24 de octubre de 2014
Informe de Valorización Determinación del precio mínimo a ser tomado en cuenta en la OPA sobre las acciones comunes de Casa Grande S.A.A.
El presente Informe de Valorización ha sido preparado sobre la base de información proporcionada por Casa Grande S.A.A. (“Casa Grande”) o por sus representantes, funcionarios, empleados y/o asesores de manera limitada respecto de Casa Grande, y sobre información pública revelada por éstos y disponible de manera razonable a EFIC Partners (la “Información”). El presente informe refleja la opinión de EFIC Partners sobre el valor de las acciones de Casa Grande a la fecha de presentación del presente Informe de Valorización. A pesar de no tener ninguna obligación al respecto, EFIC Partners se reserva el derecho de modificarlo o actualizarlo con posterioridad en caso que ello le fuese solicitado. No obstante lo anterior, de conformidad con las normas aplicables, los criterios empleados por EFIC Partners han considerado la situación existente de Casa Grande al momento que ocurrió el hecho que generó la obligación de realizar la OPA.
Al elaborar el presente Informe de Valorización, EFIC Partners no ha llevado a cabo directa o indirectamente un proceso específico de verificación o auditoria de la Información. Asimismo, como toda empresa en marcha, Casa Grande podría tener proyectos futuros cuya existencia e información relacionada no se ha podido confirmar, por lo que EFIC Partners, sus accionistas, representantes, funcionarios, empleados y asesores no garantizan expresa o implícitamente la validez, veracidad, integridad, suficiencia y exactitud de la Información contenida en el presente Informe o en cualquier otra comunicación oral o escrita, ni se responsabilizan por dicha Información, sus errores u omisiones, así como por las opiniones, estimados, proyecciones y conclusiones contenidas en el informe que hayan sido elaboradas sobre la base de la Información o por no haber considerado información relacionada con eventuales proyectos futuros cuya existencia no se ha podido confirmar de manera razonable en base a la limitada información proporcionada a EFIC Partners por Casa Grande, por que no existía de manera pública o porque en caso de existir EFIC Partners no ha tenido conocimiento y/o acceso a la misma de manera razonable.
3
Los firmantes declaran haber realizado una investigación y análisis que la lleva a considerar que el presente informe de valorización de las acciones comunes de Casa Grande S.A.A. ha sido preparado de acuerdo con la propuesta técnica y requisitos detallados en el presente documento, teniendo como base la información brindada por la empresa. Asimismo, EFIC Partners, en su calidad de empresa valorizadora, se hace responsable por los daños que se puedan generar causados por la expedición de un informe con un inadecuado sustento técnico o insuficiencia en su contenido, dentro del ámbito de su competencia, de acuerdo con la responsabilidad establecida en el Código Civil.
----------------------------------Marcos Quiroz Zuzunaga
---------------------------------Bratzo Torres Bondy
---------------------------------Daniel Olaechea Pardo
----------------------------------José Benavides Roose
---------------------------------Rodrigo Pomareda Gajate
---------------------------------Sebastián Ochoteco Melchiorre
Contenido 4
• • • • • • •
Contexto de la Operación Análisis del Sector Análisis de la Empresa Contingencias Valorización de la Sociedad Conclusiones y Recomendaciones Bibliografía
Contexto de la Operación 5
• El 14 de Mayo de 2014 se genera la obligación para Casa Grande S.A.A. (“Casa Grande”) de realizar una Oferta Pública de Adquisición (“OPA”) debido a la adquisición de acciones comunes de Casa Grande por parte del Grupo Gloria (principales accionistas) incrementado su participación total en la empresa de 59.39% a 60.063% • El literal “C” del artículo “4” del Reglamento de Oferta Pública de Adquisición y de Compra de Valores por Exclusión de la Superintendencia del Mercado de Valores (“SMV”) indica que la adquisición o incremento de participación significativa genera la obligación de efectuar una OPA siempre que: “Acarree que el adquirente alcance o supere una participación de 25%, 50% ó 60% en el capital social de la sociedad objetivo o que adquiera una cantidad de acciones o tenga la potestad de ejercer los derechos políticos de acciones, en una proporción tal que en cualquiera de dichos supuestos le permita: (i) remover o designar a la mayoría de los directores, o (ii) modificar los estatutos de la sociedad” • En base a lo anterior, con fecha 21 de Julio de 2014, Casa Grande comunicó a la SMV como hecho de importancia una solicitud de selección de una empresa valorizadora para determinar el precio mínimo a ser tomado en cuenta por el Grupo Gloria a través de su empresa vinculada DEPRODECA S.A.C. en la OPA a realizar sobre las acciones representativas del capital social emitidas por Casa Grande
Contexto de la Operación 6
• La OPA está dirigida a todos los titulares de acciones con derecho a voto a un precio mínimo determinado en función de lo señalado por la normativa SMV (Resolución Nº 009-2006-EF/94)
• El precio mínimo es el resultado de la comparación de dos valores: • El precio que resulte de la aplicación de las metodologías de valorización que la entidad valorizadora estime convenientes considerando lo señalado por el Reglamento de la SMV • El valor derivado de la operación que dio lugar a la obligación de formular la OPA posterior, denominado Valor de Contraprestación • La entidad valorizada se encargará de escoger el precio mínimo a partir del contraste entre el precio obtenido por las metodologías de valorización y el valor de la operación que dio lugar a la OPA, tomando en cuenta que el precio mínimo determinado no puede ser menor al valor de contraprestación • El valor de la contraprestación por la transacción que generó la obligación de efectuar la OPA posterior es el que se deriva de la transacción entre el Grupo Gloria y Casa Grande. • El precio por acción pagado por Casa Grande ascendió a S/. 7.10 por acción el 14 de mayo de 2014
• El valor de la contraprestación se debe comparar con el valor que resulta de la aplicación de las metodologías de valorización a realizar por la entidad valorizadora: (i) valor de la sociedad como negocio en marcha; (ii) valor bursátil; (iii) valor contable de la sociedad; y (iv) valor de liquidación de la sociedad
Contenido 7
• Contexto de la Operación • Análisis del Sector • Cadena de Valor del Azúcar • Entorno Internacional • Entorno Local • Análisis de la Empresa • Contingencias • Valorización de la Sociedad • Conclusiones y Recomendaciones • Bibliografía
Análisis del Sector 8
Cadena de Valor del Azúcar Instituciones de Apoyo: MINAG, PRODUCE, MINCETUR, INIA, SENASA, Universidades, Asoc. Nac de Prod. De Caña de Azúcar y Biocombustibles
Caña de azúcar
Azúcar y residuales
Insumos Alimenticios
Melaza
Alimentos Balanceados
Alcoholes
Golosinas
Gaseosas
Bagazo
Fármacos
Combustible
Papel
Supermercados, Mayoristas, Marcas Nacionales, Servicios de Alimentación, Industriales, Cooperativas Internacionales, Exportadores
Fuente: Maximixe (2010)
Análisis del Sector 9
Proceso Productivo del Azúcar
(1) Siembra
(11) Envasado
(2) Cosecha
(10) Secado y Enfriado
(3) Recepción
(4) Picado de la Caña
(9) Centrifugado
1. Siembra 2. Cortado y Recolección de la Caña de Azúcar 3. Determinación de calidad, contenido de sacarosa, fibra e impurezas. Se lava y pesa la caña 4. Picado, hecho por máquinas que obtienen pequeños trozos 5. Extracción del jugo de la caña mediante presión, utilizando agua caliente para extraer el máximo de sacarosa 6. Elevación de la temperatura del jugo para separar los sólidos. Se utiliza cal para separar los compuestos insolubles
(5) Molienda
(8) Cristalización
(6) Clarificación y Refinación
(7) Evaporación
7. Se evapora el agua del jugo y se obtiene un jarabe con densa concentración de sólidos 8. Se obtienen los cristales (azúcar) y el líquido 9. Se separan los cristales del líquido 10. Se seca y se enfría el azúcar en contracorriente 11. Se empaca el azúcar seca y fría en sacos para su venta
Fuente: Maximixe (2010)
Contenido 10
• Contexto de la Operación • Análisis del Sector • Cadena de Valor del Azúcar • Entorno Internacional • Entorno Local • Análisis de la Empresa • Contingencias • Valorización de la Sociedad • Conclusiones y Recomendaciones • Bibliografía
Entorno Internacional 11
Cotización Internacional del Azúcar Evolución Histórica y Futuros del Precio del Azúcar (NY 11, US$ c/lb) 35
Media 22.6
28
Media 27.3 Media 21.4
Media 18.7
21
Media 17.3
Media 16.4
14 7
0
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
• El precio del azúcar alcanzó los US$ 16 c/lb en 2014, una reducción de 15% respecto al promedio en 2009 y su menor nivel en los últimos 5 años • El principal determinante de la significativa disminución del precio internacional de azúcar es el exceso de oferta de dicho producto en el mercado mundial. A partir de 2012 se ha evidenciado un creciente superávit a nivel global • Algunos de los factores que influencian la oferta del azúcar son los siguientes: (i) condiciones climáticas, (ii) rendimientos por hectárea de la caña de azúcar, (iii) rendimiento por tonelada de caña molida, (iv) precio del etanol y del crudo; e indirectamente cada uno de los anteriormente mencionados influencian el precio del bien • La coyuntura de Brasil (que concentra el 50% de las exportaciones globales) repercute fuertemente sobre el precio del azúcar y es otro factor a tener en cuenta al analizar el precio del azúcar • De acuerdo a Morgan Stanley, se espera que a partir de 2015 los precios recuperen debido a dos factores: (i) mayor demanda de etanol en Brasil; y, (ii) reducción de área para cultivos de azúcar debido a su bajo rendimiento relativo a otros productos Fuente: Bloomberg, Morgan Stanley (2014)
Entorno Internacional 12
Evolución Histórica de la Demanda y la Oferta de Azúcar Demanda y Oferta de Azúcar (en MM de TM) 172.2 163.5
154.1 151.3
154.4 153.4
177.5
161.9 155.5
144.0
159.2 13.0
12.2
164.5
175.7
175.6
167.5
170.5
13.0 8.2
6.5
5.1
-1.0 -10.0 2007 - 2008
2008 - 2009
2009 - 2010
2010 - 2011
Superávit / Déficit
2011 - 2012 Producción
2012 - 2013
2013 - 2014E
2014 - 2015E
Consumo
• El déficit experimentado en las campañas 2008/2009 y 2009/2010 se debió principalmente a los siguientes factores: (i) condiciones climáticas adversas en Brasil; y, (ii) déficit en balanza comercial de India durante el mismo periodo, cambiando su posición de exportador neto a importador neto en azúcar • A partir de la campaña 2010/2011, el superávit en el mercado ha sido creciente. Esto ha provocado que el precio del azúcar se encuentre en mínimos históricos • De acuerdo a instituciones como Morgan Stanley y JP Morgan, se espera que el superávit se reduzca a partir de la campaña 2013/2014 debido a una ralentización de producción y el constante aumento del consumo de azúcar Fuente: USDA, Morgan Stanley, JP Morgan (2014)
Entorno Internacional 13
Azúcar Centrifugada por Principales Productores Mundiales (en MM de TM) Campaña Agrícola
Var.%
Part. %
Países 10/11
11/12
12/13
13/14E
11/12 - 10/11
12/13 - 11/12
12/13
Brasil
38.4
36.2
38.6
37.8
-5.7%
6.8%
22.4%
India
26.6
28.6
27.3
27.0
7.7%
-4.5%
15.9%
Unión Europea
15.9
18.3
16.7
16.1
14.9%
-9.1%
9.7%
China
11.2
12.3
14.0
14.3
10.2%
13.5%
8.1%
Tailandia
9.7
10.2
10.0
11.4
5.9%
-2.1%
5.8%
Estados Unidos
7.1
7.7
8.1
7.7
8.4%
5.8%
4.7%
México
5.5
5.4
7.4
6.7
-2.6%
38.2%
4.3%
Otros
47.6
53.4
55.3
54.6
12.3%
3.5%
32.1%
Total
161.9
172.2
177.5
175.7
6.3%
3.1%
100%
• La producción mundial de azúcar creció a tasas de alrededor del 6% desde la campaña 09/10 hasta la campaña 11/12, impulsada por los buenos rendimientos de la tierra en esos años • Debido a la disminución del precio internacional la producción se desaceleró y se espera disminuya para la campaña 13/14 • La creciente demanda por etanol en Brasil y las posibles malas condiciones climáticas en China, US y otros importantes productores serían catalizadores de una disminución en la producción en los próximos años • De acuerdo a Morgan Stanley, la producción de azúcar se reanimará cuando el precio del azúcar se ubique alrededor de 17.25 c/lb Fuente: USDA, Morgan Stanley (2014)
Entorno Internacional 14
Precio Mínimo para Impulsar la Producción Mundial 17.25 c / lb En US$ c/lb Costos agrarios: Cosecha Cultivo Inversión en plantación
4.04 2.32 0.93 0.79
Gastos industriales, administrativos y generales Gasto Industrial Gastos Administrativos y Generales
2.75 1.49 1.26
Logística Carga Elevación
2.39 1.82 0.58
Arriendo Proveedores Gastos de capital
1.21 4.31 2.54 17.25
Fuente: Morgan Stanley (2014)
Entorno Internacional 15
Principales Exportadores e Importadores de Azúcar (en MM de TM) Campaña Agrícola
Var.%
Part. %
Países Exportadores
10/11
11/12
12/13
13/14E
11/12 - 10/11
12/13 - 11/12
12/13
Brasil Tailandia Australia México Guatemala Unión Europea India Otros Total
25.8 6.6 2.8 1.6 1.5 1.1 3.9 10.5 53.9
24.7 7.9 2.8 1.0 1.6 2.3 3.8 10.9 55.0
27.7 6.7 3.1 2.1 1.9 1.7 0.2 11.2 54.5
26.2 7.5 3.2 2.5 2.0 1.5 1.8 11.2 55.9
-4.5% 18.9% 1.8% -36.7% 4.9% 110.5% -3.6% 3.5% 2.1%
12.2% -15.3% 10.7% 112.2% 18.0% -29.1% -95.9% 2.8% -0.9%
50.7% 12.3% 5.7% 3.8% 3.5% 3.1% 0.3% 20.6% 100.0%
Campaña Agrícola
Var.%
Part. %
Países Importadores
10/11
11/12
12/13
13/14E
11/12 - 10/11
12/13 - 11/12
12/13
Unión Europea Indonesia China Estados Unidos E.A.U. Malasia Corea del Sur Otros Total
3.8 3.1 2.1 3.4 2.0 1.8 1.7 31.4 49.3
3.6 3.0 4.4 3.3 2.2 1.7 1.7 28.6 48.5
3.9 3.6 3.8 2.9 2.5 1.9 1.8 31.2 51.7
3.5 3.8 3.9 3.0 2.3 2.0 1.9 30.1 50.5
-5.4% -1.8% 106.7% -2.9% 9.4% -5.1% -1.2% -9.0% -1.7%
10.8% 17.9% -14.2% -11.2% 17.6% 11.4% 8.3% 9.1% 6.7%
7.6% 6.9% 7.4% 5.7% 4.9% 3.7% 3.5% 60.4% 100.0%
Fuente: USDA (2014)
Entorno Internacional 16
Tendencias a Nivel Global (I/II)
Brasil
India
China
Tailandia
• Se espera una disminución de producción en 2014/2015 debido a sequías y plagas • De acuerdo a BMI (Business Monitor International): (i) la tasa de crecimiento anual de la producción 20132018 bordearía el 0.7% debido a que un mayor porcentaje de la caña de azúcar procesada sería destinada a la producción de etanol; y, (ii) Brasil es el 4to mayor consumidor de azúcar en el mundo y se espera que su consumo incremente en 1.8% en el periodo 2013-2018 • De acuerdo a JP Morgan, la campaña 2013/2014 culminaría con pequeña sobre oferta en comparación a otros años • Implementación de medidas aplicadas por el gobierno destinadas a aliviar financieramente la industria al reducir el superávit y aumentar los precios. Entre las principales destacan: subsidios a la exportación, mayores impuestos a la importación, tasas de interés de 0.0% para retrasos y aumento en la participación del etanol (de 5% a 10%) en el combustible • Actualmente el precio de la caña es fijo (regulado), lo cual genera pérdidas a la industria. Algunas regiones proponen desregular este control de precios • Las importaciones continúan aumentando: el gobierno adquiere parte de la producción de azúcar, así acumula inventarios para sostener la producción nacional y apoyar el precio doméstico • De acuerdo a Morgan Stanley, la producción para la campaña 2013/2014 aumentaría a pesar de la reducción en los márgenes financieros de las principales empresas del país • Según Morgan Stanley, las exportaciones hacia China impulsarían la producción en las campañas 2013/2014 y 2014/2015 • Se prevé una reducción de inventarios debido al incremento en el consumo interno y exportaciones • El gobierno realizará esfuerzos para diversificar los cultivos de arroz hacia alternativos como la caña de azúcar Fuente: BMI, Morgan Stanley, JP Morgan, USDA (2014)
Entorno Internacional 17
Tendencias a Nivel Global (II/II) Brasil: Evolución de Producción (MM de TM)
India: Evolución de Superávit / Déficit (MM de TM)
38.6
38.4
4.4 37.8
3.5 36.8
2.3
36.2 1.0
0.9
2010/2011 2011/2012 2012/2013 2013/2014E 2014/2015E
2010/2011 2011/2012 2012/2013 2013/2014E 2014/2015E
China: Evolución de Importaciones y Prod. (MM de TM)
Tailandia: Evolución de Exportaciones y Prod. (MM de TM) 1.0
14.3
14.0
12.3
0.7 4.4
2011/2012
Producción
0.7
0.6
3.9
3.8
2012/2013
1.1
1.0
2013/2014E
Importaciones
2011/2012
2012/2013 Producción
2013/2014E
Exportaciones Fuente: BMI, Morgan Stanley, JP Morgan, USDA
Entorno Internacional 18
Principales Jugadores del Mercado (I/II) (cifras a 2013) • 61.4 mm de toneladas de caña trituradas • 4.5 mm de toneladas de azúcar producidas • 131 kg de azúcar por tonelada de caña • 860 mil hectáreas cosechadas • Ventas: US$4 Bn / EBITDA: US$834 MM
• 15.6 mm de toneladas de caña trituradas • 1.4 mm de toneladas de azúcar producidas • 133 kg de azúcar por tonelada de caña • 300 mil hectáreas cosechadas • Ventas: US$643 MM/EBITDA: US$265 MM
• 2.5 mm de toneladas de caña trituradas • 0.2 mm de toneladas de azúcar producidas • Ventas: US$155 MM/EBITDA: US$23 MM
• 0.8 mm de toneladas de caña trituradas • 0.1 mm de toneladas de azúcar producidas • Capacidad para triturar 79.0 k toneladas de caña por día • Ventas: US$602 MM/EBITDA: US$80 MM
• 6.5 mm de toneladas de caña producidas • 1.8 mm de toneladas de azúcar producidas • 140.0 kg de sacarosa por tonelada de caña • 64.0 mil hectáreas cosechadas • Ventas: US$1.3 Bn/ EBITDA: US$307 MM
• 1.4 mm de toneladas de azúcar producidas • 124.7 kg de sacarosa por tonelada de caña1 • 85.1 mil hectáreas cosechadas • Ventas: US$1.7 Bn/ EBITDA: US$307 MM
• 18.1 mm de toneladas de caña trituradas • 2.0 mm de toneladas de azúcar producidas • Capacidad de producción de 5.7 k toneladas de azucar rubia por día • Ventas: 2.6 bn/ EBITDA US$ 298 MM
• • • •
14.1 mm de toneladas de caña trituradas 3.1 mm de toneladas de azúcar vendidas 246 mil hectáreas cultivadas Ventas: US$ 44.1 bn/ EBITDA US$ 2.4 bn
Fuente: Bloomberg, Memorias de cada empresa. Elaboración Propia
Mercado Internacional 19
Principales Jugadores del Mercado (II/II) (cifras a 2013) • 27.2 mm de toneladas de remolacha proc. • 4.7 mm de toneladas de azúcar producidas • 396 mil hectáreas cultivadas • Ventas: US$ 10.3 bn / EBITDA US$ 1.1 bn
• 20.5 mm de toneladas de caña trituradas • 17.5 mm de toneladas de remolacha proc • 3.8 mm de toneladas de azúcar producidas • 13.3 toneladas de azúcar por hectárea • Ventas: US$ 3.7 bn / EBITDA US$ 434
• 15 mm de toneladas de remolacha proc. • 2.5 mm de toneladas de azúcar producidas • Ventas: 3.1 bn
• 9.7 mm de toneladas de caña trituradas • 1.1 mm de toneladas de azúcar producidas • 118.4 kg de azúcar por tonelada de caña • 64.0 mil hectáreas cosechadas • Ventas: US$ 2.1 bn / US$ EBITDA 606 MM
Fuente: Bloomberg, Memorias de cada empresa. Elaboración Propia
Contenido 20
• Contexto de la Operación • Análisis del Sector • Cadena de Valor del Azúcar • Entorno Internacional • Entorno Local • Análisis de la Empresa • Contingencias • Valorización de la Sociedad • Conclusiones y Recomendaciones • Bibliografía
Entorno Local 21
Historia del Mercado de Azúcar • 1943 - 1968 • Producción a cargo de las haciendas azucareras • La producción crecía aproximadamente 3% anual • 1968: la producción nacional de caña de azúcar alcanzó las 7.2 MM de TM
• 1970 - 1990 • La reforma agraria: Las haciendas fueron expropiadas y adjudicadas a sus trabajadores en cooperativas • 1990: la producción de caña de azúcar alcanzó las 0.4 MM de TM
• 1990 - Presente • 1996: Promulgación de Ley que incentiva la conversión en sociedades anónimas • La producción empezó a recuperarse alcanzando los 11 MM de TM en 2013 • Situación Comercial: Importador Neto • Consumo per Cápita (2011): 19.4 kg
Entorno Local 22
Superficie Agrícola Cosechada Superficie Agrícola Cosechada por Cultivos (miles de Ha)
732 68 200 283 268
18.8%
793 37.8%
82 217 294 317
338
395
2007
2013
Arroz cáscara Maíz amarillo duro Caña de azúcar
Gastos % del Área de Ventas Total Cosechada 2009 – 2013 por(como Cultivo % (2013) de las ventas)
Papa Maíz amiláceo Otros
• En 2013, las cosechas de caña azúcar representan el 3.9% del total de área cosechada nacional, lo que es contrarrestado con altos niveles de rendimiento • Actualmente existen incentivos para ampliar la cosecha de la caña de azúcar debido a la naciente industria del etanol en el Perú. A junio 2014, el área cosechada ha aumentado en 8.6% interanual • El crecimiento promedio en el área cosechada de caña de azúcar ha sido de 3.2% anual entre 2007-2013
Arroz cáscara Papa Maíz amarillo duro
15.1% 3.9% 14.0% 10.3%
Maíz amiláceo Caña de Azúcar Otros
Incremento en el Área Cosechada de Caña (miles de Ha.) 39.3
2Q2013
42.7
2Q2014
Entorno Local 23
Producción Nacional de Caña de Azúcar (I/III) Evolución de la Producción Anual (millones de TM) y el Rendimiento Anual (TM/Ha) Leve Sequía
CAGR 2000 - 2013 (%): 3.4%
11.0 Sequía 8.4 7.1
122.3 111.8
2000
8.9
2001
2002
9.9
9.7
9.9
125.5
123.5
127.8
2010
2011
2012
8.2
7.4 123.7
9.4
10.4
6.9 114.1
2003
135.9
7.2 6.3
98.0
102.4
2004
2005
131.9
121.1
133.7
110.0
2006
Producción
2007
2008
2009
2013
Rendimiento
• La producción nacional de caña de azúcar ha crecido a un ritmo anual de 3.4% entre 2000 y 2013 • Las sequías son el factor climático que más afectan la producción de caña de azúcar • El rendimiento de caña de azúcar se ha visto impulsada en los últimos años por mayores inversiones en capital y disponibilidad hídrica • La industria naciente del etanol en el Perú es otro estímulo de la producción de caña de azúcar Fuente: Minagri, BMI, MCC Seminario
Entorno Local 24
Producción Nacional de Caña de Azúcar (II/III) Países con Mayores Rendimientos Promedio en la Producción (TM/Ha; promedio del periodo 2000 – 2013) 123 118
114 109
Perú
Egipto
Senegal
Etiopía
107
Malaui
• El Perú tiene el mayor rendimiento histórico promedio en el siglo XXI a nivel mundial • La cercanía a la línea ecuatorial y su exposición a la Corriente de Humboldt garantizan un clima cálido y constante a lo largo del año, lo cual elimina la estacionalidad en la producción de este cultivo • La principal debilidad en la producción nacional de caña de azúcar es la escasez de recursos hídricos en la costa norte del país
Fuente: FAO (2014)
Entorno Local 25
Producción Nacional de Caña de Azúcar (III/III) Producción por Principales Regiones (MM de TM)
0.1 0.5 1.6 3.0
0.1 0.6 1.3
2.8
0.1 0.7 1.4
0.1 0.7 1.6
Participación de Principales Regiones (2013)
0.1 0.9
0.9% 7.9%
1.6 Arequipa
2.7
2.8
3.0
Ancash
14.4%
Lima
49.1%
Lambayeque 4.8
4.9
5.0
5.2
5.4
2009
2010
2011
2012
2013
La Libertad 27.7%
• La producción geográfica de caña de azúcar se ubica en la costa norte y está altamente concentrada en 2 departamentos: La Libertad y Lambayeque, los cuales concentran más del 75% de la producción total a nivel nacional
Fuente: Minagri (2014)
Entorno Local 26
Producción Nacional de Azúcar (I/III) Evolución de la Producción (en miles de TM) CAGR 2000 - 2013 (%): 3.8% CAGR 2009 - 2013 (%): 2.5%
Leve Sequía Sequía
1007
959 724
2000
2001
748
2002
2003
1038
2009
2010
1076
2011
2012
1174
916
878 760
1064
1106
2004
805 695
2005
2006
2007
2008
2013
• La producción nacional de azúcar creció a un ritmo anual de 3.8% entre 2000 y 2013 • A pesar de la creciente producción de azúcar, el Perú continúa siendo importador neto de este producto dado que el consumo interno es mayor que la producción local • De acuerdo a BMI, entre 2016/2017 la producción local sería suficiente para abastecer el consumo interno Fuente: Minagri, BMI (2014)
Entorno Local 27
Producción Nacional de Azúcar (II/III) Producción por Principales Regiones (en miles de TM)
6 59
174 307
4 68
4 80
5 84
161
157
176
286
292
280
Participación de Principales Regiones (2013)
8 101
174 316
0.7% 8.6% Arequipa
Ancash
14.8%
Lima
48.9%
Lambayeque La Libertad 519
519
544
562
574
2009
2010
2011
2012
2013
26.9%
• Más del 75% de a producción de azúcar se concentra en los departamentos de La Libertad y Lambayeque , donde se encuentran las principales empresas del sector
Fuente: Minagri (2014)
Entorno Local 28
Producción Nacional de Azúcar (III/III) Producción por Principales Empresas (en miles de TM)
275
312
340
288
307
101
105
103
127
155
155
149
133
129
121
129
133
126
117
132
146
158
263
248
257
267
283
2009
2010
2011
2012
2013
106 159 135
Participación de Principales Empresas (2013)
Otros Tumán
24.1%
29.8%
Cartavio Paramonga Laredo Casa Grande
13.5%
9.9%
11.3%
11.3%
• Más del 75% de a producción de azúcar se concentra básicamente en La Libertad y Lambayeque, donde se encuentran las principales empresas del sector. Casa Grande concentra el 24.1% de la producción nacional de azúcar en 2013
Fuente: Minagri (2014)
Entorno Local 29
Producción Nacional de Azúcar 2013 (IV/IV) Empresa Agroindustrial Tumán Caña: 1,206,202 TM Azúcar: 126,638 TM Cosecha: 11,587 Ha
Empresa Agroindustrial Pomalca Caña: 852,943 TM Azúcar: 91,700 TM Cosecha: 9,682 Ha
Empresa Agroindustrial Casa Grande Caña: 2,021,082 TM Azúcar: 283,162 TM Cosecha: 11,671 Ha
Complejo Agroindustrial Cartavio Caña: 818,730 TM Azúcar: 132,939 TM Cosecha: 4,359 Ha
Agroindustrial Laredo Caña: 726,117 TM Azúcar: 158,322 TM Cosecha: 7,514 Ha
Agroindustrias San Jacinto Caña: 650,571 TM Azúcar: 101,306 TM Cosecha: 6,759 Ha
Agroindustrial Paramonga Caña: 759,668 TM Azúcar: 132, 969 TM Cosecha: 5,270 Ha
Fuente: Memorias Anuales (2013)
Entorno Local 30
Precios del Azúcar (I/II) Evolución de los Precios Promedio Mensuales al Consumidor en Lima Metropolitana (en S/. por Kg) 3.5
Media: 2.87
3.0 2.5
Media: 1.88
1.0
Media: 1.58
Media: 3.09
Media: 2.57
Media: 1.99
Media: 2.83
Media: 2.56
2.0 1.5
Media: 3.28
Media: 2.74
Media: 2.16
Media: 1.75
Media: 2.49
Media: 2.10
0.5 0.0
2008
2009
2010
2011 Azucar Blanca
2012
2013
2014
Azucar Rubia
• Los precios del azúcar al consumidor en el Perú se establecen libremente por la interacción entre la oferta y demanda • El azúcar es uno de los productos que participa en la canasta familiar en el Perú • En los últimos años, los precios medios del azúcar rubia y blanca en el mercado local han mostrado una tendencia a la baja asociado al exceso de oferta de azúcar de Brasil
Fuente: INEI (2014)
Entorno Local 31
Precios del Azúcar (II/II) Evolución de los Precios Promedio Mensuales al Mayorista y Minorista (S/. por Kg) 3.5 3.0 2.5
Media: 2.67
Media: 1.91
Media: 1.74
2.0
Media: 2.36
1.5 1.0
Media: 2.91
Media: 2.79
Media: 2.62
Media: 2.42
Media: 1.58
Media: 1.41
Media: 2.25
Media: 2.24
Media: 1.75
Media: 1.89
0.5 0.0
2008
2009
2010
2011 Minorista Mayorista
2012
2013
2014
2008
2009
2010
2011
2012
2013
2014
Promedio 2008-2013
18.9%
17.1%
11.6%
9.9%
13.4%
22.5%
14.9%
15.5%
Var.% precio al mayorista
12.5%
48.9%
11.1%
-7.9%
-27.7%
9.9%
5.3%
Var.% precio al minorista
10.0%
39.6%
9.0%
-4.1%
-19.3%
0.2%
4.5%
Margen Bruto del Minorista
Fuente: SISAP (27 Ciudades) - 2014
Entorno Local 32
Precio Mayorista de Azúcar Casa Grande Vs. Precio Internacional Evolución del Precio del Azúcar Rubia (US$ c/lb) 50.0
Media: 33.3
40.0
30.0
Media: 29.9
Media: 19.7
Media: 18.9
20.0 10.0 0.0
Media: 22.6
Media: 18.7
Media: 12.4
2008
2009
2010
NY 11
Prima sobre el precio internacional
Media: 41.4
Media: 38.7
Media: 27.3
Media: 21.4
2011
Media: 17.3
2012
2013
Media: 25.2
Media: 16.6
2014
Precio Mayorista en Mercado Santa Anita de Azúcar Casa Grande
2008
2009
2010
2011
2012
2013
2014
Promedio 2008-2013
52.3%
5.4%
47.2%
41.9%
93.7%
72.4%
51.6%
52.1%
• Los precios del azúcar en el Perú mantienen una tendencia con la cotización internacional; sin embargo, existe una prima significativa debido a costos como transporte y el almacenamiento
Fuente: SISAP, Bloomberg (2014)
Entorno Local 33
Consumo Nacional de Azúcar Evolución del Consumo Nacional (en miles de TM) CAGR 2000 - 2013 (%): 3.0% CAGR 2008 - 2013 (%): 1.8%
1,097
845
2000
896
2001
964
2002
900
878
905
930
2003
2004
2005
2006
2007
1,142
1,117
1,125
2008
2009
2010
1,171
2011
1,230
1,247
2012
2013
• El consumo nacional de azúcar ha crecido a una tasa del 3.0% entre 2000-2013, debido al incremento en la demanda de bebidas refrescantes y confitería; pero en los últimos 5 años el crecimiento promedio registrado ha sido de 1.8% anual • A pesar de que parte de la producción se exporta, el Perú aún requiere de la importación de este producto para satisfacer la demanda interna
Fuente: Minagri, BMI (2014)
Entorno Local 34
Consumo Nacional de Azúcar Consumo de Azúcar y Endulzantes per cápita en 2012 (Kg/persona) 66.6 Media Sudamérica 51.7 42.4
41.0
40.1
Media Centroamérica 42.2
39.0 34.8
Media Mundial 24.6
Brasil
Argentina
Peru
México
Venezuela
Colombia
• El consumo per cápita de azúcar del Perú se encuentra entre los más altos dentro de los países productores de azúcar de la región
Fuente: Org. Internacional del Azúcar (2012)
Entorno Local 35
Comercio Exterior Evolución de Importaciones (en miles de TM)
Origen de Importaciones 2012 (% del volumen total)
302 7.4% 5.1% 211
10.7%
190 146
148
56.5%
20.4%
2009
2010
2011
2012
2013
Colombia
Guatamala
Brasil
Bolivia
Otros
• El nivel de importaciones está en función de la producción local, el precio doméstico y el internacional • En 2013 las importaciones se redujeron considerablemente debido a la reducción de la brecha entre el precio local y el internacional • Los principales orígenes de las importaciones son Colombia y Guatemala
Fuente: Minagri, MCC Seminario (2014)
Entorno Local 36
Comercio Exterior Empresas Exportadoras 20131 (% del total valor FOB USD)
Evolución de Exportaciones (en miles de TM) 94
5.4% 2.6% 6.7%
82 75 56
22.2%
47
63.1%
2009
2010
2011
2012
2013
Casa Grande
Cartavio
Paramonga
Laredo
Otros
• El nivel de exportaciones está en función de la producción local, el precio doméstico y el internacional • Casa Grande es la principal empresa exportadora a nivel nacional • Debido a su alto rendimiento por hectárea, el cash cost del Perú (12 - 13 c/lb) es competitivo en comparación a los principales exportadores mundiales (16 - 20 c/lb) • Los principales destinos de las exportaciones de azúcar peruana son Estados Unidos y Colombia Fuente: Minagri, Seminario MCC (2014) 1/Exportación de Azúcar Rubia
Entorno Local 37
Abastecimiento de Azúcar Conciliación de la Demanda (en miles de TM) 148
Participación del Abastacimiento Nacional y Extranjero (%) 1,247 11.9%
1,174
75
88.1%
Producción
Exportacion
Importación
Consumo
Abastacimiento Doméstico Neto
Importaciones
• En 2013, las importaciones abastecieron el 11.9% de la demanda interna de azúcar • De acuerdo a estimaciones de BMI, en 2016/2017 la producción local podría abastecer su demanda interna si continúan las inversiones en capital en este sector
Fuente: Minagri, BMI (2014)
Contenido 38
• • • • • • •
Contexto de la Operación Análisis del Sector Análisis de la Empresa Contingencias Valorización de la Sociedad Conclusiones y Recomendaciones Bibliografía
Análisis de la Empresa 39
Descripción General Ubicación del Ingenio de Casa Grande
Descripción de la Empresa
• La empresa agroindustrial Casa Grande se dedica a la siembra y procesamiento de caña de azúcar y a la comercialización de los productos derivados de la caña, tales como el azúcar, la melaza, el bagazo y el alcohol
• Casa Grande forma parte del Grupo Gloria, como subsidiaria de Coazucar, desde enero de 2006 luego de adquirir el 57% de las acciones comunes vía una OPA Ingenio Casa Grande • Ubicado a 50 km de Trujillo en la provincia de Ascope en La Libertad • Ubicado a 600 km al norte de Lima • Propiedad de más de 31,400 hectáreas, de las cuales 23,600 están destinadas al cultivo de caña de azúcar
• Al cierre del primer trimestre de 2014, Casa Grande contaba con 23,653 hectáreas netas habilitadas para el cultivo de la caña de azúcar, lo que le permite ser el principal productor de azúcar en el mercado local
Análisis de la Empresa 40
Historia de Casa Grande (1860 - 2014) 1860: Inicios -Luis Albrecht funda Casa Grande Zuckerplantagen AG luego de la adquisición de las haciendas Casa Grande, Facalá y Mocollope a la Familia Bazán Heredia
1889 - 1895: Los Gildemeister -Juan Gildemeister adquiere la empresa y forma Casa Grande y Co. -Luego de su muerte, sus hijos administraron la finca llevando la empresa a la ruina
1888: Crisis -Luis Albrecht remata Casa Grande agobiado por la crisis económica post guerra con Chile y por una enfermedad
1969: Reforma Agraria -Las cooperativas se convierten en los principales accionistas de Casa Grande
1895 - 1969: Expansión -Enrique Gildemeister se encarga de la administración de Casa Grande -Adquiere Puerto Malabrigo para realizar operaciones de exportación -Expande la frontera agrícola tras la adquisición de la Hacienda Roma y consolida la posición de Casa Grande como uno de las mas importantes empresas agroindustriales del país (182,000 ha.)
2008 - a la fecha: Grupo Gloria -En enero de 2006, Coazucar adquiere el 57.09% de las acciones de Casa Grande, convirtiéndose en el accionista mayoritario -En marzo de 2008 se acuerda modificar la razón social de Empresa Agroindustrial Casa Grande S.A.A. a Casa Grande S.A.A.
1996 - 2007: Privatización -1996 - 1998: Privatización de Casa Grande -2005: Lakebar Holding S.A. adquiere el 21% de las acciones de CG
Análisis de la Empresa 41
Estructura Accionaria Distribución de Accionistas a junio 2014
2.4%
0.3%
5.3% 8.5% Desde junio de 2014, el Grupo Gloria ha incrementado su participación en Casa Grande de 57% a 59% y luego a más de 60% a través de la adquisición de acciones comunes en la BVL
Coazucar
Inversionistas (Float)
26.6%
Jubilados y Herederos
57.1%
Alejandro Henry Gubbins
Trabajadores Activos
Essalud
Fuente: Matrícula de Acciones Casa Grande (2014)
Análisis de la Empresa 42
Unidades de Negocio • Producción y Comercialización de Azúcar • Casa Grande produce azúcar rubia a partir del proceso de caña de azúcar obtenida de sus campos propios y de la compra de caña de terceros • Es el principal productor de azúcar a nivel nacional. En 2013, alcanzó una producción de 289,000 TM de azúcar (seguido de Laredo con 158,000 TM) • Se enfoca en la comercialización de azúcar rubia en el mercado local, en el cual ostenta una participación líder y una influencia en el precio de mercado • Producción y Comercialización de Subproductos de la Caña de Azúcar • Melaza: La melaza o miel de caña es un producto líquido y espeso derivado del proceso de molienda de caña de azúcar. Casa Grande destina una porción de su producción de melaza a la comercialización en el mercado local y extranjero, y el resto lo emplea para la producción de distintos alcoholes • Bagazo: Casa Grande comercializa bagazo para la industria de papel y fibras. Asimismo, a través de empresas relacionadas, emplea una porción sustancial de su producción de bagazo como combustible (generación de energía)
• Producción y Comercialización de Alcoholes • Casa Grande produce alcoholes derivados de la melaza (subproducto del azúcar) • La empresa exporta la gran mayoría de su producción de alcohol fino, mientras que comercializa internamente su producción de alcohol etílico deshidratado y alcohol industrial
Análisis de la Empresa 43
Superficie Neta de Cultivo Evolución de la Sup. Neta de Cultivo 2009 - 2013 (en Ha.)
Gastos Sup. Neta de de Ventas Cultivo 2009 por– 2013 Empresa (como 2013 % de (enlas Ha.) ventas)
CAGR 2009 - 2013 (%): -3.0%
Promedio 23,495 20,436
18,967
20,788
20,796
Paramonga Laredo
2010
2011
2012
5,270
7,514
Cartavio
6,380
San Jacinto
6,759
Casa Grande 2009
9,344
20,796
2013
• Casa Grande es la empresa azucarera más grande del país, superando ampliamente a sus pares en hectáreas cultivadas • Desde la adquisición por el Grupo Gloria (2006), Casa Grande cuenta con más de 20,000 Ha. cultivadas-. Su molienda supera las 9,000 TM diarias y la producción de azúcar bordea las 1,000 toneladas por día • Se observa una media de alrededor de 21,000 Ha en los últimos cinco años. Hacia finales del 1Q14 Casa Grande contaba con alrededor de 23,600 Ha. de superficie neta cultivada
Fuente: Memoria Casa Grande 2013
Análisis de la Empresa 44
Área Cosechada de Caña de Azúcar Evolución del Área Cosechada de Caña 2009 - 2013 (en Ha.)
Gastos Área Cosechada de Ventasde 2009 Caña – 2013 por Empresa (como %2013 de las (enventas) Ha.)
CAGR 2009 - 2013 (%): 4.1%
Promedio 13,559
13,425
12,848
11,671
9,932
6,175
Paramonga
5,270
Laredo
5,283
Cartavio
4,359
San Jacinto
4,290
Casa Grande 2009
2010
2011
2012
2013
• Se puede observar una reducción en las hectáreas cosechadas de 13.9% entre 2010 y 2013 • En 2013, el 56.1% del área neta de cultivo de caña de azúcar de Casa Grande fue cosechada (utilizada), el resto de caña permaneció en campos y se utilizará en la temporada siguiente (2013/2014)
11,671
% de Utilización del Área Neta de Cultivo Casa Grande 2013
66.3%
70.8% 61.8%
56.1%
42.3%
2009
2010
2011
2012
2013
Fuente: Memoria Casa Grande 2013
Análisis de la Empresa 45
Producción de Caña de Azúcar en Campos Propios Evolución de la Producción de Caña 09 - ‘13 (En miles de TM)
de –Azúcar 2013 (En miles TM) Producción Gastos de Ventas de Caña 2009 por Empresa 2013 (como 2013 %(miles de las de ventas) Tons.)
CAGR 2009 - 2013 (%): 1.5%
Promedio
2,212
995
2,168 2,086
Paramonga
760
Laredo
726
2,021 1,906
Cartavio 2009
2010
2011
2012
819
2013
• Se observa una reducción significativa y sostenida entre 2010 y 2013 (-3.0% anualmente en promedio) • Aún considerando la significativa disminución en la producción de caña de azúcar en campos propios, Casa Grande produce 2.5x la cantidad de toneladas que produce Cartavio (segundo más importante)
San Jacinto
Casa Grande
651
2,021
Fuente: Memoria Casa Grande 2013
Análisis de la Empresa 46
Rendimiento de Campos Propios Rendimiento Toneladas de Caña por Hectárea (TCH - TM/Ha.) 2009 - 2013
192 Factores como (i) acceso a recursos hídricos, (ii) temperaturas ambientales y (iii) desgaste de la tierra; afectaron negativamente la productividad de la tierra
173
163
2009
2010
161
162
2011
2012
2013
Fuente: Memoria Casa Grande 2013
Análisis de la Empresa Rendimiento de Campos Propios en el Sector (2013) Rendimientos de Campos Propios para las Principales Empresas del Sector 2013 (en TM/Ha) Producción de Caña de Azúcar (miles de tons)
47
2,500
2,000
1,500
1,000
500
0 125
135
Casa Grande
145
155 165 175 Rendimiento de Caña por Héctarea (TM/Ha)
San Jacinto
Cartavio
Laredo
Paramonga
185
195
205
Promedio
• El rendimiento promedio de los campos propios de Casa Grande para la producción de caña de azúcar se sitúa alrededor de las 173 toneladas métricas por hectárea, superando el promedio local de 159 y muy por encima del promedio mundial de 130
Fuente: Memoria Casa Grande 2013
Análisis de la Empresa 48
Contenido de Sacarosa en la Caña de Azúcar Evolución del Contenido de Sacarosa en Caña 2009 - 2013 (%)
13.0% Promedio del Sector: 13%
12.9%
12.8% 12.8%
12.7%
2009
2010
2011
2012
2013
• El contenido de sacarosa se refiere a la proporción de azúcar de caña promedio de las plantaciones de caña de azúcar • El nivel de sacarosa encontrado en los plantones de caña de azúcar dependen de varios factores: (i) tipo de suelo de cultivo de la caña de azúcar; (ii) variedad del cultivo de caña de azúcar; (iii) edad de la caña de azúcar; y, (iv) condiciones climatológicas en las cuales se cultiva la caña de azúcar • El nivel de sacarosa de Casa Grande se encuentra ligeramente por debajo del promedio del mercado
Fuente: Memoria Casa Grande 2013
Análisis de la Empresa 49
Caña Molida Evolución de la Caña Molida 2009 - 2013 (En miles de TM) CAGR 2009 - 2013 (%): 4.4%
2,609
GastosMolida Caña de Ventas por Empresa 2009 – 2013 2013(como (En miles % dede lasTM) ventas)
Promedio
1,567
Paramonga 2,365
2,407
1,234
Laredo
2,331
2,197
1,362
Cartavio
1,718
San Jacinto
910
Casa Grande
2009
2010
2011
2012
2,609
2013
• Casa Grande ha experimentado un crecimiento sostenido en la molienda de caña de azúcar desde el año 2011 • Si bien el crecimiento promedio anual en la molienda de caña entre 2009 y 2013 ha sido de 4.4%, dicho crecimiento ha acelerado su ritmo entre 2011 y 2013, aproximadamente 5.8% anualmente • Casa Grande muele 1.5x la cantidad de toneladas que Cartavio y 2.9x la cantidad de toneladas que San Jacinto • A partir de 2010, Casa Grande ha incrementado la proporción de caña comprada a terceros, en línea con su incremento en producción
Detalle Caña Producida/Comprada por CG 2009 - 2013 (%)
13.3%
6.5%
7.0%
13.4%
22.5%
86.7%
93.5%
93.0%
86.6%
77.5%
2009
2010
2011
2012
2013
% Propio
% Comprado Fuente: Memoria Casa Grande 2013
Análisis de la Empresa 50
Producción Azúcar Evolución de la Producción de Azúcar 2009 - 2013 (en TM) CAGR 2009 - 2013 (%): 1.8%
283,162
Promedio
162
Paramonga
266,589
263,410
Gastos de Ventas Producción de Azúcar 2009por – 2013 Empresa (como 2013 % de(En lasmiles ventas) de TM)
257,276
133
Laredo
247,526
158
Cartavio
133
San Jacinto
101
Casa Grande
2009
2010
2011
2012
283
2013 Participación de Mercado 2013 (%)
• Entre 2010 y 2013, el crecimiento anual promedio de la producción de azúcar rubia fue de 4.6%, una aceleración respecto al crecimiento promedio anual de los últimos 5 años de aproximadamente 1.8% • La producción de azúcar rubia de Casa Grande en 2013 superó en más de 70.0% a la producción media de los principales ingenios azucareros del mercado local
Casa Grande 29.8%
24.1%
Laredo Paramonga Cartavio
9.9%
13.5% 11.3% 11.3%
Tumán Otros
Fuente: Memoria Casa Grande 2013
Análisis de la Empresa 51
Rendimiento Comercial del Azúcar Rendimiento Comercial del Azúcar 2009 - 2013 (%)
Gastos de Ventas Rendimiento Comercial 2009 –del 2013 Azúcar (como por%Empresa de las ventas) 2013 (%)
12.0%
11.0%
11.1%
10.9%
10.5%
Promedio
10.6%
Paramonga
10.8%
Laredo Cartavio San Jacinto Casa Grande
2009
2010
2011
2012
11.6%
8.7% 11.1% 10.9%
2013
• El rendimiento comercial del azúcar hace referencia a la cantidad de azúcar que se puede producir a partir de una tonelada métrica (TM) de caña de azúcar • En los últimos cinco años, el rendimiento comercial del azúcar se ha mantenido relativamente estable y cercano al 11% • A nivel sectorial, los rendimientos comerciales del azúcar se mantuvieron relativamente competitivos en 2013 con un rendimiento promedio de 10.6% entre los principales jugadores del sector
Fuente: Memoria Casa Grande 2013
Análisis de la Empresa 52
Producción Alcohol Producción Alcohol 2009 - 2013 (en miles de Lts.)
Gastos de Ventas Producción Alcohol 2009 por– Empresa 2013 (como 2013 % (en de las miles ventas) de Lts.)
CAGR 2009 - 2013 (%): 3.6%
14,753
15,602
13,451
17,004
12,670
Promedio
10,578
Laredo
6,898
Cartavio San Jacinto Casa Grande
2009
2010
2011
2012
15,248 3,164
17,004
2013
• La producción de alcohol de Casa Grande se concentra en tres tipos de alcoholes: (i) alcohol de exportación; (ii) alcohol industrial; y, (iii) alcohol fino • Como se puede observar en el gráfico de barras de la parte superior izquierda de la diapositiva, luego de una ligera desaceleración en la producción de alcohol entre 2009 y 2011, la producción ha crecido a un ritmo de 15.8% entre 2011 y 2013 • La producción de alcohol de Casa Grande es la más importante del mercado local seguida por Cartavio (empresa relacionada)
Fuente: Memoria Casa Grande 2013
Análisis de la Empresa Ventas Casa Grande Evolución de Ventas 2009 - 2013 (S/. ‘000) CAGR 2009 - 2013 (%): 8.2%
700,000
290,000
583,390
400,000
511,162
490,760
500,000
280,000
453,853
270,000 260,000
331,509
300,000
250,000
200,000
240,000
100,000
230,000
0
220,000
2009
2010
2011 Ventas
2012
Azúcar Producida (en TM)
600,000
Ventas (en S/. ‘000)
53
2013
Volúmen Azúcar
• Las ventas agregadas de Casa Grande (expresadas en S/.) han disminuido considerablemente entre 2011 y 2013, debido principalmente al desplome de la cotización internacional del azúcar • El decrecimiento de ventas promedio entre 2011 y 2013 es de -11.8% anual durante dicho periodo mientras que el incremento medio en la producción de azúcar fue de 4.9% en el mismo periodo Fuente: EEFF Auditados
Análisis de la Empresa 54
Ventas por Unidad de Negocio Evolución de Ventas 2009 - 2013 (S/. ‘000) CAGR 2009 - 2013 (%) -Azúcar Rubia Doméstica: 9.2% -Azúcar Rubia Exportación: 0.5% -Alcohol: -2.5% -Subproductos: 42.9%
331,509
583,390 490,760 60,852 21,535 54,953
34,299 21,758 71,902
511,162 453,853
40,570 28,636 68,050
49,229 24,470
11,817 27,128
91,154
89,285
455,431 373,906
353,420
289,000
203,279
2009
2010 Azúcar Rubia Doméstica
2011 Azúcar Rubia Exportación
2012 Alcohol
2013 Subproductos
• Las ventas de azúcar rubia han disminuido -37% durante el periodo 2011-2013, lo que genera una reducción en las ventas totales • A nivel de subproductos la empresa ha incrementado sostenidamente sus ventas en los últimos años, registrando un crecimiento de 44% durante el periodo 2011-2013. Casa Grande le vende bagazo a Trupal para la elaboración de papel y melaza a Cartavio para la elaboración de alcohol, ambas empresas del Grupo Gloria Fuente: EEFF Auditados
Análisis de la Empresa 55
Ventas por Unidad de Negocio Evolución de Ventas por Unidad de Negocio 2009 - 2013 (como % de las ventas totales) 3.6% 8.2% 26.9%
12.4%
5.9% 3.7%
4.4%
12.3%
11.2%
72.0%
7.9% 5.6%
10.8% 5.4%
13.3% 20.1%
78.1%
73.1%
63.7%
61.3%
2009
2010 Azúcar Rubia Doméstica
2011
2012
Azúcar Rubia Exportación
2013 Alcohol
8.1% 5.5% 16.8%
69.6%
Promedio
Subproductos
• Luego de una disminución significativa de la proporción de exportación de azúcar en 2010, Casa Grande ha incrementado sostenidamente dicho canal de ventas durante el periodo 2010 - 2013 debido a la presencia de oportunidades específicas producto de desfases en la producción que le permiten a Casa Grande aprovechar nichos específicos en el exterior como es el caso de Colombia • Por otro lado, se observa una disminución de la proporción de azúcar rubia destinada al mercado local Fuente: EEFF Auditados
Análisis de la Empresa 56
Margen Bruto1 (%) Evolución del Margen Bruto 2009 - 2013 (como % de ventas)
55.7%
Factores -∆% Mg. Bruto: (i) Reducción en Ventas 11-13’: -22.2% (ii) Incremento en COGS 11-13’: +24.8%
56.0%
45.2%
44.5% -Desplome en los precios internacionales del azúcar +Incremento en el volumen de producción para mantener la posición competitiva de Casa Grande
29.5%
2009
2010
2011
2012
2013
• Factores de la reducción en el margen bruto: • El desplome de los precios del azúcar generó una disminución en ventas de 22.2% entre 2011 y 2013 • El incremento significativo del costo de ventas en la estructura de costos de la empresa pasando de 44.0% en 2011 a 70.5% en 2013 • Estos efectos adversos generaron una reducción de 26.5% en el margen bruto de la empresa entre 2011 y 2013 Fuente: EEFF Auditados 1/El Margen bruto excluye los efectos de la depreciación y amortización
Análisis de la Empresa 57
Gastos Administrativos Evolución del Gasto Administrativo 2009 - 2013 (S/. ‘000)
Gastos Administrativos 2009 - 2013 (como % de las ventas)
31,135 27,798
Promedio: S/. 23,223
19,702
6.1%
6.1%
2012
2013
4.8% 4.0%
21,600
3.7%
15,878
2009
2010
2011
Composición del Gasto Administrativo 2013 (%) 2009
2010
2011
2012
2013
• Las principales cuentas que componen el gasto administrativo son: provisiones, servicios de terceros y cargas de personal, que en conjunto explican el 84.6% del total de gastos administrativos • Incremento del gasto administrativo como porcentaje de las ventas debido al incremento de las provisiones de sueldos en 2012
0.7% 8.8%
Cargas de Personal
18.4%
Servicios de Terceros Tributos
38.2%
Provisiones Diversas
31.0% Cargas Diversas de Gestión
2.9% Participación de Trabajadores
Fuente: EEFF Auditados
Análisis de la Empresa 58
Gastos de Ventas Evolución del Gasto de Ventas 2009 - 2013 (S/. ‘000)
2013 (como (como% %de de las lasventas) ventas) Gastos de Ventas 2009 -–2013
22,156 4.9% Promedio 2009 - 2012: 2.4%
Promedio: S/. 13,464
12,962 9,194
9,645
2009
2010
13,364 2.8% 2.0%
2011
2012
2013
2009
2010
2.2%
2011
2.6%
2012
2013
• En 2013, los gastos de ventas incrementaron en 66% debido a un incremento sustancial a nivel de fletes producto del entorno del mercado. A partir de 2013, Casa Grande empezó a comercializar sus productos directamente, antes tenía un esquema de comercialización indirecta vía DEPRODECA (empresa relacionada). El nuevo esquema de comercialización directa y las mayores ventas de exportación explican un mayor gasto en fletes • Durante el periodo 2009 - 2012, los gastos de venta representaban en promedio el 2.4% de las ventas. Sin embargo, en 2013 incrementaron en 2.5% alcanzando el 4.9% de las ventas, debido al incremento en fletes
Fuente: EEFF Auditados
Análisis de la Empresa 59
EBITDA Evolución del EBITDA 2009 - 2013 (S/. ‘000) CAGR 2009 - 2013 (%): -4.9%
304,245
253,640 199,891
124,679 101,988
2009
2010
2011
2012
2013
• El EBITDA de Casa Grande ha experimentado una reducción sustancial durante el periodo 2012 - 2013, luego del incremento sostenido experimentado durante el periodo 2009 - 2011 • Los niveles actuales de EBITDA se sustentan a un mayor volumen de producción a precios muy por debajo de los registrados durante el 2010 y 2011 y a un mayor gasto de ventas en 2013 Fuente: EEFF Auditados
Análisis de la Empresa 60
EBITDA (como % de ventas) Evolución del EBITDA 2009 - 2013 (como % ventas) Promedio 2009 - 2013 (Mg. EBITDA %): 40.6%
51.7%
52.2%
Reducción de 29.7% en Mg. EBITDA en 2 años
39.1%
37.6%
22.5%
2009
2010
2011
2012
2013
• El margen EBITDA de la empresa se ha reducido significativamente en los últimos dos años, pasando de 52.2% en 2011 a 22.5% en 2013, muy por debajo del promedio de los últimos cinco años
Fuente: EEFF Auditados
Análisis de la Empresa 61
Análisis de Márgenes Comparativo 2013 Margen Bruto1 (como % de las ventas)
Gastos de Margen EBIT Ventas (como 2009 % de – 2013 las ventas) (como % de las ventas) 34.5%
20.8%
32.7% 31.3% 30.4% 29.5%
14.0%
16.1% 12.4%
10.4%
29.6%
0.9% Casa Grande
San Jacinto Cartavio
Laredo
Paramonga Promedio
Casa Grande
San Jacinto Cartavio
Laredo
Paramonga Promedio
Margen Neto (como % de las ventas)
Margen EBITDA (como % de las ventas) 25.8% 22.5%
21.9%
22.5%
20.1%
22.5%
14.3% 8.2% 4.9%
3.5%
0.5% Casa Grande
San Jacinto Cartavio
Laredo
Paramonga Promedio
Casa Grande
San Jacinto Cartavio
Laredo
Paramonga Promedio
-1.9%
• Los márgenes brutos de Laredo y Paramonga son los más altos que los de Casa Grande debido a que estas empresas están más enfocadas en la producción de azúcar refinada Fuente: EEFF Auditados 1/ Los márgenes brutos no incluyen depreciación
Análisis de la Empresa 62
Deuda Stock de Deuda Total 2009 - 2013 (S/. MM)
Deuda Total a Patrimonio (%) 23.3%
22.0%
19.9%
240 15.6%
215 180
189
10.9%
56 133
70
220
14 182 158 110
2009
2009
119
2010
Deuda Financiera
2011
2010
2011
2012
2013
Deuda Total a EBITDA (x veces) 7
20
2012
2013
3.4x
Deuda con Empresas Relacionadas
• En 2012 Coazucar emitió un bono internacional por US$ 325MM, con una tasa de 6.375% anual y un plazo de 10 años. De dicho monto Casa Grande asumió una deuda de aproximadamente US$ 68.8MM a una tasa de 6.95% • Con estos recursos Casa Grande modificó la composición de su deuda, reemplazando pasivos financieros por pasivos con empresas relacionadas
1.5x
1.3x
0.6x
2009
2010
0.3x
2011
2012
2013
Fuente: EEFF Auditados
Análisis de la Empresa 63
Capital de Trabajo Análisis del Capital de Trabajo (S/. ‘000) En S/. '000 Cuentas por cobrar Inventarios Cuentas por pagar Total Capital de Trabajo En días Cuentas por cobrar Inventarios Cuentas por pagar Días de Capital de Trabajo
2009 18,716 31,458 24,336 74,510 2009 21 63 49 35
Gastos Ventas – 2013 (como % de las ventas) Días dede Capital de2009 Trabajo (en días)
2010 2011 2012 2013 4,294 2,829 5,309 5,188 42,065 71,730 100,282 91,994 34,980 31,287 34,728 50,060 81,339 105,846 140,319 147,242 2010 9 62 50 20
2011 2 81 47 36
2012 3 111 42 71
2013 4 110 48 65
71
65
36
35 20
2009
2010
2011
2012
2013
• En los últimos cinco años, la empresa ha incrementado sus días de capital de trabajo sostenidamente debido a un incremento en los días de inventario • A nivel de cuentas por cobrar, la empresa mantiene una recolección de efectivo de 4-3 días o al contado, mientras que a nivel de cuentas por pagar la empresa mantiene un promedio histórico de alrededor de 47 días
Fuente: EEFF Auditados
Análisis de la Empresa 64
Estados Financieros: Balance General 2009 - 2013 (en S/. ‘000) Balance General (S/. '000) Activos Activos Corrientes Efectivo y equivalente de efectivo Cuentas por cobrar, terceros Cuentas por cobrar, relacionadas Existencias Otras cuentas por cobrar Activos Biológicos Gastos pagados por anticipado Activos No Corrientes Activos Biológicos PP&E Intangibles Otros activos no corrientes,neto Pasivos Pasivos Corrientes Obligaciones financieras Cuentas por pagar comerciales, terceros Cuentas por pagar comerciales, relacionadas Otras cuentas por pagar y provisiones Pasivos por impuestos a las ganancias Pasivos No Corrientes Obligaciones financieras Cuentas por pagar comerciales Cuentas por pagar a entidades relacionadas Otras cuentas por pagar y provisiones Pasivos por impuestos a las ganancias diferidas Patrimonio Capital social Reserva legal Resultados acumulados Total Pasivos y Patrimonio
2009 1,339,717 201,752 16,024 18,716 25,564 31,458 6,346 103,455 189 1,137,965 107,433 1,027,618 1,501 1,413 568,122 139,770 22,517 24,336 42,157 50,760 0 428,352 87,160 3,645 27,691 110,812 199,044 771,595 847,030 168,469 -243,904 1,339,717
2010 1,553,067 330,739 52,495 4,294 89,492 42,065 6,448 135,575 370 1,222,328 111,794 1,109,470 1,064 0 578,286 194,249 68,193 34,980 28,379 45,874 16,823 384,037 90,246 3,437 27,687 25,411 237,256 974,781 847,030 168,469 -40,718 1,553,067
2011 1,716,515 153,395 8,674 2,829 66,013 71,730 3,337 0 812 1,563,120 355,773 1,202,117 1,253 3,977 499,394 144,717 37,037 31,287 13,785 54,159 8,449 354,677 82,104 1,915 10 19,330 251,318 1,217,121 847,030 7,052 363,039 1,716,515
2012 1,740,297 174,114 17,175 5,309 42,347 100,282 4,327 0 4,674 1,566,183 326,528 1,232,704 1,992 4,959 528,385 89,556 2,169 34,728 6,838 38,158 7,663 438,829 4,602 1,274 175,453 15,699 241,801 1,211,912 847,030 38,138 326,744 1,740,297
2013 1,782,966 221,603 36,802 5,188 57,585 91,994 20,708 0 9,326 1,561,363 317,728 1,235,535 1,888 6,212 575,062 129,418 16,549 50,060 27,824 26,651 8,334 445,644 3,547 830 192,303 10,319 238,645 1,207,904 847,030 47,820 313,054 1,782,966
Análisis de la Empresa 65
Estados Financieros: Estado de Pérdidas y Ganancias 2009 - 2013 (en S/. ‘000) Estado de Ganancias y Pérdidas (S/. '000) Ventas Costo de ventas, cash Utilidad bruta % Ventas -Gastos de ventas, cash -Gastos de administración, cash EBITDA % Ventas +/-Cambio en el valor razonable de los Act. biológicos - Depreciación y amortización EBIT % Ventas - Ingresos/gastos no operativos, netos -Baja de PP&E -Gastos Financieros, netos -Diferencia de cambio,neta Utilidad antes de impuestos -IR & Participación de Trabajadores Utilidad Neta % Ventas Utilidad Básica por Acción
2009 331,509 -181,758 149,751 45.2% -9,194 -15,878 124,679 37.6% 16,613 -3,629 137,663 41.5% 7,986 -2,871 -20,681 4,836 126,933 -28,405 98,528 29.7%
2010 490,760 -207,773 282,987 57.7% -9,645 -19,702 253,640 51.7% 132,188 -26,960 358,868 73.1% -222 -17,094 -11,420 2,189 332,321 -49,058 283,263 57.7%
2011 583,390 -244,583 338,807 58.1% -12,962 -21,600 304,245 52.2% 98,138 -33,465 368,918 63.2% -972 -185 -7,234 4,421 364,948 -54,089 310,859 53.3%
2012 511,162 -266,772 244,390 47.8% -13,364 -31,135 199,891 39.1% -54,214 -40,201 105,476 20.6% 8,403 -281 -8,229 8,410 113,779 -16,958 96,821 18.9%
2013 453,853 -301,911 151,942 33.5% -22,156 -27,798 101,988 22.5% -13,818 -41,021 47,149 10.4% 2,992 -537 -13,450 -17,114 19,040 -3,048 15,992 3.5%
1.17
3.36
3.69
1.15
0.19
Contenido 66
• • • • • • •
Contexto de la Operación Análisis del Sector Análisis de la Empresa Contingencias Valorización de la Sociedad Conclusiones y Recomendaciones Bibliografía
Contingencias 67
Aspectos Civiles Casa Grande es parte en 1241 procesos de naturaleza civil en los cuales cumple el rol de demandado en 97 de ellos y el rol de demandante en 27 Procesos como Demandado • De los 97 expedientes en los que la empresa es demandada, 42 han sido iniciados luego del ingreso del Grupo Gloria al accionariado de Casa Grande el 26 de Enero de 2006; de los 55 casos restantes 27 corresponden a procesos iniciados en administraciones anteriores y los 28 restante a procesos abiertos bajo la administración del Grupo Gloria pero referentes a deudas anteriores a su incorporación al accionariado • El monto total de las contingencias por demandas civiles entendido como el monto indemnizatorio o pago reclamado alcanza los S/. 186’337,598 de los cuales Casa Grande ha provisionado S/. 11’601,871 (6.2% del total) • De acuerdo a estimaciones del área legal de Casa Grande, se prevé que las contingencias de todos los procesos civiles no superen los S/. 19’200,447. La construcción de dicha cifra está basada en la asignación de probabilidades de éxito en cada uno de los procesos
Procesos como Demandante • De los 27 procesos que Casa Grande cumple el rol de demandante, 20 han sido iniciados bajo la administración del Grupo Gloria • Si bien la administración crees que cerca del 85% de dichos procesos obtendrán fallos favorables, no se prevén ingresos dinerarios producto de los mismos Fuente: Casa Grande
1/ El detalle de todos los procesos civiles puede ser encontrado en los anexos presentados a la SMV
Contingencias 68
Aspectos Laborales y Tributarios • Casa Grande cuenta con 840 procesos laborales abiertos, cuyo monto petitorio agregado alcanza los S/. 16’958,876; de dicho monto la empresa ha provisionado S/. 3’876,850 que equivalen al 22.9% de la contingencia total en caso todos los casos fuesen resueltos con fallos negativos para Casa Grande • Los 10 expedientes con mayor monto petitorio representan el 25.5% del monto petitorio total. A continuación el detalle de los mismos1
4874-2013-3JLT VARGAS DIAZ JAVIER HUMBERTO
Monto Petitorio (S/.) 1,110,000
Monto Provisión/ Provisionado Petitorio (S/.) 110,000 9.9%
1034-2013
500,000
0
0.0%
423,376 407,952 407,532 333,949 295,152 271,983 265,424
75,000 12,300 10,800 45,270 2,000 10,800 10,000
17.7% 3.0% 2.7% 13.6% 0.7% 4.0% 3.8%
257,000
40,000
15.6%
Expediente
882-2013 714-2012 639-2012 320-2012 68-2009 544-2012 849-2008 495-20134JPLTruj Total
Demandante
Materia
INDEMNIZACION POR ACCIDENTE TRABAJO INDEMNIZAC DAÑOS Y PERJUICIOS POR ENFERMEDAD SALDAÑA GUARNIZ VICTOR HUMBERTO PROFESIONAL GIL CALDERON JOSE PAUL INDEMNIZAC DESPIDO ARBITRARIO Y OTROS CORTEZ MUÑOZ JULIO CESAR REINT REMUNERAC Y OTROS ALVITRES QUIROZ JESUS ALBERTO REINT REMUNERAC Y OTROS CORALES VIDAL ROSA CATALINA REINT REMUNERAC Y OTROS POLANCO LINARES MANUEL INDEMNIZACION POR ACCIDENTE TRABAJO GONZALES JARA PEDRO REINT REMUNERAC Y OTROS JARA MEDINA FORTUNATO EDILBERTO PAGO CTS Y OTROS TORRES PALOMINO AURELIANO INDEMNIZACION POR ACCIDENTE TRABAJO (SOLIDARIO)
4,272,369 316,170
7.4%
• Actualmente la empresa no cuenta con procesos y/o contingencias tributarias materiales Fuente: Gerencia Casa Grande, Elaboración Propia
1/ El detalle de todos los procesos laborales puede ser encontrado en los anexos presentados a la SMV
Contenido 69
• • • • • • •
Contexto de la Operación Análisis del Sector Análisis de la Empresa Contingencias Valorización de la Sociedad Conclusiones y Recomendaciones Bibliografía
Valorización de la Sociedad 70
Metodologías de Valorización • El reglamento de OPA promulgado por la SMV señala que la entidad valorizadora debe derivar el valor de las acciones comunes con derecho a voto de Casa Grande a través de cuatro metodologías, las cuales deben ser contrastadas con el valor de la contraprestación • Metodología 1: Valor de la sociedad como negocio en marcha • Estimado mediante el descuento de flujo de caja libre a la tasa de costo ponderado del capital (WACC) y contrastado mediante múltiplos de empresas y transacciones comparables • Metodología 2: Valor bursátil • Estimado a partir de los promedios ponderados de la cotización bursátil de la acción durante los 6 meses anteriores a los hechos que dieron lugar a la OPA • Metodología 3: Valor contable de la sociedad • Estimado a partir del valor por acción del valor contable del patrimonio neto • Metodología 4: Valor de liquidación de la sociedad • Estimado a partir del valor de mercado de los activos menos el valor de mercado de los pasivos de la empresa (net asset value o NAV)
Valorización de la Sociedad: Metodología 1 71
Proceso de Valorización por Flujo de Caja Descontado 1.
Proyección de flujo de caja libre a partir de la proyección del Estado de Resultados, así como de las necesidad de inversión en activos fijos (CAPEX, por sus siglas en inglés) y de capital de trabajo (working capital, en inglés) para un periodo de tiempo (e.g. 10 años)
2.
Estimación del valor terminal o residual para obtener el valor de la empresa a perpetuidad
3.
Determinación de la tasa de descuento de los flujos de caja libre (costo ponderado del capital o WACC, por sus siglas en inglés)
4.
Estimación del valor presente de los flujos de caja libre y el valor terminal, descontados al costo ponderado del capital
5.
La adición a valor presente de los flujos de caja libre y valor terminal permiten estimar el Valor Empresa de la Sociedad
6.
Se obtiene el valor del patrimonio a través de la deducción de la deuda financiera neta del valor empresa obtenido en el punto (5). Posteriormente, se procede a estimar el valor por acción
7.
