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Greenyard NV — Interim / Quarterly Report 2017
Nov 21, 2017
3957_ir_2017-11-21_22cd0ed3-aec2-4fe8-8bc0-56f074ed97c1.pdf
Interim / Quarterly Report
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HALF YEAR FINANCIAL REPORT 2017-2018
TABLE OF CONTENTS
| GREENYARD | |
|---|---|
| INFORMATION FOR SHAREHOLDERS | |
| HIGHLIGHTS | |
| MANAGEMENT COMMENT | |
| CONSOLIDATED KEY FIGURES | |
| SEGMENT PERFORMANCE | |
| CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS | |
| STATEMENT OF RESPONSIBLE PERSONS | |
| REVIEW REPORT ON THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS | |
| FINANCIAL DEFINITIONS ……………………………………………………………………………………………… |
GREENYARD
Greenyard is a global market leader of fresh, frozen and prepared fruit & vegetables, flowers, plants and growing media. Counting Europe's leading retailers amongst its customer base, the Group provides efficient and sustainable solutions to customers and suppliers through best-in-class products, market-leading innovation, operational excellence and outstanding service.
With more than 9.000 employees operating in 25 countries worldwide, Greenyard identifies its people and its key customer and supplier relationships as the key assets which enable it to deliver goods and services worth almost € 4,25 billion per annum.
Our Mission: We are committed to grow consumption of fruit & vegetables for a healthier future by partnering from fork to field to meet consumer needs – creating value for all.
Our Vision: To make lives healthier by helping people enjoy fruit & vegetables, at any moment easy, fast & pleasurable whilst fostering nature.
INFORMATION FOR SHAREHOLDERS
The Company's shares are listed on the continuous market of Euronext Brussels (ticker: GREEN), more specifically in the compartment B (mid-caps) of this market, since 1 March 2005. The Greenyard share was introduced onto the Brussels Stock Exchange in June 1999. Greenyard NV has a liquidity contract with Bank Degroof Petercam. On 14 March 2017 the Company initiated a share buyback program representing 1.750.000 shares or almost 4% of outstanding shares. The Company has ended its share buyback program by 31 August 2017. On average € 17,17 per share was paid.
On 30 September 2017 the share capital was represented by 44.372.585 shares, which have the same rights.
| Shareholder structure | Number of shares | % |
|---|---|---|
| Deprez Holding NV | 15.327.254 | 34,5% |
| Food Invest International NV | 6.534.173 | 14,7% |
| Sujajo Inv. | 3.957.145 | 8,9% |
| Treasury shares | 1.750.000 | 3,9% |
| Public | 16.804.013 | 38,0% |
| TOTAL | 44.372.585 | 100% |
HIGHLIGHTS – H1 ending 30 September 2017
- Sales are down 2,4% YoY to € 2.094,5m. Excluding the currency effect (-0,4%), sales declined internally by 2,0% compared to strong base last year of +6,8%
- o Fresh reports a sales decline of 2,5%. Internally, top line dropped by 2,2% versus a high comparable base and a stable price evolution after strong price inflation last year
- o Long Fresh' sales were down 2,6% but currencies explain 1,2% of the drop. Sales declined by 1,4% internally, which implies a strong Q2 (+1,4%). Long Fresh was confronted with shortages, while ongoing price and product mix improvements continued to contribute to top line growth
- o Horticulture sales were up 4,5%, mainly thanks to internal growth (+3,0%)
- REBITDA declined by 5,5% to € 73,4m. This entails a € 4,3m drop driven by:
- o Fresh dropped by € 2,6m largely driven by price pressure on bananas, combined with challenging sourcing and lower volumes YoY
- o Long Fresh' was slightly down (€ -1,1m). The continuing efforts to improve portfolio management and ongoing progression in Frozen France were curbed by the impact of shortages, ongoing price pressure in Prepared and irregular supply caused by adverse weather conditions
- o Horticulture declined by € 0,5m due to tough harvest conditions during summer and higher transportation costs
- Net result came in at € 11,7m. Excluding the non-cash impact of the fair value adjustment on the convertible bond, net result arrives at € 12,5m, up 84% YoY
- Including the impact of the share buyback, adjusted EPS increased to € 0,29, up more than 90% YoY
- A significant step-up in CAPEX spent to € 35,2m driven by growth investments in Fresh and timing effect
- Net financial debt dropped by € 32,5m YoY to € 346,5m. This translates into a leverage of 2,4x, down from 2,7x last year. This was realised despite the strong rise in investments and our share buyback programme
- The corporate tax rate showed a structural decline towards 37,3%, down from 47,2% last year
- Closing the acquisition of Mykogen following approval of all competent authorities. Mykogen adds 8% to group REBITDA with consolidation as from December 1, 2017
MANAGEMENT COMMENT
CEO Marleen Vaesen comments on the results and the past 6 months:
'We are pleased with the good improvement of the net result of our company further benefitting from the refinancing and ongoing tax savings. At the same time, our net debt continued to decline despite high investments in the growth of our business.
Nevertheless, both in Fresh and Long Fresh, adverse weather conditions hindered our operations and hence financial performance. In Long Fresh, price pressure in Prepared is still ongoing as well.
Going forward, we remain determined to keep our focus on profitable growth, and therefore accelerated a number of initiatives to improve profitability. Actions taken include rightsizing of our Fresh operations in Poland, Germany, Belgium and the UK. These actions lead to more streamlined operations in these countries and lower overhead costs. These initiatives are combined with investments in new state-of-the-art operations that ensure that Greenyard stays at the forefront of our sector.
