preliminary results for year ended 31 december...
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Preliminary Results for year ended 31 December 2015
Fyffes delivers another year of record earnings
EBITDA* up 16.4% to €56.1m
EBITA* up 14.2% to €45.8m
EPS* up 14% to 12.73 cent
Seventh consecutive year of earnings growth
Compound annual growth in EPS* of 18.2% since 2008
Strong return on invested capital of 15.9%
Final dividend increased by 15%
Target EBITA* range for 2016 of €42m-€48m
Commenting on the results, David McCann, Chairman, said:
“Fyffes has delivered another important step up in earnings in 2015, its seventh consecutive year of
growth, with a 14.2% increase in adjusted EBITA to €45.8m. The Group is focused on consolidating at
this higher level of earnings. The initial target EBITA for 2016 is in the range €42m-€48m. Fyffes is
pursuing necessary increases in selling prices in all markets in response to the continuing strength of
the US dollar against the euro and sterling.
The Group is also focused on continuing to grow its business and is actively pursuing a number of
attractive acquisition opportunities.”
* These financial terms are defined below and exclude a €12m net exceptional charge.
26 February 2016
Forward looking statement Any forward looking statements made in this press release have been made in good faith based on the information available
as of the date of this press release and are not guarantees of future performance. Actual results or developments may differ
materially from the expectations expressed or implied in these statements, and the company undertakes no obligation to
update any such statements whether as a result of new information, future events, or otherwise. Fyffes 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.
For further information, please view the 2015 results slide presentation at www.fyffes.com
or contact Brian Bell at Wilson Hartnell PR, Tel: +353-1-6690030.
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Fyffes plc Preliminary Results for year ended 31 December 2015
Financial Highlights
2015
€ 2014
€ Change
%
Total revenue (incl share of joint ventures) 1,222.5m 1,090.9m +12.1
Group revenue (excl share of joint ventures) 985.3m 852.6m +15.6
EBITDA* 56.1m 48.2m +16.4
EBITA* 45.8m 40.1m +14.2
EBIT* 45.8m 40.1m +14.2
Diluted earnings per share* 12.73 cent 11.17 cent +14.0
Total dividend – including proposed final dividend 2.7451 cent 2.387 cent +15.0
*Key performance measures:
Adjusted EBITDA is earnings before interest, tax, depreciation and amortisation, excluding the Group’s
share of Balmoral’s result and exceptional items
Adjusted EBITA is adjusted EBITDA less depreciation charges
Adjusted EBIT is adjusted EBITA less amortisation charges
Adjusted diluted earnings per share excludes exceptional items and, in previous years, amortisation
charges and related tax credits, and the Group’s share of Balmoral’s result
Copies of this announcement are available from the Company’s registered office, 29 North Anne Street,
Dublin 7 and on our website at www.fyffes.com.
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Financial results and operating review
Revenue
Total revenue, including the Group’s share of its joint ventures, amounted to €1.22bn in 2015, an increase of
12.1%. Group revenue, excluding Fyffes’ share of its joint ventures, was €985m in the year, 15.6% higher year
on year. Excluding the positive translation impact of the weaker euro on the Group’s US Dollar and Sterling
denominated sales, underlying revenue growth in 2015 was 7%. This was mainly driven by further organic
volume growth in the Group’s banana and melon categories. The Group’s share of revenue of its joint ventures
was marginally lower in 2015 mainly due to a reduced shareholding in one of these businesses.
Operating profit
Fyffes has delivered another important step up in profits in 2015, its seventh consecutive year of earnings
growth. Adjusted EBITA was €5.7m higher (+14.2%) at €45.8m, compared to €40.1m in 2014. Cumulatively
the Group’s Adjusted EBITA has increased by 200% over that seven year period, representing a strong
compound annual growth rate of 17%. Adjusted EBITDA of €56.1m was 16.4% higher year on year. The
calculations of Adjusted EBITA and Adjusted EBITDA are set out in note 2 of the accompanying financial
information. The key drivers of performance in the Group’s tropical produce operations are average selling
prices, exchange rates and the costs of fruit, shipping and fuel.
Fyffes achieved a strong result in the banana category in 2015, with a mid-teens percentage increase in
operating profits. This was delivered despite a significant currency headwind, with the US Dollar strengthening
by 16% and 7% against the euro and Sterling respectively during the year. The impact of this was partly
mitigated by reductions in key input costs, further logistical efficiencies combined with lower fuel costs,
operational efficiencies in the Group’s distribution network and reductions in other import costs. Fyffes also
secured increases in selling prices in some markets. The Group continued to grow its European market share,
with a mid-single digit percentage increase in its banana volumes in the year.
Fyffes pineapple operations also delivered a strong result in 2015. As in the banana category, exchanges rates
were a significant headwind due to the strength of the US Dollar. The Group secured increases in selling prices
in most markets, helped by supply constraints as a result of poor weather in Costa Rica, the key production
region. Fyffes total volumes were marginally lower for this reason, although production on the Group’s own
farms was slightly higher as a result of further yield improvements. Costs, particularly logistics and fuel, were
lower year on year.
Fyffes delivered a broadly satisfactory result in 2015 in its US melon business, although profits were down the
very strong result achieved in the previous year. There was adverse weather in the early part of the year in the
production regions which increased costs and resulted in some quality issues in certain varieties for part of the
season. This had a modest adverse impact on average selling prices. Towards the end of the year, the Group
purchased additional melon farming assets in Guatemala which contributed to a mid-single digit increase in
volumes in this category in the year and is expected to result in a 25% increase in volumes on a full year basis in
2016. Fyffes is pleased with the initial integration of these new farms and there has been a positive start to the
2015/16 US melon import season.