Análisis de sensibilidad del valor a las variables más relevantes en la determinación del valor de la sociedad en marcha
Valorización de la Sociedad: Metodología 1 72
Proceso de Valorización por Flujo de Caja Descontado Flujo de Caja Libre Proyectado
Valor Terminal o Residual Tasa de descuento (WACC)
Valor Presente de los Flujos de Caja Libres
Valor Presente del Valor Terminal
(+) Activos No Productivos
(-) Deuda Neta
Valor del Patrimonio y Valor por Acción Nota: WACC = costo ponderado del capital
Valorización de la Sociedad: Metodología 1 73
Definición del Flujo de Caja Libre • El flujo de caja libre (FCL o FCF) es el efectivo que la sociedad tiene disponible para el cumplimiento de sus obligaciones con sus acreedores (deuda) y accionistas (patrimonio) • El flujo de caja libre se define de la siguiente forma:
𝐹𝐶𝐹 = 𝐸𝐵𝐼𝑇 1 − 𝑇 + 𝐷&𝐴 − 𝐶𝐴𝑃𝐸𝑋 + ∆𝑁𝑊𝐾 • Donde: • EBIT: utilidad antes de intereses e impuestos (denominada UAII – en español) • T: tasa de impuestos y participación de trabajadores • D&A: depreciación y amortización del periodo • CAPEX: inversiones en activo fijo • ∆ NWK: cambios en el capital de trabajo operativo de la empresa
Valorización de la Sociedad: Metodología 1 74
Justificación del Uso de Flujos de Caja Libre • La utilidad antes de intereses e impuestos o EBIT captura las ganancias de la sociedad sin considerar cómo se financie, sea a través de capital (equity) o deuda • En esa línea, cuando se afecta al EBIT con la tasa de impuestos y participación de trabajadores – EBIT(1-T) – se obtiene la ganancia neta considerando el escudo fiscal neto del efecto de los intereses de la deuda • La adición de la depreciación y amortización así como de cualquier otro elemento que no represente un movimiento de caja efectivo permite obtener el flujo de caja proveniente de la operación de la empresa aislado del efecto de la deuda • La incorporación de los cambios en el capital de trabajo y las inversiones en activos fijos, permiten obtener el flujo de caja disponible para el cumplimiento de todas sus obligaciones con accionistas y acreedores
Valorización de la Sociedad: Metodología 1 75
Supuestos de Proyección del Flujo de Caja Libre (I/III) Variable
Principales Supuestos
Producción de Caña de Azúcar
Proyectada en un rango que oscila entre 179 y 173 toneladas de caña por hectárea
Molienda de Caña de Azúcar
Crecimiento sujeto al mercado de azúcar local, diferenciando entre caña de campos propios y comprada a terceros. No se ha considerado ampliaciones en la frontera agrícola de Casa Grande para los próximos años
Producción de Azúcar Rubia
Proyecciones en base a un rendimiento comercial de entre 10.5% y 11.0%
Producción de Azúcar Refinada
Considerando una pérdida de 2.0% sobre el azúcar rubia utilizada en el proceso
Producción de Alcohol
Proyectada a partir de una proporción histórica de melaza utilizada para dicha producción
Precios
Azúcar Rubia: Futuros de precio NY 11° más spread entre dicho precio y el precio al mercado local Azúcar Refinada: Futuros de precio Londres 5° más spread Subproductos y Alcohol: Precios históricos 2013
Costos
Materia Prima: diferenciando costos asociados a campos propios y caña adquirida de terceros Transformación de Azúcar y Subproductos: variable en función a la producción de azúcar
Valorización de la Sociedad: Metodología 1 76
Supuestos de Proyección del Flujo de Caja Libre (II/III) Variable
Principales Supuestos
Gastos Administrativos
Se proyectan en base al promedio histórico 2013
Gastos de Ventas
Se proyecta en 4.9% como porcentaje de ventas, en línea con el nivel de 2013. A partir de 2013, la empresa asumió la comercialización del azúcar, antes lo hacía vía DEPRODECA (relacionada)
Inversiones en Activos Fijos
En 2H14/2015, se ha considerado una inversión de US$ 5 MM para la refinería, adicionales a los aproximadamente US$ 28 MM invertidos durante los años anteriores para dicho fin Asimismo, se ha considerado inversiones anuales en mantenimiento de activo fijo, las cuales ascienden a US$ 6 MM aproximadamente
Depreciación
En función a las tasas de depreciación de cada tipo de activo
Tipo de Cambio
El tipo de cambio ha sido proyectado en 2.95 a partir de 2015
Capital de Trabajo
Separación de cuentas entre terceros y relacionadas. Proyección en función a rotación (Terceros: 69 días y Relacionadas: 19 días)
Valorización de la Sociedad: Metodología 1 77
Supuestos de Proyección del Flujo de Caja Libre (III/III) Variable
Principales Supuestos
Activos Biológicos
Considerando que la variación de los mismos no constituye un movimiento de efectivo, no afecta el calculo del EBITDA y no participa del cálculo de la base imponible se ha considerado constante en el tiempo
Deuda
En adición a la deuda financiera, se ha asumido como deuda financiera aproximadamente US$ 68.8MM del bono internacional 144A emitido por Coazucar, y que este se renueva al vencimiento
Horizonte de Proyección
11 años
Valor Terminal
Perpetuidad creciente de 1.5% que refleja crecimiento de largo plazo en los precios
Tasa de Impuestos y Participaciones
Régimen especial de 15% hasta 2020, siempre que las ventas de productos no agrícolas no superen el 20% de las ventas totales; 30% a partir de 2021
Inflación
Proyección de inflación internacional en 2% anual y local en 3%. Las principales variables de precios y de costos han sido ajustadas por sus respectivas inflaciones
Valorización de la Sociedad: Metodología 1 78
Riesgos (I/II) • Precio internacional de la azúcar: el principal producto que la empresa produce y comercializa es el azúcar rubia. El precio de la misma se establece en base a un margen sobre la cotización del precio de la azúcar a nivel internacional. Estos precios pueden subir como bajar por factores de oferta y demanda. Al bajar, los precios a los cuales la empresa vende su azúcar en el mercado local también caen, afectando sus ingresos • Tendencias del mercado: existe una tendencia a nivel mundial hacia el consumo de alimentos con menor contenido de azúcares. Dado que el principal producto de Casa Grande es el azúcar, esta tendencia podría, en un futuro, afectar negativamente sus niveles de venta
• Regulaciones Medioambientales: la empresa opera en el sector agrícola utilizando una serie de procesos como el quemado de caña de azúcar en el campo que podría en el futuro estar sujeto a regulaciones medioambientales que impliquen inversiones materiales para adecuarse a estas regulaciones • Acceso al agua: el acceso al agua en los valles que la empresa opera es limitado. Si bien la empresa ha realizado una serie de medidas para mitigar este riesgo, como ha sido la construcción de represas, estas medidas son sólo mitigantes y permiten contar con agua para una fracción del total de hectáreas de cultivo dela empresa
Valorización de la Sociedad: Metodología 1 79
Riesgos (II/II) • Climas adversos: al operar en la costa peruana, la empresa tiene como riesgo el que ocurran cambios climatológicos radicales que afecten a sus zonas de cultivo, entre ellos cambios de temperatura que afecten la concentración de sacarosa en las cañas, lluvias excesivas, sequias, Fenómeno del Niño, entre otros • Recursos Humanos: la empresa tienen la necesidad de contratar operarios para actividades de trabajo en el campo, incluyendo el corte de la caña. Estos operarios no siempre se encuentran disponibles en el número necesario requerido, lo cual puede afectar el volumen de caña que puede ser cortado en un determinado plazo y por ende afectar el volumen de producción total de la empresa
• Transporte: la empresa utiliza una amplia red de carreteras y caminos para realizar el transporte de la caña cortadas a los ingenios de producción. Cualquier interrupción de estas vías de acceso, así como regulaciones adicionales sobre la carga que la empresa transporte, pueden afectar la rentabilidad de la operación, al impedir que la empresa transporte su carga, o hagan que el costo del transporte de la misma sea más oneroso • Planta de Procesamiento: las instalaciones donde se procesa la caña y esta se convierte en azúcar muestran una infraestructura antigua. Esto implica que la empresa tenga que realizar constantes operaciones de mantenimiento y corra el riesgo que la planta no produzca con la eficiencia requerida en el futuro
Valorización de la Sociedad: Metodología 1 80
Proyecciones: Mercado de Azúcar (volumen) Mercado de Azúcar PBI Nominal (∆ %) Demanda Local de Azúcar (∆ %) (∆ %) Demanda Local de Azúcar/ (∆ %) PBI Nominal Demanda Local de Azúcar (miles de TM) Ventas Totales de Azúcar Casa Grande (miles de TM) Participación de Mercado (%)
Proyecciones 2018E 2019E 2020E
2011
2012
2013
2014E
2015E
2016E
2017E
11.9% 4.1% 0.3x
8.2% 5.0% 0.6x
6.6% 1.4% 0.2x
6.5% 1.0% 0.2x
2.8% 1.0% 0.4x
7.5% 1.0% 0.1x
7.3% 1.0% 0.1x
7.4% 1.0% 0.1x
7.6% 1.0% 0.1x
1,171
1,230 244 19.8%
1,247 296 23.7%
1,259 299 23.7%
1,272 301 23.7%
1,285 303 23.6%
1,298 306 23.6%
1,311 308 23.5%
1,324 310 23.5%
2021E
2022E
2023E
2024E
7.6% 1.0% 0.1x
7.6% 1.0% 0.1x
7.6% 1.0% 0.1x
7.6% 1.0% 0.1x
7.6% 1.0% 0.1x
1,337 313 23.4%
1,350 315 23.4%
1,364 315 23.1%
1,377 315 22.9%
1,391 315 22.7%
• Las ventas en volumen de Casa Grande se derivan del crecimiento de la demanda de azúcar en el mercado peruano, a partir del siguiente proceso: 1. Se proyecta el crecimiento de la demanda local de azúcar en función a su reciente comportamiento histórico. En los últimos dos años, la demanda local de azúcar ha crecido a un ritmo de 1% aproximadamente. Se proyecta un crecimiento de 1.0% anual en la demanda local de azúcar para todo el horizonte de proyección 2. El volumen de ventas de azúcar de la empresa se deriva de aplicar la participación de mercado de Casa Grande a la demanda local de azúcar. Se ha proyectado que la participación de mercado de Casa Grande se ubique en 23.7% en los años 2014 y 2015 en línea con los resultados históricos de 2013 y 1Q2014, y que luego descienda levemente en los años subsecuentes. Al cierre de 2014, la empresa alcanzará ventas por 300,000 TM de azúcar y alcanzará un máximo de 315,000 TM en línea con su capacidad instalada de molienda
Valorización de la Sociedad: Metodología 1 81
Proyecciones: Ventas y Producción de Azúcar (en volumen) 2012 Azúcar Rubia Demanda Local de Azucar (TM) Ventas de Azúcar Rubia Casa Grande (TM) Participación de Mercado (%) Producción de Azúcar Rubia Casa Grande Rendimiento Comercial (%) Ventas de Azúcar Rubia Local (TM) (%) Ventas Totales de Azúcar Rubia Ventas de Azúcar Rubia de Exportación (TM) (%) Ventas Totales de Azúcar Rubia Azúcar Refinada Ventas de Azúcar Refinada Casa Grande (TM) Pérdida por Refinado Azúcar Rubia para Refinado
2013
2014E
2015E
2016E
2017E
Proyecciones 2018E 2019E
2020E
2021E
2022E
2023E
2024E
1,230,000 1,247,000 1,259,470 1,272,065 1,284,785 1,297,633 1,310,610 1,323,716 1,336,953 1,350,322 1,363,826 1,377,464 1,391,238 243,729 295,566 298,522 300,863 303,222 305,600 307,997 310,412 312,847 315,300 315,300 315,300 315,300 19.8% 23.7% 23.7% 23.7% 23.6% 23.6% 23.5% 23.5% 23.4% 23.4% 23.1% 22.9% 22.7% 266,589 11.1%
283,162 298,522 10.9% 10.5%
300,863 10.9%
303,222 11.0%
305,600 11.0%
307,997 11.0%
310,412 11.0%
312,847 11.0%
315,300 11.0%
315,300 11.0%
315,300 11.0%
315,300 11.0%
205,649 84.4% 38,079 15.6%
227,203 229,475 76.9% 76.9% 68,363 69,047 23.1% 23.1%
199,912 76.9% 60,151 23.1%
193,885 76.9% 58,338 23.1%
187,872 76.9% 56,529 23.1%
181,873 76.9% 54,724 23.1%
175,889 76.9% 52,923 23.1%
169,920 76.9% 51,127 23.1%
163,965 76.9% 49,335 23.1%
163,965 76.9% 49,335 23.1%
163,965 76.9% 49,335 23.1%
163,965 76.9% 49,335 23.1%
40,000 2.0% 40,800
50,000 2.0% 51,000
60,000 2.0% 61,200
70,000 2.0% 71,400
80,000 2.0% 81,600
0 0 0
0 0 0
0 0 0
90,000 100,000 100,000 100,000 100,000 2.0% 2.0% 2.0% 2.0% 2.0% 91,800 102,000 102,000 102,000 102,000
• Las ventas de azúcar (en volumen) se derivan a partir de la participación de mercado de la empresa. Se ha considerado que las empresa comercializa dos tipos de azúcar: 1. Azúcar Rubia: la empresa comercializa azúcar rubia en el mercado local y mercado de exportación. Se ha considerado que Casa Grande mantiene la proporción histórica de azúcar rubia destinada a cada canal de ventas 2. Azúcar Refinada: a partir de 2015 se ha considerado el ingreso en operación de la refinería de azúcar de Casa Grande. Se ha considerado una meta target de 100,000 toneladas, las cuales se alcanzan en 2021. Se ha asumido una pérdida por refinado de 2%
Valorización de la Sociedad: Metodología 1 82
Proyecciones: Caña de Azúcar Producida y Adquirida a Terceros 2012
Caña de Azúcar Superficie Neta de Cultivo (Ha.) Área Cosechada (Ha.) % Cosechada/Sup.Neta Total de Caña Molida Casa Grande Producción de Caña de Azúcar (TM) Rendimiento de Campos (TCH) Caña Comprada a Terceros Caña Terceros / Caña Total (%) Capacidad Total de Molienda (TM)
2013
2014E
2015E
2016E
2017E
Proyecciones 2018E 2019E
2020E
2021E
2022E
2023E
2024E
20,788 20,796 20,796 20,796 20,796 20,796 20,796 20,796 20,796 20,796 20,796 20,796 20,796 12,848 11,671 12,262 12,262 12,262 12,262 12,262 12,262 12,262 12,262 12,262 12,262 12,262 61.8% 56.1% 59.0% 59.0% 59.0% 59.0% 59.0% 59.0% 59.0% 59.0% 59.0% 59.0% 59.0% 2,407,417 2,608,680 2,843,063 2,760,209 2,756,566 2,778,184 2,799,972 2,821,931 2,844,062 2,866,366 2,866,366 2,866,366 2,866,366 2,085,525 2,021,082 2,196,347 2,141,578 2,116,495 2,129,036 2,122,765 2,125,901 2,125,901 2,125,901 2,125,901 2,125,901 2,125,901 162 173 179 175 173 174 173 173 173 173 173 173 173 321,892 587,598 646,717 618,631 640,072 649,148 677,207 696,030 718,161 740,465 740,465 740,465 740,465 13.4%
22.5%
22.7%
22.4%
23.2%
23.4%
24.2%
24.7%
25.3%
25.8%
25.8%
25.8%
25.8%
3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000
• Casa Grande cuenta con aproximadamente 21,000 hectáreas netas de superficie de cultivo, la cual se ha mantenido estable en los últimos años. La empresa no tiene programado incrementar su superficie neta de cultivo en los próximos años. Asimismo, se espera un rendimiento promedio de 173 TM/Ha para los próximos años • Aplicando estos supuestos se obtiene una producción media de caña de azúcar en campos propios de aproximadamente 2.1 MM de TM a lo largo del horizonte de proyección • Asumiendo un rendimiento comercial del azúcar entre 10.5% y 11.0% para el horizonte de proyección, la empresa debería producir aproximadamente 2.8 MM de TM de caña de azúcar para cubrir la proyección en ventas de azúcar. El déficit de producción es adquirido vía terceros agricultores de la zona de influencia de Casa Grande • La empresa cuenta con una fábrica cuya capacidad de molienda asciende a 3 MM de TM, la cual no es superada a lo largo de las proyecciones
Valorización de la Sociedad: Metodología 1 83
Proyecciones: Producción de Subproductos 2012
2013
2014E
2015E
2016E
2017E
Proyecciones 2018E 2019E
Subproductos Bagazo para Venta (TM) (% TM Caña Molida)
239,037 9.9%
327,654 319,693 12.6% 11.2%
310,376 11.2%
309,967 11.2%
312,398 11.2%
314,848 11.2%
Melaza Producida (TM) (% TM Caña Molida)
96,465 4.0%
99,443 111,150 3.8% 3.9%
107,910 3.9%
107,768 3.9%
108,613 3.9%
109,465 3.9%
2020E
2021E
2022E
2023E
2024E
317,317 11.2%
319,805 11.2%
322,313 11.2%
322,313 11.2%
322,313 11.2%
322,313 11.2%
110,323 3.9%
111,189 3.9%
112,061 3.9%
112,061 3.9%
112,061 3.9%
112,061 3.9%
• La producción de los subproductos se deriva a partir de la molienda de caña • Se ha asumido que la producción de bagazo representa, en promedio, el 11.2% de la caña molida para todo el horizonte de proyección • Se ha asumido que la producción de melaza representa, en promedio, el 3.9% de la caña molida para todo el horizonte de proyección
Valorización de la Sociedad: Metodología 1 84
Proyecciones: Producción de Alcohol Proyecciones 2018E 2019E 2020E
2012
2013
2014E
2015E
2016E
2017E
59,938 62.1%
65,327 65.7%
73,018 65.7%
70,890 65.7%
70,796 65.7%
71,352 65.7%
71,911 65.7%
72,475 65.7%
Alcohol Fino (Lt. Miles) Litros de Alcohol por TM de Melaza (Rendimiento)
15,140
13,559
16,800
16,310
16,289
16,416
16,545
0.3x
0.2x
0.2x
0.2x
0.2x
0.2x
Alcohol Industrial (Lt. Miles) Litros de Alcohol por TM de Melaza (Rendimiento)
1,409
3,891
4,350
4,223
4,217
0.0x
0.1x
0.1x
0.1x
0.1x
Alcohol Melaza Utilizada para Alcohol (TM) (% Melaza Producida)
2021E
2022E
2023E
2024E
73,043 65.7%
73,616 65.7%
73,616 65.7%
73,616 65.7%
73,616 65.7%
16,675
16,806
16,937
16,937
16,937
16,937
0.2x
0.2x
0.2x
0.2x
0.2x
0.2x
0.2x
4,250
4,284
4,317
4,351
4,385
4,385
4,385
4,385
0.1x
0.1x
0.1x
0.1x
0.1x
0.1x
0.1x
0.1x
• Casa Grande utiliza aproximadamente el 66% de su producción de melaza para la elaboración de dos tipos de alcoholes: (i) alcohol fino y (ii) alcohol industrial • La producción de ambos alcoholes se deriva del rendimiento histórico (2012 - 2013) de la melaza para cada tipo de alcohol
Valorización de la Sociedad: Metodología 1 85
Proyecciones: Precios de Venta Azúcar Proyecciones 2018E 2019E 2020E
2012
2013
2014E
2015E
2016E
2017E
Precios de Venta Azúcar Precio del Azucar - NY 11 (US$ Ct/Lb)
22.0
18.3
15.3
16.9
18.3
18.8
19.2
19.6
Precio Azúcar Rubia Local (US$ Ct/Lb) Spread Local (US$ Ct/Lb)
31.2 9.2
21.2 2.9
19.3 4.0
21.4 4.5
23.2 4.9
23.8 5.0
24.2 5.0
Precio Azúcar Rubia a Clientes Exportación (US$ Ct/Lb) Spread Clientes Exportación (US$ Ct/Lb)
30.8 8.8
21.6 3.4
18.7 3.4
20.3 3.4
21.8 3.4
22.3 3.4
0
0
23.0 1,468
24.5 1,591
26.0 1,694
1,755 1,730
1,306 1,334
1,231 1,192
1,390 1,322
1,509 1,417
Precio Azúcar Refinada (US$ Ct/Lb) Precio Azúcar Refinada (S/. por TM) Precio Azúcar Rubia Local (S/. por TM) Precio Azúcar Rubia Exportación (S/. por TM)
2021E
2022E
2023E
2024E
20.0
20.4
20.8
21.2
21.6
24.6 5.0
25.0 5.0
25.4 5.0
25.8 5.0
26.2 5.0
26.6 5.0
22.6 3.4
23.0 3.4
23.4 3.4
23.8 3.4
24.2 3.4
24.6 3.4
25.1 3.4
26.6 1,728
27.1 1,763
27.6 1,798
28.2 1,834
28.8 1,871
29.3 1,908
29.9 1,946
30.5 1,985
1,549 1,448
1,574 1,473
1,599 1,498
1,624 1,523
1,650 1,549
1,677 1,576
1,704 1,603
1,732 1,631
• El precio de la azúcar rubia en el mercado local se compone de los siguientes elementos: 1. Precio Internacional del Azúcar: proyectado a partir de la curva de futuros del contrato NY 11 hasta 2017 y luego ajustado por inflación internacional 2. Spread o prima local: proyectada en 26.5%. Dicho diferencial es 1.0% mayor que el observado el 1Q14 y 2.0% menor que el promedio de spreads de los últimos 9 trimestres, y estable en US$ 5 c/lb a partir de 2017. Asimismo se estableció una prima de US$ 3.4 c/lb para clientes de exportación • Ambos componentes permiten obtener el precio de la azúcar rubia para el mercado local y para el mercado internacional • Precio del azúcar refinada formado a partir de la curva de futuros del contrato Londres 5 hasta 2016 y luego ajustado por inflación internacional; teniendo en cuenta un spread al igual que en el caso del azúcar rubia de exportación
Valorización de la Sociedad: Metodología 1 86
Proyecciones: Precios de Venta Subproductos y Alcohol Precios de Venta Subproductos y Alcohol Precio del Bagazo (S/. por TM) Precio de la Melaza (S/. por TM)
Precio del Alcohol Fino (S/. Por Lt) Precio del Alcohol Industrial (S/. Por Lt)
Proyecciones 2018E 2019E
2012
2013
2014E
2015E
2016E
2017E
2020E
2021E
2022E
2023E
2024E
62.3
62.0
63.9
65.8
67.8
69.8
71.9
74.1
76.3
78.6
80.9
83.4
85.9
401.6
257.1
264.9
272.8
281.0
289.4
298.1
307.0
316.2
325.7
335.5
345.6
355.9
1.8 1.3
1.8 1.3
1.8 1.3
1.9 1.4
1.9 1.4
2.0 1.5
2.0 1.5
2.1 1.6
2.2 1.6
2.2 1.7
2.3 1.7
2.4 1.8
2.4 1.8
• El precio de los subproductos y el precio del alcohol se proyectan en función a los precios de 2013, ajustados por inflación local
Valorización de la Sociedad: Metodología 1 87
Proyecciones: Ventas (en S/. ‘000) Ventas (en S/. '000) Azúcar Rubia Local Exportación
Proyecciones 2018E 2019E 2020E
2012
2013
2014E
2015E
2016E
2017E
2021E
2022E
2023E
2024E
511,162
453,853
449,981
505,705
546,640
566,028
582,475
599,532
617,218
635,552
647,436
659,583
671,998
441,956 373,906 68,050
380,154 289,000 91,154
364,722 282,418 82,303
357,363 277,827 79,536
375,318 292,659 82,658
372,973 291,092 81,881
366,860 286,253 80,607
360,507 281,230 79,277
353,906 276,016 77,890
347,048 270,605 76,443
352,704 274,953 77,751
358,473 279,388 79,085
364,357 283,911 80,446
0
63,621
84,709
103,684
123,383
143,830
165,045
187,051
190,792
194,608
198,500
Azúcar Refinada
Bagazo
14,901
20,324
20,425
20,425
21,010
21,810
22,641
23,503
24,398
25,327
26,086
26,869
27,675
Melaza
11,866
12,515
10,099
10,099
10,388
10,784
11,194
11,621
12,063
12,523
12,898
13,285
13,684
Alcohol
28,636
24,470
36,336
36,335
37,376
38,799
40,277
41,810
43,402
45,055
46,407
47,799
49,233
Otros (%) de Caña Molida
6,149 0.3%
5,269 0.2%
5,915 0.2%
5,742 0.2%
5,735 0.2%
5,780 0.2%
5,825 0.2%
5,871 0.2%
5,917 0.2%
5,963 0.2%
5,963 0.2%
5,963 0.2%
5,963 0.2%
Servicios Vinculadas (%) de Caña Molida
7,654 0.3%
11,121 0.4%
12,484 0.4%
12,120 0.4%
12,104 0.4%
12,199 0.4%
12,295 0.4%
12,391 0.4%
12,488 0.4%
12,586 0.4%
12,586 0.4%
12,586 0.4%
12,586 0.4%
Valorización de la Sociedad: Metodología 1 88
Proyecciones: Costo de Ventas (en S/. ‘000) 2012
2013
2014E
2015E
2016E
2017E
Proyecciones 2018E 2019E 2020E
2021E
2022E
2023E
2024E
Costo de Materia Prima 143,470 177,406 178,344 191,422 207,956 215,196 221,569 227,980 234,626 241,462 246,291 251,217 256,241 Caña Propia 2,086 2,021 2,196 2,142 2,116 2,129 2,123 2,126 2,126 2,126 2,126 2,126 2,126 Px Materia Prima por TM 57 65 60 66 72 74 75 77 79 80 82 83 85 Caña de Terceros 322 588 647 619 640 649 677 696 718 740 740 740 740 Px Materia Prima por TM 75 78 72 80 87 89 91 92 94 96 98 100 102 Costo de Ventas Azúcar Insumos directos a la produccion Envases y embalajes Suministros Mano de obra Costo de refinado Mantenimiento Energia electrica Energia termica Costos indirectos de fabricacion
•
•
116,437 114,067 124,571 132,027 136,806 141,701 146,714 151,850 157,112 162,504 167,100 171,835 176,711
1,558 3,563 65 3,057 0 23,578 10,414 49,861
1,888 3,407 61 3,649 0 30,286 11,472 45,753
1,924 3,905 70 3,745 0 30,041 12,235 53,595
1,981 4,022 72 3,857 3,719 30,942 12,602 55,203
2,041 4,143 75 3,973 4,649 31,870 12,980 56,859
2,102 4,267 77 4,092 5,579 32,826 13,369 58,565
2,165 4,395 79 4,215 6,508 33,811 13,770 60,322
2,230 4,527 82 4,341 7,438 34,825 14,183 62,131
2,297 4,662 84 4,471 8,368 35,870 14,609 63,995
2,366 4,802 87 4,605 9,298 36,946 15,047 65,915
2,437 4,946 89 4,744 9,298 38,055 15,498 67,892
2,510 5,095 92 4,886 9,298 39,196 15,963 69,929
2,585 5,248 95 5,032 9,298 40,372 16,442 72,027
24,340
17,550
19,057
19,629
20,218
20,825
21,449
22,093
22,756
23,438
24,141
24,866
25,612
Proyección de costo de materia prima en balanza para 2014 y ajustado por los precios internacionales de azúcar a partir de 2015. Costos de venta en función proporciones históricas de 2012 y 2013
Valorización de la Sociedad: Metodología 1 89
Proyecciones: Costo de Ventas (en S/. ‘000)
Costo de Subproductos Materiales directos Suministros Mano de obra Mantenimiento Energía eléctrica Energía térmica Costos indirectos de fabricacion
•
2012
2013
2014E
2015E
2016E
2017E
Proyecciones 2018E 2019E 2020E
2021E
2022E
2023E
2024E
6,865 906 0 417 153 314 3,134
10,438 1,817 0 472 300 428 4,822
9,626 1,509 0 496 252 414 4,426
9,915 1,555 0 511 259 426 4,558
10,213 1,601 0 527 267 439 4,695
10,519 1,649 0 542 275 452 4,836
10,835 1,699 0 559 283 466 4,981
11,160 1,750 0 575 292 479 5,131
11,494 1,802 0 593 300 494 5,285
11,839 1,856 0 610 309 509 5,443
12,194 1,912 0 629 319 524 5,606
12,560 1,969 0 648 328 540 5,775
12,937 2,028 0 667 338 556 5,948
1,940
2,599
2,530
2,606
2,684
2,765
2,847
2,933
3,021
3,112
3,205
3,301
3,400
Costos de subproductos proyectados manteniendo la proporción histórica de 2012 y 2013
Valorización de la Sociedad: Metodología 1 90
Proyecciones: Gastos Administrativo y de Ventas (en S/. ‘000) 2012 Gastos Adm. y de Ventas 44,499
2013 49,954
2014E 49,767
2015E 56,106
2016E 60,388
2017E 62,574
Proyecciones 2018E 2019E 2020E 64,643 66,795 69,587
2021E 73,190
2022E 74,688
2023E 76,222
2024E 77,795
Gasto de Ventas % Ventas Totales
13,364 2.6%
22,156 4.9%
21,967 4.9%
24,687 4.9%
26,686 4.9%
27,632 4.9%
28,435 4.9%
29,268 4.9%
30,131 4.9%
31,026 4.9%
31,606 4.9%
32,199 4.9%
32,805 4.9%
Gastos Administrativos
31,135
27,798
27,800
31,419
33,702
34,942
36,208
37,528
39,456
42,164
43,082
44,023
44,989
• El gasto de ventas ha sido proyectado como porcentaje de las ventas. Se proyecta en 4.9%, nivel alcanzado en 2013. Se espera que se mantengan en este nivel debido al incremento de ventas ex – fábrica y de exportación, lo que incrementa el gasto en fletes de la empresa • Las cuentas de los gastos administrativos han sido proyectadas mayoritariamente en base a la estructura de gastos registrados en 2013 y luego ajustadas por inflación. Dentro de los gastos administrativos se incluye la cuenta de participación de trabajadores de acuerdo a la metodología contable NIIF (10% de la utilidad antes de impuestos)
Valorización de la Sociedad: Metodología 1 91
Proyecciones: Inversiones en Activo Fijo - CAPEX (en S/. ‘000) Proyecciones 2018E 2019E
2014E
2015E
2016E
2017E
CAPEX Expansión (Refinería) Refinería
11,560 11,560
2,950 2,950
0 0
0 0
0 0
CAPEX Mantenimiento Mantenimiento
17,860 17,860
18,231 18,231
18,778 18,778
19,341 19,341
19,922 19,922
2020E
2021E
2022E
2023E
2024E
0 0
0 0
0 0
0 0
0 0
0 0
20,519 20,519
21,135 21,135
21,769 21,769
22,422 22,422
23,094 23,094
23,787 23,787
• CAPEX Expansión • Se estiman inversiones por US$ 5 MM en la refinería de azúcar, adicionales a los US$ 28 MM ya invertidos durante el periodo 2013 - 1Q2014 • CAPEX Mantenimiento • Se estiman inversiones en mantenimiento de US$ 6 MM anualmente
Valorización de la Sociedad: Metodología 1 92
Proyecciones: Capital de Trabajo (en S/. ‘000) 2012
Proyecciones 2013 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E
Capital de Trabajo (Comerciales) Cuentas por Cobrar Promedio de Días por Cobrar Inventarios Promedio de Días de Inventarios Cuentas por Pagar Promedio de Días por Pagar
5,309 5,188 5,204 5,848 6,322 6,546 6,736 6,933 7,138 7,350 7,487 7,628 7,771 3 4 4 4 4 4 4 4 4 4 4 4 4 100,282 91,994 99,523 106,154 113,035 116,997 120,723 124,504 128,402 132,406 135,520 138,713 141,985 118 116 116 116 116 116 116 116 116 116 116 116 116 34,728 50,060 43,887 46,811 49,845 51,592 53,235 54,902 56,621 58,387 59,760 61,168 62,611 45 51 51 51 51 51 51 51 51 51 51 51 51
Capital de Trabajo (Relacionadas) Cuentas por Cobrar Relacionadas Promedio de Días por Cobrar Cuentas por Pagar Relacionadas Promedio de Días por Pagar
42,347 57,585 49,540 55,675 60,181 62,316 64,126 66,004 67,951 69,970 71,278 72,615 73,982 39 40 40 40 40 40 40 40 40 40 40 40 40 6,838 27,824 17,941 19,137 20,377 21,091 21,763 22,445 23,147 23,869 24,430 25,006 25,596 14 21 21 21 21 21 21 21 21 21 21 21 21
•
El capital de trabajo para cuentas comerciales y cuentas con relacionadas ha sido calculado sobre la base de la rotación histórica
Valorización de la Sociedad: Metodología 1 93
Estado de Ganancias y Pérdidas Proyectado 2014E - 2024E (en S/. ‘000) Ventas Costo de ventas, cash Utilidad bruta % Ventas -Gastos de ventas, cash -Gastos de administración, cash EBITDA % Ventas +/-Cambio en el valor de los act. biológicos - Depreciación y amortización EBIT % Ventas -Gastos Financieros, netos Utilidad antes de impuestos -Impuesto a la renta Utilidad Neta % Ventas
2014E 449,981 -312,542 137,439 30.5% -21,967 -27,800 87,672 19.5% 0 -41,156 46,516 10.3% -14,370 32,146 -4,822 27,324 6.1%
2015E 2016E 2017E 505,705 546,640 566,028 -333,364 -354,975 -367,416 172,341 191,665 198,612 34.1% 35.1% 35.1% -24,687 -26,686 -27,632 -31,419 -33,702 -34,942 116,235 131,277 136,038 23.0% 24.0% 24.0% 0 0 0 -41,594 -41,943 -42,303 74,641 89,333 93,735 14.8% 16.3% 16.6% -14,384 -14,289 -14,202 60,257 75,044 79,533 -9,039 -11,257 -11,930 51,219 63,788 67,603 10.1% 11.7% 11.9%
2018E 582,475 -379,117 203,358 34.9% -28,435 -36,208 138,715 23.8% 0 -40,434 98,281 16.9% -14,183 84,098 -12,615 71,484 12.3%
2019E 599,532 -390,990 208,542 34.8% -29,268 -37,528 141,747 23.6% 0 -38,598 103,149 17.2% -14,183 88,966 -13,345 75,621 12.6%
2020E 617,218 -403,232 213,986 34.7% -30,131 -39,456 144,400 23.4% 0 -30,555 113,845 18.4% -14,183 99,662 -14,949 84,713 13.7%
2021E 2022E 635,552 647,436 -415,805 -425,586 219,747 221,850 34.6% 34.3% -31,026 -31,606 -42,164 -43,082 146,557 147,162 23.1% 22.7% 0 0 -14,477 -14,894 132,080 132,268 20.8% 20.4% -14,183 -14,183 117,897 118,085 -35,369 -35,426 82,528 82,660 13.0% 12.8%
2023E 659,583 -435,612 223,971 34.0% -32,199 -44,023 147,748 22.4% 0 -15,324 132,424 20.1% -14,183 118,242 -35,473 82,769 12.5%
2024E 671,998 -445,889 226,109 33.6% -32,805 -44,989 148,314 22.1% 0 -15,767 132,547 19.7% -14,183 118,365 -35,509 82,855 12.3%
Valorización de la Sociedad: Metodología 1 94
Flujo de Caja Libre Proyectado 2014E - 2023E (en S/. ‘000) EBITDA - Depreciación y Amortización EBIT - Impuestos EBIAT + Depreciación y Amortización - CAPEX Δ Capital de trabajo FCL
2014E
2015E
2016E
2017E
2018E
2019E
2020E
2021E
2022E
2023E
2024E
87,672 -41,156 46,516 -6,977 39,539 41,156 -29,420 -15,556 35,719
116,235 -41,594 74,641 -11,196 63,445 41,594 -21,181 -9,291 74,567
131,277 -41,943 89,333 -13,400 75,933 41,943 -18,778 -7,586 91,512
136,038 -42,303 93,735 -14,060 79,674 42,303 -19,341 -3,859 98,777
138,715 -40,434 98,281 -14,742 83,539 40,434 -19,922 -3,412 100,639
141,747 -38,598 103,149 -15,472 87,676 38,598 -20,519 -3,507 102,248
144,400 -30,555 113,845 -17,077 96,768 30,555 -21,135 -3,628 102,560
146,557 -14,477 132,080 -39,624 92,456 14,477 -21,769 -3,747 81,417
147,162 -14,894 132,268 -39,680 92,588 14,894 -22,422 -2,625 82,435
147,748 -15,324 132,424 -39,727 92,697 15,324 -23,094 -2,687 82,240
148,314 -15,767 132,547 -39,764 92,783 15,767 -23,787 -2,750 82,013
Valorización de la Sociedad: Metodología 1 95
Definición de la Tasa de Descuento - WACC (I/II) • La tasa de descuento (WACC) se define como el costo ponderado de las distintas fuentes de capital (patrimonio y deuda)
• Donde: • E: Patrimonio (equity) • D: Deuda • COK: Costo del capital propio (%) • Kd: Costo de la deuda (%) • T: tasa de impuestos y participación de trabajadores
Valorización de la Sociedad: Metodología 1 96
Definición de la Tasa de Descuento - WACC (II/II) • El costo de los recursos propios (COK) se calcula a partir del Capital Asset Pricing Modelo (CAPM)
• Donde: • Rf es la tasa libre de riesgo, y se estima como el rendimiento de los bonos del tesoro de Estados Unidos a 10 años. Se puede emplear el rendimiento actual de los bonos o un promedio de los últimos 2 o 3 años • (Rm – Rf) es la prima por riesgo de mercado. El modelo asume que los inversionistas esperan en el futuro retornos similares a aquellos obtenidos en periodos pasados • Beta apalancado (β) es una medida del riesgo sistemático o de mercado. Mide la correlación entre el rendimiento del sector en el cual se desempeña la empresa y el mercado. Se obtiene de publicaciones especializadas o se deriva a partir de los betas de empresas comparables. Se calcula a partir de la siguiente fórmula: βL = β x (1+ D/E), donde β es el beta desapalancado y D/E es el ratio de apalancamiento de la empresa bajo análisis • Los tres componentes previamente descritos se obtienen a partir de datos del mercado de Estados Unidos, debido al limitado tamaño del mercado bursátil peruano. En ese sentido, se agregan dos componentes de ajuste: (i) Riesgo país, spread de los bonos globales peruanos sobre el bono del tesoro de Estados Unidos a largo plazo; y, (ii) Diferencial de inflación Perú – US, convierte a moneda local los indicadores en moneda extranjera
Valorización de la Sociedad: Metodología 1 97
Estimación del WACC (I/VI) Tasa Libre de Riesgo (US Bond 10yr yield - %)
3.8
3.5 3.3
3.2
3.0
2.9 2.5
2.5
2.6
2.7
2.2 1.9
1.9 1.6
1.6
1.8
1.8
1Q2010 2Q2010 3Q2010 4Q2010 1Q2011 2Q2011 3Q2011 4Q2011 1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 3Q2013 4Q2013 1Q2014
• El rendimiento de los bonos del tesoro norteamericano se ha recuperado a partir del 2Q - 2013 asociado a los mejores resultados económicos de la economía americana y a una expectativa de incremento en tasas de interés por parte de la FED • Se estima la tasa libre de riesgo en 2.7% al cierre del primer trimestre de 2014
Fuente:Bloomberg (2014) – BCRP (2014)
98
1Ene13 11Ene13 23Ene13 4Feb13 14Feb13 26Feb13 8Mar13 20Mar13 1Abr13 11Abr13 23Abr13 3May13 15May13 27May13 6Jun13 18Jun13 28Jun13 10Jul13 22Jul13 1Ago13 13Ago13 23Ago13 4Sep13 16Sep13 26Sep13 8Oct13 18Oct13 30Oct13 11Nov13 21Nov13 3Dic13 13Dic13 25Dic13 6Ene14 16Ene14 28Ene14 7Feb14 19Feb14 3Mar14 13Mar14 25Mar14 4Abr14 16Abr14 28Abr14 8May14
Valorización de la Sociedad: Metodología 1
Estimación del WACC (II/VI)
Riesgo País Perú (Spread EMBI - %)
250
200
150
1.4%
100
50
0
• El riesgo país basado en el spread EMBI elaborado por JP Morgan se estima en 1.4% (140 pbs)
Fuente:Bloomberg (2014) – BCRP (2014)
Valorización de la Sociedad: Metodología 1 99
Estimación del WACC (III/VI) Estructura de Capital en el Sector (2013)
64.4%
61.6%
47.8%
30.0% 19.9%
27.9%
19.1% 15.3%
Casa Grande
San Jacinto
Cartavio
Laredo
Paramonga
Promedio Local Promedio Local - ex CG e Internacional
Damodaran
• La estructura de capital (D/E) promedio en el mercado azucarero local es de 30.0%. Considerando al mercado internacional, la estructura de capital promedio asciende a 64.4% • De acuerdo a Damodaran, a nivel mundial el apalancamiento promedio se encuentra en 27.9% • La estructura de capital de Casa Grande se encuentra en 19.9% al cierre de 2013, y se espera se mantenga en este nivel a lo largo del horizonte de proyección (target D/E) Fuente: Bloomberg (2014) – SMV (2014)
Valorización de la Sociedad: Metodología 1 Estimación del WACC (IV/VI) Beta Apalancado de Principales Comparables
Mercado Local
Compañía
Mercado Internacional
10 0
San Jacinto Cartavio Laredo Paramonga Cosan Sao Martinho Ledesma Illovo Sugars Tongaat Hulett Rajshree Sugars Balrampur C.Mills Delta Sugar Co. Promedio
País Perú Perú Perú Perú Brasil Brasil Argentina Sudáfrica Sudáfrica India India Egipto
Gastos de Ventas de 2009 – 2013 (como % dede lasComparables ventas) Beta Apalancado Casa Grande a partir
Market Beta Cap (US$ D/E (%) Apalancado MM) 0.39 38 61.6% 0.55 69 47.8% 0.27 111 19.1% 0.33 82 15.3% 0.46 0.48 0.58 0.46 0.43 0.50 0.46 0.49 0.46
6,719 1,914 537 1,129 1,877 9 196 242 1,077
65.3% 76.6% 64.7% 33.4% 64.8% 373.0% 133.3% 58.5% 64.4%
• El beta apalancado de Casa Grande a partir de comparables es de 0.34 • El beta de la industria (food processing) calculado por Damodaran se encuentra en 0.85 (apalancado con la estructura de capital de Casa Grande) • El beta histórico de Casa Grande calculado por Bloomberg, en base a una regresión entre el rendimiento de la acción y el rendimiento del mercado peruano, es de 0.95
Beta apalancado de la industria Estructura D/E de la industria Beta desapalancado de la industria Estructura D/E de Casa Grande Beta apalancado de Casa Grande
0.46 64.4% 0.28 19.9% 0.34
Rango de Beta Apalancado para Casa Grande 0.85
0.95
0.34
Beta Comparables
Beta Damodaran
Beta Histórico Casa Grande
Fuente: Bloomberg (2014)
Valorización de la Sociedad: Metodología 1 10 1
Estimación del WACC (V/VI) Diferencial de Inflación 2007 - 2014 (Perú – US)
4.0% 2.9%
3.0%
1.5%
2.0%
1.0%
0.8% 0.3% -0.1%
0.0% 2000
2001
2002
0.6%
0.5%
2009
2010
0.2% 2003
2004
1.3%
1.1%
2005
2006
2007
2008
0.5%
2011
2012
2013
-1.0% -2.0% -1.9%
-2.1%
-3.0% -2.9% -4.0%
• El diferencial de Inflación se calcula a partir de la diferencia entre la inflación de Perú y la inflación de EEUU • En 2013, el diferencial de inflación fue de 1.3%
Fuente: Bloomberg (2014) – SMV (2014)
Valorización de la Sociedad: Metodología 1 10 2
Estimación del WACC (VI/VI) Costo de la Deuda
0.2% 9.3%
Coazucar Préstamos y Pagarés Otros
90.5%
Los préstamos recibidos de Corporación Azucarera del Perú (Coazucar), aproximadamente US$ 68.5MM, representan más del 90.0% de las deudas totales de Casa Grande. Dichos préstamos son de vencimiento no corriente y devengan intereses de 6.95% anual en moneda extranjera. Es así que se considera dicha tasa como el costo real de endeudamiento de Casa Grande Fuente: EEFF Auditados
Valorización de la Sociedad: Metodología 1 10 3
Estimación del WACC (VII) Costo del Capital (COK) +Tasa Libre de Riesgo (10yr Bond) +Prima por Riesgo Mercado (Damodaran) +Beta apalancado Casa Grande +Riesgo País +Diferencial de Inflación (Perú – US)
Costo del Capital (COK)
Estructura de Capital Deuda/Capitalización (D/D+E)
2.7%
Costo de la Deuda (Kd) + Costo de la deuda (Kd)
6.95%
+Tasa de Impuestos y Part. (hasta 2020) +Tasa de Impuestos y Part. (desde 2021)
23.5% 37.0%
5.0% 0.95 1.4% 1.3% 10.2%
16.6%
Costo de la Deuda después de Impuestos (hasta 2020) Costo de la Deuda después de Impuestos (desde 2021) WACC WACC hasta 2020 WACC desde 2021
5.3% 4.4%
9.4% 9.2%
Fuente: Bloomberg (2014) – SMV (2014)
Valorización de la Sociedad: Metodología 1 10 4
Valor Empresa y Patrimonial de Casa Grande Descomposición del Valor Empresa y Patrimonial a diciembre de 2013 (en S/. ‘000)
41,453
1,047,424
452,751
844,003 203,421
553,221
Flujos Año 1-11
Valor Terminal
Valor Act. No Productivo
Valor Empresa
Deuda Neta
Valor Patrimonial
• El valor patrimonial de Casa Grande de acuerdo al método de flujo de caja descontado, al cierre de diciembre de 2013 fue aproximadamente S/. 844 MM
Valorización de la Sociedad: Metodología 1 Sensibilidades (I/II)
WACC
Sensibilidad Valor Empresa (S/. Miles) 1,050,890 8.4% 8.9% 9.4% 9.9% 10.4%
0.50% 1,068,349 1,028,777 992,594 959,308 928,524
Valor Residual 1.50% 1,138,426 1,090,513 1,047,424 1,008,355 972,678
2.50% 1,232,258 1,171,541 1,118,147 1,070,658 1,028,009
Valor Residual 1.50% 11.10 10.53 10.02 9.56 9.13
2.50% 12.21 11.49 10.86 10.30 9.79
Sensibilidad Precio por Acción (S/.)
WACC
10 5
8.4% 8.9% 9.4% 9.9% 10.4%
0.50% 10.27 9.80 9.37 8.97 8.61
• Al cierre de 2013, el precio de la acción por la metodología del flujo de caja descontado se encontraba en el rango 9.56 - 10.53
Valorización de la Sociedad: Metodología 1 10 6
Sensibilidades (II/II) Expresado en S/. Miles
Valor Empresa
-10% 823,250
Precio del Azúcar Rubia -5% Proyección +5% 935,337 1,047,424 1,159,512
+10% 1,271,599
-10% 7.36
Precio del Azúcar Rubia -5% Proyección +5% 8.69 10.02 11.35
+10% 12.68
Expresado en S/.
Precio Acción
Valorización de la Sociedad: Metodología 1 10 7
Proceso de Valorización por Múltiplos Comparables • La metodología de Múltiplos Comparables consiste en estimar el valor de una empresa o activo en base al valor comparable que el mercado asigna a activos similares. Es utilizada como comprobación y es complementaria a la valorización mediante flujos de caja descontados • Para realizar una valorización por Múltiplos Comparables se requiere: • Un activo idéntico o un grupo de activos similares • Una variable que estandarice el valor, que para activos de renta variable suele ser el precio del activo dividido entre un indicador común, tal como utilidad por acción, valor del patrimonio, ventas y/o EBITDA • Las etapas básicas para una valorización por Múltiplos Comparables son las siguientes: 1. Análisis de la empresa objetivo 2. Análisis y selección de las compañías comparables 3. Selección y recopilación de los múltiplos comparables 4. Aplicación del los resultados a la empresa objetivo 5. Selección de un rango de valorización para la empresa objetivo • Se ha distinguido tres tipos de múltiplos: EV/EBITDA, EV/Sales (Valor Firma/Ventas) y Price/Book (Precio/Valor Contable por Acción). Se ha realizado un análisis a nivel de empresas locales e internacionales para los dos primeros y sólo de empresas locales para el tercero
Valorización de la Sociedad: Metodología 1 10 8
Múltiplos de Empresas Comparables en el Mercado Local (a mayo 2014) Múltiplos de Empresas Comparables en la BVL a mayo 2014 (S/. '000)
Ticker Ventas 2013 EBIT 2013 Depreciación y Amortización 2013 ∆ Valor Activos Biológicos EBITDA 2013 Margen EBITDA 2013 (%) Utilidad Neta 2013 Patrimonio 2013
San Jacinto SNJACIC1 140,960 19,688 12,938 -1,762 30,864 21.9% 640 300,407
Cartavio CARTAVC1 242,763 39,049 17,936 -2,377 54,608 22.5% 19,912 407,018
Laredo LAREDOC1 257,912 53,749 12,320 428 66,497 25.8% 36,945 546,923
Paramonga PARAMOC1 218,260 1,912 29,445 12,438 43,795 20.1% -4,054 860,581
Valor Empresa (a mayo 2014) Deuda Total 2013 Caja 2013 Capitalización Bursátil (a mayo 2014) Total Acciones Precio Soles (a mayo 2014)
283,358 185,101 4,315 102,572 28,452,786 3.6
400,262 194,671 8,405 213,996 20,675,896 10.4
453,214 104,630 1,931 350,515 11,563,369 30.3
290,208 131,456 76,141 234,893 33,270,968 7.1
2.0x 9.2x 0.3x
1.6x 7.3x 0.5x
1.8x 6.8x 0.6x
1.3x 6.6x 0.3x
Múltiplos mayo 2014 EV/Sales mayo 2014 EV/EBITDA mayo 2014 P/B mayo 2014
Mediana
Promedio
1.7x 7.1x 0.4x
1.7x 7.5x 0.4x
Fuente: SMV (2014)
Valorización de la Sociedad: Metodología 1 10 9
Múltiplos de Empresas Comparables a Nivel Mundial (a mayo 2014) Múltiplos Empresas Comparables (US$ MM, excepto información por acción) Compañía Cosan Sao Martinho Ledesma Illovo Sugars Tongaat Hulett Rajshree Sugars Balrampur Chini Mills Delta Sugar Company Promedio Mediana
País
Market Cap
Ventas 2013
EBITDA 2013
Brasil Brasil Argentina Sudáfrica Sudáfrica India India Egipto
6,719 1,914 537 1,129 1,512 9 196 242 1,532 833
4,125 643 837 1,293 1,693 155 602 162 1,189 740
834 265 105 252 307 23 80 37 238 179
EV/EBITDA EV/Sales 2013 2013 15.1x 7.7x 6.2x 8.2x 8.6x 4.7x 6.1x 6.2x 7.8x 6.9x
3.1x 3.2x 0.8x 1.6x 1.6x 0.7x 0.8x 1.0x 1.6x 1.3x
• La mediana del múltiplo EV/EBITDA es de 6.9x, obtenido a partir de la muestra de comparables a nivel mundial, la cual se encuentra ligeramente por debajo de los múltiplos EV/EBITDA derivados para los comparables en el mercado local (7.1x) • La mediana del múltiplo EV/Sales se encuentra en 1.3x, por debajo de los múltiplos calculados para las empresas en el mercado local (1.7x)
Fuente: Bloomberg(2014)
Valorización de la Sociedad: Metodología 1 11 0
Valorización por Múltiplos Comparables (en S/. MM) 1. Múltiplo EV/EBITDA (mayo 2014) EBITDA 2013 Valor Empresa (EV) + Act. No Productivo -Deuda Neta 2013 Valor Patrimonial (Equity Value) Valor por acción
Local 7.1x 102 721 41 203 559 6.6
2. Múltiplo EV/Sales (mayo 2014) Ventas 2013 Valor Empresa (EV) + Act. No Productivo -Deuda Neta 2013 Valor Patrimonial (Equity Value) Valor por acción
1.7x 454 773 41 203 611 7.3
3. Múltiplo Price/Book (mayo 2014) Patrimonio 2013 Valor Empresa (EV) + Act. No Productivo Valor Patrimonial (Equity Value) Valor por acción
0.4x 1,208 524 41 565 6.7
Internacional Promedio 6.9x 7.0x 102 708 41 203 546 553 6.5 6.6 1.3x 454 588 41 203 426 5.1
1.5x
518 6.2 0
565 6.7
Valorización de la Sociedad: Metodología 2 11 1
Valor Bursátil (I/II): Descripción de la Metodología • La metodología consiste en calcular el precio promedio ponderado de la acción de Casa Grande en el semestre inmediatamente anterior a la fecha de ocurrencia de la causal que genera la obligación de realizar una Oferta Pública de Acciones (14 de mayo de 2014) • El reglamento de Oferta Pública de Adquisición y de Compra de Valores por Exclusión de la SMV establece que esta metodología es válida en la medida que se cumplan las dos siguientes condiciones: • El número de acciones negociadas como proporción de las acciones en circulación debe ser igual o mayor a 5% • La frecuencia de negociación mensual, estimado como la proporción de días que la acción cotiza respecto al total de días bursátiles o de negociación en el mes (trading days), debe ser mayor o igual al 60%
Valorización de la Sociedad: Metodología 2 11 2
Valor Bursátil (II/II): Estimación Operaciones de Casa Grande en la BVL Fecha ene-13 feb-13 mar-13 abr-13 may-13 jun-13 jul-13 ago-13 sep-13 oct-13 nov-13 dic-13 ene-14 feb-14 mar-14 abr-14 may-14 jun-14 jul-14 ago-14 sep-14
Acciones en Acciones A.Negociadas/ Frecuencia Px. Cierre Market Cap Circulación Negociadas A.Circulación (%) (Soles) (S/. MM) 84,234,550 506,051 0.6% 91.7% 13.87 1,168 84,234,550 346,599 0.4% 95.2% 12.87 1,084 84,234,550 825,207 1.0% 86.4% 11.15 939 84,234,550 754,045 0.9% 95.7% 10.19 859 84,234,550 654,342 0.8% 95.7% 10.36 873 84,234,550 835,421 1.0% 95.2% 9.27 781 84,234,550 178,778 0.2% 91.7% 8.85 746 84,234,550 375,022 0.4% 95.5% 9.55 805 84,234,550 285,324 0.3% 95.5% 9.41 792 84,234,550 178,865 0.2% 91.7% 9.07 764 84,234,550 377,093 0.4% 95.2% 8.64 728 84,234,550 294,580 0.3% 91.3% 8.06 679 84,234,550 244,518 0.3% 95.7% 7.32 616 84,234,550 312,216 0.4% 100.0% 6.62 558 84,234,550 342,577 0.4% 95.5% 6.05 509 84,234,550 355,464 0.4% 87.0% 6.68 563 84,234,550 852,316 1.0% 95.5% 6.51 548 84,234,550 403,282 0.5% 95.5% 7.24 610 84,234,550 1,066,765 1.3% 87.5% 8.67 731 84,234,550 851,495 1.0% 90.9% 8.88 748
Comentarios: • La frecuencia de la acción de Casa Grande supera el 60% • La proporción de acciones negociadas respecto al total de acciones en circulación no supera el 5% • Las acciones de Casa Grande no cuentan con la liquidez necesaria para validar el uso de la metodología de valor bursátil • Por lo antes señalado, la presente metodología no puede ser utilizada
Obligación de realizar la OPA
Fuente: Bolsa de Valores de Lima (2014)
Valorización de la Sociedad: Metodología 3 11 3
Valor Contable Valor Contable de Casa Grande (en S/. MM)
Capital Social Reservas Legales Resultados Acumulados Total Patrimonio Neto (S/. MM) # de Acciones Comunes Valor por Acción (S/. por accion)
dic-13 847 48 313 1,208 84,234,550 14.34
mar-14 847 48 318 1,213 84,234,550 14.39
• Al cierre de 2013, el valor por acción derivado a partir de la metodología de valor contable asciende a S/. 14.34 • Al cierre del primer trimestre de 2014, el valor por acción derivado a partir de la metodología de valor contable asciende a S/. 14.39
Fuente: SMV (2014)
Valorización de la Sociedad: Metodología 4 11 4
Valor de Liquidación (I/V) • El valor de liquidación o Net Asset Value (NAV) es el valor de una empresa definido a partir de la resta de sus activos y pasivos, ambos a valor de mercado
• La metodología de liquidación consiste en estimar un escenario hipotético de liquidación de la sociedad. En ese sentido, se debe valorizar los activos de la sociedad a valor de mercado y aplicarles un coeficiente de realización. Una vez obtenido este valor, se restan los pasivos a valor de mercado, y otros pasivos que se pudiesen generar en caso se realizase dicho proceso. El monto resultante es el valor de liquidación o NAV • Se ha considerado dos escenarios de liquidación • Escenario 1: Se incluyen pasivos laborales por despido del personal de S/. 135 MM (estimado según la gerencia más 50%) • Escenario 2: Se incluyen pasivos laborales por despido del personal de S/. 135 MM. Asimismo se incluyen las contingencias laborales no provisionadas de la empresa por S/. 13 MM, contingencias civiles no provisionadas por S/. 15 MM (el doble de lo estimado por el área legal de Casa Grande) y 3% sobre el total de activos por concepto de gastos de liquidación y otros
Valorización de la Sociedad: Metodología 4 11 5
Valor de Liquidación (II/IV) • Se ha actualizado a valor de mercado los siguientes activos y pasivos: • Activos: • Valor de los terrenos: Casa Grande cuenta con un total de 31,468 hectáreas, de las cuales 27,394 son productivas y 4,074 son área no productiva. Se ha considerado un valor de liquidación de US$ 16,500 para las hectáreas productivas y un valor de liquidación de US$ 3,500 para las hectáreas no productivas, de acuerdo a los parámetros empleados en la tasación de 2011 por RyB Tasadores y confirmados por expertos consultados • Pasivos: • Pasivos Laborales: contingencia según escenarios planteados
Valorización de la Sociedad: Metodología 4 11 6
Valor de Liquidación (III/IV): Escenario 1 Análisis de Liquidación Casa Grande (S/. '000) V. Libros V. Comercial Factor de V. Realización 2013 2013 Liquidación (%) 2013 Total Activos 1,782,966 1,853,407 85.0% 1,576,128 Activos Corriente 221,603 221,603 93.8% 207,949 Efectivo y equivalente de efectivo 36,802 36,802 100% 36,802 Cuentas por cobrar, terceros 5,188 5,188 90% 4,669 Cuentas por cobrar, relacionadas 57,585 57,585 100% 57,585 Existencias 91,994 91,994 90% 82,795 Otras cuentas por cobrar 20,708 20,708 90% 18,637 Gastos pagados por anticipado 9,326 9,326 80% 7,461 Activos No Corrientes 1,561,363 1,631,804 83.8% 1,368,179 Activos Biológicos 317,728 317,728 100% 317,728 PP&E 1,235,535 1,305,976 80% 1,044,781 Intangibles 1,888 1,888 70% 1,322 Otros activos no corrientes,neto 6,212 6,212 70% 4,348 Pasivos 562,060 697,060 100.0% 697,060 Obligaciones Financieras 7,094 7,094 100.0% 7,094 Cuentas por pagar comerciales, terceros 50,890 50,890 100.0% 50,890 Cuentas por pagar comerciales, relacionadas 220,127 220,127 100.0% 220,127 Pasivos por impuestos a las ganancias 246,979 246,979 100.0% 246,979 Otros Pasivos 36,970 36,970 100.0% 36,970 Pasivos Laborales por Liquidación 0 135,000 100.0% 135,000 Contingencias Laborales Adicionales 0 0 100.0% 0 Contingencias Civiles Adicionales 0 0 100.0% 0 Gastos de Liquidación 0 0 100.0% 0 Valor de Liquidación 879,068 # de Acciones Comunes 84,234,550 Valor por Acción (S/. por acción) 10.44 Fuente: SMV (2014)
Valorización de la Sociedad: Metodología 4 11 7
Valor de Liquidación (IV/IV): Escenario 2 Análisis de Liquidación Casa Grande (S/. '000) V. Libros V. Comercial Factor de V. Realización 2013 2013 Liquidación (%) 2013 Total Activos 1,782,966 1,853,407 85.0% 1,576,128 Activos Corriente 221,603 221,603 93.8% 207,949 Efectivo y equivalente de efectivo 36,802 36,802 100% 36,802 Cuentas por cobrar, terceros 5,188 5,188 90% 4,669 Cuentas por cobrar, relacionadas 57,585 57,585 100% 57,585 Existencias 91,994 91,994 90% 82,795 Otras cuentas por cobrar 20,708 20,708 90% 18,637 Gastos pagados por anticipado 9,326 9,326 80% 7,461 Activos No Corrientes 1,561,363 1,631,804 83.8% 1,368,179 Activos Biológicos 317,728 317,728 100% 317,728 PP&E 1,235,535 1,305,976 80% 1,044,781 Intangibles 1,888 1,888 70% 1,322 Otros activos no corrientes,neto 6,212 6,212 70% 4,348 Pasivos 562,060 780,662 100.0% 780,662 Obligaciones Financieras 7,094 7,094 100.0% 7,094 Cuentas por pagar comerciales, terceros 50,890 50,890 100.0% 50,890 Cuentas por pagar comerciales, relacionadas 220,127 220,127 100.0% 220,127 Pasivos por impuestos a las ganancias 246,979 246,979 100.0% 246,979 Otros Pasivos 36,970 36,970 100.0% 36,970 Pasivos Laborales por Liquidación 0 135,000 100.0% 135,000 Contingencias Laborales Adicionales 0 13,000 100.0% 13,000 Contingencias Civiles Adicionales 0 15,000 100.0% 15,000 Gastos de Liquidación 0 55,602 100.0% 55,602 Valor de Liquidación 795,465 # de Acciones Comunes 84,234,550 Valor por Acción (S/. por acción) 9.44 Fuente: SMV (2014)
Valorización de la Sociedad 11 8
Valor de la Contraprestación • El 14 de Mayo de 2014 se genera la obligación para Casa Grande S.A.A. (“Casa Grande”) de realizar una Oferta Pública de Adquisición (“OPA”), como consecuencia que desde febrero de 2012 hasta marzo de 2014, empresas y accionistas vinculados al Grupo Gloria (principales accionistas), han adquirido acciones equivalentes al 0.6733% del capital social de Casa Grande; incrementando así su participación de 59.39% a 60.063%
• El valor de la contraprestación por la transacción que generó la obligación de efectuar la OPA posterior es el que se deriva de la transacción entre el Grupo Gloria, a través de su afiliada DEPRODECA, y Casa Grande • El precio por acción pagado por las acciones de Casa Grande ascendió a S/. 7.10 por acción
• Así se debe contrastar el valor de la contraprestación con los valores resultantes de la aplicación de las otras metodologías realizadas, y por ningún motivo el valor a pagar por DEPRODECA en la OPA debe ser menor al valor de contraprestación
Valorización de la Sociedad 11 9
Actualización de Valores de Valorización • Teniendo en consideración que las diferentes metodologías empleadas han sido calculadas a diferentes momentos del tiempo y teniendo en cuenta la solicitud de la SMV de indicar un valor a la fecha de realización del presente reporte es necesario actualizar los precios de las acciones • El factor de actualización ha sido establecido a partir de la tasa interbancaria en soles publicada por el BCRP Rangos de Precio por Acción (S/.) Metodología Flujo de Caja Descontado Valor Contable Valor de Liquidación
31/12/2013 9.56 - 10.53 14.34 9.44 - 10.44
14/05/2014 9.73 - 10.72 14.46 9.61 - 10.62
24/10/2014 9.88 - 10.88 14.72 9.75 - 10.79
Contenido 12 0
• • • • • • •
Contexto de la Operación Análisis del Sector Análisis de la Empresa Contingencias Valorización de la Sociedad Conclusiones y Recomendaciones Bibliografía
Conclusiones y Recomendaciones 12 1
Análisis Comparativo del Valor Patrimonial de Casa Grande Valor del Patrimonio al 24/10/14 (S/. MM)
1,240
916
909
872
865 832
821
598
Flujo de Caja Descontado
Valor Contable
Valor de Liquidación
• El valor del patrimonio ha sido actualizado al 24/10/14 utilizando la tasa interbancaria
Valor de Contraprestación
Conclusiones y Recomendaciones 12 2
Análisis Comparativo del Valor Patrimonial de Casa Grande Valor por acción al 24/10/14 (S/.) 14.72
10.88
10.79
10.35
10.27 9.88
9.75
7.10
Flujo de Caja Descontado
Valor Contable
Valor de Liquidación
• El valor de las acciones ha sido actualizado al 24/10/14 utilizando la tasa interbancaria
Valor de Contraprestación
Conclusiones y Recomendaciones 12 3
Análisis Teórico y Práctico de las Metodologías Empleadas (i) • Hemos realizado nuestro análisis de valorización utilizando las cuatro metodologías indicadas por el Reglamento de Oferta Publica de Adquisición y de Compra de valores por Exclusión de la Superintendencia del Mercado de Valores: (i) negocio en marcha, (ii) valor contable, (iii) valor de liquidación, y (iv) valor bursátil. A continuación pasamos a describir dichas metodologías en el contexto de la Valorización de Casa Grande: • Negocio en Marcha: Creemos que la metodología de flujo de caja es la que mejor refleja el valor de un negocio en marcha. Entre las principales ventajas del uso del método del flujo de caja descontado se encuentran las siguientes: (i) permite incluir en la Valorización los flujos que la empresa generará en el tiempo, (ii) toma en cuenta la generación efectiva de dinero que estará disponible para acreedores y accionistas, (iii) el valor obtenido no está influenciado por resultados temporales o atípicos que la empresa pueda tener en un año puntual, o especulación en los mercados, (iv) considera el valor del dinero en el tiempo, (v) incorpora supuestos y proyecciones detalladas, lo que proporciona al inversionista mayor conocimiento del sector y de las diferentes líneas de la empresa. Entre las principales limitantes de esta metodología se encuentra la cantidad de información necesaria para poder estimar los supuestos sobre los cuales se llevarán a cabo las proyecciones
Conclusiones y Recomendaciones 12 4
Análisis Teórico y Práctico de las Metodologías Empleadas (i) • Valor Contable: El valor contable refleja el valor de una empresa en un momento dado del tiempo, teniendo en cuenta solamente el patrimonio de la misma. Esta metodología puede ser influenciada por prácticas o estimaciones contables que afecten el valor de los activos y/o de los pasivos, que hagan que estos no reflejen sus valores reales y que por ende, afecten el valor del Patrimonio de la empresa. • Valor de Liquidación: El método de liquidación implica por un lado, (i) estimar el valor de mercado de los activos de la empresa, y calcular su valor de realización en un escenario de liquidación, y (ii) por otro, estimar el valor de mercado de los pasivos actuales de la empresa, y agregar a dicho monto otras obligaciones y costos se incurriría en un escenario de cierre del negocio. Si bien creemos que esta metodología refleja mejor el valor de la empresa que la metodología contable, consideramos que no se trata de una metodología que capte el valor del negocio en marcha, no incorpora el valor que podría ser generado en el futuro por la empresa, y está sujeta a las restricciones políticas, sociales y de mercado que existirían si se quisiera realizar la liquidación de Casa Grande • Valor Bursátil: Esta metodología estima el valor de la empresa en base a las cotizaciones de mercado del precio de la acción en el periodo de 6 meses precedente a la fecha en la cual se realiza el análisis. Como se ha mencionado anteriormente, en este caso la metodología de valor bursátil no puede ser aplicada debido a que no se cumple con el requisito que el número de acciones negociadas como proporción de las acciones en circulación sea igual o mayor a 5%
Conclusiones y Recomendaciones 12 5
Recomendaciones • EFIC Partners realizó la valorización de Casa Grande de acuerdo a las metodologías indicadas anteriormente. En adición a la revisión de la información financiera proporcionada por la empresa, se tuvieron reuniones con el equipo contable y los auditores (Deloitte) de la misma. Asimismo, se realizó una visita a las instalaciones de Casa Grande, la que incluyó reuniones adicionales con la gerencia de la empresa e inspecciones a los campos e ingenio azucarero para tener mayor conocimiento del activo que se estaba valorizando • Los valores actualizados por acción de Casa Grande derivados de nuestro análisis son los siguientes: • (i) Flujo de Caja Descontado: S/. 10.35 • (ii) Valor Contable: S/. 14.72 • (iii) Valor de Liquidación: S/. 10.27 • EFIC Partners recomienda que el valor mínimo a ser tomado en cuenta para la OPA sea aquel que fue obtenido por la metodología del valor de la empresa en marcha utilizando el flujo de caja descontado, dado que se trata del análisis más robusto entre los diferentes métodos empleados y expuestos, y el que creemos captura de mejor manera el valor fundamental de la empresa. • Como resultado de este análisis, el valor de la acción de Casagrande a la fecha es de S/. 10.35. Es este el valor que recomendamos como valor mínimo para la realización de la OPA de Casa Grande
Contenido 12 6
• • • • • • •
Contexto de la Operación Análisis del Sector Análisis de la Empresa Contingencias Valorización de la Sociedad Conclusiones y Recomendaciones Bibliografía
Bibliografía 12 7
• Balrampur Chini Mills Limited. (2013). Memoria Anual 2013. • Banco Central de Reserva del Perú. (Octubre de 2014). Estadistica Economicas BCRP. Obtenido de https://estadisticas.bcrp.gob.pe/estadisticas/series/ • Biosev. (2013). Memoria Anual 2013. • Bolsa de Valores de Lima. (Octubre de 2014). Portal web BVL. Obtenido de www.bvl.com.pe • BTG Pactual. (2014). Fixed Income Research: Coazucar. BTG. • Business Monitor International. (2014). Industry Outlook Peru 3Q 2014. BMI. • Cartavio S.A.A. (2013). Memoria del Directorio 2013. • Casagrande S.A.A. (2011). Memoria del Directorio 2011. • Casagrande S.A.A. (2012). Memoria del Directorio 2012. • Casagrande S.A.A. (2013). Memoria del Directorio 2013. • Corporación Azucarera del Perú. (2012). Offering Memorandum. • Cosan. (2013). Memoria Anual. • Deloitte. (2012). Estados Financieros Auditados 2012 - 2011. • Deloitte. (2013). Estados Financieros Auditados 2013 - 2012. • Dongo-Soria Gaveglio y Asociados SCRL (PwC). (2010). Estados Financieros Auditados 2010 2009.
Bibliografía 12 8
• Dongo-Soria Gaveglio y Asociados SCRL (PwC). (2010). Estados Financieros Auditados 2010 2009. • Food and Agriculture Organization of The United Nations. (Octubre de 2014). FAOSTAT. Obtenido de http://faostat3.fao.org/home/E • Illovo Sugars. (2013). Memoria Anual 2013 . • Instituto Nacional de Estadística e Informática. (Octubre de 2014). Series Nacionales INEI. Obtenido de http://series.inei.gob.pe:8080/sirtod-series/ • JP Morgan. (2014). India SMID: Sugar Sector. JPM. • Laredo S.A.A. (2013). Memoria del Directorio 2013. • MCC Seminario. (2014). Cobertura Inicial Coazucar. • Ministerio de Agricultura y Riego. (Octubre de 2014). Sistema de Información de Abastecimiento y Precios. Obtenido de http://sistemas.minag.gob.pe/sisap/portal/ • Mitr Phol. (2013). Memoria Anual 2013. • Morgan Stanley. (2014). Commodities Research: Sugar Update. • Nordzucker. (2013). Memoria Anual 2013. • Organización Internacional del Azúcar (OIA). (Octubre de 2014). International Sugar Organization. Obtenido de http://www.isosugar.org/
Bibliografía 12 9
• • • • • • • • •
Paramonga S.A.A. (2013). Memoria del Directorio 2013. Pomalca S.A.A. (2013). Memoria Anual 2013. Rajshree Sugars & Chemicals Limited. (2013). Memoria Anual 2013. RyB Tasadores y Supervisores. (2011). Tasación Predio Agrícola Roma. RyB Tasadores y Supervisores. (2011). Tasación Predio Molino de Galindo. San Jacinto S.A.A. (2013). Memoria del Directorio 2013. Sao Martinho. (2013). Memoria Anual 2013. Südzucker. (2013). Memoria Anual 2013. Superintendencia del Mercado de Valores (SMV). (Octubre de 2014). Portal Web SMV . Obtenido de www.smv.gob.pe • Tereos. (2013). Memoria Anual 2013. • Tongaat Hulett. (2013). Memoria Anual 2013. • Wilmar. (2013). Memoria Anual 2013.
Índice de Anexos 1. Anexos Documentos Intermedios a. Múltiplos de empresas comparables b. Histórico de cotizaciones de Casa Grande en la BVL c. Serie de spread EMBI+ Perú y bonos del tesoro americano 10Yr d. Gráfico de la serie de rendimiento de bono del tesoro americano – 10Yr e. Gráfico de serie la serie del spread EMBI+ Perú f. Diferencia de inflación Perú – EEUU 2. Anexo Contingencias a. Contingencias Civiles (Demandado) b. Contingencias Civiles (Demandante) c. Contingencias Laborales 3. Anexo Reportes de la Empresa y la Industria a. BMI - Peru Sugar Industry Outlook (Jun-2014) b. BTG - Reporte Coazucar (Jul-2014) c. Coazucar Final OM d. JPM - India Sugar Sector (Jul-2014) e. MCC Seminario - Inicio de Cobertura Coazucar f. Morgan Stanley - Global Sugar Industry (Apr-2014) 4. Anexo Tasaciones a. Tasación Molino Galindo - RyB Tasadores b. Tasación Predio Agrícola Roma - RyB Tasadores
Anexo: Múltiplos de Empresas Comparables Actualizado: 25/09/2014 Múltiplos Empresas Comparables (US$ MM) Compañía Casa Grande San Jacinto Cartavio Laredo Paramonga Cosan Sao Martinho Ledesma Illovo Sugars Tongaat Hulett Rajshree Sugars Balrampur Chini Mills Delta Sugar Company Promedio Mediana
País
Ticker
Px (US$)
Perú Perú Perú Perú Perú Brasil Brasil Argentina Sudáfrica Sudáfrica India India Egipto
CASAGRC1 SNJACIC1 CARTAVC1 LAREDOC1 PARAMOC1 CSAN3 SMTO3 LEDE ILV TON RSSC BRCM SUGR
2.9 1.32 3.32 9.57 2.45 16.5 16.94 1.22 2.45 13.89 0.38 0.8 1.7
Acciones en circulación Market Cap Valor Empresa Ventas 2013 (millones) 84 28 21 12 33 407 113 440 461 109 24 245 142
244 38 69 111 82 6,719 1,914 537 1,129 1,512 9 196 242 1,046 219
239 36 66 139 103 11,038 2,389 676 1,436 2,508 101 428 315 1,603 371
168 52 90 96 81 4,125 643 837 1,293 1,693 155 602 162 819 382
EBITDA 2013 34 12 21 26 13 834 265 105 252 307 23 80 37 165 58
Beta Deuda EBITDA 2013 Utilidad Patrimonio EV/EBITDA EV/EBITDA EBITDA/Intereses Ventas LTM EBITDA LTM D/E 2013 (%) Apalancado Neta/EBITDA P/E 2013 (%) Neta 2013 2013 2013 LTM 2013 (βL) 2013 20.0% 23.2% 23.7% 27.0% 16.4% 20.2% 41.2% 12.5% 19.5% 18.1% 14.9% 13.2% 23.0% 0 0
6 0 7 13 -2 297 36 29 101 127 2 30 28 56 28
439 107 146 196 216 5,721 1,039 308 755 1,050 24 243 169 831 229
163 50 93 98 73 3,959 663 1,308 1,558 123 450 204 780 204
20 25 17 241 218 292 35 38 111 37
19.9% 61.6% 47.8% 19.1% 15.3% 65.3% 76.6% 64.7% 33.4% 64.8% 373.0% 133.3% 58.5% 84.4% 63.2%
0.95 0.39 0.55 0.27 0.33 0.46 0.48 0.58 0.46 0.43 0.50 0.46 0.49 0.45 0.46
7.4x 2.8x 3.6x 6.1x 8.0x 15.1x 7.7x 6.2x 8.2x 8.6x 4.7x 6.1x 6.2x 6.9x 6.2x
3.4x 5.7x 6.2x 10.3x 11.0x 7.3x 9.4x 9.5x 11.5x 8.4x 8.3x 8.9x
-0.2x -0.2x -0.2x 1.5x 1.5x 4.1x 1.7x 1.1x 0.9x 2.1x 3.9x 3.6x -0.6x 1.6x 1.5x
6.5x 4.2x 7.5x 10.2x 4.8x 2.0x 7.5x 2.5x 7.8x 4.4x 1.6x 3.0x 12.4x 5.7x 4.6x
42.9x 10.9x 9.0x 60.4x 43.8x 17.2x 17.7x 14.8x 10.4x 6.6x 9.3x 20.0x 12.9x
P/E LTM
EV/Sales 2013
EV/Sales LTM
24.4x 8.5x 7.3x 8.9x 30.8x 20.4x 28.6x 30.2x 14.2x 15.8x 329.7x 9.4x 45.8x 15.8x
1.5x 2.0x 0.9x 1.7x 1.3x 3.1x 3.2x 0.8x 1.6x 1.6x 0.7x 0.8x 1.0x 1.5x 1.4x
1.5x 0.8x 0.7x 1.5x 1.5x 2.9x 3.8x 1.2x 1.2x 1.8x 0.7x 1.0x 1.6x 1.5x 1.3x
Anexo: Histórico de Cotizaciones de Casa Grande en la BVL Casa Grande - Data Acciones
84,234,550 Cantidad
Fecha cotización
Apertura
Cierre
Máxima
Mínima
Promedio
04/11/2013 05/11/2013 06/11/2013 07/11/2013 08/11/2013 11/11/2013 12/11/2013 13/11/2013 14/11/2013 15/11/2013 18/11/2013 19/11/2013 20/11/2013 21/11/2013 22/11/2013 25/11/2013 26/11/2013 27/11/2013 28/11/2013 29/11/2013 02/12/2013 03/12/2013 04/12/2013 05/12/2013 06/12/2013 09/12/2013 10/12/2013 11/12/2013 12/12/2013 13/12/2013 16/12/2013 17/12/2013 18/12/2013 19/12/2013 20/12/2013 23/12/2013 24/12/2013 26/12/2013 27/12/2013 30/12/2013 31/12/2013 02/01/2014 03/01/2014 06/01/2014 07/01/2014 08/01/2014 09/01/2014 10/01/2014 13/01/2014 14/01/2014 15/01/2014 16/01/2014 17/01/2014 20/01/2014 21/01/2014 22/01/2014 23/01/2014 24/01/2014 27/01/2014 28/01/2014 29/01/2014 30/01/2014 31/01/2014 03/02/2014 04/02/2014 05/02/2014 06/02/2014 07/02/2014 10/02/2014 11/02/2014 12/02/2014 13/02/2014 14/02/2014 17/02/2014 18/02/2014 19/02/2014 20/02/2014 21/02/2014 24/02/2014 25/02/2014 26/02/2014
8.7 8.85 8.85 8.85 8.8 8.7 8.6 8.7 8.5 8.5 8.45 8.2 8.25 8.48 8.48 8.48 8.48 8.56 8.56 8.55 8.5 8.2 8.1 8.1 8.1 8.1 7.95 7.9 7.89 7.89 7.89 8 8.12 8.12 8.12 8 8 8 8.04 8 8 8.15 8.15 8.15 8.09 8.09 8 8 7.9 7.9 7.8 7.79 7.6 7.58 7.53 7.4 7.2 7.1 7 6.91 6.9 6.5 6.5 6.27 6 6.1 6.5 6.55 6.81 6.8 6.8 6.74 6.74 6.74 6.74 6.6 6.6 6.6 6.6 6.65 6.65
8.85 8.85 8.85 8.85 8.6 8.6 8.7 8.65 8.5 8.5 8.28 8.25 8.48 8.6 8.48 8.48 8.56 8.56 8.56 8.55 8.5 8.01 8.1 8.1 8.1 8.1 7.9 7.89 7.89 7.89 8.1 8.12 8.12 8.12 8.04 8.04 8 8 8 8 8.15 8.15 8.15 8.15 8.1 8.09 8 7.9 7.9 7.8 7.8 7.7 7.6 7.53 7.5 7.3 7.2 7 6.9 6.9 6.5 6.5 6.27 6 6.1 6.4 6.5 6.8 6.8 6.8 6.74 6.74 6.74 6.74 6.7 6.6 6.6 6.6 6.65 6.65 6.65
8.85 8.85 8.85 8.85 8.8 8.7 8.7 8.7 8.55 8.5 8.45 8.25 8.48 8.61 8.48 8.48 8.56 8.56 8.56 8.55 8.5 8.2 8.1 8.1 8.1 8.1 7.95 7.9 7.89 7.89 8.1 8.12 8.12 8.12 8.12 8.04 8 8 8.04 8 8.15 8.15 8.15 8.15 8.1 8.09 8 8 7.9 7.9 7.8 7.79 7.6 7.58 7.53 7.4 7.2 7.1 7 6.91 6.9 6.5 6.5 6.27 6.1 6.55 6.5 6.8 6.81 6.81 6.8 6.74 6.74 6.74 6.74 6.6 6.6 6.6 6.67 6.65 6.65
8.7 8.85 8.85 8.7 8.6 8.6 8.6 8.65 8.5 8.5 8.28 8.2 8.21 8.48 8.48 8.48 8.48 8.55 8.56 8.55 8.5 8.01 8.1 8.1 8.1 8.1 7.9 7.89 7.89 7.89 7.89 8 8.12 8.12 8.04 8 8 8 8 8 8 8.15 8.15 8.15 8.09 8.09 8 7.8 7.9 7.8 7.8 7.7 7.6 7.53 7.5 7.3 7.2 7 6.9 6.89 6.5 6.5 6.01 6 6 6.1 6.5 6.55 6.8 6.8 6.74 6.74 6.74 6.7 6.7 6.6 6.6 6.6 6.6 6.65 6.65
8.73 8.85 8.85 8.84 8.64 8.65 8.67 8.67 8.5 8.5 8.31 8.22 8.41 8.6 8.48 8.48 8.51 8.56 8.56 8.55 8.5 8.02 8.1 8.1 8.1 8.1 7.92 7.9 7.89 7.89 8.05 8.08 8.12 8.12 8.09 8.04 8 8 8.04 8 8.09 8.15 8.15 8.15 8.09 8.09 8 7.89 7.9 7.81 7.8 7.71 7.6 7.54 7.52 7.32 7.2 7.05 6.97 6.9 6.73 6.5 6.17 6.01 6.06 6.41 6.5 6.69 6.81 6.8 6.79 6.74 6.74 6.74 6.74 6.6 6.6 6.6 6.64 6.65 6.65
Negociada 54,632.00 4,631.00 53,542.00 9,707.00 14,358.00 4,100.00 8,422.00 20,536.00 7,096.00 3,250.00 6,807.00 10,222.00 41,827.00 21,054.00 500 1,100.00 70,794.00 3,757.00 2,800.00 37,958.00 1,000.00 23,660.00 4,500.00 3,085.00 1,599.00 65,720.00 10,890.00 7,262.00 7,321.00 1,750.00 20,497.00 33,123.00 25,898.00 9,783.00 21,923.00 5,890.00 943 900 31,220.00 2,000.00 15,616.00 500 2,000.00 5,860.00 10,496.00 3,000.00 23,020.00 19,947.00 1,500.00 25,000.00 2,000.00 7,480.00 20,980.00 2,650.00 3,350.00 14,293.00 3,800.00 14,360.00 19,463.00 8,390.00 12,120.00 18,540.00 25,769.00 16,340.00 4,500.00 46,990.00 32,422.00 34,242.00 58,392.00 20,599.00 19,053.00 1,000.00 740 17,173.00 12,265.00 750 1,000.00 2,300.00 31,900.00 1,000.00 1,000.00
Monto Negociado (S/. 476,857.41 40,981.35 473,841.70 85,796.45 124,043.58 35,460.00 72,985.20 177,993.30 60,346.73 27,625.00 56,545.22 83,985.40 351,595.86 181,028.74 4,240.00 9,328.00 602,316.20 32,152.92 23,968.00 324,535.90 8,500.00 189,796.60 36,450.00 24,988.50 12,951.90 532,332.00 86,281.00 57,340.90 57,762.69 13,807.50 164,924.00 267,621.30 210,291.76 79,437.96 177,294.92 47,334.28 7,544.00 7,200.00 250,960.00 16,000.00 126,296.15 4,075.00 16,300.00 47,759.00 84,950.14 24,270.00 184,160.00 157,381.30 11,850.00 195,150.00 15,600.00 57,641.00 159,448.00 19,970.81 25,185.00 104,588.90 27,345.00 101,230.00 135,614.70 57,894.10 81,557.00 120,554.00 158,975.10 98,282.50 27,250.00 301,126.00 210,720.00 229,127.54 397,399.02 140,169.19 129,369.40 6,740.00 4,987.60 115,686.02 82,627.50 4,950.00 6,600.00 15,180.00 211,790.00 6,650.00 6,650.00
Cantidad
Fecha cotización
Cierre
04/11/2013 05/11/2013 06/11/2013 07/11/2013 08/11/2013 11/11/2013 12/11/2013 13/11/2013 14/11/2013 15/11/2013 18/11/2013 19/11/2013 20/11/2013 21/11/2013 22/11/2013 25/11/2013 26/11/2013 27/11/2013 28/11/2013 29/11/2013 02/12/2013 03/12/2013 04/12/2013 05/12/2013 06/12/2013 09/12/2013 10/12/2013 11/12/2013 12/12/2013 13/12/2013 16/12/2013 17/12/2013 18/12/2013 19/12/2013 20/12/2013 23/12/2013 24/12/2013 26/12/2013 27/12/2013 30/12/2013 31/12/2013 02/01/2014 03/01/2014 06/01/2014 07/01/2014 08/01/2014 09/01/2014 10/01/2014 13/01/2014 14/01/2014 15/01/2014 16/01/2014 17/01/2014 20/01/2014 21/01/2014 22/01/2014 23/01/2014 24/01/2014 27/01/2014 28/01/2014 29/01/2014 30/01/2014 31/01/2014 03/02/2014 04/02/2014 05/02/2014 06/02/2014 07/02/2014 10/02/2014 11/02/2014 12/02/2014 13/02/2014 14/02/2014 17/02/2014 18/02/2014 19/02/2014 20/02/2014 21/02/2014 24/02/2014 25/02/2014 26/02/2014
8.85 8.85 8.85 8.85 8.6 8.6 8.7 8.65 8.5 8.5 8.28 8.25 8.48 8.6 8.48 8.48 8.56 8.56 8.56 8.55 8.5 8.01 8.1 8.1 8.1 8.1 7.9 7.89 7.89 7.89 8.1 8.12 8.12 8.12 8.04 8.04 8 8 8 8 8.15 8.15 8.15 8.15 8.1 8.09 8 7.9 7.9 7.8 7.8 7.7 7.6 7.53 7.5 7.3 7.2 7 6.9 6.9 6.5 6.5 6.27 6 6.1 6.4 6.5 6.8 6.8 6.8 6.74 6.74 6.74 6.74 6.7 6.6 6.6 6.6 6.65 6.65 6.65
Negociada 54,632.00 4,631.00 53,542.00 9,707.00 14,358.00 4,100.00 8,422.00 20,536.00 7,096.00 3,250.00 6,807.00 10,222.00 41,827.00 21,054.00 500.00 1,100.00 70,794.00 3,757.00 2,800.00 37,958.00 1,000.00 23,660.00 4,500.00 3,085.00 1,599.00 65,720.00 10,890.00 7,262.00 7,321.00 1,750.00 20,497.00 33,123.00 25,898.00 9,783.00 21,923.00 5,890.00 943.00 900.00 31,220.00 2,000.00 15,616.00 500.00 2,000.00 5,860.00 10,496.00 3,000.00 23,020.00 19,947.00 1,500.00 25,000.00 2,000.00 7,480.00 20,980.00 2,650.00 3,350.00 14,293.00 3,800.00 14,360.00 19,463.00 8,390.00 12,120.00 18,540.00 25,769.00 16,340.00 4,500.00 46,990.00 32,422.00 34,242.00 58,392.00 20,599.00 19,053.00 1,000.00 740.00 17,173.00 12,265.00 750.00 1,000.00 2,300.00 31,900.00 1,000.00 1,000.00
Precio Promedio por Accion
7.27
Market Cap (S/. MM)
612
27/02/2014 28/02/2014 03/03/2014 04/03/2014 05/03/2014 06/03/2014 07/03/2014 10/03/2014 11/03/2014 12/03/2014 13/03/2014 14/03/2014 17/03/2014 18/03/2014 19/03/2014 20/03/2014 21/03/2014 24/03/2014 25/03/2014 26/03/2014 27/03/2014 28/03/2014 31/03/2014 01/04/2014 02/04/2014 03/04/2014 04/04/2014 07/04/2014 08/04/2014 09/04/2014 10/04/2014 11/04/2014 14/04/2014
6.6 6.6 6.6 6.2 6.1 6.2 6.15 6.15 6.15 6.2 6 5.95 5.9 6.01 6.05 6 6 6 6 5.53 5.8 5.8 6 6.15 6 6 6.05 6.2 6.4 6.5 6.8 6.7 6.75
6.6 6.6 6.2 6.07 6.2 6.31 6.15 6.1 6.16 6.22 5.95 5.83 6 6.05 6.05 6 6 6 5.53 5.8 5.8 6 6.15 6.15 6 6 6.2 6.3 6.5 6.75 6.8 6.7 6.85
6.6 6.6 6.6 6.2 6.2 6.31 6.15 6.15 6.17 6.22 6 5.95 6 6.05 6.05 6 6 6 6 5.8 5.8 6 6.15 6.15 6 6 6.2 6.3 6.5 6.75 6.8 6.7 6.85
6.6 6.6 6.2 6.07 6.07 6.1 6.15 6.1 6.15 6.2 5.95 5.83 5.9 6 6.04 6 6 6 5.53 5.53 5.8 5.8 6 6.15 5.98 6 6.05 6.2 6.4 6.5 6.8 6.7 6.7
6.59 6.6 6.23 6.14 6.11 6.22 6.15 6.13 6.16 6.2 5.98 5.86 5.99 6.01 6.05 6 6 6 5.68 5.68 5.8 5.91 6.14 6.15 5.99 6 6.16 6.25 6.48 6.73 6.8 6.7 6.78
850 9,700.00 21,855.00 2,072.00 22,835.00 32,360.00 8,000.00 31,200.00 21,841.00 32,150.00 12,835.00 10,660.00 9,677.00 13,890.00 17,021.00 12,280.00 3,009.00 1,300.00 28,010.00 25,787.00 7,285.00 8,163.00 20,347.00 8,000.00 29,698.00 2,450.00 5,700.00 5,950.00 9,950.00 129,027.00 1,302.00 2,370.00 13,714.00
5,600.00 64,020.00 136,201.00 12,716.40 139,414.45 201,142.00 49,160.00 191,130.00 134,448.65 199,376.89 76,732.65 62,500.60 57,972.00 83,515.00 102,970.45 73,680.00 18,054.00 7,800.00 159,139.10 146,576.00 42,253.00 48,236.70 124,954.05 49,200.00 177,772.75 14,700.00 35,125.00 37,210.00 64,460.00 868,857.50 8,853.60 15,870.50 93,017.70
27/02/2014 28/02/2014 03/03/2014 04/03/2014 05/03/2014 06/03/2014 07/03/2014 10/03/2014 11/03/2014 12/03/2014 13/03/2014 14/03/2014 17/03/2014 18/03/2014 19/03/2014 20/03/2014 21/03/2014 24/03/2014 25/03/2014 26/03/2014 27/03/2014 28/03/2014 31/03/2014 01/04/2014 02/04/2014 03/04/2014 04/04/2014 07/04/2014 08/04/2014 09/04/2014 10/04/2014 11/04/2014 14/04/2014
6.6 6.6 6.2 6.07 6.2 6.31 6.15 6.1 6.16 6.22 5.95 5.83 6 6.05 6.05 6 6 6 5.53 5.8 5.8 6 6.15 6.15 6 6 6.2 6.3 6.5 6.75 6.8 6.7 6.85
850.00 9,700.00 21,855.00 2,072.00 22,835.00 32,360.00 8,000.00 31,200.00 21,841.00 32,150.00 12,835.00 10,660.00 9,677.00 13,890.00 17,021.00 12,280.00 3,009.00 1,300.00 28,010.00 25,787.00 7,285.00 8,163.00 20,347.00 8,000.00 29,698.00 2,450.00 5,700.00 5,950.00 9,950.00 129,027.00 1,302.00 2,370.00 13,714.00
Anexo: Serie de Spread EMBI+ Perú y Bonos del Tesoro Americano 10Yr
Día/Mes/Año 1Ene13 2Ene13 3Ene13 4Ene13 7Ene13 8Ene13 9Ene13 10Ene13 11Ene13 14Ene13 15Ene13 16Ene13 17Ene13 18Ene13 21Ene13 22Ene13 23Ene13 24Ene13 25Ene13 28Ene13 29Ene13 30Ene13 31Ene13 1Feb13 4Feb13 5Feb13 6Feb13 7Feb13 8Feb13 11Feb13 12Feb13 13Feb13 14Feb13 15Feb13 18Feb13 19Feb13 20Feb13 21Feb13 22Feb13 25Feb13 26Feb13 27Feb13 28Feb13
Bonos del Spread Tesoro Embi+ Perú EE.UU. - 10 (pbs) años (%) 114 1.7 105 1.8 100 1.8 100 1.9 103 1.9 108 1.9 110 1.9 109 1.9 111 1.9 111 1.9 112 1.8 111 1.8 108 1.8 110 1.9 110 1.9 111 1.8 111 1.8 110 1.8 106 1.9 109 2 112 2 121 2 129 2 126 2 127 2 121 2 123 2 124 2 122 2 124 2 122 2 119 2 122 2 124 2 124 2 121 2 128 2 131 2 132 2 138 2 139 1.9 136 1.9 138 1.9
1Mar13 4Mar13 5Mar13 6Mar13 7Mar13 8Mar13 11Mar13 12Mar13 13Mar13 14Mar13 15Mar13 18Mar13 19Mar13 20Mar13 21Mar13 22Mar13 25Mar13 26Mar13 27Mar13 28Mar13 29Mar13 1Abr13 2Abr13 3Abr13 4Abr13 5Abr13 8Abr13 9Abr13 10Abr13 11Abr13 12Abr13 15Abr13 16Abr13 17Abr13 18Abr13 19Abr13 22Abr13 23Abr13 24Abr13 25Abr13 26Abr13 29Abr13 30Abr13 1May13 2May13 3May13 6May13 7May13 8May13 9May13 10May13
141 139 132 128 125 125 127 131 135 134 144 147 152 149 150 148 147 148 150 147 147 148 142 141 133 136 132 130 126 125 128 130 128 129 131 130 130 129 131 133 137 135 132 129 125 122 122 121 121 116 112
1.9 1.8 1.9 1.9 1.9 2 2 2.1 2 2 2 2 2 1.9 2 1.9 1.9 1.9 1.9 1.8 1.8 1.9 1.8 1.9 1.8 1.8 1.7 1.7 1.8 1.8 1.8 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.6 1.6 1.7 1.8 1.8 1.8 1.8
13May13 14May13 15May13 16May13 17May13 20May13 21May13 22May13 23May13 24May13 27May13 28May13 29May13 30May13 31May13 3Jun13 4Jun13 5Jun13 6Jun13 7Jun13 10Jun13 11Jun13 12Jun13 13Jun13 14Jun13 17Jun13 18Jun13 19Jun13 20Jun13 21Jun13 24Jun13 25Jun13 26Jun13 27Jun13 28Jun13 1Jul13 2Jul13 3Jul13 4Jul13 5Jul13 8Jul13 9Jul13 10Jul13 11Jul13 12Jul13 15Jul13 16Jul13 17Jul13 18Jul13 19Jul13 22Jul13
115 112 120 131 131 135 142 134 146 149 149 156 165 164 159 161 157 162 171 162 165 181 170 162 165 161 172 182 199 191 212 211 206 205 201 192 186 191 191 185 189 189 184 188 180 175 174 166 157 160 156
1.9 1.9 2 1.9 1.9 2 2 1.9 2 2 2 2 2.2 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.2 2.2 2.2 2.2 2.2 2.1 2.2 2.2 2.4 2.4 2.5 2.5 2.6 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.7 2.6 2.6 2.6 2.6 2.6 2.5 2.5 2.5 2.5 2.5
23Jul13 24Jul13 25Jul13 26Jul13 29Jul13 30Jul13 31Jul13 1Ago13 2Ago13 5Ago13 6Ago13 7Ago13 8Ago13 9Ago13 12Ago13 13Ago13 14Ago13 15Ago13 16Ago13 19Ago13 20Ago13 21Ago13 22Ago13 23Ago13 26Ago13 27Ago13 28Ago13 29Ago13 30Ago13 2Sep13 3Sep13 4Sep13 5Sep13 6Sep13 9Sep13 10Sep13 11Sep13 12Sep13 13Sep13 16Sep13 17Sep13 18Sep13 19Sep13 20Sep13 23Sep13 24Sep13
153 157 163 172 175 178 180 179 179 176 179 183 183 186 183 177 181 185 188 193 197 200 196 199 199 208 206 208 207 207 204 202 196 192 188 194 190 191 191 182 178 174 162 163 163 166
2.5 2.5 2.6 2.6 2.6 2.6 2.6 2.6 2.7 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.7 2.7 2.8 2.8 2.9 2.8 2.9 2.9 2.8 2.8 2.7 2.8 2.8 2.8 2.8 2.9 2.9 3 3 2.9 3 2.9 2.9 2.9 2.9 2.8 2.7 2.8 2.7 2.7
25Sep13 26Sep13 27Sep13 30Sep13 1Oct13 2Oct13 3Oct13 4Oct13 7Oct13 8Oct13 9Oct13 10Oct13 11Oct13 14Oct13 15Oct13 16Oct13 17Oct13 18Oct13 21Oct13 22Oct13 23Oct13 24Oct13 25Oct13 28Oct13 29Oct13 30Oct13 31Oct13 1Nov13 4Nov13 5Nov13 6Nov13 7Nov13 8Nov13 11Nov13 12Nov13 13Nov13 14Nov13 15Nov13 18Nov13 19Nov13 20Nov13 21Nov13 22Nov13 25Nov13 26Nov13 27Nov13 28Nov13 29Nov13 2Dic13 3Dic13 4Dic13
169 176 179 184 180 179 180 177 175 172 169 168 166 166 161 165 171 168 169 175 174 175 179 179 178 174 176 176 175 176 177 182 182 182 189 189 182 179 179 179 178 181 183 190 194 193 193 193 193 195 193
2.7 2.6 2.7 2.6 2.6 2.7 2.6 2.6 2.6 2.6 2.6 2.7 2.7 2.7 2.7 2.7 2.7 2.6 2.6 2.6 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.6 2.6 2.6 2.7 2.6 2.6 2.7 2.7 2.8 2.7 2.7 2.7 2.7 2.7 2.8 2.8 2.7 2.7 2.7 2.7 2.7 2.7 2.8 2.8
5Dic13 6Dic13 9Dic13 10Dic13 11Dic13 12Dic13 13Dic13 16Dic13 17Dic13 18Dic13 19Dic13 20Dic13 23Dic13 24Dic13 25Dic13 26Dic13 27Dic13 30Dic13 31Dic13 1Ene14 2Ene14 3Ene14 6Ene14 7Ene14 8Ene14 9Ene14 10Ene14 13Ene14 14Ene14 15Ene14 16Ene14 17Ene14 20Ene14 21Ene14 22Ene14 23Ene14 24Ene14 27Ene14 28Ene14 29Ene14 30Ene14 31Ene14 3Feb14 4Feb14 5Feb14 6Feb14 7Feb14 10Feb14 11Feb14 12Feb14 13Feb14
191 188 187 189 184 177 176 173 177 171 168 173 170 163 163 162 163 166 162 162 165 164 166 168 166 164 170 172 167 163 166 168 168 169 176 190 193 193 194 201 201 202 210 200 191 188 183 182 178 174 178
2.8 2.9 2.9 2.8 2.8 2.9 2.9 2.9 2.9 2.8 2.9 2.9 2.9 2.9 3 3 3 3 3 3 3 3 3 3 2.9 3 3 2.9 2.8 2.9 2.9 2.8 2.8 2.8 2.8 2.9 2.8 2.7 2.7 2.8 2.7 2.7 2.6 2.6 2.6 2.7 2.7 2.7 2.7 2.7 2.8
14Feb14 17Feb14 18Feb14 19Feb14 20Feb14 21Feb14 24Feb14 25Feb14 26Feb14 27Feb14 28Feb14 3Mar14 4Mar14 5Mar14 6Mar14 7Mar14 10Mar14 11Mar14 12Mar14 13Mar14 14Mar14 17Mar14 18Mar14 19Mar14 20Mar14 21Mar14 24Mar14 25Mar14 26Mar14 27Mar14 28Mar14 31Mar14 1Abr14 2Abr14 3Abr14 4Abr14 7Abr14 8Abr14 9Abr14 10Abr14 11Abr14 14Abr14 15Abr14 16Abr14 17Abr14 18Abr14 21Abr14 22Abr14 23Abr14 24Abr14 25Abr14
177 177 178 178 178 177 173 178 182 182 181 184 173 166 164 163 162 162 163 168 168 165 166 164 168 168 173 168 168 168 166 165 155 153 156 156 156 157 155 154 156 154 157 156 148 148 148 149 156 155 157
2.7 2.7 2.7 2.7 2.7 2.8 2.7 2.7 2.7 2.7 2.6 2.6 2.6 2.7 2.7 2.7 2.8 2.8 2.8 2.7 2.6 2.7 2.7 2.7 2.8 2.8 2.7 2.7 2.7 2.7 2.7 2.7 2.7 2.8 2.8 2.8 2.7 2.7 2.7 2.7 2.6 2.6 2.6 2.6 2.6 2.7 2.7 2.7 2.7 2.7 2.7
28Abr14 29Abr14 30Abr14 1May14 2May14 5May14 6May14 7May14 8May14 9May14 12May14 13May14 14May14
153 150 149 152 153 152 148 146 143 143 139 140 143
2.7 2.7 2.7 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.7 2.6
1Ene13 10Ene13 21Ene13 30Ene13 8Feb13 19Feb13 28Feb13 11Mar13 20Mar13 29Mar13 9Abr13 18Abr13 29Abr13 8May13 17May13 28May13 6Jun13 17Jun13 26Jun13 5Jul13 16Jul13 25Jul13 5Ago13 14Ago13 23Ago13 3Sep13 12Sep13 23Sep13 2Oct13 11Oct13 22Oct13 31Oct13 11Nov13 20Nov13 29Nov13 10Dic13 19Dic13 30Dic13 8Ene14 17Ene14 28Ene14 6Feb14 17Feb14 26Feb14 7Mar14 18Mar14 27Mar14 7Abr14 16Abr14 25Abr14 6May14
1Ene13 10Ene13 21Ene13 30Ene13 8Feb13 19Feb13 28Feb13 11Mar13 20Mar13 29Mar13 9Abr13 18Abr13 29Abr13 8May13 17May13 28May13 6Jun13 17Jun13 26Jun13 5Jul13 16Jul13 25Jul13 5Ago13 14Ago13 23Ago13 3Sep13 12Sep13 23Sep13 2Oct13 11Oct13 22Oct13 31Oct13 11Nov13 20Nov13 29Nov13 10Dic13 19Dic13 30Dic13 8Ene14 17Ene14 28Ene14 6Feb14 17Feb14 26Feb14 7Mar14 18Mar14 27Mar14 7Abr14 16Abr14 25Abr14 6May14
Anexo: Gráfico de la Serie de Rendimiento de Bonos del Tesoro Americano - 10Yr 3.1
2.9
3
2.8
2.7
2.6
2.5
2.4
2.3
2.2
2.1
1.9 2
1.8
1.7
1.6
1.5
1.4
1.3
1.2
1.1
1
Anexo: Gráfico de la Serie del Spread EMBI+ Perú
250
200
150
100
50
0
Anexo: Diferencial de Inflación Perú – EEUU
Año 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Perú 3.7% -0.1% 1.5% 2.5% 3.5% 1.5% 1.1% 3.9% 6.7% 0.2% 2.1% 4.7% 2.6% 2.8%
USA 3.40% 2.80% 1.60% 2.30% 2.70% 3.40% 3.20% 2.80% 3.80% -0.40% 1.60% 3.20% 2.10% 1.50%
Diferencial de Inflacion 0.3% -2.9% -0.1% 0.2% 0.8% -1.9% -2.1% 1.1% 2.9% 0.6% 0.5% 1.5% 0.5% 1.3%
Anexo Contingencias Civiles (Casos como Demandado) Expediente
Fecha Inicio
Demandante
Demandado
Materia
Materia: Obligación de dar suma de dinero. Pretensión: Entrega de 909 TN de caña. De acuerdo a la pericia (10.11.06), las 909 TN de caña en planta, tienen un valor de s/. 61,812.00.
Estado del Proceso Principal: Sentencia firme que ampara la demanda desde 2002. Pendiente de resolver Cuaderno Cautelar: solicitud de precsripción de ejecutoria. Secuestro de vehículo. Pedimos variación a embargo en forma de retención de s/. 30,000 en cuentas. Solicitamos variación y entregamos Certificado Judicial por s/. 30,000.00. fue endosado a sus cesionarios Rafael Sánmchez Pérez y Bacilio. Solicitan ampliación de medida a s/. 65,000. Juzgado acepta, y dispone secuestro de vehículo PD-6667 por s/. 30,000.00 (en poder de custodio). el primer certificado fue endosado a sus cesionarios Rafael Sánmchez Pérez y Bacilio
Monto Monto Probabilidad de Temporalidad Fallo Negativo Petitorio (S/.) Provisionado (S/.)
61,812
61,812
Antes del Grupo Gloria
Proceso Principal: Sentencia firme desde el año 2002 que ordena la entrega de aprox. Pendiente que se resuelva nuestro pedido de prescripción de la ejecutoria. Cuaderno Cautelar: Secuestro de de los vehículos PD 8919 (valorado en US$. 16,730), y PD 7557 (valorado en US$. 18,310). Se encuentran en poder del demandante y custodio desde 2002.
350,480
350,480
Antes del Grupo Gloria
Félix Luciano Rodríguez Calderón (cedido a José Casa Grande H. Sánchez Pérez)
Principal: En etapa de ejecución. Sentencia firma desde el 2005 por la que se ordena la entrega de 3115 bolsas de azúcar. En fecha 17/09/2013, la perito grafotécnica presentó Dictamen Pericial a favor de Casa Grande concluyendo en la autenticidad de Mayeria: Obligación de dar bien mueble. Pretensión: Principal: 4,415 bolsas de azúcar rubia pactadas la firma del demandante en el documento de transacción y recibo de pago. Esto es contractualmente. Solo se han reconocido 3,115 bolsas de relevante para que se concluya el proceso por transacción y recibo de pago, azúcar. Cautelar: Embargo en forma de Retención, que fue Cuaderno cautelar: nos requieren la devolución de un Certificado por s/. 250,000.00 sustituido por Certificado de Depósito Judicial de (Devuelto a Casa Grande cuando se canceló la medida cauteñar por conclusión del S/.250,000.00. proceso principal). Hemos opuesto protección patrimonial. Se apeló auto que declara infundada solicitud de suspención de ejecución de pago invocada con Protección Patrimonial.
376,915
376,915
Antes del Grupo Gloria
18/06/2004
CODIGEN - Oscar Sanchez Medina
Casa Grande
Principal: Proceso concluido con transacción celebrada por CODIGEN y Juan Ivan Vojvodich Tocón, en la que se pacta la entrega de 8629 bolsas de azúcar (Valorizadas en S/. 862,900) y la suma de S/. 1´200´000,00 por indemnización. SI SUMAMOS 862,900 MÁS 1'200,000.00 TENEMOS UN TOTAL DE S/. 2´062,900.00. Sin embargo, Materia: Obligación de dar bien mueble. como consideramos que S/. 100.00 por bolsa era muy elevado, se prefirió consignar el Pretensión: Entrega de 8629 bolsas de azúcar e indemnización valor de S/. 92.70. c/u y por ello el monto redondeado de contingencia sería S/. 2´000,000.00. Cautelar: Se concedió medida cautelar de embargo sobre las cuentas bancarias de casa Grande por la suma de S/. 10´000,000.00, la cual se encuentra suspendida por la invocación del Regimen de Protección Patrimonial.
2,000,000
2,000,000
Antes del Grupo Gloria
662-2008
11/07/2008
Palmwood Financial Corp.
Casa Grande
Materia: Cumplimiento de contrato e indemnización. Pretensión: Entrega de 67,423 bolsas de azúcar, y s/. 36’050,428.00 por indemnización
Sentencia de Primera Instancia que declara Fundada en parte la Demanda odenando: - Se entregue el monto de 67,423 bolsas de azúcar, o su equivalente en soles S/.2, 914,046.00 por concepto de indemnización. - Cumplamos con cancelar la suma de S/. 26, 396,778.73 por el concepto de lucro cesante y el 19% por IGV. Se presentó recurso de Apelación oportunamente, se encuentra pediente de resolver
36,050,428
6,000,000
Antes del Grupo Gloria
471-2003
26/06/2003
CODISA
Casa Grande
Materia: Obligación de dar suma de dinero. Pretensión: cumplimiento de contrato por S/. 3´051,996.49
Se realizó diligencia de ratificación pericial. Según lo informado en Juzgado, se ordenará la realización de un debate pericial, luego de lo cual quedará expedito para sentenciar.
3,051,996
0
Antes del Grupo Gloria
034-2011
08/11/2011
Néstor Manuiel Jave Vigo
Casa Grande
Materia: Indemnización. Pretensión: Pago de indemnización por daños y perjuicios causados por inundación de campos de cultivo.
Pendiente de resolver excepciones.
251,450
0
Grupo Gloria
035-2011
08/11/2011
Braulio Hipólito Reyes
Casa Grande
Materia: Indemnización. Pretensión: Pago de indemnización por daños y perjuicios causados por inundación de campos de cultivo.
Pendiente de resolver excepciones.
874,925
0
Grupo Gloria
Casa Grande
6411-2001
21/12/2001
Justino Aredo Vega
6346-2001
21/12/2001
Miguel Ángel Solano Cruzado (cedido a José Casa Grande H. Sánchez Pérez)
Materia: Obligación de dar suma de dinero. Pretensión: Entrega de 3548 TN de caña azúcar valorizada al 2006 en S/. 350,480.00
4230-2002
3920-2004
19/12/2002
50%
096-2006
2006
Oswaldo Chigne Soto
Casa Grande
Sentencia declara fundada en parte la demanda (s/. 43,000 por capital y s/. 12,813.98 Materia: Obligación de dar suma de dinero. Pretensión: Se concele el cobrato ejecutado (s/. 96,813.98) y se por indemnización). Casa Grande interpone recurso de apelación. Pendiente de pague indemnización (s/. 73,000) resolver en segunda instancia.
169,814
118,870
Antes del Grupo Gloria
50%
705,831
141
Grupo Gloria
50%
0
0
Antes del Grupo Gloria
438-2011
08/06/2011
Matilde Alayo vda. de Barreto
Casa Grande
Materia: Indemnización por Daños y Perjuicios. Pretensión: Pago de indemnización por muerte de esposao trabajador de la empresa por la suma de S/. 705,831.00.
027-1992
02/01/1992
Santos Epifania Flores
Casa Grande
Seguridad de herencia respecto de Predios: Noncope, La Fortuna y El Palmillo. Afectación de 90 hecáreas en La Fortuna - Sentencia de 1993, en la que se incluyen dentro de la masa hereditaria predios El Palmillo (predio "Calderón); 250 hectáreas en Noncope (80 superpuestos a predios de propiedad de Casa Grande. Mediante Resolución N°212 del 18/10/13 se ha declarado fundada nuestra solicitud de oposición a la ministración. has predio "Rudecinda Amaya", 80 has predio "Manuel Grados", 90 has "Rastrojo de arroz")
731-2006
13/09/2006
Walter Bueno Castillo
Chavimochic y Casa Grande S.A.A. solicitó intervención excluyento
Prescripción adquisitiva del Predio rústico en San José de Mocán 922 hás
Sentencia que declara infundada la demanda; sin embargo, se ha corroborado con personal de campo que el predio materia de litis no es propiedad de Casa Grande, ni se encuentra en nuetsra posesión, por lo que se trata de un proceso sin implicancias para la empresa.