To conclude, we remain confident Greenyard has the right strategy and priorities in place to generate profitable growth and further strengthen our position as a global leader of fruit & vegetables in all its forms.'
CONSOLIDATED KEY FIGURES
The reported condensed consolidated income statement of the first half of AY 16/17 and AY 17/18 includes 6 months of Fresh, Long Fresh and Horticulture.
| Greenyard | H1 17/18 €'000 000 |
H1 16/17 €'000 000 |
Difference |
|---|---|---|---|
| Sales | 2.094,5 | 2.146,1 | -2,4% |
| REBITDA | 73,4 | 77,7 | -5,5% |
| REBITDA-margin % | 3,5% | 3,6% | |
| Profit/loss (-) for the period | 12,4 | 6,8 | 82,1% |
| NFD | 346,5 | 379,0 | -8,6% |
| EBIT before non-recurring items - REBITDA | H1 17/18 | H1 16/17 | |
|---|---|---|---|
| €'000 | €'000 | ||
| EBIT before non-recurring items | 40.511 | 45.529 | |
| Depreciation, amortisation and impairments Divestitures (not in IFRS 5 scope) |
32.824 105 |
30.901 1.272 |
|
| REBITDA | 73.440 | 77.703 |
| Reconciliation net financial debt | 30 September 2017 | ||
|---|---|---|---|
| As reported | Reconciliation (*) | Total | |
| €'000 | €'000 | €'000 | |
| Cash and cash equivalents | -80.014 | - | -80.014 |
| Interest-bearing loans (non-current/current) | 409.618 | 16.895 | 426.514 |
| Net financial debt | 346.500 |
(*) Primarily net capitalised transaction costs related to the refinancing (€ 6,5m) and net value of the conversion bond option at inception after amortisation (€ 10,4m) are added back in order to present the nominal amounts of drawn financing as part of the reported net financial debt.
SEGMENT PERFORMANCE
Fresh
| Fresh | H1 17/18 | H1 16/17 | Difference |
|---|---|---|---|
| €'000 000 | €'000 000 | ||
| Sales | 1.707,3 | 1.751,0 | -2,5% |
| REBITDA | 42,9 | 45,5 | -5,8% |
| REBITDA-margin % | 2,5% | 2,6% |
Sales of Fresh declined by 2,5%. With a small FX impact of -0,3%, growth dropped internally by 2,2%. Growth was realised in the Netherlands, Poland and the Growth Markets. However, this was more than offset by declines in both German Market and Belgium.
Whereas last year's top line was helped by price increases, H1 of this year was marked by less inflationary effects. This could not be compensated by ongoing product mix improvements driven by exotics, Ready-To-Eat and mixes. Moreover, availability issues impacted top line as well.
REBITDA dropped by 5,8% translating into a margin of 2,5% (-9bps YoY). There are two key reasons for this drop. Firstly, price pressure on bananas. Secondly, operational efficiencies were impacted by challenging sourcing over the period combined with the drop in volumes.
Long Fresh
| Long Fresh | H1 17/18 | H1 16/17 | Difference |
|---|---|---|---|
| €'000 000 | €'000 000 | ||
| Sales | 349,4 | 358,8 | -2,6% |
| REBITDA | 25,7 | 26,8 | -4,0% |
| REBITDA-margin % | 7,4% | 7,5% |
Long Fresh witnessed a sales decline of 2,6%. Foreign currencies impacted sales negatively by 1,2%, driven by the GBP. As such, internal sales evolution showed a -1,4% decline. This is an improvement compared to the -4,0% in Q1, entailing a solid performance in Q2 (+1,4%). This progress was mainly driven by the ongoing price and product mix improvements in Frozen, which largely curbed the impact of shortages due to last year's harvest. Prepared's top line was still impacted by shortages as well as ongoing price pressure. Also the mushroom activities within Prepared are not yet performing as anticipated both in terms of top line and margins.
REBITDA declined by 4,0%, only slightly ahead of the sales drop resulting in stable margins YoY. Underlying improvements stemmed from an ongoing trade-up in the portfolio mix and further enhancement in Moréac (Frozen France). This was more than offset by operational inefficiencies due to lower processing volumes and irregular supply resulting from adverse weather conditions.
Horticulture
| Horticulture | H1 17/18 | H1 16/17 | Difference |
|---|---|---|---|
| €'000 000 | €'000 000 | ||
| Sales | 37,9 | 36,3 | 4,5% |
| REBITDA | 4,9 | 5,4 | -10,1% |
| REBITDA-margin % | 12,9% | 15,0% |
Sales are up by 4,5% in H1. Internal growth amounted to 3,0% as growth in Q2 continued at the 3% level, as was the case in Q1. The acquisition of Nesterovskoye contributed 0,9% to top line whereas the impact of currencies was minimal (+0,6%).
The vast majority of internal growth is driven by strong demand for winter products in Q2, mainly in Western Europe, after a decent start in Q1 as well. Poland is weaker due to bad spring weather. The integration of Nesterovskoye is proceeding according to plan, significantly increasing Horticulture's sourcing hereby securing future growth.
