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Informe Anual 2014
Annual Report 2014
Desarollando Comunidades
Building Communities
Sembrando Cacao
Growing Cacao
Programa Alianza Producción Estratégica Cacao (“PAPEC”)
PAPEC is a market based financing mechanism established by the Company to promote the
cacao industry in communities around our estate. The programme has been well-received by the
communities and we are pleased to report there is a waiting list to join PAPEC. By the end of 2015,
we expect to have 200 hectares of cacao planted with 176 participants. In 2016, we expect to plant
an additional 500 hectares of PAPEC cacao involving an additional 350 participants. Our objective
is to expand the programme to 3,250 hectares with several thousand participants.
Under PAPEC, the Company extends the necessary supplies, fertilizer and seedlings to qualified
small farmers. These agricultural credits are not a donation but documented as a loan which is
ultimately repaid from future cacao harvests. The Company undertakes to purchase wet beans from
the PAPEC participants and we intend to process those beans in our fermentation centers ensuring
top quality dried, fermented beans for the export market.
El PAPEC (Programa Alianza Producción Estratégica Cacao) es un mecanismo de financiamiento
basado en el mercado que la empresa estableció para promover la industria de cacao en las
comunidades cercanas a la plantación. El programa ha sido bien recibido por las comunidades y
nos da placer reportar que existe una lista de espera para formar parte del PAPEC. A finales de
2015, esperamos contar con 200 ha de cacao sembradas y 176 participantes. En 2016, esperamos
expandir el programa a 350 participantes adicionales quienes representarian un incremento de 500
ha. Nuestra meta para el programa es de 3,250 ha con miles de participantes.
Bajo el PAPEC, la empresa provee los materiales, fertilizantes y plantones a pequeños agricultores
calificados. Estos creditos agrícolas no son donaciones sino que préstamos documentados que
serán amortizados a lo largo de cosechas en el futuro. La empresa se compromete a comprar el
cacao húmedo de los participantes del PAPEC para luego procesar el cacao en nuestros centros de
fermentación y asegurar un cacao en seco de la más alta calidad para el mercado de exportación.
The PAPEC programme was inaugurated on 17th April 2015 at the Company’s community center in Tamshiyacu.
El PAPEC se inauguró el 17 de abril 2015 en el centro comunitario de la empresa en Tamshiyacu.
The Company’s social investments in Tamshiyacu, PAPEC and its estates
is welcomed by the local Mayor, community and youth. The cycle of
perpetual poverty can finally be broken.
The PAPEC launch was celebrated by the community.
El inicio del PAPEC fué celebrado por la comunidad.
Las inversiones sociales de la empresa en Tamshiyacu junto con el PAPEC
y la plantacion son bienvenidos por el Alcalde. Finalmente el ciclo de
pobreza se puede romper.
Changing Lives Through Cacao / Cambiando vidas mediante el cacao
Mr Adriel Caro Pacaya, aged 46, has been living in Tamshiyacu since
1989. He supports his two children by making charcoal for sale to Iquitos
restaurants and growing yuca and pineapple on his nine hectare land
plot. He must carry these products several kilometers to the Tamshiyacu
town. Adriel is one of the first participants to join the Company’s PAPEC
program.
Charcoal is a tough business. Adriel and his relatives work without
protective equipment around the smoldering piles of charcoal for weeks
in a row. They use chainsaws to extract the raw wood, cut them into
smaller pieces and then build mounds which burn for several days. He
must then carry the charcoal to the river port and bring the heavy bags
to Iquitos for sale.
Adriel Caro Pacaya, de 46 años, ha vivido en Tamshiyacu desde el año 1989.
Él apoya a sus dos hijos haciendo carbón para ser vendido en restaurantes
de Iquitos y siembra yuca y piña en su parcela de nueve hectáreas. Él debe
llevar estos productos a varios kilómetros al pueblo de Tamshiyacu. Adriel
es uno de los primeros en unirse como participante del Programa PAPEC
de la Compañía.
La venta de carbón es un negocio duro. Adriel y sus familiares trabajan sin
equipos de protección alrededor de humeantes montículos de carbón por
semanas. Ellos usan motosierras para extraer la madera cruda, cortarla
a pedazos más pequeños y formar montículos que estarán al fuego por
varios días. Él luego tiene que llevar el carbón hacia el puerto del río y
llevar bolsas de gran volumen hacia Iquitos para su venta.
“Through PAPEC, I am creating a better future
for my family. One day, I will have all of my nine
hectares planted with cacao.”
“A través del PAPEC, estoy creando un mejor
futuro para mi familia. Un día tendré mis nueve
hectáreas sembradas con Cacao”.
Mr Enrique Paredes Hidalgo (bottom right) is a cacao technician with our PAPEC
program. In
1988,
Enrique
startedCARO
his career
in cacao with the United
Farmer’s
full
name:
ADRIEL
PACAYA
Nations Alternative Development Program in Peru; he is one of our most skilled technicians. The UN has worked for several decades in the Amazonian Peru
years
old.
to migrate coca (the raw material for cocaine) farmers to plant alternative crops Age:
such as46
palm
oil and
cacao. The UN has been instrumental in planting tens
of thousands of hectares of palm oil and cacao in the Amazon. Peru is the #1 coca grower in the world; coca is a crop devastating for the environment,
Family
members
(# children): 2
families and society. Enrique works closely with Adriel to ensure his seedlings are well-tended and the plantings are done with the same procedures as the
Company’s estate.
He lives in Tamshiyacu since 1989.
from
Community
River-Fernando
El señor Enrique Paredes Hidalgo (abajo a la derecha) es un técnico en cacao de His
nuestro
programa
PAPEC. EnEsperanza-Tahuayo
1988, Enrique inició su carrera
en cacao con
el Programa de Desarrollo Alternativo de las Naciones Unidas en el Perú; él es unoLores
de nuestros técnicos más hábiles. Las Naciones Unidas ha trabajado por
varias décadas en la Amazonía Peruana para erradicar la siembra de coca (materia prima para la cocaina) por la siembra de cultivos alternativos, como la
palma aceitera y el cacao. Las Naciones Unidas tiene al Perú como el país #1 en el mundo en la siembra de coca; la coca es un cultivo devastador para el
medio ambiente, las familias y la sociedad. Enrique trabaja de manera cercana a Adriel para asegurar que su semillero se encuentre bien mantenido y que las
plántulas se lleven a cabo con los mismos procedimientos aplicados en los terrenos de la Compañía.
“Adriel is a fast learner and he is a pleasure to
work with. His farm will generate top yields
with our CCN 51 planting material. We are
starting with two hectares but I know Adriel
wants to increase this to nine hectares. We
will help him achieve this.”
“Adriel aprende rápido y es un placer
trabajar con él. Su plantación generará muy
buenos rendimientos con nuestro material
genético CCN 51. Estamos iniciando con
dos hectáreas pero yo sé que Adriel desea
incrementarlas a nueve hectáreas. nosotros
lo ayudaremos a lograrlo.”
Location Map & Population Survey /
Mapa de localización y encuesta a la población
72
78
Manta
R ío Nap
Quevedo
Portoviejo Ambato
Pantoja
Riobamba
o ra
as taza
am
oZ
Rí
Loja
R ío M
a ra
Ama z o
n
A ma z o n
Leticia
varí
R ío Ya
a ri
R io J a v
Tabatinga
ñó n
Yurimaguas ío U
R
Nuevo Jerusalén
ca
ya
6
Tarapoto
Chiclayo
R ío H u
ag
a ll
R ío
Trujillo Salaverry
R io J uruá
PERU
Cajamarca
Santa
a Lucia
Cruzeiro
do Sul
Pucallpa
Ma
ra
n
ñó
Tingo
María
H ig
Abancay
R ío
Ap
urím
-
BOLIVIA
y
Puno
y
Arequipa
fe rry
Lago
Titicaca
Desaguadero Guaqui
De
200 Miles
sa
Toquepala
La Paz
Viacha
R ío
Moquegua
Matarani
g ua d e r
o
Tacna
Oruro
Transverse Mercator Projection, CM 75 W
Arica
78
D io s
Rurrenabaque
ig
a
hw
200 Kilometers
100
H
wa
Ilo
0
18
an
Juliaca
me
ric
an
Hig
h
de
12
Cusco
ac
Am
er
ic
-A
re
Puerto
Maldonado
P an
Ica
Pan
Road
Road under construction
ad
Machupicchu
(ruins)
Nazca
Railroad
M
Rí
Manú
ba
ba m
National capital
Cobija
o
U ru
Quillabamba
Ayacucho
Chincha
Alta
Pisco
San Martín
Assis Brasil
Iñapari
Huancayo
Huancavelica
United OCEAN
Cacao Estates
International boundary
R ío
s
ur ú
R ío
Peru
PACIFIC
Atalaya
MTarma
a nt
o
ar
Callao
100
Rio
Branco
P
Alto
e ni
R ío
ay
hw
La Oroya
SOUTH
0
s
P uru
li
an
Goyllarisquizga Cerro
de Pasco
Lima
Nuevo Tarapacá
Santa Rosa del Shato
R io
Huánuco
Huacho
12
BRAZIL
a ya
e ri c
-Am
P an
Huaraz
Uc
Chimbote
R ío
(Panguana III)
Company
Project Area
purá
R io J a
po
Moyobamba
Chachapoyas
Collpa
Carretera Tamshiyacu
Vila Bittencourt
li
Piura
6
Terrabona
La Pedrera
Cacao Indigenous
Growing Zone
Na
Nauta
Sullana
Centro Industrial
tu
Iquitos
S a ntia go
Macará
Pu
R ío C
Puerto
a qu
e tá
Santander
R io Iç á
P
ío
R ío
Paita
o
R
Cuenca
Machala
Tumbes
Talara
Rí
ECUADOR
Guayaquil
R ío
0
COLOMBIA
o
Nuevo
Rocafuerte
yo
ma
Population: 422,000 people
Puerto
Leguízamo
Quito
R ío B
Iquitos
Santo Domingo
de los Colorados
Equator
0
CHILE
Lago
Poopó
18
72
Base 803152AI (G00212) 1-06
Punga
Canaan
Leyenda / Legend
Pueblos / Villages
Capital de Loreto /
State Capital of Loreto
San Juan de Cunshico
5 km
The Company has undertaken a detailed social survey in
La Compañía ha llevado a cabo una encuesta social detallada en la zona
the area of its plantations and identified ten communities
de influencia de sus plantaciones y ha identificado diez comunidades
with over 5,684 people. It is the Company’s philosophy
con más de 5,684 pobladores. Es la filosofía de la Compañía mejorar las
to
operating
condiciones de vida de los pobladores que viven alrededor de las zonas
areas and the following pages detail our initiatives in
improve
the
lives
of
those
de sus operaciones. En las siguientes páginas se detallan las iniciativas
this respect.
implementadas para alcanzar estas metas.
Population Summary of Ten Communities along the Amazon
River and Tamshiyacu
Resumen Poblacion Aproximada de Diez Comunidades del Rio
Amazonas y Tamshiyacu
Community
around
our
Estimated Population
Comunidad
Población Estimada
Nuevo Jerusalén
120
Nuevo Jerusalén
120
Centro Industrial (Panguana III)
389
Centro Industrial (Panguana III)
389
Terrabona
105
Terrabona
105
Collpa
Nuevo Tarapacá
80
Collpa
80
Nuevo Tarapacá
4,638
80
80
4,638
60
Punga
72
Punga
72
Canaan
100
Canaan
100
Total Population
40
5,684
Población Total
60
40
5,684
CONTENTs / Contenido
Corporate Information
Información Corporativa
Profile of directors
Perfil de Directores
Chairman’s Statement
Declaración del Presidente
Annual Financial Statements
Estados Financieros Anuales
Independent auditors’ report
Informe Independiente del Auditor
Consolidated statements of financial position
Estados consolidados de cambios en la situación financiera
Consolidated statements of comprehensive income
Resultados integrales consolidados
Consolidated statements of changes in equity
Estado de cambios en el patrimonio neto consolidado
Consolidated statements of cash flows
Estados de flujos de efectivo consolidados
Notes to the consolidated financial statements
Notas a los estados financieros consolidados
2
3
5
18
19
21
22
23
24
25
Corporate Information / Información Corporativa
Corporate Information / Información Corporativa
Directors / Directores
Dennis Nicholas Melka
Brokers / CORREDORES
Founder, Executive Chairman and Chief Executive Officer
Fundador, Director Ejecutivo Conjunto y Presidente Ejecutivo
Anthony (“Tony”) John Kozuch
Executive Director
Director Ejecutivo
Constantine Gonticas
Non-Executive Director
Director No Ejecutivo
Roberto Tello Pereyra
VSA Capital Limited
Fourth Floor
New Liverpool House
15-17 Eldon Street
London EC2M 7LD
United Kingdom
Non-Executive Director
Director No Ejecutivo
Registered Office / OFICINA REGISTRADA
United Cacao Limited SEZC
Codan Trust Company (Cayman) Limited
Cricket Square, Hutchins Drive, PO Box 2681
Grand Cayman, KY1-1111, Cayman Islands
BUSINESS ADDRESS / DOMICILIO CORPORATIVO
HSBC House
68 West Bay Road, PO Box 10315
Georgetown, KY1-1003
Grand Cayman, Cayman Islands
Company Secretary / SECRETARIO DE LA EMPRESA
Codan Trust Company (Cayman) Limited
Cricket Square, Hutchins Drive, PO Box 2681
Grand Cayman, KY1-1111, Cayman Islands
Nominated Adviser / CONSEJERO NOMINADO
Strand Hanson Limited
26 Mount Row, London W1K 3SQ
United Kingdom
Auditor / Auditor
KALLPA Securities Sociedad Agente de Bolsa S.A.
Jr. Monterosa 233
Oficina 902
Urb. Chacarilla del Estanque
Surco, Lima 33
Peru
Registrars / REGISTRADOR
Computershare Investor Services (Cayman) Limited
The R&H Trust Co. Ltd.
Windward 1, Regatta Office Park
West Bay Road
Grand Cayman, KY1-1103
Cayman Islands
Depositary / DEPOSITARIO
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS13 8AE
United Kingdom
CONTACT / CONTACTO
Phone: +1 345 815 2710
Email: info@unitedcacao.com
Website: www.unitedcacao.com
ISIN: KYG9271M1078
LSE Ticker / Símbolo: CHOC
Paredes, Zaldivar, Burga & Asociados S.Civil.de R.L.
Member of Ernst & Young Global
Av. Víctor Andrés Belaunde 171
San Isidro, Lima 27
Peru
2
Annual Report 2014 / Informe Annual 2014
BVL Ticker / Símbolo: CHOC
Shares Outstanding / Acciones en circulación:
18,590,000 (as of 29 June / al 29 de junio, 2015)
Profile of Directors / Perfíl de Directores
Profile of Directors
Perfíl de Directores
Age 42, is the Founder, Chairman and Chief
Executive Officer of United Cacao Limited SEZC.
42 años, es el Fundador, Presidente Ejecutivo y Director
Ejecutivo Conjunto de United Cacao Limited SEZC.
Previously, Mr Melka was the Co-Founder, Executive
Director and Joint Chief Executive Officer of Asian
Plantations Limited, a plantation company on the
London Stock Exchange’s Alternative Investment
Market (AIM). Asian Plantations Limited was
admitted to AIM in November 2009 at 75 pence
per share and was subsequently purchased by
a strategic acquirer for 220 pence per share in
October 2014; during this time period, the market
capitalization grew from £22m (at Admission) to
£110 m at the time of acquisition. Since 2006,
he has co-founded and launched companies in
agriculture, consumer finance, hotels and mobile
telecommunications. Mr Melka started his career
as an investment banker with Credit Suisse First
Boston from 1995 to 2005 in New York, London,
Prague, Singapore and Bangkok.
Mr Melka
graduated magna cum laude from the Edmund
A. Walsh School of Foreign Service, Georgetown
University in Washington D.C. He is a Czech
citizen and resident in the Cayman Islands.
Previamente, el señor Melka fue el co-fundador,
Presidente Ejecutivo y Director Ejecutivo conjunto de
Asian Plantations Limited, una compañía agroindustrial
cotizada en la Bolsa de Valores Alternativa de Londres
(AIM). Asian Plantations Limited fue admitida en la
AIM en Noviembre de 2009 a 75 peniques por acción
y posteriormente fue comprada por un comprador
estratégico a 220 peniques por acción en Octubre de
2014; durante este periodo de tiempo, la capitalización
del mercado creció de £22 millones (en su admisión) a
£110 millones al momento de la adquisición. Desde el
año 2006, el señor Melka ha co-fundado y emprendido
compañías en agricultura, consumo financiero, hoteles
y telecomunicaciones de teléfonos móviles. El señor
Melka inició su carrera como banquero de inversión
con Credit Suisse First Boston del año 1995 al 2005
en Nueva York, Londres, Praga, Singapur y Bangkok. El
señor Melka se graduó magna cum laude de la escuela
Edmund A. El señor Melka se graduó magna cum laude
de la Escuela de Servicio Exterior Edmund A. Walsh de
la Universidad de Georgetown, en Washington D.C. Él
es ciudadano Checo y residente en Islas Gran Caimán.
ANTHONY J. KOZUCH
Age 41, is an Executive Director of United Cacao
Limited SEZC.
ANTHONY J. KOZUCH
41 años, es Director Ejecutivo de United Cacao Limited
SEZC.
Mr. Kozuch was born and raised in Mexico City
and is a native Spanish speaker. Over the last 14
years, Mr. Kozuch has been the Chief Financial
Officer of Communiqué Conferencing, Inc., an
international conferencing services company he
co-founded in 2001. Prior to Communiqué, Mr.
Kozuch served in various channel marketing,
program management, and business development
roles with voice and data providers in the U.S. and
Latin America including Winstar Communications,
Concert and Avantel (MCI’s venture in Mexico).
Mr. Kozuch travels frequently to Central and South
America and is an Executive Director of United Oils
Limited SEZC, a developer of palm oil plantation
estates with a land bank in excess of 30,000
hectares. Mr. Kozuch graduated from the Edmund
A. Walsh School of Foreign Service, Georgetown
University in Washington DC. He is a U.S. citizen
and resident.