Balmoral International Land Holdings plc (“Balmoral”), in which the Group has a 40% shareholding, published
its results for 2014 in September 2015, reporting a profit attributable to equity shareholders of €6.7m. Fyffes
continues to maintain an impairment provision against the carrying value of its investment in Balmoral, which
remains unchanged at €50,000, and has therefore recorded no net profit in this regard. Balmoral has not yet
reported its 2015 results.
The total operating profit for the Group, which is Adjusted EBITA less exceptional items and the Group’s share
of its joint ventures’ interest and tax charges, amounted to €32.5m for the year compared to €38.9m in the
previous year.
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Exceptional items
As explained in more detail in note 3 of the accompanying financial information, the Group has treated a
number of non-recurring matters as exceptional items in its 2015 financial statements, amounting to a net charge
of €12m. This comprised an €11.1m net charge arising on termination of the Group’s Irish defined benefit
pension scheme, a €2.9m charge recognised in relation to a fine paid by one of the Group’s joint venture
businesses and a €2m credit in respect of costs accrued in 2014 in connection with the Group’s planned merger
with Chiquita Brands International, Inc. which were not ultimately incurred. Net tax credits of €1.1 million
arose during the year in relation to these exceptional items.
Financial expense
Net financial expense in the Group’s subsidiary companies in 2015 amounted to €0.7m, unchanged on the
previous year. The Group’s share of the net financial expense of its joint ventures was €0.4m in 2015, also
unchanged on the previous year.
Profit before tax
Adjusted profit before tax for 2015 amounted to €44.6m, 14.5% up on the previous year. As set out in note 2 of
the accompanying financial information, adjusted profit before tax excludes exceptional items and the Group’s
share of the tax charge of its joint ventures, which is reflected in profit before tax under IFRS, and, in previous
years, the amortisation of intangible assets and the Group’s share of Balmoral’s result. Profit before tax,
excluding these adjustments, amounted to €31.8m compared to €38.2m in 2014, including the impact of the
€12m exception charge.
Taxation
An analysis of the tax charge for the year is set out in note 4 of the accompanying financial information. The
underlying tax charge in 2015 was €6.2m compared to €5m in the previous year, equivalent to a rate of 13.8%
(2014: 12.7%), when applied to the Group’s adjusted profit before tax. The c.1% increase in the underlying tax
rate in 2015 reflects some changes in the geographic mix of the Group’s profits. The underlying tax charge
excludes the tax impact of exceptional items and includes the Group’s share of tax of its joint ventures. This
underlying rate is used for the purposes of calculating adjusted earnings per share. The 2015 Income Statement
shows a tax charge of €4.2m before these adjustments, compared to €4m in the previous year.
Non-controlling interests
The non-controlling interests share of profit after tax for the year amounted to €0.1m in 2015, compared to
€0.2m in the previous year.
Earnings per share
The Group’s adjusted diluted earnings per share in 2015 amounted to €12.73 cent, up 14% on the previous year.
This reflects the increase in adjusted profit before tax less the impact of the slightly higher tax charge. The
calculation of adjusted earnings per share is set out in note 5 of the accompanying financial information. It
excludes exceptional items and, in previous years, the amortisation of intangible assets and related tax credits,
and the Group’s share of Balmoral’s result. Diluted earnings per share after the €12m exceptional charge,
amounted to €9.10 cent in 2015, compared to 11.20 cent in the previous year.
Dividend and share buyback
The Board is proposing to pay a final dividend for 2015 of €1.924 cent per share, up 15% on the previous year.
Subject to shareholder approval at the forthcoming AGM, this dividend, which will be subject to Irish
withholding tax rules, will be paid on 6 May 2016 to shareholders on the register on 8 April 2016. In accordance
with company law and IFRS, this dividend has not been provided for in the balance sheet at 31 December 2015.
Total dividends in respect of 2015 will amount to €2.7451 cent, 15% up on the previous year and equivalent to a
pay-out ratio of 21.6% based on adjusted earnings per share.
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Fyffes will seek to renew its authority from shareholders to repurchase shares at its 2016 AGM. Subject to this
authority and taking into account the Group’s financial position and other investment opportunities, the
company may from time to time repurchase further Fyffes plc shares in the market.
Balance sheet
Net funds
The Group’s net debt increased by €27.6m in 2015 to €39.3m. This represents 0.7 times Adjusted EBITDA. Cash
generated from operations in the year was c. €56m, comprising Adjusted EBITDA excluding the Group’s share of
EBITA from its joint ventures but including dividends received from these businesses. Total capital and
investment expenditure amounted to over €83m. This included €26.8m spent on the melon and banana farming
businesses acquired towards the end of the year, plus with a further €2.7m spent acquiring another farm which was
accounted for as an asset purchase. Regular Capex amounted to €9.6m, compared to the €10.3m depreciation
charge. Total payments of €20m were made arising from the closure of the Irish pension scheme as explained
below. Dividends paid amounted to €7.4m, tax paid was €4.3m and €5.2m was paid in respect of the Group’s
MNOPF and MNRPF liabilities. Working capital increased by €9.9m in the year, reflecting the impact of the
acquisitions during the year and volume growth in the banana and melon categories.
