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ANNUAL REPORT 2015FYFFES plc
Fyffes – Discover MoreAnnual Report 2015
Contents
PAGE
02. Discovering Fyffes
04. Group Operations
06. Fyffes in our Community
08. Five Year Summary
09. Shareholder Information
10. Chairman’s Statement
11. Directors & Secretary
12. Operating & Financial Review
22. Corporate Social Responsibility
24. Financial Statements
01
Discovering Fyffes
Fyffes – Discover MoreAnnual Report 2015
02
Fyffes plc is a leading international importer and distributor of tropical produce. Headquartered in Dublin, Ireland, Fyffes has operations in Europe, the US and Central and South America.
Fyffes plc is listed on the Enterprise Securities Market (ESM) in Dublin and the Alternative Investment Market (AIM) in London.
Primary activities include production, procurement, shipping, ripening, distribution and marketing of bananas, pineapples and melons.
A commitment to the principles of corporate responsibility is at the heart of the Fyffes brand.
03
Fyffes – Discover MoreAnnual Report 2015
The Fyffes Journey
Growing
Harvesting
12 months after planting out from the nursery, the tiny bananas begin to appear and just 3 months later, the delicious fruit is ready to harvest.
Each plant only produces a single bunch or stem carrying 100 - 200 bananas.
The JourneyFor the 14 day sea journey to Europe, Fyffes bananas are put into a form of hibernation at a constant temperature of 13°C.
Ripening & QualityUpon arrival in Europe, the bananas are transferred to special ripening centres. After a further quality check, the fruit is placed in a ripening chamber.
Fyffes has been importing bananas for more than 125 years, with the first shipment into the UK in 1888. The famous Fyffes Blue Label made its first appearance in 1929, making Fyffes the world’s oldest fruit brand. The Group’s endurance over 125 years is due to the quality of the fruit to which the Fyffes label is attached and the service levels behind it. While it is of course most closely associated with the banana, it is also applied to our other produce, including Fyffes Gold Pineapples. Only the freshest produce selected from the most reliable producers is allowed carry the famous Fyffes blue label.
Fyffes – Discover MoreAnnual Report 2015
04
Fyffes – Discover MoreAnnual Report 2015
Group Operations
Production & ProcurementFyffes bananas are procured from Central and South America under long term supply contracts with our growers. Our long term relationships with growers and the advice and structures that Fyffes provides, ensures that our fruit is always Fyffe Times Better.
ShippingFyffes transports its produce on state of the art ships under controlled conditions to ensure that all Fyffes fruit arrives at its destination in premium condition, consistently every week of the year.
RipeningFyffes owns and leases seven state of the art banana ripening centres in the UK, Germany and Ireland and a large melon distribution centre in Florida. Bananas are carefully unloaded into ripening rooms where the fruit can be ripened under controlled conditions to meet the highest customer specifications.
DistributionOur fleet of temperature controlled vehicles carefully transport Fyffes’ premium produce to the world’s leading retailers as well as a vast network of wholesale, convenience and foodservice customers.
MarketingThe famous Fyffes Blue Label is the world’s oldest fruit brand. The Group’s endurance over 125 years is due to the quality of the fruit to which the Fyffes label is attached and the service levels behind it.
Fyffes plc is primarily involved in the production, procurement, shipping, ripening, distribution and marketing of bananas, pineapples and melons.
Fyffes distributes c.46 million cases of bananas in Europe annually. In addition, the Group’s Turbana joint venture markets c.10 million cases of bananas in North America. Fyffes distributes c.10 million cases of pineapples each year. In the winter melon category, Fyffes markets c.17 million cases in North America.
05
Fyffes works both at home and abroad to give back to the communities in which we live and work.
Mozambique Fyffes assisted UNICEF to reach over 80% of vulnerable population groups (HIV-positive children, children under five years of age, pregnant women and orphaned and vulnerable children), who received both prevention and prompt malaria treatment in six provinces of Mozambique.
Nigeria Fyffes helped to eradicate polio in Nigeria in 2014. For every bag of Freddy Fyffes bananas, Fyffes donated one life-saving vaccination to children there. Fyffes is now striving to fight polio in South Sudan.
Colombia Every time you buy a Fyffes Colombian banana, you are helping communities through Fundauniban which has invested more than $250 million in health, housing and education projects since 1987.
Ireland Fyffes has been involved in supporting Dundalk FC since the 1960’s, through good times and bad. Last year saw the team crowned champions in both the League of Ireland and FAI Cup.
4.1. 2. 3.
Fyffes – Discover MoreAnnual Report 2015
06
Fyffes in our Community 3.
5.
Colombia
Belize
Belize Fyffes has worked with banana growers in Belize for nearly 50 years and has become involved in a number of the local communities during that time, such as the Inspiration Centre in Belize City, which empowers children with disabilities to participate in society.
South Sudan This year’s campaign in South Sudan forms part of UNICEF’s goal to eradicate polio worldwide by 2018. It will target young children affected by the ongoing conflict.
Europe Our drive to provide a quality product, sourced with respect for the environment, our growers, our customers and the consumer, helped us to become the number one importer of Fairtrade bananas in Europe.
5. 6. 7.
Fyffes – Discover MoreAnnual Report 2015
07
1.
2.6.
7.
4.
Mozambique
Nigeria
Ireland
South Sudan
Europe
Fyffes plc Annual Report 201508
Five Year Summary
2015
€’000
2014
€’000
2013
€’000
2012
€’000
2011
€’000
Continuing Operations
Total revenue (incl share of joint ventures) 1,222,549 1,090,887 1,082,246 1,017,825 850,044
Group revenue 985,292 852,578 835,753 783,701 659,045
Adjusted profit before taxation* 44,624 38,984 31,103 29,251 21,477
Profit before taxation 31,786 38,179 28,679 26,126 11,733
Profit after taxation 27,540 34,131 26,144 23,908 10,645
Adjusted earnings per share (cent)** 12.73 11.17 8.82 8.55 5.87
Dividend per share (cent) 2.7451 2.387 2.17 2.07 1.925
Shareholders’ equity 213,894 182,684 147,567 135,663 135,805
Notes
* Before the Group’s share of the tax charge of its joint ventures and, where relevant, intangibles amortisation, the Group’s
share of Balmoral’s result and exceptional items.
** Before, where relevant, the Group’s share of Balmoral’s result and exceptional items.
The profit and earnings per share figures for 2012 and earlier years have been restated to account for the impact of the revision
in the accounting standard on pensions.
All figures are presented in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.
Fyffes plc Annual Report 2015 09
Shareholder Information
Share price (euro cent)
High Low Year End
2015 161 101 151
2014 134 84 101
Market capitalisation
The market capitalisation of Fyffes plc at 31 December
2015 was €449 million. The ordinary share price at close of
business on 26 February 2016 was €1.282, giving a market
capitalisation at that date of €381 million.
Website
www.fyffes.com contains a wide range of detailed
information on the Group’s activities and products, together
with all the key financial data on the Company. It is updated
on a continuing basis for all Company announcements
and other relevant developments, including share price
movements.
Investor relations
Investors requiring further information on the Group are
invited to contact:
Seamus Keenan
Company Secretary
Fyffes plc
29 North Anne Street
Dublin 7
Ireland
Telephone: +353 1 887 2700
Fax: +353 1 887 2755
e-mail: skeenan@fyffes.com
Registrar
Administrative queries about holdings of Fyffes plc shares can
be directed to the Company’s registrar:
Computershare Services (Ireland) Limited
Heron House
Corrig Road
Sandyford Industrial Estate
Dublin 18
Ireland
Telephone: +353 1 216 3100
Fax: +353 1 216 3151
e-mail: web.queries@computershare.ie
Annual General Meeting
The Annual General Meeting of the Company will take place
at the Ballsbridge Hotel, Pembroke Road, Ballsbridge, Dublin
4, Ireland on Friday, 29 April 2016 at 11.00am. Notice of the
meeting is set out at the end of this Annual Report on pages
120 to 123.
Amalgamation of accounts
Shareholders receiving multiple copies of Company mailings
as a result of a number of accounts being maintained in their
name should write to the Company’s registrar at the above
address to request that their accounts be amalgamated.
Payment of dividends
Shareholders may elect to have future dividends paid directly
into a nominated bank account by completing the mandate
form which accompanies each dividend payment or by writing
to the Company’s registrar at the above address. Dividends
are ordinarily paid in euro; however, for the convenience of
shareholders with addresses in the United Kingdom, such
dividends are paid in Sterling unless requested otherwise.
Electronic communications
Shareholders who wish to opt to receive their shareholder
communications electronically can do so by going to
www.computershare.com/register.ie and following the
three steps outlined to sign up for Electronic Shareholder
Communications.
Fyffes plc Annual Report 201510
Chairman’s Statement
Fyffes has continued to build on the very strong performance it
has delivered in recent years with a 14.2% increase in earnings
before interest, tax and amortisation (Adjusted EBITA), which
is the key measure of operating performance in our Tropical
Produce division, to €45.8 million, excluding exceptional
charges of €12 million. Adjusted EBITDA and earnings per
share, on the same basis (Adjusted EPS), were 16.4% and 14%
higher respectively year on year. This is the Group’s seventh
consecutive year of earnings growth. Over that period since
2008, cumulatively Fyffes has increased sales by 61% and, with
a constant drive for efficiency, Adjusted EBITA has tripled as a
result of improved operating margins. This represents a strong
compound annual growth rate of 17%.
The Group performed well in each of its three products
in 2015, with higher profits in the banana and pineapple
categories notwithstanding significant currency headwinds
due to the strength of the US Dollar. This demonstrates the
robustness of the Group’s business model and its ability to
quickly adapt to prevailing market conditions. The strong
performance in the pineapple category is good to see as the
Group has worked hard over a number of years to achieve
necessary improvements in its pineapple operations. Further
volume growth in both bananas and melons has enhanced
Fyffes position as the largest importer in both the European
banana and US melon categories.
The Group again invested heavily in expanding its operations
in 2015, with €29.5 million spent to acquire farming
businesses in both the melon and banana categories.
The investment in additional production assets in the
melon business is particularly significant as it will increase
the Group’s capacity in the category by c. 25% on a full
year basis. The integration of these farms is progressing
satisfactorily. Fyffes is also pleased to have purchased a
banana farm in Costa Rica which it had been successfully
operating under a lease arrangement since early 2014.
Balmoral International Land Holdings plc (“Balmoral”), the
international property development company in which the
Group has a 40% stake, published its 2014 full year results
in September 2015, reporting a profit attributable to equity
shareholders of €6.7 million, increasing its net equity to €8.5
million. Fyffes share of this net equity value is €3.4 million.
Fyffes continues to maintain an impairment provision against
this investment and retains its €50,000 nominal carrying
value. Balmoral continues to be actively managed and, given
its well diversified portfolio of properties in Ireland, the UK
and Continental Europe, remains in a position to benefit from
improvements in property market conditions.
Increasing shareholder value is a core focus for the Fyffes
Board. The Company’s share price increased by a very strong
49% during the calendar year in 2015. Global stock markets
have seen significant negative moves in the early part of 2016
and Fyffes share price has not been immune from this with
an 11% reduction in the year to date. The Board increased
the interim dividend for 2015 by 15% and is proposing a
similar 15% increase in the final dividend for 2015, subject to
shareholder approval at the AGM, to 1.924 cent per share. The
total dividend for 2015 would then amount to 2.7451 cent per
share, 15% up on last year. This represents a 21.6% pay-out
ratio and a yield of c.2% based on the current share price. As
in recent years, the Board is seeking to renew the authority
from shareholders to purchase up to 10% of the outstanding
Fyffes plc shares at the 2016 AGM and may exercise this
authority from time to time.
Fyffes remains committed to high standards in corporate
governance, which is modelled on the UK Corporate
Governance Code as described on pages 29 to 34.
Looking ahead to 2016, having achieved a further step up
in profitability in 2015, Fyffes is focused on consolidating at
this higher level of earnings. The Group’s initial target EBITA
for 2016 is in the range €42-€48 million, compared to €45.8
million in 2015. Fyffes is pursuing increases in selling prices
in all markets in response to the continuing strength of the
US Dollar against the euro and Sterling. Trading conditions
have been satisfactory in the year to date in 2016. The Group
remains focused on always improving the efficiency of its
operations in order to enhance its competitiveness. Fyffes is
determined to continue to grow its business and is actively
pursuing a number of attractive acquisition opportunities at all
points in the supply chain from production to distribution.
The very strong performance of the Group in recent years
is due in no small measure to the commitment, skill and
dedication of our personnel across the world. I would like to
thank them for their contribution to the ongoing success of
the business.
David McCann
Chairman
26 February 2016
Fyffes plc Annual Report 2015 11
Directors and Secretary
D V McCann (57)
Chairman
David McCann joined the Group in 1986, having previously
practised as a partner in a leading Dublin law firm. He
became Managing Director in 1989 with responsibility for
the Group’s operations. He was appointed Chief Executive in
1995 and became Chairman in 2006. He is a member of the
nomination committee.
C Bos (60)
Chief Operating Officer
Coen Bos was a merchant navy ship’s master and active at
sea until 1983. He subsequently joined Velleman & Tas BV
in Holland and was its Banana Marketing Director when it
was acquired by Fyffes in 1994. He was appointed Managing
Director of the Group’s Tropical Produce division in 2000. He
was appointed to the Board on 1 January 2006 and to the
position of Chief Operating Officer on 30 December 2006.
T G Murphy (55)
Finance Director, B Comm, FCA
Tom Murphy joined the Group in 1990. He has held a number
of senior accounting positions in Fyffes and was appointed
to the position of deputy Managing Director and Finance
Director of the Group’s Tropical Produce division in 2000.
He was appointed to the Board as Finance Director on
2 January 2007.
R B Johnston (51)
Non Executive, BA, MA, MBA, ICD.D
Robert Johnston was appointed to the Board in 2012. He is
Chief Strategy Officer with The InterTech Group, Inc. in South
Carolina, USA which manages a diverse group of businesses,
including a number of strategic investments in various public
companies. He is a director and former director of several
businesses, including a number of listed companies in the US
and Canada.
J D McCourt (69)
Non Executive, BL, MA, MBA
Declan McCourt was appointed to the Board in 2003 and
is a member of the audit, compensation and nomination
committees. He is Chief Executive of automobile distributor,
the OHM Group. He is a director of Balmoral International
Land Holdings plc and is Chairman of the UCD President’s
Advisory Board, UCD Law Development Council and the
Mater Hospital Foundation. He is also a director of a number
of other companies. He is a former director of the Bank of
Ireland and Dublin Docklands Development Authority.
J M O’Dwyer (69)
Non Executive, LLB
James O’Dwyer was appointed to the Board in 2007 and is
a member of the audit and compensation committees. He is
a former Chairman of Arthur Cox, the leading Dublin based
law firm. He is also admitted to practice at the New York
State Bar. He is Chairman of Rohan Group and a director of
Stafford Holdings Limited. He is a former director of Goldman
Sachs Bank (Europe) plc and Jefferson Smurfit Group plc.
J R O’Hara (65)
Non Executive
Jim O’Hara was appointed to the Board in 2012. He is a
former Vice President of Intel Corporation and General
Manager of Intel Ireland. He is a director of Allied Irish
Banks plc and EBS and Chairman of a number of start-up
companies.
S P Keenan (50)
Company Secretary, B Comm, FCA
Seamus Keenan joined Fyffes in 1995 from KPMG. He has
held a number of senior financial positions in the Group
including Group Financial Controller and Investor Relations
Manager. He was appointed Company Secretary in 2006.
Fyffes plc Annual Report 201512
Operating and Financial Review
Summary Income Statement
2015
€’M
2014
€’M
Total revenue 1,222.5 1,090.9
Group revenue 985.3 852.6
Adjusted EBITA* - Tropical Produce activities
- parent and subsidiaries 44.1 37.6
- share of joint ventures 1.7 2.6
Total adjusted EBITA 45.8 40.1
Net interest expense including share of joint ventures (1.2) (1.1)
Adjusted profit before tax** - Tropical Produce activities 44.6 39.0
Share of Balmoral’s result - -
Exceptional items (12.0) 0.1
Share of joint ventures tax charge (0.9) (0.9)
Profit before tax per income statement 31.8 38.2
Tax charge (excl share of joint ventures) (4.2) (4.0)
Non-controlling interest charge (0.1) (0.2)
Profit attributable to equity shareholders 27.4 33.9
Adjusted fully diluted EPS – cent*** 12.73 11.17
Certain tables in this operating and financial review may not total due to roundings.
* Adjusted EBITA is operating profit before exceptional items, interest and tax, including the equivalent share of joint
ventures’ operating profits (and excluding, in earlier years, intangibles amortisation and the Group’s 40% share of the result
of Balmoral International Land Holdings plc (‘Balmoral’)).
** Adjusted profit before tax excludes exceptional items and the Group’s share of its joint ventures’ tax charge (and in
previous years the Group’s share of Balmoral’s result and amortisation changes).
*** Adjusted EPS excludes exceptional items (and amortisation charges and the Group’s share of Balmoral’s result in
earlier years).
Revenue
Total revenue, including the Group’s share of its joint ventures, amounted to €1.22 billion in 2015, an increase of 12.1%. Group
revenue, excluding Fyffes’ share of its joint ventures, was €985.3 million, 15.6% higher year on year. Excluding the positive
translation impact of the weaker euro on the Group’s US Dollar and Sterling denominated sales, underlying revenue growth
in 2015 was 7%. This was mainly driven by further organic volume growth in the Group’s banana and melon categories. The
Group’s share of revenue of its joint ventures was marginally lower in 2015 mainly due to a reduced shareholding in one of these
businesses.
Fyffes plc Annual Report 2015 13
Operating and Financial Review (continued)
Operating profit
Fyffes reports separately the results of its tropical produce
operations and its 40% share of the results of Balmoral, which
it demerged in 2006. The Group’s key performance measure
for its tropical produce business is Adjusted EBITA (which is
defined above). Fyffes tropical produce business produces,
sources and distributes three product categories – bananas,
pineapples and melons.
Fyffes has delivered another important step up in earnings in
2015, its seventh consecutive year of growth. Adjusted EBITA
was €5.7 million higher (+14.2%) at €45.8 million, compared
to €40.1 million in 2014. Cumulatively the Group’s Adjusted
EBITA has increased by 200% over that seven year period,
representing a strong compound annual growth rate of 17%.
Adjusted EBITDA of €56.1 million was 16.4% higher year on
year. 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 strong result in the banana category in 2015,
with a mid-teens percentage increase in operating profits.
This was delivered despite a significant currency headwind,
with the US Dollar strengthening by 16% and 7% against
the euro and Sterling respectively during the year. The impact
of this was partly mitigated by reductions in key input costs,
further logistical efficiencies combined with lower fuel costs,
operational efficiencies in the Group’s distribution network and
reductions in other import costs. Fyffes also secured increases
in selling prices in some markets. The Group continued to grow
its European market share, with a mid-single digit percentage
increase in its banana volumes in the year.
Fyffes pineapple operations also delivered a strong result in
2015. As in the banana category, exchanges rates were a
significant headwind due to the strength of the US Dollar.
The Group secured increases in selling prices in most markets,
helped by supply constraints as a result of poor weather in
Costa Rica, the key production region. Fyffes’ total volumes
were marginally lower for this reason, although production
on the Group’s own farms was slightly higher as a result of
further yield improvements. Costs, particularly logistics and
fuel, were lower year on year.
Fyffes delivered a broadly satisfactory result in 2015 in its
US melon business, although profits were down on the very
strong result achieved in the previous year. There was adverse
weather in the early part of the year in the production regions
which increased costs and resulted in some quality issues in
certain varieties for part of the season. This had a modest
adverse impact on average selling prices. Towards the end
of the year, the Group purchased additional melon farming
assets in Guatemala which contributed to a mid-single digit
increase in volumes in this category in the year and is expected
to result in a 25% increase in volumes on a full year basis in
2016. Fyffes is pleased with the initial integration of these new
farms and there has been a positive start to the 2015/16 US
melon import season.
Balmoral International Land Holdings plc (“Balmoral”), in
which the Group has a 40% shareholding, published its results
for 2014 in September 2015, reporting a profit attributable
to equity shareholders of €6.7 million. Fyffes continues to
maintain an impairment provision against the carrying value
of its investment in Balmoral, which remains unchanged at
€50,000. Balmoral has not yet reported its 2015 results.
The total operating profit for the Group, which is Adjusted
EBITA less exceptional items and the Group’s share of its joint
ventures’ interest and tax charges, amounted to €32.5 million
for the year compared to €38.9 million in the previous year.
Exceptional items
As explained in more detail in note 27 of the financial
statements, during 2015, the Group decided to close its
Irish defined benefit pension scheme to future accrual
and to future liability due to the ever increasing cost of
funding such schemes. Once-off final payments amounting
to €20 million were made to settle the scheme deficit, to
eliminate the possibility of a claim by the trustees in respect
of member expectations in relation to the scheme and to
facilitate transfers to the new defined contribution scheme.
After eliminating the accounting deficit as at 31 July 2015 of
€8.9 million, the incremental costs of €11.1 million, net of a
settlement gain of €2.7 million arising under the measurement
criteria of IAS 19, have been expensed in the income
statement as an exceptional charge.
In 2008, the European Commission published its Decision
following the conclusion of its investigation into the supply
of bananas in the Northern European region of the EEA.
No adverse findings were made against Fyffes and no fine
imposed on it. At the same time, the European Commission
found the Group’s German joint venture, Internationale
Fruchtimport Gesellschaft Weichert GmbH & Co KG
(“Weichert”) and Fresh Del Monte Produce Inc (“Del Monte”)
jointly and severally liable for a fine of €14.7 million for
breaches of Article 81 of the Treaty of Rome and Article 53
of the European Economic Area (EEA) Agreement relating to
the supply of bananas to the Northern European region of
Fyffes plc Annual Report 201514
Operating and Financial Review (continued)
Exceptional items (continued)
the EEA, in the period 1 January 2000 to 31 December 2002. Fyffes acquired its 80% interest in Weichert from Del Monte on 1
January 2003. The Commission found that Weichert was controlled by Del Monte throughout the period covered by the Decision.
Weichert provided for a net exceptional charge of €3.7 million in its 2008 accounts in relation to this fine. While Fyffes has no
liability in this matter, the Group’s income statement in 2008 reflected Fyffes 80% share of the net exceptional charge recognised
in Weichert’s accounts, amounting to €2.9 million.
There have been a number of appeals in relation to this case with a concluding judgement issued by the Court of Justice of
the European Union (“CJEU”) on 24 June 2015 which confirmed a lower fine of €9.8 million, plus interest costs. Separately,
Weichert and Del Monte reached an agreement in relation to the split of the fine. As a result of the decision of the CJEU and the
agreement with Del Monte, Weichert has recognised a further exceptional charge of €3.6 million in its 2015 financial statements
covering its share of the fine plus interest and related costs in full and final settlement of this long running matter. Fyffes 80%
share of the additional charge recognised by Weichert amounts to €2.9 million and is being reported as an exceptional item.
In March 2014, Fyffes and Chiquita Brands International Inc (“Chiquita”) announced an intention to combine in an all share
merger. In August 2014, a consortium offered to purchase Chiquita in an all cash deal. Ultimately, Chiquita shareholders voted not
to support the proposed merger with Fyffes at a special meeting in October 2014 and the business was sold to the consortium.
During 2015 Fyffes wrote back costs amounting to €2 million, which had been accrued in 2014 in respect of this proposed
merger, but were ultimately not incurred by the Group.
Net tax credits of €1.1 million arose during the year in relation to these exceptional items. This exceptional tax credit has been
excluded in the calculation of the Group’s adjusted earnings per share.
Financial expense
Net financial expense in the Group’s subsidiary companies in 2015 amounted to €0.7 million, unchanged on the previous year.
The Group’s share of the net financial expense of its joint ventures was €0.4 million in 2015, also unchanged on the previous year.
Profit before tax
Adjusted profit before tax for 2015 amounted to €44.6 million, 14.5% up on the previous year. 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 €31.8 million compared to €38.2 million in 2014, including the impact of
the €12 million exception charge above.
Taxation
2015
€’M
2014
€’M
Tax charge per income statement 4.2 4.0
Group share of tax charge of joint ventures netted in profit before tax 0.9 0.9
Total tax charge 5.1 5.0
Adjustments
Tax credit recognised on exceptional items 1.1 -
Tax charge on underlying activities 6.2 5.0
Fyffes plc Annual Report 2015 15
Operating and Financial Review (continued)
Taxation (continued)
The analysis of the tax charge for the year set out above shows the calculation of the underlying tax charge in 2015 of €6.2
million compared to €5 million in the previous year, equivalent to a rate of 13.8% (2014: 12.7%) when applied to the Group’s
adjusted profit before tax. The c.1% increase in the underlying tax rate in 2015 reflects some changes in the geographic mix of
the Group’s profits. The underlying tax charge excludes the tax impact of exceptional items 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 2015 Income
Statement shows a tax charge of €4.2 million before these adjustments, compared to €4 million in the previous year.
Non-controlling interests
The non-controlling interests’ share of profit after tax for the year amounted to €0.1 million in 2015, compared to €0.2 million in
the previous year.
Earnings per share
The calculation of adjusted diluted earnings per share, is set out below. The Group’s adjusted diluted earnings per share in 2015
amounted to €12.73 cent, up 14% on the previous year. This is in line with the increase in adjusted profit before tax. Adjusted
earnings per share 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 the €12 million exceptional charge and related tax
credit, amounted to €9.10 cent in 2015, compared to €11.20 cent in the previous year.
Calculation of Adjusted EPS
2015
€’M
2014
€’M
Adjusted profit before tax 44.6 39.0
Underlying tax charge (6.2) (5.0)
Non-controlling interests (0.1) (0.2)
Earnings for calculation of adjusted EPS 38.4 33.8
Weighted average no. of shares (diluted) (M) 301.2 302.7
Adjusted EPS – cent 12.73 11.17
Summary Balance Sheet
2015
€’M
2014
€’M
Intangible assets 39.9 24.5
Property, plant and equipment 123.1 96.4
Investment property 5.5 5.2
Investment in joint ventures 36.3 40.1
Investment in Balmoral International Land Holdings plc 0.1 0.1
Working capital/hedging instruments 87.6 77.9
Taxation (8.4) (10.2)
Provisions (3.5) (4.0)
Pension deficit - net of deferred tax (25.7) (34.0)
Net debt (39.3) (11.7)
Net assets 215.6 184.2
Shareholders’ equity 213.9 182.7
Non-controlling interests 1.7 1.6
Net assets 215.6 184.2
Fyffes plc Annual Report 201516
Operating and Financial Review (continued)
Dividend and share buyback
The Board is proposing to pay a final dividend for 2015 of €1.924 cent per share, up 15% 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
6 May 2016 to shareholders on the register on 8 April 2016. In accordance with company law and IFRS, this dividend has not
been provided for in the balance sheet at 31 December 2015. Total dividends in respect of 2015 will amount to €2.7451 cent,
15% up on the previous year and equivalent to a payout ratio of 21.6% based on adjusted earnings per share.
Fyffes will seek to renew its authority from shareholders to repurchase shares at its 2016 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.
Shareholders’ equity
Shareholders’ equity at 31 December 2015 amounted to €213.9 million compared to €182.7 million at the start of the year. The
following table summarises the changes during the year:
Movement in shareholders’ equity 2015
€’M
2014
€’M
At beginning of year 182.7 147.6
Profit after tax and non-controlling interests 27.4 33.9
Dividends paid (7.4) (6.6)
Repurchase of own shares - (3.0)
Pension scheme actuarial gain/(loss) net of deferred tax 1.6 (10.5)
Share of actuarial losses in joint ventures net of deferred tax (0.3) (1.7)
Translation of non-euro denominated net assets 17.1 15.6
Movement in hedging reserves net of deferred tax (9.0) 8.2
Share based payments and share options exercised 1.7 (0.8)
At end of year 213.9 182.7
Shareholders’ funds increased by €31.2 million (+17.1%) in 2015. The main components of this increase included - retained
profits after tax and minority interests of €27.4 million, less dividends paid of €7.4 million; translation gains on the Group’s
non-euro denominated net assets amounting to €17.1 million; net actuarial gains on the Group’s and its joint ventures’ pension
schemes of €1.3 million, net of deferred tax; the proceeds from share options exercised of €1.4 million; and mark to market
losses on valuing the Group’s currency and fuel hedges at year end amounting to €9 million, net of deferred tax.
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. Balmoral
published its 2014 full year results in September 2015, reporting a profit attributable to equity shareholders of €6.7 million,
increasing its net equity to €8.5 million. Fyffes has recognised its share of these profits but has also recognised a matching
impairment provision, on the basis that there has not yet been a sustained and prolonged recovery in Balmoral’s performance,
and the carrying value of its investment has therefore remained unchanged at €50,000. Balmoral has not yet finalised its 2015
results. Fyffes will consider the appropriateness of its impairment provision after Balmoral publishes its 2015 results. Balmoral
continues to be actively managed and, given its well diversified portfolio of properties in Ireland, the UK and Continental
Europe, remains in a position to benefit from improvements in property market conditions.
Fyffes plc Annual Report 2015 17
Operating and Financial Review (continued)
Provisions
Total provisions in the balance sheet at 31 December 2015 amounted to €3.5 million, compared to €4.0 million at the previous
year end, as analysed in the following table. The year-end deferred consideration liability relates mainly to a new acquisition
towards the end of 2015. The previous liability is no longer contingent and it has been reclassified to other payables. The slight
reduction in the MNOPF legal provision in 2015 reflects payments, less the discounting charge and a translation impact.
The MNRPF is a UK based multi-employer defined benefit pension scheme, similar to the MNOPF for a separate category of
shipping personnel. Having commenced a process a number of years ago to seek to recover the deficit in that scheme from
current and former employers of these ships’ personnel, in the same way as the MNOPF, the MNRPF Trustee issued a formal
request for payment based on the latest deficit in that scheme to the Group’s main UK subsidiary, Fyffes Group Limited, in
the amount of €4.6 million. This was paid in full during 2015. The Group had provided for this exposure in earlier years and
consequently there was no impact on profits in 2015 arising from this payment. The amount previously accrued was reclassified
from other non-current payables to provisions during the year.
2015
€’M
2014
€’M
Deferred consideration on acquisitions 1.2 1.6
MNOPF legal obligation 2.3 2.4
Total provisions 3.5 4.0
Defined benefit pension schemes
As noted earlier, during 2015 the Group decided to close its Irish defined benefit pension scheme to future accrual and to future
liability due to the ever increasing cost of funding such schemes. Once-off final payments amounting to €20 million were made
to settle the scheme deficit, to eliminate the possibility of a claim by the trustees in respect of member expectations in relation to
the scheme and to facilitate transfers to the new defined contribution scheme. After eliminating the accounting deficit in the Irish
scheme as at 31 July 2015 of €8.9 million, the incremental costs of €11.1 million, net of a settlement gain of €2.7 million arising
under the measurement criteria of IAS 19, have been expensed in the income statement as an exceptional charge. The deficit in the
Group’s remaining defined benefit pension schemes in the UK and the Netherlands, before deferred tax, amounted to €32.1 million
at the end of the year. The Group is also in the process of closing its UK defined benefit scheme to future accrual.