El señor Kozuch nació y creció en la ciudad de México
y tiene como lengua nativa el español. En los últimos
13 años, el señor Kozuch ha sido el Director Financiero
de la empresa Communiqué Conferencing, Inc., una
compañía internacional de servicios de conferencia
que co-fundó en el año 2001. Antes de formar parte
de Communiqué Conferencing, Inc., el señor Kozuch
trabajó en varios roles de marketing, programas de
gerenciamiento y de desarrollo de negocios con
proveedores de servicios de voz y datos en los EE.UU. y
América Latina, incluyendo Winstar Communications,
Concert y Avantel (un Joint Venture de MCI en
México). El señor Kozuch viaja con frecuencia a
Centro y Sur América y es Director Ejecutivo de United
Oils Limited SEZC, un desarrollador de plantaciones
de palma aceitera con una reserva de suelo de más
de 30,000 hectáreas. El señor Kozuch se graduó de
la Escuela de Servicio Exterior Edmund A. Walsh de la
Universidad de Georgetown, en Washington D.C. Él
es un ciudadano y residente estadounidense.
3
Profile of Directors / Perfíl de Directores
Age 47, is a Non Executive Director of United
Cacao Limited SEZC and also a Senior Advisor to
the Blackstone Group since 2012.
47 años, es Director No Ejecutivo de United Cacao
Limited SEZC y también se desempeña como asesor
experimentado del Grupo Blackstone desde el año 2012.
He is an active investor through Green Square
Capital Limited, his personal investment vehicle.
Previously, from 2004 to 2011, Mr Gonticas
was the Managing Partner of Novator LLP, an
investment company specializing in Central &
Eastern Europe. Whilst at Novator, Constantine
sourced a number of investments, including
PLAY (a Polish mobile telephony company which
is one of the largest ever start-ups in the region),
Netia (Polish fixed line telephony) and Forthnet
(fixed line telephony in Greece). He has served as
Vice Chairman of the Supervisory Board of PLAY
and was also Vice Chairman of the Boards of
Netia and Forthnet. Before Novator, Mr Gonticas
was Head of Investment Banking for Central and
Eastern Europe, Middle East and Africa for Merrill
Lynch and prior to that spent 12 years at Credit
Suisse First Boston. Mr Gonticas has a law degree
from Oxford University. He is a UK citizen and
resident in London.
Es un inversionista activo a través de Green Square Capital
Limited, su vehículo personal de inversión. Previamente,
desde el año 2004 hasta el año 2011, el señor Gonticas
fue el Socio Principal de Novator LLP, una compañía
de inversiones especializada en el Centro y Este de
Europa. Mientras estuvo en Novator, el señor Gonticas
financió una serie de inversiones, incluyendo PLAY (una
compañía Polaca de telefonía móvil, considerada como
una de las más grandes empresas de nueva creación en
la región), Netia (una empresa Polaca de telefonía fija)
y Forthnet (una compañía de telefonía fija en Grecia).
Él ha trabajado como Vicepresidente del Consejo de
Supervisión de PLAY y Vicepresidente de los Directorios
de Netia y Forthnet. Antes de Novator, el señor Gonticas
fue el líder de la banca de inversión en el Centro y Este
de Europa, Medio Oriente y África para Merrill Lynch y
anteriormente a ello, pasó 12 años en Credit Suisse First
Boston. El señor Gonticas es licenciado en Derecho por la
Universidad de Oxford. Es ciudadano del Reino Unido y
residente en Londres.
Roberto Tello
Age 44, is a Non Executive Director of United
Cacao Limited SEZC. He is also the principal legal
counsel for the Company’s wholly owned operating
subsidiary, Cacao Del Peru Norte SAC, in Iquitos,
Peru.
Roberto Tello
44 años, es Director No Ejecutivo de United Cacao Limited
SEZC. También es el asesor legal principal de la subsidiaria
en el Perú, de propiedad íntegra de la Compañía, Cacao del
Perú Norte SAC, en Iquitos, Perú.
As the founding partner of Estudio Juridico Tello
Pereyra Abogados, Mr. Tello advises corporate
clients and municipalities throughout the Peruvian
state of Loreto. Mr. Tello is a frequent lecturer for
legal forums and congresses throughout Latin
America with a specialization in administrative
law. In Peru, Mr. Tello is at the forefront of Peru’s
newly instituted legal procedural code and has
organized training seminars for government
appointed superior justices and prosecutors.
He earned his law degree from the Universidad
Nacional Mayor de San Marcos and is the
President of the Council of Arbitration for the
Loreto Chamber of Commerce. Mr Tello is a
Peruvian citizen and resides in Iquitos, Peru.
4
Como socio fundador del Estudio Juridico Tello Pereyra
Abogados, el señor Tello asesora clientes corporativos
y municipalidades localizadas en la Región peruana de
Loreto. El señor Tello es un conferencista frecuente para
foros y congresos jurídicos en toda América Latina, con
una especialización en derecho administrativo. En el
Perú, el señor Tello está a la vanguardia del recientemente
instituido código de procedimientos penales y ha
organizado seminarios de capacitación para jueces y
fiscales superiores nombrados por el Gobierno. El señor
Tello obtuvo su título de abogado en la Universidad
Nacional Mayor de San Marcos y es el Presidente del
Consejo de Arbitraje de la Cámara de Comercio de
Loreto. El señor Tello es ciudadano peruano y reside en
Iquitos, Perú.
Chairman’s Statement / Declaración del Presidente
Chairman’s Statement
Declaración del Presidente
Introduction
Introducción
Thank you for being a shareholder or having an interest in
Gracias por ser accionista o tener interés en United Cacao Limited SEZC
United Cacao Limited SEZC (the “Company”). It is with your
(la “Compañía”). Es con su apoyo que estamos en buen camino para
support that we are on track to create the world’s largest
crear la plantación más grande de cacao en el mundo y ser el mayor
cacao estate and to be the world’s lowest-cost cacao producer.
productor de cacao a más bajo costo en el mundo. En una industria
In an industry plagued by child labour and slavery in West
plagada por trabajo infantil1 y esclavitud2 en el Oeste de África, vuestra
Africa, your Company has created sustainable employment
Compañía ha creado cientos de oportunidades de empleo sostenible,
opportunities for hundreds and, ultimately, thousands of
y últimamente miles, para la gente de la región Amazónica, cuando la
people in the Amazon, when the project is completed. The
proyección se complete. Las comunidades dentro y alrededor del área
communities in and around the Tamshiyacu area, our operating
de Tamshiyacu, nuestra área operativa, tienen un derecho humano
area, have a fundamental human right to have access to work,
fundamental a tener acceso al trabajo, agua limpia, un salario digno
clean water, a living wage, and a better future for their families
y a un mejor futuro para sus familias - puede estar seguro de que su
– rest assured your Company is making this a reality.
Compañía está haciendo de esto una realidad.
As of publication of this statement, your Company:
A la publicación de esta declaración, su Compañía:
• owns over 3,760.5 hectares of private, freehold land
• es propietaria de más de 3,760.5 has de terreno privado,
that is fully zoned and pre-approved for agricultural
completamente zonificado y pre-aprobado para propósitos
purposes since 1997 under Legislative Decree 838
agrícolas desde el año 1997 bajo el Decreto Legislativo Nº 838,
approved by the then President, Congress and Ministry of
aprobada por el Presidente, Congreso y Ministro de Agricultura de
Agriculture;3
ese entonces;3
1
2
• has over 1,150 hectares planted, consisting of 70% with
• tiene más de 1,150 hectáreas sembradas de cacao compuesto
CCN 51 and 30% with fine aromatic varieties such as
en un 70% por CCN 51 y 30% de finas variedades aromáticas
TSH-595, IMC-67 and ICS -1. We maintain our objective
como TSH-595, IMC-67 y ICS-1. Nosotros mantenemos nuestro
to achieve 2,000 ha planted by the calendar year-end
objetivo de lograr 2,000 ha sembradas para finales del año
making your Company, we believe, the largest estate in
calendario, haciendo a su Compañía, según nosotros creemos, la
Latin America. The trees we plant, approximately 1,111
plantación más grande en América Latina. Los árboles que hemos
per hectare, are indigenous to the Amazon area and will
plantado, aproximadamente 1,111 por hectárea, son originarios
have a productive life in excess of 40 years.
del área del Amazonas y tendrán una vida útil de más de 40 años.
1 https://www.stopthetraffik.org/campaign/chocolate | 2 http://thecnnfreedomproject.blogs.cnn.com/category/chocolates-child-slaves | 3 The Superior Court of Appeals of
Loreto further supported this position with their 3-0 ruling on 26 March 2015. This is the definitive and thus far conclusive legal ruling. / El Tribunal Superior de Apelaciones de Loreto
respaldada esta posición con su decisión de 3-0, el 26 de marzo de 2015. Se trata de la resolución judicial definitiva y hasta ahora concluyente.
5
Our
Programa
Alianza
Producción
Estratégica
Cacao
Nuestro Programa Alianza Producción Estratégica Cacao (“PAPEC”)
(“PAPEC”) is also on track to achieve an additional 200
también está en buen camino para lograr la siembra de 200 hectáreas
hectares planted this year and a further 500 hectares in 2016.
adicionales este año y más adelante, 500 hectáreas en el año 2016.
PAPEC is an innovative programme that allows struggling
PAPEC es un programa innovador que permite a los pequeños
farmers around our estate to participate in the cacao
agricultores ubicados alrededor de nuestra plantación, el participar en
industry and create a positive future for themselves and
la industria del cacao y crear un futuro positivo para ellos mismos y sus
their families.
familias.
This Chairman’s statement will update you on the Company’s
La declaración del Presidente lo actualizará sobre las actividades de la
activities and provide some macro-level observations that, in
Compañía y le brindará ciertas observaciones a nivel macroeconómico,
our opinion, create and validate the investment thesis for
que en nuestra opinión, genera y valida la tesis de inversión de nuestra
your Company. As this is our first annual report, we seek to
Compañía. Como es nuestro primer reporte anual, nosotros buscamos
be as comprehensive as possible to explain our strategy for
ser lo más integral posible para explicarles nuestra estrategia a nuestros
current and future shareholders.
accionistas actuales y futuros.
CACAO IS AN ESSENTIAL, NONSUBSTITUTABLE FOOD INGREDIENT
CACAO ES UN INGREDIENTE COMESTIBLE,
ESENCIAL Y NO SUSTITUIBLE
The global chocolate confectionary industry has sales of
La industria de la confección de chocolate a nivel global, tiene ventas
approximately US$120 billion per annum. Cacao is an
de aproximadamente US$120 billones4 por año. El cacao es un
essential, non-substitutable ingredient to these sales and
ingrediente esencial, no sustituible para estas ventas y últimamente
ultimately to the profitability of thousands of consumer
para la rentabilidad de miles de compañías de productos de consumo,
product companies including a handful of globally dominant
incluyendo un puñado de marcas de confitería de dominio mundial.
confectionary brands. Unlike palm oil, for example, which
A diferencia del aceite de palma, por ejemplo, lo cual enfrenta una
faces intense competition from highly subsidized soya or
intensa competencia con los productores agroindustriales de soya
rapeseed agri-business producers in America or Europe, there
o colza altamente subsidiadas en América o Europa, no hay un
is no natural or chemical substitute to the cacao bean nor
sustituto químico para el cacao, ni los agricultores en Estados Unidos,
can farmers in the USA, Australia or China grow the crop.
Australia o China pueden producirlo. El árbol de cacao crece en una
The cacao tree grows in an extremely narrow band around
banda extremadamente estrecha alrededor de la zona ecuatorial,
the Earth’s equator providing a very high geographic barrier
que provee una muy alta barrera de ingreso de índole geográfico;
to entry; furthermore, cacao requires abundant, consistent
además, el cacao requiere de lluvia abundante y consistente para
rainfall to achieve maximum productivity. Only a few countries
alcanzar el máximo de productividad. Sólo unos cuantos países en
on Earth can commercially grow the crop and even fewer are
la Tierra pueden crecer la cosecha comercialmente y aún menos son
safe, proven, stable jurisdictions to invest in. Cacao is also less
jurisdicciones donde se puede invertir de una manera segura, probada
4
Cacao demand is highly correlated with global GDP growth…
La demanda de cacao esta altamente relacionada con el crecimiento mundial del PIB...
4,500
90,000
Cacao Grindings(000 MT)
Moliendas de Cacao (000 TM)
70,000
3,500
60,000
3,000
50,000
2,500
40,000
30,000
2,000
20,000
1,500
10,000
1,000
0
World GDP / PBI Mundial ($bn)
4 29 May 2014 Hardman Report entitled “Giant on a Pinhead”
6
Cacao Grindings (000 MT) / Moliendas de Cacao (000 TM)
World GDP / World GDP (US$bn)
80,000
4,000
of a traditional “plantation” crop and more of a specialty
y estable. El cacao tiene menos de cultivo tradicional “plantación” y más
orchard crop akin to almonds or pistachios.
de una cosecha de huerto especial, similar a las almendras o los pistachos.
Demand can be predicted with a relatively high degree
La demanda puede ser predicha con un relativo alto grado de confiabilidad
of confidence by looking at global GDP growth.
al mirar el crecimiento global del producto bruto interno.
The ICCO (International Cocoa Organization) also
La ICCO (Organización Internacional de Cocoa) también proporciona
provides some useful data points of demand, as
información útil sobre la demanda, al ser medida por moliendas
measured by bean grindings:
de grano:
1980/81
1.558 million tonnes
1980/81
1.558 millones de toneladas
1990/91
1990/91
2000/01
2000/01
2010/11
2010/11
Based on the above, the world is increasing its cacao
A través de una simple observación, el mundo está incrementando
consumption by 734,000 to 873,000 tonnes per decade.
el consumo de cacao de 734,000 a 873,000 toneladas por década.
Assuming this trend continues, we can reasonably
Asumiendo una tendencia contínua, podemos esperar razonablemente
expect grindings in 2020 to be approximately 4.6m
moliendas
tonnes and in 2030 to be somewhere around 5.3m
toneladas de toneladas y para el año 2030 estar en alrededor de
tonnes. From where will this additional supply originate
5.3 millones de toneladas. De donde vendrá todo este suministro
from given that cacao production has been declining since
adicional considerando que la producción de cacao ha ido disminuyendo
2011?
desde el año 2011?
PRODUCTION IN THE TRADITIONAL
GROWING ZONES IS STRUGGLING
LA PRODUCCIÓN EN LAS ZONAS TRADICIONALES DE
CRECIMIENTO ESTÁ LUCHANDO
The world’s four largest cacao producers are in
descending order Cote d’Ivoire, Ghana, Indonesia and
Brazil. Collectively, these four nations are producing
approximately 3.25 m tonnes of cacao out of a 4.25
m tonne market, roughly 75%. Each of these nations,
however, face serious challenges to meet rising global
demand, let alone to even maintain levels of current
production. It is interesting to note that global cacao
production peaked in 2011 at 4.3 m tonnes according
to the ICCO. Cacao is certainly unique among
commodities in that there is less produced today than
Los cuatro mayores productores de cacao en el mundo en orden
decreciente son Costa de Marfil, Ghana, Indonesia y Brasil.
En conjunto, estas cuatro naciones producen alrededor de
3.25m de toneladas de cacao, dentro de un mercado de 4.25m de
toneladas, aproximadamente el 75%. Cada una de estas naciones
tiene que enfrentar, sin embargo, serios retos para cumplir la creciente
demanda global, y mucho menos para incluso mantener los actuales
niveles de producción. Es interesante notar que la producción mundial
de cacao alcanzó su máximo en el año 2011 a 4.3m de toneladas
de acuerdo con la ICCO. Cacao es ciertamente único entre los
commodities en los que actualmente hay menos producción que hace
four years ago.
cuatro años.
Brazil and Indonesia have ceased to be meaningful
exporters to the world market. Due to their booming
middle-class populations’ demand for chocolate
confectionary product, they are now in fact net importers
of cacao from West Africa. In fact, Indonesian cacao
production peaked in 2005 and has been falling
since then. Brazilian agricultural wages are prohibitively
expensive to any expansion of the industry there as
Brasil e Indonesia han dejado de ser exportadores significativos en
el mercado mundial. Debido al boom de demanda de productos de
confitería de chocolate por parte de su población de clase media,
por lo que actualmente son importadores netos de cacao
del Oeste de África. De hecho, la producción de cacao en Indonesia
tuvo su punto más alto en el año 2005 y desde ese entonces ha venido
cayendo. Los salarios agrícolas en Brasil son prohibitivamente caros para
cualquier expansión de la industria, más aún para el cacao, por ser un
cacao is a labour-intensive crop.
cultivo que requiere mano de obra intensiva.
