to pay the 2020 interim dividend of 0.9129
cent per share, unchanged on the prior year in January 2021.
In accordance with company law and IFRS, these dividends have
not been provided for in the balance sheet at 30 June 2020 .
During the period, the Group declared dividends of EUR4.6m
(2019: EUR9.2m) to non-controlling shareholders in certain of the
Group's non wholly-owned subsidiaries. In the same period cash
dividends of EUR5.1m (2019: EUR9.7m) were paid.
9. Businesses acquired and other developments
Investments in subsidiaries
A key part of the Group's strategy is to grow by acquisition.
During the six-month period, the Group made a number of bolt-on
acquisitions and investments with committed investment of EUR2.2m
including EUR0.8m of deferred consideration and EUR0.6m contingent
consideration payable on the achievement of future profit targets.
Goodwill arising on these acquisitions amounts to EUR0.6m. 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.
Payment of contingent and deferred consideration in the
period
During the period, the Group paid EUR86,000 of contingent
consideration relating to prior period acquisitions.
10. Financial instruments
The fair values of financial assets and financial liabilities,
together with the carrying amounts in the Condensed Group Balance
Sheet at 30 June 2020, 30 June 2019 and 31 December 2019 are as
follows:
(Unaudited) (Unaudited) (Audited)
30 Jun 2020 30 Jun 2019 31 Dec 2019
========================== ========================== ==========================
Carrying value Fair value Carrying value Fair value Carrying value Fair value
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
========================== ============== ========== ============== ========== ============== ==========
Other Investments 476 476 13,597 13,597 5,049 5,049
Trade and other
receivables - current(1) 424,752 n/a 463,690 n/a 368,973 n/a
Trade and other
receivables -
non-current(1) 23,254 n/a 24,181 n/a 19,796 n/a
Derivative financial
assets 4,966 4,966 4,584 4,584 4,489 4,489
Cash and cash equivalents 131,493 n/a 78,876 n/a 115,529 n/a
========================== ============== ========== ============== ========== ============== ==========
584,941 584,928 513,836
========================== ============== ========== ============== ========== ============== ==========
Trade and other payables -
current (530,668) n/a (500,017) n/a (475,202) n/a
Trade and other payables -
non-current (2,803) n/a (1,768) n/a (2,904) n/a
Bank overdrafts (38,727) n/a (38,459) n/a (9,502) n/a
Bank borrowings (311,610) (314,100) (334,710) (335,210) (327,220) (328,397)
Lease liabilities (130,667) (130,667) (116,556) (116,556) (120,076) (120,076)
Lease dilapidations (660) (660) (912) (912) (1,011) (1,011)
Derivative financial
liabilities (391) (391) (405) (405) (305) (305)
Contingent consideration (14,464) (14,464) (17,924) (17,924) (14,860) (14,860)
Other provisions (494) n/a (916) n/a (620) n/a
Put option liability (26,433) (26,433) (25,297) (25,297) (26,612) (26,612)
========================== ============== ========== ============== ========== ============== ==========
(1,056,917) (1,036,964) (978,312)
========================== ============== ========== ============== ========== ============== ==========
(1) For the purposes of this analysis prepayments have not been
included within other receivables. Carrying value of other
financial assets, trade receivables and other receivables are
stated net of impairment provisions where appropriate and
consequently fair value is considered to approximate to carrying
value.
The Group has availed of the exemption under IFRS 7 Financial
Instruments: Disclosure for additional disclosures where fair value
closely approximates carrying value.
A number of other put and call options arising from acquisitions
are of immaterial fair value.