REBITDA dropped by 10,1% representing a margin drop to 12,9%. The decline is mainly driven by a temporary deterioration of the product mix as well as tough harvest conditions in the summer period. Additionally, transportation costs increased after the exceptionally low levels reached last year. This could not be curbed by ongoing tight cost control efforts.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
| Consolidated income statement | H1 17/18 €'000 |
H1 16/17 €'000 |
|---|---|---|
| CONTINUING OPERATIONS | ||
| Sales Cost of sales Gross profit/loss (-) |
2.094.546 -1.942.691 151.855 |
2.146.092 -1.991.743 154.349 |
| Selling, marketing and distribution expenses General and administrative expenses Other operating income Share of profit/loss (-) of equity accounted investments EBIT before non-recurring items |
-47.019 -67.457 2.986 147 40.511 |
-46.989 -64.024 2.916 -723 45.529 |
| Non-recurring items | -2.076 | -5.887 |
| EBIT | 38.434 | 39.642 |
| Interest expense Interest income Other finance result Net finance income/cost (-) |
-14.330 224 -4.541 -18.647 |
-21.174 1.017 -6.569 -26.726 |
| Profit/loss (-) before income tax | 19.787 | 12.916 |
| Income tax expense (-)/income | -7.377 | -6.102 |
| Profit/loss (-) for the period from continuing operations | 12.411 | 6.814 |
| DISCONTINUED OPERATIONS | ||
| Profit/loss (-) for the period from discontinued operations (attributable to the shareholders of the Group) |
- | - |
| PROFIT/LOSS (-) FOR THE PERIOD | 12.411 | 6.814 |
| Attributable to: The shareholders of the Group Non-controlling interests |
11.688 722 |
6.786 29 |
| Earnings per share (in € per share) | H1 17/18 | H1 16/17 |
|---|---|---|
| Basic | 0,27 | 0,15 |
| Diluted | 0,27 | 0,15 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| Consolidated statement of comprehensive income | H1 17/18 €'000 |
H1 16/17 €'000 |
|---|---|---|
| Profit/loss (-) for the period | 12.411 | 6.814 |
| Remeasurements on post employment benefit obligations, gross | - | -3.192 |
| Deferred tax on remeasurements on post employment benefit obligations | - | 830 |
| Items that will not be reclassified to the income statement | - | -2.362 |
| Cash flow hedges, gross | -1.275 | 729 |
| Deferred tax on cash flow hedges | 382 | -278 |
| Currency translation differences | -4.119 | -1.157 |
| Fair value reserve | 5 | - 1 |
| Items that may be reclassified to the income statement | -5.007 | -708 |
| Other comprehensive income | -5.007 | -3.070 |
| TOTAL | 7.403 | 3.745 |
| Attributable to: | ||
| The shareholders of the Group | 6.816 | 3.697 |
| Non-controlling interests | 587 | 48 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| Assets | 30 September 2017 €'000 |
31 March 2017 €'000 |
|---|---|---|
| NON-CURRENT ASSETS | 1.260.730 | 1.265.218 |
| Property, plant & equipment | 378.527 | 375.952 |
| Goodwill | 591.923 | 591.923 |
| Other intangible assets | 232.766 | 238.541 |
| Biological assets | 20.493 | 20.353 |
| Investments accounted for using equity method | 9.529 | 8.975 |
| Other financial assets | 183 | 183 |
| Deferred tax assets | 22.512 | 22.579 |
| Trade and other receivables | 4.795 | 6.711 |
| CURRENT ASSETS | 673.327 | 725.454 |
| Biological assets | 23 | 66 |
| Inventories | 344.056 | 296.217 |
| Trade and other receivables | 248.112 | 313.892 |
| Other financial assets | 1.123 | 2.037 |
| Cash and cash equivalents | 80.014 | 113.242 |
| TOTAL ASSETS | 1.934.056 | 1.990.673 |
| Equity and liabilities | 30 September 2017 | 31 March 2017 |
|---|---|---|
| €'000 | €'000 | |
| EQUITY | 691.572 | 706.246 |
| Issued capital | 288.392 | 288.392 |
| Share premium and other capital instruments | 317.882 | 317.882 |
| Consolidated reserves | 79.992 | 91.257 |
| Cumulative translation adjustments | -6.871 | -2.875 |
| Non-controlling interests | 12.177 | 11.590 |
| NON-CURRENT LIABILITIES | 508.055 | 517.718 |
| Employee benefit liabilities | 21.042 | 21.245 |
| Provisions | 9.885 | 8.855 |
| Interest-bearing loans | 399.097 | 410.472 |
| Other financial liabilities | 28.510 | 28.572 |
| Trade and other payables | 1.067 | 1.116 |
| Deferred tax liabilities | 48.455 | 47.458 |
| CURRENT LIABILITIES | 734.429 | 766.708 |
| Provisions | 615 | 894 |
| Interest-bearing loans | 10.521 | 8.409 |
| Other financial liabilities | 2.442 | 781 |
| Trade and other payables | 720.851 | 756.624 |
| TOTAL EQUITY AND LIABILITIES | 1.934.056 | 1.990.673 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| Equity H1 17/18 | Attributable to shareholders of the Group | Non | Total | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Share capital |
Share premiums |
Treasury shares |
Retained earnings |
Cash flow hedge reserve |
Foreign currency translation |
Fair value reserve |
Defined benefit liability |
Total | controlling interests |
equity | |
| €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | |
| Balance at 31 March 2017 | 288.392 | 317.882 | -16.436 | 111.924 | -1.901 | -3.449 | 27 | -1.784 | 694.656 | 11.590 | 706.246 |
| Profit/loss (-) for the period | - | - | - | 11.688 | - | - | - | - | 11.688 | 722 | 12.411 |
| Cash flow hedges, gross | - | - | - | -151 | -1.124 | - | - | - | -1.275 | - | -1.275 |