For far too long, the confectionary industry has relied
Durante demasiado tiempo, la industria de la confitería se ha apoyado
on poverty-stricken farmers in West Africa surviving on
en los agricultores afectados por la pobreza en África Occidental
a few hectares of dismal production to provide the
que sobreviven en unas pocas hectáreas de pésima producción para
beans needed for their high-margin sweets. Even worse,
proporcionar los granos necesarios para sus dulces de alto margen.
these farmers are effectively taxed at a 50% rate by their
Y peor aún, éstos agricultores son gravados con eficacia a una tasa del
government monopolies which are the sole buyers of
50% por sus monopolios estatales que son los únicos compradores
their beans.
de sus granos.
en el año 2020 de aproximadamente 4.6 millones de
7
These export monopolies then sell these beans to the
Estos monopolios de exportación, luego venden estos granos a los
international buyers at a healthy margin; incidentally, it is
compradores internacionales con un margen saludable; dicho sea
because of this export monopoly structure that it can be
de paso, es porque de esta estructura monopólica de exportación se
safely assumed that no rational corporate investor would
puede suponer con seguridad que ningún inversionista corporativo
locate a corporate farm in the traditional cacao-producing
racional establecería una finca en los países productores de cacao
countries in West Africa. This export tax regime is also
tradicionales en el África Occidental. Este régimen de impuesto a la
important in understanding how and why the market
exportación también es importante en la comprensión de cómo y por
pricing of cacao in the London and New York markets does
qué el precio de mercado del cacao en los mercados de Londres y
not reach the actual producers in West Africa who only see
Nueva York no llega a los verdaderos productores de África Occidental
the local currency cacao price offered by the monopolistic
quienes sólo ven el precio del cacao en moneda local ofrecido por
buying boards. As of publication of this statement, the
las juntas de compra monopolísticas. A partir de la publicación de
international cacao price was in excess of US$3,300 per
esta declaración, el precio internacional del cacao fue de más de
tonne however the Ghana cocoa board price of GHS 5,520
US$3,300 por tonelada; sin embargo, el precio en establecido por el
(US$1,255) per tonne to farmers was only 38% of the
Directorio de cacao de Ghana de GHS5,520 (US$1,255) por tonelada
international price. The Cote d’Ivoire price of CFA 850,000
a los agricultores era sólo el 38% del precio internacional. El precio
(US$1,450) per tonne was 44% of the international price.
en Costa de Marfil de 850,000 CFA (US$1,450) por tonelada fue de
The poorest citizens of these cacao-producing countries in
44% del precio internacional. Los ciudadanos más pobres de estos
effect provide the majority of foreign exchange for their
países productores de cacao en efecto proporcionan la mayor parte de
respective governments. The dismal returns available to
las divisas para sus respectivos gobiernos. Los pésimos rendimientos
these farmers has unfortunately caused a meaningful
disponibles para estos agricultores lamentablemente ha causado de
percentage to rely on child labor and slavery as well
manera significativa el trabajo infantil y la esclavitud como ha sido
documented by CNN and www.stopthetraffik.org. Think
bien documentado por la CNN y www.stopthetraffik.org. Piense
about how your income has increased over the last 15 to
en cómo sus ingresos se han incrementado en los últimos 15 a 25
25 years; unfortunately, the economic situation of the West
años; desafortunadamente, la situación económica de los agricultores
African cacao farmer has only gotten worse. It is illogical to
de cacao de África Occidental sólo ha empeorado. No es lógico
expect this type of market relationship arrange to continue
esperar que este tipo de relación de mercado permita que continúe
indefinitely. Farmers have other options in West Africa such
indefinidamente. Los agricultores tienen otras opciones en el África
as palm oil or rubber. Arguably, rubber is a superior crop to
Occidental, como el aceite de palma o caucho. Podría decirse que el
8
grow in West Africa as it is has more consistent production
caucho es un cultivo superior a desarrollar en África Occidental, ya que
and copes with the dry season and lower rainfall levels
se tiene la producción más consistente, hace frente a la estación seca y
better than cacao.
In Ghana, artisanal gold extraction
los niveles de lluvia más bajos en mejor medida que el cacao. En Ghana,
has been making meaningful inroads in traditional cacao
la extracción artesanal de oro ha resultado en incursiones significativas
growing zones. The expansion of the palm oil industry in
en las zonas tradicionales de cultivo de cacao. La expansión de la
Cote d’Ivoire and Ghana also provides farmers an option
industria del aceite de palma en Costa de Marfil y Ghana también
to sell their harvests domestically without intermediary
proporciona a los agricultores una opción de venta a nivel nacional y sin
buyers. Furthermore, the amount of land available to cacao
compradores intermediarios. Además, la cantidad de tierra disponible
production is, in fact, decreasing. In Ghana, vast areas of
para la producción de cacao está, de hecho, disminuyendo. En Ghana,
cacao farms have been converted to gold extraction; the
vastas áreas de las fincas de cacao han cambiado hacia la extracción de
pollution from this mining only further hastens the decline
oro; la contaminación de esta minería apresura aún más la disminución
in yields for neighboring cacao farms. In Cote d’Ivoire, the
de los rendimientos de las fincas vecinas de cacao. En Costa de Marfil,
industry has penetrated the last possible growing areas in
la industria ha penetrado en las últimas zonas de cultivo posibles en los
the national parks.5 There are very few areas of land left
parques nacionales.5 Hay muy pocas extensiones de tierra que quedan
for the industry to expand into in West Africa let alone the
para la expansión de la industria en África Occidental por no hablar de
matter of competition from other crops.
la cuestión de la competencia de otros cultivos.
Clearly, these are all long-term trends and there is certainly
Claramente, estas son tendencias de largo plazo y hay ciertamente
tremendous volatility along the way; however, it seems
gran volatilidad a lo largo del camino; sin embargo, parece razonable
reasonable to assume that the world’s demand for cacao
suponer que la demanda mundial de cacao ya es y seguirá superando
already outstrips and will continue to exceed the traditional
la capacidad tradicional de las zonas de producción para abastecer a
production zones’ ability to supply into this demand.
esta demanda.
Last month, Ghana announced a serious shortfall in this
El mes pasado, Ghana anunció un grave déficit en la producción
year’s production from nearly a 1m tonne estimate to less
de este año, estimada de casi 1millón de toneladas a menos de
than 700,000 tonnes. Whilst surprising, the interesting aspect
700,000 toneladas. Aunque sorprendente, el aspecto interesante del
of the announcement was the inability to explain why the
anuncio fue la incapacidad para explicar por qué ocurrió realmente
shortfall actually happened.
este déficit.
A CORPORATE MODEL FOR CACAO
UN MODELO CORPORATIVO DE CACAO
Contrary to conventional industry opinion, cacao is
Contrariamente a la opinión de la industria convencional, el cacao está
extremely well-suited for large-scale corporate cultivation.
muy bien adaptado para el cultivo corporativo a gran escala. El cacao
Cacao is a high-input agricultural crop with concentrated
es un cultivo agrícola de alta potencia, con períodos concentrados de
periods of productivity. The cacao tree needs specialized
productividad. El árbol de cacao necesita conocimiento especializado
knowledge for care and maintenance, in particular, regular
para su cuidado y mantenimiento, en particular, la poda regular
pruning by trained technicians; furthermore, it requires
por técnicos capacitados; además, se requiere la aplicación regular
regular, consistent application of fertilizer. More than
y consistente de los fertilizantes. Más del 75% de la producción del
75% of the output of the tree is concentrated during a
árbol se concentra en un período de unos pocos meses del año, y esta
few months of the year, and this output then needs to be
producción luego necesita ser exportado a los mercados de destino, a
exported via 40-foot containers to destination markets.
través de contenedores de 40 pies.
Neither of these characteristics is favorable for small,
Ninguna de estas características es favorable para los pequeños
under-capitalized small farmers in remote locations. This
agricultores subcapitalizadas en lugares remotos. Este requisito de gran
high-input requirement means buying, and paying for
inversión significa la compra, por adelantado en efectivo, de fertilizantes
in advance, fertilizer and other agricultural inputs from
y otros insumos agrícolas de los distribuidores locales a costos altos
local dealers at high costs (if any dealers exist in the
(si existen distribuidores en la zona). La producción concentrada
area). Concentrated output means all the year’s revenues
significa que todos los ingresos del año se reciben en efectivo en un
are received in cash in a short time frame, and usually,
corto período de tiempo, lo que usualmente presiona las apremiantes
pressing family needs for this cash outweigh investment
necesidades de la familia sobre este dinero en efectivo y superan a la
in the following year’s crop. Export logistics means there
inversión en la cosecha del próximo año. La logística de exportación
are usually an entire series of profit-maximizing middlemen
significa que por lo general hay toda una serie de intermediarios que
happy to take advantage of a small farmer’s need
buscan maximizar sus ganancias y estarán felices de tomar ventaja de
to sell quickly.
la necesidad de un pequeño agricultor de vender rápidamente.
5 http://www.smithsonianmag.com/science-nature/illegal-cocoa-farms-are-driving-out-primates-ivory-coast-180954823/?no-ist
9
A corporate cacao estate is able to invest appropriately,
Una finca de cacao corporativa es capaz de invertir adecuadamente,
provide consistent regular care and maintenance, take a
proporcionar cuidado y mantenimiento regular y consistente, tener
scientific approach to fertilization, leverage best practice
un enfoque científico para la fertilización, aprovechar las mejores
and handle direct-to-chocolate maker sales eliminating the
prácticas y manejar las ventas directas a los productores de chocolate,
industry’s numerous middlemen. Essentially it comes down
eliminando numerosos intermediarios de la industria. Esencialmente,
to having a sufficiently large and stable balance sheet to
se trata de tener un balance suficientemente grande y estable para
ensure maximum productivity. This is no different to what
garantizar la máxima productividad. Esto no es diferente a lo que vemos
we see in the grinding industry globally, a handful of large
en la industria de la molienda a nivel mundial, un puñado de grandes
players (four) dominate over 50% of the global grinding
jugadores (cuatro) dominan más del 50% de la capacidad de molienda
capacity. We find it slightly ironic that there is incredible
mundial. Nos parece un poco irónico que exista una concentración
concentration in chocolate confectionary production
increíble en la producción de confitería de chocolate y la capacidad
and cacao grinding capacity yet industry pundits insist
de molienda de cacao. Aún expertos de la industria insisten en que la
production must remain in the realm of impoverished
producción de cacao debe permanecer en el reino de los pequeños
small farmers! In fact, basic agronomy demands precisely
y pobres agricultores! De hecho, las demandas básicas de agronomía
the opposite.
precisan lo contrario.
THE ECONOMIC PROPOSITION REMAINS
COMPELLING
LA PROPOSICIÓN ECONÓMICA PERMANECE
CONVINCENTE
Based on costs to date, we feel comfortable that the all-
Sobre la base de los costos hasta la fecha, nos sentimos cómodos que
in cash costs per hectare to maturity are approximately
todos los costos incluidos, en efectivo por hectárea hasta el vencimiento
US$10,500
but
son aproximadamente US$10,500 (excluyendo los costos de adquisición
including all other costs including fermentation centers,
(excluding
land
acquisition
de tierras, pero que incluye todos los otros costos, incluidos los centros
etc); this capital is deployed over a four-year period. These
de fermentación, etc.), este capital se despliega sobre un período de
numbers include all overhead, all land preparation, fuel,
cuatro años. Estos números incluyen todos los gastos generales, toda la
several million man hours of work, an aggressive fertilization
preparación de la tierra, combustible, varios millones de horas-hombre
investment, amongst dozens of other expense categories.
de trabajo, una inversión agresiva de fertilización, entre decenas de otras
Note that fertilizer, labour costs and fuel represent a
categorías de gastos. Tenga en cuenta que los fertilizantes, los costos
high proportion of this US$10,500 per hectare; speed of
de mano de obra y combustible representan una alta proporción de
planting is also an important cost determinant. As such,
este US$10,500 por hectárea; la velocidad de siembra es también un
it’s important to note that this cost per hectare number
determinante importante de costos. Como tal, es importante tener en
is relevant in Peru and would probably be meaningfully
cuenta que este importe del costo por hectárea es relevante en Perú
higher in other jurisdictions.
y probablemente sería significativamente mayor en otras jurisdicciones.
In year three, defined as the third year of the tree’s life
En el tercer año, se define como el tercer año de la vida del árbol
10 Annual Report 2014 / Informe Annual 2014
costs
(month 25 to month 36 after planting in the nursery), there
(del mes 25 al mes 36 después de la siembra en el vivero), habrá
will be some cacao for harvest and sale. In year four, the
algo de cacao para la cosecha y venta. En el cuarto año, la hectárea
hectare is free cash flow positive as production increases.
está libre en el flujo de caja positivo a medida que aumenta la
Peak production will not be until year seven or eight
producción. El pico de producción no será hasta el año siete u
(“maturity”). At maturity, we expect to achieve a minimum
ocho (“madurez”). En la madurez, esperamos alcanzar un mínimo
of 2.5 tonnes of cacao per hectare potentially in excess of
de 2.5 toneladas de cacao por hectárea, potencialmente superior
3 tonnes. Smaller corporate estates in Ecuador utilizing
a 3 toneladas. Pequeñas fincas corporativas en Ecuador utilizando
similar planting material are able to regularly achieve
material de plantación similares son capaces de lograr regularidad 2.5
2.5 tonnes per hectare. We expect to do better given the
toneladas por hectárea. Nosotros esperamos hacerlo mejor, dada la
heavy investment in fertilizer that the Company is making
fuerte inversión en fertilizantes que la Compañía está haciendo en sus
in its estates.
plantaciones.
HARVESTING ACTIVITY ALREADY UNDERWAY
LA ACTIVIDAD DE COSECHA YA ESTÁ EN MARCHA
Whilst we have already been harvesting pods from our
Si bien ya hemos ido cosechando vainas de la siembra del cuarto trimestre
fourth quarter 2013 plantings, we are using these wet
del 2013, estamos utilizando estos granos húmedos como material de
beans as seedling material for our expanding nursery
plántulas para nuestras operaciones de expansión de vivero lo cual es
operations
más eficiente que la venta de estos pequeños volúmenes en el mercado.
these
small
which
is
volumes
more
efficient
selling
Esperamos hacer nuestra primera venta comercial en 2016. Estas cifras
expect to make our first commercial sale in 2016.
de producción seguirán aumentando hasta aproximadamente el año
These
rise
2021, cuando la plantación alcanzará su pico de madurez, lo que debería,
until approximately 2021 when the estate reaches peak
como mínimo, ser de 2.5 toneladas por hectárea, pero deberían, según
maturity, which should, at the minimum, be 2.5 tonnes per
se espera, estar más cerca de 3.0 toneladas por hectárea. Vale la pena
hectare, but should, it is hoped, be closer to 3.0 tonnes
señalar que los pequeños agricultores de Perú, que tienen la densidad
per hectare. It is worth noting that small farmers in Peru,
de árboles adecuada, aplican la atención básica y mantenimiento
who have the right tree density, apply basic care and
y cierta fertilización limitada, logran con regularidad en exceso de
numbers
the
than
We
production
into
will
marketplace.
continue
to
Cacao is a labour intensive crop that generates significant rural employment. / El cacao es un cultivo que requiere mano de obra intensivo que genera bastante
empleo en zonas rurales.
Annual Report 2014 / Informe Annual 2014 11
maintenance and some limited fertilization, achieve regularly
2.5 toneladas por hectárea. Muchas fincas corporativas en
in excess of 2.5 tonnes per hectare. Many corporate estates in
Ecuador también alcanzan estos niveles. También estamos
Ecuador achieve these levels as well. We are also excited to
muy contentos de iniciar la importación del material ESS
initiate the importation of ESS (a.k.a. Sacha Gold) planting
(Sacha Gold) de Ecuador lo cual representa el material
material from Ecuador, which represents the next generation
de siembra de la próxima generación y está alcanzando
planting material and is achieving over 4.0 tonnes of cacao
más de 4.0 toneladas de cacao por hectárea en Ecuador con
per hectare in Ecuador with excellent disease resistance.
excelente resistencia a enfermedades. Esperamos que un
We expect that a meaningful percentage of our 2016
porcentaje significativo de nuestros plantones del 2016 sean
plantings will be ESS. This clonal variety has fine flavor
ESS. Esta variedad de clon tiene características de sabor finas
characteristics
y un rendimiento en su productividad que parece exceder
and
yield
productivity
that
appears
to
exceed CCN 51.
al CCN 51.
TO CERTIFY OR NOT TO CERTIFY
A CERTIFICAR O A NO CERTIFICAR
We are often asked when will your production be certified and
Se nos pide a menudo cuando se certificará su producción y la
how quickly? At the moment we are not entirely convinced
rapidez en que se pueda certificar? Por el momento no estamos del
about the value of these certification standards given the
todo convencidos sobre el valor de estas normas de certificación
recent market turmoil involving some of these brands. What
dada la reciente turbulencia del mercado involucrando a algunas
has certification done to reduce child labour in the industry?
de estas marcas. Qué ha hecho la certificación para reducir el
What has certification done to reduce slavery in the industry?
trabajo infantil en la industria? Qué ha hecho la certificación para
Cacao farmers are poorer now than they were 10, 20 or 30
reducir la esclavitud en la industria? Los agricultores de cacao son
years ago – how has certification helped them? Furthermore,
más pobres de lo que eran hace 10, 20 o 30 años - ¿cómo les
there is a real cash cost of certification for which in our
han ayudado la certificación? Además, hay un costo en efectivo
opinion the current market premia does not compensate
real de la certificación que en nuestra opinión la primas del
for. We have seen this scenario before in carbon credits where
mercado actual no compensa adecuadamente. Hemos visto este
the market collapsed to a few pennies and in the process
escenario antes de los créditos de carbono, donde el mercado
mis-directing significant time and monies and destroying
se desplomó a unos pocos centavos y en el proceso que re-
billions of shareholder value. We have also seen this
orientaron montos de dinero significativos mientras destruyeron
in the palm oil industry where the much-discussed
miles de millones de valor para los accionistas. También hemos visto
global standard provides but a few negligible dollars of
esto en la industria del aceite de palma en el estándar global muy
premia to the farm gate price of the crop. It is also
discutido, pero ofrece algunos dólares insignificantes de las primas al
somewhat perplexing for me as your Chairman to believe
precio de salida de la explotación de la cosecha. También es un poco
that the value proposition of your Company’s products,
desconcertante para mí como su Presidente creer que la propuesta de
ethically-produced well-fermented beans, can only be
valor de los productos de su empresa, frijoles producidos éticamente
appreciated by the potential buyers via someone else’s
y bien fermentados, pueda ser sólo apreciado por los compradores
rubber stamp. In my humble opinion, cacao buyers clearly
potenciales a través del sello de goma de otra persona. En mi humilde
see the value proposition we offer of large-scale consistent
opinión, los compradores de cacao ven claramente la propuesta de
supply and this is evidenced by the numerous requests
valor que ofrecemos de un suministro consistente en gran escala y
for bean samples and site visits that your Company
esto se evidencia por las numerosas solicitudes de muestras de grano
has received.
y visitas de campo que su empresa ha recibido.
