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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 |
TIDMTOT
RNS Number : 2621X
Total Produce Plc
27 August 2020
TOTAL PRODUCE PLC
HALF YEAR RESULTS TO 30 JUNE 2020
Total Produce records strong results in the first half of 2020
-- Very strong performance in the first half of 2020 in the context of the unprecedented challenges posed by COVID-19 to the global economy
-- Total revenue up 2.0% to EUR3.112 billion -- Adjusted EBITDA up 0.9% to EUR118.2m -- Adjusted EBITA down 1.5% to EUR91.5m -- Adjusted profit before tax up 1.7% to EUR67.1m -- Adjusted fully diluted EPS down 3.6% to 9.45 cent
-- The Group is in a strong financial position, Net debt of EUR218.8m (June 2019: EUR294.3m )
-- 2019 final dividend of 2.577 cent per share to be paid in September 2020
-- Interim dividend of 0.9129 cent per share, unchanged on the prior year, to be paid in January 2021
Commenting on the results, Carl McCann, Chairman, said:
"We are pleased with the very strong performance in the first half of 2020 against the backdrop of the COVID-19 pandemic which has posed unprecedented challenges to the global economy. The health and wellbeing of our people is our number one priority while at the same time recognising our role in supplying vital foodstuffs, particularly during the pandemic. We are very proud of the efforts of all our people. Their dedication, commitment and hard work ensured the Group's supply chains and operations continue to function and remain open across all our key markets.
In the first half of 2020, revenue and adjusted EBITDA have increased by 2.0% and 0.9% respectively demonstrating the robustness of the Group's business model. Demand from retail and wholesale remained strong and helped offset reduced demand from the food service sector.
The Group expects revenue and adjusted EBITDA to be slightly ahead of 2019 on a full year basis with adjusted EPS slightly behind subject to the prevailing uncertainties of COVID-19. The Group intends to pay a 2020 interim dividend of 0.9129, unchanged on the prior year. The Group remains in a very strong financial position and continues to actively pursue the growth and expansion of the business ".
27 August 2020
For further information, please contact:
Brian Bell, Wilson Hartnell PR - Tel: +353-1-669-0030, Mobile: +353-87-243-6130
Interim Results
For the half year ended 30 June 2020
2020 EUR'million 2019 EUR'million change ============================================= ================= ================= ======== Total revenue 3,112 3,051 +2.0% Group revenue 1,893 1,833 +3.3 % Adjusted EBITDA 118.2 117.1 +0.9% Adjusted EBITA 91.5 92.8 (1.5%) Operating profit before exceptional items 52.9 52.4 +1.0% Operating profit after exceptional items 47.6 60.9 (21.7%) Adjusted profit before tax 67.1 65.9 +1.7% Profit before tax (after exceptional items) 42.6 55.3 (23.1%) ============================================= ================= ================= ======== EUR'cent EUR'cent change =========================================== ========= ========= ======== Adjusted fully diluted earnings per share 9.45 9.80 (3.6 %) Basic earnings per share 6.91 11.23 (38.4%) Diluted basic earnings per share 6.90 11.20 (38.4%) Interim dividend per share 0.9129 0.9129 - =========================================== ========= ========= ========
Overview
Total Produce (the 'Group') has delivered a very strong performance in the first half of 2020 against the backdrop of the unprecedented uncertainties and challenges in the global marketplace arising from the ongoing COVID-19 pandemic. The COVID-19 outbreak is an ongoing challenge for the Group and the wider fresh produce industry. The health and wellbeing of our people is the Group's number one priority while at the same time recognising the vital role in continuing to keep the supply chains open and supplying essential foodstuffs. The Group's strong presence in the global fresh produce industry, the diversity of its operations and products together with the exceptional response from our people have enabled us to meet these challenges.
Total revenue in the period grew 2.0% to EUR3,112m (2019: EUR3,051m) and adjusted EBITDA increased by 0.9% to EUR118.2m (2019: EUR117.1m) with adjusted EBITA decreasing 1.5% to EUR91.5m (2019: EUR92.8m). The increase in revenue was due to robust retail and wholesale demand offsetting reduced levels of activity in the food service sector. The Group also benefitted from the contribution of bolt-on acquisitions made in the past twelve months. Currency had a marginally positive impact on the translation of the overall results of foreign currency denominated operations to Euro in the period due principally to the strengthening of the US Dollar. On a like-for like basis excluding the impact of acquisitions, divestments and currency translation, revenues were in line with the prior period with a marginal volume decrease offset by increases in average price. The marginally 1.5% lower adjusted EBITA was primarily due to lower earnings in Dole benchmarked against a strong comparative period. This was partly offset by good performance in the Eurozone and International divisions.
Operating profit before exceptional items increased by 1.0% to EUR52.9m (2019: EUR52.4m). The operating profit after exceptional items was EUR47.6m (2019: EUR60.9m) with the decrease due to the effect of exceptional items year on year. The 2019 prior year period included exceptional gains of EUR8.4m compared to a current year charge of EUR5.3m. The gain in the prior period was due in large part to the Group's share of the gain on disposal of a Swedish salad business in Dole.
Adjusted fully diluted earnings per share decreased by 3.6% to 9.45 cent (2019: 9.80 cent), with the decrease due to the 1.5% reduction in adjusted EBITA and a higher non-controlling interest charge.
The Group was cash-generative in the period with adjusted operating cash flows of EUR33.1m (2019: EUR30.7m) before normal seasonal working capital outflows. Net debt at 30 June 2020 of EUR218.8 was lower than net debt of EUR294.3m at 30 June 2019 and EUR221.2m at 31 December 2019. The decrease in net debt on the prior period was helped by a EUR32.4m increase in non-recourse trade receivables financing and initiatives and actions taken by the Group to protect the business and militate against potential effects due to COVID-19. The Group managed its liquidity by curtailing some non-essential capital expenditure and discretionary costs. The Group is in a strong financial position and in addition to the measures outlined above, it has improved its borrowing capacity by increasing the amount and tenor of its committed borrowing facilities. The Group is operating comfortably within its bank covenants.
The Group is also pleased to announce the payment of the final 2019 dividend of 2.5770 cent per share on 2 September 2020 subject to approval of shareholders at the AGM on 28 August 2020. The Board intends to pay the 2020 interim dividend of 0.9129 cent per share, unchanged on the prior year in January 2021.
_______________________________________
Alternative performance measures 'APMs' The Group uses APMs, which are non-IFRS measures to monitor financial performance. These measures are referred to throughout the discussion of our reported operating performance and financial position and are measures which are regularly reviewed by Group management in assessing Group performance. The APMs are defined together with calculations in pages 30 to 33 of this statement
Operating Review
The table below details a segmental breakdown of the Group's total revenue and adjusted EBITA for the six months ended 30 June 2020. The European and International operating segments are primarily involved in the procurement, marketing and distribution of hundreds of lines of fresh fruit and vegetables. The Group's 45% share of the results of Dole is included as a separate operating segment. Dole is one of the world's leading fresh producers, marketers and distributors of fresh fruit and vegetables, which sell and distribute through a wide network in North America, Europe, Latin America, the Middle East and Africa. Segment performance is evaluated based on total revenue and adjusted EBITA.
(Unaudited) (Unaudited) H1 2020 H1 2019** ===================== ===================== Total Adjusted Total Adjusted revenue EBITA revenue EBITA EUR'000 EUR'000 EUR'000 EUR'000 ======================= ========== ========= ========== ========= Europe - Non-Eurozone 770,019 21,637 751,973 22,977 Europe - Eurozone 855,231 12,430 831,997 10,912 International 617,566 11,071 604,917 8,945 Dole (Group share) 902,866 46,334 891,021 49,987 Inter-segment revenue (33,446) - (28,557) - ======================= ========== ========= ========== ========= Total Group 3,112,236 91,472 3,051,351 92,821 ======================= ========== ========= ========== =========
*Dole's financial calendar consists of thirteen 4 weekly periods. The first half results are for the first six periods ended 13 June 2020. The comparative results are for the first six periods of 2019 ended 15 June 2019. The Group's share of the adjusted EBITA of Dole is after the deduction of the Group's share of the non-controlling interests charge within Dole and an allocation of a corporate overhead
** The 2019 segmental comparatives have been restated to conform with the current year's presentation. See Note 3 of the accompanying financial information.
Total revenue increased 2.0% to EUR3,112m (2019: EUR3,051m) with robust demand from retailers and wholesalers offsetting reduced levels of activity in the food service sector. The Group also benefitted from bolt-on acquisitions made in the past twelve months. Currency had a marginally positive impact on the translation of the overall results of foreign currency denominated operations to Euro in the period primarily due to the strengthening of the US Dollar. On a like-for like basis excluding the impact of acquisitions, divestments and currency translation, revenues were in line with the prior period with a marginal volume decrease offset by increases in average price.
Adjusted EBITA decreased by 1.5% to EUR91.5m (2019: EUR92.8m) due primarily to lower earnings in Dole which was benchmarked against a strong comparative period. This was offset by a good performance in the Eurozone and International divisions of the core Total Produce business. There were additional operating costs incurred in the period relating to COVID-19 such as employee personal protective equipment and costs of additional shifts in warehouse to comply with physical distancing. These additional costs were offset by reductions in other costs such as travel expenses.
Europe - Non-Eurozone
This segment includes the Group's businesses in the Czech Republic, Poland, Scandinavia and the UK. Revenue increased by 2.4% to EUR770m (2019: EUR752m) helped by the incremental impact of bolt-on acquisitions. On a like-for-like basis excluding divestments, acquisitions and disposals, revenue was circa 0.5% behind prior period with volume decreases offset by average price increases. Volume decreases are due to reduced demand in the food service sector in Scandinavia, the UK and the Czech Republic as a result of restrictions imposed due to COVID-19. This was offset by robust demand from retail, some growth in wholesale markets as well as an element of organic growth. Adjusted EBITA decreased 5.8% to EUR21.6m (2019: EUR23.0m) due to currency translation and an impact on margin due to a change in customer mix.
Europe - Eurozone
This segment includes the Group's businesses in France, Ireland, Italy, the Netherlands and Spain. Revenue increased by 2.8% to EUR855m (2019: EUR832m). Excluding the effect of acquisitions and divestments, revenue on a like-for-like basis was circa 2% ahead of prior period with average price increases offsetting a decrease in volumes. Throughout the Eurozone, robust retail and wholesale demand offset lower demand from the food service sector. Adjusted EBITA increased 13.9% to EUR12.4m (2019: EUR10.9m) with a resilient performance across all divisions particularly Spain. The results in the Netherlands were ahead of prior period with a good import business while the horticultural division remains challenged.
International
This division includes the Group's businesses in North America, South America and India. Revenue increased by 2.1% to EUR618m (2019: EUR605m). The results were helped in part with the benefit on translation of the results to Euro from the strengthening of the average US Dollar rate by 2.5% and the benefit of an increase in the shareholding in a joint venture which is now treated as a subsidiary. On a like-for-like basis excluding effects of currency and acquisitions, revenue decreased circa 1.5% with marginal decreases in volume and average price. The International division is largely retail focussed. There was an increase in demand for the staple items of potatoes, vegetables and citrus with reduced demand experienced for some more expensive soft fruit and certain varieties of deciduous product. Adjusted EBITA increased 23.8% to EUR11.1m (2019: EUR8.9m) with improved margins, lower operating costs (primarily travel related), the benefit of a joint venture becoming a subsidiary and the positive impact on the translation of the results of US Dollar denominated earnings to Euro.
Dole
This segment includes the Group's share of the results of Dole. The Group is equity accounting for its 45%
share of the results of Dole on an IFRS basis.
Dole's financial calendar consists of thirteen periods of four weeks, and the first half results are for the first six periods ended 13 June 2020 and the comparative results are for the first six periods of 2019 ended 15 June 2019. Dole's o verall business is seasonal, with the greater share of adjusted EBITA earned in the f irst half of the financial year. Hence the results for the period ended are not indicative of the results of the operations for the full year. As Dole is vertically integrated its operations are sensitive to a number of factors including weather related phenomena and the effects on industry volumes, prices, produce quality and growing costs.
Trading in Dole for the period has been robust in the context of a challenging global environment due to COVID-19 and is benchmarked against a strong comparative period in the Fresh Vegetable division for some produce categories. On an IFRS basis, Dole has recorded revenues of $2,210m ( EUR2,006m) for the period ended 13 June 2020 down 1.2% when compared to prior period of $2,236m (EUR1,980m). Adjusted EBITDA for the period of $153.4m (EUR139.0m) was down 4.7% compared to prior period of $161.0m (EUR142.9m) with adjusted EBITA of $118.8m (EUR107.5m) behind 8.8% when compared to prior period result of $130.3m (EUR115.6m).
The Fresh Fruit division remained strong with higher banana volumes in Latin America and North America and improved pricing offset by some lower European volumes. The results in this division benefitted from lower fuel prices. This was offset by a general decrease in pineapple volumes and prices due to the impact of COVID-19 on the food service sector.
The overall results are behind primarily due to a decrease in Fresh Vegetables against a very strong comparative period in some categories. However, within this division, results from packaged salad operations were ahead of prior period with favourable volumes and pricing. Results in Chile were also impacted by timing differences in the crop and harvest cycles of cherries as well as lower grape volumes due to the drought.
Total Produce's 45% share of revenue for the period ended 13 June 2020 was EUR903m (2019: EUR891m) and its share of adjusted EBITA was EUR46.3m (2019: EUR50.0m). There was a marginally positive benefit on translation of the results to Euro due to strength of the US Dollar when compared to the prior period.
Further details on the acquisition of Dole and its financial performance and position for the period ended 13 June 2020 are outlined in Note 6 of the accompanying financial information.
Financial Review
Revenue and adjusted EBITA
An analysis of the factors influencing the changes in revenue and adjusted EBITA are discussed in the operating review above.
Share of profits of joint ventures - Dole
The Group's share of the after-tax profits of Dole for the period amounted to EUR17.8m (2019: EUR18.6m) before exceptional items. The decrease is due to the lower EBITA as noted earlier in the operating review offset in part by lower interest costs due to a decrease in the US Libor rate in the period. The Group's share of exceptional items was a EUR3.8m charge in the period compared to a EUR7.0m gain in the prior period primarily due to the gain on the sale of a Swedish salad business. Post exceptional items the Group's share of after-tax profits was EUR14.0m (2019: EUR25.6m). Further details of the performance of Dole and its financial position at the end of the period is outlined in the operating review and in Note 6 of the accompanying financial information.
Share of profits of joint ventures and associates - excluding Dole
Excluding the contribution from Dole the share of after-tax profits of joint ventures and associates increased in the period to EUR5.2m (2019: EUR4.9m). Dividends declared from joint ventures and associates in the period amounted to EUR6.1m (2019: EUR6.0m) with EUR6.4m (2019: EUR6.3m) received in cash reflecting the Group's continued focus on the cash contributions from these investments.
Intangible asset amortisation
Acquisition related intangible asset amortisation within subsidiaries amounted to EUR5.1m (2019: EUR5.0m) in the period. The share of intangible asset amortisation within joint ventures and associates was EUR1.3m (2019: EUR1.3m).
