Total Produce records strong results to June 2020

TOTAL PRODUCE PLC

HALF YEAR RESULTS TO 30 JUNE 2020

Total Produce records strong results in the first half of 2020

· Very strong performance in the first half of 2020 in the context of the unprecedented challenges posed by COVID-19 to the global economy

· Total revenue up 2.0% to €3.112 billion

· Adjusted EBITDA up 0.9% to €118.2m

· Adjusted EBITA down 1.5% to €91.5m

· Adjusted profit before tax up 1.7% to €67.1m

· Adjusted fully diluted EPS down 3.6% to 9.45 cent

· The Group is in a strong financial position, Net debt of €218.8m (June 2019: €294.3m)

· 2019 final dividend of 2.577 cent per share to be paid in September 2020

· Interim dividend of 0.9129 cent per share, unchanged on the prior year, to be paid in January 2021

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

"We are pleased with the very strong performance in the first half of 2020 against the backdrop of the COVID-19 pandemic which has posed unprecedented challenges to the global economy. The health and wellbeing of our people is our number one priority while at the same time recognising our role in supplying vital foodstuffs, particularly during the pandemic. We are very proud of the efforts of all our people. Their dedication, commitment and hard work ensured the Group's supply chains and operations continue to function and remain open across all our key markets.

In the first half of 2020, revenue and adjusted EBITDA have increased by 2.0% and 0.9% respectively demonstrating the robustness of the Group's business model. Demand from retail and wholesale remained strong and helped offset reduced demand from the food service sector.

The Group expects revenue and adjusted EBITDA to be slightly ahead of 2019 on a full year basis with adjusted EPS slightly behind subject to the prevailing uncertainties of COVID-19. The Group intends to pay a 2020 interim dividend of 0.9129, unchanged on the prior year. The Group remains in a very strong financial position and continues to actively pursue the growth and expansion of the business".

27 August 2020

For further information, please contact:

Brian Bell, Wilson Hartnell PR - Tel: +353-1-669-0030, Mobile: +353-87-243-6130

Interim Results

For the half year ended 30 June 2020

Overview

Total Produce (the 'Group') has delivered a very strong performance in the first half of 2020 against the backdrop of the unprecedented uncertainties and challenges in the global marketplace arising from the ongoing COVID-19 pandemic. The COVID-19 outbreak is an ongoing challenge for the Group and the wider fresh produce industry. The health and wellbeing of our people is the Group's number one priority while at the same time recognising the vital role in continuing to keep the supply chains open and supplying essential foodstuffs. The Group's strong presence in the global fresh produce industry, the diversity of its operations and products together with the exceptional response from our people have enabled us to meet these challenges.

Total revenue in the period grew 2.0% to €3,112m (2019: €3,051m) and adjusted EBITDA increased by 0.9% to €118.2m (2019: €117.1m) with adjusted EBITA decreasing 1.5% to €91.5m (2019: €92.8m). The increase in revenue was due to robust retail and wholesale demand offsetting reduced levels of activity in the food service sector. The Group also benefitted from the contribution of bolt-on acquisitions made in the past twelve months. Currency had a marginally positive impact on the translation of the overall results of foreign currency denominated operations to Euro in the period due principally to the strengthening of the US Dollar. On a like-for like basis excluding the impact of acquisitions, divestments and currency translation, revenues were in line with the prior period with a marginal volume decrease offset by increases in average price. The marginally 1.5% lower adjusted EBITA was primarily due to lower earnings in Dole benchmarked against a strong comparative period. This was partly offset by good performance in the Eurozone and International divisions.

Operating profit before exceptional items increased by 1.0% to €52.9m (2019: €52.4m). The operating profit after exceptional items was €47.6m (2019: €60.9m) with the decrease due to the effect of exceptional items year on year. The 2019 prior year period included exceptional gains of €8.4m compared to a current year charge of €5.3m. The gain in the prior period was due in large part to the Group's share of the gain on disposal of a Swedish salad business in Dole.