The certification market will certainly evolve over the
El mercado de certificación seguramente evolucionará en los
next few years and we will watch it closely. We are in the
próximos años y vamos a verlo de cerca. Estamos en el negocio de la
shareholder value creation business, not the feel good
creación de valor para los accionistas, y no en el negocio de sentirse
business. As with most things, common sense should
bien. Al igual que con la mayoría de las cosas, el sentido común debe
prevail; we operate in full compliance with Peruvian
prevalecer; operamos en el pleno cumplimiento de las leyes laborales
labour laws and all salaries are paid via electronic deposit
peruanas y los salarios son pagados a través de depósito electrónico
by
por el Grupo TMF, un proveedor de la subcontratación de negocios a
the
TMF
Group,
a
globally-recognized
business
outsourcing provider.
nivel mundial.
Excellent pod growth on the Company’s early plantings. /
Crecimiento excelente de mazorcas en las siembras iniciales de la
Compañia.
WHERE WILL THE PRICE OF CACAO BE IN FIVE
YEARS
CUÁL SERÁ EL PRECIO DEL CACAO EN CINCO
AÑOS?
Our business model is not predicated on price levels;
Nuestro modelo de negocio no se basa en los niveles de precios;
our goal is to be the world’s lowest cost producer of high
nuestro objetivo es ser el productor de cacao de alta calidad a más
quality cacao and to be profitable regardless. That being
bajo costo en el mundo y ser rentable independientemente del
said, the trailing five year average price for the commodity
precio internacional. Dicho esto, el precio promedio durante los
has been approximately US$2,800 per tonne yet this
últimos cinco años del commodity ha sido de aproximadamente
price has been insufficient to produce sufficient beans
US$2,800 por tonelada. Sin embargo, este precio ha sido
for the marketplace, remembering that cacao production
insuficiente para producir los granos suficientes para el mercado,
peaked in 2011. Logic dictates that price should adjust to
recordando que la producción de cacao alcanzó su punto máximo
such a point that production is stimulated. The one caveat
en 2011. La lógica dicta que el precio debe ajustarse hasta tal
is that in our industry the majority of the farmers do not
punto que se estimula la producción. La única salvedad es que en
see the US Dollar market price but rather a government-
nuestro sector la mayoría de los agricultores no ven el precio del
mandated local currency price from the local monopolistic
mercado en dólares sino el precio fijado en moneda nacional por
buying boards as we discussed earlier. The question
las entidades gubernamentales monopolísticos a nivel local sobre
then becomes will these buying boards pass along real
lo cual hemos comentado anteriormente. Entonces la cuestión
average higher US Dollar prices to their impoverished
depende de la actuación de estos compradores monopolísticos y si
citizen farmers – history does not provide a positive answer.
pagarán precios mayores en dólares a sus agricultores. La historia
Ghana remains under IMF support and dollar income for their
no proporciona una respuesta positiva. Ghana sigue bajo apoyo
government is a very precious commodity indeed. Both Cote
del FMI e ingresos en dólares para su gobierno es de hecho un bien
d’Ivoire and Ghana have also been seriously impacted by
muy preciado. Tanto Costa de Marfil y Ghana también han sido
falling oil prices.
seriamente afectados por la caída de los precios del petróleo.
What price will cause global cacao production to be
Qué precio hará que la producción mundial de cacao estimule el
stimulated is a difficult question, but to expect that it may be
precio del commodity es una pregunta difícil, pero que puede ser
over US$4,000 per tonne is, in my view, not unreasonable.
más de US$4,000 por tonelada es, en mi opinión, muy razonable.
No doubt the commodity price will be volatile, but it seems
Sin duda, el precio será volátil, pero parece lógico que el
logical that the average price over the next five years should be
precio promedio en los próximos cinco años superará al precio
higher than the average price over the trailing five-year period.
promedio de los últimos cinco años.
A MARKET-BASED SOLUTION TO REDUCE
POVERTY & THE NARCO-ECONOMY
UNA SOLUCIÓN DE MERCADO PARA REDUCIR LA
POBREZA Y LA NARCO-ECONOMÍA
Our small farmer programme is developing and we are
Nuestro programa de pequeños agricultores está en marcha y
eager to expand it. We expect to achieve 200 hectares of
estamos ansiosos por expandirlo. Esperamos alcanzar 200 hectáreas
planted cacao by the end of this calendar year. An additional
de cacao sembradas a finales de este año calendario. Se espera que
500 hectares is expected to be planted by end of 2016. Over
unas 500 hectáreas adicionales se sembrarán para finales de 2016.
500 families are expected to be involved in the programme
Se espera que más de 500 familias participen en el programa a
by the end of 2016. As previously mentioned, our vision
finales de 2016. Como se mencionó anteriormente, nuestra visión
is to expand the PAPEC programme to be equal in size to
es expandir el programa PAPEC igual en tamaño que la plantación
the Company’s freehold estate. PAPEC is an important tool
de la Compañía. El PAPEC es una herramienta importante para
for the Company as it is first and foremost a moral imperative
la compañía, ya que es ante todo un imperativo moral de que
that we take clear, real action (not words) to improve people’s
tomamos acción clara, y no solamente hablar de cómo se puede
lives. Not through donations, but through market-based
mejorar la vida de las personas. Y no a través de donaciones, sino
self-sufficiency. PAPEC is not a donation; the monies your
por la autosuficiencia basada en el mercado. El PAPEC no es una
Company invests will be repaid with interest from the harvests
donación. El dinero que su empresa invierte será reembolsado con
of these small farmers.
interés de las cosechas de estos pequeños agricultores.
Also, PAPEC strikes at the heart of the critics’ arguments against
También, el PAPEC golpea en el corazón de los argumentos de los
the Company in that there are thousands upon thousands
críticos contra la Compañía en que hay miles y miles de personas
of impoverished people living in our area. Opponents
pobres que viven en nuestra área. Los opositores a la industria de las
of the plantation industry like to create a narrative of a
plantaciones buscan crear una narrativa de un ecosistema de selva
pristine rainforest ecosystem un-touched by man. The reality
virgen sin ninguna intervención humana. La realidad no podría
couldn’t be more different! Their empty words and sophistry
ser más diferente! Sus palabras vacías y sofismas no detendrán las
will not stop your Company’s actions to improve people’s
acciones de su Compañía para mejorar la calidad de vida de la
standard of living in our operating area. Opponents of the
gente en nuestra área de operaciones. Los opositores a la industria
plantation industry want to ignore these people living in
de las plantaciones quieren ignorar estas personas que viven en
challenging conditions and pretend they don’t exist. The
condiciones difíciles y pretender que no existen. La realidad es
reality is that Western demand for tropical hardwoods caused
que la demanda occidental de maderas duras tropicales causó la
the original logging of the rainforest (which continues
tala original de la selva (que continúa hasta hoy día para abastecer
to this day to supply hardwood floors and furniture to
los pisos de madera y muebles a los consumidores occidentales).
Western consumers). The only trees left behind were
Los únicos árboles dejados eran los que no tenían valor para los
the ones with no value to Western consumers. Western
consumidores occidentales. La demanda occidental de la cocaína
demand for cocaine has caused Peru to be the number one
ha causado que el Perú sea el primer productor de hoja de coca,
producer of coca, the primary ingredient of cocaine. It is
el principal ingrediente de la cocaína. Es imprescindible contar
imperative to have a legitimate, real agricultural economy
con una economía agrícola verdadera y legítimo en la Amazonía
in the Amazonian Peru growing market-based crops such as
Peruana basada en cultivos de mercado como el cacao o la palma
cacao or palm, not a narcotic-based economy supplying
y no una economía basada en narcóticos que suministra cocaína a
cocaine to Western consumers. Currently, Peru has over
los consumidores occidentales. Actualmente, el Perú cuenta con
70,000,000 hectares of forested ground cover. Almost
más de 70,000,000 ha de cobertura boscosa. Casi 20,000,000
20,000,000 of this area is permanently protected as a forest
ha están protegidas permanentemente como una reserva
reserve; another 7,500,000 is under active but legal logging
forestal; otras 7,500,000 ha están bajo concesiones madereras
concessions. The cacao and palm oil industries utilize less
activas pero legales. Las industrias del cacao y la palma de aceite
than 200,000 hectares of land mass. The narcotics estates
utilizan menos de 200,000 ha de terreno. Las fincas de narcóticos
only utilize approximately 75,000 hectares of land yet
solamente utilizan aproximadamente 75,000 ha de tierra pero
coca must be replanted in “fresh soil” every few years or so.
la coca debe ser replantado en “tierra fresca” cada pocos años.
Cacao and palm are permanent crops providing employment
El cacao y la palma son cultivos permanentes que proporcionan
for tens of thousands of people and dependents on a land
empleo a decenas de miles de personas y dependientes en una masa
mass less than a quarter of one percent of Peru’s forested land
de tierra menos de un cuarto de un por ciento de la superficie forestal
area!
del Perú!
PERU IS THE WORLD’S LOW-COST CACAO
PRODUCER
PERÚ ES EL PRODUCTOR DE CACAO DE MENOR
COSTO A NIVEL MUNDIAL
Your Company is in Peru because of the world’s
Su Compañía opera en el Perú porque tiene las mejores condiciones y
best operating and growing environment for cacao.
entorno operativo para la siembra del cacao. (Nos gusta el ceviche, pero
Nowhere else on Earth has the unique combination
no es por eso que estamos en el Perú.) Ningún otro lugar en la Tierra tiene
of factors of sufficient rainfall, freehold title, competitive
la combinación única de factores de precipitaciones suficientes, título de
cost
high-
dominio absoluto, estructura de costos competitiva y la disponibilidad
yielding planting material. Importantly, Peru is an
de material superior de alto rendimiento. Es importante destacar que
investment grade rated country by the international
el Perú es un país clasificado con grado de inversión por las agencias
credit rating agencies.
internacionales de calificación crediticia.
It is illogical to expect investment capital to expand in
No es lógico esperar que la inversión de capital incrementará en África
West Africa given the monopolistic government buying
Occidental dado las juntas de compra monopolísticas del gobierno
boards which impose roughly a 50% export tax on local
que imponen más o menos un impuesto de exportación del 50% en la
production. Whilst there are other countries in Africa
producción local. Mientras que hay otros países de África que cuentan
with have suitable growing conditions, the reality of
con condiciones de cultivo adecuadas, la realidad de estos entornos
these operating environments, presence of Ebola, weak
operativos, la presencia de Ébola, el débil estado de derecho y la falta
rule of law and lack of any proper land title, make these
de cualquier título de propiedad, hacen que éstas zonas son
challenging, if not impossible, jurisdictions in which
jurisdicciones difíciles, si no imposibles, en que uno puede operar.
to operate. We have seen the vast majority of palm oil
Hemos visto que la gran mayoría de las empresas de aceite de palma en
ventures in these countries also fail. Cacao production in
estos países también fallan. La producción de cacao en Ghana alcanzó
Ghana peaked several years ago and production in Cote
su punto máximo hace varios años y la producción en Costa de Marfil
d’Ivoire appears to have plateaued, with growth marginal
parece haber tocado techo, con un crecimiento marginal en el mejor de
at best.
los casos.
With respect to Southeast Asia, Malaysia was previously
Con respecto al sudeste de Asia, Malasia antes era un exportador
a leading cacao exporter in the 1980s but today it has
principal de cacao en la década de los 1980, pero hoy prácticamente
virtually zero production. Indonesian cacao production
carece de producción. La producción de cacao de Indonesia alcanzó su
peaked in 2005 and has declined ever since then. Last
punto máximo en 2005 y ha disminuido desde entonces. El año pasado,
year, Indonesia, in fact, became a net cacao importer
Indonesia, de hecho, se convirtió en un importador neto de cacao debido
due to confectionary demand from its large and growing
a la demanda de confitería de su gran y creciente población de clase
middle-class population. Indonesia now must import cacao
media. Indonesia ahora debe importar cacao de África occidental. La
from West Africa. Southeast Asia cacao production suffers
producción de cacao del sudeste de Asia sufre de material clonal de edad
from old clonal material and a declining skill set. Cacao
y un conjunto de habilidades en descenso. La producción de cacao en el
production in Southeast Asia, in our opinion, is in terminal
sudeste de Asia, en nuestra opinión, está en declive terminal y no es fácil
decline and it is not easy to see how this will turn around.
ver cómo esto va a dar la vuelta.
LORETO IS THE PREMIER LOCATION
FOR CACAO
LORETO ES LA MEJOR ZONA PARA EL
CACAO
Your Company operates in Loreto as it is the indigenous
La compañía opera en la región Loreto ya que el cacao es originario
home of cacao with superb growing rainfall conditions.
de la zona y cuenta con excelentes condiciones climatológicas
Cacao is a water-hungry tree and it needs
structure
and
availability
of
superior,
natural
para la siembra de cacao. El cacao es un árbol que requiere de mucha
consistent rainfall. Interestingly, our estate is close to
humedad, por lo que necesita la lluvia natural. Curiosamente, nuestra
where the Napo River merges with the Amazon; on
finca está cerca de donde el río Napo se fusiona con el Amazonas; en
the Ecuadorean side of the Napo River, there are
el lado ecuatoriano del río Napo, hay cerca de 100,000 ha de cacao la
nearly 100,000 hectares of cacao many yielding
mayoría de los cuales rinden por encima de 2.5 toneladas por año.
above 2.5 tonnes per annum. The rainfall in our area
La precipitación en nuestra área es perfectamente consistente en
is perfectly consistent at approximately 2,500mm
aproximadamente 2,500 mm por año uniformemente dispersos
per annum evenly-dispersed throughout the year;
por todo el año; muy superior a la de África occidental, que es de
far superior to that in West Africa which is approximately
aproximadamente 1,600 mm por año, con un periódo de sequía
1,600mm per annum with a three to four month dry
de tres a cuatro meses. Con respecto a la logística, existe servicio de
season. With respect to logistics, there is efficient, regular,
barcaza regular, eficiente, y de bajo costo desde nuestra plantación a los
and low-cost barge service from our estate to the interior
puertos fluviales interiores de Pucallpa o Yurimaguas a US$20 por
The community welcomes President Humala on 13 June 2015. / La comunidad da la bienvenida al Presidente Humala el 13 de junio 2015.
river ports of Pucallpa or Yurimaguas at approximately US$20
tonelada (asegurado) para un viaje de cuatro días. A partir de
per tonne (insured) for a four-day journey. From these river
estos puertos fluviales a las instalaciones de Dubai Ports (propiedad
ports to the Dubai Ports-owned container facility in Lima is a
de contenedores en Lima) es un viaje de camión de un día a
one-day truck journey at US$50 per tonne.
US$50 por tonelada.
We are pleased to report that our choice of a production
Nos complace informar que nuestra elección de un lugar de
location has been validated by several other local and
producción ha sido validado por varios otros grupos locales
international groups that are initiating cacao projects in
e internacionales que están iniciando proyectos de cacao en
the state.
el estado.
CONCLUSIVE LEGAL RULINGS
RESOLUCIONES JUDICIALES CONCLUYENTES
We are pleased to report that on 26 March 2015, the Superior
Tenemos el agrado de informar que el 26 de marzo de 2015, la
Court of Appeals of Loreto ruled on all counts unanimously in
Corte Superior de Apelaciones de Loreto resolvió en forma unánime
your Company’s favor with respect to the litigation that had
a favor de su empresa con respecto al litigio que había sido detallada
been detailed in the Company’s AIM Admission Document, fully
en el Documento de Admisión AIM de la Compañía, validando
validating the Company’s legal position.
plenamente la posición jurídica de la Compañía.
FINANCING ACTIVITIES & POSITION
ACTIVIDADES DE FINANCIACIÓN Y POSICIÓN
On 2 December 2014, the Company raised US$10,000,000
El 2 de diciembre de 2014, la compañía recaudó US $10,000,000
(before fees and expenses) via a listing on the AIM
(antes de comisiones y gastos) a través de un listado en el mercado
market
(“AIM”).
AIM de la Bolsa de Valores de Londres (“AIM”). Posteriormente, el
Subsequently, on 19 June 2015, the Company secured
19 de junio de 2015, la Compañía obtuvo una cotización secundaria
a secondary listing on the
Lima Stock Exchange
en la Bolsa de Valores de Lima (Bolsa de Valores de Lima, o “BVL”).
(Bolsa de Valores de Lima, or “BVL”). Cash balances
Los saldos de efectivo y cuentas por cobrar a partir del cierre del
and receivables as of year-end 2014 were US$7,760,041.
ejercicio 2014 fueron de US $7,760,041 millones. La Compañía no
The
of
the
Company
London
has
no
Stock
Exchange
reported
tiene endeudamiento e informó que no hubo ingresos durante el
no revenue for the reporting period. The total reported
indebtedness
and
periódo del informe. La pérdida total para el año concluido al 31
loss for the year ended 31 December 2014 was US$
de diciembre 2104 fue de US$2,981,983 dólares (una pérdida por
2,981,983 (a loss per share of 23 cents) compared with
acción de 23 centavos de dólar), en comparación con una pérdida
a loss of US$ 695,855 (a loss per share of 14 cents)
de US$695,855 (una pérdida por acción de 14 centavos de dólar)
for the year ended 31 December 2013. Net assets for the
para el año concluido al 31 de diciembre 2013. Los activos netos
period were US$ 15,480,358 compared with US$ 1,906,766
de el período fueron de US$15,480,358 en comparación con los
in the prior year.
US$1,906,766 dólares en el año anterior.
CLOSING THOUGHTS
PENSAMIENTOS FINALES
Your Company is applying a corporate model for cacao which
has been pioneered in Ecuador and Peru for the preceding
two decades. We are using the latest clonal materials and
consistently innovating our practices in the field; our team
is superb and arguably the best cacao field estate team in
the world.
La empresa esta aplicando un modelo corporativo para el cacao
que ha sido pionera en el Ecuador y el Perú durante las ultimas
dos décadas. Estamos utilizando los materiales clonales de última
generación e innovando constantemente nuestras prácticas en el
campo; nuestro equipo es excelente y, sin duda, el mejor equipo
de campo de cacao en el mundo.
It is essential that the world uses land efficiently:
Es esencial que el mundo utilice la tierra de manera eficiente:
• Use the highest yielding cacao species available;
• Utilizar las especies de cacao de mayor rendimiento disponible;
• Operate in areas with sufficient rainfall; and,
• Operar en áreas con suficiente precipitación; y,
• Operate with ethical labour standards.
• Operar bajo las normas laborales éticas.
