TOT.L Regulatory News (TOT)

•

Revenue up 8.9% to €3.76 billion

•

Adjusted fully diluted EPS up 14.1% to 12.07 cent

•

Adjusted EBITDA up 14.5% to €94.8m

•

Adjusted EBITA up 15.0% to €73.7m

•

Adjusted profit before tax up 16.8% to €67.7m

•

Total dividend up 10%

•

Targeting 2017 adjusted fully diluted EPS in the range of 12.0 to 13.0 cent per share

Key performance indicators are defined overleaf

TOTAL PRODUCE PLC PRELIMINARY RESULTS FOR THE

YEAR ENDED 31 DECEMBER 2016

2016

€'million

2015

€'million

% change

Total revenue (1)

3,762

3,454

+8.9%

Group revenue

3,105

2,875

+8.0%

Adjusted EBITDA (1)  

94.8

82.8

+14.5%

Adjusted EBITA (1)

73.7

64.1

+15.0%

Operating profit after intangible asset amortisation

56.2

52.6

+6.8%

Adjusted profit before tax (1)

67.7

58.0

+16.8%

Profit before tax

50.6

46.8

+8.2%

Euro cent

Euro cent

% change

Adjusted fully diluted earnings per share (1)  

12.07

10.58

+14.1%

Basic earnings per share

8.91

9.07

(1.8%)

Diluted earnings per share

8.80

8.97

(1.9%)

Total dividend per share

3.0393

2.7630

+10.0%

(1) Key performance indicators defined

Total revenue includes the Group's share of the revenue of its joint ventures and associates.

Adjusted EBITDA is earnings before interest, tax, depreciation, acquisition related intangible asset amortisation charges and costs, fair value movements on contingent consideration and exceptional items. It also excludes the Group's share of these items within joint ventures and associates.

Adjusted EBITA is earnings before interest, tax, acquisition related intangible asset amortisation charges and costs, fair value movements on contingent consideration and exceptional items. It also excludes the Group's share of these items within joint ventures and associates.

Adjusted profit before tax excludes acquisition related intangible asset amortisation charges and costs, fair value movements on contingent consideration and exceptional items. It also excludes the Group's share of these items within joint ventures and associates.

Adjusted fully diluted earnings per share excludes acquisition related intangible asset amortisation charges and costs, fair value movements on contingent consideration, exceptional items and related tax on such items. It also excludes the Group's share of these items within joint ventures and associates.

Overview

Total Produce (the 'Group') has delivered a very strong performance in 2016. Total revenue, adjusted EBITA and adjusted fully diluted earnings per share grew by 8.9%, 15.0% and 14.1% respectively. The results benefited from acquisitions completed in the year and a circa 4% like-for-like growth in revenue arising from both marginal volume growth and higher average prices. The Group continues to be cash generative with operating cashflows of €44.2m (2015: €60.8m).

The Board is pleased to announce a 10.0% increase in the final dividend to 2.2297 (2015: 2.027) cent per share subject to the approval of shareholders at the forthcoming AGM. If approved, the total dividend for 2016 will amount to 3.0393 (2015: 2.763) cent per share which represents an increase of 10.0% on 2015.

Operating review

Total revenue increased 8.9% to €3.76 billion (2015: €3.45 billion) with adjusted EBITA up 15.0% to €73.7m (2015: €64.1m). The results benefited from the contribution of acquisitions completed in the past twelve months and good trading conditions in many key locations. This was offset in part by the €1.9m negative impact on translation of the results of foreign currency denominated operations to Euro, including the weaker Sterling, and unsatisfactory trading conditions in the non-fresh produce businesses. On a like-for-like basis, excluding acquisitions, divestments and currency translation, revenue was circa 4% higher arising from both marginal volume growth and higher average prices.

The table below details a segmental breakdown of the Group's revenue and adjusted EBITA for the year ended 31 December 2016. Each of the operating segments is primarily involved in the procurement, marketing and distribution of hundreds of lines of fresh produce. Each segment also includes businesses involved in the marketing and distribution of healthfoods and consumer products. Segment performance is evaluated based on revenue and adjusted EBITA.

Year ended

 31 December 2016

Year ended

31 December 2015

Total

revenue

€'000

Adjusted

EBITA

€'000

Total

revenue

€'000

Adjusted

EBITA

€'000

Europe - Eurozone

1,753,328

25,953

1,653,035

22,170

Europe - Non-Eurozone

1,521,936

38,769

1,537,842

38,603

International

543,713

9,020

320,808

3,362

Inter-segment revenue

(56,572)

-

(57,920)

-

Third party revenue and adjusted EBITA

3,762,405

73,742

3,453,765

64,135

Europe - Eurozone

This segment includes the Group's businesses in France, Ireland, Italy, the Netherlands and Spain. Revenue increased by 6.1% to €1,753m (2015: €1,653m) with a 17.1% increase in adjusted EBITA to €26.0m (2015: €22.2m). There was a positive contribution from acquisitions completed in the past twelve months. Overall trading conditions were favourable with growth in certain regions offsetting more challenging conditions in the Netherlands. Excluding the effect of acquisitions, revenue on a like-for-like basis was up 3% on prior year with both volume and average price growth.

Europe - Non-Eurozone

This segment includes the Group's businesses in the Czech Republic, Poland, Scandinavia and the UK. Revenue decreased by 1.0% to €1,522m (2015: €1,538m) with adjusted EBITA marginally increasing by 0.4% to €38.8m (2015: €38.6m). The reported performance was impacted by the translation of the results of foreign currency denominated operations into Euro including the weakening of Sterling by 12% in the year. Trading was also weaker in a sports nutrition business due to a more competitive environment.

On a like-for-like basis excluding acquisitions, divestments and currency translation, revenue was circa 3% ahead of prior year with average price increases offsetting a marginal volume decline. In the second half of the year, post the outcome of the EU referendum in the UK and as a consequence of the weakening of Sterling, volumes declined marginally in the UK but this was offset by higher average prices. Overall while the decision of the UK to leave the European Union has created some macro-economic uncertainties, it is not expected to have a material impact on the Group going forward.

