Preliminary Results Year End 31 Dec 2014

Preliminary Results for year ended 31 December 2014

Fyffes delivers strong growth in earnings

· EBIT* up 28.1% to €40.1m

· EPS* up 26.6% to 11.17 cent

· Sixth consecutive year of earnings growth

· Compound annual growth in EPS* of 18.9% since 2008

· Strong return on invested capital of 18.4%

· Final dividend increased by 12.3%

· Target EBIT* range for 2015 of €36m-€42m

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

"Fyffes continued to perform strongly in 2014, delivering a 26.6% increase in Adjusted EPS, our sixth consecutive year of earnings growth.The Group's target EBIT for 2015 is in the range €36m-€42m, compared to €40.1m in 2014. Fyffes is pursuing necessary increases in selling prices in all markets in response to the significant strengthening of the US dollar against the euro and sterling in recent months. The Group is focused on continuing to grow the business and is actively pursuing a promising number of attractive acquisition opportunities."

* These financial terms are defined below and exclude a €0.1m net exceptional gain.

27 February 2015

Forward looking statement

Any forward looking statements made in this press release have been made in good faith based on the information available as of the date of this press release and are not guarantees of future performance. Actual results or developments may differ materially from the expectations expressed or implied in these statements, and the company undertakes no obligation to update any such statements whether as a result of new information, future events, or otherwise. Fyffes Annual Report contains and identifies important factors that could cause these developments or the company's actual results to differ materially from those expressed or implied in these forward-looking statements.

For further information, please view the 2014 results slide presentation at www.fyffes.comor contact Brian Bell at Wilson Hartnell PR, Tel: +353-1-6690030.

Fyffes plc Preliminary Results for year ended 31 December 2014

Financial Highlights

*Key performance measures:

· Adjusted EBITDA is earnings before interest, tax, depreciation and amortisation, excluding the Group's share of Balmoral's result and exceptional items

· Adjusted EBITA is adjusted EBITDA less depreciation charges

· Adjusted EBIT is adjusted EBITA less amortisation charges

· Adjusted diluted earnings per share excludes exceptional items and, in previous years, amortisation charges and related tax credits, and the Group's share of Balmoral's result

Copies of this announcement are available from the Company's registered office, 29 North Anne Street, Dublin 7 and on our website at www.fyffes.com.

Financial results and operating review

Revenue

Total revenue, including the Group's share of its joint ventures, increased by 0.8% in 2014, to €1.1bn. Group revenue, excluding Fyffes' share of its joint ventures, amounted to €853m in the year, an increase of 2.0%. The increase in turnover in the year reflected organic volume growth in the pineapple and melon categories, offset by price deflation in bananas and pineapples.

Operating profit

Fyffes has delivered another strong increase in earnings in 2014, its sixth consecutive year of growth. Adjusted EBITA was €7.5m higher (+22.9%) at €40.1m, compared to €32.7m in 2013. Adjusted EBIT also amounted to €40.1m, up 28.1% year on year, as there were no amortisation charges in 2014. Adjusted EBITDA was up 20.5% year on year, to €48.2m. The calculations of Adjusted EBIT, Adjusted EBITA and Adjusted EBITDA are set out in note 2 of the accompanying financial information. The key drivers of performance in the Group's tropical produce operations are average selling prices, exchange rates and the costs of fruit, shipping and fuel.

Fyffes achieved a modest increase in operating profits in its banana category in 2014. The Group experienced low single digit price deflation during the year. This was somewhat offset by the benefit of an average 4% weakening of the US dollar against euro and sterling year on year. Overall banana volumes were marginally up in 2014, although there were some changes in the mix of customers. There was further inflation in the cost of fruit during 2014, continuing a multi-year pattern, but this was offset by lower shipping and other import costs, including the benefit of a 6% reduction in bunker fuels costs.

The Group again delivered an improved result in pineapples in 2014 and has moved closer to its target returns in the category. As in the banana category, there was modest price deflation during the year. Offsetting this, the Group achieved a reduction in production costs, particularly in its operations in Costa Rica following the successful integration of the second farm acquired there early in 2013. Fyffes increased its pineapple volumes by 10% in 2014, with 65% of this being produced on the Group's own farms. Separately, the Group has written down the carrying value of one of its pineapple farms as explained in the exceptional items paragraph below.