Pension obligations
As explained further in note 6 of the accompanying financial information, during 2015 the Group decided to
close its Irish defined benefit pension scheme to future accrual and to future liability due to the ever increasing
cost of funding such schemes. Once-off final payments amounting to €20m were made to settle the scheme
deficit, to eliminate the possibility of a claim by the trustees in respect of member expectations in relation to the
scheme and to facilitate transfers to the new defined contribution scheme. After eliminating the accounting
deficit in the Irish scheme as at 31 July 2015 of €8.9m, the incremental costs of €11.1m, net of a settlement gain
of €2.7m arising under the measurement criteria of IAS 19, have been expensed in the income statement as an
exceptional charge. The deficit in the Group’s remaining defined benefit pension schemes in the UK and the
Netherlands, before deferred tax, amounted to €32.1m at the end of the year. The Group is also in the process of
closing its UK defined benefit scheme to future accrual.
Investment in Balmoral International Land Holdings plc (“Balmoral”)
In accordance with International Financial Reporting Standards, Fyffes 40% investment in Balmoral continues
to be accounted for under equity accounting rules. Fyffes wrote down the carrying value of its investment to
€50,000 in 2011. Balmoral published its 2014 full year results in September 2015, reporting a profit attributable
to equity shareholders of €6.7m, increasing its net equity to €8.5m. Fyffes has recognised its share of these
profits but has also recognised a matching impairment provision on the basis that there has not yet been a
sustained and prolonged recovery in Balmoral’s performance and the carrying value of its investment has
therefore remained unchanged at €50,000. Balmoral has not yet finalised its 2015 results. Fyffes will consider
the appropriateness of its impairment provision after Balmoral publishes its 2015 results. Balmoral continues to
be actively managed and, given its well diversified portfolio of properties in Ireland, the UK and Continental
Europe, remains in a position to benefit from improvements in property market conditions.
Shareholders’ funds
Shareholders’ funds increased by €31.2m (+17.1%) in 2015 to €213.9m. The main components of this increase
included - retained profits after tax and minority interests of €27.4m, less dividends paid of €7.4m; translation
gains on the Group’s non-euro denominated net assets amounting to €17.1m; net actuarial gains on the Group’s
and its joint ventures’ pension schemes of €1.3m, net of deferred tax; the proceeds from share options exercised
of €1.4m; and mark to market losses on valuing the Group’s currency and fuel hedges at year end amounting to
€9m, net of deferred tax.
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Outlook Having achieved a further step up in profitability in 2015, Fyffes is focused on consolidating at this higher level
of earnings. The Group’s initial target EBITA for 2016 is in the range €42m-€48m, compared to €45.8m in
2015. Fyffes is pursuing increases in selling prices in all markets in response to the continuing strength of the
US Dollar against the euro and Sterling. Trading conditions have been satisfactory in the year to date in 2016.
The Group remains focused on always improving the efficiency of its operations in order to enhance its
competitiveness. Fyffes is determined to continue to grow its business and is actively pursuing a number of
attractive acquisition opportunities.
David McCann, Chairman 26 February 2016
on behalf of the Board
Page | 7
Fyffes plc
Summary Group Income Statement for the year ended 31 December 2015
Pre-Exceptional
2015
€’000
Exceptional
2015
€’000
Total
2015
€’000
Pre-Exceptional
2014
€’000
Exceptional
2014
€’000
Total
2014
€’000
Revenue including Group share of joint ventures 1,222,549 - 1,222,549 1,090,887 - 1,090,887
Group revenue 985,292 - 985,292 852,578 - 852,578
Cost of sales (865,612) - (865,612) (748,391) - (748,391)
Gross profit 119,680 - 119,680 104,187 - 104,187
Distribution costs (32,467) - (32,467) (29,455) - (29,455)
Administrative expenses (44,881) (9,096) (53,977) (40,373) (14,339) (54,712)
Other operating income/(expense) 1,824 - 1,824 3,195 14,437 17,632
Share of profit/(loss) of joint ventures after tax 356 (2,882) (2,526) 1,273 - 1,273
Share of profit of associates after tax
– Balmoral International Land Holdings plc - - -
- - -
Operating profit 44,512 (11,978) 32,534 38,827 98 38,925
Net financial expense (748) (746)
Profit before tax 31,786 38,179
Income tax expense (4,246) (4,048)
Profit for the financial year – continuing operations 27,540 34,131
Attributable as follows:
Equity shareholders 27,425 33,910
Non-controlling interests 115 221
27,540 34,131
Earnings per ordinary share – cent Basic 9.28 11.40
Diluted 9.10 11.20
Adjusted diluted 12.73 11.17
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Fyffes plc
Summary Group Statement of Comprehensive Income for the year ended 31 December 2015
2015
€’000
2014
€’000
Profit for the financial year 27,540 34,131
Other comprehensive income
Items that are or may subsequently be reclassified to profit or loss
Translation of net equity investments 17,132 15,630
Effective portion of cash flow hedges (10,282) 9,357
Deferred tax on effective portion of cash flow hedges 1,285 (1,170)
Items that will never be reclassified to profit or loss
Actuarial gain/(loss) recognised on defined benefit pension schemes 2,521 (12,379)