Adjusted fully diluted earnings per share decreased by 3.6% to 9.45 cent (2019: 9.80 cent), with the decrease due to the 1.5% reduction in adjusted EBITA and a higher non-controlling interest charge.

The Group was cash-generative in the period with adjusted operating cash flows of €33.1m (2019: €30.7m) before normal seasonal working capital outflows. Net debt at 30 June 2020 of €218.8 was lower than net debt of €294.3m at 30 June 2019 and €221.2m at 31 December 2019. The decrease in net debt on the prior period was helped by a €32.4m increase in non-recourse trade receivables financing and initiatives and actions taken by the Group to protect the business and militate against potential effects due to COVID-19. The Group managed its liquidity by curtailing some non-essential capital expenditure and discretionary costs. The Group is in a strong financial position and in addition to the measures outlined above, it has improved its borrowing capacity by increasing the amount and tenor of its committed borrowing facilities. The Group is operating comfortably within its bank covenants.

The Group is also pleased to announce the payment of the final 2019 dividend of 2.5770 cent per share on 2 September 2020 subject to approval of shareholders at the AGM on 28 August 2020. The Board intends to pay the 2020 interim dividend of 0.9129 cent per share, unchanged on the prior year in January 2021.

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Alternative performance measures 'APMs' The Group uses APMs, which are non-IFRS measures to monitor financial performance. These measures are referred to throughout the discussion of our reported operating performance and financial position and are measures which are regularly reviewed by Group management in assessing Group performance. The APMs are defined together with calculations in pages 30 to 33 of this statement

Operating Review

The table below details a segmental breakdown of the Group's total revenue and adjusted EBITA for the six months ended 30 June 2020. The European and International operating segments are primarily involved in the procurement, marketing and distribution of hundreds of lines of fresh fruit and vegetables. The Group's 45% share of the results of Dole is included as a separate operating segment. Dole is one of the world's leading fresh producers, marketers and distributors of fresh fruit and vegetables, which sell and distribute through a wide network in North America, Europe, Latin America, the Middle East and Africa. Segment performance is evaluated based on total revenue and adjusted EBITA.

*Dole's financial calendar consists of thirteen 4 weekly periods. The first half results are for the first six periods ended 13 June 2020. The comparative results are for the first six periods of 2019 ended 15 June 2019. The Group's share of the adjusted EBITA of Dole is after the deduction of the Group's share of the non-controlling interests charge within Dole and an allocation of a corporate overhead

** The 2019 segmental comparatives have been restated to conform with the current year's presentation. See Note 3 of the accompanying financial information.

Total revenue increased 2.0% to €3,112m (2019: €3,051m) with robust demand from retailers and wholesalers offsetting reduced levels of activity in the food service sector. The Group also benefitted from bolt-on acquisitions made in the past twelve months. Currency had a marginally positive impact on the translation of the overall results of foreign currency denominated operations to Euro in the period primarily due to the strengthening of the US Dollar. On a like-for like basis excluding the impact of acquisitions, divestments and currency translation, revenues were in line with the prior period with a marginal volume decrease offset by increases in average price.

Adjusted EBITA decreased by 1.5% to €91.5m (2019: €92.8m) due primarily to lower earnings in Dole which was benchmarked against a strong comparative period. This was offset by a good performance in the Eurozone and International divisions of the core Total Produce business. There were additional operating costs incurred in the period relating to COVID-19 such as employee personal protective equipment and costs of additional shifts in warehouse to comply with physical distancing. These additional costs were offset by reductions in other costs such as travel expenses.

Europe - Non-Eurozone

This segment includes the Group's businesses in the Czech Republic, Poland, Scandinavia and the UK. Revenue increased by 2.4% to €770m (2019: €752m) helped by the incremental impact of bolt-on acquisitions. On a like-for-like basis excluding divestments, acquisitions and disposals, revenue was circa 0.5% behind prior period with volume decreases offset by average price increases. Volume decreases are due to reduced demand in the food service sector in Scandinavia, the UK and the Czech Republic as a result of restrictions imposed due to COVID-19. This was offset by robust demand from retail, some growth in wholesale markets as well as an element of organic growth. Adjusted EBITA decreased 5.8% to €21.6m (2019: €23.0m) due to currency translation and an impact on margin due to a change in customer mix.