0
0
Grupo Gloria
373-1998
1998
Jesús Correa Cortez
Casa Grande
Pago de Reserva Cooperativa po por S/. 161,435.9
En fecha 17/09/2012 se dispone la incorporación de la deuda al cronograma de pago aprobado por INDECOPI respecto de la Protección Patrimonial. Dicha disposición se ha a pelado y está pendiente de resolver.
161,436
161,436
Antes del Grupo Gloria
537-1998
20/05/1998
Ricardo Cabellos Goicochea
Casa Grande
Pago de Reserva Cooperativa (Sentencia firme)
Se han presentado cupones de pago encontrados en archivo de la empresa, con el fin de aminorar el monto a pagar. Este escrito está pendiente de resolver.
132,785
132,785
Antes del Grupo Gloria
265-1999
11/03/1999
Dolores Quiroz Chalan
Casa Grande
Reserva Cooperativa (Sentencia firme)
119,160
119,160
Antes del Grupo Gloria
676-1998
1998
Segundo Barba Izquierdo
Casa Grande
Pago de Reserva Cooperativa por Capital: s/. 104,523,05; Intereses: s/. 14,938,74
119,462
119,462
Antes del Grupo Gloria
373-2002
2002
Enrique Arce Alvarez
Casa Grande
Pago de Reserva Cooperativa (Sentencia firme)
152,636
152,636
Antes del Grupo Gloria
173,126
173,126
Antes del Grupo Gloria
155,285
155,285
Antes del Grupo Gloria
93,138
93,138
Pendiente de sanear el proceso.
En fecha 17/09/2012 se dispone la incorporación de la deuda al cronograma de pago aprobado por INDECOPI respecto de la Protección Patrimonial. Dicha disposición se ha a pelado y está pendiente de resolver. En fecha 02/10/2012 se dispone la incorporación de la deuda al cronograma de pago aprobado por INDECOPI respecto de la Protección Patrimonial. Dicha disposición se ha a pelado y está pendiente de resolver. Pendiente de pronunciamiento de juzgado sobre pagos. En fecha 12/09/2012 se dispone la incorporación de la deuda al cronograma de pago aprobado por INDECOPI respecto de la Protección Patrimonial. Dicha disposición se ha a pelado y está pendiente de resolver. En fecha 10/09/2012 se dispone la incorporación de la deuda al cronograma de pago aprobado por INDECOPI respecto de la Protección Patrimonial. Dicha disposición se ha a pelado y está pendiente de resolver. Mediante Resolución de Vista de fecha 22/06/2012 se onfirma Auto que declara infundado el pedido de conclusión del proceso y iordena el pago.
470-1998
13/05/1998
Jose Abanto Barros
Casa Grande
Pago de Reserva Cooperativa (Sentencia firme)
346-1998
1998
Felix Concepcion Quilcat
Casa Grande
Pago de Reserva Cooperativa (Sentencia firme)
372-1998
23/04/1998
Humberto Bautista Faichin
Casa Grande
Pago de Reserva Cooperativa (Sentencia firme)
1067-2007
10/10/2007
Braulio Hipólito Reyes
Casa Grande
Pago de interesespor retencion de CTS y adeudos laborales desde 1996 hasta la fecha de capitalización
Sentencia: Demanda infundada. Se interpuso recurso de apelación
18,000
0
174,735
174,735
085-1998
Manuel Mendo Llanos
Casa Grande
Reserva Cooperativa (Sentencia firme)
En fecha 10/09/2012 se dispone la incorporación de la deuda al cronograma de pago aprobado por INDECOPI respecto de la Protección Patrimonial. Dicha disposición se ha a pelado y está pendiente de resolver.
660-1999
Victor Cortegana Ponciano
Casa Grande
Reserva Cooperativa (Sentencia firme)
Se ha observado liquidación de intereses, lo cua está pendiente de resolver.
92,000
92,000
614-1998
María Sanchez Abanto
Casa Grande
Reserva Cooperativa
Proceso con sentencia desfavorable para la empresa
53,905
53,905
610-1998
Vidal Alarcón Sánchez
Casa Grande
Reserva Cooperativa (Sentencia firme)
Se ha puesto n conocimiento del Juzgado, la aprobación del Cronograma de Pago aprobado por INECOPI respecto de la Reserva cooperativa.
142,006
142,006
152-1997
Amadeo Castillo Rodríguez
Antes del Grupo Gloria Grupo Gloria por deudas anteriores Antes del Grupo Gloria Antes del Grupo Gloria Antes del Grupo Gloria Antes del Grupo Gloria Antes del Grupo Gloria Grupo Gloria por deudas anteriores
Casa Grande
Reserva Cooperativa (Sentencia firme)
Pendiente de realizar liquidación de intereses. Pericia contable.
40,000
40,000
1011-2007
2007
Georgina Tiznado de Crisólogo
Casa Grande
Pago de intereses
Se está efectuando de manera mensual, el pago de la deuda reconocida en el cornograma de INDECOPI.
25,000
25,000
302-1996
04/11/1996
Kolkandina
Casa Grande
Pago de Indeminizacion
Sentencia: Fundada la demanda por US$.17,156,80/ US$. 20,000/ s/. 302 (costas)/ s/. 10,500 (costos)/ US$. 46,033.00 (I)/ s/. 500,00. se declaró protección patrimonial. Se está efectuando de manera mensual, el pago de la deuda reconocida en el cornograma de INDECOPI.
235,915
235,915
Antes del Grupo Gloria
427-2007 (16-2010)
02/07/2007
Mercedes Lopez de Huaman
Casa Grande
Pago de intereses
Sentencia que declara fundada en parte la demanda, y ordena pagar S/. 139.59.
17,104
140
Grupo Gloria por deudas anteriores
53-2011
11/05/2011
Hermógenes Mendoza Alcalde
70-2011
27/05/2011
Hualtibamba Cárdenas Casa Grande
1376-2007
2007
Rafael Villacorta Plasencia
026-2006
2006
Elvia Chavez Vasquez
Casa Grande
Obligación de Dar Suma de Dinero Por pago de dietas de Directorio 97-99 y 00-02
Interponen Apelación de Sentencia que declaraba improcdente la demanda.
119,000
0
Obligación de dar suma por pago de dietas de Directorio 2000- Sentencia que declara improcedente la demanda. Esta sentencia ha sido apelada y está pendiente de resolver. 2002
59,520
0
Casa Grande
Obligación de Dar Suma de Dinero
47,770
0
Casa Grande
Obligación de dar suma de dinero (pago de aportes )
se declaró fundada excepcion de prescpcion. Se revoco en sala
100,000
40,000
383-2008
20/04/2010
AFP INTEGRA
Casa Grande
Obligación de dar suma de dinero
Sentencia que declara fundada contradicción. La demandante ha interpuesto recurso de pelación.
623,280
0
471-2009
13/07/2010
AFP HORIZONTE
Casa Grande
Obligación de dar suma de dinero
pendiente de sentencia
35,703
7,449
1920-2011
10/08/2011
AFP HORIZONTE
Casa Grande
Obligación de dar suma de dinero
sentencia que declara fundada nuestra contradicción, pendiente que apele la parte demandante.
186,424
55,927
561-2008
2008
AFP HORIZONTE
Casa Grande
Obligación de dar suma de dinero
Fundada en parte la demanda. Se ha apelado.
13,870
5,548
pendiente de sentencia
2,041,423
0
200-2011
26/12/2011
PRIMA AFP
Casa Grande
Obligación de dar suma de dinero
184-2011
07/11/2011
PRIMA AFP
Casa Grande
Obligación de dar suma de dinero
Sentencia que declara fundada en parte la demanda y ordena el pago de S/. 1,017.86
2,484
1,018
144-2011
22/12/2011
PRIMA AFP
Casa Grande
Obligación de dar suma de dinero
pendiente de sentencia
2,600
2,600
234-2011
26/12/2011
PRIMA AFP
Casa Grande
Obligación de dar suma de dinero
Sentencia que declara infundada la demanda, ante lo cual AFP ha apelado y está pendiente deresolver.
2,426
559
114-2011
07/10/2011
PRIMA AFP
Casa Grande
Obligación de dar suma de dinero
pendiente de sentencia
5,533
2,213
375-2010
19/10/2011
PRIMA AFP
Casa Grande
Obligación de dar suma de dinero
pendiente de apelación por parte del demandante
97,658
0
183-2010
07/07/2010
PRIMA AFP
Casa Grande
Obligación de dar suma de dinero
pendiente de sentencia
420,635
168,254
449-2009
12/11/2009
PRIMA AFP
Casa Grande
Obligación de dar suma de dinero
pendiente de sentencia
362
362
243-2009
14/07/2009
PRIMA AFP
Casa Grande
Obligación de dar suma de dinero
pendiente de sentencia
5,626
0
514-2009
2009
AFP PROFUTURO
Casa Grande
Obligación de dar suma de dinero
Fundada la demanda
66,899
66,899
438-2009
2009
AFP PROFUTURO
Casa Grande
Obligación de dar suma de dinero
pendiente de sentencia
75,447
37,724
166- 2009
24/08/2009
AFP PROFUTURO
Casa Grande
Obligación de dar suma de dinero
Fundada en parte la demanada. Se interpuso recurso de aplelación
75,528
22,658
325-2009
26/08/2009
AFP PROFUTURO
Casa Grande
Obligación de dar suma de dinero
Fundada la contradicción.
85,819
4,291
32-2011
01/07/2011
AFP PROFUTURO
Casa Grande
Obligación de dar suma de dinero
Fundada la contradicción,
2,329
0
333-2010
18/10/2010
AFP PROFUTURO
Casa Grande
Obligación de dar suma de dinero
pendiente de sentencia
172,602
94,273
95-2011
08/08/2011
PROFUTURO AFP
Casa Grande
Obligación de dar suma de dinero
Sentencia que declara fundada la demanda.
4,280
4,280
Grupo Gloria por deudas anteriores Grupo Gloria por deudas anteriores Grupo Gloria por deudas anteriores Grupo Gloria por deudas anteriores Grupo Gloria por deudas anteriores Grupo Gloria Grupo Gloria por deudas anteriores Grupo Gloria Grupo Gloria por deudas anteriores Grupo Gloria por deudas anteriores Grupo Gloria por deudas anteriores Grupo Gloria por deudas anteriores Grupo Gloria por deudas anteriores Grupo Gloria por deudas anteriores Grupo Gloria por deudas anteriores Grupo Gloria por deudas anteriores Grupo Gloria por deudas anteriores Grupo Gloria por deudas anteriores Grupo Gloria por deudas anteriores Grupo Gloria por deudas anteriores Grupo Gloria por deudas anteriores Grupo Gloria por deudas anteriores Grupo Gloria por deudas anteriores Grupo Gloria por deudas anteriores
40%
50% 50%
50%
50%
50%
40%
50%
50%
50%
Grupo Gloria por deudas anteriores Grupo Gloria por deudas anteriores Grupo Gloria por deudas anteriores Grupo Gloria
239-2011
26/12/2011
PROFUTURO AFP
Casa Grande
Obligación de dar suma de dinero
pendiente de sentencia
177,801
53,340
163-2009
22/07/2009
PROFUTURO AFP
Casa Grande
Obligación de dar suma de dinero
sentencia que declara fundada la contradicción
21,618
0
259-2011
22/12/2011
PROFUTURO AFP
Casa Grande
Obligación de dar suma de dinero
pendiente de sentencia
198,055
79,222
413-2011
2011
PROFUTURO AFP
Casa Grande
Obligación de dar suma de dinero
pendiente de sentencia
46,937
14,081
2793-1985
1985
Herminio Correa Morales
Casa Grande
Interdicto de retener respecto de100 hetáreas en el Predio "El Brujo" o "Veracruz Grande"
Proceso con sentencia contra Casa Grande. Actulamente se encuentra en etapa de ejecución de sentencia (Entrega de Ministración). Se intentó ejecutar la misnitración, pero fue imposible ubicar el predio. Peniente de que 1° Sala Civil resueva apelación de impocedencia de declaración de inejecutablidad de sentencia.
0
0
Antes del Grupo Gloria
1398-2007
12/10/2007
Teófilo Sánchez Vilanueva (extrabajador)
Casa Grande (otros: Carlos Luna Conroy/ María Flores Talavera)
Nulidad de acto jurídico del poder otorgadado a apoderada que lo despidió por violar norma de OP y BC (el GG no podía otorgar poder, solo delegar)// De la carta de despido del 07.03.05
Se relizó la audiencia de pruebas 12/03/2013
0
0
Grupo Gloria
1503-2009
31/11/2009
Mónica Trujillo Fernández
Casa Grande
Nulidad de minuta de ratificación de compraventa de fecha 20.05.2008, de predio en CP Roma
pendiente audiencia de pruebas
0
0
Grupo Gloria
590-2007 (1839-09 en Sala)
28/05/2007
Eduardo Liñan Alcalde
Casa Grande
Anulabilidad de acto jurídico
Confirmaron sentencia que declaraba infundada la demanda en primera Instancia, nos encontramos a la espera de que presente la otra parte Recurso de Casación.
0
0
Grupo Gloria
1414-2006
2006
674-2011
2011
094-2010
2010
686-2011
20/07/2011
52-2011
18/01/2011
Julio César Pérez Vargas Casa Grande
27/03/2012
Walter Huingo Cochayalle
076-2012
Municipalidad / Casa Grande Casa Grande Gerencia de I & T Nelson Gutierrez de la Casa Grande Cruz Francisco Potosí Rafael Casa Grande Cesar Gamarra Ocas
Casa Grande
Impunación de resolucion administrativa Acción de cumplimientocon la finalidad que se reconozca la
Sentencia declaran improcedente la demanda. interponen recurso de casación, se declaró procedente. Pendiente vista de causa Se declaró improcedente la demanda. Se apeló
50% 50%
0
0
Grupo Gloria
0
Grupo Gloria
0
0
Grupo Gloria
Se tiene por presentado nuestro escrito de contestación de demanda.
0
0
Grupo Gloria
0
0
Grupo Gloria
501,793
0
Grupo Gloria
12,031
6,016
Antes del Grupo Gloria
104,625,754
0
Grupo Gloria
2012
FLUVIAL SUR INGENIEROS SRL
Materia: Obligación de dar suma de dinero de S/. 501.793.26
745-2005
17/10/2005
Segundo Silva Rodriguez Casa Grande
272-2012
03/04/2013
280-2010
30/06/2010
66-2012
26/02/2013
314-2011 89-2013 109-2013
19/01/2012 15/03/2013 19/03/2013
194-2013
10/05/2013
265-2012
15/03/2013
3380-2012
24/06/2013
1359-2013
24/06/2013
46-2013
31/07/2013
Ruperto Cordero Fernández Luis Rafael Aguilar Muñoz Juan Cesar Perez Cabrera Profuturo AFP AFP INTEGRA AFP INTEGRA Distribuciones Lstinoamericana S.A.C. FLUVIAL SUR INGENIEROS SRL Tito Javier Nemoto Guarniz José Hilario Sánchez Pérez Santa Rosaura Cruz Altuna
Grupo Gloria Grupo Gloria
0
164-2012
Casa Grande
0
no se contestó: predio no es propiedad de Casa Grande
Jacinto Chávez Alfaro y Casa Grande y otra otros
Indemnizacion por daños y perjuicios
Casa Grande
Indemnizacion por daños y perjuicios
Casa Grande
Obligacion de Dar Suma de Dinero
Hemos contestado demanda y reconvenido. La parte demandante ha solicitado se declare nulidad de la Resolució Nº5 que declara su reveldía respecto de la Reconvensión de Casa Grande. Sentencia de vista que declar nula la sentenci a de primera instancia. Pendiente de emitir nueva sentencia. Hemos presentado tacha y oposición contra medios probatorios
84,120
0
Grupo Gloria
0
Grupo Gloria
0 0 0
Grupo Gloria Grupo Gloria Grupo Gloria
Prescripción Adquisitiva del Predio Sector Campo de Aterrizaje del Centro Poblado Sausal, Distrito de Chicama Obligacion de Dar Suma de Dinero Obligacion de Dar Suma de Dinero Obligacion de Dar Suma de Dinero Obligación de Dar Suma de Dinero (S/. 4600 bolsas de azucar) e Indemnización (S/. 5´851,940.00) Resolución de Contrato e Indemnización por Daños y Perjuicios
Hemos presentado tacha contra medios probatorios, deducido excepciones y contestado la demanda Fundada la contradiccion, la AFP ha apelado Nos hemos apersonado y formulamos contradiccion al mandato ejecutivo Nos hemos apersonado y formulamos contradiccion al mandato ejecutivo
5,851,940
0
Grupo Gloria
Se ha deducido excepción de litis pendencia, cuestión previa y se ha contestao la demanda.
932,041
0
Grupo Gloria
Casa Grande
Indemnizacion por daños y perjuicios
Se ha deducido excepxión de prescripción y se ha contestado la demanda
89,000
0
Grupo Gloria
Casa Grande
Acción de amparo
Se ha contestado la demanda
0
0
Grupo Gloria
Casa Grande
Indemnizacion por daños y perjuicios
Se ha deducido excepción de Falta de Legitimidad para obrar del demanadante y Prescripción. Asimismo, se ha contestado la demanda.
90,000
0
Grupo Gloria
Casa Grande Casa Grande Casa Grande Casa Grande Casa Grande Casa Grande
Se ha contestado la demanda
50%
0
Resolvieron excepciones, NULO todo lo actuado y DESE por conluido el proceso. La sentencia de primera instancia que declara infundada la demanda, ha sido confirmada por sentencia de vista. Pendiente de que la parte demandante interponga recurso de Casación.
24/04/2012
50%
0
Se declare la nulidad de Escritura de Compraventa de predio Interdicto de Recobrar para que se restituya la posesió total del predio ubicado en el Sector Campo de Aterrizaje del Centro Poblado Sausal, Distrito de Chicama - Ascope, con un área Prescripción adquisitiva de dominio respecto de inmueble ubicado en Calle Santiago de Chuco Nº 32, entre las Mz M y N,
14-2012
50% 50%
0
Otorgamiento de Escritura Pública
Nulidad de acto jurídico. Solicita que se declare la nulidad de Resolución que declara fundadas las excepciones deducidas por cartavio. Se ha la transsferencia de inmueble ubicado en Av. Tren. Mz. M deducido excepción de falta de elgitimidad para obrardel demandante y del lLote 16B, Sector 5. demandado, así como excepción de prescripción.Se ha contestado la demanda.
50%
46,937 38,374 4,227
40%
50%
0%
Pago de Frutos o Indemnización (Pretensión acumulada alternativa)
Se formuló cuiestión probatoria y se dedujeron excepciones: Falta de Legitimidad para Obrar del demandante y Prescripción; y se Contestó la demanda.
Luz Quezada de Cordero Casa Grande
Nulidad de Cosa Juzgada Fraudulenta
Se presentaron excepciones y se contestó la demanda.
Casa Grande
Obligación de Dar Suma de Dinero
Se ha contradicho la demanda
Casa Grande
Indemnización por Daños y Perjuicios
Casa Grande
Reintegro de Acciones
Casa Grande
05/06/2014
PROFUTURO AFP American Engineered Products S.A.C. Aristides Rodriguez Castillo Humberto Cristian Linares Saldaña Dennys Cabrera Pinedo
16-2014
04/07/2014
1275-2014 1014-2014
14/07/2014 10/07/2014
1002-2014 695-2014
219-2013
15/07/2013
Edgardo Cantuarias Cepeda
35-2013
26/07/2013
295-2013
31/07/2013
206-2012
23/09/2013
28-2014
18/03/2014
008-2014
05/06/2014
525-2014
Casa Grande
20,309,153
0
Grupo Gloria
0
0
Grupo Gloria
112,079
0
Grupo Gloria
Se contestó demanda
1,561,595
0
Grupo Gloria
Se contestó demanda
0
0
Grupo Gloria
Otorgamiento de Escritura Pública
Se contestó demanda
0
0
Grupo Gloria
Casa Grande
Obligación de Dar Suma de Dinero
Se contestó demanda
25,060
25,060
Grupo Gloria
Gasolinera SAC
Casa Grande
Obligación de Dar Suma de Dinero
Se ha fojado fecha para audiencia única el día 13 de setiembre de 2014 a la 1:30 pm
59,783
59,783
Grupo Gloria
PROFUTURO AFP PROFUTURO AFP
Casa Grande Casa Grande
Obligación de Dar Suma de Dinero Obligación de Dar Suma de Dinero
Pendiente de sentencia Pendiente de sentencia
6,759 1,515
313 0
10/07/2014
PROFUTURO AFP
Casa Grande
Obligación de Dar Suma de Dinero
Pendiente de sentencia
14,604
14,604
19/06/2014
PROFUTURO AFP
Casa Grande
Obligación de Dar Suma de Dinero
Pendiente de sentencia
346,811
0
497-2014
26/05/2014
PRIMA AFP
Casa Grande
Obligación de Dar Suma de Dinero
Pendiente de sentencia
620,669
0
Grupo Gloria Grupo Gloria Antes del Grupo Gloria Antes del Grupo Gloria Antes del Grupo Gloria
318-2011
08/02/2012
AFP INTEGRA
Casa Grande
Obligación de Dar Suma de Dinero
Sentencia de 1° instancia que declara fundada la conttradicción de Casa grande e infundada la demanda
119
0
798-2013
28/01/2014
AFP PRIMA
Casa Grande
Obligación de Dar Suma de Dinero
Sentencia de 1° instancia que declara fundada en parate la contradicción y fundada en parte la demanda, ordenando el paago de S/.5,166.77
115-2013 Total
16/04/2013
AFP HORIZONTE
Casa Grande
Obligación de Dar Suma de Dinero
Pendiente de sentencia
10,535 501,726 186,337,598
5,167 51,285 11,601,871
Grupo Gloria Grupo Gloria Grupo Gloria
Anexo Contingencias Civiles (Casos como Demandante) Expediente
Demandante Demandado
Estado del Proceso Se llevó a cabo audiencia de pruebas sin participacion de Solano Cruzado y Jenny Nuñez, pendiente sentencia. Se concedieron medidas cautealares de retencion de certificados judiciales en el Exp.2593-03. Se emitió sentencia de primera instancia que declara fundada en parte la demanda. Actualmente está pendiente de emitir sentencia de vista. Pendiente de solicitar el desistimiento del proceso
2932-2011
Materia (Descripción del Proceso) Materia: Nulidad de cosa juzgada fraudulenta. Miguel Ángel Solano y Casa Grande Pretensión: Se declare la nulidad de Transaccipon otros Extrajudicial celebrada por Jenny Núñez Rodas y Materia: Demanda declarativa de extinción de obligación. Miguel Ángel Solano Casa Grande Pretensión: Que se declare la validez de la transacción Cruzado y otros celebrada con José Carlos Islas para concluir el Exp. 2593-2003 Casa Grande Rosa Calderón Pardo Materia: Nulidad de cosa juzgada fraudulenta.
3012-2010
Casa Grande
Materia: Nulidad de acto jurídico. Se ha emitido sentencia de primera instancia que Apoderados Judicial e Pretensión: Se declare la nulidad del poder que los declara infundada la demanda. Se ha interpuesto Apoderados Judicial otorgaron o Vojvodich con el cual Ivan Vojvodich recurso de apelación que está pendiente de resoler este celebró la transacción con CODIGEN
928-2011
Casa Grande
Ivan Vojvodich Tocón Materia: Nulidad de cosa juzgada fraudulenta. y otros Pretensión:Se declare la nulidad de Transaccipon
5566-2009
4109-10
Pendiente de emitir sentencia.
588-2004
Casa Grande Shema S.A.C.
Materia: Obligación de dar bien mueble. Pretensión: Restitución de bolsas de azúcar por la suma de S/. 18´396,150.00 (Valor actualizado a 2012 es de S/. 25´374,000.00). Shema reconviene Indemnización por la suma de S/. 18´396,150.00
1089-2011
Casa Grande EAI Laredo S.A.A.
Materia: Indemnización por Daños y Perjuicios. Pretensión: Pago de indemnizació por dasños causados por quema de campos de caña de azúcar.
659-2004
Casa Grande Comercial Linda
Restitución de 149050 bolsas de azúcar. La demandada Presentamos escrito para reiterar designacion de reconvino Devolución de 15950 bolsas de azúcar y peritos pago de indemnización S/. 477,150.00.
1590-2004
Restitución de 31190 bolsas de azúcar. La demandada Pendiente resolver solicitud de prescindencia de Casa Grande Comercial La Muralla reconvino Devolución de 3520 bolsas de azúcar y pago medio probatorio de indemnización S/. 500,000.00.
589-2004
Casa Grande
Restitución de 17050 bolsas de azúcar. La demandada Distribuidora Central reconvino Devolución de 1860 bolsas de azúcar y pago Pendiente de sentencia EIRL de indemnización S/. 300,000.00.
660-2004
Casa Grande
Orlando Gonzales Torres
015-2007
Casa Grande Santos Rojas Perales Exclusion de bienes
1004-2010
Casa Grande
1080-2011 553-2008 995-2007
Restitución de 92170 bolsas de azúcar. El demandado reconvino Devolución de 110924 bolsas de azúcar y pago de indemnización S/. 721,848.00.
Herminio Correa Morales Antonio Castillo Casa Grande Reyniero (zabata)
mejor derecho de posesión sobre la total extensión del predio "veracruz Grande" Reivindicacion de 5.95 has en Barbacoa (Sausal Grande) Tercería de propiedadMz F1 Lt 3 - Urb. 3 de octubre Casa Grande Melva Carbonel Vera Casa Grande Casa Grande Melva Carbonel Vera Otorgamiento de Escritura Pública
Principal: Pendiente de emitir sentencia.
En etapa postulatoria
Pendiente de sentencia Se ha interpuesto recurso de apelación respecto de los cotos fijados en S/. 40,000.00 en etapa postulatoria, son 13 demandados Se llevo a cabo la vista de la causa el 21/03/2013 Sentencia: Demanda fundada. Confirmada por la Sala Se declaró improcedente la solicitud de intervención presentada por el Sr. Guarniz.
1449-2007 1499-2007 77-2005
Casa Grande Americo Duran Ruiz Casa Grande Jose Ponce Flores
Desalojo Desalojo Reivindicacion del inmueble ubicado en Mz. A - Lt. 01 y Casa Grande Luz Cabellos Valdivia 02 Nº 101, Sextor 5-A Utb. Lima Callao - CG
1137-2007
Casa Grande
444-2011
Casa Grande
98-2012 15-2007 248-2013 101-2012
Municipalidad de Casa Grande
Municipalidad de Casa Grande Municipalidad Casa Grande Distrital de Casa Grande Caasa Epifanía Flores Grande Caasa Junta de Usuarios y Grande otros Caasa Ignacio Epifanía y Grande otro
pendiente llevar a cabo audiencia de pruebas pendiente llevar a cabo audiencia de pruebas Sentencia fundada la demanda en dos instancias. Hemos interpuesto recurso de casación.
Impugnacion de resolución administrativaNulidad de la Resolución de Alcaldía N° 0348-2007-MDCG y Resolución Gerencial N° 001-2007-G.PAE y SS.CC.-MDCG Hemos presentado escrito pidiendo ejecucion de que nos impone una multa ambiental de s/. 103,500.00 Sentencia supuestamente por haber cometido la sanción de "crear una situación que ponga en peligro la salud e higiene o seguridad de la población..." Acción de amparo para evitar el cierre de fábrica por no contar con Certificado de INDECI
Se declaró fundada la demanda
Hemos presentado escrito de sustraccion de la Impugnación de Resolución Administrativa que impone materia debido a la firma de un convenio con la multa por S/.1´630,351.70 Municipalidad de Casa Grande Pendiente de resolver nulidad deducida por Casa Proceso de exclusión de predios Grande Amparo por modificación del Modulo de Riego. Mejor Derecho de Propiedad
4077-2013
Caasa Grande
Ivan Vojvodich Tocon Ineficacia de Acto Jiurídico y otros
30-2014
Caasa Grande
Magistrado del 5° Juzgado Civil de Trujillo
Amparo por ejecución de acto lesivo
Pendiente de notificar a los demandados Se admitió a trámite la demanda, y se está notificando a los demandados. Se admitió a trámite demanda. Pendiente señalar fecha de audiencia de pruebas. Se ha solicitado medida Cautelar de no innovar que está pendiente de conceder. Pendiente de admitir a trámite.
Anexo Contingencias Laborales Expediente
Demandante
906-2013 ACOSTA HOLGUIN JAVIER ORLANDO 923-2013 ACUÑA BURGA WILSON 799-2013 ACUÑA FERNANDEZ HUGO VICTOR 506-2014 AGREDA CAMACHO JESUS ROBERTI 509-2013 AGUILAR BOÑON DAVID ALEJANDRO 957-2013 AGUILAR LOPEZ JAMES JUNNIOR 1060-2013 AGUILAR ROJAS JUAN PABLO 1084-2013 ALAYO RAMIREZ FIDEL ESTUARDO 927-2013 ALCALDE RIOS ALEJANDRO 38-2014 ALEJOS CRISPIN BELIZARIO FROILAN 73-2014 ALTAMIRANO LEYVA CESAR DANIEL 61-2014 ALTAMIRANO LEYVA EUGENIO RICARDO 1051-2013 ALVA LA ROSA LUIS ENRIQUE 1022-2013 ALVA MORALES JOSE ESTUARDO 32-2014 ALVARADO MORENO SANTOS JESUS 1077-2013 ALVAREZ HUACCHA CARLOS OLEGARIO 1064-2013 ALVAREZ SANCHEZ JOSE ANTONIO 932-2013 ANDONAIRE DELFIN JULIO GROVER 634-2013 ANTICONA MURGA SEGUNDO CIRO 610-2013 AQUINO CARRERA MOISES 966-2013 ARBILDO ESCOBAL JOSE BELIZARIO 1052-2013 ARGOMEDO BRIONES HUGO VICTOR 295-2014 ARIAS AGUILAR SEGUNDO CRISTOBAL 926-2013 ASENCIO ARIAS VALENTIN FIDEL 1090-2013 BACA GALLARDO VICTOR MANUEL 284-2014 BACON INFANTES JORGE ALFREDO 652-2013 BAEZ CHICLOTE ESLI 1031-2013 BALTODANO LEYVA SEGUNDO ROQUE 1049-2013 BARRERA GALARRETA JOB 924-2013 BAUTISTA LEZAMA JIMME JHONNY 156-2014 BAZAN BENAVIDES WILBER 1039-2013 BAZAURI GOICOCHEA LEONAR 922-2013 BEJARANO SANDOVAL BREITNER BONIECK 282-2010 BENITES CABRERA JUAN WILLIAM 714-2013 BERMEJO ARRIAGA OSCAR EDUARDO 359-2014 BUENO CASTREJON ABEL 1083-2013 CABRERA GALLARDO SEGUNDO JOSE 1002-2013 CABRERA MUÑOZ JULIO CESAR 910-2013 CACHI MORENO LUIS HUMBERTO 453-2013 CARBAJAL LEON FRANCISCO 17-2011-1JMESPCARDENAS LOPEZ JULIO ELMER 82-2014 CARRASCAL HERRERA SEGUNDO ESTEBAN 875-2013 CASANA GARCIA AUGUSTO 3-2014 CASANOTAN ANGULO JOSUE ELISEO 968-2013 CASANOVA PRETELL MILTON CESAR 36-2014 CASTILLO CHIGNE CARLOS MANUEL 628-2013 CASTILLO CONDOR MANUEL ENRIQUE 984-2013 CASTILLO CORDOVA JOSE SANTOS 756-2013 CASTREJON VILLACORTA JUAN 938-2013 CERQUIN HUAMAN JOSE LUIS 877-2013 CERQUIN SANCHEZ JOSE AGUSTIN 627-2013 CHACON BRIONES EDGAR 1050-2013 CHALAN VASQUEZ MARIO 970-2013 CHAPOÑAN VERA WALTER REQUELME 1059-2013 CHAVEZ JULCAMORO PEDRO 1053-2013 CHAVEZ MOSQUEIRA OLIVER GONZALO 1074-2013 CHAVEZ MUÑOZ PAUL OSWALDO 717-2013 CHAVEZ SALAZAR DEYBHIE MITCHELL
Materia
Monto Petitorio (S/.)
DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESPIDO FRAUDULENTO DESPIDO FRAUDULENTO DESPIDO INCAUSADO DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESPIDO FRAUDULENTO DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESPIDO INCAUSADO DESPIDO INCAUSADO DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DEVOLUCION ACTUALIZADA APORTACIONES DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESPIDO FRAUDULENTO DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS PROCESO DE AMPARO DESPIDO FRAUDULENTO DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESPIDO FRAUDULENTO DESPIDO INCAUSADO DESNATURALIZ INTERMEDIACION Y OTROS DESPIDO FRAUDULENTO DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESPIDO INCAUSADO DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESPIDO INCAUSADO
REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION
Monto Provisionado (S/.) 0 0 0 0 800 0 0 0 0 0 0 0 0 0 0 0 0 0 1,500 1,500 0 0 0 0 0 0 1,500 0 0 0 0 0 0 REPOSICION 1,500 0 0 0 0 800 REPOSICION 0 0 0 0 0 1,500 0 1,500 0 0 1,500 0 0 0 0 0 1,500
485-2013 93-2012-AA 619-2013 33-2014 200-2014 24-2014 959-2013 31-2014 1085-2013 883-2013 935-2013 1066-2013 983-2013 194-2013 1005-2013 300-2014 541-2013 993-2013 9-2014 620-2013 105-2012-AA 994-2013 687-2013 509-2014 171-2014 4-2014 977-2013 453-2014 63-2012-AA 413-2014 235-2014 283-2013-AA 183-2012-AA 1008-2013 686-2013 958-2013 118-2013 1048-2013 893-2013 972-2013 537-2013 401-2014 173-2014 914-2013 816-2013 980-2013 201-2014 1056-2013 11-2014 511-2013 794-2013 1063-2013 130-2014 976-2013 1010-2013 907-2013 962-2013 830-2013 1075-2013 908-2013 1088-2013 170-2014 104-2014 156-2012-AA 199-2014 688-2013 301-2014 1001-2013 790-2013 1054-2013 167-2014 343-2014 481-2014
CHICLOTE VILLACORTA JULIO FELIX CHIGNE TRUJILLO BEDER ALEJANDRO CHINCHAYAN VENEGAS VICTOR JUAN CHUQUIMANGO CHALAN SEGUNDO MARCIAL CHUQUIPOMA ZELADA PERCY ENRIQUE CHUQUIRUNA HUACCHA JOSE AUGUSTO COCHAYALLE RUMAY DAVID ELIAS CORCUERA BOLAÑOS WALTER ENRIQUE CORREA CHIQUEZ CARLOS ALBERTO CORTEZ CORREA VICENTE CORTEZ RAMOS EDWIN MOISES COSAVALENTE NECIOSUP LUIS EDUARDO COTRINA ESCOBAL CESAR AUGUSTO COTRINA TORRES JHON HAROLD CRUZADO DE LOS SANTOS CARLOS CRUZATE ROJAS RICHARD WILDER CUEVA VILLANUEVA BENITO SMITH DE LA CRUZ CARDENAS CESAR YVAN DE LA CRUZ CARDENAS EDWAR MANUEL DE LA CRUZ RODRIGUEZ AMERICO FRANCISCO DE LOS SANTOS TRIGOSO FREDDY JAVIER DIAZ HUATAY ALBERTO DIAZ HUATAY GERONIMO DIAZ MARIN JOSE TUPAC AMARU DIAZ ÑONTOL JOSE GILBERTO DIAZ SAGASTEGUI ANDRES ORLANDO ESQUEN VASQUEZ EDUARDO FRANCISCO ESTACIO MANTILLA SEGUNDO ANTONIO FASSHAUER MAGHLORIO LUIS ENRIQUE FERNANDEZ CESPEDES ISAIAS EXEQUIEL FERNANDEZ DIAZ JAIME FLORES CABRERA JOSE ANTONIO FLORES CANSINO MICHEL MOISES FLORES ESQUIVEL IVAN DANY FLORES MONTOYA GUSTAVO ADOLFO FOURE GRANDY JEAN ALFREDO GAGO CHUNGA MIGUEL ANDRES GALARRETA VARGAS FRANCISCO GALLARDO CONTRERAS EDUARDO GALLARDO HUAMAN SEGUNDO CESAR GALVEZ GARCIA FRANCISCO GARCIA PLASENCIA ROQUE DIOMENES GIL MENDO JORGE LUIS GOMEZ LLANOS JOSE GREGORIO GRADOS CHUQUIRUNA SEGUNDO PEDRO GUARNIZ GIL CARLOS GUERRERO AGREDA RAMIRO GONZALO GUEVARA MENDO ORLANDO GUTIERREZ ABANTO LUIS ANTONIO GUTIERREZ BUENO JOSE CARLOS GUTIERREZ FLORES DANIEL GUTIERREZ ÑONTOL SANTOS ALEJANDRO GUZMAN CAMACHO SEGUNDO ABRAHAM HOLGUIN DIAZ CESAR AUGUSTO HUACCHA COTRINA JOSE ROSARIO HUACCHA GOMEZ PABLO HUACCHA SANGAY EDGAR HUACCHA SAUCEDO MAXIMO HUALTIBAMBA FLORES CARLOS ENRIQUE HUALTIBAMBA FLORIAN LUIS ALBERTO HUAMAN CABRERA JORGE LUIS HUAMAN HUARIPATA LUIS ALEJANDRO HUAMAN HUATAY VICTOR HUAMAN MOSTACERO ALEXIS BENITO HUAMAN QUILICHE ENRIQUE HUAMAN QUILICHE RICARDO HUATAY MARTINEZ LUIS ALBERTO HUATAY QUISPE ALDO YOHEL IZQUIERDO CORREA VICTOR RAUL JARA GONZALES JOSE JESUS JIMENEZ OBANDO ELADIO ALEJANDRO JIMENEZ TIRADO FRED EDWAR KAHAN CASTILLO EDUARDO
DESPIDO INCAUSADO PROCESO DE AMPARO DESPIDO INCAUSADO DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESPIDO INCAUSADO DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESPIDO INCAUSADO DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ CONTRATOS PROCESO DE AMPARO DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESPIDO INCAUSADO DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESPIDO INCAUSADO PROCESO DE AMPARO DESPIDO INCAUSADO Y OTROS DESPIDO INCAUSADO PROCESO DE AMPARO PROCESO DE AMPARO DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESPIDO INCAUSADO DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ CONTRATOS Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESPIDO INCAUSADO DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESPIDO FRAUDULENTO DESPIDO INCAUSADO DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS PROCESO DE AMPARO DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESPIDO INCAUSADO DESPIDO FRAUDULENTO
REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION
800 REPOSICION 1,500 0 0 0 0 0 0 0 0 0 0 800 0 0 800 0 0 1,500 REPOSICION 0 1,500 0 0 0 0 0 REPOSICION 0 1,500 800 REPOSICION 0 1,500 0 800 0 0 0 800 0 0 0 0 0 0 0 0 800 1,500 0 0 0 0 0 0 1,500 0 0 0 0 0 REPOSICION 0 1,500 0 0 1,500 0 0 0 0
933-2013 63-2009 47-2014 1062-2013 999-2013 892-2013 905-2013 45-2014 918-2013 136-2014 915-2013 986-2013 483-2013 1007-2013 71-2014 140-2014 942-2013 885-2013 85-2014 465-2013 1041-2013 940-2013 172-2014 791-2013 146-2014-AA 884-2013 928-2013 832-2013 35-2014 1009-2013 1011-2013 1080-2013 1042-2013 723-2013 309-2013-AA 979-2013 912-2013 1-2014 1082-2013 241-2014 1043-2013 1089-2013 904-2013 663-2014 618-2013 787-2013 125-2014 105-2014 792-2013 309-2014 1000-2013 930-2013 43-2014 292-2014 1021-2013 152-2012-AA 971-2013 483-2014 1025-2013 641-2013 79-2014 31-2013 824-2013 709-2013
LARA PRETELL LUIS ALBERTO LEAL JARA MIGUEL ANTONIO LEON RISCO ALFONSO CASIMIRO LEON SOLIZ LUCIO FROILAN LEON TELLO PABLO AGUSTIN LEYVA ALARCON CARLOS ALFONSO LEZCANO SANCHEZ JOSE MANUEL LINARES RAMOS JULIO CESAR LLAJARUNA MALAVER CESAR HUMBERTO LLAMOGA CARDENAS JOEL LLANOS CHAVIL RICARDO PEDRO LLANOS GALARCE ABEL LLAURI VIGO CESAR ESTUARDO LOPEZ ALFARO LUIS JOSE LOZADA GARCIA RAY ELIAS LULICHAC GONZALES ENRIQUE MACHUCA CHAVARRY JUAN CARLOS MALCA GARRIDO SAUL ELI MANTILLA CERQUIN FABIAN SEBASTIAN MARABOTTO MALLQUI JUAN JOSE MARIN VARGAS RICHARD ESTEBAN MARTINEZ BORJAS MIGUEL MARTINEZ URQUIZA ROBERTO CARLOS MEDINA GRACIANO JUAN JULIO MEDINA JIMENEZ JOSE ALBERTO MEDINA OBANDO FRANK LUIS MELENDEZ GAVIDIA CARLOS ARTURO MENDEZ RODRIGUEZ SEGUNDO LUIS MENDO CONCEPCION EDWIN ARMANDO MENDO VILLOSLADA MANUEL MERINO TORRES CARLOS ENRRIQUE MERINO TORRES LUIS ALBERTO MINCHON ZORIA JOSE ABEL MINEZ BAUTISTA JOSE LUCIANO MIRANDA ALVARADO SANTIAGO MIGUEL MIRANDA CAMACHO ALEX RONALD MONCADA ALCANTARA LUIS ALBERTO MONTENEGRO CHOTON RODOLFO WILLIAM MONTOYA REYES SEGUNDO MACARIO MORENO CONDOR WILFREDO MOYA JULCAMORO SEGUNDO VICTOR MUÑOZ BANDA NICOLAS MURGA LOPEZ WILLIAM NAVARRETE SALDIVAR CARLOS ESTEBAN NUREÑA GARCIA RONALD ERNESTO ÑONTOL VERGARA ALEJANDRO WILBERTO ÑONTOL VERGARA GENARO ISIDERIO OCAS BOÑON JOSE OCAS MORILLO JOSE LUIS ORBEGOSO COSAMALON EDGAR WISTON ORDOÑEZ CABRERA LUIS ORTIZ PUENTE ALAN MAURICIO PABLO BAZAN CLINT ROBERT PACHERRES BANCES CALIXTRO PADILLA MARQUEZ MAXIMO RAFAEL PAJARES RAMIREZ MIGUEL ANGEL PAREDES JARA CARLOS ALBERTO PAREDES LEIVA EDGARDO ANDRES PERALTA MARTINEZ ALFRED YVAN PEREZ LOBATO ISAIAS JOEL PONCE CHICLAYO JOSE ROSSEL QUEVEDO GARCIA CARLOS ARMANDO QUILICHE SANCHEZ BENJAMIN JOSE QUIROZ CASTILLO SANTOS ANGEL
DESNATURALIZ INTERMEDIACION Y OTROS DESPIDO FRAUDULENTO DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESPIDO INCAUSADO DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESPIDO INCAUSADO DESNATURALIZ INTERMEDIACION Y OTROS DESPIDO INCAUSADO DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS PROCESO DE AMPARO DESPIDO INCAUSADO DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS PROCESO DE AMPARO DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESPIDO INCAUSADO DESNATURALIZ INTERMEDIACION Y OTROS DESPIDO INCAUSADO DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESPIDO FRAUDULENTO DESNATURALIZ CONTRATOS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESPIDO INCAUSADO DESNATURALIZ CONTRATOS Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS PROCESO DE AMPARO DESNATURALIZ INTERMEDIACION Y OTROS DESPIDO INCAUSADO DESNATURALIZ INTERMEDIACION Y OTROS DESPIDO INCAUSADO DESNATURALIZ INTERMEDIACION Y OTROS DESPIDO FRAUDULENTO DESNATURALIZ INTERMEDIACION Y OTROS DESPIDO FRAUDULENTO
REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION
0 REPOSICION 0 0 0 0 0 0 0 0 0 0 800 0 0 0 0 0 0 800 0 0 0 0 0 1,500 0 1,500 0 0 0 0 0 1,500 0 0 0 1,500 0 1,500 0 0 0 0 1,500 0 0 0 1,500 0 0 0 0 0 0 REPOSICION 0 0 0 1,500 0 1,500 0 1,500
12-2014 10-2014 26-2014 754-2013 91-2014 452-2014 876-2013 165-2014 831-2013 911-2013 586-2013 168-2014 315-2014 969-2013 103-2014 937-2013 1065-2013 989-2013 2-2014 998-2013 774-2013 169-2014 1061-2013 909-2013 635-2013 1079-2013 965-2013 17-2014 929-2013 40-2014 1027-2013 978-2013 164-2014 920-2013 155-2012-AA 890-2013 5-2014 374-2013 422-2013 87-2014 640-2013 995-2013 1091-2013 1044-2013 1076-2013 88-2014 956-2013 689-2013 1078-2013 1081-2013 1016-2013 49-2014 939-2013 1015-2013 711-2013 1003-2013 944-2013 925-2013 841-2013 943-2013 297-2014 75-2014 310-2014 166-2014 41-2014 23-2014 240-2014 1092-2013 945-2013 487-2013
QUIROZ CHUQUIPOMA IVAN DESNATURALIZ INTERMEDIACION Y OTROS QUIROZ TORRES MANUEL DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS QUISPE ALCALDE MIGUEL ANGEL QUISPE ROMERO WILIAM RAUL DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS RAICO BAUTISTA MARCELINO RAMIREZ GONZALEZ ROGER DESPIDO INCAUSADO DESNATURALIZ INTERMEDIACION Y OTROS RAMIREZ TAFUR SEGUNDO RAMOS GAMONAL ELOY DESNATURALIZ INTERMEDIACION Y OTROS RASCO CHAVEZ WILMER DESNATURALIZ INTERMEDIACION Y OTROS REQUELME GONZALES ANDRES DESNATURALIZ INTERMEDIACION Y OTROS DESPIDO INCAUSADO RIOS MOSTACERO RONNIE MILOS RIVASPLATA MANTILLA VICTOR HUMBERTO DESNATURALIZ INTERMEDIACION Y OTROS RIVERA CABRERA ANGEL JAVIER DESPIDO INCAUSADO Y OTROS ROBLES MESTANZA MARCELINO DESNATURALIZ INTERMEDIACION Y OTROS RODRIGUEZ AMBROSIO PASCUAL DESNATURALIZ INTERMEDIACION Y OTROS RODRIGUEZ BLAS MIGUEL ANGEL DESNATURALIZ INTERMEDIACION Y OTROS RODRIGUEZ COLORADO JUAN DESNATURALIZ INTERMEDIACION Y OTROS RONCAL CARDENAS JORGE ALBERTO DESNATURALIZ INTERMEDIACION Y OTROS RONCAL LEON JESUS ANIBAL DESNATURALIZ INTERMEDIACION Y OTROS RUIZ POLIAKOFF JULIO CESAR DESNATURALIZ INTERMEDIACION Y OTROS RUIZ TORRES LUIS ALFREDO DESNATURALIZ INTERMEDIACION Y OTROS SAAVEDRA PERALTA CESAR DESNATURALIZ INTERMEDIACION Y OTROS SALAZAR CHAVEZ JESUS DESNATURALIZ INTERMEDIACION Y OTROS SALAZAR SUCCHIL GILMER ANTONIO DESNATURALIZ INTERMEDIACION Y OTROS SALDAÑA RUMAY ANTONIO DESPIDO INCAUSADO SANCHEZ CHOTON LUIS ALBERTO DESNATURALIZ INTERMEDIACION Y OTROS SANCHEZ CHUQUIPOMA MOISES DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS SANCHEZ MEDINA CARLOS ALBERTO DESNATURALIZ INTERMEDIACION Y OTROS SANCHEZ PAREDES GENARO DESNATURALIZ INTERMEDIACION Y OTROS SANCHEZ QUITO ROLANDO DESNATURALIZ INTERMEDIACION Y OTROS SANCHEZ ROJAS FELIX DESNATURALIZ INTERMEDIACION Y OTROS SANGAY GONZALES SAMUEL DESNATURALIZ INTERMEDIACION Y OTROS SAUCEDO CUEVA SEGUNDO PABLO DESNATURALIZ INTERMEDIACION Y OTROS SILVA CARRANZA SEGUNDO MANUEL PROCESO DE AMPARO SILVA CULQUI JUAN SILVA PORTAL WILDER DESNATURALIZ INTERMEDIACION Y OTROS SILVA TORRES SEGUNDO INOCENTE DESNATURALIZ INTERMEDIACION Y OTROS SINDICATO UNICO DE TRABAJADORES DE CASA GNULIDAD DE DESPIDO DESNATURALIZ INTERMEDIACION Y OTROS SOTO YGLESIAS FREDDY ALMAURO DESNATURALIZ INTERMEDIACION Y OTROS TANG ANTICONA ELVIS LUIS DESNATURALIZ INTERMEDIACION Y OTROS TANTAJULCA MONTENEGRO BILFREDO DESNATURALIZ INTERMEDIACION Y OTROS TELLO CACHAY WILSON TELLO REYES LUIS ALBERTO DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS TELLO RONCAL SEGUNDO VICTOR DESNATURALIZ INTERMEDIACION Y OTROS TELLO SANCHEZ FRANK ADDERLY TELLO SANTILLAN DIEGO RAUL DESNATURALIZ INTERMEDIACION Y OTROS TERRONES AGUILAR JOHNNY WALTER DESNATURALIZ INTERMEDIACION Y OTROS TERRONES ANDRADE LUIS DESPIDO INCAUSADO DESNATURALIZ INTERMEDIACION Y OTROS TERRONES ECHEVARRIA HENRY ALEXANDER DESNATURALIZ INTERMEDIACION Y OTROS TISNADO NUREÑA DENSI ORLANDO TORRES MENDOZA JOSE AQUINO DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS TORRES SIPIRAN LUIS FERMIN DESNATURALIZ INTERMEDIACION Y OTROS TORRES VASQUEZ WILDER SAUL DESNATURALIZ INTERMEDIACION Y OTROS TRUJILLO CUEVA ALEXIS ARTURO URQUIZA CARRANZA FELIPE DESPIDO FRAUDULENTO URTEAGA CORCUERA LUIS ALBERTO DESNATURALIZ INTERMEDIACION Y OTROS DESNATURALIZ INTERMEDIACION Y OTROS VALDEZ ZARE CARLOS VARGAS ALVARADO JOSE JESUS DESNATURALIZ INTERMEDIACION Y OTROS DESPIDO INCAUSADO VARGAS MONCADA MANUEL ANGEL VASQUEZ CABANILLAS JOSE ANTONIO DESNATURALIZ INTERMEDIACION Y OTROS DESPIDO FRAUDULENTO VASQUEZ GARCIA JOSE LUIS VASQUEZ GONZALES ERASMO OMAR DESNATURALIZ INTERMEDIACION Y OTROS VASQUEZ LULICHAC JOHN FELIX DESPIDO INCAUSADO Y OTROS VASQUEZ PEREZ JOSE DEMETRIO DESNATURALIZ INTERMEDIACION Y OTROS VELASQUEZ ABANTO LUIS ALFREDO DESNATURALIZ INTERMEDIACION Y OTROS VELASQUEZ TANTALEAN JHON MARVIN DESNATURALIZ INTERMEDIACION Y OTROS VERA CHOLAN RUDY ARMANDO DESPIDO INCAUSADO VERGARA GONZALES PEDRO JUAN DE DIOS DESNATURALIZ INTERMEDIACION Y OTROS VERTIZ MEDINA CARLOS JESUS DESNATURALIZ INTERMEDIACION Y OTROS VIGO ESPINOZA JOSE ELADIO DESPIDO INCAUSADO
REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION REPOSICION
0 0 0 1,500 0 0 1,500 0 1,500 0 800 0 0 0 0 0 0 0 0 0 1,500 0 0 0 1,500 0 0 0 0 0 0 0 0 0 REPOSICION 1,500 0 0 800 0 1,500 0 0 0 0 0 0 1,500 0 0 0 0 0 0 1,500 0 0 0 1,500 0 0 0 0 0 0 0 1,500 0 0 1,500
0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
93-2014 VILCHEZ SILVA FERNANDO ALEXANDER 97-2014 VILCHEZ SILVA PERCY ANTONIO 1028-2013 VILELA JIMENEZ NILSON 1070-2013 VILLACORTA VALLEJOS NILTON SANTOS 967-2013 VILLAR VACA JUAN MANUEL 18-2014 YESQUEN BUENO CARLOS RAUL 22-2014 YPANAQUE FLORES JOSE CARLOS 21-2014 YUPANQUI VILLAR FRANCISCO LORENZO 981-2013 YZQUIERDO ESCOBAL ROBERT ARMANDO 946-2013 ZAPATA SANCHEZ CARLOS AMERICO 175-2014 PORTILLA BOÑON WILSON 311-2014 LEYVA AROCO LUIS EDUARDO 671-2012 CARMONA CHICLOTE RICARDO JOSE 888-2013 CHAVEZ MINCHAN CARLOS ALBERTO 772-2013 CHINCHAYAN VENEGAS VICTOR JUAN 183-2014 DELGADO PEREZ AMORKS DAYZACU 4874-2013-3JLT VARGAS DIAZ JAVIER HUMBERTO 1034-2013 SALDAÑA GUARNIZ VICTOR HUMBERTO 882-2013 GIL CALDERON JOSE PAUL 714-2012 CORTEZ MUÑOZ JULIO CESAR 639-2012 ALVITRES QUIROZ JESUS ALBERTO 320-2012 CORALES VIDAL ROSA CATALINA 68-2009 POLANCO LINARES MANUEL 544-2012 GONZALES JARA PEDRO 849-2008 JARA MEDINA FORTUNATO EDILBERTO 495-2013-4JPLTrTORRES PALOMINO AURELIANO (SOLIDARIO) 1058-2008 GUARNIZ SANCHEZ YRMA VIOLETA 335-2008 VALIENTE VALIENTE ROSAS 515-2009 ESCOBEDO ROSALES JOSE JACINTO 584-2013 QUEZADA SANCHEZ JULIO RICARDO 219-2013 AGUILAR MUÑOZ LUIS RAFAEL 1002-2007 VARGAS MOSQUEIRA SEGUNDO ROSEL 1457-2008 BUENO POMATANTA LEOPOLDO 464-2009 CARRANZA VILLAR ALEJANDRO 1463-2008 YUPANQUI YUPANQUI HOMERO 1534-2002 SALAZAR MENDOZA MANUEL 145-2010 LEON AMAYA ABEL OLMEDO 1632-2007 GONZALES LINARES EDUARDO FELIPE 1041-2008 CABELLOS DE GUTIERREZ LUZ MARINA 1391-2008 CRUZATE DE HUACCHA ESPERANZA 775-2008 ALDAVE MUÑOZ JORGE LUIS 709-2012 AGUIRRE NORIEGA RUBEN HUGO 598-2009 VELASQUEZ SALDAÑA JUSTO ROBERTO 925-2008 ROCHA AMAYA DANIEL ALBERTO 257-2013 TAFUR TOCAS MARTHA 176-2009 CABRERA TORO LUIS ALBERTO 631-2008 FLORES ZELADA PORFIRIO 30-2014 CHUQUIPOMA MUÑOZ LUIS 810-2013 BARDALES TORRES GERMAN 40-2009 CRUZADO AGUILAR APOSTOL INOCENTE 111-2008 DELGADO MOSQUEIRA ALBERTO 139-2005 LINARES RAMIREZ IGNACIO FELIX 1315-2008 SAAVEDRA DE JAVIER ELOISA GENOVEVA 669-2012 LIMAY HUAMAN SEGUNDO SEBASTIAN 878-2013 JAVE DIAZ HUMBERTO LEONCIO 1140-2001 MUÑOZ VALDERRAMA ANAXIMANDRO 141-2013 SILVA GONZALEZ ANTENOR 61-2010 ASUNCION SARE PEDRO AGUSTO 802-2013 VASQUEZ VARGAS RONALD ENRIQUE 263-2014 RAZURI RAMIREZ MANUEL AUGUSTO 417-2010 DIAZ LOZANO PEDRO PABLO 755-2013 SANCHEZ LEON HUMBERTO AMADO 322-2013 ESTACIO INFANTE JOSE JUAN 966-2009 RONCAL CASTILLO MARIA MARGARITA 774-2009 JUSTINIANO CASANOVA SEGUNDO ALFREDO 1194-2008 POSADA LAZARO MARIA ELENA 253-2013 BRANDT BENITES TITO HAROLD 579-2013 MESTANZA HERAS JULIO 140-2008 SILVA ZELADA OCTAVIANO 589-2013 CORREA CHAMORRO JULIO CESAR 1040-2007 QUILICHE YOPLA PABLO 713-2008 JAVE SAAVEDRA FELIPE EDILBERTO 1070-2003-2JTL MARCELO CUEVA CRISOSTOMO 769-2008 BUENO VIUDA DE CORDOVA TERESA DE JESUS 760-2013 RODRIGUEZ SANCHEZ JULIO ANDRES 51-2014 TERRONES CHUCCHUCAN VICTOR MANUEL
DESNATURALIZ INTERMEDIACION Y OTROS REPOSICION DESNATURALIZ INTERMEDIACION Y OTROS REPOSICION DESNATURALIZ INTERMEDIACION Y OTROS REPOSICION DESNATURALIZ INTERMEDIACION Y OTROS REPOSICION DESNATURALIZ INTERMEDIACION Y OTROS REPOSICION DESPIDO FRAUDULENTO REPOSICION DESNATURALIZ INTERMEDIACION Y OTROS REPOSICION DESNATURALIZ INTERMEDIACION Y OTROS REPOSICION DESNATURALIZ INTERMEDIACION Y OTROS REPOSICION DESNATURALIZ INTERMEDIACION Y OTROS REPOSICION DESNATURALIZ INTERMEDIACION Y REGIMEN LABORAL COM REGIMEN COMUN NULIDAD CLAUSULA CONTRACTUAL NULIDAD INCREMENTO SUELDO POR REEMPLAZO NO PRECISA CESE DE ACTOS DE HOSTILIDAD HOSTILIDAD DESNATURALIZ CONTRATO Y OTROS DESNAT CONTRATO DESNATURALIZ CONTRATO Y OTROS DESNAT CONTRATO INDEMNIZACION POR ACCIDENTE TRABAJO 1,110,000 INDEMNIZAC DAÑOS Y PERJUICIOS POR ENFERMEDAD PROF 500,000 INDEMNIZAC DESPIDO ARBITRARIO Y OTROS 423,376 REINT REMUNERAC Y OTROS 407,952 REINT REMUNERAC Y OTROS 407,532 REINT REMUNERAC Y OTROS 333,949 INDEMNIZACION POR ACCIDENTE TRABAJO 295,152 REINT REMUNERAC Y OTROS 271,983 PAGO CTS Y OTROS 265,424 INDEMNIZACION POR ACCIDENTE TRABAJO 257,000 PAGO CTS Y OTROS 238,512 REINT BENEF SOCIALES Y OTROS 202,987 REINT BENEF SOCIALES Y OTROS 199,039 INDEMNIZAC DAÑOS Y PERJUICIOS Y OTROS 184,400 INDEMNIZAC DAÑOS Y PERJUICIOS Y OTROS 183,397 PAGO BENEF SOCIALES Y OTROS 182,361 REINT BENEF SOCIALES Y OTROS 172,030 REINT BENEF SOCIALES Y OTROS 169,003 REINT BENEF SOCIALES Y OTROS 154,963 REINT BENEF SOCIALES Y OTROS 153,947 REINT BENEF SOCIALES Y OTROS 150,271 REINT REMUNERAC Y OTROS 149,836 PAGO CTS Y OTROS 145,835 PAGO CTS Y OTROS 135,125 REINT REMUNERAC DEVENGADAS Y OTROS 134,719 REINT REMUNERAC Y OTROS 128,119 REINT BENEF SOCIALES Y OTROS 126,344 REINT BENEF SOCIALES Y OTROS 123,225 REINT REMUNERAC Y OTROS 114,072 REINT REMUNERAC Y OTROS 109,483 REINT REMUNERAC Y OTROS 106,196 HOMOLOGACION-REMUNERAC Y OTROS 104,138 REINT REMUNERAC Y OTROS 103,504 REINT BENEF SOCIALES Y OTROS 102,836 REINT REMUNERAC Y OTROS 98,329 INDEMNIZAC DESPIDO ARBITRARIO Y OTROS 95,983 REINT BENEF SOCIALES Y OTROS 94,297 REINT BONIFICACION TIEMPO SERVICIOS 92,452 REINT REMUNERAC Y OTROS 91,072 PAGO BENEF SOCIALES Y OTROS 89,291 REINT REMUNERAC Y OTROS 86,434 REINT REMUNERAC Y OTROS 84,927 HOMOLOGACION 84,893 DESNATURALIZ INTERMEDIACION-REMUNERAC Y OTROS 83,700 REINT BENEF SOCIALES Y OTROS 82,254 REINT REMUNERAC Y OTROS 80,138 REINT REMUNERAC Y OTROS 79,839 REINT REMUNERAC Y OTROS 78,778 REINT REMUNERAC Y OTROS 77,406 REINT BENEF SOCIALES Y OTROS 76,408 REINT REMUNERAC Y OTROS 75,499 REINT REMUNERAC Y OTROS 71,326 REINT BENEF SOCIALES Y OTROS 65,726 DESNATURALIZ CONTRATO-BENEF SOCIALES 64,878 REINT REMUNERAC Y OTROS 64,405 REINT BENEF SOCIALES Y OTROS 62,817 PAGO BENEF SOCIALES Y OTROS 62,699 REINT BENEF SOCIALES Y OTROS 62,611 REINT REMUNERAC Y OTROS 61,421 REINT REMUNERAC Y OTROS 59,737
0 0 0 0 0 0 0 0 0 0 0 0 800 0 1,500 0 110,000 0 75,000 12,300 10,800 45,270 2,000 10,800 10,000 40,000 11,000 8,900 13,600 44,000 800 10,500 14,495 6,530 7,756 0 4,972 12,500 8,000 4,408 142,653 6,465 100,025 10,500 6,450 6,529 9,700 10,550 34,508 12,500 8,900 10,000 9,000 14,000 15,700 10,000 6,465 10,500 1,500 0 6,800 18,491 6,450 5,800 2,800 11,046 6,450 5,650 12,868 4,800 5,800 12,500 5,000 6,700 31,927 33,802
0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 9.9% 0.0% 17.7% 3.0% 2.7% 13.6% 0.7% 4.0% 3.8% 15.6% 4.6% 4.4% 6.8% 23.9% 0.4% 5.8% 8.4% 3.9% 5.0% 0.0% 3.3% 8.3% 5.5% 3.3% 105.9% 5.0% 79.2% 8.5% 5.7% 6.0% 9.1% 10.1% 33.3% 12.2% 9.1% 10.4% 9.5% 15.1% 17.2% 11.2% 7.5% 12.4% 1.8% 0.0% 8.3% 23.1% 8.1% 7.4% 3.6% 14.5% 8.5% 7.9% 19.6% 7.4% 9.0% 19.9% 8.0% 10.7% 52.0% 56.6%
405-2013 804-2013 1506-2009 721-2013 722-2009 477-2010 567-2011 736-2013 288-2011-CH 443-2013 778-2012 789-2013 504-2009 898-2013 120-2013 1086-2013 496-2013 430-2013 741-2013 488-2013 650-2013 896-2013 761-2013 623-2013 106-2014 762-2013 569-2013 617-2013 512-2013 180-2014 829-2011 67-2014 458-2013 897-2009 490-2013 759-2013 44-2013 746-2013 479-2013 497-2013 881-2013 450-2013 629-2013 869-2013 807-2013-CH 358-2013 287-2013 639-2013 788-2013 342-2013 835-2011 834-2013 411-2014 633-2013 437-2009 198-2010 141-2014 211-2012 370-2014-CH 522-2013 95-2013 260-2014 181-2014 447-2013 107-2014 512-2010 411-2013 644-2013 1094-2013
VALLADOLID AGUILAR ASUNCION REINT REMUNERAC Y OTROS NORIEGA CESPEDES VDA. DE JARAMILLO BLANCA INDEMNIZAC DAÑOS Y PERJUICIOS Y OTROS REYES TAFUR CELSO REINT BENEF SOCIALES Y OTROS YNCIL CHALAN MANUEL REINT REMUNERAC Y OTROS TASILLA CHINGAY CASIMIRO REINT BENEF SOCIALES Y OTROS MARTOS PEREZ JULIO REINT INTERESES LEGALES QUIROZ CALDERON ASUNCION REINT REMUNERAC Y OTROS TERRONES VDA. DE BAZAN MARIA JULIA REINT REMUNERAC Y OTROS QUITO CABRERA JOSE ELADIO REINT BENEF SOCIALES Y OTROS NUREÑA DIAZ MARCO ANTONIO REINT BENEF SOCIALES Y OTROS OTINIANO ALCALDE GILBERTO JESUS REINT REMUNERAC Y OTROS VARGAS CHAVEZ NOLBERTO DOMINGO REINT REMUNERAC Y OTROS VILLAR MORENO ANDRES REINT REMUNERAC Y OTROS LLANOS SALAZAR CARLOS ALBERTO HOMOLOGACION-REMUNERAC Y OTROS ROMERO MARTELL ALFONSO HOMOLOGACION-REMUNERAC Y OTROS CALDERON JAVE MARIO OSWALDO REINT REMUNERAC Y OTROS PORTALES SAENZ VICENTE RAUL REINT REMUNERAC Y OTROS MELENDEZ RAMIREZ LUIS ENRIQUE REINT REMUNERAC Y OTROS SANCHEZ VILLANUEVA JUAN OSWALDO HOMOLOGACION-REMUNERAC Y OTROS D'ANGELO SILVA RAUL VIRGILIO REINT REMUNERAC Y OTROS VEGA QUITO ERASMO REINT REMUNERAC Y OTROS SOTO IGLESIAS NICOLAS SEGUNDO REINT REMUNERAC Y OTROS VIGO ROMERO GILBERTO REINT REMUNERAC Y OTROS BEJARANO RODRIGUEZ ALEJANDRO REINT REMUNERAC Y OTROS CABRERA OBANDO JOSE MANUEL REINT REMUNERAC Y OTROS JIMENEZ PASTOR SEGUNDO LORENZO REINT REMUNERAC Y OTROS ALVAREZ BAZAN RICARDO REINT REMUNERAC Y OTROS CIRIACO ALTAMIRANO AQUILES REINT REMUNERAC Y OTROS MARREROS SAAVEDRA ENRIQUE HOMOLOGACION ALZUGARAY LLAURY JESUS ORLANDO REINT REMUNERAC Y OTROS HUALTIBAMBA CARDENAS FRANCISCO PAGO BONOS ALIMENTICIOS Y OTROS GUERRA RODRIGUEZ EDMUNDO DEL CARMEN REINT REMUNERAC Y OTROS HERRERA GUARNIZ GERMAN REINT REMUNERAC Y OTROS GUERRA ACEVEDO FAUSTINO REINT BENEF SOCIALES Y OTROS ROMERO QUISPE SEGUNDO ANIBAL REINT REMUNERAC Y OTROS YEPEZ LEYVA MIGUEL REINT REMUNERAC Y OTROS SALINAS SAAVEDRA JOSE FRANCISCO PAGO BENEF SOCIALES Y OTROS HUINGO CASANA RAFAEL HOMOLOGACION ALVAREZ VASQUEZ SEGUNDO REINT REMUNERAC Y OTROS VIGO TORIBIO SEGUNDO CRISOSTOMO REINT REMUNERAC Y OTROS NUÑEZ ORTEGA MIGUEL ANGEL REINT CTS Y OTROS JOAQUIN VASQUEZ OBDULIO REINT REMUNERAC Y OTROS CHAVEZ IZQUIERDO ARCADIO REINT REMUNERAC Y OTROS ABANTO AGUILAR BENJAMIN REINT REMUNERAC Y OTROS ALFARO CUESTAS LEONCIO REINT REMUNERAC Y OTROS MENDOZA CHAVEZ GONZALO REINT REMUNERAC Y OTROS URIOL SAENZ GABRIEL ALEJANDRO REINT REMUNERAC Y OTROS CUBEÑAS ROJAS HILDEBRANDO ELADIO PAGO CTS Y OTROS ALVAREZ LEON JESUS REINT REMUNERAC Y OTROS JARA NOVOA LUCAS REINT REMUNERAC Y OTROS ROJAS HUATAY MARTIN REINT REMUNERAC Y OTROS QUIROZ GOMEZ JOSE CELSO REINT REMUNERAC Y OTROS VASQUEZ NARRO SEGUNDO JOEL REINT REMUNERAC Y OTROS HUALTIBAMBA CARDENAS GAUDENCIO REINT REMUNERAC Y OTROS BAÑALES RUIZ DE VERGARA ELVA CONSUELO REINT BENEF SOCIALES Y OTROS RODRIGUEZ POLO HUMBERTO GUILLERMO REINT ASIGNAC FAMILIAR Y OTROS GUZMAN CAMACHO VICTOR RAUL REINT REMUNERAC Y OTROS VALVERDE RODRIGUEZ ZOSIMO JORGE PAGO BENEF SOCIALES Y OTROS CABRERA CABANILLAS VICTOR RAUL REINT REMUNERAC Y OTROS VARGAS SANDOVAL IRVING MICHELL INDEMNIZAC DAÑOS Y PERJUICIOS Y OTROS URIOL MEDINA JUAN WILSON REINT REMUNERAC Y OTROS TANTA NOVOA PEDRO FELIX REINT REMUNERAC Y OTROS CRUZADO DE LOS SANTOS ABSALON REINT REMUNERAC Y OTROS VILLANUEVA NICASIO ANDRES REINT REMUNERAC Y OTROS TIRADO ESPINOZA PEDRO FRANCISCO REINT REMUNERAC Y OTROS FLORES CABALLERO ANTONIO REINT REMUNERAC Y OTROS CARHUAJULCA BEREAU FRANCISCO JAVIER REINT REMUNERAC Y OTROS CASTILLO SOLORZANO ENRIQUE REINT REMUNERAC Y OTROS MEDINA CHAVEZ WILFREDO REINT REMUNERAC Y OTROS
59,671 55,833 53,680 50,738 47,793 47,129 45,973 45,381 44,995 44,338 42,807 41,894 41,610 40,745 39,612 39,240 38,284 37,506 37,082 36,964 36,771 36,028 36,000 35,965 35,880 35,189 35,061 34,668 34,298 33,436 32,968 32,712 32,433 32,247 30,638 30,620 30,430 29,219 27,677 27,281 26,669 25,858 25,650 25,435 25,417 25,365 25,276 25,217 25,142 24,963 24,800 24,750 24,554 24,524 24,484 24,068 23,710 23,626 23,359 23,280 23,015 22,958 22,675 22,513 22,290 22,243 21,680 21,550 21,528
6,450 7,500 13,414 3,600 12,099 2,500 20,740 2,300 6,465 8,300 6,465 19,093 7,800 11,000 6,465 15,811 5,650 6,450 1,500 16,000 14,850 12,100 17,383 18,117 8,200 28,864 6,450 6,450 4,800 9,800 10,500 10,411 12,450 6,296 8,500 16,678 6,450 0 17,101 8,610 10,000 4,800 5,650 18,138 4,500 14,450 10,450 3,076 12,683 6,450 10,317 12,059 0 16,962 8,281 8,059 13,061 0 14,913 4,800 6,465 8,361 16,006 12,450 14,810 11,987 6,450 23,350 16,938
10.8% 13.4% 25.0% 7.1% 25.3% 5.3% 45.1% 5.1% 14.4% 18.7% 15.1% 45.6% 18.7% 27.0% 16.3% 40.3% 14.8% 17.2% 4.0% 43.3% 40.4% 33.6% 48.3% 50.4% 22.9% 82.0% 18.4% 18.6% 14.0% 29.3% 31.8% 31.8% 38.4% 19.5% 27.7% 54.5% 21.2% 0.0% 61.8% 31.6% 37.5% 18.6% 22.0% 71.3% 17.7% 57.0% 41.3% 12.2% 50.4% 25.8% 41.6% 48.7% 0.0% 69.2% 33.8% 33.5% 55.1% 0.0% 63.8% 20.6% 28.1% 36.4% 70.6% 55.3% 66.4% 53.9% 29.8% 108.4% 78.7%
796-2013 615-2013 353-2013 435-2013 531-2012 887-2013 341-2007 207-2014 164-2008 547-2013 286-2014-CH 299-2013 340-2010 770-2013 419-2013 563-2013 654-2013 222-2014 748-2012 283-2014 62-2013 224-2014-CH 316-2014-CH 616-2013 448-2013 457-2013 206-2014-CH 551-2013 768-2013 215-2014-CH 254-2013 150-2014-CH 223-2014-CH 214-2014-CH 226-2014-CH 211-2014-CH 142-2014-CH 209-2014-CH 256-2014-CH 210-2014-CH 201-2014-CH 85-2006 222-2014-CH 216-2014-CH 323-2013-CH 746-2013-CH 305-2014-CH 213-2014-CH 355-2014-CH 455-2013 756-2013-CH 217-2014-CH 203-2014-CH 757-2013-CH 235-2014-CH 750-2013-CH 788-2013-CH 304-2014-CH 255-2014-CH 234-2014-CH 735-2013-CH 734-2013-CH 758-2013-CH 736-2013-CH 784-2013-CH 741-2013-CH 766-2013 394-2014-CH 205-2014-CH 118-2014-CH 328-2013-CH 747-2013-CH 212-2014-CH 745-2013-CH 228-2014-CH 301-2014-CH 178-2014-CH 279-2014-CH 737-2013-CH 752-2013-CH 786-2013-CH 732-2013-CH 733-2013-CH 221-2014-CH 229-2014-CH
ZAPATA SANCHEZ IVAN ARNALDO SANCHEZ URBINA SEGUNDO JAIME MERCADO GALLARDO ROLANDO CABELLOS MESTANZA SEGUNDO BALAREZO CABRERA SERVIO TULIO ARAUJO CHACON SEGUNDO LEONARDO IZQUIERDO SANCHEZ AUGUSTO VENTURA BLAS CESAR MUÑOZ CASTILLO MARIA LORENZA TANDAYPAN NARVAEZ JIMMY CERRATO JARA MARCO ANTONIO RODRIGUEZ MUÑOZ JUAN BAUTISTA DIAZ BOCANEGRA DIOMEDES MANUEL CASTILLO ROQUE JORGE HERNAN D'ANGELO SILVA VICTOR HUMBERTO ALVAREZ ALCANTARA JORGE ROMERO PRADO LUIS ARMANDO CHIGNE TAFUR OSCAR ALFONSO RIMACHE SANCHEZ SEGUNDO VICENTE RODRIGUEZ ACOSTA AGAPITO FLORENCIO SANDOVAL BALTAZAR LUCIO GROSS VALDERRAMA SEGUNDO GONZALES MORENO LEONARDO SANTOS ROMERO LEZCANO JORGE LOZADA MOSTACERO GONZALO MINCHON CUBAS ESTERIO JOSE ESPINOZA CHAVEZ JOSE LUIS PEREZ MENDOZA WALTER ROBER AGUILAR CERQUIN EDUARDO ANTONIO CENTURION URQUIZA JUAN HUMBERTO BAZAN JULCA SEGUNDO GROSS VALDERRAMA SEGUNDO FLORES PRETELL MARIANO CHAVEZ GARCIA WILDER FLORES PRETELL MARIANO RODRIGUEZ HUAMAN MATEO JOSE ALVAREZ MENDOZA MANUEL JESUS FERNANDEZ HARO MAXIMO JUAN TERRONES HUACCHA SEGUNDO MORENO ARROYO LORENZO ALFREDO TIZNADO CAPRISTAN JORGE LUIS IZQUIERDO URQUIZO JOSE LEOPOLDO FLORES PRETELL MARIANO CHAVEZ JAVE SEGUNDO MIGUEL HUARIPATA VARGAS FELIPE DE LOS MILAGROS LLAJARUNA CABANILLAS JORGE LUIS BACON JARA JUAN CASTILLO CHIGNE CARLOS MANUEL TORIBIO MEDINA BENITO LINARES TAPIA SEGUNDO JESUS MORALES YSQUIERDO SANTIAGO WILDER ARANA GAITAN HUMBERTO RODOLFO CASTRO SEGURA SANTOS GREGORIO BRIONES ALVAREZ JOSE LUIS ALVA ARANA SANTOS CESAR CHAVEZ BOY JULIO CESAR MENDO BARBA LORENZO CARRION CASTILLO CESAR ALEJANDRO RAMIREZ MANTILLA MAXIMO LEZCANO PAJARES MAURO NUREÑA AZAÑEDO ODAR DENCI ÑONTOL MOSQUEIRA JOSE LUIS PAREDES DIESTRA CESAR ALBERTO POTOSI RAFAEL FRANCISCO ALVAREZ AMAYA ANDRES ROGER ESCOBAL LLAMOGA DIONICIO SIMON CABANILLAS CERNA RICARDO ARRIAGA DIEGUEZ JUAN MANUEL BARDALES BUENO MANUEL ESPINO BAZAN CONSTANTE ADAN AGUILAR SANCHEZ RONALD TOMAS MENDOZA FLORES ARISTIDES SABINO CHUQUIVIGUEL CHUNQUE SANTOS ENRIQUE LEIVA SULLON EDUARDO SOLIS GONZALES EDILBERTO IZQUIERDO MENDO SEGUNDO RONCAL VILLENA CARLOS MANUEL VITTERY CASAS VICTOR AUGUSTO AGUILAR SANCHEZ RONALD TOMAS CORDOVA JULCAMORO JULIO GASPAR IZQUIERDO LLOVERA MARCELINO LEZAMA GUTIERREZ EUSEBIO SANCHEZ MORENO MODESTO BUENO SANTILLAN SILVESTRE CRISOLOGO MOSTACERO SANTOS RAFAEL
INDEMNIZAC DAÑOS Y PERJUICIOS Y OTROS 21,000 REINT AFP Y OTROS 20,911 REINT BENEF SOCIALES Y OTROS 20,887 REINT REMUNERAC Y OTROS 20,863 REINT REMUNERAC Y OTROS 20,764 REINT REMUNERAC Y OTROS 20,601 REINT BENEF SOCIALES Y OTROS 20,446 REINT REMUNERAC Y OTROS 20,339 PAGO GRATIFICACIONES Y OTROS 20,108 INDEMNIZAC DESPIDO ARBITRARIO Y OTROS 20,000 REINT REMUNERAC Y OTROS 19,949 REINT REMUNERAC Y OTROS 19,806 PAGO GRATIFICACIONES Y OTROS 19,659 REINT REMUNERAC Y OTROS 19,592 REINT REMUNERAC Y OTROS 19,534 REINT REMUNERAC Y OTROS 19,506 INDEMNIZAC DAÑOS Y PERJUICIOS Y OTROS 19,100 HOMOLOGACION - REMUNERAC Y OTROS 19,059 REINT REMUNERAC Y OTROS 19,029 REINT REMUNERAC Y OTROS 19,011 REINT REMUNERAC Y OTROS 18,964 REINT REMUNERAC Y OTROS 18,944 REINT REMUNERAC Y OTROS 18,937 REINT REMUNERAC Y OTROS 18,921 REINT REMUNERAC Y OTROS 18,914 REINT REMUNERAC Y OTROS 18,914 REINT REMUNERAC Y OTROS 18,848 REINT REMUNERAC Y OTROS 18,821 INDEMNIZAC DAÑOS Y PERJUICIOS Y OTROS 18,750 REINT AFP Y OTROS 18,720 REINT REMUNERAC Y OTROS 18,695 REINT REMUNERAC Y OTROS 18,662 REINT REMUNERAC Y OTROS 18,618 REINT AFP Y OTROS 18,534 REINT REMUNERAC Y OTROS 18,527 REINT AFP Y OTROS 18,508 REINT REMUNERAC Y OTROS 18,486 REINT AFP Y OTROS 18,471 REINT AFP Y OTROS 18,471 REINT AFP Y OTROS 18,456 REINT REMUNERAC Y OTROS 18,452 REINT INTERES LEGAL Y OTROS 18,446 REINT BONIFICACION TIEMPO SERVICIOS 18,404 REINT AFP Y OTROS 18,369 REINT AFP Y OTROS 18,366 REINT AFP Y OTROS 18,360 REINT AFP Y OTROS 18,343 REINT AFP Y OTROS 18,338 REINT AFP Y OTROS 18,328 INDEMNIZAC DAÑOS Y PERJUICIOS-DESNAT INTERMED LABO 18,273 REINT REMUNERAC Y OTROS 18,267 REINT AFP Y OTROS 18,252 REINT AFP Y OTROS 18,251 REINT AFP Y OTROS 18,200 REINT REMUNERAC Y OTROS 18,181 REINT AFP Y OTROS 18,179 REINT REMUNERAC Y OTROS 18,172 REINT REMUNERAC Y OTROS 18,156 REINT REMUNERAC Y OTROS 18,156 REINT REMUNERAC Y OTROS 18,140 REINT REMUNERAC Y OTROS 18,133 REINT REMUNERAC Y OTROS 18,133 REINT REMUNERAC Y OTROS 18,133 REINT REMUNERAC Y OTROS 18,133 REINT AFP Y OTROS 18,100 REINT AFP Y OTROS 18,100 INDEMNIZAC DAÑOS Y PERJUICIOS Y OTROS 18,048 REINT REMUNERAC Y OTROS 18,024 REINT REMUNERAC Y OTROS 18,022 REINT REMUNERAC Y OTROS 17,970 REINT AFP Y OTROS 17,966 REINT REMUNERAC Y OTROS 17,964 REINT AFP Y OTROS 17,956 REINT AFP Y OTROS 17,934 REINT REMUNERAC Y OTROS 17,920 REINT AFP Y OTROS 17,905 REINT REMUNERAC Y OTROS 17,904 REINT AFP Y OTROS 17,904 REINT REMUNERAC Y OTROS 17,790 REINT REMUNERAC Y OTROS 17,790 REINT REMUNERAC Y OTROS 17,790 REINT REMUNERAC Y OTROS 17,743 REINT REMUNERAC Y OTROS 17,743 REINT REMUNERAC Y OTROS 17,675 REINT REMUNERAC Y OTROS 17,667
19,500 4,303 6,450 6,450 5,000 11,500 7,800 8,800 12,500 800 0 12,450 3,300 6,038 6,450 6,450 13,500 5,700 8,500 9,851 6,465 1,913 13,703 6,450 6,450 7,600 689 6,450 7,500 3,722 6,650 2,300 1,800 991 1,800 2,662 2,300 3,391 4,872 3,126 1,984 7,800 10,500 849 3,500 1,300 1,800 1,155 13,246 800 1,478 2,419 3,362 1,300 5,046 1,300 1,300 13,117 3,269 14,107 1,958 1,957 2,166 1,300 1,300 1,300 11,755 13,018 0 10,026 3,500 1,958 700 1,300 0 4,093 13,545 16,358 1,572 1,958 1,958 1,300 2,102 14,199 0
92.9% 20.6% 30.9% 30.9% 24.1% 55.8% 38.1% 43.3% 62.2% 4.0% 0.0% 62.9% 16.8% 30.8% 33.0% 33.1% 70.7% 29.9% 44.7% 51.8% 34.1% 10.1% 72.4% 34.1% 34.1% 40.2% 3.7% 34.3% 40.0% 19.9% 35.6% 12.3% 9.7% 5.3% 9.7% 14.4% 12.4% 18.4% 26.4% 16.9% 10.8% 42.3% 57.1% 4.6% 19.1% 7.1% 9.8% 6.3% 72.3% 4.4% 8.1% 13.3% 18.4% 7.1% 27.8% 7.2% 7.2% 72.2% 18.0% 77.8% 10.8% 10.8% 11.9% 7.2% 7.2% 7.2% 65.1% 72.2% 0.0% 55.8% 19.5% 10.9% 3.9% 7.2% 0.0% 22.9% 75.7% 91.4% 8.8% 11.0% 11.0% 7.3% 11.8% 80.3% 0.0%
705-2013-CH 744-2013-CH 738-2013-CH 753-2013-CH 155-2014-CH 467-2013 640-2013-CH 151-2012-CH 787-2013-CH 742-2013-CH 147-2014-CH 454-2013 77-2014-CH 644-2013-CH 749-2013-CH 387-2014-CH 204-2014-CH 227-2014-CH 740-2013-CH 341-2014-CH 148-2014-CH 761-2013-CH 751-2013-CH 149-2014-CH 240-2014-CH 781-2013-CH 232-2014-CH 76-2014-CH 225-2014-CH 261-2014-CH 252-2014-CH 250-2014-CH 241-2014-CH 425-2013-CH 806-2013-CH 686-2002 288-2014-CH 230-2011-CH 489-2013-CH 564-2013-CH 375-2014-CH 230-2014-CH 653-2013-CH 395-2014-CH 236-2014-CH 647-2013-CH 568-2013-CH 535-2013-CH 729-2013-CH 1317-2007 390-2014-CH 654-2013-CH 284-2014-CH 285-2014-CH 351-2014-CH 517-2013-CH 542-2013-CH 202-2014-CH 424-2014-CH 231-2014-CH 143-2014-CH 325-2014-CH 606-2013-CH 789-2013-CH 289-2014-CH 70-2014-CH 783-2013-CH 291-2014-CH 794-2013-CH 166-2014-CH 472-2013-CH 265-2014-CH 452-2013 334-2014-CH 419-2013-CH 200-2014-CH 53-2014-CH 723-2013-CH 333-2014-CH 791-2013-CH 179-2014-CH
SANCHEZ TAFUR JOSE CRUZ REINT REMUNERAC Y OTROS 17,608 HUARIPATA VARGAS FELIPE DE LOS MILAGROS REINT REMUNERAC Y OTROS 17,456 SORIA CRISOLOGO MANUEL JESUS REINT REMUNERAC Y OTROS 17,456 CUSQUISIVAN CACHI SEGUNDO PORFIRIO REINT AFP Y OTROS 17,421 LEYVA GUTIERREZ GENARO JOSE REINT REMUNERAC Y OTROS 17,400 DESNATURALIZ INTERMEDIACION-INDEMNIZAC DAÑOS Y PER17,250 SANCHEZ CHAUPE MIGUEL ANGEL MORALES GUTIERREZ ASUNCION REINT REMUNERAC Y OTROS 17,244 CORCUERA GONZALES ANDRES EUSEBIO REINT BENEF SOCIALES Y OTROS 17,235 ALCANTARA YENGLE PEDRO PABLO REINT AFP Y OTROS 17,225 ELORREAGA ALCALDE ERICO ANTONIO REINT AFP Y OTROS 17,225 PELAEZ GUZMAN PEDRO REINT REMUNERAC Y OTROS 17,151 DESNATURALIZ INTERMEDIACION - INDEMNIZAC DAÑOS Y PE17,050 TUCTO PAICO PABLO JESUS BARRIGA GAMARRA LUCIANO UBALDO REINT REMUNERAC Y OTROS 17,016 TRIGOSO VISCONDE NAZARIO REINT REMUNERAC Y OTROS 16,899 BAZAURI GOICOCHEA LUIS WILBERTO REINT REMUNERAC Y OTROS 16,820 ALFARO GIL MARCO POLO REINT REMUNERAC Y OTROS 16,693 SORALUZ MORALES CESAR ELADIO REINT REMUNERAC Y OTROS 16,684 SOLIS GONZALES EDILBERTO REINT REMUNERAC Y OTROS 16,667 CARDENAS HUALTIBAMBA VICTOR REINT REMUNERAC Y OTROS 16,620 MENDOZA MARTOS CESAR AUGUSTO REINT REMUNERAC Y OTROS 16,555 PELAEZ GUZMAN PEDRO REINT REMUNERAC Y OTROS 16,411 BERMEJO ARRIAGA LUCAS OSWALDO REINT REMUNERAC Y OTROS 16,338 CORCUERA BENITES SEGUNDO VICTOR REINT AFP Y OTROS 16,232 GROSS VALDERRAMA SEGUNDO REINT REMUNERAC Y OTROS 16,194 CHUAN MUÑOZ WILSON EDILBERTO REINT INTERESES CTS 16,186 HUACCHA VILLAR CASIMIRO REINT REMUNERAC Y OTROS 16,167 CRISOLOGO MOSTACERO SANTOS RAFAEL REINT REMUNERAC Y OTROS 16,047 BARRIGA GAMARRA LUCIANO UBALDO REINT REMUNERAC Y OTROS 16,003 GROSS VALDERRAMA SEGUNDO REINT REMUNERAC Y OTROS 15,980 PRETELL CASTILLO JULIO SERGIO REINT INTERESES CTS 15,901 VILLARREAL ALVITRES VICTOR MANUEL REINT REMUNERAC Y OTROS 15,743 AGUILAR SANCHEZ RONALD TOMAS REINT REMUNERAC Y OTROS 15,669 LEIVA CORNELIO SIXTO REINT REMUNERAC Y OTROS 15,628 HUACCHA VILLAR SEGUNDO SACRAMENTO REINT INTERESES CTS Y OTROS 15,623 ALFARO CUESTAS LEONCIO REINT REMUNERAC Y OTROS 15,604 BALTODANO CALDERON EUSEBIO REINT INTERESES LEGALES 15,581 QUISPE SANCHEZ ANASTACIO REINT REMUNERAC Y OTROS 15,428 CABRERA DIAZ FELISARDO REINT REMUNERAC Y OTROS 15,356 CHOTON PEREZ LUCIO FRANCISCO REINT INTERESES CTS Y OTROS 15,336 BLAS PAREDES OCTAVIO REINT INTERESES CTS 15,296 PIZARRO ALVARADO ORFELINDA REINT REMUNERAC Y OTROS 15,189 CRISOLOGO MOSTACERO SANTOS RAFAEL REINT REMUNERAC Y OTROS 15,112 CRUZADO BRIONES VICTOR ALFREDO REINT REMUNERAC Y OTROS 15,092 ARRIAGA DIEGUEZ JUAN MANUEL REINT REMUNERAC Y OTROS 14,948 HONORES VASQUEZ LUCIANO REINT REMUNERAC Y OTROS 14,915 SANCHEZ TAFUR JOSE CRUZ REINT REMUNERAC Y OTROS 14,827 HUAMAN QUILICHE EUSEBIO REINT INTERESES CTS 14,805 LESCANO CASTAÑEDA EDUARDO ENRIQUE REINT REMUNERAC Y OTROS 14,686 PORTILLA SANDOVAL DAVID ISMAEL REINT REMUNERAC Y OTROS 14,584 RAMIREZ CASTILLO DE GUTIERREZ TERESA ANTONREINT GRATIFICACIONES Y OTROS 14,427 CABELLOS MESTANZA SEGUNDO REINT REMUNERAC Y OTROS 14,278 CHAVARRY LIÑAN JAVIER REINT REMUNERAC Y OTROS 14,271 ROMERO ALVA WILSON REINT REMUNERAC Y OTROS 14,085 ROMERO ALVA WILSON REINT REMUNERAC Y OTROS 14,052 ROJAS MEDINA AURELIO REINT REMUNERAC Y OTROS 14,010 ACUÑA HOLGUIN MIGUEL ERASMO REINT INTERESES CTS Y OTROS 14,007 CORTEZ HUARIPATA SEGUNDO REINT REMUNERAC Y OTROS 13,941 SILVA MORENO VICTOR REINT REMUNERAC Y OTROS 13,844 ALAYO HUAMAN ROGELIO REINT INTERESES CTS 13,825 CRISOLOGO MOSTACERO SANTOS RAFAEL REINT REMUNERAC Y OTROS 13,747 ALVAREZ MENDOZA MANUEL JESUS REINT REMUNERAC Y OTROS 13,719 LEON CASTILLO CONSTANTE LEODINDO REINT GRATIFICACIONES Y OTROS 13,699 MEREJILDO SAGASTIGUE MARINO REINT INTERESES CTS 13,670 ZAVALA BARRETO PEDRO AGAPITO REINT GRATIFICACIONES Y OTROS 13,666 ARBULU FIGUEROA LUIS ALBERTO REINT REMUNERAC Y OTROS 13,661 CARDENAS RUIZ MANUEL JESUS REINT REMUNERAC Y OTROS 13,661 FLORES SALVATIERRA DE MONZON JUANA FELICI REINT REMUNERAC Y OTROS 13,661 GARCIA JULCA MARIANO ESTEBAN REINT REMUNERAC Y OTROS 13,661 OLIVA SEBASTIAN HITALO ORLANDO REINT REMUNERAC Y OTROS 13,661 CABRERA CABRERA OSWALDO REINT REMUNERAC Y OTROS 13,623 CHAVEZ VASQUEZ GONZALO EDUARDO REINT REMUNERAC Y OTROS 13,598 GARCIA JARAMILLO GREGORIO REINT REMUNERAC Y OTROS 13,598 CUSQUISIBAN QUISPE GONZALO REINT REMUNERAC Y OTROS 13,570 RONCAL VILLENA RAMIRO TEOFILO REINT REMUNERAC Y OTROS 13,518 OCAS ASTO SEGUNDO CIRILO REINT REMUNERAC Y OTROS 13,496 JAVIER PLASENCIA RAUL PERCI REINT REMUNERAC Y OTROS 13,478 CERRATO JARA MARCO ANTONIO REINT REMUNERAC Y OTROS 13,408 QUISPE MENDO AMERICO REINT GRATIFICACIONES Y OTROS 13,380 VARGAS MOSQUEIRA SEGUNDO ROSEL REINT REMUNERAC Y OTROS 13,242 AVILA SANCHEZ GREGORIO REINT REMUNERAC Y OTROS 13,220 RODRIGUEZ ÑAMOC MANUEL ENCARNACION REINT REMUNERAC Y OTROS 13,220
1,625 2,102 1,300 1,300 12,637 800 5,650 500 1,300 1,300 8,315 800 2,300 8,082 1,221 12,020 0 975 3,257 11,916 568 12,758 1,300 2,150 10,757 12,598 0 2,150 11,483 13,511 1,800 0 0 4,000 5,749 0 6,000 7,654 4,000 4,000 13,363 0 0 10,711 8,605 1,955 4,000 5,650 3,000 5,000 9,709 0 10,064 13,079 10,007 4,000 5,650 0 7,275 0 2,039 1,800 4,000 2,700 9,534 9,003 8,984 9,029 9,003 7,645 7,900 9,029 4,800 9,639 4,500 0 1,866 6,463 3,995 5,953 9,027
9.2% 12.0% 7.4% 7.5% 72.6% 4.6% 32.8% 2.9% 7.5% 7.5% 48.5% 4.7% 13.5% 47.8% 7.3% 72.0% 0.0% 5.9% 19.6% 72.0% 3.5% 78.1% 8.0% 13.3% 66.5% 77.9% 0.0% 13.4% 71.9% 85.0% 11.4% 0.0% 0.0% 25.6% 36.8% 0.0% 38.9% 49.8% 26.1% 26.2% 88.0% 0.0% 0.0% 71.7% 57.7% 13.2% 27.0% 38.5% 20.6% 34.7% 68.0% 0.0% 71.5% 93.1% 71.4% 28.6% 40.5% 0.0% 52.6% 0.0% 14.9% 13.1% 29.3% 19.8% 69.8% 65.9% 65.8% 66.1% 65.9% 56.1% 58.1% 66.4% 35.4% 71.3% 33.3% 0.0% 13.9% 48.3% 30.2% 45.0% 68.3%
353-2002 396-2014-CH 772-2013-CH 177-2014-CH 173-2010 67-2014-CH 676-2013-CH 481-2013-CH 323-2011-CH 320-2014-CH 378-2014-CH 306-2014-CH 598-2013-CH 797-2013-CH 133-2014-CH 401-2014-CH 367-2014-CH 675-2013-CH 523-2013-CH 581-2013-CH 218-2014-CH 272-2014-CH 397-2014-CH 360-2014-CH 775-2013-CH 398-2014-CH 739-2013-CH 278-2014-CH 307-2014-CH 68-2014-CH 498-2013-CH 128-2014-CH 274-2014-CH 55-2014-CH 302-2014-CH 423-2013-CH 358-2014-CH 270-2014-CH 546-2013-CH 64-2014-CH 426-2013-CH 242-2014-CH 256-2013-CH 65-2014-CH 264-2014-CH 37-2014-CH 605-2013-CH 253-2014-CH 425-2014-CH 490-2013-CH 332-2014-CH 518-2013-CH 672-2006 314-2013-CH 195-2014-CH 399-2014-CH 400-2014-CH 500-2013-CH 8-2014-CH 520-2013-CH 293-2014-CH 136-2014-CH 701-2013-CH 317-2013-CH 673-2013-CH 182-2014-CH 219-2014-CH 778-2013-CH 476-2013-CH 73-2014-CH 181-2014-CH 779-2013-CH 760-2013-CH 522-2013-CH 350-2014-CH 501-2013-CH 303-2014-CH 582-2013-CH 258-2014-CH
CUEVA VALVERDE FELICIANO TIMOTEO PAGO REMUNERAC Y OTROS BECERRA ANGULO AMERICO ANTONIO REINT REMUNERAC Y OTROS VILLANUEVA SANCHEZ ENRIQUE JAVIER REINT INTERESES CTS SANCHEZ CABELLOS WILSON MERCEDES REINT REMUNERAC Y OTROS QUISPE ESQUIVEL SEGUNDO ALEJANDRO REINT BENEF SOCIALES Y OTROS ACOSTA ALVARADO SANTOS TOMAS REINT REMUNERAC Y OTROS OCAS TUCTO HIPOLITO REINT REMUNERAC Y OTROS RUIZ RAMIREZ MANUEL PORFIRIO REINT REMUNERAC Y OTROS ORRILLO NUÑEZ MARIA LUCILA REINT BENEF SOCIALES Y OTROS ROMERO VARGAS MELQUIADES REINT GRATIFICACIONES Y OTROS ALCALDE SAGASTEGUI SEGUNDO ALEJANDRO REINT REMUNERAC Y OTROS ESTACIO RAMIREZ JOSE BALTAZAR REINT REMUNERAC Y OTROS CHALAN VASQUEZ JOSE ADOLFO REINT REMUNERAC Y OTROS CHUQUIRUNA LEON JUSTO REINT REMUNERAC Y OTROS RODRIGUEZ CERNA JUAN REINT INTERESES CTS ASCOY ALVAREZ SEGUNDO JOSE REINT ASIGNAC FAMILIAR Y OTROS ASENCIO CUEVA ADRIANO REINT REMUNERAC Y OTROS ROJAS CADENILLAS ANTONIO REINT REMUNERAC Y OTROS HIPOLITO LEYTON VICTOR MIGUEL REINT REMUNERAC Y OTROS COLORADO MANTILLA JOSE RAMOS REINT REMUNERAC Y OTROS SALDAÑA VASQUEZ AMADO REINT REMUNERAC Y OTROS BUENO SANTILLAN SILVESTRE REINT GRATIFICACIONES Y OTROS FLORES OLIVARES GUILLERMO EDUARDO REINT REMUNERAC Y OTROS PAREDES RODRIGUEZ VICTOR MODESTO REINT REMUNERAC Y OTROS PONGO MENDO JAVIER ALEJANDRO REINT INTERESES CTS DE LA CRUZ LEON AMADEO DEMETRIO REINT REMUNERAC Y OTROS VALDERRAMA CISNEROS AMERICO REINT REMUNERAC Y OTROS ZAPATA MENDO JULIO ANTENOR REINT REMUNERAC Y OTROS NUREÑA PLASENCIA ROSAS GABRIEL REINT REMUNERAC Y OTROS CONTRERAS GOMEZ ADOLFO EMILIO REINT INTERESES CTS PAJARES URBINA JUANITO REINT INTERESES CTS Y OTROS ROJAS CADENILLAS JAVIER FELIPE REINT GRATIFICACIONES Y OTROS CORDOVA MERCADO SEGUNDO HECTOR REINT GRATIFICACIONES Y OTROS ELGUERA SEVILLANO VICTOR ALFONSO REINT REMUNERAC Y OTROS ROMERO VARGAS MELQUIADES REINT INTERESES CTS SANCHEZ CHAVEZ LEOPOLDO REINT INTERESES CTS Y OTROS MEREJILDO SAGASTIGUE MARINO REINT GRATIFICACIONES Y OTROS PRETELL CASTILLO JULIO SERGIO REINT REMUNERAC Y OTROS SANCHEZ SALDAÑA ESTEBAN REINT REMUNERAC Y OTROS QUISPE MENDO AMERICO REINT REMUNERAC Y OTROS QUISPE AGUILAR LUIS ALBERTO REINT INTERESES CTS Y OTROS GAMBOA SAUCEDO JORGE LUIS REINT REMUNERAC Y OTROS LLANOS CHUQUIPOMA FRANCISCO EDUARDO REINT GRATIFICACIONES Y OTROS CABANILLAS GUEVARA MARINO GILBERTO REINT GRATIFICACIONES Y OTROS AGUILAR GONZALEZ SIMON REINT INTERESES CTS OBANDO GONZALEZ ODAR GUILLERMO REINT REMUNERAC Y OTROS ROJAS JARA ROGELIO RAMIRO REINT INTERESES CTS BARRIGA GAMARRA LUCIANO UBALDO REINT REMUNERAC Y OTROS ALAYO HUAMAN ROGELIO REINT REMUNERAC Y OTROS ZUÑIGA AYALA JORGE ELEUTERIO REINT INTERESES CTS Y OTROS ALFARO CUESTAS LEONCIO REINT REMUNERAC Y OTROS LUJAN ARENAS NORBERTO REINT INTERESES CTS TRONCOSO MANTILLA MARIO ENRIQUE PAGO GRATIFICACIONES Y OTROS BAZAURI GOICOCHEA LUIS WILBERTO REINT REMUNERAC Y OTROS HUACCHA PAREDES MAURO REINT REMUNERAC Y OTROS CORREA SANCHEZ PEDRO REINT REMUNERAC Y OTROS DE LA CRUZ GRADOS OSMER YONEL REINT REMUNERAC Y OTROS CHUQUIPOMA ABANTO ANDRES REINT REMUNERAC Y OTROS VALLADOLID AGUILAR PASCUAL REINT REMUNERAC Y OTROS CARBONELL SILVA JOSE LUIS REINT REMUNERAC Y OTROS GARCIA JULCA MARIANO ESTEBAN REINT GRATIFICACIONES Y OTROS RODRIGUEZ CERNA JUAN REINT GRATIFICACIONES Y OTROS CHIGNE ANDUAGA WALTER REINT ASIGNAC FAMILIAR Y OTROS CERNA PIZARRO JUAN REINT REMUNERAC Y OTROS PINEDO LEON ROBERTO GONZALO REINT INTERESES CTS CANTURENCIO VALQUI TOMAS LUIS REINT REMUNERAC Y OTROS PONCE ARROYO JULIO ENRIQUE REINT REMUNERAC Y OTROS SALAVARRIA ACUÑA LUIS AURELIO REINT GRATIFICACIONES Y OTROS GUEVARA DIAZ JOSE INOCENTE REINT REMUNERAC Y OTROS FLORES SALVATIERRA DE MONZON JUANA FELICITREINT GRATIFICACIONES Y OTROS RODRIGUEZ ÑAMOC MANUEL ENCARNACION REINT INTERESES CTS SALAVARRIA ACUÑA LUIS AURELIO REINT ASIGNAC FAMILIAR Y OTROS AZABACHE DURAND LUIS FRANCISCO REINT INTERESES CTS Y OTROS SALAZAR BROYTMAN MOISES NAPOLEON REINT REMUNERAC Y OTROS HUARIPATA ALFARO BENIGNO RAYMUNDO REINT REMUNERAC Y OTROS CABRERA FLORES CARLOS MANUEL REINT REMUNERAC Y OTROS OCAS ASTO FRANCISCO REINT INTERESES CTS HERAS BRIONES VICTOR VICENTE REINT REMUNERAC Y OTROS CHICLOTE TANTALEAN EUGENIO ISRAEL REINT ASIGNAC FAMILIAR Y OTROS
13,191 13,106 13,092 13,064 13,037 13,020 13,020 13,020 12,997 12,956 12,945 12,935 12,929 12,887 12,839 12,784 12,765 12,742 12,736 12,707 12,692 12,689 12,664 12,626 12,601 12,595 12,535 12,435 12,367 12,358 12,307 12,204 12,190 12,168 12,167 12,127 12,011 12,011 11,982 11,967 11,923 11,923 11,685 11,654 11,632 11,627 11,539 11,519 11,515 11,415 11,399 11,353 11,343 11,246 11,196 11,161 11,161 11,113 11,105 11,017 11,014 11,005 10,955 10,940 10,939 10,936 10,891 10,815 10,762 10,738 10,722 10,638 10,634 10,545 10,540 10,536 10,514 10,484 10,449
5,000 9,174 9,850 11,107 5,500 9,003 1,952 7,900 2,500 1,800 0 0 5,650 8,206 10,213 9,415 9,074 9,164 3,150 5,650 0 1,307 9,551 12,969 9,639 2,750 802 9,029 6,700 9,732 4,000 1,500 1,414 3,461 7,500 4,000 9,808 9,534 6,110 9,402 4,000 623 1,758 3,400 10,139 8,089 4,000 8,000 9,551 4,000 8,049 4,000 5,000 5,650 7,159 0 2,750 5,650 6,364 2,950 4,299 857 6,000 5,650 9,133 7,783 8,956 1,300 1,900 2,680 9,375 7,033 8,512 3,150 7,405 5,650 0 5,650 12,065
37.9% 70.0% 75.2% 85.0% 42.2% 69.1% 15.0% 60.7% 19.2% 13.9% 0.0% 0.0% 43.7% 63.7% 79.5% 73.6% 71.1% 71.9% 24.7% 44.5% 0.0% 10.3% 75.4% 102.7% 76.5% 21.8% 6.4% 72.6% 54.2% 78.8% 32.5% 12.3% 11.6% 28.4% 61.6% 33.0% 81.7% 79.4% 51.0% 78.6% 33.5% 5.2% 15.0% 29.2% 87.2% 69.6% 34.7% 69.5% 82.9% 35.0% 70.6% 35.2% 44.1% 50.2% 63.9% 0.0% 24.6% 50.8% 57.3% 26.8% 39.0% 7.8% 54.8% 51.6% 83.5% 71.2% 82.2% 12.0% 17.7% 25.0% 87.4% 66.1% 80.0% 29.9% 70.3% 53.6% 0.0% 53.9% 115.5%
762-2013-CH 381-2014-CH 207-2014-CH 208-2014-CH 419-2014-CH 341-2013-CH 34-2014-CH 187-2014-CH 433-2014-CH 482-2013-CH 255-2009 614-2013-CH 271-2014-CH 120-2014-CH 342-2014-CH 442-2014-CH 652-2013-CH 315-2014-CH 405-2014-CH 415-2013-CH 468-2013-CH 609-2013-CH 260-2014-CH 688-2013-CH 462-2013-CH 639-2013-CH 551-2013-CH 168-2014-CH 167-2014-CH 567-2013-CH 239-2014-CH 233-2014-CH 337-2014-CH 540-2013-CH 585-2013-CH 651-2013-CH 5-2014-CH 677-2013-CH 299-2014-CH 298-2014-CH 416-2014-CH 529-2013-CH 170-2014-CH 336-2014-CH 287-2014-CH 254-2014-CH 650-2013-CH 377-2014-CH 249-2014-CH 1-2014-CH 776-2013-CH 464-2013-CH 715-2013-CH 75-2014-CH 556-2013-CH 773-2013-CH 537-2013-CH 164-2014-CH 54-2014-CH 759-2013-CH 521-2013-CH 414-2014-CH 39-2014-CH 335-2014-CH 41-2010 280-2014-CH 442-2013-CH 314-2014-CH 427-2014-CH 251-2014-CH 380-2014-CH 649-2013-CH 6-2014-CH 183-2014-CH
PEÑA CANO FRANGUEL JESUS TAFUR TOCAS MARTHA LEZCANO MACHUCA WALTER SEGUNDO SANCHEZ CHUQUIPOMA JOSUE ABRAHAM SARI VARGAS SANTOS PEDRO CHAVARRY RONCAL ROSENDO TAPIA PEREZ AUGUSTO CASTILLO SALDAÑA SEGUNDO ENRIQUE DIAZ TRUJILLO JORGE ANTONIO RUIZ RAMIREZ MANUEL PORFIRIO GUTIERREZ HUARIPATA GENARO ROMERO URBANO JUSTINIANO ROJAS MEDINA AURELIO PORTAL LLANOS JOSE VICTOR GAMARRA OCAS MISAEL TINEO CARRASCO TEODORO SALDAÑA VASQUEZ HERNAN MORI ATOCHE LUIS ALBERTO RUIZ MERCADO SEGUNDO ROSARIO SICHE VARAS WILFREDO OCAS INFANTES MARIA MARLENY SALDAÑA VASQUEZ AMADO VIZCONDE ALCALDE VICTOR AMERICO OTINIANO ALCALDE GILBERTO JESUS LUJAN ARENAS NORBERTO SANCHEZ TAFUR JOSE CRUZ ALVAREZ IBAÑEZ CARLOS CARDENAS SEGURA BERNARDO CUZQUIPOMA DELGADO MAURA GONZALES LOPEZ VICTOR GUEVARA LLICO ROBERTO DIAZ ANGASPILCO WILMER ALEJANDRO ACEVEDO CHOLAN LANDER JOSE CASTILLO ALVA SEGUNDO MARTIN URQUIZA CARRANZA FELIPE ZAÑA MINEZ WILMER ULLOA VILLA SEGUNDO TEOFILO NAVARRETE MUÑOZ VICTOR RAUL CALDERON NARRO RODOLFO MARCIAL MATARA PABLO SEGUNDO JUAN CARRASCAL ALCALDE GUILLERMO FERNANDO ALCALDE RIOS FELIX GRADOS SALAZAR SEGUNDO LEOPOLDO ALCANTARA CASTILLO ALBERTO RICARDO MENDO VILLOSLADA SEGUNDO GERARDO BARRIGA GAMARRA LUCIANO UBALDO BAZAURI CABRERA EDINSON ABEL ALCALDE SAGASTEGUI SEGUNDO ALEJANDRO AZAÑEDO MUÑOZ SEGUNDO DANIEL VARGAS MEDINA SEGUNDO ANTONIO RONCAL DIAZ JHONI DIAZ NUÑEZ VICTOR GONZALO VARGAS TORRES CARLOS HUMBERTO ESCOBEDO LULIMACHE NICOLAS MONTOYA DIAZ STALIN ANTONIO CHUQUIRUNA LEON JUSTO GONZALEZ SANDOVAL SEGUNDO VARGAS JULCAMORO ELMER PAREDES GAITAN ANGEL ANDRES MANTILLA FAJARDO SEGUNDO ALBERTO RUBIO OLIVA VICTOR EDMUNDO QUITO SANCHEZ JULIO REQUELME GONZALEZ EULOGIO AMADOR MORALES IZQUIERDO GERMAN LEYVA AGREDA MARCOS VITTERY CASAS VICTOR AUGUSTO MERINO CORREA LUIS ENRIQUE CARBAJULCA GASPAR VICTOR JOSE DELGADO ALDAVE JORGE LUIS CUEVA FLORES DOMITILA CABRERA FLORES CARLOS MANUEL MENDOZA CABRERA CARLOS MERCEDES QUITO SAUCEDO ROMAIN HUACCHA PAREDES MAURO