It makes absolutely no sense for the cacao industry to be
expanding in West Africa when the yields per hectare are 500
kg per annum when a hectare in Peru can yield in excess of
2,500 kg per annum. The vast majority of cacao produced in
the world, principally in West Africa, is done inefficiently, using
decades old clonal materials in areas with insufficient rainfall and
what we consider to be horrific labour practices. The market
will adapt and change, and your Company is at the forefront
of this change. We have a significant first mover advantage in a
No tiene ningún sentido que la industria del cacao se expanda en
África Occidental donde los rendimientos por hectárea son de 500
kg/año cuando una hectárea en el Perú puede rendir más de 2,500
kg por año. La gran mayoría del cacao producido en el mundo,
principalmente en África occidental, se hace de manera ineficiente,
utilizando materiales clonales con mas de 50 años de edad en
zonas con precipitaciones insuficientes y prácticas laborales
terribles. El mercado va a adaptarse y cambiar y su empresa está
a la vanguardia de este cambio. Tenemos una significativa ventaja
poorly understood commodity.
del precursor en un commodity poco conocido.
There are numerous barriers to entry surrounding our business
model. Some are obvious, such as the rainfall requirements of
the tree and limited land availability in West Africa and Asia.
Some are slightly more complex, in that cacao is a far more
intensive tree species to plant given the high planting density
and grafting requirement; this dramatically slows the pace
of planting when compared to palm oil for example. A large
multinational group focused on palm oil seeks plant 5,000 to
15,000 hectares per annum; the fastest planting rate for cacao
we estimate is around 1,500 hectares per annum irrespective
of the capital availability. The complexity of a cacao estate
also requires a specialized managerial base with a passion for
the crop.
Existen numerosas barreras a la entrada que rodean nuestro modelo
de negocio. Algunos son obvios, como los requisitos de lluvia del
árbol y la limitada disponibilidad de tierras en África Occidental y Asia.
Algunos son un poco más complejos, en el que el cacao es una especie
arbórea mucho más intensivo para plantar dado los requisitos de alta
densidad de siembra y de injertación lo cual reduce drásticamente el
ritmo de plantación en comparación al aceite de palma, por ejemplo.
Un grupo multinacional grande centrado en el aceite de palma busca
sembrar entre 5,000 ha a 15,000 ha por año; la tasa de plantación
más rápida para el cacao, a nuestra estimación, es de alrededor de
1,500 ha por año, independiente de la disponibilidad de capital. La
complejidad de una finca de cacao también requiere una base de
gestión especializada con una pasión por el cultivo.
We wish to thank all of our staff, who have worked to make
the Company the success that it is been thus far. We wish
to thank our shareholders, who share our vision of creating
the leading cacao estate in the world. The remainder of 2015
will be an exciting period for the Company as we continue to
plant out the estate. We look forward to updating you on our
progress in the months ahead.
Queremos agradecer a todo nuestro personal, que han trabajado para
el éxito que la Compañía ha tenido hasta ahora. Queremos agradecer
a nuestros accionistas, que comparten nuestra visión de crear la
finca de cacao mas destacado en el mundo. El resto de 2015 será
un período emocionante para la compañía mientras continuamos a
sembrar la finca. Tenemos mucha ilusión de mantenerlos actualizados
Executive Chairman
30 June 2015
Presidente Ejecutivo
30 de junio 2015
sobre nuestro progreso en los próximos meses.
and its Subsidiaries
Annual Financial Statements For the Year
ended 31 December 2014
y sus Subsidiarias
Cuentas Anuales Correspondientes al Año
finalizado el 31 de diciembre 2014
United Cacao Limited SEZC and its Subsidiaries / United Cacao Limited SEZC y sus Subsidiarias
Paredes, Zaldívar, Burga & Asociados
Sociedad Civil de Responsabilidad Limitada
To the Directors and Shareholders of United Cacao Limited SEZC and Subsidiaries
We have audited the accompanying consolidated financial statements of United Cacao Limited SEZC
(a holding investment Company, incorporated in the Cayman Islands’ Special Economic Zone) and
its Subsidiaries (the “Group”), which comprise the consolidated statements of financial position as
of December 31, 2014 and 2013, and the consolidated statement of comprehensive income, the
consolidated statements of changes in equity and the consolidated statements of cash flows for the
years then ended, and the summary of significant accounting policies and related notes to the
consolidated financial statements. The financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting Standards (IFRS), as adopted by
the European Union.
This report is made solely for the company’s directors as a body for reporting obligations under the
AIM rules for Companies issued by the London Stock Exchange. 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 auditors’ 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.
Directors’ responsibility for the consolidated financial statements
The Directors are responsible for the preparation of these consolidated financial statements in
accordance with International Financial Reporting Standards as adopted by the European Union and
for being satisfied that they give a true and fair view, and for such internal control as the Directors
determine is necessary to enable the preparation of consolidated financial statements that are free
from material misstatements, whether due to fraud or error.
Auditors’ responsibility
Our responsibility is to audit and express an opinion on these consolidated financial statements in
accordance with applicable law and International Standards on Auditing (International Federation of
Accountants). Those standards require us to comply with the Auditing Practices Board’s Ethical
Standards for Auditors.
Inscrita en la partida 11396556 del Registro de Personas Jurídicas de Lima y Callao
Miembro de Ernst & Young Global
Independent auditors’ report (continued)
Independent auditors’ report (continued)
Scope of the audit of the consolidated financial statements
An audit involves obtaining evidence about the amounts and disclosures in the consolidated
financial statements sufficient to give reasonable assurance that the consolidated 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 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 consolidated
financial statements.
Opinion of the consolidated financial statements
In our opinion:
-
the consolidated financial statements give a true and fair view of the state of the Group’s
affairs as of 31 December 2014 and 2013, and of the Group’s loss for the years then ended;
-
the consolidated financial statements have been properly prepared in accordance with IFRS
as adopted by the European Union
Lima, Peru,
June 28, 2015
Countersigned by:
Manuel Díaz
C.P.C.C. Registration N°30296
United Cacao Limited SEZC and Subsidiaries
As of December 31, 2014 and 2013
Note
2014
US$
2013
US$
Assets
Current assets
Cash
4
5,949,459
743,620
Other accounts receivable, net
6
1,810,582
21,935
Inventory, net
7
65,296
1,948
92,541
___________
6,165
___________
7,917,878
___________
773,668
___________
8
6,392,266
1,010,231
9
1,722,976
___________
171,053
___________
8,115,242
___________
1,181,284
___________
16,033,120
___________
1,954,952
___________
Prepaid expenses
Non-current assets
Land, agriculture machinery, vehicles, equipment
and constructions in progress, net
Biological assets
Total assets
Liabilities and shareholders’ equity, net
Current liabilities
Trade and other accounts payable
10
445,734
32,003
Accounts payable to related parties
5(c)
107,028
___________
16,183
___________
552,762
___________
48,186
___________
18,430
6,595
18,613,436
2,510,215
566,743
125,853
Accumulated losses
(3,718,251)
___________
(735,897)
___________
Total shareholders’ equity, net
15,480,358
___________
1,906,766
___________
Total liabilities and shareholders’ equity, net
16,033,120
___________
1,954,952
___________
Total liabilities
Shareholders’ equity, net
Issued capital
Additional capital
Other reserves
11
The accompanying notes are an integral part of these consolidated financial statements.
For the years ended as of December 31, 2014 and 2013
Note
2014
2013
14
(2,876,639)
___________
(673,072)
___________
(2,876,639)
(673,072)
(105,344)
___________
(21,783)
___________
Loss before income tax
(2,981,983)
(694,855)
Income tax
___________
___________
Total comprehensive loss
(2,981,983)
___________
(694,855)
___________
(0.23)
___________
(0.14)
___________
US$
US$
Pre-operating expenses
Administrative expenses
Pre-operating loss
Other expenses
Exchange rate difference, net
Loss per share
3
16
___________18,430
___________
Balance as of December 31, 2014
-
11,835
Other adjustments
Share based payments, note 12(b)
Capital contributions, note 1(c) and 11(b)
-
6,595
Balance as of December 31, 2013
Net loss
___________-
Share based payments, note 12(b)
6,595
-
Capital contributions, note 11(b)
Net loss
18,613,436
___________
___________-
-
16,103,221
-
2,510,215
___________-
2,464,484
-
45,731
US$
US$
-
Additional paid-in
capital
Issued
capital
Balance as of January 1, 2013
For theConsolidated
years ended as
of December
31, 2014in
and
2013
statements
of changes
equity
Consolidated statements of changes in equity
-
-
-
566,743
___________
___________-
440,890
-
-
125,853
125,853
___________
US$
Other
reserves
(3,718,251)
___________
(371)
___________
-
-
(2,981,983)
(735,897)
___________-
-
(694,855)
(41,042)
US$
Accumulated
losses
15,480,358
___________
(371)
___________
440,890
16,115,056
(2,981,983)
1,906,766
125,853
___________
2,471,079
(694,855)
4,689
US$
Total
Consolidated statements of cash flows
Consolidated
statements of cash flows
2014
US$
2013
US$
(2,981,983)
___________
(694,855)
___________
Operating activities Net loss
Reconciliation of net loss to cash used in operating activities:
Share based payments provision, note 14(a)
336,505
125,853
Allowance for VAT impairment, note 14(a)
129,387
25,975
4,312
619
Depreciation, note 8(d)
Write-off of seeds, note 14(a)
3,542
1,189
(5,665)
(1,189)
(1,918,034)
(47,910)
(Increase) in inventory
(63,348)
(1,948)
(Increase) in prepaid expenses
(86,376)
(6,165)
Increase in trade and other accounts payable
413,731
29,755
(Decrease) increase in payable to related parties
90,845
___________
16,183
___________
Net cash used in operating activities
(4,077,084)
___________
(552,493)
___________
Acquisition of land, machineries, vehicles and equipment, note 8
(5,541,221)
(1,018,107)
Additions to biological assets
(1,305,880)
(163,796)
Disposal of lands, note 5(a)
14,968
___________
___________
Net cash used in investment activities
(6,832,133)
___________
(1,181,903)
___________
16,115,056
2,471,079
73,464
964,964
Other, net
Net changes in assets and liabilities accounts:
(Increase) in other accounts receivable
Investment activities -
Financing activities Capital contributions, net
Loans received from related parties, note 5(a)
Loans granted to related parties, note 5(a)
(3,584,110)
Collections (payments) from/to related parties, note 5(a)
3,510,646
___________
(587,789)
___________
Net cash provided by financing activities
16,115,056
___________
2,471,079
___________
5,205,839
736,683
Cash at the beginning of the year
743,620
___________
6,937
___________
Cash at the end of the year
5,949,459
___________
743,620
___________
246,043
7,257
Net increase in cash
(377,175)
Non-cash transaction:
Depreciation and share-based payment reserve capitalized as land
and biological asset, respectively
1.
Identification and business activity of the Company
(a)
Identification United Cacao Limited SEZC (hereinafter “the Company” or “UCL”) is an investment holding
Company incorporated in the Cayman Islands on May 21, 2013 and licensed by the Special
Economic Zone Authority of the Cayman Islands Government.
As of December 31, 2014, after the IPO refered to in note 1(c), there were no key controlling
shareholders as the Company is publicly listed; East Pacific Capital Private Limited, an entity
controlled by the Chairman and CEO, holds approximately 28 percent of the Company’s capital
stock. As of December 31, 2013, the key controlling shareholders were East Pacific Capital
Limited (45 per cent) and Latin Cacao Limited (23 per cent).
The legal domicile of the Company is Cricket Square, Hutchins Drive, PO Box 2681. Grand
Cayman KY1-1111, Cayman Islands.
(b)
Business activity UCL is a holding company for its Peruvian subsidiaries, Cacao Del Peru Norte S.A.C. (“CDPN”)
and Cooperativa de Cacao Peruano S.A.C. (CCP) (the “Subsidiaries”), which operate in the
agricultural sector. The Company’s participation in its Subsidiaries is as follows:
Ownership
in capital as of December 31, 2014
__________________________________________
Incorporated in
Direct
%
Indirect
%
Investment holding
Grupo Cacao del Perú Limited
British Virgin
Islands
100.00
-
Agricultural operations (cacao cultivation)
Cacao del Perú Norte S.A.C. (previously
“Plantaciones de Loreto Sur S.A.C.”)
Perú
99.99
0.01
Perú
99.99
0.01
Cooperativa de Cacao Peruano S.A.C. (previously
“Plantaciones de Loreto Norte S.A.C.”)
As of December 31, 2014 and 2013, the Company and its Subsidiaries are involved in the
creation and development of cacao estates which consists of land purchasing and subsequent
costs for clearing and planting. During this period, the Company received financial, economic and
operational support from its shareholders. As of December 31, 2014, the Company, through its
operating subsidiaries, had acquired and titled 3,877 hectares (unaudited), cleared 1,588
hectares (unaudited) and planted 527 hectares of land (unaudited) (acquired and cleared 3,160
and 525 hectares of land –unaudited-, respectively, as of December 31, 2013), see note 8(b).
Notes to the consolidated financial statements (continued)
The Company’s Board of Directors and Management have established business plans and
assumptions to ensure the continuity of the Company. In this sense, the continuity of the
business operations depends of the success of such plans. The main plan established by the
Board is the purchase of agricultural land in order to plant and harvest approximately 3,250
hectares of cacao.
(c)
Initial Public Offering (IPO) During 2014, the Company approved the execution of an international offering of new shares of
the Company under the Alternative Investment Market of the London Stock Exchange (“AIM”).
Subsequently, the Company agreed to: (i) authorize the issuance of 5,000,000 common shares
with nominal value of US$0.001, and (ii) set the issuance value of such shares at 128p
(equivalent to approximately US$2.00) per share in Peruvian and international markets. The
issuance of new common shares represented for the Company a gross cash contribution of
US$9,955,044 and a net cash contribution of US$8,739,055 after fees and expenses (equivalent
to £6.4 million approximately). Such cash contribution was recorded in the shareholders’ equity
as share capital and share premium of US$5,000 and US$8,734,055, respectively, see note
11(b).
2.
Significant accounting policies and practices
(a)
Basis of preparation –
Declaration of compliance –
These consolidated financial statements of the Company for the years ended December 31, 2014
and 2013 have been prepared in accordance with International Financial Reporting Standards
(“IFRS”) as adopted by the European Union (“EU”).
Responsibility for the information The information contained in these consolidated financial statements are the responsibility of
Management and the Board of the Company, which expressly state they have fully implemented
the principles and criteria contained in the International Financial Reporting Standards ("IFRS")
as adopted by EU as of December 31, 2014 and 2013.
Basis of measurement The consolidated financial statements have been prepared under the historical cost basis, from
the accounting records kept by the Company. The accompanying consolidated financial
statements are presented in U.S. Dollars (functional and presentation currency).
2
Used of judgments and estimates The preparation of financial information in accordance with IFRS as adopted by the EU requires
management to make judgments, estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial information and the reported amounts of income
and expenses during the reporting period. Although these estimates are based on Management’s
best knowledge of the amount, event or actions, actual events ultimately may differ from those
estimates. The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognized in the period in which the estimate is revised
and in any future periods affected.
Information about significant areas of estimation, uncertainly and critical judgments in applying
accounting policies that have the most significant effect on the amounts recognized in the
consolidated financial statements are described in note (f) below. IFRS also require management
to exercise its judgment in the process of applying the Company’s accounting policies.
(b)
Going Concern–
This historical financial information relating to the Company has been prepared on a going
concern basis, which assumes that the Company will continue its operations and will be able to
meet its liabilities as they fall due for the foreseeable future. Management considers that the
Company has sufficient funds for the foreseeable future that is for at least twelve months from
the date of this document.
(c)
New and revised IFRS adopted by the EU The accounting policies adopted are consistent with those applied in previous years, except that
the Company has adopted the new and revised IFRS and IAS's that are mandatory for periods
beginning on or after January 1, 2014, as described below:
-
IFRS 10 “Consolidated Financial Statements”, applicable for annual periods beginning on
or after 1 January 2014.
IFRS 10 replaces the portion of IAS 27 ‘Consolidated and separate financial statements’
that addresses the accounting for consolidated financial statements. It also includes the
issues raised in SIC-12 ‘Consolidation-special purposes entities’. IFRS 10 establishes a
single control model that applies to all entities including special purpose entities.
-
IFRS 11 “Joint arrangements”, applicable for annual periods beginning on or after 1
January 2014.
IFRS 11 replaces IAS 31 ‘Interests in joint ventures’ and SIC-13 ‘Jointly-controlled entities
non-monetary contributions by venturers’. Instead, jointly-controlled entities that meet
the definition of a joint venture must be accounted for using the equity method.
3
-
IFRS 12 “Disclosure of involvement with other entities”, applicable for annual periods
beginning on or after 1 January 2014.
IFRS 12 applies to an entity that has an interest in subsidiaries, joint arrangements,
associates and/or structured entities. Many of the disclosure requirements of IFRS 12
were previously included in IAS 27, IAS 31, and IAS 28. A number of new disclosures are
also required.
-
IAS 28 “Investments in Associates and Joint Ventures (as revised in 2011)”, applicable for
annual periods beginning on or after 1 January 2014.
IAS 28 ‘Investments in Associates’, has been renamed IAS 28 ‘Investments in Associates
and Joint Ventures’, and describes the application of the equity method to investments in
joint ventures in addition to associates.
-
Amendments to IFRS 10 “Consolidated Financial Statements”, IFRS 11 “Joint
Arrangements” and IFRS 12 “Disclosures of Interests in Other Entities” - Transition
Guidance, applicable for annual periods beginning on or after 1 January 2014.
The amendments were set in order to clarify certain transitional guidance on the
application of IFRS 10, IFRS 11 and IFRS 12 for the first time.
-
Amendments to IFRS 10 “Consolidated Financial Statements”, IFRS 12 “Disclosures of
Interests in Other Entities” and IAS 27 “Separate Financial Statements” - Investment
Entities, applicable for annual periods beginning on or after 1 January 2014.
