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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Total Produce Plc | LSE:TOT | London | Ordinary Share | IE00B1HDWM43 | ORD EUR0.01 (CDI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 165.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMTOT
RNS Number : 0982S
Total Produce Plc
07 March 2019
TOTAL PRODUCE PLC
2018 PRELIMINARY RESULTS
Total Produce continues growth in 2018
Hot Features
Premium
-- Total Revenue up 17.7% to EUR5.04 billion
-- Total Revenue (excluding Dole) up 1.6% to EUR4.35 billion
-- Adjusted EBITDA up 27.6% to EUR133.3m
-- Adjusted EBITDA (excluding Dole) up 5.7% to EUR110.4m
-- Adjusted fully diluted EPS (including Dole and the related share
placing) of 10.51 cent
-- Adjusted fully diluted EPS (excluding Dole and the related share
placing) up 0.1% to 13.50 cent (up 2.7% constant currency)
-- Total dividend up 2.5%
Key performance indicators are defined overleaf
Commenting on the results, Carl McCann, Chairman, said:
"We are pleased that Total Produce has delivered continuing good results in a more challenging year. Adjusted EBITDA was up 27.6% to EUR133.3m. On a like-for-like basis, excluding Dole, Adjusted EBITDA was up 5.7% with adjusted fully diluted earnings per share up 0.1%. On a constant currency basis, excluding Dole, adjusted EBITDA and adjusted fully diluted earnings per share were up 8.9% and 2.7% respectively.
On 1(st) February 2018, Total Produce announced an agreement to acquire 45% of Dole for $300m and issued 63 million ordinary shares (representing c. 19% of ordinary shares) raising $180m to part finance the acquisition. The acquisition of the shareholding in Dole represents a transformational change for Total Produce and brings together two of the world's leading fresh produce companies. The transaction completed on 31 July 2018 and the first full year including the Dole results will be 2019.
Trading in early 2019 has been satisfactory. Total Produce is targeting an increase in the 2019 adjusted fully diluted earnings per share, including Dole in the mid-to-upper single digit range over the 2018 adjusted earnings per share of 13.50 cent.
The Group is also pleased to propose a 2.5% increase in final dividend to 2.5140 cent per share".
7 March 2019
For further information, please contact:
Brian Bell, Wilson Hartnell PR - Tel: +353-1-669-0030, Mobile: +353-87-243-6130
TOTAL PRODUCE PLC PRELIMINARY RESULTS FOR THE
YEARED 31 DECEMBER 2018
Results excluding Dole acquisition and related share placing
2018 2017
EUR'million EUR'million change
Total Revenue (1) 4,354 4,286 +1.6%
------------- ------------- ---------
Adjusted EBITDA(1) 110.4 104.4 +5.7%
------------- ------------- ---------
Adjusted EBITA(1) 87.7 83.5 +5.0%
------------- ------------- ---------
Adjusted profit before tax(1) 80.7 76.7 +5.2%
------------- ------------- ---------
EUR'cent EUR'cent
------------- ------------- ---------
Adjusted fully diluted earnings
per share 13.50 13.48 +0.1%
------------- ------------- ---------
Reported results
2018 2017
EUR'million EUR'million change
Total Revenue(1) 5,043 4,286 +17.7%
------------- ------------- ---------
Group Revenue 3,728 3,674 +1.5%
------------- ------------- ---------
Adjusted EBITDA(1) 133.3 104.4 +27.6%
------------- ------------- ---------
Adjusted EBITA(1) 98.0 83.5 +17.3%
------------- ------------- ---------
Operating profit after intangible
asset amortisation 77.9 78.2 (0.5%)
------------- ------------- ---------
Adjusted profit before tax(1) 76.9 76.7 +0.2%
------------- ------------- ---------
Profit before tax 69.8 72.5 (3.7%)
------------- ------------- ---------
EUR'cent EUR'cent
------------- ------------- ---------
Adjusted fully diluted earnings
per share 10.51 13.48 (22.0%)
------------- ------------- ---------
Basic earnings per share 9.37 14.80 (36.7%)
------------- ------------- ---------
Diluted basic earnings per share 9.34 14.68 (36.4%)
------------- ------------- ---------
Total dividend per share 3.4269 3.3433 +2.5%
------------- ------------- ---------
(1) Key performance indicators defined
Total revenue includes the Group's share of the revenue of its joint
ventures and associates.
Adjusted EBITDA is earnings before interest, tax, depreciation, acquisition
related intangible asset amortisation charges and costs, fair value
movements on contingent consideration, 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 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 profit before tax 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 and exceptional items. It also excludes the Group's share
of these items within joint ventures and associates.
Adjusted fully diluted earnings per share excludes acquisition related
intangible asset amortisation charges and costs, fair value movements
on contingent consideration, 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.
Forward-looking statement
Any forward-looking statements made in this press release have been made in good faith based on the information available as of the date of this press release and are not guarantees of future performance. Actual results or developments may differ materially from the expectations expressed or implied in these statements, and the Company undertakes no obligation to update any such statements whether as a result of new information, future events, or otherwise. Total Produce's Annual Report contains and identifies important factors that could cause these developments or the Company's actual results to differ materially from those expressed or implied in these forward-looking statements.
Overview
The 2018 financial year was a significant year for Total Produce ('the
Group'). As announced on 1 February 2018, the Group entered into an
agreement to acquire a 45% stake in Dole Food Company ('Dole') for
$300m with options to further increase the Group's stake. Dole is one
of the world's leading fresh fruit and vegetables companies with an
iconic brand and leading market positions and scale. This transaction
creates the world's largest fresh produce Group. The transaction completed
on 31 July 2018 after receiving regulatory approvals. On 1 February
2018, a total of 63 million new ordinary shares (representing 19% of
the Company's issued share capital) were issued raising EUR145 million
(before related costs) to finance the Dole transaction.
The reported results for year ended 31 December 2018 include the Group's
45% share of Dole for the last five months of the year from the date
of completion. The Dole business is seasonal with the greater share
of its earnings in the first half of the financial year. For the five
month period, the Group's 45% share of revenue was EUR692m, adjusted
EBITA EUR10.3m and after tax losses EUR6.4m. The 2019 financial year
will be the first full year reflecting this transaction.
Excluding the results of Dole and the related share placing, the Group
delivered a good performance in 2018. Total revenue, adjusted EBITDA
and adjusted EBITA grew by 1.6%, 5.7% and 5.0% respectively. The results
benefited from the incremental contribution of acquisitions offset
in part by the negative impact on translation to Euro of the results
of foreign currency denominated operations and unfavourable weather
patterns. Adjusted earnings per share of 13.50 cent (2017: 13.48 cent)
was marginally ahead of the prior year. On a constant currency basis,
revenue, adjusted EBITDA, adjusted EBITA and adjusted fully diluted
EPS were 3.8%, 8.9%, 8.6% and 2.7% respectively ahead of prior year.
Including the Group's share of the results of Dole for the five months
ended 31 December 2018, total revenue of EUR5,043m, adjusted EBITDA
of EUR133.3m and adjusted EBITA of EUR98.0m were 17.7%, 27.6% and 17.3%
respectively ahead of prior year. Adjusted earnings per share of 10.51
cent (2017: 13.48 cent) was down due to impact of the share placing
on 1 February 2018 and the after tax losses of Dole for the five month
period to 31 December 2018. The Dole business is seasonal with earnings
weighted towards the first half of the financial year.
The Group continues to be cash generative with adjusted operating
cash flows of EUR52.9m (2017: EUR53.8m) and free cash flows of EUR31.2m
(2017: EUR34.3m).
The Board is pleased to announce a 2.5% increase in the final dividend
to 2.5140 (2017: 2.4527) cent per share subject to the approval of
shareholders at the forthcoming AGM. If approved, the total dividend
for 2018 will amount to 3.4269 (2017: 3.3433) cent per share which
represents an increase of 2.5% on 2017.
Operating review
The table below details a segmental breakdown of the Group's total
revenue and adjusted EBITA for the year ended 31 December 2018. 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 from the date of
acquisition 31 July 2018. Dole is one of the world's leading fresh
producers/growers, marketers and distributors of fresh fruit and vegetables
which they sell through a wide network in North America, Europe, Latin
America, the Middle East and Africa. Segment performance is evaluated
based on total revenue and adjusted EBITA.
Year ended Year ended
31 December 2018 31 December 2017
Total Adjusted Total Adjusted
revenue EBITA revenue EBITA
EUR'000 EUR'000 EUR'000 EUR'000
Europe - Eurozone 1,716,584 27,252 1,737,964 26,990
Europe - Non-Eurozone 1,511,780 41,593 1,542,598 41,716
International 1,175,297 18,880 1,061,927 14,838
Inter-segment revenue (49,991) - (56,258) -
------------- ------------ ------------ -----------
Total Group (ex-Dole) 4,353,670 87,725 4,286,231 83,544
------------- ------------ ------------ -----------
Dole 692,239 10,297 - -
Inter-segment revenue (2,419) - - -
------------- ------------ ------------ -----------
Total Group 5,043,490 98,022 4,286,231 83,544
------------- ------------ ------------ -----------
Excluding the contribution from Dole, total revenue increased 1.6%
to EUR4.35 billion (2017: EUR4.29 billion) with adjusted EBITA up 5.0%
to EUR87.7m (2017: EUR83.5m). Adjusted EBITA margin in 2018 increased
to 2.01% (2017: 1.95%). The results benefited from the incremental
contribution of acquisitions offset in part by the negative impact
on the translation to Euro of the results of foreign currency denominated
operations. On a constant currency basis total revenue and adjusted
EBITA increased by 3.8% and 8.6% respectively.
Fresh produce markets particularly in Europe have been challenged with
extended unusual weather conditions that continued through the summer
months into autumn which impacted the supply and demand dynamic. On
a like-for-like basis, excluding acquisitions, divestments and currency
translation, total revenue was in line with prior year with an increase
in average prices offsetting a marginal decrease in volumes. Volume
increases in the North America business compensated for a small decrease
in volumes in the European business.
Europe - Eurozone
This segment includes the Group's businesses in France, Ireland, Italy,
the Netherlands and Spain. Revenue decreased by 1.2% to EUR1,717m (2017:
EUR1,738m) with a 1.0% increase in adjusted EBITA to EUR27.3m (2017:
EUR27.0m). Overall trading conditions were challenging due to unusual
weather patterns which extended into the summer months which disrupted
supply and demand particularly in the soft fruit, vegetables and salads
categories. These effects were more pronounced in the Netherlands where
the market remains very competitive. This was offset by a good performance
in Southern Europe. Excluding the effect of acquisitions and divestments,
revenue on a like-for-like basis was in line with prior year with a
marginal increase in average prices offset by a small decrease in volume.
Europe - Non-Eurozone
This segment includes the Group's businesses in the Czech Republic,
Poland, Scandinavia and the UK. Revenue decreased by 2.0% to EUR1,512m
(2017: EUR1,543m) with adjusted EBITA decreasing by 0.3% to EUR41.6m
(2017: EUR41.7m). This was due to unusual weather patterns as highlighted
earlier and in particular to the adverse impact of the translation of
the results of foreign currency denominated operations into Euro due
to the weakening of the Swedish Krona and Sterling by 6.5% and 1.1%
respectively which negatively impacted revenue and adjusted EBITA by
EUR40m and EUR1.4m respectively. This was offset in part by the contribution
of bolt-on acquisitions in the past twelve months.
On a like-for-like basis excluding acquisitions, divestments and currency
translation, revenue was circa 2% behind prior year with marginal decreases
in both volume and average prices.
International
This division includes the Group's businesses in North America, South
America and India. Revenue increased by 10.7% to EUR1,175m (2017: EUR1,062m)
with adjusted EBITA increasing 27.2% to EUR18.9m (2017: EUR14.8m). The
results benefited from the incremental contribution of acquisitions.
