Half-Year Results 2019

2019 Half-Year Results Commentary The first six months of 2019 has seen improvements in revenue for the International Produce division, but also presented a challenging operating environment for T&G Global Limited and its subsidiary companies (the Group). Volume issues and fruit quality in the Pipfruit division combined with a mild winter and lower than average prices in the domestic market led to a decrease in revenue of $20.9 million, from $581.7 million to $560.8 million for the six-month period of January to June 2019. Unaudited profit of $3.9 million for the six months ended 30 June 2019 represented a $0.6 million increase from prior year. This increase was driven by a stronger gross profit margin* in the operating business combined with a $3.1 million gain on sale realised through the Group's strategy of recycling non-core assets. The unaudited profit for the period also includes expenses of $2.0 million related to a business reorganisation of the Group in early 2019. During the year the Group applied NZ IFRS 16 Leases for the first time leading to a reduction in operating expenses of $7.7 million. This was offset by additional depreciation and amortisation expenses of $7.4 million and additional financing expenses of $1.6 million. Pipfruit During the first six months of the financial year, the Group's Pipfruit division has experienced a challenging operating environment. Adverse weather conditions in New Zealand led to harvested apple volumes and apple sizing being smaller than expected. Additionally, quality issues in the New Zealand and European Pipfruit operations resulted in less fruit available to the market. Although these impacts were offset by better pricing for the Group's controlled apple varieties Envy(TM) and Jazz(TM), the division saw revenue decrease $31.0 million from $329.1 million at the end of June 2018 to $298.1 million for the period ended 30 June 2019. With the decrease in revenue and the resulting lower gross profit, the Pipfruit division recorded a decrease in operating profit of $1.7 million from last year's $13.1 million to $11.4 million for the six months ending 30 June 2019. International Produce The International Produce division saw an increase in its revenue compared to the same period last year, improving by $17.7 million from $126.7 million in 2018 to $144.4 million in 2019. This improvement was driven mainly by sales of produce exported from Australia, particularly exported grapes. Within the domestic Australian market, the division recorded a good result from citrus and berry sales and benefited from a strong plum programme. Overall the International Produce division recorded a $0.2 million increase in its operating profit, from $2.1 million in the first six months of 2018 to $2.3 million in the first six months of 2019. New Zealand Produce Revenue for the New Zealand Produce division decreased by $6.6 million from $111.9 million in the six months ended 30 June 2018 to $105.3 million in the first half of 2019. This is mainly due to the divestment of the Northland kiwifruit business during the 2018 financial year reducing the volume of kiwifruit available to market in 2019. In addition to this, the mild start to winter in New Zealand has caused unusually low prices on several key products, including tomatoes and most green vegetables, impacting revenue for the first six months of 2019. Operating result for the division remained relatively consistent with 2018 due to an increased gross margin and a reduction of net operating expenses. Looking ahead Despite the difficult start to the 2019 financial year, the outlook for the remainder of the year is positive compared to the second half of 2018, when the Group faced several operational challenges. T&G should also begin to see the benefits of the reorganisation in the second half of 2019. In the long-term, the Group will continue to focus on the recycling of non-core assets, investments in future growth of Envy(TM) and Jazz(TM), and on developing new vertically integrated categories to meet the demands of the global market. * defined as the difference between purchases, raw materials and consumables and revenue from external customers, as a percentage of revenue from external customers For more information please contact: Belinda Abernethy External Communications Manager T&G Global Tel: 027 564 7436 Email: belinda.abernethy@tandg.global End CA:00338759 For:TGG Type:HALFYR Time:2019-08-08 08:59:43