REINT REMUNERAC Y OTROS REINT GRATIFICACIONES Y OTROS REINT REMUNERAC Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT INTERESES CTS REINT ASIGNAC FAMILIAR Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT INTERESES CTS Y OTROS PAGO BENEF SOCIALES Y OTROS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT REMUNERAC Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT REMUNERAC Y OTROS REINT INTERESES CTS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT REMUNERAC Y OTROS REINT GRATIFICACIONES Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT REMUNERAC Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT REMUNERAC Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT INTERESES CTS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT INTERESES CTS REINT INTERESES CTS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT INTERESES CTS REINT ASIGNAC FAMILIAR Y OTROS REINT INTERESES CTS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT INTERESES CTS REINT REMUNERAC Y OTROS REINT ASIGNAC FAMILIAR Y OTROS HOMOLOGACION-REINT REMUNERAC REINT REMUNERAC Y OTROS REINT INTERESES CTS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT VACACIONES Y OTROS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT FONAVI Y OTROS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT INTERESES CTS
10,425 10,406 10,330 10,295 10,286 10,282 10,098 10,041 9,875 9,874 9,832 9,830 9,821 9,706 9,701 9,591 9,567 9,567 9,493 9,437 9,384 9,326 9,278 9,267 9,259 9,207 9,166 9,146 9,146 8,989 8,980 8,969 8,760 8,662 8,424 8,384 8,338 8,232 8,108 8,108 8,073 7,961 7,941 7,920 7,915 7,905 7,792 7,747 7,726 7,674 7,673 7,644 7,615 7,522 7,396 7,390 7,306 7,251 7,246 7,175 7,012 7,006 6,987 6,920 6,911 6,799 6,766 6,754 6,735 6,644 6,644 6,603 6,575 6,566
6,236 6,804 0 0 5,436 6,000 7,041 7,061 4,869 4,000 8,000 5,650 8,249 7,241 6,776 7,579 762 6,675 6,500 5,650 5,650 6,000 6,468 1,150 6,000 6,000 5,650 7,060 7,565 5,650 5,264 4,804 7,063 5,650 4,000 365 6,353 6,348 7,565 7,567 7,812 5,650 7,504 4,521 2,400 10,059 246 543 6,729 7,041 0 5,650 5,611 4,490 5,650 5,634 5,650 6,732 1,562 4,861 4,000 2,291 2,653 4,690 10,500 5,762 5,650 4,565 226 1,658 517 377 6,556 5,610
59.8% 65.4% 0.0% 0.0% 52.9% 58.4% 69.7% 70.3% 49.3% 40.5% 81.4% 57.5% 84.0% 74.6% 69.8% 79.0% 8.0% 69.8% 68.5% 59.9% 60.2% 64.3% 69.7% 12.4% 64.8% 65.2% 61.6% 77.2% 82.7% 62.9% 58.6% 53.6% 80.6% 65.2% 47.5% 4.4% 76.2% 77.1% 93.3% 93.3% 96.8% 71.0% 94.5% 57.1% 30.3% 127.2% 3.2% 7.0% 87.1% 91.7% 0.0% 73.9% 73.7% 59.7% 76.4% 76.2% 77.3% 92.8% 21.6% 67.7% 57.0% 32.7% 38.0% 67.8% 151.9% 84.8% 83.5% 67.6% 3.4% 25.0% 7.8% 5.7% 99.7% 85.4%
403-2014-CH 40-2010 237-2014-CH 319-2014-CH 263-2014-CH 307-2013-CH 709-2013-CH 356-2014-CH 192-2014-CH 389-2014-CH 194-2014-CH 431-2014-CH 36-2014-CH 359-2014-CH 119-2014-CH 185-2014-CH 672-2013-CH 186-2014-CH 811-2013-CH 331-2014-CH 189-2014-CH 244-2014-CH 9-2014-CH 30-2009 412-2014-CH 329-2014-CH 123-2011-CH 599-2013-CH 368-2014-CH 388-2014-CH 558-2013-CH 220-2014-CH 796-2013-CH 727-2013-CH 790-2013-CH 678-2013-CH 322-2014-CH 290-2014-CH 366-2014-CH 452-2013-CH 33-2014-CH 645-2013-CH 376-2014-CH 163-2014-CH 682-2013-CH 576-2013-CH 617-2013-CH 262-2014-CH 292-2014-CH 385-2014-CH 497-2013-CH 391-2014-CH 4-2014-CH 51-2014-CH 139-2014-CH 296-2014-CH 328-2014-CH 165-2014-CH 174-2014-CH 273-2014-CH 175-2014-CH 169-2014-CH 327-2014-CH 172-2014-CH 324-2014-CH 275-2014-CH 404-2014-CH 386-2014-CH 295-2014-CH 176-2014-CH 171-2014-CH 245-2014-CH 330-2014-CH 326-2014-CH 173-2014-CH 384-2014-CH 321-2014-CH 117-2014-CH 297-2014-CH 646-2013-CH 294-2014-CH 383-2014-CH
MIMBELA LOZADA SEGUNDO FELIX CABELLOS URBINA NICANOR ANDONAIRE RAMIREZ WILFREDO JUANCITO OCAS ASTO FRANCISCO AGUILAR GONZALEZ SIMON SANCHEZ ALVARADO DE COSME ILIANA ISABEL PAREDES LEIVA GERMAN OSWALDO SUAREZ HUAMAN LIZANDRO SANCHEZ ROJAS LUIS ALBERTO PORTILLA LOPEZ LUIS ANTONIO SEMINARIO PIZARRO FRANCISCO ALVA GUTIERREZ CESAR FRANCISCO DIAZ NUREÑA TEODORO POLICARPIO PAREDES RODRIGUEZ VICTOR MODESTO ALVARADO LESCANO SEGUNDO NOE CELESTINO OLORTIGA GABINO OCAS TUCTO HIPOLITO VASQUEZ PEREZ JOSE SALVADOR ESCOBEDO LULIMACHE NICOLAS ALFARO CUESTAS LEONCIO AGUIRRE ROMERO JOSE ALEJANDRO RODRIGUEZ VIGO JORGE LUIS RIOS VENTURA JULIO NOLBERTO CALDERON LEYVA VICTOR MAURICIO ZULUETA CABRERA MAXIMO RAMIRO MONTOYA DIAZ STALIN ANTONIO CONTRERAS DE LA CRUZ SEVERINO CHALAN VASQUEZ JOSE ADOLFO ESTACIO CHUNQUE ANDRES ALFARO GIL MARCO POLO SANCHEZ URBINA SEGUNDO JAIME SORIA CRISOLOGO MANUEL JESUS VILLANUEVA SANCHEZ ENRIQUE JAVIER CORDOVA AZAÑERO ARTURO CACEDA BUSTAMANTE MANUEL JULIAN GUARNIZ BENITES SEGUNDO ROSENDO ALVA APONTE CARLOS JULIO ARBULU FIGUEROA LUIS ALBERTO ANICETO URBANO JESUS POLIDORO PEREZ ORDOÑEZ JOSE PATROCINIO MORALES ESPINA RICARDO ROGER MENDO MINES ERASMO PIZARRO ALVARADO ORFELINDA TORRES SANCHEZ ISABEL PABLO GAMBOA SAUCEDO JORGE LUIS LEZAMA ACHON LUCIO DIAZ ANGASPILCO WILMER ALEJANDRO GARCIA JARAMILLO GREGORIO GARCIA JULCA MARIANO ESTEBAN MIMBELA LOZADA SEGUNDO FELIX BURGOS AGUIRRE LUIS ENRIQUE REYES TERAN JUAN EMILIO ROBLES CARRANZA NATIVIDAD GREGORIO SILVA VIUDA DE SERNAQUE PAULA ALVAREZ LEON ESMARO LUIS PLASENCIA ALVITRES LUIS ALBERTO CASTREJON VILLACORTA WALTER CARDENAS CABRERA TEODORO VIDAL ALVAREZ SAENZ ANDRES ALVAREZ URTEAGA SEGUNDO ALFREDO BAZAURI GOICOCHEA SEGUNDO GONZALO CARRASCAL HERRERA SEGUNDO ESTEBAN CASTREJON VILLACORTA WALTER CRUZADO ATALAYA LUIS FLAVIO JAVE AZAÑEDO PEDRO URBANO LEON CASTILLO CONSTANTE LEODINDO LEON SOTO JAVIER PROSPERO MANTILLA GONZALES ALEJANDRO MIMBELA LOZADA SEGUNDO FELIX MIRANDA MUÑOZ SANTOS MARTIN RODRIGUEZ MORENO FELIX VENANCIO RODRIGUEZ VIGO JORGE LUIS ROJAS GALLARDO GILBERTO ADAN RUIZ COSAVALENTE JULIO CESAR VALVERDE CASTILLO PEDRO SEBASTIAN YUPANQUI CHAVEZ AGUSTIN GABRIEL ALVA APONTE CARLOS JULIO TAFUR TOCAS MARTHA ANDONAIRE DELFIN AURELIO TOMAS SILVA CHACON SEGUNDO PABLO PEREZ CUZCO ANTONIO PRETELL OBANDO CARLOS MAGNO
REINT INTERESES CTS REINT REMUNERAC Y OTROS REINT INTERESES CTS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT INTERESES CTS Y OTROS REINT REMUNERAC Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT INTERESES CTS REINT REMUNERAC Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT INTERESES CTS REINT REMUNERAC Y OTROS REINT INTERESES CTS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT INTERESES Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT VALOR PRODUCTO REINT INTERESES CTS REINT INTERESES CTS REINT ASIGNAC FAMILIAR Y OTROS REINT INTERESES CTS REINT GRATIFICACIONES Y OTROS REINT REMUNERAC Y OTROS REINT INTERESES CTS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT INTERESES CTS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT INTERESES CTS REINT INTERESES CTS REINT REMUNERAC Y OTROS REINT INTERESES CTS Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT INTERESES CTS REINT REMUNERAC Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT INTERESES CTS REINT INTERESES CTS REINT INTERESES CTS REINT INTERESES CTS REINT INTERESES CTS REINT REMUNERAC Y OTROS REINT INTERESES CTS Y OTROS REINT INTERESES CTS Y OTROS REINT INTERESES CTS REINT ASIGNAC FAMILIAR Y OTROS REINT REMUNERAC Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT GRATIFICACIONES Y OTROS REINT REMUNERAC Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT REMUNERAC Y OTROS REINT AFP Y OTROS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT SNP Y OTROS
6,544 6,521 6,459 6,340 6,339 6,320 6,269 6,262 6,197 6,188 6,162 6,143 6,086 6,067 6,046 5,993 5,922 5,921 5,914 5,818 5,808 5,785 5,739 5,732 5,680 5,584 5,531 5,496 5,495 5,435 5,339 5,289 5,289 5,277 5,257 5,211 5,134 5,133 4,929 4,908 4,876 4,850 4,819 4,805 4,678 4,652 4,616 4,505 4,505 4,487 4,308 4,185 3,954 3,921 3,842 3,841 3,693 3,668 3,608 3,608 3,608 3,608 3,608 3,608 3,608 3,608 3,608 3,608 3,608 3,608 3,608 3,608 3,608 3,608 3,608 3,608 3,604 3,429 3,332 3,303 3,280 3,160
5,500 5,000 5,092 4,255 4,945 4,000 4,597 4,196 1,958 3,141 1,984 2,179 5,000 2,179 4,300 7,565 4,000 0 4,264 0 1,442 4,179 4,475 4,800 5,076 3,503 4,800 4,000 888 3,576 4,000 4,238 2,698 4,478 1,777 1,594 6,350 3,779 2,179 4,000 4,475 3,494 2,614 3,494 3,446 4,000 4,000 3,956 4,138 2,865 2,000 2,638 5,000 2,700 2,350 2,750 3,270 0 1,811 1,644 1,644 1,644 2,642 1,644 3,142 1,644 2,061 3,206 1,644 1,811 1,811 1,644 2,642 1,644 1,644 2,011 2,642 4,167 2,776 608 1,551 2,600
84.1% 76.7% 78.8% 67.1% 78.0% 63.3% 73.3% 67.0% 31.6% 50.8% 32.2% 35.5% 82.2% 35.9% 71.1% 126.2% 67.5% 0.0% 72.1% 0.0% 24.8% 72.3% 78.0% 83.7% 89.4% 62.7% 86.8% 72.8% 16.2% 65.8% 74.9% 80.1% 51.0% 84.9% 33.8% 30.6% 123.7% 73.6% 44.2% 81.5% 91.8% 72.0% 54.2% 72.7% 73.7% 86.0% 86.7% 87.8% 91.9% 63.9% 46.4% 63.1% 126.4% 68.9% 61.2% 71.6% 88.5% 0.0% 50.2% 45.6% 45.6% 45.6% 73.2% 45.6% 87.1% 45.6% 57.1% 88.9% 45.6% 50.2% 50.2% 45.6% 73.2% 45.6% 45.6% 55.7% 73.3% 121.5% 83.3% 18.4% 47.3% 82.3%
317-2014-CH 277-2014-CH 364-2014-CH 190-2014-CH 365-2014-CH 188-2014-CH 191-2014-CH 323-2014-CH 248-2014-CH 243-2014-CH 363-2014-CH 393-2014-CH 402-2014-CH 361-2014-CH 421-2014-CH 588-2013-CH 312-2014-CH 310-2014-CH 362-2014-CH 193-2014-CH 354-2014-CH 382-2014-CH 392-2014-CH 184-2014-CH 76-2012-CH 313-2014-CH 769-2013 773-2013 837-2004 Totales
TAFUR TOCAS MARTHA CALDERON MUÑOZ MARINO FRANCISCO DIAZ PALOMINO IVAN SEGUNDO HUACCHA VILLANUEVA SEGUNDO BALTAZAR QUISPE PALACIOS FIDEL ALEJANDRO QUISPE SANCHEZ AGUSTIN SANCHEZ RAICO ALFREDO ROMERO VARGAS MELQUIADES AZAÑEDO MUÑOZ SEGUNDO DANIEL RODRIGUEZ VIGO JORGE LUIS GANOZA ROMERO PEDRO ANTENOR LARA VILLAR SIXTO YUPANQUI CHAVEZ AGUSTIN GABRIEL RIOS CASTAÑEDA SANTIAGO IZQUIERDO FLORES GILMER CARRANZA NAVARRETE CARLOS EDUARDO MARTINEZ URQUIZA ROBERTO CARLOS JIMENEZ OBANDO ELADIO ALEJANDRO VARGAS ALVARADO JESUS ARNALDO HUAMAN DELGADO GILBERTO LLANOS RUIZ HUBERT ANGEL YUPANQUI CHAVEZ AGUSTIN GABRIEL VARGAS CARDENAS JOSE ERNESTO GONZALEZ AZAÑERO MIGUEL ANGEL RUIZ CASTILLO JOSE ANGEL VASQUEZ PEREZ JOSE DEMETRIO DE LA CRUZ RODRIGUEZ AMERICO FRANCISCO NUREÑA GARCIA RONALD ERNESTO SILVA ZARATE HERMOGENES
REINT AFP Y OTROS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT CTS Y OTROS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT REMUNERAC Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT REMUNERAC Y OTROS REINT REMUNERAC Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT ASIGNAC FAMILIAR Y OTROS REINT REMUNERAC Y OTROS CESE DE HOSTILIDADES CESE DE HOSTILIDADES NULIDAD DE DESPIDO
3,074 2,860 2,860 2,860 2,860 2,860 2,860 2,742 2,705 2,705 2,698 2,684 2,577 2,530 2,470 2,383 2,292 2,280 2,234 2,225 1,991 1,805 1,793 1,487 917 585 0 0 0 16,958,876
1,800 1,175 2,179 1,984 2,645 662 662 2,237 0 2,019 2,524 2,513 1,500 2,398 2,061 2,200 0 0 0 1,679 1,994 1,854 1,845 1,471 7,121 0 1,000 1,000 50,000 3,876,850
58.6% 41.1% 76.2% 69.4% 92.5% 23.1% 23.1% 81.6% 0.0% 74.6% 93.5% 93.6% 58.2% 94.8% 83.4% 92.3% 0.0% 0.0% 0.0% 75.5% 100.1% 102.7% 102.9% 98.9% 776.4% 0.0% 0.0% 0.0% 0.0%
Anexo: Business Monitor International - Industry Outlook Peru 3Q 2014
Industry Forecast - Sugar Outlook - Peru - Q3 2014 Peru - Sugar - Agribusiness - 19 Jun 2014
BMI Supply View: After a disastrous period in the late 1970s and 1980s when production fell by more than half, Peru's sugar industry has gradually clawed its way back to profitability. From 1999/00 to 2008/09, sugar production expanded by 48.3% to reach 1.07mn tonnes. This reinvigoration of the industry was driven by the privatisation of mills previously run by cooperatives and resultant increases in investment. The area planted to sugar cane has also increased on the back of high prices. In 2014/15, we forecast sugar production to increase to 1.3mn tonnes. We believe sugar will remain one of the country's most favoured crops and forecast production to continue increasing by an average of 5.0% annually until 2017/18. We forecast sugar output to increase to 1.46mn tonnes in 2017/18, when the country will achieve self-sufficiency. The rising interest in biofuels has spurred further awareness of Peru's formerly moribund sugar industry, with both international and domestic investors rushing to get involved. Investment continued despite the global financial crisis, with land purchased by both foreigners and domestic investors to create new plantations and processing plants modernised. This has led to an increase in land under sugar cane cultivation and investment in retooling mills to produce ethanol as well as sugar. These investments will allow Peru to increase its sugar production as a result of increased efficiency and the benefits of economies of scale. The country is therefore expected to be able to move towards regaining selfsufficiency, as well as developing a biofuels industry. BMI Demand View: Sugar consumption has grown rapidly over the past few years as the Peruvian economy has picked up. From 2006 to 2011, sugar consumption rose 23.6%, to 1.17mn tonnes, despite dipping in 2011 owing to strike action and resultant disruptions in the production chain. This was driven by a rise in per capita income, which grew by more than 50% over the period. Much of the increased sugar consumption comes in the form of soft drinks and confectionery. With soft drink and confectionery sales continuing to grow, we estimate that demand will remain strong at 1.25mn tonnes in 2014. Out to 2018, BMI forecasts sugar consumption to grow by 12.4% on the 2013 level, to 1.4mn tonnes. Sugar Production & Consumption (Peru 2013-2018) 2013e Sugar Production, '000 tonnes Sugar production, % y-o-y
2014 f
2015f
2016 f
2017f
2018 f
1,160.0 1,220.0 1,275.0 1,338.2 1,401.4 1,464.6 7.8
5.2
4.5
5.0
4.7
4.5
Sugar C onsum ption, '000 tonnes 1,236.2 1,248.5 1,282.2 1,316.9 1,352.4 1,388.9 Sugar consum ption, % y-o-y
0.5
1.0
2.7
2.7
2.7
2.7
Sugar m arket value, % of total
6.1
6.0
6.5
6.6
6.9
0.0
e/f= BMI estimate/forecast, Source: Ministerio de Agricultura, USDA, BMI
Peru's Alicorp To Deliver Stable Growth Alicorp is the largest manufacturer of fast moving consumer goods (FMCG) in Peru, with full year revenue for 2013 reaching PEN5.8bn, surpassing the USD2bn revenue target set in 2008. We believe that Alicorp will deliver solid annual growth on account of good industry dynamics within Peru, but argue that recent acquisitions have left the company highly leveraged. Alicorp is a well diversified company, offering a range of FMCG across Latin America. In late 2013, the company sold its pet food division, but continues to operate a portfolio consisting of pasta, cookies and
chocolate, as well as some durables. Alicorp also has significant international exposure in Latin America, primarily in Brazil, Ecuador, Chile and Argentina, with the region accounting for about 37% of the group's total revenues. As such, we believe the company is well placed to take advantage of the long-term dynamic that Latin America offers. Since 2008, Alicorp has increased its revenues by more than 50% and the company has primarily gone about this through a series of takeovers, acquiring a number of companies across Latin America. In 2008 the company acquired Colombian company PROPERSA, before buying Argentina-based companies The Value Brand Company later that year and SANFORD in 2010. In 2012 Alicorp acquired Chilean company SALMOFOOD, in an expansion of its animal nutrition business. These were relatively small-scale bolt-on acquisitions, but in 2013 the company broke away from this tradition, taking over Peru's Industrias Teal in January for PEN413.9mn, and then Santa Amália through its Brazilian subsidiary Alicorp de Brasil in February. The incorporation of Industrias Teal instantly increased Alicorp's assets within the food manufacturing sector by 70%, and will likely reap the benefits from added synergies in the future. The company's gross margin increased from 27.2% in Q412 to 28.7% in Q413. As a result of the acquisition, Alicorp's total debt/trailing 12-month EBITDA ratio rose to a six-year high of 3.65x earnings. Prior to 2003, Alicorp ran as a highly leveraged company, with total debt/ EBITDA rarely falling to below 5x. However, as has been the case over the past decade, it is likely that Alicorp will run a more conservative approach regarding its debt. As such, while Alicorp could initiate some takeovers of smaller companies, particularly outside of Peru, we hold the view that an acquisition of a company the size of Industrias Teal is unlikely in the very near future. Alicorp's acquisition strategy has helped it to achieve impressive, stable revenue and profit growth over the past decade, which has helped drive its share price upwards. However, in years that have constituted primarily of organic growth, both revenue and profit gains have been very moderate. Last year, for example, revenue grew by 5.1% year-on-year (y-o-y), despite our estimates suggesting total food consumption rose by 12.3% y-o-y in Peru that year. A current trend in consumer staples that we have previously highlighted has been share price stagnation since early to mid-2013 (see 'Safe Havens Losing Steam', January 9 2014). FMCG companies with broad exposure to emerging markets have largely seen their share prices stagnate or fall since mid-2013 for two reasons. Firstly, as we highlighted in the aforementioned article, non-cyclical FMCG companies' valuations have receded as their roles as quasi- safe havens have diminished, following a return to growth in developed markets. Secondly, the EM slowdown and subsequent currency depreciation has knocked confidence in companies with significant exposure to such countries. Indeed, Alicorp's share performance is thoroughly indicative of such a trend. New Capacity Confirms Strong Interest For Sugar Industry We maintain our estimate for Peru's sugar production to increase 5% y-o-y to 1.22mn tonnes in 2013/14, a result of yield improvements and new processing capacity. The average sugar yield in 2012/13 was 128 tonnes per hectare (ha), up 4% y-o-y. Total harvested area in 2012/13 was 81,149ha. For 2013/14, local industry sources are indicating that sugar yields could be as high as 190 tonnes/ha in some regions, which could push up the average and support production growth. Moreover, weather conditions have reportedly been favourable during plantings, with sufficient water supply and investments in new plantations. Production Catching Up Peru - Sugar Production & Consumption ('000 tonnes)
e/f = BMI estimate/forecast. Source: USDA, BMI This will continue to stimulate growth in ethanol production. The US Department of Agriculture (USDA) forecasts Peru's ethanol production to increase by 9.0% to 240mn litres in 2013/14. This strong growth will be the result a new plant in the northern part of the country starting operations. However, production now stands below full capacity (at 350mn litres) as the new processing plant will need more time to reach full production capacity. Therefore, we see more room for growth in the coming years. This new capacity will add to two ethanol plants already operating in the country. With an investment of USD210mn, Caña Brava (owned by the Romero Group) is currently the largest ethanol producer in Peru. Maple, through its subsidiary Maple Ethanol and Maple Biocombustibles, is also an important player in Peru's ethanol business. With an investment of USD280mn, the company now owns 13,500ha of sugar cane in Piura; of this, 7,800ha is set to be used for ethanol production. Looking For Outside Demand Peru - Ethanol Production & Exports (mn litres)
f = BMI forecast. Source: USDA, Peruvian Customs, Ministry of Agriculture and Ministry of Energy and Mining We believe the country will continue to improve its ethanol export capacity to the US or Europe, benefiting from healthy margins, as local markets in these countries are still tight and as Peruvian production costs are very competitive. The USDA forecasts ethanol exports from Peru to reach 135mn litres in 2013/14, a 7.0% y-o-y increase. Production growth over the past decade (on average 9.0% y-oy) has largely outpaced consumption growth (which averages 5.1% y-o-y). This will continue to be the case in the next five years and will help to support exports out of the country. The Netherlands was the
main destination for Peruvian ethanol in 2012/13, accounting for 54% of total ethanol exports. Booming Industry Peru - Ethanol Capacity (mn litres) & Number of Facilities
f = BMI forecast. Source: USDA, Peruvian Customs, Ministry of Agriculture and Ministry of Energy and Mining Over the medium term, we are still positive about the long-term growth prospects of the industry on the back of a rush in investment and a consolidation drive. We forecast sugar production to increase by 30.2% between 2012 and 2017. We believe the largest players in the industry will continue to pour money into new production capacity and will also target smaller players that are still largely inefficient. This will continue to help yield progression over the coming years. Sugar Production & Consumption (Peru 2008-2013) 2008 Sugar Production, '000 tonnes Sugar production, % y-o-y
2009
2010
2011
2012e
2013e
990.0 1,074.0 1,059.0 1,038.0 1,076.0 1,160.0 23.0
8.5
-1.4
-2.0
3.7
7.8
Sugar C onsum ption, '000 tonnes 1,080.0 1,152.0 1,210.0 1,171.0 1,230.0 1,236.2 Sugar consum ption, % y-o-y
8.5
6.7
5.0
-3.2
5.0
0.5
Sugar m arket value, % of total
4.7
7.4
7.0
6.9
5.6
6.1
e = BMI estimate, Source: Ministerio de Agricultura, USDA, BMI
Risks To Outlook There are concerns that the rapid expansion of sugar cane cultivation on Peru's north coast could lead to water resources being overstretched to the detriment of other crops grown in the area. When investments in increasing cane plantations are made, careful consideration of what strain it will place on the local environment needs to be taken if production growth is to be sustainable. There are also concerns that increasing acreage planted to ethanol could pose a threat to Peru's food security. On the consumption side, if Peru's economy fails to sustain the rapid growth of recent years in the face of falling commodity prices, consumption of sugar could fall short of our targets as consumers are forced to cut back on non-essential food and drink products such as soft drinks.
This material is protected by international copyright laws, and use of this is subject to our Terms & Conditions. ©2014 Business Monitor International Ltd
Anexo: BTG Pactual Fixed Income Research - Coazucar
Fixed Income Research Peru Agriculture FixedIncome 16 July 2014
Coazucar Good fundamentals, despite higher leverage Initiating credit coverage of Coazucar with a BUY for its 2022 bonds We are initiating credit coverage of Coazucar with a BUY rating for its 2022 bonds, as its spread seems attractive compared to most of its BB rated Latam peers. We expect
Josefina Valdivia Chile - BTG Pactual
[email protected] +562 27134938
improvements in the company’s credit metrics as sugar prices gradually recover; operations become more efficient, and crushed volumes increase after investments in capacity growth. Coazucar 2022’s spreads were hurt by rising net leverage, which triggered ratings downgrades, as FCF generation was weakened by lower global
Alexandre Muller Brazil – Banco BTG Pactual S.A.
[email protected] +55 11 3383 2165
sugar prices and greater sugar imports into Peru. However, the company’s good asset coverage and conservative liquidity position make its credit profile strong, justifying our constructive view of the bond at $96.4 / 6.97% / 470bps. Premium market position and efficient cost structure
Thomas Tenyi, CFA Brazil – Banco BTG Pactual S.A.
[email protected] +55 11 3383 2687
Coazucar is the largest S&E producer in Peru, with a ~50% market share and a total crushing capacity of ~8.4mn tons. The company enjoys a competitive cost structure thanks to favorable weather conditions in Peru, which support year-round high-yield sugarcane harvests, freely available surface irrigation, close proximity of sugarcane fields to milling facilities, and relative independence from third-party sugarcane suppliers. The company also has high capacity utilization rates (~85%), which have helped dilute fixed costs. Coazucar is part of Grupo Gloria, an industrial conglomerate with sales of over US$3bn and EBITDA of US$640mn. Strong asset coverage on sizeable land bank We see Coazucar’s hefty asset coverage (100,000ha of land ownership valued at ~US$630mn, ~US$500mn inside the bond guaranteeing entities) as a strong support to the credit case. This is reflected in the company’s strong debt to equity ratio (0.52x), which is far better than that of Brazil’s S&E players (average above 3.0x). We think owning land is important for sugar producers, since it (i) reduces land leasing costs, thus increasing the potential for cash flow generation, (ii) can be sold to address liquidity needs, or (iii) can be used as collateral for loans even amid difficult industry & credit market conditions. The 2022 bonds are fully guaranteed by three of Coazucar’s subsidiaries (Cartavio, San Jacinto, and Azucarera Olmos) and partially guaranteed by Casa Grande (up to 50% of the bond issuance). Gradually improving sector fundamentals aren’t enough to regain its BB+ rating Despite a string of acquisitions, Coazucar managed to post moderate leverage ratios in the past, with a net debt/EBITDA below 2.0x, mainly due to the support of shareholders and strong FCF generation amidst supportive sugar prices. However, depressed international sugar prices and a lower sugar price premium in Peru caused by a surge in imports put a dent in the company’s credit metrics, with net leverage spiking to 4.9x by 1Q14-end. We believe the company’s B/S will remain more consistent with its current BB rating at expected sugar prices, and our base case scenario assumes that net leverage will decrease to 3.5x by 2015-end.
ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 19 Banco BTG Pactual S.A. does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
Coazucar 16 July 2014
Investments Thesis We are initiating coverage of Coazucar, Peru’s largest sugar producer, with a BUY recommendation for its BB rated 2022 bonds, as we expect improvements in the company’s credit metrics on the back of a gradual recovery in sugar prices and greater operational efficiency, which should widen margins. We like Coazucar’s conservative debt profile, with a relevant portion of its debt made up of the US$325mn bonds, and adequate liquidity, with a cash to ST debt ratio of 1.3x. In addition, the company’s land portfolio represents strong asset coverage, with land comprising 1.35x of the company’s total debt. Land inside guaranteeing entities represents 1.2x of 2022 bonds. This is also reflected in its debt/equity ratio of 0.53x, much better than the average for Brazil’s S&E players (average above 3.0x).
Chart 1: Debt/equity ratio for S&E names
160 140
133.5
120 100 80 60 40 20
6.1
1.4
0.5
Tonon
USJ
Coazucar
0 GVO Source: Companies Data. BTG Pactual.
Coazucar boasts a strong market position in Peru, which supports healthy margins. Overall, our call on Coazucar’s bonds is grounded in our view of the company’s more conservative fundamentals in relation to other similarly rated bonds like Minerva 2023 (trading at a Z-spread of 496 bps, 6.18% YTC), Aje 2022 (trading at a Z-spread of 557 bps, 7.79% YTW) and OAS 2019 (trading at a Z-spread of 561bps, 7.06% YTW).
page 2
Coazucar 16 July 2014
Chart 2: Coazucar bonds vs. BB names (Z-spread)*
page 3
Chart 3: Coazucar bonds vs. peers (Z-spread)*
152
170
108
200
900
150
800 700
100 26
600
50
500
0
400
Ajecbv'22 Source: Bloomberg. *in bps
Minerv'23
Cozcar'22
Jul-14
May-14
Apr-14
Mar-14
Feb-14
Jan-14
Dec-13
Nov-13
200
Oct-13
-100
Sep-13
300
Aug-13
-50
Jul-14
May-14
Apr-14
Mar-14
Feb-14
Jan-14
Dec-13
Nov-13
Oct-13
-64
Sep-13
Aug-13
Jul-13
-73 -86
-3
Jul-13
-22 -25 -26 -27
OAS'19
Source: Bloomberg. *in bps
Table 1: Comparative Brazilian S&E players
US$mn Crushed Sugarcane (mt) Capacity utilization
GVO LTM Jan-14 11,309 94%
Tonon LTM Mar-14 7,575 92%
USJ LTM Dec-13 3,241 85%
Coazucar LTM Mar-14 7,242 84%
Net Revenues Sugar Ethanol EBIT EBITDA % EBITDA margin Net Income
569 308 231 31 174 30.6% (74)
361 190 159 44 155 43.0% (79)
185 108 67 (3) 42 22.7% 24
465 380 46 34 82 17.6% (45)
Revenue / Ton EBITDA / ton
50.28 15.36
48.19 20.47
57.02 12.96
64.25 11.34
Assets Cash & Equivalents ST Debt LT Debt Total Debt Net Debt Equity
1,469 58 374 847 1,221 1,163 9
837 43 255 357 612 570 114
756 68 41 355 396 328 274
1,661 65 51 415 466 401 897
(165) (113)
(164) (58)
(26) (73)
(61) 0
229 6.7x 133.5 5.3x 1.4x 0.4x
168 3.7x 5.4 n/a 1.1x 0.2x
225 7.8x 1.4 n/a 1.0x 1.7x
155 4.9x 0.5 n/a 2.4x 1.3x
Capex FCF, Recurring Net Debt / Crush.Vol. Net Debt / EBITDA Debt / Equity Net Leverage(ex-Copersucar) Interest Coverage Cash / ST Bank Debt Source: Companies Data. BTG Pactual.
Coazucar 16 July 2014
Chart 4: Net Debt/crushing volumes ratio for S&E names (US$/ton) 250
229
Chart 5: Net leverage for S&E names 9
225
7.8x
8 200
7
168
155
150
page 4
6.7x
6
4.9x
5 3.7x
4
100
3 2
50
1 0
0 GVO
Tonon
USJ
Source: Companies Data. BTG Pactual.
Coazucar
GVO
Source: Companies Data. BTG Pactual.
In 2012, the worsening international sugar market and record price premiums attracted more imports (+46% y/y) and thus the premium nearly vanished during much of 2013. The weaker price environment hurt Coazucar’s operational margins and FCF generation, and the company’s credit metrics deteriorated, triggering ratings downgrades. Net leverage spiked to 4.9x at 1Q14-end from 1.9x right after the bond issuance. We expect this negative trend to revert in the short-to-medium term, mainly supported by a gradual recovery of international sugar prices and a higher premium in Peru following more normalized imported sugar volumes. We believe the trend in sugar imports will be crucial to the company’s performance, and despite the stability of the local currency (the PEN is one of the most stable currencies in Latam), we don’t expect the local price premium to contract to the levels seen in 2013, as imports have been stabilizing. Imports contracted by 49% in 2013, and the local price premium has recovered since 3Q13. In addition, the company’s efforts to cut costs and improve its operational efficiency, along with the capacity additions related to the Olmos project, should strengthen margins going forward. Its EBITDA margin deteriorated sharply from 34.4% in 2012 to 19% in 2013; however, these marginally improving sector fundamentals will not be enough to support the operational margins seen in the previous year, and we thus expect an EBITDA margin around 25% in the medium term, with net leverage decreasing to 3.5x at 2015-end (vs. current 4.9x), in line with the company’s current ratings. We expect FCF generation to be slightly negative in 2014 and FCF to be neutral going forward.
Tonon
USJ
Coazucar
Coazucar 16 July 2014
page 5
Drop in sugar prices hurt margins and balance sheet Efficient cost structure supports structurally good margins, but recent trend in sugar prices dented results Peruvian producers enjoy a competitive advantage, as Peru’s northern coast benefits from favorable soil and weather, which allows for continued sugarcane production throughout the year and greater sugarcane crop yields. High temperatures with little climate differentiation between the seasons, mild rain, and surface irrigation all make Peru one of the lowest-cost sugar producers in the world. Overall, average sugarcane crop yields in Brazil, the country responsible for around 45% of the world’s sugar, are around 80 tons per hectare, while in Peru this figure can jump to 130 tons per hectare. Average production costs per pound of brown sugar in Brazil are around US$0.18 per pound, vs. US$0.13 per pound for the brown sugar produced by Coazucar.
Chart 6: Sugarcane yields in Peru (Mt/Ha)
Chart 7: Sugarcane yields for Coazucar (Mt/Ha) 175
160 140 120 100
108 112
122 124
136 132 114 98 102
111
120
126 126 126
172
170 164
165
80
161
160 160
60 40
158
155
20 150
0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: Peruvian Ministry of Agriculture
2009
Source: Company Data
For Coazucar, technological improvements, greater mechanization, and freely available surface irrigation have also helped to support higher sugarcane yields per hectare and greater sucrose content from crushed sugarcane. Coazucar’s cost structure also benefits from the proximity of its sugarcane fields to the milling facilities and from its relative independence from third parties. The company’s mills and distilleries are located an average of 15km away from the sugarcane fields, which reduces transportation costs and improves sucrose recovery. Around 60-70% of its production comes from its own farms, while the remainder is purchased from third parties, mostly through long-term contracts. The company also has relatively high capacity utilization rates (of around 85% of its crushing volume potential), which has helped to dilute fixed costs.
2010
2011
2012
2013
Coazucar 16 July 2014
page 6
Chart 8: Capacity utilization
86.0% 85.0%
84%
84%
84%
84.0%
85%
85%
83.0% 82.0% 81.0%
80%
80.0% 79.0% 78.0% 77.0%
2011
2012
2013
2014E
2015E
2016E
Source: Company Data
Overall, this low-cost structure has historically supported strong operational margins for Coazucar. Its efficient cost structure and strong market positioning mitigate the effects of price volatility on its financial position and increase operating performance visibility. However, the drop in international prices in the last couple of years has impacted the company’s results, and the EBITDA margin has thinned from 44.3% in 2011 to 19.1% in 2013. Coazucar’s solid market position (~50% market share in Peru) and Peru’s historically low imports have kept domestic prices under control, and internal prices have therefore been at a premium to prices in international markets, climbing to +US$120180MT. This premium has been supported by the differences between sugar consumption in Peru and other countries (almost 90% of consumption comes from raw sugar, which is easier for local producers to track, giving them time to adjust prices) and importers’ lack of relationships with wholesale clients. However, a worsening international sugar market and record local price premium in Peru in 2012 lifted imports in 2012 (+46% y/y), impacting local producers like Coazucar.
Chart 9: White sugar price evolution and Coazucar’s premium 900 850 800 750 700 650 600 550 500 450 400
Chart 10: Brown sugar price evolution and Coazucar’s premium 180
163.4 146 126.4 109 104.2
35
140
30
120 88.4
100 60.2 65.9
48.6 23.2
35.7 3.9
11.2
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 Premium
Source: Company Data
Peru White (US/MT)
London 5 (US/MT)
80
11.2
40
160
10.6
11 11.2 10.1
12
9.3
10 8
25 5.8
20
60
15
40
10
20
5
0
0
6 4.3
3.5
3.4
3.1
4.2
1.9
4 2 0
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 Premium
Source: Company Data
Peru Brown (US ¢/pound)
NY 11(US ¢/pound)
Coazucar 16 July 2014
page 7
We believe that the trend in sugar imports going forward will be crucial to the company’s performance, but despite the stability of the local currency (the PEN is one of the most stable currencies in Latam), we don’t expect the premium to contract to the levels seen in 2013, since imports have been normalizing (after a 49% y/y retreat in 2013). This, together with better dynamics expected in the international markets, should make the pricing environment more favorable for Coazucar. In addition, the company’s efforts to cut costs, improve operational efficiency, and add capacity to the Olmos project should widen margins going forward.
Chart 11: Evolution Sugar Imports in to Peru
90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
Raw Sugar (MT)
3Q13
4Q13
1Q14
White Sugar (MT)
Source: Company Data, Sunat.
However, these marginal improvements in the sector’s fundamentals will not be enough to support the operational margins for Coazucar seen in previous years, and we are thus expecting an EBITDA margin around 25% in the medium term.
Chart 12: Historical and forecasted Sales and Volumes 1,600 1,400
666,858
1,200 1,000
782,798 786,987
600
600,000
461,649
500,000 1,304
600
700
800,000 700,000
558,622
800 400
719,688 723,240
Chart 13: Historical and forecasted EBITDA and EBITDA Margin 900,000
1,462
1,275
1,329
1,458
1,517
400,000 300,000
938
200,000
200
100,000
0
0 2010
2011
2012
Net Revenues
Source: Company Data, Sunat.
2013
2014E
2015E
2016E
44.5%
44.3% 34.4%
500 400 300 200
578 417
19.1%
19.4%
244
258
2013
2014E
23.7%
24.9%
345
378
2015E
2016E
503
100 0 2010
2011
2012 EBITDA
Sugar Volumes (MT)
Source: Company Data, BTG Pactual estimates
Weaker FCF bruised credit metrics, but debt maturity profile has stayed strong Despite a string of acquisitions, Coazucar managed to post moderate leverage ratios until 2012, with a net debt/EBITDA below 2.0x, mainly due to the support of shareholders through capital increases and strong FCF generation from supportive sugar prices. However, as mentioned, the deterioration of the sugar market took a
EBITDA Margin
50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%
Coazucar 16 July 2014
page 8
bite out of the company’s FCF generation, and credit metrics have been on the rise in the last couple of years as a result. The company’s net leverage spiked to 4.9x by 1Q14-end, up from 2.9x a year before and well above the company’s outstanding bond covenants, which limit indebtedness to 3.5x net debt/EBITDA, preventing the company from raising more debt. On the bright side, the company has a strong debt profile, with almost all of its debt comprised by the US$325mn in international bonds due to 2022. Liquidity has worsened since the bond issuance in 2012; however, the balance sheet has remained relatively strong, and by 1Q14, the company was sitting on a cash cushion of PEN$181mn, which covers ~1.3x of its ST loans.
Chart 14: Debt maturity profile (US$mn)
Chart 15: Historical and forecasted leverage ratios and liquidity position 6.0
450 386
400 350
4.5x
250
3.0
200
52
50
8
10
8
8 0.0
12M
1.4
1.0
0 Cash
1.2x
1.1x
64.5
24M
36M
48M
60M
72M+
1Q11
0.79
0.4
0.38
2Q11
3Q11
4Q11
Net Debt / EBITDA
Source: Company Data
Source: Company Data , BTG Pactual estimates
Nevertheless, we highlight that since Coazucar is a holding company, access to cash flow comes mainly in the form of dividends. Coazucar has a controlling stake in all of its Peruvian subsidiaries, and so they are fully consolidated in the company’s financial statements. But since it doesn’t fully own them, part of this cash flow generation goes to minority shareholders (see company description for details on its capital structure). Olmos project will boost company’s sales from 2017 Since the company thinks further M&A opportunities are limited, especially in Peru, growth plans for the future mainly involve expanding its land portfolio and increasing its harvested area to raise sugarcane production and fully utilize its processing capacity (currently at 80% utilization). However, given current sugar prices, the company has scaled back its capex plans, which today are mainly comprised by the Olmos expansion plan. The project involves the addition of 11,100 hectares of land and a new production plant, which will add ~1.4mn tons of sugarcane crushing capacity (from the current 8.4mn tons per year). On December 2011, Azucarera Olmos (Coazucar’s subsidiary) and Gloria S.A. won the rights to purchase land in the “Olmos Expansion Plan” through a public auction. Coazucar has invested ~US$70mn in land, and the entire project includes investments for US$270mn, of which US$80mn has already been disbursed. Operations should start by 2016-end. Here, sugarcane greenfield crops will be developed using pressurized water, which has been available since March 2014. The company expects to finance future capex mainly with its current cash position and FCF generation.
3.4x
2.3x
2.0
150
3.8x
4.0
4.0
300
100
5.0x
5.0
1Q12
0.45 2Q12
Cash / ST Debt
0.50 3Q12
Coazucar 16 July 2014
Chart 16: Historical and forecasted CAPEX (US$mn)
Chart 17: Historical and forecasted FCF (US$mn)
90 80 70 60 50 40 30 20 10 0 2011
2012
2013
2014E
2015E
2016E
Source: Company Data , BTG Pactual estimates
40 30 20 10 0 -10 -20 -30 -40 -50 -60
2011
2012
that should boost white sugar production going forward, a product mainly oriented to the industrial segment and that boasts better margins than the main product in Peru, brown sugar. Exposure to FX, weather conditions and geographic and product concentration can amplify earnings volatility Sugar producers are exposed to the effects of adverse weather conditions, which can result in production declines. Particularly in Peru, the natural phenomenon called El Nino can cause severe flooding that can hurt production. El Niño warms the surface of the tropical eastern Pacific Ocean, causing changes in weather patterns all over the world but particularly in South America. Experts have already stated that the odds of an intense El Niño later this year are growing (above 70%), which, depending on its intensity, could affect Coazucar’s sugarcane production in the next few quarters. However, we don’t expect this effect to be substantial. El Nino could also hurt production levels in other countries like Brazil and India (the largest sugar producers in the world), thus supporting improvements in sugar prices, which could partially offset the impact on production levels. Since its incorporation in 2005, Coazucar has grown primarily through acquisitions, expanding its sugar and ethanol operations in Peru and abroad. In 2H11, the company made its first international expansion in Latin America, with the purchase of a 60% stake in Ingenio San Isidro, an Argentine organic sugar producer and the owner of a 36.4% stake in Ingenio La Troncal, a formerly state-owned company in Ecuador. Although these operations have thinner operational margins than the Peruvian ones and expose the company to countries with greater sovereign risk, we its business
profile benefits
2013
Source: Company Data , BTG Pactual estimates
Elsewhere, the company has recently finished its investments in a new refinery plant
think
the
page 9
company via
greater
geographical
diversification, which reduces exposure to the effects of adverse weather conditions in a particular region. However, Coazucar’s production capacity and sales still come mainly from Peru, with 66% of its sales generated in this country in 2013.
2014E
2015E
2016E
Coazucar 16 July 2014
page 10
Chart 18: Revenue distribution by country (2013)
25%
10% 66%
Peru
Arg
Ecuador
Source: Company Data
The company is also exposed to currency risk, since sugar prices in Peru track international prices (USD-denominated) while Coazucar’s operating expenses are almost entirely in local currency. However, exchange rates are stable in Peru, given that the Central Bank has considerable international reserves (to the tune of 35% of GDP) and a distinct aversion to FX volatility and sudden depreciation. On the negative side, a stronger PEN increases the likelihood of sugar imports coming to the market, thus reducing the potential premium of sugar prices vs. international prices. We expect the local currency to depreciate by 5% in 2014 and then appreciate 2% more going forward. Almost 83% of sales in 2013 came from sugar products (brown, white and refined sugar), while the remainder comes mainly from alcohol (10%) and, to a lesser extent, from molasses and bagasse. Note that the company has the flexibility to alter its crushing mix between alcohol and sugar, a decision that is mainly driven by international prices. Ethanol production is mainly exported (around 80% of total production), while the rest is sold to local alcohol producers.
Chart 19: Revenue distribution by product (2013)
Chart 20: Revenue distribution by type of sugar (2013)
6%
6%
10% 44% 50% 83%
Sugar Source: Company Data
Alcohol
Others
White Sugar Source: Company Data
Brown Sugar
Organic Sugar
Coazucar 16 July 2014
page 11
Strong asset coverage and adequate bond guarantees We think it is crucial for sugar producers to own land, since it (i) reduces land leasing costs and thus increases the potential for cash flow generation, (ii) can be sold to address liquidity needs, or (iii) can be used as collateral on loans even amid difficult industry and credit market conditions. We thus see Coazucar’s hefty asset coverage as a strong support to the credit case, and it is reflected in the company’s strong debt to equity ratio, at 0.52x, vs. the average of 4.9x for Brazil’s S&E players. The company owns ~100,000ha of land at a book value of ~US$630mn. Coazucar is the holding company of three sugar mills in Peru (Cartavio, San Jacinto and Casa Grande), one in Ecuador, and another in Argentina. The 2022 bonds are fully guaranteed by two of these companies – Cartavio and San Jacinto – and partially guaranteed by Casa Grande (up to 50% of the bond issuance). The guarantor’s subsidiaries together represented 66% and 74% of the company’s revenues and EBITDA, respectively, in 2013. Land under Coazucar’s subsidiaries guaranteeing the 2022 bonds is valued at ~US$500mn including land at the Olmos project, still a relevant level of asset coverage for bondholders. The latter, adjusted by the 50% guarantee from Casa Grande, represents 1.2x coverage of the 2022 bonds. Casa Grande is Coazucar’s largest subsidiary, with almost 37% of the consolidated EBITDA in 2013. It is also the largest sugar mill and the leading sugar producer in Peru, with 31k hectares of arable land and a crushing capacity of 3.3mn tons per year. Coazucar is the majority shareholder of Casa Grande, with a 57.1% ownership. Cartavio is Peru’s second-largest producer of sugar and the second-largest hydrous alcohol producer in Peru. It owns 7,934 hectares of arable land and has a crushing capacity of 2.4mn tons per year. San Jacinto owns 8,132 hectares of arable land. The bonds are also guaranteed by Azucarera Olmos, a subsidiary incorporated for the development of the Olmos Expansion Plan, with no sales currently but counting on land assets valued in US$70mn.
Table 2: Data per subsidiary
Own land (hectares) Own land (estimated value in US$mn)
Casa Grande
Cartavio
San Jacinto
San Isidro
La troncal*
31,468
7,929
11,937
11,000
15,000
280
103
75
62
66
Cultivated Land
20,796
6,380
6,759
3,300
13,724
Crushing capacity (000 tons)
3,000
2,100
975
600
1,760
Crushing volumes 2013 (000 tons)
2,609
1,627
910
NA
NA
% of own sugarcane
77%
50%
68%
NA
NA
Capacity Utilization
87%
77%
93%
NA
NA
Sugar Production (000 tons)
283
133
101
NA
NA
57.10% Up to 50% of bond issuance
87.20%
82.60%
60.00%
36.40%
Yes
Yes
No
No
235
39
76
NA
NA
Coazucar stake share Bond Guarantor Market Cap (US$mn)
Source: Company Data. BTG Pactual estimates. * Coazucar has a 52% share on a trust vehicle that has a 70% stake in la Troncal.
Coazucar 16 July 2014
All of the company’s Peruvian subsidiaries, with the exception of Olmos, are publicly traded and present annual consolidated financial statements, so coverage value for the bonds, from an equity value perspective, can be easily estimated. Overall, equity value of the guarantor subsidiaries, at US$350mn, adjusted for the equity value for Coazucar (US$231mn) together with the US$70mn in land at Olmos, covers 0.93x of the bonds and 0.65x of the company’s current consolidated debt.
page 12
Coazucar 16 July 2014
Shareholder support and access to Gloria distribution network Coazucar is part of Grupo Gloria, an industrial conglomerate with operations in different countries in Latin America and investments that make up a diverse business portfolio. The company’s activities range from dairy and food through to cement, paper, agro-industry, transport and service, and it is a leader in every sector in which it participates. Grupo Gloria benefits Coazucar in terms of access to financing and capital backing. Coazucar is also helped by the synergies from Grupo Gloria’s extensive distribution and transport network, with the capacity to reach its markets in a more efficient way. Companies under Grupo Gloria are managed under the same corporate team, which helps to reduce administrative costs. However, we believe this kind of structure could lead to conflicts of interest between bondholders and the controller. In addition, the existence of commingling assets among Gloria’s subsidiaries and potential intercompany loans among them also limits transparency. The company has been improving its communication with the market; however, we believe disclosure is still weak due to the absence of consolidated financial statements for the group.
page 13
Coazucar 16 July 2014
Sugar prices outlook After reaching all-time highs in 2011 and peaking at c35/lb, sugar prices fell to a minimum of ~15c/lb in 2013. In the last few months, prices have recovered substantially to 17.2c/lb, driven mainly by (i) the drought in Brazil, with an expected reduction in harvest yields & crushing volumes, and (ii) lower expected production volumes from India. Even in a conservative scenario, sugar prices should increase on the back of an almost inevitable shift toward a supply deficit in the coming years (as we see limited capacity additions worldwide) and increasing global sugar consumption. All told, we expect a more benign outlook for sugar prices in the long term.
Table 3: Our sugar price scenario Sugar Price Estimates Int'l Price - NY 11(US cents/pound) Int´l Price – London 5 (US/MT) Coazucar spread over international White Sugar Brown Sugar FX White Sugar (PEN/Ton) Brown Sugar (PEN/Ton) Source: BTG Pactual
2014E 17.5 471
2015E 18.5 500
2016E 19.25 510
119% 127% 2.85 1.60 1.39
119% 127% 2.89 1.72 1.49
119% 127% 2.83 1.72 1.52
page 14
Coazucar 16 July 2014
page 15
Peruvian S&E market Peru ranks among the world’s highest crop yielding countries for various products including sugarcane, thanks to its location near the equator line and the resulting sunlight, (which improves the quality of the soil) as well as the Humboldt Current, which keeps the temperature relatively constant and mild. This spring-like climate allows crops such as sugarcane to be harvested 12 months out of the year under the proper water management techniques. The military government in the 1970s hampered Peru’s sugar industry by expropriating the sugar estates on the country’s north coast and turning them into government-owned cooperatives. Having peaked at 1mn tons in 1975, output fell to 400,000tons by the early 1990s. However, the industry has recovered in the last decade after the privatization of most mills and cultivated sugarcane land, which has supported increases in investment and productivity. As a result, sugar production has more than doubled since the early 1990s. Owing to the privatization process, the industry consolidated, reducing the number of sugar companies to eleven. Peru is a net importer of sugar, with exports representing around 50% of imports in the last six years. Demand is expected to continue outpacing supply, due to the country’s strong macroeconomic fundamentals. Sugar can be separated into two main product categories in the Peruvian market – raw sugar and white sugar. Raw sugar (partially purified sugar) represents approximately 90% of the total sugar consumption in the country. It is also further refined to produce white sugar.
Chart 21: Imports vs. exports in Peru (000 MT)
Chart 22: Historical sugar consumption in Peru (000 MT)
300
1,400
250
213
208
1,200
190
200
1,000
146
150 100
1,600
276
62
82
141 93 56
53
74
50
800
929
947
181
252
1,251 1,269 1,158 1,215 1,211 1,049 190 208 146 213 247 244
600 400
276
1,315 141
1,174 1,007 1,065 1,038 1,079 1,108
695
805
911
2004 2005
2006
2007 2008 2009
748
1,384
200
0
0 2008
2009
2010 Exports
Source: Peruvian Ministry of Agriculture
2011 Imports
2012
2013
Production
Source: Peruvian Ministry of Agriculture
Imports
2010 2011 2012
2013
Coazucar 16 July 2014
page 16
Company Description Coazucar is the largest producer of sugar and ethanol in Peru, with a 46% market share and a total crushing capacity of 8.4mn tons. The company was incorporated in 2005 to manage the agro-industrial division of Grupo Gloria, and since then it has grown through several acquisitions of local producers and recently some international players. Its first acquisition was of Casa Grande in 2006, Cartavio and Sintuco a year after, and San Jacinto in 2009. In 2011, the company made its first international expansion with the purchase of a majority stake in Ingenio San Isidro for US$33mn, followed by the purchase of a 36.4% stake in Ingenio La Troncal in Argentina for US$105mn, a state-owned company with a 30% market share in Ecuador.
Table 4: Coazucar’s corporate structure COAZUCAR
Casa Grande 57.1%/ Peru
Cartavio 87.2%/Peru
Chiquitoy 43.6%/Peru
San Jacinto 82.6% / Peru
Azucarera Olmos 100% / Peru
Sintuco 69.7%/Peru
Source: Coazucar. * Coazucar has a 52% share on a trust vehicle that has a 70% stake in la Troncal.
Peru’s sugar industry has seen a lot of M&A activity in the last few years, and it has led to greater consolidation. Currently, there are eleven mills operating in the country. Coazucar is the leader in Peru, with almost 50% of the market when one includes sugar production from its three Peruvian subsidiaries. Its main competitors are smaller companies like Laredo, Paramonga and Tuman, each with market shares below 15%. Coazucar also has a ~28% share of sugar production in Ecuador and is the only producer of organic sugar in Argentina. It is also the second-largest ethanol producer in Peru. Around 70% of its sales in Peru are wholesale, with the remainder going to industrial clients. Exports, on the other hand, are mainly directed to major sugar refineries, primarily in the United States, Haiti, Colombia and Chile. Ethanol is mostly exported to customers in the US and Europe. Coazucar is part of Grupo Gloria, an industrial conglomerate with sales of US$3bn and EBITDA of US$640mn in 2012. Grupo Gloria has operations in various industries throughout Latin America, including consumer packaged food (34% of Ebitda), cement, nitrates, & lime (29%), and paper (5%). It is present in Bolivia, Colombia, Ecuador, Argentina and Puerto Rico. Grupo La Gloria is under the control of the brothers Vito and Jorge Rodríguez. Both brothers founded a transport company back in 1967 that provided services for mining companies and later (in 1986) acquired Gloria SA from Nestle, Peru's largest producer of evaporated milk. Since then, they have bought a number of companies that are all part of Grupo Gloria today.
San Isidro 60% / Argentina
La Troncal* 36.4% / Ecuador
Coazucar 16 July 2014
Table 5: Shareholder structure
Vito Rodríguez Rodríguez
50%
50%
Maninham Holding S.A 100%
Clarcrest Investments S.A 94.1%
COAZUCAR Source: Coazucar
Jorge Rodríguez Rodríguez
page 17
Coazucar 16 July 2014
page 18
Table 6: Company financials Balance Sheet (PEN$mn)
2010
2011
2012
2013
2014E
2015E
2016E
Total Assets
2,800
4,242
4,654
4,730
4,747
4,855
4,995
71 102 81 222 0
114 111 300 278 6
293 161 401 0 14
210 174 420 0 41
119 179 434 0 41
66 175 481 0 41
71 182 500 0 41
Cash Accounts receivables Inventories Biological assets Other current assets Current Assets
476
810
869
846
773
763
795
2,025
2,806
2,830
2,896
2,985
3,103
3,211
Biological assets Other non-current assets
156 144
379 247
648 307
631 358
631 358
631 358
631 358
Short Term Liabilities Accounts payable ST Debt Other ST liabilities
492 302 186 3
721 372 292 58
400 217 72 110
458 176 152 130
461 181 150 130
482 201 151 130
490 209 151 130
Long Term Liabilities LT Debt Deferred income tax Others LT Liabilities Equity & minority interest
768 347 354 67 1,540
1,035 519 470 45 2,486
1,629 1,100 440 89 2,626
1,718 1,159 416 143 2,555
1,769 1,211 416 143 2,516
1,781 1,222 416 143 2,592
1,781 1,222 416 143 2,724
Total Equity and Liabilities
2,800
4,242
4,654
4,730
4,747
4,855
4,995
Income Statement (PEN$mn)
2010
2011
2012
2013
2014E
2015E
2016E
Net Revenues Cost
938 (498)
1,304 (705)
1,462 (924)
1,275 (978)
1,318 (1,001)
1,458 (1,032)
1,517 (1,062)
Change in fair value of biological assets Gross Profit
178 617
188 787
(77) 461
(14) 284
0 316
0 426
0 455
65.8%
60.4%
31.5%
22.3%
24.0%
29.2%
30.0%
Fixed assets
-- Gross Margin Selling expenses
(19)
(30)
(48)
(66)
(70)
(77)
(80)
Administrative expenses
(43)
(66)
(100)
(112)
(108)
(118)
(117)
Other operating income (expenses)
(20)
(1)
6
13
0
0
0
EBIT
536
690
318
231
258
59
76
108
120 0 110
139
Depreciation
110
114
118
EBITDA
417
578
503
244
249
344
376
44.5%
44.3%
34.4%
19.1%
18.9%
23.6%
24.8%
Net Financial Expenses Foreign exchange gain (loss) Others
(44) 11 0
(45) 18 0
(69) 42 7
(92) (125) 6
(79) (50) 0
(89) (13) 0
(94) 0 0
EBT
504
664
298
(90)
10
129
164
Income Taxes Net Income
(76) 428
(105) 559
(65) 233
(6) (96)
(2) 8
(27) 102
(34) 129
Credit Metrics Total Debt Net Debt Total Debt / EBITDA Net Debt / EBITDA Interest Expense LTM Interest Coverage Ratio Cash / ST Debt Total Debt to Equity
2010 534 463 1.3 1.1 -44 9.53 0.38 0.35
2011 811 697 1.4 1.2 -45 12.85 0.4 0.33
2012 1,432 1,138 2.8 2.3 -69 7.32 4.0 0.55
2013 1,311 1,101 5.4 4.5 -191 1.28 1.4 0.51
2014E 1,361 1,242 5.5 5.0 -223 1.12 0.79 0.54
2015E 1,373 1,307 4.0 3.8 -257 1.34 0.44 0.53
2016E 1,373 1,302 3.7 3.5 -344 1.09 0.47 0.50
-- EBITDA Margin
Source: Company Data and BTG Pactual (Forecasts)
Coazucar 16 July 2014
page 19
Required Disclosures This report has been prepared by BTG Pactual Chile S.A. Corredores de Bolsa. The figures contained in performance charts refer to the past; past performance is not a reliable indicator of future results.
BTG Pactual S.A. Global Credit Research: Recommendation Definitions BTG Pactual S.A. employs a recommendation scheme designed to rank potential investment opportunities within non-government fixed income markets and sectors
Outlook for
Time Horizon
BTG Pactual S.A. Terminology
Expectation
Credit fundamentals of the company
6 months
IMPROVING
Improve
STABLE
Remain stable
DETERIORATING
Deteriorate
BUY
Outperform
HOLD
Perform in line
SELL
Underperform
Under Review
N/A
Bond
All recommendation types
3 months
N/A
Definition
Credit fundamentals of the company are anticipated to
over the next six months
Company/Bond is anticipated to other companies/bonds within a given peer group in the local currency investment universe over a three-month horizon The recommendation is under review and a new recommendation may be published within the next 18 days
Analyst Certification Each research analyst primarily responsible for the content of this investment research report, in whole or in part, certifies that: (i) all of the views expressed accurately reflect his or her personal views about those securities or issuers, and such recommendations were elaborated independently, including in relation to Banco BTG Pactual S.A., BTG Pactual Chile S.A. Corredores de Bolsa and/or its affiliates, as the case may be; (ii) no part of his or her compensation was, is, or will be, directly or indirectly, related to any specific recommendations or views contained herein or linked to the price of any of the securities discussed herein. Research analysts contributing to this report who are employed by a non-US Broker dealer are not registered/qualified as research analysts with FINRA and therefore are not subject to the restrictions contained in the FINRA rules on communications with a subject company, public appearances, and trading securities held by a research analyst account. Part of the analyst compensation comes from the profits of Banco BTG Pactual S.A. or BTG Pactual Chile S.A. Corredores de Bolsa as a whole and/or its affiliates and, consequently, revenues arisen from transactions held by Banco BTG Pactual S.A., BTG Pactual Chile S.A. Corredores de Bolsa and/or its affiliates.
Company Disclosures Company Name Coazucar 18, 19, 20, 21, 22 18. As of the end of the month immediately preceding the date of publication of this report, neither BTG Pactual Chile S.A. Corredores de Bolsa, Banco BTG Pactual S.A., nor its affiliates or subsidiaries beneficially own 1% or more of any class of common equity securities. 19. Neither BTG Pactual Chile S.A. Corredores de Bolsa, Banco BTG Pactual S.A. nor its affiliates or subsidiaries have managed or co-managed a public offering of securities for the company within the past 12 months. 20. Neither BTG Pactual Chile S.A. Corredores de Bolsa, Banco BTG Pactual S.A. nor its affiliates or subsidiaries engaged in market making activities in the subject company's securities at the time this research report was published. 21. BTG Pactual Chile S.A. Corredores de Bolsa, Banco BTG Pactual S.A. or its affiliates or subsidiaries have not received compensation for investment banking services from the companies in the past 12 months. 22. BTG Pactual Chile S.A. Corredores de Bolsa, Banco BTG Pactual S.A. or its affiliates or subsidiaries do not expect to receive or intends to seek compensation for investment banking services from the companies within the next 3 months.
Coazucar 16 July 2014
page 20
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Where this report is disseminated in the UK by BTG Pactual, this report is issued only to and directed only at persons who (i) have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the "Financial Promotion Order"), (ii) are persons falling within Article 49(2)(a) to (d) ("high net worth companies, unincorporated associations etc") of the Financial Promotion Order, (iii) are outside the United Kingdom, or (iv) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any securities may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as "relevant persons"). This report is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this report relates is available only to relevant persons and will be engaged in only with relevant persons. Dubai: This research report does not constitute or form part of any offer to issue or sell, or any solicitation of any offer to subscribe for or purchase, any securities or investment products in the UAE (including the Dubai International Financial Centre) and accordingly should not be construed as such. Furthermore, this information is being made available on the basis that the recipient acknowledges and understands that the entities and securities to which it may relate have not been approved, licensed by or registered with the UAE Central Bank, Emirates Securities and Commodities Authority or the Dubai Financial Services Authority or any other relevant licensing authority or governmental agency in the UAE. The content of this report has not been approved by or filed with the UAE Central Bank or Dubai Financial Services Authority.
Coazucar 16 July 2014
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United Arab Emirates Residents: This research report, and the information contained herein, does not constitute, and is not intended to constitute, a public offer of securities in the United Arab Emirates and accordingly should not be construed as such. The securities are only being offered to a limited number of sophisticated investors in the UAE who (a) are willing and able to conduct an independent investigation of the risks involved in an investment in such securities, and (b) upon their specific request. The securities have not been approved by or licensed or registered with the UAE Central Bank or any other relevant licensing authorities or governmental agencies in the UAE. This research report is for the use of the named addressee only and should not be given or shown to any other person (other than employees, agents or consultants in connection with the addressee's consideration thereof). No transaction will be concluded in the UAE and any enquiries regarding the securities should be made with BTG Pactual CTVM S.A. at +55 11 3383-2638, Avenida Brigadeiro Faria Lima, 3477, 14th floor, São Paulo, SP, Brazil, 04538-133.
Anexo: Offering Memorandum Final Bono Coazucar
OFFERING MEMORANDUM
16JUL201201162235 US$325,000,000
´ S.A. Corporacio´n Azucarera del Peru 6.375% Senior Notes due 2022
Unconditionally and Irrevocably Guaranteed by Certain of its Operating Subsidiaries We are offering US$325,000,000 aggregate principal amount of our 6.375% senior notes due 2022 (the ‘‘notes’’). The notes will mature on August 2, 2022. Interest on the notes will accrue at a rate of 6.375% per annum and will be payable semi-annually in arrears on each February 2 and August 2 of each year, commencing on February 2, 2013. We may redeem the notes, in whole or in part, subject to a minimum float condition, at any time on or after August 2, 2017 at the applicable redemption prices set forth in this offering memorandum, plus accrued and unpaid interest and any Additional Amounts. Before August 2, 2017, we may also redeem the notes, in whole or in part, subject to a minimum float condition, at a redemption price based on a ‘‘make-whole’’ premium. In addition, at any time prior to August 2, 2015, we may redeem up to 35% of the notes at a redemption price equal to 106.375% of their outstanding principal amount, plus accrued and unpaid interest and any Additional Amounts, using the proceeds of certain equity offerings. We may also redeem the notes, in whole but not in part, if certain changes in applicable tax laws occur. See ‘‘Description of the Notes—Optional Tax Redemption.’’ The notes will be our senior unsecured obligations. The notes will be unconditionally, irrevocably and fully guaranteed on a senior unsecured basis by one of our wholly-owned subsidiaries and two of our partially-owned subsidiaries, and unconditionally, irrevocably and partially guaranteed by another one of our partially-owned subsidiaries for an initial amount equal to US$162,500,000, as subsequently adjusted as provided in ‘‘Description of the Notes—Note Guarantees’’ and ‘‘—Principal, Maturity and Interest.’’ The notes and the related guarantees: (i) will rank equally with all of our and the subsidiary guarantors’ respective existing and future unsecured and unsubordinated indebtedness, other than with respect to certain obligations given preferential treatment pursuant to the laws of Peru; (ii) will be effectively subordinated to all of our and the subsidiary guarantors’ respective existing and future secured indebtedness to the extent of the assets securing such indebtedness; (iii) will be structurally subordinated to the existing and future indebtedness and other liabilities of our subsidiaries which are not guarantors and with respect to the partial guarantor, to the extent that any obligations under the notes exceed US$162,500,000, as subsequently adjusted as provided in ‘‘Description of the Notes—Note Guarantees’’ and ‘‘—Principal, Maturity and Interest’’ and (iv) will not provide holders with any direct claims on the assets of any non-guarantor unless or until such entity becomes a guarantor. Application has been made to the Irish Stock Exchange for the approval of this document as Listing Particulars. Application has been made to the Irish Stock Exchange for the notes to be admitted to the Official List and to trading on the Global Exchange Market which is the exchange regulated market of the Irish Stock Exchange. The Global Exchange Market is not a regulated market for the purposes of Directive 2004/39/EC.
Investing in the notes involves risks. See ‘‘Risk Factors’’ beginning on page 17. Price: 99.091% plus accrued interest, if any, from August 2, 2012. We have not and will not register the notes and the guarantees under the U.S. Securities Act of 1933, as amended (the ‘‘Securities Act’’) or under any state securities laws. Prospective purchasers that are qualified institutional buyers are hereby notified that the sellers of the notes may be relying on an exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A under the Securities Act. Outside the United States, the offering is being made in reliance on Regulation S under the Securities Act. See ‘‘Transfer Restrictions.’’ We have registered the notes and this offering memorandum with the Peruvian Superintendency of the Securities Market (Superintendencia del Mercado de Valores, or ‘‘SMV’’). In Peru, this offering will be considered a public offering directed exclusively to ‘‘institutional investors’’ (as such term is defined under the Seventh Final Disposition of CONASEV Resolution No. 141-98-EF/94.10.1). In addition, we have registered the notes with the Foreign Investment and Derivatives Instruments Registry (Registro de Instrumentos de Inversi´ on y de Operaciones de Cobertura de Riesgo Extranjeros) of the Peruvian Superintendency of Banks, Insurance and Private Pension Fund Administrators (Superintendencia de Banca, Seguros y Administradoras Privadas de Fondos de Pensiones, or ‘‘SBS’’) for Peruvian private pension fund investment eligibility, as required by Peruvian law. The notes may not be offered or sold in the Republic of Peru or in any other jurisdiction except in compliance with the securities laws thereof. We expect that delivery of the notes will be made to investors in book-entry form through the facilities of The Depository Trust Company (‘‘DTC’’) for the accounts of its direct and indirect participants, including Euroclear Bank S.A./N.V., as operator of the Euroclear System (‘‘Euroclear’’), and Clearstream Banking, soci´et´e anonyme (‘‘Clearstream’’), Luxembourg, on or about August 2, 2012. Joint Book-Running Managers
BofA Merrill Lynch
Peruvian Placement Agent
´ S.A. Sociedad Agente de Bolsa Citicorp Peru The date of this offering memorandum is July 26, 2012
Citigroup
TABLE OF CONTENTS Page Available Information....................................................................................................................................................v Enforcement of Civil Liabilities ....................................................................................................................................v Forward-Looking Statements ......................................................................................................................................vii Presentation of Financial and Other Information..........................................................................................................ix Summary........................................................................................................................................................................1 Risk Factors .................................................................................................................................................................17 Use of Proceeds ...........................................................................................................................................................39 Capitalization...............................................................................................................................................................40 Exchange Rates ...........................................................................................................................................................41 Selected Financial and Other Information ...................................................................................................................42 Management’s Discussion and Analysis of Financial Condition and Results of Operations ......................................45 Peruvian Sugar Industry ..............................................................................................................................................67 Business.......................................................................................................................................................................71 Regulatory Overview...................................................................................................................................................91 Management ................................................................................................................................................................97 Shareholders ..............................................................................................................................................................100 Grupo Gloria..............................................................................................................................................................100 Related Party Transactions ........................................................................................................................................101 Description of the Notes ............................................................................................................................................103 Taxation.....................................................................................................................................................................151 Plan of Distribution ...................................................................................................................................................156 Transfer Restrictions..................................................................................................................................................160 Legal Matters.............................................................................................................................................................163 Independent Auditors ................................................................................................................................................163 Listing and General Information ...............................................................................................................................164 Index to Financial Statements.................................................................................................................................... F-1 ____________________ Unless otherwise indicated or the context otherwise requires, all references in this offering memorandum to:
“Coazucar,” “issuer,” “we,” “us,” “our,” “our company,” “ourselves” and similar terms refer to Corporación Azucarera del Perú S.A. and its consolidated subsidiaries;
“Argentina” refers to the Republic of Argentina;
“Azucarera Olmos” refers to Azucarera Olmos S.A., a wholly-owned subsidiary of our company that is a guarantor of the notes;
“Cartavio” refers to Cartavio S.A.A., a partially-owned subsidiary of our company that is a guarantor of the notes;
“Casa Grande” refers to Casa Grande S.A.A., a partially-owned subsidiary of our company that is a guarantor of the notes;
“Chiquitoy” refers to Empresa Agraria Chiquitoy S.A.;
“CONASEV” refers to the Comisión Nacional Supervisora de Empresas y Valores del Perú; i
“Ecuador” refers to the Republic of Ecuador;
“FAO” refers to the Food and Agriculture Organization of the United Nations.