On the 1 March 2017, the Group acquired a further 30% of the Oppenheimer
Group ('Oppy') taking its interest to 65% and from this date it is fully
consolidated as a subsidiary. Previously the original 35% shareholding
was equity accounted for as an associate interest. In addition there
was the incremental benefit from The Fresh Connection acquisition in
October 2017. This was offset in part by the weakening of the US Dollar
and Canadian Dollar by 3.7% and 4.9% respectively in the year which
negatively impacted the results on translation to Euro. On a like-for
like basis revenue increased by circa 2% with volume increases offset
by a marginal price decrease. In the prior year, the soft fruit market
was impacted by weather conditions that led to surplus volumes and lower
pricing. Oppy also incurred start-up losses in a new soft fruit growing
partnership in 2017.
Dole
This segment includes the Group's share of the results of Dole from
date of completion of the acquisition. As noted earlier, the Group completed
the acquisition of the initial tranche of 45% of Dole on 31 July 2018
and is equity accounting for its 45% share of the results of Dole on
an IFRS basis with effect from 1 August 2018. The overall business is
seasonal with the greater share of trading profits earned in the first
half of the financial year. The 2019 financial year will therefore be
the first full year reflecting this transaction.
On a full year basis under US GAAP, Dole has recorded revenues of $4.42
billion for the year ended 31 December 2018 (2017: $4.41 billion). Adjusted
EBITDA (on an S-1 basis) was $192.5m (2017: $238.0m) with adjusted EBITA
of $102.9m (2017: $134.5m). The Dole Fresh Fruit Division performed
well in 2018 while adjusted EBITDA in the Dole Fresh Vegetable Division
decreased $33m on prior year due in the main to the effect of two industry
wide safety notices affecting romaine lettuce, not directly linked to
Dole and an oversupply resulting in lower pricing.
Post completion of the transaction, Dole sold its corporate headquarters
for $50.0m. The book value gain of $7.3m has been excluded from the
adjusted EBITDA and adjusted EBITA above. Post the year end in January
2019, Dole completed the sale of its salad business and production facilities
in Sweden and Finland. The sale of the Swedish facility was a condition
of the European Commission's approval of the acquisition of the 45%
interest in Dole.
On an IFRS basis for the five months ended 31 December 2018, the Group's
45% share of revenue was $795m; EUR692m, and adjusted EBITA was $11.8m;
EUR10.3m reflecting the weighting of trading profits towards the first
half of the year and the impact of industry wide safety notices on the
results in the Fresh Vegetable Division as noted earlier.
Further details on the acquisition of Dole and its financial performance
and position for the five months ended 31 December 2018 are outlined
in Note 8 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 and associates
Excluding the contribution of Dole, the share of after tax profits of
joint ventures and associates decreased to EUR10.9m (2017: EUR12.2m)
with reduced earnings in some joint ventures in Europe offset in part by the incremental effect of acquisitions in the second half of 2017. Dividends declared from joint ventures and associates in the year amounted to EUR11.2m (2017: EUR12.6m) with EUR10.9m (2017: EUR8.2m) received in cash reflecting the Group's continued focus on cash return from these investments. The Group's share of after tax losses of Dole for the five months ended 31 December 2018 amounted to EUR2.7m before exceptional items due to trading profits being weighted towards first half of the year, the impact of industry wide safety notices on romaine lettuce as highlighted in the operating review and high interest charges and tax charges due to the impact of recent US tax reform. Post exceptional items the Group's share of after tax losses was EUR6.4m. Intangible asset amortisation Acquisition related intangible asset amortisation within subsidiaries decreased to EUR10.3m (2017: EUR10.5m) due to some assets being fully amortised during the year and the effect of currency translation offset in part by incremental charges relating to new acquisitions. The share of intangible asset amortisation within joint ventures and associates was EUR2.7m (2017: EUR2.5m). Exceptional Items Exceptional items in the year amounted to a net credit after tax of EUR3.7m (2017: credit of EUR7.3m). The net credit in 2018 relates to exceptional foreign currency gains relating to Dole transaction and gains on a disposal of an investment. These were offset by non-cash goodwill impairment charges, restructuring charges, pension charges and net costs associated with the Dole transaction (net of interest income on the proceeds from the share placing) and the Group's share of exceptional items within Dole. A full analysis of exceptional items for both 2018 and 2017 are set out in Note 5 of the accompanying financial information and have been excluded from the calculation of the adjusted numbers. Operating profit Operating profit before exceptional items increased 3.5% to EUR72.1m (2017: EUR69.6m) with increased profits in the core Group offset by the impact of equity accounting for the Group's 45% share of the loss of Dole in the five month period post acquisition of EUR2.7m. Operating profit after the impact of exceptional items decreased by 0.5% to EUR77.9m (2017: EUR78.2m). Net Financial Expense Net financial expense (before exceptional items) in the year increased to EUR7.4m (2017: EUR5.8m) due primarily to the interest cost associated with funding the Dole acquisition, higher average net debt in the year partly offset by the lower cost of funding. The net exceptional interest charge in the year of EUR0.7m was due to charges for committed funding of the Dole transaction offset by deposit interest income on the share placing proceeds. Net interest cover for the year was 13.3 times based on adjusted EBITA. The Group's share of the net interest expense of joint ventures (ex-Dole) and associates in the year was EUR1.1m (2017: EUR1.1m). The Group's share of the net interest expense of Dole in the five month period post acquisition was EUR12.7m. Profit Before Tax Excluding exceptional items, acquisition related intangible asset amortisation charges and costs and fair value movements on contingent consideration, the adjusted profit before tax increased by 0.2% to EUR76.9m (2017: EUR76.7m). Statutory profit before tax after these items was EUR69.8m (2017: EUR72.5m) with the decrease due to Group's equity accounted share of the after tax losses in Dole post acquisition and lower exceptional credits year on year. Taxation The tax charge for the year, including the Group's share of joint ventures and associates tax and before non-trading items, as set out in Note 6 of the accompanying financial information, was EUR18.6m (2017: EUR19.4m) representing an underlying tax rate of 24.2% (2017: 25.3%) when applied to the Group's adjusted profit before tax. Excluding the effect of the Dole transaction and related costs the underlying tax rate of the Group decreased to 23.1% (2017: 25.3%). Non-Controlling Interests The non-controlling interests' share of after tax profits in the year was EUR18.0m (2017: EUR13.7m). Included in this was the non-controlling interests' share of exceptional items, amortisation charges and acquisition related costs which amounted to EURNil in 2018 (2017: credit of EUR0.3m). Excluding these non-trading items, the non-controlling interests' share of adjusted after tax profits was EUR18.0m (2017: EUR13.4m) with the increase due to the non-controlling interests incremental share of profits in certain non-wholly owned subsidiaries in North America and Europe. Adjusted and Basic Earnings per Share Adjusted earnings per share excluding the impact of the acquisition of Dole and the related share placing in February 2018 marginally increased by 0.1% to 13.50 cent per share (2017: 13.48 cent) with the 5.0% increase in adjusted EBITA (ex-Dole) offset by the higher non-controlling interest share of after tax profits. On a constant currency basis adjusted earnings per share was 2.7% ahead of prior year. Including the impact of the Dole acquisition, related costs and the share placing, the adjusted fully diluted earnings per share was 10.51 cent (2017: 13.48 cent). The decrease was due to the impact of the share placing on 1 February 2018 which increased shares in issue by 19% and equity accounting for the Group's share of the after tax losses of Dole for the five month period post acquisition. The Dole business is seasonal with earnings weighted towards the first half of the financial year. 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 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 9.37 cent per share (2017: 14.80 cent) and 9.34 cent per share (2017: 14.68 cent) respectively. Note 7 of the accompanying financial information provides details of the calculation of the respective earnings per share amounts. Cash Flow and Net Debt Net debt at 31 December 2018 was EUR219.7m compared to EUR113.1m at 31 December 2017. The increase is due to the acquisition of a 45% interest in Dole for a cost including fees of EUR251m, partly funded by the proceeds from the share placing of EUR141m (net of costs). Net debt relative to adjusted EBITDA at 31 December 2018 was 1.6 times and interest is covered 13.3 times by adjusted EBITA. Average net debt for 2018 (which excludes the proceeds from the share placing up to 31 July 2018) was EUR217.1m (2017: EUR142.1m). In addition, the Group has non-recourse trade receivables financing at 31 December 2018 of EUR30.0m (2017: EUR39.1m). Prior to working capital movements, the Group generated EUR68.1m (2017: EUR56.1m) in adjusted operating cash flows. Working capital outflows of EUR15.2m (2017: EUR2.3m) were primarily due to the decrease in the non-recourse trade receivables financing. Cash outflows on routine capital expenditure, net of disposals, were EUR22.1m (2017: EUR18.9m). Dividends received from joint ventures and associates in the year were EUR10.9m (2017: EUR8.2m) due to increased profits in 2017 and the Group's continued focus on cash returns from these investments. Dividends paid to non-controlling interests increased to EUR10.5m (2017: EUR8.8m) due to share of increased profits in 2017. Free cashflow generated by the Group decreased to EUR31.2m (2017: EUR34.3m) due to the higher working capital outflow. Free cashflow is the funds available after outflows relating to routine capital expenditure and dividends to non-controlling interests but before acquisition related expenditure, development capital expenditure and the payment of dividends to equity shareholders. Cash outflows on acquisitions and investments amounted to EUR259.6m (2017: EUR44.7m) due primarily to the net spend of EUR250.6m on Dole including associated costs. There was also EUR3.8m cash (2017: EUR23.9m net debt) assumed on acquisition in the year. Contingent and deferred consideration payments relating to prior period acquisitions were EUR7.0m (2017: EUR9.3m). Payments for non-routine property and plant additions amounted to EUR7.4m (2017: EUR22.6m). The Group distributed EUR13.1m (2017: EUR10.1m) in dividends to equity shareholders in the year representing payment of final 2017 dividend and the 2018 interim dividend. Net proceeds of EUR141.0m arose from the share placing in February 2018. There was a positive movement of EUR1.7m (2017: EUR13.4m) on the translation of foreign currency debt/cash into Euro at 31 December 2018. This is primarily due to the translation gain on the EUR141.0m proceeds from the share placing in early February that were used to purchase US Dollars and placed on deposit in order to hedge the investment in Dole. The strengthening of the US Dollar from early February to date of completion of the transaction on 31 July 2018 resulted in a foreign exchange gain of EUR7.6m on translation of the US Dollar deposit to Euro. This was offset by foreign currency losses on the retranslation of US Dollar borrowings due to the stronger US Dollar exchange rates prevailing at year-end compared to those prevailing at 31 December 2017.
2018 2017
EUR'million EUR'million
Adjusted EBITDA 133.3 104.4
Deduct adjusted EBITDA of joint ventures and associates (44.5) (22.6)
Net financial expense and tax paid (20.5) (22.6)
Other (0.2) (3.1)
------------- -------------
Adjusted operating cash flows before working capital
movements 68.1 56.1
Working capital movements (15.2) (2.3)
------------- -------------
Adjusted operating cash flows 52.9 53.8
Routine capital expenditure net of routine disposal
proceeds (22.1) (18.9)
Dividends received from joint ventures and associates 10.9 8.2
Dividends paid to non-controlling interests (10.5) (8.8)
------------- -------------
Free cash flow 31.2 34.3
Cashflows from exceptional items 3.0 0.5
Acquisition payments, net (1) (259.6) (44.7)
Net cash/(debt) assumed on acquisition of subsidiaries 3.8 (23.9)
Contingent and deferred consideration payments (7.0) (9.3)
Subsidiary now a joint venture - (6.7)
Disposal of trading assets - 2.1
Non-routine capital expenditure / property additions (7.4) (22.6)
Dividends paid to equity shareholders (13.1) (10.1)
Proceeds from issue of share capital - share placing 141.0 -
Proceeds from issue of share capital - other 0.4 2.6
Other (0.6) (0.3)
------------- -------------
Total net debt movement in year (108.3) (78.1)
------------- -------------
Net debt at beginning of year (113.1) (48.4)
Foreign currency translation 1.7 13.4
Net debt at end of year (219.7) (113.1)
============= =============
(1) Includes payments in period in respect of subsidiaries, non-controlling interests, joint ventures and associates and is net of contributions from non-controlling interests and proceeds on disposal of shares to non-controlling interests. For 2018 it also includes EUR5.1m of long term funding to a joint ventures in Europe to fund a development.