Europe - Eurozone

This segment includes the Group's businesses in France, Ireland, Italy, the Netherlands and Spain. Revenue increased by 2.8% to €855m (2019: €832m). Excluding the effect of acquisitions and divestments, revenue on a like-for-like basis was circa 2% ahead of prior period with average price increases offsetting a decrease in volumes. Throughout the Eurozone, robust retail and wholesale demand offset lower demand from the food service sector. Adjusted EBITA increased 13.9% to €12.4m (2019: €10.9m) with a resilient performance across all divisions particularly Spain. The results in the Netherlands were ahead of prior period with a good import business while the horticultural division remains challenged.

International

This division includes the Group's businesses in North America, South America and India. Revenue increased by 2.1% to €618m (2019: €605m). The results were helped in part with the benefit on translation of the results to Euro from the strengthening of the average US Dollar rate by 2.5% and the benefit of an increase in the shareholding in a joint venture which is now treated as a subsidiary. On a like-for-like basis excluding effects of currency and acquisitions, revenue decreased circa 1.5% with marginal decreases in volume and average price. The International division is largely retail focussed. There was an increase in demand for the staple items of potatoes, vegetables and citrus with reduced demand experienced for some more expensive soft fruit and certain varieties of deciduous product. Adjusted EBITA increased 23.8% to €11.1m (2019: €8.9m) with improved margins, lower operating costs (primarily travel related), the benefit of a joint venture becoming a subsidiary and the positive impact on the translation of the results of US Dollar denominated earnings to Euro.

Dole

This segment includes the Group's share of the results of Dole. The Group is equity accounting for its 45% share of the results of Dole on an IFRS basis.

Dole's financial calendar consists of thirteen periods of four weeks, and the first half results are for the first six periods ended 13 June 2020 and the comparative results are for the first six periods of 2019 ended 15 June 2019. Dole's overall business is seasonal, with the greater share of adjusted EBITA earned in the first half of the financial year. Hence the results for the period ended are not indicative of the results of the operations for the full year. As Dole is vertically integrated its operations are sensitive to a number of factors including weather related phenomena and the effects on industry volumes, prices, produce quality and growing costs.

Trading in Dole for the period has been robust in the context of a challenging global environment due to COVID-19 and is benchmarked against a strong comparative period in the Fresh Vegetable division for some produce categories. On an IFRS basis, Dole has recorded revenues of $2,210m (€2,006m) for the period ended 13 June 2020 down 1.2% when compared to prior period of $2,236m (€1,980m). Adjusted EBITDA for the period of $153.4m (€139.0m) was down 4.7% compared to prior period of $161.0m (€142.9m) with adjusted EBITA of $118.8m (€107.5m) behind 8.8% when compared to prior period result of $130.3m (€115.6m).

The Fresh Fruit division remained strong with higher banana volumes in Latin America and North America and improved pricing offset by some lower European volumes. The results in this division benefitted from lower fuel prices. This was offset by a general decrease in pineapple volumes and prices due to the impact of COVID-19 on the food service sector.

The overall results are behind primarily due to a decrease in Fresh Vegetables against a very strong comparative period in some categories. However, within this division, results from packaged salad operations were ahead of prior period with favourable volumes and pricing. Results in Chile were also impacted by timing differences in the crop and harvest cycles of cherries as well as lower grape volumes due to the drought.

Total Produce's 45% share of revenue for the period ended 13 June 2020 was €903m (2019: €891m) and its share of adjusted EBITA was €46.3m (2019: €50.0m). There was a marginally positive benefit on translation of the results to Euro due to strength of the US Dollar when compared to the prior period.