The Group uses the following hierarchy for determining and
disclosing the fair value of financial instruments by valuation
technique:
-- Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
-- Level 2: other techniques for which all inputs which have a
significant effect on the recorded fair value are observable,
either directly or indirectly;
-- Level 3: techniques which use inputs which have a significant
effect on the recorded fair value that are not based on observable
market data
(Unaudited) (Unaudited) (Audited)
30 Jun 2020 30 Jun 2019 31 Dec 2019
============================== ============================== ==============================
Fair value Designated as Fair value Designated as Fair value Designated as
through P+L or hedging through P+L or hedging through P+L or hedging
equity(1) instrument equity(1) instrument equity(1) instrument
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
============== ============== ============== ============== ============== ============== ==============
Level 1
Other
Investments - - 12,230 - 4,554 -
Level 2
Foreign
exchange
contracts
assets 8 559 - 240 33 51
Foreign
exchange
contracts
liability (218) (173) (25) (375) (16) (289)
Interest rate
swaps
liability - - (5) - - -
Level 3
Other
Investments 476 - 1,367 - 495 -
Options to
acquire
additional
shares in
subsidiaries,
joint
ventures and
associates 4,399 - 4,344 - 4,405 -
Contingent
consideration (14,464) - (17,924) - (14,860) -
Put option
liability(1) (1) (26,433) - (1) (25,297) - (1) (26,612) -
============== ============== ============== ============== ============== ============== ==============
(1) Put option liability is fair valued through equity.
Additional disclosures for Level 3 fair value measurements
Options to acquire
Other Investments additional shares(1) Contingent consideration Put option liability
EUR'000 EUR'000 EUR'000 EUR'000
========================= ================= ======================== ======================== ====================
At 1 January 2020 495 4,405 (14,860) (26,612)
Paid during the period - - 86 -
Arising on acquisition of
subsidiaries - - (581) -
Fair value movement on
put option recognised
directly within equity - - - 179
Foreign exchange
movements (19) (6) 210 -
Included in the income
statement
Fair value movements - - 681 -
========================= ================= ======================== ======================== ====================
At 30 June 2020 476 4,399 (14,464) (26,433)
Presented on Balance
Sheet as follows:
Current asset/(liability) 150 - (10,662) (13,270)
Non-current
asset/(liability) 326 4,399 (3,802) (13,163)
========================= ================= ======================== ======================== ====================
476 4,399 (14,464) (26,433)
========================= ================= ======================== ======================== ====================
(1) The Group has options to acquire additional shares in
certain subsidiaries, joint ventures and associates at the end of
the period.
Contingent consideration
Contingent consideration represents the provision for the net
present value of the amounts expected to be payable in respect of
acquisitions which are subject to earn-out arrangements. Contingent
consideration for each individual transaction is valued internally
by the Group Finance team in consultation with Senior Management
and updated as required at each reporting period.
EUR'000
================================================= =======
Contingent consideration balance at 30 June 2020 14,464
Contractual maturity of cashflows:
Less than 6 months 6,796
6 to 12 months 4,125
1 to 2 years 784
2 to 3 years 1,871
3 to 4 years 234
4 to 5 years 769
Greater than 5 years 386
==================================================== =======
Total cash value 14,965
==================================================== =======
Put option liability
The Group has a number of contractual put options and forward
commitments in place in relation to non-controlling interest
('NCI') shares in subsidiaries whereby the NCI shareholder can
require the Group, or the Group has agreed to acquire ('forward
commitment') the shares in these subsidiaries at various future
dates. The value of the put option or forward commitment liability
recognised represents management's best estimate of the fair value
of the amounts which may be payable discounted to net present
value. The put option or forward commitment for each individual
transaction is valued internally by the Group Finance team in
consultation with Senior Management and updated as required at each
reporting period.
