29th Mar 2007 07:02
Total Produce Plc29 March 2007 Stock Exchange Announcement Total Produce plc Commenting on the results Carl McCann, Chairman, said: "We are pleased that Total Produce plc was admitted to the IEX and AIM marketsof the Dublin and London Stock Exchanges and its shares have traded since 2January 2007. The strategy of the company is to continue to expand thebusiness both organically and, in particular, by acquisition." 29 March 2007 For further information, please contact:Brian Bell, Wilson Hartnell PRTel: +353-1-669 0030 2006 Financial summary Demerger We are pleased to report that the demerger of the Fyffes' general produce anddistribution businesses to Total Produce plc was successfully completed on 30December 2006. Fyffes' shareholders received one new share in Total Produce foreach share owned. Total Produce shares were admitted to the IEX and AIM marketsof the Dublin and London Stock Exchanges and have traded actively since 2January 2007. The carrying value of the assets of the businesses transferred toTotal Produce amounted to €147.4m as set out below. This financial informationhas been prepared as if the Group had, in substance, been in existence in itscurrent form since 1 January 2005, as further explained in note 1 of theaccompanying preliminary financial information. Revenue Total revenue at €1,861m was 11% higher than 2005 which was €1,676m. Revenue,excluding share of joint ventures and associates, of €1,577m, was up 16.3% onthe €1,356m in 2005. The increase in revenue reflects the impact of theacquisition during the year of the second half of two joint venture operations,in Denmark and the UK, combined with strong organic growth in a number of keymarkets. Operating profit Adjusted EBITA (which is operating profit, before exceptional items,amortisation, interest and tax, including the equivalent share of joint venturesoperating profit - the calculation of which is set out in note 2 of theaccompanying preliminary financial information) was €38.9m in 2006 as against€37.9m for 2005. The 2006 result includes the first time cost of rent payableto Blackrock International Land plc of €1.5m, for eight months to December, inrespect of the properties previously owned by Total Produce. Excluding this, thelike-for-like increase is adjusted EBITA was 6.7%. The increase in adjustedEBITA compared to the previous year reflects the impact of the organic growth incertain key markets and the acquisitions noted above, although these factorswere partly offset by more difficult trading conditions in a number of locationsin Europe. The statutory operating profit, after exceptional items,amortisation and the share of ventures/associates, interest and tax amounted to€21.8m in 2006, compared to €32.3m in the previous year, mainly reflecting thevarious exceptional items outlined below. Financial expense The net financial expense for the year was €2.9m compared to €2.7m in 2005. Thefinancial expense in 2006 should not be regarded as indicative of the futurefinancial expense of Total Produce as it does not reflect the agreed initialcapital structure following the demerger. Profit before tax Adjusted profit before tax amounted to €36.1m, compared to €35m in 2005, thecalculation of which is set out in note 2 of the accompanying preliminaryfinancial information. Taxation As set out in note 4 of the accompanying preliminary financial information,including the Group's share of the tax charge of its joint ventures andassociates, which is netted in operating profit under IFRS, the underlying taxcharge, exclusive of the impact of the once-off tax credits and the tax chargeon exceptional items, amounted to 26.8%, compared to 32% in the previous year. Minority interest The minority share of profits amounted to €6.5m in the year compared to €7m in2005, reflecting slightly lower profits in certain non-wholly owned businessesin Europe. Earnings per share Adjusted fully diluted earnings per share, excluding exceptional items,non-recurring tax credits and the amortisation of intangible assets, as set outin note 5 of the accompanying preliminary financial information, amounted to€5.70 cent for the Group in 2006, compared to €4.76 cent in the previous year.Basic earnings per share for the year, before such adjustments, amounted to€2.02 cent, compared to €3.83 cent in 2005. Fully diluted earnings per share,before such adjustments, amounted to €2.00 cent, compared to €3.78 cent in theprevious