Exceptional items
Exceptional items in the period amounted to a net charge after tax of EUR6.3m (2019: EUR8.7m gain). The net charge in 2020 primarily relates to the Group's EUR3.8m share of the net charge within Dole. In the comparative period the net gain primarily related to the Group's EUR7.0m share of the net gain within Dole primarily due to the profit on sale of the Swedish salad business. A full analysis of exceptional items for both 2020 and 2019 are set out in Note 4 of the accompanying financial information and have been excluded from the calculation of the adjusted numbers.
Operating profit
Operating profit before exceptional items increased 1.0% to EUR52.9m (2019: EUR52.4m) due primarily to the increased profits in the Eurozone and International divisions offset by lower earnings in Dole. Including exceptional items, operating profit decreased by 21.7% to EUR47.6m (2019: EUR60.9m) with the decrease due to the impact of exceptional items in the period. The net impact of exceptional items in the period on operating profit, was a charge of EUR5.3m compared to a gain of EUR8.4m in 2019. The prior year period included the Group's share of the gain in Dole on the sale of a Swedish salad business. As noted earlier, a full analysis of exceptional
items for both 2020 and 2019 are set out in Note 4 of the accompanying financial information.
Net financial expense
Net financial expense in the period decreased to EUR5.1m (2019: EUR5.5m) primarily due to the fall in US Libor rates and lower average net debt in the period.
The Group's share of the net interest expense of joint ventures and associates in the period was EUR19.3m (2019: EUR21.4m) with the decrease due to Group's share of a lower interest charge in Dole due to reduction in US Libor rates in the period.
Profit before tax
Excluding acquisition related intangible asset amortisation charges and costs, fair value movements on contingent consideration and share of joint venture interest and tax which is netted in profit before tax in the statutory income statement, the adjusted profit before tax increased by 1.7% in the period to EUR67.1m (2019: EUR65.9m) with increase in the adjusted EBITA and effect of lower interest charges. Statutory profit before tax after these items was EUR42.6m (2019: EUR55.3m) with the decrease due to the impact of exceptional items in both periods. As noted earlier, there was a net exceptional charge of EUR6.3m in the period after tax (2019: net gain of EUR8.7m).
Taxation
The adjusted tax charge for the period, including the Group's share of joint ventures and associates tax and before non-trading items as set out on page 31 of the accompanying financial information was EUR21.3m (2019: EUR20.7m) representing an underlying tax rate of 31.7% (2019: 31.4%) when applied to the Group's adjusted profit before tax.
Non-controlling interests
The non-controlling interests' share of after-tax profits in the period was EUR7.3m (2019: EUR6.1m). Included in this was the non-controlling interests' share of the net charge on exceptional items, amortisation charges and acquisition related costs (net of tax) of EUR1.7m (2019: EUR1.0m). Excluding these non-trading items, the non-controlling interests' share of adjusted after tax profits increased by EUR1.9m to EUR9.0m (2019: EUR7.1m) with the increase due to the non-controlling interests' share of earnings in certain non-wholly owned companies in Europe and North America.
Adjusted and basic earnings per share
Adjusted fully diluted earnings per share was 9.45 cent (2019: 9.80 cent), a decrease of 3.6% due to the marginally lower EBITA in the period and the increase in the non-controlling interest charge noted earlier.
Management believes that adjusted fully diluted earnings per share, which excludes acquisition related intangible asset amortisation charges and costs, fair value movements on contingent consideration, unrealised gains or losses on derivative financial instruments, gains and losses on foreign currency denominated intercompany borrowings, exceptional items and the related tax on these items, provides a fairer reflection of the underlying trading performance of the Group.
Basic earnings per share and diluted earnings per share after these non-trading items amounted to 6.91 cent per share (2019: 11.23 cent) and 6.90 cent per share (2019: 11.20 cent) respectively. The decrease on prior year is due to the large exceptional one-off gains in the 2019 comparative period compared to the exceptional charges in the current period as noted earlier.
Note 5 of the accompanying financial information provide details of the calculation of the respective earnings per share amounts.
Cash flow and net debt
Net debt (which excludes lease liabilities) at 30 June 2020 is EUR218.8m compared to EUR294.3m at 30 June 2019. Net debt at 31 December 2019 was EUR221.2m. Average net debt for the six-month period was EUR253.7m compared to EUR285.9m for the six-month period ended 30 June 2019 and EUR284.0m for the year ended 31 December 2019. In addition, the Group has non-recourse trade receivables financing of EUR67.4m at 30 June 2020 (30 June 2019: EUR35.0m and 31 December 2019: EUR46.4m).
The decrease in net debt on the prior period was due to the increase of EUR32.4m in non-recourse trades receivables financing and to initiatives and actions taken by the Group to protect the business and mitigate cash outflows due to COVID-19. Some non-essential capital expenditure and discretionary costs were deferred.
Adjusted operating cashflows increased in the period to EUR33.1m (2019: EUR30.7m) before normal seasonal working capital outflows. The normal seasonal working capital outflows for the period were EUR24.7m compared to EUR62.2m in prior period with the decreased outflows due to the increase in non-recourse trade receivables financing as noted earlier. Continued strong working capital management and a change in the customer mix also helped working capital in the period. Cash outflows on routine capital expenditure, net of disposals, were lower at EUR8.6m (2019: EUR9.8m) due to the deferral of some non-essential capital expenditure. Dividends received from joint ventures and associates in the period were EUR6.4m (2019: EUR6.3m) representing the Group's continued focus on cash returns from these investments. Dividends paid to non-controlling interests decreased to EUR5.1m (2019: EUR9.7m) due to the deferral of some dividends to non-controlling interests until second half of the year.
Cash inflows from exceptional items were EUR1.6m (2019: EUR0.6m outflow) primarily as a result of sale of farming investments. Cash inflows from disposals net of acquisitions amounted to EUR1.9m (2019: EUR9.9m outflow) with proceeds from disposals of equity investments in the period offset by the costs of some bolt-on acquisitions primarily in the Eurozone. Contingent and deferred consideration payments relating to prior period acquisitions were EUR0.1m (2019: EUR7.2m) with some payments deferred until second half of the year. Payments for non-routine property and plant additions amounted to EUR1.3m (2019: EUR3.8m). The Group did not make any dividend payments to equity shareholders in the period due to deferral of the date for the 2020 AGM. The 2020 dividend is expected to be paid in September 2020 subject to approval at the AGM on 28 August 2020. In the comparative period the 2018 final dividend of EUR9.8m was paid. At 30 June 2020, there was a EUR0.3m gain (2019: EUR0.7m loss) on the translation of foreign currency denominated net debt to Euro due primarily to the weaker Sterling and Canadian Dollar. The US Dollar and Swedish Krona rates at the period end were in line with the rates at 31 December 2019.
(Unaudited) (Unaudited) (Audited) H1 2020 H1 2019 FY 2019 EUR'million EUR'million EUR'million ================================================= ============ ============ ============ Adjusted EBITDA (1) 118.2 117.1 202.8 Deduct adjusted EBITDA of joint ventures and associates (73.3) (74.6) (121.1) Net financial expense and tax paid (10.4) (11.2) (26.3) Other (1.4) (0.6) (2.6) ================================================= ============ ============ ============ Adjusted operating cash flows before working capital movements 33.1 30.7 52.8 Working capital movements (24.7) (62.2) 6.6 ================================================= ============ ============ ============ Adjusted operating cash flows (1) 8.4 (31.5) 59.4 Routine capital expenditure net of routine disposal proceeds (1) (8.6) (9.8) (19.0) Dividends received from joint ventures and associates 6.4 6.3 10.7 Dividends paid to non-controlling interests (5.1) (9.7) (16.1) ================================================= ============ ============ ============ Free cash flow (1) 1.1 (44.7) 35.0 Cashflows from exceptional items 1.6 (0.6) 5.8 Cashflow receipts/(payments) from acquisitions, net of disposals (1) 1.9 (9.9) (14.5) Net (debt)/cash assumed on acquisition of subsidiaries (1.0) 0.4 2.1 Contingent and deferred consideration payments (0.1) (7.2) (11.1) Non-routine capital expenditure (1.3) (3.8) (4.5) Dividends paid to equity shareholders - (9.8) (13.3) Proceeds from issue of share capital - - 0.1 Other (0.1) 0.1 - ================================================= ============ ============ ============ Total net debt movement in period 2.1 (75.5) (0.4) Net debt (1) at beginning of period (221.2) (219.7) (219.7)
Finance leases reclassified to lease liabilities - 1.6 1.6 Foreign currency translation 0.3 (0.7) (2.7) ================================================= ============ ============ ============ Net debt (1) at end of period (218.8) (294.3) (221.2) ================================================= ============ ============ ============
(1) The APMs are defined together with calculations in pages 30 to 33 of this statement
Liquidity
It has always been the policy of the Group to have adequate facilities available providing the Group with sufficient headroom in addition to the flexibility to take advantage of opportunities to develop the business. As the pandemic hit global markets in mid-March, the Group took a number of steps to protect its liquidity and financial position. As described earlier, the Group postponed or deferred some non-essential capital expenditure and discretionary costs.
The Group has increased both the amount and tenor of its corporate borrowing facilities providing additional headroom. At 30 June 2020, the Group has approved committed and uncommitted bank borrowings of up to EUR646m (December 2019: EUR623m) in addition to approved overdrafts of EUR116m (31 December 2019: EUR109m). The Group has utilised 46% (31 December 2019: 46%) of these available facilities at 30 June 2020. At 30 June 2020, the Group also has cash and deposit balances of EUR131m (31 December 2019: EUR116m).
Post 30 June 2020, the Group renewed a three-year private placement facility of US$66m (EUR59m) which gives the Group the ability to draw down long term funding for periods of up to twelve years.
The Group is in a strong financial position with significant financial capacity. The Group is operating comfortably within its bank covenants and enjoys the support of its banking partners.
Defined benefit pension obligations
The net liability of the Group's defined benefit pension schemes (net of deferred tax) was EUR7.9m at 30 June 2020 (31 December 2019: EUR9.3m). The decrease in the liability was due to a 2.3% average return on pension scheme assets in the period together with the impact of an increase in the discount rates for the Irish schemes which decreased the net present value of these scheme obligations. This was partly offset by the effect of a decrease in the UK discount rate which increased the net present value of UK scheme obligations. Other post-employment benefit obligations increased to EUR6.4m at 30 June 2020 (31 December 2019: EUR5.9m). Further details are outlined in Note 7 of the accompanying financial information.
Shareholders' equity
Shareholders' equity increased by EUR12.1m in the six-month period to EUR463.2m. The increase was due to profit after tax of EUR26.9m attributable to equity shareholders. This was offset by currency translation loss of EUR10.0m on the retranslation of the net assets of foreign currency denominated operations into Euro, remeasurement losses of EUR4.8m (net of deferred tax) on post-employment benefit schemes, and effective portions of cashflow hedges movements (net of deferred tax) of EUR1.3m.
Development Activity
The Group made some bolt-on acquisitions during the six months ended 30 June 2020 as well as investments in existing joint ventures. The investments were in the Eurozone and International divisions. The total committed investment was EUR2.2m including EUR0.8m of deferred consideration of EUR0.6m contingent consideration payable on the achievement of future profit targets.
Dividends
Having regard to Government guidelines on the holding of meetings, the Board decided to postpone the AGM which was due to be held on 15 May 2020, to 28 August 2020. Subject to the shareholders' approval at the AGM, the 2019 final dividend of 2.5770 cent per share will be paid on 2 September 2020 to shareholders on the Register of Members as at 7 August 2020.
The Board intends to pay the 2020 interim dividend of 0.9129 cent per share, unchanged on the prior year in January 2021.
In accordance with company law and IFRS, these dividends have not been provided for in the balance sheet at 30 June 2020.
Post Balance Sheet Events
There have been no material events subsequent to 30 June 2020 which would require disclosure or adjustment in the financial statements.
Environmental, Social and Governance (ESG)
Total Produce marked the World Environment Day 2020 by launching the first, Group wide Sustainability Report. The report details Total Produce's strategic approach to sustainability, progress made to date, charts the Group's path forward and profiles a selection of our international sustainability related initiatives. We are working to use the collective strengths of our Group to bring about real and demonstrable change in environmental matters.
Our approach has involved communicating shared sustainability principles and values throughout our international organisation and targets to embed these principles into our everyday trading practices, both locally and at Group level. It has entailed putting in place new Group-wide reporting structures extending from our global operating companies to the Group Board of Directors heightening the awareness and placing sustainability at the very heart of our operations and strategic decision making.
In setting of Group-wide targets; measuring and managing core issues collectively and collaboration across the supply chain, the adoption of renewable energy or the application of environmentally friendly packaging is contributing to our global efforts and initiatives.
Our primary function is the marketing and distribution of fresh fruits and vegetables. The heath promoting properties of fresh produce makes a positive contribution to public diet and general wellbeing. The products we market and distribute are associated with the lowest environmental impact of all the primary foodstuffs.
The ESG section of our website details Total Produce's commitment to the responsible and sustainable production of our broad portfolio of fresh fruits and vegetables. Our Group wide Sustainability Report that was launched in June 2020 is available on the website at www.totalproduce.com.
Brexit and International Trade
The result of the UK's exit from the European Union ('Brexit') on 31 January 2020 and its impact in terms of the exit deal including tariffs and trade agreements remain unclear. Post the exit, the UK entered an 11-month transition period. Brexit committees set up in relevant areas of the business continue to monitor and assess the risks and opportunities that may arise post the transition period.
COVID-19 Outbreak
Since the outbreak of COVID-19 all parts of our business have continued to work tirelessly to safely supply fresh produce to our customers. It is due to the efforts of our people that we have been able to support frontline workers and help feed consumers The health and safety of all colleagues across the business is at the forefront of our thinking with the introduction of safe working practices. We have participated in helping communities, examples include supplying food packages to frontline healthcare workers, providing fruit to those in need, loaning spare vehicles to transport meals to the homeless and donating fresh produce to local food banks.
Going Concern
The Directors have reviewed forecasts and projected cashflows for a period not less than 12 months from the date of these interim financial statements. Consumer demand for fresh produce has remained robust through the pandemic and this is expected to continue. As highlighted earlier, when the pandemic hit in mid-March, the Group took a number of steps to protect its liquidity and financial position. The Group has also increased both the amount and tenor of its corporate borrowing facilities providing additional headroom. Taking all these factors into consideration, the Directors are satisfied that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they have adopted the going concern basis in preparing the financial statements.
Board Changes
Frank Gernon, Executive Director, and Jerome Kennedy, Non-Executive retired as Directors on 31 March 2020. From this date, the Board comprises of six independent Non-Executive Directors and three Executive Directors.
Frank has been an integral part of our Group for over 45 years and has served as an Executive Director of Total Produce since 2007. His outstanding service, dedication and accomplishments have been invaluable. During his tenure he has played a key role in the stewardship and development of the Group.
Jerome has served as a Non-executive Director on the Board and its Committees since the formation of Total Produce Plc. The Group has benefitted greatly from his business acumen, professionalism and wise counsel over the years.
I join the Board in extending to Frank and Jerome our sincerest appreciation for their dedication and commitment. Their valuable contributions have added greatly to the success of Total Produce. We wish them the very best for the future.
Summary and Outlook
We are pleased with the very strong performance in the first half of 2020 against the backdrop of the COVID-19 pandemic which has posed unprecedented challenges to the global economy. The health and wellbeing of our people is our number one priority while at the same time recognising our role in supplying vital foodstuffs, particularly during the pandemic. We are very proud of the efforts of all our people. Their dedication, commitment and hard work ensured the Group's supply chains and operations continue to function and remain open across all our key markets.
