FFY.L Regulatory News (FFY)

Fyffes reports strong first half results and reconfirms full year targets

· Continuation of strong earnings growth in first half - adjusted EPS up 12.2%

· Reconfirms full year target earnings ranges as follows:

o Adjusted EBITDA - €55m - €61m

o Adjusted EBITA/EBIT - €44m - €50m

o Adjusted EPS - 12.2 cent - 13.9 cent

· Strong cash generation in first half - net cash of €18.6m at 30 June 2015

· 15% increase in interim dividend

Commenting on the results, David McCann, Chairman, said:

"Fyffes is pleased to report a continuation of the strong growth in earnings achieved in recent years, with a 12.2% increase in Adjusted EPS in the first half of the year. The Group is also pleased to reconfirm the increased 2015 full year target earnings ranges announced on 19 June 2015. This demonstrates the Group's ability to quickly adapt to prevailing market conditions given the significant adverse movement in exchange rates earlier in the year. Fyffes continues to pursue increases in selling prices in all markets in this regard.

Cash generation has been strong in the year to date, with the Group moving from net debt of €11.7m at the beginning of the year to a net cash position of €18.6m at 30 June 2015. Fyffes is very focused on shareholder value and is increasing its interim dividend by 15% given its strong performance in the year to date and in recent years. The Group may also, from time to time, repurchase further Fyffes shares in the market."

* The financial terms used above are defined below and exclude exceptional items.

27 August 2015

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 interims results slide presentation at www.fyffes.comor contact Brian Bell at Wilson Hartnell PR, Tel: +353-1-6690030.

Fyffes plc Interim Results for six months ended 30 June 2015

Financial highlights

*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 where applicable

· As further explained below, Interfrucht Weichert, the Group's German joint venture, recognised an exceptional charge in the period (Fyffes 80% share amounted to €2.9m) in full and final settlement of the fine imposed by the European Commission arising from an historic investigation into the supply of bananas in Northern Europe in the period 2000-2002, which was prior to Fyffes investment in that business.

· 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.

Financial results and operating review

Revenue

Total revenue, including the Group's share of its joint ventures, increased by 8.7% in in the first half of the year to €644.3m. Group revenue, excluding Fyffes' share of its joint ventures, amounted to €540.6m in the period, an increase of 10.3%. The increase in turnover included the positive impact of translating Sterling and US Dollar denominated sales into euro. In addition, the Group delivered modest organic volume growth in the banana category, combined with some price increases in each product category.

Operating profit

Fyffes has delivered another strong increase in earnings in the first half of 2015, with satisfactory results in each product category. Adjusted EBITDA in the period was €4.4m higher (+12.4%), at €39.5m. Adjusted EBITA was up €2.9m (+9.1%) year on year to €34.3m. Adjusted EBIT was the same as adjusted EBITA as there were no amortisation charges in 2015 or 2014. The calculations of Adjusted EBIT, Adjusted EBITA and Adjusted EBITDA are set out in note 3 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 delivered a very satisfactory result in the banana category in the first half with operating profits €2m higher year on year. This was achieved notwithstanding the significant adverse change in exchange rates due to the strengthening late last year and early this year of the US Dollar against Sterling and particularly the euro. This demonstrates the robustness of the Group's business model and its ability to quickly adapt to prevailing market conditions. Offsetting this currency headwind, the cost of key inputs was lower including logistics costs, particularly fuel, other import costs and operating costs in the Group's UK distribution centres. Banana volumes increased modestly in the period due mainly to further organic growth by a number of key customers. Fyffes has also secured necessary price increases.

Fyffes pineapple operations achieved a strong result in the first six months of the year with a €0.9m increase in profits. Exchange rates were a significant headwind in the period, as in the banana category. In response, the Group secured increases in average selling prices year on year, helped by supply constraints. Costs were also lower, particularly logistics and fuel. Overall yields and efficiency on the Group's pineapple farms continued to improve.

Fyffes US melon business delivered a satisfactory result in the first half, with profits similar to the very strong result achieved in the same period in 2014, particularly given the prolonged period of poor winter weather experienced in the US earlier this year. Weather issues in the production regions resulted in a slight reduction in total volumes in the period which also contributed to an increase in total production costs. The Group secured a modest level of price increases in response. There was also a positive translation impact on these US Dollar denominated earnings.