| Deferred tax on cash flow hedges | - | - | - | - | 382 | - | - | - | 382 | - | 382 |
| Currency translation differences | - | - | - | - | - | -3.984 | - | - | -3.984 | -135 | -4.119 |
| Fair value reserve | - | - | - | - | - | - | 5 | - | 5 | - | 5 |
| Other comprehensive income | - | - | - | -151 | -742 | -3.984 | 5 | - | -4.872 | -135 | -5.007 |
| Total comprehensive income for the period |
- | - | - | 11.538 | -742 | -3.984 | 5 | - | 6.816 | 587 | 7.403 |
| Dividend payment | - | - | - | -8.525 | - | - | - | - | -8.525 | - | -8.525 |
| Scope and other changes | - | - | - | 50 | - | - | - | - | 50 | - | 50 |
| Buyback program | - | - | -13.603 | - | - | - | - | - | -13.603 | - | -13.603 |
| Balance at 30 September 2017 | 288.392 | 317.882 | -30.039 | 114.988 | -2.643 | -7.433 | 32 | -1.784 | 679.395 | 12.177 | 691.572 |
| Equity H1 16/17 | Attributable to shareholders of the Group | Non | Total | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Share | Share | Treasury | Retained | Cash flow | Foreign | Fair value | Defined | Total | controlling | equity | |
| capital | premiums | shares | earnings | hedge | currency | reserve | benefit | interests | |||
| reserve | translation | liability | |||||||||
| reserve | |||||||||||
| €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | ||
| Balance at 31 March 2016 | 288.392 | 317.882 | - | 120.284 | -3.900 | -4.370 | 87 | -1.801 | 716.574 | 11.718 | 728.292 |
| Profit/loss (-) for the period | - | - | - | 6.786 | - | - | - | - | 6.786 | 29 | 6.814 |
| Cash flow hedges, gross | - | - | - | - | 729 | - | - | - | 729 | - | 729 |
| Deferred tax on cash flow hedges | - | - | - | - | -278 | - | - | - | -278 | - | -278 |
| Currency translation differences | - | - | - | - | - | -1.176 | - | - | -1.176 | 19 | -1.157 |
| Remeasurements on post | - | ||||||||||
| employment benefit obligations, | - | - | - | - | - | - | -3.192 | -3.192 | - | -3.192 | |
| gross | - | ||||||||||
| Deferred tax on remeasurements on | - | ||||||||||
| post employment benefit obligations | - | - | - | - | - | - | - | 830 | 830 | - | 830 |
| Fair value reserve | - | - | - | - | - | - | - 1 |
- | - 1 |
- | - 1 |
| Other comprehensive income | - | - | - | - | 451 | -1.176 | - 1 |
-2.362 | -3.089 | 19 | -3.070 |
| Total comprehensive income for the | |||||||||||
| period | - | - | - | 6.786 | 451 | -1.176 | - 1 |
-2.362 | 3.697 | 48 | 3.745 |
| Dividend payment | - | - | - | -8.875 | - | - | - | - | -8.875 | - | -8.875 |
| Scope and other changes | - | - | - | -35 | - | - | - | - | -35 | 34 | - 1 |
| Balance at 30 September 2016 | 288.392 | 317.882 | - | 118.160 | -3.449 | -5.546 | 86 | -4.163 | 711.362 | 11.797 | 723.160 |
CONSOLIDATED STATEMENT OF CASH FLOWS
| Consolidated statement of cash flows | H1 17/18 €'000 |
H1 16/17 €'000 |
|---|---|---|
| CASH, CASH EQUIVALENTS AND BANK OVERDRAFTS, OPENING BALANCE | 112.735 | 137.949 |
| CASH FLOW FROM OPERATING ACTIVITIES (A) | 41.476 | 49.971 |
| EBIT Income taxes paid |
38.434 -2.674 |
39.642 -4.770 |
| Adjustments Fair value adjustments biological assets Amortisation and impairment of intangible assets Depreciation and impairment of property, plant & equipment Write-off on stock/trade receivables Increase/decrease (-) in provisions and employee benefit liabilities Gain (-)/loss on disposal of property, plant & equipment Share of profit/loss (-) of equity accounted investments |
30.653 -759 7.952 24.872 -1.437 661 -489 -147 |
25.521 -905 7.278 24.542 -2.106 -3.503 -508 723 |
| Increase (-) /decrease in working capital Increase (-)/decrease in inventories Increase (-)/decrease in trade and other receivables Increase/decrease (-) in trade and other payables |
-24.938 -49.205 70.496 -46.230 |
-10.423 -35.730 49.219 -23.912 |
| CASH FLOW FROM INVESTING ACTIVITIES (B) | -31.987 | -22.418 |
| Acquisitions (-) Acquisition of intangible assets and property, plant & equipment Acquisition of subsidiaries/ associates Disposals Disposal of intangible assets and property, plant & equipment Disposal of subsidiaries/ associates |
-35.175 -34.688 -487 3.188 1.172 2.017 |
-24.205 -21.282 -2.923 1.787 1.287 500 |
| CASH FLOW FROM FINANCING ACTIVITIES (C) | -41.208 | -61.192 |
| Acquisition of treasury shares Long- and short-term funds paid (-) Net interests paid Other financial expenses |
-13.603 -10.265 -16.239 -1.100 |
- -36.774 -23.043 -1.375 |
| NET INCREASE IN CASH AND CASH EQUIVALENTS (A+B+C) | -31.719 | -33.639 |
| Effect of exchange rate fluctuations | -1.003 | 1.312 |
| CASH, CASH EQUIVALENTS AND BANK OVERDRAFTS, CLOSING BALANCE | 80.014 | 105.621 |
| Of which: Cash and cash equivalents Bank overdrafts |
80.014 - |
106.832 -1.212 |
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Greenyard, domiciled in Belgium in Sint-Katelijne-Waver, is a global market leader in fresh and prepared fruit and vegetables, flowers, plants and growing media. Counting the majority of Europe's leading retailers amongst its customer base, the Group provides efficient and sustainable solutions to customers and suppliers through best-in-class products, market-leading innovation, operational excellence and outstanding service. The Group counts more than 9.000 employees in 25 countries worldwide.