“Grupo Gloria” refers to a conglomerate comprised of operating companies, including among many others, the Guarantors, Gloria S.A. and Yura S.A., under the common control of Vito Rodríguez Rodríguez and Jorge Rodríguez Rodríguez, with operations in seven countries in Latin America;
the “Guarantors” refer to Casa Grande, Cartavio, San Jacinto and Azucarera Olmos;
“La Troncal” refers to Grupo Azucarero EQ2 S.A., which is owned by us through Fideicomiso Mercantil Consorcio Azucarero Ecuatoriano;
“OECD” refers to the Organisation for Economic Co-operation and Development;
“Peru” refers to the Republic of Peru;
the “Peruvian government” refers to the government of Peru;
the “Peruvian Ministry of Agriculture” refers to the Ministerio de Agricultura del Perú.
“San Isidro” refers to, collectively, Verha S.A., Prosal S.A., Emaisa S.A. and Bio San Isidro S.A., partiallyowned subsidiary of our company;
“San Jacinto” refers to Agroindustrias San Jacinto S.A.A., a partially-owned subsidiary of our company that is a guarantor of the notes;
“Sintuco” refers to Empresa Agrícola Sintuco S.A., a partially-owned subsidiary of our company; and
the “United States” or the “U.S.” refers to the United States of America.
You should assume that the information appearing in this offering memorandum is accurate as of the date on the front cover of this offering memorandum only. Our business, financial condition, results of operations and prospects may have changed since that date. Neither the delivery of this offering memorandum nor any sale made hereunder shall under any circumstances imply that the information herein is correct as of any date subsequent to the date on the cover of this offering memorandum. We have prepared this offering memorandum for use solely in connection with the proposed offering of the notes described in this offering memorandum. This offering memorandum is personal to each offeree and does not constitute an offer to any other person other than the offeree to whom it has been delivered or the public generally to subscribe for or otherwise acquire notes (other than pursuant to CONASEV Resolution No. 079-2008-EF/94.01.1). Distribution of this offering memorandum to any person other than a prospective investor and any person retained to advise such prospective investor with respect to its purchase is unauthorized, and any disclosure of any of its contents, without our prior written consent, is prohibited. Each prospective investor, by accepting delivery of this offering memorandum, agrees to the foregoing and to make no photocopies of this offering memorandum or any documents referred to in this offering memorandum. The initial purchasers make no representation or warranty, expressed or implied, as to the accuracy or completeness of the information contained in this offering memorandum. Nothing contained in this offering memorandum is, or shall be relied upon as, a promise or representation by the initial purchasers as to the past or future. This offering memorandum is intended solely for the purpose of soliciting indications of interest in the notes from qualified investors and does not purport to summarize all of the terms, conditions, covenants and other provisions relating to the terms of the notes contained in the indenture being entered into in connection with the issuance of the notes as described herein and other transaction documents described herein. The market information in this offering memorandum has been obtained by us from publicly available sources deemed by us to be reliable. ii
We accept responsibility for correctly extracting and reproducing such information. Notwithstanding any investigation that the initial purchasers may have conducted with respect to the information contained in this offering memorandum, the initial purchasers accept no liability in relation to the information contained in this offering memorandum or its distribution or with regard to any other information supplied by us or on our behalf. Neither we nor the initial purchasers are making an offer to sell the notes in any jurisdiction except where such an offer or sale is permitted. You must comply with all applicable laws and regulations in force in any jurisdiction in which you purchase, offer or sell the notes or possess or distribute this offering memorandum and you must obtain any consent, approval or permission required by you for the purchase, offer or sale of the notes under the laws and regulations in force in your jurisdiction to which you are subject or in which you make such purchases, offers or sales, and neither we nor the initial purchasers will have any responsibility therefor. You acknowledge that:
you have been afforded an opportunity to request from us, and to review, all additional information considered by you to be necessary to verify the accuracy of, or to supplement, the information contained in this offering memorandum;
you have not relied on the initial purchasers or their agents or any person affiliated with the initial purchasers or their agents in connection with your investigation of the accuracy of such information or your investment decision; and
no person has been authorized to give any information or to make any representation concerning us or the notes other than those as set forth in this offering memorandum. If given or made, any such other information or representation should not be relied upon as having been authorized by us, the initial purchasers or their agents.
We are relying upon an exemption from registration under the Securities Act for an offer and sale of securities which do not involve a public offering. By purchasing the notes, you will be deemed to have made certain acknowledgments, representations and agreements as set forth under “Transfer Restrictions” in this offering memorandum. The notes are subject to restrictions on transfer and resale and may not be transferred or resold except as permitted under the Securities Act and applicable state securities laws. As a prospective purchaser, you should be aware that you may be required to bear the financial risks of this investment for an indefinite period of time. See “Plan of Distribution” and “Transfer Restrictions.” In making an investment decision, prospective investors must rely on their own examination of our company and the terms of the offering, including the merits and risks involved. Prospective investors should not construe anything in this offering memorandum as legal, business or tax advice. Each prospective investor should consult its own advisors as needed to make its investment decision and to determine whether it is legally permitted to purchase the notes under applicable legal, investment or similar laws or regulations. None of the United States Securities and Exchange Commission (the “SEC”), any United States state securities commission or any United States, Peruvian or other regulatory authority has approved or disapproved of these securities or determined if this offering memorandum is truthful or complete. Any representation to the contrary is a criminal offense. Application has been made to the Irish Stock Exchange for the approval of this document as Listing Particulars. Application has been made to the Irish Stock Exchange for the notes to be admitted to the Official List and to trading on the Global Exchange Market which is the exchange regulated market of the Irish Stock Exchange. The Global Exchange Market is not a regulated market for the purposes of Directive 2004/39/EC. The Irish Stock Exchange’s Global Exchange Market takes no responsibility for the contents of this offering memorandum, makes no representations as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this offering memorandum. We confirm that, after having made all reasonable inquiries, this offering memorandum contains all information which is material to the offering and sale of the notes, that the information contained in this offering memorandum is true and accurate in all material respects and is not misleading and that there are no omissions of any facts from this iii
offering memorandum which, by their absence herefrom, make this offering memorandum misleading. We accept responsibility for the information contained in this offering memorandum. The opinions and intentions expressed in this offering memorandum are honestly held and based on reasonable assumptions.
______________ NOTICE TO NEW HAMPSHIRE RESIDENTS ONLY NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES (“RSA”) WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE IMPLIES THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT ANY EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH. ______________ NOTICE TO RESIDENTS OF PERU IN PERU, THIS OFFERING WILL BE CONSIDERED A PUBLIC OFFERING DIRECTED EXCLUSIVELY TO “INSTITUTIONAL INVESTORS” (AS SUCH TERM IS DEFINED UNDER THE SEVENTH FINAL DISPOSITION OF CONASEV’S RESOLUTION NO. 141-98-EF/94.10, AS AMENDED). THE NOTES AND THIS OFFERING MEMORANDUM HAVE BEEN REGISTERED WITH THE SMV IN ACCORDANCE WITH THE PROCEDURES SET FORTH IN NUMERAL IV OF THE SECOND SECTION OF THE MANUAL FOR COMPLIANCE WITH THE APPLICABLE REQUIREMENTS FOR INITIAL PUBLIC OFFERINGS, AS SET FORTH UNDER SMV RESOLUTION NO. 004-2011- EF/94.01.1, PURSUANT TO CONASEV RESOLUTION NO. 079-2008-EF/94.01.1, APPLICABLE TO U.S. OFFERINGS IN RELIANCE OF RULE 144A UNDER THE SECURITIES ACT WITH A LOCAL PERUVIAN COMPONENT. THE NOTES OFFERED HEREBY ARE SUBJECT TO TRANSFER AND RESALE RESTRICTIONS AND MAY NOT BE TRANSFERRED OR RESOLD IN PERU EXCEPT AS PERMITTED UNDER CONASEV RESOLUTION NO. 079-2008-EF/94.01.1. THE NOTES HAVE BEEN PROVISIONALLY REGISTERED WITH THE FOREIGN INVESTMENT AND DERIVATIVES INSTRUMENTS REGISTRY (REGISTRO DE INSTRUMENTOS DE INVERSIÓN Y DE OPERACIONES DE COBERTURA DE RIESGO EXTRANJEROS) OF THE SBS, IN ORDER TO MAKE THE NOTES ELIGIBLE FOR PERUVIAN PENSION FUND INVESTMENT, AS REQUIRED BY PERUVIAN LEGISLATION. THIS REGISTRATION WAS PROVISIONALLY APPROVED, AND DEFINITIVE REGISTRATION IS CONDITIONED ON THE DELIVERY OF THE FINAL OFFERING MEMORANDUM AND OTHER ANCILLARY DOCUMENTS TO THE SBS.
______________
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NOTICE TO INVESTORS IN THE EUROPEAN ECONOMIC AREA This offering memorandum has been prepared on the basis that any offer of notes in any Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”) will be made pursuant to an exemption under the Prospectus Directive from the requirement to publish a prospectus for offers of notes. Accordingly any person making or intending to make an offer in that Relevant Member State of notes which are the subject of the offering contemplated in this offering memorandum may only do so in circumstances in which no obligation arises for any of the Issuer, the Guarantors or the initial purchasers to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive, in each case, in relation to such offer. Neither the Issuer, the Guarantors nor the initial purchasers have authorised, nor do they authorise, the making of any offer (other than Permitted Public Offers) of notes in circumstances in which an obligation arises for the Issuer, the Guarantors or the initial purchasers to publish or supplement a prospectus for such offer. The expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State and the expression “2010 PD Amending Directive” means Directive 2010/73/EU. IN CONNECTION WITH THE OFFERING OF THE NOTES, THE PERSON (IF ANY) NAMED AS THE STABILIZING MANAGER(S) (THE “STABILIZING MANAGER(S)) (OR PERSONS ACTING ON THEIR BEHALF) MAY OVER-ALLOT NOTES OR EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE MARKET PRICE OF THE NOTES AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL. HOWEVER, THERE IS NO ASSURANCE THAT THE STABILIZING MANAGER(S) (OR PERSONS ACTING ON THEIR BEHALF) WILL UNDERTAKE STABILIZATION ACTION. ANY STABILIZATION ACTION MAY BEGIN ON OR AFTER THE DATE ON WHICH ADEQUATE PUBLIC DISCLOSURE OF THE TERMS OF THE OFFER OF THE RELEVANT TRANCHE OF NOTES IS MADE AND, IF BEGUN, MAY BE ENDED AT ANY TIME, BUT IT MUST END NO LATER THAN 30 DAYS AFTER THE DATE ON WHICH THE ISSUER RECEIVED THE PROCEEDS OF THE ISSUE, OR NO LATER THAN 60 DAYS AFTER THE DATE OF ALLOTMENT OF THE RELEVANT SECURITIES, WHICHEVER IS THE EARLIER.
______________ AVAILABLE INFORMATION To permit compliance with Rule 144A in connection with resales of the notes, for so long as the notes are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, we have agreed to furnish upon request of a holder or beneficial owner of such restricted securities and a prospective purchaser or subscriber of such restricted securities designated by such holder or beneficial owner upon the request of such holder, beneficial owner or prospective purchaser or subscriber the information required to be delivered under Rule 144A(d)(4) if at the time of such request we are neither a reporting company under Section 13 or Section 15(d) of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor exempt from reporting pursuant to Rule 12g3-2(b) thereunder. We will be required to file certain information in Spanish with the SMV, such as quarterly and annual reports and notices of material events (Hechos de Importancia). All such reports and notices are available at www.smv.gob.pe. The documents filed with the SMV are not and will not form part of this offering memorandum and are not incorporated by reference herein.
ENFORCEMENT OF CIVIL LIABILITIES We are, and each of the Guarantors is, an exempted limited liability company organized under the laws of Peru and substantially all of our and the Guarantors’ assets are located outside the United States. In addition, all of our and each of the Guarantors’ directors and officers and certain other persons named in this offering memorandum reside outside the United States and all or a significant portion of our and their assets are located outside the United States. As a result, it may be difficult or impossible for investors to effect service of process within the United v
States upon such persons or to enforce against them, our company or each of the Guarantors judgments of courts of the United States, whether or not predicated upon the civil liability provisions of the federal securities laws of the United States or other laws of the United States or any state thereof. We have been advised by our Peruvian counsel, Rubio Leguía Normand, that any final and conclusive judgment for a fixed and final sum obtained against us in any foreign court having jurisdiction in respect of any suit, action or proceeding against us for the enforcement of any of our obligations under the notes that are governed by New York law will, upon request, be deemed valid and enforceable in Peru through an exequatur judiciary proceeding (which does not involve the reopening of the case), provided that: (1) there is a treaty in effect between the country where said foreign court sits and Peru regarding the recognition and enforcement of foreign judgments; or (2) in the absence of such a treaty, the following conditions and requirements are met: (i) the judgment does not resolve matters under the exclusive jurisdiction of Peruvian courts (and the matters contemplated in respect of this offering memorandum or the notes are not matters under the exclusive jurisdiction of Peruvian courts); (ii) such court had jurisdiction under its own private international conflicts of law rules and under general principles of international procedural jurisdiction; (iii) we received service of process in accordance with the laws of the place where the proceeding took place, were granted a reasonable opportunity to appear before such foreign court and were guaranteed due process rights; (iv) the judgment has the status of res judicata as defined in the jurisdiction of the court rendering such judgment; (v) no pending litigation in Peru between the same parties for the same dispute was initiated before the commencement of the proceeding that concluded with the foreign judgment; (vi) the judgment is not incompatible with another judgment that fulfills the requirements of recognition and enforceability established by Peruvian law, unless such foreign judgment was rendered first; (vii)
the judgment is not contrary to Peruvian public policy or good morals; and
(viii) it is not proven that such foreign court denies enforcement of Peruvian judgments or engages in a review of the merits thereof. We have no reason to believe that any of our obligations relating to the notes and the guarantees would be contrary to Peruvian public policy, good morals and international treaties binding upon Peru or generally accepted principles of international law. The United States does not currently have a treaty providing for reciprocal recognition and enforcement of judgments in civil and commercial matters with Peru. Therefore, a final judgment for payment of money rendered by a federal or state court in the United States based on civil liability, whether or not predicated solely upon U.S. federal securities laws, may not be enforceable, either in whole or in part, in Peru. However, if the party in whose favor such final judgment is rendered brings a new suit in a competent court in Peru, such party may submit to the Peruvian court the final judgment rendered in the United States. Under such circumstances, a judgment by a federal or state court of the United States against our company, the Guarantors or such persons could be regarded by a Peruvian court only as evidence of the outcome of the dispute to which such judgment relates, and a Peruvian court may choose to re-hear the dispute. In addition, awards of punitive damages in actions brought in the United States or elsewhere are unenforceable in Peru. In the past, Peruvian courts have enforced judgments rendered in the United States based on legal principles of reciprocity and comity. We and the Guarantors will appoint CT Corporation System, New York, New York, as agent to receive service of process under the indenture governing the notes, including with respect to any action brought against us or the Guarantors in the Supreme Court of the State of New York in the County of New York or the United States District Court for the Southern District of New York under the federal securities laws of the United States. vi
FORWARD-LOOKING STATEMENTS This offering memorandum contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These statements appear throughout this offering memorandum, principally in “Summary,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business”. Such estimates and forward-looking statements are primarily based on current expectations and projections about future events and financial trends that affect, or may affect, our business, financial condition, results of operations and prospects. There are many significant risks, uncertainties and assumptions that might cause our business, financial condition, results of operations and prospects to differ materially from those set out in our estimates and forward-looking statements. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates” and similar expressions are forward-looking statements. Although we believe that these forward-looking statements are based upon reasonable assumptions, these statements are subject to several risks and uncertainties and are made in light of information currently available to us. Our forward-looking statements may be influenced by factors, including the following:
economic, political and business conditions in Peru, Ecuador, Argentina and in major international markets to which we export and sell sugar and ethanol, including price and demand for such products;
climatic conditions, climate changes and natural disasters;
the cost and availability of financing and our ability to obtain financing on satisfactory terms;
our investment, acquisition, joint venture, strategic alliances or divestiture plans;
interest rate fluctuations, inflation and exchange rates between Peruvian and foreign currencies;
existing and future governmental regulations;
market price variation, client preferences and competition;
our ability to successfully implement our strategy and capital expenditure plans;
our future production capacity and the availability of sugarcane;
our ability to retain certain personnel and ability to hire additional key personnel;
changes in tax policies and legislation;
seasonality of the sugarcane growing cycle in Ecuador and Argentina;
export duties and tariffs, as well as tariff barriers;
other factors or trends that may affect our financial condition or results of operations;
the factors discussed under the section entitled “Risk Factors” in this offering memorandum; and
other statements contained in this offering memorandum regarding matters that are not historical facts.
Our forward-looking statements are not guarantees of future performance, and our actual results or other developments may differ materially from the expectations expressed in the forward-looking statements. As for forward-looking statements that relate to future financial results and other projections, actual results will be different due to the inherent uncertainty of estimates, forecasts and projections. Because of these uncertainties, potential investors should not rely on these forward-looking statements.
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Forward-looking statements speak only as of the date they are made, and neither we nor the initial purchasers undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances or to reflect the occurrence of unanticipated events.
viii
PRESENTATION OF FINANCIAL AND OTHER INFORMATION Currencies and Exchange Rates Unless otherwise specified herein or the context otherwise requires, in this offering memorandum references to “US$,” “dollars” and “U.S. dollars” are to United States dollars, the official currency of the United States and Ecuador, and references to “S/.” and “nuevos soles” are to Peruvian nuevos soles, the official currency of Peru, and references to “Pesos” or “Argentine Pesos” are to Argentine pesos, the official currency of Argentina. Solely for the convenience of the reader, we have translated certain amounts included in “Summary—Summary Financial and Other Information,” “Capitalization,” “Selected Financial and Other Information” and elsewhere in this offering memorandum from nuevos soles into U.S. dollars for figures as of December 31, 2011 using the rate as specified by the SBS as of December 31, 2011 of S/.2.696 to US$1.00 and, for figures as of March 31, 2012, using the rate as specified by the SBS as of March 31, 2012 of S/.2.667 to US$1.00. These translations should not be considered representations that any such nuevos sol amounts have been, could have been or could be converted into U.S. dollars at that or at any other exchange rate. Such translations should not be construed as representations that the nuevo sol amounts represent or have been or could be converted into U.S. dollars as of that or any other date. For a complete description of the exchange rates between the nuevo sol and the U.S. dollar, see “Exchange Rates.” The Federal Reserve Bank of New York does not report a noon buying rate for nuevos soles. Financial Statements We maintain our books and records in nuevos soles. We have prepared our consolidated financial statements in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”) and are the first consolidated financial statements we have prepared in accordance with IFRS. This offering memorandum includes: (i) our audited consolidated statements of financial position as of December 31, 2011, 2010 and January 1, 2010 (transition date) and our results of operations for the years ended December 31, 2011 and 2010 and (ii) our unaudited condensed consolidated interim statements of financial position as of March 31, 2012 and our results of operations for the three months ended March 31, 2012 and 2011. Our financial information as of December 31, 2011, 2010 and January 1, 2010 (transition date) and for the years ended December 31, 2011 and 2010 has been derived from our audited consolidated financial statements contained elsewhere in this offering memorandum. Our financial information as of March 31, 2012 and for the three months ended March 31, 2012 and 2011 has been derived from our unaudited condensed consolidated interim financial statements. The results of operations for the three months ended March 31, 2012 are not necessarily indicative of the results to be expected for the year ending December 31, 2012 or for any other period. The unaudited condensed consolidated interim financial statements and the notes thereto have been condensed, but contain all adjustments, including adjustments of a normal and recurring nature, necessary for a fair presentation of our financial position and results of operation. Guarantors’ Financial Statements Each of the Guarantors (other than Azucarera Olmos) is a publicly traded company in Peru and like us prepares annual consolidated financial statements comparable to those prepared by us. As indicated in this section, the Guarantors (other than Azucarera Olmos) are consolidated into our audited consolidated financial statements and unaudited condensed consolidated interim financial statements and represented at March 31, 2012 and December 31, 2011 (i) in the case of Casa Grande 41.7% and 40.5%, respectively, of our consolidated assets, 86.8% and 55.6%, respectively, of our consolidated profit and 51.3% and 52.5%, respectively, of our consolidated EBITDA (as defined below), (ii) in the case of Cartavio 15.9% and 15.9%, respectively, of our consolidated assets, 12.0% and 20.3%, respectively, of our consolidated profit and 17.2% and 23.3%, respectively, of our consolidated EBITDA and (iii) in the case of San Jacinto 10.8% and 11.6%, respectively, of our consolidated assets, (7.7)% and 17.9%, respectively, of our consolidated profit and 16.0% and 12.4%, respectively, of our consolidated EBITDA. Furthermore, Casa Grande, Cartavio and San Jacinto at March 31, 2012 and December 31, 2011 had total liabilities of S/.614.6 million and S/.499.4 million, S/.312.6 million and S/.227.7 million and S/.180.7 million and S/.190.7 million, respectively. ix
We are an operating company and also operate through our subsidiaries, including Casa Grande, Cartavio and San Jacinto. Given the (i) relative contribution of Casa Grande, Cartavio and San Jacinto to our results of operations and financial condition, (ii) Casa Grande’s, Cartavio’s and San Jacinto’s ability under limited circumstances to incur additional indebtedness and (iii) limited amount of Casa Grande’s guarantee, we do not believe the inclusion of separate consolidated financial statements for each of the Guarantors would be material to a prospective purchaser’s decision on whether to invest in and acquire the notes. Non-GAAP Financial Measures A body of generally accepted accounting principles is commonly referred to as “GAAP.” For this purpose, a non-GAAP financial measure is generally defined by the SEC as one that purports to measure historical or future financial performance, financial position or cash flows but excludes or includes amounts that would not be so adjusted in the most comparable GAAP measure. In this offering memorandum, we disclose so-called non-GAAP financial measures, primarily EBITDA, Fixed Charge Coverage Ratio and Consolidated Leverage Ratio. We define EBITDA as operating income less the change in fair value of biological assets plus depreciation plus amortization. See “Description of the Notes—Certain Definitions” for the definitions of Fixed Charge Coverage Ratio and Consolidated Leverage Ratio. The non-GAAP financial measures described in this offering memorandum are not a substitute for GAAP measures of earnings. Our management believes that disclosure of EBITDA, Fixed Charge Coverage Ratio and Consolidated Leverage Ratio provides useful information to investors and financial analysts in their review of our operating performance and their comparison of our operating performance to the operating performance of other companies in the same industry and other industries. EBITDA, Fixed Charge Coverage Ratio and Consolidated Leverage Ratio, as calculated by us, may not be comparable to similarly titled measures reported by other companies, including those in the sugar and ethanol industries. Market Data We obtained the market and competitive position data, including market forecasts, used throughout this offering memorandum from internal surveys, reports issued by market research firms, publicly available information and industry publications. We include data from reports prepared by OECD-FAO Agricultural Outlook 2011-2020, the Peruvian Ministry of Agriculture, the Czarnikow Group, IntercontinentalExchange, the World Bank and Indexmundi. Industry publications, including those referenced here, generally state that the information presented therein has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. Similarly, internal surveys, industry forecasts and market research, while believed to be reliable, have not been independently verified, and neither we nor the initial purchasers make any representation as to the accuracy of such information. Information derived from the industry publications above have been accurately reproduced and, to the best of our knowledge (after taking all reasonable care to ensure that such is the case), no facts have been omitted which would render the reproduced information inaccurate or misleading. Assumptions made in this offering memorandum as to domestic prices were made on basis of international prices made from the above mentioned sources and also using a conservative model based on past developments. Climate phenomena, such as “El Niño”, that could affect our performance also were included in our model so as to stress the model. Technical and Other Terms As used in this offering memorandum, the following terms have these meanings:
“Ethanol” means a clear, colorless liquid with a characteristic, agreeable odor, made by fermenting and then distilling starch or sugar crops. It is also known as alcohol or ethyl alcohol, and can be in hydrous or anhydrous state, depending on the percentage of water or purity. We currently produce only hydrous ethanol, and therefore references throughout this offering memorandum to “ethanol” are only to hydrous ethanol. x
“Ethanol 1” refers to a mixture of 96% ethanol and 4% water.
“Ethanol 2” refers to a mixture of 94% ethanol and 6% water.
“Polarization” refers to the measurement of sucrose content in sugar, where 100 is the maximum and means 100% sucrose.
“Sugar” means any grade or type of saccharine product derived, directly or indirectly, from sugarcane or sugar beets and consisting of, or containing, sucrose or invert sugar, including all raw sugar, refined crystalline sugar, liquid sugar, edible molasses, and cane syrup.
All references in this offering memorandum to “tons” shall also include “metric tons.” The term “MW” refers to megawatt. One “hectare” is equivalent to 10,000 square meters or 2.47105381 acres. One “cubic meter” is equivalent to 1,000 liters. Rounding Certain figures included in this offering memorandum and in our financial statements have been rounded for ease of presentation. Percentage figures included in this offering memorandum have not in all cases been calculated on the basis of such rounded figures but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this offering memorandum may vary from those obtained by performing the same calculations using the figures in our financial statements. Certain other amounts that appear in this offering memorandum may not sum due to rounding. General Our obligations under the notes will be fully and unconditionally guaranteed by Cartavio, San Jacinto and Azucarera Olmos on a joint and several basis, and Casa Grande will partially guarantee such obligations in an initial amount equal to US$162,500,000. Azucarera Olmos, a wholly-owned Guarantor of the notes, does not currently have any operations or assets. Because Azucarera Olmos was incorporated on May 9, 2012, it is not consolidated in our audited consolidated financial statements or unaudited condensed consolidated interim financial statements contained in this offering memorandum. Assuming the land sale for the Olmos Expansion Plan (as defined below) is completed and land preparation occurs, we expect the Olmos Expansion Plan to result in increases to our harvested area and sugar production. As a result, our financial results for a future period may not be directly comparable to prior periods.
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SUMMARY This summary highlights information presented in greater detail elsewhere in this offering memorandum. This summary is not complete and does not contain all of the information you should consider before investing in our notes. You should carefully read this entire offering memorandum before deciding whether to invest in our notes, including the “Risk Factors,” “Selected Financial and Other Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections and our financial statements and notes to those statements, included elsewhere in this offering memorandum. Overview We cultivate, harvest, purchase and crush sugarcane, the principal raw material used to produce sugar and ethanol. We conduct our sugar and ethanol operations through our five mills and eight distilleries, which are located throughout Peru, and in Ecuador and Argentina. We market and sell all of the sugar and ethanol we produce, both domestically and globally. In 2011, we cultivated sugarcane on 55,733 hectares. According to data provided by the Peruvian Ministry of Agriculture, we were the largest sugarcane crush processor in terms of sugarcane crushed, the largest producer of sugar and one of the two largest producers of ethanol in Peru in 2011. In addition, according to data provided by the Peruvian Ministry of Agriculture, we accounted for approximately 46% of the sugar produced in Peru in 2011. We believe, according to internal data, that we accounted for approximately 38% of the ethanol produced in Peru in 2011. Our operations are conducted in Peru through Coazucar (approximately 1% of our EBITDA for the three months ended March 31, 2012 and 2% of our EBITDA for 2011) and our subsidiaries (i) Casa Grande (approximately 51% of our EBITDA for the three months ended March 31, 2012 and 52% of our EBITDA for 2011), (ii) Cartavio (approximately 17% of our EBITDA for the three months ended March 31, 2012 and 23% of our EBITDA for 2011), (iii) San Jacinto (approximately 16% of our EBITDA for the three months ended March 31, 2012 and 12% of our EBITDA for 2011) and (iv) Sintuco (approximately 2% of our EBITDA for the three months ended March 31, 2012 and 1% of our EBITDA for 2011); in Ecuador through our subsidiary La Troncal (approximately 13% of our EBITDA for the three months ended March 31, 2012 and 6% of our EBITDA for 2011); and in Argentina through our subsidiary San Isidro (approximately 0% of our EBITDA for the three months ended March 31, 2012 and 4% of our EBITDA for 2011). Our mills have a combined installed sugarcane crushing capacity of approximately 8.4 million tons per year and benefit from high agricultural yields, proximity to a main port and consumer markets and a more efficient structure for sugarcane transportation, as compared to other mills. In addition, Peru’s dry, tropic climate allows us to harvest our sugarcane throughout the entire calendar year, giving us a competitive advantage over producers in other countries, which can only harvest once or twice a year. Most of our mills are also able to shift production between brown, white and refined sugar in order to capitalize on unexpected price variations among the different types of sugar. The close proximity of our sugarcane fields and those of our suppliers to our milling facilities (average distance of approximately 15 kilometers) and our increasing mechanization levels (approximately 13% of the sugarcane we cultivated was harvested mechanically in 2011) positively impact our operating cost structure. Our Peruvian mills and distilleries are located in the La Libertad and Ancash regions, an average of approximately 59 kilometers from the nearest sea port, Salaverry, also located in the La Libertad region, through which we ship almost all of our Peruvian exports. The La Libertad and Ancash regions are approximately 610 kilometers and 407 kilometers respectively from Lima, our principal market. For the three months ended March 31, 2012, we crushed 1.3 million tons of sugarcane, all of which was used to produce sugar and ethanol in Peru because the sugarcane harvest does not begin in Ecuador and Argentina until July and May, respectively. In the same period, we produced approximately 133 thousand tons of sugar and approximately 14.1 million liters of ethanol. For the three months ended March 31, 2012, we reported sales of products of S/.377.2 million (US$141.4 million) and EBITDA of S/.138.6 million (US$52.0 million). Our sales of sugar and ethanol for the three months ended March 31, 2012 were S/.340.1 million (US$127.5 million) and S/.30.9 million (US$11.6 million), respectively. During 2011, we crushed 6.7 million tons of sugarcane (4.7 million tons of which were crushed in Peru), all of which was used to produce sugar and ethanol. In 2011, we produced approximately 690 thousand tons of sugar (492 thousand tons of which were produced in Peru) and approximately 1
69.2 million liters of ethanol (47.9 million liters of which were produced in Peru). For 2011, we reported sales of products of S/.1,304.4 million (US$483.8 million) and EBITDA of S/.578.5 million (US$214.6 million). Our sales of sugar and ethanol during 2011 were S/.1,166.2 million (US$432.6 million) and S/.93.4 million (US$34.6 million), respectively. As of March 31, 2012, we owned land with a total area of 89,752 hectares (approximately 224,380 acres), of which approximately 80,862 hectares (approximately 199,814 acres) is arable land. As of December 31, 2011, we cultivate sugarcane on 55,733 hectares (approximately 137,719 acres). We also purchase sugarcane from third party suppliers, which represented approximately 28% of the total sugarcane that we crushed during 2011. Key Financial and Operating Data The following table sets forth certain of our financial information and operating data for the periods indicated. As of and for the Three Months Ended March 31, 2012 2012 2011 (in thousands of US$, except (in thousands of S/., as indicated) except as indicated)
Financial data: Sales of products ......................... Profit for the period..................... EBITDA(1) ................................... EBITDA margin(2) ....................... Total debt(3) ................................. Total debt / EBITDA(4) ................ Net debt(5) .................................... Net debt / EBITDA(6) ..................
141,427 32,767 51,979 36.8% 302,049 1.46x 230,133 1.11x
(unaudited) 377,185 87,388 138,628 36.8% 805,566 1.46x 613,766 1.11x
As of and for the Years Ended December 31, 2011 2011 2010 (in thousands of US$, except (in thousands of S/., as indicated) except as indicated)
309,162 147,796 164,151 53.1%
As of and for the Three Months Ended March 31, 2012 2011
483,833 207,543 214,587 44.4% 302,946 1.41x 260,558 1.21x
1,304,415 559,535 578,526 44.4% 816,744 1.41x 702,467 1.21x
937,854 427,689 416,977 44.5% 533,619 1.28x 462,637 1.11x
2011
As of and for the Years Ended December 31, 2010
2009
Operating data:
Sugarcane crushed (tons) Casa Grande .......................... Cartavio ................................. San Jacinto............................. San Isidro............................... La Troncal ............................. Total ...................................... Sugar production (tons)............... Ethanol production (million liters) ........................................ Employees ..................................
648,161 449,681 207,568 —(7) —(7) 1,305,409 133,429
664,952 455,021 171,499 —(7) —(7) 1,291,472 135,866
2,331,436 1,688,790 696,063 488,752 1,500,886 6,705,927 689,651
2,365,120 1,696,196 605,809 547,106 1,629,216 6,843,447 470,599
2,197,378 1,690,490 546,774 515,821 1,295,569 6,246,032 451,866
14.1 13,526
13.1 9,706
69.2 12,089
67.2 8,646
59.7 9,471
_______________________________ (1) EBITDA is calculated using profit from operations for the period before financing and taxation without initial recognition and change in fair value of biological asset, added to depreciation and amortization. See “Presentation of Financial and Other Information.” (2) EBITDA margin is EBITDA divided by sales of products, expressed as a percentage. (3) Total debt is the sum of total short- and long-term loans. (4) Total debt/EBITDA is the ratio of our total debt as of the end of the applicable period divided by our EBITDA for the then most recently concluded period of four consecutive fiscal quarters, including the four consecutive fiscal quarters ended March 31, 2012. (5) Net debt is obtained netting total debt with cash and cash equivalents. (6) Net debt/EBITDA is the ratio of our net debt as of the end of the applicable period divided by our EBITDA for the then most recently concluded period of four consecutive fiscal quarters, including the four consecutive fiscal quarters ended March 31, 2012. (7) Sugarcane harvest begins in Ecuador and Argentina in July and May, respectively, due to climate conditions in these countries that do not permit sugarcane harvesting year-round.
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The following tables set forth certain of the financial information and operating data of the Guarantors for the periods indicated.
Casa Grande Financial data: Sales of products ........................................... 153,270 Profit for the period....................................... 75,848 EBITDA(2) ..................................................... 71,134 EBITDA margin(3) ........................................ 46.4% Total debt(4) ................................................... 106,801 (5) Total debt / EBITDA ................................. 0.39x Net debt(6) ...................................................... 70,127 Net debt / EBITDA(7) .................................... 0.26x Operating data: Total area for sugarcane production capacity (hectares) ..................................... 21,115 Sugarcane crushed (tons) .............................. 648,161 Daily ethanol production capacity (liters) .... 60,000 Total ethanol production (million liters)....... 4.0
% of Coazucar
40.6% 86.8% 51.3% 13.3% 11.4%
37.9% 49.7% 13.6% 28.2%
For the Three Months Ended March 31, 2012 (in thousands of S/., except as indicated) % of San % of Cartavio Coazucar Jacinto Coazucar Others(1)
95,749 10,508 23,814 24.9% 54,040 0.45x 32,394 0.27x
25.4% 12.0% 17.2%
6,891 449,681 80,000 3.7
12.4% 34.4% 18.2% 26.4%
6.7% 5.3%
48,430 (6,764) 22,181 45.8% 103,481 1.42x 102,865 1.42x
12.8% (7.7)% 16.0%
6,081 207,568 40,000 0.6
10.9% 15.9% 9.1% 4.1%
12.8% 16.8%
% of Coazucar
Total
79,736 7,796 21,499 27.0% 541,244 6.25x 408,380 4.72x
21.1% 8.9% 15.5%
21,646 (8) — 260,000 5.8
38.8% 55,733 (8) 1,305,410 — 59.1% 440,000 41.3% 14.1
67.2% 66.5%
377,185 87,388 138,628 36.8% 805,566 1.46x 613,766 1.11x
_______________________________
(1) Includes La Troncal, San Isidro, Sintuco and Coazucar distilleries with respect to financial data, and adjustment for consolidation. With respect to operating data, only the Coazucar distilleries are included in total ethanol production and capacity figures and La Troncal, San Isidro and Sintuco are included in the total sugarcane production and total of sugarcane crushed figures. (2) EBITDA is calculated using profit from operations for the period before financing and taxation without initial recognition and change in fair value of biological asset, added to depreciation and amortization. See “Presentation of Financial and Other Information.” (3) EBITDA margin is EBITDA divided by sales of products, expressed as a percentage. (4) Total debt is the sum of total short- and long-term loans. (5) Total debt/EBITDA is the ratio of our total debt as of the end of the applicable period divided by our EBITDA for the then most recently concluded period of four consecutive fiscal quarters, including the four consecutive fiscal quarters ended March 31, 2012. (6) Net debt is obtained netting total debt with cash and cash equivalents. (7) Net debt/EBITDA is the ratio of our net debt as of March 31, 2012 divided by our EBITDA for the then most recently concluded period of four consecutive fiscal quarters ended March 31, 2012. (8) Sugarcane harvest begins in Ecuador and Argentina in July and May, respectively, due to climate conditions in these countries that do not permit sugarcane harvesting year-round.
Casa Grande
% of Coazucar
For the Year Ended December 31, 2011 (in thousands of S/., except as indicated) % of San % of Cartavio Coazucar Jacinto Coazucar Others(1)
% of Coazucar
Total
Financial data: Sales of products ........................................... 583,390 Profit for the year .......................................... 310,859 EBITDA(2) ..................................................... 303,581 EBITDA margin(3) ........................................ 52.0% Total debt(4) ................................................... 119,141 (5) Total debt / EBITDA ................................. 0.39x Net debt(6) ...................................................... 110,467 Net debt / EBITDA(7) .................................... 0.36x Operating data: Total area for sugarcane production capacity (hectares) ..................................... 21,115 Sugarcane crushed (tons) .............................. 2,331,436 Daily ethanol production capacity (liters) .... 60,000 Total ethanol production (million liters)....... 12.7
44.7% 55.6% 52.5%
401,718 113,742 134,659 33.5% 56,211 0.42x 47,889 0.36x
30.8% 20.3% 23.3%
37.9% 6,891 34.8% 1,688,790 13.6% 80,000 18.3% 15.8
12.4% 25.2% 18.2% 22.9%
14.6% 15.7%
6.9% 6.8%
164,855 99,990 71,922 43.6% 105,406 1.47x 103,410 1.44x
12.6% 17.9% 12.4%
154,452 34,944 68,364 44.3% 535,986 7.84x 440,701 6.45x
11.8% 1,304,415 6.2% 559,535 11.8% 578,526 44.4% 65.6% 816,744 1.41x 62.7% 702,467 1.21x
6,081 696,063 40,000 2.4
10.9% 21,646 10.4% 1,989,638 9.1% 260,000 3.5% 38.2
38.8% 55,733 29.7% 6,705,927 59.1% 440,000 55.3% 69.2
12.9% 14.7%
_______________________________
(1) Includes La Troncal, San Isidro, Sintuco and Coazucar distilleries with respect to financial data, and adjustment for consolidation. With respect to operating data, only the Coazucar distilleries are included in total ethanol production and capacity figures and La Troncal, San Isidro and Sintuco are included in the total sugarcane production and total of sugarcane crushed figures. (2) EBITDA is calculated using profit from operations for the period before financing and taxation without initial recognition and change in fair value of biological asset, added to depreciation and amortization. See “Presentation of Financial and Other Information.” (3) EBITDA margin is EBITDA divided by sales of products, expressed as a percentage. (4) Total debt is the sum of total short- and long-term loans. (5) Total debt/EBITDA is the ratio of our total debt as of the end of the applicable period divided by our EBITDA for the then most recently concluded year. (6) Net debt is obtained netting total debt with cash and cash equivalents. (7) Net debt/EBITDA is the ratio of our net debt as of December 31, 2011 divided by our EBITDA for the then most recently concluded period of fiscal year ended December 31, 2011.
3
Our Main Products We market and sell all the sugar and ethanol produced by our mills and distilleries, both domestically and globally. We also produce other sugarcane by-products including molasses and bagasse. Ethanol is produced from molasses, the principal remaining by-product of processing sugarcane into sugar. Bagasse is used as a raw material to generate the vapor that is used to produce sugar and it is also used to cogenerate electricity. Sugar We are able to produce several types of sugar such as refined white, refined, brown and organic sugar. While brown sugar has constituted the majority of our sugar sales during the last six years, most of our mills have industrial flexibility to produce brown, white and refined sugar. We produced approximately 690 thousand tons of sugar during 2011 (consisting 60% of brown sugar, 29% of white sugar, 8% of refined sugar and 3% of organic sugar) and recorded sales of products from sugar of S/.1,166.2 million, or 89.4%, of our sales of products in 2011. For 2011, we exported approximately 11.7% of our total sugar sales to customers located primarily in North America and Europe. In Peru, we sell our sugar products to retailers, wholesale distributors and food and beverage manufacturers. In Argentina, we produce mostly organic sugar, which we export mainly to Europe, where demand for this specialty product is highest. Ethanol We produce and sell ethanol both domestically and globally. In 2011, we produced approximately 69.2 million liters of ethanol in our eight distilleries and recorded sales of products from ethanol of S/.93.4 million, or 7.2%, of our sales of products. In 2011, we sold 20.2% of our ethanol mainly to alcohol producers in Peru and exported 79.8% to customers located in the U.S. and Europe. Sugarcane by-products We also produce molasses and bagasse. Molasses is a by-product of processing sugarcane into sugar and is used as a raw material to produce ethanol. Sugarcane bagasse is a by-product of processing both sugar and ethanol and is a renewable energy source. We generate electricity at all of our mills through the burning of sugarcane bagasse in boilers, which enables those mills to be self-sufficient in terms of their energy needs. In addition, we sell excess bagasse produced at our Casa Grande, Cartavio and San Jacinto mills to Trupal S.A., an affiliate of Grupo Gloria engaged in the production of paper and cardboard. Peru’s Competitive Advantages in the Production of Sugarcane According to the Food and Agricultural Policy Research Institute (“FAPRI”), Peru had one of the highest crop yields in the world for sugarcane in 2011. Peru is located near the equator and the resulting vertical solar radiation it receives allow for such high sugarcane crop yields. Moreover, the vast territory, mild climate and stable water supply found in Peru, make it possible to harvest sugarcane all year long, thus further increasing productivity. According to the Peruvian Ministry of Agriculture, approximately 8% of Peru’s coastal agricultural land, or 127,809 million hectares, is currently used for sugarcane production, and we believe that Peru should be able to increase its sugarcane production capacity significantly depending on market conditions and the suitability of available land for sugarcane cultivation. Peru’s favorable growing conditions also permit sugarcane to be harvested seven times before requiring re-planting, compared to (i) India, where, on average, sugarcane must be re-planted every two harvests and (ii) the United States and other countries that harvest sugar beet, which has one annual crop and must be re-planted every year, as well as requiring crop rotations that range between three and five years. We believe that Peruvian producers of sugar, including us, enjoy competitive advantages over sugar producers in other countries due to the following factors: Low-cost producer. The cost of producing sugar from sugarcane in Peru is low due to its extremely favorable climate and soil. Peru experiences dry weather with little climate differentiation among the seasons due to its proximity to the equator and due to the effects of the Humboldt sea current. Peru also benefits from 4
technological improvements developed in the production of sugar. These technological improvements have resulted in longer harvesting cycles, higher sugarcane yield per hectare and increased sucrose content from crushed sugarcane, which has improved sugar output. According to the Czarnikow Group, sugar production costs in Peru are significantly lower than production costs in Brazil, a leading producer of sugar. For example, during 2011, average production costs per pound of brown sugar in Brazil was approximately US$0.20, or 53.8% higher than the US$0.13 per pound cost of brown sugar produced from our own sugarcane. Strong domestic and global sugar demand. Peru consumed approximately 1.2 million tons of sugar during 2011. Sugar consumption in Peru has continued to grow, principally as a result of higher consumption of beverages and processed food products made with sugar, as well as a result of higher consumer disposable income. Worldwide sugar consumption has more than doubled since the early 1980s, to approximately 165 million tons in 2010 from approximately 70 million tons in 1971, in each case, measured based on raw sugar equivalent. OECD-FAO estimates the worldwide sugar consumption to increase to 207 million tons by 2020. We expect future growth opportunities to come from a gradual liberalization of trade barriers in markets outside Peru, mainly in developed OECD countries; and we expect increased sugar consumption due to (1) population growth concentrated in markets open to the international sugar trade, (2) increased purchasing power in many countries and (3) higher consumption of processed foods and drinks. Increased opportunities to export sugar. The global sugar market has grown significantly in recent years. However, sugar producing countries still give priority to supplying their domestic markets. Therefore, the international trade market for sugar should have ample room for growth. Consumption growth of sugar is not always accompanied by increased local production in many countries. This creates medium-term opportunities for Peruvian sugar export growth. Furthermore, given Peru’s location in the western hemisphere and proximity to the equator, Peruvian producers of sugar, such as us, are able to export the majority of their products in a different export window than those of competitors outside of Peru. This also creates opportunities for Peruvian sugar export growth. Our Strengths Undisputed leadership in Peru. We enjoy leading market positions in Peru, a country with one of the highest sugarcane yields in the world in 2011 and we have one of the highest sugarcane yields in Peru. We are the largest grower and processor of sugarcane in Peru, whose climate allows us to harvest sugarcane year-round. According to the Peruvian Ministry of Agriculture, we are the largest sugarcane grower in Peru, with 55,733 hectares cultivated in 2011, compared to 10,350 hectares cultivated by our largest competitor. For 2011, the combined crushing capacity of our three Peruvian mills is over six million tons per year, compared to a crushing capacity 1.2 million tons for our largest competitor. We produced approximately 492 thousand tons of sugar in Peru and are also the largest seller of sugar in Peru, with a market share of approximately 46% through our brands Casa Grande, Cartavio and San Jacinto. We are one of the two largest producers of ethanol in Peru, having produced 47.9 million liters of ethanol in 2011, and the largest exporter in Peru, having exported 42.2 million liters of ethanol in 2011. Low-cost producer and strategically located assets throughout Peru. Our mills and distilleries and the land on which we cultivate and harvest sugarcane are strategically located throughout Peru and benefit from favorable climate and stable water supply. Peru is one of the world’s most productive countries in terms of high crop yields for sugarcane, primarily as a result of:
its favorable climate;
a combination of climate and soil resulting in increased production of sugar per hectare of planted sugarcane;
extensive agricultural properties and operations, with large-scale production;
availability of land for sugarcane production; and
extensive logistical infrastructure, allowing for efficient product distribution.
5
Our existing mills, distilleries and other production facilities are located in close proximity to our customers, sugarcane fields owned by us and by other growers, port terminals and other transportation infrastructure and warehouses. For example, our production facilities, Casa Grande, Cartavio and San Jacinto, are located throughout Peru, approximately 63, 54 and 170 kilometers, respectively, from the port of Salaverry, in the La Libertad Region, from which we export sugar and ethanol. Our production facilities are also located close to major roads and our warehouses, thus decreasing delivery time, increasing operating efficiencies, reducing logistics costs and facilitating responses to shifts in demand. During 2011, 65% of our total sugarcane crushed was harvested from our own fields, with lower costs than the sugarcane supplied by third-party growers. Our expansive owned lands and those of our suppliers are also strategically located within an average of approximately 15 kilometers from our mills and distilleries. This close proximity, coupled with our increasing level of mechanization, reduces our transportation costs. We are also energy self-sufficient and can generate enough energy to support our milling and distilling operations. We believe our low costs, the increasing mechanization of our agricultural processes, improvements in industrial operations and other factors enable us to manage our operating costs efficiently. Increasingly mechanized agro-industrial complex. We seek to implement technological innovations in our planting, harvesting and production processes, which has greatly improved our productivity and reduced our operating costs in recent years by, among others, reducing the number of workplace accidents and the number of employees assigned to harvesting. For 2011, our level of mechanized harvesting contributed to reduce our costs associated to our sugarcane harvest and loading operations. During 2011, we harvested approximately 13% of the sugarcane we produced in Peru using mechanized harvesters, which we operate 24 hours per day, seven days per week throughout the harvesting season. We have developed and implemented numerous technological improvements for our mechanized harvesting equipment, such as automatic pilots and use of high precision GPS for soil preparation (including application of fertilizers and pesticides) and harvesting, which has significantly improved our productivity levels, and are also in the process of developing and testing mechanized planting. Diversified sugarcane varieties. We currently cultivate 19 types of sugarcane, with no single variety representing more than 40% of our total cultivated area. Six of the types of sugarcane we cultivate have been developed to maximize productivity considering the soil and climate conditions in Peru and to be more resistant to pests and disease. Our use of a wide variety of sugarcane plants coupled with our practice of replanting approximately 11% of our sugarcane crop annually, has resulted in historical low infestation and disease rates of our crops and mitigates our exposure to the risk of loss of our crops from pests and disease. Long operating history and experienced management team. Many of our mills and distilleries have been in operation for over 100 years, including Casa Grande (1860), Cartavio (1782), San Jacinto (1868) and San Isidro (1760). As a result, we benefit from significant operating experience in both the sugar and ethanol industries. We have successfully acquired companies and facilities and expanded our sugar and ethanol operations throughout Peru, and more recently in Ecuador and Argentina. We believe this demonstrates our ability to grow our operations and succeed in the industries in which we operate, reducing our fixed average costs. Our team of seven senior executives has an average of 15 years experience and knowledge in the sugar and ethanol industries and in production and operations. Our management team and our other professionals are highly trained, and we have a results- oriented corporate culture that is focused on reducing operating costs and increasing revenue. We utilize human resource management tools that focus on the integration and motivation of our management team and other professionals to help to maximize their effectiveness. Efficient use of water. Water is vital to the production of sugarcane, and our investments in water storage and distribution systems allow us to increase our water efficiency and improve our sugarcane production. We are planning to increase the area under cultivation by introducing new pressurized watering systems that will allow us to reduce our usage of water per hectare compared to traditional watering systems. The pressurized water system also decreases the time needed for sugarcane to achieve maturity, allowing us to harvest sugarcane earlier. In addition, our investments in water storage will allow us to manage our supply of water. By building reservoirs to obtain water from the Chicama River when its levels are the highest, we are able to store that water in reservoirs both for future use on existing cultivated lands and to use the reservoirs as water sources to expand cultivation.
6
Our Strategy We intend to focus on achieving sustainable and profitable growth, further reducing our operating costs and building on our competitive strengths to maintain our market share in Peru and in the other countries in which we operate. Expand our sugarcane and industrial facilities, increasing utilization of our existing capacity. We currently use approximately 80% of our overall crushing capacity. We have a combined sugarcane crushing capacity of approximately 8.4 million tons per year, and in 2011 we crushed approximately 6.7 million tons of sugarcane. We will seek to increase our sugarcane production and achieve the full utilization of our existing crushing capacity, therefore increasing the productivity of those crops, resulting in more sugarcane volume and expansion of the harvested area close to our mills and distilleries through new plantations. Through more efficient water use, we intend to significantly increase our harvested area over the next five years from approximately 55,733 hectares in 2011. We expect to significantly increase our harvested area mainly through the Olmos Expansion Plan (as defined below), which will add approximately 14,500 hectares to our sugarcane operations, in addition to increasing our harvested area on our existing lands by approximately 12,100 hectares in Peru, approximately 2,276 hectares in Ecuador and approximately 3,200 hectares in Argentina. The potential areas that we have identified for such expansion are within the 50 kilometer radius area where most of our producing land is currently located. Expanding our harvested area and renewing our current harvesting areas will allow us to fully utilize the processing capacity of our mills and distilleries. Continue to reduce our operating costs and seek to increase our operating efficiencies. We intend to continue to focus on our low-cost operations improving the efficiency of our operations through additional investments in technology, including agricultural and industrial processes, and information technology. As part of this effort, we intend to continue to (1) increase the level of mechanization of our harvesting, (2) test and implement mechanized planting in our land, (3) take advantage of the competitive advantage of climate and soil conditions in Peru, by expanding our sugarcane production to levels that would allow us to fully utilize our existing crushing capacity, (4) invest in the modernization of our equipments and industrial facilities, (5) invest in improving the productivity of our crop and the efficiency of our industrial process and (6) invest in water storage and distribution systems to increase our water efficiency and improve our sugarcane production. Expand our land portfolio. We plan to further expand our land portfolio. Through a public auction in December 2011, Azucarera Olmos and our affiliate, Gloria S.A., won the rights to purchase 15,600 hectares (11,100 hectares by Azucarera Olmos and 4,500 hectares by Gloria S.A.) of land from Odebrecht, S.A. in Olmos, Lambayeque, Peru (approximately 854 kilometers north of Lima) of the Proyecto Especial de Irrigación Olmos (the “Olmos Expansion Plan”), from which sugarcane greenfield crops will be developed using pressurized water and green harvesting for the production of sugar. According to the auction criterion, water will be available as of March 2014, when construction of the project will be finalized. See “—Recent Developments.” Participate in the consolidation of the sugar and ethanol sectors. The sugar and ethanol sectors have been consolidating in recent years in Latin America. In addition to acquisitions in Peru, we recently acquired sugar and ethanol companies in Argentina and Ecuador. We closely monitor domestic and foreign acquisition and investment opportunities in these sectors and are currently considering, and will continue to consider in the future, selective acquisitions, partnerships and investment opportunities that offer the right strategic fit for our operations. We may enter into acquisitions or partnerships or make certain investments that could be material to our results of operations. Focus on environmental and social awareness. We are committed to acting as an environmentally and socially conscious company. Cartavio, San Jacinto and Casa Grande have signed an Environmental Compliance and Management Program (Programas de Adecuación y Manejo Ambiental or “PAMA”) with the Peruvian government regulating mechanical harvesting, burning of sugarcane, and carbon dioxide emissions, formalizing our commitment to reducing environmental impacts. Casa Grande’s PAMA has been approved by the Peruvian government through the Ministry of Agriculture, and San Jacinto’s and Cartavio’s are in the process of obtaining the approval for their respective PAMAs from the Peruvian government. We continue to invest in the mechanization of our harvests, which is not only cost-efficient, but also reduces our emission levels and decreases the burning of sugarcane fields for manual harvesting, and to improve and develop new training programs for our employees, as well as for the communities where we operate in. 7
Recent Developments Azucarera Olmos was incorporated on May 9, 2012 and it has committed to purchase 11,100 hectares and Grupo Gloria, through Gloria S.A., has committed to purchase 4,500 hectares, for the Olmos Expansion Plan. We have provided a US$49.8 million guarantee for the financing used to purchase the land. The sale contract was signed on May 30, 2012, and a payment schedule is expected to be determined in the second half of August 2012, with land preparation expected to begin in September 2012 and sugar production by 2016. Grupo Gloria and Our History We are part of the Grupo Gloria conglomerate, which is comprised of operating companies, including among many others, the Guarantors, Gloria S.A. and Yura S.A., under the common control of Vito Rodríguez Rodríguez and Jorge Rodríguez Rodríguez, with operations in various industries throughout Latin America, including dairy, food, cement, paper, packaging, agriculture and transportation. Grupo Gloria, through Trupal S.A. was involved in the packaging business which used paper as a raw material. Trupal S.A. began to research the use of bagasse as a raw material used in the production of paper and as a result decided to enter into the sugarcane business in order to produce bagasse. In October 2005, Coazucar, a company formed to manage the agro-industrial division of Grupo Gloria, bought an ownership interest in Casa Grande S.A.A. and in January 2006, acquired the majority of Casa Grande S.A.A.’s shares, laying the foundation for Coazucar’s sugar business. Since 2006, Coazucar has made a number of acquisitions of local Peruvian sugarcane producers. In 2007, Coazucar purchased a majority ownership interest in Complejo Agroindustrial Cartavio S.A.A. from Azucagro S.A., along with a direct ownership interest in its subsidiary Cooperativa Agraria Sintuco Ltda. In 2009, Coazucar also purchased a majority ownership interest in Agroindustrias San Jacinto S.A.A. from Grupo Picasso S.A.C. In 2011, Coazucar undertook several international acquisitions beginning with the purchase of an ownership interest in Ingenio La Troncal, an Ecuadorian sugar company. In that same year, Coazucar also purchased a majority ownership interest in Ingenio San Isidro, Argentina’s largest sugar producer. Corporate Information Our executive offices are located at Av. República de Panamá 2461, La Victoria, Lima 13, Peru. Our telephone number is +51 (1) 470-7170. Our website is http://www.coazucar.com. Any information that is included on or linked to on our website or which may be accessed through our website is not a part of this offering memorandum and is not included herein by reference or otherwise.
8
Our Corporate Structure The following is a chart of our current ownership and corporate structure. 50.0%
50.0%
Vito Rodríguez Rodríguez
Jorge Rodríguez Rodríguez Maningham Holding S.A.(1) 100.0% Clarcrest Investments S.A.(1) 94.1%(2)
Peru
57.1%
Argentina
87.2%
Casa Grande
Cartavio
82.6%
100.0%
San Jacinto
Azucarera Olmos
60.0% San Isidro
Ecuador
36.4% (3) La Troncal
14.6% 50.0% Chiquitoy (4)
57.7% Sintuco
(1) Incorporated under the laws of the Republic of Panama. (2) Clarcrest Investments S.A. owns 270,135,573 (or 94.1%) shares of Coazucar. Vito Rodríguez Rodríguez and Jorge Rodríguez Rodríguez each own 8,438,000 (or 2.94%) shares of Coazucar. Maningham Holding S.A. owns one share of Coazucar. (3) Coazucar owns a 52% interest in a trust vehicle. The trust has a 70% ownership interest in La Troncal. (4) Chiquitoy’s results of operations are not consolidated into our results of operations because we do not own a majority ownership interest in Chiquitoy.
9
THE OFFERING The following summary contains basic information about the notes and the guarantees and is not intended to be complete. It does not contain all of the information that is important to you. For a more complete understanding of the notes, please refer to the section of this offering memorandum entitled “Description of the Notes.” Issuer .........................................................
Corporación Azucarera del Perú S.A.
Guarantors .................................................
Cartavio S.A.A., Agroindustrias San Jacinto S.A.A., Casa Grande S.A.A. and Azucarera Olmos S.A., each, a company incorporated in Peru.
Notes Offered ............................................
US$325,000,000 aggregate principal amount of 6.375% senior notes due 2022.
Maturity.....................................................
August 2, 2022.
Interest.......................................................
The notes will bear interest at the rate of 6.375% per annum, payable semiannually in arrears on each February 2 and August 2 of each year, beginning on February 2, 2013.
Issue Price .................................................
99.091%, plus accrued interest, if any, from August 2, 2012.
Guarantees.................................................
Cartavio, San Jacinto and Azucarera Olmos will unconditionally, irrevocably and fully guarantee all of the Issuer’s obligations pursuant to the notes. Casa Grande will unconditionally, irrevocably and partially guarantee all amounts due on the notes, including principal, interest, premium, if any, and any other amounts, in an initial amount equal to US$162,500,000, as subsequently adjusted as provided in “Description of the Notes—Note Guarantees” and “—Principal, Maturity and Interest.” See “Description of the Notes—Note Guarantees.” In the event that we acquire or redeem any notes and such notes are no longer considered outstanding under the indenture governing the notes, the amount of Casa Grande’s guarantee will be reduced on a proportional basis.
Ranking .....................................................
The notes and the guarantees will be senior unsecured obligations and: (i) will rank equally with all of our and the Guarantors’ respective existing and future unsecured and unsubordinated indebtedness, other than with respect to certain obligations given preferential treatment pursuant to the laws of Peru; (ii) will be effectively subordinated to all of our and the Guarantors’ respective existing and future secured indebtedness to the extent of the assets securing such indebtedness and other liabilities; (iii) will be structurally subordinated to the existing and future indebtedness and other liabilities of our subsidiaries which are not guarantors and Casa Grande to the extent that any obligations under the notes exceed the amount of its partial guarantee of an initial amount equal to US$162,500,000 and (iv) will not provide holders with any direct claims on the assets of any non-guarantor unless or until such entity becomes a guarantor. As of March 31, 2012, after excluding intercompany balances and intercompany guarantees: on a consolidated basis, we and our subsidiaries had S/.805.6 million (US$302.0 million) of indebtedness outstanding, of which S/.619.2 million (US$232.2 million) was secured indebtedness and S/.0 would have been subordinated in right of payment to the notes; and on a combined basis, the Guarantors had S/.264.3 million (US$99.1 million) of indebtedness outstanding, of which S/.199.5 million (US$74.8 million) was secured indebtedness and S/.0 would have been 10
subordinated in right of payment to the Guarantees; Casa Grande had S/.106.8 million (US$40.0 million) of indebtedness outstanding, of which S/.97.8 million (US$36.7 million) was secured indebtedness and S/.0 million would have been subordinated in right of payment to its Guarantee; and on a combined basis, the restricted subsidiaries other than the Guarantors, had total liabilities of S/.568.1 million (US$213.0 million), including S/.306.6 million (US$115.0 million) of indebtedness, and total assets of S/.1,425.8 million (US$534.6 million). For the three months ended March 31, 2012, our non-guarantor subsidiaries and Casa Grande generated 24.1% and 40.6%, respectively, of our consolidated revenues and 14.8% and 51.3%, respectively, of our consolidated EBITDA. Optional Redemption ................................
On or after August 2, 2017, we may redeem the notes, in whole or in part, provided at least US$100 million in aggregate principal amount of the notes remains outstanding (not including notes held by us or our affiliates), at the redemption prices set forth in “Description of the Notes—Optional Redemption.” Before August 2, 2017, we may also redeem the notes, in whole or in part, provided at least US$100 million in aggregate principal amount of the notes remains outstanding (not including notes held by us or our affiliates), at a redemption price based on a “make-whole” premium. In addition, at any time prior to August 2, 2015, we may redeem up to 35% of the aggregate principal amount of the notes (including any additional notes), with the net proceeds from certain equity offerings by us, at a price of 106.375% of the aggregate principal amount thereof, plus accrued and unpaid interest, and any Additional Amounts.
Change of Control Offer............................
Upon the occurrence of a change of control repurchase event (including both a change of control and a rating downgrade event), we will be required to make an offer to repurchase all notes then outstanding at 101% of their principal amount, plus accrued and unpaid interest to the repurchase date and any Additional Amounts. See “Description of the Notes—Repurchase at the Option of Holders—Change of Control.”
Additional Amounts ..................................
All payments in respect of the notes, whether of principal or interest, will be made without withholding or deduction for or on account of any present or future taxes, duties, levies, or other governmental charges and any interest, penalties or other liabilities with respect thereto, except to the extent required by applicable law. If withholding or deduction is required by applicable law, subject to certain exceptions and limitations, we will pay additional amounts so that the net amount received by the holders of the notes is no less than the amount they would have received in the absence of such withholding or deduction. See “Description of the Notes—Additional Amounts.”
Optional Tax Redemption .........................
The notes are redeemable at our option, in whole but not in part, at any time, at the principal amount thereof plus accrued and unpaid interest and any Additional Amounts due thereon if certain changes in applicable tax laws occur. See “Description of the Notes—Optional Tax Redemption.”
11
Covenants ..................................................
The indenture governing the notes contains covenants that will limit our and our restricted subsidiaries’ ability to, among other things:
incur additional debt or issue certain preferred shares;
pay dividends on or make other distributions in respect of our capital stock or make other restricted payments;
make certain investments;
sell certain assets;
create liens on certain assets to secure debt;
consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;
enter into certain transactions with our affiliates; and
designate our subsidiaries as unrestricted subsidiaries.
These covenants are subject to a number of important limitations and exceptions. Many of these covenants will cease to apply to the notes at all times after the notes have investment grade ratings. See “Description of the Notes—Certain Covenants.” In particular, although the indenture governing the notes will contain restrictions on the incurrence of additional debt, these restrictions are subject to a number of important qualifications and exceptions, and the debt incurred in compliance with these restrictions could be substantial. Events of Default.......................................
For a discussion of certain events of default that will permit acceleration of the principal of the notes plus accrued and unpaid interest, if any, and any other amounts due with respect to the notes, see “Description of the Notes— Events of Default and Remedies.”
No Registration Rights ..............................
We will not register the notes for resale under the Securities Act or the securities laws of any other jurisdiction, other than Peru, or offer to exchange the notes for registered notes under the Securities Act or the securities laws of any other jurisdiction. See “Risk Factors—Risks Relating to the Notes and the Guarantees—There are restrictions on your ability to transfer or resell the notes without registration under applicable securities laws.”
Further Issuances ......................................
Subject to the covenants in the indenture governing the notes, we may from time to time, without the consent of the holders of the notes, issue further notes of the same series having the same terms and conditions as the notes in all respects, including (i) full and unconditional guarantees of any such additional notes by Cartavio, San Jacinto and Azucarera Olmos and (ii) a partial and unconditional guarantee of any such additional notes by Casa Grande in an amount equal to one half of the aggregate principal amount of such additional notes. Any further issue will be consolidated with, and form a single series with, the notes sold in this offering.
Book-Entry System; Delivery and Form and Denomination of the Notes .................
The notes will be issued only in fully registered form, without coupons, in the form of beneficial interests in respect of one or more global securities (the “Global Notes”) in denominations of US$100,000 and integral multiples of US$1,000 thereof. Beneficial interests in respect of the Global Notes will be shown on, and transfers thereof will be effected only through, the book-entry records maintained by DTC and its participants, including Euroclear and 12
Clearstream. The notes will not be issued in definitive form except under certain limited circumstances. Use of Proceeds .........................................
We intend to use the net proceeds from the sale of the notes, after the deduction of certain fees and expenses in connection with this offering to (i) repay approximately US$148 million of the outstanding indebtedness of the Issuer, Cartavio S.A.A., Agroindustrias San Jacinto S.A.A. and Casa Grande S.A.A., (ii) purchase land in connection with the Olmos Expansion Plan, and (iii) use the remainder for capital expenditures and general corporate purposes for our operations in Peru.
Governing Law..........................................
The notes, the guarantees and the indenture will be governed by the laws of the State of New York.
Listing........................................................
Application has been made to the Irish Stock Exchange for the approval of this document as Listing Particulars. Application has been made to the Irish Stock Exchange for the notes to be admitted to the Official List and to trading on the Global Exchange Market which is the exchange regulated market of the Irish Stock Exchange. However, we cannot assure you that the listing application will be approved.
Peruvian SBS Registration ........................
The notes have been provisionally registered with the Foreign Investment and Derivatives Instruments Registry (Registro de Instrumentos de Inversión y de Operaciones de Cobertura de Riesgo Extranjeros) of the SBS, in order to make the notes eligible for Peruvian pension fund investment, as required by Peruvian legislation. This registration was provisionally approved, and definitive registration is conditioned on the delivery of the final offering memorandum and other ancillary documents to the SBS.
Peruvian SMV Registration.......................
The notes and this offering memorandum have been registered with the SMV. We will be required to file certain information in Spanish with the SMV, such as quarterly and annual reports and notices of material events (Hechos de Importancia). All such reports and notices are available at www.smv.gob.pe. The documents filed with the SMV are not and will not form part of this offering memorandum and are not incorporated by reference herein.
Trustee, Registrar, Paying Agent and Transfer Agent .......................................
Citibank, N.A.
Irish Listing Agent.....................................
Arthur Cox Listing Services Limited
Transfer Restrictions .................................
The notes have not been registered under the Securities Act and are subject to restrictions on transfer and resale. See “Transfer Restrictions” and “Plan of Distribution.”
Risk Factors...............................................
Investing in the notes involves substantial risks and uncertainties. See “Risk Factors” and other information included in this offering memorandum for a discussion of factors you should carefully consider before deciding to invest in the notes.
13
SUMMARY FINANCIAL AND OTHER INFORMATION The following summary financial data has been derived from (1) our unaudited condensed consolidated interim financial statements as of March 31, 2012 and for the three months ended March 31, 2012 and 2011 and (2) our audited consolidated financial statements as of December 31, 2011, 2010 and January 1, 2010 (transition date) and for the years ended December 31, 2011 and 2010, in each case included elsewhere in this offering memorandum. Our financial statements have been prepared in accordance with IFRS, as issued by the IASB. The unaudited condensed consolidated interim financial statements and the notes thereto have been condensed, but contain all adjustments, including adjustments of a normal and recurring nature, necessary for a fair presentation of our financial position and results of operation. The results for the three months ended March 31, 2012 are not necessarily indicative of the results to be expected for the entire year ending March 31, 2012. This financial information should be read in conjunction with “Presentation of Financial and Other Information,” “Selected Financial and Other Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and the related notes thereto, which are included elsewhere in this offering memorandum. As of and for the Three Months Ended March 31, 2012 2012 2011 (in thousands of US$, except (in thousands of S/., as indicated) except as indicated) Consolidated Statement of Comprehensive Income: Sales of products Cost of products sold Gross profit Initial recognition and change in fair value of biological assets(1) Profit before operating expenses Selling expenses Administrative expenses Other operating expenses, net Profit from operation before financing and taxation Financial income Financial expenses Exchange difference, net Income attributable to associate Profit before income tax Income tax expense Profit for the period Exchange differences on translating foreign operations, net of deferred income tax Fair value change in cash flow hedge, net Total comprehensive income for the year
As of and for the Years Ended December 31, 2011 2011 2010 (in thousands of US$, except (in thousands of S/., as indicated) except as indicated)
(unaudited) 141,427 (85,548) 55,879 66
377,185 (228,157) 149,028 175
309,162 (145,824) 163,338 31,786
483,833 (261,583) 222,250 69,865
1,304,415 (705,229) 599,186 188,355
937,854 (498,467) 439,387 177,852
55,945 (3,227) (9,725) (722)
149,203 (8,606) (25,936) (1,924)
195,124 (4,710) (8,762) (1,364)
292,115 (11,220) (24,624) (58)
787,541 (30,248) (66,386) (157)
617,239 (18,563) (42,924) (19,623)
42,271 190 (6,484) 2,237 656 38,870 (6,103) 32,767 (1,933)
112,737 506 (17,294) 5,966 1,750 103,665 (16,277) 87,388 (5,155)
180,288 787 (7,591) 268 — 173,752 (25,956) 147,796 —
256,213 913 (17,599) 6,808 — 246,335 (38,792) 207,543 (4,947)
690,750 2,461 (47,446) 18,354 — 664,119 (104,584) 559,535 (13,336)
536,129 1,621 (45,388) 11,096 — 503,458 (75,769) 427,689 —
(82) 30,752
(219) 82,014
(1,285) 146,511
(325) 202,271
(877) 545,322
(5,141) 422,548
________________________________ (1) See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Presentation and Accounting Policies—Valuation of biological assets” for a description of how we calculate the fair value of biological assets using the criteria set out in IAS 41, which requires that a biological asset should be measured at its fair value less the estimated point-of-sale costs.
14
As of and for the Years As of and for the Three As of Ended December 31, Months Ended March 31, January 1, 2012 2012 2011 2011 2010 2010 (in thousands (in thousands (in thousands of US$, except of S/., except as of US$, except (in thousands of S/., as indicated) indicated) as indicated) except as indicated) Consolidated Statement of Financial Position: Non-current assets Property, plant and equipment Intangible assets Biological assets Investments in associates Deferred income tax assets Trade and other accounts receivables Total non-current assets Current assets Biological assets Inventories Trade and other accounts receivables Cash and cash equivalents Total current assets Total assets Equity Share capital Cumulative translation adjustment Legal and other reserves Retained earnings Equity attributable to equity holders of the parent Non-controlling interest Total equity Non-current liabilities Borrowings Trade and other accounts payables Provisions and other liabilities Deferred income tax liabilities Derivative financial instruments Total non-current liabilities Current liabilities Borrowings Trade and other accounts payables Provisions and other liabilities Derivative financial instruments Total current liabilities Total liabilities Total equity and liabilities
(unaudited) 1,056,169 76,166 161,256 11,834 3,151 2,612 1,311,188
2,816,804 203,135 430,069 31,560 8,405 6,966 3,496,939
1,040,651 75,195 140,570 11,058 2,378 3,050 1,272,902
2,805,594 202,727 378,978 29,811 6,410 8,224 3,431,744
2,025,253 130,743 155,721 1,303 3,470 7,982 2,324,472
1,907,566 131,477 82,726 1,306 3,650 20,446 2,147,171
93,451 100,336 45,939 71,916 311,642 1,622,830
249,234 267,595 122,520 191,800 831,149 4,328,088
103,191 111,423 43,515 42,388 300,517 1,573,419
278,204 300,395 117,317 114,277 810,193 4,241,937
222,099 80,870 102,017 70,982 475,968 2,800,440
111,105 76,385 84,938 21,367 293,795 2,440,966
287,011 — 44,674 687,375
270,136 — 21,299 425,181
107,616 (4,648) 16,457 416,478
287,011 (12,397) 43,892 1,110,748
106,458 (3,316) 16,335 390,588
287,011 (8,941) 44,039 1,053,024
535,903
1,429,254
510,065
1,375,133
1,019,060
716,616
405,884 941,787
1,082,492 2,511,746
412,026 922,091
1,110,822 2,485,955
521,008 1,540,068
408,075 1,124,691
91,188 112,451 2,529 175,655 — 381,823
243,198 299,906 6,745 468,472 — 1,018,321
96,429 109,810 3,177 174,511 — 383,927
259,973 296,047 8,566 470,481 — 1,035,067
347,284 43,153 9,086 353,854 15,074 768,451
284,201 192,187 8,197 329,574 15,183 829,342
112,503 179,510 3,418 3,789 299,220 681,043 1,622,830
300,046 478,754 9,117 10,104 798,021 1,816,342 4,328,088
108,181 152,961 2,343 3,916 267,401 651,328 1,573,419
291,657 412,384 6,316 10,558 720,915 1,755,982 4,241,937
186,335 302,425 3,161 — 491,921 1,260,372 2,800,440
159,476 326,310 1,147 — 486,933 1,316,275 2,440,966
15
As of and for the Three Months Ended March 31, 2012 2012 2011 (in thousands of US$, except (in thousands of S/., as indicated) except as indicated)
Other data: EBITDA(1) ....................................................... EBITDA margin(2) ........................................... Total debt(3) ..................................................... Total debt / EBITDA(4) .................................... Net debt(5) ........................................................ Net debt / EBITDA(6)....................................... Fixed Charge Coverage Ratio(7) ....................... Consolidated Leverage Ratio(8) ........................
51,979 36.8% 302,049 1.46x 230,133 1.11x 9.75x 1.45x
138,628 36.8% 805,566 1.46x 613,766 1.11x 9.75x 1.45x
164,151 53.1%
As of and for the Years Ended December 31, 2011 2011 2010 (in thousands of US$, except (in thousands of S/., as indicated) except as indicated)
214,587 44.4% 302,946 1.41x 260,558 1.21x 12.25x 1.41x
578,526 44.4% 816,744 1.41x 702,467 1.21x 12.25x 1.41x
416,977 44.5% 533,619 1.28x 462,637 1.11x 9.22x 1.27x
________________________________ (1) EBITDA is calculated using profit from operations for the period before financing and taxation without initial recognition and change in fair value of biological asset, added to depreciation and amortization. See “Presentation of Financial and Other Information.” We calculate EBITDA as follows: As of and for the Three Months Ended March 31, 2012 2011 2012 (in thousands of US$, except (in thousands of S/., as indicated) except as indicated) Profit from operation before financing and taxation ............................................................ (-) Initial recognition and change in fair value of biological assets................................. (+) Depreciation .............................................. (+) Amortization.............................................. EBITDA...........................................................
As of and for the Years Ended December 31, 2011 2011 2010 (in thousands of US$, except (in thousands of S/., as indicated) except as indicated)
42,271
112,737
180,288
256,213
690,750
536,129
(66) 9,686 88 51,979
(175) 25,832 234 138,628
(31,786) 15,454 195 164,151
(69,865) 27,899 340 214,587
(188,355) 75,215 916 578,526
(177,852) 57,672 1,028 416,977
(2) EBITDA margin is EBITDA divided by sales of products, expressed as a percentage. (3) Total debt is the sum of total short- and long-term loans. (4) Total debt/EBITDA is the ratio of our total debt as of the end of the applicable period divided by our EBITDA for the then most recently concluded period of four consecutive fiscal quarters, including the four consecutive fiscal quarters ended March 31, 2012. (5) Net debt is obtained netting total debt with cash and cash equivalents. (6) Net debt/EBITDA is the ratio of our net debt as of the end of the applicable period divided by our EBITDA for the then most recently concluded period of four consecutive fiscal quarters, including the four consecutive fiscal quarters ended March 31, 2012. (7) See “Description of the Notes—Certain Definitions” for the definition of Fixed Charge Coverage Ratio. (8) See “Description of the Notes—Certain Definitions” for the definition of Consolidated Leverage Ratio.
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RISK FACTORS Prospective purchasers of notes should carefully consider the risks discussed below, as well as the other information in this offering memorandum, before deciding to purchase any notes. Our business, results of operations, financial condition or prospects could be negatively affected if any of these risks occurs and, as a result, the trading price of the notes could decline and you could lose all or part of your investment. The risk factors discussed below are not the only risks that we and the Guarantors face, but are the risks that we currently consider to be material. There may be additional risks that we currently consider immaterial or of which we are currently unaware, and any of these risks could have similar effects to those set forth below. Risks Related to Our Business and the Sugar and Ethanol Industries Fluctuations in the price of our products, as well as Peruvian and global economic, political and financial uncertainties, may materially and adversely affect us. The sugar and ethanol industries, both globally and in Peru, have historically been cyclical and sensitive to domestic and international changes in supply and demand, causing fluctuations in the prices of these products, as well as in our profit margins. In addition, sugar and ethanol are commodities and are subject to price fluctuations that generally affect commodities. Various factors beyond our control contribute to the volatility in the prices of sugar, ethanol and other sugarcane by-products, including:
the demand for sugar and ethanol both in Peru and abroad;
climatic conditions and natural disasters in areas where sugarcane is cultivated;
the production capacity of our competitors;
government incentives and subsidies to promote the production, domestic sale, export and consumption of these products both in Peru and in other countries that produce sugar and ethanol;
the availability of substitutes for sugar, ethanol and other sugarcane by products such as saccharine and high fructose syrup (“HFCS”); and
developments in trade negotiations, including through the World Trade Organization (the “WTO”).
In addition, sugar is traded on commodities and futures exchanges, and thus, is subject to speculative trading, which may affect prices in a manner that may materially and adversely affect us. The prices of sugar and ethanol sold by us are based on prevailing market prices, and thus, are subject to macroeconomic factors that may affect our industry, Peru and/or the global economy. Any significant and prolonged decline in sugar and/or ethanol prices could materially and adversely affect us. There can be no assurance that we will be able to maintain sales at generally prevailing market prices for sugar and ethanol in Peru, nor that we will be able to sell or export sufficient quantities of sugar and ethanol to assure an appropriate domestic and export market balance. In addition, we may use financial instruments to protect ourselves against the risk of fluctuations in sugar and ethanol prices. In the event that market prices exceed the price set under future contracts we enter into, we may be materially and adversely affected. We may not be successful at reducing our operating costs and increasing our operating efficiencies. We must continue to reduce our operating costs and increase our operating efficiencies to achieve further cost savings in future periods. We cannot assure you that we will be able to achieve all of the cost savings that we expect to realize from current initiatives. In particular, we may be unable to implement one or more of our initiatives successfully or we may experience unexpected cost increases that offset the savings that we achieve. Our failure to realize cost savings may adversely affect our results of operations. Any reduction in the amount of sugarcane or sugar that we can cultivate and purchase in a given harvest could have a material and adverse effect on our business. Our sugar production depends on the volume and sucrose content of the sugarcane that we cultivate. Any reduction 17
in the amount of sugar recovered could have a material and adverse affect on our results of operations. We may be adversely affected by a shortage of sugarcane or by high sugarcane costs. Sugarcane is the principal raw material used for the production of sugar and ethanol and any limitation on our ability to obtain sugarcane may materially and adversely affect us. During 2011, the cost of sugarcane represented 59% of the sale cost of sugar in Peru. Approximately 65% of the sugarcane we used in our production was harvested from our own fields, and the remaining 35% was bought from independent farmers, to whom we pay the amount equivalent to 60% of the value of the sugarcane, as determined by sucrose levels. We do not foresee any shortage in the supply of sugarcane, however, any limitation on our ability to obtain sugarcane may affect us. A reduction in the productivity of our sugarcane crop and the sugarcane that we purchase may materially and adversely affect us. Our sugar production depends on the volume and sucrose content of the sugarcane that we cultivate or that is supplied to us by growers located in the vicinity of our mills and distilleries. Crop yields and sucrose content depend primarily on geographic factors, such as land composition and topography, weather conditions, such as the amount of rainfall and average temperatures, agricultural techniques that may be employed and the variety of sugarcane planted. Weather conditions have historically caused volatility in the ethanol and sugar industries and, consequently, in our results of operations by causing crop failures or reduced harvests. Future weather patterns may reduce the amount of sugar or sugarcane that we can recover in a given harvest or its sucrose content. Accordingly, many factors beyond our control, including drought, frost and/or sugarcane pests and diseases may materially and adversely affect the quantity and quality of sugarcane that we produce and purchase from third parties, our sugar and ethanol production volumes and our company. We face significant competition in the sugar and ethanol industries, which may materially and adversely affect us. The sugar and ethanol industries are highly competitive. Domestically, we compete with numerous small- and medium-size sugar and ethanol producers. Currently, our main competitors in Peru are Empresa Agroindustrial Laredo S.A.A. (Grupo Manuelita of Colombia), Empresa Agroindustrial Pomalca S.A.A. and Empresa Agroindustrial Tuman S.A.A. (Grupo Oviedo) and Agro Industrial Paramonga S.A.A. (GrupoWong). In the event that one or more of our competitors increase their financial and other resources, present a greater breadth of products than we do or adopt more successful sales or pricing policies, our competitive position and our business may be materially and adversely affected. If we are unable to remain competitive with our competitors, we may be materially and adversely affected. Alternative sweeteners have negatively affected demand for our sugar products in Peru and other countries, which could have a material and adverse affect on us. We believe that the increased use of alternative sweeteners, especially artificial alternative sweeteners such as aspartame, saccharine and HFCS, has adversely affected the growth of the overall demand for sugar in Peru and the rest of the world. For example, soft drink bottlers in Peru and many other countries have switched from sugar to, or increased consumption of, alternative sweeteners. A substantial decrease in sugar consumption, or the increased use of alternative or artificial sweeteners, would decrease demand for our sugar products and could result in lower growth in our sales of products and overall financial performance. We may be adversely affected by seasonality, which could negatively impact us. Our businesses in Argentina and Ecuador are subject to seasonal trends based on the sugarcane harvesting cycle in those countries, which begins in Ecuador and Argentina in July and May, respectively. This cycle creates seasonal fluctuations in our inventory (which usually peaks from October to November) to cover sales between the sugarcane harvest, our sales of products and gross profit. In addition, seasonality affects our level of outstanding indebtedness and working capital, as we generally incur more indebtedness to meet our greater working capital needs during the harvesting period, which increases our financial expenses during the harvest period. 18
Our results of operations, including for current periods, may be adversely affected by market conditions. Our results of operations are dependent on a variety of factors in Peru, Argentina and Ecuador, including local and international demand of sugar and ethanol and other factors. In recent periods in 2012, our results of operations have been affected by, among other things, (i) the impact of integration and high level administrative costs associated with acquisitions of La Troncal and San Isidro in the second half of 2011, (ii) lesser margins of our acquired companies pending possible improvement through synergies and other positive effects of our consolidated operations, (iii) the impact of valuation adjustments associated with IAS 41 (See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Presentation and Accounting Policies— Valuation of biological assets”) and (iv) the impact of recurrent scheduled maintenance at certain of our mills during the second quarter of each year (which necessarily lowers income during such quarter). These and other factors can be expected to adversely affect the level of our profit for the period in future financial quarterly periods in 2012 pending our efforts to increase for 2012 our EBITDA. In the near term, it is possible we may continue to experience a lessening of our total consolidated profit from operations compared to the comparable period of the prior year and consistent with recent periods. Based on the factors mentioned herein, including the factors that affected our results for the three month period ended March 31, 2012 described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” we believe that our EBITDA for the six months ended June 30, 2012 will decrease when compared to the six months ended June 30, 2011. We also believe our EBITDA for the three months ended June 30, 2012 will decrease when compared to the three months ended March 31, 2012 for similar reasons. We expect however, that our EBITDA for the three months ended June 30, 2012 will be substantially in line with our EBITDA for the three months ended June 30, 2011. Government policies and regulations affecting the agricultural sector and related industries could materially and adversely affect us. Our industry is subject to numerous statutes, rules, and regulations, both within Peru and internationally. To operate our farms, mills and distilleries, we must comply with certain administrative requirements, such as acquiring appropriate permits, licenses, concessions, authorizations, certifications and registrations, some of which are granted for fixed terms and therefore require periodic renewal. Changes to any of the laws, regulations, rules, or policies regarding the licensing, harvesting, production, processing, preparation, distribution, packaging, or labeling of our products, or environmental matters, or a stricter interpretation or enforcement thereof, or a delay obtaining or renewing administrative requirements, may increase our operating costs or impose restrictions on our operations which, in turn, could have a material and adverse affect on us. Agricultural production and trade flows are also significantly affected by government policies and regulations. Governmental policies, such as taxes, tariffs, duties, subsidies and import and export restrictions on agricultural commodities and products made from these commodities can adversely affect the agricultural industry and its profitability, the allocation of agricultural resources, the location and size of crop production, the trading of unprocessed or processed commodity products, and the type and volume of imports and exports, which may materially and adversely affect us. Future government policies in Peru and elsewhere may adversely affect the supply, and demand for, and prices of, our products or restrict our ability to do business in our existing and target markets, which could materially and adversely affect our financial performance. Sugar prices, like the prices of many other staple goods in Peru, were historically subject to controls imposed by the Peruvian government. Although sugar prices in Peru have not been subject to price controls since 1990, additional measures may be imposed in the future, such as in Ecuador and Argentina, where sugar prices are currently subject to governmental control. Any changes affecting governmental policies and regulations regarding ethanol, sugar or sugarcane in Peru may materially and adversely affect our company.
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IFRS accounting standards require us to make numerous estimates in the compilation and preparation of our financial results and limit the comparability of our financial statements to similar issuers using Generally Accepted Accounting Principles in United States (“U.S. GAAP”) measurements. IFRS accounting standards for agricultural companies require that we make assumptions and estimates relating to, among other things, future agricultural commodity yields, prices, and production costs extrapolated through a discounted cash flow method. For example, the value of our biological assets with a production cycle lasting more than one year generated initial recognition and changes in fair value of biological assets amounting to S/.0.2 million (US$0.1 million) and S/.188.4 million (US$69.9 million) for the three months ended March 31, 2012 and the year ended December 31, 2011, respectively. These assumptions and estimates, and any changes to such prior estimates, directly affect our reported results of operations. If actual market conditions differ from our estimates and assumptions, there could be material adjustments to our results of operations. In addition, the use of such discounted cash flow method utilizing these future estimated metrics differs from U.S. GAAP. As a result, our financial statements and reported earnings are not directly comparable to those of similar companies in the United States. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Presentation and Accounting Policies—Valuation of biological assets”. We are subject to extensive environmental and labor regulations and may be exposed to liabilities and potential costs for environmental and labor compliance. We are subject to Peruvian state and local environmental protection and health and safety laws and regulations that govern, among other things:
the generation, storage, handling, use and transportation of hazardous materials;
the emission and discharge of hazardous materials into the ground, air or water;
the use of natural resources; and
the health and safety of our employees.
We are regularly inspected by various governmental environmental protection agencies in Peru, Argentina and Ecuador to ensure our compliance with applicable laws and regulations. We are also required to obtain permits from governmental authorities for certain aspects of our operations. In connection with our mills and distilleries in Peru, starting in 2011, Cartavio, San Jacinto and Casa Grande signed PAMAs with the Peruvian government regarding mechanical harvesting, burning of sugarcane, and carbon dioxide emissions over a 33-year period. Casa Grande’s PAMA has been approved by the Peruvian government through the Ministry of Agriculture, and San Jacinto’s and Cartavio’s are in the process of obtaining the approval for their respective PAMAs from the Peruvian government. Upon the expiration of the PAMAs, we will have to comply with Peruvian environmental legislation relating to emissions and air quality in force at that time. Non-compliance with environmental laws and regulations may require us to remedy any environmental damage, as well as subject us to criminal and administrative penalties, such as fines and/or the suspension of our activities. In addition, we may be strictly liable for certain environmental damages caused by third-parties on or related to property that we acquired from such third parties. In addition, any changes in applicable environmental regulation or changes in its interpretation may lead to an increase in compliance costs, which may materially and adversely affect us. Environmental protection laws in Peru are becoming more strict, therefore our expenses in complying with our environmental obligations may significantly increase in the future. See “Regulatory Overview.” Additionally, according to the Peruvian Safety and Health at Work Law (Ley de Seguridad y Salud en el Trabajo), Law No. 29783, we are obligated to adopt the necessary measures to guarantee the health and safety of employees, and third parties, in our production facilities or workplaces. In order to fulfill such regulations, we maintain (i) an Internal Regulation of Safety and Health at Work (Reglamento de Seguridad y Salud en el Trabajo) and (ii) a special committee whose members include representatives of our employees and management, which is in charge of monitoring the proper application of the Internal Regulation Safety and Health at Work and Peruvian law.