Defined Benefit Pension Obligations
The net liability of the Group's defined benefit pension schemes (net
of deferred tax) decreased to EUR9.1m at 31 December 2018 (2017: EUR13.8m).
The decrease in the liability is primarily due to the increase in discount
rates in the Eurozone and UK schemes which result in a decrease in
the net present value of the schemes' obligations. Other post-employment
benefit obligations decreased to EUR5.0m (2017: EUR5.3m). Further details
are outlined in Note 9 of the accompanying financial information.
Shareholders' Equity
Shareholders' equity increased by EUR173.3m at 31 December 2018 to
EUR433.1m (2017: EUR259.8m) primarily due to the EUR141.0m increase
from the share placing (less associated costs). Profit after tax of
EUR35.8m attributable to equity shareholders and remeasurement gains
of EUR5.5m (net of deferred tax) on post-employment benefit schemes
were principally offset by a currency translation loss of EUR8.4m on
the retranslation of the net assets of foreign currency denominated
operations to Euro and the payment of dividends of EUR13.1m to equity
shareholders of the Company.
Development Activity
Investment in Dole Food Company and Share Placing
Investment in Dole Food Company ('The Transaction')
On 1 February 2018, the Group announced that it had entered into a
binding agreement to acquire a 45% stake in Dole Food Company ('Dole')
from Mr. David H. Murdock for a cash consideration of $300 million
(the 'First Tranche'). The acquisition of the First Tranche was approved
by the Board of Directors of Total Produce and was initially subject
to anti-trust review in a limited number of jurisdictions.
On 30 July 2018 the European Commission (the 'EC') approved the acquisition
of the First Tranche. The EC approval was conditional on the divestment
of Saba Fresh Cut AB (the Swedish bagged salad business owned by Dole).
This limited disposal has no material impact on the strategic rationale
or the commercial value of the transaction. As all other transaction
conditions precedent were satisfied at this date, the acquisition of
the First Tranche completed on 31 July 2018.
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'). The Group has no present intention to exercise
its option to acquire the Second Tranche. In the event the Group exercises
the right to acquire the additional 6% the total consideration for
the 51% stake shall be $312 million.
Following the second anniversary of the closing of the First Tranche,
the Group has the right, but not the obligation, to acquire the balance
of Dole common stock (the 'Third Tranche'), whereby the consideration
for the Third Tranche is to be calculated based on nine times the three
year average historical Dole Adjusted EBITDA less net debt. However,
in no event shall the Third Tranche purchase price be less than $250
million or exceed $450 million (such cap subject to increase after
six years). The Third Tranche consideration is payable in cash or,
if the parties mutually agree, Total Produce stock.
From the fifth anniversary of completion of the acquisition of the
First Tranche, in the event the Group has not exercised its right to
acquire 100% of Dole, Mr. David H. Murdock is permitted to cause a
process to market and sell 100% of Dole common stock.
On completion of the acquisition of the First Tranche on 31 July 2018,
the Group and Mr. David H. Murdock have balanced governance rights
with respect to Dole. The Board of Directors of Dole comprises of six
members, three of which are appointed by Total Produce and three by
Mr. David H. Murdock. Mr. David H. Murdock remains Chairman of Dole
and 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 Group secured funding for the acquisition of the First Tranche
with a balance of equity and bank financing. As detailed below, the
Group raised c.$180 million (c.$175m net of costs) from a share placing
on 1 February 2018 with the balance funded through committed bank financing.
The conservative funding strategy in relation to the acquisition of
the First Tranche allows the Group to retain a strong balance sheet
post-closing for strategic and financial flexibility going forward.
The investment in Dole and its financial contribution is 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 the
exercise of the Third Tranche. Total Produce is therefore equity accounting
for its 45% share of the results of Dole with effect from 1 August
2018. The overall business is seasonal with the greater share of EBITDA
in the first half of the financial year. The 2019 financial year will
therefore be the first full year reflecting this transaction.
Further details on the acquisition of Dole and its financial performance
and position for the five months ended 31 December 2018 are outlined
in Note 8 of the accompanying financial information.
Share Placing
On 1 February 2018 a total of 63 million new ordinary shares were placed
(the 'Placing Shares') in a placing transaction at a price of EUR2.30
per Placing Share, raising gross proceeds of EUR145 million or c.$180
million (before expenses) to finance the Dole transaction. Net of expenses
the proceeds were EUR141 million (c. US$ 175 million). The Placing
Shares represented approximately 19% of the Company's issued ordinary
share capital (excluding treasury shares) prior to the placing. The
new issued shares were admitted to the Irish Stock Exchange and the
London Stock Exchange on the ESM and AIM respectively on 5 February
2018.
Other investments in 2018
The Group made a number of bolt-on acquisitions during 2018 which committed
investment of EUR4.5m, including EUR1.7m of contingent consideration
payable on the achievement of future profit targets.
In January 2018, the Group completed investments in two new state-of-the-art
facilities. The development of the Danish central distribution facility
south of Copenhagen was completed. The facility has 6 different temperature
zones, 26 banana ripening rooms, 4 stone fruit ripening rooms and a
dedicated packing area to prepare product to meet the specifications
required by our customers. Also, in January 2018 the Group's Exotic
business in the Netherlands specialising in ripening of avocados and
other stone fruit moved into a new facility. This ongoing investment
demonstrates the Group's commitment to investing in facilities to deliver
bespoke services and products to meet our customers' needs, adding
value and leveraging on our collective strengths to generate efficiencies.
The combined investment in these facilities in 2017 and 2018 was EUR23m.
Dividends
The Board is proposing a 2.5% increase in the final dividend to 2.5140
(2017: 2.4527) cent per share subject to the approval of shareholders
at the forthcoming AGM. If approved, this dividend will be paid on
6 June 2019 to shareholders on the register at 26 April 2019 subject
to dividend withholding tax. The total dividend for 2018 will amount
to 3.4269 (2017: 3.3433) cent per share and represents an increase
of 2.5% on 2017. The total dividend represents a pay-out of 32.6 %
of the adjusted earnings per share.
Post Balance Sheet Events
On 29 January 2019, Dole completed the sale of Saba Fresh Cuts AB (in
Sweden) and Saba Fresh Cuts OY (in Finland) to Bama International.
Both Saba Fresh Cuts AB and Saba Fresh Cuts OY are producers of washed
and ready to eat salads. The sale of Saba Fresh Cuts AB was a condition
of the European Commission's approval of the acquisition by Total Produce
of a 45% interest in Dole in July 2018.
There have been no other material events subsequent to 31 December
2018 which would require disclosure or adjustment in the financial
statements.
Brexit
While the outcome of the UK's exit from the European Union remains
unclear, Brexit committees, set up in the relevant areas of the business,
are continuing to assess and prepare for risks which may arise in the
coming months.
Going Concern
The Directors are satisfied that the Group has adequate resources to
continue in operational existence for the foreseeable future. Accordingly,
they have adopted the going concern basis in preparing the financial
statements.
Summary and Outlook
We are pleased that Total Produce has delivered continuing good results
in a more challenging year. Adjusted EBITDA was up 27.6% to EUR133.3m.
On a like-for-like basis, excluding Dole, Adjusted EBITDA was up 5.7%
with adjusted fully diluted earnings per share up 0.1%. On a constant
currency basis, excluding Dole, adjusted EBITDA and adjusted fully
diluted earnings per share were up 8.9% and 2.7% respectively.
On 1(st) February 2018, Total Produce announced an agreement to acquire
45% of Dole for $300m and issued 63 million ordinary shares (representing
c. 19% of ordinary shares) raising $180m to part finance the acquisition.
The acquisition of the shareholding in Dole represents a transformational
change for Total Produce and brings together two of the world's leading
fresh produce companies. The transaction completed on 31 July 2018
and the first full year including the Dole results will be 2019.
Trading in early 2019 has been satisfactory. Total Produce is targeting
an increase in the 2019 adjusted fully diluted earnings per share,
including Dole in the mid-to-upper single digit range over the 2018
adjusted earnings per share of 13.50 cent.
The Group is also pleased to propose a 2.5% increase in final dividend
to 2.5140 cent per share.