International

This division includes the Group's businesses in North America and India. Revenue increased to €544m (2015: €321m) with adjusted EBITA increasing to €9.0m (2015: €3.4m). The results benefited from the incremental contribution from the Progressive Produce acquisition in February 2016 and a strong trading performance in the existing businesses. This was offset in part by a loss of €0.9m on the disposal of a US sports nutrition business in April 2016.

Financial Review

Revenue and Adjusted EBITA

An analysis of the factors influencing the changes in revenue and adjusted EBITA are discussed in the operating review above.

Share of profits of joint ventures and associates

Share of after tax profits of joint ventures and associates increased in 2016 to €12.3m (2015: €10.1m) reflecting the incremental impact of recent acquisitions and a strong performance of associate companies in the International division. Dividends received from joint ventures and associates in the year amounted to €8.3m (2015: €8.1m).

Intangible asset amortisation

Acquisition related intangible asset amortisation within subsidiaries increased to €7.7m (2015: €5.2m) due to additional charges relating to recent acquisitions. The share of intangible asset amortisation within joint ventures and associates was €2.6m (2015: €2.4m).

Exceptional Items

Exceptional items in the year amounted to a net charge of €1.4m compared to a net gain of €2.0m in 2015. The current year charge relates to a non-cash goodwill impairment charge of €5.2m relating to a sports nutrition business offset by €3.8m in profit relating to property and leasehold disposals and related insurance income. The €2.0m gain in 2015 related to profits on sale of property and leaseholds. A full analysis of these exceptional items is set out in Note 5 of the accompanying financial information.

Operating profit

Operating profit before intangible asset amortisation and exceptional items increased 17.0% to €65.2m (2015: €55.8m). Operating profit after these items increased 6.8% to €56.2m (2015: €52.6m).

Net Financial Expense

Net financial expense in the year decreased to €5.5m (2015: €5.8m) with lower cost of funding offsetting higher average net debt. The Group's share of the net interest expense of joint ventures and associates in the year was €0.5m (2015: €0.3m). Net interest cover for the year was 13.3 times based on adjusted EBITA.

Profit Before Tax

Excluding exceptional items, fair value movements on contingent consideration and acquisition related intangible asset amortisation charges and costs, the adjusted profit before tax increased by 16.8% to €67.7m (2015: €58.0m). Statutory profit before tax after these items was up 8.2% to €50.6m (2015: €46.8m).

Taxation

The tax charge for the year, including the Group's share of joint ventures and associates tax and before non-trading items, as set out in Note 6 of the accompanying financial information, was €16.7m (2015: €14.2m) representing an underlying tax rate of 24.7% (2015: 24.4%) when applied to the Group's adjusted profit before tax.

Non-Controlling Interests

The non-controlling interests' share of after tax profits in the year was €10.8m (2015: €7.5m). Included in the charge was the non-controlling interests' share of exceptional items, amortisation charges and acquisition related costs of €1.1m (2015: €0.9m). Excluding these non-trading items, the non-controlling interests' share of after tax profits increased by €3.5m. The increase was primarily due to non-controlling interests' share of the after tax profits of recent acquisitions completed in the past twelve months.

Adjusted and Basic Earnings per Share

Adjusted fully diluted earnings per share increased by 14.1% to 12.07 cent per share (2015: 10.58 cent) in the year assisted by the incremental contribution from acquisitions and the positive impact of the share buyback program completed in January 2016. Management believes that adjusted fully diluted earnings per share, which excludes exceptional items, acquisition related intangible asset amortisation charges and costs, fair value movements on contingent consideration and related tax on these items, provides a fairer reflection of the underlying trading performance of the Group.

Basic earnings per share and diluted earnings per share after these non-trading items amounted to 8.91 cent per share (2015: 9.07 cent) and 8.80 cent per share (2015: 8.97 cent) respectively.

Note 7 of the accompanying financial information provides details of the calculation of the respective earnings per share amounts.

Cash Flow and Net Debt

Net debt at 31 December 2016 was €48.4m compared to €18.1m at 31 December 2015. Net debt relative to adjusted EBITDA at 31 December 2016 was 0.5 times and interest is covered 13.3 times by adjusted EBITA. Average net debt for 2016 was €95.9m (2015: €66.6m). In addition, the Group has non-recourse trade receivables financing at 31 December 2016 of €43.0m (2015: €40.5m).

The Group generated €53.7m (2015: €45.9m) in operating cash flows in 2016 before working capital movements. There were €9.5m of working capital outflows in the year compared to a €14.9m inflow in 2015. The prior year working capital movement included the benefit of an incremental €9.2m in trade receivables financing year-on-year whereas the current year incremental benefit was €2.5m. Cash outflows on routine capital expenditure, net of disposals, were €15.3m (2015: €18.1m). Dividends received from joint ventures and associates in the year increased to €8.3m (2015: €8.1m) which is a function of the Group's increased investments in the past number of years while dividends paid to non-controlling interests increased to €6.8m (2015: €2.4m) due to both higher profits in companies with non-controlling shareholdings and the timing of dividend payments.

The cash inflows of €3.0m (2015: €3.1m) from exceptional items relate to proceeds from sale of property and leasehold interests and related compensation. Cash outflows on acquisitions amounted to €44.2m (2015: €11.3m) with contingent and deferred consideration payments relating to prior period acquisitions of €4.8m (2015: €12.7m) in the year. The Group received cash of €6.4m (2015: €Nil) on the disposal of trading assets of a US sports nutrition business as set out in more detail below. Payments for non-routine property and plant additions amounted to €7.8m (2015: €4.2m). The Group distributed €9.1m (2015: €8.3m) in dividends to equity shareholders in the year and also made payments of €6.0m (2015: €14.4m) acquiring its own shares. There was an exchange rate gain of €0.4m (2015: €2.1m loss) on the translation of foreign currency debt into Euro at 31 December 2016 with the movement due to the weaker Sterling and Swedish Krona rates partly offset by stronger US Dollar and Canadian Dollar exchange rates at year-end compared to those prevailing at 31 December 2015.