Further details on the acquisition of Dole and its financial performance and position for the period ended 13 June 2020 are outlined in Note 6 of the accompanying financial information.

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 - Dole

The Group's share of the after-tax profits of Dole for the period amounted to €17.8m (2019: €18.6m) before exceptional items. The decrease is due to the lower EBITA as noted earlier in the operating review offset in part by lower interest costs due to a decrease in the US Libor rate in the period. The Group's share of exceptional items was a €3.8m charge in the period compared to a €7.0m gain in the prior period primarily due to the gain on the sale of a Swedish salad business. Post exceptional items the Group's share of after-tax profits was €14.0m (2019: €25.6m). Further details of the performance of Dole and its financial position at the end of the period is outlined in the operating review and in Note 6 of the accompanying financial information.

Share of profits of joint ventures and associates - excluding Dole

Excluding the contribution from Dole the share of after-tax profits of joint ventures and associates increased in the period to €5.2m (2019: €4.9m). Dividends declared from joint ventures and associates in the period amounted to €6.1m (2019: €6.0m) with €6.4m (2019: €6.3m) received in cash reflecting the Group's continued focus on the cash contributions from these investments.

Intangible asset amortisation

Acquisition related intangible asset amortisation within subsidiaries amounted to €5.1m (2019: €5.0m) in the period. The share of intangible asset amortisation within joint ventures and associates was €1.3m (2019: €1.3m).

Exceptional items

Exceptional items in the period amounted to a net charge after tax of €6.3m (2019: €8.7m gain). The net charge in 2020 primarily relates to the Group's €3.8m share of the net charge within Dole. In the comparative period the net gain primarily related to the Group's €7.0m share of the net gain within Dole primarily due to the profit on sale of the Swedish salad business. A full analysis of exceptional items for both 2020 and 2019 are set out in Note 4 of the accompanying financial information and have been excluded from the calculation of the adjusted numbers.

Operating profit

Operating profit before exceptional items increased 1.0% to €52.9m (2019: €52.4m) due primarily to the increased profits in the Eurozone and International divisions offset by lower earnings in Dole. Including exceptional items, operating profit decreased by 21.7% to €47.6m (2019: €60.9m) with the decrease due to the impact of exceptional items in the period. The net impact of exceptional items in the period on operating profit, was a charge of €5.3m compared to a gain of €8.4m in 2019. The prior year period included the Group's share of the gain in Dole on the sale of a Swedish salad business. As noted earlier, a full analysis of exceptional items for both 2020 and 2019 are set out in Note 4 of the accompanying financial information.

Net financial expense

Net financial expense in the period decreased to €5.1m (2019: €5.5m) primarily due to the fall in US Libor rates and lower average net debt in the period.

The Group's share of the net interest expense of joint ventures and associates in the period was €19.3m (2019: €21.4m) with the decrease due to Group's share of a lower interest charge in Dole due to reduction in US Libor rates in the period.

Profit before tax

Excluding acquisition related intangible asset amortisation charges and costs, fair value movements on contingent consideration and share of joint venture interest and tax which is netted in profit before tax in the statutory income statement, the adjusted profit before tax increased by 1.7% in the period to €67.1m (2019: €65.9m) with increase in the adjusted EBITA and effect of lower interest charges. Statutory profit before tax after these items was €42.6m (2019: €55.3m) with the decrease due to the impact of exceptional items in both periods. As noted earlier, there was a net exceptional charge of €6.3m in the period after tax (2019: net gain of €8.7m).

Taxation

The adjusted tax charge for the period, including the Group's share of joint ventures and associates tax and before non-trading items as set out on page 31 of the accompanying financial information was €21.3m (2019: €20.7m) representing an underlying tax rate of 31.7% (2019: 31.4%) when applied to the Group's adjusted profit before tax.