year. Dividend The board envisages a likely dividend payment of between €1.50 cent and €1.75cent in respect of 2007 subject to operating cash flows, capital and acquisitioncommitments. Exceptional items Net exceptional items in 2006 amounted to a charge of €13.2m. During the year,the Group recognised impairment charges as a result of changes in a number ofbusinesses and investments, giving rise to an aggregate non-cash charge in theincome statement of €22.7m. This comprised a €6.3m reduction in the carryingvalue of intangible assets, a €7.4m reduction in the carrying value of jointventures and a €9.1m charge in relation to other equity investments, includingthe write-off through the income statement of a €1.4m fair value reserverecognised in the previous year. Exceptional operating income amounted to€9.5m, comprising the disposal of a leasehold interest on a property occupied inIreland giving rise to a gain of €3.4m and a fair value gain of €6.1m on a UKproperty. Acquisitions Total Produce announced in January 2007 the acquisition of 100% of RedbridgeHoldings Limited, the UK fresh produce company, for a consideration of €23m,including deferred consideration of €4.5m and assumed pension liabilities of€5.5m. Redbridge is a leading fresh produce company with strong market positionsin the retail and wholesale sectors in the UK and annual turnover of Stg £236m(€352m). Total Produce also announced in February 2007 a 50/50 joint venture with Tatawith the objective of creating state-of-the-art distribution facilities forfresh produce across India. The initial investment by Total Produce will be€2.25m. Strategy and outlook The strategy of the Group is to expand the business organically and byacquisitions, joint ventures and alliances. The Group, through its bankingfacilities and stock market quotation, has the resources to grow substantiallyby medium and large scale acquisitions. The ambition is to double turnover overthe next five years. The target is for EPS growth in the current year in the mid-single digit range.Trading in the first two months of the year has been in line with the Group'sexpectations. Carl McCann, Chairmanon behalf of the Board29 March 2007 Copies of this announcement will be available on the company's website,www.totalproduce.com and from the company's registered office, Charles McCannBuilding, The Ramparts, Dundalk, Co. Louth. Total Produce plcSummary Group Income Statement for the year ended 30 December 2006 (unaudited) Pre- Exceptional Total Pre- Exceptional Total exceptional Items 2006 exceptional Items 2005 2006 2006 2005 2005 •'000 •'000 •'000 •'000 •'000 •'000 Revenue including Group share of joint venturesand associates 1,860,892 - 1,860,892 1,676,206 1,676,206Group revenue 1,577,056 - 1,577,056 1,355,973 - 1,355,973Cost of sales (1,353,820) - (1,353,820) (1,173,309) - (1,173,309) Gross Profit 223,236 223,236 182,664 - 182,664 Distribution expenses (148,074) - (148,074) (130,439) (316) (130,755)Administration expenses (42,784) - (42,784) (26,167) - (26,167)Other operating expenses (3,847) (22,749) (26,596) (201) (1,566) (1,767)Other operating income 3,135 9,550 12,685 3,086 1,136 4,222 Share of profit of joint ventures and associates (net of tax) 3,381 - 3,381 3,464 688 4,152 Operating profit 35,047 (13,199) 21,848 32,407 (58) 32,349Net financial expense (2,932) (2,694) Profit before tax 18,916 29,655Income tax expense (5,356) (9,302) Profit for the financial year 13,560 20,353 Attributable as follows:Equity shareholders 7,060 13,356Minority interests 6,500 6,997 13,560 20,353 All activities were in respect of continuingoperations. Earnings per share - •cent Basic €2.02 cent €3.83 centFully diluted €2.00 cent €3.78 centAdjusted fully diluted €5.70 cent €4.76 cent Total Produce plc Summary Group Statement of Recognised Income and Expense for the year ended 30December 2006 (unaudited) 2006 2005 •'000 •'000 Movement on translation of net investment in foreign operations 3,639 (967)Revaluation gains on property - 12,742Deferred tax arising on revaluation of property - (3,077)Revision to deferred tax provision on revaluation reserve 585 -Share of joint ventures revaluation on property - 722Deferred tax on joint ventures revaluation gains on property - (12)Fair value adjustment on equity investments 1,400 (1,400)Effective portion of cashflow hedges (61) 61Deferred tax on effective portion of cashflow hedges 9 (9)Actuarial gain/(loss) recognised on defined