2016

€'million

2015

€'million

Adjusted EBITDA

94.8

82.8

Deduct adjusted EBITDA of joint ventures and associates

(22.1)

(18.6)

Net financial expense and tax paid

(17.3)

(16.8)

Other

(1.7)

(1.5)

Operating cash flows before working capital movements

53.7

45.9

Working capital movements

(9.5)

14.9

Operating cash flows

44.2

60.8

Routine capital expenditure net of routine disposal proceeds

(15.3)

(18.1)

Dividends received from joint ventures and associates

8.3

8.1

Dividends paid to non-controlling interests

(6.8)

(2.4)

Free cash flow

30.4

48.4

Cashflows from exceptional items

3.0

3.1

Acquisition payments, net 1

(44.2)

(11.3)

Net cash/(debt) assumed on acquisition of subsidiaries

0.8

(0.7)

Contingent and deferred consideration payments

(4.8)

(12.7)

Disposal of trading assets

6.4

-

Non-routine capital expenditure / property additions

(7.8)

(4.2)

Dividends paid to equity shareholders

(9.1)

(8.3)

Buyback of own shares

(6.0)

(14.4)

Other

0.6

0.9

Total net debt movement in year

(30.7)

0.8

Net debt at beginning of year

(18.1)

(16.8)

Foreign currency translation

0.4

(2.1)

Net debt at end of year

(48.4)

(18.1)

Defined Benefit Pension Obligations

The net liability of the Group's defined benefit pension schemes (net of deferred tax) increased to €31.8m at 31 December 2016 from €14.5m at 31 December 2015. The increase in the liability is primarily due to a significant decrease in the discount rates underlying the calculations of the present value of the schemes obligations offset in part by positive returns on pension schemes assets. Further details are outlined in Note 8 of the accompanying financial information.

Shareholders' Equity

Shareholders' equity decreased by €12.5m to €226.3m at 31 December 2016. Profit after tax of €28.5m attributable to equity shareholders was offset by remeasurement losses of €19.7m (net of deferred tax) on post-employment defined benefit schemes, foreign currency loss of €8.3m on the retranslation of the net assets of foreign currency denominated operations, the payment of dividends of €9.1m to equity shareholders of the Company and the share buyback of €6.0m.

Development Activity

A key part of the Group's strategy is growth by acquisition. In line with this strategy the Group made a number of acquisitions and investments in 2016 with committed investments of €60m, including deferred and contingent consideration payable of €17m on the achievement of future profit targets.

On 1 February 2016, the Group made a 65% investment in Progressive Produce LLC ('Progressive Produce'), headquartered in Los Angeles, California. Progressive Produce is a grower, packer and distributor of conventional and organic produce to the retail, wholesale and foodservice sectors in the US and Canada. Progressive Produce was founded in 1967 and today is one of California's premier produce companies with revenues in excess of $200m. An initial payment was made on closing with further consideration due in 2019 contingent on achievement of future profit targets. In addition to this, long term put and call options are in place for the remaining 35% shareholding.

In addition to this, the Group made a number of other investments in the year including;  

· the acquisition in April 2016 of a 60% interest in Organic Trade Company Holland BV, a company headquartered in The Netherlands and specialising in organic fruit and vegetables.

· the incorporation in April 2016 of Vezet Convenience Nordic ('VCN'), jointly owned 50/50 with a Dutch based company G Kramer & Zonen trading as Vezet. Over a period of three to five years, VCN will invest in a state-of-the-art facility to be used for the production of fresh cut and pre-packed meal salads for supply to the Nordic market.

· the acquisition in April 2016 by Provenance Partners Limited (a 50% subsidiary of the Group), of 100% of the share capital of Planet Produce Limited, a company headquartered in the UK specialising in the import of exotic fruit and vegetables.

· the acquisition in December 2016 of a 50% shareholding in the El Parque Group, a fresh produce company headquartered in Chile and specialising in avocados, citrus and grapes.

Further details on development activity in 2016 including details of consideration paid and assets and liabilities acquired are provided in Note 10 of the accompanying financial information. 

In April 2016, the Group disposed of a sports nutrition business in the US for total proceeds of €7.7m. Details of this disposal are outlined in Note 10 of the accompanying financial information.

The Group continues to actively pursue further investment opportunities in both new and existing markets.

Share Buyback

On 27 January 2016, the Group completed the €20m share buyback program that commenced on 8 October 2015 with a total of 14,017,270 ordinary shares being repurchased and cancelled. Within this program, during January 2016, 4,073,872 of these shares were repurchased and cancelled at a cost of €6.0m. The share buyback programme is earnings accretive.

Under the authority granted at the AGM in 2016, the Group will continue to exercise this authority should the appropriate opportunity arise. Under this authority, the Group is permitted to purchase up to 10% of its issued share capital in the market at a price which would not exceed 105% of the average price over the previous five trading days.

Dividends

The Board is proposing a 10.0% increase in the final dividend to 2.2297 (2015: 2.027) cent per share subject to the approval of shareholders at the forthcoming AGM. If approved, this dividend will be paid on 26 May 2017 to shareholders on the register at 5 May 2017 subject to dividend withholding tax. The total dividend for 2016 will amount to 3.0393 (2015: 2.763) cent per share and represents an increase of 10.0% on 2015. The total dividend represents a pay-out of 25.2% of the adjusted earnings per share.

Post Balance Sheet Events

Post year end, on 1 March 2017 the Group has agreed to invest €28m to increase its shareholding in the North American based Oppenheimer Group ("Oppy") from 35% to 65%, and Oppy has entered into strategic agreements in North America with the New Zealand based T&G Global. There have been no other material events subsequent to 31 December 2016 which would require disclosure or adjustment in the report.