In the first half of 2020, revenue and adjusted EBITDA have increased by 2.0% and 0.9% respectively demonstrating the robustness of the Group's business model. Demand from retail and wholesale remained strong and helped offset reduced demand from the food service sector.
The Group expects revenue and adjusted EBITDA to be slightly ahead of 2019 on a full year basis with adjusted EPS slightly behind subject to the prevailing uncertainties of COVID-19. The Group intends to pay a 2020 interim dividend of 0.9129, unchanged on the prior year. The Group remains in a very strong financial position and continues to actively pursue the growth and expansion of the business .
Carl McCann, Chairman
On behalf of the Board
27 August 2020
Forward-looking statement
Any forward-looking statements made in this announcement have been made in good faith based on the information available as of the date of this announcement and are not guarantees of future performance. Actual results or developments may differ materially from the expectations expressed or implied in these statements, and the Company undertakes no obligation to update any such statements whether as a result of new information, future events, or otherwise. Total Produce's Annual Report contains and identifies important factors that could cause these developments or the Company's actual results to differ materially from those expressed or implied in these forward-looking statements.
Condensed Group Income Statement
for the half year ended 30 June 2020
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) (Audited) (Audited) H1 2020 H1 2020 H1 2020 H1 2019 H1 2019 H1 2019 FY 2019 FY 2019 FY 2019 Pre-Exceptional Exceptional Total Pre-Exceptional Exceptional Total Pre-Exceptional Exceptional Total (Note 4) (Note 4) (Note 4) EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 ================= ================ ============ ============ ================ ============ ============ ================ ============ ============ Revenue, including Group share of joint ventures and associates 3,112,236 - 3,112,236 3,051,351 - 3,051,351 6,173,195 - 6,173,195 ================= ================ ============ ============ ================ ============ ============ ================ ============ ============ Group revenue 1,893,164 - 1,893,164 1,832,598 - 1,832,598 3,729,346 - 3,729,346 Cost of sales (1,632,116) - (1,632,116) (1,582,218) - (1,582,218) (3,212,057) - (3,212,057) ================= ================ ============ ============ ================ ============ ============ ================ ============ ============ Gross profit 261,048 - 261,048 250,380 - 250,380 517,289 - 517,289 Operating expenses (225,979) (1,449) (227,428) (216,556) 1,447 (215,109) (455,371) (1,816) (457,187) Share of profit of joint venture - Dole 17,817 (3,849) 13,968 18,638 6,997 25,635 19,327 7,048 26,375 Share of profit of joint ventures - Other 4,211 - 4,211 4,568 - 4,568 10,658 - 10,658 Share of profit of associates 967 - 967 366 - 366 666 - 666 ================= ================ ============ ============ ================ ============ ============ ================ ============ ============ Operating profit before acquisition related intangible asset amortisation 58,064 (5,298) 52,766 57,396 8,444 65,840 92,569 5,232 97,801 Acquisition related intangible asset amortisation (5,129) - (5,129) (4,986) - (4,986) (10,301) - (10,301) ================= ================ ============ ============ ================ ============ ============ ================ ============ ============ Operating profit after acquisition related intangible asset amortisation 52,935 (5,298) 47,637 52,410 8,444 60,854 82,268 5,232 87,500 Net financial expense (5,070) - (5,070) (5,515) - (5,515) (10,967) - (10,967) ================= ================ ============ ============ ================ ============ ============ ================ ============ ============ Profit before tax 47,865 (5,298) 42,567 46,895 8,444 55,339 71,301 5,232 76,533 Income tax expense (7,427) (973) (8,400) (5,964) 304 (5,660) (10,282) (47) (10,329) ================= ================ ============ ============ ================ ============ ============ ================ ============ ============ Profit for the period 40,438 (6,271) 34,167 40,931 8,748 49,679 61,019 5,185 66,204 ================= ================ ============ ============ ================ ============ ============ ================ ============ ============ Attributable to Equity holders of the parent 26,853 43,620 53,302 Non-controlling interests 7,314 6,059 12,902 ================= ================ ============ ============ ================ ============ ============ ================ ============ ============ 34,167 49,679 66,204 ================= ================ ============ ============ ================ ============ ============ ================ ============ ============ Earnings per ordinary share Basic 6.91 cent 11.23 cent 13.72 cent Fully diluted 6.90 cent 11.20 cent 13.69 cent ================= ================ ============ ============ ================ ============ ============ ================ ============ ============
Condensed Group Statement of Comprehensive Income
for the half year ended 30 June 2020
(Unaudited) (Unaudited) (Audited) H1 2020 H1 2019 FY 2019 EUR'000 EUR'000 EUR'000 ============================================================== ============ ============ ========== Profit for the period 34,167 49,679 66,204 ============================================================== ============ ============ ========== Other comprehensive income: Items that may be reclassified subsequently to profit or loss: Foreign currency translation effects: * foreign currency net investments - subsidiaries (13,650) (1,255) 5,664 * foreign currency net investments - joint ventures and associates (903) (373) 3,274 * foreign currency recycled to income statement on (102) - - joint venture becoming a subsidiary * foreign currency borrowings designated as net investment hedges 1,895 (376) (3,397) Effective portion of changes in fair value of cash flow hedges, net 819 (78) (149) Changes in fair value of cost of hedging, net of recycling (191) 145 137 Deferred tax on items above (124) (2) (9) Share of joint ventures and associates effective portion of cash flow hedges (1,266) (1,708) (5,101) Share of joint ventures and associates deferred tax on items above (431) 265 497 ============================================================== ============ ============ ========== (13,953) (3,382) 916 ============================================================== ============ ============ ========== Items that will not be reclassified to profit or loss: Remeasurement loss on employee benefit schemes (166) (1,188) (3,009) Revaluation gain on property, plant and
equipment, net - - 2,095 Deferred tax on items above 238 (128) (966) Share of joint venture gain on revaluation of property, plant and equipment 135 - 1,369 Share of joint ventures loss on employee benefit schemes (6,196) (1,881) (2,601) Share of joint ventures deferred tax on items above 1,091 547 (75) ============================================================== ============ ============ ========== (4,898) (2,650) (3,187) ============================================================== ============ ============ ========== Other comprehensive (expense)/income for the period (18,851) (6,032) (2,271) ============================================================== ============ ============ ========== Total comprehensive income for the period 15,316 43,647 63,933 ============================================================== ============ ============ ========== Attributable to: Equity holders of the parent 10,738 37,021 49,417 Non-controlling interests 4,578 6,626 14,516 ============================================================== ============ ============ ========== 15,316 43,647 63,933 ============================================================== ============ ============ ==========
Condensed Group Balance Sheet
as at 30 June 2020
(Unaudited) (Unaudited) (Audited) 30 Jun 2020 30 Jun 2019 31 Dec 2019 EUR'000 EUR'000 EUR'000 =========================================================== ============= ============= ============= Assets Non-current Property, plant and equipment 173,900 176,573 175,485 Right of use assets 123,738 109,793 113,032 Investment property 11,604 7,369 11,843 Goodwill and intangible assets 258,973 267,112 268,462 Investments in joint ventures and associates - Dole 272,078 264,426 264,893 Investments in joint ventures and associates - Other 98,321 104,968 104,050 Other investments 326 4,968 2,743 Other receivables 23,254 24,181 19,796 Deferred tax assets 13,397 12,370 13,497 =========================================================== ============= ============= ============= Total non-current assets 975,591 971,760 973,801 =========================================================== ============= ============= ============= Current Inventories 113,368 84,134 98,031 Biological assets 2,783 4,215 3,965 Trade and other receivables 443,879 481,996 380,791 Other investments 150 8,629 2,306 Corporation tax receivables 1,294 2,765 2,439 Derivative financial instruments 4,966 4,584 4,489 Cash and cash equivalents 131,493 78,876 115,529 =========================================================== ============= ============= ============= Total current assets 697,933 665,199 607,550 =========================================================== ============= ============= ============= Total assets 1,673,524 1,636,959 1,581,351 =========================================================== ============= ============= ============= Equity Share capital 4,105 4,105 4,105 Share premium 295,487 295,454 295,487 Other reserves (141,165) (131,604) (131,309) Retained earnings 304,760 281,148 282,816 =========================================================== ============= ============= ============= Total equity attributable to equity holders of the parent 463,187 449,103 451,099 Non-controlling interests 98,939 95,484 98,768 =========================================================== ============= ============= ============= Total equity 562,126 544,587 549,867 =========================================================== ============= ============= ============= Liabilities Non-current Interest-bearing loans and borrowings 281,018 217,611 250,572 Lease liabilities 110,406 99,276 99,770 Other payables 2,803 1,768 2,904 Contingent consideration and other provisions 4,462 12,499 7,957 Put option liability 13,163 25,297 23,083 Corporation tax payable 6,714 6,658 6,541 Deferred tax liabilities 27,028 30,196 27,731 Employee benefits 16,098 16,140 16,736 =========================================================== ============= ============= ============= Total non-current liabilities 461,692 409,445 435,294 =========================================================== ============= ============= ============= Current Interest-bearing loans and borrowings 69,319 155,558 86,150 Lease liabilities 20,261 17,280 20,306 Trade and other payables 530,668 500,017 475,202 Contingent consideration and other provisions 11,156 7,253 8,534 Put option liability 13,270 - 3,529 Derivative financial instruments 391 405 305 Corporation tax payable 4,641 2,414 2,164 =========================================================== ============= ============= ============= Total current liabilities 649,706 682,927 596,190 =========================================================== ============= ============= ============= Total liabilities 1,111,398 1,092,372 1,031,484 =========================================================== ============= ============= ============= Total liabilities and equity 1,673,524 1,636,959 1,581,351 =========================================================== ============= ============= =============
Condensed Group Statement of Changes in Equity
For the half year ended 30 June 2020
Attributable to equity holders of the parent ==================================================================================================== Own Currency Other Share Share Undenomi-nated share translation Revaluation equity Retained Non-controlling Total capital premium capital reserve reserve reserve reserves(1) earnings Total interests equity EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 ================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ======== Balance at 1 January 2020 as presented in the Balance Sheet 4,105 295,487 140 (8,580) (18,699) 30,809 (134,979) 282,816 451,099 98,768 549,867 Adjust for transfer of NCI subject to put option for presentation
purposes - - - - - - (16,038) - (16,038) 16,038 - ================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ======== As at 1 January 2020 4,105 295,487 140 (8,580) (18,699) 30,809 (151,017) 282,816 435,061 114,806 549,867 ================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ======== Comprehensive income Profit for the period - - - - - - - 26,853 26,853 7,314 34,167 Other comprehensive income Items that may be reclassified subsequently to profit or loss: Foreign currency translation effects, net - - - - (10,108) - 30 - (10,078) (2,682) (12,760) Effective portion of cash flow hedges, net of recycling - - - - - - 596 - 596 223 819 Changes in fair value of cost of hedging, net of recycling - - - - - - (150) - (150) (41) (191) Deferred tax on items above - - - - - - (86) - (86) (38) (124) Share of joint ventures and associates effective portion of cashflow hedges - - - - - - (1,266) - (1,266) - (1,266) Share of joint ventures and associates deferred tax on cashflow hedges - - - - - - (431) - (431) - (431) Items that will not be reclassified subsequently to profit or loss: Remeasurement loss on employee benefit schemes - - - - - - - 31 31 (197) (166) Deferred tax on items above - - - - - - - 239 239 (1) 238 Share of joint ventures remeasurement loss on employee pension schemes - - - - - - - (6,196) (6,196) - (6,196) Share of joint ventures revaluation gains on property, plant and equipment - - - - - 135 - - 135 - 135 Share of joint ventures deferred tax on items above - - - - - - - 1,091 1,091 - 1,091 ================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ======== Total other comprehensive income - - - - (10,108) 135 (1,307) (4,835) (16,115) (2,736) (18,851) ================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ======== Total comprehensive income - - - - (10,108) 135 (1,307) 22,018 10,738 4,578 15,316 ================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ======== Transactions with equity holders of the parent Non-controlling interest arising on acquisition of subsidiaries - - - - - - - - - 1,816 1,816 Fair value movement on put option liability - - - - - - 179 - 179 - 179 Acquisition of non-controlling interests - - - - - - - (74) (74) (423) (497) Dividends paid - - - - - - - - - (4,555) (4,555) Total transactions with equity holders of the parent - - - - - - 179 (74) 105 (3,162) (3,057) ================ ======= ======= ============== ======= =========== =========== =========== ======== As at 30 June 2020 4,105 295,487 140 (8,580) (28,807) 30,944 (152,145) 304,760 445,904 116,222 562,126 ================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ======== Transfer of NCI subject to put option for presentation purposes - - - - - - 17,283 - 17,283 (17,283) - ================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ======== As at 30 June 2020 4,105 295,487 140 (8,580) (28,807) 30,944 (134,862) 304,760 463,187 98,939 562,126 ================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ========
(1) Other equity reserves comprise the demerger reserve, share option reserve, cash flow hedge reserve, cost of hedging reserve and the put option reserve
Condensed Group Statement of Changes in Equity
For the half year ended 30 June 2019
Attributable to equity holders of the parent ==================================================================================================== Own Currency Other Share Share Undenomi-nated share translation Revaluation equity Retained Non-controlling Total capital premium capital reserve reserve reserve reserves(1) earnings Total interests equity EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 ================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ======== Balance at 1 January 2019 as presented in the Balance Sheet 4,104 295,421 140 (8,580) (22,721) 28,336 (120,232) 256,654 433,122 82,483 515,605 Adjust for impact of transition to IFRS 16 - - - - 159 - - (6,937) (6,778) (1,337) (8,115) Adjust for transfer of NCI subject to put option for presentation purposes - - - - - - (34,673) - (34,673) 34,673 - ================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ======== As at 1 January 2019 4,104 295,421 140 (8,580) (22,562) 28,336 (154,905) 249,717 391,671 115,819 507,490 ================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ======== Comprehensive income Profit for the period - - - - - - - 43,620 43,620 6,059 49,679 Other comprehensive income Items that may be reclassified subsequently to profit or loss: Foreign currency translation effects, net - - - - (1,730) - (1,069) - (2,799) 795 (2,004) Effective portion of cash flow hedges, net of recycling - - - - - - (49) - (49) (29) (78) Changes in fair value of cost of hedging, net of recycling - - - - - - 135 - 135 10 145 Deferred tax on items above - - - - - - (11) - (11) 9 (2) Share of joint ventures and associates effective portion of cashflow hedges - - - - - - (1,708) - (1,708) - (1,708) Share of joint ventures and associates deferred tax on cashflow hedges - - - - - - 265 - 265 - 265 Items that will not be reclassified subsequently to profit or loss: Remeasurement loss on employee benefit schemes - - - - - - - (972) (972) (216) (1,188) Deferred tax on items above - - - - - - - (126) (126) (2) (128) Share of joint ventures remeasurement loss on employee