2. FINANCIAL REPORTING PRINCIPLES
2.1. DECLARATION OF CONFORMITY
The condensed consolidated interim financial statements for the 6 months ended 30 September 2017 contain the financial statements of the Company, its subsidiaries (the 'Group'), and the Group's interests in associated companies and jointly controlled entities. The condensed consolidated interim financial statements provide a general overview of the Group's activities and performance. They give a true and fair view of the Group's financial position, financial performance and cash flows on a going concern basis.
The condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union. They do not contain all the information needed for full annual financial statements and should therefore be read in conjunction with the consolidated financial statements for the reporting period ended 31 March 2017, published in the 2016-2017 Financial Report.
These condensed consolidated interim financial statements were authorised for issue by the Board of Directors on the 16th of November 2017.
2.2. SEASONALITY
The performance of Greenyard is impacted by seasonality but the combination of Long Fresh and Fresh has a compensating effect on seasonality and working capital dynamics. Generally Long Fresh has a production peak in the period from July to November with corresponding inventory build up, whereas the demand is relatively stable during the year. This gives rise to high working capital swings in the last two quarters of the calendar year. In Fresh, a greater portion of the sales are realised during the first two calendar quarters, whereas the third and fourth calendar quarters typically have lower sales and less homogenous sales patterns. Horticulture has historically realised a greater portion of its revenues during the two first quarters of the calender year (especially between mid-January and mid-May).
2.3. CHANGES IN ACCOUNTING POLICIES AND PRESENTATION RULES
The accounting policies adopted in the preparation of the condensed consolidated interim financial statements are consistent with those applied in the preparation of the consolidated financial statements for the financial year 2016-2017 ending as per 31 March 2017, except for the adoption of new standards and interpretations as of 1 April 2017 onwards, noted below:
- Annual improvements to IFRS Standards 2014-2016 Cycle: Amendments to IFRS 12 (applicable for annual periods beginning on or after 1 January 2017, but not yet endorsed by the EU);
- Amendments to IAS 7 Statement of Cash Flows Disclosure Initiative (applicable for annual periods beginning on or after 1 January 2017, but not yet endorsed by the EU);
- Amendments to IAS 12 Income Taxes Recognition of Deferred Tax Assets for Unrealised Losses (applicable for annual periods beginning on or after 1 January 2017, but not yet endorsed by the EU);
With regard to the standards and interpretations which became applicable during the period April 2017 – September 2017, the Group is in the opinion that these have no or limited impact on the condensed consolidated interim financial statements of the Group.
The Group did not apply prospectively to the AY 17/18 the following new standards and interpretations, which had been issued but had not yet come into effect at the date of approval of these condensed consolidated interim financial statements:
- IFRS 14 Regulatory Deferral Accounts (applicable for annual periods beginning on or after 1 January 2016, but not yet endorsed in the EU);
- IFRS 17 Insurance Contracts (applicable for annual periods beginning on or after 1 January 2021, but not yet endorsed in the EU);
- Amendments to IFRS 4 Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (applicable for annual periods beginning on or after 1 January 2018, but not yet endorsed in the EU);
- Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (the effective date has been deferred indefinitely, and therefore the endorsement in the EU has been postponed);
- IFRIC 23 Uncertainty over Income Tax Treatments (applicable for annual periods beginning on or after 1 January 2019, but not yet endorsed in the EU);
- IFRS 15 Revenue from Contracts with Customers. The Group plans to adopt the new standard on the required effective date using the modified retrospective method. During 2017, the Group performed a preliminary assessment of IFRS 15, and based on the current status of the assessment the Group deems that there will not be a significant impact on revenues;
- IFRS 9 Financial Instruments. The Group plans to adopt the new standard on the required effective date. During 2017 the Group has performed a high-level impact assessment of IFRS 9. This preliminary assessment is based on currently available information and may be subject to changes arising from further detailed analyses or additional reasonable and supportable information being made available to the Group in the future. Overall, the Group expects no significant impact on its balance sheet and equity.
3. SEGMENT INFORMATION
For management purposes the Group is organised in three operating segments based on the activity of the Group.