The amendments to IFRS 10 define an investment entity and introduce an exception from
the requirement to consolidate subsidiaries for an investment entity. In terms of the
exception, an investment entity is required to measure its interests in subsidiaries at fair
value through profit or loss. The exception does not apply to subsidiaries of investment
entities that provide services that relate to the investment entity’s investment activities.
Consequential amendments to IFRS 12 and IAS 27 have been made to introduce new
disclosure requirements for investment entities. In general, the amendments require
retrospective application, with specific transitional provisions.
-
Amendments to IAS 32 “Offsetting Financial Assets and Financial Liabilities” applicable for
annual periods beginning on or after 1 January 2014.
The amendments to IAS 32 clarify the requirements relating to the offset of financial
assets and financial liabilities. Specifically, the amendments clarify the meaning of
“currently has a legally enforceable right of set-off” and “simultaneous realisation and
settlement”. Retrospective application is required.
-
Amendments to IAS 36 “Impairment of Assets” – recoverable amount disclosures,
applicable for annual periods beginning on or after 1 January 2014.
The amendment removes the requirement to disclose recoverable amounts when there
has been no impairment or reversal of impairment.
4
Due to the structure of the Company and its Subsidiaries and the nature of its operations,
adoption of these standards had no significant effect on its consolidated financial position and
results; therefore it was not necessary to modify the comparative consolidated financial
statements of the Company.
(d)
Basis of consolidationThe consolidated financial statements comprise the financial statements of the Company and the
controlled entities. Control is presumed when the Company owns, directly or indirectly, more
than half of the voting rights of the issued share capital of Subsidiaries, and has the power to
govern the financial and operating policies of an entity so as to obtain benefits from its activities.
All balances, sales and other transactions between the Company and its Subsidiaries have been
eliminated in full, including the realized and unrealized gains and losses resulting from such
transactions.
(e)
Segment Reporting–
Operating segments are reporting in a manner consistent with the internal reporting provided to
the chief operating decision-maker. The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of operating segments, has been identified as
the Board of Directors and the Financial Controller.
(f)
Estimates and assumptions The preparation of the consolidated financial statements requires management to use estimates
and assumptions to determine the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities as of the date of the consolidated financial statements, as well as
the reported amounts of revenues and expenses for the year ended December 31, 2014 and
2013.
These accounting judgments and estimates are based on the best knowledge by Management of
material events and circumstances, taking into account historical experience; however, the actual
results obtained in future periods may differ from the estimated amounts. The Company and
Subsidiaries’ Management do not expect that these changes, if any, will have a significant effect
on the consolidated financial statements.
Significant estimates and assumptions are as follows:
-
Determination of the useful life and depreciation method of agriculture machinery,
vehicles and equipment.
-
Estimation of the provision for impairment of long-lived assets.
-
Estimation of the provision for contingencies arising from legal processes and
administrative procedures.
-
Stock options valuation (share-based payments)
Any difference between estimates and actual results thereafter is recorded in year’s results in
which it occurs.
5
(g)
Foreign currency transactions Functional and presentation currency The functional currency, which is the currency of the primary economic environment in which the
entity operates, was determined by Management at the Company and its Subsidiaries and is the
U.S. Dollar, which is also its presentation currency.
Transactions and balances in foreign currency Transactions in foreign currencies are initially recorded at the functional currency rates
prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign
currencies are translated at the functional currency spot rate of exchange ruling as of the date of
the consolidated statements of financial position. Gains or losses from exchange difference
resulting from the settlement of such transactions and translation of monetary assets and
liabilities in foreign currencies at rates of exchange ruling as of the date of the consolidated
statements of financial position are recognized in the consolidated statements of comprehensive
income. Non-monetary assets and liabilities that are measured in terms of historical cost in a
foreign currency are translated to the functional currency using the exchange rates as of the
dates of the initial transactions.
(h)
Financial assets Financial assets within the scope of IAS 39 are classified as financial assets at fair value through
profit or loss, loans and receivables, held-to-maturity investments, available-for-sale
investments, or as derivatives designated as hedging instruments in an effective hedge, as
appropriate.
All financial assets are recognized initially at fair value plus, in the case of investments not at fair
value through profit or loss, directly attributable transaction costs. The Company and its
Subsidiaries determine the classification of its financial assets at initial recognition.
The Company and its Subsidiaries’ financial assets include cash, and other accounts receivable.
As of December 31, 2014 and 2013 the Company and its Subsidiaries do not have financial
assets at fair value through profit or loss, held-to-maturity investments, available-for-sale
investments, or derivatives designated as hedging instruments.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. After initial measurement, these financial assets are
subsequently measured at amortized cost using the effective interest rate method (EIR), less
impairment. Gains and losses are recognized in the consolidated statements of comprehensive
income when the loans and receivables are derecognized or impaired, as well as through the
amortization process.
Amortized cost
Any premium or discount in the debt instruments classified into the loans and receivables
category is considered in the calculation of the amortized cost by applying the effective interest
rate methodology, recognizing the accrued interest in the “Financial income” caption of the
income statements.
6
(i)
Impairment of financial assets The Company and its Subsidiaries assess at each reporting date whether there is any objective
evidence that a financial asset or a group of financial assets is impaired. If there is objective
evidence that an impairment loss has been incurred, the amount of the loss is measured as the
difference between the assets carrying amount and the present value of estimated future cash
flows (excluding future expected credit losses that have not yet been incurred). The present
value of the estimated future cash flows is discounted at the financial asset’s original effective
interest rate (for example, the effective interest rate calculated at initial recognition). The
carrying amount of the asset is reduced through the use of an allowance account and the amount
of the loss is recognized in the consolidated statements of comprehensive income.
If, in a subsequent year, the amount of the estimated impairment loss decreases and the loss can
be related to an event occurring after the impairment was recognized, the previously recognized
impairment loss is reduced up to the point where the carrying value of the assets does not exceed
its amortized cost as of the reduction date. Any subsequent reduction related to an impairment
loss will be recognized in the consolidated statements of comprehensive income.
(j)
Cash Cash in the consolidated statements of financial position comprise current bank accounts.
(k)
Inventories Inventories correspond mainly to cacao seeds and supplies. Such are valued at the lower of cost
and net realizable value. Costs incurred in bringing each product to its present location and
condition is accounted for as follows:
-
Inventory At acquisition cost, using the weighted average cost method.
-
Inventory in transit At specific acquisition cost.
Management periodically assesses the devaluation and obsolescence of these assets.
Obsolescence and devaluation are recorded when it is estimated that these are necessary
changes to the assets based on technical areas of the Company.
(l)
Biological assets –
Biological assets, including mature and immature plantations of cacao, are measured at fair value
less estimated selling costs. IAS 41 “Agriculture” establishes that Gains or losses arising on initial
recognition of plantations at fair value less estimated costs to sell and changes in fair value less
estimated selling costs in each reporting date, are included in the results of the period in which
they occur.
7
The cacao tree is estimated to have an average life of 35 years; with the first 5 years being
considered as immature. It is classified as mature when the biological asset is in the production
phase. Biological assets include costs of agricultural land preparation whose principal activities
are to clear the land to ensure that plantations are ready for planting cacao.
The fair value of the cacao is calculated using the discounted cash flows of the underlying
biological assets. The expected cash flows throughout the life cycle of the cacao plantations is
determined using the market price and the estimated yield of agricultural production, net of
maintenance and harvesting costs and any necessary cost to bring cacao estates to maturity. The
performance of the cacao estate is affected by age, location, soil type and infrastructure cacao
trees. The market price of dry, fermented cacao beans is set in the commodity markets in London
and New York.
However, cost may sometimes approximate fair value when there has been little biological
transformation or it is not expected that variations in international prices will have a significant
impact at this stage. As the Company’s subsidiaries are in start-up stage, biological assets were
valued at cos. Cost includes expenditures for seed, labor of workers, depreciation of operating
assets, among other items. Additionally, in the case of biological assets for which it is not prices
or values set by the market available, and for which it has been clearly determined to be
unreliable are measured at historical cost less accumulated depreciation and any impairment loss
value.
As of December 31, 2014 and 2013, the Company classifies as part of biological assets the
preparation of cacao’s seedlings for planting in the definitive growfield; net of any provision for
loss on disposal or handling, see note 9.
(m)
Land, vehicles, agriculture machinery, equipment and construction in progress, net Land, vehicles, agriculture machinery and equipment are stated at cost, net of accumulated
depreciation and/or accumulated impairment losses, if any.
The initial cost comprises the purchase price, including import duties and non-refundable
purchase taxes and any directly attributable cost necessary to place and bring the asset to its
working condition. For land, including subsequent costs and charges related to preparation and
adaptation in order to use as growing field. Other subsequent disbursements related to repair
and maintenance costs are recognized in the results of the period when incurred. Subsequent
disbursements that will result in future economic benefits, in excess of the originally assessed
standard of performance, are capitalized as an additional cost.
8
Land is not be depreciated. Depreciation is calculated on a straight-line basis over the estimated
useful lives of the assets as follows:
Years
Agriculture machinery
4
Vehicles
5
Furniture and fixtures
10
Computer equipment
4
Other equipment
10
When selling or retiring vehicles and equipment, the cost and associated accumulated
depreciation is eliminated, and any gain or loss arising on such disposal is included in the
consolidated statements of comprehensive income.
Construction in progress –
Constructions in progress include the costs incurred for the construction of assets and other
expenses directly attributable to such constructions, accrued during its execution. Constructions
in progress are capitalized when completed and its depreciation is measured and recorded since
the moment when they are put into use.
To capitalize directly attributable personnel expenses, the Company identifies each one of the
areas and time dedicated to the planning, execution and management of the constructions.
The book value of an asset is provisioned immediately to its recoverable amount if the carrying
amount of the asset is greater than its estimated recoverable value.
(n)
Impairment of long-lived assets –
Whenever events or circumstances indicate that the carrying amount of long-term duration
assets may not be recoverable, the Company assesses the value of land, vehicles and equipment;
and biological assets to verify that there is no impairment. When the book value exceeds its
recoverable value, an impairment loss is recognized in the consolidated statements
comprehensive income.
The recoverable value is the higher between the net sale price and its value in use. The net sale
price is the amount that can be obtained from the sale of an asset on a free market, while the
value in use is the present value of estimated future cash flows from the continuing use of an
asset and from its disposal at the end of its useful life. Recoverable amounts are estimated for
each asset or cash generating unit.
(o)
Administrative and other expenses recognition Costs and expenses are recognized on an accrual basis, regardless of when they are paid, and are
recorded in the periods to which they relate.
9
(p)
Share based payments –
The Company operates an equity settled share based option scheme under which the entity
receives services from employees’ in consideration for equity instruments (options) of the
Company. The cost of equity-settled transactions is determined by the fair value at the date
when the grant is made using an appropriate valuation model. The fair value of the employees'
services received in exchange for the grant of options is recognized as an expense. The total
amount to be expensed is determined by reference to the fair value of the options granted,
excluding the impact of any non-market service and performance vesting conditions. The total
amount expensed is recognized over the vesting period, which is the period over which all the
specified conditions are satisfied. At each balance sheet date, the entity revises its estimates of
the number of options that are expected to vest based on the vesting conditions. The dilutive
effect of outstanding stock options is reflected as additional share dilution in the computation of
diluted earnings per share, when it is applicable (further details are given in Note 16).
(q)
Income tax –
Current income tax
Assets and liabilities for current income tax are measured by the amount expected to be
recovered or paid to the Tax Authority. The tax rates and tax laws used to compute the amount
are those in effect on the date of closing of the reporting period reported in Peru.
Deferred income tax
Deferred tax is recognized using the liability method on temporary differences at the reporting
date between the tax bases of assets and liabilities and their carrying amounts for financial
reporting purposes. Deferred tax assets and liabilities are measured at the tax rates that have
been enacted and are expected to apply in the year when the asset is realized or the liability is
settled. The measurement of deferred assets and deferred liabilities reflects the tax
consequences that arise from the manner in which the Company and its Subsidiaries expect, as of
the date of the consolidated statement of financial position, to recover or settle the carrying
amount of its assets and liabilities.
Value added tax Revenue, expenses and assets are recognized excluding the amount of Value Added Tax (VAT),
except:
-
When the VAT incurred on a purchase of asset or service is not recoverable from the Tax
Authorities, in which case, the VAT is recognized as part of the cost of acquisition of the
asset or as part of the expenditure, as appropriate;
Receivables and payables that are already expressed by the amount of VAT included.
10
(r)
Provisions –
Provisions are recognized when the Company and its Subsidiaries have a present obligation (legal
or constructive) as a result of a past event, it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation and a reliable estimate can be made of
the amount of the obligation. The expense relating to any provision is presented in the
consolidated statements of comprehensive income, net of any reimbursement. If the effect of the
time value of money is material, provisions are discounted using a current pre-tax rate that
reflects, where appropriate, the risks specific to the liability. Where discounting is used, the
increase in the provision due to the passage of time is recognized as a finance cost.
(s)
Share capital –
Ordinary shares are classified as equity. Any excess above the par value of shares received upon
issuance of those shares is classified as “additional capital” (share premium).
(t)
New accounting pronouncements –
New and revised IFRS adopted by the EU that are not mandatorily effective (but allow early
application) for the year ending December 31, 2014:
-
Amendments to IAS 19 “Defined Benefit Plans: Employee Contributions”, applicable for
annual periods beginning on or after February 1, 2015.
The amendments clarify how an entity should account for contributions made by
employees or third parties that are linked to services to defined benefit plans, based on
whether those contributions are dependent on the number of years of service provided by
the employee.
-
Annual improvements 2010-2012 Cycle, not yet endorsed by the EU.
These improvements relate to IFRS 2 Share-based payments, IFRS 3 Business
combinations, IFRS 8 Operating segments, IAS 16 Property, plant and equipment, IAS 38
Intangible assets, and IAS 24 Related party disclosures and are effective for annual
periods beginning on or after February 1, 2015.
-
These improvements relate to IFRS 3 Business combinations, IFRS 13 Fair value
measurement, and IAS 40 Investment property and are effective for annual periods
beginning on or after February 1, 2015.
-
IFRIC Interpretation 21 Levies (IFRIC 21), applicable to annual periods beginning on or
after June 17, 2014.
IFRIC 21 clarifies that an entity recognises a liability for a levy when the activity that
triggers payment, as identified by the relevant legislation, occurs. For a levy that is
triggered upon reaching a minimum threshold, the interpretation clarifies that no liability
should be anticipated before the specified minimum threshold is reached.
11
The Company has decided not to early adopt the mentioned standards and interpretations.
Standards and Interpretations issued by the IASB but not yet adopted by the EU –
As of the date of these financial statements, IFRS as adopted by the EU do not significantly differ
from regulations adopted by the International Accounting Standards Board (IASB) except for the
following standards and amendments to the existing standards, which were not endorsed for use
in the EU as of 31 December 2014 and cannot be applied by the entities preparing their financial
statements in accordance with IFRS as adopted by the EU:
-
IFRS 9 “Financial Instruments”, not yet endorsed by the EU.
In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments which
reflects all phases of the financial instruments project and replaces IAS 39 Financial
Instruments: Recognition and Measurement and all previous versions of IFRS 9. The
standard introduces new requirements for classification and measurement, impairment
and hedge accounting. IFRS 9 is effective for annual periods beginning on or after 1
January 2018, with early application permitted. Retrospective application is required, but
comparative information is not compulsory.
-
IFRS 14 “Regulatory Deferral Accounts”, not yet endorsed by the EU.
IFRS 14 permits an entity which is a first-time adopter of International Financial Reporting
Standards to continue to account, with some limited changes, for 'regulatory deferral
account balances' in accordance with its previous GAAP, both on initial adoption of IFRS
and in subsequent financial statements. IFRS 14 is effective for an entity’s first annual
IFRS financial statements for annual periods beginning on or after 1 January 2016, with
earlier application permitted.
-
IFRS 15 “Revenue from contracts with customers”, not yet endorsed by the EU.
IFRS 15 was issued in May 2014 and establishes a new five-step model that will apply to
revenue arising from contracts with customers. Under IFRS 15 revenue is recognised at
an amount that reflects the consideration to which an entity expects to be entitled in
exchange for transferring goods or services to a customer. The principles in IFRS 15
provide a more structured approach to measuring and recognising revenue. The new
revenue standard is applicable to all entities and will supersede all current revenue
recognition requirements under IFRS. Either a full or modified retrospective application is
required for annual periods beginning on or after 1 January 2017 with early adoption
permitted.
12
-
Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor
and its Associate or Joint Venture, not yet endorsed by the EU.
These amendments clarify the treatment of the sale or contribution of assets from an
investor to its associate or joint venture requiring full recognition in the investor's
financial statements of gains and losses arising on the sale or contribution of assets that
constitute a business (as defined in IFRS 3 Business Combinations) and the partial
recognition of gains and losses where the assets do not constitute a business, i.e. a gain or
loss is recognised only to the extent of the unrelated investors’ interests in that associate
or joint venture. These amendments are effective for annual periods beginning on or after
January 1, 2016.
-
Amendments to IFRS 10, IFRS 12 and IAS 28 Investment Entities: Applying the
Consolidation Exception, not yet endorsed by the EU.
The amendments address issues that have arisen in the context of applying the
consolidation exception for investment entities. The amendments confirm that the
exemption from preparing consolidated financial statements for an intermediate parent
entity is available to a parent entity that is a subsidiary of an investment entity, even if the
investment entity measures all of its subsidiaries at fair value. A subsidiary that provides
services related to the parent's investment activities should not be consolidated if the
subsidiary itself is an investment entity. These amendments are effective for annual
periods beginning on or after January 1, 2016.
-
Amendments to IFRS 11 Accounting for Acquisitions of Interests in Joint Operations, not
yet endorsed by the EU
The amendments to IFRS 11 provide guidance on how to account for the acquisition of an
interest in a joint operation in which the activities constitute a business as defined in IFRS
3 Business Combinations. Specifically, the amendments state that the relevant principles
on accounting for business combinations in IFRS 3 and other standards (e.g. IAS 36
Impairment of Assets regarding impairment testing of a cash generating unit to which
goodwill on acquisition of a joint operation has been allocated) should be applied. The
same requirements should be applied to the formation of a joint operation if and only if an
existing business is contributed to the joint operation by one of the parties that participate
in the joint operation. A joint operator is also required to disclose the relevant information
required by IFRS 3 and other standards for business combinations. The amendments to
IFRS 11 apply prospectively for annual periods beginning on or after January 1, 2016.