Deferred tax movements related to defined benefit pension schemes (922) 1,921
Share of actuarial (loss) on joint ventures defined benefit pension schemes (356) (2,239)
Deferred tax on actuarial losses in joint ventures defined benefit pension schemes 49 524
Total comprehensive income 36,967 45,775
Attributable as follows:
Equity shareholders 36,852 45,554
Non-controlling interests 115 221
Total comprehensive income 36,967 45,775
Page | 9
Summary statement of movement in equity for the year ended 31 December 2015
Share
Capital
€’000
Share
Premium
€’000
Other Reserves
(Note 9)
€’000
Retained
Earnings
€’000
Shareholders’
Funds
€’000
Non-controlling
Interests
€’000
Total
Equity
€’000
2015
Total shareholders’ equity at beginning of year 19,546 99,117 64,230 (209) 182,684 1,560 184,244
Total comprehensive income - - 8,135 28,717 36,852 115 36,967
Share options exercised 152 1,297 (351) 351 1,449 - 1,449
Share based payments - - 273 - 273 - 273
Dividends paid to equity shareholders - - - (7,364) (7,364) - (7,364)
Total shareholders’ equity at end of year 19,698 100,414 72,287 21,495 213,894 1,675 215,569
2014
Total shareholders’ equity at beginning of year 19,544 99,105 44,293 (15,375) 147,567 1,339 148,906
Total comprehensive income - - 23,817 21,737 45,554 221 45,775
Share options exercised 2 12 - - 14 - 14
Acquisition of own shares - - (3,038) - (3,038) - (3,038)
Share options which did not vest credited to Income Statement - - (985) - (985) - (985)
Share based payments - - 143 - 143 - 143
Dividends paid to equity shareholders - - - (6,571) (6,571) - (6,571)
Total shareholders’ equity at end of year 19,546 99,117 64,230 (209) 182,684 1,560 184,244
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Fyffes plc
Summary Group Balance Sheet as at 31 December 2015
2015
€’000
2014
€’000
Non-current assets
Property, plant and equipment 123,099 96,429
Investment property 5,524 5,202
Goodwill and intangible assets 39,851 24,452
Other receivables - 4,682
Investments in joint ventures 36,326 40,121
Investments in associate – Balmoral International Land Holdings plc 50 50
Equity investments 16 16
Deferred tax assets 11,044 11,596
Total non-current assets 215,910 182,548
Current assets
Inventories 60,198 48,812
Biological assets 21,314 18,715
Trade and other receivables 119,149 91,966
Hedging instruments 3,118 6,379
Corporation tax recoverable 1,222 545
Cash and cash equivalents 22,759 22,069
Total current assets 227,760 188,486
Total assets 443,670 371,034
Equity
Called-up share capital 19,698 19,546
Share premium 100,414 99,117
Other reserves 72,287 64,230
Retained earnings 21,495 (209)
Total shareholders’ equity 213,894 182,684
Non-controlling interests 1,675 1,560
Total equity and non-controlling interests 215,569 184,244
Non-current liabilities
Interest bearing loans and borrowings 1,337 9,833
Employee retirement benefits 32,148 41,448
Other payables 3,780 7,902
Provisions 1,864 1,987
Corporation tax payable 9,508 10,330
Deferred tax liabilities 3,922 3,952
Total non-current liabilities 52,559 75,452
Current liabilities
Interest bearing loans and borrowings 60,703 23,955
Trade and other payables 104,611 83,761
Provisions 1,627 1,985
Corporation tax payable 815 608
Hedging instruments 7,786 1,029
Total current liabilities 175,542 111,338
Total liabilities 228,101 186,790
Total liabilities and equity 443,670 371,034
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Fyffes plc
Summary Group Cash Flow Statement for the year ended 31 December 2015
2015
€’000
2014
€’000
Cash flows from operating activities (note 8.1) 16,509 27,668
Cash flows from investing activities (note 8.2) (36,708) (29,626)
Cash flows from financing activities (note 8.3) 24,558 (8,095)
Net movement in cash and cash equivalents 4,359 (10,053)
Cash and cash equivalents, including bank overdrafts at start of year 16,730 25,300
Translation adjustment on cash and cash equivalents 1,045 1,483
Cash and cash equivalents, including bank overdrafts at end of year 22,134 16,730
Reconciliation of total net (debt)/funds
Increase/(decrease) in cash and cash equivalents 4,359 (10,053)
Net increase in debt (32,000) (2,813)
Capital element of finance lease payments 1,527 1,313
New finance leases (1,238) (861)
Translation adjustment (210) 258
Movement in net debt (27,562) (12,156)
Net (debt)/funds at the beginning of the year (11,719) 437
Net (debt) at the end of the year (39,281) (11,719)
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Fyffes plc
Notes to Preliminary Results for the year ended 31 December 2015
1. Basis of preparation
This preliminary financial information has been derived from the Group’s consolidated financial statements for
the year ended 31 December 2015, which were approved by the Board of Directors on 25 February 2016. It has
been prepared in accordance with the International Financial Reporting Standards (IFRS) as endorsed by the EU
Commission and the accounting policies set out in the Group’s 2014 annual report.
The Group’s full financial statements and annual report will be circulated to shareholders, published on the
Group’s website and filed with the Irish Registrar of Companies in due course.
The comparative financial information for the year ended 31 December 2014 presented in this preliminary
results announcement represents an abbreviated version of the Group’s statutory financial statements for that
year, on which an unqualified audit report was issued and which have been filed with the Companies
Registration Office in Dublin.