The Fresh segment supplies high quality fresh and fresh-cut fruit and vegetables, flowers and plants and logistics services. Segment Long Fresh includes the Frozen activities processing a wide range of freshly harvested fruits and vegetables into fresh frozen products. The Prepared entities, also being part of the Long Fresh segment, process harvest-fresh vegetables and fruits and deliver ready-to-eat food products. Segment Horticulture offers a wide range of growing media for growing plants, fruit and vegetables.
Management assesses segment performance and allocates resources based on REBITDA and sales.
The segment's assets are assets belonging directly to it. Segment assets and segment sales are presented before elimination of intersegment transactions. Sales between segments are on an arm's length basis in a manner similar to transactions with third parties.
The tables below provide a summary of the performance of each business segment, for H1 17/18 and H1 16/17.
| Segment information H1 17/18 | Continuing operations | |||||
|---|---|---|---|---|---|---|
| Eliminations | Unallocated | |||||
| Fresh | Long Fresh | Horticulture | (*) | (**) | Consolidated | |
| €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | |
| Sales | 1.707.975 | 349.369 | 37.910 | -707 | - | 2.094.546 |
| Sales | 1.707.286 | 349.351 | 37.910 | - | - | 2.094.546 |
| Intersegment sales | 689 | 18 | - | -707 | - | - |
| REBITDA | 42.866 | 25.683 | 4.891 | - | - | 73.440 |
| Total assets at 30 September 2017 | 1.036.694 | 675.673 | 148.965 | -8.304 | 81.029 | 1.934.056 |
| Segment information H1 16/17 | Continuing operations | ||||||
|---|---|---|---|---|---|---|---|
| Eliminations | Unallocated | ||||||
| Fresh | Long Fresh | Horticulture | (*) | (**) | Consolidated | ||
| €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | ||
| Sales | 1.751.485 | 358.791 | 36.281 | -464 | - | 2.146.092 | |
| Sales | 1.751.036 | 358.775 | 36.281 | - | - | 2.146.092 | |
| Intersegment sales | 449 | 16 | - | -464 | - | - | |
| REBITDA | 45.496 | 26.766 | 5.441 | - | - | 77.703 | |
| Total assets at 31 March 2017 | 1.094.264 | 635.115 | 160.610 | -14.067 | 114.750 | 1.990.673 |
(*) long-term intersegment receivables and intersegment participations are not included in the segment assets and therefore not included in the eliminations
(**) unallocated assets include derivative financial instruments and cash and cash equivalents
4. NOTES TO THE CONSOLIDATED INCOME STATEMENT
The reported consolidated income statement of H1 16/17 and H1 17/18 includes 6 months for Fresh, Long Fresh and Horticulture.
4.1. Operating expenses
| Operating expenses | H1 17/18 | H1 16/17 |
|---|---|---|
| €'000 | €'000 | |
| Cost of goods | 1.444.936 | 1.512.556 |
| Transport | 156.811 | 142.522 |
| Packing, warehousing and farming | 181.976 | 177.574 |
| Personnel and temporary workforce costs | 134.656 | 130.784 |
| Other | 24.313 | 28.307 |
| Cost of sales (*) | 1.942.691 | 1.991.743 |
| Rentals | 7.002 | 7.121 |
| Maintenance and repair | 1.729 | 1.905 |
| Personnel expenses | 62.051 | 59.969 |
| Utilities | 1.244 | 1.414 |
| Travel and representation | 4.438 | 5.098 |
| Office expenses | 1.863 | 1.619 |
| Fees | 10.655 | 7.877 |
| Insurance | 2.249 | 3.625 |
| Information and communication technology | 5.045 | 5.603 |
| Depreciation | 10.683 | 8.664 |
| Quality | 164 | 199 |
| Other | 7.355 | 7.919 |
| Other operating expenses | 114.476 | 111.013 |
| TOTAL | 2.057.168 | 2.102.756 |
(*) Contain rental costs, personnel expenses, depreciation and other direct operating expenses.
