FFY.L Regulatory News (FFY)

Fyffes reports positive first half result and reconfirms full year targets

· Continuation of earnings growth in first half - adjusted EBITDA up 11.3%

· Reconfirms strong full year target earnings ranges as follows:

o Adjusted EBITDA - €63m - €69m

o Adjusted EBITA - €49m - €55m

o Adjusted EPS - 12.8 cent - 14.5 cent

· Completion of €99m acquisition of Highline Produce in period

· 10% increase in interim dividend

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

"Fyffes is maintaining its strong full year target earnings ranges, which were increased in April 2016 following the Highline acquisition. The result for the first half of the year was satisfactory given the difficult prevailing market conditions, including adverse currency movements as a result of the weakness of Sterling and the euro against the US Dollar. The Group was very pleased to complete the purchase of Canadian mushroom business, Highline Produce, during the period. Highline has performed in line with our expectations for the three-month period post acquisition. The first half results in the Group's other product categories were in line with the same period last year in aggregate, with strong performances in the pineapple and melon categories."

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

2 September 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 2016 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 2016

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

· Adjusted EBITA is adjusted EBITDA less depreciation charges

· Adjusted diluted earnings per share excludes exceptional items, amortisation charges and related tax charges or credits, and in previous years, 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 14.7% in the first half of the year to €739.3m. Group revenue, excluding Fyffes' share of its joint ventures, amounted to €630.5m in the period, an increase of 16.6%. The increase in turnover in the period included the first time contribution from Highline, for the three-months post acquisition. In addition, the Group achieved volume growth in each of its existing product categories in the period, including the first time contribution from the additional melon farming assets acquired at the end of 2015. There was also some price inflation in each of these product categories.

Operating profit

Fyffes has delivered another satisfactory performance in the first half, with Adjusted EBITDA in the period €4.5m higher (+11.3%), at €44.0m, and Adjusted EBITA up €2.3m (+6.6%) to €36.6m. Excluding the first time contribution from the Highline acquisition, Adjusted EBITA in the first half was in line with the same period last year. This represents a good result for the period with strong performances in the pineapple and melon categories offsetting the impact of the relatively difficult market conditions experienced in the banana category. The calculations of Adjusted EBITA and Adjusted EBITDA are set out in note 3 of the accompanying financial information.

Trading conditions in the banana category were challenging during the first half of 2016, mainly due to the further strengthening of the US Dollar against Sterling and the euro. In response, Fyffes has secured some price increases to date but this has been insufficient to offset the impact of the adverse exchange rates and the Group therefore continues to pursue further price increases in all markets. Partly offsetting this, costs have been lower year on year, particularly for fuel. The Group has also continued to grow its banana business organically, with a satisfactory mid-single digit percentage increase in volumes in the period.

Fyffes pineapple operations achieved a strong result in the first six months of the year. As in the banana category, exchange rates were a head wind in the period but, as a lower proportion of the Group's pineapple volumes are sold in the UK market compared to the banana category, the negative movement in the Sterling/US Dollar exchange rate had a somewhat less adverse impact. The Group also secured price increases in some markets and benefited from lower fuel costs. The Group's pineapple farms performed well in the period, with higher yields and lower production costs. Total volumes sold increased by a strong mid-teens in percentage terms in the period.

Fyffes US melon business delivered a strong result in the first half. Volumes increased by more than 20% as a result of the successful integration of the additional farming assets in Guatemala which the Group acquired in late 2015. Costs were higher as a result of this expansion in business, including the hiring of additional shipping capacity and the impact of wider sales distribution throughout the US market, including the West Coast.

Fyffes was very pleased to complete the acquisition of 100% of the equity of Canadian mushroom business, Highline Produce, in April 2016 for a consideration of c.€99m. Highline has performed in line with our expectations to date and contributed EBITA of €2.3m in the first three-months post acquisition.

Balmoral International Land Holdings plc ("Balmoral"), in which the Group has a 40% shareholding, has not yet reported its 2015 results. Fyffes share of its net assets therefore remain unchanged at €3.4m and the Group continues to carry its investment in Balmoral €50,000. Fyffes may revisit this accounting approach if there is evidence of a continued and sustained improvement in Balmoral's performance when it publishes its 2015 results.

The total operating profit for the Group, which is Adjusted EBITA less the Group's share of joint ventures interest and tax, amortisation charges and exceptional items, amounted to €36.5m for the first half, 17.1% up on the same period last year, mainly due to the exceptional credit in 2016 compared to an exceptional charge last year (see below). The Group incurred amortisation charges of €1.3m in the period in respect of the intangible assets recognised on recent acquisitions, including Highline. There were no amortisation charges in the prior year.