Carl McCann, Chairman
On behalf of the Board
7 March 2019
Total Produce plc
Extract from the Group Income Statement
for the year ended 31 December 2018
Note Before Before
Exceptional Exceptional
exceptional items exceptional items
items (Note 5) Total items (Note 5) Total
2018 2018 2018 2017 2017 2017
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Revenue,
including
Group share of
joint ventures
and associates 3 5,043,490 - 5,043,490 4,286,231 - 4,286,231
-
Group revenue 3 3,727,591 - 3,727,591 3,674,294 - 3,674,294
Cost of sales (3,220,805) - (3,220,805) (3,182,507) - (3,182,507)
---------------- ------------ ----------------- ------------------ ----------------- ------------------
Gross profit 506,786 - 506,786 491,787 - 491,787
Operating
expenses (net) (432,618) 9,450 (423,168) (423,875) 8,610 (415,265)
Share of loss of
joint ventures
- Dole 8 (2,697) (3,658) (6,355) - - -
Share of profit
of joint
ventures
- Other 8,685 - 8,685 11,427 - 11,427
Share of profit
of associates 2,183 - 2,183 782 - 782
Operating profit
before
acquisition
related
intangible
asset
amortisation 82,339 5,792 88,131 80,121 8,610 88,731
Acquisition
related
intangible
asset
amortisation (10,281) - (10,281) (10,499) - (10,499)
---------------- ------------ ----------------- ------------------ ----------------- ------------------
Operating profit
after
acquisition
related
intangible
asset
amortisation 72,058 5,792 77,850 69,622 8,610 78,232
Net financial
expense (7,365) (667) (8,032) (5,754) - (5,754)
---------------- ------------ ----------------- ------------------ ----------------- ------------------
Profit before
tax 64,693 5,125 69,818 63,868 8,610 72,478
Income tax
expense 6 (14,619) (1,395) (16,014) (9,613) (1,358) (10,971)
---------------- ------------ ----------------- ------------------ ----------------- ------------------
Profit for the
year 50,074 3,730 53,804 54,255 7,252 61,507
================ ============ ================= ================== ================= ==================
Attributable to:
Equity holders
of the parent 35,793 47,826
Non-controlling
interests 18,011 13,681
----------------- ------------------
53,804 61,507
================= ==================
Earnings per
ordinary share
Basic 7 9.37 14.80
Fully diluted 7 9.34 14.68
Adjusted fully
diluted 7 10.51 13.48
---------------- ------------ -----------------
Total Produce plc
Extract from the Group Statement of Comprehensive Income
for the year ended 31 December 2018
2018 2017
EUR'000 EUR'000
Profit for the year 53,804 61,507
--------- ---------
Other comprehensive income:
Items that may be reclassified subsequently to
profit or loss:
Foreign currency translation effects:
* foreign currency net investments - subsidiaries (6,416) (13,537)
* foreign currency net investments - joint ventures and
associates 3,236 (3,866)
* foreign currency borrowings designated as net
investment hedges (4,387) 10,892
* foreign currency recycled to income statement on
joint venture/associate becoming subsidiary 90 (1,137)
Effective portion of changes in fair value of
cash flow hedges, net 340 (492)
Changes in fair value of cost of hedging, net 23 -
Deferred tax on items above (97) 124
Share of joint ventures and associates effective 51
portion of cash flow hedges -
Share of joint ventures and associates deferred
tax on items above 696 -
--------- ---------
(6,464) (8,016)
--------- ---------
Items that will not be reclassified to profit
or loss:
Remeasurement gains on post-employment defined
benefit pension schemes 6,323 5,708
Remeasurement gains on other post-employment
defined benefit schemes 354 1,604
Revaluation gains on property, plant and equipment,
net 475 5,356
Deferred tax on items above (1,172) (3,310)
Share of joint ventures and associates remeasurement
(losses)/gains on post-employment benefit schemes (1,867) 711
Share of joint ventures and associates deferred
tax on items above 854 -
4,967 10,069
--------- ---------
Other comprehensive (expense)/income for the
year (1,497) 2,053
========= =========
Total comprehensive income for the year 52,307 63,560
========= =========
Attributable to:
Equity holders of the parent 33,071 54,193
Non-controlling interests 19,236 9,367
--------- ---------
52,307 63,560
========= =========
Total Produce plc
Extract from the Group Balance Sheet
As at 31 December 2018
2018 2017
Assets EUR'000 EUR'000
Non-current
Property, plant and equipment 175,825 167,397
Investment property 7,344 7,203
Goodwill and intangible assets 266,950 281,081
Investments in joint ventures and associates - 245,881 -
Dole
Investments in joint ventures and associates -
Other 105,172 106,421
Other investments 3,465 719
Other receivables 18,724 11,063
Deferred tax assets 12,393 13,759
Total non-current assets 835,754 587,643
---------- ----------
Current
Inventories 90,295 89,665
Biological assets 5,066 4,578
Trade and other receivables 392,786 365,334
Other investments 6,612 -
Corporation tax receivables 4,523 4,375
Derivative financial instruments 4,388 6
Cash and cash equivalents 102,299 100,247
---------- ----------
Total current assets 605,969 564,205
---------- ----------
Total assets 1,441,723 1,151,848
========== ==========
Equity
Share capital 4,104 3,468
Share premium 295,421 150,763
Other reserves (123,057) (128,054)
Retained earnings 256,654 233,632
---------- ----------
Total equity attributable to equity holders of
the parent 433,122 259,809
Non-controlling interests 82,483 79,774
---------- ----------
Total equity 515,605 339,583
---------- ----------
Liabilities
Non-current
Interest-bearing loans and borrowings 263,356 165,649
Deferred government grants 322 386
Other payables 1,289 568
Contingent consideration and other provisions 12,931 26,128
Put option liability 34,975 38,961
Corporation tax payable 6,676 6,286
Deferred tax liabilities 31,140 29,415
Employee benefits 15,964 22,000
Total non-current liabilities 366,653 289,393
---------- ----------
Current
Interest-bearing loans and borrowings 58,686 47,724
Trade and other payables 482,934 463,605
Contingent consideration and other provisions 14,333 8,337
Derivative financial instruments 296 719
Corporation tax payable 3,216 2,487
---------- ----------
Total current liabilities 559,465 522,872
---------- ----------
Total liabilities 926,118 812,265
---------- ----------
Total liabilities and equity 1,441,723 1,151,848
========== ==========
Total Produce plc
Extract from the Group Statement of Changes in Equity
for the year ended 31 December 2018
Attributable to equity holders of the parent
---------------- ----------
Undenominated Own Currency Reval-uation Other Non-controlling
Share Share capital De-merger shares translation reserve equity Retained interests Total
capital premium EUR'000 reserve reserve reserve EUR'000 Reserves* earnings Total EUR'000 equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
As at 1 January
2018 as
presented
in the Balance
Sheet 3,468 150,763 140 (122,521) (8,580) (14,168) 28,035 (10,960) 233,632 259,809 79,774 339,583
--------- --------- -------------- ----------- -------- ------------ ------------- ---------- ---------- ---------- ---------------- ----------
Adjust for NCI
subject to put
option
transferred for
presentation
purposes - - - - - - - (26,788) - (26,788) 26,788 -
--------- --------- -------------- ----------- -------- ------------ ------------- ---------- ---------- ---------- ---------------- ----------
As at 1 January
2018 3,468 150,763 140 (122,521) (8,580) (14,168) 28,035 (37,748) 233,632 233,021 106,562 339,583
--------- --------- -------------- ----------- -------- ------------ ------------- ---------- ---------- ---------- ---------------- ----------
Comprehensive
income
Profit for the
year - - - - - - - - 35,793 35,793 18,011 53,804
Other
comprehensive
income:
Items that may
be reclassified
subsequently to
profit or loss:
Foreign currency
translation
effects,
net - - - - - (8,553) - 154 - (8,399) 922 (7,477)
Effective
portion of cash
flow
hedges, net - - - - - - - 248 - 248 92 340
Changes in fair
value of cost
of hedging, net - - - - - - - (14) - (14) 37 23
Deferred tax on
items above - - - - - - - (63) - (63) (34) (97)
Share of joint
ventures &
associates
effective
portion of
cashflow
hedges - - - - - - - 51 - 51 - 51
Share of joint
ventures &
associates
deferred tax on
cashflow hedges - - - - - - - 696 - 696 - 696
Items that will
not be
reclassified
subsequently to
profit or loss:
Revaluation
gains on
property,
plant and
equipment, net - - - - - - 409 - - 409 66 475
Remeasurement
gains on
defined
benefit pension
schemes - - - - - - - - 6,306 6,306 17 6,323
Remeasurement
gains on other
post-employment
benefit schemes - - - - - - - - 230 230 124 354
Deferred tax on
items above - - - - - - (108) - (1,065) (1,173) 1 (1,172)
Share of joint
ventures and
associates
remeasurement
losses on
defined
benefit pension
schemes - - - - - - - - (1,867) (1,867) - (1,867)
Share of joint
ventures and
associates
deferred tax on
items above - - - - - - - - 854 854 - 854
Total other
comprehensive
income - - - - - (8,553) 301 1,072 4,458 (2,722) 1,225 (1,497)
--------- --------- -------------- ----------- -------- ------------ ------------- ----------
Total
comprehensive
income - - - - - (8,553) 301 1,072 40,251 33,071 19,236 52,307
--------- --------- -------------- ----------- -------- ------------ ------------- ---------- ---------- ---------- ---------------- ----------
Transactions
with equity
holders
of the parent
New shares
issued 636 144,658 - - - - - (97) (3,790) 141,407 - 141,407
Non-controlling
interest
arising
on acquisition
of subsidiaries - - - - - - - - - - 2,314 2,314
Recognition of
put option
liability
on acquisition - - - - - - - (896) - (896) - (896)
Fair value
movements on
put option
liability - - - - - - - 4,728 - 4,728 - 4,728
Acquisition of
non-controlling
interests - - - - - - - - (388) (388) (723) (1,111)
Disposal of
shareholding to
non-controlling
interest - - - - - - - - 11 11 275 286
Contribution by
non-controlling
interest - - - - - - - - - - 130 130
Dividends paid
(Note 10) - - - - - - - - (13,062) (13,062) (10,638) (23,700)
Share-based
payment
transactions - - - - - - - 557 - 557 - 557
--------- --------- -------------- ----------- -------- ------------ ------------- ---------- ---------- ---------- ---------------- ----------
Total
transactions
with equity
holders of the
parent 636 144,658 - - - - - 4,292 (17,229) 132,357 (8,642) 123,715
--------- --------- -------------- ----------- -------- ------------ ------------- ---------- ---------- ---------- ---------------- ----------
As at 31
December 2018 4,104 295,421 140 (122,521) (8,580) (22,721) 28,336 (32,384) 256,654 398,449 117,156 515,605
========= ========= ============== =========== ======== ============ ============= ========== ========== ========== ================ ==========
Transfer of NCI
subject to put
option for
presentation
purposes - - - - - - - 34,673 - 34,673 (34,673) -
--------- --------- -------------- ----------- -------- ------------ ------------- ---------- ---------- ---------- ---------------- ----------
As at 31
December 2018
as presented
in the Balance
Sheet 4,104 295,421 140 (122,521) (8,580) (22,721) 28,336 2,289 256,654 433,122 82,483 515,605
========= ========= ============== =========== ======== ============ ============= ========== ========== ========== ================ ==========
*Other equity reserves comprise the share option reserve, the cash flow hedge reserve, the cost of hedging
reserve and the put option reserve.
Total Produce plc
Extract from the Group Statement of Changes in Equity
for the year ended 31 December 2018
Attributable to equity holders of the parent
---------------- ----------
Undenominated Own Currency Reval-uation Other Non-controlling
Share Share capital De-merger shares translation reserve equity Retained interests Total
capital premium EUR'000 reserve reserve reserve EUR'000 reserves* earnings Total EUR'000 equity
For the year EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
ended 31
December
2017
As at 1 January
2017 as
presented
in the Balance
Sheet 3,429 148,204 140 (122,521) (8,580) (7,675) 24,088 841 188,396 226,322 72,600 298,922
--------- --------- -------------- ----------- -------- ------------ ------------- ---------- ---------- ---------- ---------------- ----------
Adjust for NCI
subject to put
option
transferred for
presentation
purposes - - - - - - - (20,259) - (20,259) 20,259 -
--------- --------- -------------- ----------- -------- ------------ ------------- ---------- ---------- ---------- ---------------- ----------
Balance as at 1
January 2017 3,429 148,204 140 (122,521) (8,580) (7,675) 24,088 (19,418) 188,396 206,063 92,859 298,922
--------- --------- -------------- ----------- -------- ------------ ------------- ---------- ---------- ---------- ---------------- ----------
Comprehensive
income
Profit for the
year - - - - - - - - 47,826 47,826 13,681 61,507
Other
comprehensive
income:
Items that may
be reclassified
subsequently to
profit or loss:
Foreign currency
translation
effects,
net - - - - - (6,493) - 3,800 - (2,693) (4,955) (7,648)
Effective
portion of cash
flow
hedges, net - - - - - - - (342) - (342) (150) (492)
Deferred tax on
items above - - - - - - - 86 - 86 38 124
Items that will
not be
reclassified
subsequently to
profit or loss:
Revaluation
gains on
property,
plant and
equipment, net - - - - - - 5,061 - - 5,061 295 5,356
Remeasurement
gains on
defined
benefit pension
schemes - - - - - - - - 5,686 5,686 22 5,708
Remeasurement
gains on other
post-employment
benefit schemes - - - - - - - - 1,043 1,043 561 1,604
Deferred tax on
items above - - - - - - (1,114) - (2,071) (3,185) (125) (3,310)
Share of joint
ventures and
associates
remeasurement
gains on
post-employment
defined benefit
schemes - - - - - - - - 711 711 - 711
Total other
comprehensive
income - - - - - (6,493) 3,947 3,544 5,369 6,367 (4,314) 2,053
--------- --------- -------------- ----------- -------- ------------ ------------- ----------
Total
comprehensive
income - - - - - (6,493) 3,947 3,544 53,195 54,193 9,367 63,560
--------- --------- -------------- ----------- -------- ------------ ------------- ---------- ---------- ---------- ---------------- ----------
Transactions
with equity
holders
of the parent
New shares
issued 39 2,559 - - - - - (924) 924 2,598 - 2,598
Non-controlling
interest
arising
on acquisition
of subsidiaries - - - - - - - - - - 10,784 10,784
Recognition of
put option
liability
on acquisition - - - - - - - (25,072) - (25,072) - (25,072)
Fair value
movements on
put option
liability - - - - - - - 3,526 - 3,526 - 3,526
Disposal of
shareholding to
non-controlling
interests - - - - - - - - 1,182 1,182 7,479 8,661
Contribution by
non-controlling
interests - - - - - - - - - - 2,473 2,473
Subsidiaries
becoming joint
ventures - - - - - - - - - - (6,699) (6,699)
Dividends paid
(Note 10) - - - - - - - - (10,065) (10,065) (9,701) (19,766)
Share-based
payment
transactions - - - - - - - 596 - 596 - 596
--------- --------- -------------- ----------- -------- ------------ ------------- ---------- ---------- ---------- ---------------- ----------
Total
transactions
with equity
holders of the
parent 39 2,559 - - - - - (21,874) (7,959) (27,235) 4,336 (22,899)
--------- --------- -------------- ----------- -------- ------------ ------------- ---------- ---------- ---------- ---------------- ----------
As at 31
December 2017 3,468 150,763 140 (122,521) (8,580) (14,168) 28,035 (37,748) 233,632 233,021 106,562 339,583
========= ========= ============== =========== ======== ============ ============= ========== ========== ========== ================ ==========
Transfer of NCI
subject to put
option for
presentation
purposes - - - - - - - 26,788 - 26,788 (26,788) -
--------- --------- -------------- ----------- -------- ------------ ------------- ---------- ---------- ---------- ---------------- ----------
As at 31
December 2017
as presented
in the balance
sheet 3,468 150,763 140 (122,521) (8,580) (14,168) 28,035 (10,960) 233,632 259,809 79,774 339,583
========= ========= ============== =========== ======== ============ ============= ========== ========== ========== ================ ==========
*Other equity reserves comprise the share option reserve, the cash flow hedge reserve and the put option reserve.