Fyffes' US melon business delivered a strong result in 2014. Farming efficiency continued to improve, contributing to a low double digit increase in volumes, consolidating the Group's market leading position in this category in the US. Market conditions were generally positive during the 2013/14 import season, with a low single digit increase in average prices. The business continues to be very focused on the efficiency of its operations. There has been a satisfactory start to the 2014/15 import season.

Balmoral International Land Holdings plc ("Balmoral"), in which the Group has a 40% shareholding, reported its final results for 2013 in August 2014. These showed a small profit for the first time since 2007 and Fyffes share of its net assets increased to €0.6m from €0.4m at the end of last year. Fyffes has elected to leave the carrying value of its investment in Balmoral unchanged at €50,000 and has therefore not recognised its share of these 2013 profits. Balmoral has not yet reported its 2014 results.

The total operating profit for the Group, which is Adjusted EBITA less the Group's share of joint ventures interest and tax and, where relevant, amortisation charges and exceptional items, amounted to €38.9m for the year, 29.9% up on the previous year.

Exceptional items

Following a number of months of negotiation and due diligence, Fyffes and Chiquita announced in March 2014 an intention to combine in an all share merger subject, inter alia, to approval by shareholders of both companies and anti-trust clearance in relevant jurisdictions. In August 2014, a consortium offered to purchase Chiquita in an all cash deal. Fyffes and Chiquita subsequently agreed a number of changes to the terms of its merger agreement, including the respective percentages Fyffes and Chiquita shareholders would own in the merged entity and an increase in the obligation to pay a break fee to Fyffes in the event of a termination of that transaction. Chiquita shareholders ultimately voted not to support the proposed merger with Fyffes at a special meeting in October 2014 and the business was subsequently sold to the consortium. Following termination of the proposed merger, Chiquita paid US$23.3m (€18.6m) to Fyffes in respect of its obligations under the terms of the merger agreement. During this protracted process, which extended over a prolonged period, Fyffes incurred professional and advisory fees and other costs amounting to €14.3m, including costs related to a review of Fyffes business operations, resulting in a net surplus of €4.3m.

Following a strategic review of the Group's pineapple operations, Fyffes wrote down the carrying value of the assets of one of its pineapple farms, which has been underperforming compared to its other pineapple farms. The impairment charges recognised in 2014 in writing down these assets amounted to €4.2m.

These exceptional items, which amounted to a net surplus of €0.1m, had no tax impact in the year.

Financial expense

Net financial expense in the Group's subsidiary companies in 2014 amounted to €0.7m, compared to €1.3m in the previous year. This improvement mainly relates to a €0.6m reduction in non-cash interest costs arising on the discounting of deferred acquisition consideration and other provisions following the significant pay down in these liabilities in 2013. The Group's share of the net financial expense of its joint ventures was €0.4m in 2014, compared to €0.3m in the previous year.

Profit before tax

Adjusted profit before tax for 2014 amounted to €39.0m, 25.3% up on the previous year, ahead of the increase in EBITA due to the lower interest charges. As set out in note 2 of the accompanying financial information, adjusted profit before tax excludes exceptional items and the Group's share of the tax charge of its joint ventures, which is reflected in profit before tax under IFRS rules, and, in previous years, the amortisation of intangible assets and the Group's share of Balmoral's result. Profit before tax, excluding these adjustments, amounted to €38.2m compared to €28.7m in 2013, an increase of 33.1%, reflecting a reduction in amortisation charges to nil in 2014.

Taxation

An analysis of the tax charge for the year is set out in note 4 of the accompanying financial information. The underlying tax charge in 2014 was €5m compared to €4m in the previous year, equivalent to a rate of 12.7% (2013: 12.9%), when applied to the Group's adjusted profit before tax. The underlying tax charge excludes deferred tax credits related to the amortisation of intangible assets, where applicable, and includes the Group's share of tax of its joint ventures. This underlying rate is used for the purposes of calculating adjusted earnings per share. The 2014 Income Statement shows a tax charge of €4m before these adjustments, compared to €2.5m in the previous year.

Non-controlling interests

The non-controlling interests share of profit after tax for the year amounted to €0.2m in 2014, compared to €0.5m in the previous year.

Earnings per share

The Group's adjusted diluted earnings per share in 2014 amounted to €11.17 cent, up 26.6% on the previous year. This increase reflects the 25.3% increase in adjusted profit before tax and the slightly lower tax and non-controlling interest charges. The calculation of adjusted earnings per share is set out in note 5 of the accompanying financial information. It excludes exceptional items and, in previous years, the amortisation of intangible assets and related tax credits and the Group's share of Balmoral's result. The diluted earnings per share after exceptional items and in prior years, amortisation charges and Balmoral's result, amounted to €11.20 cent in 2014, up 31.6% on the previous year.