Movement in defined benefit pension obligations
2015
€’M
2014
€’M
Deficit at beginning of year (41.4) (28.2)
Pension expense recognised in income statement (excl settlement gain) (3.8) (2.9)
Settlement gain on termination of Irish scheme 2.7 -
Actuarial gain/(loss) recognised in statement of comprehensive income 2.5 (12.4)
Employer contributions to schemes 9.6 3.7
Exchange movement (1.8) (1.7)
Deficit at end of year (32.1) (41.4)
Related deferred tax asset 6.5 7.5
Net deficit after deferred tax (25.7) (34.0)
Fyffes plc Annual Report 201518
Operating and Financial Review (continued)
Summary Cash Flow Statement
2015
€’M
2014
€’M
Inflows
Adjusted EBITA 45.8 40.1
Depreciation 10.3 8.1
Chiquita break fee less costs incurred - 4.3
Share of joint ventures EBITA (1.7) (2.6)
Dividend payments by joint venture 1.5 0.2
Total inflows 55.9 50.1
Investment and other expenditure
Maintenance capital expenditure, incl leased assets (9.6) (7.2)
Non-routine capital expenditure (2.7) (19.7)
Acquisition of businesses (26.8) -
Deferred acquisition consideration (0.1) (2.5)
Tax paid (4.3) (4.9)
Purchase of own shares - (3.0)
Dividends paid to shareholders (7.4) (6.6)
Pension payments (in excess of income statement charges) (5.8) (0.8)
Other exceptional charges (incl termination of Irish Pension Scheme) (13.9) -
Payments to the MNOPF & MNRPF (5.2) (0.6)
Investment in joint ventures - (0.9)
Working capital and movement in biological assets (9.3) (14.5)
Other 1.8 (1.8)
Total investment and other expenditure (83.3) (62.5)
Net (outflows) (27.4) (12.4)
Translation of non-euro denominated funds (0.2) 0.3
Net (debt)/funds at beginning of year (11.7) 0.4
Net (debt) at end of year (39.3) (11.7)
Movement in net debt
The Group’s net debt increased by €27.6 million in 2015 to €39.3 million. This represents 0.7 times Adjusted EBITDA. Cash
generated from operations in the year was c. €56 million, comprising Adjusted EBITDA, excluding the Group’s share of EBITA
from its joint ventures but including dividends received from these businesses. Total capital and investment expenditure
amounted to over €83 million. This included €26.8 million spent on the melon and banana farming businesses acquired towards
the end of the year (see below), plus with a further €2.7 million spent acquiring another farm which was accounted for as an
asset purchase. Regular Capex amounted to €9.6 million, compared to the €10.3 million depreciation charge. Total payments
of €20 million were made arising from the closure of the Irish pension scheme as explained above. Dividends paid amounted
to €7.4 million, tax paid was €4.3 million and €5.2 million was paid in respect of the Group’s MNOPF and MNRPF liabilities.
Working capital including movements in biological assets increased by €9.3 million in the year, reflecting the impact of the
acquisitions during the year and volume growth in the banana and melon categories.
Fyffes plc Annual Report 2015 19
Operating and Financial Review (continued)
Acquisition of subsidiaries
Towards the end of 2015, the Group acquired additional melon farming assets in Guatemala for a total consideration of €14.5
million, including deferred consideration contingent on completion of €1.1 million. The Group also completed the purchase of a
banana farm in Costa Rica during the second half of 2015 for a total cash consideration of €13.4 million.
The purchase method of accounting has been applied in respect of these acquisitions. Initial estimates of the fair value of the
assets acquired have been performed and these provisional fair values will be finalised within twelve months of the acquisition
dates, in accordance with IFRS 3 Business Combinations. Goodwill of €5.7 million has been recognised on these acquisitions,
based on the provisional fair values attributed to the identifiable assets acquired. Given the proximity to the year end of
the completion of these acquisitions, they made no material contribution to the Group’s revenues or profits in 2015 and no
amortisation has been charged in respect of the intangible assets recognised on these transactions.
The provisional fair values of the assets acquired and consideration paid and payable in respect of these transactions is
summarised in the table below:
€’M €’M
Provisional fair value of identifiable assets acquired
Property, plant and equipment 14.8
Intangible assets 6.9
Working capital 0.6
Total fair value of assets acquired 22.2
Consideration
Cash paid 26.8
Deferred consideration 1.1
Fair value of consideration 27.9
Goodwill arising 5.7
Fyffes plc Annual Report 201520
Operating and Financial Review (continued)
Business and Financial Risks and Financial Instruments
Key business drivers
The key drivers of short term performance in Fyffes’ tropical
produce operations are:
• selling prices;
• cost of fruit;
• shipping and fuel costs;
• exchange rates; and
• EU banana import duty.
These variables, together with operating costs and efficiencies
and volume changes, are the key factors impacting the
Group’s annual results, including its EBITA, which as noted
earlier, is the key performance measure for Fyffes’ tropical
produce operations. Given the significance of these factors,
the Group’s short term performance can be difficult to
predict and potentially volatile.
Key operational risks
The principal risks and uncertainties the Group faces on
an ongoing basis relate to the factors outlined above and
include, in particular, the challenge of passing on inflationary
increases in supply chain costs to the Group’s customers,
particularly the retail sector. The Group’s performance is also
influenced by normal supply and demand factors, including
the impact of weather in both the producing countries and
in the main markets in which Fyffes trades and by trends
in consumption of fresh produce. Fyffes operates in a
highly competitive industry and consequently the actions of
competitors can also influence the performance of the Group.
Fyffes has always pursued a strategy of growth by acquisition
and future growth will remain dependant on the Group’s
ability to continue to successfully complete such transactions,
in addition to organic growth. Fyffes is also dependent on the
continuing commitment of its senior management.
Risks of operating internationally
The Group’s operations are in part dependent upon activities
and investments in jurisdictions outside of the EU. Although
Fyffes aims to co-operate with and invest only in countries
that are politically stable, these operations and investments
are subject to risks that are inherent in operating in certain
foreign countries, including: political changes and economic
crises which may lead to significant changes in the business
environment; and economic downturns, political instability,
war or civil disturbances which may disrupt individual
markets. In addition, the Group operates some of its
businesses through joint ventures in which its rights to control
business decisions is limited.
Transportation risks
An extended interruption in Fyffes’ ability to ship or distribute
its products could have an adverse effect on the Group’s
performance. While Fyffes believes it is adequately insured and
would attempt to transport its products by alternative means
if there was an interruption due to strike, natural disasters or
otherwise, the Group cannot be sure that it would be able to
do so or be successful in doing so in a timely and cost-effective
manner. Shipping and fuel are among the principal costs of the
Group. When these costs increase, the Group may not be able
to pass on the full impact of these higher costs to customers or
there may be a time lag in doing so.
Production and quality risks
Adverse weather and other unfavourable conditions for
tropical produce production can adversely affect crop size
and quality. In extreme circumstances, entire harvests may be
lost in specific geographic areas. These factors can increase
costs, decrease revenues and lead to additional charges to
earnings which, from time to time, may have an adverse
effect on the Group’s business. Similarly, serious quality issues
and in particular deliberate or accidental contamination could
have a significant impact on revenue.
Earnings sensitivity to market conditions
Fyffes’ earnings are significantly dependent on the selling
prices obtained for tropical produce, which competes directly
in any given market with other imported fresh produce
and with local production when in season. Pricing is largely
determined by market supply of and demand for tropical
produce and competing fresh produce. Market demand is
a function of population size, per capita consumption, the
availability and quality of tropical produce, the availability,
quality and price of locally produced or imported competing
products and climatic and other general conditions in the
marketplace. The global and individual country markets can
from time to time be over-supplied. Excess supplies of tropical
produce or competing fresh produce could lead to reduced
selling prices for tropical produce and could have an adverse
effect on Fyffes’ performance.
Fyffes plc Annual Report 2015 21
Operating and Financial Review (continued)
Key financial risks
The Group’s multinational operations expose it to different
financial risks that include foreign exchange rate risks, credit
risks, liquidity risks and interest rate risks. Fyffes has a risk
management programme in place which seeks to limit the
impact of these risks on the financial performance of the
Group. The Board has determined the policies for managing
these risks. It is the policy of the Board to manage these risks
in a non-speculative manner.
Foreign exchange risk
Fyffes’ primary input costs are fruit, shipping and fuel. These
costs are routinely denominated in US Dollars while most
sales, other than in the Group’s US melon business, are made
in euro and Sterling. Although Fyffes may engage in foreign
currency hedging transactions from time to time, there can be
no assurance that those hedging transactions will be sufficient
to protect against adverse exchange rate fluctuations; meaning
that profits may be affected by fluctuations in exchange rates.
A strengthening of the US Dollar against the euro and Sterling
could have an adverse effect on the Group’s performance.
These currency risks are monitored by the Group’s Treasury
Committee on an ongoing basis and managed as deemed
appropriate by utilising a combination of spot and forward
foreign currency contracts and, from time to time, foreign
currency options. The Group’s balance sheet is also exposed
to currency fluctuations relating to its net investment in its
overseas non-euro denominated operations. Depending on
the scale of the transaction, Fyffes may finance its overseas
investments through foreign currency borrowings to hedge this
exposure. Post acquisition, these overseas businesses generally
fund their operations locally.
Credit and liquidity risk
The Group has detailed procedures for monitoring and
managing the credit risk related to its trade receivables. Cash
and short term bank deposits are invested with institutions
of the highest credit rating or state guaranteed institutions,
with limits on amounts held with individual banks at any
one time. It is also the policy of the Group to have adequate
undrawn facilities available at all times to cover unanticipated
financing requirements. The maximum exposure to credit risk
is represented by the carrying amount of the financial assets
in the balance sheet.
Interest rate risk
The Group’s balance sheet contains both interest bearing
assets and interest bearing liabilities. In general, the approach
employed by the Group to manage its interest rate exposure
is to maintain the majority of its cash, short term bank
deposits and interest bearing borrowings on floating rates.
Rates are generally fixed for relatively short periods in order to
match funding requirements while being able to benefit from
opportunities due to movements in longer term rates.
Financial instruments
Fyffes finances its operations through a combination of
retained profits, its own cash resources and bank debt. The
financial instruments that arise from this activity comprise
bank deposits, bank loans and potentially, from time to
time, certain financial assets such as government securities,
commercial paper and other trade investments. Other
financial instruments such as trade receivables and trade
payables arise directly from operations. In addition, as noted
above, the Group enters into hedging instruments with a
view to managing currency risk and, to a lesser extent, the
interest rate risk arising from its operations.
The disclosures required under IFRS 7 and IAS 39 in relation
to these financial instruments and the above risks are set out
in Note 30 to the financial statements on pages 102 to 109.
Fyffes plc Annual Report 201522
Fyffes has a responsible attitude towards the environment, its growers, its customers and the consumer, and is proud of its
corporate social responsibility and sustainability profiles.
Fyffes is aware of the social and environmental issues associated with the products that it sources and sells, particularly as a large
proportion of its fresh produce supplies originate in developing countries. Whether conventional, organic or Fairtrade, all Fyffes fruit
is produced to the highest quality and ethical standards, and listed below are some of the tools that it uses to help achieve this.
Food safety
Global GAP certification
Fyffes is a founder member of Global GAP, established by
major food retailers and their suppliers across Europe to
address consumer concerns about food safety, environmental
protection and worker welfare and to promote safe and
sustainable agriculture. Fyffes Global GAP certification
has been continually renewed for 14 years and we require
compliance for all suppliers to this or an equivalent standard,
including retailers own standards where required.
Other relevant food safety, hygiene and handling standards
are applied in our packing stations and ripening centres.
Environment
Through its support of programmes such as Global GAP,
the Ethical Trading Initiative, the Sustainable Agriculture
Network (Rainforest Alliance), the Carbon Trust Standard and
increasingly stringent environmental legislation in production
countries, Fyffes seeks to minimise the impact of its activities
upon the environment, particularly in our source countries.
As one of the largest importers of organic products into
Europe, Fyffes supports sustainable agricultural practices in
producing countries. We participate actively in local initiatives
for controlling issues such as water management and health
and safety procedures in the countries in which we work.
We also comply fully with environmental licensing rules and
regulations.
Carbon Trust Standard
In 2010, Fyffes became the first UK banana importer and
distributor to be awarded the Carbon Trust Standard. Fyffes
continuing efforts and achievement in measuring, managing
and reducing its carbon emissions were rewarded with the
renewal of its Carbon Trust Standard in 2014. Fyffes has also
achieved Carbon Trust Waste Reduction Standard certification
for its UK operations.
Sustainable Agriculture Alliance (Rainforest Alliance)
In 2015, Fyffes has agreed to certify its suppliers of bananas
across a wide number of sources under the Sustainable
Agriculture Alliance (SAN) standard. The SAN standard
is comprehensive in how it brings together ethical and
environmental compliance requirements as well as introducing
a strong element of integration with the local community.
The SAN standard is well recognised for its “frog” logo.
Sustainable Initiative Fruit and Vegetables (SIFAV)
In 2014, Fyffes joined this initiative which aims to make
imports of fruits and vegetables from Africa, Asia and South
America 100% sustainable by 2020. Driven by the Dutch
Sustainable Trade Initiative (IDH), many parties including
retailers, operators in the sector and a number of civil society
organisations have signed a covenant committing to 100%
sustainable sourcing by January 2020.
Social
Ethical Trading Initiative
Fyffes is a member since 2002 of the UK government
sponsored Ethical Trading Initiative (ETI), an alliance of
companies, non-governmental organisations and labour
representative bodies working in partnership to improve
the lives of workers across the globe who make or grow
consumer goods. The ETI Base Code is incorporated into
the Fyffes Codes of Best Practice with which all Fyffes direct
banana and pineapple suppliers must comply.
ETI and other ethical standards are benchmarked by the
Global Social Compliance Programme, which Fyffes recognises
as a useful tool in reducing duplication of audits. These
programmes follow the United Nations Guiding Principles
(UNGP) on the application of Human Rights. Fyffes follows the
UNGP requirement to “respect, protect and remedy” human
rights and is committed to continue doing so.
Sustainability and Responsibility
Fyffes plc Annual Report 2015 23
Sustainability and Responsibility (continued)
Fairtrade
Fyffes is the largest supplier of Fairtrade bananas in Europe.
Products that carry the FAIRTRADE Mark are independently
certified against internationally agreed standards defined
by the Fairtrade Labelling Organisations International (FLO).
These standards cover a range of social and environmental
“criteria” including trading standards to ensure that the
producer organisation receive an agreed, stable price based
on production costs, plus additional premiums to invest in
improving the quality of life in their communities.
World Banana Forum
Fyffes is a member of the World Banana Forum (WBF),
established under the auspices of the UN Food and
Agriculture Organisation as a permanent space of assembly
for participants representing the global banana supply
chain to promote open dialogue on challenges facing the
global banana industry. The mission of the WBF is to inspire
collaboration between stakeholders that produces pragmatic
outcomes for the betterment of the banana industry and
to achieve an industry wide consensus on best practices
regarding workplace issues, gender equality, environmental
impact, sustainable production and economic issues.
Fyffes is an active member of the Steering Group and the
Working Groups on “Sustainable Banana Production and
Environmental Impact” and “Distribution of Value”.
Community
Longstanding trading relationships with growers have
encouraged partnerships in community development
programmes and sponsorships. Fyffes prefers to work with
people in the countries from which its fruit is sourced in
order to maximise the benefit, evaluating the success of
our participation in terms of observable results rather than
potential media coverage.
In this respect we work with local charitable organisations
in various countries, and through the Fairtrade premium,
where funding goes to finance development projects
selected by the farmers themselves to benefit the local
community.
Fyffes works with UNICEF Ireland, supporting its “100%:
Let’s Vaccinate Every Child” campaign. This is a polio
vaccination programme which has the goal of immunising
c.1 million children aged 5 years and under. Polio is a
devastating and potentially fatal infectious disease which
predominantly affects young children. UNICEF aims to
eradicate polio by 2018 and Fyffes is proud to support them
in this mission.
Through all of the above, and other social responsibility
measures, Fyffes aims to provide the finest quality produce,
produced under the safest working conditions, following
fair labour practices and with the minimum environmental
impact. Fyffes is pro-active in these matters and actively
participates in industry forums on social, ethical, health
and safety and environmental issues. In addition, Fyffes is
satisfied that it has appropriate risk management procedures
in place to ensure it complies with the highest standards in
relation to food safety regulations.
Fyffes plc Annual Report 201524
Financial Statements
Page
Directors and Other Information 25
Directors’ Report 26
Corporate Governance Report 29
Audit Committee Report 35
Compensation Committee Report 38
Statement of Directors’ Responsibilities 44
Independent Auditor’s Report 45
Group Income Statement 47
Group Statement of Comprehensive Income 48
Group Statement of Movement in Equity 49
Group Balance Sheet 50
Group Cash Flow Statement 51
Significant Accounting Policies 53
Notes to Group Financial Statements 62
Company Balance Sheet 111
Company Statement of Movement in Equity 112
Company Cash Flow Statement 113
Notes to Company Financial Statements 114
Significant Subsidiaries, Joint Ventures and Associates 118
Notice of Annual General Meeting 120
Fyffes plc Annual Report 2015 25
Directors and Other Information
Fyffes plc
David McCann, Executive Chairman
Coen Bos (Netherlands)
Declan McCourt
Tom Murphy
James O’Dwyer
Jim O’Hara
Robert Johnston (USA/Canada)
Secretary and Registered Office
Seamus Keenan
29 North Anne Street
Dublin 7
Auditor
KPMG
Chartered Accountants
1 Stokes Place
St Stephen’s Green
Dublin 2
Registrars
Computershare Services (Ireland) Limited
Heron House
Corrig Road
Sandyford Industrial Estate
Dublin 18
Stockbrokers and Nominated Advisor
Davy
49 Dawson Street
Dublin 2
Solicitors
Arthur Cox
Arthur Cox Building
Earlsfort Terrace
Dublin 2
Legal Advisors
King & Wood Mallesons LLP
10 Queen Street Place
London EC4R 1BE
Holland & Knight LLP
701 Brickell Avenue
Suite 3300
Miami, FL 33131
USA
Principal Bankers
Rabobank Ireland plc
Charlemont Place
Dublin 2
HSBC Bank plc
1 Grand Canal Square
Dublin 2
Allied Irish Banks plc
Bankcentre
Ballsbridge
Dublin 4
Barclays Bank plc
Pall Mall
London SW1Y 5AX
Fyffes plc Annual Report 201526
Directors’ Report
The directors present their report to the shareholders, together with the audited financial statements, for the financial year
ended 31 December 2015.
Principal activities and business review
Fyffes plc is a publicly quoted company incorporated in Ireland. Fyffes is one of the largest marketers and distributors of tropical
produce globally and the biggest in Europe. The Group also has an investment in Balmoral International Land Holdings plc,
an international property company. A detailed business review is included in the Operating and Financial Review on page 12
to 21. The Operating and Financial Review also includes details of the key business and financial risks faced by the Group and
an analysis of the key performance indicators, including adjusted earnings before interest, tax and amortisation, excluding
exceptional items (Adjusted EBITA) and key short-term variables such as selling prices, costs and exchange rates.
Profit
Details of the profit for the year are set out in the income statement on page 47.
Dividends
An interim dividend in respect of 2015 of 0.8211 cent (2014: 0.714 cent) per share was paid on 2 October 2015. The directors
have proposed, subject to shareholder approval at the Annual General Meeting (“AGM”), the payment of a final dividend for
2015 of 1.924 cent (2014: 1.673 cent) per share.
Future developments
A review of future developments of the business is included within the Chairman’s Statement on page 10 and the Operating and
Financial Review on pages 12 to 21.
Directors and secretary
In accordance with the Articles of Association of the Company and the Group’s corporate governance practice, T G Murphy, R B
Johnston and J D McCourt retire from the Board and, being eligible, offer themselves for re-election. Details of the terms of the
service contract of C Bos are set out in the compensation committee report on pages 38 to 43. No other director has a service
contract with any Group company.
Directors’ and company secretary’s interests
Details of the directors’ and company secretary’s share interests and interests in share options of the Company and Group
companies are set out in the compensation committee report on pages 38 to 43.
Substantial holdings
The directors have been notified of the following significant interests in the issued ordinary share capital of the Company:
Number of
Ordinary Shares
Percentage
The Article 6 Marital Trust created under the First Amended and Restated Jerry
Zucker Revocable Trust 39,034,612 13.1%
Balkan Investment Company and related companies 37,238,334 12.5%
Fidelity International 31,200,000 10.5%
Invesco Limited 14,279,602 4.8%
Farringdon Capital Management 13,136,857 4.4%
BNP Paribas Investment Partners SA 11,882,803 4.0%
Arnsberg Investment Company, which is a related party of Balkan Investment Company, owns 6.8% of the issued share capital
of the Company which is included in the total for Balkan Investment Company above. The Board has not been notified of any
other holdings of 3% or more of the issued ordinary share capital of the Company.
Fyffes plc Annual Report 2015 27
Directors’ Report (continued)
Directors’ interests in contracts
None of the directors had a beneficial interest in any material
contract to which the Company or any subsidiaries was a party
during the year other than the employment contract of C Bos
as explained on page 40.
Treasury shares
At 31 December 2015, the total number of treasury shares
held amounted to 31,075,000 (2014: 31,075,000) ordinary
€0.06 shares at a cost of €20,407,000 (2014: €20,407,000).
These shares represent 9.5% of the ordinary shares in issue at
31 December 2015 (2014: 9.5%). The rights to dividends on
these shares have been waived and they are excluded from the
calculation of earnings per share.
Accounting records
The directors believe that they have complied with the
requirements of Sections 281 to 286 of the Companies Act,
2014, with regard to maintaining adequate accounting records
by employing accounting personnel with appropriate expertise
and by providing adequate resources to the financial function.
The accounting records of the Company are maintained at 29
North Anne Street, Dublin 7, Ireland.
Political donations
During the year, the Group and Company did not make any
donations disclosable in accordance with The Electoral Acts,
1997–2012.
Auditor
In accordance with Section 383 (2) of the Companies Act,
2014, the auditor, KPMG, Chartered Accountants, has
expressed willingness to continue in office. A resolution will
be proposed at the AGM for the re-appointment of KPMG,
Chartered Accountants, as auditor of the Company.
Going concern
The Group has considerable financial resources available
to it, including undrawn committed bank facilities. As a
consequence, the directors believe that Fyffes is well placed to
manage its business risks successfully. After making enquiries,
the directors have a reasonable expectation that the Company
and the Group have adequate resources to continue in
operational existence for the foreseeable future. Accordingly,
they continue to adopt the going concern basis in preparing
the annual report and accounts.
Subsidiaries, joint ventures and associates
Information on the Group’s significant subsidiaries, joint
ventures and associates is included on pages 118 and 119.
Annual General Meeting (‘AGM’)
Your attention is drawn to the Notice of the AGM of AIM
and ESM listed Fyffes plc which will be held at the Ballsbridge
Hotel, Pembroke Road, Ballsbridge, Dublin 4 on 29 April 2016
at 11.00am which is set out on pages 120 to 123 of
this document.
In addition to the usual business to be transacted at the AGM
which are described below, there are a number of items of
special business proposed for the meeting.
The Investment Association (‘IA’) guidelines on directors’
authority to allot shares state that IA members will permit, and
treat as routine, resolutions seeking authority to allot shares
representing up to two-thirds of the Company’s issued share
capital. The guidelines provide that the extra routine authority
(that is the authority to allot shares representing an additional
one-third of the Company’s issued share capital) should only
be used to allot shares pursuant to a fully pre-emptive rights
issue. The Board is proposing that shareholders adopt these
new guidelines in the first three items of special business.
Under the first item of special business (Resolution 5),
shareholders are bing asked to approve an amendment to
Article 7(d)(i) of the Articles of Association (which deals with
the directors’ authority to allot shares) in order to enable the
Company to comply with these new guidelines. If adopted, this
amendment will make it clear that an open offer and rights
issue may be used to allot equity securities for cash so long as
this does not exceed one-third of the Company’s issued share
capital, and that any allotment of equity securities in excess of
one-third of the Company’s issued share capital should only be
applied to a rights issue.
Under the second item of special business (Resolution 6),
the board seeks shareholders’ authority to allot shares in
the capital of the Company up to a maximum nominal
amount of €13,145,198 representing the IA guideline limit of
approximately two-thirds of the Company’s issued ordinary
share capital as at 14 March 2016 (the latest practicable date
prior to publication of the AGM Notice). Of this amount,
€6,572,599 (representing approximately one-third of the
Company’s issued ordinary share capital) can only be allotted
pursuant to a rights issue. The directors have no present
intention of exercising this authority. However, the directors
consider it appropriate to maintain the flexibility that this
authority provides. If adopted, this authority will expire on the
earlier of the close of business on 29 July 2017 or the date of
the AGM of the Company in 2017.
Fyffes plc Annual Report 201528
Directors’ Report (continued)
Annual General Meeting (‘AGM’) (continued)
Under the third item of special business (Resolution 7), shareholders are being asked to renew the authority to disapply the strict
statutory pre-emption provisions in the event of a rights issue or in any other issue up to an aggregate amount of €1,971,977
in nominal value of ordinary shares, representing 10% of the nominal value of the Company’s issued ordinary share capital for
the time being, which limit has become more commonplace for AIM and ESM listed companies such as Fyffes. If adopted, this
authority will expire on the earlier of the close of business on 29 July 2017 or the date of the AGM of the Company in 2017. In
accordance with IA guidelines, the Board confirms in relation to Resolution 7 that (i) it intends that any use of the authority in
excess of 5% of the Company’s issued ordinary share capital would be only in connection with an acquisition or specified capital
investment; and (ii) it does not intend to issue shares for cash representing more than 7.5% of the Company’s issued ordinary
share capital in any rolling three-year period to those who are not existing shareholders, save in connection with an acquisition
or specified capital investment, without prior consultation with shareholders.
Under the fourth item of special business (Resolution 8), shareholders are being asked to extend the authority granted at the
last AGM to give the Company, or any of its subsidiaries, the authority to purchase up to 10% of its own shares. If adopted,
this authority will expire on the earlier of the close of business on 29 July 2017 or the date of the AGM of the Company in 2017.
The Board reviews the appropriateness of share repurchases on an ongoing basis and this authority is being sought as it is
common practice for public companies. Such purchases would be made only at price levels which the directors considered to be
in the best interests of the shareholders generally, after taking into account the Company’s overall financial position, including a
positive impact on earnings per share. In addition, the authority being sought from shareholders will provide that the minimum
price which may be paid for such shares shall not be less than the nominal value of the shares and the maximum price will be
the greater of (i) 105% of the average market price of such shares for the previous five days, and (ii) the higher of the price
quoted for the last independent trade and the highest current independent bid or offer for such shares.
Shareholders are also being asked under the fifth item of special business (Resolution 9) to pass a resolution authorising the
Company to reissue such shares purchased by it and not cancelled, as treasury shares. If granted, the minimum and maximum
prices at which treasury shares may be reissued shall be set at 95% and 120%, respectively, of the then market price of such
shares. This authority will expire on the earlier of the close of business on 29 July 2017 or the date of the AGM of the Company
in 2017.
A Form of Proxy for use at the AGM is being sent to shareholders along with this Annual Report. You are requested to complete,
sign and return the Form of Proxy as soon as possible whether or not you propose to attend the meeting in person. To be valid,
the Form of Proxy should be returned by hand or by post to the registrar of the Company, Computershare Services (Ireland)
Limited, P.O. Box 954, Sandyford Industrial Estate, Dublin 18, Ireland or by facsimile transmission to the facsimile number
printed on the Form of Proxy, to arrive not less than 48 hours before the time appointed for the holding of the meeting. You
may appoint more than one proxy provided that each proxy is appointed to exercise the rights attached to a different share or
shares held by him/her. The completion and return of a form of proxy will not preclude you from attending and voting at the
meeting should you so wish. Alternatively, you may appoint a proxy or proxies electronically by logging on to the website of the
registrars, Computershare Services (Ireland) Limited: at www.eproxyappointment.com. Shareholders will be asked to enter their
Shareholder Reference Number and PIN Number, in addition to the meeting Control Number, as printed on your Form of Proxy
and agree to certain conditions.
Your Board believes that the resolutions to be proposed at the AGM are in the best interests of the Company and its
shareholders. Accordingly, the directors unanimously recommend you to vote in favour of the resolutions as they intend to do in
respect of all the ordinary shares which can be voted by them.
On behalf of the Board
D V McCann T G Murphy
Executive Chairman Finance Director 26 February 2016
Fyffes plc Annual Report 2015 29
Corporate Governance Report
Corporate Governance Approach
Fyffes plc (“Fyffes”) is committed to business integrity, appropriately high ethical standards and professionalism in all its activities
and operations. This includes a commitment to high standards in corporate governance, which describes the systems by which
companies are directed and controlled at a senior level, including the operation of the Board. The bench-mark standard in this
regard, for UK and Irish listed companies, is the UK Corporate Governance Code, as most recently updated in 2014, which
forms part of the Listing Rules of the Irish and London Stock Exchanges (“the UK Code”). In addition, following a review of
compliance with the UK Code, the Irish Stock Exchange issued an annex to its Listing Rules in 2010 setting out additional
disclosure requirements which supplement the principles of the UK Code (“the Annex”). A number of the changes to the UK
Code introduced in the 2010 and 2012 revisions, including the recommendations for all directors to put themselves forward for
re-election annually and for the evaluation of the Board to be carried out by external advisors every three years, are specifically
applicable to larger listed companies (those listed on the FTSE350 index or equivalent) rather than smaller companies.
Compliance with the UK Code, on a ‘comply or explain’ basis, is required for companies listed on the main markets of the
London and Dublin Stock Exchanges. Fyffes is listed on the secondary Enterprise Securities Market (ESM) in Dublin and the
Alternative Investment Market (AIM) in London and, consequently, is not required to comply with the UK Code. In addition,
a significant portion of Fyffes’ current issued share capital is held by investors outside of the UK and Ireland, who may expect
compliance with alternative corporate governance standards, such as the rules of the New York Stock Exchange in the case of
US shareholders. These alternative corporate governance codes, in some cases, have certain principles or areas of emphasis
which are different from, and in some respects contradictory to, the UK Code.
Therefore, whilst not applying the UK Code in full, Fyffes has had regard to its provisions and the requirements of other Stock
Exchanges in determining the appropriate governance structures and practices for the Company. This report summarises Fyffes
approach to corporate governance, which is primarily modelled on the provisions of the UK Code (as applicable to smaller
companies).
The Board of directors
Fyffes is led by a strong and effective Board of Directors (see biographical details set out on page 11). The Board currently
comprises three executive directors, including the Executive Chairman, and four independent non-executive directors. This
exceeds the recommendations of the UK Code and meets the requirements of the New York Stock Exchange in this regard.
The executive directors are responsible for the operation of the business while the non-executive directors bring independent
objective judgement to bear on Board decisions by constructively challenging management and helping to develop the Group’s
strategic objectives. All of the directors have fiduciary responsibilities to the Company. Collectively, the Board is responsible for
leading and directing the long term development of the Group.
Each of the executive directors has extensive knowledge of the fresh produce industry, in addition to wide-ranging business
skills and commercial experience. All of the directors bring an objective judgement to bear on issues of strategy, performance,
resources (including key appointments) and standards of conduct. Board members are selected because of their pertinent
experience and appropriate training is available to them whenever necessary. On appointment, new directors receive an
induction into the Group’s activities and the operation and procedures of the Board.
Executive Chairman D V McCann is responsible for the running of the Board including setting its agenda, ensuring its effectiveness
and managing the interaction between the executive and non-executive directors. He is also responsible for ensuring timely and
effective communication with shareholders. Responsibility for running the Group’s business rests with the executive directors
comprising the Executive Chairman, the Chief Operations Officer and the Finance Director. The Board is satisfied that this is
appropriate for the size of the business and ensures that no one director has exclusive decision making powers.
Fyffes plc Annual Report 201530
Corporate Governance Report (continued)
Independence of non-executive directors
The Board has evaluated the independence of each of its non-executive directors. Following this assessment, the Board has
determined that, throughout the reporting period, all of its non-executive directors, who are appointed for specified terms
of office, were independent, based above all on their objectivity and integrity. The terms and conditions relating to the
appointment of the non-executive directors are available from the company secretary.
In arriving at its conclusion on their independence, the Board considered the factors set out in the UK Code including, inter alia,
whether any of the non-executive directors:
• has been an employee of the Group within the last five years;
• has, or had within the last three years, a material business relationship with the Group;
• receives remuneration from the Group other than a director’s fee;
• has close family ties with any of the Group’s advisors, directors or senior employees;
• holds cross-directorships or has significant links with other directors through involvement in other companies or bodies;
• has served more than nine years on the Board; or
• represents a significant shareholder.
The UK Code acknowledges that a director may be regarded as independent notwithstanding the existence of any of the
above factors.
J D McCourt joined the Board in 2003. He has extensive commercial experience through his role as Chief Executive of
automobile distributor, the OHM Group, and as a director or former director of other listed companies. J M O’Dwyer was
appointed to the Board in 2007. He is former Chairman of and remains a consultant with Arthur Cox, the leading Dublin based
law firm used by the Group. He has many years of experience in mergers and acquisitions. J R O’Hara joined the Board in 2012.