Total Produce plc
Extract from the Group Statement of Cash Flows
for the year ended 31 December 2018
2018 2017
EUR'000 EUR'000
Net cash flows from operating activities before
working capital movements 65,208 48,851
Movements in working capital (20,265) (2,288)
---------- ----------
Net cash flows from operating activities (Note
12) 44,943 46,563
Investing activities
Acquisition of subsidiaries (2,496) (36,230)
Cash assumed on acquisition of subsidiaries, net 3,833 758
Acquisition of, and investment in joint ventures
and associates (251,949) (21,062)
Payments of contingent consideration (7,009) (9,269)
Proceeds from disposal of joint ventures and associates - 400
Proceeds from disposal of trading assets - 2,138
Cash derecognised on subsidiary becoming a joint
venture - (6,689)
Net debt derecognised on disposal of a subsidiary - 2,304
Disposal of investment in subsidiary to non-controlling
interests 286 8,661
Acquisition of property, plant and equipment (25,942) (39,496)
Acquisition of other financial assets - (98)
Expenditure on computer software (4,352) (2,771)
Acquisition of intangible assets - brands (19) (462)
Development expenditure capitalised (121) (204)
Proceeds from disposal of property, plant and equipment
and software- routine 797 807
Proceeds from disposal of investments and property
- exceptional item 5,876 7,770
Dividends received from joint ventures and associates 10,908 8,243
Government grants received 11 163
Net cash flows from investing activities (270,177) (85,037)
---------- ----------
Financing activities
Drawdown of borrowings 436,319 251,820
Repayment of borrowings (329,766) (226,487)
Decrease in bank deposits - 2,500
Proceeds from the issue of share capital, net 141,408 2,598
Capital element of finance lease repayments (681) (869)
Acquisition of non-controlling interests (490) -
Capital contribution by non-controlling interests 130 936
Dividends paid to non-controlling interests (10,535) (8,843)
Dividends paid to equity holders of the parent (13,062) (10,065)
Net cash flows from financing activities 223,323 11,590
---------- ----------
Net decrease in cash, cash equivalents and bank
overdrafts (1,911) (26,884)
Net foreign exchange movement 5,671 (1,224)
Cash, cash equivalents and bank overdrafts at 1
January 88,979 117,087
---------- ----------
Cash, cash equivalents and overdrafts at end of
year (Note 13) 92,739 88,979
========== ==========
Total Produce plc
Extract from the Summary Group Reconciliation of Net Debt
for the year ended 31 December 2018
2018 2017
EUR'000 EUR'000
Net decrease in cash, cash equivalents and bank
overdrafts (1,911) (26,884)
Drawdown of borrowings (436,319) (251,820)
Repayment of borrowings 329,766 226,487
Decrease in bank deposits - (2,500)
Interest-bearing loans and borrowings arising
on acquisition - (24,492)
Capital element of finance lease repayments 681 869
Other movements on finance leases (500) (45)
Finance leases arising on acquisition - (149)
Finance leases derecognised on disposal of subsidiary - 356
Foreign exchange movement 1,666 13,418
---------- ----------
Movement in net debt (106,617) (64,760)
Net debt at beginning of the year (113,126) (48,366)
---------- ----------
Net debt at end of the period (Note 13) (219,743) (113,126)
========== ==========
Total Produce plc
Selected explanatory notes for the Preliminary Results for the year
ended 31 December 2018
1. Basis of preparation
The financial information included in this preliminary results statement
has been extracted from the Group's Financial Statements for the
year ended 31 December 2018 and is prepared based on the accounting
policies set out therein, which are consistent with those applied
in the prior year with the exception of the effect of the new accounting
standards listed below. As permitted by European Union (EU) law and
in accordance with AIM/ESM rules, the Group Financial Statements
have been prepared in accordance with International Financial Reporting
Standards (IFRSs) and their interpretations issued by the International
Accounting Standards Board (IASB) as adopted by the EU.
The financial information prepared in accordance with IFRSs as adopted
by the EU included in this report do not comprise "full group accounts"
within the meaning of Regulation 40(1) of the European Communities
(Companies: Group Accounts) Regulations 1992 of Ireland insofar as
such group accounts would have to comply with the disclosure and
other requirements of those Regulations.
The information included has been derived from the Group Financial
Statements which were approved by the Board of Directors on 6 March
2019. The Financial Statements will be filed with the Irish Registrar
of Companies and circulated to shareholders in due course. The financial
information is presented in Euro, rounded to the nearest thousand
where appropriate.
Changes in accounting policy and disclosures
The accounting policies adopted are consistent with those of the
previous year except for the following new and amended IFRS and IFRIC
interpretations adopted by the Group and Company in these financial
statements.
The Group has initially adopted the following standards with effect
from 1 January 2018:
* IFRS 15 Revenue from Contracts with Customers; and
* IFRS 9 Financial Instruments
IFRS 15 Revenue from Contracts with Customers
IFRS 15 Revenue from Contracts with Customers replaces IAS 18 Revenue
and IAS 11 Construction Contracts and associated interpretations.
The standard applies a single control model to be applied to all
contracts with customers. Under IFRS 15 revenue is recognised when
control of the goods has been transferred to the buyer at an amount
that reflects the consideration that the Group expects to receive
for the transfer of those goods.
The Group has considered the impact on its consolidated financial
statements resulting from the application of IFRS 15. The Group recognises
revenue at a point in time when control of the goods has transferred
to the customer, which can either be on shipping or delivery depending
on the terms of trade with the customer. The Group measures revenue
recognised as the consideration that it expects to receive from its
customers for the sale of these goods. The Group assessed all of
its material contracts with suppliers and customers under the revised
IFRS 15 principal versus agent considerations and concluded that
the accounting for all material arrangements continued to be appropriate.
Following our review it was concluded that the impact of adopting
IFRS 15 on the consolidated financial statements was not material
for Total Produce.
The Group has adopted the modified retrospective approach on transition
to IFRS 15, there has been no adjustment to retained earnings at
1 January 2018 and 2017 comparatives have not been restated.
IFRS 9 Financial Instruments
IFRS 9 Financial Instruments replaces IAS 39 Financial Instruments:
Recognition and Measurement. The standard includes requirements for
the recognition, measurement and derecognition of financial instruments,
introduces new hedge accounting rules and a new expected credit loss
model for calculating impairment of financial assets.
The Group's findings following the evaluation of the effect of the
adoption of IFRS 9 are as follows:
* The vast majority of the Group's financial assets are
held as trade receivables or cash which will continue
to be accounted for at amortised cost. The Group's
other financial assets, which were previously
accounted for as Available For Sale (AFS), will be
measured at Fair Value through Profit or Loss (FVPL)
under IFRS 9. Accordingly, the classification and
measurement changes of IFRS 9 have not had a material
impact on the Group's consolidated financial
statements.
* The new hedging requirements of IFRS 9 have aligned
hedge accounting more closely to the Group's risk
management policies and made more hedging
relationships eligible for hedge accounting. All of
the Group's hedging relationships continued to be
appropriate under IFRS 9. The only change is the cost
of hedging which can now be accounted for through
other comprehensive income and is only recognised in
the income statement at the same time as the hedged
item affects profit or loss. Accounting for the costs
of hedging, which is not material, has been applied
prospectively, without restating comparatives.
* IFRS 9 introduces a forward-looking expected credit
loss model rather than the incurred loss model of IAS
39. Given historic loss rates and the significant
portion of trade and other receivables that are
within terms, this change did not have a material
impact on the Group consolidated financial
statements.
The impact of applying IFRS 9 was not material for Total Produce
and there was no adjustment to retained earnings on application at
1 January 2018. In line with the transition guidance in IFRS 9 the
Group has not restated the 2017 comparatives.
New standards and interpretations not applied
IFRS 16 Leases
IFRS 16 Leases is effective from 1 January 2019 and replaces IAS
17 Leases. It introduces a single lessee accounting model to be adopted
and accordingly the majority of all lease agreements will now result
in the recognition of a right-of-use asset and a lease liability
in the balance sheet. The income statement charge in relation to
all leases will now comprise a depreciation element relating to the
right-of-use asset and also a financing charge relating to the lease
liability.
During 2018 the Group conducted a detailed evaluation of the fair
values of these leases. As a result of the transition to IFRS 16
the fair value of these leases representing the present value of
the lease payments over the expected lease contract period will be
recognised as a right-of-use asset with a corresponding value recognised
as a lease liability. This will increase the Group's recognised assets
and liabilities.
The Group has decided to adopt the modified retrospective approach
on transition. Therefore the effect of transitioning to IFRS 16 will
be recognised at 1 January 2019 and comparatives will not be restated.
Right-of-use assets for certain property assets will be measured
on transition as if IFRS 16 had always been applied, all other right-of
use assets will be measured based on the lease liability on transition.
The Group is currently finalising their detailed assessment of the
impact of the adoption of IFRS 16 throughout the Group. Whilst the
actual impact of applying IFRS 16 may change as new accounting policies
are subject to change until the first financial statements that include
the date of initial application the Group estimates that this will
increase lease liabilities in the balance sheet by circa EUR120m
- EUR130m with the corresponding right-of-use assets recognised being
circa EUR5m - EUR10m lower than the lease liabilities.
2. Translation of foreign currencies
The reporting currency of the Group is Euro. Group results are impacted
by fluctuations in exchange rates year-on-year versus the Euro. The
rates used in the translation of results and balance sheets into
Euro were as follows:
Average rate Closing rate
2018 2017 % change 2018 2017 % change
Brazilian Real 4.4162 3.7381 (18.1%) 4.4440 3.9729 (11.9%)
Canadian Dollar 1.5288 1.4577 (4.9 %) 1.5601 1.5037 (3.8%)
Czech Koruna 25.7000 26.2301 2.0% 25.7240 25.5350 (0.7%)
Danish Kroner 7.4530 7.4387 (0.2%) 7.4668 7.4454 (0.3%)
Indian Rupee 80.6220 73.5033 (9.7%) 79.5453 76.4059 (4.1%)
Polish Zloty 4.2601 4.2570 (0.1 %) 4.2973 4.1766 (2.9%)
Pound Sterling 0.8849 0.8756 (1.1%) 0.8986 0.8879 (1.2%)
Swedish Krona 10.2695 9.6438 (6.5%) 10.2188 9.8386 (3.9%)
US Dollar 1.1784 1.1359 (3.7%) 1.1445 1.1980 4.5%
-------- -------- --------- -------- -------- ---------
3. Revenue and Segmental Analysis
Revenue
2018 2017
EUR'000 EUR'000
Group Revenue 3,727,591 3,674,294
-------------- -----------
Plus:
Share of revenue of joint ventures - Dole 692,239 -
Share of revenue of joint ventures - Other 622,295 576,017
Share of revenue of associates 74,447 96,863
Total share of revenue of joint ventures and associates 1,388,981 672,880
-------------- -----------
Less:
Elimination of proportionate share of transactions
between Group subsidiaries and joint ventures and
associates (1) (73,082) (60,943)
-------------- -----------
Total Revenue 5,043,490 4,286,231
============== ===========
(1) For calculation of Total Revenue which includes the Group's share of joint ventures and associates, the Group eliminates the proportionate share of revenue transactions between Group subsidiaries and joint ventures and associates.