Dividend and share buyback

The Board is proposing to pay a final dividend for 2014 of €1.673 cent per share, up 12.3% on the previous year. Subject to shareholder approval at the forthcoming AGM, this dividend, which will be subject to Irish withholding tax rules, will be paid on 7 May 2015 to shareholders on the register on 7 April 2015. In accordance with company law and IFRS, this dividend has not been provided for in the balance sheet at 31 December 2014. Total dividends in respect of 2014 will amount to €2.387 cent, 10.0% up on the previous year and equivalent to a payout ratio of 21.4% based on adjusted earnings per share.

Fyffes will seek to renew its authority from shareholders to repurchase shares at its 2015 AGM. Subject to this authority and taking into account the Group's financial position and other investment opportunities, the company may from time to time repurchase further Fyffes plc shares in the market.

Balance sheet

Net funds

The Group finished 2014 with net debt of €11.7m, compared to net cash of €0.4m at the start of the year. Cash generated amounted to in excess of €50m including EBITDA of €48.2m and the €4.3m net exceptional gain related to the proposed merger with Chiquita, less the €2.2m share of joint ventures profit before tax. The main uses of cash in the year included €19.7m for the construction of a new distribution centre in the UK and the purchase of another depot in the UK, previously leased from Balmoral, along with an adjoining warehouse. Other/maintenance capital expenditure amounted to €7.2m. Dividend and tax payments amounted to €6.6m and €4.9m respectively, and €3m was spent on repurchasing 3m Fyffes shares in December 2014. Deferred consideration payments in respect of prior period acquisitions amounted to €2.5m. Working capital increased by €14.5m year on year, including an increase in loans and advances to suppliers.

Pension obligations

The deficit in the Group's defined benefit pension schemes, before deferred tax, increased from €28.2m at the beginning of the year to €41.4m at the end of the year. Asset values in the various schemes increased by €23.2m (17.8%) in 2014, but liabilities increased by €36.5m (23.1%), mainly due to the impact of lower international bonds rates.

Investment in Balmoral International Land Holdings plc ("Balmoral")

In accordance with International Financial Reporting Standards, Fyffes 40% investment in Balmoral continues to be accounted for under equity accounting rules. Fyffes wrote down the carrying value of its investment to €50,000 in 2011 and there has been no change in this position since then. Balmoral continues to be actively managed and, given its extensive and well diversified portfolio of properties in Ireland, the UK and Continental Europe, remains in a position to benefit from improvements in property market conditions. Balmoral shares continue to be traded on a grey market. At its current share price of c.€0.015, Fyffes investment in Balmoral has a market value of €3.5m.

Shareholders' funds

Shareholders' funds increased by €35.1m (23.8%) in the year to €182.7m. Retained profits after tax and minority interests of €33.9m, combined with translation gains on the Group's non-euro denominated net assets of €15.6m and mark to market gains of €8.2m on valuing the Group's currency and fuel hedges, were partly offset by a €12.2m actuarial loss on the Group's pension schemes, dividend payments of €6.6m and the €3m share buy back at the end of the year.

Current trading

The Group's target EBIT for 2015 is in the range €36m-€42m, compared to €40.1m in 2014. Fyffes is pursuing increases in selling prices in all markets in response to the significant strengthening of the US Dollar against the euro and Sterling in recent months. The Group is focused on continuing to grow the business and is actively pursuing a promising number of attractive acquisition opportunities.

David McCann, Chairman 27 February 2015

on behalf of the Board

Fyffes plc

Summary Group Income Statement for the year ended 31 December 2014

Fyffes plc

Summary Group Statement of Comprehensive Income for the year ended 31 December 2014

Summary statement of movement in equity for the year ended 31 December 2014

Fyffes plc

Summary Group Balance Sheet as at 31 December 2014

Fyffes plc

Summary Group Cash Flow Statement for the year ended 31 December 2014

Fyffes plc

Notes to Preliminary Results for the year ended 31 December 2014

1. Basis of preparation

This preliminary financial information has been derived from the Group's consolidated financial statements for the year ended 31 December 2014, which were approved by the Board of Directors on 26 February 2015. It has been prepared in accordance with the International Financial Reporting Standards (IFRS) as endorsed by the EU Commission and the accounting policies set out in the Group's 2013 annual report, except for certain revisions resulting from the impact of the application of a new suite of accounting standards relating to consolidation issues (IFRS 10 Consolidated Financial Statements; IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities). These new accounting standards have had no material impact on the Group's financial statements. The Group constructed and acquired a number of investment properties during 2014 and has adopted an accounting policy in respect of these property assets which is to carrying them at fair value in accordance with IFRS.