Summary and Outlook

We are pleased that Total Produce has continued to deliver very strong growth in 2016. Total revenue has increased by 8.9% to €3.76 billion with a 14.1% increase in adjusted earnings per share to 12.07 cent.

The Group has made a number of fresh produce acquisitions in 2016 in Europe and North America with a total expenditure of €60m, including €17m of contingent consideration. The Group acquired 65% of Progressive Produce, the Los Angeles based company with sales in excess of $200 million along with further investments in a number of top quality produce companies.

In addition, Total Produce has in 2017 agreed to invest €28m to increase its shareholding in the North American based Oppenheimer Group which has entered into strategic agreements in North America with the New Zealand based T&G Global.

We are pleased to propose a 10% increase in final dividend to 2.2297 cent per share. The Group is continuing to actively pursue additional acquisitions and is targeting 2017 adjusted earnings per share in the range of 12.0 to 13.0 cent per share.

Carl McCann, Chairman

On behalf of the Board

2 March 2017

Total Produce plc

Extract from the Group Income Statement

for the year ended 31 December 2016

Note

Before

exceptional

items

2016

€'000

Exceptional items

 (Note 5)

2016

€'000

Total

2016

€'000

Before

exceptional

items

2015

€'000

Exceptional items

(Note 5)

2015

€'000

Total

2015

€'000

Revenue, including Group share of joint ventures

and associates

3

3,762,405

-

3,762,405

3,453,765

-

3,453,765

Group revenue

3

3,105,475

-

3,105,475

2,875,388

-

2,875,388

Cost of sales

(2,672,585)

-

(2,672,585)

(2,479,072)

-

(2,479,072)

Gross profit

432,890

-

432,890

396,316

-

396,316

Operating expenses (net)

(379,924)

(1,409)

(381,333)

(350,662)

2,028

(348,634)

Share of profit of joint ventures

7,258

-

7,258

7,706

-

7,706

Share of profit of associates

5,012

-

5,012

2,393

-

2,393

Operating profit before acquisition related intangible asset amortisation

65,236

(1,409)

63,827

55,753

2,028

57,781

Acquisition related intangible asset amortisation

(7,675)

-

(7,675)

(5,183)

-

(5,183)

Operating profit after acquisition related intangible asset amortisation

57,561

(1,409)

56,152

50,570

2,028

52,598

Financial income

1,309

-

1,309

1,017

-

1,017

Financial expense

(6,833)

-

(6,833)

(6,832)

-

(6,832)

Profit before tax

52,037

(1,409)

50,628

44,755

2,028

46,783

Income tax expense

6

(10,638)

(686)

(11,324)

(8,930)

(351)

(9,281)

Profit for the year

41,399

(2,095)

39,304

35,825

1,677

37,502

Attributable to:

Equity holders of the parent

28,536

30,027

Non-controlling interests

10,768

7,475

39,304

37,502

Earnings per ordinary share

Basic

7

8.91

9.07

Fully diluted

7

8.80

8.97

Adjusted fully diluted

7

12.07

10.58

Total Produce plc

Extract from the Group Statement of Comprehensive Income

for the year ended 31 December 2016

2016

€'000

2015

€'000

Profit for the year

39,304

37,502

Other comprehensive income:

Items that may be reclassified subsequently to profit or loss:

Foreign currency translation effects:

- foreign currency net investments - subsidiaries

(12,189)

8,471

- foreign currency net investments - joint ventures and associates

629

704

- foreign currency borrowings designated as net investment hedges

3,496

(4,015)

Effective portion of changes in fair value of cash flow hedges

1,880

(386)

Fair value of cash flow hedges transferred to income statement and recognised in cost of sales

(1,923)

395

Deferred tax on items taken directly to other comprehensive income

11

(1)

(8,096)

5,168

Items that will not be reclassified to profit or loss:

Remeasurement (losses)/gains on post-employment defined benefit schemes

(23,769)

9,870

Revaluation gains on property, plant and equipment

1,421

2,261

Revaluation losses on property, plant and equipment

(292)

(2,233)

Deferred tax on items taken directly to other comprehensive income

4,679

(782)

Share of joint ventures and associates remeasurement losses on post-employment defined benefit schemes (net of tax)

(820)

(564)

(18,781)

8,552

Other comprehensive income for the year

(26,877)

13,720

Total comprehensive income for the year

12,427

51,222

Attributable to:

Equity holders of the parent

1,643

42,764

Non-controlling interests

10,784

8,458

12,427

51,222

Total Produce plc

Extract from the Group Balance Sheet

as at 31 December 2016

2016

€'000

2015

€'000

Assets

Non-current assets

Property, plant and equipment

145,184

141,994

Investment property

8,585

9,698

Goodwill and intangible assets

220,490

190,518

Investments in joint ventures and associates

92,910

76,115

Other financial assets

649

732

Other receivables

7,761

5,781

Deferred tax assets

15,458

9,071

Total non-current assets

491,037

433,909

Current assets

Inventories

61,195

63,429

Biological assets

194

-

Trade and other receivables

317,530

279,223

Corporation tax receivable

1,472

3,875

Derivative financial instruments

187

196

Bank deposits

2,500

2,500

Cash and cash equivalents

127,280

129,738

Total current assets

510,358

478,961

Total assets

1,001,395

912,870

Equity

Share capital

3,429

3,446

Share premium

148,204

254,512

Other reserves

(113,707)

(106,727)

