Half Yearly Report

Fyffes plc

Interim Results 2012

Fyffes reports strong first half result and increases full year target

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

"Fyffes has delivered a strong increase in profits for the first half of the year, driven by further organic growth in each of its product categories. Earnings per share also benefited from the significant repurchase of shares in 2011. Fyffes is increasing its 2012 full year target EBITA range to €28m-€33m from €25m-€30m previously."

* These financial terms are defined on the next page

3 September 2012

For further information, please view the interim results slide presentation at www.fyffes.comor contact Brian Bell at Wilson Hartnell PR, Tel: +353-1-6690030.

Financial results and operating review

Revenue

Total revenue, including the Group's share of its joint ventures, was €92m higher (20.0%) year on year in the first half, amounting to €550.1m. Sales were higher in each of the Group's product categories, driven mainly by further organic growth. Revenue also benefited from favourable exchange rates on translation of sales in the Group's Sterling and US Dollar denominated operations. In addition, turnover included the Group's share of the sales of its German joint venture for the full first half in 2012, compared to the 4 months post acquisition in 2011.

Operating profit

Adjusted EBITDA* amounted to €28.1m in the seasonally stronger first six months of 2012, up 36% on the same period last year. Adjusted EBITA* increased 31.2% in the first half, to €23.3m. The key drivers of the short term performance of Fyffes' tropical produce operations, and its banana category in particular, are average selling prices, exchange rates and the costs of fruit, shipping and fuel, all of which can result in volatility in year on year profitability. The increase in profits achieved in the first half of the year reflects, in particular, the further organic growth in each of the Group's product categories and continued improvements and efficiencies throughout its operations.

Fyffes performed strongly in the banana category during the first half of the year, achieving a €3.9m increase in operating profit year on year. The Group increased its banana volumes as a result of additional business with new and existing customers during the period. The industry experienced a number of headwinds during the first half of the year, including a significant adverse movement in exchange rates, due to the relative strength of the US Dollar, combined with higher fruit costs and a further 20% increase in bunker fuel prices. The Group is continuing to pursue necessary increases in selling prices in its key markets in the context of these higher costs and less favourable exchange rates. In addition, Fyffes continued to focus on its cost base and the efficiency of its operations during 2012 and has achieved savings as a result of reconfiguring part of its shipping logistics.

In the pineapple category, Fyffes has built on the progress made in the previous year with an increase in profits in the first half of the year. This has been achieved despite the same headwinds as experienced in the banana category, including higher fuel costs and adverse currency movements. The key drivers of the higher profits in the category were an 8% increase in volumes and lower shipping costs as a result of the logistical changes mentioned above. Overall market conditions were broadly positive compared to the same period last year, particularly in Continental Europe.

Fyffes' US melon business performed well during the key import season, with an increase in its underlying trading profit in the first half of the year. The business continues to achieve strong organic growth. Production capacity increased during the period through the purchase of an additional farming operation in Guatemala and its marketing reach was expanded with the opening of a sales office on the US West Coast. While growing the business strongly, management also remained very focused on its operating costs and structures.

There has been no change in the period in the carrying value of the Group's 40% investment in Balmoral International Land Holdings plc ("Balmoral") which was written down to a nominal value at the end of 2011 following its corporate reorganisation and delisting.

Total operating profit for the six months ended 30 June 2012, including amortisation charges and joint ventures tax charges amounted to €21.6m, compared to €16.5m in the first half last year, an increase of 31.5%.

* Adjusted EBITDA is earnings before interest, tax, depreciation and amortisation, excluding the Group's share of Balmoral's result, including the Group's share of the pre-tax earnings of its joint ventures. Adjusted EBITA is EBITDA less depreciation charges. Adjusted profit before tax is Adjusted EBITA less financing charges. Adjusted diluted earnings per share excludes the Group's share of Balmoral's result and amortisation charges. 

Financial income/expense

Net interest expense in the Group's subsidiary companies in the first half amounted to €0.8m, compared to €0.3m in the same period last year, mainly reflecting lower average cash balances in the period.