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If an adverse final decision is issued in an administrative process, we could be exposed to penalties and sanctions derived from the violation of any of these laws and regulations, including the payment of fines, and, depending on the level of severity applied to the infraction, the closure of facilities and/or stoppage of activities and the cancellation or suspension of the registrations, authorizations and licenses, which may also result in temporary interruption or discontinuity of activities in our farms, mills and distilleries, and materially and adversely affect us. Government laws and regulations governing the burning of sugarcane could materially and adversely affect our business or financial performance. We currently harvest approximately 100% of our sugarcane in Peru and 87% of our sugarcane in Ecuador by burning the crop, which removes leaves and destroys insects and other pests. The PAMAs signed with the Peruvian Ministry of Agriculture gradually reduce our ability to burn sugarcane. We do not burn sugarcane in Argentina. We currently incur significant costs to comply with these laws and regulations, and there is a likelihood that increasingly stringent regulations relating to the burning of sugarcane will be imposed by the governmental authorities of Peru, Ecuador and Argentina in the near future. As a result, our costs to comply with existing or new laws or regulations are likely to increase, which could materially and adversely affect us. Any failure to comply with these laws and regulations may subject us to legal and administrative actions. These actions can result in administrative, civil or criminal penalties. Governmental price controls may materially and adversely affect us. In order to protect domestic farmers, the Peruvian government sets every week the Range of Prices (Bandas de Precios) that can be charged by importers for basic agricultural commodities, including sugar, and publishes the prices in the newspaper Diario Oficial El Peruano. The price range set in the Bandas de Precios do not necessarily reflect the global market prices of agricultural commodities. For the last three years, the Peruvian price of sugar has fluctuated within the range of prices set in the Bandas de Precios. However, in the first week of July 2012, the Peruvian price of sugar dropped below the low band of the Bandas de Precios. As a result, if the low band of the Bandas de Precios is set higher than global commodities prices, foreign producers may increase their imports to Peru in order to sell their products at above-market prices, resulting in increased competition to us. Furthermore, if the low band of the Bandas de Precios is lowered or the Bandas de Precios is eliminated altogether, the price of the sugar we sell in Peru may be reduced. Decisions by the Peruvian government regarding the Bandas de Precios may materially and adversely affect us. Suspension, cancellation or decrease in tax incentives that currently benefit us may materially and adversely affect us. Our mills located in Peru currently benefit from certain tax incentives granted by the Peruvian government through the Agricultural Sector Promotion Law (Ley No. 27360 - Ley de Promoción del Sector Agrario). In connection with the income tax owed by our Peruvian operating subsidiaries, a reduced corporate income tax rate of 15% and a special annual depreciation rate of 20% for hydraulic infrastructure and irrigation works is assessed on our operating subsidiaries. These benefits were granted in 1997 and currently extend through 2021. The reduced tax rates from which we benefit have definite terms and we may not be able to renew or replace such benefits in the future. In order to qualify for, and maintain, such tax incentives, we are required to comply with a number of obligations (including labor, tax, social security and environmental protection obligations). Noncompliance with such obligations may result in loss or suspension of incentives as well as the imposition of fines. We may also be obligated to pay in full all the taxes owed and interest thereon. We cannot assure you that we will maintain, or qualify for, such benefits in the future, until they end pursuant to applicable law or that we will be able to renew or replace such benefits in the future. In addition, there is a risk that modifications of tax laws or judicial decisions may prohibit, interrupt, limit or change the use of existing tax incentives as of the date of this offering memorandum. Any suspension, early maturity, reimbursement, limitation or impossibility to renew such tax benefits may materially and adversely affect 21
us. If we lose our tax benefits and incentives or are unable to comply with future requirements, this could have a material adverse effect on us. Any failure to maintain or obtain due authorizations for the generation of electricity may materially and adversely affects us. We believe we are in compliance in all material respects with applicable regulations with regards to the generation of electricity. Currently, San Jacinto and Cartavio are permitted to generate electricity with renewable energy resources, and Casa Grande is in the process of requesting authorization from the General Bureau of Electricity of the Ministry of Energy and Mines (Dirección General de Electricidad del Ministerio de Energía y Minas), the governmental entity responsible for granting such authorization. Notwithstanding the foregoing, if San Jacinto and Cartavio’s authorizations expire or if Casa Grande’s authorization is not granted, our operations could be materially and adversely affected. Any failure to obtain sanitary permits or fuel storage authorizations may materially and adversely affects us. We believe we are in compliance in all material aspects with applicable statutory and administrative regulations with regards to controlled chemicals, sanitary permits and fuel storage authorizations in Peru, Ecuador and Argentina. However, Casa Grande, San Jacinto and Cartavio are currently adjusting their Hazard Analysis and Critical Control Point (HACCP) Plans, which is the sanitary permit that every Peruvian company must submit to the General Bureau of Environmental Health (Dirección General de Salud Ambiental - DIGESA) of the Health Ministry for its official validation, in order to participate in food and/or beverages manufacture processes for the domestic or international market. In addition, San Jacinto is currently in the process of obtaining the authorizations to maintain fuel storage facilities before the Supervising Body of Investment in Mining and Energy (Organismo Supervisor de la Inversión en Energía y Minas, or “OSINERGMIN”). If the aforementioned authorizations expire or are not granted, our operations could be materially and adversely affected. We are insured against business interruption for our operations, but our assets are not insured against war or sabotage. In addition, our insurance coverage may be inadequate to cover all losses and/or liabilities that may be incurred in our operations. We maintain insurance coverage for business interruptions of our operations, including business interruptions caused by labor disruptions. This coverage remains in effect for a term of 12 months as of commencement of business interruption. However, we do not insure our assets against war or sabotage (other than physical damage deriving from acts of bad faith, which are covered by the corresponding insurance policy). Our operations in Argentina are no insured against sabotage. Therefore, an attack or an operational incident causing an interruption of our business could have a material and adverse effect on our financial condition or results of operations. Our operations are also subject to risks affecting our crops which are not covered by the business interruption insurance, including fire potentially destroying some or our entire crop. If disease, pestilence, accidents or natural or climatic disasters were to strike our crops, it may result in destruction of a significant portion of our harvest. Crop disease and pestilence, as well as accidents or natural or climatic disasters, can occur and have a devastating effect on our crops and those of our suppliers, potentially rendering useless or unusable all or a substantial portion of affected harvests. Even when only a portion of the crop is damaged, our business and financial performance could be materially and adversely affected because we may have incurred a substantial portion of the production cost for the related harvest. Any serious incidents of crop disease, pestilence or accidents or natural or climatic disasters, and related costs, may materially and adversely affect our production levels and, as a result, our sales of products and overall financial performance. We do not maintain insurance coverage against fire, disease, accidents or natural or climatic disasters and other risks to our crops. In the event of interruption of operations at one of our production facilities, we cannot assure you that we will be able to shift production to another location or at all. In addition, our operations are subject to hazards associated with the manufacture of inflammable products and transportation of feedstocks and inflammable products. 22
We maintain insurance against some risks at levels that we believe are customary in our industry to protect against these liabilities, but we cannot assure you that we will be able to maintain compliance necessary for renewal of such policies. Our insurance policies may not cover our losses or be cancelled in the event that we do not obtain or renew all required licenses, permits and governmental authorizations. Furthermore, our insurance may not be adequate to cover all losses or liabilities that might be incurred in our operations. Funding on terms acceptable to us may not be available to meet our future capital needs. Global market and economic conditions have been, and continue to be, disruptive and volatile. The debt capital markets have been impacted by significant defaults in the financial services sector and the re-pricing of credit risk, among other things. These events have negatively affected general economic conditions. If funding is unavailable when needed, or is available only on unfavorable terms, it may become challenging for us meeting our capital needs or otherwise taking advantage of business opportunities or responding to competitive pressures, which could have a material and adverse effect on our revenue and results of operations. Termination of our sugarcane supply contracts or a decrease or an interruption in the sale of sugarcane by our suppliers may materially and adversely affect us. Sugarcane is the main raw material we use to produce sugar and ethanol. During 2011, we crushed approximately 6.7 million tons of sugarcane, approximately 4.3 million tons (or 65%) of which we cultivated on our properties and approximately 2.4 million tons (or 35%) from third-party suppliers. We own the only sugar mills that exist in the areas in which we operate and, in some cases, we have entered into long-term contracts with our suppliers for an average term of approximately five years. If our supply of sugarcane were to be interrupted, we may be required to pay higher prices for sugarcane and/or the volume of sugarcane available to us may decrease significantly, each of which could materially and adversely affect us. Our controlling shareholder may have conflicts of interest relating to our business. Grupo Gloria directly and indirectly owns all of our capital stock and a majority ownership interest in our subsidiaries. As a result, Grupo Gloria has the power to determine the outcome of almost all matters that require shareholder votes, such as the election of our board members and, subject to contractual and legal restrictions, the distribution of dividends and payments in respect of intercompany debt. Grupo Gloria also has the power to determine our business strategy. The interests of Grupo Gloria may in some cases differ from those of the holders of our notes. Grupo Gloria conducts its business through us as well as through other entities in which we do not have an equity interest. In circumstances involving a conflict of interest between Grupo Gloria and the holders of the notes, Grupo Gloria may exercise its rights in a manner that would benefit Grupo Gloria to the detriment of the holders of the notes. We do not have any independent members of our Board of Directors. We have exposure to material litigation for which we have not established provisions. We are currently involved in various legal proceedings, which could result in unfavorable decisions or financial penalties against us, and we will continue to be subject to future legal proceedings, which if determined adverse to us, could result in material adverse consequences for us. For more information regarding the significant legal claims against our company, see “Business—Legal and Administrative Proceedings” and note 15 to our audited consolidated financial statements and note 13 to our unaudited condensed consolidated interim financial statements. Some of these claims may be resolved against us. Although we believe that we have established adequate provisions for these legal proceedings, there are some legal proceedings with respect to which we have not established provisions based on our assessment of the unlikely possibility of an adverse outcome in these legal proceedings. If we are incorrect in our assessment, we may have to establish provisions that could materially and adversely affect us.
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We may lose corporate control over San Jacinto as a result of litigation. On May 30, 2006, a plaintiff initiated a lawsuit against San Jacinto and a previous owner, among others, from which we purchased 2,519,498 shares of San Jacinto (representing 55.25% of the capital stock of San Jacinto at that time). The plaintiff, in his lawsuit, claimed that the owner from which we purchased the shares of San Jacinto did not have valid title to the shares. On March 2, 2012, we were added by the court as a party to the lawsuit as the purchaser of the shares in dispute. Should the court rule against the seller that the seller did not have valid title to the shares and therefore, could not have validly transferred its ownership in San Jacinto to us, we could be required to divest our shares and potentially result in the loss corporate control in San Jacinto, which may materially and adversely affect us. We are substantially dependent on our facilities, and any interruption or operational failure in any of these facilities may result in a reduction of the volume of sugar and ethanol we produce or sell and, therefore, materially and adversely affect us. Most of our profit is derived from the sale of the sugar and ethanol produced in our five mills and eight distilleries. If an accident, unanticipated repair, equipment malfunction, or natural or climatic disaster occurs in one or more of our mills, we may be materially and adversely affected and all or part of our operations may be interrupted, nor can we assure you that such damage will be covered under our insurance policies. In addition, we are subject to labor strikes and other operational incidents, such as equipment failures, fires, explosions, pipe ruptures and transportation accidents. These and other operational accidents may result in physical injury, death, material loss and destruction of our properties and equipment, and/or, in the case of environmental accidents, which may result in the suspension of our operations and/or the imposition of civil, labor and administrative penalties and criminal liability. Irregularities in our mills’ environmental licensing, National Institute of Civil Defense (Instituto Nacional de Defensa Civil, or “INDECI”) licensing, municipal licensing and our failure to comply with regulations applicable to our business may also result in the suspension of our operations and/or the imposition of civil, administrative and criminal penalties. We are subject to labor risks and a dispute with one or more of our labor unions could materially and adversely affect us. Labor is a significant cost for our production. Changes in labor regulations and increases in labor costs would have a significant effect on our operations. Approximately 46% of our employees are affiliated with labor unions and are thus covered by collective bargaining agreements with such labor unions. A work slowdown, work stoppage, strike or other labor dispute may occur prior to or upon the expiration of our other labor agreements, and we are unable to estimate the adverse effect of any such work slowdown, stoppage or strike or other dispute on our production and sales. A labor dispute at one of our facilities or an unfavorable judicial or administrative ruling against us in one labor proceeding may result in labor disputes in other facilities and unfavorable rulings in other cases, magnifying the effect on our operations and costs. Given our high concentration and dependency of labor in specific tasks, work slowdowns, stoppages, strikes or other labor-related developments affecting us could materially and adversely affect us. We depend on third parties to provide our customers and us with facilities and services that are integral to our business. We have entered into agreements with third-party contractors to provide facilities and services required for our operations, such as the transportation of our sugarcane from our plantations to our mills and the transportation of our mechanical harvesters from one facility to another. Our reliance on third parties to provide these services for us also gives us less control over the costs, efficiency, timeliness and quality of those services. Contractors’ negligence could result in damage or loss of our sugarcane or mechanical harvesters, which may materially and adversely affect us. We expect to be dependent on these contractors for the foreseeable future. The loss or expiration of our agreements with third-party contractors or our inability to renew these agreements or to negotiate new agreements with other providers at comparable rates could harm our business and financial performance.
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Disruption of transportation and logistics services or insufficient investment in public infrastructure could materially and adversely affect us. A substantial portion of Peruvian sugar and production is transported by truck, which is generally significantly more expensive than the rail transportation available to U.S. and other international producers. Efficient access to transportation infrastructure and ports is critical to the continued growth of the Peruvian sugar and ethanol industry generally and of our operations in particular. Improvements in transportation infrastructure are likely to be required to make more sugar and ethanol production accessible to export terminals at competitive prices. Improvement projects may not be undertaken and/or completed on a timely basis, if at all, which could adversely affect the demand for our products, impede our delivery of products or increase our costs. We depend on the continuous operation of the port facilities we use. Interruptions in port operations could result from various events and circumstances outside of our control including, among others, catastrophic events, environmental issues, strikes or labor issues, adverse meteorological conditions and the interruption in the supply of our products to our facilities. Any such difficulties with port facilities could, therefore, result in delays in, or the suspension of, the transportation of sugar and ethanol to our customers, adversely affecting our product distributions capacity which could have a material adverse effect on us. We may not successfully acquire or develop additional production capacity through the expansion of existing facilities or greenfield projects. We continually explore opportunities to increase our production capacity, including through expansion of our existing facilities and greenfield projects. We are currently developing the greenfield Olmos Expansion Plan, where Azucarera Olmos and our affiliate, Gloria S.A., purchased 15,600 hectares of land (14,500 hectares of which are arable) in Olmos, Lambayeque, Peru, to cultivate sugarcane using pressurized water and green harvesting for the production of sugar. We also have expansion plans to increase our industrial facilities and crushing capacity in some of our existing mills and distilleries. At this time, we do not have all of the environmental or other permits, designs or engineering, procurement and construction contracts with respect to our greenfield Olmos Expansion Plan. As a result, we may not implement this greenfield project on a timely basis or at all, and may not realize the related benefits from this project. In addition, we may be unable to obtain the required financing for this project on satisfactory terms, or at all. In addition, we may not have the appropriate personnel and equipment to implement this project. The expansion of our existing facilities or integration of this or other greenfield projects may result in unforeseen operating difficulties and may require significant financial and managerial resources that would otherwise be available for conducting our existing operations. Planned or future expansion of existing facilities or greenfield projects may not enhance our financial performance. We may undertake additional acquisitions that may be significant in size and that may change the scale of our business. Although we believe that future acquisition opportunities to acquire agro-business companies in Latin America are likely to be limited, we expect to evaluate opportunities to acquire additional processing assets and/or businesses from time to time. If those future acquisitions were significant in size, they could change the scale of our business and may expose us to new geographic, political, operating and financial risks. Our ability to make any such acquisitions would depend on our ability to identify suitable acquisition candidates, acquire them on acceptable terms and integrate their operations successfully. Any acquisitions would be accompanied by risks, including risks related to the quality of the facilities acquired; the difficulty of assimilating the operations and personnel of any acquired companies; the potential disruption of our ongoing business; the inability of management to maximize our financial and strategic position through the successful integration of acquired assets and businesses; the inability of management to maintain uniform standards, controls, procedures and policies; the impairment of relationships with employees, customers and contractors as a result of any integration of new management personnel; and the potential unknown liabilities associated with acquired assets and businesses. In addition, we would need additional capital to finance an acquisition. Debt financing related to any acquisition will expose us to the risks associated with borrowing money, while equity financing may cause existing shareholders to suffer dilution. We may not be successful in overcoming these risks or any other problems encountered in connection with such acquisitions. 25
We may engage in hedging transactions, which involve risks that can materially and adversely affect us. We are exposed to market risks arising from the conduct of our business activities—in particular, market risks arising from changes in commodity prices, exchange rates or interest rates. Historically, our only hedging transactions have been against exchange rate and interest rate volatility and we have not hedged against sugar price fluctuations. Notwithstanding the foregoing, we can not assure you we will not enter into other type of hedging transactions in the future. As of both March 31, 2012 and December 31, 2011, all of our sugar exports were at market prices. However, in an attempt to minimize the effects of volatility of sugar prices and exchange rates on our cash flows and results of operations, we may engage in hedging transactions involving commodities and exchange rate futures, options, forwards and swaps. We also may engage in interest rate-related hedging transactions from time to time. Hedging transactions expose us to the risk of financial loss in situations where the other party to the hedging contract defaults on its contract or there is a change in the expected differential between the underlying price in the hedging agreement and the actual price of commodities or exchange rate. Our exports expose us to factors that are outside our control. Our sales of products from exports in 2011 totaled S/.211.2 million (US$78.3 million), representing 16.2% of our total sales of products, 64.7% of which were from sugar exports. For the three months ended March 31, 2012, our sales of products from exports accounted for 11.9% (S/.44.7 million) of our sales of products and sugar exports accounted for 5.4% of our sales of products. We are subject to risks that are outside our control in connection with our export operations, including:
changes in foreign currency exchange rates;
deterioration of economic conditions in our principal export markets;
imposition of tax increases, anti-dumping tariffs and other trade and/or health barriers;
exchange controls and restrictions to exchange operations; and
strikes or other events that may affect ports and transportations.
Our future financial performance will depend significantly on economic, political and social conditions in our principal export markets. Most countries that produce sugar or ethanol, including the United States and European Union member countries, protect local producers from international competition by establishing government policies that affect the production and importation of sugar and ethanol. We may therefore have limited or no access to our main export markets or other major potential markets if new trade barriers are established, which could result in difficulties in reallocating our products to other markets under favorable conditions, possibly resulting in a material and adverse effect on us. Certain of our indebtedness and the indenture for the notes contain covenants that restrict our ability to engage in certain transactions and may impair our ability to respond to changing business and economic conditions. Certain of our indebtedness and the indenture for the notes contain covenants that restrict our ability to engage in certain transactions, such as the incurrence of indebtedness and the execution of corporate mergers or reorganizations, and may impair our ability to respond to changing business and economic conditions, including, among other things, limitations on our ability to:
incur additional indebtedness;
incur additional liens;
issue certain guarantees;
pay dividends or make certain other restricted payments;
consummate certain asset sales;
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enter into certain transactions with affiliates; or
merge or consolidate with any other person or sell or otherwise dispose of all or substantially all of our assets.
In addition, certain of our indebtedness require us to satisfy certain financial covenants. Future indebtedness or other contracts could contain financial or other covenants more restrictive than those applicable to our indebtedness and the indenture for the notes. Our ability to comply with these provisions may be affected by general economic conditions, political decisions, industry conditions and other events beyond our control. As a result, we cannot assure you that we will be able to comply with these covenants. Our failure to comply with the covenants contained in certain of our indebtedness and in the indenture for the notes, including failure as a result of events beyond our control, could result in an event of default, which could materially and adversely affect our operating results and our financial condition. If there were an event of default under one of our debt instruments, the holders of the defaulted debt could cause all amounts outstanding with respect to that debt to be due and payable immediately and may be cross-defaulted to other debt. We cannot assure you that our assets or cash flow would be sufficient to fully repay borrowings under our outstanding debt instruments if accelerated upon an event of default, or that we would be able to repay, refinance or restructure the payments on those debt securities. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness.” We may face conflicts of interest in transactions with related parties. We engage in business and financial transactions with our controlling shareholder and other shareholders that may create conflicts of interest between our company and these shareholders. In the ordinary course of our business, we engage in a variety of transactions with subsidiaries, affiliates and related parties, including loan agreements relating to the sale of our products, sale of goods, management services, processing services, storage services and provision of labor. Commercial, administrative and financial transactions between our affiliates and us, even if entered into on an arm’s length basis, create the potential for, or could result in, conflicts of interests. Water shortages or any failure to maintain existing licenses for water rights may materially and adversely affect us. We grow our crops in an arid, desert region of northern Peru that is characterized by low levels of rainfall. Therefore, the continued supply of water is essential for our business. We obtain the vast majority of the water used to irrigate our crops pursuant to licenses granted to us by the Peruvian National Water Authority (Autoridad Nacional de Agua, or the “ANA”). These rights permit us to use a system of canals that diverts water from major rivers that are fed by melting snow in the Andes mountains. These licenses generally do not have an expiration date. Under Peruvian law, authorities may grant temporary water rights, as well as rights for indefinite periods, such as those licenses that have been granted to us as of the date of this offering memorandum. Our licenses are subject to our compliance with certain customary legal conditions related to the permitted use of the water. For example, Peruvian law requires that water rights must be used efficiently without adversely affecting water quality or the environment, and taking into account primary uses (such as water for food preparation, human direct consumption, agricultural activities and personal hygiene) and rights for the use of water previously granted. Water rights, including licenses, may be terminated by government authorities or courts under certain circumstances, including: (i) a titleholder’s resignation; (ii) the annulment of the resolution approving the corresponding permit, authorization and/or license, (iii) the expiration of the permit, authorization and/or license, (iv) the nullification of the resolution approving the corresponding permit, authorization and/or license, declared by the ANA, based on certain infringements of applicable laws and regulations, such as a failure to pay an applicable water rights fee. Although we continue to seek alternative sources of water to minimize the risk of any disruption, the available water supply may be adversely affected by shortages or changes in governmental regulations that may reduce the available volumes of water to which we currently have access. We cannot assure you that water will be available in 27
sufficient quantities to meet our future needs or will prove sufficient to meet our water supply needs. In addition, we cannot assure you that our existing licenses related to water rights will be maintained. If our water supply is reduced, this could adversely affect our business, results of operations, financial condition and ability to repay the notes. See “Regulatory Overview—Peru—Water Permits.” Risks Related to the Countries in which We Operate Our results of operations and financial condition are dependent upon economic conditions in the countries in which we operate, and any decline in economic conditions could materially and adversely affect us. All of our operations and development are in countries in emerging markets, and we expect to have additional operations in these or other emerging market countries. Many of these countries have a history of political, social and economic instability. Our revenue is derived primarily from the sale of sugar and ethanol, and the demand for sugar and ethanol is largely driven by the economic conditions of the countries in which we operate. Therefore, our results of operations and financial condition are to a large extent dependent upon the overall level of economic activity and political and social stability in those emerging market countries. Should economic conditions deteriorate in these countries or in emerging markets generally, we could be materially and adversely affected. Governments have a high degree of influence in the economies in which we operate, which could have a material and adverse effect on us. Governments in many of the markets in which we operate frequently intervene in the economy and occasionally make significant changes in monetary, credit, industry and other policies and regulations. Government actions to control inflation and other policies and regulations have often involved, among other measures, price controls, currency devaluations, capital controls and limits on imports. We have no control over, and cannot predict, what measures or policies governments may take in the future. The results of operations and financial condition of our businesses may be adversely affected by changes in governmental policy or regulations in the jurisdictions in which they operate that impact factors such as:
subsidies and incentives;
labor laws;
economic growth;
currency fluctuations;
inflation;
capital control policies;
interest rates;
liquidity of domestic capital and lending markets;
fiscal policy;
tax laws, including the effect of tax laws on distributions from our subsidiaries;
import/export restrictions; and
other political, social and economic developments in or affecting the country where each business is based.
Uncertainty over whether governments will implement changes in policy or regulation affecting these or other factors in the future may contribute to economic uncertainty and heightened volatility in the securities markets. Due to populist political trends that have become more prevalent in certain countries in Latin America over recent years, some of the administrations in countries where we operate may increase government involvement in regulating economic activity. 28
Changes in tax laws may increase our tax burden and, as a result, have a material and adverse effect on us. The governments of each of the countries in which we operate regularly implement changes to their tax regulations that may increase our tax burdens. For example, the Peruvian government is currently in the process reforming the Income Tax, Value Added Tax and the Tax Code. These changes include modifications in the methods for tax audits and, from time to time, the enactment of temporary taxes. The effects of these proposed tax reforms and any other changes resulting from the enactment of additional tax reforms have not been quantified. However, if enacted, some of these reforms may result in increases in our overall tax burden, which could materially and adversely affect us. The climatic phenomenon El Niño and other natural phenomena such as earthquakes and floods may have a material and adverse effect on us. El Niño is an oceanic and atmospheric phenomenon that causes a warming of temperatures in the Pacific Ocean to rise, resulting in heavy rains off the coast of Peru and Ecuador and various other effects in other parts of the world. The effects of El Niño, which typically occurs every two to seven years around the end of December, include, among other things, flooding and significant declines in fish populations and negative effects on agriculture, and accordingly, can have a negative effect on Peru’s economy. The strongest El Niño events of the 20th and 21st centuries occurred in 1982-1983 and in 1997-1998. Should another strong El Niño event occur, there is no assurance that our installed river barriers and reefs will be sufficient to prevent damage to our farmlands. In addition, Peru has experienced other natural phenomena in the past such as earthquakes and floods. Most recently, on August 15, 2007, a strong earthquake, measuring 7.9 on the Richter scale, hit the central coast of Peru, heavily affecting the Ica province in particular. A major earthquake could damage infrastructure necessary to our operations. Peru has also experienced droughts caused by low rainfall. Most recently, a drought in 2004 adversely affected our farm production yields, raised our production costs and reduced our sales. If such earthquakes, El Niño events, droughts or other natural phenomena occur in the future, we may suffer damage to, or destruction of, properties and equipment, as well as temporary disruptions to our production, which may materially and adversely affect us. Economic, political and social developments in Peru could materially and adversely affect us. The majority of our operations and customers are located in Peru. As a result, our results of operations and financial condition are dependent on economic, political and social developments in Peru, and are affected by the economic and other policies of the Peruvian government, including devaluation, currency exchange controls, inflation, economic downturns, political instability, social unrest and terrorism. During the past several decades, Peru has experienced political instability that has included a succession of regimes with differing economic policies. Previous governments have imposed controls on prices, exchange rates, local and foreign investment and international trade, restricted the ability of companies to dismiss employees, expropriated private sector assets and prohibited the remittance of profits to foreign investors. Presidential elections were held in Peru in April 2011. On July 28, 2011, after winning a run-off election, Ollanta Humala was sworn in as president of Peru for a five-year term through 2016. President Humala founded the Gana Perú (Win Peru) party, an alliance of various left-leaning parties such as the Partido Comunista del Perú (Communist Party of Peru), the Partido Socialista (Socialist Party), the Partido Socialista Revolucionario (Socialist Revolutionary Party), the Movimiento Político Voz Socialista (Socialist Voice Political Movement), and a significant constituency of the Movimiento Político Lima para Todos (Political Movement Lima for All). The President of Peru has considerable power to determine governmental policies and actions that relate to the Peruvian economy and that consequently affect the operations and financial performance of companies that operate in Peru such as us. The uncertainties characteristic of a change in government could cause instability and volatility in Peru, including volatility in the nuevo sol exchange rate and the performance of the Lima Stock Exchange (“BVL”). See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting Operating Results—Economic Conditions in Peru, Argentina and Ecuador.” Although it is unclear what policies the Humala administration will enact, President Humala has publicly stated that Peru will continue conservative economic policies, a responsible fiscal policy and autonomous monetary policy. 29
Furthermore, the appointment of independent ministers and public announcements from government officials have partially dissipated concerns that Peru’s economic policy framework would change drastically. However, we cannot assure you whether the current or any future Peruvian administration will maintain business-friendly and openmarket economic policies or policies that stimulate economic growth and social stability. Any changes in the Peruvian economy or the Peruvian government’s economic policies may materially and adversely affect us. Also, the Peruvian Congress is discussing proposed legislation that would seek to limit the amount of farm lands to be held, directly or indirectly, by a single owner. If any of the proposed legislation is enacted into law, such law could have a material adverse effect on the expansion plans of Coazucar in Peru. A devaluation of the nuevo sol could have a material adverse effect on us and consequently affect our ability to make payments on the notes. A sudden and significant devaluation of the nuevo sol could materially and adversely affect us. A severe devaluation of the nuevo sol may have a material and adverse effect on our financial condition, results of operations and cash flows in future periods by, for example, increasing in nuevos soles terms the amount of our foreign currency-denominated liabilities. Any significant devaluation of the nuevo sol against the U.S. dollar could have a material adverse effect on us, including our ability to make payments on the notes. The re-implementation of certain laws by the Peruvian government, most notably restrictive exchange rate policies, could materially and adversely affect us and our and the Guarantors’ ability to make payment on the notes and the guarantees. Since 1991, the Peruvian economy has experienced a significant transformation from a highly protected and regulated system to a free market economy. In 1991, President Fujimori’s administration eliminated all foreign exchange controls and unified the exchange rate. Currently, foreign exchange rates are determined by market conditions, with regular operations by the Peruvian Central Reserve Bank in the foreign exchange market in order to reduce volatility in the value of Peru’s currency against the U.S. dollar. Since the early 1990s, protectionist and interventionist laws and policies have been gradually dismantled to create a liberal economy dominated by market forces. The Peruvian economy has generally responded positively to this transformation, GDP grew by an average annual rate of approximately 5.0% during the period from 1995 to 2011. Exchange controls and restrictions on remittances of profits, dividends and royalties have ceased. Prior to 1991, Peru exercised control over foreign exchange markets by imposing restrictions to multiple exchange rates and restrictions to the possession and use of foreign currencies. The Peruvian government may institute restrictive exchange rate policies in the future. Any such restrictive exchange rate policy could affect our ability to engage in foreign exchange activities, and could also materially and adversely affect us. In addition, if the Peruvian government were to institute restrictive exchange rate policies in the future, we and the Guarantors might be obligated to seek an authorization from the Peruvian government to make payments on the notes and the guarantees. We cannot assure you that such an authorization would be obtained. Any such exchange rate restrictions or the failure to obtain such an authorization could materially and adversely affect our and the Guarantors’ ability to make payments under the notes and the guarantees, respectively. Peruvian inflation could adversely affect us. In the past, Peru has suffered through periods of high and hyper inflation, which has materially undermined the Peruvian economy and the government’s ability to create conditions that would support economic growth. A return to a high inflation environment would undermine Peru’s foreign competitiveness, with negative effects on the level of economic activity and employment. Additionally, in response to increased inflation, the Peruvian Central Bank (Banco Central de Reserva del Perú), which sets the Peruvian basic interest rate, may increase or decrease the basic interest rate in an attempt to control inflation or foster economic growth. As a result of reforms initiated in the 1990s, Peruvian inflation has decreased significantly in recent years from four-digit inflation during the 1980s. The Peruvian economy experienced annual inflation of 2.94% in 2009, 1.53%
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in 2010 and 3.37% in 2011, as measured by the Peruvian Consumer Price Index (Índice de Precios al Consumidor del Perú). If Peru experiences substantial inflation in the future, our costs of goods could increase and its operating margins could decrease, which could materially and adversely affect us. Inflationary pressures may also limit our ability to access foreign financial markets and may cause government intervention in the economy, including the introduction of government policies that may adversely affect the overall performance of the Peruvian economy. In the past, Peru experienced significant levels of domestic terrorist activity. It is possible that a resurgence of terrorism in Peru may occur in the future, which would have a material adverse effect on the Peruvian economy and, ultimately, on us. In the late 1980s and early 1990s, Peru experienced significant levels of terrorist activity targeted against, among others, the government and private sector. These activities were attributed mainly to two local terrorist groups, Sendero Luminoso and Movimiento Revolucionario Túpac Amaru (the “MRTA”). Both terrorist groups suffered significant defeats in the 1990s, including the arrest of their leaders, causing considerable limitations in their activities during the decade of 2000. Although we believe that Sendero Luminoso and MRTA no longer pose a significant risk as they did during the 1980s and early 1990s, their members still operate in remote mountainous and jungle areas in central and southern Peru, where military patrols have decreased due to military spending cutbacks. Despite the suppression of terrorist activity, we cannot assure you that a resurgence of terrorism in Peru will not occur, or that if there is a resurgence, it will not disrupt the economy of Peru and us. The Peruvian economy could be adversely affected by economic developments in regional or global markets. Financial and securities markets in Peru are influenced, to varying degrees, by economic and market conditions in regional or global markets. Although economic conditions vary from country to country, investors’ perceptions of the events occurring in one country may substantially affect capital flows into and securities from issuers in other countries, including Peru. The Peruvian economy was adversely affected by the political and economic events that occurred in several emerging economies in the 1990s, including in Mexico in 1994, which impacted the market value of securities in many markets throughout Latin America. The crisis in the Asian markets beginning in 1997 also negatively affected markets throughout Latin America. Similar adverse consequences resulted from the economic crisis in Russia in 1998, the Brazilian devaluation in 1999 and the Argentine crisis in 2001. In addition, Peru continues to be affected by events in the economies of its major regional partners. Furthermore, the Peruvian economy may be affected by events in developed economies that are trading partners or that affect the global economy. The 2008 global economic crisis, principally driven by the sub-prime mortgage market in the United States, significantly affected the international financial system, including Peru’s securities market and economy. Additionally, the current economic crisis in Europe, beginning with the financial crises in Greece, Spain, Italy and Portugal, has reduced the confidence of foreign investors, which has caused volatility in the securities markets and affected the ability of companies to obtain financing in the global capital markets. Moreover, the fiscal problems in the United States due to difficulties and delays in increasing the government debt ceiling, culminating in the downgrade of the U.S. long term sovereign credit rating by Standard & Poor’s on August 6, 2011, has added to an already high risk-avert environment. Renewed doubts about the pace of global growth have contributed to weak international growth in 2011. An interruption to the recovery of the developed economies, the continued effects of the current crisis in Europe, or a new economic and/or global financial crisis, could affect Peru’s economy, and, consequently, materially adversely affect our business, economic and financial condition or results of operations. The recent market volatility generated by distortions in the international financial markets may affect the Peruvian capital markets. The international financial conditions in 2008 and 2009 increased the volatility of the Lima Stock Exchange. The general index of the Lima Stock Exchange decreased by 60% in 2008, increased by 101% in 2009, increased by 65% in 2010, and decreased by 17% in 2011. In recent years, the Lima Stock Exchange has experienced increased participation from retail investors that react rapidly to the effects from international markets. Further volatility in 31
the international markets may also adversely affect the Peruvian capital markets. The Peruvian banking system has not experienced significant liquidity problems as a result of the international financial conditions, primarily because the major source of funds for local banks is represented by their deposit base. Nevertheless, we have partially relied on funding from the local capital markets and limited liquidity in those markets as a result of future market volatility could adversely affect our ability to raise funds at the price or level we consider necessary to fund our operations. Argentine economic and political conditions and perceptions of these conditions in the international market may have a direct impact on our business and could materially and adversely affect us. One of our subsidiaries, San Isidro, is located in Argentina and accounted for 4% of our EBITDA in 2011. The Argentine economy has experienced significant volatility in recent decades, characterized by periods of low or negative growth, high and variable levels of inflation and currency devaluation. Between 2001 and 2003 Argentina experienced a period of severe political, economic and social crisis. More than a decade of uninterrupted Peso/dollar parity ended in 2002, and the value of the Peso against the U.S. dollar has fluctuated significantly since then. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting Operating Results—Economic Conditions in Peru, Argentina and Ecuador.” Although general economic conditions in Argentina have recovered significantly during the past years, there is uncertainty as to whether this growth is sustainable. This is mainly because the economic growth was initially dependent on a significant devaluation of the Peso, a high excess production capacity resulting from a long period of deep recession and high commodity prices. The global economic crisis of 2008 has led to a sudden economic decline, accompanied by political and social unrest, inflationary and Peso depreciation pressures and lack of consumer and investor confidence. We cannot assure you that GDP will increase or remain stable in the future. The economic crisis in Europe, beginning with the financial crisis in Greece, Spain, Italy and Portugal, the international demand for Argentine products, the stability and competitiveness of the Peso against foreign currencies, confidence among consumers and foreign and domestic investors, a stable and relatively low rate of inflation and the future political uncertainties, among other factors, may affect the development of the Argentine economy. In response to the prevailing economic conditions during 2011 and the beginning of 2012, including the rise of inflation, the continued demand for salary increases, the growth of the fiscal deficit, the required payments to be made on public debt in 2012, the reduction of the industrial growth and the increase of the capital flow out of Argentina, the Argentine government has adopted different measures, including strengthening foreign exchange controls, the elimination of subsidies to the private sector and the proposal for new taxes. On April 16, 2012, the Argentine government announced its intention to expropriate YPF, S.A. (“YPF”), the largest oil and gas company in Argentina, which is controlled by Repsol YPF, S.A., a Spanish integrated oil and gas company. On May 4, 2012, the Argentine Congress approved the expropriation of 51% of YPF’s capital stock, with 26.03% held by the national government and the remaining 24.99% distributed among certain provinces. This measure has sparked strong international condemnation and could have a significant negative impact on future foreign direct investment in Argentina as well as potentially limit the country’s access to international capital and debt markets. In response to the nationalization of YPF by the Argentine government, Spain has blocked loans disbursements to Argentina it had previously agreed to fund through multilateral development institutions. On June 13, 2012, the European Union Parliament voted to suspend unilateral tariff preferences to Argentina, one year ahead of schedule. Also in response to the Argentine government’s actions, the European Union has lodged a formal complaint against Argentina with the World Trade Organization, denouncing the country’s protectionist trade and investment policies. If such sanctions by international trading blocks like the European Union continue to be imposed on Argentina or on its agricultural exports, it may have a negative impact on our Argentine subsidiaries’ financial conditions and results of operations. Argentine economic and political conditions and resulting measures could have a material adverse impact on our operations in Argentina. Ecuadorian economic and political conditions may have a material and adverse impact on us. One of our subsidiaries, La Troncal, is located in Ecuador and accounted for 6% of our EBITDA in 2011. Between 1997 and 2006, Ecuador experienced a severe political crisis during which it elected or appointed seven presidents. While Rafael Correa has served as president since 2007 and is eligible for reelection in 2013, there can 32
be no assurance that political instability, and consequently lower economic growth, will not return in Ecuador. Correa’s presidency has resulted in greater direct government intervention in the economy and there can be no guarantee that the Ecuadorian government will not intervene in the sugar and ethanol sector in the future. The Ecuadorean economy has experienced periods of significant economic volatility, resulting in two sovereign defaults in 1999 and in 2009 that have since limited the government’s ability to borrow money. The scheduled presidential elections in 2013 may encourage increased government spending and pressure the government to increase tax revenue or increase borrowings from its already limited sources of credit, and there is no guarantee that overspending will not contribute to additional economic volatility and deterioration. While Ecuador’s economy has been dollarized since 2002, economic instability could still occur. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting Operating Results—Economic Conditions in Peru, Argentina and Ecuador.” In particular, a decline in current account receipts could spur the government to make the exit of dollars from the country more difficult. For example, Ecuadorian lawmakers attempted unsuccessfully last year to pass a tax on capital outflows and there is no guarantee that the government will not continue pursuing policies to preserve its dollar reserves. Decreasing productivity in Ecuador’s oil sector may adversely affect the country’s growth prospects. While several oil producers have settled their claims against the government and accepted the government’s increased involvement in the oil industry, there is no guarantee that the petrochemical investment climate and growth prospects will not deteriorate. The decreased independence of the Ecuadorian central bank following the 2008 constitutional reforms and newly passed banking regulations may also deter private sector investment and adversely affect the growth of the Ecuadorian economy. Risks Relating to the Notes and the Guarantees Coazucar is a holding company and most of its production assets are held by subsidiaries. Coazucar is a holding company, and most of its production assets are held by its direct and indirect subsidiaries, including the Guarantors. Accordingly, we depend on the results of operations of our subsidiaries, including the Guarantors. The ability of Coazucar’s subsidiaries to make dividend or other payments to Coazucar are affected by, among other factors, the obligations of these subsidiaries, including the Guarantors, to their creditors, requirements of the relevant corporate and other laws in the jurisdiction in which each subsidiary, including each Guarantor, operates, and restrictions contained in agreements entered into by or relating to these entities. In the event that we do not receive dividend or other payments from our subsidiaries, we may not be able to make required principal and interest payments on our indebtedness, including the notes, or honor our other obligations, and you may be forced to make a claim against the Guarantors that guarantee the notes. Coazucar’s non-guarantor subsidiaries do not have an obligation to pay amounts due on the notes or to make funds available for that purpose. While the indenture governing the notes limits the ability of Coazucar’s subsidiaries to incur consensual restrictions on their ability pay dividends or make intercompany payments to Coazucar, these limitations are subject to certain qualifications and exceptions. Our substantial indebtedness may make it difficult for us to service our debt, including the notes, and to operate our businesses. We have, and after the offering of the notes will continue to have, a significant amount of indebtedness. As of March 31, 2012, we and our subsidiaries had S/.805.6 million (US$302.0 million) of total consolidated debt. We anticipate that our substantial indebtedness will continue for the foreseeable future. Our substantial indebtedness may have important negative consequences for you, including:
making it more difficult for us and our subsidiaries to satisfy our obligations with respect to our debt, including the notes and other liabilities; requiring that a substantial portion of the cash flow from operations of our operating subsidiaries be dedicated to debt service obligations, reducing the availability of cash flow to fund internal growth through working capital and capital expenditures and for other general corporate purposes; increasing our vulnerability to economic downturns in our industry; exposing us to interest rate increases; 33
placing us at a competitive disadvantage compared to our competitors that have less debt in relation to cash flow; limiting our flexibility in planning for or reacting to changes in our business and our industry; restricting us from pursuing strategic acquisitions or exploiting certain business opportunities; and limiting, among other things, our and our subsidiaries’ ability to borrow additional funds or raise equity capital in the future and increasing the costs of such additional financings.
In the worst case, an actual or impending inability by us or our subsidiaries to pay debts as they become due and payable could result in our insolvency. Despite our current substantial indebtedness, we may be able to incur more debt in the future, including on a secured basis, which could further exacerbate the risks of our indebtedness. Despite our current substantial indebtedness, we may be able to incur more debt in the future. The indenture governing the notes will limit our ability to incur additional debt but will not prohibit us from doing so. We may incur additional debt in the future that could mature prior to the notes, and such debt could be secured on an equal, ratable and pari passu basis with the notes and the guarantees. Any such additional debt could further exacerbate the risks of our indebtedness. Payments on the notes and the guarantees will be effectively subordinated to any secured debt obligations of Coazucar and the Guarantors, and structurally subordinated to the liabilities of non-guarantor subsidiaries to their own creditors and the liabilities of Casa Grande to its own creditors to the extent that the obligations under the notes exceed its partial guarantee of an initial amount equal to US$162,500,000. The notes will be fully guaranteed by Cartavio, San Jacinto and Azucarera Olmos, and partially guaranteed by Casa Grande, on an unsecured basis. The notes and the guarantees will constitute senior unsecured obligations of Coazucar and the Guarantors, and will rank equal in right of payment with all of the other existing and future unsecured, unsubordinated indebtedness of Coazucar and the Guarantors, other than with respect to certain obligations given preferential treatment pursuant to the laws of Peru. Holders of the notes will not have any claim against our subsidiaries that are not guarantors of the notes. Therefore, our non-guarantor subsidiaries will pay their debt and other obligations as required, before they make any funds available to us for making payments under the notes. Moreover, the right of holders of the notes to receive assets of any non-guarantor subsidiaries upon liquidation or reorganization or to participate in the distribution of, or realize the proceeds of, those assets will be structurally subordinated to the claims of such subsidiary’s creditors. Additionally, while Casa Grande is a Guarantor, its guarantee is limited to an initial amount equal to US$162,500,000, which represents only a portion of the aggregate principal amount of the notes. In the event that we are not able to make required principal and interest payments on the notes, you may be limited in the amounts recoverable against Casa Grande pursuant to its limited guarantee. As of March 31, 2012, Coazucar had total consolidated debt of S/.805.6 million (US$302.0 million), of which S/.234.6 million (US$87.9 million) was debt of Coazucar, S/.264.3 million (US$99.1 million) was debt of the Guarantors, S/.106.8 million (US$40.0 million) was debt of Casa Grande, and S/.306.6 million (US$115.0 million) was debt of the non-guarantor subsidiaries. As of March 31, 2012, Coazucar, the Guarantors, Casa Grande and the non-guarantor subsidiaries had secured debt in the amounts of S/.132.4 million (US$49.6 million), S/.199.5 million (US$74.8 million), S/.97.8 million (US$36.7 million) and S/.287.3 million (US$107.7 million), respectively. As of and for the three months ended March 31, 2012, the Guarantors represented 68.4% of our consolidated total assets and 84.5% of our consolidated EBITDA and Casa Grande represented 41.7% of our consolidated total assets and 51.3% of our consolidated EBITDA. We intend to repurchase a portion of the indebtedness of Coazucar with a portion of the proceeds of this offering. Although the holders of the notes will have a direct, but unsecured, claim on the assets and property of the Coazucar and the Guarantors, payment on the notes and guarantees will be effectively subordinated to payments on Coazucar’s and the Guarantors’ secured debt to the extent of the assets and property securing such debt. Payments on the notes and guarantees is also subject to the payment of certain other obligations that receive preferential treatment under Peruvian law, such as certain labor and tax obligations. 34
The guarantee of Casa Grande is limited to an initial amount equal to US$162,500,000 and as a result, in the case of a default in respect of our obligations under the notes, you may be limited in the amounts recoverable from Casa Grande to satisfy our obligations under the notes. Casa Grande’s guarantee is limited to an initial amount equal to US$162,500,000, which represents only a portion of the aggregate principal amount of the notes. As of and for the three months ended March 31, 2012, Casa Grande generated 51.3% of our consolidated EBITDA and had 41.7% of our consolidated total assets. Because Casa Grande’s guarantee is limited to an initial amount equal to US$162,500,000, in the case of a default in respect of our obligations under the notes, you may be limited in the amounts recoverable from Casa Grande to satisfy our obligations under the notes. Our obligations under the notes and guarantees will be subordinated to certain statutory liabilities. Under Peruvian bankruptcy law, our obligations under the notes and guarantees are subordinated to certain statutory preferences. In the event of our liquidation, such statutory preferences, including claims for salaries, wages, secured obligations, social security, taxes and court fees and expenses related thereto, will have preference over any other claims, including claims by any investor in respect of the notes and guarantees. It is possible that the guarantees may not be enforceable in the event of insolvency or bankruptcy or may be limited as to enforcement. The guarantees provide a basis for a direct claim against the Guarantors. However, it is possible that the guarantees may not be enforceable under Peruvian law or U.S. federal or state law. In particular, while the laws of these jurisdictions do not prevent the guarantees from being granted, in the event that a Guarantor is declared insolvent or bankrupt, the relevant guarantee could be voided, or claims in respect of a guarantee could be subordinated to all other debts of that Guarantor if, among other things, the Guarantor, at the time it provided its guarantee:
issued such guarantee by means of misrepresentation; provided the guarantee with the intent to hinder, delay or defraud creditors or was influenced by a desire to put the beneficiary of the guarantee in a position which, in the event of the Guarantor’s insolvency, would be better than the position the beneficiary would have been in had the guarantee not been given; received less than reasonably equivalent value or fair consideration for the incurrence of such guarantee; was insolvent or rendered insolvent by reason of such incurrence; was engaged in a business or transaction for which the Guarantor’s remaining assets constituted unreasonably small capital; or intended to provide, or believed that it would provide, the guarantee beyond its ability to repay it upon its maturity.
In a recent Florida bankruptcy case, subsidiary guarantees containing this kind of provision were found to be fraudulent conveyances and thus unenforceable and the court stated that this kind of limitation is ineffective. We do not know if that case will be followed if there is litigation on this point under the indenture governing the notes. However, if it is followed, the risk that the guarantees will be found to be fraudulent conveyances will be significantly increased. Additionally, the guarantee of Cartavio, San Jacinto and Azucarera Olmos, by its terms, will be limited to such amount as would not render each of these entities insolvent, and the guarantee of Casa Grande will be limited to an initial amount equal to US$162,500,000. While such limitation may not prevent the guarantee from being determined to be a fraudulent transfer, such limitation could meaningfully limit amounts recoverable pursuant to such guarantee. Developments in other emerging markets may adversely affect the market value of the notes. The market price of the notes may be adversely affected by declines in the international financial markets and world economic conditions. The market for securities of companies doing substantially all of their business in Latin American markets, such as our company, is influenced, to varying degrees, by economic and market conditions in other emerging market countries, especially those in Latin America. Although economic conditions are different in 35
each country, investors’ reaction to developments in one country may affect the securities markets and the securities of issuers in other countries. We cannot assure you that the market for our securities will not be affected negatively by events in countries in which we do not operate, particularly in emerging markets, or that such developments will not have a negative impact on the market value of the notes. Enforcing your rights as a holder of notes in Peru may prove difficult. Your rights under the notes will be subject to the insolvency and administrative laws of Peru and we cannot assure you that you will be able to effectively enforce your rights in such bankruptcy, insolvency or similar proceedings. In addition, the bankruptcy, insolvency, administrative and other laws of Peru may be materially different from, or in conflict with, each other, including in the areas of rights of creditors, priority of government entities and related-party creditors and ability to obtain post bankruptcy filing loans or to pay interest. The application of these laws, or any conflict among them, could call into question what and how Peruvian laws should apply. The laws of Peru may not be as favorable to your interests as the laws of jurisdictions with which you are familiar. Such issues may adversely affect your ability to enforce your rights under the notes in Peru or limit any amounts that you may receive. In addition, the ability of holders of notes to institute bankruptcy proceedings against us or the Guarantors in Peru, where most of our and their respective assets and operations are located, is currently not guaranteed by Peruvian law. Therefore, we cannot assure you that the holders of notes will have the right directly (or indirectly through the trustee) to institute bankruptcy proceedings against us or the Guarantors in Peru if we default on the notes. You may be unable to enforce judgments against us, the Guarantors, or our respective directors and officers. We and the Guarantors are organized under the laws of Peru. In addition, all of our assets are outside the United States and all of our directors and officers live outside the United States. Our auditors are also organized outside the United States. As a result, it may be difficult or impossible to serve process against any of these persons in the United States. Furthermore, as all or substantially all of the assets of these persons are located outside of the United States, it may not be possible to enforce judgments obtained in courts in the United States predicated upon civil liability provisions of the federal securities laws of the United States against these persons. There is no guarantee that a judgment against such persons in Peru will be enforceable, whether in original actions or in actions to enforce judgments of U.S. courts, based solely on the U.S. federal securities laws. See “Enforcement of Civil Liabilities.” The notes constitute a new issue of securities for which there is no existing market, and we cannot assure you that you will be able to sell your notes in the future. The notes constitute new securities for which there is no existing market. Although application has been made to the Irish Stock Exchange for the notes to be admitted to the Official List and to trading on the Global Exchange Market, we cannot assure you that the application will be approved or that an active trading market in the notes will develop. In addition, we cannot provide you with any assurances regarding the ability of holders of the notes to sell their notes, or the price at which such holders may be able to sell their notes. If such a market were to develop, the notes could trade at prices that may be higher or lower than the initial offering price depending on many factors, including prevailing interest rates, our results of operations and financial condition, political and economic developments in and affecting the jurisdictions where we have operations, and the market for similar securities. The initial purchasers of this offering have advised our company that they currently intend to make a market in the notes. However, the initial purchasers are not obligated to do so, and any marketmaking with respect to the notes may be discontinued at any time without notice. There are restrictions on your ability to transfer or resell the notes without registration under applicable securities laws. The notes and the guarantees have not been, and will not be, registered under the Securities Act or any state securities laws and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 36
Securities Act and applicable state securities laws. Such exemptions include offers and sales that occur outside the United States in compliance with Regulation S under the Securities Act and in accordance with any applicable securities laws of any other jurisdiction and sales to qualified institutional buyers as defined under Rule 144A under the Securities Act. The notes have been registered in Peru pursuant to SMV Resolution No. 004-2011-EF/94.01.1. In Peru, the notes are subject to transfer and resale restrictions and shall not be transferred or resold except as permitted under CONASEV Resolution No. 079-2008-EF/94-01.1. For a discussion of certain restrictions on resale and transfer, see “Transfer Restrictions”. Due to these transfer restrictions, you may be required to bear the risk of your investment for an indefinite period of time. We may be unable to satisfy our note purchase obligations upon a change of control repurchase event. Upon the occurrence of a change of control repurchase event, which is comprised of certain change of control events together with a ratings decline, as described in the “Description of the Notes” and the indenture governing the notes, each holder of the notes may require us to purchase all or a portion of such holder’s notes at a purchase price equal to 101% of the aggregate principal amount of such holder’s notes, together with accrued and unpaid interest, if any, to the date of purchase. In such event, we may not have the financial resources sufficient to purchase all of the notes and our other indebtedness that might become payable upon the occurrence of a change of control repurchase event. We may choose to redeem the notes and you may be unable to reinvest the proceeds at the same or a higher rate of return. We may redeem the notes, in whole or in part, subject to a minimum float condition, at any time on or after August 2, 2017 at the applicable redemption prices set forth in this offering memorandum, plus accrued and unpaid interest and any Additional Amounts. Before August 2, 2017, we may also redeem the notes, in whole or in part, subject to a minimum float condition, at a redemption price based on a “make-whole” premium. In addition, at any time prior to August 2, 2015, we may redeem up to 35% of the notes (including any additional notes), at a redemption price equal to 106.375% of their outstanding principal amount, plus accrued and unpaid interest and any Additional Amounts, using the proceeds of certain equity offerings. See “Description of the Notes—Optional Redemption”. Additionally, in the event of certain changes in applicable tax laws, we will have the right to redeem the notes prior to their maturity at a price equal to 100% of their outstanding principal amount plus accrued and unpaid interest and Additional Amounts, if any. See “Description of the Notes—Optional Tax Redemption”. We may chose to redeem the notes at times when prevailing interest rates may be relatively low. Accordingly, you may not be able to reinvest the redemption proceeds in a comparable security with an effective interest rate as high as that of the notes. Different disclosure and accounting principles in Peru and the United States may provide you with different or less information about us than you expect. Securities disclosure requirements in Peru differ from those applicable in the United States. Accordingly, the information about us available to you may not be the same as the information available to security holders of a U.S. company. There may be less publicly available information about us than is regularly published about companies in the U.S. and certain other jurisdictions. We are not subject to the periodic reporting requirements of the Exchange Act and, therefore, are not required to comply with the information disclosure requirements that it imposes. The perception of higher risk in other countries, especially in emerging economies, may adversely affect the Peruvian economy, our business and the market price of securities issued by Peruvian issuers, including the notes. Emerging markets like Peru are subject to greater risks than more developed markets, and financial turmoil in any emerging market could disrupt business in Peru and adversely affect the price of the notes. Moreover, financial turmoil in any emerging market country may adversely affect prices in stock markets and prices for debt securities of issuers in other emerging market countries as investors move their money to more stable, developed markets. An increase in the perceived risks associated with investing in emerging markets could dampen capital flows to Peru and adversely affect the Peruvian economy in general, and the interest of investors in the notes. We cannot assure 37
you that the value of the notes will not be negatively affected by events in other emerging markets or the global economy in general. We cannot assure you that the credit ratings for the notes will not be lowered, suspended or withdrawn by the rating agencies. The credit ratings of the notes may change after issuance. Such ratings are limited in scope, and do not address all material risks relating to an investment in the notes, but rather reflect only the views of the rating agencies at the time the ratings are issued. An explanation of the significance of such ratings may be obtained from the rating agencies. We cannot assure you that such credit ratings will remain in effect for any given period of time or that such ratings will not be lowered, suspended or withdrawn entirely by the rating agencies, if, in the judgment of such rating agencies, circumstances so warrant. Any lowering, suspension or withdrawal of such ratings may have a material and adverse effect on the market price and marketability of the notes. Peruvian capital gains tax may apply on transfers of the offered notes. In the event beneficial interests in the Global Notes are exchanged for definitive notes (or the Global Notes are transferred), the non-Peruvian holders of such Global Notes may be subject to Peruvian capital gains tax on any transfer of such definitive notes (or transfer of notes). See “Taxation—Peruvian Tax Considerations.”
38
USE OF PROCEEDS We intend to use the net proceeds from the sale of the notes, after the deduction of certain fees and expenses in connection with this offering to (i) repay approximately US$148 million of the outstanding indebtedness of the Issuer, Cartavio S.A.A., Agroindustrias San Jacinto S.A.A. and Casa Grande S.A.A., (ii) purchase land in connection with the Olmos Expansion Plan, and (iii) use the remainder for capital expenditures and general corporate purposes for our operations in Peru.
39
CAPITALIZATION The following table sets forth our consolidated debt and capitalization as of March 31, 2012, derived from our unaudited condensed consolidated interim financial statements as of March 31, 2012 prepared in accordance with IFRS, as issued by the IASB:
on an actual historical basis; and
as adjusted for the sale of the notes in this offering, the receipt of net proceeds therefrom in the aggregate amount of approximately US$319 million after deduction of commissions and expenses and the use of a portion of the proceeds to repay approximately US$148 million of outstanding indebtedness.
You should read this table in conjunction with “Use of Proceeds,” “Selected Financial and Other Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and the related notes thereto, which are included in this offering memorandum. As of March 31, 2012 Actual As Adjusted (in US$ millions)(1) (in S/. millions) (in US$ millions)(1) (in S/. millions)
Cash and cash equivalents.............. Short-term debt Overdraft ..................................... Promissory notes ......................... Finance lease ............................... Payable from acquisition of subsidiaries(2) ............................ Payable from acquisition of associate(3) ................................ Total short-term debt.................. Long-term debt Promissory notes ......................... 6.375% Senior Notes due 2022 offered hereby .......................... Finance lease ............................... Payable from acquisition of subsidiaries(2) ............................ Total long-term debt.................... Total debt ....................................... Total equity .................................... Total capitalization......................
71.9
191.8
242.9
647.8
0.8 111.1 0.6
2.1 296.3 1.6
— 54.0 0.6
— 144.0 1.6
6.9
18.5
6.9
18.5
7.3 126.7
19.4 337.9
7.3 68.8
19.4 183.5
90.9
242.4
—
—
— 0.3
— 0.8
325.0 0.3
866.8 0.8
84.1 175.3 302.0 941.8 1,243.8
224.4 467.6 805.5 2,511.7 3,317.2
84.1 409.4 478.2 941.8 1,420.0
224.4 1,092.0 1,275.5 2,511.7 3,787.2
________________________________ (1) (2) (3)
Amounts stated in U.S. dollars have been translated from nuevos soles at the exchange rate of S/.2.667 per US$1.00 as of March 31, 2012. See “Exchange Rates” for additional information on the exchange rate. The liability incurred in connection with our acquisition of La Troncal is treated as an account payable and not as indebtedness. Includes an account payable in connection with our acquisition of 50% of the shares of Producargo S.A., an ethanol company in Ecuador.
Since March 31, 2012, we have provided a guarantee in the amount of US$49.8 million for purchasing lands in connection with the Olmos Expansion Plan, which we anticipate repaying with the proceeds from this offering.
40
EXCHANGE RATES Peruvian law does not impose any restrictions on the ability of companies having operations in Peru to transfer foreign currencies from Peru to other countries, to convert nuevos soles into any foreign currency or to convert any foreign currency into nuevos soles. Companies may freely remit interest and principal payments abroad and investors may repatriate capital from liquidated investments. Peruvian law in the past imposed restrictions on the conversion of Peruvian currency and the transfer of funds abroad, however, we cannot assure you that Peruvian law will continue to permit such payments, transfers, conversions or remittances without restrictions. Exchange rates for the nuevo sol have been relatively stable in recent years. The following table sets forth the low, high, period-average and period-end rates for the periods indicated, expressed in nuevos soles per U.S. dollar. Low
High
Period Average(1)
Period End
Year Ended December 31: 2007........................................................................................... 2008........................................................................................... 2009........................................................................................... 2010........................................................................................... 2011...........................................................................................
2.968 2.693 2.852 2.787 2.694
3.201 3.157 3.259 2.883 2.833
3.124 2.941 3.006 2.826 2.752
2.996 3.140 2.890 2.809 2.696
2012: January ...................................................................................... February .................................................................................... March ........................................................................................ April .......................................................................................... May ........................................................................................... June ........................................................................................... July (through July 25) ...............................................................
2.690 2.677 2.667 2.640 2.636 2.641 2.620
2.689 2.691 2.676 2.668 2.709 2.708 2.654
2.693 2.684 2.671 2.657 2.670 2.671 2.636
2.690 2.677 2.667 2.640 2.709 2.671 2.638
(1) Calculated as the average of the month-end or day-end exchange rates during the relevant period, as applicable. Source: SBS
On July 25, 2012, the exchange rate was S/.2.638 per U.S. dollar.
41
SELECTED FINANCIAL AND OTHER INFORMATION The following selected financial data has been derived from (1) our unaudited condensed consolidated interim financial statements as of March 31, 2012 and for the three months ended March 31, 2012 and 2011 and (2) our audited consolidated financial statements as of December 31, 2011, 2010 and January 1, 2010 (transition date) and for the years ended December 31, 2011 and 2010, in each case included elsewhere in this offering memorandum. Our financial statements have been prepared in accordance with IFRS, as issued by the IASB. The unaudited condensed consolidated interim financial statements and the notes thereto have been condensed, but contain all adjustments, including adjustments of a normal and recurring nature, necessary for a fair presentation of our financial position and results of operation. The results for the three months ended March 31, 2012 are not necessarily indicative of the results to be expected for the entire year ending March 31, 2012. This financial information should be read in conjunction with “Presentation of Financial and Other Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and the related notes thereto, which are included elsewhere in this offering memorandum. As of and for the Three Months Ended March 31, 2012 2012 2011 (in thousands of US$, except (in thousands of S/., as indicated) except as indicated) Consolidated Statement of Comprehensive Income: Sales of products Cost of products sold Gross profit Initial recognition and change in fair value of biological assets(1) Profit before operating expenses Selling expenses Administrative expenses Other operating expenses, net Profit from operation before financing and taxation Financial income Financial expenses Exchange difference, net Income attributable to associate Profit before income tax Income tax expense Profit for the period Exchange differences on translating foreign operations, net of deferred income tax Fair value change in cash flow hedge, net Total comprehensive income for the year
As of and for the Years Ended December 31, 2011 2011 2010 (in thousands of US$, except (in thousands of S/., as indicated) except as indicated)
(unaudited) 141,427 (85,548) 55,879 66
377,185 (228,157) 149,028 175
309,162 (145,824) 163,338 31,786
483,833 (261,583) 222,250 69,865
1,304,415 (705,229) 599,186 188,355
937,854 (498,467) 439,387 177,852
55,945 (3,227) (9,725) (722)
149,203 (8,606) (25,936) (1,924)
195,124 (4,710) (8,762) (1,364)
292,115 (11,220) (24,624) (58)
787,541 (30,248) (66,386) (157)
617,239 (18,563) (42,924) (19,623)
42,271 190 (6,484) 2,237 656 38,870 (6,103) 32,767 (1,933)
112,737 506 (17,294) 5,966 1,750 103,665 (16,277) 87,388 (5,155)
180,288 787 (7,591) 268 — 173,752 (25,956) 147,796 —
256,213 913 (17,599) 6,808 — 246,335 (38,792) 207,543 (4,947)
690,750 2,461 (47,446) 18,354 — 664,119 (104,584) 559,535 (13,336)
536,129 1,621 (45,388) 11,096 — 503,458 (75,769) 427,689 —
(82) 30,752
(219) 82,014
(1,285) 146,511
(325) 202,271
(877) 545,322
(5,141) 422,548
________________________________ (1) See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Presentation and Accounting Policies—Valuation of biological assets” for a description of how we calculate the fair value of biological assets using the criteria set out in IAS 41, which requires that a biological asset should be measured at its fair value less the estimated point-of-sale costs.
42
As of and for the Years As of and for the Three As of Ended December 31, Months Ended March 31, January 1, 2012 2012 2011 2011 2010 2010 (in thousands (in thousands (in thousands of US$, except of S/., except as of US$, except (in thousands of S/., as indicated) indicated) as indicated) except as indicated) Consolidated Statement of Financial Position: Non-current assets Property, plant and equipment Intangible assets Biological assets Investments in associates Deferred income tax assets Trade and other accounts receivables Total non-current assets Current assets Biological assets Inventories Trade and other accounts receivables Cash and cash equivalents Total current assets Total assets Equity Share capital Cumulative translation adjustment Legal and other reserves Retained earnings Equity attributable to equity holders of the parent Non-controlling interest Total equity Non-current liabilities Borrowings Trade and other accounts payables Provisions and other liabilities Deferred income tax liabilities Derivative financial instruments Total non-current liabilities Current liabilities Borrowings Trade and other accounts payables Provisions and other liabilities Derivative financial instruments Total current liabilities Total liabilities Total equity and liabilities
(unaudited) 1,056,169 76,166 161,256 11,834 3,151 2,612 1,311,188
2,816,804 203,135 430,069 31,560 8,405 6,966 3,496,939
1,040,651 75,195 140,570 11,058 2,378 3,050 1,272,902
2,805,594 202,727 378,978 29,811 6,410 8,224 3,431,744
2,025,253 130,743 155,721 1,303 3,470 7,982 2,324,472
1,907,566 131,477 82,726 1,306 3,650 20,446 2,147,171
93,451 100,336 45,939 71,916 311,642 1,622,830
249,234 267,595 122,520 191,800 831,149 4,328,088
103,191 111,423 43,515 42,388 300,517 1,573,419
278,204 300,395 117,317 114,277 810,193 4,241,937
222,099 80,870 102,017 70,982 475,968 2,800,440
111,105 76,385 84,938 21,367 293,795 2,440,966
287,011 — 44,674 687,375
270,136 — 21,299 425,181
107,616 (4,648) 16,457 416,478
287,011 (12,397) 43,892 1,110,748
106,458 (3,316) 16,335 390,588
287,011 (8,941) 44,039 1,053,024
535,903
1,429,254
510,065
1,375,133
1,019,060
716,616
405,884 941,787
1,082,492 2,511,746
412,026 922,091
1,110,822 2,485,955
521,008 1,540,068
408,075 1,124,691
91,188 112,451 2,529 175,655 — 381,823
243,198 299,906 6,745 468,472 — 1,018,321
96,429 109,810 3,177 174,511 — 383,927
259,973 296,047 8,566 470,481 — 1,035,067
347,284 43,153 9,086 353,854 15,074 768,451
284,201 192,187 8,197 329,574 15,183 829,342
112,503 179,510 3,418 3,789 299,220 681,043 1,622,830
300,046 478,754 9,117 10,104 798,021 1,816,342 4,328,088
108,181 152,961 2,343 3,916 267,401 651,328 1,573,419
291,657 412,384 6,316 10,558 720,915 1,755,982 4,241,937
186,335 302,425 3,161 — 491,921 1,260,372 2,800,440
159,476 326,310 1,147 — 486,933 1,316,275 2,440,966
43
As of and for the Three Months Ended March 31, 2012 2012 2011 (in thousands of US$, except (in thousands of S/., as indicated) except as indicated)
Other data: EBITDA(1) ....................................................... EBITDA margin(2) ........................................... Total debt(3) ..................................................... Total debt / EBITDA(4) .................................... Net debt(5) ........................................................ Net debt / EBITDA(6)....................................... Fixed Charge Coverage Ratio(7) ....................... Consolidated Leverage Ratio(8) ........................
51,979 36.8% 302,049 1.46x 230,133 1.11x 9.75x 1.45x
138,628 36.8% 805,566 1.46x 613,766 1.11x 9.75x 1.45x
164,151 53.1%
As of and for the Years Ended December 31, 2011 2011 2010 (in thousands of US$, except (in thousands of S/., as indicated) except as indicated)
214,587 44.4% 302,946 1.41x 260,558 1.21x 12.25x 1.41x
578,526 44.4% 816,744 1.41x 702,467 1.21x 12.25x 1.41x
416,977 44.5% 533,619 1.28x 462,637 1.11x 9.22x 1.27x
________________________________ (1) EBITDA is calculated using profit from operations for the period before financing and taxation without initial recognition and change in fair value of biological asset, added to depreciation and amortization. See “Presentation of Financial and Other Information.” We calculate EBITDA as follows: As of and for the Three Months Ended March 31, 2012 2011 2012 (in thousands of US$, except (in thousands of S/., as indicated) except as indicated) Profit from operation before financing and taxation ............................................................ (-) Initial recognition and change in fair value of biological assets................................. (+) Depreciation .............................................. (+) Amortization.............................................. EBITDA...........................................................
As of and for the Years Ended December 31, 2011 2011 2010 (in thousands of US$, except (in thousands of S/., as indicated) except as indicated)
42,271
112,737
180,288
256,213
690,750
536,129
(66) 9,686 88 51,979
(175) 25,832 234 138,628
(31,786) 15,454 195 164,151
(69,865) 27,899 340 214,587
(188,355) 75,215 916 578,526
(177,852) 57,672 1,028 416,977
(2) EBITDA margin is EBITDA divided by sales of products, expressed as a percentage. (3) Total debt is the sum of total short- and long-term loans. (4) Total debt/EBITDA is the ratio of our total debt as of the end of the applicable period divided by our EBITDA for the then most recently concluded period of four consecutive fiscal quarters, including the four consecutive fiscal quarters ended March 31, 2012. (5) Net debt is obtained netting total debt with cash and cash equivalents. (6) Net debt/EBITDA is the ratio of our net debt as of the end of the applicable period divided by our EBITDA for the then most recently concluded period of four consecutive fiscal quarters, including the four consecutive fiscal quarters ended March 31, 2012. (7) See “Description of the Notes—Certain Definitions” for the definition of Fixed Charge Coverage Ratio. (8) See “Description of the Notes—Certain Definitions” for the definition of Consolidated Leverage Ratio.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of our financial condition and results of operations for the three months ended March 31, 2012 and 2011 and for the years ended December 31, 2011 and 2010 should be read in conjunction with (1) our unaudited condensed consolidated interim financial statements as of March 31, 2012 and for the three months ended March 31, 2012 and 2011 and (2) our audited consolidated financial statements as of December 31, 2011, 2010 and January 1, 2010 (transition date) and for the years ended December 31, 2011 and 2010, in each case included elsewhere in this offering memorandum, as well as the information presented under “Presentation of Financial and Other Information” and “Selected Financial and Other Information.” The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including those set forth in “Forward-Looking Statements” and “Risk Factors.” Overview We cultivate, harvest, purchase and crush sugarcane, the principal raw material used to produce sugar and ethanol. According to data provided by the Peruvian Ministry of Agriculture, we were the largest producer of sugar and the one of the two largest producers of ethanol (along with Grupo Romero’s Caña Brava) in Peru during 2011. Over the last three years, our main sugar product has been brown sugar. Our main ethanol product is hydrous ethanol. During 2011, we recorded sales of products of S/.1,304 million (US$484 million), gross profit of S/.599 million (US$222 million) and profit for the year of S/.559 million (US$207 million). During the three months ended March 31, 2012, we recorded sales of products of S/.377 million (US$141 million), gross profit of S/.149 million (US$56 million) and profit for the period of S/.87 million (US$33 million). We currently conduct our principal sugar and ethanol operations through our production facilities, Casa Grande, Cartavio, San Jacinto, La Troncal, San Isidro and Coazucar, which are located throughout Peru, and in Ecuador and Argentina. We currently market and sell all of our sugar and ethanol products, both domestically and through exports. We own and operate warehouse facilities at the port of Salaverry, in the La Libertad region, through which we export sugar and ethanol products. In Argentina we export our products through the port of Buenos Aires. Factors Affecting Operating Results Our results of operations have been influenced and will continue to be influenced by the following key factors: Global Sugar Demand and Pricing Sugar is a commodity and is subject to price fluctuations in the international market. Sugar prices are affected by the perceived and actual supply and demand for sugar and its substitute products. The supply of sugar is affected by weather conditions, governmental trade policies and regulations (including import tariffs and other trade restrictions) and the amount of sugarcane and sugar beet planted by farmers, including substitution by farmers growing other agricultural commodities for sugarcane or sugar beet. Demand is affected by growth in domestic and worldwide consumption of sugar and the prices of substitute sugar products. See “Peruvian Sugar Industry.” From time to time, imbalances may occur between overall sugarcane and sugar beet processing capacity, the supply of sugarcane and sugar beet and demand for sugar and ethanol products. Prices of sugar and ethanol products are also affected by these imbalances, which, in turn, impact our decision regarding when to sell our sugar and ethanol inventories, as well as our market projections regarding the recommended overall mix between sugar and ethanol. According to OECD-FAO Agricultural Outlook 2011-2020, world raw sugar prices increased from an average of US$0.18 per pound in March 2010 to US$0.26 per pound in March 2011 and decreased to US$0.24 per pound in March 2012, principally due to: (1) demand for sugar that exceeded supply in part due to lower sugar production caused by droughts in China, India, Thailand and Brazil and a resulting reduction in world sugar inventories to meet demand; (2) the reduction in protectionist practices in the European market; and (3) the overall 11.7% appreciation of the nuevo sol against the U.S. dollar during this two-year period. As of June 30, 2012, the price of the NY11 sugar contract was US$0.22 per pound. 45
Domestic Peruvian brown sugar prices rose similarly, increasing from an average of S/.1,622 per ton on December 31, 2009 to S/.2,088 per ton on December 31, 2010 to S/.2,075 per ton on December 31, 2011, according to the Peruvian Ministry of Agriculture. Due to the appreciation of the nuevo sol against the U.S. dollar, the domestic Peruvian price of brown sugar in U.S. dollar terms increased by approximately 4.2% (compared to a 0.6% decrease in nuevos soles) during 2011. During the three months ended March 31, 2012, according to the Peruvian Ministry of Agriculture, the domestic Peruvian price of brown sugar decreased by approximately 4.0%, from S/.2,075 per ton on December 31, 2011 to S/.1,992 per ton on March 31, 2012, principally due to market expectations that production volumes in Brazil, Australia and India would decrease, thereby also decreasing global inventories. For a chart of the evolution of sugar prices, see “Peruvian Sugar Industry.” We are also affected by domestic and international prices of ethanol, competition, governmental policies and regulations and market demand for ethanol. The price for ethanol that we sell domestically is determined in accordance with market prices. There is no established international reference price for ethanol, and prices for exported ethanol are generally set in accordance with international market prices, dictated by the balance of supply and demand and by opportunities to sell ethanol in Peru. The Peruvian and the international sugar and ethanol industries are marked by periods of instability of offer and demand, resulting in changes in sales prices and profit margins. In addition to the factors described above, the following factors which are beyond our control contribute to the price fluctuations of sugar, ethanol and other sugarcane byproducts, including the following:
weather conditions and natural disasters in the regions where sugarcane is cultivated;
the production capacity of our competitors;
incentive trade policies in Peru and abroad for the production, sale, export and consumption of sugar, ethanol and other sugarcane byproducts;
governmental incentives and subsidies from other countries that also produce sugar, ethanol and other sugarcane byproducts;
negotiation developments in international trade, including at the WTO;
the growth rate of the world economy and the corresponding sugar consumption growth;
the GDP growth rate in Peru, which has a positive effect on the consumption of sugar and ethanol products in Peru, in particular by industries that produce or process food;
the exchange rate of the Peruvian nuevo sol against the U.S. dollar, which directly affects our sales of products and our financing costs, and indirectly affects the international market price of sugar and our cost of third- party supplied sugarcane;
tax policies adopted by the Peruvian federal government and by the governments of Argentina and Ecuador, and our resulting tax obligations, as well as tax policies adopted by the markets for sugar and ethanol; and
greater use of ethanol as a source of cleaner, renewable energy
Furthermore, both sugar and ethanol are negotiated in futures and commodities exchange and their prices may be affected by market speculation. Cost of Products Sold We incur costs and expenses in producing sugar and ethanol. For accounting purposes, we classify our cost of products sold into two major categories: (1) the cost of sugarcane; and (2) costs that we incur that are directly related to our processing of sugarcane into sugar and ethanol, or industrial costs. On a consolidated basis, our cost of sugarcane reflects the cost of purchasing sugarcane from related parties (including our controlling shareholders) and 46
from third parties. Our industrial costs include costs relating to our purchase of other raw materials that we use to process sugarcane, labor costs and benefits, third-party service costs, transportation costs, maintenance and replacement part costs, fuel and lubricant costs, taxes and administrative costs. As a percentage of our sales of products, our cost of products sold represented 54% and 53% during 2011 and 2010, respectively. The following table shows the evolution of our principal costs for our three Peruvian mills for the periods presented. Three Months Ended March 31, Years Ended December 31, 2012 2011 2011 2010 (as a percentage of total cost of products sold for the period) Casa Grande Cost of sugarcane ........................... Industrial costs ............................... Total ............................................... Cartavio Cost of sugarcane ........................... Industrial costs ............................... Total ............................................... San Jacinto Cost of sugarcane ........................... Industrial costs ............................... Total ...............................................
71.9% 28.1% 100.0%
73.3% 26.7% 100.0%
68.1% 31.9% 100.0%
72.1% 27.9% 100.0%
91.6% 8.4% 100.0%
96.8% 3.2% 100.0%
94.7% 5.3% 100.0%
95.9% 4.1% 100.0%
85.4% 14.6% 100.0%
79.8% 20.2% 100.0%
81.3% 18.7% 100.0%
77.7% 22.3% 100.0%
As a producer of commodities, we attempt to increase our margins through efficient management of our operations, including effective control over our cost of sugarcane and industrial costs. We believe that our significant investments in mechanization (for both planting and harvesting) and in our logistical facilities have assisted us in improving our gross profit. Prices for sugarcane are set based on the quality of sugarcane harvested. The unit price (per kilogram) of sugarcane varies in part based on the amount of sucrose equivalents in the sugar that we produce. The quality of sugarcane is also expressed in sucrose equivalents. To determine the amount of sucrose equivalents in sugarcane delivered to our mills, we inspect all of the sugarcane that we process upon receipt by our mills. Accordingly, the price of sugarcane that we pay to third parties is based on the quality of the sugarcane (as measured by sucrose equivalents), the volume of sugarcane delivered to us and the price per kilogram of sucrose equivalents. Our Productivity Our results of operations are materially affected by the level of our productivity, including the level of sucrose equivalents per ton of our harvested sugarcane, which is also affected by the quality of our soil. We have increased our agricultural productivity to 158 tons of sugarcane per hectare harvested during 2011, 25.4% higher than average productivity of sugarcane per hectare (126 tons) harvested in Peru during 2011. During 2011, we harvested approximately 67.0% of the total sugarcane that was planted in 2011. We operate 24 hours per day throughout the harvesting season. We are implementing precision agriculture techniques, such as automatic pilots and use of high precision GPS for soil preparation (including application of fertilizers and pesticides) and harvesting which will significantly improve our productivity levels, and we are also in the process of developing and testing mechanized planting. The use of GPS systems will allows us to steer our harvesters along predefined parallel tracks, which reduces soil compaction and damage to the crowns, thus, improving the productivity of our sugarcane for the harvest cycle. We use computer simulations to model the harvesting, loading and transportation of our sugarcane under various conditions, which has assisted us in improving our productivity. We also have improved the quality of our soil through mechanized harvesting, as the leaves that remain after sugarcane has been harvested mechanically form a protective cover over the crop. This protective covers contributes to the reducing of erosion and increases the organic matter in the soil, which in turn reduces our use of chemical fertilizers and lowers our costs increasing productivity over time. In addition, we have improved our productivity by planting new varieties of sugarcane that are more resistant to diseases and pests and richer in sucrose concentration. We also use satellite imaging to monitor our sugarcane crops and to plan for the future. 47
Our productivity is also determined in part by the level of sucrose equivalents per ton of our harvested sugarcane. During 2011, the sucrose equivalents per ton of our harvested sugarcane in Peru was 13.0%. The level of sucrose equivalents per ton of our harvested sugarcane during 2010 and 2009 was 12.9% and 12.8%, respectively. Economic Conditions in Peru, Argentina and Ecuador Most of our operations and a significant portion of our sales of products are derived from our sales in Peru. As a result, our results of operations and financial condition are primarily affected by Peruvian economic conditions, and to a lesser extent, by conditions in Argentina and Ecuador. During the 1980s, Peru experienced a severe economic crisis and high levels of inflation. Beginning in the 1990s, however, the Peruvian government implemented a series of structural reforms, which contributed to the stabilization of the Peruvian economy, GDP growth, low inflation, lower interest rates, stable currency and significantly improved public finances. As a result, according to the International Monetary Fund, the Peruvian economy has been one of the fastest growing and most stable economies in Latin America since 2000. The average yearly rate of GDP growth between 1995 to 2011 was 5.0%. The Peruvian economic environment has been characterized by significant variations in economic growth, inflation and currency exchange rates. The following table sets forth Peruvian GDP growth, inflation rates and exchange rates as of and for the three months ended March 31, 2012 and as of and for the three years ended December 31, 2011, 2010 and 2009:
GDP growth................................................................................ Inflation rate ............................................................................... Appreciation (devaluation) of nuevo sol against US$1.00 ........ Average exchange rate — nuevos soles against US$1.00 .........
As of and for the Three Months Ended March 31, 2012 6.0% 4.2% 4.6% S/.2.67
2011 6.9% 3.4% 3.9% S/.2.70
As of and for the Years Ended December 31, 2010 8.8% 1.5% 2.8% S/.2.81
2009 0.9% 2.9% 8.0% S/.2.89
_________________________________
Sources: Economist Intelligence Unit Country Report June 2012, IMF (International Financial Statistics).
The global economy experienced a period of significant financial instability in 2008 and 2009, accompanied by the worst global economic downturn in many decades. The Peruvian economy, while affected, was one of the few economies in Latin America to experience growth in 2009. Peru’s real GDP grew at a rate of 0.9% in 2009, sustained by the Peruvian government’s launching of fiscal stimulus programs. The following sectors of production showed the greatest contribution to GDP during this period: (i) construction, (ii) agriculture and (iii) electricity and water. Furthermore, Peru continues to be one of six countries in Latin America, along with Brazil, Chile, Colombia, Mexico and Panama, to have its sovereign debt obtain an investment grade credit rating by Standard and Poor’s Rating Services, Fitch Ratings Ltd. and Moody’s Investor Service. The Peruvian economy has experienced a strong recovery during 2010 and 2011, with growth in GDP of 8.8% and 6.9%, respectively. This increase was mostly driven by increased domestic demand and stronger public and private investment. The 2010 and 2011 GDP growth represented one of the highest rates among Latin American countries. The high growth of GDP was primarily a result of growth in exports and in internal demand, which was attributable to increases in private investment and consumer spending. San Isidro is located in Argentina and accounted for 4% of our EBITDA in 2011. The following table sets forth Argentine GDP growth, inflation rates and exchange rates as of and for the three months ended March 31, 2012 and as of and for the three years ended December 31, 2011, 2010 and 2009:
GDP growth................................................................................ Inflation rate ............................................................................... Appreciation (devaluation) of Pesos against US$1.00 .............. Average exchange rate — Pesos against US$1.00 ....................
As of and for the Three Months Ended March 31, 2012 4.2% 9.8% (8.0)% Ps.4.34
As of and for the Years Ended December 31, 2011 2010 8.9% 9.2% 9.5% 10.9% (5.4)% (5.1)% Ps.4.11 Ps.3.90
_________________________________
Sources: Economist Intelligence Unit Country Report June 2012, IMF (International Financial Statistics).
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2009 0.9% 7.7% (18.2)% Ps.3.71
La Troncal is located in Ecuador and accounted for 6% of our EBITDA in 2011. The following table sets forth Ecuadorian GDP growth and inflation rates as of and for the three months ended March 31, 2012 and as of and for the three years ended December 31, 2011, 2010 and 2009: As of and for the Three Months As of and for the Years Ended March 31, Ended December 31, 2012 2011 2010 GDP growth................................................................................ N/A 7.8% 3.6% Inflation rate ............................................................................... 6.1% 5.4% 3.3% _________________________________ Sources: Economist Intelligence Unit Country Report June 2012, IMF (International Financial Statistics).
2009 0.4% 4.3%
Operating Expenses We incur operating expenses, including our selling and administrative expenses, which consist of salaries and benefits paid to our employees, taxes, expenses related to third-party services, rentals (other than land) and other expenses. As a percentage of our sales of products, our selling and administrative expenses, represented 9.2%, 7.4% and 6.6% during the three months ended March 31, 2012 and for the years ended December 31, 2011 and 2010, respectively. The costs and expenses we incur in selling our products include:
Selling expenses, which include freight (both in transferring sugar and ethanol products and in delivering final sugar products to our domestic and export customers and final ethanol products to our export customers, as our domestic ethanol customers generally accept delivery at our mills, commissions, professional fees, packaging, sales commissions, port and other (including inspection and certification) costs. We include these costs on our statement of comprehensive income under the line item “Selling expenses.”
Administrative expenses, which primarily consist of salaries and other charges payable in respect of our administrative staff and other employees; legal and consulting fees; and administrative expenses related to our monitoring and other activities at each of our production facilities. We include these costs on our statement of comprehensive income under the line item “Administrative expenses.”
Other operating expenses, which primarily consist of write-off of plant, property and equipment from previous years. We include these costs on our statement of comprehensive income under the line item “Other operating expenses, net.”
In addition to operating and administrative expenses, we incur:
financial expenses related to debt service payments in respect of our outstanding indebtedness, which we incur primarily to finance our exports and working capital. We record our financial expenses related to the indebtedness we incur to finance our exports and working capital, as well as financial expenses related to indebtedness that we incur to finance our operations, on our statement of comprehensive income under the line item “Financial expenses”;
expenses in connection with our hedging of our exposure to fluctuations in the value of the nuevo sol as against the U.S. dollar and other foreign currencies. We record our expenses on our statement of comprehensive income under the line item “Financial income”; and
expenses under transactions that we engage in from time to time to hedge our exposure to fluctuations in sugar and ethanol prices. We deduct these expenses from our sales of products.
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Financial Presentation and Accounting Policies Our Financial Statements We have prepared (1) our unaudited condensed consolidated interim statement of financial position as of March 31, 2012 and our unaudited condensed consolidated interim statements of comprehensive income for the three months ended March 31, 2012 and 2011 and (2) our audited consolidated statements of financial position as of December 31, 2011 and 2010 and at January 1, 2010 (transition date) and our audited consolidated statements of comprehensive income for the years ended December 31, 2011 and 2010, in each case, in accordance with IFRS, as issued by the IASB, and included elsewhere in this offering memorandum. Our annual financial statements have been audited by Dongo-Soria Gaveglio y Asociados Sociedad Civil de Responsabilidad Limitada, a member firm of PricewaterhouseCoopers. Guarantors’ Financial Statements Each of the Guarantors (other than Azucarera Olmos) is a publicly traded company in Peru and like us prepares annual consolidated financial statements comparable to those prepared by us. As indicated in this section, the Guarantors (other than Azucarera Olmos) are consolidated into our audited consolidated financial statements and unaudited condensed consolidated interim financial statements and represented at March 31, 2012 and December 31, 2011 (i) in the case of Casa Grande 41.7% and 40.5%, respectively, of our consolidated assets, 86.8% and 55.6%, respectively, of our consolidated profit and 51.3% and 52.5%, respectively, of our consolidated EBITDA, (ii) in the case of Cartavio 15.9% and 15.9%, respectively, of our consolidated assets, 12.0% and 20.3%, respectively, of our consolidated profit and 17.2% and 23.3%, respectively, of our consolidated EBITDA and (iii) in the case of San Jacinto 10.8% and 11.6%, respectively, of our consolidated assets, (7.7)% and 17.9%, respectively, of our consolidated profit and 16.0% and 12.4%, respectively, of our consolidated EBITDA. Furthermore, Casa Grande, Cartavio and San Jacinto at March 31, 2012 and December 31, 2011 had total liabilities of S/.614.6 million and S/.499.4 million, S/.312.6 million and S/.227.7 million and S/.180.7 million and S/.190.7 million, respectively. We are an operating company and also operate through our subsidiaries, including Casa Grande, Cartavio and San Jacinto. Given the (i) relative contribution of Casa Grande, Cartavio and San Jacinto to our results of operations and financial condition, (ii) Casa Grande’s, Cartavio’s and San Jacinto’s ability under limited circumstances to incur additional indebtedness and (iii) limited amount of Casa Grande’s guarantee, we do not believe the inclusion of separate consolidated financial statements for each of the Guarantors would be material to a prospective purchaser’s decision on whether to invest in and acquire the notes. Critical Accounting Policies The presentation of our financial condition and results of operation in conformity with IFRS requires us to make certain judgments and estimates regarding the effects of matters that are inherently uncertain and that impact the carrying value of our assets and liabilities. Actual results could differ from those estimates. To provide an understanding about how we form our judgments and estimates about certain future events, including the variables and assumptions underlying the estimates, and the sensitivity of those judgments to different variables and conditions, we have summarized the critical accounting policies set forth below under IFRS that may be impacted by our judgments and estimates. Functional Currency Management has determined the functional currency of our principal operating entities to be the nuevo sol. These entities sell their products in international markets to customers in a number of countries, and sales are influenced by a number of currencies. Most operating costs are incurred in Peru but many are invoiced in U.S. dollars and the price of certain raw materials and supplies are influenced by the U.S. dollar. The borrowings and cash balances of these entities are held in nuevos soles, Argentine Pesos and U.S. dollars. Management has used its judgment to determine our functional currency, taking into account the secondary factors and concluded that the currency that most faithfully represents the economic environment and conditions of these entities is the nuevo sol.
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Valuation of biological assets Biological assets of sugarcane are stated at their fair value less costs to sell. Land and related facilities are accounted for under property, plant and equipment. To assess the fair value of biological assets we take into account the criteria set out in IAS 41, which requires that a biological asset should be measured at its fair value less the estimated point-of-sale costs. The fair value indicated is determined by using the present value of net cash flows expected to be obtained from the assets. Determining the fair value of an asset requires the application of judgment to decide on the way in which the biological asset will be recovered and assumptions to be used in its determination. For the present value method, assumptions are used to estimate the harvest volumes, cost per ton, and depletion. Cost of delivery includes all costs associated with getting the harvested sugarcane produce to the market, being harvesting and allocated fixed overheads. Future cash flows are discounted using the pre-tax weighted average cost of capital. The net change in the fair value of biological assets as of the date of the consolidated statement of financial position is recognized in the consolidated statement of comprehensive income. Property, plant and equipment Property, plant and equipment are recorded at cost, less accumulated depreciation and impairment losses, if any. Historical cost comprises the purchase price and any costs directly attributable to the acquisition. Where individual components of an item of property, plant and equipment have different useful lives, they are accounted for as separate items, which are depreciated separately. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to Coazucar and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to the statement of comprehensive income during the period in which they are incurred. Assets in the construction stage are capitalized as separate components. At their completion, the cost is transferred to the adequate category. Work in progress is not depreciated. Land is not depreciated. Depreciation on other assets is calculated using the straight-line method, to allocate their cost to their residual values over their estimated useful lives, as follows: Buildings and other constructions................................................. Machinery and equipment ............................................................ Furniture and fixtures and others .................................................. Vehicles ........................................................................................
Years Up to 40 Between 3 and 30 Between 3 and 10 Between 3 and 25
The assets’ residual values and useful lives are reviewed and adjusted, if appropriate, at the date of each statement of financial position. An asset’s carrying amount is immediately written down to its recoverable amount if it is greater than its estimated recoverable amount. Gains and losses on disposals correspond to the difference between the proceeds and the carrying amount of the assets, which are included in the consolidated statement of comprehensive income. Impairment of assets Goodwill For the purpose of impairment testing, assets are grouped at the lowest levels for which they separately generate identifiable cash flows. This group of assets is known as cash-generating units. If the recoverable amount of a cashgenerating unit is less than the carrying amount of the assets within the unit, an impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit on a pro-rata 51
basis based on the carrying amount of each asset in the unit. Goodwill impairment losses recognized cannot be reversed in a subsequent periods. The recoverable amount of goodwill is the higher of its fair value less costs to sell and its value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted (see note 4 for details). Property, plant and equipment and finite useful live intangible assets At each statement of financial position date, Coazucar reviews the carrying amounts of its property, plant and equipment and finite useful live intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent, if any, of the impairment loss. Where the asset does not generate cash flows that are independent from other assets, Coazucar estimates the recoverable amount of the cash generating unit to which the asset belongs. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. An impairment loss is recognized immediately in the statement of comprehensive income. Where an impairment loss subsequently reverses the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, which should not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in the statement of comprehensive income. Impairment of financial assets We assess at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a “loss event”) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. The criteria that we use to determine that there is objective evidence of an impairment loss include:
Significant financial difficulty of the issuer or obligor;
A breach of contract, such as a default or delinquency in interest or principal payments;
When we, for economic or legal reasons relating to the borrower’s financial difficulty, grant to the borrower a concession that the lender would not otherwise consider;
It becomes probable that the borrower will enter bankruptcy or other financial reorganization;
The disappearance of an active market for that financial asset because of financial difficulties; or
Observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio, including: (i) adverse changes in the payment status of borrowers in the portfolio; and (ii) national or local economic conditions that correlate with defaults on the assets in the portfolio.