benefit pension schemes 6,315 (3,282)Deferred tax on actuarial gain/(loss) on defined benefit pension schemes (236) 410Share of actuarial loss on joint ventures defined benefit pension schemes (609) (585)Deferred tax on actuarial loss on joint ventures defined benefit pension schemes 149 135 Net income recognised directly in equity 11,191 4,738Profit for the year 13,560 20,353 Total recognised income and expense 24,751 25,091 Attributable as follows:Equity shareholders 17,838 17,087Minority interest 6,913 8,004 24,751 25,091 Total Produce plcSummary Group Balance Sheet as at 30 December 2006 (unaudited) 2006 2005 •'000 •'000Non-current assetsProperty, plant and equipment 112,049 134,766Investment property 9,009 10,543Goodwill & Intangible assets 95,895 79,941Other receivables 1,627 1,116Investments in joint ventures and associates 26,859 42,057Equity investments 11,011 16,524Employee benefits 3,047 -Deferred tax assets 4,502 4,070 Total non-current assets 263,999 289,017 Current assetsInventories 30,342 28,206Trade and other receivables 221,351 163,258Derivative financial instruments 17 -Non-trade receivables due from Fyffes plc and subsidiaries - 226,655 Cash and cash equivalents 87,909 55,043 Total current assets 339,619 473,162 Total assets 603,618 762,179 EquityCalled-up share capital 3,510 3,426Share premium 251,990 251,079Other reserves (108,063) (88,827)Total shareholders' equity 147,437 165,678Minority interest 48,501 46,004 Total equity and minority 195,938 211,682 Non-current liabilitiesInterest-bearing loans and borrowings 60,066 29,133Employee benefits 3,237 6,623Deferred government grants 2,081 2,248Other payables 538 520Provisions 4,384 28,151Corporation tax payable 7,785 8,085Deferred tax liabilities 15,047 21,121 Total non-current liabilities 93,138 95,881 Current liabilitiesInterest-bearing borrowings 22,178 39,686Trade and other payables 227,628 169,413Non-trade payables to Fyffes plc and subsidiaries 15,667 234,340Provisions 46,406 5,930Derivative financial instruments 3 69Corporation tax payable 2,660 5,178 Total current liabilities 314,542 454,616 Total liabilities 407,680 550,497 Total liabilities and equity 603,618 762,179 Total Produce plc Summary Group Cash Flow Statement for the year ended 30 December 2006(unaudited) 2006 2005 •'000 •'000 Cash flows from operating activities (Note 9.1) 38,811 31,222Cash flows from investing activities (Note 9.2) (45,481) (11,626)Cash flows from financing activities (Note 9.3) 47,812 (7,716) Net movement in cash and cash equivalents 41,142 11,880Cash and cash equivalents, including bank overdrafts at 1 January 42,882 30,893Translation adjustment on cash and cash equivalents 1,018 109 Cash and cash equivalents, including bank overdrafts at 30 December 85,042 42,882 Reconciliation of total net funds Increase in cash and cash equivalents 41,142 11,880Net (decrease)/increase in debt (22,634) 6,062Capital element of finance lease payments 1,083 1,394Other movements on finance leases (516) (346)Translation adjustment 366 18 Movement in net funds 19,441 19,008Net funds at the beginning of the year (13,776) (32,784) Net funds at the end of the year 5,665 (13,776) Total Produce plcNotes to Preliminary Results (unaudited)for the year ended 30 December 2006 1. Basis of preparation Total Produce plc was incorporated on 6 October 2006 for the purposes of thedemerger by Fyffes plc of its General Produce and Distribution business. Thedemerger was approved by Fyffes plc shareholders at an EGM on 5 December 2006.The demerger was effected on 30 December 2006 by Fyffes plc transferringcompanies and businesses, the net assets of which had a carrying value of€147.4m to Total Produce plc in exchange for the issuance of Ordinary Shares inTotal Produce plc to Fyffes plc shareholders on the basis of one share in TotalProduce plc for one share held in Fyffes plc. The business demerged to Total Produce plc was a separate segment in the Fyffesplc consolidated financial statements and was distinguishable both operationallyand for financial reporting purposes from the other operations of Fyffes plc.This preliminary financial information of Total Produce plc and subsidiaries ("the TP Group") has been derived from the consolidated financial statements ofFyffes plc for the year ended 31 December 2006 which have been prepared inaccordance with International Financial Reports Standards (IFRS) as endorsed bythe EU Commission on the basis set out