Segmental Analysis
The table below details a segmental breakdown of the Group's total
revenue and adjusted EBITA for the years ended 31 December 2018 and
31 December 2017.
In accordance with IFRS 8, the Group's reportable operating segments
based on how performance is currently assessed and resources are allocated
are as follows:
- Europe - Eurozone: This reportable segment is an aggregation
of thirteen operating segments principally in France, Ireland,
Italy, the Netherlands and Spain primarily involved in the procurement,
marketing and distribution of fresh produce and some healthfoods
and consumer goods products. These operating segments have been
aggregated because they have similar economic characteristics.
- Europe - Non-Eurozone: This operating segment is an aggregation
of six operating segments in the Czech Republic, Poland, Scandinavia
and the United Kingdom primarily involved in the procurement,
marketing and distribution of fresh produce. Up to the middle
of 2018 it also included a small healthfoods business that has
been discontinued. These operating segments have been aggregated
because they have similar economic characteristics.
- International: This segment is an aggregation of five operating
segments in North America, one in South America and one in India
primarily involved in the procurement, marketing and distribution
of fresh produce. These operating segments have been aggregated
because they have similar customer profiles and primarily transact
in US Dollar.
- Dole: This operating segment represents the Group's 45% interest
in Dole. Dole is one of the world's leading producers, marketers
and distributors of fresh fruit and vegetables. It has an iconic
brand and leading market positions and scale. It is one of the
world's largest producers of bananas and pineapples and a leader
in other fresh fruits, value added and fresh-packed vegetables
and berries. In terms of market share they hold the number one
and three positions respectively for bananas in North American
and Europe and are number two and three respectively for pineapples
in North America and Europe. They sell and distribute throughout
a wide network in North America, Europe, Latin America, the Middle
East and Africa.
Segment performance is evaluated based on revenue and adjusted EBITA.
Management believes that adjusted EBITA, while not a defined term
under IFRS, gives a fair reflection of the underlying trading performance
of the Group. Adjusted EBITA represents earnings before interest,
tax, acquisition related intangible asset amortisation charges and
costs, fair value movements on contingent consideration, unrealised
gains or losses on derivative financial instruments, gains and losses
on foreign currency denominated intercompany borrowings and exceptional
items. It also excludes the Group's share of these items within joint
ventures and associates. Adjusted EBITA is therefore measured differently
from operating profit in the Group financial statements as explained
and reconciled in full detail in the analysis that follows.
Finance costs, finance income and income taxes are managed on a centralised
basis. These items are not allocated between operating segments for
the purpose of the information presented to the Chief Operating Decision
Maker ('CODM') and are accordingly omitted from the detailed segmental
analysis that follows.
Year ended Year ended
31 December 2018 31 December 2017
Segmental Third party Adjusted Segmental Third party Adjusted
revenue revenue EBITA revenue revenue EBITA
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Europe - Eurozone 1,716,584 1,695,773 27,252 1,737,964 1,714,915 26,990
Europe - Non-Eurozone 1,511,780 1,482,600 41,593 1,542,598 1,509,389 41,716
International 1,175,297 1,175,297 18,880 1,061,927 1,061,927 14,838
Inter-segment revenue (49,991) - - (56,258) - -
------------ ------------ --------- ------------ ------------ ---------
Total Group (ex-Dole) 4,353,670 4,353,670 87,725 4,286,231 4,286,231 83,544
------------ ------------ --------- ------------ ------------ ---------
Dole (1) 692,239 689,820 10,297 - - -
Inter-segment revenue (2,419) - - - - -
------------ ------------ --------- ------------ ------------ ---------
Total Group 5,043,490 5,043,490 98,022 4,286,231 4,286,231 83,544
============ ============ ========= ============ ============ =========
All inter-segment revenue transactions are at arm's length
(1) The Group's share of the adjusted EBITA of Dole above is after
the deduction of the Group's share of the non-controlling interests
charge within Dole
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:
2018 2017
Note EUR'000 EUR'000
Adjusted EBITA per management reporting 98,022 83,544
Acquisition related intangible asset amortisation
in subsidiaries (i) (10,281) (10,499)
Share of joint ventures and associates acquisition
related intangible asset amortisation (i) (2,684) (2,460)
Fair value movements on contingent consideration (ii) 4,043 4,174
Acquisition related costs within subsidiaries (iii) (105) (897)
Share of joint ventures and associates net
financial expense (iv) (13,784) (1,058)
Share of joint ventures and associates tax
(before tax on exceptional items) (iv) (3,153) (3,182)
---------- ----------
Operating profit before exceptional items 72,058 69,622
Net financial expense before exceptional
items (v) (7,365) (5,754)
---------- ----------
Profit before tax before exceptional items 64,693 63,868
Exceptional items (Note 5) (vi) 5,125 8,610
---------- ----------
Profit before tax 69,818 72,478
========== ==========
(i) Acquisition related intangible asset amortisation charges are
not allocated to operating segments in the Group's management
reports.
(ii) Fair value movements on contingent consideration are not allocated
to operating segments in the Group's management reports.
(iii) Acquisition related costs are transaction costs directly related
to the acquisition of subsidiaries and are not allocated to operating
segments in the Group's management reports.
(iv) Under IFRS, included within profit before tax is the Group's
share of joint ventures and associates profit after acquisition
related intangible amortisation charges and costs, tax and interest.
In the Group's management reports these items are excluded from
the adjusted EBITA calculation.
(v) Financial income and expense is primarily managed at Group level
and is therefore not allocated to individual operating segments
in the Group's management reports.
(vi) Exceptional items (Note 5) are not allocated to operating segments
in the Group's management reports.
4. Adjusted profit before tax, adjusted EBITA and adjusted EBITDA
For the purpose of assessing the Group's performance, Total Produce
management believes that adjusted EBITDA, adjusted EBITA, adjusted
profit before tax and adjusted earnings per share (Note 7) are the
most appropriate measures of the underlying performance of the Group.
2018 2017
EUR'000 EUR'000
Profit before tax per income statement 69,818 72,478
Adjustments
Exceptional items (Note 5) (5,125) (8,610)
Fair value movements on contingent consideration (4,043) (4,174)
Share of joint ventures and associates tax (before
tax on exceptional items) 3,153 3,182
Acquisition related intangible asset amortisation
within subsidiaries 10,281 10,499
Share of joint ventures and associates acquisition
related intangible asset amortisation 2,684 2,460
Acquisition related costs within subsidiaries 105 897
--------- ---------
Adjusted profit before tax 76,873 76,732
Exclude
Net financial expense - subsidiaries before exceptional
items 7,365 5,754
Net financial expense - share of joint ventures
and associates 13,784 1,058
--------- ---------
Adjusted EBITA 98,022 83,544
Exclude
Amortisation of software costs 1,397 1,443
Depreciation - subsidiaries 17,194 15,764
Depreciation - share of joint ventures and associates 16,679 3,690
--------- ---------
Adjusted EBITDA 133,292 104,441
========= =========
5. Exceptional items
2018 2017
EUR'000 EUR'000
Gain on disposal of investment (a) 14,728 -
Foreign currency gains arising on foreign currency
denominated intercompany borrowings relating to
proceeds from share placing (b) 12,535 -
Impairment of goodwill (c) (9,060) (9,075)
Restructuring costs and costs associated with termination (4,891) -
of a business (d)
Costs associated with the Dole transactions, net (3,225) -
(e)
(Charge)/credit on employee defined benefit obligations
(f) (1,304) 4,097
Fair value uplift on associate investment (g) - 12,428
Profit on disposal of property (h) - 1,160
Share of joint ventures and associates exceptional (4,580)
items - Dole (i) -
----------- ----------
Total exceptional items (before share of joint ventures
and associates tax) 4,203 8,610
Share of joint ventures and associates tax on exceptional 922
items - Dole (i) -
----------- ----------
Exceptional items within profit before tax* 5,125 8,610
Net tax charge on exceptional items (j) (1,395) (1,358)
----------- ----------
Total net of tax 3,730 7,252
=========== ==========
Attributable as follows:
Equity holders of the parent 560 7,116
Non-controlling interests 3,170 136
----------- ----------
3,730 7,252
=========== ==========
*Of the EUR5.1m in exceptional items, EUR9.5m has been recognised
as exceptional operating income, EUR3.7m loss recognised within profits
of joint ventures and associates and EUR0.7m recognised as an exceptional
financial expense.
(a) Gain on disposal of farming investment
In July 2018 a subsidiary of the Group disposed of an interest in
a farming entity for consideration of shares in an equity investment
which will be realised over a period of three years and may vary depending
on certain circumstances. The exceptional gain, which represents the
gain on the disposal of the investment received to date and fair valuing
the investment held in escrow resulted in an exceptional gain of EUR14.7m
being recorded in the income statement in 2018.
(b) Foreign currency gains arising on foreign currency denominated
intercompany borrowings relating to proceeds from share placing
In February 2018 the Group issued 63 million new ordinary shares,
raising proceeds of EUR141m (net of associated costs) to finance the
Dole transaction. The net proceeds from this share placing were used,
via an inter-company loan, to purchase US Dollars in February. The
strengthening of the US Dollar from the date of purchase to when the
inter-company loan was converted to equity in August 2018 following
the completion of the Dole transaction resulted in a foreign currency
gain of EUR12.5m.
(c) Impairment of goodwill
In 2018 the Group recognised a non-cash impairment charge of EUR9.1m
(2017: EUR9.1m) in relation to its fresh produce businesses in the
Netherlands which have experienced a continued difficult trading environment
resulting in a slower recovery than had been anticipated.
(d) Restructuring costs and costs association with termination of
a business
In 2018, the Group ceased operations in a non-performing sports supplements
business in the UK. The total costs associated with the termination
of this business were EUR2.3m including the write off of fixed assets,
intangible assets, other assets and redundancies. The Group implemented
restructuring programmes in a number of entities primarily within
the Eurozone Division in 2018 with the EUR2.6m of costs associated
with these programmes being recorded as an exceptional cost in the
income statement.
(e) Costs associated with the Dole transactions, net
Costs associated with the committed financing and other transaction
costs associated with Dole net of interest income on the proceeds
of share placing have been disclosed as a net exceptional cost of
EUR3.2m in the year.
(f) (Charge)/credit on employee defined benefit obligations
As explained in further detail in Note 9, a charge of EUR1.3m relating
to the UK defined benefit pension schemes was recognised in the 2018
income statement as a result of the UK High Court ruling that pension
benefits must be equalised in respect of Guaranteed Minimum Pensions
(GMPs) accrued between 17 May 1990 and 5 April 1997.
In 2017, an Enhanced Transfer Value ('ETV') offer was made to members
of the Irish defined benefit pension schemes. As a result of members
taking up this ETV offer settlement credits net of associated costs
resulted in an exceptional accounting credit of EUR4.1m.
(g) Fair value uplift on associate investment
In March 2017 the Group acquired a further 30% shareholding in the
Oppenheimer Group ('Oppy') to take its total shareholding to 65%.
As a result of this increased shareholding, Oppy became a subsidiary
from this date and in accordance with IFRS, the Group's previously
held 35% associate interest was remeasured to fair value resulting
in a fair value gain of EUR11.3m. This gain, together with the reclassification
of EUR1.1m of currency translation gains from the currency translation
reserve, was reclassified to the income statement resulting in an
exceptional gain of EUR12.4m.