The financial information is presented in euro, rounded to the nearest thousand. The results and cash flows of
Group companies denominated in foreign currencies have been translated into euro at the average exchange
rates for the period while their balance sheets have been translated at the year end rate of exchange. Adjustments
arising on retranslation of the opening net assets and results for the year of these non-euro denominated
operations at the year end rate of exchange are recognised directly in equity, in the currency translation reserve,
net of any movements on related foreign currency borrowings, including those arising on long term intra-Group
loans regarded as quasi-equity in nature. All other translation differences are recognised in the income
statement. The principal non-euro currencies applicable to the Group are sterling and the US dollar. The average
and closing rates to the euro were as follows:
Average Closing
2015 2014 2015 2014
Pound Sterling 0.7258 0.8058 0.7365 0.7820
US Dollar 1.1100 1.3631 1.0859 1.2170
2. Adjusted profit before tax, EBITA and EBITDA 2015
€’000
2014
€’000
Profit before tax per income statement 31,786 38,179
Adjustments
Exceptional items (see note 3 below) 11,978 (98)
Group share of tax charge of joint ventures 860 903
Adjusted profit before tax 44,624 38,984
Exclude
Net financial expense – Group 748 746
Net financial expense – share of joint ventures 447 403
Adjusted EBITA 45,819 40,133
Depreciation 10,322 8,093
Adjusted EBITDA 56,141 48,226
Page | 13
Fyffes is currently organised into two separate operating divisions – Tropical Produce and Property. Fyffes
Tropical Produce operations produce and import bananas, pineapples and melons sourced in Central and South
America for distribution to customers in Europe and the US. Fyffes Property activities comprise its 40%
investment in Balmoral International Land Holdings plc (“Balmoral”) which is an international property
development company. This preliminary results announcement presents the separate information for Balmoral
under equity accounting rules in the Income Statement and the Balance Sheet and in the reconciliation above.
The performance of the Tropical Produce division is reviewed by the Chief Operating Decision Maker
(“CODM”), being the executive team comprising the Executive Chairman, the Chief Operating Officer and the
Finance Director, based on Adjusted EBITA which, while not a term defined in IFRS, Fyffes believes is the
most appropriate measure of the underlying operating result of the Group. Adjusted EBITA is earnings before
interest, tax and amortisation charges, excluding exceptional items and the Group’s share of Balmoral’s result
and including the Group’s share of its joint ventures on a consistent basis. Adjusted earnings per share are
presented on a similar basis in note 5 below. Adjusted EBITA reflects the results of Fyffes Tropical Produce
operations, net of all central overheads, and is the basis for the analysis of the performance of that division in the
accompanying text. Financial income and expense, income tax and certain corporate overheads are managed on
a centralised basis. The only inter-segmental transactions between Fyffes Tropical Produce division and
Balmoral arise because Fyffes leases a number of its distribution centres from Balmoral and Fyffes in turn
sublets space in its corporate head office to Balmoral.
Balmoral published its 2014 full year results in September 2015, reporting a profit after tax of €6.7m. Fyffes has
recognised its share of these profits but has also recognised a matching impairment provision on the basis that
there has not yet been a sustained and prolonged recovery in Balmoral’s performance and the carrying value of
its investment has therefore remained unchanged at €50,000. Balmoral has not yet finalised its 2015 results.
Fyffes will consider the appropriateness of its impairment provision after Balmoral publishes its 2015 results.
3. Exceptional items
2015
€’000
2014
€’000
Costs arising on closure of Irish defined benefit pension scheme (11,144) -
Share of fine paid by joint venture in connection with EU Competition case (2,882) -
Break fee received following termination of proposed merger with Chiquita - 18,594
Professional and advisory fees and other costs connected with proposed
merger with Chiquita 2,048 (14,339)
Impairment charges related to under-performing pineapple farm - (4,157)
Total exceptional items per income statement (11,978) 98
As explained further in note 6 below, during 2015 the Group decided to close its Irish defined benefit pension
scheme to future accrual and to future liability due to the ever increasing cost of funding such schemes. Once-
off final payments amounting to €20m were made to settle the scheme deficit, to eliminate the possibility of a
claim by the trustees in respect of member expectations in relation to the scheme and to facilitate transfers to the
new defined contribution scheme. After eliminating the accounting deficit as at 31 July 2015 of €8.9m, the
incremental costs of €11.1m, net of a settlement gain of €2.7m arising under the measurement criteria of IAS 19,
have been expensed in the income statement as an exceptional charge.
In 2008, the European Commission published its Decision following the conclusion of its investigation into the
supply of bananas in the Northern European region of the European Economic Area (“EEA”). No adverse
findings were made against Fyffes and no fine imposed on it. At the same time, the European Commission
found the Group’s German joint venture, Internationale Fruchtimport Gesellschaft Weichert GmbH & Co KG
(“Weichert”) and Fresh Del Monte Produce Inc (“Del Monte”) jointly and severally liable for a fine of €14.7m,
for breaches of Article 81 of the Treaty of Rome and Article 53 of the EEA Agreement relating to the supply of
bananas to the Northern European region of the EEA in the period 1 January 2000 to 31 December 2002. Fyffes
acquired its 80% interest in Weichert from Del Monte on 1 January 2003. The Commission found that Weichert
was controlled by Del Monte throughout the period covered by the Decision. Weichert provided for a net
exceptional charge of €3.7m in its 2008 accounts in relation to this fine. While Fyffes has no liability in this
Page | 14
matter, the Group’s income statement in 2008 reflected Fyffes 80% share of the net exceptional charge
recognised in Weichert’s accounts, amounting to €2.9m.