Retained earnings

188,396

87,589

Total equity attributable to equity holders of the parent

226,322

238,820

Non-controlling interests

72,600

74,959

Total equity

298,922

313,779

Liabilities

Non-current liabilities

Interest-bearing loans and borrowings

130,162

131,885

Deferred government grants

481

1,800

Other payables

2,021

1,411

Contingent consideration

36,746

28,363

Put option liability

21,215

-

Corporation tax payable

5,836

6,319

Deferred tax liabilities

17,915

17,397

Employee benefits

37,777

17,174

Total non-current liabilities

252,153

204,349

Current liabilities

Interest-bearing loans and borrowings

47,984

18,408

Trade and other payables

389,708

369,457

Contingent consideration

9,629

5,149

Derivative financial instruments

569

407

Corporation tax payable

2,430

1,321

Total current liabilities

450,320

394,742

Total liabilities

702,473

599,091

Total liabilities and equity

1,001,395

912,870

Total Produce plc

Extract from the Group Statement of Changes in Equity

for the year ended 31 December 2016

Attributable to equity holders of the parent

For the year ended 31 December 2016

Share

capital

€'000

Share

premium

€'000

Undenominated capital

€'000

De-merger

reserve

€'000

Own shares

reserve

€'000

Currency

translation

reserve

€'000

Reval-uation

reserve

€'000

Other equity

reserves*

€'000

Retained

earnings

€'000

Total

€'000

Non-controlling

interests

€'000

Total

equity

€'000

As at 1 January 2016

3,446

254,512

99

(122,521)

(8,580)

70

22,178

2,027

87,589

238,820

74,959

313,779

Comprehensive income

Profit for the year

-

-

-

-

-

-

-

-

28,536

28,536

10,768

39,304

Other comprehensive income:

Items that may be reclassified subsequently to profit or loss:

Foreign currency translation effects, net

-

-

-

-

-

(7,745)

-

(514)

-

(8,259)

195

(8,064)

Effective portion of cash flow hedges, net

-

-

-

-

-

-

-

(19)

-

(19)

(24)

(43)

Deferred tax on items taken directly to other comprehensive income

-

-

-

-

-

-

-

4

-

4

7

11

Items that will not be reclassified subsequently to profit or loss:

Revaluation gains/(losses) on property, plant and equipment, net

-

-

-

-

-

-

1,138

-

-

1,138

(9)

1,129

Remeasurement losses on post-employment defined benefit schemes

-

-

-

-

-

-

-

-

(23,584)

(23,584)

(185)

(23,769)

Deferred tax on items taken directly to other comprehensive income

-

-

-

-

-

-

772

-

3,875

4,647

32

4,679

Share of joint ventures and associates remeasurement losses on post-employment defined benefit schemes (net of tax)

-

-

-

-

-

-

-

-

(820)

(820)

-

(820)

Total other comprehensive income

-

-

-

-

-

(7,745)

1,910

(529)

(20,529)

(26,893)

16

(26,877)

Total comprehensive income

-

-

-

-

-

(7,745)

1,910

(529)

8,007

1,643

10,784

12,427

Transactions with equity holders of the parent

New shares issued

24

1,763

-

-

-

-

-

(651)

651

1,787

-

1,787

Own shares acquired and cancelled

(41)

-

41

-

-

-

-

-

(5,973)

(5,973)

-

(5,973)

Capital reduction (Note 13)

-

 (108,071)

-

-

-

-

-

-

107,963

(108)

-

(108)

Non-controlling interest arising on acquisition of subsidiaries (Note 10)

-

-

-

-

-

-

-

-

-

-

15,215

15,215

Recognition of put option liability on acquisition (Note 10)

-

-

-

-

-

-

-

(17,155)

-

(17,155)

-

(17,155)

Put option granted to non-controlling interests (Note 10)

-

-

-

-

-

-

-

(3,367)

-

(3,367)

-

(3,367)

Remeasurement of put option liability

-

-

-

-

-

-

-

(179)

-

(179)

-

(179)

Acquisition of non-controlling interests (Note 10)

-

-

-

-

-

-

-

-

(692)

(692)

(3,796)

(4,488)

Disposal of shareholding to non-controlling interests (Note 10)

-

-

-

-

-

-

-

-

-

-

3,993

3,993

Contribution by non-controlling interests

-

-

-

-

-

-

-

-

-

-

5

5

Share of buyback within associate company

-

-

-

-

-

-

-

-

(73)

(73)

-

(73)

Subsidiary becoming a joint venture

-

-

-

-

-

-

-

-

-

-

(1,503)

(1,503)

Dividends paid

-

-

-

-

-

-

-

-

(9,076)

(9,076)

(6,798)

(15,874)

Share-based payment transactions

-

-

-

-

-

-

-

436

-

436

-

436

Total transactions with equity holders of the parent

(17)

(106,308)

41

-

-

-

-

(20,916)

92,800

(34,400)

7,116

(27,284)

As at 31 December 2016

3,429

148,204

140

(122,521)

(8,580)

(7,675)

24,088

(19,418)

188,396

206,063

92,859

298,922

Transfer of NCI subject to put option for presentation purposes

-

-

-

-

-

-

-

20,259

-

20,259

(20,259)

-

As at 31 December 2016

3,429

 148,204

140

(122,521)

(8,580)

(7,675)

24,088

841

188,396

226,322

72,600

298,922

Total Produce plc

Extract from the Group Statement of Changes in Equity

for the year ended 31 December 2016 (Continued)

Attributable to equity holders of the parent

 For the year ended 31 December 2015

Share

capital

€'000

Share

premium

€'000

Un-denominated capital

€'000

De-merger

reserve

€'000

Own shares

reserve

€'00

Currency

translation

reserve

€'000

Reval-uation

reserve

€'000

Other equity

reserves*

€'000

Retained

earnings

€'000

Total

€'000

Non-controlling

interests

€'000

Total

equity

€'000

As at 1 January 2015

3,533

253,565

-

(122,521)

(8,580)

(4,483)

21,882

2,024

71,628

217,048

68,341

285,389

Comprehensive income

Profit for the year

-

-

-

-

-

-

-

-

30,027

30,027

7,475

37,502

Other comprehensive income:

Items that may be reclassified subsequently to profit or loss:

Foreign currency translation effects, net

-

-

-

-

-

4,553

-

-

-

4,553

607

5,160

Effective portion of cash flow hedges, net

-

-

-

-

-

-

-

(11)

-

(11)

20

9

Deferred tax on items taken directly to other comprehensive income

-

-

-

-

-

-

-

6

-

6

(7)