-
Amendments to IAS 1 Disclosure initiative, not yet endorsed by the EU.
The IAS 1 Disclosure initiative was issued in December 2014 and seeks to clarify the
concept of materiality in filtering out entity-specific information which is not relevant to
financial statement users.
13
-
Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation
and Amortisation, not yet endorsed by the EU.
The amendments to IAS 16 prohibit entities from using a revenue-based depreciation
method for items of property, plant and equipment. The amendments to IAS 38 introduce
a rebuttable presumption that revenue is not an appropriate basis for amortisation of an
intangible asset. This presumption can only be rebutted in the following two limited
circumstances: when the intangible asset is expressed as a measure of revenue or when it
can be demonstrated that revenue and the consumption of the economic benefits of the
intangible asset are highly correlated. The amendments apply prospectively for annual
periods beginning on or after 1 January 2016.
-
Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants, not yet endorsed by the
EU.
The amendments to IAS 16 Property, Plant and Equipment and IAS 41 Agriculture define
a bearer plant and require biological assets that meet the definition of a bearer plant to be
accounted for as property, plant and equipment in accordance with IAS 16, instead of IAS
41. In terms of the amendments, bearer plants can be measured using either the cost
model or the revaluation model set out in IAS 16. On the initial application of the
amendments, entities are permitted to use the fair value of items of bearer plant as their
deemed cost as at the beginning of the earliest period presented. Any difference between
the previous carrying amount and fair value should be recognised in opening retained
earnings at the beginning of the earliest period presented. The produce growing on bearer
plants continues to be accounted for in accordance with IAS 41.
-
Amendments to IAS 27 Equity Method in Separate Financial Statements, not yet endorsed
by the EU.
IAS 27 Separate Financial Statements requires an entity to account for its investments in
subsidiaries, joint ventures and associates either at cost or in accordance with IFRS 9
Financial Instruments (or IAS 39 Financial Instruments: Recognition and Measurement for
entities that have not yet adopted IFRS 9). The amendments allow an entity to apply also
the equity method in accounting for its investments in subsidiaries, joint ventures and
associates in its separate financial statements. The accounting option must be applied by
category of investments. The amendments also clarify that when a parent ceases to be an
investment entity, or becomes an investment entity, it shall account for the change from
the date when the change in status occurred. These amendments are effective for annual
periods beginning on or after January 1, 2016.
-
These improvements relate to IFRS 5 Non-current Assets Held for Sale and Discontinued
Operations, IFRS 7 Financial Instruments: Disclosures, IAS 19 Employee Benefits, and IAS
34 Interim Financial Reporting and are effective from 1 July 2016.
The Company is in the process of evaluating the impact of the application of these rules, if any, on
its consolidated financial statements and disclosures in the notes of the consolidated financial
statements.
14
3.
Transactions and balances in foreign currency
The main foreign exchange operations are stated in “Nuevos Soles” (Peruvian currency), which are
carried out at market exchange rates published by the Peruvian Superintendencia de Banca y Seguros y
AFP. As of December 31, 2014, the exchange rates issued for Nuevos Soles for that institution were
US$0.3346 for buying and US$0.3355 for sale (US$0.3577 and US$0.3579 as of December 31, 2013,
respectively), and have been applied by the Company for the accounts of assets and liabilities,
respectively.
As of the dates of statements of financial position, the Company had the following assets and liabilities
denominated in Nuevos Soles:
2014
S/.
2013
S/.
Asset
Cash
Other accounts receivable
5,450,697
105,297
13,822
___________
12,340
___________
5,464,519
___________
117,637
___________
1,000,503
55,156
___________
18,303
___________
1,000,503
___________
73,459
___________
4,464,016
___________
44,178
___________
Liabilities
Payable to related parties
Net asset position
As of December 31, 2014 and 2013, the Company and its Subsidiaries do not use derivative
instruments to reduce the foreign exchange risk.
During year 2014, the net loss originated from exchange differences was US$105,344 (US$21,783,
during 2013). All of these effects are presented in the “Exchange rate differences, net” caption in the
consolidated statement of comprehensive income.
4.
Cash
The Company and its Subsidiaries held current accounts mainly in Peruvian and Singaporean banks and
are denominated in Nuevos Soles and U.S. Dollar. These funds are freely available and do not earn
interest.
15
5.
Transactions and balances with related parties
(a)
During 2014 and 2013, the Company carried out the following transactions with related parties:
2014
US$
2013
US$
Revenue Income from disposal of lands (d)
14,968
___________
___________
20,487
___________
34,999
___________
Plantaciones de Pucallpa S.A.C.
1,780,871
170,290
Plantaciones de Ucayali S.A.C.
1,379,952
184,783
262,160
-
Expenses Management operating services (e),
Operating cash granted/(collected) -
Servicios Ripio S.A.C
Grupo Palmas del Peru S.A.C.
87,219
3,986
Industrias de Palma Aceitera S.A.C.
51,255
-
Plantaciones del Peru Este S.A.C.
10,709
18,116
Plantaciones de San Francisco S.A.C.
10,064
-
Plantaciones de Masisea S.A.C
1,006
-
Plantaciones de Loreto S.A.C.
524
-
Cacao de Requena Este S.A.C.
60
-
Cacao de Requena Oeste S.A.C.
60
-
Plantaciones de Napo Norte S.A.C.
60
-
Plantaciones de Napo S.A.C.
60
-
Plantaciones de Napo Sur S.A.C.
60
-
Plantaciones de Marin S.A.C.
42
-
Plantaciones de Loreto Este S.A.C.
Cash collected from related parties
8
-
(3,584,110)
___________
(377,175)
___________
___________
___________
Operating cash received /(paid) Plantaciones del Peru Este S.A.C.
Plantaciones Loreto S.A.C.
107,028
20,196
27,189
-
Plantaciones de Pucallpa S.A.C.
21,793
108,696
Servicios Ripio S.A.C.
16,728
119,848
7,009
168,841
711
-
Plantaciones de Ucayali S.A.C.
Cacao de Requena Oeste S.A.C.
Industrias de Palma Aceitera S.A.C.
34
21,053
East Pacific Capital Limited
-
474,020
Plantaciones de Tamshiyacu S.A.C.
-
41,667
Plantaciones de Loreto Este S.A.C
-
20,280
Grupo palmas del Perú S.A.C.
Cash paid to related parties
16
-
6,546
(73,464)
___________
(964,964)
___________
107,028
___________
16,183
___________
(b)
The Company conducts its operations with related parties under the same conditions as those
carried out by third parties; therefore there is no difference in pricing or base tax settlement. In
relation to the payment terms, they do not differ from policies granted to third parties.
(c)
As of December 31, 2014, the Company maintains accounts payable to related parties with
Plantaciones del Perú Este S.A.C. amounting to US$107,028 related to the purchase of boats
used in the transportation of people and goods to the location of the Company’s plantations
through river Amazonas. As of 31 December 2013, the Company had accounts payable to
related parties, mainly to East Pacific Capital Private Limited and Grupo Palmas del Perú S.A.C.
for US$9,637 and US$6,546, respectively. Such balances are denominated in U.S. Dollar and
Nuevos Soles (Peruvian currency); have current maturities, non interest and no guarantees have
been provided.
(d)
Corresponds to the sale of land to Plantaciones de Loreto S.A.C.
(e)
Corresponds to support and management services in the operation provided by its related party
Grupo Palmas del Perú S.A.C.
(d)
Key management compensation Key management comprises the Directors and Executive Officers of the Company. During 2014,
the compensation of key management personnel amounted to US$33,267 (US$3,000, during
2013), which corresponds to short-term employee benefits. No post-retirement and termination
benefits are paid to key management. The share-based payment pertaining to key management
amounted approximately to US$143,613, during 2014 (US$64,513, during 2013).
Clasified by Directors –
Share-based
payment
US$
Bonus
US$
2014
Dennis Melka (Executive Chairman)
Anthony Kozuch (Executive Director)
Constantine Gonticas (Non-Executive Director)
Roberto Tello (Non-Execuive Director)
30,000
65,219
-
78,394
2,614
-
653
___________
___________
33,267
___________
143,613
___________
-
49,471
3,000
___________
15,042
___________
3,000
___________
64,513
___________
2013
Dennis Melka (Chairman)
Anthony Kozuch (Executive Director)
17
6.
Other accounts receivable, net
(a)
This item is made up as follows:
2014
US$
Accounts receivable from broker (b)
Tax credit of VAT (c)
Guarantee deposit for operating lease
1,806,238
-
155,362
25,975
2,348
2,505
-
11,911
1,996
__________
7,519
__________
1,965,944
47,910
Advances to suppliers (d)
Other
2013
US$
Less:
Allowance for impairment of other accounts receivable (c)
(b)
(155,362)
__________
(25,975)
__________
1,810,582
__________
21,935
__________
As of December 31, 2014, this balance corresponds to an account receivable provided by IPO
contributions collected by the Company’s broker. This balance was credited to the Company in
January 6, 2015.
(c)
Corresponds to the tax credit of VAT generated from the purchase of goods and services in
accordance with the tax regime described in note 13. Management and its tax advisors have
assessed the form and timing of the recoverability of such tax credit, and have decided to record
a provision for the full amount due to the uncertain of its recoverability.
(d)
As of December 31, 2013, the balance relates to advances granted to domestic suppliers which
have been fully applied to invoices received during first quarter 2014.
(e)
All receivables at each reporting date are current. Any receivables are neither past due nor
impaired. The Company considers that the carrying amount of the other receivables do not differ
significantly from their estimated fair value at each reporting date.
7.
Inventory, net
Corresponds to fertilizers and other agricultural consumables to be used in the Company’s operations.
In Management’s opinion, it is not necessary to record a provision for inventory obsolescence as of
December 31, 2014 and 2013.
18
8.
3,694,054
__________
Balance as of December 31
__________
3,694,054
__________
Net cost
48,000
859,234
__________
77,305
__________
74,505
__________
2,800
936,539
__________
__________
888,539
525,983
__________
61,339
__________
57,547
__________
3,792
587,322
__________
__________
527,279
60,043
Vehicles
US$
4,702
__________
323
__________
319
__________
4
5,025
__________
__________
4,490
535
Furniture and
fixtures
US$
11,159
__________
3,698
__________
3,158
__________
540
14,857
__________
__________
10,768
4,089
Computer
equipment
US$
156,421
__________
8,712
__________
7,972
__________
740
165,133
__________
__________
122,943
42,190
Other
equipment
US$
1,140,713
__________
__________
__________
-
1,140,713
__________
__________
1,140,713
-
Construction in
progress (e)
US$
6,392,266
__________
151,377
__________
143,501
__________
7,876
6,543,643
__________
(15,685)
__________
5,541,221
1,018,107
Total
US$
-
1,010,231
__________
7,876
__________
7,876
__________
-
1,018,107
__________
__________
1,018,107
Total
US$
As of December 31, 2014 and 2013, Management has assessed the recoverable amount of its long-term assets and did not find any impairment indicator.
7,876
__________
143,501
__________
(f)
619
__________
7,257
4,312
__________
139,189
2013
US$
Construction in progress correspond to disbursements related to the construction of roads necessary for transportation from and to the plantations as well as to costs incurred in the camps of the operating locations.
Administrative expenses, note 14
Land
2014
US$
During the periods presented, the depreciation was allocated as follows:
potential losses for claims considered in the insurance policy is reasonable considering the type of assets held.
The Company keeps insurance contracts on their main assets, in accordance with the policy established by Management. In Management’s opinion, its insurance policies are consistent with industry practice. The risk of
Additionally, the Company acquired machineries and vehicles for an amount of approximately US$1,416,000, such as trucks, motorcycles and vans (US$108,000 during 2013).
land also include costs for approximately US$2,772,000 (US$721,000 during 2013) related to the preparation and adaptation in order to use the land as a growing field.
During 2014, the Company acquired 717 hectares of agricultural land for a total cost amounting to US$74,613 (3,160 hectares during the year 2013 for a total cost amounting to US$142,274). Additions in the cost of
-
__________
Balance as of January 1
Charge for the period (d)
Accumulated depreciation
(15,685)
__________
Disposals
863,250
2,846,489
Additions (b)
Balance as of January 1
Cost
Land
US$
Agriculture
machinery
US$
2014
_______________________________________________________________________________________________________________________________________________________________
The movement and composition of this item is as follows:
(e)
(d)
(c)
(b)
(a)
Land, agriculture machinery, vehicles, equipment and constructions in progress, net
2013
______________
9.
Biological assets
(a)
The movement and composition of this item is as follows:
2014
US$
Balance as of January 1,
(b)
2013
US$
171,053
-
Preparing plantable lands (b)
1,445,069
171,053
Share-based payment reserve, note 12(b)
106,854
__________
__________
1,722,976
__________
171,053
__________
During 2014 and 2013, the Company cleared 1,063 and 525 hectares (unaudited) land for
cultivation, respectively; and during 2014 planted 527 hectares (unaudited) in the final growing
fields. The Company incurred costs amounting to US$1,445,069 that mainly correspond to
disbursements for the preparation of agricultural land, treatment of seeds in the nursery and
operating costs for planting seedlings in the final growing field, payroll dedicated to such
activities (salaries), and other consumables (US$171,053 during 2013).
(c)
As of December 31, 2014 and 2013, the Company has defined its biological assets measured at
cost, which is similar to their fair value at such dates, mainly because of the following:
-
The Company is in a pre-operational stage and is expected to enter the harvesting stage
during 2017.
-
Plantations in process corresponding mainly to first planting of seedlings in the final
growing field.
10.
-
There has been little biological transformation.
-
Significant impact of the variations in international prices at this stage are not expected.
(a)
2014
US$
2013
US$
349,908
_________
19,376
_________
Vacation payable
45,493
6,566
Taxes and contributions
27,775
3,711
Social benefits
7,099
2,350
Wages payable
2,334
-
13,125
_________
_________
95,826
_________
12,627
_________
445,734
_________
32,003
_________
Trade payables (b)
Other:
Other
20
(a)
As of December 31, 2014 and 2013, mainly corresponds to the provision for professional
services payable such as audit, legal and accounting services.
11.
Shareholders' equity, net
(a)
Issued capital As of December 31, 2014, the Company’s share capital amounted to US$18,430, which is
represented by 18,430,000 ordinary shares issued and fully paid as set out below (US$6,595
and 6,595,000 ordinary shares respectively, as of December 31, 2013). All of which have a
nominal book value of US$0.001:
2014
2013
Number
Number
Ordinary shares (previously Class A shares)
4,500,000
4,500,000
Ordinary shares (previously Class A-1 shares)
6,020,000
2,095,000
Ordinary shares (previously Class A-2 shares)
2,910,000
-
5,000,000
___________
___________
18,430,000
___________
6,595,000
___________
Class of shares
Public ordinary shares issuance, note 1(c)
All classes of shares have the same rights, mainly related to voting rights (one vote per share),
dividends as the Board may from time to time declare, and others.
(b)
Additional capital This item is made up for the share premium account, as follows:
Nominal
value
US$
As of January 1, 2013
Ordinary
shares issued
Number
-
Share
capital
US$
Share
premium
US$
-
-
Class A ordinary shares issued (i)
0.001
4,500,000
4,500
417,310
Class A-1 ordinary shares issued (ii)
0.001
2,095,000
___________
2,095
___________
2,092,905
___________
6,595,000
6,595
2,510,215
As of December 31, 2013
Class A-1 ordinary shares issued (ii)
0.001
3,925,000
3,925
3,888,575
Class A-2 ordinary shares issued (iii)
0.001
2,910,000
2,910
3,480,591
New Ordinary Shares Issued (v)
0.001
5,000,000
___________
5,000
___________
8,734,055
___________
18,430,000
___________
18,430
___________
18,613,436
___________
As of December 31, 2014
21
(i)
On August 16, 2013 the Board approved that each US$0.01 ordinary share of the
Company be split into 10 new ordinary shares amounting to US$0.001 each and such new
shares be issued and allotted. In the same date, the Board approved the “Contribution
Agreement” whereby the Company issued 2,999,990 shares Class A (the “Initial EPC
Class A Share”) to its main Shareholder (East Pacific Capital Private Limited – EPC) in
exchange of EPC’s participation into Cacao Del Peru Norte S.A.C. (“CDPN”). Capital
contributions in advance for US$417,310 performed at that date were regularized as
share premium of Class A ordinary shares issued. Furthermore, Latin Capital Limited (a
totally owned company by EPC) purchased 1,500,000 Class A Share at nominal value of
US$0.001 each.
(ii)
On August 16, 2013, the Company and third parties (“Investors”) entered the Class A-1
Share Subscription Agreement, whereby, each Investor agreed to subscribe and purchase
a number of Class A-1 Shares, at a price of US$1.00 per subscription share (the nominal
value was agreed in US$0.001 each), as follows:
Closing
Subscription
Aggregate
Shares Number
Purchase Price
US$
16 August 2013 (Initial)
550,000
550,000
26 December 2013 (first additional)
1,545,000
1,545,000
15 January 2014 (second additional)
3,925,000
3,892,500
The Company received a total amount of US$5,987,500, net of its corresponding
transaction costs.
(iii)
On April 28, 2014, the Investors entered the Class A-2 Share Subscription Agreement,
whereby each Investor agreed to subscribe and purchase a number of Class A-2 Shares, at
a price of US$1.25 per subscription share (the nominal value was agreed in US$0.001
each), as follows:
Closing
28 April 2014 (initial)
30 May 2014 (additional)
Subscription
Shares Number
Aggregate
Purchase Price
US$
2,828,327
3,385,733
81,673
97,768
The Company received a total amount of US$3,483,501, net of its corresponding
transaction costs.
22
(iv)
On November 11, 2014, all members of the Class A Ordinary Shares, the Class A-1
Ordinary Shares and the Class A-2 Ordinary Shares agreed to amend their respective class
rights and restrictions, so that each share class has equal rights and restrictions effective
upon Admission. Contingent on and effective upon Admission, all Members in the
Company approved the conversion of all classes presently in issue into Ordinary Shares.