Non-controlling interests

The non-controlling interests' share of after-tax profits in the period was €7.3m (2019: €6.1m). Included in this was the non-controlling interests' share of the net charge on exceptional items, amortisation charges and acquisition related costs (net of tax) of €1.7m (2019: €1.0m). Excluding these non-trading items, the non-controlling interests' share of adjusted after tax profits increased by €1.9m to €9.0m (2019: €7.1m) with the increase due to the non-controlling interests' share of earnings in certain non-wholly owned companies in Europe and North America.

Adjusted and basic earnings per share

Adjusted fully diluted earnings per share was 9.45 cent (2019: 9.80 cent), a decrease of 3.6% due to the marginally lower EBITA in the period and the increase in the non-controlling interest charge noted earlier.

Management believes that adjusted fully diluted earnings per share, which excludes acquisition related intangible asset amortisation charges and costs, fair value movements on contingent consideration, unrealised gains or losses on derivative financial instruments, gains and losses on foreign currency denominated intercompany borrowings, exceptional items and the 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 6.91 cent per share (2019: 11.23 cent) and 6.90 cent per share (2019: 11.20 cent) respectively. The decrease on prior year is due to the large exceptional one-off gains in the 2019 comparative period compared to the exceptional charges in the current period as noted earlier.

Note 5 of the accompanying financial information provide details of the calculation of the respective earnings per share amounts.

Cash flow and net debt

Net debt (which excludes lease liabilities) at 30 June 2020 is €218.8m compared to €294.3m at 30 June 2019. Net debt at 31 December 2019 was €221.2m. Average net debt for the six-month period was €253.7m compared to €285.9m for the six-month period ended 30 June 2019 and €284.0m for the year ended 31 December 2019. In addition, the Group has non-recourse trade receivables financing of €67.4m at 30 June 2020 (30 June 2019: €35.0m and 31 December 2019: €46.4m).

The decrease in net debt on the prior period was due to the increase of €32.4m in non-recourse trades receivables financing and to initiatives and actions taken by the Group to protect the business and mitigate cash outflows due to COVID-19. Some non-essential capital expenditure and discretionary costs were deferred.

Adjusted operating cashflows increased in the period to €33.1m (2019: €30.7m) before normal seasonal working capital outflows. The normal seasonal working capital outflows for the period were €24.7m compared to €62.2m in prior period with the decreased outflows due to the increase in non-recourse trade receivables financing as noted earlier. Continued strong working capital management and a change in the customer mix also helped working capital in the period. Cash outflows on routine capital expenditure, net of disposals, were lower at €8.6m (2019: €9.8m) due to the deferral of some non-essential capital expenditure. Dividends received from joint ventures and associates in the period were €6.4m (2019: €6.3m) representing the Group's continued focus on cash returns from these investments. Dividends paid to non-controlling interests decreased to €5.1m (2019: €9.7m) due to the deferral of some dividends to non-controlling interests until second half of the year.

Cash inflows from exceptional items were €1.6m (2019: €0.6m outflow) primarily as a result of sale of farming investments. Cash inflows from disposals net of acquisitions amounted to €1.9m (2019: €9.9m outflow) with proceeds from disposals of equity investments in the period offset by the costs of some bolt-on acquisitions primarily in the Eurozone. Contingent and deferred consideration payments relating to prior period acquisitions were €0.1m (2019: €7.2m) with some payments deferred until second half of the year. Payments for non-routine property and plant additions amounted to €1.3m (2019: €3.8m). The Group did not make any dividend payments to equity shareholders in the period due to deferral of the date for the 2020 AGM. The 2020 dividend is expected to be paid in September 2020 subject to approval at the AGM on 28 August 2020. In the comparative period the 2018 final dividend of €9.8m was paid. At 30 June 2020, there was a €0.3m gain (2019: €0.7m loss) on the translation of foreign currency denominated net debt to Euro due primarily to the weaker Sterling and Canadian Dollar. The US Dollar and Swedish Krona rates at the period end were in line with the rates at 31 December 2019.