(1)

Items that will not be reclassified subsequently to profit or loss:

Revaluation gains/(losses) on property, plant and equipment, net

-

-

-

-

-

-

105

-

-

105

(77)

28

Remeasurement gains on post-employment defined benefit schemes

-

-

-

-

-

-

-

-

9,638

9,638

232

9,870

Deferred tax on items taken directly to other comprehensive income

-

-

-

-

-

-

191

-

(1,181)

(990)

208

(782)

Share of joint ventures and associates remeasurement losses on post-employment defined benefit schemes (net of tax)

-

-

-

-

-

-

-

-

(564)

(564)

-

(564)

Total other comprehensive income

-

-

-

-

-

4,553

296

(5)

7,893

12,737

983

13,720

Total comprehensive income

-

-

-

-

-

4,553

296

(5)

37,920

42,764

8,458

51,222

Transactions with equity holders of the parent

New shares issued

12

947

-

-

-

-

-

(373)

373

959

-

959

Own shares acquired and cancelled

(99)

-

99

-

-

-

-

-

(14,388)

(14,388)

-

(14,388)

Non-controlling interests arising on acquisition

-

-

-

-

-

-

-

-

-

-

4,132

4,132

Acquisition of non-controlling interests

-

-

-

-

-

-

-

-

351

351

(4,265)

(3,914)

Disposal of shareholding to non-controlling interests

-

-

-

-

-

-

-

-

-

-

599

599

Contribution by non-controlling interests

-

-

-

-

-

-

-

-

-

-

36

36

Dividends paid

-

-

-

-

-

-

-

-

(8,295)

(8,295)

(2,342)

(10,637)

Share-based payment transactions

-

-

-

-

-

-

-

381

-

381

-

381

Total transactions with equity holders

(87)

947

99

-

-

-

-

8

(21,959)

(20,992)

(1,840)

(22,832)

As at 31 December 2015

3,446

254,512

99

(122,521)

(8,580)

70

22,178

2,027

87,589

238,820

74,959

313,779

Total Produce plc

Extract from the Group Statement of Cash Flows

for the year ended 31 December 2016

2016

€'000

2015

€'000

Net cash flows from operating activities (Note 11)

44,148

60,811

Investing activities

Acquisition of subsidiaries

(32,887)

(4,312)

Cash assumed on acquisition of subsidiaries, net

1,940

2,235

Acquisition of, and investment in joint ventures and associates

(8,620)

(7,338)

Payments of contingent consideration

(1,976)

(11,964)

Payments of deferred consideration

(2,778)

(692)

Proceeds from disposal of joint ventures and associates

-

670

Proceeds from disposal of trading assets

6,419

-

Cash derecognised on subsidiary becoming a joint venture

(491)

-

Disposal of shares in subsidiary to non-controlling interests

273

599

Acquisition of property, plant and equipment

(24,378)

(16,506)

Acquisition of investment property

-

(4,176)

Expenditure on computer software

(1,344)

(2,448)

Development expenditure capitalised

(253)

(251)

Proceeds from disposal of property, plant and equipment

2,651

852

Proceeds from exceptional items

3,030

3,092

Dividends received from joint ventures and associates

8,339

8,070

Government grants received

-

449

Net cash flows from investing activities

(50,075)

(31,720)

Financing activities

Drawdown of borrowings

68,144

95,673

Repayment of borrowings

(40,671)

(86,488)

Increase in bank deposits

-

(500)

Proceeds from the issue of share capital

1,787

959

Buyback of own shares

(5,973)

(14,388)

Costs of capital reduction

(108)

-

Capital element of finance lease repayments

(2,175)

(1,898)

Acquisition of non-controlling interests

(3,044)

(1,000)

Capital contribution by non-controlling interests

5

36

Dividends paid to non-controlling interests

(6,798)

(2,342)

Dividends paid to equity holders of the parent

(9,076)

(8,295)

Net cash flows from financing activities

2,091

(18,243)

Net (decrease)/increase in cash, cash equivalents and overdrafts

(3,836)

10,848

Cash, cash equivalents and overdrafts at start of year

123,205

110,390

Net foreign exchange difference

(2,282)

1,967

Cash, cash equivalents and overdrafts at end of year (Note 12)

117,087

123,205

Total Produce plc

Extract from the Summary Group Reconciliation of Net Debt

for the year ended 31 December 2016

2016

€'000

2015

€'000

Net (decrease)/increase in cash, cash equivalents and overdrafts

(3,836)

10,848

Drawdown of borrowings

(68,144)

(95,673)

Repayment of borrowings

40,671

86,488

Increase in bank deposits

-

500

Interest-bearing loans and borrowings arising on acquisition

(474)

(2,901)

Capital element of finance lease repayments

2,175

1,898

Other movements on finance leases

(419)

(242)

Finance leases arising on acquisition

(673)

-

Foreign exchange movement

389

(2,125)

Movement in net debt

(30,311)

(1,207)

Net debt at beginning of the year

(18,055)

(16,848)

Net debt at end of the year (Note 12)

(48,366)

(18,055)

Total Produce plc

Selected explanatory notes for the Preliminary Results for the year ended 31 December 2016

1.

Basis of preparation

The financial information included in this preliminary results statement has been extracted from the Group's Financial Statements for the year ended 31 December 2016 and is prepared based on the accounting policies set out therein, which are consistent with those applied in the prior year with the exception of the effect of the new accounting standards listed below. As permitted by European Union (EU) law and in accordance with AIM/ESM rules, the Group Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) and their interpretations issued by the International Accounting Standards Board (IASB) as adopted by the EU.The financial information prepared in accordance with IFRSs as adopted by the EU included in this report do not comprise "full group accounts" within the meaning of Regulation 40(1) of the European Communities (Companies: Group Accounts) Regulations 1992 of Ireland insofar as such group accounts would have to comply with the disclosure and other requirements of those Regulations.