11. Cash flows generated from operations
(Unaudited) (Unaudited) (Audited)
H1 2020 H1 2019 FY 2019
EUR'000 EUR'000 EUR'000
=========================================================================== =========== =========== =========
Operating activities
Profit for the period 34,167 49,679 66,204
Adjustments for non-cash items:
Income tax expense 8,400 5,660 10,329
Income tax paid (5,028) (5,659) (15,154)
Depreciation of property, plant and equipment 8,945 8,782 17,773
Depreciation of right of use assets 10,803 9,174 19,253
Exceptional items - impairment of property plant and equipment 1,101 - -
Exceptional items - operating expenses 348 (1,447) 1,816
Cashflows from exceptional items (487) (3,044) (3,489)
Fair value movements on contingent consideration (681) (1,067) (204)
Amortisation of intangible assets - acquisition related 5,129 4,986 10,301
Amortisation of intangible assets - capitalised development costs 117 120 238
Amortisation of intangible assets - computer software 1,175 947 2,046
Amortisation of government grants (33) (25) (63)
Defined benefit pension scheme expense 923 872 1,677
Contributions to defined benefit pension schemes (1,254) (2,537) (4,866)
Other post-employment benefit schemes' expense 231 223 451
Net contributions/(payments) for other post-employment benefit schemes 22 22 (249)
Share-based payment expense - 109 109
Net gain on disposal of property, plant and equipment (57) (68) (313)
Currency recycled to income statement on joint venture becoming subsidiary (102) - -
Net finance expense 5,070 5,515 10,967
Net financial expense paid (5,414) (5,531) (11,144)
(Gain)/loss on non-hedging derivative financial instruments 34 (42) (115)
Loss on termination of IFRS 16 leased assets - - 146
Gain on disposal of joint venture - (88) (88)
Fair value loss on a joint venture becoming a subsidiary 80 - -
Fair value movements on biological assets (247) 713 666
Fair value gain on other investments - (848) (854)
Movements in provisions - (298) (489)
Share of profits of joint ventures and associates (19,146) (30,569) (37,699)
=========================================================================== =========== =========== =========
Net cash flows from operations before working capital movements 44,096 35,579 67,249
=========================================================================== =========== =========== =========
Movements in working capital:
Movements in inventories (15,608) 6,400 (6,091)
Movements in biological assets 1,631 182 530
Movements in trade and other receivables (68,201) (94,034) 27,342
Movement in trade and other payables 57,521 25,303 (15,254)
=========================================================================== =========== =========== =========
Total movements in working capital (24,657) (62,149) 6,527
=========================================================================== =========== =========== =========
Cash flows from operating activities 19,439 (26,570) 73,776
=========================================================================== =========== =========== =========
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 borrowings. The calculation
of net debt at 30 June 2020, 30 June 2019 and 31 December 2019 is
as follows:
(Unaudited) (Unaudited) (Audited)
30 Jun 2020 30 Jun 2019 31 Dec 2019
EUR'000 EUR'000 EUR'000
================================ ============ ============ ============
Current assets
Cash and cash equivalents 117,395 67,706 99,445
Call deposits (demand balances) 14,098 11,170 16,084
Current liabilities
Bank overdrafts (38,727) (38,459) (9,502)
Current bank borrowings (30,592) (117,099) (76,648)
Non-current liabilities
Non-current bank borrowing (281,018) (217,611) (250,572)
Net debt at end of the period (218,844) (294,293) (221,193)
================================ ============ ============ ============
Reconciliation of cash and cash equivalents per balance sheet to
cashflow statement
(Unaudited) (Unaudited) (Audited)
30 Jun 2020 30 Jun 2019 31 Dec 2019
EUR'000 EUR'000 EUR'000
=================================================================== ============ ============ ============
Cash and cash equivalents per balance sheet 131,493 78,876 115,529
Bank overdrafts (38,727) (38,459) (9,502)
Cash, cash equivalents and bank overdrafts per cash flow statement 92,766 40,417 106,027
=================================================================== ============ ============ ============
13. Post balance sheet events
There have been no other material events subsequent to 30 June
2020 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 2019
Annual Report that materially affect the financial position or the
performance of the Group for the six months period ended 30 June
2020.
15. Board approval
This interim results statement was approved by the Board of
Directors of Total Produce plc on 26 August 2020.
Appendix 1
Alternative Performance Measures (APMs)
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.
(Unaudited) (Unaudited) (Audited)
H1 2020 H1 2019 FY 2019
EUR'000 EUR'000 EUR'000
================================================================================= =========== =========== =========
Profit before tax per income statement 42,567 55,339 76,533
Adjustments
Exceptional items 5,298 (8,444) (5,232)
Fair value movements on contingent consideration (681) (1,067) (204)
Share of joint ventures and associates' tax (before tax on exceptional items) 13,078 13,761 14,059
Acquisition related intangible asset amortisation within subsidiaries 5,129 4,986 10,301
Share of joint ventures and associates acquisition related intangible asset
amortisation 1,328 1,349 2,696
Acquisition related costs within subsidiaries 348 23 177
================================================================================= =========== =========== =========
Adjusted profit before tax 67,067 65,947 98,330
Exclude
Net finance expense - subsidiaries before exceptional items 5,070 5,515 10,967
Net finance expense - share of joint ventures and associates 19,335 21,359 40,817
================================================================================= =========== =========== =========
Adjusted EBITA 91,472 92,821 150,114
Exclude
Amortisation of software costs 1,175 947 2,046
Depreciation of property, plant and equipment - subsidiaries 8,945 8,782 17,773
Depreciation of property, plant and equipment - share of joint ventures and
associates 16,583 14,555 32,870
================================================================================= =========== =========== =========
Adjusted EBITDA 118,175 117,105 202,803
Exclude
Depreciation of right of use assets - subsidiaries 10,803 9,174 19,253
Depreciation of right of use assets - share of joint ventures and associates 15,342 18,533 29,115
================================================================================= =========== =========== =========
Adjusted EBITDA (before depreciation on right of use assets) 144,320 144,812 251,171
================================================================================= =========== =========== =========
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
5.