pension schemes - - - - - - - (1,881) (1,881) - (1,881) Share of joint ventures deferred tax on items above - - - - - - - 547 547 - 547 ================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ======== Total other comprehensive income - - - - (1,730) - (2,437) (2,432) (6,599) 567 (6,032) ================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ======== Total comprehensive income - - - - (1,730) - (2,437) 41,188 37,021 6,626 43,647 ================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ======== Transactions with equity holders of the parent New shares issued 1 33 - - - - (10) 10 34 - 34 Non-controlling interest arising on acquisition of subsidiaries - - - - - - - - - 1,537 1,537 Put option liability extinguished - - - - - - 11,657 - 11,657 - 11,657 Fair value movement on put option liability - - - - - - (891) - (891) - (891) Dividends paid - - - - - - - (9,767) (9,767) (9,229) (18,996) Share-based payment transactions - - - - - - 109 - 109 - 109 ================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ======== Total transactions with equity holders of the parent 1 33 - - - - 10,865 (9,757) 1,142 (7,692) (6,550) ================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ======== As at 30 June 2019 4,105 295,454 140 (8,580) (24,292) 28,336 (146,477) 281,148 429,834 114,753 544,587 ================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ======== Transfer of NCI subject to put option for presentation purposes - - - - - - 19,269 - 19,269 (19,269) - ================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ======== As at 30 June 2019 4,105 295,454 140 (8,580) (24,292) 28,336 (127,208) 281,148 449,103 95,484 544,587 ================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ======== (1) Other equity reserves comprise the demerger reserve, share option reserve, cash flow hedge reserve, cost of hedging reserve and the put option reserve
Condensed Group Statement of Changes in Equity
For the full year ended 31 December 2019
Attributable to equity holders of the parent ==================================================================================================== Own Currency Other Share Share Undenomi-nated share translation Revaluation equity Retained Non-controlling Total capital premium capital reserve reserve reserve reserves(1) earnings Total interests equity EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 ================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ======== Balance at 1 January 2019 as presented in the Balance Sheet 4,104 295,421 140 (8,580) (22,721) 28,336 (120,232) 256,654 433,122 82,483 515,605 Adjust for impact of transition to IFRS 16 - - - - 159 - - (6,937) (6,778) (1,337) (8,115) Adjust for transfer of NCI subject to put option for presentation purposes - - - - - - (34,673) - (34,673) 34,673 - ================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ======== As at 1 January 2019 4,104 295,421 140 (8,580) (22,562) 28,336 (154,905) 249,717 391,671 115,819 507,490 ================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ======== Comprehensive income Profit for the year - - - - - - - 53,302 53,302 12,902 66,204 Other comprehensive income Items that may be reclassified subsequently to profit or loss: Foreign currency translation effects, net - - - - 3,863 - 33 - 3,896 1,645 5,541 Effective portion of cash flow hedges, net of recycling - - - - - - (148) - (148) (1) (149) Changes in fair value of cost of hedging, net of recycling - - - - - - 155 - 155 (18) 137 Deferred tax on items above - - - - - - - - - (9) (9) Share of joint ventures and associates effective portion of cashflow hedges - - - - - - (5,101) - (5,101) - (5,101) Share of joint ventures and associates deferred tax on cashflow hedges - - - - - - 497 - 497 - 497 Items that will not be reclassified subsequently to profit or loss: Revaluation gain on property, plant and equipment, net - - - - - 1,624 - - 1,624 471 2,095 Remeasurement loss on employee benefit schemes - - - - - - - (2,955) (2,955) (54) (3,009) Deferred tax on items above - - - - - (520) - (26) (546) (420) (966) Share of joint ventures remeasurement loss on employee pension schemes - - - - - - - (2,601) (2,601) - (2,601) Share of joint ventures revaluation gains on property, plant and equipment - - - - - 1,369 - - 1,369 - 1,369 Share of joint ventures deferred tax on items above - - - - - - - (75) (75) - (75) ================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ======== Total other comprehensive income - - - - 3,863 2,473 (4,564) (5,657) (3,885) 1,614 (2,271) ================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ======== Total comprehensive income - - - - 3,863 2,473 (4,564) 47,645 49,417 14,516 63,933 ================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ======== Transactions with equity holders of the parent New shares issued 1 66 - - - - (20) 20 67 - 67 Non-controlling interest arising on acquisition of subsidiaries - - - - - - - - - 959 959 Put option liability extinguished - - - - - - 11,657 - 11,657 - 11,657 Fair value movement on put option liability - - - - - - (3,294) - (3,294) - (3,294) Acquisition of non-controlling
interests - - - - - - - (1,102) (1,102) (554) (1,656) Acquisition of non-controlling interests by a joint venture - - - - - - - (151) (151) - (151) Disposal of subsidiary - - - - - - - - - 121 121 Dividends paid - - - - - - - (13,313) (13,313) (16,055) (29,368) Share-based payment transactions - - - - - - 109 - 109 - 109 ================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ======== Total transactions with equity holders of the parent 1 66 - - - - 8,452 (14,546) (6,027) (15,529) (21,556) ================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ======== As at 31 December 2019 4,105 295,487 140 (8,580) (18,699) 30,809 (151,017) 282,816 435,061 114,806 549,867 ================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ======== Transfer of NCI subject to put option for presentation purposes - - - - - - 16,038 - 16,038 (16,038) - ================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ======== As at 31 December 2019 4,105 295,487 140 (8,580) (18,699) 30,809 (134,979) 282,816 451,099 98,768 549,867 ================ ======= ======= ============== ======= =========== =========== =========== ======== ======== =============== ========
(1) Other equity reserves comprise the demerger reserve, share option reserve, cash flow hedge reserve, cost of hedging reserve and the put option reserve
Condensed Group Statement of Cashflows
for the half year ended 30 June 2020
(Unaudited) (Unaudited) (Audited) H1 2020 H1 2019 FY 2019 EUR'000 EUR'000 EUR'000 =============================================================================== =========== =========== ========= Net cash flows from operating activities before working capital movements 44,096 35,579 67,249 Movement in working capital (24,657) (62,149) 6,527 =============================================================================== =========== =========== ========= Net cash flows from operating activities (Note 11) 19,439 (26,570) 73,776 =============================================================================== =========== =========== ========= Investing activities Acquisition of subsidiaries (71) (2,200) (6,683) Cash assumed on acquisition of subsidiaries, net 1,524 401 2,308 Acquisition of, and investment in joint ventures and associates (504) (7,715) (7,145) Payments of contingent consideration (86) (7,205) (11,103) Acquisition of equity investments - - (150) Proceeds from disposal of joint ventures and associates 98 48 48 Proceeds from disposal of investments for resale 2,632 - 1,043 Cash/(bank overdraft) derecognised on disposal of subsidiaries - - (191) Acquisition of property, plant and equipment (6,835) (11,916) (19,518) Expenditure on computer software (3,333) (1,904) (4,621) Development expenditure capitalised (96) (56) (62) Proceeds from disposal of property, plant and equipment and software - routine 267 301 678 Proceeds from exceptional item 2,073 2,396 9,307 Dividends received from joint ventures and associates 6,356 6,282 10,652 Government grants received - - 106 =============================================================================== =========== =========== ========= Net cash flows from investing activities 2,025 (21,568) (25,331) =============================================================================== =========== =========== ========= Financing activities Drawdown of borrowings 87,562 135,062 345,764 Repayment of borrowings (102,988) (111,788) (333,211) Lease payments (11,508) (7,959) (17,902) Proceeds from the issue of share capital, net - 34 67 Acquisition of non-controlling interests (300) - (1,656) Dividends paid to non-controlling interests (5,044) (9,687) (16,055) Dividends paid to equity holders of the parent - (9,767) (13,313) =============================================================================== =========== =========== ========= Net cash flows from financing activities (32,278) (4,105) (36,306) =============================================================================== =========== =========== ========= Net decrease in cash, cash equivalents and bank overdrafts (10,814) (52,243) 12,139 Net foreign exchange movement (2,447) (79) 1,149 Cash, cash equivalents and bank overdrafts at beginning of the period 106,027 92,739 92,739 =============================================================================== =========== =========== ========= Cash, cash equivalents and overdrafts at end of period 92,766 40,417 106,027 =============================================================================== =========== =========== =========
Condensed summary group reconciliation of net debt
(Unaudited) (Unaudited) (Audited) H1 2020 H1 2019 FY 2019 EUR'000 EUR'000 EUR'000 ======================================================================= =========== =========== ========= Net (decrease)/ increase in cash, cash equivalents and bank overdrafts (10,814) (52,243) 12,139 Drawdown of borrowings (87,562) (135,062) (345,764) Repayment of borrowings 102,988 111,788 333,211 Loans arising on acquisition (2,550) - - Foreign exchange movement 287 (669) (2,672) ======================================================================= =========== =========== ========= Movement in net debt 2,349 (76,186) (3,086) Finance lease reclassified from net debt on adoption of IFRS 16 - 1,636 1,636 Net debt at beginning of the period (221,193) (219,743) (219,743) ======================================================================= =========== =========== ========= Net debt at end of the period (218,844) (294,293) (221,193) ======================================================================= =========== =========== =========
Net debt is a non-IFRS measure which comprises bank deposits, cash and cash equivalents and current and non-current borrowings. It excludes lease liabilities. The calculation is outlined on Note 12.
Notes to the Interim Results
for the half year ended 30 June 2020
1. Basis of preparation
The condensed consolidated interim financial statements of Total Produce plc as at, and for the six months ended 30 June 2020, have been prepared in accordance with IAS 34 Interim Financial Reporting, as adopted by the EU. The accounting policies and methods of computation adopted in the preparation of the financial information are consistent with those set out in the Group's consolidated financial statements for the year ended 31 December 2019, with the exception of those disclosed below, which were prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.
The interim financial information for both the six months ended 30 June 2020 and the comparative six months ended 30 June 2019 is unaudited. The financial information for the year ended 31 December 2019 represents an abbreviated version of the Group's statutory financial statements for that year, which contained an unqualified audit report and have been filed with the Registrar of Companies.
The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended 31 December 2019, with the addition of assessing the impact of the COVID-19 pandemic as set out below.
Changes in accounting policy and disclosures
Except as described below, the accounting policies applied in these interim financial statements are the same as those applied in the Group's consolidated financial statements as at 31 December 2019.
A number of new standards are effective from 1 January 2020 and they have not had a material impact on the Group's consolidated financial statements. Any changes in accounting policy will be disclosed in the Group's consolidated financial statements as at 31 December 2020.
The Group has considered the impact of COVID-19 with respect to the judgements and estimates it makes in the application of its accounting policies. The financial statements as at 30 June 2020 incorporate these considerations on the recoverability of inventory, trade receivables and other assets. The Group continues to actively manage its working capital including inventory and trade receivables. COVID-19 has increased the credit risk from customers in the food service sector as demand has significantly decreased as a result of government-imposed restrictions. Outstanding customer balances are actively monitored and reviews for indicators of impairment are done on an ongoing basis. Furthermore, trade credit is extended to customers after careful consideration and thereafter continuously monitored. Where the extension of credit is considered inappropriate, payment plans are put in place. A significant element of credit risk is covered by credit insurance. Whilst expected credit losses from some food service customers have increased, the impact of COVID-19 on the recoverability of inventory and trade receivables is not considered significant.
The impairment testing of goodwill and indefinite life intangibles at the reporting date is based on the key assumptions disclosed in the 2019 Annual Report, updated to take account of future potential trading scenarios as a result of this pandemic. Where indicators of impairment were present in a Cash Generating Unit, the Group performed detailed testing using updated forecasts. The testing did not result in any impairment at the balance sheet date and will be reassessed in December 2020.
Land and Buildings and Investment Property are stated at fair value. Investment Property is revalued at each reporting period by registered independent appraisers with Land and Buildings valued by registered independent appraisers every three to five years. Further details are outlined in the Group's 2019 Annual Report. At 30 June 2020, the Group performed a desktop review of Investment Property and Land and Buildings and identified two properties in the Non-Eurozone division where fair value was below historic cost resulting in a EUR1.1m impairment charge in the period.
2. Translation of foreign currencies
The reporting currency of the Group is Euro. The rates used in the translation of results and balance sheets into Euro were as follows:
Average rate Closing rate ============================================================== ============================================================== H1 H1 30 Jun 31 Dec 2020 2019 % change 2020 2019 % change ====================== =================== =================== ==================== ============== =================== =================== ==================== Brazilian Real 5.9287 4.3410 (36.6%) 6.1118 4.5157 (35.3%) Canadian Dollar 1.5185 1.5066 (0.8%) 1.5319 1.4599 (4.9%) Czech Koruna 26.6368 25.6785 (3.7%) 26.7400 25.4080 (5.2%) Danish Kroner 7.4613 7.4661 0.1% 7.4523 7.4717 0.3% Indian Rupee 81.4880 79.0941 (3.0%) 84.5415 79.9301 (5.8%) Polish Zloty 4.4138 4.2915 (2.8%) 4.4524 4.2551 (4.6%) Pound Sterling 0.8842 0.8712 (1.5%) 0.9109 0.8506 (7.1%) Swedish Krona 10.6653 10.5308 (1.3%) 10.4824 10.4778 (0.0%) US Dollar(1) 1.1016 1.1296 2.5% 1.1229 1.1216 (0.1%) ====================== =================== =================== ==================== ============== =================== =================== ====================
(1) For period ended 13 June 2020, the average rate used in translating the revenues of Dole to Euro was 1.1016 (2019: 1.1267) and equity accounted profit after tax of Dole to Euro in 2020 was 1.1047 (2019: 1.1267).
3. Segmental Analysis
The table below details a segmental breakdown of the Group's total revenue and adjusted EBITA for the six months ended 30 June 2020, the six months ended 30 June 2019 and the full year ended 31 December 2019.
In accordance with IFRS 8, the Group's reportable operating segments based on how performance is currently assessed and resources are allocated are as follows:
-- Europe - Eurozone: This reportable segment is an aggregation of thirteen operating segments principally in France, Ireland, Italy, the Netherlands and Spain primarily involved in the procurement, marketing and distribution of fresh produce and some healthfoods and consumer goods products. These operating segments have been aggregated because they have similar economic characteristics.
-- Europe - Non-Eurozone : This operating segment is an aggregation of six operating segments in the Czech Republic, Poland, Scandinavia and the United Kingdom primarily involved in the procurement, marketing and distribution of fresh produce. These operating segments have been aggregated because they have similar economic characteristics.
-- International : This segment is an aggregation of five operating segments in North America, one in South America and one in India primarily involved in the procurement, marketing and distribution of fresh produce. These operating segments have been aggregated because they have similar customer profiles and primarily transact in US Dollar.
-- Dole: This operating segment represents the Group's 45% interest in Dole. Dole is one of the world's leading producers, marketers and distributors of fresh fruit and vegetables. It has an iconic brand and leading market positions. It is one of the world's largest producers of bananas and pineapples and a leader in other fresh fruits, value added and fresh-packed vegetables and berries. In terms of market share they hold the number one and number three positions respectively for bananas in North American and Europe and are number two and number three respectively for pineapples in North America and Europe. They sell and distribute throughout a wide network in North America, Europe, Latin America, the Middle East and Africa.
Segment performance is evaluated based on revenue and adjusted EBITA. Management believes that adjusted EBITA, while not a defined term under IFRS, gives a fair reflection of the underlying trading performance of the Group. Adjusted EBITA represents earnings before interest, tax, acquisition related intangible asset amortisation charges and costs, fair value movements on contingent consideration, unrealised gains or losses on derivative financial instruments, gains and losses on foreign currency denominated intercompany borrowings and exceptional items. It also excludes the Group's share of these items within joint ventures and associates. Adjusted EBITA is therefore measured differently from operating profit in the Group financial statements and is explained and reconciled in full detail in the analysis that follows.
Finance costs, finance income and income taxes are managed on a centralised basis. These items are not allocated between operating segments for the purpose of the information presented to the Chief Operating Decision Maker ('CODM') and are accordingly omitted from the detailed segmental analysis that follows.