The information included has been derived from the Group Financial Statements which were approved by the Board of Directors on 1 March 2017. The Financial Statements will be filed with the Irish Registrar of Companies and circulated to shareholders in due course. The financial information is presented in Euro, rounded to the nearest thousand where appropriate.

Changes in accounting policy

The following are the new standards and amendments that are effective for the Group's financial year ending on 31 December 2016. They had no significant impact on the results and financial position of the Group for the period ended 31 December 2016.

· Amendments to IFRS 11 Joint Arrangements - Accounting for acquisition of interests in joint arrangements

· Amendments to IAS 16 Property, Plant and Equipment and IAS 38: Intangible Assets - Clarification of acceptable methods of depreciation and amortisation

· Amendments to IAS 16 Property, Plant and Equipment and IAS 41 Agriculture - Bearer Plants

· Amendments to IAS 27 Separate Financial Statements - Equity Method in Separate Financial Statements

· Amendments to IAS 1 Presentation of Financial Statements - Disclosure Initiative

· Annual Improvements to IFRSs 2012-2014 Cycle

Accounting policy for put options over non-controlling interest shares

If a put option is held by a non-controlling interest ('NCI') in a subsidiary undertaking, whereby the holder of the put option can require the Group to acquire the NCI's shareholding in the subsidiary at a future date, the Group carefully examines the nature of such a put option. The Group assesses whether or not the NCI continues to have a present ownership interest in the shares subject to the put option. Present ownership interest can be evidenced by NCI continuing to have a right to the receipt of dividends, or benefitting from increases in net assets while holding a voting entitlement to the shares subject to the put option. If it is deemed that the put option holders continue to have a present ownership interest, the Group applies the partial recognition of NCI method as follows:

(a) the Group continues to recognise the amount that would have been recognised for the non-controlling interest, including an update to reflect its share of profit and losses, dividends and other changes;

(b) the Group recognises a financial liability in accordance with IAS 32 being the estimate of the fair value of the consideration to acquire the NCI shares that are subject to the put option and records this in a separate reserve in equity;

(c) changes in the fair value of the financial liability are reflected as a movement in the put liability reserve; and

(d) for presentation purposes in the balance sheet, the Group transfers the non-controlling interest subject to the put option as an offset to the put option reserve in equity.

If the NCI put option is exercised, the same treatment is applied up to the date of exercise. The amount recognised as the financial liability at that date is extinguished by the payment of the exercise price. If the put option expires unexercised, the position is unwound so that the non-controlling interest is recognised as the amount it would have been as if the put option had never been granted and the financial liability is derecognised with a corresponding credit to equity.

If the non-controlling interest does not have present ownership rights from the put option, then the transaction is accounted for as if the Group had acquired the NCI at the date of entering into the put option.

Accounting policy for forward commitments over non-controlling interest shares

If a firm commitment is in place to acquire the shares held by a NCI in a subsidiary undertaking, whereby the Group has an irrevocable agreement to acquire the NCI's shareholding in the subsidiary at a future date, the Group carefully examines the nature of such a commitment. The Group assesses whether or not the NCI continues to have a present ownership interest in the shares subject to commitment. Present ownership interest can be evidenced by NCI continuing to have a right to the receipt of dividends, or benefitting from increases in net assets while holding a voting entitlement to the shares subject to the put option. If it is deemed that the non-controlling shareholders continue to have a present ownership interest, the Group applies the partial recognition of NCI method as outlined above in the accounting policy for put options over non-controlling interest shares.

Accounting policy for call options over non-controlling interest shares

If the Group has a call option over the shares held by a NCI in a subsidiary undertaking, where the Group can require the NCI to sell its shareholding in the subsidiary at a future date, the option is classified as a derivative and is recognised as a financial instrument on inception with fair value movements recognised in the income statement.

Accounting policy for put and call options over shareholdings of joint venture and associate interests

If there are put and call options over the remaining shares in a joint venture and associate undertakings, the option is classified as a derivative instrument on inception with fair value movements recognised in the income statement.

2.

Translation of foreign currencies

The reporting currency of the Group is Euro. Results and cash flows of foreign currency denominated operations have been translated into Euro at the exchange rate at the date of the transaction or an average exchange rate for the period where appropriate, and the related balance sheets have been translated at the rates of exchange ruling at the balance sheet date. Adjustments arising on the translation of the results of foreign currency denominated operations at average rates, and on restatement of the opening net assets at closing rates, are accounted for in a separate translation reserve within equity, net of differences on related foreign currency borrowings. All other translation differences are taken to the income statement. The rates used in the translation of results and balance sheets into Euro were as follows:

Average rate

Closing rate

2016

2015

% change

2016

2015

% change

Brazilian Real

3.6919

-

-

3.4305

4.3198

20.6%

Canadian Dollar

1.4674

1.4184

(3.5%)

1.4141

1.5129

6.5%

Czech Koruna

27.0353

27.2862

0.9%

27.0210

27.0217

0.0%

Danish Kroner

7.4427

7.4584

0.2%

7.4344

7.4623

0.4%

Indian Rupee

74.2703

71.1987

(4.3%)

71.4680

72.2024

1.0%

Polish Zloty

4.3621

4.1769

(4.4%)

4.4051

4.2628

(3.3%)

Pound Sterling

0.8102

0.7223

(12.2%)

0.8526

0.7368

(15.7%)

Swedish Krona

9.4650

9.3489

(1.2%)

9.5773

9.1858

(4.3%)

US Dollar

1.1081

1.1106

0.2%

1.0520

1.0907

3.5%

3.

Revenue and Segmental Analysis

0BRevenue

1B2016

2B€'000

3B2015

4B€'000

Group Revenue

3,105,475

2,875,388

Plus:

Share of revenue of joint ventures

397,659

355,620

Share of revenue of associates

259,271

222,757

Total share of revenue of joint ventures and associates

656,930

578,377

Total Revenue

3,762,405

3,453,765

Segmental Analysis

The table below details a segmental breakdown of the Group's total revenue and adjusted EBITA for the years ended 31 December 2016 and 31 December 2015.