1The APMs are defined together with calculations in pages 30 to 33 of this statement

Liquidity

It has always been the policy of the Group to have adequate facilities available providing the Group with sufficient headroom in addition to the flexibility to take advantage of opportunities to develop the business. As the pandemic hit global markets in mid-March, the Group took a number of steps to protect its liquidity and financial position. As described earlier, the Group postponed or deferred some non-essential capital expenditure and discretionary costs.

The Group has increased both the amount and tenor of its corporate borrowing facilities providing additional headroom. At 30 June 2020, the Group has approved committed and uncommitted bank borrowings of up to €646m (December 2019: €623m) in addition to approved overdrafts of €116m (31 December 2019: €109m). The Group has utilised 46% (31 December 2019: 46%) of these available facilities at 30 June 2020. At 30 June 2020, the Group also has cash and deposit balances of €131m (31 December 2019: €116m).

Post 30 June 2020, the Group renewed a three-year private placement facility of US$66m (€59m) which gives the Group the ability to draw down long term funding for periods of up to twelve years.

The Group is in a strong financial position with significant financial capacity. The Group is operating comfortably within its bank covenants and enjoys the support of its banking partners.

Defined benefit pension obligations

The net liability of the Group's defined benefit pension schemes (net of deferred tax) was €7.9m at 30 June 2020 (31 December 2019: €9.3m). The decrease in the liability was due to a 2.3% average return on pension scheme assets in the period together with the impact of an increase in the discount rates for the Irish schemes which decreased the net present value of these scheme obligations. This was partly offset by the effect of a decrease in the UK discount rate which increased the net present value of UK scheme obligations. Other post-employment benefit obligations increased to €6.4m at 30 June 2020 (31 December 2019: €5.9m). Further details are outlined in Note 7 of the accompanying financial information.

Shareholders' equity

Shareholders' equity increased by €12.1m in the six-month period to €463.2m. The increase was due to profit after tax of €26.9m attributable to equity shareholders. This was offset by currency translation loss of €10.0m on the retranslation of the net assets of foreign currency denominated operations into Euro, remeasurement losses of €4.8m (net of deferred tax) on post-employment benefit schemes, and effective portions of cashflow hedges movements (net of deferred tax) of €1.3m.

Development Activity

The Group made some bolt-on acquisitions during the six months ended 30 June 2020 as well as investments in existing joint ventures. The investments were in the Eurozone and International divisions. The total committed investment was €2.2m including €0.8m of deferred consideration of €0.6m contingent consideration payable on the achievement of future profit targets.

Dividends

Having regard to Government guidelines on the holding of meetings, the Board decided to postpone the AGM which was due to be held on 15 May 2020, to 28 August 2020. Subject to the shareholders' approval at the AGM, the 2019 final dividend of 2.5770 cent per share will be paid on 2 September 2020 to shareholders on the Register of Members as at 7 August 2020.

The Board intends to pay the 2020 interim dividend of 0.9129 cent per share, unchanged on the prior year in January 2021.

In accordance with company law and IFRS, these dividends have not been provided for in the balance sheet at 30 June 2020.

Post Balance Sheet Events

There have been no material events subsequent to 30 June 2020 which would require disclosure or adjustment in the financial statements.

Environmental, Social and Governance (ESG)

Total Produce marked the World Environment Day 2020 by launching the first, Group wide Sustainability Report. The report details Total Produce's strategic approach to sustainability, progress made to date, charts the Group's path forward and profiles a selection of our international sustainability related initiatives. We are working to use the collective strengths of our Group to bring about real and demonstrable change in environmental matters.

Our approach has involved communicating shared sustainability principles and values throughout our international organisation and targets to embed these principles into our everyday trading practices, both locally and at Group level. It has entailed putting in place new Group-wide reporting structures extending from our global operating companies to the Group Board of Directors heightening the awareness and placing sustainability at the very heart of our operations and strategic decision making.

In setting of Group-wide targets; measuring and managing core issues collectively and collaboration across the supply chain, the adoption of renewable energy or the application of environmentally friendly packaging is contributing to our global efforts and initiatives.