(Unaudited) (Unaudited) (Unaudited) H1 2020 H1 2019 (3) FY 2019 (3) =================== =================== =================== Total Adjusted Total Adjusted Total Adjusted revenue EBITA revenue EBITA revenue EBITA EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 ========================= ========= ======== ========= ======== ========= ======== Europe - Non-Eurozone 770,019 21,637 751,973 22,977 1,481,657 41,913 Europe - Eurozone 855,231 12,430 831,997 10,912 1,661,446 20,477 International 617,566 11,071 604,917 8,945 1,271,566 22,284 Dole (Group share)(1) 902,866 46,334 891,021 49,987 1,821,400 65,440 Inter-segment revenue(2) (33,446) - (28,557) - (62,874) - ========================= ========= ======== ========= ======== ========= ======== Total Group 3,112,236 91,472 3,051,351 92,821 6,173,195 150,114 ========================= ========= ======== ========= ======== ========= ========
(1) Dole's financial calendar consists of thirteen 4 weekly periods. The first half results are for the first six periods ended 13 June 2020. The comparative results are for the first six periods of 2019 ended 15 June 2019. The Group's share of the adjusted EBITA of Dole above is after the deduction of the Group's share of the non-controlling interests charge within Dole and an allocation of corporate overhead.
(2) All inter-segment revenue transactions are at arm's length.
(3) In 2020 there was a realignment in the reporting of small businesses in Europe due to change in divisional management responsibility. The comparative 2019 financial information for both European divisions has been restated to conform with the current presentation.
Reconciliation of segmental profit to operating profit
Below is a reconciliation of adjusted EBITA per the Group's management reports to operating profit and profit before tax as presented in the Group income statement:
(Unaudited) (Unaudited) (Audited) H1 2020 H1 2019 FY 2019 EUR'000 EUR'000 EUR'000 ================================================================================= =========== =========== ========= Adjusted EBITA per management reporting 91,472 92,821 150,114 Acquisition related intangible asset amortisation within subsidiaries(1) (5,129) (4,986) (10,301) Share of joint ventures and associates acquisition related intangible asset amortisation (1,328) (1,349) (2,696) Fair value movements on contingent consideration(2) 681 1,067 204 Acquisition related costs within subsidiaries(3) (348) (23) (177) Share of joint ventures and associates net financial expense(4) (19,335) (21,359) (40,817) Share of joint ventures and associates tax (before tax on exceptional items) (13,078) (13,761) (14,059) ================================================================================= =========== =========== ========= Operating profit before exceptional items 52,935 52,410 82,268 Net financial expense before exceptional items(5) (5,070) (5,515) (10,967) ================================================================================= =========== =========== ========= Profit before tax before exceptional items 47,865 46,895 71,301 Exceptional items(6) (5,298) 8,444 5,232 ================================================================================= =========== =========== ========= Profit before tax after exceptional items 42,567 55,339 76,533 ================================================================================= =========== =========== =========
(1) Acquisition related intangible asset amortisation charges are not allocated to operating segments in the Group's management reports.
(2) Fair value movements on contingent consideration are not allocated to operating segments in the Group's management reports.
(3) Acquisition related costs are transaction costs directly related to the acquisition of subsidiaries and are not allocated to operating segments in the Group's management reports.
(4) Under IFRS, included within profit before tax is the Group's share of joint ventures and associates profit after acquisition related intangible amortisation charges and costs, tax and interest. In the Group's management reports these items are excluded from the adjusted EBITA calculation.
(5) Financial income and expense is primarily managed at Group level and is therefore not allocated to individual operating segments in the Group's management reports.
(6) Exceptional items (Note 4) are not allocated to operating segments in the Group's management reports.
4. Exceptional items (Unaudited) (Unaudited) (Audited) H1 2020 H1 2019 FY 2019 EUR'000 EUR'000 EUR'000 ============================================================================ =========== =========== ========= Gain/(Loss) on disposal of investment(1) - 1,447 (670) Restructuring costs and costs associated with termination of a business(2) (348) - (1,146) Share of joint venture and associates exceptional items - Dole(3) (4,788) 6,199 5,523 Impairment of PPE(4) (1,101) - - Total exceptional items (before share of joint ventures and associates tax) (6,237) 7,646 3,707 Share of joint venture and associates tax on exceptional items - Dole(3) 939 798 1,525 ============================================================================ =========== =========== ========= Exceptional items within profit before tax (5,298) 8,444 5,232 Net tax (charge)/credit on exceptional items(5) (973) 304 (47) ============================================================================ =========== =========== ========= Total net of tax (6,271) 8,748 5,185 ============================================================================ =========== =========== ========= Attributable as follow: Equity holders of the parent (6,271) 8,135 5,246 Non-controlling interests - 613 (61) ============================================================================ =========== =========== ========= (6,271) 8,748 5,185 ============================================================================ =========== =========== =========
Of the EUR5.3m net exceptional cost in H1 2020, EUR1.4m has been recognised as a net charge within operating expenses, and EUR3.9m as a net exceptional charge within share of profits of joint ventures and associates. Of the EUR8.4m net exceptional credit in H1 2019, EUR1.4m has been recognised as a credit within net operating expenses and EUR7.0m as a net exceptional gain has within share of profits of joint ventures and associates. Of the EUR5.2m net exceptional credit in FY 2019, EUR1.8m has been recognised as a charge with net operating expenses and a EUR7.0m net exceptional gain has been recognised within share of profits of joint ventures and associates.
(1) Gain/(Loss) on disposal of equity/farming investment
In 2018 a subsidiary of the Group disposed of an interest in a farming entity for consideration of shares in an equity investment which was to be realised over a period of two to three years and could vary depending on certain circumstances. The exceptional gain of EUR1.5m for the period ended 30 June 2019 and exceptional loss of EUR0.7m for the year ended 31 December 2019 represented the gain/loss on the disposals of the investment in those periods and the fair value movements of the remaining investment held in escrow at that period end.
(2) Restructuring costs and costs associated with termination and disposal of businesses
Restructuring charges of EUR0.3m were incurred in the period on ongoing structuring programs in Europe. In the second half of 2019, the Group incurred losses of EUR0.6m on the disposal of and termination of two small businesses in the Non-Eurozone division as well as charges of EUR0.5m incurred in 2019 on ongoing restructuring programs in Europe
(3) Share of exceptional items within joint ventures and associates - Dole
The share of the exceptional items in Dole for the 6 month period to 13 June 2020 was a charge of EUR4.8m with a related tax credit of EUR0.9m. Included in these were a net charge of EUR2.4m on mark to market of derivative financial instruments (including ineffectiveness on interest rate swap hedging instrument) and foreign currency gains/losses on long term foreign currency denominated intercompany borrowings, net restructuring charges of EUR1.4m and EUR1.0m due to COVID-19 costs (costs of employee protective equipment, double shifts etc).
The share of the exceptional items in Dole for the 6 month period to 15 June 2019 was a credit of EUR6.2m with a related tax credit of EUR0.8m. Included in these were net gains of EUR11.0m on disposals of businesses/assets, net charges of EUR0.9m on mark to market of derivative financial instruments and foreign currency gains/losses on long term foreign currency denominated intercompany borrowings, net restructuring charges of EUR2.2m, transaction costs of EUR0.9m and costs of EUR0.8m associated with industry wide product recalls.
The Group's share of the exceptional items in Dole for the year ended 28 December 2019 was a net gain of EUR5.5m with a related tax credit of EUR1.5m. Included in these exceptional items are net gains of EUR11.8m on disposals of businesses/assets, net gains of EUR0.1m on mark to market of derivative financial instruments and foreign currency gains/losses on long term foreign currency denominated intercompany borrowings, net restructuring charges of EUR4.1m, transaction costs of EUR0.6m and costs of EUR1.7m associated with industry wide product recalls.
(4) Impairment of property, plant and equipment
All property is recognised in the financial statements at fair value. As part of the Group's bi-annual review of carrying value of property, the Group identified two properties in the Non-Eurozone division where fair value exceeded historic cost resulting in an exceptional income statement charge of EUR1.1m.
(5) Tax credit/(charge) on exceptional items
The net tax effect on the exceptional items above for the half year ended June 2020 was a net charge of EUR1.0m (year ended 31 December 2019: a charge of less than EUR0.1m and a gain of EUR0.3m for the half year ended 30 June 2019).
Effect of exceptional items on cash flow statement
The net effect of exceptional items including prior period exceptional items was a net cash inflow of EUR1.6m for the period to 30 June 2020 (2019: outflow of EUR0.6m). The net effect of exceptional items for the year ended 31 December 2019 was a cash inflow of EUR5.8m.
5. Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period, excluding shares purchased by the Company which are held as treasury shares.
(Unaudited) (Unaudited) (Audited) H1 2020 H1 2019 FY 2019 EUR'000 EUR'000 EUR'000 ==================================================================== =========== =========== ========= Profit attributable to equity holders of the parent 26,853 43,620 53,302 ==================================================================== =========== =========== ========= '000 '000 '000 Shares in issue at beginning of period 410,525 410,429 410,429 New shares issued from exercise of share options (weighted average) - 47 51 Shares repurchased by company (weighted average) - - (2) Effect of treasury shares held (22,000) (22,000) (22,000) ==================================================================== =========== =========== ========= Weighted average number of shares at end of period 388,525 388,476 388,478 ==================================================================== =========== =========== ========= Basic earnings per share - cent 6.91 11.23 13.72 ==================================================================== =========== =========== =========
Diluted earnings per share
Diluted earnings per share is calculated by dividing the profit for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding after adjustment for the effects of all ordinary shares and options with a dilutive effect.
(Unaudited) (Unaudited) (Audited) H1 2020 H1 2019 FY 2019 EUR'000 EUR'000 EUR'000 ============================================================= =========== =========== ========= Profit attributable to equity holders of the parent 26,853 43,620 53,302 ============================================================= =========== =========== ========= '000 '000 '000 Weighted average number of shares at end of period 388,525 388,476 388,478 Effect of share options with a dilutive effect 583 867 817 Weighted average number of shares at end of period (diluted) 389,108 389,343 389,295 ============================================================= =========== =========== ========= Diluted earnings per share - cent 6.90 11.20 13.69 ============================================================= =========== =========== =========
The average market value of the Company's shares for the purpose of calculating the dilutive effect of share options was based on the quoted market prices for the period during which the options were outstanding.
Adjusted basic earnings per share and adjusted fully diluted earnings per share
Management believe that adjusted fully diluted earnings per share as set out below provides a fairer reflection of the underlying trading performance of the Group after eliminating the effect of acquisition related intangible asset amortisation charges and costs, fair value movements on contingent consideration, unrealised gains or losses on derivative financial instruments, gains and losses on foreign currency denominated intercompany borrowings and exceptional items and the related tax on these items.
Adjusted basic earnings per share is calculated by dividing the adjusted profit attributable to ordinary equity holders of the parent (as calculated below) by the weighted average number of ordinary shares outstanding during the period, excluding shares purchased by the Company which are held as treasury shares.
Adjusted fully diluted earnings per share is calculated by dividing the adjusted profit attributable to ordinary equity holders of the parent (as calculated below) by the weighted average number of ordinary shares outstanding after adjustment for the effects of all ordinary shares and options with a dilutive effect.
(Unaudited) (Unaudited) (Audited) H1 2020 H1 2019 FY 2019 EUR'000 EUR'000 EUR'000 ================================================================================= =========== =========== ========= Profit attributable to equity holders of the parent 26,853 43,620 53,302 Adjustments: Exceptional items - net of tax (Note 4) 6,271 (8,748) (5,185) Acquisition related intangible asset amortisation within subsidiaries 5,129 4,986 10,301 Share of joint ventures and associates acquisition related intangible asset amortisation 1,328 1,349 2,696 Acquisition related costs within subsidiaries 348 23 177 Fair value movements on contingent consideration (681) (1,067) (204)
Tax effect of amortisation of goodwill, intangible assets and fair value movements on contingent consideration (759) (1,006) (3,188) Non-controlling interests share of items above (1,718) (1,002) (2,915) Adjusted profit attributable to equity holders of the parent 36,771 38,155 54,984 '000 '000 '000 ================================================================================= =========== =========== ========= Weighted average number of shares 388,525 388,476 388,478 Weighted average number of shares (diluted) 389,108 389,343 389,295 ================================================================================= =========== =========== ========= Adjusted basic earnings per share - cent 9.46 9.82 14.15 ================================================================================= =========== =========== ========= Adjusted fully diluted earnings per share - cent 9.45 9.80 14.12 ================================================================================= =========== =========== ========= 6. Investment in Dole
As disclosed previously, on 31 July 2018 the Group completed the transaction to acquire a 45% shareholding in Dole Food Company ('Dole') for $300m.
In addition, and at any time after closing of the First Tranche, the Group has the right, but not the obligation, to acquire (in any one or more tranches of 1%) up to an additional 6% of Dole common stock (the 'Second Tranche'). In the event the Group exercises the right to acquire the additional 6%, the total consideration for the 51% stake shall be $312m.
From 31 July 2020, the Group has the right, but not the obligation, to acquire the balance of Dole common stock (the 'Third Tranche'), whereby the consideration for the Third Tranche is to be calculated based on nine times the preceding historical three year average Dole adjusted EBITDA less net debt. However, in no event shall the Third Tranche purchase price be less than $250m or exceed $450m (such cap subject to increase after six years). The Third Tranche consideration is payable in cash or, if the parties mutually agree, Total Produce stock.
From the fifth anniversary of completion which of the acquisition of the First Tranche, which is 31 July 2023 in the event the Group has not exercised its right to acquire 100% of Dole, Mr. David H. Murdock is permitted to cause a process to market and sell 100% of Dole common stock. A price protection mechanism is in place in favour of Total Produce around the proceeds from such a sale.
On completion of the acquisition of the First Tranche on 31 July 2018, the Group and Mr. David H. Murdock have balanced governance rights with respect to Dole. The Board of Directors of Dole comprises of six members, three of which are appointed by Total Produce and three by Mr. David H. Murdock. Mr. David H. Murdock remains Chairman of Dole and Mr. Carl McCann was appointed Vice Chairman. Major decisions require consent of at least one Board Member appointed by each of Total Produce and Mr. David H. Murdock.
The investment in Dole and its financial contribution is being treated as a joint venture and accounted for under the equity method in accordance with IFRS in the consolidated Group accounts following completion of the acquisition of the First Tranche on 31 July 2018 and until an exercise of the Third Tranche.
Total Produce is therefore equity accounting for its 45% share of the results of Dole with effect from 1 August 2018. The overall business is seasonal with the greater share of EBITDA in the first half of the financial year. As part of the Securities Purchase Agreement, Dole agreed to contribute $15m to cover professional and advisory fees relating to the transaction.
As part of the provisions of acquisition accounting, a fair value was determined for the Second Tranche Option which is recognised as a current derivative financial asset in the Total Produce Group balance sheet and correspondingly reduces the deemed cost of the acquisition of the First Tranche. The fair value of the Third Tranche Option was not deemed material at the date of acquisition.
As part of the Securities Purchase Agreement, the seller provided indemnities against certain liabilities outstanding at the date of acquisition. The fair value of these indemnities was recognised as a long-term asset in the Total Produce Group balance sheet with a corresponding reduction in the deemed cost of the acquisition.