Balmoral International Land Holdings plc ("Balmoral"), in which the Group has a 40% shareholding, has not yet reported its 2014 results. Fyffes share of its net assets therefore remain unchanged at €0.6m and the Group continues to carry its investment in Balmoral €50,000. Balmoral shares continue to be traded on a grey market. At its current share price of c.€0.018, Fyffes investment in Balmoral has a market value of €4.2m.

The total operating profit for the Group, which is Adjusted EBITA less the Group's share of joint ventures interest and tax and, where relevant, amortisation charges and exceptional items, amounted to €31.2m for the first half, 38.2% up on the same period last year due to lower exceptional charges (see below).

Exceptional items

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 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 European Economic Area (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 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 their respective shares of the fine. As a result of the decision of the CJEU and the agreement with Del Monte, Weichert will recognise 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 €2.875m and is being reported as an exceptional item in these interim accounts. Fyffes and Weichert have always maintained that the activities in question were not anti-competitive. No tax charge or credit has been recognised in relation to this exceptional item. In the first half of 2014, the Group had recognised an exceptional charge of €8.3m in respect of professional and advisory fees and related costs in connection with the proposed merger with Chiquita.

Financial expense

Net financial expense in the Group's subsidiary companies in the first half amounted to €0.3m, unchanged on the same period last year. The Group's share of the net financial expense of its joint ventures in the period was €0.1m, also largely unchanged on the previous year.

Profit before tax

Adjusted profit before tax for the first half of the year amounted to €33.9m, 9.3% up on the same period last year. As set out in note 3 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 rules, 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 €30.8m, up 38.7% on first half in 2014, mainly due to the lower exceptional item charge in the period.

Taxation

The underlying tax charge for the first half has been calculated based on the tax rate expected to apply for the full year 2015. An analysis of the tax charge for the period is set out in note 5 of the accompanying financial information. The underlying tax charge for the period, including the Group's share of the tax charge of its joint ventures, was €4.4m compared to €4m in the same period last year, equivalent to a rate of 13% (2014 first half: 13%), when applied to the Group's adjusted profit before tax. This underlying rate is used for the purposes of calculating adjusted earnings per share. The equivalent underlying tax rate for the full year in 2014 was 12.7%.

Non-controlling interests

The non-controlling interests' share of profit after tax for the year amounted to a credit of €0.3m in the first half of 2015, compared to a charge of €0.2m in the same period last year.

Earnings per share

Adjusted diluted earnings per share amounted to 9.93 cent in the first half, and increase of 12.2% on the same period last year. This reflects the 9.3% increase in adjusted profit before tax and the lower non-controlling interest charge. The calculation of adjusted earnings per share is set out in note 6 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. The diluted earnings per share after exceptional items amounted to €8.97 cent, up 46.6% on the same period last year mainly due to the lower exceptional items charge.

Dividends and share buyback

The Board is proposing to pay an interim dividend for 2015 of 0.8211 cent per share, an increase of 15% on the previous year, reflecting the strong increase in earnings in the year to date and in recent years. This dividend, which will be subject to Irish withholding tax rules, will be paid on 2 October 2015 to shareholders on the register on 11 September 2015. In accordance with company law and IFRS, neither of these dividends have been provided for in the balance sheet at 30 June 2015.

At its AGM in April 2015, shareholders renewed the Group's authority to repurchase up to 10% of the shares in issue. 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

Cash generation was strong in the first half of the year with an increase in net funds of €30.3m, moving from a net debt position at the beginning of the year to net cash of €18.6m at 30 June 2015. EBITDA, excluding the Group's share of its joint ventures amounted to €39.1m. Dividends received from joints ventures amounted to €1.6m. Material outflows in the period included dividends paid of €4.9m, maintenance capital expenditure of €4.9m and tax payments of €2.7m. There was a net reduction in working capital of €3.7m in the first half.

Pension obligations

The deficit in the Group's defined benefit pension schemes, before deferred tax, increased from €41.4m at the beginning of the year to €41.8m at 30 June 2015, including a €3m adverse translation impact on the deficit in the Group's UK scheme. Euro denominated bond rates increased slightly in the period and UK rates remained unchanged which had a €2m positive impact on scheme liabilities overall. The Group continues to actively explore ways in which it can further de-risk and eliminate its ongoing exposure under these schemes.  