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.
(Unaudited) (Unaudited) (Audited)
H1 2020 H1 2019 FY 2019
EUR'000 EUR'000 EUR'000
================================================================================= =========== =========== =========
Income tax expense 8,400 5,660 10,329
Group share of tax charge of joint ventures and associates 12,139 12,963 12,534
================================================================================= =========== =========== =========
Total tax charge 20,539 18,623 22,863
Adjustments
Deferred tax credit on amortisation of intangible assets - subsidiaries 550 777 2,623
Deferred tax credit on amortisation of intangible assets - share of joint
ventures and associates 209 229 565
Tax charge on exceptional items in subsidiaries (973) 304 (47)
Group share of tax charge on exceptional items within joint ventures and
associates 939 798 1,525
Tax charge on underlying activities 21,264 20,731 27,529
Adjusted profit before tax 67,067 65,947 98,330
Effective tax on underlying activities 31.71% 31.44% 28.0%
================================================================================= =========== =========== =========
Net debt
Definition
Net debt is a non-IFRS measure which comprises bank deposits,
cash and cash equivalents and current and non-current borrowings.
It excludes lease liabilities. The calculation is outlined in Note
12.
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.
Non-routine capital expenditure is expenditure on projects to
grow the business and generally relate to the acquisition, and fit
out of new facilities or extending the capacity of existing
facilities.
(Unaudited) (Unaudited) (Audited)
H1 2020 H1 2019 FY 2019
EUR'000 EUR'000 EUR'000
====================================================== =========== =========== =========
Acquisition of property, plant and equipment 6,835 11,916 19,518
Acquisition of intangible assets - computer software 3,333 1,904 4,621
Proceeds on disposal of property, plant and equipment (267) (301) (678)
Non-routine (development capital expenditure) (1,318) (3,759) (4,470)
====================================================== =========== =========== =========
Routine capital expenditure 8,583 9,760 18,991
====================================================== =========== =========== =========
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.
(Unaudited) (Unaudited) (Audited)
H1 2020 H1 2019 FY 2019
EUR'000 EUR'000 EUR'000
============================================================== =========== =========== =========
Net cashflow from operating activities per cashflow statement 19,439 (26,570) 73,776
Cash impact of exceptional items in operating cashflows 487 3,044 3,489
Less lease liability payments (11,508) (7,959) (17,902)
============================================================== =========== =========== =========
Adjusted operating cashflow 8,418 (31,485) 59,363
============================================================== =========== =========== =========
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.
(Unaudited) (Unaudited) (Audited)
H1 2020 H1 2019 FY 2019
EUR'000 EUR'000 EUR'000
============================================================== =========== =========== =========
Net cashflow from operating activities per cashflow statement 19,439 (26,570) 73,776
Cash impact of exceptional items in operating cashflows 487 3,044 3,489
Less lease liability payments (11,508) (7,959) (17,902)
Dividends received from joint ventures and associates 6,356 6,282 10,652
Dividends paid to non-controlling interests (5,044) (9,687) (16,055)
Routine capital expenditure (8,583) (9,760) (18,991)
============================================================== =========== =========== =========
Free Cashflow 1,147 (44,650) 34,969
============================================================== =========== =========== =========
Net Debt/Adjusted EBITDA
Definition
Net debt/adjusted EBITDA is a measure of the Group's leverage
and is calculated by dividing net debt (as defined earlier) by
adjusted EBITDA (as defined earlier). Adjusted EBITDA is a rolling
12-month measure, therefore for H1 2020 and H1 2019 it is
calculated as the adjusted EBITDA for the preceding 12 months
ending on 30 June.