Exceptional items

As further explained below, the Group realised a €3.6m curtailment gain as a result of the agreement reached with the trustees of its UK defined benefit pension scheme to close the scheme to future accrual. The Group incurred professional and advisory fees amounting to €1.9m in the period arising from financial and commercial due diligence and related work in connection with a number of acquisitions completed in the period, including Highline. Net exceptional credits in the first half therefore amounted to €1.7m. A tax charge of €0.7m has been recognised in relation to this net exceptional gain. The Group recognised a €2.9m exceptional charge in the first half of 2015 in respect of a fine paid by a joint venture business following the conclusion of a long running EU competition investigation relating to a period before Fyffes had invested in that business.

Financial expense

Net financial expense in the Group's subsidiary companies in the first half amounted to €0.9m, compared to €0.3m in the same period last year, reflecting the increase in net debt following the Highline acquisition. The Group's share of the net financial expense of its joint ventures in the period was €0.2m, compared to €0.1m in the previous year.

Profit before tax

Adjusted profit before tax for the first half of the year amounted to €35.5m, 4.5% 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, amortisation charges 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 Group's share of Balmoral's result. Profit before tax, excluding these adjustments, amounted to €35.6m, up 15.4% on first half in 2015.

Taxation

The underlying tax charge for the first half has been calculated based on the tax rate expected to apply for the full year 2016. 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 and excluding the tax impact of exceptional items, was €5.3m compared to €4.4m in the same period last year, equivalent to a rate of 15% (2015 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 2015 was 13.8%. The increase in the underlying tax rate in 2016 mainly reflects the change in the geographic mix of the Group's profits following the acquisition of Highline.

Non-controlling interests

The non-controlling interests' share of profit after tax for the year amounted to a credit of €0.2m in the first half of 2016, compared to a credit of €0.3m in the same period last year.

Earnings per share

Adjusted diluted earnings per share amounted to 10.01 cent in the first half, an increase of 0.8% on the same period last year. This reflects the 4.5% increase in adjusted profit before tax, less the impact of the higher tax charge and a c.1% increase in the number of shares in issue in the period. The calculation of adjusted earnings per share is set out in note 6 of the accompanying financial information. It excludes exceptional items, the amortisation of intangible assets and the related tax impacts and, in previous years, the Group's share of Balmoral's result. Diluted earnings per share after exceptional items and amortisation charges amounted to €9.94 cent, up 10.8% on the same period last year mainly due to there being a net credit on exceptional items in 2016 compared to an exceptional charge in the prior year.

Dividends and share buyback

The Board is proposing to pay an interim dividend for 2016 of 0.9032 cent per share, an increase of 10% on the previous year, ahead of the increase in earnings per share in the period. This dividend, which will be subject to Irish withholding tax rules, will be paid on 7 October 2016 to shareholders on the register on 16 September 2016. In accordance with company law and IFRS, this dividend has not been provided for in the balance sheet at 30 June 2016. At its AGM in April 2016, 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 debt

Net debt increased by c.€60m in the first half of 2016 to €99.1m. The Group invested €92.2m on acquisitions completed in the period, including Highline, net of cash in these businesses. Cash generated by operations amounted to €38.2m, representing Adjusted EBITDA of €44.0m less the share of joint ventures earnings and after acquisition costs treated as exceptional items. Regular capital expenditure in the period amounted to a relatively high €14.3m as the Group bought out a significant number of shipping containers which it had previously been leasing. Other significant outflows in the period included dividend payments of €5.7m, tax payments of €3.6m and deferred acquisition consideration of €1.1m. There was a €22.8m inflow from working capital in the first half mainly related to the timing of the ending of the US melon import season. As usual, this will reverse in the second half of the year as the Group reinvests in planting new product ahead of the start of the next melon import season which commences towards the end of the year. As a result, net debt at year end will be significantly higher than at the end of the half year. The Group has sufficient committed financial resources available to fund its operations into the future.

Pension obligations

During the first half of the year, following agreement with the trustees and members, the Group closed its defined benefit pension scheme in the UK to future accrual. This gave rise to a €3.6m curtailment gain, which has been included in the income statement as an exceptional item. The aggregate deficit in the Group's defined benefit pension schemes has now reduced to €21.3m, before deferred tax, at 30 June 2016 from €32.1m at the previous year end. This reduction in the deficit also reflects an increase in asset values in the period, a positive translation impact and is net of an increase in scheme liabilities arising from the further decrease in international bond rates. The Group has made significant progress in limiting and reducing its exposure in relation to its pension obligations, having also closed its defined benefit pension scheme in Ireland to future accrual in 2015 and subsequently eliminating the full deficit in that scheme.

Shareholders' funds

Shareholders' funds increased by €27.3m (12.8%) in the first half to €241.2m. This increase included retained profits after tax and non-controlling interests of €30.1m, translation losses on the Group's non-euro denominated net assets of €6.7m, gains of €6.6m on revaluing the Group's outstanding currency and fuel hedging instruments at 30 June 2016 and a €2.5m actuarial gain on the Group's pension schemes, less dividend payments of €5.7m.