We first assess whether objective evidence of impairment exists. The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The asset’s carrying amount of the asset is reduced and the amount of the loss is recognized in the consolidated statement of comprehensive income. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, we may measure impairment on the basis of an instrument’s fair value using an observable market price. 52
A provision for impairment of trade receivables is estimated when there is objective evidence that we will not be able to collect all amounts due according to the original terms of the invoice. The amount of the provision is determined as explained in the paragraph above. Bad debts are written off when they are assessed as uncollectible. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized (such as an improvement in the debtor’s credit rating), the reversal of the previously recognized impairment loss is recognized in profit or loss. Inventories Inventories comprise raw materials, finished goods (including harvested agricultural produce) and others. The cost of finished products comprises the fair value of the agriculture produce less cost necessary to sell at the harvest point (an amount transferred from biological asset to productive process) plus the cost incurred in the industrial production process, such as direct labor, other direct cost and overhead production costs. Inventories are measured at the lower of cost and net realizable value. Cost is determined using the weighted average method, except for in-transit inventory, which is stated by using the specific identification method. The net realization value is the estimated sales price of the product during the ordinary course of business, based on the current price less estimated costs to complete its production and expenses to place inventory in sales conditions. Trade receivables Current trade receivables are recognized initially at fair value and subsequently re-measured at amortized cost using the effective interest method, less any provision for impairment. A provision for impairment of trade receivables is estimated when there is objective evidence that we will not be able to collect all amounts due according to the original terms of the invoice. The amount of the provision is the difference between the carrying amount and the present value of the recoverable amounts and this difference is recognized in the consolidated statement of comprehensive income. Bad debts are written off when they are assessed as uncollectible. Revenue recognition Revenue comprises the fair value of the consideration received or receivable for the sale of goods in the ordinary course of our activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating sales within our group companies. Revenue is recognized to the extent that it is probable that the economic benefits will flow to us and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized: Sale of goods Sales of goods are recognized when all risks and rewards of ownership have been transferred to the buyer, usually on delivery of the goods. Sales of goods comprise of sales in three segments: Peru, Ecuador and Argentina, and also some exports to other countries. Interest income Revenue is recognized as interest accrues using the effective interest method. Description of the Principal Statement of Comprehensive Income Line Items Sales of products We primarily generate revenue from the sales of our sugar (brown, white, refined and organic) as well as ethanol.
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Cost of products sold Our cost of products sold primarily include: (1) the cost of our raw materials, which include sugarcane, (2) depreciation related to fixed assets used to produce our products, and (3) our labor costs associated with the production. Our raw material costs are our largest costs of sales. Selling expenses Our selling expenses primarily include commissions, professional fees, transportation of our products from our plants to our distribution centers (heavy freight costs) and to the port of embarkation. Administrative expenses Our administrative expenses primarily include labor expenses for our management, third party services such as professional services and other items such as rent, insurance and depreciation. Financial income (expenses) Our financial income is comprised mainly of interest on bank deposits. Our financial expenses primarily include the interest on borrowings and other accounts payable. Income taxes - current and deferred Our tax expense for the year comprises the charge for current tax payable and deferred taxation attributable to our operating subsidiaries. Tax is recognized in the statement of comprehensive income, except to the extent that it relates to items recognized directly in equity. In this case, the tax is also recognized in equity. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the date of the statement of financial position in the countries where our subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the date of the statement of financial position and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. Deferred income tax is provided on temporary differences arising on investments in associates, except where the timing of the reversal of the temporary difference is controlled by us and it is probable that the temporary difference will not reverse in the foreseeable future. Results of Operations The following discussion of our results of operations for the years ended December 31, 2011 and 2010 and for the three months ended March 31, 2012 and 2011 is based on our financial statements, together with the notes thereto, prepared in accordance with IFRS, as issued by the IASB, and included in this offering memorandum.
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Three Months Ended March 31, 2012 Compared to the Three Months Ended March 31, 2011 The following table provides a summary of our results of operations for the three months ended March 31, 2012 and 2011:
Sales of products....................................................... Cost of products sold ................................................ Gross profit ............................................................... Initial recognition and change in fair value of biological assets ..................................................... Selling expenses........................................................ Administrative expenses ........................................... Other operating expenses, net ................................... Financial income....................................................... Financial expenses .................................................... Exchange difference, net........................................... Income attributable to associate................................ Income tax expense................................................... Profit for the period ..................................................
For the Three Months Ended March 31, % of Sales of Products 2012 2011 % Change 2012 2011 (in millions of S/.) (unaudited) 377.2 309.2 22.0% 100.0% 100.0% (228.2) (145.8) 56.5% 60.5% 47.2% 149.0 163.3 (8.8)% 39.5% 52.8% 0.2 (8.6) (25.9) (1.9) 0.5 (17.3) 6.0 1.8 (16.3) 87.4
31.8 (4.7) (8.8) (1.4) 0.8 (7.6) 0.3 — (26.0) 147.8
(99.4)% 82.7% 196.0% 41.1% (35.7)% 127.8% 2126.1% 0.0% (37.3)% (40.9)%
0.0% 2.3% 6.9% 0.5% 0.1% 4.6% 1.6% 0.5% 4.3% 23.2%
10.3% 1.5% 2.8% 0.4% 0.3% 2.5% 0.1% 0.0% 8.4% 47.8%
Sales of products Our sales of products increased by 22.0% to S/.377.2 million during the three months ended March 31, 2012 from S/.309.2 million during the corresponding period in 2011, primarily as a result of: (i) a 1.1% increase in the volume of sugarcane crushed to 1.31 million tons during the three months ended March 31, 2012 from 1.29 million tons during the corresponding period in 2011, (ii) a 19.9% increase in sales of products from sugar to S/.340.1 million during the three months ended March 31, 2012 from S/.283.8 million during the corresponding period in 2011 and (iii) a 60.5% increase in sales of products from ethanol to S/.30.9 million during the three months ended March 31, 2012 from S/.19.3 million during the corresponding period in 2011. Sugar Our sales of products from sugar increased by 19.9% to S/.340.1 million during the three months ended March 31, 2012 from S/.283.8 million during the corresponding period in 2011, primarily as a result of a 31.5% increase in sales of products from domestic sugar sales, which was partially offset by a 50.0% decrease in sales of products from export sugar sales. The 31.5% increase in sales of products from domestic sugar sales was due to a 39.9% increase in domestic sales volumes to 163,280 tons during the three months ended March 31, 2012 from 116,705 tons during the corresponding period in 2011, which was partially offset by a 6.0% decrease in average domestic sugar sale prices for the period to S/.1,958 per ton during the three months ended March 31, 2012 from S/.2,083 per ton during the corresponding period in 2011. The 50.0% decrease in sales of products from sugar exports was due to a 48.0% decrease in export sales volumes to 9,201 tons during the three months ended March 31, 2012 from 17,697 tons during the corresponding period in 2011, as a result of a 19.9% decrease in our average sugar sale prices in Peru for the period to S/.1,840 per ton during the three months ended March 31, 2012 from S/.2,298 per ton during the corresponding period in 2011. Ethanol Our sales of products from ethanol increased by 60.5% to S/.30.9 million during the three months ended March 31, 2012 from S/.19.3 million during the corresponding period in 2011, primarily as a result of:
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a 24.1% increase in domestic sales volumes of ethanol to 3,034 cubic meters during the three months ended March 31, 2012 from 2,444 cubic meters during the corresponding period in 2011, as a result of incorporating the operations of our new subsidiaries in Argentina and Ecuador in the second half of 2011;
a 9.4% increase in average domestic sales price of ethanol in Peru to S/.1,567 per cubic meter during the three months ended March 31, 2012 from S/.1,433 per cubic meter during the corresponding period in 2011;
a 45.7% increase in export sales volumes of ethanol to 14,164 cubic meters during the three months ended March 31, 2012 from 9,721 cubic meters during the corresponding period in 2011, as a result of the increase of ethanol consumption in our export countries, primarily due to the higher production of molasses, which we used to produce ethanol; and
a 6.0% increase in average international sales price of ethanol to S/.1,720 per cubic meter during the three months ended March 31, 2012 from S/.1,623 per cubic meter during the corresponding period in 2011.
Cost of Products Sold Cost of products sold increased by 56.5% to S/.228.2 million during the three months ended March 31, 2012 from S/.145.8 million during the corresponding period in 2011, primarily as a result of incorporating the operations of our new subsidiaries in Argentina and Ecuador in the second half of 2011. As a percentage of our sales of products, cost of products sold increased to 60.5% during the three months ended March 31, 2012 from 47.2% during the corresponding period in 2011. Gross Profit Gross profit decreased by 8.8% to S/.149.0 million during the three months ended March 31, 2012 from S/.163.3 million during the corresponding period in 2011, primarily as a result of (i) higher production costs as the result of a reduction in water levels at Casa Grande and (ii) an anomalous administrative delay on the part of the export client at the port of Salaverry, resulting in sugar being held at the port before shipment to the United States. Initial Recognition and Change in Fair Value of Biological Assets Initial recognition and change in fair value of biological assets decreased by 99.4% to S/.0.2 million during the three months ended March 31, 2012 from S/.31.8 million during the corresponding period in 2011, primarily as a result of a decrease of approximately 11% in the estimated price of sugar by the FAO and an increase in administrative expenses in 2012 derived from the acquisition of La Troncal, which affected our calculation of fair value of biological assets. See “—Financial Presentation and Accounting Policies—Valuation of biological assets” for a description of how we calculate the fair value of biological assets using the criteria set out in IAS 41, which requires that a biological asset should be measured at its fair value less the estimated point-of-sale costs. Selling Expenses Selling expenses increased by 82.7% to S/.8.6 million during the three months ended March 31, 2012 from S/.4.7 million during the corresponding period in 2011, primarily as a result of (i) a 28.3% increase in sales volumes of sugar to 172,481 tons during the three months ended March 31, 2012 from 134,403 tons during the corresponding period in 2011 and (ii) a 41.4% increase in sales volume of ethanol to 17,198 cubic meters during the three months ended March 31, 2012 from 12,165 cubic meters during the corresponding period in 2011. As a percentage of our sales of products, our selling expenses increased to 2.3% during the three months ended March 31, 2012 from 1.5% during the corresponding period in 2011. Administrative Expenses Administrative expenses increased by 196.0% to S/.25.9 million during the three months ended March 31, 2012 from S/.8.8 million during the corresponding period in 2011, primarily as a result of (i) a S/.7.4 million increase in salaries primarily as a result of incorporating the operations of our new subsidiaries in Argentina and Ecuador in the second half of 2011 and (ii) a S/.4.7 million increase in expenses related to depreciation and amortization. As a 56
percentage of our sales of products, our administrative expenses increased to 6.9% during the three months ended March 31, 2012 from 2.8% during the corresponding period in 2011. Other Operating Expenses, Net Other operating expenses, net, increased by 41.1% to S/.1.9 million during the three months ended March 31, 2012 from S/.1.4 million during the corresponding period in 2011, primarily due to the effect of adjustments for a recording error in actual sugar inventories recorded in our mills for the three months ended March 31, 2012. Financial Income Financial income sold decreased by 35.7% to S/.0.5 million during the three months ended March 31, 2012 from S/.0.8 million during the corresponding period in 2011, primarily as result of the higher financial expenses associated with the acquisition of our new subsidiaries in Argentina and Ecuador in the second half of 2011. Financial Expenses Financial expenses increased by 127.8% to S/.17.3 million during the three months ended March 31, 2012 from S/.7.6 million during the corresponding period in 2011, primarily as a result of new debt and financial expenses originated from the companies that we acquired in Argentina and Ecuador in the second half of 2011. Exchange Difference, Net Exchange difference, net, increased to S/.6.0 million during the three months ended March 31, 2012 from S/.0.3 million during the corresponding period in 2011, primarily as a result of (i) a 4.9% appreciation in the nuevo sol against the U.S. dollar, to S/.2.667 per US$1.00 during the three months ended March 31, 2012, from S/.2.804 per US$1.00 during the corresponding period of 2011, and (ii) the indebtedness of the companies that we acquired in Argentina and Ecuador in the second half of 2011, which amounted to US$115.0 million as of March 31, 2012. Income Attributable to Associate Income attributable to associate increased to S/.1.8 million during the three months ended March 31, 2012 from S/.0 during the corresponding period in 2011, primarily as a result of our acquisition of 50% of the shares of Producargo S.A., an ethanol company, of which we own 36.4%. We do not consolidate Producargo in our financial statements. See note 2.2(c) to our audited consolidated financial statements included in this offering memorandum. Income Tax Expense Our income tax expense decreased by 37.3% to an expense of S/.16.3 million during the three months ended March 31, 2012 from an expense of S/.26.0 million during the corresponding period in 2011, primarily as a result of minor profits before income tax. Profit for the Period As a result of the foregoing, during the three months ended March 31, 2012, we recorded profit for the period of S/.87.4 million, compared to a profit for the period of S/.147.8 million during the corresponding period in 2011.
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Year Ended December 31, 2011 Compared with Year Ended December 31, 2010 The following table provides a summary of our results of operations for the years ended December 31, 2011 and 2010:
Sales of products................................................. Cost of products sold .......................................... Gross profit ......................................................... Initial recognition and change in fair value of biological assets ............................................... Selling expenses.................................................. Administrative expenses ..................................... Other operating expenses, net ............................. Financial income................................................. Financial expenses .............................................. Exchange difference, net..................................... Income tax expense............................................. Profit for the year................................................
For the Years Ended December 31, % of Sales of Products 2011 2010 % Change 2011 2010 (in millions of S/.) 1,304.4 937.9 39.1% 100.0% 100.0% (705.2) (498.5) 41.5% 54.1% 53.1% 599.2 439.4 36.4% 45.9% 46.9% 188.4 (30.2) (66.4) (0.2) 2.5 (47.4) 18.4 (104.6) 559.5
177.9 (18.6) (42.9) (19.6) 1.6 (45.4) 11.1 (75.8) 427.7
5.9% 62.9% 54.7% (99.2)% 51.8% 4.5% 65.4% 38.0% 30.8%
14.4% 2.3% 5.1% 0.0% 0.2% 3.6% 1.4% 8.0% 42.9%
19.0% 2.0% 4.6% 2.1% 0.2% 4.8% 1.2% 8.1% 45.6%
Sales of Products Our sales of products increased by 39.1% to S/.1,304.4 million during 2011 from S/.937.9 million during 2010, primarily as a result of: (i) a 42.6% increase in volume of sugarcane crushed to 6.7 million tons during 2011 from 4.7 million tons during 2010, (ii) a 40.5% increase in sales of products from sugar to S/.1,166.2 million during 2011 from S/.830.1 million during 2010 and (iii) a 21.6% increase in sales of products from ethanol to S/.93.4 million during 2011 from S/.76.8 million during 2010. Sugar Our sales of products from sugar increased by 40.5% to S/.1,166.2 million during 2011 from S/.830.1 million during 2010, primarily as a result of: (i) a 39.5% increase in sales of products from sugar export and (ii) a 40.6% increase in sales of products from domestic sugar sales. The 39.5% increase in sales of products from sugar export was due to (i) a 2.1% increase in export sales volume to 55,450 tons during 2011 from 54,298 tons during 2010 and (ii) a 36.6% increase in the average international sugar sale prices for the period to S/.2,464 per ton during 2011 from S/.1,804 per ton during 2010. The 40.6% increase in sales of products from domestic sugar sales was due to (i) a 23.5% increase in domestic sales volumes to 503,273 tons during 2011 from 407,351 tons during 2010 and (ii) a 13.8% increase in average domestic sugar sale prices for the period to S/.2,046 per ton during 2011 from S/.1,797 during 2010. Ethanol Our sales of products from ethanol increased by 21.6% to S/.93.4 million during 2011 from S/.76.8 million during 2010, primarily as a result of:
a 45.2% increase in domestic sales volume of ethanol to 10,083 cubic meters during 2011 from 6,944 cubic meters during 2010.
a 1.7% increase in export sales volume of ethanol to 42,516 cubic meters during 2011 from 41,798 cubic meters during 2010; and
a 9.2% increase in average sales price of ethanol in Peru to S/.1,720 per cubic meter during 2011 from S/.1,576 per cubic meter during 2010. 58
Cost of Products Sold Cost of products sold increased by 41.5% to S/.705.2 million during 2011 from S/.498.5 million during 2010, primarily as a result of a 43.7% increase in sugarcane crushed to 6.7 million tons during 2011 from 4.7 million tons during 2010. As a percentage of our sales of products, cost of products sold increased to 54.1% during 2011 from 53.1% during 2010. Gross Profit Gross profit increased by 36.4% to S/.599.2 million during 2011 from S/.439.4 million during 2010, as a result of (i) a 5.5% increase in the price of sugar in Peru in 2011 and a 5.3% increase in the price of ethanol in Peru in 2011 and (ii) a 21.6% in the sales volume of sugar and (iii) a 8.2% increase in the sales volume of ethanol in 2011. Initial Recognition and Change in Fair Value of Biological Assets Initial recognition and change in fair value of biological assets increased by 5.9% to S/.188.4 million during 2011 from S/.177.9 million during 2010, as a result of (i) a 36.6% increase in the average international sugar sale prices for the period to S/.2,464 per ton during 2011 from S/.1,804 per ton during 2010, (ii) a decrease in the discount rate to 9.7% from 11.7%, and (iii) a decrease in the projected production volume of sugarcane of 8.8% in 2011, with respect to 2010. Selling Expenses Selling expenses increased by 62.9% to S/.30.2 million during 2011 from S/.18.6 million during 2010, primarily as a result of a 21.0% increase in sugar sales volume to 558,723 tons during 2011 from 461,649 tons during 2010 and a 7.9% increase in ethanol sales volume to 52,599 cubic meters during 2011 from 48,742 cubic meters during 2010. As a percentage of our sales of products, our selling expenses increased to 2.3% during 2011 from 2.0% during 2010. Administrative Expenses Administrative expenses increased by 54.7% to S/.66.4 million during 2011 from S/.42.9 million during 2010, primarily as a result of an increase in (i) legal fees, (ii) depreciation and (iii) security, contractor, marketing and utilities fees associated with the companies that we acquired in Argentina and Ecuador in the second half of 2011. As a percentage of our sales of products, our administrative expenses increased to 5.1% during 2011 from 4.6% during 2010. Other Operating Expenses, Net Other operating expenses, net, decreased by 99.2% to S/.0.2 million during 2011 from S/.19.6 million during 2010, as a result of a decrease in the write-offs of plant, property and equipment that was recorded because they were no longer being used. Financial Income Financial income increased by 51.8% to S/.2.5 million during 2011 from S/.1.6 million during 2010, primarily as a result of a 340.7% increase in interest on bank deposits to S/.1.6 million during 2011 from S/.0.4 million during 2010 associated with the companies that we acquired in Argentina and Ecuador in the second half of 2011. Financial Expenses Financial expenses increased by 4.5% to S/.47.4 million during 2011 from S/.45.4 million during 2010, primarily as a result of a 38.0% increase in interest on borrowings to S/.40.1 million during 2011 from S/.29.1 million during 2010 primarily associated with the companies that we acquired in Argentina and Ecuador in the second half of 2011. Exchange Difference, Net Exchange difference, net, increased by 65.4% to S/.18.4 million during 2011 from S/.11.1 million during 2010, as a result of (i) a 4.0% appreciation of the nuevo sol against the U.S. dollar, to S/.2.696 per US$1.00 during 2011, 59
from S/.2.809 per US$1.00 during the corresponding period of 2010, and (ii) the indebtedness associated with the companies that we acquired in Argentina and Ecuador in the second half of 2011. Income Tax Expense We recorded income tax expenses of S/.104.6 million during 2011 and income tax expenses of S/.75.8 million during 2010, primarily as a result of a 31.9% increase in our profit before income taxes during 2011. Profit for the Year As a result of the foregoing, we recorded profit for the year of S/.559.5 million during 2011 compared to S/.427.7 million during 2010. The Guarantors Casa Grande Casa Grande was incorporated in 1860 and it is the largest sugar mill in Peru, owning 31,377 hectares, of which 28,128 hectares are arable and 21,115 hectares are used for sugarcane production. Casa Grande produces sugar, bagasse, molasses and alcohol. We acquired a minority ownership interest in Casa Grande in October 2005 and became majority shareholders in January 2006 with a 57.09% ownership interest. Casa Grande is located 50 kilometers north of Trujillo, 610 kilometers north of Lima, in the province of Ascope, region of La Libertad, where the Chicama River is its main source of irrigation, discharging more than 400 million cubic meters of water a year. Casa Grande is Peru’s leading sugar producer, selling brown sugar in the local and international markets, and also the third largest hydrous alcohol producer in Peru, exporting all of its alcohol production. Casa Grande has a crushing capacity of 3.3 million tons per year and a daily ethanol production capacity of 60,000 liters. As of March 31, 2012, Casa Grande harvested during 83 days (84 days as of March 31, 2011), crushed 648.2 thousand tons of sugarcane (665.0 thousand as of March 31, 2011), of which 90.4% of the sugarcane crushed was produced by Casa Grande and the remaining 9.6% was acquired from third parties. In addition, Casa Grande produced 71.2 thousand tons of sugar (73.9 thousand as of March 31, 2011), 204.7 thousand tons of bagasse (198.5 thousand as of March 31, 2011), 24.7 thousand tons of molasses (29.2 thousand as of March 31, 2011) and 3.9 million liters of alcohol (3.8 million as of March 31, 2011). During 2011, Casa Grande harvested during 312 days (322 days in 2010), crushed 2.3 million tons of sugarcane (2.4 million in 2010), of which 90.5% of the sugarcane crushed was produced by Casa Grande and the remaining 9.5% was acquired from third parties. In addition, Casa Grande produced 257.3 thousand tons of sugar (247.5 thousand in 2010), 714.5 thousand tons of bagasse (716.8 thousand in 2010), 90.4 thousand tons of molasses (13.5 thousand in 2010) and 12.7 million liters of alcohol (13.5 million in 2010). As of March 31, 2012, Casa Grande recorded a sales of product of S/.153.3 million (S/.175.4 million as of March 31, 2011), generated an EBITDA of S/.71.1 million, had a total debt of S/.106.8 million and had a net debt of S/.70.1 million. As of December 31, 2011, Casa Grande recorded a sales of product of S/.583.4 million (S/.490.8 million as of December 31, 2010), generated an EBITDA of S/.303.6 million, had a total debt of S/.119.1 million and had a net debt of S/.110.5 million. Cartavio Cartavio was incorporated in 1782 and is the second largest contributor to our total comprehensive income of our sugar mills in Peru, owning 7,932 hectares, of which 7,486 hectares are arable and 6,891 hectares are used for sugarcane production. Cartavio produces sugar, bagasse, molasses and alcohol. We acquired 52.23% of Cartavio in May 2007 and between 2007 through 2009, we increased our ownership interest to 87.17%. 60
Cartavio is located 50 kilometers north of Trujillo, 610 kilometers north of Lima, in the province of Ascope, region of La Libertad, near to Casa Grande. Cartavio is Peru’s second largest producer of sugar, selling sugar in the local and international markets. Cartavio is also the second largest hydrous alcohol producer in Peru, exporting all of its alcohol production. Cartavio has a crushing capacity of 2.4 million tons per year and a daily ethanol production capacity of 80,000 liters. As of March 31, 2012, Cartavio harvested during 76 days (76 days as of March 31, 2011), crushed 449.7 thousand tons of sugarcane (455.0 thousand as of March 31, 2011), of which 49.8% of the sugarcane crushed was produced by Cartavio and the remaining 50.2% was acquired from third parties. In addition, Cartavio produced 39.3 thousand tons of sugar (41.2 thousand as of March 31, 2011), 122.9 thousand tons of bagasse (127.5 thousand as of March 31, 2011) and 3.7 million liters of alcohol (4.1 million as of March 31, 2011). During 2011, Cartavio harvested during 287 days (298 days in 2010), crushed 1.7 million tons of sugarcane (1.7 million in 2010), of which 45.5% of the sugarcane crushed was produced by Cartavio and the remaining 54.5% was acquired from third parties. In addition, Cartavio produced 154.5 thousand tons of sugar (155.1 thousand in 2010), 465.2 thousand tons of bagasse (490.8 thousand in 2010), 9.7 thousand tons of molasses and 15.8 million liters of alcohol (16.7 million in 2010). As of March 31, 2012, Cartavio recorded a sales of product of S/.95.7 million (S/.99.4 million as of March 31, 2011), generated an EBITDA of S/.23.8 million, had a total debt of S/.54.0 million and had a net debt of S/.32.4 million. As of December 31, 2011, Cartavio recorded a sales of product of S/.401.7 million (S/.362.1 million as of December 31, 2010), generated an EBITDA of S/.134.7 million, had a total debt of S/.56.2 million and had a net debt of S/.47.9 million. San Jacinto San Jacinto was incorporated in 1872 and owns 12,349 hectares, of which 11,035 hectares are arable and 6,081 hectares are used for sugarcane production. San Jacinto produces sugar, bagasse, molasses and alcohol. We acquired 72.62% of San Jacinto in 2009 and through a mandatory tender offer increased our ownership interest to 82.63% in March 2010. San Jacinto is located 45 kilometers of Chimbote, 405 kilometers north of Lima, in the province of Santa, district of Nepeña, region of Ancash. San Jacinto sells white and brown sugar in the local and international markets. San Jacinto has a crushing capacity of 1.2 million tons per year and a daily ethanol production capacity of 40,000 liters. As of March 31, 2012, San Jacinto harvested during 84 days (73 days as of March 31, 2011), crushed 207.6 thousand tons of sugarcane (171.5 thousand as of March 31, 2011), of which 76.1% of the sugarcane crushed was produced by San Jacinto and the remaining 23.9% was acquired from third parties. In addition, San Jacinto produced 23.0 thousand tons of sugar (20.8 thousand as of March 31, 2011), 61.5 thousand tons of bagasse (50.8 thousand as of March 31, 2011) and 0.6 million liters of alcohol (1.0 million as of March 31, 2011). During 2011, San Jacinto harvested during 286 days (279 days in 2010), crushed 0.7 million tons of sugarcane (0.6 million in 2010), of which 76.1% of the sugarcane crushed was produced by Cartavio and the remaining 23.9% was acquired from third parties. In addition, San Jacinto produced 80.1 thousand tons of sugar (67.9 thousand in 2010), 198.1 thousand tons of bagasse (178.1 thousand in 2010), 27.7 thousand tons of molasses (21.8 thousand in 2010) and 2.4 million liters of alcohol (1.5 million in 2010). As of March 31, 2012, San Jacinto recorded a sales of product of S/.48.4 million (S/.42.2 million as of March 31, 2011), generated an EBITDA of S/.22.2 million, had a total debt of S/.103.5 million and had a net debt of S/.102.9 million. As of December 31, 2011, San Jacinto recorded a sales of product of S/.164.9 million (S/.122.7 million as of December 31, 2010), generated an EBITDA of S/.71.9 million, had a total debt of S/.105.4 million and had a net debt of S/.103.4 million. 61
Azucarera Olmos Azucarera Olmos was incorporated on May 9, 2012 to develop the Olmos Expansion Plan in Olmos, Lambayeque, Peru. As of the date of this offering memorandum, Azucarera Olmos has no material sales of product, EBITDA, total debt or net debt. See “Presentation of Financial and Other Information—General.” Liquidity and Capital Resources Our financial condition and liquidity is and will be influenced by a variety of factors, including:
our ability to generate cash flows from our operations and our ability to sell and distribute our sugar and ethanol;
the level of our outstanding indebtedness and the interest we are obligated to pay on this indebtedness;
prevailing domestic and international interest rates, which affects our net financial expenses;
our ability to continue to borrow funds from Peruvian and international financial institutions; and
our capital expenditure requirements, which consist primarily of investments in crop planting and the maintenance of our agricultural and industrial equipment.
Our cash requirements consist mainly of the following:
working capital requirements;
the servicing of our indebtedness;
the payment of dividends or interest attributable to equity; and
capital expenditures related to investments in our agricultural and industrial operations.
Our sources of liquidity consist mainly of the following:
cash flows from our operating activities, derived mainly from our sale and distribution of our sugar and ethanol; and
short- and long-term borrowings.
During the three months ended March 31, 2012 and the year ended December 31, 2011, we used cash flow generated by operations primarily for investments in our agricultural and industrial operations and for working capital requirements. As of March 31, 2012, our cash and cash equivalents and other investments amounted to S/.191.8 million, and we had working capital of S/.33.1 million. Projected Sources and Uses of Cash We anticipate that we will be required to spend approximately S/.971.1 million to meet our short-term contractual obligations and commitments and budgeted capital expenditures in 2012. We expect that we will meet these cash requirements through a combination of cash generated from operating activities and cash generated by financing activities, including some of the proceeds of this offering and the refinancing of our existing short-term indebtedness as it becomes due. We anticipate that we will be required to spend approximately S/.722.2 million to meet our commitments and budgeted capital expenditures through the end of 2013. We anticipate that we will meet these cash requirements through a combination of cash generated from operating activities and cash generated by financing activities, including additional debt financings and the refinancing of our existing indebtedness as it becomes due.
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Indebtedness General As of March 31, 2012, our total outstanding indebtedness on a consolidated basis was approximately S/.805.6 million, consisting of S/.338.0 million of short-term indebtedness, including the current portion of long-term indebtedness (or 42.0% of our total indebtedness), and S/.467.5 million of long-term indebtedness (or 58.0% of our total indebtedness). As of March 31, 2012, 30.4%, 67.6% and 2.0% of our outstanding indebtedness was denominated in nuevos soles, U.S. dollars and Argentine pesos. As of March 31, 2012, 67.4% of our total indebtedness corresponded to working capital financial lines of credit and the remaining 32.6% to others, such as government development banks. As of March 31, 2012, S/.621.3 million (or 77.1%) of our debt was secured. The following table sets forth selected information with respect to our principal outstanding indebtedness as of March 31, 2012:
Lender
Borrower
Currency
Interest Rate
Maturity Date
Collateral
Outstanding Principal Outstanding Amount as of March Principal Amount as 31, 2012 adjusted in of March 31, 2012 accordance with IFRS (in thousands) (in thousands)
BBVA
Coazucar
S/.
7.65%
September 2015 Coazucar’s shares of Cartavio and Casa Grande; properties of Sintuco
US$23,563
US$23,563
Citibank
Coazucar
S/.
7.10%
November 2012 Coazucar’s shares of Cartavio
US$18,810
US$18,810
Corporación Financiera Nacional
Coazucar
US$
5.06%
March 2026
Coazucar’s shares of Producargo
US$7,274
US$7,274
Citibank
Coazucar
US$
5.45%
May 2012
None
US$9,000(1)
US$9,000(1)
(1)
5.45%
June 2012
None
US$26,000
US$26,000(1)
6.90%
June 2017
Mortgage over certain properties of Casa Grande and a joint obligation of Coazucar
US$14,764
US$14,764
US$20,000
US$20,000
None
US$11,249
US$11,249
June 2017
Properties of San Jacinto and a joint obligation of Gloria S.A.
US$20,247
US$20,247
7.50%
June 2016
Coazucar’s shares of San Jacinto; properties of San Jacinto
US$9,822
US$9,822
S/.
7.50%
June 2016
Coazucar’s shares of San Jacinto; properties of San Jacinto
US$8,036
US$8,036
US$
5.00%
July 2026
Coazucar’s shares of La Troncal
US$117,085(2)
US$91,070
Citibank
Coazucar
US$
BBVA
Casa Grande S/.
CitibankScotiabank
Casa Grande US$
Banco de Crédito del Perú
Cartavio
S/.
7.00%
February 2015
Scotiabank
San Jacinto
S/.
7.75%
Interbank
San Jacinto
S/.
BanBif
San Jacinto
Corporación Financiera Nacional
La Troncal
LIBOR+5.70% December 2015 Mortgage over certain physical properties of Casa Grande
Other US$36,506(2) US$42,214 US$322,356(2) Total US$302,049 _________________________________ (1) As of the date of this offering memorandum, these loans have been fully repaid. (2) Nominal amounts. Unless otherwise specified, the figures appearing in the financial statements and elsewhere in this offering memorandum have been adjusted in accordance with IFRS.
63
Short-Term Indebtedness Our consolidated short-term indebtedness, including the current portion of long-term debt, increased to S/.338.0 million as of March 31, 2012 from S/.329.7 million as of December 31, 2011, primarily as a result of increase in working capital requirements during the first three months of the year. We also maintain short-term lines of credit with a number of financial institutions in Peru. Although we have no committed lines of credit with these financial institutions, we believe that we will continue to be able to obtain sufficient credit to finance our working capital needs based on current market conditions. As of March 31, 2012, the total outstanding balance under our short-term working capital lines of was S/.122.0 million. Long-Term Indebtedness Our consolidated long-term indebtedness decreased to S/.467.5 million as of March 31, 2012 from S/.486.9 million as of December 31, 2011, primarily as a result of the decrease in the short-term portion of our long-term indebtedness. Our long-term indebtedness is mainly composed of bank loans. As of March 31, 2012, some of our long-term indebtedness owed to financial institutions required that we comply with financial covenants (on a consolidated basis), the most restrictive of which were the following:
Debt service coverage ratio shall be not less than: 1.3x for Coazucar and Casa Grande, 1.2x for Cartavio and 1.75x for San Jacinto.
Debt to EBITDA ratio shall not exceed: 2.0x for Coazucar, 2.25x for Casa Grande, 1.9x for Cartavio, 3.0x for San Jacinto and 4.0x for San Isidro.
Leverage shall not exceed: 1.0x for Coazucar and Cartavio, 0.75x for Casa Grande, 1.3x for San Jacinto and 4.0x for San Isidro.
Consolidated assets to consolidated liabilities shall be not less than: 1.7x for Coazucar and 1.0x for Cartavio.
Many of these instruments also contain other covenants that restrict, among other things, our ability to:
incur additional indebtedness;
incur additional liens;
issue certain guarantees;
pay dividends or make certain other restricted payments;
consummate certain asset sales;
enter into certain transactions with affiliates; or
merge or consolidate with any other person or sell or otherwise dispose of all or substantially all of our assets.
In addition, the instruments governing a substantial portion of our long-term indebtedness contain cross-default or cross- acceleration clauses, such that the occurrence of an event of default under one of these instruments could trigger an event of default under other indebtedness or enable the creditors under certain other indebtedness to accelerate that indebtedness. Off-Balance Sheet Arrangements We do not currently have any transactions involving off-balance sheet arrangements that are reasonably likely to have a material effect on our financial condition, results of operations or liquidity. 64
Contractual Commitments and Capital Expenditures Contractual Commitments The following table summarizes the maturity schedule of our significant contractual obligations and commitments as of March 31, 2012: Payments Due by Period Less than 1 Year Total(1).......... 110,842 Total(2).......... 116,328 ________________________
1 to 2 Years 27,411 27,189
2 to 3 Years 3 to 4 Years 4 to 5 Years (in thousands of US$) 29,974 28,681 13,380 29,752 27,792 12,269
More than 5 Years
Total
112,068 88,720
322,356 302,049
(1) Principal amount without interest. (2) Principal balance at present value in accordance with IFRS.
Capital Expenditures Our capital expenditures on property, plant and equipment were S/.44.4 million during the three months ended March 31, 2012, S/.186.5 million in 2011 and S/.193.9 million in 2010. Over the last three years, we have applied our capital expenditures mainly to
expand our production capacity, through repowering two of our mills in Peru;
plant sugarcane to stabilize our sugarcane crops;
modernize our agricultural equipment and processing facilities;
increase the mechanization of our harvesting and production process; and
improve safety and environmental controls and compliance.
We have budgeted total capital expenditures of approximately S/.1,910 million for 2012, 2013 and 2014. However, our actual capital expenditures for these years may exceed or fall short of these budgeted amounts. All of the budgeted capital expenditures are expected to be used primarily for developing the Olmos Expansion Plan, replanting sugarcane, modernizing our agricultural equipment and processing facilities, increasing mechanization of our harvesting and production process, increasing the cogeneration capacity of our mills, investing in machinery needed to begin production of hydrous ethanol and improving our safety and environmental controls and compliance. As water availability is vital to ensure the stability of sugarcane yields, we also expect to use capital expenditures for water projects, including the construction of reservoirs and improving our access to water in the Chicama Valley. The following table sets forth our principal capital expenditures for 2012 (including those already made), 2013 and 2014. Total Budgeted Amount (in millions of S/.) 653 (1) 663 594
Year 2012 2013 2014
______________________ (1) Includes S/.44.4 million of capital expenditures incurred during the three months ended March 31, 2012.
We plan to obtain financing for approximately 25% of our capital expenditures, directly or indirectly, with the proceeds from the notes and with additional bank loans. We intend to pay for the remaining 75% of our capital expenditures through internal cash generation.
65
Quantitative and Qualitative Disclosures About Market Risk We consider market risk to be the potential loss arising from adverse changes in market rates and prices. We are exposed to a number of market risks arising from our normal business activities. Such market risks principally involve the possibility that changes in commodity prices, interest rates or exchange rates will adversely affect the value of our inventory, financial assets and liabilities or future cash flows and earnings. General Risk Management We periodically review our exposure to market risks and determine at the senior management level how to manage and reduce the impact of these risks. We use derivative financial instruments solely for the purpose of managing market risks, primarily fluctuations in interest rates and foreign exchange rates. While these hedging instruments fluctuate in value, these fluctuations are generally offset by the value of the underlying hedged exposures. The counterparties to these contractual arrangements are primarily major financial institutions. As a result, we do not believe that we are subject to any material credit risk arising from these contracts, and accordingly, we do not anticipate any material credit-related losses. We do not enter into derivative or other hedging instruments for speculative purposes. Commodities Risk We are exposed to market risks arising from the activities inherent to our business, that is, operations in the commodities market with sugar and ethanol. For risk management purposes and to evaluate our overall level of commodity price exposure, we further reduce our exposure to commodity market risk by the sugar and ethanol produced from sugarcane that we purchase from growers, as we pay for the sugarcane costs based on sucrose equivalents. Unlike sugarcane harvested on our own land, the price of sugarcane supplied by growers is indexed to the market price of sugar and ethanol, which provides a partial natural hedge to our sugar price exposure. When we acquire sugarcane from growers, we take samples from the delivered sugarcane to measure its sugar content (or sucrose) and pay only for the sucrose that we acquire according to a formula established by the market in Peru and Argentina and by the government in Ecuador. Therefore, our net market risk would be approximately S/.68 million, which is the potential loss in fair value resulting from a hypothetical 10% decrease in prices. Interest Rate Risk We have fixed and floating rate indebtedness, so we are exposed to market risk as a result of changes in interest rates. As of March 31, 2012, approximately 7.24% of our loans and financings bear interest at floating rates such as the London Interbank Offered Rate (LIBOR) and the Buenos Aires Deposits of Large Amount Rate (BADLAR). Foreign Currency Risk A portion of our debt is denominated in U.S. dollars, so we are exposed to market risk related to exchange movements between the nuevo sol and the U.S. dollar. As of March 31, 2012, approximately 67.6%, or S/.544.3 million, of our debt was denominated in U.S. dollars and approximately 2.0%, or S/.16.5 million of our debt was denominated in Argentine Pesos. The following tables show our swap instrument as of March 31, 2012: Derivative Cross Currency Swap
As of March 31, 2012 Maturity Notional Receivable November 6, 2012 US$18,810
Notional Payable S/.58,725
We estimate our foreign currency exchange rate risk as the potential devaluation of the nuevo sol on our dollar denominated debt. Based on the profile of our dollar denominated debt vis-à-vis our operations as of March 31, 2012, the results from a hypothetical 10% devaluation of the nuevo sol would result in a decrease of our profit before income tax by approximately S/.33.7 million.
66
PERUVIAN SUGAR INDUSTRY Introduction Sugar is a staple consumer product that is produced in over 90 countries and supplies a highly-developed market that continues to grow largely due to population growth. Peru ranks among world’s highest crop yield countries for various products including sugarcane. Peru’s location near the equator and the resulting vertical solar radiation, which improves the quality of the soil, are essential to such high yields. Peru features 84 out of the 104 life zones known in the world in its 11 natural eco-regions. This broad variety of climates allows for a great variety of food crops, some being produced and exported all year. Peru, the third largest country in South America, has 7.6 million hectares with immediate agricultural potential, but less than 3.6 million are used, according to the FAO. The country’s temperature is relatively constant and mild due to the Humboldt Current, which brings cold water from the Antarctic to most of Peru’s coast and thus moderates otherwise hot temperatures. The proximity of Peru to the equator gives the country a relatively even length of daylight and supply of sunshine throughout the year and guarantees the absence of frost. This spring-like climate allows crops such as sugarcane to be harvested 12 months out of the year, under the proper water-management techniques. Sugarcane Yields (Mt/Ha) 126
92
91 80
Peru
Guatemala
Egypt
E.U.
79
76
Brazil
Colombia
75
U.S.
70
70
68
China
World
India
Source: World Agricultural Outlook 2011, Food and Agricultural Policy Research Institute
Peru’s combination of business climate, low labor costs, and climatic conditions helped lay the foundation for developing a competitive and successful sugar industry. Coazucar has taken advantage of these factors to grow and consolidate its existing business, and become the leading player in the Peruvian sugar industry. Sugarcane and Sugar Sugarcane is the primary raw material used in the production of sugar throughout the world. Sugarcane is a tall grass that grows best in tropical climates characterized by warm temperatures and high humidity. The climate and topography of the northwest and northern central regions of Peru are ideal for the cultivation of sugarcane, accounting for approximately 100% of the country’s sugarcane production. Sugar is a essential commodity produced in various parts of the world. Sugar is primarily derived from sugarcane and sugar beet. Sugar has agricultural and industrial applications and its production is both labor and capital intensive.
67
History of the Sugar Production in Peru In the 1960s, Peru’s sugar industry was among the most efficient in the world. The military government in the 1970s negatively impacted the industry by expropriating the sugar estates on the country’s north coast, turning them into government-owned co-operatives. Having peaked at 1 million tons in 1975, output fell to 400,000 tons by the early 1990s. Following the negative land reforms implemented by the military government in the 1970s, the Peruvian sugar industry has finally recovered. This ongoing process has resulted in the privatization of most mills and sugarcane cultivated land, increased investment and productivity. The following chart shows the evolution of Peruvian sugarcane production and sugar production between 1961 and 2011 according to FAO: Historical Sugar Production (tons) 1,200 1,100 1,000 Thousands
900 800 700 600 500 400
2011
2009
2007
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
1985
1983
1981
1979
1977
1975
1973
1971
1969
1967
1965
1963
1961
300
Source: FAO, Peruvian Ministry of Agriculture
Over the past decade production has returned to its historic peak. The change has been gradual. The government has sold its ownership interest in the industry in tranches; land has been purchased by Peruvian and foreign investors, followed by the consolidation of property. The efficiency brought by economies of scale is improving return rates, which attracts more investment, generating a beneficial cycle. This process is finally undoing the damage to production levels done by the 1970s land reform that expropriated land to give to workers in socialist type cooperatives. Production and Consumption Peru’s sugar production has more than doubled since the early 1990s, from approximately 521 thousand tons in 1990 to approximately 1,076 thousand tons (of raw sugar equivalent) in the 2011 harvest. The consumption of sugar has also increased steadily to approximately 1,269 thousand tons during 2011 from 929 thousand tons during 2004. The Peruvian consumption of sugar is expected to continue to grow due to overall population growth, increasing purchasing power of consumers in the country and increasing consumption of processed foods as a result of widespread migration from rural to urban areas and the future growth in per capita income. Peru is a net importer of sugar with imports around 190 thousand tons and exports around 56 thousand tons. Demand is expected to continue growing at a faster pace than supply due to the strong macroeconomic fundamentals of the country. The following chart illustrates the evolution of Peruvian production and imports of sugar (in thousands of tons) in the last 8 years.
68
Sugar Consumption (Thousand Tons)
929
947
181
252
748
695
2004
2005
1,050 244
1,215
1,211
1,251
247
208
146
213
190
911
805
2006
1,269
1,158
2007 Production
1,007
1,065
1,038
1,079
2008
2009
2010
2011
Imports
Source: Peruvian Ministry of Agriculture Peruvian Ministry of Agriculture
Sugar can be categorized into two main product categories in the Peruvian market, raw sugar and white sugar. Raw sugar represents approximately 90% of the total sugar consumption in the country:
Raw Sugar: Raw sugar is a tan to brown colored, coarsely grained solid obtained through the evaporation of clarified sugarcane or sugar beet juice. It is a partially purified sugar, characterized by sucrose crystals covered with a film of molasses. Raw sugar is processed from the sugarcane or the sugar beet at a sugar mill and usually further refined to produce white sugar for consumption. Raw sugar is traded in US$ per pound at the New York’s Intercontinental Exchange (ICE) under contract no. 11. The Sugar No. 11 (NY 11) contract is the world benchmark contract for raw sugar trading. The contract prices the physical delivery of raw cane sugar, free-on-board (FOB), the receiver’s vessel to a port within the country of origin of the sugar.
White sugar is a purified sugar, produced directly from either sugarcane or beet; the only difference in the final product produced is in its appearance. Due to the higher purity of the beet concentrate, white sugar from beet tends to be produced in slightly smaller and more uniform crystals than that from sugarcane; there is no difference in taste between the two. White sugar can also be produced indirectly from raw sugar under a refining process. Refined granulated sugar is traded in US$ per metric ton at London’s Euronext LIFFE, under contract no. 5 (Lon 5).
The following chart shows 2011 sugar production across the year in Peru. 2011 Sugar Production Distribution (%)
9%
8% 7%
Jan
9%
Feb
Mar
7%
7%
Apr
May
7%
7%
Jun
Jul
Source: Peruvian Ministry of Agriculture
69
Aug
8%
Sep
10%
10%
Oct
Nov
10%
Dec
Pricing Most sugar producing countries, including the United States and E.U. countries, protect their domestic sugar markets from foreign competition through policies, regulations and other measures, including import and export restrictions, quotas, duty taxes and subsidies. As a result of these regulatory measures, domestic sugar prices fluctuate from one country to another. The unregulated international prices of raw sugar follow the rates established by the NY 11 agreement. The Lon 5 rate is based on the price of crystal sugar traded on LIFFE. In Peru, domestic sugar prices are established according to free market principles. Prices are established every morning in a negotiation between producers and wholesalers/distributors in Lima’s Wholesaler Market (known as “Santa Anita Market”), the most important wholesaler market in the country and pricing source of different agriculture products. In Peru, domestic sugar prices generally follow international sugar prices trend, with a significant premium due to additional costs (transportation, nationalization, etc), benefiting local producers’ margins. The following chart shows the price evolution of raw sugar on the NY 11 and the Peruvian Market. Sugar Price Evolution (US$/Ton)
800
600
400
200 Jan-09
May-09 Sep-09
Jan-10
May-10 Sep-10 NY 11
Jan-11
May-11 Sep-11
Jan-12
Peruvian Raw
Source: Peruvian Ministry of Agriculture
Major Sugar Companies in Peru As a result of the privatization process of the sugar mills in Peru, the industry faced a consolidation process, reducing the number of sugar companies to eleven. We are not only the largest sugar producer in Peru, but also is the biggest company in terms of land ownership for sugar production. Market Share (% Volume)
Other 4.2% Pomalca 7.9% Pucala 9.1%
Land Ownership (Thousand Hectares) Pomalca
8
Pucala
8
Paramonga
8
Casagrande 23.9% Coazucar 45.7%
Cartavio 14.4%
Tuman
Tuman 9.7% Paramonga 11.2%
San Jacinto 7.4%
Laredo
10
14
Laredo 12.3% Coazucar
51
Source: Companies’ Filings and SMV. Coazucar land ownership includes land recently acquired in the Olmos Expansion Plan.
70
BUSINESS Overview We cultivate, harvest, purchase and crush sugarcane, the principal raw material used to produce sugar and ethanol. We conduct our sugar and ethanol operations through our five mills and eight distilleries, which are located throughout Peru, and in Ecuador and Argentina. We market and sell all of the sugar and ethanol we produce, both domestically and globally. In 2011, we cultivated sugarcane on 55,733 hectares. According to data provided by the Peruvian Ministry of Agriculture, we were the largest sugarcane crush processor in terms of sugarcane crushed, the largest producer of sugar and one of the two largest producers of ethanol in Peru in 2011. In addition, according to data provided by the Peruvian Ministry of Agriculture, we accounted for approximately 46% of the sugar produced in Peru in 2011. We believe, according to internal data, that we accounted for approximately 38% of the ethanol produced in Peru in 2011. Our operations are conducted in Peru through Coazucar (approximately 1% of our EBITDA for the three months ended March 31, 2012 and 2% of our EBITDA for 2011) and our subsidiaries (i) Casa Grande (approximately 51% of our EBITDA for the three months ended March 31, 2012 and 52% of our EBITDA for 2011), (ii) Cartavio (approximately 17% of our EBITDA for the three months ended March 31, 2012 and 23% of our EBITDA for 2011), (iii) San Jacinto (approximately 16% of our EBITDA for the three months ended March 31, 2012 and 12% of our EBITDA for 2011) and (iv) Sintuco (approximately 2% of our EBITDA for the three months ended March 31, 2012 and 1% of our EBITDA for 2011); in Ecuador through our subsidiary La Troncal (approximately 13% of our EBITDA for the three months ended March 31, 2012 and 6% of our EBITDA for 2011); and in Argentina through our subsidiary San Isidro (approximately 0% of our EBITDA for the three months ended March 31, 2012 and 4% of our EBITDA for 2011). Our mills have a combined installed sugarcane crushing capacity of approximately 8.4 million tons per year and benefit from high agricultural yields, proximity to a main port and consumer markets and a more efficient structure for sugarcane transportation, as compared to other mills. In addition, Peru’s dry, tropic climate allows us to harvest our sugarcane throughout the entire calendar year, giving us a competitive advantage over producers in other countries, which can only harvest once or twice a year. Most of our mills are also able to shift production between brown, white and refined sugar in order to capitalize on unexpected price variations among the different types of sugar. The close proximity of our sugarcane fields and those of our suppliers to our milling facilities (average distance of approximately 15 kilometers) and our increasing mechanization levels (approximately 13% of the sugarcane we cultivated was harvested mechanically in 2011) positively impact our operating cost structure. Our Peruvian mills and distilleries are located in the La Libertad and Ancash regions, an average of approximately 59 kilometers from the nearest sea port, Salaverry, also located in the La Libertad region, through which we ship almost all of our Peruvian exports. The La Libertad and Ancash regions are approximately 610 kilometers and 407 kilometers respectively from Lima, our principal market. For the three months ended March 31, 2012, we crushed 1.3 million tons of sugarcane, all of which was used to produce sugar and ethanol in Peru because the sugarcane harvest does not begin in Ecuador and Argentina until July and May, respectively. In the same period, we produced approximately 133 thousand tons of sugar and approximately 14.1 million liters of ethanol. For the three months ended March 31, 2012, we reported sales of products of S/.377.2 million (US$141.4 million) and EBITDA of S/.138.6 million (US$52.0 million). Our sales of sugar and ethanol for the three months ended March 31, 2012 were S/.340.1 million (US$127.5 million) and S/.30.9 million (US$11.6 million), respectively. During 2011, we crushed 6.7 million tons of sugarcane (4.7 million tons of which were crushed in Peru), all of which was used to produce sugar and ethanol. In 2011, we produced approximately 690 thousand tons of sugar (492 thousand tons of which were produced in Peru) and approximately 69.2 million liters of ethanol (47.9 million liters of which were produced in Peru). For 2011, we reported sales of products of S/.1,304.4 million (US$483.8 million) and EBITDA of S/.578.5 million (US$214.6 million). Our sales of sugar and ethanol during 2011 were S/.1,166.2 million (US$432.6 million) and S/.93.4 million (US$34.6 million), respectively. As of March 31, 2012, we owned land with a total area of 89,752 hectares (approximately 224,380 acres), of which approximately 80,862 hectares (approximately 199,814 acres) is arable land. As of December 31, 2011, we 71
cultivate sugarcane on 55,733 hectares (approximately 137,719 acres). We also purchase sugarcane from third party suppliers, which represented approximately 28% of the total sugarcane that we crushed during 2011. Key Financial and Operating Data The following table sets forth certain of our financial information and operating data for the periods indicated. As of and for the Three Months Ended March 31, 2012 2012 2011 (in thousands of US$, except (in thousands of S/., as indicated) except as indicated)
Financial data: Sales of products ......................... Profit for the period..................... EBITDA(1) ................................... EBITDA margin(2) ....................... Total debt(3) ................................. Total debt / EBITDA(4) ................ Net debt(5) .................................... Net debt / EBITDA(6) ..................
141,427 32,767 51,979 36.8% 302,049 1.46x 230,133 1.11x
(unaudited) 377,185 87,388 138,628 36.8% 805,566 1.46x 613,766 1.11x
As of and for the Three Months Ended March 31, 2012 2011
As of and for the Years Ended December 31, 2011 2011 2010 (in thousands of US$, except (in thousands of S/., as indicated) except as indicated)
309,162 147,796 164,151 53.1%
483,833 207,543 214,587 44.4% 302,946 1.41x 260,558 1.21x
1,304,415 559,535 578,526 44.4% 816,744 1.41x 702,467 1.21x
937,854 427,689 416,977 44.5% 533,619 1.28x 462,637 1.11x
2011
As of and for the Years Ended December 31, 2010
2009
Operating data:
Sugarcane crushed (tons) Casa Grande .......................... Cartavio ................................. San Jacinto............................. San Isidro............................... La Troncal ............................. Total ...................................... Sugar production (tons)............... Ethanol production (million liters) ........................................ Employees ..................................
648,161 449,681 207,568 —(7) —(7) 1,305,409 133,429
664,952 455,021 171,499 —(7) —(7) 1,291,472 135,866
2,331,436 1,688,790 696,063 488,752 1,500,886 6,705,927 689,651
2,365,120 1,696,196 605,809 547,106 1,629,216 6,843,447 470,599
2,197,378 1,690,490 546,774 515,821 1,295,569 6,246,032 451,866
14.1 13,526
13.1 9,706
69.2 12,089
67.2 8,646
59.7 9,471
_______________________________ (1) EBITDA is calculated using profit from operations for the period before financing and taxation without initial recognition and change in fair value of biological asset, added to depreciation and amortization. See “Presentation of Financial and Other Information.” (2) EBITDA margin is EBITDA divided by sales of products, expressed as a percentage. (3) Total debt is the sum of total short- and long-term loans. (4) Total debt/EBITDA is the ratio of our total debt as of the end of the applicable period divided by our EBITDA for the then most recently concluded period of four consecutive fiscal quarters, including the four consecutive fiscal quarters ended March 31, 2012. (5) Net debt is obtained netting total debt with cash and cash equivalents. (6) Net debt/EBITDA is the ratio of our net debt as of the end of the applicable period divided by our EBITDA for the then most recently concluded period of four consecutive fiscal quarters, including the four consecutive fiscal quarters ended March 31, 2012. (7) Sugarcane harvest begins in Ecuador and Argentina in July and May, respectively, due to climate conditions in these countries that do not permit sugarcane harvesting year-round.
72
The following tables set forth certain of the financial information and operating data of the Guarantors for the periods indicated.
Casa Grande Financial data: Sales of products ........................................... 153,270 Profit for the period....................................... 75,848 EBITDA(2) ..................................................... 71,134 EBITDA margin(3) ........................................ 46.4% Total debt(4) ................................................... 106,801 (5) Total debt / EBITDA ................................. 0.39x Net debt(6) ...................................................... 70,127 Net debt / EBITDA(7) .................................... 0.26x Operating data: Total area for sugarcane production capacity (hectares) ..................................... 21,115 Sugarcane crushed (tons) .............................. 648,161 Daily ethanol production capacity (liters) .... 60,000 Total ethanol production (million liters)....... 4.0
% of Coazucar
40.6% 86.8% 51.3% 13.3% 11.4%
37.9% 49.7% 13.6% 28.2%
For the Three Months Ended March 31, 2012 (in thousands of S/., except as indicated) % of San % of Cartavio Coazucar Jacinto Coazucar Others(1)
95,749 10,508 23,814 24.9% 54,040 0.45x 32,394 0.27x
25.4% 12.0% 17.2%
6,891 449,681 80,000 3.7
12.4% 34.4% 18.2% 26.4%
6.7% 5.3%
48,430 (6,764) 22,181 45.8% 103,481 1.42x 102,865 1.42x
12.8% (7.7)% 16.0%
6,081 207,568 40,000 0.6
10.9% 15.9% 9.1% 4.1%
12.8% 16.8%
% of Coazucar
Total
79,736 7,796 21,499 27.0% 541,244 6.25x 408,380 4.72x
21.1% 8.9% 15.5%
21,646 (8) — 260,000 5.8
38.8% 55,733 (8) 1,305,410 — 59.1% 440,000 41.3% 14.1
67.2% 66.5%
377,185 87,388 138,628 36.8% 805,566 1.46x 613,766 1.11x
_______________________________
(1) Includes La Troncal, San Isidro, Sintuco and Coazucar distilleries with respect to financial data, and adjustment for consolidation. With respect to operating data, only the Coazucar distilleries are included in total ethanol production and capacity figures and La Troncal, San Isidro and Sintuco are included in the total sugarcane production and total of sugarcane crushed figures. (2) EBITDA is calculated using profit from operations for the period before financing and taxation without initial recognition and change in fair value of biological asset, added to depreciation and amortization. See “Presentation of Financial and Other Information.” (3) EBITDA margin is EBITDA divided by sales of products, expressed as a percentage. (4) Total debt is the sum of total short- and long-term loans. (5) Total debt/EBITDA is the ratio of our total debt as of the end of the applicable period divided by our EBITDA for the then most recently concluded period of four consecutive fiscal quarters, including the four consecutive fiscal quarters ended March 31, 2012. (6) Net debt is obtained netting total debt with cash and cash equivalents. (7) Net debt/EBITDA is the ratio of our net debt as of March 31, 2012 divided by our EBITDA for the then most recently concluded period of four consecutive fiscal quarters ended March 31, 2012. (8) Sugarcane harvest begins in Ecuador and Argentina in July and May, respectively, due to climate conditions in these countries that do not permit sugarcane harvesting year-round.
Casa Grande
% of Coazucar
For the Year Ended December 31, 2011 (in thousands of S/., except as indicated) % of San % of Cartavio Coazucar Jacinto Coazucar Others(1)
% of Coazucar
Total
Financial data: Sales of products ........................................... 583,390 Profit for the year .......................................... 310,859 EBITDA(2) ..................................................... 303,581 EBITDA margin(3) ........................................ 52.0% Total debt(4) ................................................... 119,141 (5) Total debt / EBITDA ................................. 0.39x Net debt(6) ...................................................... 110,467 Net debt / EBITDA(7) .................................... 0.36x Operating data: Total area for sugarcane production capacity (hectares) ..................................... 21,115 Sugarcane crushed (tons) .............................. 2,331,436 Daily ethanol production capacity (liters) .... 60,000 Total ethanol production (million liters)....... 12.7
44.7% 55.6% 52.5%
401,718 113,742 134,659 33.5% 56,211 0.42x 47,889 0.36x
30.8% 20.3% 23.3%
37.9% 6,891 34.8% 1,688,790 13.6% 80,000 18.3% 15.8
12.4% 25.2% 18.2% 22.9%
14.6% 15.7%
6.9% 6.8%
164,855 99,990 71,922 43.6% 105,406 1.47x 103,410 1.44x
12.6% 17.9% 12.4%
154,452 34,944 68,364 44.3% 535,986 7.84x 440,701 6.45x
11.8% 1,304,415 6.2% 559,535 11.8% 578,526 44.4% 65.6% 816,744 1.41x 62.7% 702,467 1.21x
6,081 696,063 40,000 2.4
10.9% 21,646 10.4% 1,989,638 9.1% 260,000 3.5% 38.2
38.8% 55,733 29.7% 6,705,927 59.1% 440,000 55.3% 69.2
12.9% 14.7%
_______________________________
(1) Includes La Troncal, San Isidro, Sintuco and Coazucar distilleries with respect to financial data, and adjustment for consolidation. With respect to operating data, only the Coazucar distilleries are included in total ethanol production and capacity figures and La Troncal, San Isidro and Sintuco are included in the total sugarcane production and total of sugarcane crushed figures. (2) EBITDA is calculated using profit from operations for the period before financing and taxation without initial recognition and change in fair value of biological asset, added to depreciation and amortization. See “Presentation of Financial and Other Information.” (3) EBITDA margin is EBITDA divided by sales of products, expressed as a percentage. (4) Total debt is the sum of total short- and long-term loans. (5) Total debt/EBITDA is the ratio of our total debt as of the end of the applicable period divided by our EBITDA for the then most recently concluded year. (6) Net debt is obtained netting total debt with cash and cash equivalents. (7) Net debt/EBITDA is the ratio of our net debt as of December 31, 2011 divided by our EBITDA for the then most recently concluded period of fiscal year ended December 31, 2011.
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Our Main Products We market and sell all the sugar and ethanol produced by our mills and distilleries, both domestically and globally. We also produce other sugarcane by-products including molasses and bagasse. Ethanol is produced from molasses, the principal remaining by-product of processing sugarcane into sugar. Bagasse is used as a raw material to generate the vapor that is used to produce sugar and it is also used to cogenerate electricity. Sugar We are able to produce several types of sugar such as refined white, refined, brown and organic sugar. While brown sugar has constituted the majority of our sugar sales during the last six years, most of our mills have industrial flexibility to produce brown, white and refined sugar. We produced approximately 690 thousand tons of sugar during 2011 (consisting 60% of brown sugar, 29% of white sugar, 8% of refined sugar and 3% of organic sugar) and recorded sales of products from sugar of S/.1,166.2 million, or 89.4%, of our sales of products in 2011. For 2011, we exported approximately 11.7% of our total sugar sales to customers located primarily in North America and Europe. In Peru, we sell our sugar products to retailers, wholesale distributors and food and beverage manufacturers. In Argentina, we produce mostly organic sugar, which we export mainly to Europe, where demand for this specialty product is highest. Ethanol We produce and sell ethanol both domestically and globally. In 2011, we produced approximately 69.2 million liters of ethanol in our eight distilleries and recorded sales of products from ethanol of S/.93.4 million, or 7.2%, of our sales of products. In 2011, we sold 20.2% of our ethanol mainly to alcohol producers in Peru and exported 79.8% to customers located in the U.S. and Europe. Sugarcane by-products We also produce molasses and bagasse. Molasses is a by-product of processing sugarcane into sugar and is used as a raw material to produce ethanol. Sugarcane bagasse is a by-product of processing both sugar and ethanol and is a renewable energy source. We generate electricity at all of our mills through the burning of sugarcane bagasse in boilers, which enables those mills to be self-sufficient in terms of their energy needs. In addition, we sell excess bagasse produced at our Casa Grande, Cartavio and San Jacinto mills to Trupal S.A., an affiliate of Grupo Gloria engaged in the production of paper and cardboard. Peru’s Competitive Advantages in the Production of Sugarcane According to FAPRI, Peru had one of the highest crop yields in the world for sugarcane in 2011. Peru is located near the equator and the resulting vertical solar radiation it receives allow for such high sugarcane crop yields. Moreover, the vast territory, mild climate and stable water supply found in Peru, make it possible to harvest sugarcane all year long, thus further increasing productivity. According to the Peruvian Ministry of Agriculture, approximately 8% of Peru’s coastal agricultural land, or 127,809 million hectares, is currently used for sugarcane production, and we believe that Peru should be able to increase its sugarcane production capacity significantly depending on market conditions and the suitability of available land for sugarcane cultivation. Peru’s favorable growing conditions also permit sugarcane to be harvested seven times before requiring re-planting, compared to (i) India, where, on average, sugarcane must be re-planted every two harvests and (ii) the United States and other countries that harvest sugar beet, which has one annual crop and must be re-planted every year, as well as requiring crop rotations that range between three and five years. We believe that Peruvian producers of sugar, including us, enjoy competitive advantages over sugar producers in other countries due to the following factors: Low-cost producer. The cost of producing sugar from sugarcane in Peru is low due to its extremely favorable climate and soil. Peru experiences dry weather with little climate differentiation among the seasons due to its proximity to the equator and due to the effects of the Humboldt sea current. Peru also benefits from technological improvements developed in the production of sugar. These technological improvements have 74
resulted in longer harvesting cycles, higher sugarcane yield per hectare and increased sucrose content from crushed sugarcane, which has improved sugar output. According to the Czarnikow Group, sugar production costs in Peru are significantly lower than production costs in Brazil, a leading producer of sugar. For example, during 2011, average production costs per pound of brown sugar in Brazil was approximately US$0.20, or 53.8% higher than the US$0.13 per pound cost of brown sugar produced from our own sugarcane. Strong domestic and global sugar demand. Peru consumed approximately 1.2 million tons of sugar during 2011. Sugar consumption in Peru has continued to grow, principally as a result of higher consumption of beverages and processed food products made with sugar, as well as a result of higher consumer disposable income. Worldwide sugar consumption has more than doubled since the early 1980s, to approximately 165 million tons in 2010 from approximately 70 million tons in 1971, in each case, measured based on raw sugar equivalent. OECD-FAO estimates the worldwide sugar consumption to increase to 207 million tons by 2020. We expect future growth opportunities to come from a gradual liberalization of trade barriers in markets outside Peru, mainly in developed OECD countries; and we expect increased sugar consumption due to (1) population growth concentrated in markets open to the international sugar trade, (2) increased purchasing power in many countries and (3) higher consumption of processed foods and drinks. Increased opportunities to export sugar. The global sugar market has grown significantly in recent years. However, sugar producing countries still give priority to supplying their domestic markets. Therefore, the international trade market for sugar should have ample room for growth. Consumption growth of sugar is not always accompanied by increased local production in many countries. This creates medium-term opportunities for Peruvian sugar export growth. Furthermore, given Peru’s location in the western hemisphere and proximity to the equator, Peruvian producers of sugar, such as us, are able to export the majority of their products in a different export window than those of competitors outside of Peru. This also creates opportunities for Peruvian sugar export growth. Our Strengths Undisputed leadership in Peru. We enjoy leading market positions in Peru, a country with one of the highest sugarcane yields in the world in 2011 and we have one of the highest sugarcane yields in Peru. We are the largest grower and processor of sugarcane in Peru, whose climate allows us to harvest sugarcane year-round. According to the Peruvian Ministry of Agriculture, we are the largest sugarcane grower in Peru, with 55,733 hectares cultivated in 2011, compared to 10,350 hectares cultivated by our largest competitor. For 2011, the combined crushing capacity of our three Peruvian mills is over six million tons per year, compared to a crushing capacity 1.2 million tons for our largest competitor. We produced approximately 492 thousand tons of sugar in Peru and are also the largest seller of sugar in Peru, with a market share of approximately 46% through our brands Casa Grande, Cartavio and San Jacinto. We are one of the two largest producers of ethanol in Peru, having produced 47.9 million liters of ethanol in 2011, and the largest exporter in Peru, having exported 42.2 million liters of ethanol in 2011. Low-cost producer and strategically located assets throughout Peru. Our mills and distilleries and the land on which we cultivate and harvest sugarcane are strategically located throughout Peru and benefit from favorable climate and stable water supply. Peru is one of the world’s most productive countries in terms of high crop yields for sugarcane, primarily as a result of:
its favorable climate;
a combination of climate and soil resulting in increased production of sugar per hectare of planted sugarcane;
extensive agricultural properties and operations, with large-scale production;
availability of land for sugarcane production; and
extensive logistical infrastructure, allowing for efficient product distribution.
Our existing mills, distilleries and other production facilities are located in close proximity to our customers, sugarcane fields owned by us and by other growers, port terminals and other transportation infrastructure and 75
warehouses. For example, our production facilities, Casa Grande, Cartavio and San Jacinto, are located throughout Peru, approximately 63, 54 and 170 kilometers, respectively, from the port of Salaverry, in the La Libertad Region, from which we export sugar and ethanol. Our production facilities are also located close to major roads and our warehouses, thus decreasing delivery time, increasing operating efficiencies, reducing logistics costs and facilitating responses to shifts in demand. During 2011, 65% of our total sugarcane crushed was harvested from our own fields, with lower costs than the sugarcane supplied by third-party growers. Our expansive owned lands and those of our suppliers are also strategically located within an average of approximately 15 kilometers from our mills and distilleries. This close proximity, coupled with our increasing level of mechanization, reduces our transportation costs. We are also energy self-sufficient and can generate enough energy to support our milling and distilling operations. We believe our low costs, the increasing mechanization of our agricultural processes, improvements in industrial operations and other factors enable us to manage our operating costs efficiently. Increasingly mechanized agro-industrial complex. We seek to implement technological innovations in our planting, harvesting and production processes, which has greatly improved our productivity and reduced our operating costs in recent years by, among others, reducing the number of workplace accidents and the number of employees assigned to harvesting. For 2011, our level of mechanized harvesting contributed to reduce our costs associated to our sugarcane harvest and loading operations. During 2011, we harvested approximately 13% of the sugarcane we produced in Peru using mechanized harvesters, which we operate 24 hours per day, seven days per week throughout the harvesting season. We have developed and implemented numerous technological improvements for our mechanized harvesting equipment, such as automatic pilots and use of high precision GPS for soil preparation (including application of fertilizers and pesticides) and harvesting, which has significantly improved our productivity levels, and are also in the process of developing and testing mechanized planting. Diversified sugarcane varieties. We currently cultivate 19 types of sugarcane, with no single variety representing more than 40% of our total cultivated area. Six of the types of sugarcane we cultivate have been developed to maximize productivity considering the soil and climate conditions in Peru and to be more resistant to pests and disease. Our use of a wide variety of sugarcane plants coupled with our practice of replanting approximately 11% of our sugarcane crop annually, has resulted in historical low infestation and disease rates of our crops and mitigates our exposure to the risk of loss of our crops from pests and disease. Long operating history and experienced management team. Many of our mills and distilleries have been in operation for over 100 years, including Casa Grande (1860), Cartavio (1782), San Jacinto (1868) and San Isidro (1760). As a result, we benefit from significant operating experience in both the sugar and ethanol industries. We have successfully acquired companies and facilities and expanded our sugar and ethanol operations throughout Peru, and more recently in Ecuador and Argentina. We believe this demonstrates our ability to grow our operations and succeed in the industries in which we operate, reducing our fixed average costs. Our team of seven senior executives has an average of 15 years experience and knowledge in the sugar and ethanol industries and in production and operations. Our management team and our other professionals are highly trained, and we have a results- oriented corporate culture that is focused on reducing operating costs and increasing revenue. We utilize human resource management tools that focus on the integration and motivation of our management team and other professionals to help to maximize their effectiveness. Efficient use of water. Water is vital to the production of sugarcane, and our investments in water storage and distribution systems allow us to increase our water efficiency and improve our sugarcane production. We are planning to increase the area under cultivation by introducing new pressurized watering systems that will allow us to reduce our usage of water per hectare compared to traditional watering systems. The pressurized water system also decreases the time needed for sugarcane to achieve maturity, allowing us to harvest sugarcane earlier. In addition, our investments in water storage will allow us to manage our supply of water. By building reservoirs to obtain water from the Chicama River when its levels are the highest, we are able to store that water in reservoirs both for future use on existing cultivated lands and to use the reservoirs as water sources to expand cultivation.
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Our Strategy We intend to focus on achieving sustainable and profitable growth, further reducing our operating costs and building on our competitive strengths to maintain our market share in Peru and in the other countries in which we operate. Expand our sugarcane and industrial facilities, increasing utilization of our existing capacity. We currently use approximately 80% of our overall crushing capacity. We have a combined sugarcane crushing capacity of approximately 8.4 million tons per year, and in 2011 we crushed approximately 6.7 million tons of sugarcane. We will seek to increase our sugarcane production and achieve the full utilization of our existing crushing capacity, therefore increasing the productivity of those crops, resulting in more sugarcane volume and expansion of the harvested area close to our mills and distilleries through new plantations. Through more efficient water use, we intend to significantly increase our harvested area over the next five years from approximately 55,733 hectares in 2011. We expect to significantly increase our harvested area mainly through the Olmos Expansion Plan (as defined below), which will add approximately 14,500 hectares to our sugarcane operations, in addition to increasing our harvested area on our existing lands by approximately 12,100 hectares in Peru, approximately 2,276 hectares in Ecuador and approximately 3,200 hectares in Argentina. The potential areas that we have identified for such expansion are within the 50 kilometer radius area where most of our producing land is currently located. Expanding our harvested area and renewing our current harvesting areas will allow us to fully utilize the processing capacity of our mills and distilleries. Continue to reduce our operating costs and seek to increase our operating efficiencies. We intend to continue to focus on our low-cost operations improving the efficiency of our operations through additional investments in technology, including agricultural and industrial processes, and information technology. As part of this effort, we intend to continue to (1) increase the level of mechanization of our harvesting, (2) test and implement mechanized planting in our land, (3) take advantage of the competitive advantage of climate and soil conditions in Peru, by expanding our sugarcane production to levels that would allow us to fully utilize our existing crushing capacity, (4) invest in the modernization of our equipments and industrial facilities, (5) invest in improving the productivity of our crop and the efficiency of our industrial process and (6) invest in water storage and distribution systems to increase our water efficiency and improve our sugarcane production. Expand our land portfolio. We plan to further expand our land portfolio. Through a public auction in December 2011, Azucarera Olmos and our affiliate, Gloria S.A., won the rights to purchase 15,600 hectares (11,100 hectares by Azucarera Olmos and 4,500 hectares by Gloria S.A.) of land from Odebrecht, S.A. in Olmos, Lambayeque, Peru (approximately 854 kilometers north of Lima) of the Olmos Expansion Plan, from which sugarcane greenfield crops will be developed using pressurized water and green harvesting for the production of sugar. According to the auction criterion, water will be available as of March 2014, when construction of the project will be finalized. See “Summary—Recent Developments.” Participate in the consolidation of the sugar and ethanol sectors. The sugar and ethanol sectors have been consolidating in recent years in Latin America. In addition to acquisitions in Peru, we recently acquired sugar and ethanol companies in Argentina and Ecuador. We closely monitor domestic and foreign acquisition and investment opportunities in these sectors and are currently considering, and will continue to consider in the future, selective acquisitions, partnerships and investment opportunities that offer the right strategic fit for our operations. We may enter into acquisitions or partnerships or make certain investments that could be material to our results of operations. Focus on environmental and social awareness. We are committed to acting as an environmentally and socially conscious company. Cartavio, San Jacinto and Casa Grande have signed a PAMA with the Peruvian government regulating mechanical harvesting, burning of sugarcane, and carbon dioxide emissions, formalizing our commitment to reducing environmental impacts. Casa Grande’s PAMA has been approved by the Peruvian government through the Ministry of Agriculture, and San Jacinto’s and Cartavio’s are in the process of obtaining the approval for their respective PAMAs from the Peruvian government. We continue to invest in the mechanization of our harvests, which is not only cost-efficient, but also reduces our emission levels and decreases the burning of sugarcane fields for manual harvesting, and to improve and develop new training programs for our employees, as well as for the communities where we operate in.
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Operations Sugarcane is the main raw material used in the production of sugar and ethanol. Sugarcane is a tropical grass that grows best in locations with stable warm temperatures and humidity. The climate and topography of Peru is ideal for the cultivation of sugarcane. During 2011, we cultivated sugarcane in an area equal to 55,733 hectares (137,719 acres), of which we own 52,382 hectares (or approximately 94.0%), distributed as follows: Casa Grande
Owned land....................... Related company land....... Total.................................. _______________________
21,115 — 21,115
San Jacinto
Cartavio
6,891 — 6,891
Sintuco Chiquitoy(1) (in hectares)
6,081 — 6,081
1,271 — 1,271
— 3,351 3,351
San Isidro
La Troncal
3,300 — 3,300
Total
13,724 — 13,724
52,382 3,351 55,733
(1) We do not include Chiquitoy in our calculations of sugarcane crushed because it is not a consolidated subsidiary.
During 2011, we produced 690 thousand tons of sugar, distributed per our five mills as follows: Casa Grande
Sugar.................................
257,276
Cartavio
San Jacinto San Isidro (in tons)
154,507
80,112
La Troncal
47,288
150,468
Total
689,651
During 2011, we produced 69.2 million liters of ethanol, distributed per our distilleries as follows: Casa Grande
Ethanol.............................. 12,670,020 _______________________
Cartavio
San Jacinto
15,844,568
2,447,929
San Isidro (in liters)
La Troncal
Coazucar(1)
Total
7,583,143
13,746,460
16,917,467
69,209,587
(1) Comprised of three distilleries.
We also purchase sugarcane directly from independent sugarcane growers, some under agreements with an approximate five-year term. We transport the sugarcane purchased from third-party suppliers to our mills. The price that we pay our suppliers is based on the total amount of sugar content, in the delivered sugarcane. On delivery of the purchased sugarcane to our mills, we test the sugarcane to determine its sucrose content, which is used to determine the price of the sugarcane. After the price for the sugarcane is determined, we pay 100% of the total amount due on delivery of the sugarcane. Prices are based on the monthly price indicators published by the Peruvian Ministry of Agriculture. During 2011, we harvested approximately 65%, or 4.3 million tons, of sugarcane that we crushed from our own land, and we purchased approximately 35%, or 2.4 million tons, of the total amount of sugarcane that we crushed from third-party growers. The following table compares the total amount of sugarcane grown on land we owned with the amount we purchased from third parties during the relevant period. For the Three Months Ended March 31, 2012(1)
Sugarcane harvested from owned land .............. Sugarcane purchased from third parties............. Total................................................................... _______________________
967,603 337,807 1,305,409
Sugarcane Processed For the Years Ended December 31, 2011 2010 (in thousands of tons)
4,352,710 2,353,217 6,705,927
3,309,632 1,357,493 4,667,125
2009
3,133,046 1,301,596 4,434,642
(1) Includes only sugarcane harvested in Peru, as the sugarcane harvest begins in Ecuador and Argentina in July and May, respectively, due to climate conditions in these countries that do not permit sugarcane harvesting year-round.
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Sugarcane Harvest Cycle The annual sugarcane harvesting cycle in Peru occurs during the entire year because of Peru’s stable, warm and humid climate. Sugarcane is ready for harvest when the crop’s sucrose content is at its greatest level. In Peru, the highest sucrose levels are reached every 16 months on average, and in Ecuador and Argentina, the highest levels are reached once a year starting in July and May, respectively. We have developed and implemented numerous technological improvements for our mechanized planting and harvesting equipment. Mechanized harvesting does not require burning prior to harvesting, significantly reducing potential environmental damage and labor accidents, compared to manual harvesting. In addition, the leaves that remain after sugarcane has been harvested mechanically form a protective cover over the crop, reducing evaporation and aiding in pest and disease control. This protective cover of leaves decomposes into organic material over time, which acts to increase the fertility of the soil. Mechanical harvesting is time efficient and has lower overall production costs, when compared to manual harvesting. During 2011, we harvested mechanically approximately 13%, 25% and 100% of the sugarcane that we cultivated in Peru, Ecuador and Argentina, respectively. Under PAMAs signed with the Peruvian government in 2011, we are allowed 33 years to achieve full mechanical harvest. See “Risk Factors—Risks Related to Our Business and the Sugar and Ethanol Industries—We are subject to extensive environmental and labor regulations and may be exposed to liabilities and potential costs for environmental and labor compliance.” The following table compares the percentage of sugarcane mechanically harvested over the last two years, including sugarcane cultivated by us on our owned land and sugarcane we purchased from third-parties. Mechanically Casa Grande........................................ Cartavio .............................................. San Jacinto.......................................... La Troncal........................................... San Isidro............................................
2011 14.58% 4.17% 2.94% 26.00% 100.00%
2010 5.43% 0.01% — N/A N/A
Sugarcane yield is an important productivity measure for our harvesting operations. Geographical factors, such as soil composition, topography and climate, as well as some agricultural techniques that we implement and the sugarcane varieties we plant, directly affect our high sugarcane yield. During 2011, our Peruvian mills averaged 158 tons of sugarcane per hectare, while the average sugarcane yield in Peru was 126 tons per hectare. The following table shows our agricultural productivity measured in tons of sugarcane per hectare and sucrose content during the last three years in Peru. Tons of sugarcane per hectare............. Sucrose content...................................
2010 164 12.9%
2011 158 13.0%
2009 160 12.8%
After the sugarcane is harvested, it is loaded onto trucks we own and transported to one of our five mills for weighing, analysis and processing. In the current harvest, the average distance from the fields on which our sugarcane is harvested in Peru to our mills and distilleries in Peru is approximately 15 kilometers (9.3 miles). The proximity of our milling facilities to the land on which we cultivate sugarcane reduces our transportation costs, thereby enabling us to maximize sucrose recovery, as the sucrose content of cut sugarcane decreases over time. In Argentina, we mechanically harvest all of our sugarcane. The average distance from the fields on which our sugarcane is harvested to our San Isidro facility is 12 kilometers (7.5 miles). In Ecuador, the average distance from the fields on which our sugarcane is harvested to our La Troncal facility is 35 kilometers (21.7 miles).
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Our Mills and Distilleries We conduct our sugar operations through our five mills: (i) Cartavio and Casa Grande, which are located in the La Libertad Region of Peru, 610 kilometers north of Lima; (ii) San Jacinto, which is located in the Ancash Region of Peru, 407 kilometers north of Lima; (iii) San Isidro, which is located in the Province of Salta in Argentina; and (iv) La Troncal, which is located in the Province of Guayas in Ecuador. We conduct our ethanol operations through our eight distilleries: Casa Grande, Cartavio, San Jacinto, La Troncal, San Isidro and Coazucar’s three distilleries located in La Libertad. The following map sets forth the location of our mills and distilleries.
Quito Guayas La Troncal La Libertad Cartavio Casa Grande Ancash San Jacinto Lima Salta San Isidro
Buenos Aires
We have a total sugarcane crushing capacity of approximately 8.4 million tons of sugarcane per year (3.0 million tons at Casa Grande, 2.1 million tons at Cartavio, 1.0 million tons at San Jacinto, 0.6 million tons at San Isidro and 1.8 million tons at La Troncal). We seek to minimize the excess crushing capacity of our mills and compete with other sugarcane producers in acquiring land to cultivate sugarcane and in acquiring sugarcane produced by third-party growers and by expanding our areas under cultivation on our existing lands. 80
Our production facilities are able to produce both sugar and ethanol. During the three months ended March 31, 2012, we produced a total of approximately 133 thousand tons of sugar and 14.1 million liters of ethanol. During 2011, we produced a total of approximately 690 thousand tons of sugar and 69.2 million liters of ethanol. While all of our mills except for Casa Grande are currently able to shift production between brown, white and refined sugar in order to capitalize on unexpected price variations among the different types of sugar, we expect that all mills will soon have industrial flexibility as a result of capital expenditures we plan on making at Casa Grande during 2012. The following table sets forth the quantity of sugar that we produce at each of our five mills, the production capacity of each of our mills and our production volumes for the periods indicated.
Mill
Casa Grande (Peru) Cartavio (Peru) San Jacinto (Peru) San Isidro (Argentina) La Troncal (Ecuador)
Operational data (in tons, except days)
Sugarcane crushed Products Sugar Number of days in harvest Sugarcane crushed Products Sugar Number of days in harvest Sugarcane crushed Products Sugar Number of days in harvest Sugarcane crushed Products Sugar Number of days in harvest Sugarcane crushed Products Sugar Number of days in harvest
Daily Average Crushing Capacity
For the Years Ended December 31,
For the Three Months Ended March 31, 2012
2011
2010
2009
10,000
648,161
2,331,436
2,365,120
2,197,378
7,000
71,151 83 449,681
257,276 312 1,688,790
247,526 322 1,696,196
233,446 320 1,690,490
3,200
39,319 76 207,568
154,507 287 696,063
155,145 298 605,809
159,286 287 546,774
3,800
22,959 84 —(1)
80,112 286 488,752
67,928 279 547,106
59,134 247 515,821
11,000
—(1) —(1) —(1)
47,288 151 1,500,886
48,614 137 1,629,216
43,467 137 1,295,569
—(1) —(1)
150,468 145
159,778 152
135,445 137
_______________________ (1) Sugarcane harvest begins in Ecuador and Argentina in July and May, respectively, due to climate conditions in these countries that do not permit sugarcane harvesting year-round.
The following table sets forth the types of ethanol products that we produce at each of our eight distilleries, the production capacity of ethanol of each of our distilleries and our production volumes for the periods indicated.
Distillery
Coazucar(1) (Peru) Casa Grande (Peru) Cartavio (Peru) San Jacinto (Peru) San Isidro (Argentina) La Troncal (Ecuador)
Daily Average Production Capacity
120,000 60,000 80,000 40,000 50,000 90,000
For the Three Months Ended March 31, 2012
5,821,273 3,966,712 3,720,944 577,087 —(2) —(2)
For the Years Ended December 31, 2011
16,917,467 12,670,020 15,844,568 2,447,929 7,583,143 13,746,460
2010
15,743,020 13,451,469 16,687,865 1,523,939 6,593,775 11,957,735
2009
8,747,579 14,753,220 17,072,020 2,106,363 6,380,808 10,637,700
_______________________ (1) Composed of three distilleries. (2) Sugarcane harvest begins in Ecuador and Argentina in July and May, respectively, due to climate conditions in these countries that do not permit sugarcane harvesting year-round.
The ratio of our effective production time to effective availability of our production facilities during 2011 was 80%. Our Peruvian mills, Casa Grande, Cartavio and San Jacinto, currently have spare crushing capacity and are located close to each other (25 kilometers between Cartavio and Casa Grande and 250 kilometers between Cartavio/Casa Grande and San Jacinto), providing us with the ability to transport sugarcane to another mill for crushing should one mill require mechanical repairs.
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The following table sets forth the storage capacity of each of our five mills as of March 31, 2012. Casa Grande
Cartavio
San Jacinto
San Isidro
La Troncal
Sugar Bags
250,000
120,000
60,000
578,000
1,270,000
The following table sets forth the storage capacity of each of our eight distilleries as of March 31, 2012. Casa Grande Ethanol (in liters) Tank 1 Tank 2 Tank 3 Tank 4 Tank 5 Tank 6 Tank 7 Total
250,000 250,000 50,000 45,000 45,000 50,000 — 690,000
Cartavio
San Jacinto
500,000 500,000 60,000 — — — — 1,060,000
200,000 14,000 — — — — — 214,000
San Isidro
La Troncal
Coazucar(1)
1,048,497 1,076,025 1,520,440 1,613,103 1,142,672 69,283 421,462 6,891,482
5,000,000 1,000,000 1,000,000 500,000 — — — 7,500,000
750,000 750,000 1,500,000 1,500,000 3,000,000 — — 7,500,000
_______________________
(1) Composed of three distilleries.
The following table sets forth the polarization of each of our five mills as of March 31, 2012. Casa Grande
Cartavio
San Jacinto
San Isidro
La Troncal
Sugar Brown White Refined Organic
97.0 — 99.2 —
98.5 99.0 99.2 —
98.5 99.0 — —
— — — 98.5
98.5 99.0 — —
Our Main Products The following table sets forth a breakdown of our sales volume and sales of products by type and market for each the three most recent years ended.
Volume Sold(1) Domestic sales Sugar................................................... Ethanol................................................ Molasses ............................................. Others ................................................. Total domestic sales of products........ Export sales Sugar................................................... Ethanol................................................ Total export sales of products ............ Total sales of products .....................
Years ended December 31, 2011 Sales of Products Volume Sold(1) (millions of S/.) (%)
2010 Sales of Products (millions of S/.) (%)
503,273 10,082,806
1,029.6 18.9 33.0 11.8 1,093.3
78.9% 1.4% 2.5% 0.9% 83.8%
407,351 6,943,716
732.2 9.2 18.7 12.2 772.3
78.1% 1.0% 2.0% 1.3% 82.3%
55,450 42,515,985
136.6 74.5 211.2 1,304.4
10.5% 5.7% 16.2% 100.0%
54,298 41,797,932
97.9 67.6 165.6 937.9
10.4% 7.2% 17.7% 100.0%
_______________________
(1)
Sugar volumes are measured in tons and ethanol volumes are measured in liters.
Sugar We produce several types of granulated sugar such as white, refined, brown and organic sugar. Brown sugar has been the most significant contributor to our sales of products during the last six years, representing approximately 60% of our sugar produced and 56.6% of our sales of product in 2011. We produced approximately 690 thousand tons of sugar during 2011 and recorded sales of products from sugar of S/.1,166.2 million, or 89.4%, of our sales of products in 2011.
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Ethanol We produce and sell two types of ethanol: ethanol 1, a mixture of 96% ethanol and 4% water, and ethanol 2, a mixture of 94% ethanol and 6% water. The majority of the ethanol we produce is exported for industrial use. In 2011, we produced 69.2 million liters of ethanol and recorded sales of products from ethanol of S/.93.4 million, or 7.2%, of our sales of products. Sugar Sales and Distribution During the three months ended March 31, 2012, we sold domestically approximately 163.3 thousand tons of sugar or 94.7% of the total quantity of sugar we sold, and exported approximately 9.2 thousand tons of sugar. During 2011, we sold domestically approximately 503.3 thousand tons of sugar, or 90.1% of the total quantity of sugar we sold, and exported approximately 55.5 thousand tons of sugar. In most domestic sales, the end-customer is responsible for arranging for shipment of the sugar products from our mills. Payment is due in cash for wholesale customers on delivery, which represents 97.0% of our customer base, and for the remaining sectors, due approximately 30 to 60 days after billing. We export our sugar products—brown sugar (our main sugar export), white sugar, refined sugar and organic sugar—free-on-board (“FOB”), operating throughout our supply chain, from the mill to the end-user, including road and railroad transportation, loading terminal operation at the port of Salaverry, located in the La Libertad region of Peru, and shipping services (through cost insurance freight (“CIF”) sales). During 2011, we exported approximately 9.9% of the total volume of sugar sold. We enter into short-term and long-term export contracts, and payment of the sales price is generally on a cash against documents basis. During the three months ended March 31, 2012, approximately 5.4% of our sales of products was derived from exports (S/.20.4 million). During the year ended December 31, 2011, approximately 10.5% of our sales of products was derived from exports (S/.136.6 million). The sugar exported during the year ended December 31, 2011 was sold to customers in the United States, Haiti, Colombia and Chile, among other countries. In Peru, our sales and distribution channels include: (1) sales to the industrial sector, such as food and beverage manufacturers, where we deliver sugar directly to their factories; (2) sales to the wholesale sector, where the sugar sold is delivered to the wholesalers or picked up from our warehouses and (3) sales to retailers, where we sell 1 kilogram and 5 kilogram bags of sugar directly to supermarkets and grocery stores. In Ecuador, our sales and distribution channels include: (1) sales to the industrial sector, such as food and beverage manufacturers which pick up the sugar from our warehouses; (2) sales to the wholesale and commercial sectors, where the sugar sold is picked up from our warehouses; and (3) sales to retailers, where we sell bags of sugar directly to supermarkets and grocery stores. In Argentina, our sales and distribution channels include: (1) sales of non-organic sugar, where customers pick up the sugar from our warehouses and (2) sales of organic sugar, where we deliver the sugar to the customs facilities in Buenos Aires for export. Prices Prices for our sugar products for export are set in accordance with international market prices. Prices for raw sugar are established in accordance with NY 11 futures contracts and prices for refined sugar are established in accordance with the Lon 5 futures contracts, traded on the London International Financial Futures and Options Exchange. Prices for sugar we sell in Peru are set in accordance with domestic market prices, using a reference published by the Peruvian Ministry of Agriculture, and NY 11 futures contracts. In Ecuador and Argentina, domestic prices of sugar and the prices paid to farmers for sugarcane are set by the government and follow international market prices. Spot market prices are fixed daily based on international NY 11 futures contracts and London 5 futures contracts, plus brokerage premiums, freights, import and banking costs and also the stocks availability. All export sales are made with payment due on delivery, with prices based on NY 11 futures contracts.