below. This preliminary consolidated financial information for the TP Group has beenprepared as if the TP Group had always existed separately from Fyffes plc andconsequently reflects; • in the summary group balance sheet the net assets of the businesses transferred to Total Produce plc on 30 December 2006 and the comparative amounts reflect the net assets of those same businesses as they were included in the consolidated financial statements of Fyffes plc at 31 December 2005; • in the summary group income statement, summary group statement of recognised income and expenses and summary group cash flow statement, the results, performance and cashflows of those businesses for the year to 30 December 2006 and 31 December 2005, as they were recorded in the consolidated financial of Fyffes plc for those years; in accordance with the accounting polices as set out in TP Group's AdmissionDocument published on 2 January 2007. In accordance with Section 62 of the Companies Act 1963, the ordinary sharesissued by Total Produce plc have been recorded at fair value of €255.5m, basedon the average market capitalisation of Total Produce plc over the first fivedays post demerger. The difference between the carrying value of the investment recorded in theCompany balance sheet at fair value and the pre-existing carrying value of theassets and liabilities transferred has been recognised as a demerger deficit inother reserves within equity. The amounts shown for all reserves prior to the date of the demerger, except forthe share premium and demerger reserve are the amounts which would have beenrecorded if the TP Group had always existed as a separate group. The comparative amounts shown for share capital in issue reflects the actualshares in issue in Fyffes plc that ranked for dividend, as on the date ofdemerger each holder of a Fyffes share that ranked for dividend received oneshare in Total Produce plc. Consequently, the weighted average number of sharesin issue used in calculating earnings per share reflects the movements thatoccurred in the share capital of Fyffes plc over the period. 2. Adjusted profit before tax, EBITA and minority interests 2006 2005 €000 €000 Profit before tax per Income Statement 18,916 29,655AdjustmentsExceptional items (see note 3 below) 13,199 58Group share of tax charge of joint ventures and associates 894 2,186Amortisation of intangible incl share of joint ventures 3,063 3,110 Adjusted profit before tax 36,072 35,009ExcludeFinancial expense - group 2,932 2,694Financial expense - share of joint ventures and associates (70) 151 Adjusted EBITA 38,934 37,854 Total Produce believes that adjusted profit before tax and adjusted fullydiluted earnings per share (note 5 below) are the appropriate measures of theunderlying performance of the Group, excluding exceptional items andamortisation charges. Similarly, adjusted earnings before interest, tax,exceptional items and amortisation (adjusted EBITA) are a more indicativereflection of the underlying operations particularly given changes in thecapital structure of the Group following its demerger from Fyffes plc on 30December 2006. 3. Exceptional items 2006 2005 •'000 •'000 Impairment losses (22,749) -Gain on disposal of leasehold interest in property 3,430 -Fair value gain on investment properties 6,120 1,136Share of fair value gain on joint ventures/associates investment properties (net of tax) - 688Loss on disposal of investment property to Fyffes plc - (1,566)Impairment of property, plant and equipment - (316) Total exceptional items per income statement (13,199) (58) During the year, the Group recognised impairment losses arising from changes ina number of the businesses giving rise to an aggregate non cash charge in theincome statement of €22.7m. This comprises a €6.3m reduction in the carryingvalue of intangible assets, a €7.4m reduction in the carrying value of jointventures and a €9.1m charge in relation to the value of other equity investmentsincluding a €1.4m fair value reserve recognised in the prior year but nowwritten off in the income statement. Exceptional operating income comprises thegain on disposal of a leasehold interest on a property occupied in Irelandgiving rise to a gain of €3.4m and a fair value adjustment of €6.1m on aninvestment property in the UK. 4. Income Tax 2006 2005 €000 €000 Tax charge per Income Statement 5,356 9,302Group share of tax charge of its joint ventures/associates netted in profit