There have been a number of appeals in relation to this case with a concluding judgement issued by the Court of
Justice of the European Union (“CJEU”) on 24 June 2015 which confirmed a lower fine of €9.8m, plus interest
costs. Separately, Weichert and Del Monte reached an agreement in relation to the split of the fine. As a result
of the decision of the CJEU and the agreement with Del Monte, Weichert has recognised a further exceptional
charge of €3.6m in its 2015 financial statements covering its share of the fine plus interest and related costs in
full and final settlement of this long running matter. Fyffes 80% share of the additional charge recognised by
Weichert amounts to €2.9m and is being reported as an exceptional item.
In March 2014, Fyffes and Chiquita Brands International Inc (“Chiquita”) announced an intention to combine in
an all share merger. In August 2014, a consortium offered to purchase Chiquita in an all cash deal. Ultimately,
Chiquita shareholders voted not to support the proposed merger with Fyffes at a special meeting in October
2014 and the business was sold to the consortium. Following termination of the proposed merger, Chiquita paid
US$23.3m (€18.6m) to Fyffes in respect of its obligations under the terms of the merger agreement. During this
protracted process, which extended over a prolonged period, Fyffes incurred professional and advisory fees and
other costs amounting to €14.3m, including costs related to a review of Fyffes business operations, resulting in a
net surplus of €4.3m in 2014. During 2015, Fyffes wrote back costs amounting to €2.048m, which had been
accrued in 2014 in respect of this proposed merger, but were ultimately not incurred by the Group.
Following a strategic review of its pineapple farming operations in 2014, the Group decided to write down the
carrying value of the assets of one of its pineapple farms which has been under-performing compared to its other
larger pineapple farm. The impairment charges recognised in 2014 in writing down these assets amounted to
€4.2m.
Net tax credits of €1.1m arose during the year in relation to these exceptional items. This exceptional tax credit
has been excluded in the calculation of the Group’s Adjusted earnings per share (see note 5 below).
4. Corporation tax
2015
€’000
2014
€’000
Tax charge per income statement 4,246 4,048
Group share of tax charge of its joint ventures netted in profit before tax 860 903
Total tax charge 5,106 4,951
Adjustments
Tax on credit on exceptional items 1,053 -
Tax charge on underlying activities 6,159 4,951
Including the Group’s share of the tax charge of its joint ventures, amounting to €0.9m (2014: €0.9m), which is
netted in operating profit in accordance with IFRS, the total tax charge for the year amounted to €5.1m (2014:
€5.0m). Excluding the impact of tax credits which arose during the year on certain exceptional charges (see
note 3), the underlying tax charge for the Group for the year was €6.2m (2014: €5.0m), equivalent to a rate of
13.8% (2014: 12.7%) when applied to the Group’s adjusted profit before tax.
Page | 15
5. Earnings per share
2015
€’000
2014
€’000
Profit for financial year attributable to equity shareholders 27,425 33,910
‘000 ‘000
Issued ordinary shares at start of year 325,765 325,735
Effect of own shares held (31,075) (28,240)
Effect of shares issued 740 1
Weighted average number of shares for basic earnings per share calculation 295,430 297,496
Weighted average number of options with dilutive effect 5,787 5,158
Weighted average number of shares for diluted earnings per share calculation 301,217 302,654
Basic earnings per share - € cent 9.28 11.40
Diluted earnings per share - € cent 9.10 11.20
Adjusted diluted earnings per share
2015
€’000
2015
€ cent
2014
€’000
2014
€ cent
Profit for financial year attributable to equity shareholders 27,425 9.10 33,910 11.20
Adjustments
Exceptional items 11,978 3.98 (98) (0.03)
Tax impact of exceptional items (1,053) (0.35) - -
Adjusted diluted earnings 38,350 12.73 33,812 11.17
Adjusted diluted earnings per share is calculated to exclude, where applicable, the Group’s share of the results
of Balmoral International Land Holdings plc, exceptional items, intangible amortisation, related tax credits /
charges, once-off tax credits and the impact of share options with a dilutive effect.
6. Post employment benefits 2015
€’000
2014
€’000
Deficit at beginning of year (41,448) (28,150)
Current/past service cost less finance income recognised in Income Statement (3,786) (2,943)
Gain on settlement of Irish scheme 2,721 -
Actuarial remeasurements recognised in Statement of Comprehensive Income 2,521 (12,379)
Employer contributions to schemes 9,626 3,730
Foreign exchange movement (1,782) (1,706)
Deficit at end of year (32,148) (41,448)
Related deferred tax asset 6,466 7,456
Net deficit after deferred tax at end of year (25,682) (33,992)
Page | 16
The table above summarises the movements during the year in the Group’s defined benefit pension schemes in
Ireland, the UK and Continental Europe. The current/past service cost is charged in the Income Statement,
together with the interest cost of scheme liabilities net of the finance income on scheme assets. The actuarial
(loss)/gain is recognised in the Statement of Comprehensive Income, in accordance with the amendment to IAS
19 Employee Benefits (2011). The measurement of the Group’s pension obligations is based on a number of key
assumptions which are determined in consultation with independent actuaries. One key assumption is the
appropriate interest rate to use in discounting the estimated future cash flows of the schemes. For 2015, the
Group used a rate of 2.6% (2014: 2.3%) in respect of its euro denominated schemes and 3.8% (2014: 3.7%) in
respect of its UK scheme.