The Group's full financial statements and annual report will be circulated to shareholders, published on the Group's website and filed with the Irish Registrar of Companies in due course.

The comparative financial information for the year ended 31 December 2013 presented in this preliminary results announcement represents an abbreviated version of the Group's statutory financial statements for that year, on which an unqualified audit report was issued and which have been filed with the Companies Registration Office in Dublin.

The financial information is presented in euro, rounded to the nearest thousand. The results and cash flows of Group companies denominated in foreign currencies have been translated into euro at the average exchange rates for the period while their balance sheets have been translated at the year end rate of exchange. Adjustments arising on retranslation of the opening net assets and results for the year of these non-euro denominated operations at the year end rate of exchange are recognised directly in equity, in the currency translation reserve, net of any movements on related foreign currency borrowings, including those arising on long term intra-Group loans regarded as quasi-equity in nature. All other translation differences are recognised in the income statement. The principal non-euro currencies applicable to the Group are sterling and the US dollar. The average and closing rates to the euro were as follows:

2. Adjusted profit before tax, EBITA and EBITDA

Fyffes is currently organised into two separate operating divisions - Tropical Produce and Property. Fyffes Tropical Produce operations produce and import bananas, pineapples and melons sourced in Central and South America for distribution to customers in Europe and the US. Fyffes Property activities comprise its 40% investment in Balmoral International Land Holdings plc ("Balmoral") which is an international property development company. This preliminary results announcement presents the separate information for Balmoral under equity accounting rules in the Income Statement and the Balance Sheet and in the reconciliation above. The performance of the Tropical Produce division is reviewed by the Chief Operating Decision Maker ("CODM"), being the executive team comprising the Executive Chairman, the Chief Operating Officer and the Finance Director, based on Adjusted EBITA which, while not a term defined in IFRS, Fyffes believes is the most appropriate measure of the underlying operating result of the Group. Adjusted EBITA is earnings before interest, tax and amortisation charges, excluding exceptional items and the Group's share of Balmoral's result and including the Group's share of its joint ventures on a consistent basis. Adjusted earnings per share are presented on a similar basis in note 5 below. Adjusted EBITA reflects the results of Fyffes Tropical Produce operations, net of all central overheads, and is the basis for the analysis of the performance of that division in the accompanying text. Financial income and expense, income tax and certain corporate overheads are managed on a centralised basis. The only ongoing inter-segmental transactions between Fyffes Tropical Produce division and Balmoral arise because Fyffes leases a number of its distribution centres from Balmoral and Fyffes in turn sublets space in its corporate head office to Balmoral. During 2014, the Group paid €2.9m to purchase a distribution centre in the UK which it had been leasing from Balmoral.

Balmoral published its 2013 full year results in August 2014. It has not yet reported its 2014 results. Balmoral reported a small profit in 2013, its first since 2007. Fyffes share of its net assets increased to €0.6m based on these results. Fyffes has elected to leave the carrying value of its investment in Balmoral unchanged at €50,000 until there is further certainty regarding the longer term outlook in the international property sector.

3. Exceptional items

3. Exceptional items (continued)

Following a number of months of negotiation and due diligence, Fyffes and Chiquita Brands International, Inc ("Chiquita") announced in March 2014 an intention to combine in an all share merger subject, inter alia, to approval by shareholders of both companies and anti-trust clearance in relevant jurisdictions. In August 2014, a consortium offered to purchase Chiquita in an all cash deal. Fyffes and Chiquita subsequently agreed a number of changes to the terms of its merger agreement, including the respective percentages Fyffes and Chiquita shareholders would own in the merged entity and an increase in the obligation to pay a break fee to Fyffes in the event of a termination of this transaction. Chiquita shareholders ultimately voted not to support the proposed merger with Fyffes at a special meeting in October 2014 and the business was subsequently sold to the consortium. Following termination of the proposed merger, Chiquita paid Fyffes US$23.3m (€18.6m), in respect of its obligation under the terms of the merger agreement. During this protracted process, which extended over a prolonged period, Fyffes incurred professional and advisory fees and other costs amounting to €14.3m, including costs related to a review of Fyffes business operations, resulting in a net surplus of €4.3m.