Shareholders' funds

Shareholders' funds increased by €38.2m (20.9%) in the first half to €220.9m. This increase included retained profits after tax and non-controlling interests of €26.9m, translation gains on the Group's non-euro denominated net assets of €14.1m and a €1.7m actuarial gain on the Group's pension schemes, less dividend payments of €4.9m.

Current trading

Trading conditions have been in line with expectations in recent months and the Group is pleased to reconfirm its target full year 2015 earnings ranges as follows:

Adjusted EBITDA €55m-€61m (2014: €48.2m)

Adjusted EBITA/EBIT €44m-€50m (2014: €40.1m)

Adjusted EPS 12.2 cent - 13.9 cent (2014: €11.17 cent)

Fyffes continues to pursue increases in selling prices in all markets given prevailing exchange rates. The Group is focused on continuing to grow its business and is actively pursuing a number of attractive acquisition opportunities. Fyffes remains confident about its future prospects and is well placed to compete strongly in its key markets following important strategic and operational developments in recent years.

David McCann, Chairman 27 August 2015

on behalf of the Board

Fyffes plc

Condensed Group Income Statement

Fyffes plc

Condensed Group Statement of Comprehensive Income

Fyffes plc

Condensed Group Statement of Movement in Equity

Fyffes plc

Condensed Group Statement of Movement in Equity (continued)

Fyffes plc

Condensed Group Balance Sheet

Fyffes plc

Condensed Group Cash Flow Statement

Fyffes plc

Notes supporting 2015 Interim condensed consolidated financial statements

1. Basis of preparation

The condensed consolidated interim financial statements of Fyffes plc, its subsidiaries and joint ventures ("the Group") for the half year ended 30 June 2015 are unaudited. These financial statements do not constitute the statutory financial statements that are required by Irish Company law to be annexed to the annual return of the company. The statutory consolidated financial statements for the year ended 31 December 2014 have been annexed to the 2015 annual return and filed with the Registrar of Companies. The audit report on those statutory financial statements was unqualified and did not include a reference to any matters by way of emphasis.

During the period, a number of amendments to existing International Financial Reporting Standards (IFRS) as adopted by the EU Commission became effective. These have been considered by the directors and have not had a significant impact on the Group's condensed consolidated interim financial statements.

Therefore the financial information contained in these interim financial statements has been prepared in accordance with the accounting policies set out in the last annual report for the year ended 31 December 2014, prepared in accordance with the recognition and measurement principles of IFRS as adopted by the EU. Fyffes is not required to apply IAS 34 Interim Financial Reporting as adopted by the EU, as it is listed on the secondary AIM and ESM markets in London and Dublin, and has not applied the presentation and disclosure requirements of that standard.

The financial information is presented in euro, rounded to the nearest thousand. Given the seasonality of the tropical produce sector, the Group's profits are typically significantly weighted towards the first half of the year. In addition, the Group's biological asset valuation peaks at its year end date due to the seasonality in the melon category in particular.

The condensed consolidated interim financial statements were authorised by the Board on 26 August 2015.

2. Segmental analysis

Segment information below is presented in accordance with IFRS 8 Operating Segments. IFRS 8 requires segment information to be presented in the format reviewed by the Chief Operating Decision Maker ("CODM") of the Group. In Fyffes, this function is carried out by the executive director team comprising the Executive Chairman, the Chief Operating Officer and the Finance Director.

Fyffes is currently organised into two separate operating divisions - its Tropical Produce activities and its Property activities, which comprises its 40% investment in Balmoral International Land Holdings plc ("Balmoral").

Fyffes Tropical Produce division is a fully integrated distributor of tropical fresh produce, comprising three product categories - bananas, pineapples and melons, with bananas being the largest category both in terms of revenues and profits. The primary activities of this division include the production, procurement, shipping, ripening, distribution and marketing of these products. They are produced in broadly the same geographic areas in Central and South America and distributed to the Group's customers in Europe and the US. Fyffes directly farms some of the produce it distributes, particularly in the pineapple and melon categories. The procurement, shipping, distribution and marketing activities for the banana and pineapple categories are managed centrally on a combined basis. As a result, the Group's Tropical Produce activities are regarded as a single reporting segment for the purposes of IFRS 8.