(h) Profit on disposal of property
During 2017 the Group recorded a profit of EUR1.2m after associated
costs on the disposal of property in Continental Europe.
(i) Share of joint ventures and associates exceptional items - Dole
The share of exceptional items in Dole for the five month period ended
31 December 2018 was EUR4.6m. This related to non-trading exceptional
items such non-cash gains/losses on mark to market of derivative financial
instruments and foreign currency movements on long term foreign currency
denominated inter-company borrowings and restructuring costs. It also
includes some costs associated with the industry wide ban on romaine
lettuce as highlighted in the operating review. The share of the associated
tax credit was EUR0.9m.
(j) Tax charge on exceptional items
The tax effect on exceptional items within Group companies was a net
charge of EUR1.4m (2017: EUR1.4m).
Effect of exceptional items on cash flow statement
The net effect on cash of the items above was a net cash inflow in
the year of EUR3.0m (2017: EUR0.5m).
6. Income tax
2018 2017
EUR'000 EUR'000
Income tax expense 16,014 10,971
Group share of tax charge of joint ventures
and associates netted in profit before tax 2,231 3,182
--------- -----------------
Total tax charge 18,245 14,153
Adjustments
Net deferred tax (charge)/credit on amortisation
of intangibles and goodwill - subsidiaries (1,190) 7,267
Share of deferred tax credit on amortisation
of intangible assets with joint ventures and
associates 460 997
Deferred tax credit/(charge) charge on fair
value movements on contingent consideration 1,535 (1,666)
Net deferred tax charge on fair value movements
on investment properties - subsidiaries - (512)
Share of joint ventures and associates tax on
exceptional items - Dole 922 -
Tax impact of other exceptional items (1,395) (846)
Tax charge on underlying activities 18,577 19,393
========= =================
The total tax charge for the year amounted to EUR18.2m (2017: EUR14.2m),
including the Group's share of the tax charge of its joint ventures
and associates of EUR2.2m (2017: EUR3.2m), which is netted in profit
before tax in accordance with IFRS.
Excluding the impact of deferred tax related to the amortisation of
intangibles and goodwill and the fair value movements on contingent
consideration and the tax effect of exceptional items, the underlying
tax charge for the year was EUR18.6m (2017: EUR19.4m), equivalent
to a rate of 24.2% (2017: 25.3%) when applied to the Group's adjusted
profit before tax.
Excluding Dole and related costs, the underlying tax rate for the
Group was 23.1% (25.3%).
7. Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit for
the year attributable to ordinary equity holders of the parent by
the weighted average number of ordinary shares outstanding during
the year, excluding shares purchased by the company which are held
as treasury shares.
2018 2017
EUR'000 EUR'000
Profit attributable to equity holders of the
parent 35,793 47,826
========== =========
'000 '000
Shares in issue at beginning of year 346,829 343,015
New shares issued from exercise of share options
(weighted average) 275 2,148
New shares issued from share placing (weighted 56,786 -
average)
Effect of treasury shares held (22,000) (22,000)
---------- ---------
Weighted average number of shares 381,890 323,163
========== =========
Basic earnings per share - cent 9.37 14.80
========== =========
Diluted earnings per share
Diluted earnings per share is calculated by dividing the profit for
the year attributable to ordinary equity holders of the parent by the
weighted average number of ordinary shares outstanding after adjustment
for the effects of all ordinary shares and options with a dilutive
effect.
2018 2017
EUR'000 EUR'000
Profit attributable to equity holders of the parent 35,793 47,826
========= ================
'000 '000
Weighted average number of shares 381,890 323,163
Effect of share options with a dilutive effect 1,257 2,598
--------- ----------------
Weighted average number of shares (diluted) 383,147 325,761
========= ================
Diluted earnings per share - cent 9.34 14.68
========= ================
The average market value of the Company's shares for the purpose of
calculating the dilutive effect of share options was based on the quoted
market prices for the period during which the options were outstanding.
Adjusted basic earnings per share and adjusted fully diluted earnings
per share
Management believe that adjusted fully diluted earnings per share as
set out below provides a fairer reflection of the underlying trading
performance of the Group after eliminating the effect of acquisition
related intangible asset amortisation charges and costs, fair value
movements on contingent consideration, unrealised gains or losses on
derivative financial instruments, gains and losses on foreign currency
denominated intercompany borrowings and exceptional items and the related
tax on these items.
Adjusted basic earnings per share is calculated by dividing the adjusted
profit attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year, excluding shares
purchased by the company which are held as treasury shares.
Adjusted fully diluted earnings per share is calculated by dividing
the adjusted profit attributable to ordinary shareholders by the weighted
average number of ordinary shares outstanding after adjustment for
the effects of all ordinary shares and options with a dilutive effect.
2018 2017
EUR'000 EUR'000
Profit attributable to equity holders of the parent 35,793 47,826
Adjustments:
Exceptional items - net of tax (Note 5) (3,730) (7,252)
Acquisition related intangible asset amortisation
within subsidiaries 10,281 10,499
Share of joint ventures and associates acquisition
related intangible asset amortisation 2,684 2,460
Acquisition related costs within subsidiaries 105 897
Fair value movements on contingent consideration (4,043) (4,174)
Tax effect of amortisation of goodwill, intangible
assets and fair value movements on contingent
consideration (805) (6,598)
Non-controlling interests share of the items above 1 265
Adjusted profit attributable to equity holders
of the parent 40,286 43,923
========= ================
'000 '000
Weighted average number of shares 381,890 323,163
Weighted average number of shares (diluted) 383,147 325,761
Weighted average number of shares (diluted, excluding
the effect of the share placing) 326,361 325,761
Adjusted basic earnings per share - cent 10.55 13.59
========= ================
Adjusted fully diluted earnings per share - cent 10.51 13.48
========= ================
Memo item
Adjusted fully diluted earnings per share - cent
(excluding the effect of Dole acquisition and
related share placing)* 13.50 13.48
========= ================
*The calculation presented here is the adjusted fully diluted earnings
per share calculated excluding the impact of the Dole acquisition and
the related 63 million share placing in early February 2018.
8. Investment in Dole
As noted on page 8 above, on 31 July 2018, the Group completed the
transaction to acquire a 45% stake in Dole Food Company ('Dole') for
$300m.
In addition, and at any time after closing of the First Tranche, the
Group has the right, but not the obligation, to acquire (in any one
or more tranches of 1%) up to an additional 6% of Dole common stock
(the 'Second Tranche'). The Group has no present intention to exercise
its option to acquire the Second Tranche. In the event the Group exercises
the right to acquire the additional 6%, the total consideration for
the 51% stake shall be $312 million.
Following the second anniversary of the closing of the First Tranche,
the Group has the right, but not the obligation, to acquire the balance
of Dole common stock (the 'Third Tranche'), whereby the consideration
for the Third Tranche is to be calculated based on nine times the preceding
three year average historical Dole Adjusted EBITDA less net debt. However,
in no event shall the Third Tranche purchase price be less than $250
million or exceed $450 million (such cap subject to increase after
six years). The Third Tranche consideration is payable in cash or,
if the parties mutually agree, Total Produce stock.
From the fifth anniversary of completion of the acquisition of the
First Tranche, in the event the Group has not exercised its right to
acquire 100% of Dole, Mr. David H. Murdock is permitted to cause a
process to market and sell 100% of Dole common stock.
On completion of the acquisition of the First Tranche on 31 July 2018,
the Group and Mr. David H. Murdock have balanced governance rights
with respect to Dole. The Board of Directors of Dole comprises of six
members, three of which are appointed by Total Produce and three by
Mr. David H. Murdock. Mr. David H. Murdock remains Chairman of Dole
and Carl McCann was appointed Vice Chairman. Major decisions require
consent of at least one Board Member appointed by each of Total Produce
and Mr. David H. Murdock.
The investment in Dole and its financial contribution is being treated
as a joint venture and accounted for under the equity method in accordance
with IFRS in the consolidated Group accounts following completion of
the acquisition of the First Tranche on 31 July 2018 and until an exercise
of the Third Tranche.
Total Produce is therefore equity accounting for its 45% share of the
results of Dole with effect from 1 August 2018. The overall business
is seasonal with the greater share of EBITDA in the first half of the
financial year. The 2019 financial year will therefore be the first
full year reflecting this transaction.
The table below summarises the consideration paid and fair value of
the net identifiable assets of Dole on acquisition as prepared in accordance
with IFRS.
2018 2018
Consideration paid US$'m EUR'm
Cash consideration 300 256
Acquisition fees (net of contribution from Dole)
(a) 2 2
Fair value of Second Tranche Option (b) (5) (4)
Total cost of acquisition 297 254
Fair value of indemnification assets on acquisition(c) (4) (4)
Total deemed cost of acquisition 293 250
Fair value identifiable assets and liabilities on
acquisition
Intangible assets - Brand 287 245
Property, plant and equipment 1,008 861
Assets held for sale / Actively marketed property 185 158
Other non-current assets 105 89
Other current assets 869 742
Net debt (1,343) (1,147)
Employee benefit obligations (184) (157)
Other current liabilities (599) (511)
Other non-current liabilities (286) (244)
Non-controlling interests (8) (7)
Fair value identifiable assets and liabilities on
acquisition 34 29
Total Produce's 45% share of identifiable assets
and liabilities on acquisition 15 13
Goodwill arising 278 237
(a) As part of the Securities Purchase Agreement, it was agreed that
Dole would make a contribution of $15m to cover professional and advisory
fees relating to the transaction.
(b) As part of the provisions of acquisition accounting, a fair value
was determined for the Second Tranche Option which is recognised as
a current derivative financial asset in the Total Produce Group balance
sheet and correspondingly reduces the deemed cost of the acquisition
of the First Tranche. The fair value of the Third Tranche Option was
not deemed material at the date of acquisition.
(c) As part of the Securities Purchase Agreement, the seller provided
indemnities against certain liabilities outstanding at the date of
acquisition. The fair value of these indemnities was recognised as
a long term asset in the Total Produce Group balance sheet with a corresponding
reduction in the deemed cost of the acquisition.
The initial assignment of fair values to net assets for this investment
has been performed on a provisional basis in respect of the acquisition
given the timing of the completion of the transaction and will be finalised
within twelve months from the acquisition date, as permitted by IFRS
3 (Revised) Business Combinations.
Summary of Financial Information for Dole for the five months ended
31 December 2018
The following is the summarised financial information of Dole for the
five month period from date of acquisition to 31 December 2018 based
on consolidated financial statements prepared under IFRS, modified
for fair value adjustments on acquisition and differences in the Group's
accounting policies.
