Final Results

26 September 2014

Produce Investments plc

Final results for 52 weeks ended 28 June 2014

Produce Investments plc ("Produce Investments" or the "Group") (AIM:PIL), a leading operator in the fresh potato sector with vertically integrated activities covering seed production, own growing, processing and packing and supply to the major retailers, is pleased to announce its results for the 52 weeks ended 28 June 2014.

(1) Excluding fair value adjustment for biological assets of £120k (2013 : £965k) and exceptional charges of £1.6m (2013 : £nil) relating to the closure of Tern Hill

Operational Highlights

· Operating profit up 46% at £11.0m (2013: £7.5m)

· Operating profit margin increased to 5.7% from 3.7%

· Own brand - GreenVale - continues to perform well

· Inclusion of The Jersey Royal Company Limited from 16 May 2014, with trading in line with expectations

· Reduction in turnover as a result of lower prices following the high priced season in 2012/2013

· Improvement in adjusted earnings per share - up 59% on 2013

· Increase in dividend per share - up 25% on 2013

For further information contact:

Note to Editors

The Group is a vertically integrated company supplying blue chip customers such as Tesco, Sainsbury and Marks & Spencer with fresh and processed potatoes and daffodils.

Website: www.produceinvestments.co.uk

CHAIRMAN'S STATEMENT

I am pleased to report to shareholders that the Group has again performed well in the year to 28 June 2014. A return to more normal growing conditions in the UK in 2013, compared to the wet weather experienced in 2012 has been a welcome relief to us all. The year has been a busy one for management with the successful acquisition of The Jersey Royal Company Limited (JRCL) and the closure of one of our three main fresh packing sites at Tern Hill, in Shropshire, on top of the normal day to day management requirements.

All parts of the Group have performed well in the year on the back of a more normal season, compared to that of 2012.The retail market environment remains fiercely competitive in terms of both price and volumes, and as expected we have experienced an element of inevitable price deflation on the back of the higher prices that were necessary last year to cover the cost of the more expensive crop from the 2012 harvest. The retail fresh potato sector is also experiencing higher than anticipated volume decline.

The acquisition of JRCL which was concluded on the 16th May 2014, adds a number of important strategic elements to the Group. The deal strengthens the Group's product offering and also gives the Group greater control and influence over the early season potato market, with Jersey Royals always being the first UK product to market at the start of the season. The acquisition also gives us a fresh packing site in Kent, which supplies a number of retail and foodservice customers with locally sourced Kent potatoes, something which we are keen to exploit.

The business also announced the closure of our Tern Hill site in Shropshire. This site predominantly packed fresh potatoes for retail and foodservice. Key strategic capital investments at our other fresh sites have allowed us to increase efficiencies and therefore re-align capacities, facilitating the closure of the site. Final volumes were packed at the end of August and a buyer for the site is currently being sought. An impairment charge of £0.9m has been charged to the income statement relating to the write down of fixed assets and a charge of £0.7m has also been included to cover redundancy and closure costs. This leaves us with 3 fresh packing sites: in Cambridgeshire, the Scottish Borders and Kent through the acquisition of JRCL.

Looking to the year ahead, although recognising we are only circa 30% of the way through harvesting, our best estimates for the current year's crop would indicate both reasonable yields and quality. As a result of this we would expect prices to come under pressure as supply is forecast to be higher than demand. The Group's procurement model which fixes an element of crop in advance but also has a proportion of crop linked to the free market enables the Group to take advantage of any such lowering of prices. We would also expect the retail environment to remain fiercely competitive as the market continues to evolve through increased competition from the Discounters, changing consumer shopping habits and more focus on reducing home waste, all of which impact market volume.

Whilst the market will continue to be challenging the Directors remain confident about the Group's prospects for the coming year and are pleased to announce an increase in the final dividend to 4.55 pence per share (2013: 3.64 pence), which combined with the interim dividend of 2.275 pence per share (2013: 1.82 pence) results in a total dividend for the year of 6.825 pence per share (2013: 5.46 pence per share). The final dividend will be paid on 30 October 2014 to ordinary shareholders on the register at close of business on 10 October 2014.

Given the performance of the Group and the hard work that was necessary to acquire JRCL and the closure of the Tern Hill site, I would especially like to express my sincere thanks to all employees of the Group who have helped to contribute to these excellent results for the year.

Barrie Clapham

Non-Executive Chairman

It is pleasing to report that the growing season experienced in 2013 saw a return to more normal growing conditions compared to the wet weather of 2012. This resulted in a better quality potato crop, with total UK production of 5.5m tonnes compared to 4.5m tonnes in 2012. As a consequence of a more balanced crop, in terms of supply and demand, free buy prices for potatoes were much lower than that experienced in 2012. The Group, which fixes a large proportion of its procurement requirements in advance of the season was able to take advantage of these lower prices which along with a much lower imported tonnage, resulted in significantly lower procurement costs for the year. In order to cover the additional procurement costs in the year to June 2013 it was necessary to obtain significant price increases across the entire customer base and it was only to be expected that some of these necessary increases would come under pressure as we started to utilise the lower priced new season crop. In addition, the well publicised decline in fresh produce volumes through the major retailers has impacted overall volumes and hence turnover. This has resulted in total turnover for the Group of £191.8m in the year to June 2014, compared to £205.9m for the previous year.