Outlook

The Group is pleased to reconfirm its target full year 2016 earnings ranges, which represent strong increases in respect of each of the following key measures of performance:

Adjusted EBITDA €63m-€69m (2015: €56.1m)

Adjusted EBITA €49m-€55m (2015: €45.8m)

Adjusted EPS 12.8 cent - 14.5 cent (2015: €12.73 cent)

Fyffes continues to pursue increases in selling prices in all markets to offset continuing adverse exchange rates. The Group remains confident about its future prospects and is well placed to compete strongly in its key markets.

David McCann, Chairman 2 September 2016

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 2016 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 2016 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 2015 have been annexed to the 2016 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 2015, 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 1 September 2016.

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 Produce activities and its Property activities, which comprises its 40% investment in Balmoral International Land Holdings plc ("Balmoral").

Fyffes Produce division is a fully integrated distributor of fresh produce, comprising four product categories - bananas, pineapples, melons and mushrooms, 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. Bananas, pineapples and melons 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. The Group's new mushroom business is based in Canada with customers in Canada and the US. Fyffes directly farms a significant portion of the produce it distributes, particularly in the mushroom, 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 Produce activities are regarded as a single reporting segment for the purposes of IFRS 8. The CODM reviews the performance of the 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 2015 results. Based on its 2014 results, Fyffes share of its net equity value of €3,389,000 remained in excess of the Group's €50,000 carrying value. In recent years, while Fyffes has recognised its share of Balmoral's profit, it has also recognised a matching impairment provision on the basis that there has not yet been a sustained or prolonged recovery in Balmoral's performance and the carrying value of its investment has therefore remained unchanged at €50,000. Fyffes will reconsider the appropriateness of this approach following publication by Balmoral of its 2015 accounts.

The only inter-segment transactions between the Group's 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

During the first half of 2016, the Group implemented a number of changes to its defined benefit pension scheme in the UK including closing it to future accrual. This gave rise to a €3.6m curtailment gain (see note 7 below).

The Group incurred €1.9m of professional and advisory fees arising from due diligence carried out in relation to a number of acquisitions it completed during the period, including the purchase of Highline Produce Limited.

A net tax charge of €0.7m 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 €0.3m (2015 first half: €0.2m), which is netted in operating profit in accordance with IFRS, the total tax charge for the period amounted to €6.0m (2015 first half: €4.4m). Excluding the tax effect of exceptional items, the underlying tax charge for the period was €5.3m (2015 first half: €4.4m), equivalent to a rate of 15% (2015 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 2015 was a charge of €6.2m, equal to a rate of 13.8%. This increase in the underlying tax rate in 2016 reflects the change in geographic mix of the Group's profit following the acquisition of Canadian mushroom business, Highline Produce Limited, during the period.

6. Earnings per share

Adjusted diluted earnings per share excludes, where applicable, the Group's share of Balmoral's result and, 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.

7. Post employment benefits

This table summarises the movements in the net deficit on the Group's various defined benefit pension schemes. 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 2016, the Group used a rate of 1.7% (30 June 2015: 2.5%) in respect of its euro denominated scheme and 2.9% (30 June 2014: 3.7%) in respect of its UK scheme.

During the second half of 2015, the Group closed its defined benefit pension scheme in Ireland to future accrual and settled the outstanding liabilities in full. During the first half of 2016, the Group closed its UK defined benefit scheme to future accrual. This gave rise to a curtailment gain of €3.6m which has been treated as an exceptional item in the Income Statement (note 4 above).

8. Dividends paid to equity shareholders

The final dividend for 2015 of 1.924 cent per share, approved by the shareholders at the Annual General Meeting on 29 April 2016, gave rise to a distribution of €5.7m in the period.

The directors have proposed an interim dividend for 2016 of €0.9032 cent per share (2015: €0.8211 cent per share). This dividend, which will be subject to Irish withholding tax rules, will be paid on 7 October 2016 to shareholders on the register at 16 September 2016. In accordance with company law and IFRS, this dividend has not been recognised as a liability in the balance sheet at 30 June 2016.

At 30 June 2016, the company and subsidiary companies held 31,075,000 Fyffes plc ordinary shares (31 December 2015: 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 debt in the period

10. Reconciliation of other reserves

11. Acquisition of subsidiaries

The Group acquired Highline Produce Limited, a Canadian mushroom producer, in April 2016. The Group also completed the acquisition of a number of other smaller businesses towards the end of the first half of 2016.

The provisional fair values of the assets acquired and consideration paid and payable in respect of these transactions is summarised in the table below.

The post acquisition profit contribution of these businesses were:

12. 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 2016, 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 2016:

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