Profit before tax

Adjusted profit before tax amounted to €22.4m in the first half, 29.5% up on the same period last year, reflecting the 31.2% increase in EBITA less the higher interest costs. As explained above and set out in detail in note 2 of the attached interim financial information, adjusted profit before tax excludes amortisation of intangible assets and the Group's share of the tax charge of its joint ventures, which is reflected in profit before tax under IFRS rules and, where applicable, the Group's share of Balmoral's result and exceptional items. Profit before tax, before these adjustments, amounted to €20.9m, up 29.6% on the €16.1m in the same period last year.

Taxation

The underlying tax charge for the first half of the year has been calculated based on the tax rate that is expected to apply for the full year 2012. The tax charge for the period is analysed in note 3 of the accompanying financial information. Excluding the impact of deferred tax credits related to the amortisation of intangible assets and including the Group's share of tax of its joint ventures, the underlying tax charge for the half year was €2.9m (2011 half year: €2.3m), equivalent to a rate of 13% (2011 half year: 13%). This underlying rate is used for the purposes of calculating adjusted earnings per share. The equivalent underlying tax rate for the full year in 2011 was 13%.

Non-controlling interests

The non-controlling interests share of profit after tax for the first half amounted to €0.3m, compared to €0.5m in the same period last year.

Earnings per share

Adjusted diluted earnings per share, amounted to €6.48 cent in the first half, an increase of 46.9% compared to €4.41 cent in the same period last year. This increase reflects the 31.2% increase in Adjusted EBITA in the period and the benefit of the shares repurchased in the second half of 2011 which amounted to close to 10% of the shares in issue. As set out in note 4 of the accompanying financial information, adjusted earnings per share excludes the Group's share of Balmoral's result where applicable, the amortisation of intangible assets and related tax credits. Diluted earnings per share, before adjustments, amounted to €6.16 cent in the period, compared to €4.34 cent in the first half last year, an increase of 41.9%.

Dividend and share repurchase

The Board has declared an interim dividend for the year of 0.65 cent per share, an increase of 7.4% on the prior year. This dividend, which will be subject to Irish withholding tax rules, will be paid on 22 October 2012 to shareholders on the register on 14 September 2012. In accordance with company law and IFRS, this dividend has not been provided for in the balance sheet at 30 June 2012.

At its AGM in May 2012, shareholders renewed the Group's authority to repurchase up to 10% of the shares in issue. Taking into account the Group's financial position and other investment opportunities, the company may from time to time decide to repurchase further Fyffes plc shares in the market.

Balance sheet

Net funds

Net funds at 30 June 2012 amounted to €9.1m, an increase of €10.3m in the period compared to a €1.2m net debt position at the beginning of the year. Cash generated from operations in the first half, comprising profit before tax, excluding the Group's share of profits in its joint ventures and before depreciation and amortisation amounted to €25.2m. Capital expenditure amounted to €4.5m in the period, including €2.9m on the purchase of containers in the Group's US melon business. Other significant expenditure in the period included dividend payments of €3.9m, €2.2m on acquisitions and deferred consideration payments, tax payments of €1.6m and excess pension contributions plus MNOPF payments of €1.5m.

Cash balances are expected to reduce during the second half of the year. The Group anticipates making further deferred consideration and similar payments in respect of prior year acquisitions before the end of the year. In addition, the Group's US melon business requires a significant annual seasonal investment in working capital during the second half each year.

Pension obligations

The deficit in the Group's defined benefit pension schemes, before deferred tax, increased from €21.7m at the beginning of the year to €31.9m at 30 June 2012. This represents a prudent estimate of the obligations under these schemes measured in accordance with actuarial advice and reflects the impact of the continued reduction in international bond rates. On this basis, scheme liabilities increased by €16.1m during the period, partly offset by a €5.9m (5.2%) increase in the value of scheme assets. The schemes are closed to new members.