Our primary function is the marketing and distribution of fresh fruits and vegetables. The heath promoting properties of fresh produce makes a positive contribution to public diet and general wellbeing. The products we market and distribute are associated with the lowest environmental impact of all the primary foodstuffs.

The ESG section of our website details Total Produce's commitment to the responsible and sustainable production of our broad portfolio of fresh fruits and vegetables. Our Group wide Sustainability Report that was launched in June 2020 is available on the website at www.totalproduce.com.

Brexit and International Trade

The result of the UK's exit from the European Union ('Brexit') on 31 January 2020 and its impact in terms of the exit deal including tariffs and trade agreements remain unclear. Post the exit, the UK entered an 11-month transition period. Brexit committees set up in relevant areas of the business continue to monitor and assess the risks and opportunities that may arise post the transition period.

COVID-19 Outbreak

Since the outbreak of COVID-19 all parts of our business have continued to work tirelessly to safely supply fresh produce to our customers. It is due to the efforts of our people that we have been able to support frontline workers and help feed consumers The health and safety of all colleagues across the business is at the forefront of our thinking with the introduction of safe working practices. We have participated in helping communities, examples include supplying food packages to frontline healthcare workers, providing fruit to those in need, loaning spare vehicles to transport meals to the homeless and donating fresh produce to local food banks.

Going Concern

The Directors have reviewed forecasts and projected cashflows for a period not less than 12 months from the date of these interim financial statements. Consumer demand for fresh produce has remained robust through the pandemic and this is expected to continue. As highlighted earlier, when the pandemic hit in mid-March, the Group took a number of steps to protect its liquidity and financial position. The Group has also increased both the amount and tenor of its corporate borrowing facilities providing additional headroom. Taking all these factors into consideration, the Directors are satisfied that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they have adopted the going concern basis in preparing the financial statements.

Board Changes

Frank Gernon, Executive Director, and Jerome Kennedy, Non-Executive retired as Directors on 31 March 2020. From this date, the Board comprises of six independent Non-Executive Directors and three Executive Directors.

Frank has been an integral part of our Group for over 45 years and has served as an Executive Director of Total Produce since 2007. His outstanding service, dedication and accomplishments have been invaluable. During his tenure he has played a key role in the stewardship and development of the Group.

Jerome has served as a Non-executive Director on the Board and its Committees since the formation of Total Produce Plc. The Group has benefitted greatly from his business acumen, professionalism and wise counsel over the years.

I join the Board in extending to Frank and Jerome our sincerest appreciation for their dedication and commitment. Their valuable contributions have added greatly to the success of Total Produce. We wish them the very best for the future.

Summary and Outlook

We are pleased with the very strong performance in the first half of 2020 against the backdrop of the COVID-19 pandemic which has posed unprecedented challenges to the global economy. The health and wellbeing of our people is our number one priority while at the same time recognising our role in supplying vital foodstuffs, particularly during the pandemic. We are very proud of the efforts of all our people. Their dedication, commitment and hard work ensured the Group's supply chains and operations continue to function and remain open across all our key markets.

In the first half of 2020, revenue and adjusted EBITDA have increased by 2.0% and 0.9% respectively demonstrating the robustness of the Group's business model. Demand from retail and wholesale remained strong and helped offset reduced demand from the food service sector.

The Group expects revenue and adjusted EBITDA to be slightly ahead of 2019 on a full year basis with adjusted EPS slightly behind subject to the prevailing uncertainties of COVID-19. The Group intends to pay a 2020 interim dividend of 0.9129, unchanged on the prior year. The Group remains in a very strong financial position and continues to actively pursue the growth and expansion of the business.

Carl McCann, Chairman

On behalf of the Board

27 August 2020

Forward-looking statement

Any forward-looking statements made in this announcement have been made in good faith based on the information available as of the date of this announcement 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. Total Produce's 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.