(Unaudited) (Unaudited) (Audited)
H1 2020 H1 2019 FY 2019
EUR'000 EUR'000 EUR'000
================================= =========== =========== =========
Net debt 218,844 294,293 221,193
Rolling adjusted EBITDA 203,873 193,709 202,803
================================= =========== =========== =========
Net debt/Adjusted EBITDA (times) 1.1 x 1.5x 1.1x
================================= =========== =========== =========
Interest cover: EBITA interest cover
Definition
Interest cover is a measure of the Group's ability to meet its
interest payments and is calculated by dividing adjusted EBITA (as
defined earlier) by net financial expense.
(Unaudited) (Unaudited) (Audited)
H1 2020 H1 2019 FY 2019
EUR'000 EUR'000 EUR'000
============================================= =========== =========== =========
Adjusted EBITA 91,472 92,821 150,114
Net financial expense 5,070 5,515 10,967
============================================= =========== =========== =========
Adjusted EBITA/Net financial expense (times) 18.0 x 16.8x 13.7x
============================================= =========== =========== =========
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 and proceeds from sale of equity
investments.
(Unaudited) (Unaudited) (Audited)
H1 2020 H1 2019 FY 2019
EUR'000 EUR'000 EUR'000
===================================================================== =========== =========== =========
Cash outflow relating to investment in joint ventures and associates 504 7,715 7,145
Investment in subsidiaries 71 2,200 6,683
Proceeds from disposal of joint venture (98) (48) (48)
Acquisition of non-controlling interests 300 - 1,656
Proceeds on disposal of investments for resale (2,632) - (1,043)
Acquisition of equity investments - - 150
===================================================================== =========== =========== =========
Acquisition related expenditure (inflow)/outflow (1,855) 9,867 14,543
===================================================================== =========== =========== =========
Appendix 2
Risks and Uncertainties
The Board of Total Produce has the ultimate responsibility for
the Group's systems of risk management and internal control.
The Group's control system is designed to actively manage rather
than eliminate the risks of failure to achieve its business
objectives. The internal controls system is designed to provide
reasonable but not absolute assurance against material misstatement
or loss.
Risk management within Total Produce plc is co-ordinated by an
Executive Risk Committee ('ERC' or the 'Committee') which directs
the implementation of the process consistently throughout the
Group. Responsibility for the identification and evaluation of
financial, operational and compliance risks is delegated to senior
management, which reports back to the Committee. The Committee
meets during the year, as required, to identify, assess and manage
risk. In this process it reviews the relevant findings and makes
recommendations. The Committee reports its findings and
recommendations to the Audit Committee, which in turn reports to
the Board.
Summarised below are the principal risks and uncertainties
facing the Group, along with key controls and mitigation
activities.
COVID-19
Risk Identified
The recent COVID-19 pandemic has been a challenge for the Group
and the wider fresh produce industry. Commercially, the crisis led
to some change in the distribution channels for fresh produce.
Temporary government restrictions on the movement on people and
lockdowns has led to lower levels of activity in the food service
sector but this has been offset by higher retail and wholesale
activity. The pandemic has also put pressure on global supply
chains.
Operationally, physical distancing and workplace guidance from
governments require additional precautions in the supply/production
chain which leads to less efficient and more costly delivery of
product. There is also a risk of infection clusters in workgroup,
and suspension of production lines.
Organisationally, it has put more pressure on the Group's
overall Health and Safety management and operations, and the Group
has had to implement numerous measures to keep its people safe.
Key control and mitigation activities
The Group is diversified in terms of geography, product,
suppliers and customers. This diversification has been a key factor
in mitigating the effect of the pandemic. The Group was also able
to reallocate resources where required to support the increased
retail and wholesale demand.
Operationally, the Group has invested in training and workplace
changes to facilitate safe, and socially distant work practices.
These activities include, and are not limited to, installation of
temperature scanning machines, additional shifts to accommodate
physical distancing, supply and the wearing of personal protective
equipment, rigorous training and facility assessments.