Following a strategic review of the Group's pineapple operations, Fyffes wrote down the carrying value of the assets of one of its pineapple farms, which has been underperforming compared to its other pineapple farms. The impairment charges recognised in 2014 in writing down these assets amounted to €4.2m.

These exceptional items, which amounted to a net surplus of €0.1m, had no tax impact in the year.

4. Corporation tax

Including the Group's share of the tax charge of its joint ventures, amounting to €0.9m (2013: €1.1m), which is netted in operating profit in accordance with IFRS, the total tax charge for the year amounted to €5.0m (2013: €3.6m). Excluding the impact (in the prior year) of deferred tax credits related to the amortisation of intangible assets, the underlying tax charge for the Group for the year was €5.0m (2013: €4.0m), equivalent to a rate of 12.7% (2013: 12.9%) when applied to the Group's adjusted profit before tax.

5. Earnings per share

Adjusted diluted earnings per share

Adjusted diluted earnings per share is calculated to exclude, where applicable, the Group's share of the results of Balmoral International Land Holdings plc, exceptional items, intangible amortisation, related tax credits / charges, once-off tax credits and the impact of share options with a dilutive effect.

6. Post employment benefits

The table summarises the movements during the year in the Group's defined benefit pension schemes in Ireland, the UK and Continental Europe. The current/past service cost is charged in the Income Statement, together with the interest cost of scheme liabilities net of the 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 Employee Benefits (2011). The measurement of the Group's pension obligations is based on a number of key assumptions which are determined in consultation with independent actuaries. One key assumption is the appropriate interest rate to use in discounting the estimated future cash flows of the schemes. At 31 December 2014, the Group used a rate of 2.3% (2013: 4.0%) in respect of its euro denominated schemes and 3.7% (2013: 4.5%) in respect of its UK scheme.

7. Dividends and share buy-back

The directors have proposed a final dividend for 2014, subject to shareholder approval at the AGM of €1.673 cent per share. In accordance with IFRS, this dividend has not been provided for in the Balance Sheet at 31 December 2014.

On 11 December 2014, Fyffes purchased 3,000,000 ordinary shares of €0.06 each in the issued share capital of the company on the market at a price of €1.00 per share, at a total cost of €3,038,000 including taxes and commission. At 31 December 2014, the company and subsidiary companies held 31,075,000 Fyffes plc ordinary shares (2013: 28,075,000). The right to dividends on these shares has been waived and they are excluded from the calculation of earnings per share.

8. Notes supporting cash flow statement

8.1 Cash generated from operations

8.2 Cash flows from investing activities

8.3 Cash flows from financing activities

8.4 Analysis of movement in net funds/(debt) in the year

9. Reconciliation of other reserves

10. Financial instruments

The fair values of financial assets and financial liabilities, together with the carrying amounts in the Summary Group Balance Sheet at 31 December 2014 are as follows:

All of the Group's debt is due within one year with the exception of €8,000,000 (2013: €2,276,000).

Fair value of financial instruments carried at fair value

In accordance with IFRS 13 Fair Value Measurement, financial instruments recognised at fair value are analysed between those based on quoted prices in active markets for identical assets or liabilities (Level 1); those involving inputs other than quoted prices that are observable for the assets or liabilities, either directly or indirectly (Level 2); and those involving inputs for the assets or liabilities that are not based on observable market data (Level 3). The following table sets out the fair value of all financial instruments whose carrying value is at fair value:

The fair value of hedging instruments entered into by the Group is measured in accordance with Level 2 and consist of foreign currency forward contracts and bunker fuel forward contracts.

10. Financial instruments (continued)

Where derivatives are traded either on exchanges or liquid over-the-counter-markets, the Group uses the closing prices at the reporting date. Normally, the derivatives entered into by the Group are not traded on active markets. The fair values of these contracts are estimated using a valuation technique that maximises the use of observable market inputs, eg market exchange.

The fair value of deferred contingent consideration is measured in accordance with Level 3. Details of movements in the period are set out below. The contingent element is measured on a series of trading performance targets and is adjusted by the application of a range of outcomes and associated probabilities.

Additional disclosures for Level 3 fair value measurements