These defined benefit pension schemes represent a very significant commitment of Group resources. Fyffes had
been exploring for some time how it might de-risk its exposure in this regard, either through fully eliminating
these liabilities or, where this is not feasible, spreading the funding costs over an extended period. While the
Group’s Irish and UK defined benefit pension schemes have been closed to new entrants since 2009, liabilities
under these schemes continued to accrue as a result of the ongoing service of the existing members. In July
2015, the Group decided to close its Irish defined benefit pension scheme to future accrual and to future
liability. Following agreement with the scheme trustees and certain scheme members, all accrued liabilities,
rights and related costs were settled. Once-off final payments amounting to €20m were made to settle the deficit
in the scheme, to eliminate the possibility of a claim by the trustees in respect of member expectations in
relation to the scheme and to facilitate transfers to the new defined contribution scheme, including the payment
for all members of enhanced transfer values calculated by the scheme actuary and agreed by the trustees and
members. The Group therefore has no further obligation in relation to that scheme and it is in the process of
being wound up. The Group has established a new defined contribution scheme for the former members of the
Irish defined benefit scheme. The accumulated benefits of each member of the former defined benefit scheme
have been transferred to the new defined contribution scheme by bulk transfer.
Net of a settlement gain of €2.7m arising on termination under the measurement criteria of IAS 19, a final
contribution of €6.1m was paid directly into the Irish scheme to eliminate the accounting deficit of €8.9m as at
31 July 2015. A net exceptional charge of €11.1m has been recognised in the income statement (see note 3
above), being the difference between the €20m final payments and the accounting deficit of €8.9m.
UK legislation provides a very significant level of protection to occupational pension schemes. The Group is,
therefore, more constrained in its options to limit its exposure in respect of its UK defined benefit scheme. It
would not be possible to fully eliminate the Group’s exposure to this scheme on the same terms as the
settlement agreed with the trustees of the Irish scheme. An agreement has been in place for a number of years
with the trustee of the UK scheme to fund the past service deficit over an extended period. The Group is in the
process of closing its UK scheme to future accrual.
The pension cost expensed in the income statement for the year in respect of the Group’s defined benefit
schemes was €1.1m, net of the €2.7m settlement gain on termination of the Group’s Irish defined benefit
scheme (2014: €2.9m).
7. Dividends and share buy-back
2015
€’000
2014
€’000
Dividends paid on Ordinary €0.06 shares
Interim dividend for 2015 of €0.8211 cent (2014: €0.714 cent) 2,425 2,130
Final dividend for 2014 of €1.673 cent (2013: €1.49 cent) 4,939 4,441
Total cash dividends paid in the year 7,364 6,571
The directors have proposed a final dividend for 2015, subject to shareholder approval at the AGM of €1.924
cent per share. In accordance with IFRS, this dividend has not been provided for in the Balance Sheet at 31
December 2015.
Page | 17
On 31 December 2015, the company and subsidiary companies held 31,075,000 Fyffes plc ordinary shares. The
right to dividends on these shares has been waived and they are excluded from the calculation of earnings per
share.
8. Notes supporting cash flow statement
8.1 Cash generated from operations 2015
€’000
2014
€’000
Profit for the year 27,540 34,131
Adjustments for
Depreciation of property, plant and equipment 10,322 8,093
Net (gain) on disposal of property, plant and equipment (210) (47)
Impairment of property, plant and equipment - 4,157
Gain on partial disposal of investment in joint venture (687) -
Equity settled compensation 273 (842)
Defined benefit pension scheme expense (net of exceptional settlement gain) 1,065 2,943
Contributions paid to defined benefit pension schemes (9,626) (3,730)
Payments in connection with MNOPF and MNRPF (5,171) (599)
Reduction in deferred consideration liability (37) -
Share of loss/(profit) of joint ventures 2,526 (1,273)
Movement in working capital (9,952) (15,047)
Decrease in fair value of biological assets 673 513
Income tax charge per income statement 4,246 4,048
Income tax (paid) (4,313) (4,888)
(Gain)/loss on ineffective hedging instruments (264) 59
Net interest expense 748 746
Net interest paid (624) (596)
Cash flows from operating activities 16,509 27,668
8.2 Cash flows from investing activities
2015
€’000
2014
€’000
Acquisition of subsidiaries (26,790) -
Acquisition of property, plant and equipment excluding leased assets (12,268) (22,836)
Investment in joint ventures - (873)
Proceeds on partial disposal of investment in joint venture 271 -
Dividends paid by joint ventures 1,533 221
Joint venture becoming a subsidiary 5 -
Payment of deferred acquisition consideration (92) (2,481)
Acquisition of investment property - (4,090)
Proceeds from disposal of property, plant and equipment 633 433
Cash flows from investing activities (36,708) (29,626)
Page | 18
8.3 Cash flows from financing activities
2015
€’000
2014
€’000
Proceeds on issue of shares (including premium) 1,449 14
Purchase of own shares - (3,038)
Net increase in borrowings 32,000 2,813
Capital element of lease payments (1,527) (1,313)
Dividends paid to equity shareholders (7,364) (6,571)
Cash flows from financing activities 24,558 (8,095)
8.4 Analysis of movement in net (debt) in the year Opening