In May 2014 the Group acquired The Jersey Royal Company Limited which grows, markets and supplies early season Jersey Royal potatoes into a number of UK retailers. The acquisition has a number of strategic benefits which are highlighted in the Chairman's report and we are excited not only about the future prospects for the Jersey business, but also the opportunities to exploit the benefits of locally sourced and packed potatoes in Kent - the "Garden of England".

The consideration paid for the acquisition consisted of £11.0m in cash, and 1,590,909 new shares in Produce Investments, resulting in a total consideration of £14.9m. The net assets acquired in both Jersey and Kent, including the fair value of the potato stocks equated to £14.0m. In addition to the assets purchased we have a put and call option for the purchase of the freehold of Peacock Farm, which is the main packing facility for Jersey Royals on the island. This has been agreed at a cost of £6.35m and expires in May 2019.

The acquisition was partly funded with £6m of new equity, before fees, through a significantly oversubscribed placing, with the balance funded through existing cash resources and an increase in the existing bank facilities with HSBC.

I am pleased to report, that whilst it is still relatively early in the process, integration of the acquired sites is on track with a positive reaction from both our customers and suppliers. Current trading for both the Jersey and Kent businesses is in line with our initial expectations and we are very confident about the future prospects for both of these new additions to the Group.

Our branded fresh potato, GreenVale, continues to gain momentum, both in terms of rate of sale and distribution. A successful TV advertising campaign was run during February and March on national TV and had the desired effect of increasing brand awareness. The brand brings together a unique packaging concept and great tasting variety, which attracts new customers to the category. We remain excited and committed about building the brand credentials and proposition in the years ahead.

On a sombre note it is sad to see the final closure of the Tern Hill site in Shropshire. The site and the many loyal employees, a number of whom have been with the business for many years, have served the business extremely well. The last pack of potatoes was packed at the site on the 29th August and the team running the process have done an excellent job in what was always going to be difficult circumstances. I am pleased to report that at the time of writing, the majority of people who have been made redundant through the process have managed to secure alternative employment in the area, and we must thank them for their understanding and support and wish them well in their future careers.

Operations remain cash generative and at the year end, total net debt stood at £24.5m compared to £17.3m last year, with the increase due to the acquisition of The Jersey Royal Company Limited. A number of significant capital projects were undertaken in the year across the Group with total spend at £6.5m compared to £2.6m for the prior year. A large part of the increase relates to the re-alignment of capacities at our fresh packing sites to facilitate the closure of Tern Hill. This re-alignment of our total operational capacities and the resulting improvement in operating efficiencies should stand us in good stead should the current reduction in sales of fresh produce through the major retailers be sustained.

As the Chairman noted, the growing conditions experienced so far in 2014 would point to a higher than average yielding crop, of reasonable quality. Whilst it is still difficult to predict, we would therefore expect prices for non-contracted free buy potatoes to be lower than average for most of the coming season. The Group's procurement model which fixes an element of crop in advance, still leaves the Group with opportunities to take advantage of the lower free buy prices, should these indeed come to fruition. The changing retail environment will result in an even more competitive marketplace, which when combined with a surplus crop could lead to price deflation in the sector and margin pressure.

However, following the recent acquisitions we have made along with the rationalisation of our fresh packing sites, we believe that we are in a stronger position to deal with these pressures. The Board remains confident that Produce Investments is well positioned to both grow organically and to take advantage of any acquisition opportunities.

Angus Armstrong

Chief Executive Officer

CONSOLIDATED INCOME STATEMENT

For the 52 weeks ended 28 June 2014

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the 52 weeks ended 28 June 2014

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 28 June 2014

 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the 52 weeks ended 28 June 2014

CONSOLIDATED CASH FLOW STATEMENT

For the 52 weeks ended 28 June 2014

 Notes

1. Statement of compliance

The Group's financial statement have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union as they apply to the financial statements of the Group for the period ended 28 June 2014 and applied in accordance with the Companies Act 2006. The financial information set out above does not constitute the Company's statutory report and accounts for the years ended 28 June 2014 or the year ended 29 June 2013, but is derived from those accounts. Statutory accounts for 2013 have been delivered to the registrar of companies, and those for 2014 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. The annual report and accounts for the year ended 28 June 2014 will be posted to shareholders on 29 September 2014. The results for the year ended 28 June 2014 were approved by the Board of Directors on 26 September 2014 and are audited.

The information contained in this preliminary announcement has been approved by the Board of Directors.

2. Basis of preparation

The financial statements have been prepared on a historical cost basis, except for derivative financial instruments and biological assets, which have both been measured at fair value in line with applicable accounting standards.

3. Earnings Per Share

 Adjusted earnings per share is included to enable earnings to be produced on a directly comparable basis. To achieve this comparison, the operating profit for the 52 weeks to 28 June 2014 is reflected as if the exceptional items had not been included in the income statement. This increases underlying profit by £1,497k, being the provisions relating to the closure of the Tern Hill site £1,617k plus fair value adjustments in relation to biological assets at the year end £(120k). An underlying effective tax rate of 9.4% has then been applied to the adjusted profit.

4. Report distribution

Copies of the annual report and financial statements will be sent to shareholders shortly and will be available for a period of one month to the public at the offices of Produce Investments plc, Floods Ferry, Floods Ferry Road, Doddington, March, Cambridge, PE15 OUW, and at the Company's website.