Summary of financial information
The following is the summarised financial information of Dole for the period ended 13 June 2020 (H1 2020) and the period ended 15 June 2019 (H1 2019) based on consolidated financial statements prepared under IFRS, modified for fair value adjustments on acquisition and differences in the Group's accounting policies.
Summary income statement Dole (in USD '000)
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) (Audited) (Audited) H1 2020 H1 2020 H1 2020 H1 2019 H1 2019 H1 2019 FY 2019 FY 2019 FY 2019 Pre-Exceptional Exceptional Total Pre-Exceptional Exceptional Total Pre-Exceptional Exceptional Total $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 ================= ================ ============ ============ ================ ============ ============ ================ ============ ========== Revenue 2,210,322 - 2,210,322 2,236,182 - 2,236,182 4,566,354 - 4,566,354 ================= ================ ============ ============ ================ ============ ============ ================ ============ ========== Operating profit 118,775 (8,371) 110,404 130,290 15,607 145,897 173,790 13,846 187,636 Net financial expense (35,579) (3,480) (39,059) (38,631) - (38,631) (78,369) - (78,369) Leasing interest expense (9,097) - (9,097) (12,449) - (12,449) (19,284) - (19,284) ================= ================ ============ ============ ================ ============ ============ ================ ============ ========== Profit before tax 74,099 (11,851) 62,248 79,210 15,607 94,817 76,137 13,846 89,983 Income tax expense (28,899) 2,313 (26,586) (31,288) 1,991 (29,297) (25,477) 3,823 (21,654) ================= ================ ============ ============ ================ ============ ============ ================ ============ ========== Profit for the period 45,200 (9,538) 35,662 47,922 17,598 65,520 50,660 17,669 68,329 Non-controlling interests (1,460) - (1,460) (1,255) - (1,255) (2,205) - (2,205) ================= ================ ============ ============ ================ ============ ============ ================ ============ ========== Profit for the period attributable to equity shareholders 43,740 (9,538) 34,202 46,667 17,598 64,265 48,455 17,669 66,124 ================= ================ ============ ============ ================ ============ ============ ================ ============ ========== Group 45% share of profit attributable to equity shareholders 19,683 (4,292) 15,391 21,000 7,919 28,919 21,805 7,951 29,756 ================= ================ ============ ============ ================ ============ ============ ================ ============ ==========
Summary of other comprehensive income statement Dole (in USD '000)
(Unaudited) (Unaudited) (Audited) H1 2020 H1 2019 FY 2019 $'000 $'000 $'000 ================================================================ ============ ============ ========== Effective portion of cashflow hedges, net of recycling (3,111) (4,417) (12,753) Remeasurement loss on employee benefit schemes (15,167) (4,725) (6,459) Revaluation gain on property, plant and equipment 339 - 3,411 Deferred tax on items above 1,612 2,069 1,048 Foreign currency translation effects 842 (5,903) (8,015) Other comprehensive expense for the period (net of tax) (15,485) (12,976) (22,768) Non-controlling interests share - - -
================================================================ ============ ============ ========== Attributable to equity shareholders (15,485) (12,976) (22,768) ================================================================== ============ ============ ========== Group's 45% share of other comprehensive expense attributable to equity shareholders (6,968) (5,839) (10,246) ================================================================== ============ ============ ==========
Key performance indicators Dole (in USD '000)
(Unaudited) (Unaudited) (Audited) H1 2020 H1 2019 FY 2019 $'000 $'000 $'000 ================================================================ ============ ============ ========== Adjusted EBITDA (adding back depreciation of right-of-use assets) 185,412 202,395 307,724 Adjusted EBITDA 153,354 161,044 245,013 Adjusted EBITA 118,775 130,290 173,790 ================================================================== ============ ============ ==========
Summary income statement Dole (in Euro '000)
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) (Audited) (Audited) H1 2020 H1 2020 H1 2020 H1 2019 H1 2019 H1 2019 FY 2019 FY 2019 FY 2019 Pre-Exceptional Exceptional Total Pre-Exceptional Exceptional Total Pre-Exceptional Exceptional Total EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 ================= ================ ============ ============ ================ ============ ============ ================ ============ ========== Revenue 2,006,367 - 2,006,367 1,980,046 - 1,980,046 4,047,555 - 4,047,555 ================= ================ ============ ============ ================ ============ ============ ================ ============ ========== Operating profit 107,521 (7,497) 100,024 115,615 13,782 129,397 154,044 12,274 166,318 Net financial expense (32,210) (3,150) (35,360) (34,272) - (34,272) (69,465) - (69,465) Leasing interest expense (8,235) - (8,235) (11,047) - (11,047) (17,093) - (17,093) ================= ================ ============ ============ ================ ============ ============ ================ ============ ========== Profit before tax 67,076 (10,647) 56,429 70,296 13,782 84,078 67,486 12,274 79,760 Income tax expense (26,161) 2,094 (24,067) (27,764) 1,767 (25,997) (22,582) 3,388 (19,194) ================= ================ ============ ============ ================ ============ ============ ================ ============ ========== Profit for the period 40,915 (8,553) 32,362 42,532 15,549 58,081 44,904 15,662 60,566 Non-controlling interests (1,322) - (1,322) (1,114) - (1,114) (1,954) - (1,954) ================= ================ ============ ============ ================ ============ ============ ================ ============ ========== Profit for the period attributable to equity shareholders 39,593 (8,553) 31,040 41,418 15,549 56,967 42,950 15,662 58,612 ================= ================ ============ ============ ================ ============ ============ ================ ============ ========== Group 45% share of profit attributable to equity shareholders 17,817 (3,849) 13,968 18,638 6,997 25,635 19,327 7,048 26,375 ================= ================ ============ ============ ================ ============ ============ ================ ============ ==========
Summary of other comprehensive income statement Dole (in Euro '000)
(Unaudited) (Unaudited) (Audited) H1 2020 H1 2019 FY 2019 EUR'000 EUR'000 EUR'000 ================================================================ ============ ============ ========== Effective portion of cashflow hedges, net of recycling (2,824) (3,920) (11,414) Remeasurement loss on employee benefit schemes (13,768) (4,193) (5,781) Revaluation gain on property, plant and equipment 302 - 3,041 Deferred tax on items above 1,463 1,836 938 Foreign currency translation effects 764 (5,237) (7,173) Other comprehensive expense for the period (net of tax) (14,063) (11,514) (20,389) Non-controlling interests share - - - ================================================================ ============ ============ ========== Attributable to equity shareholders (14,063) (11,514) (20,389) ================================================================== ============ ============ ========== Group's 45% share of other comprehensive expense attributable to equity shareholders (6,328) (5,182) (9,175) ================================================================== ============ ============ ==========
Key performance indicators Dole (in Euro '000)
(Unaudited) (Unaudited) (Audited) H1 2020 H1 2019 FY 2019 EUR'000 EUR'000 EUR'000 ================================================================ ============ ============ ========== Adjusted EBITDA (adding back depreciation of right-of-use assets) 167,845 179,599 272,762 Adjusted EBITDA 138,825 142,905 217,176 Adjusted EBITA 107,521 115,615 154,044 ================================================================== ============ ============ ==========
Summary Balance Sheet of Dole (in USD '000)
(Unaudited) (Unaudited) (Audited) 13 Jun 2020 15 Jun 2019 28 Dec 2019 $'000 $'000 $'000 ============================================================== ============= ============= ============= Intangible assets - Brand 285,119 286,267 285,540 Property, plant and equipment 1,081,324 1,024,228 1,069,546 Right of use assets 243,705 288,858 279,068 Assets held for sale/Actively marketed property 60,848 80,114 64,760 Other non-current assets 108,623 119,173 107,753 Other current assets 910,469 857,816 862,588 Net debt (1,269,270) (1,271,781) (1,287,328) Employee benefit obligations (190,397) (187,013) (175,059) Lease liabilities (256,501) (303,336) (294,034) Other non-current liabilities (235,826) (258,743) (238,636) Other current liabilities (661,982) (571,011) (617,365) Non-controlling interests (9,732) (8,976) (9,170) ============================================================== ============= ============= ============= Fair value of net assets attributable to equity shareholders 66,380 55,596 47,663 ============================================================== ============= ============= ============= Total Produce's 45% share of net assets 29,871 25,018 21,448 ============================================================== ============= ============= =============
Goodwill 275,687 275,687 275,687 ============================================================== ============= ============= ============= Total carrying value of 45% interest in Dole 305,558 300,705 297,135 ============================================================== ============= ============= =============
Reconciliation of Group's carrying value of investment in Dole (in USD '000)
(Unaudited) (Unaudited) (Audited) 13 Jun 2020 15 Jun 2019 28 Dec 2019 $'000 $'000 $'000 ========================================================================= ============= ============= ============= Opening carrying value of 45% investment in Dole 297,135 281,432 281,432 Retained earnings adjustment on transition to IFRS 16 - (3,807) (3,807) Group share of profit/(loss) for period attributable to equity shareholders 15,391 28,919 29,756 Group share of other comprehensive expense for period attributable to equity shareholders (6,968) (5,839) (10,246) Closing carrying value of 45% interest in Dole 305,558 300,705 297,135 ========================================================================= ============= ============= =============
Summary Balance Sheet of Dole (in Euro '000)
(Unaudited) (Unaudited) (Audited) 13 Jun 2020 15 Jun 2019 28 Dec 2019 EUR'000 EUR'000 EUR'000 ============================================================== ============= ============= ============= Intangible assets - Brand 253,914 251,753 254,592 Property, plant and equipment 962,977 900,742 953,622 Right of use assets 217,032 254,032 248,821 Assets held for sale/Actively marketed property 54,188 70,455 57,741 Other non-current assets 96,735 104,805 96,074 Other current assets 810,822 754,393 769,096 Net debt (1,130,353) (1,118,449) (1,147,800) Employee benefit obligations (169,559) (164,466) (156,085) Lease liabilities (228,428) (266,764) (262,165) Other non-current liabilities (210,016) (227,548) (212,771) Other current liabilities (589,529) (502,167) (550,452) Non-controlling interests (8,667) (7,894) (8,176) ============================================================== ============= ============= ============= Fair value of net assets attributable to equity shareholders 59,116 48,892 42,497 ============================================================== ============= ============= ============= Total Produce's 45% share of net assets 26,602 22,001 19,124 ============================================================== ============= ============= ============= Goodwill 245,476 242,425 245,769 ============================================================== ============= ============= ============= Total carrying value of 45% interest in Dole 272,078 264,426 264,893 ============================================================== ============= ============= =============
Reconciliation of Group's carrying value of investment in Dole (in EUR '000)
(Unaudited) (Unaudited) (Audited) 13 Jun 2020 15 Jun 2019 28 Dec 2019 EUR'000 EUR'000 EUR'000 ========================================================================= ============= ============= ============= Opening carrying value of 45% investment in Dole 264,893 245,902 245,881 Retained earnings adjustment on transition to IFRS 16 - (3,326) (3,326) Group share of profit/(loss) for period attributable to equity shareholders 13,968 25,635 26,375 Group share of other comprehensive expense for period attributable to equity shareholders (6,328) (5,182) (9,175) Foreign exchange movement (455) 1,397 5,138 ========================================================================= ============= ============= ============= Closing carrying value of 45% interest in Dole 272,078 264,426 264,893 ========================================================================= ============= ============= ============= 7. Post-employment obligations (Unaudited) (Unaudited) (Audited) H1 2020 H1 2019 FY 2019 EUR'000 EUR'000 EUR'000 ===================================================== =========== =========== ========= Employee defined benefit pension schemes obligations (9,650) (9,955) (10,828) Other post-employment defined benefit obligations (6,448) (6,185) (5,908) ===================================================== =========== =========== ========= (16,098) (16,140) (16,736) ===================================================== =========== =========== =========
Employee defined benefit pension schemes
(Unaudited) (Unaudited) (Audited) H1 2020 H1 2019 FY 2019 EUR'000 EUR'000 EUR'000 ================================================================================= =========== =========== ========= Pension assets 189,277 185,179 192,227 Pension obligations (198,927) (195,134) (203,055) ================================================================================= =========== =========== ========= Net liability (9,650) (9,955) (10,828) Net related deferred tax asset 1,798 1,557 1,479 ================================================================================= =========== =========== ========= Net liability after tax (7,852) (8,398) (9,349) ================================================================================= =========== =========== ========= Movement in period Net liability at beginning of period (10,828) (10,941) (10,941) Net interest expense and current service cost recognised in the income statement (923) (872) (1,677) Employer contributions to schemes 1,254 2,537 4,866 Remeasurement gain/(loss) recognised in other comprehensive income 407 (523) (2,683) Translation adjustment 440 (156) (393) ================================================================================= =========== =========== ========= Net liability at end of period before deferred tax (9,650) (9,955) (10,828) ================================================================================= =========== =========== =========
The table above summarises the movements in the net liability of the Group's various defined benefit pension schemes in Ireland, the UK, Continental Europe and North America in accordance with IAS 19 Employee Benefits (2011).
The Group's balance sheet at 30 June 2020 reflects net pension liabilities of EUR9.7m in respect of schemes in deficit, resulting in a net deficit of EUR7.9m after deferred tax. There was a 2.3% average return on pension scheme assets in 2020 (10% in H1 2019).
The below table shows the discount rates and inflation rates:
Jun 2020 Jun 2019 Dec 2019 ================ ======== ======== ======== Eurozone Discount rates 1.55% 1.40% 1.40% Inflation rates 1.10% 1.20% 1.40% UK Discount rates 1.60% 2.30% 2.00% Inflation rates 2.60% 3.20% 2.70% ================ ======== ======== ======== 8. Dividends
Having regard to Government guidelines on the holding of meetings, the Board decided to postpone the AGM which was due to be held on 15 May 2020, to 28 August 2020. Subject to the shareholders' approval at the AGM, the 2019 final dividend of 2.5770 cent per share will be paid on 2 September 2020 to shareholders on the Register of Members as at 7 August 2020.
The Board intends to pay the 2020 interim dividend of 0.9129 cent per share, unchanged on the prior year in January 2021.
In accordance with company law and IFRS, these dividends have not been provided for in the balance sheet at 30 June 2020 .
During the period, the Group declared dividends of EUR4.6m (2019: EUR9.2m) to non-controlling shareholders in certain of the Group's non wholly-owned subsidiaries. In the same period cash dividends of EUR5.1m (2019: EUR9.7m) were paid.
9. Businesses acquired and other developments
Investments in subsidiaries
A key part of the Group's strategy is to grow by acquisition. During the six-month period, the Group made a number of bolt-on acquisitions and investments with committed investment of EUR2.2m including EUR0.8m of deferred consideration and EUR0.6m contingent consideration payable on the achievement of future profit targets. Goodwill arising on these acquisitions amounts to EUR0.6m. The principal factor contributing to the recognition of the goodwill is the realisation of costs savings and synergies expected to be achieved for integrating the acquired entities, and the value and skills of the assembled workforce in the acquired entities.
The initial assignment of fair values to net assets for all investments has been performed on a provisional basis in respect of these acquisitions given the timing of the completion of these transactions and will be finalised within twelve months from the acquisition date, as permitted by IFRS 3 (Revised) Business Combinations.
Payment of contingent and deferred consideration in the period
During the period, the Group paid EUR86,000 of contingent consideration relating to prior period acquisitions.