1 Jan
2015
€’000
Cash flow
€’000
Non cash
movement
€’000
Translation
€’000
Closing
31 Dec
2015
€’000
Bank balances 13,379 6,121 - 1,045 20,545
Call deposits 8,690 (6,476) - - 2,214
Cash & cash equivalents per balance sheet 22,069 (355) - 1,045 22,759
Overdrafts (5,339) 4,714 - - (625)
Cash & cash equivalents per cash flow statement 16,730 4,359 - 1,045 22,134
Bank loans – current (17,395) (40,000) - (893) (58,288)
Bank loans – non current (8,000) 8,000 - - -
Finance leases (3,054) 1,527 (1,238) (362) (3,127)
Total net (debt) (11,719) (26,114) (1,238) (210) (39,281)
9. Reconciliation of other reserves
Capital
Reserves
€’000
Share
Options
Reserve
€’000
Currency
Translation
Reserve
€’000
Revaluation
Reserve
€’000
Treasury
Shares
Reserve
€’000
Hedging
Reserve
€’000
Total
Other
Reserves
€’000
2015
Total at beginning of year 74,107 1,784 1,737 2,328 (20,407) 4,681 64,230
Total comprehensive income - - 17,132 - - (8,997) 8,135
Share options exercised - (351) - - - - (351)
Currency movements in
revaluation reserves - - (52) 52 - - -
Share based payments - 273 - - - - 273
Total at end of year 74,107 1,706 18,817 2,380 (20,407) (4,316) 72,287
2014
Total at beginning of year 74,107 2,626 (13,840) 2,275 (17,369) (3,506) 44,293
Total comprehensive income - - 15,630 - - 8,187 23,817
Currency movements in
revaluation reserves - - (53) 53 - - -
Acquisition of own shares - - - - (3,038) - (3,038)
Unvested share options
credited to Income Statement - (985) - - - - (985)
Share based payments - 143 - - - - 143
Total at end of year 74,107 1,784 1,737 2,328 (20,407) 4,681 64,230
Page | 19
10. Acquisition of subsidiaries
In a number of separate transactions during 2015, the Group purchased additional melon farming assets in
Central America. It also completed the acquisition of a banana farm in Costa Rica which it had been
successfully operating under a lease arrangement since early in 2014. The provisional fair values of the assets
acquired and consideration paid and payable in respect of these transactions is summarised in the table below.
€’000 €’000
Provisional fair value of assets acquired
Property, plant and equipment 14,799
Intangible assets 6,864
Working capital 581
Total fair value of assets acquired 22,244
Consideration
Cash paid 26,790
Deferred consideration 1,126
Fair value of consideration 27,916
Goodwill arising 5,672
11. Financial instruments
The fair values of financial assets and financial liabilities, together with the carrying amounts in the Summary
Group Balance Sheet at 31 December 2015 are as follows:
2015
Carrying value
€’000
2015
Fair value
€’000
2014
Carrying Value
€’000
2014
Fair value
€’000
Assets
Equity investments 16 16 16 16
Trade and other receivables 113,203 113,203 91,683 91,683
Cash and cash equivalents 22,759 22,759 22,069 22,069
Hedging instruments 3,118 3,118 6,379 6,379
Total assets 139,096 139,096 120,147 120,147
Liabilities
Trade and other payables (108,391) (108,391) (91,663) (91,663)
Interest bearing loans and borrowings (62,040) (62,040) (33,788) (33,788)
Deferred contingent consideration (1,194) (1,194) (1,578) (1,578)
Hedging instruments (7,786) (7,786) (1,029) (1,029)
Total liabilities (179,411) (179,411) (128,058) (128,058)
All of the Group’s debt is due within one year (2014: €8,000,000 due after more than one year).
Page | 20
Fair value of financial instruments carried at fair value
In accordance with IFRS 13 Fair Value Measurement, financial instruments recognised at fair value are
analysed between those based on quoted prices in active markets for identical assets or liabilities (Level 1);
those involving inputs other than quoted prices that are observable for the assets or liabilities, either directly or
indirectly (Level 2); and those involving inputs for the assets or liabilities that are not based on observable
market data (Level 3). The following table sets out the fair value of all financial instruments whose carrying
value is at fair value:
Total Level 1 Level 2 Level 3
2015
€’000
2014
€’000 2015
€’000
2014
€’000 2015
€’000
2014
€’000 2015
€’000
2014
€’000
Assets measured at fair value
Equity investments 16 16 16 16 - - - -
Designated as hedging instruments
Foreign exchange contracts 3,118 6,250 - - 3,118 6,250 - -
Fuel contracts - 129 - - - 129 - -
Liabilities at fair value
At fair value through profit or loss
Deferred contingent consideration (1,194) (1,578) - - - - (1,194) (1,578)
Designated as hedging instruments
Foreign exchange contracts (1,376) - - - (1,376) - - -
Fuel contracts (6,410) (1,029) - - (6,410) (1,029) - -
The fair value of hedging instruments entered into by the Group is measured in accordance with Level 2 and
consist of foreign currency forward contracts and bunker fuel forward contracts.
Where derivatives are traded either on exchanges or liquid over-the-counter-markets, the Group uses the closing
prices at the reporting date. Normally, the derivatives entered into by the Group are not traded on active
markets. The fair values of these contracts are estimated using a valuation technique that maximises the use of
observable market inputs, eg market exchange.
The fair value of deferred contingent consideration is measured in accordance with Level 3. Details of
movements in the period are set out below.
Additional disclosures for Level 3 fair value measurements
2015
€’000
2014
€’000
Deferred contingent consideration
At beginning of year 1,578 2,942
Revisions during the year (37) 802
Transferred to other payables (1,370) -
Discounting charge - 20
Arising on acquisition 1,126 -
Paid during the year (92) (2,481)
Foreign exchange movements (11) 295
At end of year 1,194 1,578
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