The CODM reviews the performance of the Tropical Produce division based on Adjusted EBITA, which is believed to be the most appropriate measure of underlying performance.

Following a number of years of significant losses due to the difficulties in the international property sector, Fyffes wrote down its investment in Balmoral to a nominal value of €50,000 in 2011. Balmoral has not yet reported its 2014 results. Based on its 2013 results, Fyffes share of its net equity value of €595,000 remained in excess of the Group's €50,000 carrying value. Fyffes has recognised no share of profit or loss in relation to its investment in Balmoral in respect of 2013 or 2014.

The only inter-segment transactions between the Group's Tropical Produce division and Balmoral arise because Fyffes rents a number of its distribution centres in the UK and Ireland from Balmoral. Fyffes in turn sublets space in its corporate head office to Balmoral.

In the analysis below, reconciling items included in Adjusted EBITA represent central costs not allocated to the operating divisions, including the cost of the Board of directors, together with legal and other costs connected with the corporate head office of the Group.

3. Adjusted profit before tax, EBITA and EBITDA

Fyffes believes that Adjusted profit before tax, Adjusted EBITDA, Adjusted EBITA and Adjusted earnings per share (note 6 below) are the appropriate measures of the underlying performance of the Group, excluding exceptional items and amortisation charges, if any.

4. Exceptional items

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 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 European Economic Area (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 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 will recognise 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 €2.875m and is being reported as an exceptional item. Fyffes and Weichert have always maintained that the activities in question were not anti-competitive.

No tax charge or credit has been recognised in relation to these exceptional items.

5. Taxation

Including the Group's share of the tax charge of its joint ventures of €0.2m (2014 first half: €0.6m), which is netted in operating profit in accordance with IFRS, the total tax charge for the period amounted to €4.4m (2014 first half: €4.0m), equivalent to a rate of 13% (2014 first half: 13%) when applied to the Group's Adjusted Profit before Tax.

The Group's underlying tax rate for the first half of the year is based on the estimated tax rate that is expected to apply for the full year. The equivalent underlying charge for the full year in 2014 was a charge of €5.0m, equal to a rate of 12.7%.

6. Earnings per share

Adjusted diluted earnings per share excludes, where applicable, the Group's share of Balmoral's result, the impact of exceptional items after tax and non-controlling interests, once-off tax credits and amortisation charges on intangible assets and related deferred tax credits where applicable.

7. Post employment benefits

This table summarises the movements in the net deficit on the Group's various defined benefit pension schemes in Ireland, the UK and Continental Europe. The current service cost is charged in the Income Statement, net of finance income on scheme assets. The actuarial gain or loss is recognised in the Statement of Comprehensive Income, in accordance with the amendment to IAS 19, Actuarial Gains and Losses, Group Plans and Disclosures. The measurement of the Group's pension obligations is based on a number of 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. At 30 June 2015, the Group used a rate of 2.5%(30 June 2014: 3.2%) in respect of its euro denominated schemes and 3.7% (30 June 2014: 4.2%) in respect of its UK scheme.

8. Dividends paid to equity shareholders

The final dividend for 2014 of 1.673 cent per share, approved by the shareholders at the Annual General Meeting on 30 April 2015, gave rise to a distribution of €4.9m in the period.

The directors have proposed an interim dividend for 2015 of €0.8211 cent per share (2014: €0.714 cent per share). This dividend, which will be subject to Irish withholding tax rules, will be paid on 2 October 2015 to shareholders on the register at 11 September 2015. In accordance with company law and IFRS, this dividend has not been recognised as a liability in the balance sheet at 30 June 2015.

At 30 June 2015, the company and subsidiary companies held 31,075,000 Fyffes plc ordinary shares (31 December 2014: 31,075,000). No dividends are payable on these treasury shares and they are excluded from the calculation of earnings per share.

9. Notes supporting cash flow statement

9.1 Cash flows from operating activities

9.2 Cash flows from investing activities

9.3 Cash flows from financing activities

9.4 Analysis of movement in net funds in the period

10. Reconciliation of other reserves

11. 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 2015, are as follows:

Fair value of financial instruments carried at fair value

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 at 30 June 2015:

All derivatives entered into by the Group are included in Level 2 and consist of foreign currency 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.

Deferred consideration is included in Level 3. Details of movements in the period are set out below.

Additional disclosures for Level 3 fair value measurements