In accordance with IFRS 8, the Group's reportable operating segments based on how performance is currently assessed and resources are allocated are as follows:

-

Europe - Eurozone: This reportable segment is an aggregation of thirteen operating segments principally in France, Ireland, Italy, the Netherlands and Spain primarily involved in the procurement, marketing and distribution of fresh produce and some healthfoods and consumer goods products. These operating segments have been aggregated because they have similar economic characteristics.

-

Europe - Non-Eurozone: This operating segment is an aggregation of six operating segments in Scandinavia, the United Kingdom, Poland and the Czech Republic primarily involved in the procurement, marketing and distribution of fresh produce and some healthfoods and consumer goods products. These operating segments have been aggregated because they have similar economic characteristics.

-

International: This segment is an aggregation of five operating segments in North America and India primarily involved in the procurement, marketing and distribution of fresh produce. The North American sports nutrition business ceased trading in April 2016.

Segment performance is evaluated based on revenue and adjusted EBITA. Management believes that adjusted EBITA, while not a defined term under IFRS, gives a fair reflection of the underlying trading performance of the Group. Adjusted EBITA represents earnings before interest, tax, acquisition related intangible asset amortisation charges and costs, fair value movements on contingent consideration and exceptional items. It also excludes the Group's share of these items within joint ventures and associates. Adjusted EBITA is therefore measured differently from operating profit in the Group financial statements as explained and reconciled in full detail in the analysis that follows.

Finance costs, finance income and income taxes are managed on a centralised basis. These items are not allocated between operating segments for the purpose of the information presented to the Chief Operating Decision Maker ('CODM') and are accordingly omitted from the detailed segmental analysis that follows.

Year ended

31 December 2016

Year ended

31 December 2015

Segmental revenue €'000

Total

revenue

€'000

Adjusted

EBITA

€'000

Segmental revenue €'000

Total

revenue

€'000

Adjusted

EBITA

€'000

Europe - Eurozone

1,753,328

1,731,675

25,953

1,653,035

1,636,479

22,170

Europe - Non-Eurozone

1,521,936

1,487,091

38,769

1,537,842

1,496,478

38,603

International

543,713

543,639

9,020

320,808

320,808

3,362

Inter-segment revenue

(56,572)

-

-

(57,920)

-

-

Third party revenue and adjusted EBITA

3,762,405

3,762,405

73,742

3,453,765

3,453,765

64,135

All inter-segment revenue transactions are at arm's length.

Reconciliation of segmental profit to operating profit

Below is a reconciliation of adjusted EBITA per the Group's management reports to operating profit and profit before tax as presented in the Group income statement:

Note

2016

€'000

2015

€'000

Adjusted EBITA per management reporting

73,742

64,135

Acquisition related intangible asset amortisation within subsidiaries

(i)

(7,675)

(5,183)

Share of joint ventures and associates acquisition related intangible asset amortisation

(i)

(2,557)

(2,434)

Fair value movements on contingent consideration

(ii)

(73)

(1,384)

Acquisition related costs within subsidiaries

(iii)

(922)

(672)

Share of joint ventures and associates net finance expense

(iv)

(481)

(330)

Share of joint ventures and associates tax

(iv)

(4,473)

(3,562)

Operating profit before exceptional items

57,561

50,570

Exceptional items (Note 5)

(v)

(1,409)

2,028

Operating profit after exceptional items

56,152

52,598

Net financial expense

(vi)

(5,524)

(5,815)

Profit before tax

50,628

46,783

(i)

Acquisition related intangible asset amortisation charges are not allocated to operating segments in the Group's management reports.

(ii)

Fair value movements on contingent consideration are not allocated to operating segments in the Group's management reports.

(iii)

Acquisition related costs are transaction costs directly related to the acquisition of subsidiaries and are not allocated to operating segments in the Group's management reports.

(iv)

Under IFRS, included within profit before tax is the Group's share of joint ventures and associates profit after acquisition related intangible amortisation charges and costs, tax and interest. In the Group's management reports these items are excluded from the adjusted EBITA calculation.

(v)

Exceptional items (Note 5) are not allocated to operating segments in the Group's management reports.

(vi)

Financial income and expense is primarily managed at Group level and is therefore not allocated to individual operating segments in the Group's management reports.

4.

Adjusted profit before tax, adjusted EBITA and adjusted EBITDA

For the purpose of assessing the Group's performance, Total Produce management believes that adjusted EBITDA, adjusted EBITA, adjusted profit before tax and adjusted earnings per share (Note 7) are the most appropriate measures of the underlying performance of the Group.

2016

€'000

2015

€'000

Profit before tax per income statement

50,628

46,783

Adjustments

Exceptional items (Note 5)

1,409

(2,028)

Fair value movements on contingent consideration

73

1,384

Share of joint ventures and associates tax

4,473

3,562

Acquisition related intangible asset amortisation within subsidiaries

7,675

5,183

Share of joint ventures and associates acquisition related intangible asset amortisation

2,557

2,434

Acquisition related costs within subsidiaries

922

672

Adjusted profit before tax

67,737

57,990

Exclude

Net financial expense - subsidiaries

5,524

5,815

Net financial expense - share of joint ventures and associates

481

330

Adjusted EBITA

73,742

64,135

Exclude

Amortisation of software costs

1,356

988

Depreciation - subsidiaries

17,423

15,527

Depreciation - share of joint ventures and associates

2,301

2,172

Adjusted EBITDA

94,822

82,822

5.

Exceptional items

2016

€'000

2015

€'000

Matters relating to property, plant and equipment and leasehold interests (a)

3,774

2,028

Impairment of goodwill (b)

(5,183)

-

Total exceptional items

(1,409)

2,028

Net tax charge on exceptional items (c)

(686)

(351)

Total

(2,095)

1,677

Attributable as follows:

Equity holders of the parent

(2,812)

1,349

Non-controlling interests

717

328

(2,095)

1,677