He has broad commercial experience through his previous role as Vice President of Intel Corporation and General Manager of
Intel Ireland. He is a non-executive director of another listed company and of a number of other private companies. R B Johnston
also joined the Board in 2012. He is Chief Strategy Officer with the US based business The InterTech Group Inc, which manages a
diverse group of businesses including a number of strategic investments in various public companies. Arising from this role, he is
currently and has been a director of several businesses including a number of listed companies in the US and Canada. A private
investment fund connected with the main shareholder of The InterTech Group Inc, The Article 6 Martial Trust created under the
First Amended and Restated Jerry Zucker Revocable Trust, currently owns 13.1% of the Fyffes plc shares in issue.
Having carried out a detailed assessment, the Board has concluded that each of the non-executive directors are independent
of management and that they discharge their duties in a proper and independent manner, notwithstanding his tenure on the
Board in the case of J D McCourt and his connection with a large shareholder in the case of R B Johnston. They are objective
and appropriately challenge the executive directors and the Board on an ongoing basis. They bring an unfettered perspective
and integrity to their advisory and monitoring roles and a diverse breath of experience in other businesses to compliment the
specific industry skills of the executive directors. The Board is satisfied that each of the non-executive directors makes the
appropriate commitment of time necessary to discharge their responsibilities.
Senior non-executive director
J D McCourt acted in the capacity of senior independent non-executive director throughout the year.
Fyffes plc Annual Report 2015 31
Corporate Governance Report (continued)
Operation of the Board
Full Board
Audit
Committee
Compensation
Committee
Number of meetings held in 2015 12 3 4
Directors and positions held:
D V McCann – Executive Chairman 12 - 4*
C Bos – Chief Operating Officer 10 - -
T G Murphy – Finance Director 12 3* -
R B Johnston – Non-executive 12 - -
J D McCourt – Non-executive 10 3 4
J M O’Dwyer – Non-executive 11 3 4
J R O’Hara – Non-executive 10 - -
* In attendance only
In addition to the full Board meetings above, there were a number of sub-committee meetings during 2015 to deal with specific
matters. Ordinarily, the Board is scheduled to meet six times each year.
The Board and its committees are supplied with relevant, timely and accurate information for review prior to each meeting
to enable them to discharge their duties. The Board has identified and formally adopted a schedule of key matters that are
reserved for its decision, including the annual fiscal and capital budgets, interim, preliminary and final results announcements,
interim and final dividends, the appointment or removal of directors and the company secretary, circulars to shareholders, Group
treasury policies and capital expenditure and acquisitions in excess of €20 million. Certain other matters are delegated to Board
committees, the details of which are set out below.
There is an agreed Board procedure enabling directors to take independent advice, in the furtherance of their duties, at the
Company’s expense. Each Board member has access to the impartial advice and services of the company secretary, who is
responsible to the Board for ensuring that appropriate procedures are followed. The Company maintained directors’ and
officers’ liability insurance throughout 2015.
The Memorandum and Articles of Association of the Company require that one third of the Board must, by rotation, seek re-
election at the Annual General Meeting (AGM) each year, together with all new directors appointed since the previous AGM.
There is open communication between senior executive management and Board members.
Evaluation of performance of the Board, its committees and individual directors
Towards the end of 2015, the Board undertook its annual evaluation of its own performance and that of its committees and
of each individual director throughout the year. In assessing the performance of the Board, the directors objectively considered
such matters as the appropriateness of its composition, its effectiveness in developing Group strategy, its contribution to
managing the Group’s business and operational risks, its response to developing issues and its communications with the Group’s
stakeholders. In assessing the performance of the committees of the Board, the directors considered the appropriateness of
their composition and terms of reference, their effectiveness in fulfilling their roles and their interaction with the Board. The
assessment of the performance of individual directors included consideration of their contribution to the effective functioning
of the Board, the appropriateness of their knowledge, skill and experience and their commitment to their roles. The Chairman
summarised the outcome of these evaluation processes, the results of which were satisfactory, and reported them to the Board
in December 2015. In addition, the non-executive directors met privately to evaluate the effectiveness of the Chairman, the
result of which was also satisfactory.
Fyffes plc Annual Report 201532
Corporate Governance Report (continued)
Board committees
The composition and terms of reference of the committees of the Board are as follows:
Audit committee
Full details of the composition, terms of reference and activities of the audit committee in 2015 are set out in the audit
committee report on pages 35 to 37.
Nomination committee
The terms of reference of the nomination committee are to evaluate the balance of skills, knowledge and experience of the
Board, to consider the need for any new or additional appointments, where necessary to prepare a list of potential candidates
and to forward the names of potential candidates to the Board for its consideration and, if appropriate, approval. The
nomination committee also considers the issue of diversity on the Board. The members of the nomination committee are D
V McCann and J D McCourt. The nomination committee did not believe it was necessary to use the services of any external
consultants during the year.
Compensation committee
Details of the composition and terms of reference of the compensation committee, which has responsibility for the remuneration
of the executive directors, are set out in the compensation committee report on pages 38 to 43.
Procedures in relation to share dealing
In accordance with the terms of the Model Codes of the UK Listing Authority and the Irish Stock Exchange, Fyffes has a policy
on regulating dealing in securities by its directors and other designated senior management. Directors and the company
secretary require the authorisation of the Chairman before dealing in Fyffes’ shares. Transactions in Fyffes’ shares by the
Chairman require the authorisation of the senior independent non-executive director. All share dealings by other designated
senior management require the authorisation of the company secretary. Directors and other designated senior management are
prohibited from dealing during certain specified periods each year and at all other times when the Company is in possession of
price sensitive information.
Internal controls and the management of risk
The Board is ultimately responsible for the overall system of internal controls applied in the Company and its subsidiaries and for
reviewing the effectiveness of these controls. The system is designed to manage, but not eliminate, risks that may impede the
achievement of the Group’s business objectives. The internal controls system is designed to provide reasonable assurance (but
not absolute assurance) against material misstatement or loss.
Fyffes operates a comprehensive internal audit function under the direction of the audit committee. Both the internal audit and
risk management functions facilitate each other and, together with divisional management, they provide the Board with distinct
sources of reasonable assurance as to the effectiveness of the system of internal controls that underlies the Group’s control
environment.
Risk management within Fyffes is co-ordinated by the executive risk committee which reviews the implementation of the risk
management process consistently throughout the Group. The committee periodically advises the audit committee of its activities
which, in turn, reports to the Board at least annually enabling corrective initiatives to be undertaken where appropriate. The
executive risk committee assesses the key risks facing the Group and assists the Board in fulfilling its responsibility as to the
manner in which risk is recognised, assessed and managed on an ongoing basis. The members of the executive risk committee
during the year included the Group finance director, the head of internal audit, the company secretary, the head of information
technology and a number of other senior personnel.
Fyffes plc Annual Report 2015 33
Corporate Governance Report (continued)
Internal controls and the management of risk (continued)
Key risks that might impair the business from achieving its objectives are identified and assessed by conducting detailed reviews
with executive managers at divisional level. Divisional management is thereafter charged with the cost efficient mitigation of the
risks within their areas of responsibility. Risk evaluation and recommendations for strategic change are reviewed by the executive
risk committee which reports its findings to the audit committee for its consideration. The Board also conducts its own risk
identification and assessment so that it is sufficiently aware of the principal threats to which the Group may be exposed.
The Board, through the audit and executive risk committees, has reviewed and updated the process for identifying and
evaluating the significant risks affecting the business and the policies and procedures by which these risks are managed
effectively. The Board is satisfied that these structures and procedures are embedded throughout the Group and considers
them to be a robust and efficient mechanism for creating a culture of risk awareness at every level of management.
The directors regard the process of risk management as a positive medium for change, adding value in the interests of
shareholders by utilising sound and considered judgement, while simultaneously making the organisation alert to best
management practices.
Communications with shareholders and Annual General Meeting (AGM)
Communication with shareholders is an important part of Fyffes’ activities and is dealt with by senior personnel, including the
executive directors. There is regular dialogue and meetings with institutional shareholders, including general presentations after
the release of the annual and interim results. This often includes discussion of corporate governance matters. The Group also
has dialogue with proxy voting agencies from time to time on these issues. Feedback from contact with shareholders is given to
the Board at regular intervals. The Group publishes its preliminary and interim results presentations on the Company’s website
(www.fyffes.com). Stock Exchange announcements in respect of trading updates and corporate activity are similarly published
on the website.
A business presentation provided at the Group’s AGM, followed by a question and answer forum, offers shareholders the
opportunity to question the Board. The AGM is valued by the Board as an occasion where individual shareholders’ views and
suggestions can be noted and considered by the directors.
Details of proxy voting are announced in respect of each resolution considered at the AGM or any EGM. As in previous years,
the Company will arrange for the Notice of the 2016 AGM and related papers to be sent to shareholders at least 20 working
days before the meeting.
Accountability and audit
The contents of the operating and financial review, which includes a description of the key risks in the Group’s business model,
the directors’ report and financial statements (in addition to official Company press releases, Stock Exchange announcements
and interim results issued during the period) have been reviewed in order to ensure a balanced presentation, so that the
Group’s position and prospects may be properly appreciated by shareholders. The Board believes that the Annual Report, taken
as a whole, is fair, balanced and understandable and provides relevant and reliable information for shareholders. A summary
of directors’ responsibilities in respect of the financial statements is given on page 44. The system of internal controls and
risk management established to safeguard shareholders’ investment and the Company’s assets is set out above. The audit
committee, whose composition and functions are described on pages 35 to 37, has considered, in conjunction with the external
auditor, the accounting policies adopted in the financial statements. The committee has also evaluated the internal controls that
have been established within the Group.
Fyffes plc Annual Report 201534
Corporate Governance Report (continued)
Environmental management, corporate responsibility and ethical trading initiatives
The European Commission has previously published recommendations governing the recognition, measurement and disclosure
of environmental issues in the annual reports of companies. Although the provisions of the recommendations are not binding
on Fyffes in the conduct of its business across the world, the Group recognises its social responsibility and endorses the growing
trend towards environmental accountability.
The Group actively promotes best business practices and standards that seek to enhance the health, education and conditions of
workers and their families and to universally encourage the use of sustainable farming methods by its suppliers. Further details
of the Group’s activities in this regard are set out on pages 22 and 23.
Directors’ remuneration
The disclosures regarding directors’ remuneration are set out in the report of the compensation committee on pages 38 to 43.
This report also includes details of the share ownership of the directors.
Fyffes plc Annual Report 2015 35
Audit Committee Report
Membership and responsibilities
Throughout 2015, the audit committee was comprised of independent non-executive directors J D McCourt (Chairman) and J
M O’Dwyer. The Board believes that J D McCourt satisfied the recommendation in the UK Code that at least one member of
the audit committee should have recent relevant financial experience. It is also satisfied that J M O’Dwyer, inter alia through
his membership of the committee, is sufficiently knowledgeable in relevant financial matters to enable him to fulfil his
responsibilities on the committee.
These responsibilities, which are reviewed periodically in line with best practice, are set out in the terms of reference of the audit
committee. They are summarised below:
1. to approve the terms of engagement and remuneration of the external auditor and to recommend to the Board, when
appropriate, any change in the external auditor;
2. to agree, in advance, with the external auditor the nature and scope of the audit as set out in their audit plan;
3. to review the Group’s preliminary and interim financial information and full year financial statements and to report to
the Board on the outcome of this review. As part of this process, the committee considers:
• the appropriateness of the Group’s accounting policies, including any changes in these policies;
• any significant judgemental matters;
• any significant audit adjustments;
• the continuing appropriateness of the going concern assumption;
• the contents of the directors’ report, the operating and financial review and chairman’s statement as set out in the
annual report;
• compliance with relevant financial reporting standards; and
• compliance with legal and Stock Exchange requirements.
4. to review any issues raised by the external auditor during the conduct of the audit. As part of this review, the
committee considers any report from the external auditor on their findings in relation to the Group’s financial systems
and controls, together with any management responses. In addition, the committee reviews any representation letter
required by the external auditor as part of the audit, prior to its endorsement by the Board. The committee also meets
the external auditor independently of management at least annually;
5. to annually assess and monitor the independence, objectivity and effectiveness of the external auditor. As part of this
process, the committee reviews the implementation of its policy in relation to the provision of non-audit services by the
external auditor taking into account relevant ethical guidance. In addition, the committee has established a policy on
the employment by the Group of former employees of the external auditor, which it monitors on an ongoing basis;
6. to meet regularly with the Group’s head of internal audit in order to review the internal audit programme and to
consider the findings on completed audits. The committee also reviews the adequacy of the resources of the internal
audit team and the co-ordination between the internal and external auditor. The committee is responsible, in
consultation with the Chairman of the Board, for the appointment or removal of the head of internal audit;
7. to address any other topics as requested by the Board, including to consider the findings of any internal investigations
and the response of management;
8. to review the Group’s arrangements for employees to raise concerns, in confidence, about possible impropriety in
financial reporting or other matters and to ensure there is provision for a proportionate investigation and follow-up of
such matters; and
9. to review, at least annually, the committee’s own performance and terms of reference and to report to the Board
how it has discharged its responsibilities, including recommending any changes it considers necessary to its terms of
reference to the Board for approval.
Fyffes plc Annual Report 201536
Audit Committee Report (continued)
Committee meetings in 2015
The audit committee schedules three routine meetings annually. There is a formal agenda for all meetings, which follows the
financial reporting cycle of the Company. Meetings are attended as appropriate by the Group finance director, the Group
financial controller, the head of internal audit and representatives of the external auditor. The main items addressed at the three
routine audit committee meetings held during 2015 were as follows:
February meeting
• Review of the draft statutory financial statements for the year ended 31 December 2014 (including the directors’ report,
the operating and financial review and the corporate governance report for the year), together with the draft preliminary
results announcement to the Stock Exchange.
• Review with the external auditor of the outcome of the audit of these financial statements, including discussion of any
significant audit issues. This included a private meeting with the external auditor without management present. As in
previous years, the significant audit issues arising related mainly to judgemental valuation matters including the carrying
value of the Group’s property assets, its intangible assets and goodwill, its biological assets and judgemental provisions
and accruals.
• Consideration of the letter of representation required by the external auditor in connection with the audit.
• Recommendation of the draft statutory financial statements to the Board. The committee received sufficient, reliable and
timely information from management and the external auditor to enable it to make this recommendation. There were no
disagreements with management or the external auditor in relation to any significant audit issues.
• Consideration of any observations or recommendations raised by the external auditor in its management letter, including
management responses.
• Periodic review with the head of internal audit.
• Review and approval of audit committee’s own terms of reference.
August meeting
• Review of the draft interim financial statements for the first half of the year, together with the draft interim results
announcement to the Stock Exchange.
• Consideration with the external auditor of their review of the interim financial statements.
• Consideration of the representation letter required by the external auditor arising from their review of the interim
financial statements.
• Recommendation of the draft interim financial statements to the Board.
• Periodic review with the head of internal audit.
• Consideration of the Group’s policies in relation to the provision of non-audit services by the external auditor, the
employment of former employees of the external auditor and other relevant matters.
December meeting
• Review with the external auditor of the nature and scope of the forthcoming audit as set out in the audit plan, including
consideration of the likely significant audit issues.
• Review of the proposed audit fees for the year.
• Consideration of the independence and objectivity of the external auditor, including assessment of the impact, in this
regard, of any non-audit services provided.
• Review of the report of the executive risk committee. Recommendation of this report for approval by the Board. (Further
details in relation to risk management are set out in the corporate governance report on pages 29 to 34).
• Periodic review with the head of internal audit, including a private meeting with the internal auditor without
management present.
• Review of the committee’s own effectiveness.
Fyffes plc Annual Report 2015 37
Audit Committee Report (continued)
Independence of external auditor
As part of its annual review of the independence of the external auditor, the audit committee seeks confirmation from the external
auditor that he is, in his professional judgement, independent of Fyffes. The committee also monitors the nature, extent and
scope of the non-audit services provided by the external auditor. In this regard, the engagement of the external auditor to provide
any non-audit services, where the expected costs exceed a pre-approved limit, requires the approval of the audit committee. The
amounts paid to the external auditor during the year, for audit and non-audit services, are disclosed on page 66.
Four key principles underpin the provision of non-audit services by the external auditor, namely that the auditor shall not:
• audit its own firm’s work;
• make management decisions for the Group;
• have a mutuality of financial interest with the Group; or
• be put in the role of advocate for the Group.
The committee also reviewed the Group’s practices in respect of the hiring of former employees of the external auditor in order
to assess whether such appointments might affect, or appear to affect, the external auditor’s independence. The committee is
advised in advance of any such proposed appointments.
The audit committee does, from time to time, consider whether it would be appropriate to put the audit out to tender but it is
currently satisfied the existing external auditor is effective in the conduct of the audit.
Performance evaluation
Towards the end of 2015, the committee, as part of the overall evaluation of the Board and its directors, undertook a self-
evaluation of its effectiveness. The outcome of this review, which was satisfactory, was reported to, and considered by, the
Board in December 2015.
Fyffes plc Annual Report 201538
Compensation Committee Report
Composition and terms of reference of compensation committee
The compensation committee comprises solely of the independent non-executive directors, J D McCourt (Chairman) and J M
O’Dwyer. J D McCourt has served on the compensation committees of other public companies in the past. These directors have
no financial interest other than as shareholders in the matters to be decided, no potential conflicts of interest other than as
shareholders in the matters to be decided, no potential conflicts of interest arising from cross-directorships and no day to day
involvement in the running of the business. J D McCourt is a non-executive director of Balmoral International Land Holdings plc,
in which Fyffes plc has a 40% stake.
The terms of reference of the compensation committee are:
• to establish the Company’s policy on executive directors and senior management remuneration;
• to establish the terms of service agreements, remuneration packages and employment conditions of executive directors;
• to approve the grant of share options to executive directors and employees and to determine whether the conditions as
set out in the share option scheme have been met;
• where appropriate to recommend to shareholders the establishment of medium or long term incentive schemes, to set
appropriate performance targets for such schemes, to define the basis of participation in such schemes and to determine
the grants of awards under such schemes;
• if necessary, to establish the amount and constituents of termination payments to be made to executive directors; and
• to report to shareholders on directors’ remuneration in accordance with the requirements of the Irish Stock Exchange and
Company Law.
The Chairman of Fyffes is consulted about the remuneration of the other executive directors and the compensation committee is
authorised to obtain independent professional advice, if deemed appropriate.
Remuneration policy
The Group’s policy on executive directors’ remuneration recognises that employment and remuneration conditions for senior
executives must properly reward and motivate them to perform in the best interests of the shareholders.
The recurring elements of the remuneration package for executive directors are basic salary and benefits, annual performance
bonus, short term incentive plan, pensions or payments in lieu of pensions and participation in the Company’s share option
scheme and profit sharing scheme. It is policy to grant share options to senior executives to encourage identification with
shareholders’ interests. Employees are encouraged to hold shares for a further period after the exercise of their options, subject
to the need to finance any cost of acquisition and associated tax liability. During 2012, the compensation committee undertook
a comprehensive review of the Group’s policy on the remuneration of its executive directors, including a bench-marking
review against a peer group of public companies. This resulted in an updated remuneration framework which was the basis for
determining the component elements of executive directors’ remuneration packages since then. Consultants, Mercers, advised
the committee on the benchmarking review and the framework.
Executive directors’ basic salary and benefits
Basic salaries of executive directors are reviewed annually with regard to personal performance, Group performance, inflation
trends and competitive market practice.
Performance related bonus
The Group pays performance related annual bonuses to the executive directors. The level earned in any one year depends
on an assessment of individual performance and the overall performance of the Group. Annual performance bonuses for the
executive directors are limited to 75% of basic salary, except in exceptional circumstances at the discretion of the compensation
committee. Given the very strong financial performance of the Group in 2015, the committee concluded that the performance
related bonus should be at the maximum 75% level for the year (2014: 75%).
Fyffes plc Annual Report 2015 39
Pensions
Until July 2015, the Executive Chairman and Finance Director were members of the Group’s defined benefit pension scheme
in Ireland. The Chief Operating Officer is a member of the Group’s defined benefit pension scheme in the Netherlands. These
schemes provided for pensions of two-thirds of pensionable salary for full service (40 years) at retirement. As further explained
in note 27 on page 91, in July 2015, the Group decided to close its Irish defined benefit pension scheme to future accrual and
to future liability. Following agreement with the scheme trustees and certain scheme members, all accrued liabilities, rights and
related costs were settled by a final payment of €20 million. The final payment was made to settle the deficit in the scheme, to
eliminate the possibility of a claim by the trustees in respect of member expectations in relation to the scheme and to facilitate
transfers to the new defined contribution scheme. The total liabilities arising from the agreement with the trustees and members
as a result of the decision to terminate the scheme, calculated by the Group’s actuary on a consistent basis for all members,
amounted to €43.9 million. The total liabilities of the Irish scheme accrued in the Group’s financial statements at 31 July 2015,
the effective date of closure of the scheme, amounted to €30.1 million or 69% of the final settlement liabilities. The share of the
€13.9 million incremental liabilities attributable to the Executive Chairman and Finance Director in this regard amounted to €3.6
million and €2.4 million respectively.
The Executive Chairman and Finance Director have elected not to become members of the Group’s new Irish defined contribution
scheme following the termination of the defined benefit scheme. Instead, the compensation committee has approved additional
annual taxable, non-pensionable cash payments in lieu of pension contributions. These payments are equivalent to the amount of
pension contributions they would be entitled to if they were members of the defined contribution scheme. The amounts set out
below as pension contributions or payments in lieu of pension in respect of the Executive Chairman and Finance Director comprise
the contributions on their behalf to the Irish defined benefit scheme up to the end of July 2015, when that scheme terminated,
and the compensating cash payments made in respect of the period from August to December 2015. Following a change in
Dutch pension rules, the compensation committee has also approved additional taxable, non-pensionable payments for the Chief
Operating Officer so that the total pension contributions and payments in lieu of pension would be equivalent to the unrestricted
contributions previously made to the Group’s Dutch defined benefit scheme on his behalf. These payments are included in the
disclosed pension contributions or payments in lieu of pension contributions below.
Short term incentive plan
As in previous years, the compensation committee authorised a Short Term Incentive Plan (“STIP”) for the executive directors
for the year ended 31 December 2015, in addition to the annual performance bonus arrangements. The terms of the STIP for
executive directors provide for a maximum annual award of 75% of basic salary based on two performance criteria. The relative
total shareholder return measure determines up to 50% of any award and the achievement of a stretch earnings per share (EPS)
target determines a further 50% of any award. The basis of the STIP is designed to align elements of performance related pay
to shareholders’ interests. In 2015, the Group’s EPS has exceeded the stretch target set by the compensation committee. In
addition, Fyffes delivered a 55.9% total shareholder return in 2015, as measured under the rules of the STIP, which was in the
top quartile of the peer group. As a result, the STIP will pay out in full in respect of 2015, amounting to 75% of basic salary
(2014: 37.5%). The amounts accruing to the executive directors under the 2015 STIP are included in the analysis of directors’
remuneration on pages 40 to 41. Under the rules of the 2015 STIP, 50% of these awards will be deferred for a minimum of
two years and, unless this gives rise to adverse tax consequences for the directors, a minimum of 50% will be paid in the form
of Fyffes plc shares purchased in the market and held in an employee benefit trust for the benefit of the participants. Any such
shares at year end are included in the directors’ share interests disclosed on page 42.
Employee share option scheme
It is the Group’s policy to grant share options as an incentive to enhance performance and to encourage employee share ownership
in the Company. The current employee share options scheme was approved by shareholders in 2007 to replace the previous share
option scheme which had expired after ten years of operation. The percentage of share capital which can be issued under the
employee share option scheme, and individual limits, comply with institutional guidelines. The amount of ordinary share capital
over which options may be granted in any ten year period is limited to 5% of the aggregate of the issued ordinary share capital. At
31 December 2015, options had been granted but not yet exercised over 11,910,000 (2014: 11,774,000) ordinary shares at prices
ranging from €0.4525 to €1.184 or 3.6% (2014: 3.6%) of the issued ordinary share capital of the Company. Details of the share
options held by the executive directors and company secretary are set out on page 43.
Compensation Committee Report (continued)
Fyffes plc Annual Report 201540
Compensation Committee Report (continued)
Employee profit sharing scheme
The Company has an employee profit sharing scheme which appropriated shares at market value for directors and other
employees of the Group during the year. In December 2015, 16,988 ordinary €0.06 shares were appropriated on behalf of the
executive directors and 8,494 ordinary €0.06 shares on behalf of the company secretary. These transactions took place at the
market price on that day of €1.495 (total cost €38,000). Such shares held by the directors at the year end are included in the
directors’ share interests disclosed on page 42. Non-executive directors do not participate in this scheme.
Service contracts
No service contracts existed between the Company or any of its subsidiaries and any executive or non-executive directors during
the year, except in the case of C Bos.
C Bos’s service contract provides that he shall be entitled to a compensation payment equal to twice his income if his
employment is terminated by the Group except in one of the following circumstances: (i) a summary dismissal for an urgent
reason immediately communicated to C Bos within the meaning of Dutch law; (ii) after an illness lasting two years (or longer);
or (iii) termination of the employment agreement by law on reaching 65 years or such earlier retirement date as provided in his
pension scheme. Also, no compensation payment arises where his employment is terminated as a consequence of a dissolution
based on important reasons within the meaning of section 7:685 of the Dutch Civil Code at the request of the Company
provided that the dissolution is based on a change in circumstances within the meaning of section 7:685 of the Dutch Civil
Code. In calculating the compensation payment, C Bos’s contract provides that his income shall be understood to include his
annual salary, the vacation allowance payable under his contract and the average bonus paid to him over the three calendar
years preceding the termination of the employment.
Directors’ interests in contracts
There were no contracts at any stage during the year between the Company or any of its subsidiaries and any director of the
Company.
Directors’ remuneration
Aggregate directors’ remuneration for the year was as follows:
Executive Directors Non-Executive Directors Total
2015
€’000
2014
€’000
2015
€’000
2014
€’000
2015
€’000
2014
€’000
Basic salaries 1,464 1,464 - - 1,464 1,464
Fees - - 350 350 350 350
Performance bonuses 1,098 1,098 - - 1,098 1,098
Other benefits 61 59 - - 61 59
Short Term Incentive Plan 1,098 548 - - 1,098 548
Project Chicago - 425 - - - 425
Pension contributions or related payments 391 424 - - 391 424
Total remuneration 4,112 4,018 350 350 4,462 4,368
Number of directors (average) 3 3 4 4 7 7
Fyffes plc Annual Report 2015 41
Compensation Committee Report (continued)
Directors’ remuneration (continued)
In accordance with IFRS 2 Share-based Payment, a charge of €120,000 (2014: credit of €12,000) has been recognised in
the income statement in respect of share options granted to directors. In accordance with IAS 19 Employee Benefits, the
pension credit recognised in the income statement for executive directors amounted to €485,000 (2014: expense €340,000)
compared with cash contributions of €391,000 (2014: €424,000). The pension contributions or payments in lieu of pension
contributions for the individual executive directors were: D V McCann - €167,000 (2014: €186,000); C Bos - €134,000 (2014:
€133,000) and T G Murphy - €90,000 (2014: €105,000). The total pension contributions and related payments in 2015 for the
three executive directors, including the share of additional payments made in connection with the closure of the Group’s Irish
defined benefit pension scheme, referred to on page 39, amounted to €9.2 million. Actuarial gains recognised in the statement
of comprehensive income, in respect of pension benefits of executive directors, amounted to €993,000 (2014: losses of
€2,933,000).
Awards totalling €1,098,000 (2014: €548,000) have accrued to the executive directors under the Short Term Incentive Plan. The
amounts accruing to the individual directors are – D V McCann €527,000 (2014: €263,000), C Bos €314,000 (2014: €157,000)
and T G Murphy €257,000 (2014: €128,000). Other benefits for executive directors consist entirely of motor expenses.
Payments totalling €425,000 were made to the executive directors in 2014 in recognition of their exceptional additional
commitment of time and effort during the year in connection with the proposed merger with Chiquita (referred to as Project
Chicago). The payments to the individual directors were: D V McCann €200,000, C Bos €75,000 and T G Murphy €150,000.
The information for each director is as follows:
Salary
or Fees
Performance
Bonus
Other
Benefits
Total
2015
Total
2014
€’000 €’000 €’000 €’000 €’000
Executives
D V McCann 702 527 21 1,250 1,250
C Bos 419 314 23 756 754
T G Murphy 343 257 17 617 617
1,464 1,098 61 2,623 2,621
Non executives
R B Johnston 75 - - 75 75
J D McCourt 107 - - 107 107
J M O’Dwyer 93 - - 93 93
J R O’Hara 75 - - 75 75
350 - - 350 350
Sub-total 2,973 2,971
Pension contributions or related payments for executive directors 391 424
Project Chicago - 425
Short Term Incentive Plan 1,098 548
4,462 4,368
Fyffes plc Annual Report 201542
Pension entitlements of executive directors
The pension benefits attributable to the executive directors during the year and the total accrued pensions at the end of the year
were as follows:
Increase
in accrued
pension during
2015
Transfer value
of increase
during 2015
Total accrued
pension at
31 Dec 2015
Increase in
accrued
pension during
2014
Transfer
value of
increase during
2014
Total accrued
pension at
31 Dec 2014
(a) (b) (c) (a) (b) (c)
€’000 €’000 €’000 €’000 €’000 €’000
D V McCann 7 169 298 12 255 291
C Bos 7 113 117 5 78 110
T G Murphy 5 87 202 7 129 197
Total 19 369 617 24 462 598
(a) The increase in accrued pension during the year excluding inflation.
(a) The transfer value of the increase in accrued pension has been calculated on actuarial advice. These transfer values do not
represent sums paid or due, but are the amounts that the pension scheme would transfer to another pension scheme in
relation to the additional benefits accrued in the year, in the event of a member of the scheme leaving service.
(a) This represents the pension which would be paid annually, on normal retirement date, based on service to the end of this
accounting period.
As explained earlier, the Group’s Irish defined benefit pension scheme was terminated with effect from 31 July 2015. The accrual
of pension benefits ceased for D V McCann and T G Murphy at that date. The figures above represent the accrual of benefit up
to 31 July 2015 for both. As part of the wind up of that scheme, the members’ interests in the scheme were settled.
Directors’ and company secretary’s share interests
The interests of the directors in the issued share capital of the Company are shown below.
At 31 December 2015
Beneficial number
Fyffes plc
Ordinary shares of €0.06
At 31 December 2014
Beneficial number
Fyffes plc
Ordinary shares of €0.06
D V McCann 2,262,399 2,028,905
C Bos 92,147 25,000
T G Murphy 768,123 649,854
R B Johnston 7,000 7,000
J D McCourt 50,000 50,000
J M O’Dwyer 50,000 50,000
J R O’Hara - -
At 31 December 2015, the company secretary, S P Keenan, held 389,618 Fyffes plc ordinary €0.06 shares (2014: 335,611).
Compensation Committee Report (continued)
Fyffes plc Annual Report 2015 43
Compensation Committee Report (continued)
Directors’ and company secretary’s interests in share options
Information on directors’ and company secretary’s share options to subscribe for ordinary shares of the Company is set out below.
Options
held at
31 Dec
2014
Granted
Exercised
Lapsed
Options
held at
31 Dec
2015
Exercise
price
€
Date from
which
exercisable
(if vested)
Expiry
date
D V McCann 1,000,000 - - - 1,000,000 0.925 26/09/10 25/09/17
1,000,000 - - - 1,000,000 0.4525 06/09/12 05/09/19
800,000 - - - 800,000 0.483 02/10/15 30/09/22
- 520,000 - - 520,000 1.184 31/03/18 30/03/25
C Bos 500,000 - - - 500,000 0.925 26/09/10 25/09/17
600,000 - - - 600,000 0.4525 06/09/12 05/09/19
480,000 - - - 480,000 0.483 02/10/15 30/09/22
- 310,000 - - 310,000 1.184 31/03/18 30/03/25
T G Murphy 400,000 - - - 400,000 0.925 26/09/10 25/09/17
600,000 - - - 600,000 0.4525 06/09/12 05/09/19
480,000 - - - 480,000 0.483 02/10/15 30/09/22
- 310,000 - - 310,000 1.184 31/03/18 30/03/25
S P Keenan* 200,000 - - - 200,000 0.925 26/09/10 25/09/17
200,000 - - - 200,000 0.4525 06/09/12 05/09/19
160,000 - - - 160,000 0.483 02/10/15 30/09/22
- 105,000 - - 105,000 1.184 31/03/18 30/03/25
* Company secretary
There have been no movements in the share interests of the directors or company secretary between the year end and
26 February 2015. In addition, the directors and the company secretary have not been granted, nor have they exercised any
options between the year end and 26 February 2015.