Economic and political
Risk Identified
Global economic conditions and the stability of the markets in
which we operate could impact on the Group's performance.
Key control and mitigation activities
The Group's management monitors global developments and the
organisation structure enables prompt response, where appropriate,
to changing market conditions.
The Group is geographically well diversified with operations in
30 countries across five continents.
The Group sources produce from numerous regions to ensure
continuous supply.
Food Safety
Risk Identified
Profitability in the fresh produce sector is dependent on high
quality of supplies and consistency of delivery. It is possible
that serious quality issues, and in particular, contamination of
product, whether deliberate or accidental, could have a negative
impact on revenue.
Key control and mitigation activities
Management undertakes ongoing reviews to ensure food safety
policies and procedures continue to be effective and that adequate
resources are in place.
The Group has very close and well-established relationships with
its growers and only buys product when comfortable with the
grower's reputation and commitment to food safety.
The Group sources produce from numerous regions to ensure
continuous supply.
Corporate communication and shareholders
Risk Identified
The Group as a publicly listed company, undertakes regular
communications with its shareholders. These communications may
contain forward-looking statements which by their nature involve
uncertainty and actual results or developments may differ
materially from the expectations expressed or implied in these
communications. Failure to deliver on performance indications
communicated to stakeholders could result in a reduction in share
price, reduced earnings and reputational damage.
Key control and mitigation activities
Structures are in place at operational and divisional levels to
ensure accurate and timely reporting.
The operational and financial performance of the Group is
reported to the Board on a monthly basis.
Stock Exchange Announcements including preliminary and interim
results announcements are all approved by the Board and by the
Audit Committee as required/covered by their respective terms of
reference.
The Group places a high priority on communications with
stakeholders and devotes considerable time and resources each year
to stakeholder engagement.
The Group has an active investor relations programme and meets
regularly with investors and analysts and in particular at the time
of the announcements of preliminary and interim results.
Key customer relationships and credit risk
Risk Identified
The Group's customer base consists primarily of retailers,
wholesalers and food service operators. The increasing
concentration of customers can increase credit risk. Changes in the
trading relationships with major customers, or of their procurement
policies, could positively or adversely affect the operations and
profitability of the Group. In addition, the Group faces strong
competition in its various markets and, if it fails to compete
effectively, its business, results and financial condition could be
adversely affected.
Key control and mitigation activities
Customer relationships are developed at both local and at senior
management level to reduce risk and ensure that value is maintained
for both Total Produce and the customer.
There is a focus on improving choice, price and service to our
customers on an ongoing basis.
Credit risk is managed by credit management structures and
reviews.
The utilisation of credit limits is regularly monitored, and a
significant element of the credit risk is covered by credit
insurance.
Key supplier relationships
Risk Identified
The Group sources its products from a significant number of
suppliers. The loss of any of these could have an adverse impact on
the Group. Additionally, the Group may enter into seasonal purchase
agreements committing it to purchase fixed quantities of produce at
fixed prices. The Group is exposed to the risk of losses arising
from any inability to sell on these committed quantities and/or
achieve the committed price.
Key control and mitigation activities
Key supplier relationships are actively managed by local and
senior management. Any changes are communicated to executive
management to ensure timely reaction to mitigate risks.
The Group sources produce from numerous regions and suppliers
worldwide to ensure continuity of supply.
Internal procedures are in place for the approval and monitoring
of any seasonal arrangements.
Acquisition activity
Risk Identified
Growth through acquisition is a key element of the Group's
strategy to create shareholder value. A failure to identify,
execute or properly integrate acquisitions could impact on profit
targets, the strategic development of the Group and consequently
shareholder value.
Key control and mitigation activities
The Group has traditionally grown through acquisition and has a
long-proven track record in identifying and integrating
acquisitions.
Executive, senior and local management, together with a
dedicated in-house corporate finance team, engage in a continuous
and active review of acquisitions.
All potential acquisitions are subject to an assessment of the
strategic fit within the Group and ability to generate a return on
capital employed in excess of the cost of capital of the Group.
The Group conducts extensive due diligence using both internal
and external resources prior to completing any acquisitions.
Board approval of the business case for all significant
acquisitions is in place.