Shareholders' funds

Shareholders' funds increased by €4.1m in the first half, to €139.9m at 30 June 2012. This reflected retained profits after minority interest of €18.3m and balance sheet currency gains of €2.7m on translation of the Group's Sterling and US Dollar denominated net assets, less dividends paid of €3.9m, a €3.6m reduction in hedging assets as a result of hedging gains recognised in the period and a €9.3m actuarial loss in the Group's pension schemes, net of deferred tax.

Current trading

The Group continues to pursue necessary increases in selling prices in all markets to offset the impact of adverse exchange rate movements and the higher cost of fuel and fruit. Trading conditions in Continental Europe have been broadly satisfactory during the summer months. As a result, Fyffes is increasing its 2012 full year target EBITA range to €28m - €33m, from €25m - €30m previously.

David McCann, Chairman

on behalf of the Board

3 September 2012

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.

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 (cont'd)

Fyffes plc

Condensed Group Balance Sheet

Fyffes plc

Condensed Group Cash Flow Statement

Fyffes plc

Notes supporting 2012 interim 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 2012 are unaudited. These financial statements do not constitute the statutory financial statements that are required by Section 7 of the Companies (Amendment) Act, 1986 to be annexed to the annual return of the company. The statutory consolidated financial statements for the year ended 31 December 2011 have been annexed to the 2012 annual return and filed with the Registrar of Companies. The audit report on those statutory financial statements was unqualified.

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 2011, prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS) as adopted by the EU.

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. The interim financial statements were authorised by the Board on 31 August 2012.

There were no new accounting standards which became effective for the first time in 2012 that had a material impact on the results or the financial position of the Group in the six month period ended 30 June 2012.

2. Adjusted profit before tax, EBITA and EBITDA

Fyffes believes that adjusted profit before tax, adjusted EBITA and adjusted earnings per share (note 4 below) are the appropriate measures of the underlying performance of the Group, excluding exceptional items if any and amortisation charges.

3. Taxation

Including the Group's share of the tax charge of its joint ventures of €0.3m (2011 first half: €0.7m), which is netted in operating profit in accordance with IFRS, the total tax charge for the period amounted to €2.6m (2011 first half: €2.0m).

Adjusting for deferred tax credits related to the amortisation of intangible assets, the underlying tax charge for the period was €2.9m (2011 first half: €2.3m), equivalent to a rate of 13% (2011 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 2011 was a charge of €2.9m, equal to a rate of 13%.

4. Earnings per share

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

5. Post employment benefits

This table summarises the movements in the net deficit on the Group's various defined benefit pension schemes in Ireland, the UK and Continental Europe. The current/past service cost is charged in the Income Statement, net of finance income on scheme assets. The actuarial (loss)/gain is recognised in the Statement of Comprehensive Income, in accordance with the amendment to IAS 19, Actuarial Gains and Losses, Group Plans and Disclosures.

6. Dividends paid to equity shareholders

The final dividend for 2011 of 1.32 cent per share, approved by the shareholders at the Annual General Meeting on 10 May 2012, gave rise to a distribution of €3.9m in the period.

The directors have proposed an interim dividend for 2012 of €0.65 cent per share (2011: €0.605 cent per share). This dividend, which will be subject to Irish withholding tax rules, will be paid on 22 October 2012 to shareholders on the register at 14 September 2012. In accordance with company law and IFRS, this dividend has not been recognised as a liability in the balance sheet at 30 June 2012.

At 30 June 2012, the company and subsidiary companies held 28,075,000 Fyffes plc ordinary shares(31 December 2011: 33,075,000). 5,000,000 treasury shares were cancelled in January 2012. The right to dividends on all treasury shares has been waived and they are excluded from the calculation of earnings per share.

7. Notes supporting cash flow statement

7.1 Cash flows from operating activities

7.2 Cash flows from investing activities

7.3 Cash flows from financing activities

7.4 Analysis of movement in net funds in the period

8. Reconciliation of other reserves