Options granted under the 2007 Share Option Scheme are only exercisable when the earnings per share figure, in respect of the
third or any subsequent accounting period after the end of the basis year (ie accounting period preceding the date of the grant),
is greater than the earnings per share figure for the basis year by a percentage which is not less than (on a year on year basis) the
annual percentage increase in the consumer price index plus 5% compounded during that period.
Fyffes plc Annual Report 201544
Statement of Directors’ Responsibilities in respect of the Annual Report and Financial Statements
The directors are responsible for preparing the Annual Report and the Group and Company financial statements, in accordance
with applicable law and regulations.
Company law requires the directors to prepare Group and Company financial statements for each financial year. Under that law
and in accordance with AIM/ESM Rules, the Directors are required to prepare the Group financial statements in accordance with
IFRS as adopted by the EU and applicable law and have elected to prepare the Company financial statements in accordance with
IFRS as adopted by the EU and as applied in accordance with the Companies Act 2014.
Under company law the directors must not approve the Group and Company financial statements unless they are satisfied that
they give a true and fair view of the assets, liabilities and financial position of the Group and Company and of the Group’s profit
or loss for that year.
In preparing each of the Group and Company financial statements, the directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether they have been prepared in accordance with IFRS as adopted by the EU; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and
Company will continue in business.
The directors are responsible for keeping adequate accounting records which disclose with reasonable accuracy at any time
the assets, liabilities, financial position and profit or loss of the Company and which enable them to ensure that the financial
statements of the Group are prepared in accordance with applicable IFRS, as adopted by the EU and comply with the provisions of
the Companies Act 2014. They have general responsibility for taking such steps as are reasonably open to them to safeguard the
assets of the Group and to prevent and detect fraud and other irregularities. Under applicable law, the directors are also responsible
for preparing a Directors’ Report that complies with the Companies Act 2014. The directors are responsible for the maintenance
and integrity of the corporate and financial information included on the Company’s website. Legislation in the Republic of Ireland
governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
On behalf of the Board
D V McCann T G Murphy
Executive Chairman Finance Director
Fyffes plc Annual Report 2015 45
Independent Auditor’s Report to the Members of Fyffes plc
We have audited the Group and Company financial
statements (the “financial statements”) of Fyffes plc for the
year ended 31 December 2015 which comprise the Group
income statement, the Group statement of comprehensive
income, the Group and Company statement of movement
in equity, the Group and Company balance sheet, the Group
and Company cash flow statements and the related notes.
The financial reporting framework that has been applied
in their preparation is Irish law and International Financial
Reporting Standards (IFRS) as adopted by the European Union,
and, as regards the parent Company financial statements, as
applied in accordance with the provisions of the Companies
Acts 2014.
Opinions and conclusions arising from our audit
Our opinion on the financial statements is unmodified
In our opinion:
• the Group financial statements give a true and fair
view of the assets, liabilities and financial position of
the Group as at 31 December 2015 and of its profit
for the year then ended;
• the Company balance sheet gives a true and fair view
of the assets, liabilities and financial position of the
Company as at 31 December 2015;
• the Group financial statements have been properly
prepared in accordance with IFRS as adopted by the
European Union;
• the Company financial statements have been properly
prepared in accordance with IFRS as adopted by the
European Union as applied in accordance with the
provisions of the Companies Act 2014; and
• the Group financial statements and Company financial
statements have been properly prepared in accordance
with the requirements of the Companies Acts 2014.
Our conclusions on other matters on which we are
required to report by the Companies Act 2014 are set
out below
We have obtained all the information and explanations which
we consider necessary for the purposes of our audit.
In our opinion the accounting records of the Company were
sufficient to permit the financial statements to be readily
and properly audited and the financial statements are in
agreement with the accounting records.
In our opinion the information given in the Directors’ Report is
consistent with the financial statements.
We have nothing to report in respect of matters on
which we are required to report by exception
ISAs (UK & Ireland) require that we report to you if, based
on the knowledge we acquired during our audit, we have
identified information in the annual report that contains a
material inconsistency with either that knowledge or the
financial statements, a material misstatement of fact, or that
is otherwise misleading.
In addition, the Companies Act 2014 requires us to report
to you if, in our opinion, the disclosures of directors’
remuneration and transactions required by sections 305 to
312 of the Act are not made.
Basis of our report, responsibilities and restrictions
on use
As explained more fully in the Statement of Directors’
Responsibilities set out on page 44, the directors are
responsible for the preparation of the financial statements
and for being satisfied that they give a true and fair view
and otherwise comply with the Companies Act 2014.
Our responsibility is to audit and express an opinion on
the financial statements in accordance with Irish law and
International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Financial Reporting
Council’s Ethical Standards for Auditors.
An audit undertaken in accordance with ISAs (UK &
Ireland) involves obtaining evidence about the amounts
and disclosures in the financial statements sufficient to
give reasonable assurance that the financial statements
are free from material misstatement, whether caused by
fraud or error. This includes an assessment of: whether
the accounting policies are appropriate to the Group and
Company’s circumstances and have been consistently applied
and adequately disclosed; the reasonableness of significant
accounting estimates made by the directors; and the overall
presentation of the financial statements.
In addition, we read all the financial and non-financial
information in the Annual Report to identify material
inconsistencies with the audited financial statements and to
identify any information that is apparently materially incorrect
Fyffes plc Annual Report 201546
based on, or materially inconsistent with, the knowledge
acquired by us in the course of performing the audit. If we
become aware of any apparent material misstatements or
inconsistencies we consider the implications for our report.
Whilst an audit conducted in accordance with ISAs (UK
& Ireland) is designed to provide reasonable assurance of
identifying material misstatements or omissions it is not
guaranteed to do so. Rather the auditor plans the audit to
determine the extent of testing needed to reduce to an
appropriately low level the probability that the aggregate
of uncorrected and undetected misstatements does not
exceed materiality for the financial statements as a whole.
This testing requires us to conduct significant audit work on
a broad range of assets, liabilities, income and expense as
well as devoting significant time of the most experienced
members of the audit team, in particular the engagement
partner responsible for the audit, to subjective areas of the
accounting and reporting.
Our report is made solely to the Company’s members, as
a body, in accordance with section 391 of the Companies
Act 2014. Our audit work has been undertaken so that we
might state to the Company’s members those matters we are
required to state to them in an auditor’s report and for no
other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the
Company and the Company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
26 February 2016
Ryan McCarthy
for and on behalf of
KPMG
Chartered Accountants, Statutory Audit Firm
1 Stokes Place
St Stephen’s Green
Dublin 2
Independent Auditor’s Report to the Members of Fyffes plc (continued)
Fyffes plc Annual Report 2015 47
Notes
Pre-
Exceptional
2015
€’000
Exceptional
2015
€’000
Total
2015
€’000
Pre-
Exceptional
2014
€’000
Exceptional
2014
€’000
Total
2014
€’000
Total revenue 1 1,222,549 - 1,222,549 1,090,887 - 1,090,887
Less: share of revenue of
joint ventures
13
(237,257) - (237,257) (238,309) - (238,309)
Group revenue 1 985,292 - 985,292 852,578 - 852,578
Cost of sales (865,612) - (865,612) (748,391) - (748,391)
Gross profit 119,680 - 119,680 104,187 - 104,187
Distribution expenses (32,467) - (32,467) (29,455) - (29,455)
Administrative expenses 6 (44,881) (9,096) (53,977) (40,373) (14,339) (54,712)
Other operating income 2/6 3,599 - 3,599 4,041 18,594 22,635
Other operating expenses 3/6 (1,775) - (1,775) (846) (4,157) (5,003)
Share of profit of joint
ventures after tax
13
356 (2,882) (2,526) 1,273 - 1,273
Share of profit/(loss) of
associates after tax
– Balmoral International
Land Holdings plc 13 - - - - - -
Operating profit 44,512 (11,978) 32,534 38,827 98 38,925
Financial income 4 130 264
Financial expense 4 (878) (1,010)
Profit before tax 31,786 38,179
Income tax charge 7 (4,246) (4,048)
Profit for the financial year –
continuing operations 27,540 34,131
Attributable as follows:
Equity shareholders of the
Company 27,425 33,910
Non-controlling interests 20 115 221
27,540 34,131
Earnings per ordinary
share – cent
9
Basic 9.28 11.40
Diluted 9.10 11.20
D V McCann, Executive Chairman T G Murphy, Finance Director 26 February 2016
Group Income Statementfor the financial year ended 31 December 2015
Fyffes plc Annual Report 201548
Notes 2015
€’000
2014
€’000
Profit for the financial year 27,540 34,131
Other comprehensive income
Items that are or may subsequently be reclassified to profit or loss
Translation of net assets of equity investments
- subsidiaries 16,073 14,573
- joint ventures 13 1,059 1,057
Cash flow hedges
- effective portion of changes in fair value 2,587 11,369
- reclassified to the income statement (12,869) (2,012)
Deferred tax relating to cash flow hedges net of reclassification 25 1,285 (1,170)
Items that will never be reclassified to profit or loss
Actuarial gain/(loss) recognised on defined benefit pension schemes 27 2,521 (12,379)
Deferred tax on actuarial movement on defined benefit pension schemes 25 (922) 1,921
Share of actuarial loss on joint ventures defined benefit pension schemes 13 (356) (2,239)
Deferred tax on actuarial losses on joint ventures defined benefit pension schemes 13 49 524
Other comprehensive income – net of tax 9,427 11,644
Total comprehensive income 36,967 45,775
Attributable as follows:
Equity shareholders of the Company 36,852 45,554
Non-controlling interest 20 115 221
Total comprehensive income 36,967 45,775
D V McCann T G Murphy
Executive Chairman Finance Director 26 February 2016
Group Statement of Comprehensive Income for the financial year ended 31 December 2015
Fyffes plc Annual Report 2015 49
Shar
e
Cap
ital
€’00
0
Shar
e
Prem
ium
€’00
0
Cap
ital
Res
erve
s
€’00
0
Shar
e
Op
tio
n
Res
erve
€’00
0
Cu
rren
cy
Tran
slat
ion
Res
erve
€’00
0
Rev
alu
atio
n
Res
erve
€’00
0
Ow
n S
har
e
Res
erve
€’00
0
Hed
gin
g
Res
erve
€’00
0
Ret
ain
ed
Earn
ing
s
€’00
0
Shar
eho
lder
s’
Fun
ds
€’00
0
No
n-
con
tro
llin
g
Inte
rest
s
€’00
0
Tota
l
Equ
ity
€’00
0
Bala
nce
at 1
Jan
uary
201
419
,544
99,1
0574
,107
2,62
6(1
3,84
0)2,
275
(17,
369)
(3,5
06)
(15,
375)
147,
567
1,33
914
8,90
6
Profi
t fo
r ye
ar-
--
--
--
-33
,910
33,9
1022
134
,131
Shar
e op
tions
exe
rcis
ed2
12-
--
--
--
14-
14
Fore
ign
curr
ency
tra
nsla
tion
effe
cts
(incl
sha
re o
f jo
int
vent
ures
)-
--
-15
,630
--
--
15,6
30-
15,6
30
Effe
ctiv
e po
rtio
n of
cas
h flo
w h
edge
s
(net
of
defe
rred
tax
)-
--
--
--
8,18
7-
8,18
7-
8,18
7
Act
uaria
l los
s on
defi
ned
bene
fit p
ensi
on
sche
mes
(net
of
defe
rred
tax
)-
--
--
--
-(1
0,45
8)(1
0,45
8)-
(10,
458)
Shar
e of
act
uaria
l los
s on
join
t ve
ntur
es d
efine
d
bene
fit s
chem
es (n
et o
f de
ferr
ed t
ax)
--
--
--
--
(1,7
15)
(1,7
15)
-(1
,715
)
Acq
uisi
tion
of o
wn
shar
es-
--
--
-(3
,038
)-
-(3
,038
)-
(3,0
38)
Cur
renc
y m
ovem
ents
in r
eval
uatio
n re
serv
es-
--
-(5
3)53
--
--
--
Unv
este
d sh
are
optio
ns c
redi
ted
to in
com
e
stat
emen
t-
--
(985
)-
--
--
(985
)-
(985
)
Shar
e ba
sed
paym
ents
--
-14
3-
--
--
143
-14
3
Div
iden
ds t
o sh
areh
olde
rs-
--
--
--
-(6
,571
)(6
,571
)-
(6,5
71)
Bal
ance
at
31 D
ecem
ber
201
419
,546
99,1
1774
,107
1,78
41,
737
2,32
8(2
0,40
7)4,
681
(209
)18
2,68
41,
560
184,
244
Profi
t fo
r ye
ar-
--
--
--
-27
,425
27,4
2511
527
,540
Shar
e op
tions
exe
rcis
ed15
21,
297
-(3
51)
--
--
351
1,44
9-
1,44
9
Fore
ign
curr
ency
tra
nsla
tion
effe
cts
(incl
sha
re o
f jo
int
vent
ures
)-
--
-17
,132
--
--
17,1
32-
17,1
32
Effe
ctiv
e po
rtio
n of
cas
h flo
w h
edge
s
(net
of
defe
rred
tax
)-
--
--
--
(8,9
97)
-(8
,997
)-
(8,9
97)
Act
uaria
l gai
n on
defi
ned
bene
fit p
ensi
on
sche
mes
(net
of
defe
rred
tax
)-
--
--
--
-1,
599
1,59
9-
1,59
9
Shar
e of
act
uaria
l los
s on
join
t ve
ntur
es d
efine
d
bene
fit s
chem
es (n
et o
f de
ferr
ed t
ax)
--
--
--
--
(307
)(3
07)
-(3
07)
Cur
renc
y m
ovem
ents
in r
eval
uatio
n re
serv
es-
--
-(5
2)52
--
--
--
Shar
e ba
sed
paym
ents
--
-27
3-
--
--
273
-27
3
Div
iden
ds t
o sh
areh
olde
rs-
--
--
--
-(7
,364
)(7
,364
)-
(7,3
64)
Bal
ance
at
31 D
ecem
ber
201
519
,698
100,
414
74,1
071,
706
18,8
172,
380
(20,
407)
(4,3
16)
21,4
9521
3,89
41,
675
215,
569
Group Statement of Movement in Equityfor the financial year ended 31 December 2015
Fyffes plc Annual Report 201550
Notes 2015 €’000
2014 €’000
Assets
Non-current
Property, plant and equipment 10 123,099 96,429
Investment property 11 5,524 5,202
Goodwill and intangible assets 12 39,851 24,452
Other receivables 17 - 4,682
Investments in joint ventures and associate 13 36,376 40,171
Equity investments 14 16 16
Deferred tax assets 25 11,044 11,596
Total non-current assets 215,910 182,548
Current
Inventories 15 60,198 48,812
Biological assets 16 21,314 18,715
Trade and other receivables 17 119,149 91,966
Corporation tax recoverable 1,222 545
Hedging instruments 30 3,118 6,379
Cash and cash equivalents 18 22,759 22,069
Total current assets 227,760 188,486
Total assets 443,670 371,034
Equity
Called-up share capital 19,698 19,546
Share premium 100,414 99,117
Other reserves 19 72,287 64,230
Retained earnings 21,495 (209)
Total equity attributable to equity shareholders of Company 213,894 182,684
Non-controlling interests 20 1,675 1,560
Total equity 215,569 184,244
Liabilities
Non-current
Interest bearing loans and borrowings 21 1,337 9,833
Other payables 22 3,780 7,902
Provisions 23 1,864 1,987
Corporation tax payable 9,508 10,330
Deferred tax liabilities 25 3,922 3,952
Employee retirement benefits 27 32,148 41,448
Total non-current liabilities 52,559 75,452
Current
Interest bearing loans and borrowings 21 60,703 23,955
Trade and other payables 22 104,611 83,761
Provisions 23 1,627 1,985
Corporation tax payable 815 608
Hedging instruments 30 7,786 1,029
Total current liabilities 175,542 111,338
Total liabilities 228,101 186,790
Total equity and liabilities 443,670 371,034
D V McCann, Executive Chairman T G Murphy, Finance Director 26 February 2016
Group Balance Sheet as at 31 December 2015
Fyffes plc Annual Report 2015 51
Notes 2015
€’000
2014
€’000
Operating activities
Profit for financial year 27,540 34,131
Adjustments for:
Depreciation of property, plant and equipment 10 10,322 8,093
Impairment of property, plant and equipment 10 - 4,157
Net (gain) on disposal of property, plant & equipment (210) (47)
Equity settled share-based compensation (2014: net of gain on lapsed options) 273 (842)
Defined benefit pension scheme expense (net of exceptional settlement gain) 27 1,065 2,943
Contributions to defined benefit pension schemes 27 (9,626) (3,730)
Payments to MNOPF and MNRPF 23 (5,171) (599)
Reduction in deferred consideration liability 23 (37) -
Gain on partial disposal of investment in joint venture 13 (687) -
Share of loss/(profit) of joint ventures 13 2,526 (1,273)
Movement in trade and other receivables (16,106) (12,495)
Movement in trade and other payables 15,580 2,084
Movement in inventories/biological assets (9,426) (4,636)
Decrease in fair value of biological assets 16 673 513
Income tax charge 7 4,246 4,048
Income tax paid (net) (4,313) (4,888)
(Gain)/loss on ineffective hedging instruments (264) 59
Interest income 4 (130) (264)
Interest expense 4 878 1,010
Interest received 68 201
Interest paid (692) (797)
Net cash inflow from operating activities 16,509 27,668
Investing activities
Acquisition of subsidiaries 26 (26,790) -
Acquisition of property, plant and equipment (excluding leased assets) (12,268) (22,836)
Investment in joint ventures 13 - (873)
Dividend paid by joint ventures 13 1,533 221
Proceeds on partial disposal of investment in joint venture 13 271 -
Payment of deferred acquisition consideration 23 (92) (2,481)
Joint venture becoming a subsidiary 13 5 -
Acquisition of investment property 11 - (4,090)
Proceeds from disposal of property, plant and equipment 633 433
Net cash (outflow) from investing activities (36,708) (29,626)
Group Cash Flow Statementfor the financial year ended 31 December 2015
Fyffes plc Annual Report 201552
Group Cash Flow Statement (continued)
for the financial year ended 31 December 2015
Notes 2015
€’000
2014
€’000
Financing activities
Proceeds from the issue of share capital 1,449 14
Purchase of own shares - (3,038)
Proceeds from borrowings 40,000 8,000
Repayment of borrowings (8,000) (5,187)
Capital element of lease payments 18 (1,527) (1,313)
Dividends to Company equity shareholders 8 (7,364) (6,571)
Net cash inflow/(outflow) from financing activities 24,558 (8,095)
Net increase/(decrease) in cash and cash equivalents 4,359 (10,053)
Cash and cash equivalents, incl. bank overdrafts at beginning of year 16,730 25,300
Effect of exchange rate fluctuations on cash and cash equivalents 18 1,045 1,483
Cash and cash equivalents, incl bank overdrafts at end of year 18 22,134 16,730
Group Reconciliation of Net (Debt)/Fundsfor the financial year ended 31 December 2015
Notes 2015
€’000
2014
€’000
Net increase/(decrease) in cash and cash equivalents 4,359 (10,053)
Proceeds from new borrowings (40,000) (8,000)
Repayment of borrowings 8,000 5,187
Capital element of lease payments 18 1,527 1,313
New finance leases 18 (1,238) (861)
Foreign exchange movement 18 (210) 258
Movement in net funds (27,562) (12,156)
Net (debt)/funds at beginning of year (11,719) 437
Net (debt) at end of year 18 (39,281) (11,719)
Fyffes plc Annual Report 2015 53
Significant Accounting Policies
Fyffes plc (the “Company”) is tax resident and incorporated in Ireland. The consolidated financial statements of the Company
for the financial year ended 31 December 2015 comprise the individual financial statements of the Company and its subsidiaries
(together referred to as “the Group”) and the Group’s interest in its joint ventures and associate using the equity method of
accounting. The Group is one of the largest operators in the tropical fresh produce sector globally.
The individual and consolidated financial statements of the Company were authorised for issue by the directors on 25 February
2016. The accounting policies applied consistently in the preparation of the financial statements for the financial year ended 31
December 2015 are set out below.
Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards
(IFRS) as adopted by the EU. The individual financial statements of the Company (“Company financial statements”) have been
prepared in accordance with IFRS as adopted by the EU and as applied in accordance with the Companies Act 2014. The IFRS
adopted by the EU applied by the Company and Group in the preparation of these financial statements are those that were
effective for accounting periods ending on or before 31 December 2015.
Basis of preparation
The consolidated and individual financial statements of the Company are prepared on the historical cost basis except that the
following assets and liabilities are stated at their fair value: property, derivative financial instruments, share based payments at
grant date and biological assets. In addition, the assets and liabilities in the Group’s defined benefit pension schemes are valued
in accordance with the retirement benefits accounting policy on page 58. The accounting policies have been applied consistently
for all periods presented and by all Group entities. The financial statements are presented in euro, the Company’s functional
currency, rounded to the nearest thousand, except where otherwise indicated.
The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and
assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The
estimates and associated assumptions are based on historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of
assets and liabilities that are not readily apparent from other sources.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future
periods if the revision affects both current and future periods.
Judgements made by management in the application of IFRS that have a significant effect on the financial statements and
estimates with a significant risk of material adjustment in the next year are discussed in note 31.
The profit attributable to equity shareholders dealt with in the financial statements of the Company was €129,000 (2014:
€9,888,000). In accordance with Section 304 of the Companies Act 2014, the Company is availing of the exemption from
presenting its individual profit and loss account, which forms part of the approved financial statements, to the Annual General
Meeting and from filing it with the Registrar of Companies.
Fyffes plc Annual Report 201554
Significant Accounting Policies (continued)
Accounting for subsidiaries, joint ventures and associates
Group financial statements
Subsidiaries
Subsidiaries are those entities which are controlled by the Group. The Group controls an entity when it is exposed to, or has rights
to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the
entity. Subsidiaries are consolidated from the date on which control is transferred to the Group until the date that control ceases.
The amounts included in these financial statements in respect of subsidiaries are taken from their latest financial statements. The
accounting policies of subsidiaries are changed to ensure consistency with the policies adopted by the Group if necessary.
Loss of control
When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, any related non-
controlling interest and other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest
retained in the former subsidiary is measured at fair value when control is lost.
Non-controlling interests
Non-controlling interests are measured at their proportionate share of the acquiree’s identifiable net assets at the acquisition date.
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.
Joint ventures and associates
The Group’s interests in equity-accounted investees comprise interests in joint ventures and associates. A joint venture is
an arrangement in which the Group has joint control, whereby the Group has rights to the net assets of the arrangement,
rather than rights to its assets and obligations for its liabilities. Associates are those entities in which the Group has significant
influence, but not control or joint control, over the financial and operating policies. Interests in joint ventures and associates are
accounted for using the equity method. They are recognised initially at cost, which includes transaction costs. Subsequent to
initial recognition, the consolidated financial statements include the Group’s share of the profit or loss and other comprehensive
income of equity-accounted investees, until the date on which significant influence or joint control ceases.
Transactions eliminated on consolidation
Intragroup balances and any unrealised gains and losses or income and expenses arising from intragroup transactions are
eliminated in preparing the Group financial statements. Unrealised gains, together with income and expenses, arising from
transactions with associates and joint ventures are eliminated to the extent of the Group’s interest in the equity. Unrealised
losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
Company financial statements
Investments in subsidiaries, joint ventures and associates are carried at cost less impairment. Dividend income is recognised
when the right to receive payment is established.
Property, plant and equipment
Land and buildings are recognised at fair value with the increase in the value of any property reflected in revaluation gains in the
statement of comprehensive income. The fair value is based on market value, being the estimated amount for which a property
could be exchanged in an arms length transaction.
Plant and equipment is stated at cost less accumulated depreciation and impairment losses. Subsequent expenditure is
capitalised only when it increases the future economic benefits embodied in the item of property, plant and equipment. All other
expenditure including repairs and maintenance costs are recognised in the income statement as an expense as incurred.
Depreciation is calculated to write off the carrying amount of property, plant and equipment, other than freehold land, on a
straight line basis, by reference to the following estimated useful lives:
Fyffes plc Annual Report 2015 55
Significant Accounting Policies (continued)
Property, plant and equipment (continued)
• Freehold properties: 30-50 years.
• Leasehold improvements: Over the shorter of 40 years or the unexpired portion of the lease.
• Plant and equipment: 5-20 years.
• Motor vehicles: 5 years.
The residual value of assets, if not insignificant, and the useful life of assets, is reassessed annually.
Gains and losses on disposal of property, plant and equipment are recognised on the ultimate completion of sale. Gains and
losses on disposals are determined by comparing the proceeds received with the carrying amount and are included in operating
profit.
Investment property
Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the
ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment
property is measured initially at cost and subsequently at fair value with any change therein recognised in profit or loss. Cost
includes expenditure that is directly attributable to the acquisition of the investment property. The cost of self-constructed
investment property includes the cost of materials and direct labour, any other costs directly attributable to bringing the
investment property to a working condition for its intended use and capitalised borrowing costs where applicable.
Any gain or loss on disposal of an investment property (calculated as the difference between the net proceeds from disposal
and the carrying value of the item) is recognised in profit or loss. When an investment property that was previously classified as
property, plant and equipment is sold, any related amount included in the revaluation reserve is transferred to retained earnings.
Inventories
Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the
ordinary course of business, less the estimated costs of completion and selling expenses. The cost of inventories is based on
the first-in, first-out principle and includes expenditure incurred in acquiring the inventories and bringing them to their existing
location and condition, and transfers from biological assets.
Foreign currency
Transactions in foreign currencies are translated into the functional currency of the entity at the foreign exchange rate ruling at
the date of the transaction. Non-monetary assets carried at historic cost are not subsequently retranslated. Non-monetary assets
carried at fair value are subsequently remeasured at the exchange rate at the date of valuation. Monetary assets and liabilities
denominated in foreign currencies at the reporting date are translated into functional currencies at the foreign exchange rate
ruling at that date. Foreign exchange movements arising on translation are recognised in the income statement.
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are
translated to euro at the foreign exchange rates ruling at the reporting date. The income and expenses of foreign operations are
translated to euro at the average exchange rate for the financial period. Foreign exchange movements arising on translation of
the net investment in a foreign operation, including those arising on long term intra Group loans deemed to be quasi equity in
nature, are recognised in other comprehensive income, in the currency translation reserve in equity.
Any movements that have arisen since 1 January 2004, the date of transition to IFRS, are recognised in the currency translation
reserve and are reclassified to the income statement on disposal of the related business. Translation differences that arose before
the date of transition to IFRS in respect of all non-euro denominated operations are not presented separately.
Fyffes plc Annual Report 201556
Significant Accounting Policies (continued)
Foreign currency (continued)
The principal non-euro currencies applicable to the Group are Sterling and the US Dollar. The average and closing rates to the
euro for these currencies were:
Average Closing
2015 2014 2015 2014
Pound Sterling 0.7258 0.8058 0.7365 0.7820
US Dollar 1.1100 1.3631 1.0859 1.2170
Business combinations
Acquisitions on or after 1 January 2010
Since 1 January 2010, the Group has applied IFRS 3 Business Combinations (2008) in accounting for business combinations.
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which
control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to
obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that currently
are exercisable.
For acquisitions on or after 1 January 2010, the Group measures goodwill at the acquisition date as:
• the fair value of the consideration transferred; plus
• the recognised amount of any non-controlling interests in the acquiree; plus
• if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less
• the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
The consideration transferred does not include amounts related to the settlement of the pre-existing relationships. Such amounts
are generally recognised in profit or loss.
Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in
connection with a business combination are expensed as incurred.
When the initial accounting for a business combination is determined provisionally, any adjustments to the provisional values
allocated to the identifiable assets, liabilities and contingent liabilities are made within twelve months of the acquisition date.
Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is
classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair
value of the contingent consideration are recognised in profit or loss.
Leased assets
Assets held under leasing arrangements that transfer substantially all the risks and rewards of ownership (finance leases) to the
Group are included in the balance sheet as property, plant and equipment at cost less accumulated depreciation and the capital
element of future rentals is treated as a liability. The interest element is charged to the income statement over the period of
the finance lease, in proportion to the balance of capital repayments outstanding. Rental costs in respect of all other leases are
charged to the income statement as incurred.
Fyffes plc Annual Report 2015 57
Significant Accounting Policies (continued)
Goodwill
Goodwill represents amounts arising on acquisition of subsidiaries, joint ventures and associates. In respect of business acquisitions
that have occurred between 1 January 2004 and 1 January 2010, goodwill represents the difference between the cost of the
acquisition and the fair value of the net identifiable assets acquired. Transaction costs, other than those associated with the issue
of debt or equity securities, that the Group incurred in connection with business combinations prior to 1 January 2010 were
capitalised as part of the cost of the acquisition. In respect of acquisitions prior to this date, goodwill is included on the basis of
its deemed cost, ie original cost less accumulated amortisation since acquisition up to 31 December 2003, which represents the
amount recorded under Irish GAAP. The Group elected under IFRS 1, at the date of transition to IFRS, not to apply IFRS 3, Business
Combinations to previous transactions and therefore the reclassification and accounting treatment of business combinations
that occurred prior to 1 January 2004 was not reconsidered in preparing the Group’s opening IFRS balance sheet at 1 January
2004. The basis for measurement of goodwill on acquisitions after 1 January 2010 is set out in the accounting policy for business
combinations above. Goodwill is allocated to cash generating units and is not amortised but is tested annually for impairment at
a consistent time each year. Goodwill is now stated at cost or deemed cost less any accumulated impairment losses. In respect of
joint ventures and associates, the carrying amount of goodwill is included in the carrying amount of the investment.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill
associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or
loss on disposal of the operation. Goodwill disposed of in this circumstance is measured on the basis of the relative values of the
operation disposed of and the portion of the cash generating unit retained.
Intangible assets
Trademarks are carried at historic cost. The directors are of the opinion that the Fyffes trademark has an indefinite useful life
and therefore it is not amortised, but subject to annual impairment testing. Other identifiable intangible assets that are acquired
by the Group are stated at cost, except for those arising on a business combination which are measured at fair value on initial
recognition, less accumulated amortisation and impairment losses, when separable or arising from contractual or other legal
rights and reliably measurable.
Amortisation is expensed in the income statement on a straight line basis over the estimated useful lives of intangible assets,
unless such lives are indefinite, from the date they are available for use. Intangible assets, mainly reflecting the value of customer
relationships which arise on acquisitions, are amortised over their useful lives.
Impairment of non-financial assets
The carrying amounts of the Group’s assets, other than biological assets (which are stated at fair value), inventories (which are
carried at the lower of cost and net realisable value) and deferred tax assets (which are recognised based on recoverability), are
reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, an
impairment test is carried out and the asset is written down to its recoverable amount as appropriate. Goodwill and intangible
assets with an indefinite useful life are tested for impairment at each balance sheet date.
The recoverable amount of an asset is the greater of its fair value less cost of sale and value in use. In assessing value in
use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely
independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.
Impairment losses are recognised in the income statement. Impairment losses recognised in respect of cash-generating units are
allocated first to reduce the carrying amount of any goodwill related to cash-generating units and then to reduce the carrying
amount of the other assets in the unit on a pro rata basis.
An impairment loss, other than in the case of goodwill, is reversed if there has been a change in the estimates used to determine
the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the
carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Fyffes plc Annual Report 201558
Significant Accounting Policies (continued)
Employee benefits
Short term employee benefits
Short term employee benefits are measured on an undiscounted basis and are recognised as expenses as the related employee
service is received.
Retirement benefits obligations – Group financial statements
Obligations for contributions to defined contribution pension schemes are expensed as the related service is provided. Prepaid
contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.
The Group’s net obligation in respect of defined benefit schemes is calculated separately for each scheme by estimating the
amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting
the fair value of any scheme assets.
The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method.
When the calculation results in a potential asset for the Group, the recognised asset is limited to the present value of economic
benefits available in the form of any future refunds from the scheme or reductions in future contributions to the scheme. To
calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.
Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on scheme
assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in other
comprehensive income. The Group determines the net interest expense/(income) on the net defined benefit liability/(asset) for
the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to
the then net defined benefit liability/(asset), taking into account any changes in the net defined benefit liability/(asset) during the
period as a result of contributions and benefit payments. Net interest expense and other expenses related to the defined benefit
schemes are recognised in profit or loss.