4.2. Other operating income
| Other operating income | H1 17/18 | H1 16/17 |
|---|---|---|
| €'000 | €'000 | |
| Income from rentals | 872 | 1.023 |
| Indemnities received | 505 | 452 |
| Sale of waste | 318 | 213 |
| Gain/loss (-) on disposal of property, plant & equipment | 487 | 508 |
| Operating subsidies | 266 | - |
| Recharge of costs from frozen division to CECAB (Groupe d'Aucy) | - | 151 |
| Other | 537 | 569 |
| TOTAL | 2.986 | 2.916 |
4.3. Non-recurring items
| Non-recurring items | H1 17/18 | H1 16/17 |
|---|---|---|
| €'000 | €'000 | |
| Reorganisation costs Belgium | -433 | -3.090 |
| Reorganisation costs Germany | -1.100 | -1.365 |
| Other reorganisation costs | -665 | - |
| Impact of acquisition accounting on inventory valuation Lutèce | - | -617 |
| Merger & acquisition costs | -404 | -238 |
| Project costs | -191 | -99 |
| Loss on sale H-Pack & H-Fruit | - | -81 |
| Other | -675 | -397 |
| Non-recurring expenses | -3.467 | -5.887 |
| Post-sale settlement H-Pack & H-Fruit | 1.379 | - |
| Other | 12 | - |
| Non-recurring income | 1.390 | - |
| TOTAL | -2.076 | -5.887 |
4.4. Finance result
| Finance result | H1 17/18 | H1 16/17 |
|---|---|---|
| €'000 | €'000 | |
| Interest expense - Fresh bond (redeemed in AY 16/17) | - | -11.226 |
| Interest expense - Retail bond | -3.760 | -3.755 |
| Interest expense - Convertible bond | -2.350 | - |
| Interest expense - Bank borrowings | -3.062 | -2.878 |
| Amortisation transaction costs - Fresh bond (redeemed in AY 16/17) | - | -814 |
| Amortisation transaction costs - Retail bond | -37 | -37 |
| Amortisation transaction costs - Convertible bond | -246 | - |
| Amortisation conversion option | -1.072 | - |
| Amortisation transaction costs - Fresh revolving credit facility (redeemed in AY 16/17) | - | -195 |
| Amortisation transaction costs - Revolving credit facility (redeemed in AY 16/17) | - | -238 |
| Amortisation transaction costs - Term loan / Revolving credit facility | -478 | - |
| Amortisation fair value - Fresh bond (redeemed in AY 16/17) | - | 996 |
| Interest expense - Factoring | -2.283 | -1.981 |
| Interest expense - IRS | -772 | -849 |
| Other | -270 | -197 |
| Interest expense | -14.330 | -21.174 |
| Interest income | 224 | 1.017 |
| Interest income | 224 | 1.017 |
| Foreign exchange gains/losses (-) | -1.546 | -5.935 |
| Fair value gains/losses (-) on IRS | 60 | 675 |
| Fair value gains/losses (-) on conversion option | -800 | - |
| Bank and other finance expenses | -2.255 | -1.310 |
| Other finance result | -4.541 | -6.569 |
| TOTAL | -18.647 | -26.726 |
The decrease in foreign exchange losses can be explained by the significant change in GBP exchange rate in H1 16/17.
4.5. Income tax
| Income tax | H1 17/18 | H1 16/17 |
|---|---|---|
| €'000 | €'000 | |
| Current tax on profits for the year | -5.636 | -6.460 |
| Adjustments in respect of prior years | -450 | 569 |
| Current tax | -6.087 | -5.891 |
| Origination and reversal of temporary differences | -1.539 | -211 |
| Deferred tax assets on tax losses and forfeited losses | 249 | - |
| Deferred tax | -1.290 | -211 |
| TOTAL | -7.377 | -6.102 |
Income tax for H1 17/18 amount to € 7,4m, which implies an effective tax rate of 37,3%. The decrease in effective tax rate compared to H1 16/17 is the result of ongoing efforts to structurally improve the tax rate.
5. NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
5.1. Property, plant & equipment
The increase in property, plant & equipment by € 2,6m is related to the investments during the first half year of the accounting period (€ 31,2m). This increase is largely compensated by the depreciation (€ 24,8m), and the combined impact of disposals, changes in scope, foreign exchange rate fluctuations and other movements (€ 3,8m).
The investments consist of 'land and buildings' (€ 1,9m), 'plant, machinery and equipment' (€ 9,1m), 'furniture and vehicles' (€ 1,7m), 'leasing' (€ 0,8m) and 'assets under construction' (€ 17,7m). The main investments concern new distribution centres in Germany and the United Stated.
5.2. Goodwill
The Group tests the goodwill for impairment annually and in case there are indications that the value of goodwill has decreased. The Group's impairment test for goodwill is based on value in use calculations resulting from a discounted cash flow model.
As per 30 September 2017 there are no circumstances that indicate that the carrying value of the goodwill may be impaired. Hence the impairment analyses as mentioned in the annual report ending as per 31 March 2017 are still valid.
5.3. Other intangible assets
The decrease of the other intangible assets by € 5,8m mainly results from the depreciation (€ 8,0m). This is primarily compensated by software investments (€ 2,0m).
5.4. Provisions
The increase of the provisions is mainly attributable to the increase in provisions for decommissioning, mainly related to a new distribution centre in Germany.
5.5. Financial assets and liabilities
The table below only includes the financial assets and liabilities for which the fair value differs from the carrying amount. For all other financial assets and liabilities we consider the carrying amounts approximate the fair values.
| Financial assets and liabilities at 30 September 2017 | Net carrying amount | Fair value |
|---|---|---|
| €'000 | €'000 | |
| Retail bond | 149.860 | 159.111 |
| Host component of the convertible bond | 112.175 | 126.896 |
| Bank loans | 146.741 | 158.895 |
| Financial assets and liabilities at 31 March 2017 | Net carrying amount | Fair value |
|---|---|---|
| €'000 | €'000 | |
| Retail bond | 149.822 | 160.419 |
| Host component of the convertible bond | 110.857 | 121.751 |
| Bank loans | 156.535 | 160.470 |
6. OTHER ELEMENTS
6.1. Subsidiaries and changes in consolidation scope
The parent company of the Group is Greenyard NV, Sint-Katelijne-Waver, Belgium. The subsidiaries and associates of the Group as per 30 September 2017 are the same as presented in the annual report as per 31 March 2017, apart from:
- On 17 July 2017 Greenyard divested its stake in Greenyard Logistics Bulgaria.
- On 29 August 2017 Greenyard divested its stake in Atabel.
6.2. Off-balance sheet commitments
There are no significant changes to contingencies compared with the previous reporting period.
6.3. Contingent assets and liabilities
During H1 17/18 there are no significant changes in the contingent assets and liabilities compared to the previous reporting period.