before tax 894 2,186 Total tax charge 6,250 11,488 AdjustmentsDeferred tax on amortisation of intangibles (including share of joint ventures/ associates) 2,500 469Tax impact of exceptional items (2,688) (755)Once-off tax credits arising on demergers during the year 3,605 - Tax charge on underlying activities 9,667 11,202 Including the Group's share of the tax charge of its joint ventures andassociates amounting to €0.9m (2005: €2.2m), which is netted in operating profitin accordance with IFRS, the total tax charge for the year amounted to €6.3m(2005: €11.5m). Excluding the impact of once-off tax credits, deferred tax credits related tothe amortisation of intangibles and the tax effect of exceptional items, theunderlying tax charge for the year was €9.7m (2005: €11.2m), equivalent to arate of 26.8% (2005: 32.0%) when applied to the Group's adjusted profit beforetax. 5. Earnings per share 2006 2005 €000 €000 Profit for financial year attributable to equity shareholders 7,060 13,356 '000 '000 Weighted average number of shares for basic earnings per sharecalculation (note 1) 349,951 348,971Weighted average number of options with dilutive effect (note 1) 3,857 4,541 Weighted average number of shares for fully diluted earnings per share calculation (note 1) 353,808 353,512 Basic earnings per share - • cent 2.02 3.83 Diluted earnings per share - • cent 2.00 3.78 Adjusted fully diluted earnings per share 2006 2006 •'000 • cent per shareProfit for financial year attributable to equity shareholders 7,060 2.02Adjustments:Impairment losses (Note 3) 22,749 6.50Profit on disposal of leasehold interest (3,430) (0.98)Fair value movement on investment properties (6,120) (1.75)Amortisation of intangible assets 3,063 0.88Tax effect of exceptional items and amortisation charges (3,417) (0.98)Minority impact of exceptional items 282 0.08Impact on earnings of dilutive share options - (0.07) Adjusted fully diluted earnings - 2006 20,187 5.70 2005 2005 •'000 • cent per shareProfit for financial year attributable to equity shareholders 13,356 3.83Adjustments:Fair value movement on investment properties (1,136) (0.32)Share of joint ventures fair value movement on investment properties (688) (0.20)Impairment of property, plant and equipment 316 0.09Loss on disposal of investment property to Fyffes plc 1,566 0.45Amortisation of intangible assets 3,110 0.89Tax effect of exceptional items and amortisation charges 286 0.08Impact on earnings of dilutive share options - (0.06) Adjusted fully diluted earnings - 2005 16,810 4.76 Adjusted fully diluted earnings per share is calculated to adjust forexceptional items, intangible amortisation, related tax charges/credits and theimpact of share options with a dilutive effect 6. Employee post employment benefits 2006 2005 •'000 •'000 Deficit at beginning of year (6,623) (3,971)Current/past service cost less net finance income recognised in income statement (2,642) (1,686)Actuarial gain/(loss) recognised in statement of recognised gains and losses 6,315 (3,282)Contributions to schemes 2,760 2,316 Deficit at end of year (190) (6,623)Related deferred tax asset 592 828 Net asset/(deficit) 402 (5,795) The table summarises the movements in the net deficit on the Group's variousdefined benefit pension schemes in Ireland, the UK and Continental Europe. As aconsequence of the demerger from Fyffes plc, separate defined benefit pensionschemes now exist for Total Produce employees. The figures above reflect thepension assets and liabilities in respect of the employees who have transferredto Total Produce. The current/past service cost is charged in the Income Statement, net of thefinance income on scheme assets. Actuarial gains/(losses) are recognised in theStatement of Recognised Income and Expense. The reduction in the scheme'sdeficit during the year arose mainly as a result of the increase in long terminternational bond rates. 