When the benefits of a scheme are changed or when a scheme is curtailed, the resulting change in benefit that relates to past
service or the gain or loss on curtailment is recognised immediately in profit or loss. The Group recognises gains and losses on the
settlement of a defined benefit scheme when the settlement occurs.
Retirement benefit obligations – Company financial statements
The Company is not the sponsoring employer for any of the Group’s defined benefit pension schemes. The employees of
the Company are members of different defined benefit pension schemes operating within the Group. There is no stated
policy within the Group in relation to the obligations of Group companies to contribute to scheme deficits. Group companies
make contributions to the schemes as requested by the sponsoring employers. Consequently, the Company accounts for its
contributions to defined benefit pension schemes on a defined contribution basis.
Share based payments
The grant date fair value of options granted under the Group’s equity settled share option scheme is recognised as an expense with
a corresponding increase in equity over the period during which the employees become unconditionally entitled to the options. The
fair value of the options granted is measured using a binomial lattice model, taking into account the terms and conditions upon
which the options were granted. Vesting conditions are non-market and consequently the amount recognised as an expense is
adjusted to reflect the actual number of share options that vest. The proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and share premium when vested awards are converted into ordinary shares. The
Group has no cash-settled share-based payment transactions as defined in IFRS 2.
To the extent that the Group receives a tax deduction relating to the services paid in shares, deferred tax in respect of share options
is provided on the basis of the difference between the expected fair value of the underlying equity as at the date the instrument is
expected to be exercised and the exercise price of the option; as a result, the deferred tax impact of share options will not directly
correlate with the expense reported in the Group income statement.
Fyffes plc Annual Report 2015 59
Significant Accounting Policies (continued)
Biological assets
Certain of the Group’s subsidiaries involved in the production of fresh produce recognise biological assets, which includes
agricultural produce due for harvest on plantations. Biological assets are stated at fair value less estimated point of sale costs,
with any resultant gain or loss recognised in the income statement. Point of sale costs include all costs that would be necessary
to sell the assets.
Taxation
Taxation expense for the year comprises current and deferred tax. Taxation is recognised in the income statement except to the
extent that it relates to items recognised directly in equity, in which case the related tax is recognised in other comprehensive
income or equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates and laws that have
been enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. If the temporary difference arises from initial recognition of an
asset or liability in a transaction other than a business combination that at the time of the transaction does not affect accounting
nor taxable profit or loss, it is not recognised. Deferred tax is provided on temporary differences arising on investments in
subsidiaries, joint ventures and associates, except where the timing of the reversal of the temporary difference is controlled
by the Group and it is probable that the temporary difference will not reverse in the foreseeable future or where no taxation
is expected to arise on any ultimate remittance. The amount of deferred tax provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the
balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be
available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that
the related tax benefit will be realised.
Provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a
past event, it is probable that an outflow of economic benefits will be required to settle the obligation and the amount of the
provision can be measured reliably. If the effect is material, provisions are determined by discounting the expected future cash
flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits, including bank deposits of less than three months maturity.
Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a
component of cash and cash equivalents for the purpose of the cash flow statement.
Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are recognised
in equity as a deduction, net of tax, from the proceeds.
Repurchase, cancellation and reissue of share capital (treasury shares)
When share capital recognised as equity is repurchased, the amount of the consideration paid, which includes directly
attributable costs, net of any tax effects, is recognised as a deduction from equity. Repurchased shares are classified as treasury
shares and are presented in the reserve for own shares. When treasury shares are cancelled, the nominal value of the shares is
transferred from ordinary share capital to the capital redemption reserve and the balance in the own shares reserve is set against
retained earnings.
Fyffes plc Annual Report 201560
Financial instruments
Trade and other receivables
Trade and other receivables are initially measured at fair value and are thereafter measured at amortised cost using the effective
interest method less any provision for impairment. A provision for impairment of trade receivables is recognised when there is
objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables.
Trade and other payables
Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method.
Short term bank deposits
Short term bank deposits of greater than three months maturity which do not meet the definition of cash and cash equivalents
are classified as financial assets available for sale within current assets and stated at fair value in the balance sheet.
Equity investments
Equity investments held by the Group and Company are classified as being available-for-sale and are stated at fair value, with
any resultant gain or loss being recognised directly in equity (in the fair value reserve), except for impairment losses. When a
devaluation of these assets is significant or prolonged, it is removed from the fair value reserve and shown as an impairment loss
in the income statement. When these investments are derecognised, the cumulative gain or loss previously recognised directly in
equity is recognised in the income statement.
Derivative financial instruments
Foreign currency or fuel derivatives are entered into only when they match an existing foreign currency asset or liability or where
they are used to hedge a forecasted transaction. The Group does not enter into speculative transactions. Derivative financial
instruments are measured at fair value at each reporting date and the movement in fair value is recognised in the income statement
unless they are designated as cash flow hedges under IAS 39. Where such instruments are classified as cash flow hedges, and
subject to the satisfaction of certain criteria relating to the documentation of the risk, objectives and strategy for the hedging
transaction and the ongoing measurement of its effectiveness, they are accounted for under hedge accounting rules. In such cases,
any gain or loss arising on the effective portion of the derivative instrument is recognised in the hedging reserve, as a separate
component of equity. Gains or losses on any ineffective portion of the derivative are recognised in the income statement. When the
hedged transaction matures, the related gains or losses in the hedging reserve are transferred to the income statement.
Interest bearing borrowings
Interest bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial
recognition, interest bearing borrowings are stated at amortised cost with any difference between cost and redemption value
being recognised in the income statement over the period of the borrowings on an effective interest basis.
Revenue
Revenue comprises the fair value of the sale of goods, excluding value added tax, delivered to or collected by third party
customers during the accounting period, net of any returns, discounts or rebates and after eliminating sales within the Group.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods are transferred
to the buyer.
Significant Accounting Policies (continued)
Fyffes plc Annual Report 2015 61
Finance income and expense
Finance income comprises interest income on funds invested and dividend income on financial assets. Interest income is
recognised as it accrues using the effective interest method. Finance expense comprises interest expense on borrowings,
unwinding the discount on provisions and borrowing extinguishment costs. All finance expenses are recognised in profit or loss
using the effective interest method.
Exceptional items
The Group has adopted an income statement format which seeks to highlight significant items within Group results for the year.
The Group believes that this presentation provides a more helpful analysis as it highlights one off items. Such items may include
significant restructuring costs, costs of significant acquisitions or terminated acquisitions, profit or loss on disposal or termination
of operations, material litigation costs and settlements, and significant impairment of assets. Judgement is used by the Group in
assessing the particular items, which by virtue of their scale and nature, should be disclosed in the income statement and related
notes as exceptional items.
Newly effective accounting standards
The following new standards were adopted by the Group for the first time in the current financial reporting period.
• Annual improvements to IFRS 2011-2013 Cycle. Effective from 1 January 2015.
Application of these annual improvements had no material impact on the Group’s 2015 financial statements.
Forthcoming requirements
The following new standards were not yet effective for the Group’s 2015 financial statements, but will be applied where
relevant, from their effective dates following endorsement by the EU. In the case of some EU endorsed standards, the effective
date will be later than the IASB effective dates. The Group is still reviewing these upcoming standards to determine their impact.
• Annual improvements to IFRS 2010-2012 Cycle. Effective 1 February 2015.
• Amendments to IFRS 11: Accounting for acquisitions of interests in Joint Operations. Effective 1 January 2016.
• Amendments to IAS 16 and IAS 38: Clarification of acceptable methods of depreciation and amortisation. Effective 1
January 2016.
• Amendments to IAS 16: Property, Plant and Equipment and IAS 41: Bearer Plants. Effective 1 January 2016.
• Amendments to IAS 27: Equity method in Separate Financial Statements. Effective 1 January 2016.
• Amendments to IAS 1: Disclosure Initiative. Effective 1 January 2016.
• Annual improvements to IFRS 2012-2014 Cycle. Effective 1 January 2016.
• IFRS 14: Regulatory Deferral Accounts. Not endorsed.
• Amendments to IFRS 10 and IAS 28: Sale or contribution of assets between an investor and its associate or joint venture
(September 2014). Endorsement postponed.
• Amendments to IFRS 10, IFRS 12 and IAS 28: Investment Entities: Applying the consolidation exception (December 2014).
Not endorsed.
• IFRS 15: Revenue from contracts with customers (May 2014) including amendments to IFRS 15: Effective date of IFRS 15
(September 2015). Not endorsed.
• IFRS 9: Financial Instruments (July 2014). Not endorsed.
• IFRS 16: Leases. Not endorsed.
Significant Accounting Policies (continued)
Fyffes plc Annual Report 201562
Notes to the Group Financial Statements for the financial year ended 31 December 2015
1. Segment reporting
Approach to segment reporting
Segment information is presented below in accordance with IFRS 8 Operating Segments. IFRS 8 requires segment information to be
presented in the format reviewed by the Chief Operating Decision Maker (‘CODM’) of the Group. In Fyffes, this function is carried
out by the executive director team comprising the Executive Chairman, the Chief Operating Officer and the Finance Director.
Fyffes is currently organised into two separate operating divisions – its Tropical Produce activities and its Property activities,
which comprises its 40% investment in Balmoral International Land Holdings plc (‘Balmoral’).
Fyffes’ Tropical Produce division is a fully integrated distributor of tropical fresh produce, comprising three product categories
- bananas, pineapples and melons, with bananas being by far the largest category both in terms of revenues and profits. The
primary activities of this division include the production, procurement, shipping, ripening, distribution and marketing of these
products. They are produced in broadly the same geographic areas in Central and South America and distributed to the Group’s
customers in Europe and the US. Fyffes directly farms some of the produce it distributes, particularly in the pineapple and
melon categories. The procurement, shipping, distribution and marketing activities for the banana and pineapple categories are
managed centrally on a combined basis. As a result, the Group’s Tropical Produce activities are regarded as a single reporting
segment for the purposes of IFRS 8.
The CODM reviews the performance of the Tropical Produce division based on Adjusted EBITA, which is believed to be the
most appropriate measure of underlying performance. Adjusted EBITA is operating profit, excluding amortisation charges
on intangible assets and exceptional items, if any. It includes the Group’s share of the results of its joint ventures on a similar
basis, in contrast to the requirement under IFRS to report joint ventures’ results after interest charges and tax. The operating
performance of the Tropical Produce division is analysed in the Operating and Financial Review, on pages 12 to 21, based on
this Adjusted EBITA measure and including comments on the factors reflected in the performance of each of the three product
categories in the division.
As explained in note 13, following a number of years of significant losses due to the difficulties in the international property
sector, Fyffes wrote down its investment in Balmoral to a nominal value of €50,000 in 2011. Balmoral reported its 2014 results
during 2015 and the Group’s share of its net equity value amounts to €3.4 million. Fyffes continues to maintain an impairment
provision against this investment and retains it €50,000 carrying value. Balmoral has not yet reported its 2015 results.
Balmoral continues to actively manage its property assets. Fyffes’ share of its gross assets amounted to €79.7m at 31 December
2014, which was equivalent to 21.5% of Fyffes then gross assets. While Fyffes has not reported a share of profit or loss for
Balmoral since 2011 as a result of adjustments to its impairment provision, it continues to treat its investment in Balmoral as a
separate reportable segment in accordance with IFRS 8 Operating Segments, which states that if a reportable segment falls
below the relevant quantitative thresholds in the current period, but the CODM expects it to meet the criteria in future, it
should continue to be treated as a reportable segment to maintain comparability. It is not possible to predict the timing of any
recovery in international property markets. Fyffes continues to keep the treatment of Balmoral in its financial statements under
review.
The only ongoing inter-segment transactions between the Group’s Tropical Produce division and Balmoral arise because Fyffes
rents a number of its distribution centres in the UK and Ireland from Balmoral. Fyffes in turn sublets space in its corporate head
office to Balmoral. These amounts are included in the operating lease disclosures (Note 24) and the related party disclosures
(Note 29). In addition, in 2014 the Group purchased a distribution centre in the UK which it had been leasing from Balmoral.
In the analysis below, reconciling items included in Adjusted EBITA represent central costs not allocated to the operating
divisions including the cost of the Board of directors together with legal and other costs connected with the corporate head
office of the Group.
Fyffes plc Annual Report 2015 63
Notes to the Group Financial Statements for the financial year ended 31 December 2015
1.
Seg
men
t re
po
rtin
g (c
ontin
ued)
Not
es
Tro
pic
al
Pro
du
ce
2015
€’00
0
Bal
mo
ral
2015
€’00
0
Rec
on
cilin
g
Item
s
2015
€’00
0
Tota
l
2015
€’00
0
Trop
ical
Prod
uce
2014
€’00
0
Balm
oral
2014
€’00
0
Reco
ncili
ng
Item
s
2014
€’00
0
Tota
l
2014
€’00
0
Seg
men
t in
com
e st
atem
ent
Tota
l rev
enue
incl
udin
g sh
are
of jo
int
vent
ures
1,22
2,54
9-
-1,
222,
549
1,09
0,88
7-
-1,
090,
887
Gro
up r
even
ue e
xclu
ding
sha
re o
f jo
int
vent
ures
985,
292
--
985,
272
852,
578
--
852,
578
Ad
just
ed E
BIT
A51
,477
-(5
,658
)45
,819
46,0
26-
(5,8
93)
40,1
33
Net
fina
ncia
l inc
ome
Shar
e of
join
t ve
ntur
es in
tere
st e
xpen
se(4
47)
--
(447
)(4
03)
--
(403
)
Net
fina
ncia
l exp
ense
in s
ubsi
diar
ies
4(7
48)
--
(748
)(7
46)
--
(746
)
Ad
just
ed p
rofi
t b
efo
re t
ax a
nd
am
ort
isat
ion
50,2
82-
(5,6
58)
44,6
2444
,877
-(5
,893
)38
,984
Reco
ncili
atio
n to
sta
tuto
ry fi
nanc
ial s
tate
men
ts
Exce
ptio
nal i
tem
s6
--
(11,
978)
(11,
978)
--
9898
Shar
e of
join
t ve
ntur
es t
ax c
harg
e(8
60)
--
(860
)(9
03)
--
(903
)
Profi
t be
fore
tax
per
inco
me
stat
emen
t49
,422
-(1
7,63
6)31
,786
43,9
74-
(5,7
95)
38,1
79
Inco
me
tax
char
ge(4
,246
)(4
,048
)
Pro
fit
for
the
fin
anci
al y
ear
27,5
4034
,131
Fyffes plc Annual Report 201564
Notes to the Group Financial Statements for the financial year ended 31 December 2015
1. Segment reporting (continued)
Tropical
Produce
2015
Balmoral
2015
Total
2015
Tropical
Produce
2014
Balmoral
2014
Total
2014
€’000 €’000 €’000 €’000 €’000 €’000
Other disclosures
Income statement items
Adjusted EBITA – share of joint
ventures 1,663 - 1,663 2,579 - 2,579
Joint ventures (loss)/profit after tax (2,526) - (2,256) 1,273 - 1,273
Depreciation 10,322 - 10,322 8,093 - 8,093
Balance sheet disclosures
Segment assets 407,294 - 407,294 330,863 - 330,863
Investment in joint ventures and
associates (note 13) 36,326 50 36,376 40,121 50 40,171
443,620 50 443,670 370,984 50 371,034
Segment liabilities 228,101 - 228,101 186,790 - 186,790
Geographical analysis – Tropical Produce division
Ireland
2015
€’000
UK
2015
€’000
Eurozone
2015
€’000
Other
2015
€’000
Total
2015
€’000
Total revenue including share of joint ventures 54,921 408,047 475,054 284,527 1,222,549
Group revenue 54,921 374,638 342,173 213,560 985,292
Current assets 54,403 53,236 34,264 85,857 227,760
Non current assets 3,851 48,083 28,958 134,968 215,860
Ireland
2014
€’000
UK
2014
€’000
Eurozone
2014
€’000
Other
2014
€’000
Total
2014
€’000
Total revenue including share of joint ventures 48,974 360,017 465,190 216,706 1,090,887
Group revenue 48,974 327,872 313,469 162,263 852,578
Current assets 60,074 36,548 30,037 61,827 188,486
Non current assets 7,617 48,215 33,250 93,416 182,498
Fyffes had no customers which accounted for more than 10% of Group revenue in 2015 or 2014.
Fyffes plc Annual Report 2015 65
Notes to the Group Financial Statements for the financial year ended 31 December 2015
2. Other operating income
2015
€’000
2014
€’000
Sub-lease income 1,315 976
Gain on disposal of property, plant and equipment 210 127
Gain on partial disposal of investment in joint venture (note 13) 687 -
Foreign exchange gains 1,241 2,843
Other 146 95
Total before exceptional items 3,599 4,041
Exceptional items (note 6) - 18,594
3,599 22,635
3. Other operating expenses
2015
€’000
2014
€’000
Loss on disposal of property, plant and equipment - (80)
Foreign exchange losses (1,512) (766)
Loss on liquidation of subsidiary (263) -
Total before exceptional items (1,775) (846)
Exceptional items (note 6) - (4,157)
(1,775) (5,003)
4. Financial income and expense
2015
€’000
2014
€’000
Interest income 43 64
Other financial income 87 200
Financial income 130 264
Interest expense on interest bearing borrowings (479) (403)
Discounting charge on provisions (note 23) (186) (212)
Other interest expense (213) (395)
Financial expense (878) (1,010)
Net financial expense (748) (746)
Fyffes plc Annual Report 201566
Notes to the Group Financial Statements for the financial year ended 31 December 2015
5. Statutory and other information
2015
€’000
2014
€’000
Depreciation of property, plant and equipment
- Owned assets 8,899 7,158
- Leased assets 1,423 935
Auditor’s remuneration*
- Audit of these financial statements 206 206
- Other assurance 15 25
- Taxation services 240 428
- Other non-audit services 25 625
Operating lease rentals
- Plant and equipment 4,890 3,210
- Other 2,923 2,518
Details of directors’ remuneration, pension entitlements and interests in share options are set out in the compensation
committee report on pages 38 to 43.
* KPMG provided extensive due diligence and tax planning advice to the Group in connection with the proposed merger
with Chiquita in 2014. An element of the non-audit fees incurred in 2015 also related to matters connected to that
proposed transaction. The Group believed KPMG was best placed to provide this advice given their knowledge of Fyffes
business and its industry.
6. Exceptional items
2015
€’000
2014
€’000
Costs arising on termination of Irish Defined Benefit Pension Scheme (11,144) -
Share of fine paid by joint venture in connection with EU Competition case (2,882) -
Break fee in connection with proposed Chiquita merger - 18,594
Professional and advisory fees and other costs related to proposed Chiquita merger 2,048 (14,339)
Impairment charges related to under-performing pineapple farm - (4,157)
Total exceptional item per income statement (11,978) 98
As more fully explained in Note 27 on page 91, in July 2015, the Group decided to close its Irish defined benefit pension
scheme to future accrual and to future liability due to the ever increasing cost of funding such schemes. Once-off final
payments amounting to €20 million were made to settle the deficit scheme, to eliminate the possibility of a claim by
the trustees in respect of member expectations in relation to the scheme and to facilitate transfers to the new defined
contribution scheme. After eliminating the accounting deficit as at 31 July 2015 of €8.856 million, the incremental costs
of €11.144 million, net of a settlement gain of €2.721 million arising under the measurement criteria of IAS 19, have been
expensed in the income statement as an exceptional charge.
Fyffes plc Annual Report 2015 67
Notes to the Group Financial Statements for the financial year ended 31 December 2015
6. Exceptional items (continued)
In 2008, the European Commission published its Decision following the conclusion of its investigation into the supply of
bananas in the Northern European region of the EEA. No adverse findings were made against Fyffes and no fine imposed
on it. At the same time, the European Commission found the Group’s German joint venture, Internationale Fruchtimport
Gesellschaft Weichert GmbH & Co KG (“Weichert”) and Fresh Del Monte Produce Inc (“Del Monte”) jointly and severally
liable for a fine of €14.7m for breaches of Article 81 of the Treaty of Rome and Article 53 of the European Economic
Area (EEA) Agreement relating to the supply of bananas to the Northern European region of the EEA, in the period 1
January 2000 to 31 December 2002. Fyffes acquired its 80% interest in Weichert from Del Monte on 1 January 2003. The
Commission found that Weichert was controlled by Del Monte throughout the period covered by the Decision. Weichert
provided for a net exceptional charge of €3.7 million in its 2008 accounts in relation to this fine. While Fyffes has no liability
in this matter, the Group’s income statement in 2008 reflected Fyffes 80% share of the net exceptional charge recognised in
Weichert’s accounts, amounting to €2.9 million.
There have been a number of appeals in relation to this case with a concluding judgement issued by the Court of Justice of
the European Union (“CJEU”) on 24 June 2015 which confirmed a lower fine of €9.8 million, plus interest costs. Separately,
Weichert and Del Monte reached an agreement in relation to the split of the fine. As a result of the decision of the CJEU and
the agreement with Del Monte, Weichert has recognised a further exceptional charge of €3.6 million in its 2015 financial
statements covering its share of the fine plus interest and related costs, in full and final settlement of this long running
matter. Fyffes 80% share of the additional charge recognised by Weichert amounts to €2.882 million and is being reported
as an exceptional item.
In March 2014, Fyffes and Chiquita Brands International Inc (“Chiquita”) announced an intention to combine in an all share
merger. In August 2014, a consortium offered to purchase Chiquita in an all cash deal. Ultimately, Chiquita shareholders
voted not to support the proposed merger with Fyffes at a special meeting in October 2014 and the business was sold to
the consortium. Following termination of the proposed merger, Chiquita paid US$23.3 million (€18.6 million) 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 €14.3 million, including costs
related to a review of Fyffes business operations, resulting in a net surplus of €4.3 million in 2014. During 2015 Fyffes wrote
back costs amounting to €2.048 million, which had been accrued in 2014 in respect of this proposed merger, but were
ultimately not incurred by the Group.
Following a strategic review of its pineapple farming operations in 2014, the Group decided to write down the carrying value
of the assets of one of its pineapple farms, which had been under-performing compared to its other larger pineapple farm.
The impairment charges recognised in 2014 in writing down these assets amounted to €4.2 million (note 10).
Net tax credits of €1.1 million arose during the year in relation to these exceptional items. This exceptional tax credit has
been excluded in the calculation of the Group’s Adjusted earnings per share (note 9).
Fyffes plc Annual Report 201568
Notes to the Group Financial Statements for the financial year ended 31 December 2015
7. Income tax
2015
€’000
2014
€’000
Recognised in the income statement
Ireland
Current tax on profit for the year 1,125 3,156
Adjustment in respect of prior years (219) 189
906 3,345
Overseas
Current year tax on profit for the year 3,481 3,547
Adjustment in respect of prior years (1,403) (2,408)
2,078 1,139
Total current tax charge 2,984 4,484
Deferred tax charge/(credit)
Origination and reversal of temporary differences 1,180 (512)
Reduction in tax rates 82 -
Adjustment in respect of prior years - 76
Total deferred tax charge/(credit) 1,262 (436)
Income tax charge 4,246 4,048
Deferred tax recognised directly in equity
Employee benefit schemes 922 (1,921)
Hedging instruments (1,285) 1,170
Total deferred tax (credit) in statement
of comprehensive income (363) (751)
The Group’s share of the tax charge of its joint ventures amounting to €860,000 (2014: €903,000) is set off against the
profit of these joint ventures in profit before tax under IFRS rules.
2015
%
2015
€’000
2014
%
2014
€’000
Reconciliation of effective tax rate
Profit on ordinary activities before tax 31,786 38,179
Taxation based on Irish corporation tax rate of 12.5% 12.50 3,973 12.50 4,772
Effects of:
Expenses not deductible for tax purposes 2.40 765 2.54 971
Tax effect on profits of joint ventures 1.02 325 (0.42) (159)
Differences in tax rates 2.24 711 2.19 837
Adjustments to prior years (5.10) (1,622) (5.61) (2,143)
Previously unrecognised deferred tax movements 1.36 432 1.11 425
Reduction in tax rates 0.26 82 - -
Non-taxable gains (1.32) (420) (1.72) (657)
Other items - - 0.01 2
Total income tax charge in income statement 13.36 4,246 10.60 4,048
Fyffes plc Annual Report 2015 69
Notes to the Group Financial Statements for the financial year ended 31 December 2015
8. Dividends to equity shareholders
Interim dividends to equity shareholders in Fyffes plc are recognised when the interim dividend is paid by the Company.
The final dividend in respect of a financial year is recognised when the dividend has been approved by the Company’s
shareholders. During the financial year, the following dividends were recognised.
2015
€ cent
per share
2015
€’000
2014
€ cent
per share
2014
€’000
Interim dividend for 2015 (2014) 0.8211 2,425 0.714 2,130
Final dividend for 2014 (2013) 1.6730 4,939 1.490 4,441
Total distributions to shareholders 2.4941 7,364 2.204 6,571
The directors have proposed a final dividend in respect of the 2015 financial year of 1.924 cent per ordinary share (2014:
1.673 cent). This dividend has not been provided for in the Company or Group balance sheet. The final dividend is subject to
approval by the Company’s shareholders at the Annual General Meeting.
9. Earnings per share
Basic earnings per share
The calculation of basic earnings per share for the financial year ended 31 December 2015 is based on the profit for the
financial year attributable to ordinary shareholders of €27,425,000 (2014: €33,910,000) divided by the weighted average
number of ordinary shares outstanding during the year ended 31 December 2015 of 295,430,000 (2014: 297,496,000)
calculated as follows:
2015
€’000
2014
€’000
Profit for financial year attributable to shareholders 27,425 33,910
‘000 ‘000
Issued ordinary shares at start of year 325,765 325,735
Effect of own shares held (31,075) (28,240)
Effect of shares issued 740 1
Weighted average number of ordinary shares for year 295,430 297,496
Basic earnings per share - € cent 9.28 11.40
Fyffes plc Annual Report 201570
Notes to the Group Financial Statements for the financial year ended 31 December 2015
9. Earnings per share (continued)
Diluted earnings per share
The calculation of diluted earnings per share for the financial year ended 31 December 2015 is based on the profit
attributable to ordinary shareholders of €27,425,000 (2014: €33,910,000) divided by the weighted average number
of ordinary shares and options with a dilutive effect outstanding during the year of 301,217,000 (2014: 302,654,000)
calculated as follows:
2015
€’000
2014
€’000
Profit for financial year attributable to equity shareholders 27,425 33,910
‘000 ‘000
Weighted average number of ordinary shares for year 295,430 297,496
Share options with a dilutive effect 5,787 5,158
Weighted average number of ordinary shares for year (diluted) 301,217 302,654
Diluted earnings per share - € cent 9.10 11.20
Adjusted diluted earnings per share
2015
€’000
2015
€ cent
2014
€’000
2014
€ cent
Profit for financial year attributable to equity shareholders 27,425 9.10 33,910 11.20
Adjustments
Exceptional items (note 6) 11,978 3.98 (98) (0.03)
Tax impact of exceptional items (1,053) (0.35) - -
Adjusted diluted earnings 38,350 12.73 33,812 11.17
Fyffes plc Annual Report 2015 71
Notes to the Group Financial Statements for the financial year ended 31 December 2015
10. Property, plant and equipment
Land and
Buildings
€’000
Plant and
Equipment
€’000
Motor
Vehicles
€’000
Total
€’000
Cost or valuation
Balance at 1 January 2014 62,449 51,331 4,781 118,561
Additions 9,158 13,448 1,087 23,693
Disposals - (3,834) (834) (4,668)
Transfer to investment property (note 11) (903) - - (903)
Foreign exchange movement 7,167 6,695 606 14,468
Reclassifications 207 (207) - -
Balance at 31 December 2014 78,078 67,433 5,640 151,151
Additions 1,578 9,728 2,200 13,506
Disposals - (847) (1,339) (2,186)
Arising on acquisition (note 26) 10,737 4,031 31 14,799
Foreign exchange movement 7,762 7,033 615 15,410
Reclassifications (159) 159 - -
Balance at 31 December 2015 97,996 87,537 7,147 192,680
Depreciation and impairment losses
Balance at 1 January 2014 5,744 32,755 2,025 40,524
Depreciation charge for the year 879 6,093 1,121 8,093
Impairment charges 2,648 1,334 175 4,157
Disposals - (3,626) (656) (4,282)
Foreign exchange movement 1,129 4,689 412 6,230
Balance at 31 December 2014 10,400 41,245 3,077 54,722
Depreciation charge for the year 1,189 7,852 1,281 10,322
Disposals - (706) (1,057) (1,763)
Foreign exchange movement 1,208 4,672 420 6,300
Balance at 31 December 2015 12,797 53,063 3,721 69,581
Carrying amount
At 31 December 2014 67,678 26,188 2,563 96,429
At 31 December 2015 85,199 34,474 3,426 123,099
Property assets, comprising land and buildings are stated at fair value. Plant and equipment and motor vehicles are stated
at depreciated historic cost. Capital commitments at 31 December 2015 are disclosed in note 28. The carrying amount
of plant and equipment held under finance leases amounted to €3,397,000 at 31 December 2015 (2014: €2,586,000).
Depreciation charged on these assets in the year amounted to €1,423,000 (2014: €935,000). Impairment charges amounting
to €4,157,000 were recognised in 2014 in respect of certain property and equipment assets in one of the Group’s pineapple
farming subsidiaries, as further explained in note 6 above (2015: €Nil).
Fyffes plc Annual Report 201572
Notes to the Group Financial Statements for the financial year ended 31 December 2015
10. Property, plant and equipment (continued)
Fair values of land and buildings
The Group has performed an assessment to determine the fair value of its property assets as at 31 December 2015. No
change in carrying value arose from this review. The following table analyses the fair value of these non-financial assets by
valuation method. In IFRS 13 Fair Value Measurement, the different valuation methods are defined as follows:
• Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
• Inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly
(that is, as prices) or indirectly (that is, derived from prices) (Level 2);
• Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).
Fair value measurements at 31 December 2015 using:
Recurring fair value measurements
31 Dec 2015
€’000
Quoted prices
in active
markets
for identical
assets (Level 1)
€’000
Significant
other
observable
inputs
(Level 2)
€’000
Significant
unobservable
inputs
(Level 3)
€’000
Total gains
or (losses)
€’000
Farm land and infrastructure 47,511 - 25,935 21,576 -
Ripening and distribution centres 37,688 - 10,499 27,189 -
Total land and buildings 85,199 - 36,434 48,765 -
Valuation processes applied by the Group
The Level 2 fair values for the Group’s land and ripening/distribution centre assets above have been determined in-house
using the “sales comparison” approach. External/independent valuers have not been used. Where available, recent
observable sales prices for comparable assets in similar locations to the Group’s properties were considered and adjusted for
differences in key attributes such as size and location. The reference bench mark for farming assets is price per hectare and
price per square foot in the case of ripening and distribution centres.
Where no recent directly comparable transactions exist, the Group applies a Level 3 approach to determining fair values. This
is also based on a sales price comparison approach, for other non-directly comparable transactions, and other unobservable
inputs including the Group’s knowledge and experience in valuing these assets, taking into account the size, age and
condition of the properties and local market conditions. This is particularly the case in relation to the Group’s specialised
ripening and distribution centres. As a result of this consideration of fair values, the Group has not recognised any change in
fair value in respect of these property assets, other than in respect of the pineapple farm in 2014 noted above.
The Group’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as of the date of the event or
change in circumstances that caused the transfer. There were no transfers between levels during the year.
Fyffes plc Annual Report 2015 73
Notes to the Group Financial Statements for the financial year ended 31 December 2015
10. Property, plant and equipment (continued)
Information about fair value measurements using significant unobservable inputs (Level 3)
Farm land &
infrastructure
€‘000
Ripening &
distribution centres
€’000
Opening balance – 1 January 2015 19,954 20,480
Additions - 1,564
Depreciation (90) (660)
Arising on acquisition of subsidiary - 3,735
Gains/(losses) recognised in other comprehensive income – translation 1,712 2,070
Closing balance – 31 December 2015 21,576 27,189
Description Fair value
December
2015
€’000
Valuation
technique(s)
Unobservable
inputs
Range of
unobservable inputs
(probability-weighted
average)
Relationship of
unobservable
inputs to fair
value
Farm land and
infrastructure21,576
Sales
comparison
approach
Price per
hectare
US$7,500 -US$17,500
per hectare
The higher the price
per hectare, the
higher the fair value
Ripening and
distribution centres27,189
Sales
comparison
approach
Price per
square foot
€30 - €80
per square foot
The higher the price
per square foot, the
higher the fair value
11. Investment property
2015
€’000
2014
€’000
Balance at beginning of year 5,202 -
Additions - 4,090
Transfer from property, plant and equipment (note 10) - 903
Foreign exchange movement 322 209
5,524 5,202
Investment property comprises land and buildings not occupied by the Group and earning rental income from third parties,
and is stated at fair value. During 2014, the Group constructed a new ripening and distribution centre in the UK, including
a section which was purpose built for a third party. This property opened in November 2014. In addition, during the second
half of 2014, the Group purchased a warehouse in the UK adjoining one of its existing ripening and distribution centres. This
new depot is not currently occupied by the Group. The Group has concluded that the cost of construction / acquisition of
these two investment properties in late 2014 is a reasonable approximation to their fair values.