Summary income statement for 5 months ended
31 December 2018
2018 2018 2018 2018 2018 2018
US$'m US$'m US$'m EUR'm EUR'm EUR'm
Pre-exceptional Exceptional Pre-exceptional Exceptional
Items Total items Total
Revenue 1,767 - 1,767 1,538 - 1,538
Operating profit 27.3 (11.7) 15.6 23.7 (10.2) 13.5
Net financial expense (32.4) - (32.4) (28.2) - (28.2)
---------------- ------------ --------- ---------------- ------------ ---------
Loss before tax (5.1) (11.7) (16.8) (4.5) (10.2) (14.7)
Income tax (0.8) 2.4 1.6 (0.7) 2.1 1.4
---------------- ------------ --------- ---------------- ------------ ---------
Loss for period (5.9) (9.3) (15.2) (5.2) (8.1) (13.3)
Non-controlling interests (1.0) - (1.0) (0.8) - (0.8)
---------------- ------------ --------- ---------------- ------------ ---------
Loss for period attributable
to equity shareholders (6.9) (9.3) (16.2) (6.0) (8.1) (14.1)
================ ============ ========= ================ ============ =========
Groups' 45% share of
loss attributable to
equity shareholders (3.1) (4.2) (7.3) (2.7) (3.7) (6.4)
Summary of other comprehensive income statement for the five months
ended 31 December 2018
2018 2018
US$'m EUR'm
Other comprehensive expense for the
period (net of tax) (8.5) (7.4)
Non-controlling interests share - -
--------- ---------
Other comprehensive expense for the
period attributable to equity shareholders (8.5) (7.4)
========= =========
Group's 45% share of other comprehensive
expense attributable to equity shareholders (3.8) (3.3)
========= =========
Key performance indicators for the five months
ended 31 December 2018
2018 2018
US$'m EUR'm
Adjusted EBITDA 59.4 51.8
Adjusted EBITA 27.3 23.7
Summary Balance Sheet of Dole at 31 December 2018
2018 2018
US$'m EUR'm
Intangible assets - primarily brands 286 250
Property, plant and equipment 1,046 913
Assets held for sale / Actively marketed property 103 90
Other non-current assets 114 99
Other current assets 863 754
Net debt (1,350) (1,178)
Employee benefit obligations (186) (162)
Other non-current liabilities (265) (232)
Other current liabilities (593) (518)
Non-controlling interests (9) (8)
-------- --------
Fair value of net assets attributable to equity
shareholders 9 8
-------- --------
Total Produce's 45% share of net assets 4 4
Goodwill 278 242
-------- --------
Total carrying amount of 45% interest in Dole 282 246
======== ========
Reconciliation of Group's carrying value of investment
in Dole
2018 2018
US$'m EUR'm
Carrying amount at start of year - -
Arising on acquisition 293 250
Group share of loss for period attributable to
equity shareholders (7) (6)
Group share of other comprehensive expense for
period attributable to equity shareholders (4) (3)
Foreign exchange movement - 5
Total carrying amount of 45% interest in Dole
at end of year 282 246
====== ======
9. Post-employment obligations
2018 2017
EUR'000 EUR'000
Employee defined benefit pension schemes obligations (10,941) (16,707)
Other post-employment obligations (5,023) (5,293)
-------------------- --------------------
(15,964) (22,000)
==================== ====================
Employee defined benefit pension schemes
2018 2017
EUR'000 EUR'000
Pension assets 168,766 175,343
Pension obligations (179,707) (192,050)
---------- ----------
Net liability at end of year (10,941) (16,707)
Net related deferred tax asset 1,889 2,860
---------- ----------
Net liability after tax at end of year (9,052) (13,847)
========== ==========
Analysis of movement in the year
Net liability at beginning of year (16,707) (37,777)
Net interest expense and service costs recognised
in the income statement (2,035) (2,298)
Exceptional (charge)/credit in the income statement (1,304) 6,683
Employer contributions to schemes - normal 2,693 4,290
Employer contributions to schemes - ETV offer - 6,303
Remeasurement gains recognised in other comprehensive
income 6,323 5,708
Arising on acquisition - (252)
Translation adjustment 89 636
---------- ----------
Net liability at end of year before deferred tax (10,941) (16,707)
========== ==========
The table above summarises the movements in the net liability of the
Group's various defined benefit pension schemes in Ireland, the UK,
Continental Europe and North America in accordance with IAS 19 Employee
Benefits (2011).
The Group's balance sheet at 31 December 2018 reflects net pension
liabilities of EUR10.9m (2017: EUR16.7m) in respect of schemes in deficit,
resulting in a net deficit of EUR9.1m (2017: EUR13.8m) after deferred
tax.
The current and past service costs and the net finance expense on the
net scheme liabilities are charged to the income statement. Remeasurement
gains and losses are recognised in other comprehensive income. In determining
the valuation of pension obligations, consultation with independent
actuaries is required. The estimation of employee benefit obligations
requires the determination of appropriate assumptions such as discount
rates, inflations rates and mortality rates.
On 26 October 2018, the UK High Court ruled (in a landmark case relating
to the Lloyds Banking Group's pension schemes) that pension benefits
must be equalised in respect of Guaranteed Minimum Pensions (GMPs)
accrued between 17 May 1990 and 5 April 1997. The calculation of the
GMP equalisation adjustment required is complex with each pension having
to be equalised. The Group engaged the services of an actuary to perform
a preliminary estimate of the impact of GMP, and the estimated charge
of EUR1.3m is recognised as a past service cost in the income statement
and classified as an exceptional item.
In 2017 the Group initiated an Enhanced Transfer Value (ETV) programme
whereby an offer above the minimum statutory transfer value was made
to all active and deferred members of the Irish defined benefit pension
schemes ("Schemes") to transfer their accumulated accrued benefits
from the Schemes, eliminating future accrual of benefits in the Schemes,
and receive a transfer value above the statutory minimum amount. Further
details on the programme are outlined in the Group's 2017 Annual Report.
The programme has reduced the volatility of the Schemes going forward.
The decrease in the net liability in 2018 was primarily due to the
increase in discount rates in the Eurozone and the UK which result
in a decrease in the net present value of scheme obligations. The discount
rate in Ireland and the Eurozone increased to 2.10% (2017: 2.00%) and
in the UK increased to 2.90 % - 3.0 % (2017: 2.50% - 2.60%). This was
partly offset by a 2% negative return on scheme assets in the year
and the effect of the GMP equalisation in the UK schemes are mentioned
above.
10. Dividends
2018 2017
EUR'000 EUR'000
Dividends paid on Ordinary Euro 1 cent shares
Final dividend for 2017 of 2.4527 cent (2016: 2.2297
cent) 9,517 7,177
Interim dividend for 2018 of 0.9129 cent per share
(2017: 0.8906 cent) 3,545 2,888
Total dividend paid in the year 13,062 10,065
========== =========
Total dividend per share paid in the year 3.3656 3.1203
========== =========
The Board is proposing a 2.5 % increase in the final dividend to 2.5140
cent per share (2017: 2.4527 cent), subject to approval at the forthcoming
AGM. If approved, this dividend will be paid on 6 June 2019 to shareholders
on the register at 26 April 2019 subject to dividend withholding tax.
The total dividend for 2018 will amount to 3.4269 (2017: 3.3433) cent
per share and represents an increase of 2.5% on 2017. In accordance
with IFRS, this dividend has not been provided for in the Balance Sheet
at 31 December 2018.
11. Businesses acquired and other developments in 2018
Investments in subsidiaries
A key part of the Group's strategy is to grow by acquisition. During
the year, the Group made a number of bolt-on acquisitions and investments
in the UK and Sweden with committed investment of EUR4.5m including
EUR1.7m of contingent consideration payable on the achievement of future
profit targets. Goodwill arising on these acquisitions amounts to EUR1.7m.
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.
Cash flows relating to acquisition of subsidiaries
2018 2017
EUR'000 EUR'000
Cash consideration for acquisition of subsidiary
undertakings (2,496) (36,230)
Cash, cash equivalents and bank overdrafts acquired 3,833 758
------------------------- --------------------------
Cash inflow/(outflow) per statement of cash flows 1,337 (35,472)
========================= ==========================
The Group incurred acquisition related costs of EUR105,000 on legal
and professional fees and due diligence in respect of completed acquisitions.
These costs have been included within operating expenses in the year.
Payment of contingent and deferred consideration
In 2018, the Group paid EUR7.0m contingent consideration relating to
prior period acquisitions.
Investment in joint ventures and associates
The principal investment in joint ventures in the period was the acquisition
of an initial 45% interest in Dole Food Company as outlined in Note
8.
12. Cash Generated From Operations
2018 2017
EUR'000 EUR'000
Operating activities
Profit for the year 53,804 61,507
Non-cash adjustments to reconcile profit to net
cash flows:
Income tax expense 16,014 10,971
Income tax paid (13,349) (16,471)
Depreciation of property, plant and equipment 17,194 15,764
Reversal of impairment of property, plant and
equipment - (362)
Exceptional items (9,450) (8,610)
Exceptional cash flow (2,884) (7,254)
Fair value movements on contingent consideration (4,043) (4,174)
Amortisation of intangible assets - acquisition
related 10,281 10,499
Amortisation of intangible assets - development
costs capitalised 267 299
Amortisation of intangible assets - computer software 1,397 1,443
Amortisation of government grants (75) (81)
Defined benefit pension scheme expense - normal 2,035 2,298
Contributions to defined benefit pension schemes
- normal (2,693) (4,290)
Other post-employment benefit scheme expense 442 536
Net payments for other employee benefit scheme (168) (107)
Share-based payment expense 557 596
Net gain on disposal of property, plant and equipment (492) (432)
Currency recycled to income statement on joint 90 -
venture becoming subsidiary
Financial income (3,704) (2,046)
Financial expense 11,736 7,800
Financial income received excluding exceptional
items 2,245 1,327
Financial expense paid excluding exceptional items (9,418) (7,464)
Gain on non-hedging derivative financial instruments (59) (434)
Loss on disposal of trading assets and subsidiaries - 39
Gain on disposal of joint venture - (5)
Fair value movements on biological assets (6) (289)
Share of profit of joint ventures (2,330) (11,427)
Share of profit of associates (2,183) (782)
Net cash flows from operating activities before
working capital movements 65,208 48,851
-------------------- --------------------
Movements in working capital:
Movements in inventories 1,179 (10,409)
Movements in biological assets (851) (2,127)
Movements in trade and other receivables (23,571) (4,253)
Movements in trade and other payables 2,978 14,501
-------------------- --------------------
Total movements in working capital (20,265) (2,288)
-------------------- --------------------
Net cash flows from operating activities 44,943 46,563
-------------------- --------------------
13. Analysis of Net Debt and Cash and Cash Equivalents
Net debt is a non-IFRS measure which comprises cash and cash equivalents
and current and non-current interest-bearing loans and borrowings.
The calculation of net debt at 31 December 2018 and 31 December 2017
is as follows:
2018 2017
EUR'000 EUR'000
Current assets
Cash and cash equivalents 91,099 89,929
Call deposits (demand balances) 11,200 10,318
Current liabilities
Bank overdrafts (9,560) (11,268)
Current bank borrowings (48,658) (35,861)
Current finance leases (468) (595)
Non-current liabilities
Non-current bank borrowing (262,188) (164,374)
Non-current finance leases (1,168) (1,275)
-------------------------- -------------------------
Net debt at end of year (219,743) (113,126)
========================== =========================
Average net debt
Average net debt for 2018 was EUR217.1m (2017: EUR142.1m).
Trade receivables financing
The Group has a number of sales of receivables arrangements. Under
the terms of these agreements, the Group has transferred substantially
all of the credit risk of these trade receivables which are subject
to these agreements. Accordingly EUR30.0m (2017: EUR39.1m) has been
derecognised at 31 December 2018.
Reconciliation of cash and cash equivalents per balance sheet to cash
flow statement
2018 2017
EUR'000 EUR'000
Cash and cash equivalents per balance sheet 102,299 100,247
Bank overdrafts (9,560) (11,268)
--------- ---------
Cash, cash equivalents and bank overdrafts per cash
flow statement 92,739 88,979
========= =========
14. Post balance sheet events
On 29 January 2019, Dole completed the sale of Saba Fresh Cuts AB
(in Sweden) and Saba Fresh Cuts OY (in Finland) to Bama International.
Both Saba Fresh Cuts AB and Saba Fresh Cuts OY are producers of washed
and ready to eat salads. The sale of Saba Fresh Cuts AB was a condition
of the European Commission's approval of the acquisition by Total
Produce of a 45% interest in Dole in July 2018.
There have been no other material events subsequent to 31 December
2018 which would require disclosure or adjustment in the financial
statements.
15. Related party transactions
With the exception of transactions with Dole outlined in Note 8 of
this statement, there have been no related party transactions or changes
to related party transactions other than those described in the 2017
Annual Report that materially affect the financial position or the
performance of the Group for the year ended 31 December 2018.
16. Board approval
This announcement was approved by the Board of Directors of Total
Produce plc on 6 March 2019.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
FR JFMMTMBBMTBL
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March 07, 2019 02:01 ET (07:01 GMT)
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