(v)
On December 2, 2014, 5,000,000 new ordinary shares were allotted in the Company,
each at a price of 128 pence (equivalent to approximately US$2.00) (the nominal value
was agreed in US$0.001 each), and consisting of 1,447,753 Placing Shares and
3,552,247 Subscription Shares, to raise gross proceeds of £6.4m equivalent to
US$9,955,044 (approximately £5.5m net of expenses, equivalent to US$8,739,055).
Closing
2 December 2014
(c)
Subscription
Shares Number
5,000,000
Net Proceeds
US$
8,739,055
Other reserves Share-based payments The share-based payment reserve is used to recognize the value of equity-settled share-based
payments provided to employees, including key management personnel, as part of their
remuneration, see Note 12 for further details of these plans.
12.
Share based payments
(a)
The Company operates a share option scheme for the benefit of its employees. Grants are made
at the discretion of the Board of Directors. The exercise price of the share options is equal to the
market price of the underlying shares on the date of grant. The contractual term of each option
granted is 10 years and there are no cash settlement alternative employees (employees must
remain in service until 2017). Options are forfeited three months following the employee
termination date with the Company and can only be exercised to the extent that they have
vested.
The fair value of share options granted is estimated at grant date using a Hull and White 2002
valuation model, taking into account the terms and conditions upon which the share options were
granted.
23
(b)
The movement on options in issue under these schemes is set out below:
2014
____________________________
Number of
share options
Weighted
average
exercise price
2013
____________________________
Number of
share options
Weighted
average
exercise price
Outstanding at the beginning of
the year
Granted during the year
1,000,000
1.00
-
-
1,140,000
__________
1.82
_____
1,000,000
__________
1.00
_____
2,140,000
__________
1.43
_____
1,000,000
__________
1.00
_____
685,000
__________
1.34
_____
200,000
__________
1.00
_____
Outstanding at the end of the
year
Exercisable at the end of the
year
During 2014, 1,140,00 additional options were granted to employees at fair value of
US$877,800 and the options outstanding as of that date had a weighted average remaining
contractual life of 9.2 years. During 2013, 1,000,000 options were granted to employees at fair
value of US$450,000, and the options outstanding had a weighted average remaining
contractual life of 9.7 years.
Based on the calculation of the total fair value of the options granted, during 2014, the Company
recognized a total charge through the consolidated statements of comprehensive income of
US$336,505 (US$125,853 during 2013) and a charge of US$106,854 during 2014 to biological
assets (for the portion related to operating personnel). The total fair value amounted to
US$440,890 (US$125,853 during 2013) was accredited into to “Stock options reserve” caption
in the consolidated statement of changes in equity.
The inputs used in the Hull and White option pricing model are as follows:
2014
2013
Weighted average share price
1.82
1.00
Weighted average share exercise price
1.43
1.00
41.10%
39.5%
Expected life
10 years
10 years
Risk free rate
2.42%
2.8%
0%
0%
Expected volatility
Expected dividend yield
Expected volatility and the expected life used in the model are based in management’s best
estimates and are adjusted for the effects on non-transferability, exercise restrictions and
behavioral considerations. The risk free rate is based on the US Treasury rate.
24
13.
Tax situation
(a)
UCL is subject to the tax and regulatory regime established by the Special Economic Zone
Authority of The Cayman Islands.
(b)
Peruvian tax regime Peruvian Subsidiaries are subject to the Peruvian tax law. As of December 31, 2014 and 2013,
the statutory income tax rate is 30 per cent on taxable income, calculated on the period results in
Nuevos Soles.
From the financial year 2015, in response to the Law 30296 published on December 31, 2014
and effective from January 1, 2015, the tax rate applicable on taxable income, after deducting
the workers’ profit sharing will be as follows:
-
Year 2015 and 2016: 28 per cent.
-
Years 2017 and 2018: 27 per cent.
-
Year 2019 forward: 26 per cent.
Legal persons not domiciled in Peru and individuals are subject to retention of an additional tax
on dividends received. In attention to Law 30296, the additional tax on dividends is as follows:
-
4.1 per cent of the profits generated until December 31, 2014.
-
For profits generated from 2015, whose distribution is made after that date will be the
following:
-
2015 and 2016: 6.8 per cent.
-
2017 and 2018: 8 per cent.
-
2019 forward: 9.3 per cent.
According to Law No. 27037 - Taxation of Investment Promotion in the Amazon (hereinafter "the
Amazon Law"), if the Peruvian Subsidiaries qualify for the requirements of this Law, they could
enjoy tax benefits related to the value added tax, such as exemption from the sale of goods for
consumption in the Amazon, services and construction contracts made in this area, special tax
credit of 25 or 50 per cent depending on the area in which the activities of the Peruvian
Subsidiaries and the nature of activity are carried out, and that tax exemption on the import of
goods contained in the Appendix to Decree Law No. 21503 and specified and fully released in the
common tariff annexed to the protocol amending of the Convention Colombian Peruvian Customs
Cooperation (PECO), 1938. Furthermore, in compliance with the Amazon Law, the Peruvian
Subsidiaries may also access the related tax benefits on income tax, which basically consist of
obtaining reduced rates of 0 per cent, 5 per cent and 10 per cent depending on the activities to
be performed, the specific area where they develop and the type of crop.
Tax benefits related to income tax and value added tax will be effective until 2048, except for the
benefit of the tax exemption for the import of goods to be consumed in the Amazon region, which
expires in 2015.
25
According to the Amazon Law, the Subsidiaries may use the benefits indicated in the previous
paragraph only if all the requirements below are fulfilled:
(i)
The head office must be in the Amazon, where the administration and accounting is
carried out.
(ii)
The administration shall be held in the Amazon.
(iii)
The accounting records and the individual responsible of keeping the books shall be
located in the Amazon.
(iv)
The company must be registered in the registry office of the Amazon.
(v)
At least 70 per cent of the assets must be in the Amazon.
(vi)
Production should be in the Amazon. Service companies cannot provide services outside
the Amazon. Goods produced in the Amazon may be placed inside or outside the Amazon.
As of 31 December, 2014 and 2013, the Company and its Subsidiaries are performing
procedures to comply with the requirements of the Tax Authorities, and thus enjoy the benefits
of the Amazon Law.
(b.1) Transfer pricing transactions For the purpose of determining the income tax, the transfer pricing of transactions with
related companies and companies residing in areas of low or no taxation, should be
supported by documentation and information on the valuation methods used and the
criteria used for its determination. To date, the transfer pricing rules are in force in Peru,
these regulate that transactions with related companies and local or foreign companies
domiciled in tax havens must be carried at market value. Based on the analysis of the
Company's and Subsidiaries operations, in Management’s opinions and of its legal
advisors, as a result of the application of these standards will not result in significant
contingencies for the Company and its Subsidiaries as of 31 December 2014 and 2013.
(b.2) Tax Authority reviews The Peruvian Tax Authority is entitled to review and, if applicable, amend the income tax
calculated by the Company’s Subsidiaries up to four years after the tax return was filed.
Due to the interpretations likely to be given by the Peruvian Tax Authority on current legal
regulations, it is not possible to determine, as of this date, if whether the reviews to be
conducted will result or not in liabilities for the Company and its Subsidiaries, therefore,
any increased tax or surcharge that could arise from possible tax reviews will be applied to
the consolidated results of the year in which is determined. In Management’s opinion and
of its tax advisors, any additional tax settlement will not be significant for the consolidated
historical financial information as of 31 December 2014 and 2013.
(b.3) During the years 2014 and 2013, the Company’s Subsidiaries generated tax losses.
According to the recovery system chosen by the Management, the tax loss can be carried
forward indefinitely and offset up to a maximum of 50 per cent of taxable earnings for
each year. The amount of the tax loss carry forward is subject to the outcome of the
reviews referred to in paragraph (b.2) above.
26
As of December 31, 2014 and 2013, Cacao Del Peru Norte S.A.C. had tax losses declared
to the tax administration amounting to S/.3,426,599 and S/.780,199, respectively
(equivalent to US$1,146,403 and US$279,109, respectively). The Subsidiaries are in
start-up phase and Management expects to have taxable income over the long term. In
addition, as explained in literal (b.2), Subsidiaries are subjected to the Tax Administrator’s
review in order to offset any tax losses. Management assessed there is no certainty about
when the Company would be able to apply its carry forward tax losses. Thus, Management
has decided not to recognize deferred tax asset on the carry forward tax loss as of 31
December 2014 and 2013.
14.
Administrative expenses
(a)
2014
US$
Services provided by third parties (b)
1,500,909
394,587
Personnel expenses (c)
682,652
122,334
Provision for share based payments, note 12(b)
336,505
125,853
Allowance for VAT impairment, note 6(b)
129,387
25,975
15,511
2,515
Taxes
Depreciation, note 8(d)
4,312
619
Write-off of seeds
3,542
1,189
203,821
__________
__________
2,876,639
__________
673,072
__________
Other (d)
(b)
2013
US$
The services provided by third parties is further broken down as follows:
2014
US$
2013
US$
Advisory services
524,685
9,181
Travel expenses
328,213
18,000
Legal services
251,754
33,243
Other labor services
105,127
100,825
Payroll services
100,030
8,030
Accounting and administrative services
84,045
131,666
Bank expenses
22,519
30,021
84,536
__________
63,621
__________
1,500,909
__________
394,587
__________
Other
27
(c)
Personnel expenses are made up as follows:
2014
US$
Wages and salaries
2013
US$
390,932
80,150
Ordinary benefits
84,914
13,515
Social security contributions
38,338
7,233
Vacation expenses
29,845
6,758
138,623
_________
14,678
_________
682,652
_________
122,334
_________
Other
Average number of employees The average number of people employed by the Company during the periods was:
2014
Administrative
Workers
(d)
31
10
182
_______
_______
213
_______
10
_______
2014
US$
2013
US$
The item is made up as follows:
Office and sundry supplies
101,287
-
Environment management activities
36,503
-
Machinery spare parts
12,759
-
Insurance
14,550
-
38,722
________
________
203,821
________
________
Other
15.
2013
Contingencies
Certain non-governmental organizations have expressed concern on the internet related to the
environmental impact of the Company's activities. In the opinion of the Company's Management and its
legal counsel, the Company is in compliance with the administrative, legal, social and environmental
requirements to conduct its agricultural investments. Thus, in the Company's opinion, there is no
litigation or other contingencies that have a significant impact on the consolidated historical financial
information of the Company and its Subsidiaries as of December 31, 2014 and 2013.
28
16.
Loss per share
Basic loss per share amounts are calculated by dividing net loss for the year attributable to equity
holders of the parent by the weighted average number of Ordinary Shares outstanding during the year.
Diluted loss per share amounts are calculated by dividing the net loss for the year attributable to
ordinary equity holders of the parent by the weighted average number of Ordinary Shares outstanding
during the year plus the weighted average number of Ordinary Shares that would be issued on the
conversion of all the dilutive potential Ordinary Shares into Ordinary Shares.
The following reflects the loss and share data used in the basic and diluted loss per share computations:
2014
2013
Net loss attributable to equity holders of the parent for basic and
diluted earnings (numerator)
(2,981,983)
(694,855)
12,745,429
___________
5,071,164
___________
(0.23)
___________
(0.14)
___________
Weighted average number of ordinary shares for basic and diluted
earnings per share (denominator) (*)
Basic and diluted loss per share (average)
(*)
The weighted average number of shares takes into account the weighted average effect of changes in
ordinary share transactions during the year
The Company has granted stock options to certain employees whose corresponding number of shares
related to outstanding options (see note 12) may have a dilutive effect in earnings per share in future
periods. However, considering that the Company had net losses during 2014 and 2013, these options
were not considered in the earnings per share calculation as of December 31, 2014 and 2013, due to its
potential anti-dilutive effect.
There have been no other transactions involving ordinary shares or potential ordinary shares between
the reporting date and the date of authorisation of these financial statements.
17.
Financial risk management
The activities of the Company and its Subsidiaries are exposed to market risks during the normal course
of their operations; however, Management, based on its technical knowledge and experience, intends to
diminish the potential adverse effects in its financial performance, establishing policies for credit,
liquidity, currency and interest risks.
29
The Company’s Management is aware of market conditions and, based on its knowledge and experience,
manages liquidity, interest rate, currency and credit risks following the policies adopted by the Board.
The most important aspects of managing these risks are:
(a)
Market risksThe market risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market prices. Market risks arise from open positions in interest
rates, currency and equity products. In case of the Company and its Subsidiaries, the financial
instruments affected by the market risks include bank deposits, receivable and payable accounts
which are exposed to currency, interest rates, credit and liquidity risks.
(b)
Currency risk The Company and its Subsidiaries obtain financing for working capital and investments in U.S.
Dollars, so there is no exchange rate risk. The Company’s Subsidiaries are in start-up stage so
there are some local buys in foreign currency (mainly Nuevos Soles). Management believes that
future fluctuations in the exchange rate of Peruvian currency against the U.S. Dollar will not
affect significantly the results of the Company’s future operations.
The following table demonstrates the sensitivity to a reasonably possible change in the Nuevos
Soles (Peruvian Currency – S/.) exchange rate, with all other variables held constant. The impact
on the Company’s results before income tax is due to changes in the fair value of monetary
assets and liabilities:
Change in S/. rates
(Increase) decrease of net loss for the
year ended at 31 December
_______________________________________
2014
US$
2013
US$
%
+5
74,638
789
+10
149,276
1,579
-5
(74,638)
(789)
(149,276)
(1,579)
-10
(c)
Credit risk Credit risk is the risk that a counterparty does not perform its assumed obligations in a financial
instruments or a commercial contract, and this causes a financial loss. The Company and its
subsidiaries are exposed to credit risk from its operating and financial activities, including
deposits in banks and financial institutions and other financial instruments.
Financial instruments and bank deposits The credit risk on bank balances is managed by the Finance Department in accordance with
Company’s policies. The counterparty credit limits are reviewed by Management and the Board of
Directors.
30
The limits are set to minimize the concentration of risks and therefore mitigate financial losses
from potential counterparty defaults. The Company and its subsidiaries’ maximum exposure to
credit risk for the components of the consolidated statements of financial position as of
December 31, 2014 and 2013 is the carrying amount as illustrated in notes 4 and 6.
In Management’s opinion, as of December 31, 2014 and 2013, the Company does not consider
that those concentrations imply unusual risk for its operations.
(d)
Liquidity risk Liquidity risk originates from the inability to obtain funds necessary to meet the Company’s
financial obligations.
The administration of the liquidity risk implies keeping enough cash as well as having the
availability to obtain financing through adequate credit sources and the capability to liquidate
transactions.
As of December 31, 2014 and 2013, the Company’s subsidiaries are in the initial agricultural
growth stage and have the financing support of its shareholders. In Management’s opinion, the
Company and its subsidiaries are not exposed to a significant risk of liquidity risk.
(e)
Interest rate risk The Company and its Subsidiaries are not exposed to this risk because do not have financial
liabilities subject to fixed and/or variable interest rates. Management believes that future
fluctuations in interest rates will not affect significantly the results of the Company’s future
operations.
(f)
Capital management The primary objective of the Company and its Subsidiaries capital management is to ensure that
it maintains a strong credit rating and healthy capital ratios in order to support its business and
maximize shareholder value.
The Company and its Subsidiaries manage its capital structure and makes adjustments to it in
light of changes in economic conditions. To maintain or adjust the capital structure, the Company
and its Subsidiaries may adjust the dividend payment to shareholders, return capital to
shareholders or issue new shares.
No changes were made in the objectives, policies or processes for managing capital during the
years ended as of December 31, 2014 and 2013.
31
United Cacao Limited and its Subsidiaries
18.
Fair value information
The fair values of the financial assets and liabilities are included at the amount at which the instrument
could be exchanged in a current transaction between willing parties, other than in a forced or liquidation
sale.
In Management’s opinion, the fair value of the Company and its Subsidiaries financial instruments is not
significantly different from their carrying values; therefore, the disclosure of this information has no
effect on the consolidated historical financial information as of December 31, 2014 and 2013.
19.
Segment information
The Company’s activities consist of agricultural operations related to cacao cultivation. The Board of
Directors and the Financial Controller are together considered be the chief operating decision makers.
The business is managed as one entity, and activities are not split into any further regional or product
subdivisions in the internal management reporting as any such split would not provide management with
meaningful information. Consequently, all activities relate to this one segment. All non-current assets
are located in the Subsidiaries’ country of domicile, being Peru.
20.
Commitments
There were no capital commitments as of December 31, 2014 and 2013.
21.
Events after the reporting period
On January 5, 2015, the Company’s Chairman & CEO, Dennis Melka, exercised 150,000 options at an
exercise price of US$1.00 and 10,000 options at an exercise price of $1.25. Total shares outstanding
following the issuance was 18,590,000.
On June 19, 2015, the Company's shares were registered for trading on the Lima Stock Exchange
(“BLV” for its Spanish acronym).
32
Community Snapshots / Fotos de la Comunidad
The Company maintains an active community engagement programme. Please visit our website for more pictures and information.
La Compañia maintiene un programa de iniciativas comunitarias. Favor de visitar nuestra pagina web para mayor informacion y fotos.
2nd Annual Football Tournament (The Cacao Cup 2014) - 1st December 2014.
El 2o Campeonato Anual de Fútbol (La Copa Cacao 2014) - 1 de diciembre 2014.
Parade for the 131 Anniversary of Tamshiyacu – December 8th, 2014.
First Anniversary Celebration – April 26th, 2014.
Desfile por el 131 Aniversario de Tamshiyacu - 8 de Diciembre de 2014.
Celebración del Primer Aniversario – 26 de Abril de 2014.
Donation of Educational Materials and others – January 27, 2014
Beauty Contest ‘Miss Tamshiyacu’ – September 1st, 2014.
Donación de Materiales Educativos y Otros – 27 de Enero de 2014.
Certamen de Belleza ‘Miss Tamshiyacu’ - 1 de Setiembre de 2014.
www.unitedcacao.com

Descarga aquí - United Cacao

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