Fyffes plc Annual Report 201574
Notes to the Group Financial Statements for the financial year ended 31 December 2015
12. Goodwill and intangible assets
Customer
Relationships
and other
intangibles
€’000
Fyffes
Trademark
€’000
Goodwill
€’000
Total
€’000
Cost
Balance at 1 January 2014 9,995 2,040 19,285 31,320
Revision to deferred contingent consideration liability (note 23) - - 802 802
Foreign exchange movement 1,318 139 2,590 4,047
Balance at 31 December 2014 11,313 2,179 22,677 36,169
Arising on acquisition of business (note 26) 6,864 - 5,672 12,536
Foreign exchange movement 1,242 135 2,854 4,231
Balance at 31 December 2015 19,419 2,314 31,203 52,936
Accumulated amortisation & impairment
Balance at 1 January 2014 9,995 - 404 10,399
Foreign exchange movement 1,318 - - 1,318
Balance at 31 December 2014 11,313 - 404 11,717
Foreign exchange movement 1,368 - - 1,368
Balance at 31 December 2015 12,681 - 404 13,085
Carrying amount
At 31 December 2014 - 2,179 22,273 24,452
At 31 December 2015 6,738 2,314 30,799 39,851
The carrying amount of the trademark represents the cost of acquiring the worldwide rights to the Fyffes trademark. The
trademark is tested for impairment at each balance sheet date. The Fyffes trademark is widely used in the business with
ongoing success and therefore, in the opinion of the directors, does not have a finite useful life. Customer relationships and
other intangible assets identified on acquisition of businesses, including other trademarks, are amortised over their estimated
useful lives, ranging from one to six years. As explained in note 26, no amortisation charge has been recognised in 2015
given the proximity to the year end of the completion of the acquisitions in the year. Goodwill and intangible assets arise in
connection with acquisitions.
Fyffes plc Annual Report 2015 75
Notes to the Group Financial Statements for the financial year ended 31 December 2015
12. Goodwill and intangible assets (continued)
2015
€’000
2014
€’000
Goodwill and intangibles arising on investment in subsidiary undertakings 37,537 22,273
Goodwill and intangibles arising on investment in joint ventures (note 13) 22,812 22,812
Fyffes Trademark 2,314 2,179
The recoverable amounts of cash generating units are based on value in use calculations. Those calculations use cash flow
projections based on expected future operating results and cash flows. The cash flow projections are based on current
operating results of the individual cash generating units and a conservative assumption regarding future organic growth.
For the purposes of the calculation of value in use, the cash flows are projected over a twenty year period, unless a shorter
period is appropriate to the circumstances of a particular cash generating unit. The cash flows are discounted using
appropriate risk adjusted pre-tax discount rates averaging 7% (2014: 7%), reflecting the risk associated with the individual
future cash flows and the risk free rate. The cash flows are based on current budget assumptions plus inflation related
growth. Included in investment in joint ventures and associate is goodwill and intangible assets with a carrying amount
€22,812,000 (2014: €22,812,000). This goodwill is subject to annual impairment testing on a similar basis to the goodwill
arising in the Group’s subsidiaries. Any adverse change in the expected future operational results and cash flows may result
in the value in use being less than the carrying value of a business unit and would require that the carrying value of the
business unit be impaired and stated at the greater of the value in use or the recoverable amount of the business unit.
Group earnings are significantly dependent on the selling prices obtained for products sold. These, in turn, are largely
determined by market supply and demand. Fresh produce supplies in individual markets are affected by the geography of
production, growing conditions (including climate), seasonality and perishability. Market demand is a function of population
size, per capita consumption, the availability and quality of individual products and competing products and climatic and
other general conditions in the marketplace. Excess supplies of fresh produce leading to reduced selling prices (particularly
for products purchased under contract) could have a material adverse effect on the Group’s business, results of operations
and financial condition.
Fyffes plc Annual Report 201576
Notes to the Group Financial Statements for the financial year ended 31 December 2015
13. Investments in joint ventures and associate
The Group’s interests in its joint ventures and associate, all of which are unlisted, are set out below:
Joint Ventures
€’000
Associate
€’000
Total
€’000
Balance at 1 January 2014 38,854 50 38,904
Investment in joint ventures 873 - 873
Share of profit after tax 1,278 195 1,473
Impairment charge recognised in income statement (5) (195) (200)
Dividend received (221) - (221)
Share of other comprehensive income (1,715) - (1,715)
Foreign exchange movement 1,057 - 1,057
Balance at 31 December 2014 40,121 50 40,171
Partial disposal of investment in joint venture (397) - (397)
Capital contribution by new partner 813 - 813
Share of profit after tax before exceptional items 821 2,676 3,497
Impairment charge (465) (2,676) (3,141)
Share of exceptional items charge (note 6) (2,882) - (2,882)
Dividends receivable (2,432) - (2,432)
Share of other comprehensive income (307) - (307)
Joint venture becoming a subsidiary (5) - (5)
Foreign exchange movement 1,059 - 1,059
Balance at 31 December 2015 36,326 50 36,376
The investment in joint ventures and associate as stated above comprises entirely of equity investments with no outstanding
loans. Investments in joint ventures and associate include the Group’s share of fair value gains and losses arising from the
revaluation of property, plant and equipment and fair value movements on investment property. The share of joint venture
profit per the income statement is €356,000 (2014: €1,273,000) before exceptional charges. This comprises profit after tax
of €821,000 (2014: €1,278,000) and an impairment charge of €465,000 (2014: €5,000). Of the dividends receivable from
joint ventures of €2,432,000 in respect of 2015, €1,533,000 was received in cash in the year, €300,000 will be paid on
completion of the joint venture’s 2015 financial statements and €599,000 is recoverable dividend withholding tax.
During 2015, one of the Group’s joint venture businesses undertook a reorganisation as a result of which each of the existing
three shareholders sold a portion of their investment to a new investor. The Group realised a profit of €687,000 on this
transaction which is included in other operating income (see note 2). This profit is the difference between the fair value of
the share of net assets disposed of by the Group of €397,000, cash proceeds received from the new investor of €271,000
and the Group’s share of a capital contribution to the joint venture by the new investor of €813,000.
In 2011, as part of a reorganisation approved by its shareholders, Balmoral International Land Holdings plc (“Balmoral”)
became the holding company of Balmoral International Land plc, with existing shareholders receiving an equal number of
shares in the new holding company. At the same time, Balmoral International Land plc delisted from the Stock Exchanges in
Dublin and London. Shares in Balmoral are traded on the grey market by its brokers. As a result of its delisting, the market
value of Fyffes’ investment in Balmoral became more difficult to accurately determine and, consequently, Fyffes wrote down
the carrying value of its investment to a nominal value of €50,000. Fyffes continues to account Balmoral as an associate
under equity accounting rules.
Fyffes plc Annual Report 2015 77
Notes to the Group Financial Statements for the financial year ended 31 December 2015
13. Investments in joint ventures and associate (continued)
Balmoral published its 2014 full year results in September 2015, reporting a profit attributable to equity shareholders of €6.7
million, increasing its net equity to €8.5 million. Balmoral also reported a small profit in respect of 2013. Fyffes has recognised
its share of these 2013 and 2014 profits in 2014 and 2015 respectively, but has also recognised a matching impairment charge
in respect of each of those years, on the basis that there has not yet been a sustained and prolonged recovery in Balmoral’s
performance and the carrying value of its investment has therefore remained unchanged at €50,000. The table below shows
that Fyffes share of Balmoral’s net assets, based on its latest published financial statements amounted to €3.4 million and the
Group’s cumulative impairment provision amounted to €3.3 million. Balmoral has not yet finalised its 2015 results. Fyffes will
consider the appropriateness of its impairment provision after Balmoral publishes its 2015 results.
The following additional disclosures are set out in respect of the Group’s share of the net assets of its joint ventures and
associate:
Joint Ventures
2015
€’000
Associate
2015
€’000
Total
2015
€’000
Non-current assets 10,614 74,316 84,930
Cash and cash equivalents 13,537 4,529 18,066
Other current assets 39,670 854 40,524
Non-current liabilities (4,367) (1,721) (6,088)
Employee benefits (4,282) (18) (4,300)
Current liabilities (39,190) (2,429) (41,619)
Interest bearing loans and borrowings - (72,142) (72,142)
Share of net assets 15,982 3,389 19,371
Impairment provision (2,468) (3,339) (5,807)
Goodwill and intangible assets 22,812 - 22,812
Balance at 31 December 2015 36,326 50 36,376
Fyffes plc Annual Report 201578
Notes to the Group Financial Statements for the financial year ended 31 December 2015
13. Investments in joint ventures and associate (continued)
As noted above, Balmoral reported its 2014 results in September 2015 and has not yet reported its 2015 results. The 2015
figures in the table above reflect Balmoral’s reported 2014 net assets. Similarly, the 2014 figures in the table below are based
on Balmoral’s 2013 reported net assets.
Joint Ventures
2014
€’000
Associate
2014
€’000
Total
2014
€’000
Non-current assets 10,579 76,358 86,937
Cash and cash equivalents 13,425 2,680 16,105
Other current assets 37,529 1,161 38,690
Non-current liabilities (3,762) (1,857) (5,619)
Employee benefits (4,818) (18) (4,836)
Current liabilities (33,641) (2,024) (35,665)
Interest bearing loans and borrowings - (75,705) (75,705)
Share of net assets 19,312 595 19,907
Impairment provision (2,003) (545) (2,548)
Goodwill and intangible assets 22,812 - 22,812
Balance at 31 December 2014 40,121 50 40,171
Joint Ventures
2015
€’000
Associate
2015
€’000
Total
2015
€’000
Group share of revenue 237,257 - 237,257
2014
€’000
2014
€’000
2014
€’000
Group share of revenue 238,309 - 238,309
The Group has determined that its interests in its joint ventures and associate undertakings are not individually material at 31
December 2015 and 2014. Furthermore, the Group has given due consideration to all the relevant facts and circumstances
associated with these undertakings, in the context of whether the Group has control of these undertakings under IFRS 10
Consolidated Financial Statements as at 31 December 2015 and 2014. The conclusion reached based on these assessments
is that the Group does not have control of these undertakings and that it is appropriate to account for them as joint venture
and associated undertakings respectively.
Fyffes plc Annual Report 2015 79
Notes to the Group Financial Statements for the financial year ended 31 December 2015
14. Equity investments
2015
€’000
2014
€’000
Balance at beginning of year 16 15
Exchange movements - 1
Balance at end of year 16 16
15. Inventories
2015
€’000
2014
€’000
Goods for resale 40,532 34,118
Consumable stores 19,666 14,694
60,198 48,812
16. Biological assets
2015
€’000
2014
€’000
Level 3 Level 3
Balance at start of year 18,715 16,030
Harvested fruit transferred to inventories (113,552) (80,234)
Additions to unharvested fruit 112,175 81,255
Fair value adjustment (673) (513)
Arising on acquisition of businesses 2,457 -
Exchange movements 2,192 2,177
Balance at end of year – current 21,314 18,715
Fyffes plc Annual Report 201580
Notes to the Group Financial Statements for the financial year ended 31 December 2015
16. Biological assets (continued)
Biological assets represent the fair value of unharvested fruit in a number of the Group’s subsidiaries involved in the
production of tropical produce in Costa Rica, Panama, Honduras and Guatemala. At 31 December 2015, unharvested fruit
comprised mainly pineapple plants farmed on approximately 3,500 hectares (owned and leased), winter season melons
farmed on approximately 8,000 hectares (owned and leased) and banana plants farmed on approximately 800 hectares
(owned). All have been categorised as Level 3 fair values based on the inputs to the valuation techniques used. The Group’s
biological assets are exposed to the risk of damage from climatic events, diseases and other natural forces. The fair value
estimate of the value of biological assets reflects a prudent estimate of the fair value of unharvested crops in the context of
the stage of the growing season.
The estimated fair value may increase or decrease depending on changes in the significant unobservable inputs below:
Description Valuation Technique Significant unobservable inputs and relationship to fair
value measurement
Unharvested fruit Discounted cash flows Estimated future market prices of pineapples and melons
Estimated harvest and transportation costs
17. Trade and other receivables
2015
€’000
2014
€’000
Non-current
Other receivables - 4,682
Current
Trade receivables 90,900 72,241
Trade receivables due from joint ventures 2,771 350
Other receivables 13,791 12,976
Prepayments 5,946 4,965
Non-trade receivables due from joint ventures 5,741 1,434
119,149 91,966
Details of impairment losses related to the credit risk on trade and other receivables above are set out in note 30.
Fyffes plc Annual Report 2015 81
Notes to the Group Financial Statements for the financial year ended 31 December 2015
18. Net funds / net (debt)
1 Jan
2015
€’000
Cash flow
€’000
Non-cash
movement
€’000
Translation
adjustment
€’000
31 Dec
2015
€’000
Bank balances 13,379 6,121 - 1,045 20,545
Call deposits 8,690 (6,476) - - 2,214
Cash and cash equivalents per balance
sheet 22,069 (355) - 1,045 22,759
Bank overdrafts (5,339) 4,714 - - (625)
Cash and cash equivalents per cash flow
statement 16,730 4,359 - 1,045 22,134
Current bank borrowings (17,395) (40,000) - (893) (58,288)
Non current bank borrowings (8,000) 8,000 - - -
Finance leases (3,054) 1,527 (1,238) (362) (3,127)
(28,449) (30,473) (1,238) (1,255) (61,415)
Net (debt) (11,719) (26,114) (1,238) (210) (39,281)
1 Jan
2014
€’000
Cash flow
€’000
Non-cash
movement
€’000
Translation
adjustment
€’000
31 Dec
2014
€’000
Bank balances 23,429 (11,262) - 1,212 13,379
Call deposits 7,568 851 - 271 8,690
Cash and cash equivalents per balance
sheet 30,997 (10,411) - 1,483 22,069
Bank overdrafts (5,697) 358 - - (5,339)
Cash and cash equivalents per cash flow
statement 25,300 (10,053) - 1,483 16,730
Current bank borrowings (21,604) 5,074 - (865) (17,395)
Non current bank borrowings (114) (7,887) - 1 (8,000)
Finance leases (3,145) 1,313 (861) (361) (3,054)
(24,863) (1,500) (861) (1,225) (28,449)
Net funds/(debt) 437 (11,553) (861) 258 (11,719)
Fyffes plc Annual Report 201582
Notes to the Group Financial Statements for the financial year ended 31 December 2015
19. Capital and reserves
Share capital
2015
Ordinary
Shares
‘000
2014
Ordinary
Shares
‘000
Allotted, called up and fully paid
In issue at beginning of year 325,765 325,735
Share options exercised 2,538 30
In issue at end of year 328,303 325,765
Treasury shares (31,075) (31,075)
297,228 294,690
At the end of both 2015 and 2014, the authorised share capital comprised 750,000,000 ordinary shares with a par value
of €0.06 cent each. The holders of ordinary shares are entitled to receive dividends as declared and are entitled to one vote
per share at meetings of the Company. All shares rank equally with regard to the Company’s residual assets. In respect
of the Company’s shares that are held by the Group (Treasury Shares), all rights (including voting and dividend rights) are
suspended until those shares are reissued. These shares are not included in the calculation of earnings per share. All ordinary
shares are fully paid up.
Other reserves
2015
€‘000
2014
€’000
Capital conversion reserve 1,034 1,034
Capital redemption reserve 73,073 73,073
Share option reserve 1,706 1,784
Currency translation reserve 18,817 1,737
Revaluation reserve 2,380 2,328
Own shares reserve (20,407) (20,407)
Hedging reserve (4,316) 4,681
Total 72,287 64,230
Capital conversion reserve
This reserve arose on the renominalisation of the Company’s share capital following the introduction of the euro.
Capital redemption reserve
This reserve arose on the conversion of preference shares into ordinary share capital of the Company in prior years and also
reflects the cancellation of treasury shares.
Share option reserve
This reserve comprises amounts expensed in the income statement in connection with share option grants less any exercises
of such share options.
Fyffes plc Annual Report 2015 83
Notes to the Group Financial Statements for the financial year ended 31 December 2015
19. Capital and reserves (continued)
Currency translation reserve
The translation reserve comprises all foreign exchange differences from 1 January 2004, arising from the translation of the
net assets of the Group’s non-euro denominated operations, including the translation of the profits of such operations from
the average exchange rate for the year to the exchange rate at the reporting date, as well as from the translation of liabilities
that hedge those net assets.
Reserve for own shares
The reserve for the Company’s own shares comprises the cost of the Company’s shares held by the Group. At 31 December
2015, the total number of treasury shares held amounted to 31,075,000 (2014: 31,075,000) ordinary €0.06 shares at a cost
of €20,407,000 (2014: €20,407,000).
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging
instruments related to hedged transactions that have not yet occurred, net of deferred tax.
Revaluation reserve
The revaluation reserve relates to revaluation surpluses arising on revaluations of property in a number of the Group’s joint
venture operations.
Capital management
The Board regularly reviews and monitors the Group’s capital structure including appropriate debt/equity levels in the
context of possible acquisitions, with a view to maintaining a strong capital base in order to sustain market confidence
in the business. This involves consideration of the level of dividends paid to shareholders, the demographic spread of
shareholders, the amount of liquid assets on the balance sheet and the return on capital (based on shareholders’ funds). The
Board encourages all employees to purchase shares in the Group and a share option scheme is in place for employees. The
Group may purchase its own shares from time to time. The decision will depend on market prices and alternative investment
opportunities at the time.
20. Non-controlling interests
2015
€‘000
2014
€’000
Balance at beginning of year 1,560 1,339
Share of profit after tax for year 115 221
Balance at end of year 1,675 1,560
Fyffes plc Annual Report 201584
Notes to the Group Financial Statements for the financial year ended 31 December 2015
21. Interest bearing loans and borrowings
2015
€‘000
2014
€’000
Non-current
Bank borrowings - 8,000
Finance lease liabilities 1,337 1,833
1,337 9,833
Current
Overdrafts 625 5,339
Bank borrowings 58,288 17,395
Finance lease liabilities 1,790 1,221
60,703 23,955
Interest bearing loans and borrowings excluding finance leases are repayable as follows:
Bank borrowings and overdrafts
Within one year 58,913 22,734
After one but within two years - 8,000
58,913 30,734
None of the above borrowings are secured on any of the Group’s assets. See note 28 for further details regarding bank
borrowings.
Finance lease obligations
Within one year 1,790 1,221
After one but within five years 1,337 1,833
3,127 3,054
Total future minimum lease payments on finances leases amount to €3,127,000 (2014: €3,054,000).
Fyffes plc Annual Report 2015 85
Notes to the Group Financial Statements for the financial year ended 31 December 2015
22. Trade and other payables
2015
€‘000
2014
€’000
Non-current
Other payables 3,780 7,902
Non-current payables are due entirely within five years.
Current
Trade payables 71,511 50,909
Trade payables due to joint ventures 2 62
Accruals 17,086 20,565
Other payables 13,328 5,385
Other tax 2,003 4,896
Non-trade payables due to joint ventures 681 1,944
104,611 83,761
23. Provisions
Deferred
Contingent
Consideration
€’000
MNOPF &
MNRPF
€’000
Total
€’000
Balance at 1 January 2014 2,942 2,634 5,576
Discounting charge (note 4) 20 192 212
Payments (2,481) (599) (3,080)
Revisions to previous estimates (note 12) 802 - 802
Foreign exchange 295 167 462
Balance at 31 December 2014 1,578 2,394 3,972
Discounting charge (note 4) - 186 186
Payments (92) (5,171) (5,263)
Arising on acquisition of businesses (note 26) 1,126 - 1,126
Transfer (to)/from other creditors (1,370) 4,735 3,365
Revisions to previous estimates (37) - (37)
Foreign exchange (11) 153 142
Balance at 31 December 2015 1,194 2,297 3,491
Analysed as follows:
Non-current - 1,864 1,864
Current 1,194 433 1,627
Balance at 31 December 2015 1,194 2,297 3,491
Fyffes plc Annual Report 201586
Notes to the Group Financial Statements for the financial year ended 31 December 2015
23. Provisions (continued)
Deferred contingent consideration
Deferred contingent consideration liabilities represent full provision for the net present value of the amounts expected to be
payable in respect of acquisitions which are subject to earn out or other deferred payment arrangements. Total payments of
€92,000 were made in 2015 (2014: €2,481,000) in relation to prior year acquisitions. The remaining consideration payable
in respect of prior year acquisitions of €1,370,000 is no longer contingent on earnings and consequently was transferred to
other payables during the year. As set out in note 26, a deferred contingent consideration liability of €1,126,000 arose in
connection with the acquisition of a business in late 2015. This amount was subsequently paid in January 2016 following
finalisation of certain outstanding matters related to the acquisition.
Merchant Navy Officers Pension Fund
As a result of a ruling by the High Court in the UK in 2005, a claim was made against Fyffes in respect of a deficit in the
Merchant Navy Officers Pension Fund (MNOPF), a UK based multi-employer defined benefit pension scheme operated on
behalf of ships’ officers employed by approximately 2,000 companies. The Trustee of the MNOPF was authorised by the
Court to recover any deficit in the scheme from both the current and former employers of these ships’ officers. The claim
against Fyffes relates to ships’ officers employed by two subsidiaries prior to their acquisition by the Group. The Trustee
notified Fyffes that its share of the deficit as at 31 March 2005 could be settled by ten equal instalments payable between
September 2005 and March 2014, amounting to €6.4 million in aggregate. The Trustee also indicated that further cash calls
may be necessary in subsequent years, depending on the results of future actuarial valuations of the scheme and on his
ability to recover the amounts due from all relevant current and former employers. In 2005, the Group provided for the net
present value of the payments claimed amounting to €4,994,000.
The Group’s liability in this regard increased during 2007 following an actuarial review. However, in the same year the
Trustee also reallocated a portion of the liability of one of the Group’s subsidiaries to the former owners of this entity. The
Group’s liability increased again in 2009 as a result of the triennial valuation of the scheme in that year giving rise to an
estimated charge of €3,774,000. This liability was finalised and reduced by €285,000 in 2010. Also in 2010, the present
value of amounts recoverable from a third party of €875,000 relating to the 2009 increase, which had previously been
netted against the Group’s MNOPF liability, was reclassified as other receivables. The Group recognised a further charge of
€1,598,000 in 2013 as a result of the 2012 triennial valuation of the scheme. The MNOPF Trustee has indicated that it is not
seeking to recover any additional funds following the results of the 2015 triennial valuation. Payments in 2015 amounted
to €529,000 (2014: €599,000) and, after currency movements, the present value of the Group’s liability to the MNOPF
amounted to €2,297,000 at 31 December 2015 (2014: €2,394,000). Fyffes plc has provided a parent company guarantee in
support of these remaining deferred payments.
Merchant Navy Ratings Pension Fund (MNRPF)
The MNRPF is a UK based multi-employer defined benefit pension scheme, similar to the MNOPF for a separate category of
shipping personnel. Having commenced a process a number of years ago to seek to recover the deficit in that scheme from
current and former employers of these ships’ personnel, in the same way as the MNOPF, the MNRPF Trustee issued a formal
request for payment based on the latest deficit in that scheme to the Group’s main UK subsidiary, Fyffes Group Limited,
in the amount of €4,642,000. This was paid in full during 2015. The Group had provided for this exposure in earlier years
and consequently there was no impact on profits in 2015 arising from this payment. The amount previously accrued was
reclassified from other non-current payables to provisions during the year.
Fyffes plc Annual Report 2015 87
Notes to the Group Financial Statements for the financial year ended 31 December 2015
24. Operating leases
Leases as lessee
Non-cancellable operating lease rentals are payable as set out below. These amounts represent the minimum future lease
payments, in aggregate, that the Group is required to make under existing lease agreements.
2015
€‘000
2014
€’000
Payable in:
Less than one year 4,396 3,683
Between two and five years 10,737 3,336
More than five years 5,946 -
21,079 7,019
The Group leases certain property, plant and equipment under operating leases, including properties previously owned but
transferred to Balmoral International Land Holdings plc arising from the demerger of the Group’s property undertaking in
2006. The leases typically run for an initial lease period with the potential to renew the leases at market rates after the initial
period.
During the year €7,813,000 (2014: €5,728,000) was recognised as an expense in the income statement in respect of
operating leases, including €1,703,000 (2014: €2,262,000) paid to the Group’s 40% associate, Balmoral International Land
Holdings plc.
Leases as lessor
The Group sub-leases part of certain leased property. Non-cancellable operating lease rentals receivable are set out below.
These amounts represent the minimum future lease payments, in aggregate, that the Group will receive under existing lease
agreements.
2015
€‘000
2014
€’000
Less than one year 972 935
Between two and five years 4,361 3,692
More than five years 3,031 2,730
8,364 7,357
During the year, €1,315,000 (2014: €976,000) was recognised as sub-lease income and Nil (2014: Nil) was recognised as an
expense for the operating costs arising from the sub-lease of leased property.
Fyffes plc Annual Report 201588
Notes to the Group Financial Statements for the financial year ended 31 December 2015
25. Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities are attributable to the following:
Assets
2015
€’000
Liabilities
2015
€’000
Net
2015
€’000
Assets
2014
€’000
Liabilities
2014
€’000
Net
2014
€’000
Property, plant and equipment 686 (1,560) (874) 539 (1,084) (545)
Hedging instruments 973 (390) 583 128 (797) (669)
Employee benefits 6,466 - 6,466 7,456 - 7,456
Trade and other payables 1,922 (42) 1,880 2,017 - 2,017
Intangible assets 812 - 812 812 - 812
Other items 185 (1,930) (1,745) 644 (2,071) (1,427)
Net deferred tax assets / (liabilities) 11,044 (3,922) 7,122 11,596 (3,952) 7,644
No deferred tax asset is recognised in relation to certain income tax losses and certain future capital allowances of the Group
on the grounds that there is insufficient evidence that the assets will be recoverable. In the event that sufficient profits are
generated in the relevant jurisdictions in the future, these assets may be recovered. The estimated unrecognised deferred tax
asset at 31 December 2015 is €8,090,000 (2014: €7,569,000).
No deferred tax asset is recognised in relation to certain capital losses incurred by the Group on the grounds that there is
insufficient evidence that the assets will be recoverable. The estimated unrecognised deferred tax asset at 31 December 2015
is €4,632,000 (2014: €4,684,000).
No deferred tax is recognised on the unremitted earnings of overseas subsidiaries, branches and joint ventures where the
Group does not anticipate additional tax on any ultimate remittance.
Fyffes plc Annual Report 2015 89
Notes to the Group Financial Statements for the financial year ended 31 December 2015
25. Deferred tax assets and liabilities (continued)
Movement in temporary differences during the year
1 Jan 2015
€’000
Recognised
in income
€’000
Recognised
in equity
€’000
Retranslation
adjustment
€’000
Balance
31 Dec 2015
€’000
Property, plant and equipment (545) (210) - (119) (874)
Hedging instruments (669) (33) 1,285 - 583
Employee benefits 7,456 (445) (922) 377 6,466
Trade and other payables 2,017 (267) - 130 1,880
Intangible assets 812 - - - 812
Other items (1,427) (307) - (11) (1,745)
7,644 (1,262) 363 377 7,122
1 Jan 2014
€’000
Recognised
in income
€’000
Recognised
in equity
€’000
Retranslation
adjustment
€’000
Balance
31 Dec 2014
€’000
Property, plant and equipment (699) 102 - 52 (545)
Hedging instruments 494 7 (1,170) - (669)
Employee benefits 5,368 (174) 1,921 341 7,456
Trade and other payables 929 992 - 96 2,017
Intangible assets 812 - - - 812
Other items (902) (491) - (34) (1,427)
6,002 436 751 455 7,644
26. Acquisitions, disposals and terminations
Towards the end of 2015, the Group acquired additional melon farming assets in Guatemala, comprising c.2,500 hectares
of leased land, 100 hectares of owned land, four packing stations and related plant and equipment for a total consideration
of €14.493 million, including deferred consideration contingent on completion of €1.126 million. The Group also completed
the purchase of a banana farm in Costa Rica during the second half of 2015 for a total cash consideration of €13.423 million.
The Group had been operating this farm under a lease arrangement since early 2014.
The purchase method of accounting has been applied in respect of these acquisitions. Initial estimates of the fair value of
the assets acquired have been performed and these provisional fair values will be finalised within twelve months of the
acquisition dates, in accordance with IFRS 3 Business Combinations. Costs related to the completion of these acquisitions
have been expensed in 2015 in administration expenses in the income statement. Goodwill of €5,672,000 has been
recognised on these acquisitions, based on the provisional fair values attributed to the identifiable assets acquired. This
goodwill represents, inter alia, the value of the skilled work forces in these businesses and the expected realisation of cost
savings and synergies to be achieved on integration of these businesses into the Group’s operations.
Fyffes plc Annual Report 201590
Notes to the Group Financial Statements for the financial year ended 31 December 2015
26. Acquisitions, disposals and terminations (continued)
Given the proximity to the year end of the completion of these acquisitions, they made no material contribution to the
Group’s revenues or profits in 2015 and no amortisation has been charged in respect of the intangible assets recognised.
There were no acquisitions of subsidiary undertakings in 2014.
The provisional fair values of the assets acquired and consideration paid and payable in respect of these transactions is
summaried in the table below:
€’000 €’000
Provisional fair value of identifiable assets acquired
Property, plant and equipment (note 10) 14,799
Intangible assets (note 12) 6,864
Working capital 581
Total fair value of assets acquired 22,244
Consideration
Cash paid 26,790
Deferred consideration (note 23) 1,126
Fair value of consideration 27,916
Goodwill arising (note 12) 5,672
27. Employee benefits
2015
€’000
2014
€’000
Remuneration
Wages and salaries 76,255 58,953
Social security contributions 13,257 9,885
Pension costs – defined contribution schemes 1,179 796
Pension costs – defined benefit schemes 1,065 2,943
Share based payment (share option expense/(credit)) 273 (842)
Recognised in the income statement 92,029 71,735
Actuarial (gain)/loss on defined benefit schemes (2,521) 12,379
Total employee benefit costs 89,508 84,114
2015
Number
2014
Number
Employee numbers
Production 1,981 1,936
Sales and distribution 325 329
Administration 463 465
2,769 2,730
Fyffes plc Annual Report 2015 91
Notes to the Group Financial Statements for the financial year ended 31 December 2015
27. Employee benefits (continued)
Certain subsidiary companies involved in fruit production employ casual farming personnel on a seasonal basis. The number of
such seasonal personnel, not included in the table above, ranges from c.1,000 to a high of c.13,000 depending on the stage of
the growing season. Total remuneration included above for these personnel amounted to €22.3 million in 2015 (2014: €14.3
million).
Post retirement benefits
The Group operates a number of externally funded defined benefit and defined contribution pension schemes. The
schemes are set up under trusts and the assets of the schemes are therefore held separately from those of the Group.
The measurement of the assets and liabilities of the Group’s defined benefit pension schemes and the related information
disclosed on the following pages has been prepared in accordance with IAS 19 Employee Benefits (2011).
These defined benefit pension schemes represent a very significant commitment of Group resources. Fyffes had been
exploring for some time how it might de-risk its exposure in this regard, either through fully eliminating these liabilities or,
where this is not feasible, spreading the funding costs over an extended period. While the Group’s Irish and UK defined
benefit pension schemes have been closed to new entrants since 2009, liabilities under these schemes continued to accrue
as a result of the ongoing service of the existing members. In July 2015, the Group decided to close its Irish defined benefit
pension scheme to future accrual and to future liability. Following agreement with the scheme trustees and certain scheme
members, all accrued liabilities, rights and related costs were settled. Once-off final payments amounting to €20 million
were made to settle the deficit in the scheme, to eliminate the possibility of a claim by the trustees in respect of member
expectations in relation to the scheme and to facilitate transfers to the new defined contribution scheme, including the
payment for all members of enhanced transfer values calculated by the scheme actuary and agreed by the trustees and
members. The Group therefore has no further obligation in relation to that scheme and it is in the process of being wound
up. The Group has established a new defined contribution scheme for the former members of the Irish defined benefit
scheme. The accumulated benefits of each member of the former defined benefit scheme have been transferred to the new
defined contribution scheme by bulk transfer.
Net of a settlement gain of €2.721 million arising on termination under the measurement criteria of IAS 19, a final
contribution of €6.135 million was paid directly into the Irish scheme to eliminate the accounting deficit of €8.856 million
as at 31 July 2015. Regular annual contributions and related costs for the period up to 31 July 2015 amounted to €835,000,
resulting in total contributions in the year to the Irish scheme of €6.97 million. A net exceptional charge of €11.144 million
has been recognised in the income statement (see note 6), being the difference between the €20 million final payments and
the accounting deficit of €8.856 million.
UK legislation provides a very significant level of protection to occupational pension schemes. The Group is therefore more
constrained in its options to limit its exposure in respect of its UK defined benefit scheme. It would not be possible to fully
eliminate the Group’s exposure to this scheme on the same terms as the settlement agreed with the trustees of the Irish
scheme. As explained below an agreement has been in place for a number of years with the trustee of the UK scheme to fund
the past service deficit over an extended period. Agreement has been reached with the trustees to close it to future accrual.
The pension cost expensed in the income statement for the year in respect of the Group’s defined benefit schemes was
€1,065,000, net of a €2,721,000 settlement gain on termination of the Group’s Irish defined benefit scheme (2014:
€2,943,000) and €1,179,000 (2014: €796,000) in respect of the Group’s defined contribution schemes.
Fyffes plc Annual Report 201592
Notes to the Group Financial Statements for the financial year ended 31 December 2015
27. Employee benefits (continued)
The accompanying disclosures relate to all of the Group’s defined benefit retirement schemes in Ireland, the UK and
Continental Europe. The previous full actuarial valuations of these schemes, for the purposes of these disclosures, were
updated to 31 December 2015. A full actuarial valuation was carried out on the UK scheme at 31 October 2012, the result of
which was a deficit of STG£22.6 million. The Group agreed a revised recovery plan with the trustees of that scheme involving
eighteen annual payments of STG£1,000,000 by its UK subsidiary, Fyffes Group Limited, commencing in January 2014,
supported by a guarantee from Fyffes plc. All calculations were carried out by independent actuaries using the projected unit
method. The actuarial reports are not available for public inspection. However, the results of the valuations are advised to
members of the schemes. The schemes’ assets do not include any shareholdings in the Company.
The principal assumptions used by the actuaries were:
Ireland UK Netherlands
2015 2014 2015 2014 2015 2014
Rate of increase in salaries N/A 3.00% 3.25% 3.25% 3.25% 3.00%
Rate of increase in pensions N/A 1.50% 3.00% 3.00% 0.00% 0.00%
Inflation rate N/A 1.50% 3.00% 3.00% 1.75% 1.50%
Discount rate N/A 2.30% 3.80% 3.70% 2.60% 2.30%
The key discount rates used for the valuation of the liabilities of each scheme are based on actuarial advice with reference to
highly rated corporate bonds of comparable maturities to scheme liabilities.
Demographic assumptions
The Group uses certain mortality rate assumptions when calculating scheme obligations. The current assumptions for all
major schemes retain a prudent allowance for future improvements in longevity. The UK scheme uses 80% of S1PMA Heavy
Standard tables, allowing for individual members’ year of birth (CMI 2012 projections with a long term rate of 1.25% per
annum). This represents the following in terms of life expectancies:
Ireland
Years
UK
Years
Netherlands
Years
Life expectancy for 65 year old pensioner
Male N/A 22.3 22.2
Female N/A 25.9 24.8
Life expectancy at age 65 for current 40 year old
Male N/A 24.7 24.8
Female N/A 28.3 27.2
Fyffes plc Annual Report 2015 93
Notes to the Group Financial Statements for the financial year ended 31 December 2015
27. Employee benefits (continued)
Sensitivity analysis, scheme duration and projected costs
The table below sets out the impact on the Group’s total defined benefit liabilities (DBO) of movements in the key discount
rate and mortality assumptions:
(Increase)/
Decrease
in DBO
€’000
Discount rate
25 basis point increase 6,718
25 basis point decrease (7,022)
Mortality
Increase of one year 873
Decrease of one year (938)
The weighted average period until benefit payments are paid (scheme duration) is 16 years for the Group’s UK scheme and
19 years for the Dutch scheme.
The Group anticipates that total expense recognised in its income statement in respect of its defined benefit pension
schemes will amount to €2.8 million in 2016 (2015: €3.8 million excluding exceptional settlement gain) and total
contributions will amount to €2.7 million (2015: €3.5 million, excluding the €6.1 million final contribution on settlement of
the Irish scheme).
Analysis of net liability
2015
€’000
2014
€’000
Equities 49,804 58,922
Bonds 50,519 56,504
Property 7,362 10,996
Other (including cash) 27,898 26,534
Fair value of scheme assets 135,583 152,956
Present value of scheme obligations (167,731) (194,404)
Employee benefits liability (32,148) (41,448)
Deferred tax asset 6,466 7,456
Net liability (25,682) (33,992)
Fyffes plc Annual Report 201594
Notes to the Group Financial Statements for the financial year ended 31 December 2015
27. Employee benefits (continued)
Historical information
2015
€’000
2014
€’000
2013
€’000
2012
€’000
2011
€’000
Fair value of scheme assets 135,583 152,956 129,801 123,195 114,317
Present value of scheme obligations (167,731) (194,404) (157,951) (152,759) (135,992)
Net pension liabilities (32,148) (41,448) (28,150) (29,564) (21,675)
Movements in the fair value of scheme assets
Ireland
€’000
UK
€’000
Netherlands
€’000
Total
€’000
Fair value of assets at 1 January 2014 18,685 103,710 7,406 129,801
Interest income on scheme assets 771 4,789 297 5,857
Employer contributions 1,161 2,057 512 3,730
Employee contributions 124 290 - 414
Premiums paid / expenses (40) - (35) (75)
Benefit payments (66) (5,598) (331) (5,995)
Remeasurement of return on scheme assets 1,367 8,368 2,118 11,853
Foreign exchange movements - 7,371 - 7,371
Fair value of assets at 31 December 2014 22,002 120,987 9,967 152,956
Interest income on scheme assets 346 4,777 229 5,352
Employer contributions 6,970 2,257 399 9,626
Employee contributions 72 309 - 381
Premiums paid / expenses (40) - (23) (63)
Benefit payments (39) (6,252) (319) (6,610)
Remeasurement of return on scheme assets 768 (3,715) (545) (3,492)
Settlement payments from scheme assets (30,079) - - (30,079)
Foreign exchange movements - 7,512 - 7,512
Fair value of assets at 31 December 2015 - 125,875 9,708 135,583
Fyffes plc Annual Report 2015 95
Notes to the Group Financial Statements for the financial year ended 31 December 2015
27. Employee benefits (continued)
Movements in the present value of scheme obligations
Ireland
€’000
UK
€’000
Netherlands
€’000
Total
€’000
Value of scheme obligations at 1 January 2014 (22,654) (126,948) (8,349) (157,951)
Current / past service cost (864) (1,000) 134 (1,730)
Interest on scheme obligations (905) (5,803) (327) (7,035)
Employee contributions (124) (290) - (414)
Premiums paid 40 - - 40
Benefit payments 66 5,598 331 5,995
Experience adjustments on scheme liabilities 449 (103) 114 460
Effect of changes in actuarial assumptions (9,586) (12,314) (2,792) (24,692)
Foreign exchange movements - (9,077) - (9,077)
Value of scheme obligations at 31 December 2014 (33,578) (149,937) (10,889) (194,404)
Current / past service cost (844) (1,332) (374) (2,550)
Interest on scheme obligations (450) (5,868) (247) (6,565)
Gain on settlement 2,721 - - 2,721
Employee contributions (72) (309) - (381)
Premiums paid 40 - - 40
Benefit payments 39 6,252 319 6,610
Experience adjustments on scheme liabilities 1,265 843 - 2,108
Effect of changes in actuarial assumptions 800 2,556 549 3,905
Settlement payments from scheme assets 30,079 - - 30,079
Foreign exchange movements - (9,294) - (9,294)
Value of scheme obligations at 31 December 2015 - (157,089) (10,642) (167,731)
Fyffes plc Annual Report 201596
Notes to the Group Financial Statements for the financial year ended 31 December 2015
27. Employee benefits (continued)
Movements in the net (liability) recognised in the balance sheet
Ireland
€’000
UK
€’000
Netherlands
€’000
Total
€’000
Net (liability) at 1 January 2014 (3,969) (23,238) (943) (28,150)
Employer contributions 1,161 2,057 512 3,730
(Expense)/income recognised in income statement (998) (2,014) 69 (2,943)
Recognised in statement of comprehensive income (7,770) (4,049) (560) (12,379)
Foreign exchange movement - (1,706) - (1,706)
Net (liability) at 31 December 2014 (11,576) (28,950) (922) (41,448)
Employer contributions 6,970 2,257 399 9,626
(Expense) recognised in income statement (948) (2,423) (415) (3,786)
Gain on settlement recognised in income statement 2,721 - - 2,721
Recognised in statement of comprehensive income 2,833 (316) 4 2,521
Foreign exchange movement - (1,782) - (1,782)
Net (liability) at 31 December 2015 - (31,214) (934) (32,148)
Defined benefit pension expense recognised in the income statement
2015 Ireland
€’000
UK
€’000
Netherlands
€’000
Total
€’000
Current service costs (844) (1,332) (374) (2,550)
Gain on settlement recognised in income statement 2,721 - - 2,721
Expenses - - (23) (23)
Interest on scheme obligations (450) (5,868) (247) (6,565)
Interest on scheme assets 346 4,777 229 5,352
1,773 (2,423) (415) (1,065)
2014 Ireland
€’000
UK
€’000
Netherlands
€’000
Total
€’000
Current service costs (864) (1,000) (307) (2,171)
Past service credit - - 441 441
Expenses - - (35) (35)
Interest on scheme obligations (905) (5,803) (327) (7,035)
Interest on scheme assets 771 4,789 297 5,857
(998) (2,014) 69 (2,943)
The defined benefit pension expense is recognised under administrative expenses in the income statement, except for the
€2,721,000 gain on settlement arising on termination of the Group’s defined benefit scheme in Ireland which has been
treated as an exceptional item (note 6).
Fyffes plc Annual Report 2015 97
Notes to the Group Financial Statements for the financial year ended 31 December 2015
27. Employee benefits (continued)
Remeasurements recognised in the statement of comprehensive income
2015 Ireland
€’000
UK
€’000
Netherlands
€’000
Total
€’000
Changes in financial assumptions 800 2,556 549 3,905
Experience adjustments on scheme liabilities 1,265 843 - 2,108
Return on scheme assets excluding interest income 768 (3,715) (545) (3,492)
2,833 (316) 4 2,521
Cumulative amounts recognised in equity – 2015 (17,512) (23,316) (2,817) (43,645)
2014
Ireland
€’000
UK
€’000
Netherlands
€’000
Total
€’000
Changes in demographic assumptions (243) - 14 (229)
Changes in financial assumptions (9,343) (12,314) (2,806) (24,463)
Experience adjustments on scheme liabilities 449 (103) 114 460
Return on scheme assets excluding interest income 1,367 8,368 2,118 11,853
(7,770) (4,049) (560) (12,379)
Cumulative amounts recognised in equity – 2014 (20,345) (23,000) (2,821) (46,166)
Share based payments
In September 2007, 4,330,000 options were granted under the Group’s 2007 share option scheme. A further 4,780,000
options were granted under this scheme in September 2009. In October 2012, 3,864,000 options were granted under the
scheme. In March 2015, 2,674,000 options were granted under the scheme. In accordance with the terms of the scheme,
the options when vested are exercisable at the market price at the date of grant.
Share options granted under the scheme only vest when the earnings per share figure in respect of the third or any subsequent
accounting period after the end of the basis year (ie the accounting period preceding the date of the grant) is greater than
the earnings per share figure for the basis year by a percentage which is not less than (on a year on year basis) the annual
percentage increase in the consumer price index plus 5% compounded during that period. Subject to the achievement of this
performance condition, the shares vest three years after grant. The contractual life of the options is 10 years.
Fyffes plc Annual Report 201598
Notes to the Group Financial Statements for the financial year ended 31 December 2015
27. Employee benefits (continued)
Share based payments (continued)
The number and weighted average exercise prices of share options outstanding are as follows:
2015
Weighted
Exercise
Price
€
2014
Weighted
Exercise
Price
€
2015
Number
of
Options
‘000
2014
Number
of
Options
‘000
Options outstanding at beginning of year 0.603 0.582 11,774 13,659
Granted during year 1.184 - 2,674 -
Lapsed during the year - (0.457) - (1,855)
Exercised during the year (0.571) (0.4525) (2,538) (30)
Options outstanding at end of year 0.7399 0.603 11,910 11,774
The average share price for the financial year was €1.3285 (2014: €1.0452) and the year end price was €1.51 (2014: €1.012).
2015
Weighted
Exercise
Price
€
2014
Weighted
Exercise
Price
€
2015
Number
of
Options
‘000
2014
Number
of
Options
‘000
Options exercisable at end of year 0.6110 0.6610 9,236 7,910
The options outstanding at 31 December 2015 had an exercise price in the range of €0.4525 to €1.184 (2014: €0.4525 to
€0.925) and a weighted average contractual life of 5.3 years (2014: 5.2 years).
The fair value of services received in return for share options granted is measured by reference to fair value of the share
options granted. The estimate of the fair value of the services received is measured based on a binomial lattice model.
The contractual life of the options, which is 10 years, is used as an input in this model. Expectations of early exercise are
incorporated into the binominal lattice model and are reflected in the assumptions.
Fyffes plc Annual Report 2015 99
Notes to the Group Financial Statements for the financial year ended 31 December 2015
27. Employee benefits (continued)
Share based payments (continued)
The calculated fair value of share options granted in September 2007, September 2009, October 2012 and March 2015 and
the related assumptions used in the binominal model are as follows:
September
2007
September
2009
October
2012
March
2015
Fair value at measurement date €0.261 €0.155 €0.122 €0.271
Share price at date of grant €0.925 €0.4525 €0.483 €1.184
Exercise price €0.925 €0.4525 €0.483 €1.184
Expected volatility 30% 37.5% 37.5% 37.5%
Option life (years) 8.76 years 9.99 years 9.33 years 9.32 years
Expected dividend yield 2.00% 3.00% 4.00% 2.00%
Risk-free interest rate 4.33% 3.57% 1.565% 0.215%
The expected volatility and option life are expressed as weighted averages in modelling in the binominal lattice model.
The expected volatility is based on the historic volatility of the share price. Share options are granted under a service
condition and a non-market related performance condition, which is the achievement of growth in earnings per share as
set out earlier. The total expense for share options recognised in the income statement was €273,000 (2014: €143,000).
Share options granted in March 2004 lapsed without vesting in March 2014 as the earnings per share performance condition
had not been achieved. Charges of €985,000 had been recognised in previous years in respect of these options and, in
accordance with IFRS 2, these charges were credited back to the income statement in 2014 following their lapsing.
Fyffes plc Annual Report 2015100
Notes to the Group Financial Statements for the financial year ended 31 December 2015
28. Capital commitments and contingencies
(a) Capital commitments
The directors had authorised capital and other expenditure of €23 million (2014: €12 million) at the balance sheet date.
Capital expenditure contracted for at 31 December 2015 amounted to Nil (2014: Nil).
(b) Subsidiaries
In order to avail of the exemption under Section 357 of the Companies Act 2014 the Company has guaranteed the liabilities
of certain of its subsidiaries registered in Ireland. As a result, the following subsidiaries have been exempted from the
provisions of Section 347 and 348 of the Companies Act 2014:
Banana Importers of Ireland Limited Fyffes Renewable Investments Limited
Bernard Dempsey & Co Limited Fyffes Tropical (Ireland) Limited
Coleb Holdings Limited Huntroyde Limited
Fyffes Atlantic Shipping Limited Jack Dolan Limited
Fyffes Banana Processing Limited Kinsealy Farms Limited
Fyffes Bananas North America Limited Motcombe Limited
Fyffes Bananas (Swords) Limited Motik Holdings Limited
Fyffes Florida Property Limited Melvich Limited
Fyffes Fruit Procurement Limited Millerton Limited
Fyffes German Holdings Limited Munster Fruit & Produce Limited
Fyffes Honduras Holdings Limited Southern Fruit Suppliers (Waterford) Limited
Fyffes Management Services Ireland Limited Tropical Fruit Company (Cork) Limited
Fyffes Personnel Services Limited Tropical Fruit Company (Ireland) Limited
Fyffes Secretarial Services Limited
The Company has guaranteed the cash borrowings of subsidiaries under overdraft and loan facilities at 31 December 2015
in the amount of €58,913,000 (2014: €30,734,000). The loan facilities are also guaranteed by certain subsidiary companies
which are borrowers under these facilities. In addition, the Company has guaranteed borrowings by subsidiary companies
under bank guarantee facilities amounting to €6.75 million at 31 December 2015 (2014: €6.4 million).
Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within the
Group, the Company considers these to be insurance arrangements and accounts for them as such. The Company treats
the guarantee contract as a contingent liability until such time as it becomes probable that the Company will be required to
make such a payment under the guarantee contracts with third parties.
(c) Contingencies
From time to time, the Group is involved in other claims and legal actions which arise in the normal course of business. Based
on information currently available to the Company, and legal advice, the directors believe such litigation will not, individually
or in aggregate, have a material adverse effect on the financial statements and that the Group is adequately positioned to
deal with the outcome of any such litigation.
29. Related parties
Identity of related parties
Under IAS 24, Related Party Disclosures, the Group has a related party relationship with its joint ventures and associate.
Transactions with the Group’s joint ventures and associate are set out below.
Fyffes plc Annual Report 2015 101
Notes to the Group Financial Statements for the financial year ended 31 December 2015
29. Related parties (continued)
IAS 24 also requires the disclosure of compensation paid to the Group’s key management personnel. This comprises its
executive and non-executive directors, together with persons discharging managerial responsibility (“PDMR”) as defined in
section 12(8) of the Irish Market Abuse Directive Regulations, being the company secretary.
Remuneration of key management personnel and other transactions
2015
€‘000
2014
€’000
Short term benefits (salary, bonus, incentives) 4,510 4,460
Post employment benefits (pension contribution) 445 489
Share based payment (share option expense/(credit)) 130 (22)
Total 5,085 4,927
In accordance with IAS 19, Employee Benefits, the pension expense or credit recognised in the Group’s income statement
for these key management personnel amounted to a credit of €609,000 net of the exceptional gain on settlement of the
Irish scheme (2014: expense of €420,000) compared to the cash contributions above of €445,000 (2014: €489,000). As
explained in more detail in the Compensation Committee report on page 39, a final payment of €20 million was made to
settle the deficit in the Group’s Irish defined benefit pension scheme, to eliminate the possibility of claim by the trustees
in respect of member expectations in relation to the scheme and to facilitate transfers to the new defined contribution
scheme. Including the portion of this payment attributable to them, total pension and related payments on behalf of the
key management personnel in 2015 amounted to €10.5 million. The actuarial gain/(loss) recognised in the statement of
comprehensive income in respect of the pension benefits of these key management personnel for 2015 amounted to a
gain of €1,215,000 (2014: loss of €3,556,000). Details of the remuneration of the Company’s individual directors, together
with the number of Fyffes plc shares owned by them and their outstanding share options are set out in the compensation
committee report on pages 38 to 43.
During 2015, the Group acquired a number of fork lift and pallet trucks for use in its UK operations, at a total cost of
€214,000 (2014: €222,000) on normal commercial terms from a subsidiary of a business jointly controlled by J D McCourt,
who is a non-executive director of Fyffes plc. There was no outstanding payable in this regard at 31 December 2015.
Related party transactions with joint ventures and associate
The Group trades in the normal course of its business, in some situations under long term supply contracts, with its joint
ventures and associate. The Group also leases premises from its 40% owned associate, Balmoral International Land Holdings
plc (see note 24). A summary of transactions with these related parties is as follows:
2015
Revenue
€’000
2014
Revenue
€’000
2015
Purchases
€’000
2014
Purchases
€’000
Joint ventures 146,357 143,200 821 1,025
Associate 95 69 1,944 2,264
146,452 143,269 2,765 3,289
During 2014, the Group paid STG£2,325,000 to purchase a distribution centre in the UK it had been leasing from Balmoral.
Fyffes also terminated a lease with Balmoral on another distribution centre in the UK following the construction by the
Group of a new replacement premises. The amounts due from and to joint ventures and associate at the year end are
disclosed, in aggregate, in notes 17 and 22 respectively. The Group’s significant joint ventures and associate are set out on
pages 118 to 119.
Fyffes plc Annual Report 2015102
Notes to the Group Financial Statements for the financial year ended 31 December 2015
30. D
eriv
ativ
es a
nd
oth
er fi
nan
cial
inst
rum
ents
Fair
val
ues
of
fin
anci
al a
sset
s an
d li
abili
ties
In r
espe
ct o
f th
e fin
anci
al a
sset
s an
d lia
bilit
ies
belo
w, t
he f
ollo
win
g ta
ble
sets
out
the
car
ryin
g am
ount
s in
the
Gro
up b
alan
ce s
heet
and
the
ir re
spec
tive
fair
valu
es, i
nclu
ding
the
rele
vant
fai
r va
lue
hier
arch
y:
No
te
At
fair
val
ue
€’00
0
Loan
s &
rece
ivab
les
€’00
0
Ava
ilab
le
for
sale
€’00
0
Liab
iliti
es
at a
mo
rtis
ed
cost
€’00
0
Tota
l
carr
yin
g
amo
un
t
€’00
0
Fair
Val
ue
Leve
l 1
Fair
Val
ue
Leve
l 2
Fair
Val
ue
Leve
l 3
Fair
Val
ue
Tota
l
31 D
ecem
ber
201
5
Fin
anci
al a
sset
s
Equi
ty in
vest
men
ts14
16-
--
1616
--
16
Trad
e an
d ot
her
rece
ivab
les
17-
113,
203
--
113,
203
--
--
Cas
h an
d ca
sh e
quiv
alen
ts a
nd s
hort
ter
m d
epos
its18
-22
,759
--
22,7
59-
--
-
Hed
ging
3,11
8-
--
3,11
8-
3,11
8-
3,11
8
Fin
anci
al a
sset
s3,
134
135,
962
--
139,
096
163,
118
-3,
134
Fin
anci
al li
abili
ties
Trad
e pa
yabl
es a
nd o
ther
pay
able
s22
--
-(1
08,3
91)
(108
,391
)-
--
-
Inte
rest
bea
ring
loan
s an
d bo
rrow
ings
21-
--
(62,
040)
(62,
040)
-*(
61,4
15)
-*(
61,4
15)
Def
erre
d co
ntin
gent
con
side
ratio
n23
(1,1
94)
--
-(1
,194
)-
-(1
,194
)(1
,194
)
Hed
ging
(net
)30
(7,7
86)
--
-(7
,786
)-
(7,7
86)
-(7
,786
)
Fin
anci
al li
abili
ties
(8,9
80)
--
(170
,431
)(1
79,4
11)
-(6
9,20
1)(1
,194
)(7
0,39
5)
31 D
ecem
ber
201
4
Fin
anci
al a
sset
s
Equi
ty in
vest
men
ts14
16-
--
1616
--
16
Trad
e an
d ot
her
rece
ivab
les
17-
91,6
83-
-91
,683
--
--
Cas
h an
d ca
sh e
quiv
alen
ts a
nd s
hort
ter
m d
epos
its18
-22
,069
--
22,0
69-
--
-
Hed
ging
306,
379
--
-6,
379
-6,
379
-6,
379
Fin
anci
al a
sset
s6,
395
113,
752
--
120,
147
166,
379
-6,
395
Fin
anci
al li
abili
ties
Trad
e pa
yabl
es a
nd o
ther
pay
able
s22
--
-(9
1,66
3)(9
1,66
3)-
--
-
Inte
rest
bea
ring
loan
s an
d bo
rrow
ings
21-
--
(33,
788)
(33,
788)
-*(
28,4
49)
-*(
28,4
49)
Def
erre
d co
ntin
gent
con
side
ratio
n23
(1,5
78)
--
-(1
,578
)-
-(1
,578
)(1
,578
)
Hed
ging
30(1
,029
)-
--
(1,0
29)
-(1
,029
)-
(1,0
29)
Fin
anci
al li
abili
ties
(2,6
07)
--
(125
,451
)(1
28,0
58)
-(2
9,47
8)(1
,578
)(3
1,05
6)
*Exc
lude
s ba
nk o
verd
raft
s
Fyffes plc Annual Report 2015 103
Notes to the Group Financial Statements for the financial year ended 31 December 2015
30. Derivatives and other financial instruments (continued)
Fair value hierarchy
In accordance with IFRS 7 Financial Instruments: Disclosures, the Group uses the following hierarchy for determining and
disclosing the fair value of financial instruments by valuation technique. There are no financial assets or liabilities valued in
accordance with the Level 1 hierarchy (quoted market prices) other than equity investments with a carrying value of €16,000.
Most of the Group’s financial assets and liabilities are valued under Level 2 being directly observable market inputs, other
than quoted prices for similar instruments. The Group’s deferred contingent consideration is categorised under Level 3, in
accordance with the terms of the relevant acquisition contracts, as there are no other observable market data.
Estimation of fair values
Set out below are the major methods and assumptions used in estimating the fair values of the financial assets and liabilities
disclosed above.
The following table shows the valuation techniques used in measuring Level 2 and Level 3 fair values, as well as the
significant unobservable inputs used.
Financial instruments measured at fair value
Description Valuation technique Significant unobservable inputs
Deferred contingent consideration Discounted cash flows Not applicable
Hedging instruments Market comparison technique:
the fair values are based on
broker quotes
Not applicable
Equity investments
When market values are available, fair values are determined by reference to the bid market price for such investments
without any deduction for transaction costs.
Short term bank deposits and cash and cash equivalents
For short term bank deposits and cash and cash equivalents, with a remaining maturity of less than six months, the nominal
amount is deemed to reflect fair value.
Trade and other receivables / payables
For receivables and payables with a remaining life of less than six months or demand balances, the nominal amount is
deemed to reflect fair value. All other receivables and payables are discounted to determine the fair value.
Derivatives (currency options and forward currency or fuel contracts)
Currency options are marked to market using quotes from financial institutions. Forward currency or fuel contracts are either
marked to market using market prices or by discounting the contractual forward price and deducting the current spot rate.
Interest bearing loans and borrowings
For interest bearing loans and borrowings with a contractual repricing date of less than one year, the nominal amount is
deemed to reflect fair value. For loans with a repricing date of greater than one year, the fair value is calculated based on the
expected future principal and interest cash flows.
Fyffes plc Annual Report 2015104
Notes to the Group Financial Statements for the financial year ended 31 December 2015
30. Derivatives and other financial instruments (continued)
Risk exposures
The Group’s multinational operations expose it to different financial risks that include foreign exchange rate risks, credit risks,
liquidity risks and interest rate risks. The Group also periodically manages its exposure to movement in fuel costs through
hedging instruments. Fyffes has a risk management programme in place which seeks to limit the impact of these risks on the
financial performance of the Group as explained below. The Board has determined the policies for managing these risks. It is
the policy of the Board to manage these risks in a non-speculative manner.
Foreign exchange risk
While a significant portion of the Group’s distribution and marketing businesses are based in Eurozone economies, it also has
significant operations in the UK and, as a result, the consolidated balance sheet is exposed to Sterling currency fluctuations.
In addition, the Group has substantial production and procurement operations in Central and South America and selling
and distribution businesses in the US. The Group also has large transactional currency risk as a significant portion of costs,
particularly cost of fruit, shipping and fuel, are routinely denominated in US Dollars. The Group uses forward foreign
exchange contracts and, from time to time, options to hedge some of its US Dollar transactional risk, all currently with a
maturity of less than two years at the years end. The percentage of estimated future purchases that are hedged can vary at
any point in time and depends on prevailing market conditions.
These currency risks are monitored by the Group’s Treasury Committee on an ongoing basis and managed as deemed
appropriate by utilising a combination of spot and forward currency contracts and foreign currency options. The Group does
not enter spot or forward contracts on a speculative basis.
Credit and liquidity risk
The Group has detailed procedures for monitoring and managing the credit risk related to its trade receivables including
the use of credit limits together with weekly reporting and review by senior management of all trade receivables. There is
no significant concentration of risk in a small number of customers and the Group’s bad debt experience is relatively good.
Cash and short term bank deposits are usually invested with institutions of the highest credit rating, or state guaranteed
institutions, with limits on amounts held with individual banks or institutions at any one time. It is also the policy of the
Group to have adequate committed undrawn facilities available at all times to cover unanticipated financing requirements.
The maximum exposure to credit risk is represented by the carrying amount of the financial assets in the balance sheet.
Interest rate risk
The Group’s balance sheet contains both interest bearing assets and interest bearing liabilities. At 31 December 2015, the
Group had gross cash balances of €22.8 million (2014: €22.1 million) and gross debt of €62.0 million (2014: €33.8 million).
In general, the approach employed by the Group to manage its interest rate exposure is to maintain the majority of its cash,
short term bank deposits and interest bearing borrowings on floating rates.
Fyffes plc Annual Report 2015 105
Notes to the Group Financial Statements for the financial year ended 31 December 2015
30. Derivatives and other financial instruments (continued)
Accounting for derivatives and hedging activities
The fair value of derivatives is set out in the following table:
Assets
2015
€‘000
Liabilities
2015
€’000
Forward currency contracts 3,118 (1,376)
Forward fuel contracts - (6,410)
3,118 (7,786)
Assets
2014
€‘000
Liabilities
2014
€’000
Forward currency contracts 6,250 -
Forward fuel contracts 129 (1,029)
6,379 (1,029)
The accounting treatment of derivatives depends on their designation as hedges. The Group has designated hedges of
highly probable forecasted future transactions as cash flow hedges. In order to qualify for hedge accounting, the Group is
required to document the relationship between the items being hedged and the hedging instrument and demonstrate, at
inception, that the hedge relationship will be highly effective on an ongoing basis. The hedge relationship must be tested for
effectiveness at subsequent reporting dates.
Gains and losses on cash flow hedges that are determined to be highly effective are recognised in other comprehensive
income to the extent that they are effective. When the forecasted transaction occurs, the gains or losses deferred in equity
are released to the income statement. Ineffective portions of the gain or loss on each hedging instrument are recognised
immediately in the income statement. The cash flows with respect to the cash flow hedges are expected to occur in two
years (2014: two years) following the balance sheet date and relate to hedges of produce purchases.
The following table indicates the periods in which the cash flows associated with derivatives that are cash flow hedges are
expected to occur.
2015 2014
Total
€‘000
<6
months
€’000
6-12
months
€’000
1-2
years
€’000
Total
€’000
<6
months
€’000
6-12
months
€’000
1-2
years
€’000
Forward fuel contracts (7,915) (3,958) (3,957) - (2,181) (792) (792) (597)
Foreign currency contracts 3,261 1,473 1,736 52 6,295 3,484 2,811 -
(4,654) (2,485) (2,221) 52 4,114 2,692 2,019 (597)
At the balance sheet date, these contracts represented 36% (2014: 35%) of forecasted dollar purchases for the following
year. The periods in which cash flows associated with derivatives that are cash flow hedges are expected to impact profit
and loss are not materially different to the periods in which the cash flows actually occur, due to the short time lag between
the purchase of US Dollar denominated inputs and the subsequent sale of the goods.
Fyffes plc Annual Report 2015106
Notes to the Group Financial Statements for the financial year ended 31 December 2015
30. Derivatives and other financial instruments (continued)
Accounting for derivatives and hedging activities (continued)
During 2015, a credit of €2,587,000 (2014: credit of €11,369,000) was recognised in the hedging reserve in respect of
derivative instruments. Of this, a credit of €12,849,000 (2014: credit of €2,012,000) was reclassified to the income statement
in respect of contracts maturing in the year (see statement of comprehensive income).
Interest risk
The interest rate profile of the Group’s interest bearing financial instruments was:
2015
€‘000
2014
€’000
Variable rate:
Bank loans/overdrafts (58,913) (30,734)
Cash and cash equivalents including short term deposits 22,759 22,069
(36,154) (8,665)
Fixed rate:
Interest bearing other payables - -
Finance leases (3,127) (3,054)
(3,127) (3,054)
Bank overdrafts in certain wholly owned subsidiaries amounting to €0.6 million at 31 December 2015 (2014: €5.3 million)
are guaranteed by Fyffes plc. Bank loans outstanding at 31 December 2015 in certain wholly owned subsidiaries guaranteed
by Fyffes plc and other subsidiaries which are potential borrowers under these facilities, consist of a €27 million loan at a rate
of 1.37%, an €8 million loan at a rate of 1.45%, a €15 million loan at a rate of 0.87% and a US$9 million loan at 1.62%. At
31 December 2015, the Group had net debt of €39,281,000 (2014: net debt of €11,719,000).
Cash flow sensitivity analysis for variable rate instruments
At 31 December 2015, the average interest rate being earned on the Group’s cash balances was 0.2% (2014: 0.4%) and the
average rate paid on its debt was 1.29% (2014: 1.32%).
An increase or decrease of 50 basis points in interest rates at the reporting date would have had the following effect on
profit or loss and equity. This analysis assumes that all other variables, in particular foreign exchange rates, remain constant.
Profit & Loss
50 Point
Increase
€’000
50 Point
Decrease
€’000
Combined
31 December 2015 – Variable rate instruments (451) (89)
31 December 2014 – Variable rate instruments (23) 63
Fyffes plc Annual Report 2015 107
Notes to the Group Financial Statements for the financial year ended 31 December 2015
30. Derivatives and other financial instruments (continued)
Liquidity risk
2015 Carrying
amount
€’000
Contractual
cash flows
€’000
<6
Months
€’000
6-12
Months
€’000
+1
Year
€’000
Bank loans and overdrafts 58,913 59,692 59,692 - -
Finance leases 3,127 3,127 447 447 2,233
Trade and other payables – current 104,611 104,611 104,611 - -
Trade and other payables – non-current 3,780 3,780 - - 3,780
Hedging instruments (net) 4,668 4,654 2,485 2,221 (52)
175,099 175,864 167,235 2,668 5,961
2014 Carrying
amount
€’000
Contractual
cash flows
€’000
<6
Months
€’000
6-12
Months
€’000
+1
Year
€’000
Bank loans and overdrafts 30,734 31,082 22,848 - 8,234
Finance leases 3,054 3,054 611 610 1,833
Trade and other payables – current 83,761 83,761 83,761 - -
Trade and other payables – non-current 7,902 7,902 - - 7,902
Hedging instruments (net) (5,350) (4,114) (2,692) (2,019) 597
120,101 121,685 104,528 (1,409) 18,566
It is the policy of the Group to have adequate committed undrawn facilities available at all times to cover unanticipated
financing requirements. The Group has in place approved borrowing facilities of up to €100 million (2014: €50 million),
comprising two €35 million five year revolving credit facilities and two €15 million one year uncommitted revolving loans,
plus a US$9 million (2014: US$9 million) one year term loan, in addition to €20.4 million (2014: €20.1 million) in cash
overdraft facilities.
Fyffes plc Annual Report 2015108
Notes to the Group Financial Statements for the financial year ended 31 December 2015
30. Derivatives and other financial instruments (continued)
Credit risk
The carrying amount of financial assets represents the maximum credit exposure. The following table details the aging of
trade receivables and trade receivables due from joint ventures:
2015 2014
Gross
€’000
Impairment
€’000
Gross
€’000
Impairment
€’000
Not past due 85,307 (1,847) 65,168 -
Past due 0-30 days 9,943 (392) 7,095 (429)
Past due 31-120 days 776 (151) 884 (157)
Past due 121-365 days 183 (148) 296 (266)
Past due +365 days 120 (120) 1,112 (1,112)
Total 96,329 (2,658) 74,555 (1,964)
The following table details the aging of other receivables including loans and advances to suppliers and non-trade balances
with joint ventures:
2015 2014
Gross
€’000
Impairment
€’000
Gross
€’000
Impairment
€’000
Not past due 28,635 (9,103) 27,354 (8,262)
Analysis of movement in impairment provisions:
2015 2014
Trade
receivables
€’000
Other
receivables
€’000
Trade
receivables
€’000
Other
receivables
€’000
At beginning of year (1,964) (8,262) (557) (5,992)
Increase (503) (5,083) (1,341) (6,926)
Released/utilised - 4,965 - 4,965
Foreign exchange (191) (723) (66) (309)
At end of year (2,658) (9,103) (1,964) (8,262)
Fyffes plc Annual Report 2015 109
Notes to the Group Financial Statements for the financial year ended 31 December 2015
30. Derivatives and other financial instruments (continued)
Currency risk
The following table details the Group’s exposure to foreign currency risk at the balance sheet date.
2015 2014
Euro
€’000
Sterling
€’000
US Dollar
€’000
Euro
€’000
Sterling
€’000
US Dollar
€’000
Trade receivables - 376 753 - 276 9,440
Other receivables - 1 16,666 - - 16,159
Cash and cash equivalents - 651 3,117 - 314 9,887
Interest bearing loans - - (8,793) - - (7,395)
Trade payables - (158) (26,067) - (196) (19,975)
Other payables - (13) (1,542) - 28 (290)
Hedging instruments - 1,186 557 - 3,717 2,534
- 2,043 (15,309) - 4,139 10,360
Sensitivity analysis
A 5% strengthening or weakening of the euro against the US Dollar and Sterling, based on outstanding assets and liabilities
at year end, would have increased/(decreased) equity and profit or loss by the amounts shown below. This analysis assumes
that all other variables, in particular interest rates, remain constant.
5% Strengthening 5% Weakening
Equity
€’000
Profit & Loss
€’000
Equity
€’000
Profit & Loss
€’000
31 December 2015
US Dollar (10,426) (1,739) 11,523 1,923
Sterling (860) (860) 950 950
31 December 2014
US Dollar (8,000) (1,415) 8,842 1,564
Sterling (387) (387) 428 428
Fyffes plc Annual Report 2015110
Notes to the Group Financial Statements for the financial year ended 31 December 2015
31. Accounting estimates and judgements and comparative figures
The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and reported amounts of assets and liabilities, income and
expenses.
Management discussed with the audit committee the development, selection and disclosure of the Group’s critical
accounting policies and estimates and the application of these policies and estimates.
Particular areas which are subject to accounting estimates and judgements in these financial statements are areas such as
impairment testing, post employment benefits including discount rates, fair values of properties, fair values of biological
assets, carrying value of investments, impairment provisions and in relation to judgemental provisions and accruals.
Impairment testing of assets, particularly of goodwill and intangibles, involves estimating the future cash flows for a cash
generating unit and an appropriate discount rate to determine a recoverable value. The estimation of employee benefit costs
requires the use of actuaries in the determination of appropriate assumptions such as discount rates and expected future
rates of return as set out in note 27.
Comparative amounts have been regrouped, where necessary, on the same basis as in the current year.
32. Subsequent events
There have been no material events subsequent to the year end and up to 26 February 2016, the date of approval of the
financial statements by the Board.
Fyffes plc Annual Report 2015 111
Company Financial Statementsfor the financial year ended 31 December 2015
Balance Sheetas at 31 December 2015
Notes 2015
€’000
2014
€’000
Assets
Non-current
Property, plant and equipment 33 18 37
Equity investments 34 274,607 274,607
Total non-current assets 274,625 274,644
Current
Trade and other receivables 35 118,319 111,963
Cash and cash equivalents 36 21 12
Total current assets 118,340 111,975
Total assets 392,965 386,619
Equity
Called-up share capital 19,698 19,546
Share premium 100,414 99,117
Other reserves 37 63,692 63,770
Retained earnings 105,023 111,907
Total equity 288,827 294,340
Current liabilities
Trade and other payables 38 104,138 92,279
Total equity and liabilities 392,965 386,619
On behalf of the Board
D V McCann T G Murphy
Executive Chairman Finance Director 26 February 2016
Fyffes plc Annual Report 2015112
Statement of Movement in Equity
Share
capital
€’000
Share
premium
€’000
Capital
conversion
reserve
€’000
Capital
redemption
reserve
€’000
Share
option
reserve
€’000
Own
shares
reserve
€’000
Retained
earnings
€’000
Total
€’000
Balance at 1 January 2014 19,544 99,105 1,034 73,073 2,626 (9,083) 108,590 294,889
Profit for financial year - - - - - - 9,888 9,888
Share options exercised 2 12 - - - - - 14
Unvested share options credited
to income statement
- - - - (985) - - (985)
Equity settled transactions - - - - 143 - - 143
Acquisition of own shares - - - - - (3,038) - (3,038)
Dividends to shareholders - - - - - - (6,571) (6,571)
Balance at 31 December 2014 19,546 99,117 1,034 73,073 1,784 (12,121) 111,907 294,340
Profit for financial year - - - - - - 129 129
Share options exercised 152 1,297 - - (351) - 351 1,449
Equity settled transactions - - - - 273 - - 273
Dividends to shareholders - - - - - - (7,364) (7,364)
Balance at 31 December 2015 19,698 100,414 1,034 73,073 1,706 (12,121) 105,023 288,827
Company Financial Statements for the financial year ended 31 December 2015
Fyffes plc Annual Report 2015 113
Company Financial Statements for the financial year ended 31 December 2015
Cash Flow Statement
2015
€’000
2014
€’000
Operating activities
Profit for financial year 129 9,888
Adjustments for:
Depreciation on property, plant and equipment 19 24
Equity settled compensation 273 (842)
Interest income (205) (196)
Impairment provision 6,285 -
Movement in trade and other receivables (12,641) 34,345
Movement in trade payables, other payables and provisions 11,859 (34,027)
Interest received 205 196
Cash flow from operating activities 5,924 9,388
Investing activities
Acquisition of property, plant and equipment - (12)
Cash flow from investing activities - (12)
Financing activities
Proceeds from the issue of share capital 1,449 14
Acquisition of own shares - (3,038)
Dividends to Company equity shareholders (7,364) (6,571)
Cash flow from financing activities (5,915) (9,595)
Net increase/(decrease) in cash and cash equivalents 9 (219)
Cash and cash equivalents, including bank overdrafts at beginning of year 12 231
Cash and cash equivalents, including bank overdrafts at end of year 21 12
Fyffes plc Annual Report 2015114
Notes to the Company Financial Statements for the financial year ended 31 December 2015
33. Property, plant and equipment
Plant and
equipment
2015
€‘000
Plant and
equipment
2014
€’000
Cost
Balance at beginning of year 2,004 1,992
Additions - 12
Balance at end of year 2,004 2,004
Depreciation and impairment losses
Balance at beginning of year 1,967 1,943
Depreciation charge for the year 19 24
Balance at end of year 1,986 1,967
Carrying amount
Balance at beginning of year 37 49
Balance at end of year 18 37
34. Equity investments
Investment in
subsidiaries
€’000
Other
investments
€’000
Total
€’000
Balance at 31 December 2014 and 2015 274,595 12 274,607
The Group’s significant subsidiaries, joint ventures and associates are set out on pages 118 and 119.
35. Trade and other receivables
2015
€‘000
2014
€’000
Current
Amounts due from subsidiaries 118,228 111,875
Other receivables/prepayments 91 88
118,319 111,963
Fyffes plc Annual Report 2015 115
Notes to the Company Financial Statements for the financial year ended 31 December 2015
36. Cash and cash equivalents
2015
€‘000
2014
€’000
Cash and cash equivalents per balance sheet 21 12
Bank overdrafts - -
Cash and cash equivalents in the cash flow statement 21 12
37. Other reserves
2015
€‘000
2014
€’000
Capital conversion reserve 1,034 1,034
Capital redemption reserve 73,073 73,073
Share option reserve 1,706 1,784
Own shares reserve (12,121) (12,121)
63,692 63,770
38. Trade and other payables
2015
€‘000
2014
€’000
Current
Amounts payable to subsidiaries 103,128 86,319
Accruals and deferred income 759 5,701
Other payables 251 259
104,138 92,279
Fyffes plc Annual Report 2015116
Notes to the Company Financial Statements for the financial year ended 31 December 2015
39. Related party transactions
The Company has a related party relationship with its subsidiaries, joint ventures, associates and with the directors of the
Company. Details of the remuneration of the Company’s individual directors, together with the number of Fyffes plc shares
owned by them and their outstanding share options are set out in the compensation committee report on pages 38 to 43.
2015
€’000
2014
€’000
Net income from subsidiaries 205 196
40. Employee benefits
The aggregate employee costs for the Company were as follows:
2015
€’000
2014
€’000
Wages and salaries 402 402
Share option expense/(credit) 273 (842)
675 (440)
The Company has no direct employees. The wages and salaries figure represents the cost of non-executive directors.
41. Auditor’s remuneration
Fees paid to the auditor of the parent entity of the Group for the year amounted to:
2015
€’000
2014
€’000
Audit services 10 10
Taxation services 12 12
Other non-audit services 2 2
Fyffes plc Annual Report 2015 117
Notes to the Company Financial Statements for the financial year ended 31 December 2015
42. Financial instruments and guarantees
The average interest rate at the year end on the Company’s net cash was Nil (2014: Nil). Interest rate sensitivity is not
applicable. At the year end, all trade and other payables and interest bearing loans had contractual cash flows equalling
their carrying value and were all due within six months. The same applied at 31 December 2014. At 31 December 2015
and 31 December 2014, all amounts due from subsidiaries, joint ventures and other receivables were not past due. At 31
December 2015, the Company had net assets of €3,497,000 denominated in Sterling (2014: €3,357,000) and €42,552,000
denominated in US Dollars (2014: €24,972,000). At the year end, a 5% strengthening of euro versus Sterling would have
reduced profit by €167,000 (2014: €160,000) and a 5% weakening of euro versus Sterling would have increased profit by
€184,000 (2014: €177,000). At the year end, a 5% strengthening of the euro versus the US Dollar would have reduced
profit by €2,026,000 (2014: €1,189,000) and a 5% weakening of euro versus the US Dollar would have increased profit by
€2,240,000 (2014: €1,314,000).
The Company has guaranteed the cash borrowings of subsidiaries under overdraft and loan facilities at 31 December 2015
in the amount of €58,913,000 (2014: €30,734,000). In addition, the Company has guaranteed borrowings by subsidiary
companies under bank guarantee facilities amounting to €6.75 million at 31 December 2015 (2014: €6.4 million). The
Company has also issued guarantees in favour of the Trustees of the MNOPF as explained in Note 23 and in favour of the
Trustees of the Group’s UK defined benefit pension scheme as explained in Note 27.
Fyffes plc Annual Report 2015118
Notes to the Group Financial Statements for the financial year ended 31 December 2015
43. Significant subsidiaries, joint ventures and associates
The principal areas of operation are the countries of incorporation.
Subsidiaries Principal activity Group share %
Incorporated in Ireland
Banana Importers of Ireland Limited* Tropical produce distributor 87.2
Fyffes International Holdings Limited* Investment holding company 100
Fyffes International Tropical produce procurement 100
Fyffes Fruit Procurement Limited Tropical produce procurement 76
Fyffes Tropical Ireland Limited Tropical produce distributor 100
Fyffes Atlantic Shipping Limited Distribution 100
Fyffes Bananas (Swords) Limited Tropical produce distributor 100
The registered office of all the above is 29 North Anne Street, Dublin 7, Ireland.
Incorporated in the United Kingdom
FII Holdings Limited* Investment holding company 100
Fyffes Group Limited Tropical produce distributor 100
The registered office of all of the above is Houndmills Industrial Estate, Houndmills Road, Basingstoke, Hampshire RG21 6XL,
United Kingdom.
Incorporated in The Netherlands
Fyffes BV (formerly Velleman & Tas International) Tropical produce distributor 100
Fyffes Holdings BV Investment holding company 100
The registered office of all of the above is Marconistraat 19, 3029 AE Rotterdam, The Netherlands.
Incorporated in Germany
Fyffes GmbH* Investment holding company 100
J A Kahl & Co Investment holding company 100
The registered office of all of the above is Bauernbrauweg 1, 81369, Munich, Germany.
Incorporated in the United States of America
Fyffes Inc Investment holding company 100
Fyffes Tropical Produce LLC (formerly Cobalt LLC) Tropical produce distributor 100
Sol Group Marketing Company Inc Tropical produce distributor 100
The registered office of Fyffes Inc and Fyffes Tropical Produce LLC is 550 Biltmore Way, Suite 730, Coral Gables, Florida,
33134, USA. The registered office of Sol Group Marketing Company Inc is 1751 SW 8th Street, Pompano Beach, Florida,
33069, USA.
Fyffes plc Annual Report 2015 119
Notes to the Group Financial Statements for the financial year ended 31 December 2015
43. Significant subsidiaries, joint ventures and associates (continued)
Incorporated in Jersey
Fyffes Windward Holdings Limited* Investment holding company 100
Fyffes Caribbean Limited Investment holding company 100
The registered office of all of the above is Barette Commercial Centre, Route du Mont Mado, St John, Jersey.
Incorporated in Costa Rica
Ananas Export Company SA Pineapple production 100
The registered office is San Rafael de Rio Cuarto Grecia, Alajuela, Costa Rica.
Associates Principal activity Group share %
Incorporated in Ireland
Balmoral International Land Holdings plc Property holding company 40
The registered office is 1 Stokes Place, St Stephen’s Green, Dublin 2, Ireland.
Joint Ventures Principal activity Group share %
Incorporated in the United Kingdom
Windward Isles Banana Company (UK) Limited Investment holding company 50
The registered office is Little Park Farm Road, Segensworth, Fareham, Hampshire, PO15 5TD, United Kingdom.
Incorporated in Germany
Internationale Fruchtimport Gesellschaft Weichert GmbH &
Co KG
Tropical produce distributor 80(i)
The registered office is Bankstrasse 28, 20097, Hamburg, Germany.
Fruchtimport vanWylick GmbH Fresh produce distributor 25(ii)
The registered office is Rather Strasse 25, 40476 Dusseldorf, Germany.
Incorporated in the United States of America
Turbana Corporation Tropical produce distributor 50
The registered office is 550 Biltmore Way, Suite 730, Coral Gables, FL 33134, USA.
A full list of subsidiaries, joint ventures and associates is included with the Company’s Annual Return filed with the
Companies Registration Office, Dublin, Ireland.
* Subsidiaries owned directly by Fyffes plc.
(i) While the Group has a participating interest in excess of 50% in this entity, it shares control with other partners.
(ii) In January 2015, Fyffes sold 8.3% of its investment in Fruchtimport vanWylick GmbH, reducing its shareholding to 25%.
Fyffes plc Annual Report 2015120
NOTICE IS HEREBY GIVEN that the Annual General Meeting
(“AGM”) of Fyffes plc (the “Company”), which is listed on the
AIM market in London and the ESM market in Dublin, will be
held at the Ballsbridge Hotel, Pembroke Road, Ballsbridge, Dublin
4 on 29 April 2016 at 11.00am for the following purposes:
1. To receive and consider the Company’s Financial
Statements for the year ended 31 December 2015 and the
reports of the directors and auditor thereon, and to review
the Company’s affairs.
2. To confirm the interim dividend and declare a final dividend
of 1.924 cent per share on the ordinary shares for the year
ended 31 December 2015.
3. By separate resolutions to re-elect as directors the
following who retire in accordance with the Articles of
Association and, being eligible, offer themselves for re-
election:
(A) T G Murphy
(B) R B Johnston
(C) J D McCourt
4. To authorise the directors to fix the remuneration of the
auditor for the year ending 31 December 2016.
As special business to consider and, if thought fit,
pass the following resolutions:-
5. AS A SPECIAL RESOLUTION:
“That sub-paragraph (i) of Article 7(d) of the Articles of
Assoication be amended by:
(a) the insertion of the words “open offer or” before the
words “rights issue” in the first line of that sub-para-
graph; and
(b) the insertion of the words “provided that the allotment
of equity securities in excess of one-third of existing
issued shares should be applied only to rights issues in
favour of Ordinary Shareholders as permited in this ar-
ticle” after the words “fractional entitlements or other-
wise” in the last line of that sub-paragraph.”
6. AS AN ORDINARY RESOLUTION:
“That the directors of Fyffes plc, which is listed on the
AIM and ESM markets in London and Dublin, are hereby
unconditionally authorised to exercise all the powers of the
Company to allot relevant securities (within the meaning of
Section 1021 of the Companies Act 2014):
(a) up to an aggregate nominal amount of €6,572,599
(109,543,314 shares) being equivalent to approximately
33% of the aggregate nominal value of the issued share
capital of the Company; and
(b) up to an aggregate nominal amount of €13,145,198
(219,086,627 shares) (after deducting from such limit
any relevant securities allotted under paragraph (a)
above) being equivalent to approximately 66% of the
aggregate nominal value of the issued share capital
of the Company, provided that (i) they are equity
securities (within the meaning of section 1023(1) of
the Companies Act 2014) and (ii) they are offered by
way of a rights issue to holders of ordinary shares on
the register of members at such record dates as the
directors may determine where the equity securities
respectively attributable to the interests of the ordinary
shareholders are proportionate (as nearly as may be
practicable) to the respective numbers of ordinary shares
held by them on any such record dates, but subject to
such exclusions or other arrangements as the directors
may deem necessary or expedient to deal with legal or
practical problems in respect of overseas shareholders,
fractional entitlements or otherwise.
The authority hereby conferred shall expire at the earlier
of the close of business on the date of the next AGM after
the passing of this resolution or 29 July 2017 provided
however that the Company may before such expiry make
an offer or agreement which would or might require
relevant securities to be allotted after such expiry and the
directors may allot relevant securities in pursuance of such
offer or agreement as if the authority hereby conferred had
not expired.”
7. AS A SPECIAL RESOLUTION:
“That pursuant to Article 7(d) of the Articles of Association
and Sections 1022 and 1023 of the Companies Act 2014
the directors of Fyffes plc, which is listed on the AIM and
ESM markets in London and Dublin, are hereby empowered
to allot equity securities (as defined by Section 1023
of that Act) for cash pursuant to the authority to allot
relevant securities conferred on the directors by resolution
6 above in the notice of this meeting as if sub-section
(1) of Section 1022 of that Act did not apply to any such
allotment provided that this power shall be limited to the
matters provided for in Article 7(d)(i) and (ii) of the Articles
of Association and provided further that the aggregate
nominal value of any shares which may be allotted pursuant
to Article 7(d)(ii) may not exceed €1,971,977 (32,866,281
shares) representing 10% of the nominal value of the issued
share capital provided that this authority shall expire at the
earlier of the close of business on the date of the next AGM
after the passing of this resolution or 29 July 2017.”
Notice of Annual General Meeting
Fyffes plc Annual Report 2015 121
8. AS A SPECIAL RESOLUTION:
“That the Company and/or any subsidiary (as defined by
Section 7 of the Companies Act 2014) of the Company
is hereby generally authorised to make market purchases
(as defined by Section 1072 of the Companies Act 2014)
of shares of any class in the Company (“shares”) on such
terms and conditions and in such manner as the directors
may determine from time to time but subject to the
provisions of the Companies Act 2014 and to the following
restrictions and provisions:
(a) the maximum number of ordinary shares (as defined in
the Articles of Association of the Company) authorised
to be acquired pursuant to this resolution shall not
exceed 32,866,281 (representing 10% of the issued
share capital);
(b) the minimum price (excluding expenses) which may
be paid for any share shall be an amount equal to the
nominal value thereof;
(c) the maximum price (excluding expenses) which may
be paid for any share (a “relevant share”) shall be an
amount equal to the greater of:
(i) 105% of the average of the five amounts resulting
from determining whichever of the following (a), (b)
or (c) specified below in relation to the shares of the
same class as the relevant share shall be appropriate
for each of the five business days immediately
preceding the day on which the relevant share is
purchased, as determined from the information
published in the Irish Stock Exchange Daily Official
List reporting the business done on each of those five
business days:
(A) if there shall be more than one dealing reported
for the day, the average of the prices at which
such dealings took place; or
(B) if there shall be only one dealing reported for the
day, the price at which such dealing took place; or
(C) if there shall not be any dealing reported for the
day, the average of the high and low market
guide prices for that day; and if there shall be
only a high (but not a low) or a low (but not a
high) market guide price reported, or if there shall
not be any market guide price reported, for any
particular day then that day shall not count as one
of the said five business days for the purposes of
determining the maximum price. If the means of
providing the foregoing information as to dealings
and prices by reference to which the maximum
price is to be determined is altered or is replaced
by some other means, then a maximum price
shall be determined on the basis of the equivalent
information published by the relevant authority in
relation to dealings on the Irish Stock Exchange or
its equivalent; and
(ii) the higher of the price quoted for (a) the last
independent trade of; and (b) the highest current
independent bid or offer for; any number of relevant
shares on the trading venue where the purchase
pursuant to the authority conferred by this resolution
will be carried out;
(d) the authority hereby granted shall expire at the close
of business on the date of the next AGM of the
Company or 29 July 2017, whichever is the earlier,
unless previously varied, revoked or renewed by special
resolution in accordance with the provisions of Section
1074 of the Companies Act 2014. The Company or
any such subsidiary may, before such expiry, enter into
a contract for the purchase of shares which would or
might be executed wholly or partly after such expiry
and may complete any such contract as if the authority
conferred hereby had not expired.”
9. AS A SPECIAL RESOLUTION:
“That, subject to the passing of resolution 8, for the
purposes of Section 1078 of the Companies Act 2014, the
reissue price range at which any treasury shares (as defined
by the said Section 1078) for the time being held by the
Company may be reissued off-market shall be as follows:-
(a) The maximum price at which a treasury share may be
reissued off-market shall be an amount equal to 120%
of the “appropriate price”; and
(b) the minimum price at which a treasury share may be re-
issued off-market shall be the nominal value of the share
where such a share is required to satisfy an obligation
under an employee share scheme (as defined in the
Listing Rules of The Irish Stock Exchange plc) operated
by the Company or, in all other cases, an amount equal
to 95% of the appropriate price.
For the purposes of this resolution the expression
“appropriate price” shall mean the average of the five
amounts resulting from determining whichever of the
following (i), (ii) or (iii) specified below in relation to shares
of the class of which such treasury share is to be reissued
shall be appropriate in respect of each of the five business
Notice of Annual General Meeting (continued)
Fyffes plc Annual Report 2015122
days immediately preceding the day on which the treasury
share is reissued, as determined from information published
in the Irish Stock Exchange Daily Official List reporting the
business done in each of those five business days:-
(i) if there shall be more than one dealing reported for the
day, the average of the prices at which such dealings
took place; or
(ii) if there shall be only one dealing reported for the day,
the price at which such dealing took place; or
(iii) if there shall not be any dealing reported for the day,
the average of the high or low market guide prices for
the day; and if there shall be only a high (but not a low)
or a low (but not a high) market guide price reported,
or if there shall not be any market guide price reported,
for any particular day then that day shall not count
as one of the said five business days for the purposes
of determining the appropriate price. If the means of
providing the foregoing information as to dealings and
prices by reference to which the appropriate price is to
be determined is altered or is replaced by some other
means, then the appropriate price shall be determined
on the basis of the equivalent information published by
the relevant authority in relation to dealings on the Irish
Stock Exchange or its equivalent.
The authority hereby conferred shall expire at the close
of business on the day of the next AGM of the Company
or 29 July 2017, whichever is the earlier, unless previously
varied or renewed in accordance with the provisions of
Section 1078 of the Companies Act 2014.”
S Keenan
Secretary
29 North Anne Street, Dublin 7 14 March 2016
Notice of Annual General Meeting (continued)
Fyffes plc Annual Report 2015 123
Notes
1. A member entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and vote on his behalf. A proxy need not be a member of the Company. Appointment of a proxy will not preclude a member from attending and voting at the meeting should the member subsequently wish to do so. You may appoint more than one proxy provided that each proxy is appointed to exercise the rights attached to a different share or shares held by him. Should you wish to appoint more than one proxy, please read carefully the explanatory notes accompanying the Form of Proxy.
2. As a member, you have several ways to exercise your right to vote:
(a) By attending the Annual General Meeting in person;
(b) By appointing (either electronically or by returning a completed Form of Proxy) the Chairman or another person as a proxy to vote on your behalf;
(c) By appointing a proxy via the CREST System if you hold your shares in CREST.
In the case of joint holders, the vote of the senior who tenders a vote, whether in person or by proxy, will be accepted to the exclusion of the votes of the other registered holder(s) and, for this purpose, seniority will be determined by the order in which the names stand in the register of members.
3. You may appoint the Chairman of the Company or another individual as your proxy. You may appoint a proxy by completing the enclosed Form of Proxy, making sure to sign and date the form at the bottom and return it to the Company’s Registrars, Computershare Services (Ireland) Limited. If you are appointing someone other than the Chairman as your proxy, then you must fill in the contact details of your representative at the meeting on the Form of Proxy. If you appoint the Chairman or another person as a proxy to vote on your behalf, please make sure to indicate how you wish your votes to be cast by ticking the relevant boxes on the Form of Proxy. Alternatively, a member may appoint a proxy or proxies electronically by logging on to the website of the registrars, Computershare Services (Ireland) Limited: at www.eproxyappointment.com. Shareholders will be asked to enter the Meeting Control Number along with their Shareholder Reference Number and PIN Number, all of which are printed on your Form of Proxy and agree to certain conditions.
4. To be valid, forms of proxy duly signed together with the power of attorney or such other authority (if any) under which they are signed (or a certified copy of such power or authority) must be lodged with the Company’s registrar, Computershare Services (Ireland) Limited, P.O. Box 954, Sandyford, Dublin 18 by not later than 11.00am on 27 April 2016.
5. The Company, pursuant to Section 1105 of the Companies Act 2014 and Regulation 14 of the Companies Act, 1990 (Uncertificated Securities) Regulations, 1996 (as amended), specifies that only those shareholders registered in the register of members of the Company as at close of business on 27 April 2016 (or in the case of an adjournment as at 48 hours before the time of the adjourned meeting) shall be entitled to attend and vote at the meeting in respect of the number of shares registered in their names at the time. Changes to entries in the register after that time will be disregarded in determining the right of any person to attend and/or vote at the meeting.
6. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the meeting and any adjournment(s) thereof by using the procedures described in the CREST Manual. CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to
take the appropriate action on their behalf. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST Proxy Instruction must be properly authenticated in accordance with Euroclear UK & Ireland Limited (“EUI”)’s specifications and must contain the information required for such instructions, as described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy or an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by Computershare Services (Ireland) Limited (ID 3RA50) by 11.00am on 27 April 2016. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which Computershare Services (Ireland) Limited is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means. CREST members and, where applicable, their CREST sponsors or voting service providers should note that EUI does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Companies Act 1990 (Uncertificated Securities) Regulations 1996 (as amended).
7. As of 14 March 2016 (being the latest practicable date prior to the publication of this notice), the outstanding share options issued by the Company would result in the issue of 11,550,000 new ordinary shares if such share options were to be exercised. Further the issue of all of these shares would represent approximately 3.4% of the enlarged equity or 3.8% if the Company were to exercise in full the proposed authority being sought in resolution 7 above to purchase its own shares.
8. In accordance with IA guidelines, the Board confirms in relation to Resolution 7 that (i) it intends that any use of the authority in excess of 5% of the Company’s issued ordinary share capital would be only in connection with an acquisition or specified capital investment; and (ii) it does not intend to issue shares for cash representing more than 7.5% of the Company’s issued ordinary share capital in any rolling three-year period to those who are not existing shareholders, save in connection with an acquisition or specified capital investment, without prior consultation with shareholders.
9. Biographical details for the directors standing for re-election at the AGM are set out in the Annual Report. Each of the directors has been subject to the evaluation process recommended by the UK Corporate Governance Code. On this basis, the Chairman and Board are pleased to recommend the re-election of those directors.
10. Copies of all documentation tabled before the AGM are available on the Company’s website. Should you not receive a Form of Proxy, or should you wish to be sent copies of these documents, you may request this by telephoning the Company’s registrar on (+353 1 216 3100) or by writing to the Company Secretary at the address set out above.
Notice of Annual General Meeting (continued)
Fyffes plc Annual Report 2015124
Notes
Fyffes plc 29 North Anne Street Dublin 7, Ireland
Tel: 353 1 887 2700Fax: 353 1 887 2755 www.fyffes.com
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