10. Financial instruments
The fair values of financial assets and financial liabilities, together with the carrying amounts in the Condensed Group Balance Sheet at 30 June 2020, 30 June 2019 and 31 December 2019 are as follows:
(Unaudited) (Unaudited) (Audited) 30 Jun 2020 30 Jun 2019 31 Dec 2019 ========================== ========================== ========================== Carrying value Fair value Carrying value Fair value Carrying value Fair value EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 ========================== ============== ========== ============== ========== ============== ========== Other Investments 476 476 13,597 13,597 5,049 5,049 Trade and other receivables - current(1) 424,752 n/a 463,690 n/a 368,973 n/a Trade and other receivables - non-current(1) 23,254 n/a 24,181 n/a 19,796 n/a Derivative financial assets 4,966 4,966 4,584 4,584 4,489 4,489 Cash and cash equivalents 131,493 n/a 78,876 n/a 115,529 n/a ========================== ============== ========== ============== ========== ============== ========== 584,941 584,928 513,836 ========================== ============== ========== ============== ========== ============== ========== Trade and other payables - current (530,668) n/a (500,017) n/a (475,202) n/a Trade and other payables - non-current (2,803) n/a (1,768) n/a (2,904) n/a Bank overdrafts (38,727) n/a (38,459) n/a (9,502) n/a Bank borrowings (311,610) (314,100) (334,710) (335,210) (327,220) (328,397) Lease liabilities (130,667) (130,667) (116,556) (116,556) (120,076) (120,076) Lease dilapidations (660) (660) (912) (912) (1,011) (1,011) Derivative financial liabilities (391) (391) (405) (405) (305) (305) Contingent consideration (14,464) (14,464) (17,924) (17,924) (14,860) (14,860) Other provisions (494) n/a (916) n/a (620) n/a Put option liability (26,433) (26,433) (25,297) (25,297) (26,612) (26,612) ========================== ============== ========== ============== ========== ============== ========== (1,056,917) (1,036,964) (978,312) ========================== ============== ========== ============== ========== ============== ==========
(1) For the purposes of this analysis prepayments have not been included within other receivables. Carrying value of other financial assets, trade receivables and other receivables are stated net of impairment provisions where appropriate and consequently fair value is considered to approximate to carrying value.
The Group has availed of the exemption under IFRS 7 Financial Instruments: Disclosure for additional disclosures where fair value closely approximates carrying value.
A number of other put and call options arising from acquisitions are of immaterial fair value.
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
-- Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
-- Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly;
-- Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data
(Unaudited) (Unaudited) (Audited) 30 Jun 2020 30 Jun 2019 31 Dec 2019 ============================== ============================== ============================== Fair value Designated as Fair value Designated as Fair value Designated as through P+L or hedging through P+L or hedging through P+L or hedging equity(1) instrument equity(1) instrument equity(1) instrument EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 ============== ============== ============== ============== ============== ============== ============== Level 1 Other Investments - - 12,230 - 4,554 - Level 2 Foreign exchange contracts assets 8 559 - 240 33 51 Foreign exchange contracts liability (218) (173) (25) (375) (16) (289) Interest rate swaps liability - - (5) - - - Level 3 Other Investments 476 - 1,367 - 495 - Options to acquire additional shares in subsidiaries, joint ventures and associates 4,399 - 4,344 - 4,405 - Contingent consideration (14,464) - (17,924) - (14,860) - Put option liability(1) (1) (26,433) - (1) (25,297) - (1) (26,612) - ============== ============== ============== ============== ============== ============== ==============
(1) Put option liability is fair valued through equity.
Additional disclosures for Level 3 fair value measurements
Options to acquire Other Investments additional shares(1) Contingent consideration Put option liability EUR'000 EUR'000 EUR'000 EUR'000 ========================= ================= ======================== ======================== ==================== At 1 January 2020 495 4,405 (14,860) (26,612) Paid during the period - - 86 - Arising on acquisition of subsidiaries - - (581) - Fair value movement on put option recognised directly within equity - - - 179 Foreign exchange movements (19) (6) 210 - Included in the income statement Fair value movements - - 681 - ========================= ================= ======================== ======================== ==================== At 30 June 2020 476 4,399 (14,464) (26,433) Presented on Balance Sheet as follows: Current asset/(liability) 150 - (10,662) (13,270) Non-current asset/(liability) 326 4,399 (3,802) (13,163) ========================= ================= ======================== ======================== ==================== 476 4,399 (14,464) (26,433) ========================= ================= ======================== ======================== ====================
(1) The Group has options to acquire additional shares in certain subsidiaries, joint ventures and associates at the end of the period.
Contingent consideration
Contingent consideration represents the provision for the net present value of the amounts expected to be payable in respect of acquisitions which are subject to earn-out arrangements. Contingent consideration for each individual transaction is valued internally by the Group Finance team in consultation with Senior Management and updated as required at each reporting period.
EUR'000 ================================================= ======= Contingent consideration balance at 30 June 2020 14,464 Contractual maturity of cashflows: Less than 6 months 6,796 6 to 12 months 4,125 1 to 2 years 784 2 to 3 years 1,871 3 to 4 years 234 4 to 5 years 769 Greater than 5 years 386 ==================================================== ======= Total cash value 14,965 ==================================================== =======
Put option liability
The Group has a number of contractual put options and forward commitments in place in relation to non-controlling interest ('NCI') shares in subsidiaries whereby the NCI shareholder can require the Group, or the Group has agreed to acquire ('forward commitment') the shares in these subsidiaries at various future dates. The value of the put option or forward commitment liability recognised represents management's best estimate of the fair value of the amounts which may be payable discounted to net present value. The put option or forward commitment for each individual transaction is valued internally by the Group Finance team in consultation with Senior Management and updated as required at each reporting period.
11. Cash flows generated from operations (Unaudited) (Unaudited) (Audited) H1 2020 H1 2019 FY 2019 EUR'000 EUR'000 EUR'000 =========================================================================== =========== =========== ========= Operating activities Profit for the period 34,167 49,679 66,204 Adjustments for non-cash items: Income tax expense 8,400 5,660 10,329 Income tax paid (5,028) (5,659) (15,154) Depreciation of property, plant and equipment 8,945 8,782 17,773 Depreciation of right of use assets 10,803 9,174 19,253 Exceptional items - impairment of property plant and equipment 1,101 - - Exceptional items - operating expenses 348 (1,447) 1,816 Cashflows from exceptional items (487) (3,044) (3,489) Fair value movements on contingent consideration (681) (1,067) (204) Amortisation of intangible assets - acquisition related 5,129 4,986 10,301 Amortisation of intangible assets - capitalised development costs 117 120 238 Amortisation of intangible assets - computer software 1,175 947 2,046 Amortisation of government grants (33) (25) (63) Defined benefit pension scheme expense 923 872 1,677 Contributions to defined benefit pension schemes (1,254) (2,537) (4,866) Other post-employment benefit schemes' expense 231 223 451 Net contributions/(payments) for other post-employment benefit schemes 22 22 (249) Share-based payment expense - 109 109 Net gain on disposal of property, plant and equipment (57) (68) (313) Currency recycled to income statement on joint venture becoming subsidiary (102) - - Net finance expense 5,070 5,515 10,967 Net financial expense paid (5,414) (5,531) (11,144) (Gain)/loss on non-hedging derivative financial instruments 34 (42) (115) Loss on termination of IFRS 16 leased assets - - 146 Gain on disposal of joint venture - (88) (88) Fair value loss on a joint venture becoming a subsidiary 80 - - Fair value movements on biological assets (247) 713 666 Fair value gain on other investments - (848) (854) Movements in provisions - (298) (489) Share of profits of joint ventures and associates (19,146) (30,569) (37,699) =========================================================================== =========== =========== ========= Net cash flows from operations before working capital movements 44,096 35,579 67,249 =========================================================================== =========== =========== ========= Movements in working capital: Movements in inventories (15,608) 6,400 (6,091) Movements in biological assets 1,631 182 530 Movements in trade and other receivables (68,201) (94,034) 27,342 Movement in trade and other payables 57,521 25,303 (15,254) =========================================================================== =========== =========== ========= Total movements in working capital (24,657) (62,149) 6,527 =========================================================================== =========== =========== ========= Cash flows from operating activities 19,439 (26,570) 73,776 =========================================================================== =========== =========== ========= 12. Analysis of Net Debt and Cash and Cash Equivalents
Net debt is a non-IFRS measure which comprises cash and cash equivalents and current and non-current borrowings. The calculation of net debt at 30 June 2020, 30 June 2019 and 31 December 2019 is as follows:
(Unaudited) (Unaudited) (Audited) 30 Jun 2020 30 Jun 2019 31 Dec 2019 EUR'000 EUR'000 EUR'000 ================================ ============ ============ ============ Current assets Cash and cash equivalents 117,395 67,706 99,445 Call deposits (demand balances) 14,098 11,170 16,084 Current liabilities Bank overdrafts (38,727) (38,459) (9,502) Current bank borrowings (30,592) (117,099) (76,648) Non-current liabilities Non-current bank borrowing (281,018) (217,611) (250,572) Net debt at end of the period (218,844) (294,293) (221,193) ================================ ============ ============ ============
Reconciliation of cash and cash equivalents per balance sheet to cashflow statement
(Unaudited) (Unaudited) (Audited) 30 Jun 2020 30 Jun 2019 31 Dec 2019 EUR'000 EUR'000 EUR'000 =================================================================== ============ ============ ============ Cash and cash equivalents per balance sheet 131,493 78,876 115,529 Bank overdrafts (38,727) (38,459) (9,502) Cash, cash equivalents and bank overdrafts per cash flow statement 92,766 40,417 106,027 =================================================================== ============ ============ ============ 13. Post balance sheet events
There have been no other material events subsequent to 30 June 2020 which would require disclosure or adjustment in the financial statements.
14. Related party transactions
There have been no related party transactions or changes to related party transactions other than those described in the 2019 Annual Report that materially affect the financial position or the performance of the Group for the six months period ended 30 June 2020.
15. Board approval
This interim results statement was approved by the Board of Directors of Total Produce plc on 26 August 2020.
Appendix 1
Alternative Performance Measures (APMs)
The Group uses a number of alternative performance measures ('APMs') that are not required under International Financial Reporting Standards ('IFRS') which represent the generally accepted accounting principles ('GAAP') under which the Group reports. These measures are referred to throughout the discussion of our reported operating performance and financial position and are measures which are regularly reviewed by Group management. The Group believes that the presentation of these APM's provide useful supplementary information which, when viewed with the IFRS financial information provides investors with a more meaningful understanding of the underlying financial and operating performance of the Group.
These APM's may not be uniformly defined by all companies and accordingly they may not be directly comparable with similarly titled measures and disclosures by other companies. These APM's should not be viewed in isolation or as an alternative to the equivalent GAAP measures.
The principal APM's used by the Groups together with the reconciliation where the non-GAAP measures are not readily identifiable from the financial statements are as follows:
Total revenue
Definition
Total revenue includes the Group's share of the revenue of its joint ventures and associates. The calculation is presented in Note 3 of the accompanying financial information.
Adjusted EBITDA
Definition
Earnings before interest, tax, depreciation on property, plant and equipment, acquisition related intangible asset amortisation charges and costs, fair value movements on contingent consideration, unrealised gains or losses on derivative financial instruments, gains and losses on foreign currency denominated intercompany borrowings and exceptional items. It also excludes the Group's share of these items within joint ventures and associates. The calculation is presented in the table below.
Adjusted EBITDA (after add back of right of use asset depreciation)
Definition
E arnings before interest, tax, depreciation on property, plant and equipment, depreciation on right of use assets, acquisition related intangible asset amortisation charges and costs, fair value movements on contingent consideration, unrealised gains or losses on derivative financial instruments, gains and losses on foreign currency denominated intercompany borrowings and exceptional items. It also excludes the Group's share of these items within joint ventures and associates. The calculation is presented in the table below.
Adjusted EBITA
Definition
E arnings before interest, tax, acquisition related intangible asset amortisation charges and costs, fair value movements on contingent consideration, unrealised gains or losses on derivative financial instruments, gains and losses on foreign currency denominated intercompany borrowings and exceptional items. It also excludes the Group's share of these items within joint ventures and associates. The calculation is presented in the table below.
Adjusted profit before tax
Definition
E xcludes acquisition related intangible asset amortisation charges and costs, fair value movements on contingent consideration, unrealised gains or losses on derivative financial instruments, gains and losses on foreign currency denominated intercompany borrowings and exceptional items. It also excludes the Group's share of these items within joint ventures and associates. The calculation is presented in the table below.
(Unaudited) (Unaudited) (Audited) H1 2020 H1 2019 FY 2019 EUR'000 EUR'000 EUR'000 ================================================================================= =========== =========== ========= Profit before tax per income statement 42,567 55,339 76,533 Adjustments Exceptional items 5,298 (8,444) (5,232) Fair value movements on contingent consideration (681) (1,067) (204) Share of joint ventures and associates' tax (before tax on exceptional items) 13,078 13,761 14,059 Acquisition related intangible asset amortisation within subsidiaries 5,129 4,986 10,301 Share of joint ventures and associates acquisition related intangible asset amortisation 1,328 1,349 2,696 Acquisition related costs within subsidiaries 348 23 177 ================================================================================= =========== =========== ========= Adjusted profit before tax 67,067 65,947 98,330 Exclude Net finance expense - subsidiaries before exceptional items 5,070 5,515 10,967 Net finance expense - share of joint ventures and associates 19,335 21,359 40,817 ================================================================================= =========== =========== ========= Adjusted EBITA 91,472 92,821 150,114 Exclude Amortisation of software costs 1,175 947 2,046 Depreciation of property, plant and equipment - subsidiaries 8,945 8,782 17,773 Depreciation of property, plant and equipment - share of joint ventures and associates 16,583 14,555 32,870 ================================================================================= =========== =========== ========= Adjusted EBITDA 118,175 117,105 202,803 Exclude Depreciation of right of use assets - subsidiaries 10,803 9,174 19,253 Depreciation of right of use assets - share of joint ventures and associates 15,342 18,533 29,115 ================================================================================= =========== =========== ========= Adjusted EBITDA (before depreciation on right of use assets) 144,320 144,812 251,171 ================================================================================= =========== =========== =========
Adjusted fully diluted earnings per share
Definition
E xcludes acquisition related intangible asset amortisation charges and costs, fair value movements on contingent consideration, unrealised gains or losses on derivative financial instruments, gains and losses on foreign currency denominated intercompany borrowings, exceptional items and related tax on such items. It also excludes the Group's share of these items within joint ventures and associates. The calculation is outlined in Note 5.
Effective tax rate calculation
Definition
The Group's effective tax rate expresses the Group's income tax expense (including the share of joint ventures and associates) before tax impact of exceptional items and goodwill and intangible asset amortisation as a percentage of the Group's adjusted profit before tax.
(Unaudited) (Unaudited) (Audited) H1 2020 H1 2019 FY 2019 EUR'000 EUR'000 EUR'000 ================================================================================= =========== =========== ========= Income tax expense 8,400 5,660 10,329 Group share of tax charge of joint ventures and associates 12,139 12,963 12,534 ================================================================================= =========== =========== ========= Total tax charge 20,539 18,623 22,863 Adjustments Deferred tax credit on amortisation of intangible assets - subsidiaries 550 777 2,623 Deferred tax credit on amortisation of intangible assets - share of joint ventures and associates 209 229 565 Tax charge on exceptional items in subsidiaries (973) 304 (47) Group share of tax charge on exceptional items within joint ventures and associates 939 798 1,525 Tax charge on underlying activities 21,264 20,731 27,529 Adjusted profit before tax 67,067 65,947 98,330 Effective tax on underlying activities 31.71% 31.44% 28.0% ================================================================================= =========== =========== =========
Net debt
Definition
Net debt is a non-IFRS measure which comprises bank deposits, cash and cash equivalents and current and non-current borrowings. It excludes lease liabilities. The calculation is outlined in Note 12.