The Group has appropriate credit facilities available to fund
acquisitions.
Senior management are responsible for the oversight and
successful integration of new investments.
Regulation and Compliance
Risk Identified
The Group operates in a number of jurisdictions and is therefore
exposed to a wide range of legal and regulatory frameworks.
Key control and mitigation activities
There is regular monitoring and review of changes in law and
regulation in relevant areas.
Management has access to the appropriate professional advisors
in the relevant areas of compliance.
There is ongoing training arranged to ensure compliance.
Access to credit and interest rate fluctuations
Risk Identified
The Group is exposed to fluctuations in credit markets which
could impact the availability and cost of financing and
consequently the Group's ability to grow through acquisition.
Key control and mitigation activities
The Group has facilities with a number of recognised
international banks and funding providers with varied maturity
profiles.
The Group ensures that sufficient funds and resources are
available to meet expected liabilities and to finance the growth of
the business through a combination of cash and cash equivalents,
operating cash flows and undrawn committed facilities.
The Group has in place approved facilities giving access to
appropriate long-term borrowings as and when required.
Retention of key personnel and talent management
Risk Identified
The Group is dependent on the continuing commitment of its
Directors and senior management team. The loss of such key
personnel without adequate replacement could have an adverse effect
on the Group's business.
Key control and mitigation activities
Throughout the Group there is a focus on succession planning,
and it is formally assessed and reviewed by the Board.
Recruitment policies, management incentives and training and
development programmes have all been established to encourage the
retention of key personnel.
The Nomination Committee regularly assess Board composition and
also examine Group succession plans.
IT systems and cyber-security
Risk Identified
The Group relies on information technology and systems to
support our business. Failure to ensure that our core operational
systems are available to service business requirements could impact
the day-to-day operations of the Group. In addition, the
exploitation of vulnerabilities in IT systems either accidental or
malicious, including those resulting from cyber-security attacks,
could adversely impact the Group's business.
Key control and mitigation activities
The Group has robust Information Security and Computer User
policies regarding the protection of business and personal
information and governing the use of IT assets.
The Group seeks to manage this risk, in conjunction with our
external partners, through a range of measures which include
monitoring of threats, testing for vulnerabilities, provision of
resilience and reviewing cyber-security standards.
Independent, external and internal, reviews of our core
operational systems are performed on an on-going basis.
There is a Group policy on backups in place and these are
regularly tested.
Goodwood Impairment
Risk Identified
Sustained underperformance in any of the Group's cash generating
units may result in a material write down of goodwill. While such a
write down would be a non-cash charge it could have a substantial
impact on the Group's income statement and shareholders'
equity.
Key control and mitigation activities
During the monthly reporting process indicators of goodwill
impairment are monitored. Where necessary there is communication
with senior management in order to ensure that potential impairment
issues are highlighted and where practical corrective action is
taken.
The Group tests goodwill annually for impairment on 31 December,
or more frequently if there are indications that goodwill might be
impaired.
The results of the goodwill impairment assessment are reported
to the Audit Committee and the Board.
Foreign Currency
Risk Identified
As a large multinational group with extensive operations
worldwide the Group is exposed to translational and transactional
currency fluctuations. The principal currency risk to which the
Group is exposed, is adverse currency movements on translation of
the results and balance sheets of foreign currency denominated
operations into Euro, the Group's reporting currency. Adverse
changes in exchange rates will have an impact on the Group's
reported results and shareholders' equity. The impact of such
movements is reported in the Condensed Group Statement of
Comprehensive Income. Foreign currency risk also arises from
foreign currency transactions within each individual entity.
Key control and mitigation activities
The Group finances its initial overseas investments by, as far
as is appropriate, matching foreign currency borrowings which
naturally hedge the translation movement on foreign currency
investments.
Repayments and interest on borrowings are therefore denominated
in currencies that match the cash flows generated by the underlying
businesses.
Group operations manage their individual transactional foreign
exchange risk against their functional currency and material
currency risks are managed by utilising forward contracts to cover
committed exposures.
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END
IR BCGDILDDDGGL
(END) Dow Jones Newswires
August 27, 2020 02:00 ET (06:00 GMT)
Total Produce (LSE:TOT)
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