Condensed Group Income Statement

for the half year ended 30 June 2020

Condensed Group Statement of Comprehensive Income

for the half year ended 30 June 2020

Condensed Group Balance Sheet

as at 30 June 2020

Condensed Group Statement of Changes in Equity

For the half year ended 30 June 2020

1 Other equity reserves comprise the demerger reserve, share option reserve, cash flow hedge reserve, cost of hedging reserve and the put option reserve

Condensed Group Statement of Changes in Equity

For the half year ended 30 June 2019

Condensed Group Statement of Changes in Equity

For the full year ended 31 December 2019

1 Other equity reserves comprise the demerger reserve, share option reserve, cash flow hedge reserve, cost of hedging reserve and the put option reserve

Condensed Group Statement of Cashflows

for the half year ended 30 June 2020

Condensed summary group reconciliation of net debt

Net debt is a non-IFRS measure which comprises bank deposits, cash and cash equivalents and current and non-current borrowings. It excludes lease liabilities. The calculation is outlined on Note 12.

Notes to the Interim Results

for the half year ended 30 June 2020

1. Basis of preparation

The condensed consolidated interim financial statements of Total Produce plc as at, and for the six months ended 30 June 2020, have been prepared in accordance with IAS 34 Interim Financial Reporting, as adopted by the EU. The accounting policies and methods of computation adopted in the preparation of the financial information are consistent with those set out in the Group's consolidated financial statements for the year ended 31 December 2019, with the exception of those disclosed below, which were prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.

The interim financial information for both the six months ended 30 June 2020 and the comparative six months ended 30 June 2019 is unaudited. The financial information for the year ended 31 December 2019 represents an abbreviated version of the Group's statutory financial statements for that year, which contained an unqualified audit report and have been filed with the Registrar of Companies.

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended 31 December 2019, with the addition of assessing the impact of the COVID-19 pandemic as set out below.

Changes in accounting policy and disclosures

Except as described below, the accounting policies applied in these interim financial statements are the same as those applied in the Group's consolidated financial statements as at 31 December 2019.

A number of new standards are effective from 1 January 2020 and they have not had a material impact on the Group's consolidated financial statements. Any changes in accounting policy will be disclosed in the Group's consolidated financial statements as at 31 December 2020.

The Group has considered the impact of COVID-19 with respect to the judgements and estimates it makes in the application of its accounting policies. The financial statements as at 30 June 2020 incorporate these considerations on the recoverability of inventory, trade receivables and other assets. The Group continues to actively manage its working capital including inventory and trade receivables. COVID-19 has increased the credit risk from customers in the food service sector as demand has significantly decreased as a result of government-imposed restrictions. Outstanding customer balances are actively monitored and reviews for indicators of impairment are done on an ongoing basis. Furthermore, trade credit is extended to customers after careful consideration and thereafter continuously monitored. Where the extension of credit is considered inappropriate, payment plans are put in place. A significant element of credit risk is covered by credit insurance. Whilst expected credit losses from some food service customers have increased, the impact of COVID-19 on the recoverability of inventory and trade receivables is not considered significant.

The impairment testing of goodwill and indefinite life intangibles at the reporting date is based on the key assumptions disclosed in the 2019 Annual Report, updated to take account of future potential trading scenarios as a result of this pandemic. Where indicators of impairment were present in a Cash Generating Unit, the Group performed detailed testing using updated forecasts. The testing did not result in any impairment at the balance sheet date and will be reassessed in December 2020.

Land and Buildings and Investment Property are stated at fair value. Investment Property is revalued at each reporting period by registered independent appraisers with Land and Buildings valued by registered independent appraisers every three to five years. Further details are outlined in the Group's 2019 Annual Report. At 30 June 2020, the Group performed a desktop review of Investment Property and Land and Buildings and identified two properties in the Non-Eurozone division where fair value was below historic cost resulting in a €1.1m impairment charge in the period.

2. Translation of foreign currencies

The reporting currency of the Group is Euro. The rates used in the translation of results and balance sheets into Euro were as follows: