Total Produce plc plc Produce Total Annual Report and Accounts 2016 Accounts and Report Annual Total Produce plc Annual Report and Accounts 2016 Total Produce is at the forefront of the global fresh produce industry. Operating primarily across Europe, North America and South America, Total Produce is involved in the growing, sourcing, importing, packaging, marketing and distribution of an extensive selection of fresh fruits, vegetables and flowers – ranging from the familiar to the truly exotic. Global Strategy and Presence Business Model 2016 has seen Total Produce’s global infrastructure extend even The Group’s vision is to continue to develop our position as one further. Our physical presence across Europe, North America of the world’s leading fresh produce companies. The Group’s and South America differentiates Total Produce, positioning our ambition is to deliver long term shareholder value by leveraging operations at the very heart of the markets in which we trade our collective skills at a local level and by continued acquisition and in the world’s primary production centres. and partnerships. More information on pages 2-3 More information on pages 6-7 Financial Highlights of 2016 Revenue1 Adjusted EBITDA1 Adjusted EBITA1 €3,762m €94.8m €73.7m +8.9% on prior year +14.5% on prior year +15.0% on prior year 1 Key performance indicators are defined on page 10. Inside this report Strategic Report Governance Global Presence 2 Board of Directors and Secretary 40 Group Statement of Changes in Equity 64 Chairman’s Statement 4 Directors’ Report 42 Group Statement of Cash Flows 66 Strategy and Business Model 6 Corporate Governance Report 46 Group Reconciliation of Net Debt 67 Our Supply Chain and Product Portfolio 8 Audit Committee Report 50 Significant Accounting Policies 68 Growth in Numbers 10 Compensation Committee Report 52 Notes to the Group Financial Statements 78 Risks and Risk Management 12 Company Balance Sheet 137 Investing 16 Financial Statements Company Statement of Changes in Equity 138 Innovating 20 Company Statement of Cash Flows 139 Responsible 24 Statement of Directors’ Responsibilities 58 Notes to the Company Financial Statements 140 Operating Review 30 Independent Auditor’s Report 59 Directors and Other Information 143 Financial Review 32 Group Income Statement 61 Group Statement of Comprehensive Income 62 Group Balance Sheet 63 Shareholder Information 144 Notice of Annual General Meeting 145 Our Supply Growth Chain in Numbers Distributing over 350 million cartons of fresh produce annually, The Group has grown organically and through acquisition in the Group’s size and reach across the supply chain brings the last number of years. In the five year period ended 2016, together the collective resources of a global multi-national with the Group has recorded a compounded growth rate of 8.2% the market knowledge of local management; generating in revenue and 10.6% in adjusted earnings per share. synergies, creating efficiencies and adding value. More information on pages 8-9 More information on pages 10-11 Adjusted EPS1 Shareholders’ Equity Dividend per Share (Total) 12.07 cent €226.3m 3.039 cent +14.1% on prior year -5.2% on prior year +10.0% on prior year Forward-looking statements Any forward-looking statements made in the annual report have been made in good faith based on the information available as of the date of the report and are not guarantees of future performance. Actual results or developments may differ materially from the expectations expressed or implied in this report, and the Company undertakes no obligation to update any such statements whether as a result of new information, future events or otherwise. Outlined on pages 13 to 15 of this report are important factors that could cause these developments or the Company’s actual results to differ materially from those expressed or implied in these forward-looking statements. Total Produce plc 1 Annual Report and Accounts 2016 Strategic Report NORTH AMERICA Global Number of facilities Presence 21 Total Produce is one of the world’s largest and most accomplished fresh produce providers. Operating out of 26 countries, while serving many more, we are the European market leader and an increasingly prominent force in the North American marketplace. Our physical presence across the world differentiates Total Produce, positioning our operations at the very heart of the markets in which we trade and in the world's primary production centres. Serving the wholesale, foodservice and retail sectors, Total Produce is a complete fresh produce solution provider – offering a comprehensive menu of services to our customers ranging from simple service provision to complete category management. Countries Operating Facilities 26 138 Cartons Sold Annually Total Revenue 350m+ €3.76bn 2 Total Produce plc Annual Report and Accounts 2016 1. Strategic Report 2. 3. EUROPE Number of facilities 106 ASIA Number of facilities SOUTH AMERICA 4 Number of facilities 7 Total Produce plc 3 Annual Report and Accounts 2016 Strategic Report Chairman’s Statement Ten years of sustained growth and expansion The Group is ambitious to continue its growth and In line with this strategy the Group made a number of fresh produce acquisitions deliver long term shareholder value through organic in 2016 in Europe and in North and South growth, innovation, operational efficiencies and America with a total expenditure in continued acquisitions and partnerships. A key excess of €60m, including €17m of part of the Group’s growth strategy is growth contingent consideration. by acquisition. On 1 February 2016, the Group acquired 65% of Progressive Produce, a company based in Los Angeles, California. Progressive Produce is a grower, packer and distributor of conventional and organic produce to the retail, wholesale and foodservice sectors in the US and Canada. Founded in 1967, it is today one of California’s premier produce companies with revenues in excess of US$200m. This represented the Group’s fourth acquisition in the North American fresh produce industry. In addition to this the Group made a number of other investments in the year. In April 2016, the Group acquired a 100% interest in Planet Produce Limited, a company headquartered in the UK specialising in the import of exotic fruit and vegetables. Also in April 2016, the Group acquired a 60% interest in Organic Trade Company Holland BV, a company headquartered in the Netherlands and specialising in organic fruit and vegetables. In April 2016, the Group incorporated Vezet Convenience Nordic a company jointly owned 50/50 with G Kramer & Zonen, trading as Vezet. Over a period of three to five years, Vezet Convenience Nordic will invest in a state-of-the-art facility to be used for the production of fresh cut and pre-packed meal salads for supply to the Nordic market. 4 Total Produce plc Annual Report and Accounts 2016 1. Strategic Report 2. 3. Adjusted earnings per share 12.07 cent +14.1% At the end of December 2016, the Group The Board is recommending an increase acquired a 50% shareholding in the El of 10.0% in the final dividend to 2.2297 cent Parque Group, a fresh produce company per share. This together with the interim headquartered in Chile and specialising in dividend of 0.8096 cent per share brings avocados, citrus and grapes. the total 2016 dividend to 3.0393 cent per share, an increase of 10.0% on 2015. This Post year-end, on 1 March 2017, the Group represents a distribution of 25.2% of has agreed to invest €28m to increase its adjusted earnings per share. shareholding in the North American based Oppenheimer Group (‘Oppy’) from 35% to Trading conditions to date in 2017 have been 65% and Oppy has entered into strategic satisfactory and we are targeting 2017 agreements in North America with the adjusted earnings in the range of 12.0 to New Zealand based T&G Global. The 13.0 cent per share. The Group is in a very Group continues to actively pursue further strong financial position with capacity to investment opportunities in both new and pursue further acquisitions in Europe, North existing markets. America and further afield. On 27 January 2016, the Group completed The Group’s growth and success reflects the €20m share buyback programme that the calibre and commitment of all its people. commenced on 9 October 2015, with a On behalf of the Board, I would like to thank total of 14,017,270 ordinary shares being them for their valued contribution to the repurchased and cancelled at a total cost ongoing success of Total Produce. of €20.4m including expenses. The share buyback program is earnings accretive. The Group will continue to exercise this C P McCann authority should the appropriate opportunity Chairman arise and will seek to renew this authority at 1 March 2017 the forthcoming AGM in May 2017. In 2016, Total Produce has shown continued strong growth and development in the business. Total revenue has increased by 8.9% to €3.76 billion with a 14.1% increase in adjusted earnings per share to 12.07 cent. Total Produce plc 5 Annual Report and Accounts 2016 Strategic Report Strategy and Business Model Our Vision and Strategy OUR VISION: To continue to develop our position as one of the world’s leading fresh produce companies OUR STRATEGY: Deliver long term shareholder value by Leveraging our Continued collective skills acquisition at a local level and partnerships Ensuring Building operational on our core excellence competencies 6 Total Produce plc Annual Report and Accounts 2016 1. Strategic Report 2. 3. Local at Heart Global by Nature In Total Produce, we believe in local. Across our worldwide We believe that in bringing together the unique attributes and operations, it is local management who shape our service and strengths of diverse local fresh produce providers from across drive our business on the ground.