7. Summary Statement of Movement in Shareholders' Equity 2006 2005 •'000 •'000 Total shareholders' equity at beginning of year 165,678 157,666Total recognised income and expense 17,838 17,087Dividends paid to Fyffes plc and subsidiaries (4,534) (21,503)Distribution in specie arising from property demerger (39,346) -Movement in funding balance with Fyffes 7,801 12,428 Total shareholders' equity at end of year 147,437 165,678 During the year, dividends of €4.5m were recognised (2005: €21.5m) and paid toFyffes plc, the legal parent at the date of such distributions. As part of the distribution by Fyffes plc of its property undertakings toBlackrock International Land plc, fair value gains of €39.3m recognised inrespect of properties held by entities in its General Produce and Distributionbusiness were distributed to Fyffes plc. 8. Assets and liabilities acquired by Total Produce plc arising from demergerby Fyffes of its General Produce and Distribution business The following table summarises the carrying value of net assets in thebusinesses which were transferred to the Group arising from the demerger byFyffes plc of its General Produce and Distribution business. Carrying value of assets transferred from Fyffes plc •'m Property, plant and equipment and investment property 121.0Investment in joint ventures and associates 26.9Other equity investments 11.0Net working capital 23.0Net funds 5.7Net amount due to Fyffes in connection with demerger (15.7)Corporation tax liabilities - current and non-current (10.4)Deferred tax liabilities (net) (10.5)Net liability on defined benefit pension schemes (0.2)Provisions - current and non-current (mainly deferred consideration) (50.8)Minority interests (48.5) Aggregate tangible net assets transferred 51.5Goodwill and intangible assets on businesses demerged 95.9 Aggregate carrying value of assets transferred 147.4 In accordance with the terms of the demerger, the agreed initial net debt of theGroup, defined as cash and cash equivalents less current and non-current bankdebt and finance lease obligations, amounts to €10 million. Such net cashbalances in the Group at 30 December 2006 amounted to €5.7m. The Group also hasnet amounts payable to Fyffes, other than trade related balances, which arose inconnection with the demerger amounting to €15.7m, which when settled will leavethe Group with the agreed pro-forma €10 million initial net debt. 9.1 Cash flow from operations 2006 2005 •'000 •'000 Profit for the year 13,560 20,353Taxation expense 5,356 9,302Tax paid (12,255) (10,695)Gain on disposal of property, plant and equipment (610) -Depreciation of property, plant and equipment 12,294 10,582Fair value movement on investment properties (6,120) (1,136)Impairment of property, plant and equipment - 316Impairment of intangible assets 6,274 -Impairment of joint ventures 7,403 -Impairment of trade investments 9,072 -Amortisation of grants (323) (305)Net loss on disposal of investment property - 1,566Defined benefit pension scheme expense 2,642 1,686Contributions paid to defined benefit pension schemes (2,760) (2,316)Amortisation of intangible assets 3,020 3,110Share of profits of joint ventures and associates (3,381) (4,152)Net interest expense 2,932 2,781Interest received less interest paid (2,007) (1,600)Movement in working capital 3,714 1,730 Cash generated from operating activities 38,811 31,222 9.2 Cash flows from investing activities Acquisition of subsidiary, net of cash acquired (10,255) (668)Investment in and advances to joint ventures (2,498) (86)Payments of deferred consideration (5,076) (2,701)Acquisition of property, plant and equipment and investment property (27,476) (10,991)Proceeds from disposal of property, plant and equipment and investment property 1,580 2,134Dividends received from joint ventures and associates 80 722Acquisition of other equity investments (1,991) (36)Other 155 - Cash flows from investing activities (45,481) (11,626) 9.3 Cash flows from financing activities Net increase/(reduction) in borrowings 22,634 (6,062)Net cash movement in balance with Fyffes 34,099 26,694Capital element of lease payments (1,083) (1,394)Dividends paid to equity shareholders (4,534) (21,503)Capital injection by minority interest 116 -Dividends to minority interest (3,420) (5,451) Cash flows from financing activities 47,812 (7,716) 9.4 Analysis of movement in net funds in the year Opening Cash Non-Cash Closing 2006 Flow Movement Translation 2006 •'000 •'000 •'000 •'000 •'000Bank balances 42,377 2,906 815 46,098Call deposits 12,666 28,738 407 41,811 Cash and cash equivalents per balance sheet 55,043 31,644 1,222 87,909Overdrafts (12,161) 9,498 (204) (2,867) Cash and cash equivalents per cashflow statement 42,882 41,142 1,018 85,042Bank loans - current (27,726) 9,793 (391) (18,324)Bank loans - non-current (26,543) (32,427) (261) (59,231)Finance leases (2,389) 1,083 (516) _____ (1,822) Total net funds (13,776) 19,591 (516) 366 5,665 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
TOT.L