Routine capital expenditure and non-routine capital expenditure
Definition
Routine capital expenditure is cash spend on property, plant, and equipment and software (which under IFRS is classified within intangible assets) less proceeds on disposal of property, plant and equipment and any expenditure classified as non-routine or development capital expenditure.
Non-routine capital expenditure is expenditure on projects to grow the business and generally relate to the acquisition, and fit out of new facilities or extending the capacity of existing facilities.
(Unaudited) (Unaudited) (Audited) H1 2020 H1 2019 FY 2019 EUR'000 EUR'000 EUR'000 ====================================================== =========== =========== ========= Acquisition of property, plant and equipment 6,835 11,916 19,518 Acquisition of intangible assets - computer software 3,333 1,904 4,621 Proceeds on disposal of property, plant and equipment (267) (301) (678) Non-routine (development capital expenditure) (1,318) (3,759) (4,470) ====================================================== =========== =========== ========= Routine capital expenditure 8,583 9,760 18,991 ====================================================== =========== =========== =========
Adjusted operating cashflow
Definition
Adjusted operating cashflow is the operating cashflow generated from operations as reported in the Group Cashflow Statement before cash outflows associated with exceptional items less lease liability payments and development loans provided to joint ventures and associates.
(Unaudited) (Unaudited) (Audited) H1 2020 H1 2019 FY 2019 EUR'000 EUR'000 EUR'000 ============================================================== =========== =========== ========= Net cashflow from operating activities per cashflow statement 19,439 (26,570) 73,776 Cash impact of exceptional items in operating cashflows 487 3,044 3,489 Less lease liability payments (11,508) (7,959) (17,902) ============================================================== =========== =========== ========= Adjusted operating cashflow 8,418 (31,485) 59,363 ============================================================== =========== =========== =========
Free Cash Flow
Definition
Free Cash flow is defined by the Group as the funds available after outflows relating to routine capital expenditure, dividends paid to non-controlling interests but before acquisition related expenditure (including loans advanced to joint ventures an associates), development capital expenditure and the payment of dividends to equity shareholders.
(Unaudited) (Unaudited) (Audited) H1 2020 H1 2019 FY 2019 EUR'000 EUR'000 EUR'000 ============================================================== =========== =========== ========= Net cashflow from operating activities per cashflow statement 19,439 (26,570) 73,776 Cash impact of exceptional items in operating cashflows 487 3,044 3,489 Less lease liability payments (11,508) (7,959) (17,902) Dividends received from joint ventures and associates 6,356 6,282 10,652 Dividends paid to non-controlling interests (5,044) (9,687) (16,055) Routine capital expenditure (8,583) (9,760) (18,991) ============================================================== =========== =========== ========= Free Cashflow 1,147 (44,650) 34,969 ============================================================== =========== =========== =========
Net Debt/Adjusted EBITDA
Definition
Net debt/adjusted EBITDA is a measure of the Group's leverage and is calculated by dividing net debt (as defined earlier) by adjusted EBITDA (as defined earlier). Adjusted EBITDA is a rolling 12-month measure, therefore for H1 2020 and H1 2019 it is calculated as the adjusted EBITDA for the preceding 12 months ending on 30 June.
(Unaudited) (Unaudited) (Audited) H1 2020 H1 2019 FY 2019 EUR'000 EUR'000 EUR'000 ================================= =========== =========== ========= Net debt 218,844 294,293 221,193 Rolling adjusted EBITDA 203,873 193,709 202,803 ================================= =========== =========== ========= Net debt/Adjusted EBITDA (times) 1.1 x 1.5x 1.1x ================================= =========== =========== =========
Interest cover: EBITA interest cover
Definition
Interest cover is a measure of the Group's ability to meet its interest payments and is calculated by dividing adjusted EBITA (as defined earlier) by net financial expense.
(Unaudited) (Unaudited) (Audited) H1 2020 H1 2019 FY 2019 EUR'000 EUR'000 EUR'000 ============================================= =========== =========== ========= Adjusted EBITA 91,472 92,821 150,114 Net financial expense 5,070 5,515 10,967 ============================================= =========== =========== ========= Adjusted EBITA/Net financial expense (times) 18.0 x 16.8x 13.7x ============================================= =========== =========== =========
Acquisition related expenditure, net
Definition
Acquisition related expenditure is cash outflows in respect of acquisition and investment in subsidiaries, joint ventures and associates, non-controlling interests and is net of contributions from non-controlling interests and proceeds on disposal of shares to non-controlling interests and proceeds from sale of equity investments.
(Unaudited) (Unaudited) (Audited) H1 2020 H1 2019 FY 2019 EUR'000 EUR'000 EUR'000 ===================================================================== =========== =========== ========= Cash outflow relating to investment in joint ventures and associates 504 7,715 7,145 Investment in subsidiaries 71 2,200 6,683 Proceeds from disposal of joint venture (98) (48) (48) Acquisition of non-controlling interests 300 - 1,656 Proceeds on disposal of investments for resale (2,632) - (1,043) Acquisition of equity investments - - 150 ===================================================================== =========== =========== ========= Acquisition related expenditure (inflow)/outflow (1,855) 9,867 14,543 ===================================================================== =========== =========== =========
Appendix 2
Risks and Uncertainties
The Board of Total Produce has the ultimate responsibility for the Group's systems of risk management and internal control.
The Group's control system is designed to actively manage rather than eliminate the risks of failure to achieve its business objectives. The internal controls system is designed to provide reasonable but not absolute assurance against material misstatement or loss.
Risk management within Total Produce plc is co-ordinated by an Executive Risk Committee ('ERC' or the 'Committee') which directs the implementation of the process consistently throughout the Group. Responsibility for the identification and evaluation of financial, operational and compliance risks is delegated to senior management, which reports back to the Committee. The Committee meets during the year, as required, to identify, assess and manage risk. In this process it reviews the relevant findings and makes recommendations. The Committee reports its findings and recommendations to the Audit Committee, which in turn reports to the Board.
Summarised below are the principal risks and uncertainties facing the Group, along with key controls and mitigation activities.
COVID-19
Risk Identified
The recent COVID-19 pandemic has been a challenge for the Group and the wider fresh produce industry. Commercially, the crisis led to some change in the distribution channels for fresh produce. Temporary government restrictions on the movement on people and lockdowns has led to lower levels of activity in the food service sector but this has been offset by higher retail and wholesale activity. The pandemic has also put pressure on global supply chains.
Operationally, physical distancing and workplace guidance from governments require additional precautions in the supply/production chain which leads to less efficient and more costly delivery of product. There is also a risk of infection clusters in workgroup, and suspension of production lines.
Organisationally, it has put more pressure on the Group's overall Health and Safety management and operations, and the Group has had to implement numerous measures to keep its people safe.
Key control and mitigation activities
The Group is diversified in terms of geography, product, suppliers and customers. This diversification has been a key factor in mitigating the effect of the pandemic. The Group was also able to reallocate resources where required to support the increased retail and wholesale demand.
Operationally, the Group has invested in training and workplace changes to facilitate safe, and socially distant work practices. These activities include, and are not limited to, installation of temperature scanning machines, additional shifts to accommodate physical distancing, supply and the wearing of personal protective equipment, rigorous training and facility assessments.
Economic and political
Risk Identified
Global economic conditions and the stability of the markets in which we operate could impact on the Group's performance.
Key control and mitigation activities
The Group's management monitors global developments and the organisation structure enables prompt response, where appropriate, to changing market conditions.
The Group is geographically well diversified with operations in 30 countries across five continents.
The Group sources produce from numerous regions to ensure continuous supply.
Food Safety
Risk Identified
Profitability in the fresh produce sector is dependent on high quality of supplies and consistency of delivery. It is possible that serious quality issues, and in particular, contamination of product, whether deliberate or accidental, could have a negative impact on revenue.
Key control and mitigation activities
Management undertakes ongoing reviews to ensure food safety policies and procedures continue to be effective and that adequate resources are in place.
The Group has very close and well-established relationships with its growers and only buys product when comfortable with the grower's reputation and commitment to food safety.
The Group sources produce from numerous regions to ensure continuous supply.
Corporate communication and shareholders
Risk Identified
The Group as a publicly listed company, undertakes regular communications with its shareholders. These communications may contain forward-looking statements which by their nature involve uncertainty and actual results or developments may differ materially from the expectations expressed or implied in these communications. Failure to deliver on performance indications communicated to stakeholders could result in a reduction in share price, reduced earnings and reputational damage.
Key control and mitigation activities
Structures are in place at operational and divisional levels to ensure accurate and timely reporting.
The operational and financial performance of the Group is reported to the Board on a monthly basis.
Stock Exchange Announcements including preliminary and interim results announcements are all approved by the Board and by the Audit Committee as required/covered by their respective terms of reference.
The Group places a high priority on communications with stakeholders and devotes considerable time and resources each year to stakeholder engagement.
The Group has an active investor relations programme and meets regularly with investors and analysts and in particular at the time of the announcements of preliminary and interim results.
Key customer relationships and credit risk
Risk Identified
The Group's customer base consists primarily of retailers, wholesalers and food service operators. The increasing concentration of customers can increase credit risk. Changes in the trading relationships with major customers, or of their procurement policies, could positively or adversely affect the operations and profitability of the Group. In addition, the Group faces strong competition in its various markets and, if it fails to compete effectively, its business, results and financial condition could be adversely affected.
Key control and mitigation activities
Customer relationships are developed at both local and at senior management level to reduce risk and ensure that value is maintained for both Total Produce and the customer.
There is a focus on improving choice, price and service to our customers on an ongoing basis.
Credit risk is managed by credit management structures and reviews.
The utilisation of credit limits is regularly monitored, and a significant element of the credit risk is covered by credit insurance.
Key supplier relationships
Risk Identified
The Group sources its products from a significant number of suppliers. The loss of any of these could have an adverse impact on the Group. Additionally, the Group may enter into seasonal purchase agreements committing it to purchase fixed quantities of produce at fixed prices. The Group is exposed to the risk of losses arising from any inability to sell on these committed quantities and/or achieve the committed price.
Key control and mitigation activities
Key supplier relationships are actively managed by local and senior management. Any changes are communicated to executive management to ensure timely reaction to mitigate risks.
The Group sources produce from numerous regions and suppliers worldwide to ensure continuity of supply.
Internal procedures are in place for the approval and monitoring of any seasonal arrangements.
Acquisition activity
Risk Identified
Growth through acquisition is a key element of the Group's strategy to create shareholder value. A failure to identify, execute or properly integrate acquisitions could impact on profit targets, the strategic development of the Group and consequently shareholder value.
Key control and mitigation activities
The Group has traditionally grown through acquisition and has a long-proven track record in identifying and integrating acquisitions.
Executive, senior and local management, together with a dedicated in-house corporate finance team, engage in a continuous and active review of acquisitions.
All potential acquisitions are subject to an assessment of the strategic fit within the Group and ability to generate a return on capital employed in excess of the cost of capital of the Group.
The Group conducts extensive due diligence using both internal and external resources prior to completing any acquisitions.
Board approval of the business case for all significant acquisitions is in place.
The Group has appropriate credit facilities available to fund acquisitions.
Senior management are responsible for the oversight and successful integration of new investments.
Regulation and Compliance
Risk Identified
The Group operates in a number of jurisdictions and is therefore exposed to a wide range of legal and regulatory frameworks.
Key control and mitigation activities
There is regular monitoring and review of changes in law and regulation in relevant areas.
Management has access to the appropriate professional advisors in the relevant areas of compliance.
There is ongoing training arranged to ensure compliance.
Access to credit and interest rate fluctuations
Risk Identified
The Group is exposed to fluctuations in credit markets which could impact the availability and cost of financing and consequently the Group's ability to grow through acquisition.
Key control and mitigation activities
The Group has facilities with a number of recognised international banks and funding providers with varied maturity profiles.
The Group ensures that sufficient funds and resources are available to meet expected liabilities and to finance the growth of the business through a combination of cash and cash equivalents, operating cash flows and undrawn committed facilities.
The Group has in place approved facilities giving access to appropriate long-term borrowings as and when required.
Retention of key personnel and talent management
Risk Identified
The Group is dependent on the continuing commitment of its Directors and senior management team. The loss of such key personnel without adequate replacement could have an adverse effect on the Group's business.
Key control and mitigation activities
Throughout the Group there is a focus on succession planning, and it is formally assessed and reviewed by the Board.
Recruitment policies, management incentives and training and development programmes have all been established to encourage the retention of key personnel.
The Nomination Committee regularly assess Board composition and also examine Group succession plans.
IT systems and cyber-security
Risk Identified
The Group relies on information technology and systems to support our business. Failure to ensure that our core operational systems are available to service business requirements could impact the day-to-day operations of the Group. In addition, the exploitation of vulnerabilities in IT systems either accidental or malicious, including those resulting from cyber-security attacks, could adversely impact the Group's business.
Key control and mitigation activities
The Group has robust Information Security and Computer User policies regarding the protection of business and personal information and governing the use of IT assets.
The Group seeks to manage this risk, in conjunction with our external partners, through a range of measures which include monitoring of threats, testing for vulnerabilities, provision of resilience and reviewing cyber-security standards.
Independent, external and internal, reviews of our core operational systems are performed on an on-going basis.
There is a Group policy on backups in place and these are regularly tested.
Goodwood Impairment
Risk Identified
Sustained underperformance in any of the Group's cash generating units may result in a material write down of goodwill. While such a write down would be a non-cash charge it could have a substantial impact on the Group's income statement and shareholders' equity.
Key control and mitigation activities
During the monthly reporting process indicators of goodwill impairment are monitored. Where necessary there is communication with senior management in order to ensure that potential impairment issues are highlighted and where practical corrective action is taken.
The Group tests goodwill annually for impairment on 31 December, or more frequently if there are indications that goodwill might be impaired.
The results of the goodwill impairment assessment are reported to the Audit Committee and the Board.
Foreign Currency
Risk Identified
As a large multinational group with extensive operations worldwide the Group is exposed to translational and transactional currency fluctuations. The principal currency risk to which the Group is exposed, is adverse currency movements on translation of the results and balance sheets of foreign currency denominated operations into Euro, the Group's reporting currency. Adverse changes in exchange rates will have an impact on the Group's reported results and shareholders' equity. The impact of such movements is reported in the Condensed Group Statement of Comprehensive Income. Foreign currency risk also arises from foreign currency transactions within each individual entity.
Key control and mitigation activities
The Group finances its initial overseas investments by, as far as is appropriate, matching foreign currency borrowings which naturally hedge the translation movement on foreign currency investments.
Repayments and interest on borrowings are therefore denominated in currencies that match the cash flows generated by the underlying businesses.
Group operations manage their individual transactional foreign exchange risk against their functional currency and material currency risks are managed by utilising forward contracts to cover committed exposures.
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END
IR BCGDILDDDGGL
(END) Dow Jones Newswires
August 27, 2020 02:00 ET (06:00 GMT)
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