6.4. Related parties
During H1 17/18 there are no significant changes in related parties compared to the previous reporting period.
6.5. Risk management description
The principal risks and uncertainties for the remaining months of the financial year ending 31 March 2018 remain the same as those described in the previous annual report at 31 March 2017.
6.6. Litigations and claims
During H1 17/18 there are no new significant changes in the litigations and claims compared to the previous reporting period.
6.7. Events after balance sheet date
Between 30 September 2017 and the date the interim report was released for publication, no significant events occurred.
STATEMENT OF RESPONSIBLE PERSONS
Declaration regarding the condensed consolidated interim financial statements for the 6 months period ended 30 September 2017.
Sint-Katelijne-Waver, 21 November 2017
The undersigned, in the name and on behalf of Greenyard NV, declare that, as far as they are aware:
- the condensed consolidated interim financial statements for the 6 month period ended 30 September 2017, established in conformity with the applicable accounting standards, give a true and fair view of the equity, the financial position and the results of Greenyard NV, including its consolidated subsidiaries;
- this half year financial report for the 6 months period ended 30 September 2017 contains a true and fair statement of the important events, the results and the position of Greenyard NV, including its consolidated subsidiaries, as well as a comment on the principal risks and uncertainties confronting the Group.
Deprez Invest NV, represented by Mr Hein Deprez, president of Board of Directors
Mavac BVBA, represented by Mrs Marleen Vaesen, CEO
PDN BVBA, represented by Mr Karl Peeters, CFO
REVIEW REPORT ON THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Deloitte.
Report on the review of the consolidated interim financial information of Greenyard NV for the six-month period ended 30 September 2017
In the context of our appointment as the company's statutory auditor, we report to you on the consolidated interim financial information. This consolidated interim financial information comprises the consolidated condensed statement of financial position as at 30 September 2017, the consolidated condensed income statement, the consolidated condensed statement of comprehensive income, the consolidated condensed statement of changes in equity and the consolidated condensed statement of cash flows for the period of six months then ended, as well as selective notes 1 to 6.
Report on the consolidated interim financial information
We have reviewed the consolidated interim financial information of Greenyard NV ("the company") and its subsidiaries (jointly "the group"), prepared in accordance with International Accounting Standard (IAS) 34, "Interim Financial Reporting" as adopted by the European Union.
The consolidated condensed statement of financial position shows total assets of 1 934 056 (000) EUR and the consolidated condensed income statement shows a consolidated profit (group share) for the period then ended of 11 688 (000) EUR.
The board of directors of the company is responsible for the preparation and fair presentation of the consolidated interim financial information in accordance with IAS 34, "Interim Financial Reporting" as adopted by the European Union. Our responsibility is to express a conclusion on this consolidated interim financial information based on our review.
Scope of review
We conducted our review of the consolidated interim financial information in accordance with International Standard on Review Engagements (ISRE) 2410, "Review of interim financial information performed by the independent auditor of the entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit performed in accordance with the International Standards on Auditing (ISA) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on the consolidated interim financial information.
Deloitte Bedrijfsrevisoren / Réviseurs d'Entreprises Burgerlijke vennootschap onder de vorm van een coöperatieve vennootschap met beperkte aansprakelijkheid /
Société civile sous forme d'une société coopérative à responsabilité limitée
Registered Office: Gateway building, Lu
Member of Deloitte Touche Tohmatsu Limited
Greenyard NV Report on the review of the consolidated Interim financial information for the six-month period ended 30 September 2017
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the consolidated interim financial information of Greenyard NV has not been prepared, in all material respects, in accordance with IAS 34, "Interim Financial Reporting" as adopted by the European Union.
Ghent, 17 November 2017
The statutory auditor
DELOITTE Bedrijfsrevisoren / Réviseurs d'Entreprises
BV o.v.v.e. CVBA / SC s.f.d. SCRL Represented by
Canaban
Charlotte Vanrobaeys
Mario Dekeyser
FINANCIAL DEFINITIONS
| EBIT | Operating result |
|---|---|
| EPS | Earnings per share |
| IRS | Interest rate swap |
| Liquidity | Current assets (including assets classified as held or sale)/current liabilities (including liabilities related to assets classified as held for sale). |
| Net financial debt (NFD) | Interest-bearing debt (at nominal value) less bank deposits, cash and cash equivalents. |
| Non-recurring items | Non-recurring items mean any items that, in the opinion of management of the Company, must be disclosed (either on the face of the consolidated income statement of the Group or separately in the notes to the financial statements) by virtue of their size or incidence and including but not limited to certain restructuring activities, impairments, gains or losses on disposal of investments and IFRS 3 acquisition accounting and the effect of the accelerated repayment of certain financial indebtedness. |
| REBITDA | EBIT corrected for depreciation, amortisation and impairments excluding non-recurring items and EBIT corrected for depreciation, amortisation and impairments from minor divested operations. |
| Working capital | Working capital is the sum of the inventories, trade and other receivables (non-current and current) and trade and other payables (current). In this respect trade and other receivables are corrected for long-term (financing) receivables and accrued interest income and trade and other payables exclude accrued interest expenses and dividend payable. |
| AY 17/18 | Accounting year ending 31 March 2018 |
| AY 16/17 | Accounting year ended 31 March 2017 |
| H1 17/18 | First half year of accounting year ending 31 March 2018 |
| H1 16/17 | First half year of accounting year ended 31 March 2017 |