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For further information on average sales prices and sales revenue from the sale of our sugar in the domestic and international markets for the three years ended December 31, 2011 and the three months ended March 31, 2012 and 2011, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Customers In Peru, we operate exclusively in the wholesale and industrial sectors, with an estimated 46% market share of the domestic market, according to data published by the Peruvian Ministry of Agriculture. Approximately 70% of our sugar sales are to the wholesale sectors. Most of our domestic sugar customers are manufacturers of soft drinks, candy and chocolate, dairy products, cookies, powdered chocolate, jellies, juices and teas. We also sell sugar for refining and packaging. Producers of food and candy represents the largest segment of our industrial sector. As of the date of this offering memorandum, we have approximately 1,100 active customers in our domestic portfolio. As most of our domestic sugar sales are made in the wholesale market, our losses resulting from payment defaults have been very low. In the export market, our end-user customers are primarily major sugar refineries, which purchase a significant amount of our sugar products. We export sugar primarily to customers in United States, Haiti, Colombia and Chile. Ethanol Sales and Distribution During the three months ended March 31, 2012, our sales of products from ethanol operations were S/.30.9 million (US$11.6 million), or 8.2% of our sales of products for the three months ended March 31, 2012, compared to sales of products from ethanol operations of S/.19.3 million (US$6.9) for the three months ended March 31, 2011. We sold approximately 17.2 million liters of ethanol, of which we sold 17.6% (3.0 million liters) domestically and exported approximately 82.4% (14.2 million liters). During the three months ended March 31, 2012, 78.7% of our sales of products from ethanol sales was derived from exports (S/.24.4 million), representing 6.5% of our sales of products. During 2011, our sales of products from ethanol operations were S/.93.4 million (US$34.6 million), or 7.2% of our sales of products in 2011, compared to sales of products from ethanol operations of S/.76.8 million (US$27.3 million) in 2010. We sold approximately 52.6 million liters of ethanol, of which we sold 19.2% (10.1 million liters) domestically and exported approximately 80.8% (42.5 million liters). During 2011, 79.8% of our sales of products from ethanol sales (representing 5.7% of our sales of products) was derived from exports (S/.74.5 million). Most of our domestic ethanol sales are made pursuant to annual supply contracts or in the spot market, with payment due in cash in 30 to 60 days. In the international market, we sell through trading houses. We transport ethanol from our distilleries by truck to the port, where the ethanol is loaded onto ships for export. Sales are made FOB (where we pay for transportation of the goods to the port of shipment, plus loading costs, and the buyer pays freight, insurance, unloading costs and transportation from the port of destination to its facilities) or CIF (where the selling price includes the cost of the goods, the freight or transport costs and also the cost of marine insurance). Prices The price of ethanol in Peru is determined by the market. Daily prices are used as a reference for pricing spot transactions. Most export sales are made with payment due on delivery, with prices based on daily prices. We enter into short-term and long-term sales contracts, and payment of the sales price is generally due on delivery. The ethanol export market is currently not material, and ethanol export prices are determined in accordance with international market prices. Customers Most of our domestic ethanol customers are industrial customers in Peru. As of March 31, 2012, we had approximately 10 active customers in our domestic portfolio. 84
In Peru, the main market for our ethanol exports is Europe, where we sell ethanol to traders that resell the ethanol to industrial consumers for the production of alcoholic beverages in addition to a variety of industrial uses. Other Products and Activities Sugarcane byproducts are biodegradable and not harmful to the environment. They are an important alternative energy source. For example, bagasse is used to produced vapor and cogenerate electricity. In addition, residues from sugar and ethanol production processes, including cachaza and vinaze, are also used as organic fertilizers in our fields. Bagasse and Co-Generation of Electricity Sugarcane is composed of water, fibers, sucrose and other sugars and minerals. When the sugarcane undergoes the milling process, we separate water, sugar and minerals from the fibers and what remains is sugarcane bagasse. Sugarcane bagasse is an important sugarcane byproduct and used as fuel for the boilers in our mills. Sugarcane bagasse is burned and heats the water in the boilers to high temperatures, and the resulting vapor is used to produce sugar and ethanol. Part of the vapor is also used by a turbo-generator that produces electricity to power our mills. Currently, our five mills are self-sufficient during the harvest, generating all of the electric energy they consume. We sell excess bagasse to producers of paper, cartons and packages. During 2011, we sold 193 thousand tons of bagasse, or 0.8% our sales of products. Our total installed electricity generation capacity is 68 MW at Casa Grande, 10 MW at Cartavio, 3 MW at San Jacinto, 25 MW at La Troncal and 7 MW at San Isidro, all of which we use in our industrial facilities. The main advantages of electricity generated by burning sugarcane bagasse include:
it is clean and renewable energy;
it complements hydraulic energy, and it is generated during the harvest when water reservoirs levels are lower; and
there is a short period of time required to start up the electricity generator.
As our installed electricity generation expands, excess electricity we do not use can be sold to the market. According to the Agencia de Promoción de la Inversión Privada - Perú, the Peruvian government’s investment promotion agency, projected economic growth rates for Peru suggest that investments in electricity generation will be required as demand for electricity increases further. The Peruvian government has enacted certain laws (Legislative Decree No. 1002 and its Regulation approved by Supreme Decree No. 012-2011-EM) with the aim of promoting investment in the generation of electric energy with renewable resources, including the incentives to encourage the generation of electric energy from sugarcane bagasse. Molasses Molasses is a by-product of processing sugarcane into sugar and is used as a raw material for the production of ethanol. The remaining molasses is sold to the animal feeding industry. During 2011, we sold 41,762 tons of molasses, all of which were sold to the domestic market. During 2011, our sales of products from molasses was S/.33.0 million (2.5% of our sales of products), all of which were sold to the domestic market. In Peru, approximately 438,000 tons of molasses is produced annually, of which approximately 360,000 tons are used by distilleries for alcohol production. A decrease in the use of molasses for ethanol production would increase the supply of ethanol available for other uses and result in a drop in the price of molasses. Customer Concentration We have a wide variety of customers in Peru, Ecuador, Argentina and other countries. In Peru, we have more than 1,100 customers, with the largest customer constituting 9% of our sales in Peru. In Ecuador, we have more than 600 customers, with the largest customer constituting 11% of our sales in Ecuador. In Argentina, we have 18 customers, with the largest customer constituting 30% of our sales in Argentina. 85
The following table sets forth the 10 largest customers of Casa Grande during 2011: Customer
SUCDEN AMERICAS CORPORATION DEPRODECA S.A.C. INVERSIONES SAN ROQUE EIRL INVERSIONES DOWER WARTHON S.A.C. CORPORACION VEGA S.A.C. NEONAZARENO E.I.R.L. COMERCIALIZADORA Y DISTRIBUCION EMC TRADING ED & F MAN SUGAR INC. INVERSIONES PUCARA S.A.C.
The following table sets forth the 10 largest customers of Cartavio during 2011: Customer
GLORIA S.A. CORPORACION AZUCARERA DEL PERU S.A. EMC TRADING ED & F MAN PERU S.A.C. ALICORP S.A.A. INVERSIONES SAN ROQUE E.I.R.L. MOLITALIA S.A. DEPRODECA S.A.C. CASA GRANDE S.A.A. AJEPER S.A.
The following table sets forth the 10 largest customers of San Jacinto during 2011: Customer
DEPRODECA S.A.C. AJINOMOTO DEL PERU S.A. CALSA PERU S.A.C. CORPORACION AZUCARERA DEL PERU S.A. INVERSIONES SAN ROQUE E.I.R.L. COMERCIAL ALVARADO S.R.L. TRANSPORTE PHI & GIL S.A.C. ALCOHOLES DEL PERU S.C.R.L NEONAZARENO E.I.R.L. TABLEROS PERUANOS S.A.
The following table sets forth the 10 largest customers of San Isidro during 2011: Customer
ED & F MAN SUGAR DELLA NATURA CANDICO SUNPROJUICE PRONATEC NATURKOST AVAFINA SUCRE EXP. WORLEE CARE
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The following table sets forth the 10 largest customers of La Troncal during 2011: Customer
ARCA ECUADOR, S.A. AJECUADOR S.A. DISTRIBUIDORA IMPORTADORA DIPOR S.A. PATIAM S.A. MULTICOMERCIO ALDEAN S.C.C. QUIJIJE TOALA ANGEL ROBERTO DISTRIMEDIOS S.A. CONFITECA COMPAÑIA ANONIMA TIENDAS INDUSTRIALES ASOCIADAS TIA S.A. ORTIZ BENAVIDES MARCOS GIOVANNY
Competition The sugar and ethanol industry in Peru has undergone great changes. The Peruvian military coup led by General Juan Velasco Alvarado in 1968 resulted in the expropriation of sugar plantations and their conversion into cooperatives. Since the return to a democratic government in 1980, most sugar plantations have become privatized. The sugar and ethanol industry in Peru has experienced increased consolidation through mergers and acquisitions and the implementation of new greenfield projects over the last several years. Despite the increased consolidation over the last several years, this industry remains highly fragmented with approximately eleven mills in operation during 2011, of which only one competitor, Laredo, is located in the La Libertad Region, according to the Peruvian Ministry of Agriculture. Due to distance and high logistical costs, we face little competition from sugarcane, sugar and ethanol producers located in Peru. The closest competing mills are Tuman and Pomalca, both of which are located in the Chiclayo region. The following table sets forth the number of mills, the amount of sugarcane crushed and the quantities of sugar and ethanol produced by us and our main Peruvian competitors during 2011. Group Crushed Sugarcane (tons) Casa Grande........................................ 2,331,436 Cartavio .............................................. 1,688,790 San Jacinto.......................................... 696,063 Laredo................................................. 1,255,632 Paramonga .......................................... 1,125,246 Tuman................................................. 995,925 Pucala ................................................. 932,997 Pomalca .............................................. 809,668 Andahuasi ........................................... 345,467 Azucarera del Norte ............................ 38,024 Chucarapi............................................ 36,187 Total.................................................... 10,255,436 _______________________ Source: Peruvian Ministry of Agriculture
Market share 22.7% 16.5% 6.8% 12.2% 11.0% 9.7% 9.1% 7.9% 3.4% 0.4% 0.4% 100.0%
In Ecuador, there are six sugar mills, of which La Troncal represents 28% of the Ecuadorian sugar production. In Argentina, there are 23 mills, of which San Isidro is the only producer of organic sugar, substantially all of which is exported. We also face competition from international sugar producers. In addition, we face strong competition in highly regulated and protected markets, such as the United States and the European Union. Intellectual Property The nature of our business requires brand differentiation and our products are registered under trademarks. Our corporate names and logos, as well as our products’ names and logos are registered before the Peruvian National Institute for the Defense of Competition and Intellectual Property (Instituto Nacional de Defensa de la Competencia y de la Propiedad Intelectual, or “INDECOPI”). Coazucar has seven trademark certificates with its corporate names 87
“Coazucar del Peru S.A.” and “Coazucar”, which expire in 2021. Cartavio has eight trademark certificates with its corporate and product names, and logo “Cartavio”, which expire in 2013. Casa Grande has 33 trademark certificates with its corporate and product names, and logos “Casa Grande”, “Hacienda Casa Grande”, “Justo y Cabal”, among others, which expire in 2016. San Jacinto has three trademark certificates with its corporate and product names, and logos “San Jacinto” and “Un sol de azucar de Agroindustrias San Jacinto S.A.A.”, which expire in 2014. Our trademarks can be renewed prior to their expiration. The brand names of our mills in Argentina and Ecuador are also registered with the applicable governmental authorities in each country. Research and Development We have an agricultural research and development department, which promotes independent studies for the most efficient allocation of sugarcane varieties in specific planting areas to obtain maximum productivity. Our independent research and development activities are aimed at the continuous improvement of our agricultural process. For our industrial operations, we have a quality control department, which analyzes variables that affect the efficiency of our production process and maintain a record of corrective measures to address failures detected. These corrective measures undergo a thorough testing process to assess their effectiveness. Plant, Property and Equipment Our principal executive offices are located in the cities of Trujillo and Lima. Our properties consist primarily of sugarcane, sugar and ethanol production facilities and land on which we cultivate sugarcane. We own substantially all of the land on which we cultivate sugarcane. The charts in “—Overview – Our Mills and Distilleries” show the primary products, daily production capacity and production capacity at each of our mills and distilleries for the three months ended March 31, 2012 and for the years ended December 31, 2011, 2010, and 2009. We believe that all of our production facilities are in good operating condition. As of March 31, 2012, our consolidated net book value of our property, plant and equipment was S/.2,816.8 million, S/.1,769.3 million of which consisted of land. As of March 31, 2012, S/.276.7 million of our total outstanding indebtedness was secured by certain of our land and agricultural and industrial equipment and machinery. The following chart shows the breakdown of the net book value of our property, plant and equipment by subsidiary as of March 31, 2012. Entity Coazucar .......................................................................... Casa Grande..................................................................... Cartavio ........................................................................... San Jacinto....................................................................... Sintuco............................................................................. San Juan(1) ........................................................................ San Isidro......................................................................... La Troncal........................................................................ Total ................................................................................ _______________________
Property, Plant and Equipment (in millions of S/.) 131,501 1,214,502 418,061 334,841 55,240 2,384 200,609 459,666 2,816,804
Land 75,995 784,010 288,170 209,075 51,845 179 174,134 185,886 1,769,294
(1) Refers to Agroindustrias San Juan S.A.C., a subsidiary of Coazucar with a parcel of land but no operations.
Employees As of March 31, 2012, we had 10,658 permanent employees and 2,868 temporary employees (who were contracted for harvesting operations). We hire new employees throughout the year, and offer our employees training to allow them to develop two skills: one for use during the harvest and the other for use between harvests.
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The following chart shows the breakdown of our employees by subsidiary as of March 31, 2012. Entity Coazucar .......................................................................... Casa Grande..................................................................... Cartavio ........................................................................... San Jacinto....................................................................... Sintuco............................................................................. Chiquitoy ......................................................................... San Isidro......................................................................... La Troncal........................................................................ Total ................................................................................
Permanent 17 3,780 1,542 1,470 103 495 599 2,652 10,658
Temporary — 1,420 989 254 51 — 30 124 2,868
Total 17 5,200 2,531 1,724 154 495 629 2,776 13,526
We negotiate annual collective bargaining agreements with the various unions with which our employees are affiliated. As of March 31, 2012, we were party to nine collective bargaining agreements. We have experienced two recent labor stoppages. We experienced a labor stoppage at Cartavio for 15 days in February 2010 and at San Jacinto for 9 days in March 2011, both of which were due disagreements over wages. Both labor stoppages were resolved. Approximately 46% of our employees are unionized as of March 31, 2012. Benefits We offer our employees (depending on their job description) a benefit package, including: (1) recreation and entertainment programs; (2) loans for health and educational needs; (3) annual trainings; (4) housing for employees; (5) profit sharing plans; and (6) transportation service from the city of Trujillo to our production facilities. Social Programs We participate in a number of social projects with local communities, mainly where our industrial facilities are located. As the principal employer in our community, we support constant dialog with local authorities and institutions, and contribute millions of nuevos soles annually for road improvements and cleaning. We also provide potable water to over than 65,000 habitants in the community and donate the construction of wells for neighboring rural settlements. We also provide sports and recreation venues such as soccer athletic fields and swimming pools to the community. Other social programs that we offer to the community include: (1) an educational program for local students, offering them four libraries with books and Internet-connected computers to assist them in their schoolwork; (2) an athletic program partnering with municipalities to provide children with volleyball, soccer, basketball and swimming; (3) a women’s program that provides workshops on skills such as handicrafts, sewing and cooking to allow local women to generate income; (4) a nutritional program that provides free milk daily to children in lowincome families and provide medical checkups to children to detect and treat malnutrition. We also provide donations to the community, including fuel to local police, donations for construction of health centers and infrastructure improvement, donations to retirement homes and churches and food donations, among others. Insurance As of the date of this offering memorandum, we had insurance covering the vehicles we own that are used in our business, with all risks coverage including related civil liabilities, collision coverage and third party coverage. We also have insurance covering our facilities and their contents, such as equipment, machinery and inventory stored therein. We do not have insurance that covers our planted sugarcane prior to harvesting. We do not anticipate having any difficulties in renewing any of our insurance policies, which are provided by leading insurance companies such as Pacifico Vida, Pacifico Seguros, Rimac Seguros and Mapfre Seguros, and believe that our insurance coverage is reasonable in amount and consistent with industry standards applicable to similarly situated sugar and ethanol companies operating in Peru.
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Legal and Administrative Proceedings As of March 31, 2012, we are party to approximately 2,013 legal and administrative proceedings, involving tax, social security, civil, environmental and other matters, brought against us for a total amount of approximately S/.232.6 million. Under Peruvian Law and IFRS we are required to make a provision for those legal and administrative proceedings that, in our judgment or in the judgment of our legal advisors, are likely to have a result that is adverse to us. As of March 31, 2012, we have recorded provisions for an amount of S/.15.9 million in connection with these legal and administrative proceedings compared to a total of S/.14.9 million as of December 31, 2011, as reflected in our audited consolidated financial statements. As of March 31, 2012, our subsidiaries have made judicially-mandated payments in an aggregate amount of approximately S/.17.0 million. In addition, there are currently certain legal proceedings pending in which we are involved for which we have not established provisions or made judicially-mandated payments. If any of these proceedings is decided adversely against us, our results of operations or financial condition could be materially adversely affected. With respect solely to Coazucar, there is one legal proceeding and there are no governmental or arbitration proceedings (and we are not aware of any such proceedings which are pending or threatened) during the past 12 months, which may have significant effects on Coazucar or our financial position or profitability. Although we are not a party to any government or arbitration proceedings, we may be adversely affected by the negative outcome of proceedings in which other companies of Grupo Gloria are involved. Tax and Social Security Contribution Proceedings As of March 31, 2012, we were involved in 14 administrative tax proceedings, all of which we initiated in response to disagreements over income and VAT taxes with the Peruvian National Superintendency of Tax Administration (Superintendencia Nacional de Administración Tributaria), primarily relating to the deductibility of expenses. These tax proceedings are currently before the tax tribunal (tribunal fiscal), the decisions of which can be appealed to the judiciary (poder judicial). We have assessed our estimated exposure in respect of these proceedings as approximately S/.8.7 million (based on lawsuits for which we classify our risk of loss as probable or possible) and have deposited S/.0.2 million with the court pursuant to judicial judgments. We calculated our total exposure based on our experience in similar lawsuits in the past. Labor Proceedings As of March 31, 2012, we were party to 1,749 judicial and administrative labor proceedings involving a total amount of approximately S/.98.7 million. As of March 31, 2012, we have established provisions in an aggregate amount of S/.12.3 million. We calculated our exposure based on our experience in similar lawsuits in the past. Civil Proceedings As of March 31, 2012, we were a party in 188 civil proceedings in the courts, 157 of them as defendants. Our total estimated exposure in these proceedings was S/.13.2 million (based on lawsuits for which we classify our risk of loss as probable or possible). As of March 31, 2012, we have established provisions in an aggregate amount of S/.3.5 million. Claims against us in these suits include (1) compensatory and punitive damages for workrelated accidents; (2) orders to refrain from using right-of-way; (3) reimbursement of amounts not paid under agreements for the transportation of our employees and for sugarcane harvesting and other contracts; (4) a civil class action for application of amounts in welfare plan; and (5) annulment of contracts. Environmental Proceedings We are party to one administrative proceedings regarding our burning of sugarcane, which is part of the sugarcane harvesting process and the legal forestry reserve. Restructuring Proceedings We purchased Chiquitoy while it was in judicially approved restructuring proceedings. Chiquitoy is currently still in an ordinary restructuring proceeding (procedimiento concursal ordinario) with the Peruvian consumer protection agency INDECOPI. We and our partner Agroholding S.A. each own 50% of the outstanding shares of Chiquitoy and we each own 50% of the 86.63% of the debt of Chiquitoy. 90
REGULATORY OVERVIEW We are subject to governmental regulation and supervision generally applicable to companies engaged in business in Peru, including labor laws, social security laws, environmental laws, consumer protection and antitrust laws, among others. These include applicable regulations for the construction, operation and maintenance of our administrative offices, warehouses, factories, mills and distilleries, among others. Despite certain issues related to the delay in the processing or renewal of certain permits, we believe to be in compliance in all material aspects with applicable statutory and administrative regulations with regard to our business. Peru Promotion of the Agricultural Sector Law N° 27360, Law for the Promotion of the Agricultural Sector, and its regulations approved by Supreme Decree No. 049-2002-AG, provide the main legal framework governing agricultural and related activities in Peru. The legal benefits contemplated by this Law allow our Peruvian subsidiaries to pay a reduced income tax rate of 15% per annum instead of the general rate of 30% per annum, as well as a more flexible labor and social regime. Certain other regulations of the special Peruvian regime that promote the development of the sugar industry which are applicable to our Peruvian subsidiaries, include those regulations governed by Legislative Decree N° 802, Law N° 28027 and Law N° 29678, under which we have been able to (i) capitalize our tax debt, (ii) adhere to the special regime of payment with respect to contributions to the private pension system (we settled our debts and are currently paying within the normal procedure), and (iii) access to the asset protection regime, which entails that any injunction, mortgage, guaranty or others cannot be enforced (only Casa Grande qualified for this last benefit, under which approximately S/.2 million of its preexisting debt was protected from creditors, but is required to make payments according to a schedule approved by INDECOPI). Water Permits The Peruvian Ministry of Agriculture is the Peruvian authority responsible for setting guidelines and policies regarding sugarcane harvesting and processing. As is required for sugarcane harvesters and processors, we are in compliance with Law Nº 29338 – the Water Resources Law, and its regulations approved by Supreme Decree Nº 001-2010-AG, with the purpose of maintaining and obtaining the necessary water permits before the ANA, yet some of them are in renewal or regularization processes. We must also obtain from the ANA the necessary authorizations to reuse domestic or industrial wastewaters in our sugarcane fields. However, such permits require proper environmental licenses to be in place, which are currently in process. Controlled Chemicals The industrial production of sugar and ethanol requires the use of certain controlled chemicals and substances, the commercialization, transportation and use of which is controlled by the National Agricultural Health Service (Servicio Nacional de Sanidad Agraria, or “SENASA”) due to their potentially being used to produce illegal drugs. We comply with Law Nº 28305 and its regulations which requires us to obtain a User Certificate from the National Police Drug Division (Unidad Antidrogas de la Policia Nacional del Perú, or “DIRANDRO”) and to register ourselves before the Peruvian Ministry of Production. Furthermore, our activities (purchase and use of controlled chemicals) are registered in the special registries in the Peruvian Ministry of Production. Fuel Storage Any company that purchases fuel for its own activities and has facilities to receive and store fuel is required to (i) obtain an authorization from the Supervising Body of Investment in Mining and Energy (Organismo Supervisor de la Inversión en Energía y Minas) prior to installing or expanding such facilities, and (ii) be registered in the Registry of Direct Fuel Consumers. Casa Grande and Cartavio meet the above mentioned requirements; however San Jacinto is currently in the process of obtaining the relevant authorizations. 91
Sanitary Regulation Our products for human consumption, such as white and brown sugar, have Sanitary Registries with the General Bureau of Environmental Health (Dirección General de Salud Ambiental, or “DIGESA”) of the Peruvian Ministry of Health, which allows their commercialization in the local market. Likewise, companies that participate in food and/or beverages manufacturing processes for the domestic or international market must meet the Standards for the implementation of Hazard Analysis and Critical Control Point (HACCP) System, approved by Ministerial Resolution No. 449-2006/MINSA. Under such standards, companies must apply for the approval of their “HACCP Plan” before DIGESA. Currently, our companies are adjusting their plans. In order to export our product, we are currently applying for Phytosanitary Certificates from SENASA, including the compliance of regulations to ensure sanitary and safe conditions in facilities for the sale and distribution of food products. Likewise, certain of our companies have the U.S. Food and Drug Administration – FDA Certificate and others are applying for it. The aforementioned permits meet the terms of the Food Safety Law, approved by Legislative Decree N° 1062, and the Regulation for Food and Agricultural Health and Safety, approved by Supreme Decree N° 004-2011-AG. Environmental Permits According to article 18 of Law N° 27446, Law of the National System of Environmental Impact Evaluation, the competent environmental authority for granting environmental permits is the entity that corresponds to the activity of the company which generates the highest gross annual income. Therefore, the environmental authority that monitors our operations is the Peruvian Ministry of Agriculture. Our companies are required to file an Environmental Adequacy and Management Program (Programa de Adecuación y Manejo Ambiental, or “PAMA”). Currently, Casa Grande has obtained such environmental permit approved by the competent authority, while the permits of Cartavio and San Jacinto are in process and are expected to be received in the coming months. Electricity Generation Authorizations The process of burning sugarcane bagasse qualifies as “electric cogeneration”, which is defined by article 1.5 of Law N° 28832, Law to Ensure Efficient Development of Electricity Generation, as the process of the combined production of electricity and thermal energy, which is an integral part of a productive activity, where electricity is destined for consumption by oneself or by third parties. See “Business—Other Products and Activities—Bagasse and Co-Generation of Electricity.” The process of burning sugarcane bagasse was considered as thermoelectric generation until May 2, 2008. Subsequent to May 2, 2008, it is considered as a renewable energy resource, according to the Law for the Promotion of Investments in Electricity Generation based on Renewable Energy Sources (Ley de promoción de la inversión para la generación de electricidad con el uso de energías renovables) approved by Legislative Decree N° 1002 (“DLRER”). Prior to the entry into force of DLRER, an authorization was required to generated electricity with biomass, as was specified in article 4° of Law Decree N° 25844, Electricity Concessions Law. Furthermore, from the date of effectiveness of DLRER, which modified article 3° d) of the Electricity Concessions Law, a definitive concession is required in order to generate electricity with renewable energy resources with installed capacities larger than 500 kW. Currently, San Jacinto is in the process of transferring the authorization of an acquired company to its own name and Cartavio has the corresponding authorization in order to generate electric power and Casa Grande is in process of requesting such authorization from the competent authority. Argentina The production and commercialization of sugar in Argentina is subject to a wide range of both national and provincial regulations, including mainly companies, environmental, foreign exchange control, tax, sale and ownership of real estate, price controls and export quotas, among others. Please find below a brief description of the material regulations affecting the sugar business in Argentina: 92
Companies The incorporation, organization, existence, and liquidation of companies in Argentina is governed by the Companies Law (No. 19,550). The Public Registry of Commerce is the agency that oversees companies in Argentina and it is represented by a different body in each province and in the city of Buenos Aires. These bodies only have jurisdiction over the companies incorporated in each specific jurisdiction. In the city of Buenos Aires, the Public Registry of Commerce is entrusted to the Inspección General de Justicia. Environmental The production and commercialization of sugar in Argentina is subject to several both national and provincial environmental regulations, which are briefly described below: National Law No. 24,051, which sets forth the regime applicable to the generation, use, transport, treatment, and final disposition of hazardous waste materials, establishes that all persons that generate or process hazardous waste materials must be enrolled in the respective registers. The application authority of said regime is the Secretariat of Environment and Sustainable Development of Argentina. Accordingly, pursuant to local Resolution No. 224/2006, the Province of Salta requires the enrollment in the local Hazardous Waste Registry. Law No. 7,070 of the Province of Salta provides that all activities that could generate adverse effects to the environment must obtain a certificate that assesses and approves the environmental effects of said activity. According to local Executive Decree No. 3097/2000, the sugar industry is considered to be an environmental hazardous activity. Under Resolutions Nos. 568/2009 and 182/2010 of the Secretariat of Environment and Sustainable Development of the Province of Salta, sugar manufacturers must register with the environmental hazardous local registry. The Water Code of the Province of Salta and Law No. 7,070 of the Province of Salta, establish that companies that pour waste liquids into water courses and emit toxic gases that cause bad odors, which can potentially pollute the environment, must obtain the respective permits. Section 78 of the Water Code of the Province of Salta establishes the need to obtain a concession for the industrial use of water courses. The Argentine Food Code (Law No. 18,284) provides that all products that are manufactured, commercialized, imported or exported destined to human consumption must be registered and approved by the National Administration on Medicines, Food and Technology (ANMAT). Foreign Exchange controls Since the abandonment of the Peso-U.S. dollar parity in 2002, the Argentine government adopted a number of monetary and currency exchange control measures, among which it created the Single Free Foreign Exchange Market (“Mercado Único y Libre de Cambios” or “FX Market”) through which all purchases and sales of foreign currency must be made. The agency in charge of enforcing the foreign exchange controls in Argentina is the Central Bank of the Republic of Argentina (Banco Central de la República Argentina). Please find below a list of the main foreign exchange restrictions in force that could affect companies with activities in Argentina: (1) Argentine entities are required to transfer into Argentina and convert into Pesos, through the FX Market, funds disbursed under financial indebtedness granted by non-residents. Unless expressly exempted, these funds are subject to a 365-day non-interest bearing and non-transferrable bank deposit, in U.S. dollars, with an Argentine financial entity, for an amount equal to 30% of the amount of the transaction (the “Mandatory Deposit”). The principal under the foreign financial debt cannot be repaid prior to the expiration of a 365day term counted as from the date on which the financing proceeds were converted into Pesos and provided certain conditions set forth by the Central Bank are complied with. (2) Argentine entities are required to transfer into Argentina and convert into Pesos, in the FX Market, funds disbursed under pre-export loans granted by non-residents (the “Pre-Export Financings”); and 93
(3) Argentine entities are required to transfer into Argentina and convert into Pesos in the FX Market, all foreign currency proceeds from exports of goods (except for those that are applied to the repayment of PreExport Financings) and services within certain periods established by the Central Bank. Taxes The main federal taxes in force in Argentina are the income tax, minimum presumptive income tax, value added tax, tax on debits and credits in bank accounts, personal assets tax, equalization tax on dividends, and export taxes. The main provincial taxes are the gross turnover tax and stamp tax. The agency in charge of collecting federal taxes in Argentina is the Federal Administration of Public Revenue (Administración Federal de Ingresos Públicos – AFIP), whereas each province has a local agency in charge of collecting provincial taxes. Please find below a brief summary with the main characteristics and applicable rate of each of the above mentioned taxes: Income Tax. The Income Tax Law (No. 20,628) establishes a federal tax on the worldwide income of Argentine resident individuals and legal entities, and on the Argentine sourced income of non-resident individuals and legal entities. The general income tax rate for companies is currently 35% on taxable net income obtained in Argentina or abroad (gross income minus deductible expenses). Non-residents are taxed in Argentina by means of a fixed withholding made by the local payer of Argentine sourced income. Minimum Presumptive Income Tax. This tax applies to worldwide assets of Argentine companies. The tax is only applicable if the total value of the assets exceeds AR$200,000 at the end of the company’s fiscal year, and is levied at a yearly rate of 1% on the total value of such assets. Minimum Presumptive Income Tax can be credited against Income Tax. Value Added Tax. The Value Added Tax (“VAT”) applies to the domestic sale of goods, the domestic rendering of services, and the import of goods and services. The current VAT general rate is 21%, however, certain sales of goods (such as raw meats, cereals and oilseeds) are subject to a lower tax rate of 10.5%. The VAT rate for the commercialization of sugar is 21%. VAT resulting from sales can be credited against VAT paid to suppliers, and the balance must be monthly paid to the AFIP. Tax on debits and credits in bank accounts. This tax applies to debits and credits in bank accounts opened in Argentina and to other transactions that, due to their special nature and characteristics, are similar or could be used in lieu of a bank account. The general tax rate is 0.6% on each credit and each debit. 20% of the resulting tax can be credited against Income Tax. Personal Assets Tax. Argentine companies have to pay the personal assets tax corresponding to Argentine resident individuals, foreign individuals, and foreign entities for the holding of shares and other participations in such company as of December 31 of each year. The applicable tax rate is 0.5% and is levied on the equity value stated in the latest financial statements. Equalization Tax on dividends. Although in principle there is no dividends tax in Argentina, equalization tax is applicable at a 35% rate on dividends distributed in excess of the accumulated taxable income of the entity. Under certain double tax treaties, equalization tax may be reduced. Export Taxes. At present, pursuant to Decree No. 509/07 of the Ministry of Economy and Public Finance, exports of sugar are subject to a 5% export duty. Sugar exporters are entitled to a reimbursement of local export duties up to 4.05% of the export price. Gross Turnover Tax. The Gross Turnover tax is a provincial tax levied on gross income derived from lucrative activity. Each of the provinces and the City of Buenos Aires apply different tax rates; however, most of the provinces apply rates ranging between 3% and 5% on the commercialization of sugar. The tax is levied on the amount of gross income resulting from business activities carried on within the respective jurisdictions. A federal treaty has been agreed between provinces to avoid double taxation in cases of inter-jurisdictional activities. Stamp Tax. The Stamp tax is a provincial tax, which is levied on the formal execution of public or private instruments, such as all type of contracts, notary deeds and promissory notes, among others. In general, stamp tax
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rates vary from 0.6% to 4% depending on the jurisdiction, and it is applied based on the economic value of the instrument. Sale and Ownership of Real Estate The acquisition and transfer of real estate is governed by the provisions of the Argentine Civil Code as well as municipal zoning ordinances. On December 28, 2011, the Congress of Argentina passed Law No. 26,737 (regulated by Decree No. 274/2012) that lays down the regime for the protection of national land (“National Land Protection Law”), which restricts the ownership of land by foreigners. For purposes of the National Land Protection Law, foreigners are deemed: (i) Foreign individuals whether domiciled in Argentina or abroad, unless they have resided in Argentina interruptedly during ten years, have Argentinean children (who have resided uninterruptedly in Argentina during five years) or are married to an Argentine citizen to the extent the marriage took place no less than five years before the acquisition of the land and have resided for at least five years in Argentina; (ii) Legal entities where foreigners own or control 51% of its equity or a lower percentage if it is sufficient to control the entity; and (iii) Foreign governments or public entities controlled by foreign governments. The following transactions must be notified to the Government of Argentina in order to control that the provisions of the National Land Protection Law are met: (i) Any variation in the equity composition of a legal entity that is controlled by foreigners or where foreigners own more than 25% of its equity. (ii) The transfer of land ownership (whether directly or indirectly) to a trust whose beneficiaries are foreigners. (iii) Any joint venture or association in which foreigners own 25% or a larger participation. Foreigners cannot own more than 15% of the rural land of Argentina. The same cap is applicable in each province and municipality. Each foreign individual or legal entity cannot individually own more than 30% of said 15% cap. Furthermore, foreigners are not allowed to purchase land that is adjacent to relevant rivers or lakes. The purchase of land located in the so-called security zone (close to the borders) must be approved by the Ministry of Interior. As from the issuance of the National Land Protection Law, foreigners are not allowed to purchase more than 1,000 hectares of the best quality land or its equivalent depending on where the land is located. The Government will determine said parameter based on the location of the land and its productive potential, so it is possible that in certain regions the surface that foreigners will be allowed to buy will be higher. Prior to the acquisition of the land, the Government will issue a certificate in order to validate that the purchaser meets the parameters set forth by the National Land Protection Law. Essentially, this certificate will indicate the land that the buyer owns in Argentina, if any. Price Controls and Export Quotas As of year 2010, the Secretariat of Domestic Trade of the Ministry of Economy and Public Finance, unofficially and threatening with the application of the Supply Law (No. 20,680), has obliged sugar manufacturers to sell certain quantities of sugar at a preferred price for its subsequent sale to the public. In a similar fashion, in 2010, the Secretariat of Domestic Trade of the Ministry of Economy and Public Finance temporarily reduced the sugar export quota to oblige local sugar producers to sell the product at a lower price in the domestic market. 95
Ecuador The governmental authorities in Ecuador in charge of regulating the environment in the areas where La Troncal include: (a) the Ministry of Environment (Ministerio del Ambiente), (b) the National Council of Electricity (Consejo Nacional de Electricidad), (c) the National Water Secretariat (Secretaría Nacional del Agua) and (d) the Autonomous Provincial Government of La Troncal (Gobierno Provincial y Autónomo de la Troncal). The environmental laws and regulations applicable to La Troncal include: (a) the Cultural Heritage Act (Ley de Patrimonio Cultural), (b) the Bylaws of the Electricity Sector Regime (Reglamento a la Ley de Regimen del Sector Eléctrico), (c) the Codification of the Environmental Management Act (Codificación de la Ley de Gestión Ambiental), (d) the Regulations to the Environmental Management Act (Reglamento a la ley de Gestión Ambiental), (e) the Codification of the Forestry Law (Codificación de la Ley Forestal), (f) the Unified Text to the Secondary Environmental Legislation (Texto Unificado de la Legislación Ambiental Secundaria), and (g) Technical environment standards (Normas técnicas ambientales).
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MANAGEMENT We are managed by a board of directors and by our executive officers. Board of Directors The Board of Directors is the body responsible for the administration of Coazucar. The members of our Board of Directors are appointed by our shareholders at the general shareholders meeting for a three-year term and are eligible for re-election. The Board of Directors is currently comprised of three members. The quorum for the Board of Directors meetings is the next whole number greater than half of members of the Board of Directors. In order for resolutions to be adopted by the Board of Directors, approval by the majority of all the Directors present at the meeting is required and, in the case of a deadlock, the chairman’s vote determines the result. The Board of Directors has all the powers for legal representation and management necessary to conduct the business of Coazucar, except for those powers granted exclusively to the general shareholders by our bylaws and by applicable law. The following table sets forth certain information with respect to the current members of our Board of Directors. Name
Date of Appointment
Jorge Columbo Rodríguez Rodríguez (President) ............ Vito Modesto Rodríguez Rodríguez (Vice President) ...... Claudio José Rodríguez Huaco.........................................
2005 2007 2007
Age
Expiration of Appointment
66 73 31
2014 2014 2014
We summarize below certain biographical information regarding our current directors. Jorge Columbo Rodríguez Rodríguez. Mr. Rodríguez has served as a member of our Board of Directors since 2005. He currently serves as either the President or Vice President of all Grupo Gloria companies. He serves as a member of the board of directors of Cartavio, Casa Grande, San Jacinto, Azucarera Olmos, Sintuco, Gloria S.A., Yura S.A., as well as other Grupo Gloria companies. He holds a bachelor’s degree in industrial engineering from the Universidad Nacional de Ingeniería del Perú and graduate degrees in business administration from the University of Leeds and the University of Reading. Vito Modesto Rodríguez Rodríguez. Mr. Rodríguez has served as a member of our Board of Directors since 2007. He currently serves as either the President or Vice President of all Grupo Gloria companies. He serves as a member of the board of directors of Cartavio, Casa Grande, San Jacinto, Azucarera Olmos, Sintuco, Gloria S.A., Yura S.A., as well as other Grupo Gloria companies. He holds a bachelor’s degree in civil engineering from the Universidad Nacional de Ingeniería del Perú. Claudio José Rodríguez Huaco. Mr. Rodríguez has served as a member of our Board of Directors since 2007. Mr. Rodríguez worked in the Capital Markets and Banking department of PricewaterhouseCoopers in London and as an investment banker with JPMorgan Chase in New York, focusing on Latin American markets. He serves as a member of the board of directors of Cartavio, Casa Grande, San Jacinto, Azucarera Olmos, Gloria S.A. and Yura S.A. He holds a bachelor’s degree in business administration, finance and accounting from Oxford Brookes University and a master’s degree in financial administration from the Lancaster University in England. The business address of the members of our Board of Directors is Corporación Azucarera del Perú S.A., Av. República de Panamá 2461, La Victoria, Lima 13, Peru. Executive Officers Our chief executive officers of Coazucar, La Troncal and San Isidro are our legal representatives and our chief executive officers and our executive officers are responsible for our internal organization and day-to-day operations and the implementation of the general policies and guidelines established from time to time by our Board of Directors.
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The following table sets forth certain information with respect to our executive officers and the chief executive officers of our principal subsidiaries. Name
John Carty Chirinos .................. Hugo Dávila Trinidad............... Fabio Bouroncle Zegarra .......... Elizabeth Mardini Eliot ............ Carlo Bertini Hurtado ............... Stanley Simons Chirinos .......... César Loli Berríos..................... Marco Ricasca Zvietcovich ...... Roberto Foulkes........................ Edgardo García .........................
Position
Date of Appointment
Years of Experience in Sugar and Ethanol
Age
Chief Executive Officer Production Manager Agricultural Services Manager Commercial Manager Administrative Manager Human Resources Manager Field Manager Field Superintendent Chief Executive Officer of La Troncal Chief Executive Officer of San Isidro
2007 2007 2007 2007 2012 2011 2007 2009 2007 2011
13 25 9 10 3 9 12 11 14 26
42 74 48 53 48 52 37 38 45 56
Summarized below is certain biographical information regarding our executive officers and the chief executive officers of our principal subsidiaries. John Carty Chirinos. Mr. Carty has served as our Chief Executive Officer since 2007. Previously, he served as Chief Executive Officer of Casa Grande and has served as Operations Supervisor, Commercial Manager and Assistant Manager of Cartavio. Before joining Grupo Gloria, Mr. Carty worked in different companies of the manufacturer, beverage, cattle and transport industries. He holds a bachelor’s degree in business administration from the Universidad Católica de Santa María. Mr. Carty also completed graduate studies in business administration at Centrum Pontificia Universidad Católica del Perú. Hugo Dávila Trinidad. Mr. Dávila has served as our Production Manager since 2007. Previously, he served as Production Manager of Casa Grande, Cartavio and San Jacinto and as Ethanol Business Manager of Coazucar. Before joining Grupo Gloria, Mr. Dávila served as CEO of Sociedad Paramonga Ltda. S.A., Assistant Manager of Empresa Agricola Paramonga, S.A. and as Manager of Papelera Peruana S.A. He holds a bachelor’s degree in mechanical and electrical engineering from the Universidad Nacional de Ingeniería. Mr. Dávila also completed graduate studies in management at the Universidad de Piura, in accounting and finance at Universidad ESAN, and at North Carolina State University. Fabio Bouroncle Zegarra. Mr. Bouroncle has served as our Agricultural Services Manager since 2007. Previously, he served as Agricultural Services Manager of Cartavio and Casa Grande and as Agricultural Machinery Manager of Cartavio. Before joining Grupo Gloria, he served as head of the North and Barranca offices of Transaltisa S.A. Mr. Bouroncle completed graduate studies in strategic planning at the Universidad César Vallejo. Elizabeth Mardini Eliot. Ms. Mardini has served as our Commercial Manager since 2007. Previously, she served as Director of Sales and Commercial Superintendent of Casa Grande. Before joining Grupo Gloria, Ms. Mardini served as National Sales Manager of Deprodeca, S.A.C., Chief Executive Officer of Ocho Rios Distribuidora S.A.C., Enrique W. Gibson Ltda., Andina de Valores Sociedad Agente de Bolsa, Radio TV Continental in Arequipa, and as General Services Director of Enafer Peru. She holds a bachelor’s degree in business administration from the Universidad Nacional de San Agustín. Carlo Bertini Hurtado. Mr. Bertini has served as our Administrative Manager since February 2012. Before joining Grupo Gloria, Mr. Bertini served as Planning Manager of Grupo Caña Brava, as General Manager of the Gobierno Regional Piura, President of Proyecto Especial Chira – Piura, and as Manager of Finance and Administration of DSM Anti-Infectives Peru. Mr. Bertini holds a bachelor’s degree in economics and a master’s degree in finance and banking, both from the Universidad de Lima. Mr. Bertini also completed graduate studies in business administration at the Universidad ESAN. Stanley Simons Chirinos. Mr. Simons has served as our Human Resources Manager since 2011. Previously, he served as Human Resources Manager of Grupo Gloria, Casa Grande and Cartavio. Before joining Grupo Gloria, Mr. Simons served as Director of Human Resources of Corporación Andina de Distribución S.A., Compañía Minera Milpo S.A.A. and Consorcio Textil del Pacifico S.A. He holds a bachelor’s degree in law from the Universidad Católica de Santa María. 98
César Loli Berríos. Mr. Loli Berríos has served as our Field Manager since 2007. Previously, he served as Field Manager of Cartavio, Sintuco and Casa Grande. Before joining Grupo Gloria, Mr. Loli served as a field engineer for Empresa Agroindustrial Laredo, S.A.A. He holds a bachelor’s degree in agricultural engineering from the Universidad Privada Antenor Orrego and a master’s degree in business administration from the Pontificia Universidad Católica del Perú. Marco Ricasca Zvietcovich. Mr. Ricasca has served as Field Superintendent since 2009. He previously served as Field Manager and Projects and Water Director of San Jacinto. Before joining Grupo Gloria, Mr. Ricasca served as a Technical Irrigation Specialist of Instituto Nacional de Investigación Agraria. He holds a bachelor’s degree in agricultural engineering from the Universidad Nacional de San Antonio Abad del Cusco. Mr. Ricasca also completed graduate studies in agribusiness administration at Universidad ESAN. Roberto Foulkes. Mr. Foulkes has served as our Chief Executive Officer of La Troncal since 2007. Before joining Grupo Gloria, Mr. Foulkes worked as a tax advisor for Banco Latino. He holds a bachelor’s degree in law from the Universidad Católica de Santa María and a master’s degree in business administration from the Pontificia Universidad Católica del Perú. Edgardo García. Mr. García has served as our Chief Executive Officer of San Isidro since 2011. Before joining Grupo Gloria, Mr. García served as a partner of the tax and accounting firm Estudio Bona, Garcia y Asoc., as General Manager of Prosal, S.A., and as a partner at Editorial Kapelusz, S.A. He holds a bachelor’s degree in accounting from the Universidad de Buenos Aires. Committees Our Board of Directors does not have any specialized committees as of the date of this offering memorandum. The Board of Directors is assisted in its audit functions by our internal audit department, by internal auditors from KPMG and by the comptroller of Grupo Gloria. Compensation Our bylaws provide that the remuneration of the Board of Directors shall from time to time be determined by Coazucar’s shareholders in an annual mandatory general shareholders meeting. All members of our Board of Directors serve without compensation. Key personnel compensation include management services and personnel, which services amounted for S/.2.7 million during 2011. In addition to salaries and bonuses, our executive officers generally receive an automobile allowance, life insurance and medical insurance. In addition, our executive officers that are expatriates serving in Ecuador receive housing allowances and annual paid home leave. Share Ownership Two members of our Board of Directors, Vito Rodríguez Rodríguez and Jorge Rodríguez Rodríguez, each directly owns 2.94% of our shares. They indirectly own all of our outstanding shares. Stock Option Plan We do not have any stock option plans for our employees as of the date of this offering memorandum.
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SHAREHOLDERS Clarcrest Investments S.A., a sociedad anónima incorporated under the laws of the Republic of Panama, owns 94.12% of our outstanding shares. Vito Rodríguez Rodríguez and Jorge Rodríguez Rodríguez each own 2.94% of our outstanding shares. Maningham Holding S.A., the sole shareholder of Clarcrest Investments S.A., owns one of our outstanding shares. The rights of Clarcrest Investments S.A., Vito Rodríguez Rodríguez, Jorge Rodríguez Rodríguez and Maningham Holding S.A., as shareholders of Coazucar are contained in our bylaws. Our company operates in accordance with those bylaws and with the provisions of Peruvian law. GRUPO GLORIA The shareholders of Grupo Gloria directly and indirectly own all of our shares. Grupo Gloria is a conglomerate comprised of operating companies, including among many others, the Guarantors, Gloria S.A. and Yura S.A., under the common control of Vito Rodríguez Rodríguez and Jorge Rodríguez Rodríguez, with operations in various industries throughout Latin America, including dairy, food, cement, paper, agriculture and transportation. Grupo Gloria had assets of approximately S/.3,568.5 million (US$1,323.6 million) and S/.3,647.1 million (US$1,367.5 million) as of December 31, 2011 and March 31, 2012, respectively. For the year ended December 31, 2011 and the three months ended March 31, 2012, Grupo Gloria generated net income of S/.362.8 million (US$134.6 million) and S/.93.9 million (US$35.2 million), respectively, and revenues of S/.2,512.4 million (US$931.9 million) and S/.677.3 million (US$253.9 million), respectively. As of March 31, 2012, Grupo Gloria had approximately 26,000 employees on a consolidated basis. The principal executive offices of Grupo Gloria are located at Av. República de Panamá 2461, La Victoria, Lima 13, Peru. Its main telephone number is +51 (1) 470-7170.
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RELATED PARTY TRANSACTIONS In the ordinary course of our business we engage in a variety of transactions with certain of our affiliates. These transactions are entered into on an arm’s length basis. As of December 31, 2011, the material transactions that we had entered into with our related parties are described below, and as of March 31, 2012, there have been no additional material transactions with related parties. See note 28 to the audited consolidated financial statements and note 15 to the unaudited condensed consolidated interim financial statements included in this offering memorandum. The following is a description of related party transactions that our management believes are material to us. Chiquitoy In 2005, Cartavio granted a US$2.9 million loan to Chiquitoy, one of our subsidiaries. This loan has a senior tranche, which bears interest at a rate of 4.0% per annum, and a subordinated tranche, which bears interest at a rate per annum of 1.0% . In order to secure Chiquitoy’s payments obligations in favor of Cartavio, Chiquitoy granted a first and preferential lien in favor of Cartavio over 280,000 tons of its sugarcane. San Jacinto In 2009, we entered into a management, consulting and other services agreement with San Jacinto, one of our subsidiaries, to provide management, consulting and other services related to the operation and business of San Jacinto. Under this agreement, we paid S/.233,333 plus value added tax, on a monthly basis during a period of three years, beginning on January 2010, for such services. We will have paid the full amount due under this agreement in January 2013. Gloria S.A. We enter into sugar purchase and sale transactions on a regular basis with Gloria S.A., a related party. During 2011, we sold approximately S/.59.5 million worth of sugar to Gloria S.A., of which S/.2.3 million is outstanding. Deprodeca S.A.C. We enter into sugar purchase and sale transactions on a regular basis with Deprodeca S.A.C., a related party. During 2011, we sold approximately S/.228.1 million worth of sugar to Deprodeca S.A.C., of which S/.13.1 million is outstanding. In 2007 and 2008, we granted a S/.6.7 million unsecured loan to Deprodeca S.A.C. This loan bears interest at a rate per annum of 6%. In addition, during 2011, we entered into an operating lease of premises with Deprodeca S.A.C. as lessor. We also enter into freight services transactions on a regular basis with Deprodeca S.A.C. We are required to pay S/.2.1 million as rent for the above mentioned operating lease and for all services rendered. Trupal S.A. We enter into bagasse purchase and sale transactions on a regular basis with Trupal S.A., a related party. During 2011, we sold approximately S/.13.8 million worth of bagasse to Trupal S.A., of which S/.1.0 million is outstanding. Lakebar Holding S.A. In 2006, Lakebar Holding S.A., a related party, granted us a S/.25.5 million unsecured loan to finance the acquisition of shares of Casa Grande. This agreement does not bear interest and does not have a definite due date. Before the closing of this notes offering, we intend to enter into an amended and restated loan agreement with Lakebar Holding S.A. to subordinate the loan to the notes offered herein. The amended and restated loan agreement will require us to pay interest on the loan at a rate per annum of LIBOR + 0.25% and the loan will mature in June 2023. 101
Racionalizacion Empresarial S.A. We enter into freight services transactions on a regular basis with Racionalizacion Empresarial S.A., a related party. We are required to pay S/.3.0 million for the freight services rendered to us during 2011. Clarcrest Investments S.A. Between 2009 and 2010, Clarcrest Investments S.A., our majority shareholder, granted us a S/.44.4 million unsecured loan to finance the acquisition of certain shares of Cartavio and San Jacinto and for working capital. This loan does not bear any interest and does not have a definite due date. Before the closing of this notes offering, we intend to enter into an amended and restated loan agreement with Clarcrest Investments S.A. to subordinate the loan to the notes offered herein. The amended and restated loan agreement will require us to pay interest on the loan at a rate per annum of LIBOR + 0.25% and the loan will mature in June 2023.
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DESCRIPTION OF THE NOTES In this “Description of the Notes,” the word “Company” refers only to Corporación Azucarera del Perú S.A. and not to any of its Subsidiaries, as defined herein. The definitions of certain other terms used in this description are set forth throughout the text or under “―Certain Definitions.” The Company will issue, and the Initial Guarantors will guarantee, the notes offered hereby (the “Notes”) under an indenture (the “Indenture”) among the Company, the Initial Guarantors and Citibank, N.A., as trustee (the “Trustee”). The terms of the Notes include those set forth in the Indenture. The Notes will not be registered under the Securities Act and will be subject to certain transfer restrictions. See “Transfer Restrictions”. The following description is a summary of the material terms of the Indenture. It does not, however, restate the Indenture in its entirety. You should read the Indenture because it contains additional information and because it and not this description defines your rights as a holder of the Notes. After the Notes have been issued, a copy of the Indenture may be obtained by requesting it from the Company. Brief Description of the Structure and Ranking of the Notes and the Note Guarantees The Notes The Notes will:
be the Company’s general unsecured unsubordinated obligations;
mature on August 2, 2022;
be effectively subordinated to all existing and future secured Indebtedness of the Company to the extent of the assets securing such Indebtedness;
be structurally subordinated to all existing and future Indebtedness and other liabilities of Subsidiaries of the Company that do not provide Note Guarantees and with respect to Casa Grande, to the extent that any obligations under the Notes exceed the amount of its partial Guarantee of amounts due on the Notes in an initial amount equal to US$162,500,000;
rank equally in right of payment with any and all of the Company’s existing and future Indebtedness that is not subordinated in right of payment to the Notes, other than with respect to certain obligations given preferential treatment pursuant to the laws of Peru;
rank senior in right of payment to any and all of the Company’s existing and future Indebtedness that is subordinated in right of payment to the Notes; and
be guaranteed on an unsubordinated basis by the Guarantors.
The Note Guarantees Each Note Guarantee of a Guarantor will:
cover all amounts due on or with respect to the Notes, including amounts due in respect of principal, interest or otherwise;
be a general unsecured unsubordinated obligation of the Guarantor unlimited in amount, except in the case of Casa Grande whose Note Guarantee in respect of amounts due under the Notes is limited to an initial amount equal to US$162,500,000;
provide that each Guarantor will be jointly and severally liable for the Notes, subject to the limited amount applicable to Casa Grande;
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to the extent not otherwise secured by assets of such Guarantor, be effectively subordinated to all existing and future secured Indebtedness of such Guarantor to the extent of the assets securing such Indebtedness;
rank equally in right of payment with any and all of such Guarantor’s existing and future Indebtedness that is not subordinated in right of payment to its Note Guarantee, other than with respect to certain obligations given preferential treatment pursuant to the laws of Peru; and
rank senior in right of payment to any and all of such Guarantor’s existing and future Indebtedness that is subordinated in right of payment to its Note Guarantee.
General As of March 31, 2012, after excluding intercompany balances and intercompany guarantees:
on a consolidated basis, the Company and its Subsidiaries had S/.805.6 million (US$302.0 million) of Indebtedness outstanding, of which S/.619.2 million (US$232.2 million) was secured Indebtedness and S/.0 would have been subordinated in right of payment to the Notes;
on a combined basis, the Guarantors had S/.264.3 million (US$99.1 million) of Indebtedness outstanding, of which S/.199.5 million (US$74.8 million) was secured Indebtedness and S/.0 would have been subordinated in right of payment to the Note Guarantees;
Casa Grande had S/.106.8 million (US$40.0 million) of Indebtedness outstanding, of which S/.97.8 million (US$36.7 million) was secured Indebtedness and S/.0 million would have been subordinated in right of payment to its Note Guarantee; and
on a combined basis, the Restricted Subsidiaries other than the Guarantors, had total liabilities of S/.568.1 million (US$213.0 million), including S/.306.6 million (US$115.0 million) of Indebtedness, and total assets of S/.1,425.8 million (US$534.6 million).
Not all of the Company’s Subsidiaries will Guarantee the Notes. In the event of a bankruptcy, liquidation or reorganization of any of these non-guarantor Subsidiaries, subject to applicable bankruptcy law, the non-guarantor Subsidiaries will likely be required to repay financial and trade creditors before distributing any assets to the Company or a Guarantor. For the three months ended March 31, 2012, the non-guarantor Subsidiaries and Casa Grande generated 24.1% and 40.6%, respectively, of the Company’s consolidated revenues and 14.8% and 51.3%, respectively, of the Company’s consolidated EBITDA. As of the Issue Date, all of the Company’s Subsidiaries will be “Restricted Subsidiaries.” However, under the circumstances described below under the caption “—Certain Covenants—Designation of Restricted and Unrestricted Subsidiaries,” the Company will be permitted to designate certain of its Subsidiaries as “Unrestricted Subsidiaries.” Unrestricted Subsidiaries will not be subject to any of the restrictive covenants in the Indenture. Further, Unrestricted Subsidiaries will not Guarantee the Notes. Application has been made to the Irish Stock Exchange for the Notes to be admitted to the Official List and to trading on the Global Exchange Market which is the exchange regulated market of the Irish Stock Exchange. Although the Indenture will contain limitations on the amount of additional Indebtedness that the Company, the Guarantors and the Restricted Subsidiaries may incur, the amount of such additional Indebtedness could be substantial. Principal, Maturity and Interest The Notes will mature on August 2, 2022. The Company will issue the Notes in the aggregate principal amount of US$325.0 million in this offering. Subject to the covenant described under “—Certain Covenants—Limitation on Indebtedness,” the Company is permitted to issue additional Notes of the same series under the Indenture (“Additional Notes”), having the same terms and conditions as the Notes in all respects, including (i) full and unconditional Note Guarantees of any such Additional Notes by Cartavio, San Jacinto and Azucarera Olmos and (ii) 104
a partial and unconditional Note Guarantee of any such Additional Notes by Casa Grande in an amount equal to one half of the aggregate principal amount of such Additional Notes. The Notes and any Additional Notes that are issued will be treated as a single class for all purposes under the Indenture, including with respect to waivers, amendments, redemptions and Offers to Purchase. However, in order for any Additional Notes to have the same ISIN, CUSIP or common code, as applicable, as the Notes, such Additional Notes must be fungible with the Notes for U.S. federal income tax purposes. Unless the context otherwise requires, references to the “Notes” for all purposes under the Indenture and in this “Description of the Notes” include any Additional Notes that are issued. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from and including the Issue Date, at a rate per annum of 6.375%, and will be payable semi-annually in arrears on February 2 and August 2 of each year, commencing on February 2, 2013. Interest will be payable to Holders of record on each Note in respect of the principal amount thereof outstanding as of the immediately preceding January 16 or July 16, as the case may be. Interest will be computed on the basis of a 360-day year comprising twelve 30-day months. In no event will the rate of interest on the Notes be higher than the maximum rate permitted by applicable law. Under New York’s statute of limitations, any legal action for breach of the Indenture, including non-payment of interest or principal, must be commenced within six years after any such breach. Form of Notes The Notes will be issued on the Issue Date only in fully registered form without coupons and only in denominations of US$100,000 and integral multiples of US$1,000 in excess thereof. The Notes sold in reliance upon Rule 144A under the Securities Act will be represented by one or more permanent global notes (the “Rule 144A Global Notes”). The Notes sold in offshore transactions in reliance upon Regulation S under the Securities Act will be represented by one or more permanent global notes (the “Regulation S Global Notes,” together with the Rule 144A Global Notes, the “Global Notes”). The Global Notes will be deposited with the Trustee as custodian for the Depository Trust Company (“DTC”). Ownership of interests in the Global Notes, referred to in this description as “book-entry interests,” will be limited to persons that have accounts with DTC or their respective participants. The terms of the Indenture will provide for the issuance of definitive registered Notes in certain circumstances. Please see the section entitled “―Book-Entry; Delivery and Form.” The registered Holder of a Note will be treated as the owner of it for all purposes. Transfer and Exchange A Holder may transfer or exchange Notes in accordance with the Indenture and the procedures described in “Transfer Restrictions.” The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents. No service charge will be made for any registration of transfer, exchange or redemption of the Notes, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection with any such registration of transfer or exchange. The Company is not required to transfer or exchange any Note selected for redemption. Also, the Company is not required to transfer or exchange any Note for a period of 15 days before a selection of Notes to be redeemed. Payments on the Notes; Paying Agent and Registrar If a Holder holds at least US$10.0 million in aggregate principal amount of Notes and has given wire transfer instructions to the Company and the Paying Agent at least 10 Business Days prior to the applicable payment date, the Company, or the Paying Agent on its behalf, will pay all principal, interest and premium, if any, on that Holder’s Notes in accordance with those instructions. All other payments on Notes will be made at the office or agency of the Paying Agent and Registrar within the City and State of New York unless the Company elects to make interest payments by check mailed to the Holders at their addresses set forth in the register of Holders; provided that all payments of principal, premium, if any, and interest, with respect to the Global Notes registered in the name of or
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held by DTC or its nominee will be made by wire transfer of immediately available funds to the account specified by DTC. The principal of and interest on the Notes will be payable in U.S. dollars or in such other coin or currency of the United States as at the time of payment is legal tender for the payment of public and private debts. The Trustee will initially act as Paying Agent and Registrar. The Company may change the Paying Agent or Registrar without prior notice to the Holders, and the Company or any of its Subsidiaries may act as Paying Agent or Registrar. However, for so long as any Notes are listed on the Irish Stock Exchange and its rules so require, we will deliver notice of any such change to the Companies Announcement Office in Dublin. Note Guarantees General Under the Indenture, the Initial Guarantors will jointly and severally agree to guarantee the due and punctual payment of all amounts payable under the Notes and the Indenture, including principal, premium, if any, and interest; provided that the Note Guarantee of Casa Grande with respect to amounts due on the Notes, including principal, interest, premium, if any, and any other amounts, will be limited to an initial amount equal to US$162,500,000. The Indenture will require any Restricted Subsidiary that Guarantees Indebtedness of the Company or any Guarantor to provide a Note Guarantee. Please see the section entitled “―Future Note Guarantees” below. In the event that the Company acquires or redeems any Notes and such Notes are no longer considered outstanding under the Indenture, the amount of Casa Grande’s Note Guarantee will be reduced on a proportional basis. Each Guarantor that makes a payment or distribution under its Note Guarantee will be entitled to contribution from any other Guarantor. In addition to Casa Grande’s partial guarantee, the Indenture will limit the obligations of each Guarantor under its Note Guarantee to an amount not to exceed the maximum amount that can be guaranteed by such Guarantor by law or without resulting in its obligations under its Note Guarantee being voidable or unenforceable under applicable laws relating to fraudulent transfer, or under similar laws affecting the rights of creditors generally. By virtue of these limitations, a Guarantor’s obligation under its Note Guarantee could be significantly less than amounts payable with respect to the Notes and the Indenture, or a Guarantor may have effectively no obligation under its Note Guarantee. We cannot assure you that the above limitation will protect the Note Guarantees from fraudulent transfer challenges or, if it does, that the remaining amount due and collectible under the Note Guarantees would suffice, if necessary, to pay the Notes in full when due. In a recent Florida bankruptcy case, this kind of provision was found to be unenforceable and, as a result, the subsidiary guarantees in that case were found to be fraudulent conveyances. We do not know if that case will be followed if there is litigation on this point under the Indenture. However, if it is followed, the risk that the Note Guarantees will be found to be fraudulent conveyances will be significantly increased. Future Note Guarantees If the Company or any Restricted Subsidiary acquires or creates any Significant Subsidiary on or after the Issue Date, then that newly acquired or created Significant Subsidiary must become a Guarantor and execute a supplemental indenture and deliver an Opinion of Counsel to the Trustee; provided that (i) such Significant Subsidiary’s Note Guarantee of the Company’s obligations under the Notes and the Indenture will be limited to the maximum amount that would not result in a breach or violation by such Significant Subsidiary of any provision of any agreement to which it is party existing at the time of such acquisition or creation; provided, further, that such provision was not adopted in connection with, or in contemplation of, such acquisition or creation or to avoid guaranteeing the Notes, and (ii) such Significant Subsidiary shall not be required to execute any such supplemental indenture if the execution or enforcement of such supplemental indenture and the resultant Note Guarantee 106
thereunder is prohibited by, or in violation of, any applicable law to which such Significant Subsidiary is subject and the Company has delivered to the Trustee an Opinion of Counsel to that effect. Notwithstanding the foregoing, if at the time of such acquisition or creation, such Significant Subsidiary has no Indebtedness, such Significant Subsidiary shall not be required to become a Guarantor or execute any such supplemental indenture; provided that if at any time after such acquisition or creation, such Significant Subsidiary Incurs any Indebtedness, at the time of such Incurrence such Significant Subsidiary must become a Guarantor and execute a supplemental indenture and deliver an Opinion of Counsel to the Trustee in accordance with the preceding sentence. The Company will not permit any Restricted Subsidiary, directly or indirectly, to Guarantee any Indebtedness of the Company or any Guarantor unless such Restricted Subsidiary (a) is a Guarantor or (b) within 10 days executes and delivers to the Trustee an Opinion of Counsel and a supplemental indenture providing for the Guarantee of the payment of the Notes by such Restricted Subsidiary, which Guarantee will rank senior in right of payment to or equally in right of payment with such Subsidiary’s Guarantee of such other Indebtedness. Release of the Note Guarantees A Note Guarantee of a Guarantor will be automatically and unconditionally released (and thereupon shall terminate and be discharged and be of no further force and effect): (1) in connection with any sale or other disposition (including by merger or otherwise) of Capital Stock of the Guarantor after which such Guarantor is no longer a Subsidiary of the Company, if the sale of all such Capital Stock of that Guarantor complies with the applicable provisions of the Indenture; (2) if the Company properly designates the Guarantor as an Unrestricted Subsidiary under the Indenture; (3) solely in the case of a Note Guarantee created pursuant to the second paragraph of the covenant described under “—Future Note Guarantees,” upon the release or discharge of the Guarantee that resulted in the creation of such Note Guarantee pursuant to that covenant, except a discharge or release by or as a result of payment under such Guarantee; (4) upon a Legal Defeasance or satisfaction and discharge of the Indenture that complies with the provisions under “—Legal Defeasance and Covenant Defeasance” or “—Satisfaction and Discharge;” (5) upon payment in full of the aggregate principal amount of all Notes then outstanding and all other obligations under the Indenture and the Notes then due and owing; or (6) upon the final liquidation or dissolution of such Guarantor; provided that no Event of Default occurs as a result thereof or has occurred or is continuing. In addition, the Holders of at least seventy-five percent (75.0%) in principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes) may release any Guarantor from any of its obligations under its Note Guarantee or the Indenture. Upon any occurrence giving rise to a release of a Note Guarantee as specified above, the Trustee, upon receipt of an Officers’ Certificate from the Company and an Opinion of Counsel each stating that all conditions precedent to such release have been satisfied, will execute any documents reasonably required in order to evidence or effect such release, discharge and termination in respect of such Note Guarantee. Neither the Company nor any Guarantor will be required to make a notation on the Notes to reflect any Note Guarantee or any such release, termination or discharge. For so long as any Notes are listed on the Irish Stock Exchange and its rules so require, we will deliver notice of any such release, termination or discharge of a Note Guarantee to the Companies Announcement Office in Dublin. Optional Redemption At any time prior to August 2, 2015, the Company may redeem up to 35% of the aggregate principal amount of Notes issued under the Indenture (including any Additional Notes) at a redemption price of 106.375% of the principal amount thereof, plus accrued and unpaid interest thereon to the redemption date, subject to the rights of 107
Holders of Notes on the relevant record date to receive interest due on the relevant interest payment date, with the net cash proceeds of one or more Equity Offerings; provided that: (1) at least 65% of the aggregate principal amount of Notes issued under the Indenture (including any Additional Notes) remains outstanding immediately after the occurrence of such redemption (excluding Notes held by the Company or its Affiliates); and (2) the redemption must occur within 90 days of the date of the closing of such Equity Offering. Subject to the minimum float condition (as defined below), at any time prior to August 2, 2017, the Company may redeem all or part of the Notes at a redemption price equal to the sum of (i) 100% of the principal amount thereof, plus (ii) the Applicable Premium as of the date of redemption, plus (iii) accrued and unpaid interest to the date of redemption, subject to the rights of Holders of Notes on the relevant record date to receive interest due on the relevant interest payment date. Subject to the minimum float condition, on or after August 2, 2017, the Company may redeem all or a part of the Notes, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest thereon, to the applicable redemption date, subject to the rights of Holders of Notes on the relevant record date to receive interest due on the relevant interest payment date, if redeemed during the twelve-month period beginning on August 2 of the years indicated below: Year Percentage 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.188% 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102.125% 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.063% 2020 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.000% If less than all of the Notes are to be redeemed at any time, the Trustee will select Notes for redemption as follows: (1) in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed; or (2) if the Notes are not so listed, on a pro rata basis, by lot or by such other method as the Trustee deems fair and appropriate. No Notes of US$100,000 or less will be redeemed in part. Notices of redemption will be mailed by first class mail, at least 30 but not more than 60 days before the redemption date, to each Holder of Notes to be redeemed at its registered address (with a copy to the Trustee). For so long as any Notes are listed on the Irish Stock Exchange, we will inform the Irish Stock Exchange of the principal amount of the Notes that have not been redeemed in connection with any redemption. Notices of redemption may not be conditional. If any Note is to be redeemed in part only, the notice of redemption that relates to that Note will state the portion of the principal amount thereof to be redeemed. At least US$100,000,000 in aggregate principal amount of the Notes issued under the Indenture (not including any Notes held by the Company or any of its Affiliates) must remain outstanding after any redemption of the Notes in part but not in whole (the “minimum float condition”), except with respect to any redemption pursuant to the first paragraph of this “Optional Redemption” section. A new Note in principal amount equal to the unredeemed portion of the original Note will be issued in the name of the Holder thereof upon cancellation of the original Note. Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest will cease to accrue on Notes or portions thereof called for redemption. Optional Tax Redemption The Notes will be redeemable at the Company’s option, in whole but not in part, at 100% of their outstanding principal amount plus accrued and unpaid interest to the date of redemption and any Additional Amounts (as defined under “—Additional Amounts”) payable with respect thereto, only if: 108
(1) on the next interest payment date the Company would, for reasons outside of its control, be obligated to pay Additional Amounts in excess of the Additional Amounts that it would pay if payments in respect of the Notes were subject to deduction or withholding at a rate of 4.99% generally (excluding any value added taxes) determined without regard to any interest, fees, penalties or other additions to tax, as a result of any change in, or amendment to, the laws or regulations of any Taxing Jurisdiction (as defined under “— Additional Amounts”) or any authority or agency thereof or therein having power to tax, or any change in, or a pronouncement by competent authorities of the relevant Taxing Jurisdiction with respect to, the official application or official interpretation of such laws or regulations, which change, amendment or pronouncement occurs after the date of the Indenture (or, in the case of any withholding taxes imposed by the jurisdiction of the paying agent, after the date of appointment of such paying agent, and, in the case of any successor to the Company pursuant to the covenant described under the caption “Certain Covenants— Merger, Consolidation or Sale of Assets”, after the date of such succession); and (2) such obligation cannot be avoided by the Company taking reasonable measures available to it; provided that for this purpose reasonable measures shall not include any change in its jurisdiction of organization or location of its principal executive office. For the avoidance of doubt, reasonable measures may include a change in the jurisdiction of the paying agent, provided that such change shall not require the Company to incur material additional costs or legal or regulatory burdens. No such notice of redemption will be given earlier than 30 days prior to the earliest date on which the Company would be obligated to pay such Additional Amounts if a payment in respect of the Notes were then due. Prior to the giving of any notice of redemption of the Notes as described under “—Optional Redemption”, the Company must deliver to the Trustee an Officers’ Certificate confirming that it is entitled to exercise such right of redemption. The Company will also deliver an Opinion of Counsel of recognized standing stating that it would be obligated to pay such Additional Amounts due to the changes in tax laws or regulations or changes in, or pronouncements with respect to, the official application or official interpretation of such laws or regulations. The Trustee will accept this certificate and opinion as sufficient evidence of the satisfaction of the conditions precedent set forth in clauses (1) and (2) above, in which event it will be conclusive and binding on the Holders. Mandatory Redemption; Offers to Purchase; Open Market Purchases The Company is not required to make any mandatory redemption or sinking fund payments with respect to the Notes. However, under certain circumstances, the Company may be required to offer to purchase the Notes as described under the captions “―Repurchase at the Option of Holders―Change of Control” and “―Repurchase at the Option of Holders―Asset Sales.” The Company and its Restricted Subsidiaries may at any time and from time to time purchase Notes in the open market or otherwise. Repurchase at the Option of Holders Change of Control Unless the Company has previously or concurrently mailed a redemption notice with respect to all the outstanding Notes as described under “―Optional Redemption,” the Company must commence, within 30 days of the occurrence of a Change of Control Repurchase Event, and consummate an Offer to Purchase for all Notes then outstanding, at a purchase price in cash equal to 101% of the aggregate principal amount of the Notes repurchased plus accrued and unpaid interest thereon, to the date of repurchase, subject to the rights of Holders of Notes on the relevant record date to receive interest due on the relevant interest payment date. Any future agreements to which the Company becomes a party may prohibit or limit, the Company from purchasing any Notes as a result of a Change of Control Repurchase Event. In the event a Change of Control Repurchase Event occurs at a time when the Company is prohibited from purchasing the Notes, the Company could seek the consent of its lenders to permit the purchase of the Notes or could attempt to refinance the borrowings that contain such prohibition. If the Company does not obtain such consent or repay such borrowings, the Company will remain prohibited from purchasing the Notes. In such case, the Company’s failure to purchase tendered Notes would constitute an Event of Default under the Indenture. 109
The Company’s ability to pay cash to the Holders of the Notes following the occurrence of a Change of Control Repurchase Event may be limited by the Company’s then-existing financial resources. Sufficient funds may not be available when necessary to make any required repurchases. The Change of Control Repurchase Event purchase feature of the Notes may in certain circumstances make more difficult or discourage a sale or takeover of the Company and, thus, the removal of incumbent management. The Change of Control Repurchase Event purchase feature is a result of negotiations between the Initial Purchasers and the Company. As of the Issue Date, the Company has no present intention to engage in a transaction involving a Change of Control, although it is possible that the Company could decide to do so in the future. Subject to the limitations discussed below, the Company could, in the future, enter into certain transactions, including acquisitions, refinancings or other recapitalizations, that would not constitute a Change of Control under the Indenture, but that could increase the amount of Indebtedness outstanding at such time or otherwise affect the Company’s capital structure or credit ratings. Restrictions on the Company’s and its Restricted Subsidiaries’ ability to Incur additional Indebtedness are contained in the covenants described under “Certain Covenants—Limitation on Indebtedness” and “Certain Covenants—Limitation on Liens.” Except for the limitations contained in such covenants, however, the Indenture will not contain any covenants or provisions that may afford Holders of the Notes protection in the event of a highly leveraged transaction. The Company will not be required to make an Offer to Purchase upon a Change of Control Repurchase Event if a third party makes the Offer to Purchase in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to an Offer to Purchase made by the Company and purchases all Notes validly tendered and not withdrawn under such Offer to Purchase. The definition of Change of Control includes a phrase relating to the direct or indirect sale, transfer, conveyance or other disposition of “all or substantially all” of the properties or assets of the Company and the Restricted Subsidiaries taken as a whole. Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a Holder of Notes to require the Company to repurchase such Notes as a result of a sale, transfer, conveyance or other disposition of less than all of the assets of the Company and the Restricted Subsidiaries taken as a whole to another Person or group may be uncertain. The Company will comply with Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder, to the extent such laws and regulations are applicable, in the event that the Company is required to repurchase Notes pursuant to an Offer to Purchase. To the extent that the provisions of any securities laws or regulations conflict with the provisions of the Indenture relating to an Offer to Purchase, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under such provisions of the Indenture by virtue of such conflict. Asset Sales The Company will not, and will not permit any Restricted Subsidiary to, consummate an Asset Sale unless: (1) the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the assets or Equity Interests issued or sold or otherwise disposed of; and (2) at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of: (a) Cash Equivalents (including any Cash Equivalents received from the conversion within 60 days of such Asset Sale of any securities, notes or other obligations received in consideration of such Asset Sale); (b) Replacement Assets; (c) any liabilities of the Company or any Restricted Subsidiary as shown on the Company’s or such Restricted Subsidiary’s most recent balance sheet (other than contingent liabilities, Indebtedness that is 110
by its terms subordinated in right of payment to the Notes or any Note Guarantee and liabilities to the extent owed to the Company or any Affiliate of the Company) that are assumed by the transferee of any such assets or Equity Interests and for which the Company and all of the Restricted Subsidiaries have been validly released by all creditors in writing; or (d) any combination of the consideration specified in clauses (a) to (c). Within 365 days after the receipt of any Net Available Cash from an Asset Sale, the Company or a Restricted Subsidiary, as the case may be, may apply an amount equal to such Net Available Cash at its option: (1) to repay (a) Indebtedness secured by such assets, (b) Indebtedness of a Restricted Subsidiary that is not a Guarantor (other than Indebtedness owed to the Company or another Restricted Subsidiary) or (c) the Notes or Indebtedness constituting Pari Passu Debt where (i) such Indebtedness has a final maturity date earlier than the Stated Maturity of the Notes or (ii) the rate of interest per annum payable with respect to such Indebtedness, as in effect (pursuant to the agreement governing such Indebtedness) on the date of such repayment, is greater than the rate of interest per annum payable with respect to the Notes; provided that all reductions of or offers to reduce Obligations under the Notes shall be made as provided under “—Optional Redemption” or by making an offer (in accordance with the provisions set forth below for an Offer to Purchase) to all Holders of Notes to purchase their Notes at 100% of the principal amount thereof plus accrued and unpaid interest to the date of purchase; provided, further, that if the Indebtedness repaid pursuant to this clause (1) is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto; (2) to purchase Replacement Assets (or enter into a binding agreement to purchase such Replacement Assets; provided that (x) such purchase is consummated no later than the later of (i) the 360th day after such Asset Sale or (ii) 90 days after the date of such binding agreement and (y) if such purchase is not consummated within the period set forth in subclause (x), the Net Available Cash not so applied will be deemed to be Excess Proceeds (as defined below)); or (3) to make an Offer to Purchase as described below. The amount of such Net Available Cash required to be applied (or to be committed to be applied) during such 365 day period as set forth in the preceding paragraph and not applied (or committed to be applied) as so required by the end of such period shall constitute “Excess Proceeds.” If, as of the first day of any calendar month, the aggregate amount of Excess Proceeds totals at least US$20.0 million, the Company must commence, not later than the fifteenth business day of such month, and consummate an Offer to Purchase, from the Holders and all holders of other Pari Passu Debt containing provisions similar to those set forth in the Indenture with respect to offers to purchase with the proceeds of sales of assets, the maximum principal amount of Notes and such other Pari Passu Debt that may be purchased out of the Excess Proceeds. The offer price in any such Offer to Purchase will be equal to 100% of the principal amount (or accreted value, if applicable) of the Notes and such other Pari Passu Debt plus accrued and unpaid interest to the date of purchase, subject to the rights of Holders of Notes on the relevant record date to receive interest on the relevant interest payment date, and will be payable in cash. To the extent that any Excess Proceeds remain after consummation of an Offer to Purchase pursuant to this “Asset Sales” covenant, the Company may use those Excess Proceeds for any purpose not otherwise prohibited by the Indenture, and those Excess Proceeds shall no longer constitute “Excess Proceeds”. The Company will comply with Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder, to the extent such laws and regulations are applicable, in the event that the Company is required to repurchase Notes pursuant to an Offer to Purchase. To the extent that the provisions of any securities laws or regulations conflict with the provisions of the Indenture relating to an Offer to Purchase, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under such provisions of the Indenture by virtue of such conflict. Any future agreement to which the Company becomes a party may prohibit the Company from purchasing any Notes and also provide that certain asset sale events with respect to the Company would constitute a default under such agreement. In the event an Asset Sale occurs at a time when the Company is prohibited from purchasing Notes, the Company could seek the consent of its lenders to the purchase of Notes or could attempt to refinance the 111
borrowings that contain such prohibition. If the Company does not obtain such a consent or repay such borrowings, the Company will remain prohibited from purchasing Notes. In such case, the Company’s failure to purchase tendered Notes would constitute an Event of Default under the Indenture, which would, in turn, constitute a default under such other agreements. Additional Amounts All payments made under or with respect to the Notes or the Note Guarantees will be made without withholding or deduction for or on account of any present or future taxes, duties, levies, or other governmental charges and any interest, penalties or other liabilities with respect thereto (collectively, “Taxes”) imposed or assessed by or on behalf of any jurisdiction in which the Company or any Guarantor is organized, engaged in business or resident for tax purposes, or from or through which payment under or with respect to the Notes or the Note Guarantees is made or, in each case, any political subdivision thereof (each, a “Taxing Jurisdiction”) or any authority or agency therein or thereof having the power to tax, unless the withholding or deduction is required by applicable law. If the Company or any Guarantor is required to make any withholding or deduction of this nature, it will pay Holders the additional amounts (“Additional Amounts”) necessary to ensure that they receive the same amount as they would have received without this withholding or deduction. The Company or the relevant Guarantor will not, however, pay any Additional Amounts with respect to any Note in connection with any Tax that is imposed: (1) because the Holder has some present or former connection with the Taxing Jurisdiction other than merely holding or owning the Note, the receipt of payments on the Note or enforcing rights under the Notes; (2) because the Holder has failed to present the Note for payment (where presentation is required by the terms of the Notes) within 30 days from when Holders receive notice in accordance with the Indenture that the payment is available (except to the extent that the Holder would have been entitled to Additional Amounts had the Note been presented on the last day of such 30-day period); (3) because the Holder presents the Note for payment in a member state of the European Union (where presentation is required by the terms of the Notes) and such tax could have been avoided had the Holder presented the Note for payment in another member state of the European Union; (4) in respect of any estate, inheritance, gift, sales, transfer, personal property tax or similar Tax; (5) in respect of Taxes payable otherwise than by withholding from payment of principal of or interest or premium, if any, on the Notes; (6) because of the Holder’s failure to comply with a written request of the Company or Guarantor, provided to the Holder at least 60 calendar days prior to the first payment date with respect to which the Company or Guarantor shall apply this clause (6), to provide information concerning such Holder’s nationality, residence, identity, connection with any Taxing Jurisdiction or other similar information, if and to the extent that compliance would have reduced or eliminated any withholding or deduction as to which Additional Amounts would otherwise apply; provided, however, that in no event shall such Holder’s requirement to provide such information require the Holder to provide any materially more onerous information, documents or other evidence than would be required to be provided had such Holder been required to file U.S. Internal Revenue Service Forms W-8BEN, W-8ECI, W-8EXP and/or W-8IMY; or (7) due to any combination of the preceding clauses (1) through (6). In addition, we will pay and indemnify the Holders against any Peruvian value added tax that is imposed on a payment of interest on the Notes, except to the extent that such Peruvian value added tax is described in items (1) through (7) above. All references in this offering memorandum to principal of or interest or premium, if any, on the Notes will include any Additional Amounts payable by the Company or the relevant Guarantor in respect of such principal, interest or premium. 112
Certain Covenants The Indenture contains, among others, the following covenants. Changes in Covenants When Notes Rated Investment Grade If on any date following the Issue Date (such date, a “Suspension Date”): (1) the Notes are rated Investment Grade by two out of the three Rating Agencies; and (2) no Default or Event of Default shall have occurred and be continuing (other than with respect to the covenants specifically listed under the following captions), then, beginning on that day and subject to the provisions of the following paragraph, the covenants specifically listed under the following captions in this “Description of the Notes” will be suspended: (1) “Repurchase at the Option of Holders—Asset Sales”; (2) “—Limitation on Restricted Payments”; (3) “—Limitation on Indebtedness”; (4) “—Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries”; (5) “—Limitation on Transactions with Affiliates”; (6) “—Designation of Restricted and Unrestricted Subsidiaries”; and (7) clauses (1) (to the extent that a Default or an Event of Default exists by reason of one or more of the covenants specifically listed in this paragraph) and (3) of the covenant described below under the caption “—Merger, Consolidation or Sale of Assets”. During any period that the foregoing covenants have been suspended, the Company’s Board of Directors may not designate any of its Subsidiaries as Unrestricted Subsidiaries pursuant to the covenant described below under the caption “— Designation of Restricted and Unrestricted Subsidiaries” or the definition of “Unrestricted Subsidiary”. The Company will provide written notice to the Trustee of the occurrence of any Suspension Date. Notwithstanding the foregoing, if the rating assigned by two out of the three Rating Agencies should subsequently decline to below Investment Grade, the Company shall provide written notice to the Trustee and the foregoing covenants will be reinstated as of and from the date of such rating decline and any actions taken, or omitted to be taken, before such rating decline that would have been prohibited had the foregoing covenants been in effect shall not form the basis for a Default or an Event of Default. Calculations under the reinstated “Limitation on Restricted Payments” covenant will be made as if the “Limitation on Restricted Payments” covenant had been in effect since the Issue Date except that no Default or Event of Default will be deemed to have occurred solely by reason of a Restricted Payment made while that covenant was suspended. There can be no assurance that the Notes will ever achieve an Investment Grade rating or that any such rating will be maintained. Limitation on Restricted Payments (A) The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, take any of the following actions (each, a “Restricted Payment”): (1) declare or pay any dividend or make any other payment or distribution with respect to any of the Company’s or any Restricted Subsidiary’s Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company or any Restricted Subsidiary) or to the direct or indirect holders of the Company’s or any Restricted Subsidiary’s Equity Interests in 113
their capacity as such (other than dividends, payments or distributions (x) payable in Equity Interests (other than Disqualified Stock) of the Company or (y) to the Company or a Restricted Subsidiary); (2) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Company or any Restricted Subsidiary) any Equity Interests of the Company held by any Person (other than by a Restricted Subsidiary) or any Preferred Stock of a Restricted Subsidiary; (3) call for redemption or make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value, prior to the Stated Maturity thereof, any Indebtedness that is subordinated in right of payment to the Notes or any Note Guarantee except (a) in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of such payment, purchase or other acquisition or (b) intercompany Indebtedness permitted to be incurred pursuant to clause (5) of the second paragraph of the covenant described below under the caption “—Limitation on Indebtedness;” or (4) make any Investment (other than a Permitted Investment) in any Person, unless, at the time of and after giving pro forma effect to such Restricted Payment: (1) no Default or Event of Default will have occurred and be continuing or would occur as a consequence thereof; and (2) the Company could Incur at least US$1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test and the Consolidated Leverage Ratio test set forth in the first paragraph of the covenant described below under the caption “—Limitation on Indebtedness;” and (3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and the Restricted Subsidiaries after the Issue Date (excluding Restricted Payments permitted by clauses (2), (3), (4), (5), (6) and (10) of the next succeeding paragraph (B)), is less than the sum, without duplication, of: (a) 50% of the Consolidated Net Income on a cumulative basis during the period (taken as one accounting period) beginning on April 1, 2012 and ending on the last day of the Company’s last fiscal quarter ending prior to the date of such proposed Restricted Payment for which internal financial statements are available (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus (b) the aggregate net cash proceeds received by the Company since the Issue Date as a contribution to its common equity capital or from the issue or sale of Equity Interests (other than Disqualified Stock) of the Company and the amount of reduction of Indebtedness of the Company or its Restricted Subsidiaries that has been converted into or exchanged for such Equity Interests (other than Equity Interests sold to, or Indebtedness held by, a Subsidiary of the Company), plus (c) with respect to Investments (other than Permitted Investments) made by the Company and the Restricted Subsidiaries after the Issue Date, an amount equal to the net reduction in such Investments in any Person (except, in each case, to the extent any such amount is included in the calculation of Consolidated Net Income), resulting from repayment to the Company or any Restricted Subsidiary of loans or advances or from the receipt of net cash proceeds from the sale of any such Investment, from the release of any Guarantee (except to the extent any amounts are paid under such Guarantee) or from redesignations of Unrestricted Subsidiaries as Restricted Subsidiaries, not to exceed, in each case, the amount of such Investments previously made by the Company or any Restricted Subsidiary in such Person.
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(B) The preceding provisions will not prohibit: (1) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of the Indenture, and the redemption of any Indebtedness that is subordinated in right of payment to the Notes or any Note Guarantees within 60 days after the date on which notice of such redemption was given, if at said date of the giving of such notice, such redemption would have complied with the provisions of the Indenture; (2) the payment of any dividend by a Restricted Subsidiary to all the holders of its Common Stock on a pro rata basis; (3) any Restricted Payment in exchange for, or out of the net cash proceeds of a substantially concurrent contribution to the common equity of the Company or a substantially concurrent sale (other than to a Subsidiary of the Company) of, Equity Interests (other than Disqualified Stock) of the Company; provided that the amount of any such net cash proceeds that are utilized for such Restricted Payment will be excluded from clause (3)(b) of the preceding paragraph (A); (4) the redemption, repurchase, defeasance or other acquisition or retirement for value of Indebtedness that is subordinated in right of payment to the Notes or the Note Guarantees in exchange for, or with the net cash proceeds from a substantially concurrent Incurrence (other than to a Subsidiary of the Company) of, Permitted Refinancing Indebtedness for such Indebtedness; (5) the repurchase of Capital Stock deemed to occur upon the exercise of options or warrants to the extent that such Capital Stock represents all or a portion of the exercise price thereof and applicable withholding taxes, if any; (6) the payment of cash in lieu of fractional Equity Interests pursuant to the exchange or conversion of any exchangeable or convertible securities; provided, that such payment shall not be for the purpose of evading the limitations of this covenant (as determined by the Board of Directors of the Company in good faith); (7) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company held by any current or former employee or director of the Company (or any Subsidiaries) pursuant to the terms of any employee equity subscription agreement, stock option agreement or similar agreement entered into in the ordinary course of business; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests in any calendar year will not exceed US$5.0 million (with unused amounts in any calendar year being carried over to succeeding years subject to a maximum of US$10.0 million in any calendar year); (8) the declaration and payment of dividends to holders of any class or series of Disqualified Stock of the Company or any Restricted Subsidiary issued in accordance with the covenant described under “Limitation on Indebtedness”, and provided that (i) such dividends constitute “Fixed Charges” and (ii) with respect to Disqualified Stock that is not convertible or exchangeable into Pari Passu Debt, no Event of Default has occurred and is continuing or would be caused thereby; (9) in connection with a Change of Control Repurchase Event or an Offer to Purchase required by the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales,” repurchases of Subordinated Indebtedness at a purchase price not greater than (a) 101% of the principal amount or accreted value, as applicable, of such Subordinated Indebtedness and accrued and unpaid interest thereon in the event of a Change of Control Repurchase Event or (b) 100% of the principal amount or accreted value, as applicable, of such Subordinated Indebtedness and accrued and unpaid interest thereon in the event of an Offer to Purchase required by the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales,” in connection with any change of control offer or asset sale offer required by the terms of such Subordinated Indebtedness, but only if: (i) in the case of a Change of Control Repurchase Event, the Company has first complied with and fully satisfied its obligations under the covenant described above under the caption “— 115
Repurchase at the Option of Holders—Change of Control” or (ii) in the case of an Offer to Purchase required by the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales,” the Company has first complied with and fully satisfied its obligations under the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales”; and (10) so long as no Event of Default has occurred and is continuing or would be caused thereby, other Restricted Payments in an aggregate amount not to exceed US$15.0 million since the Issue Date. The amount of all Restricted Payments (other than cash) will be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued to or by the Company or such Subsidiary, as the case may be, pursuant to the Restricted Payment. Limitation on Indebtedness The Company will not, and will not permit any Restricted Subsidiary to, Incur any Indebtedness; provided, however, that the Company or any Restricted Subsidiary may Incur Indebtedness if, (A) after giving effect to the Incurrence of such Indebtedness and the receipt and application of the proceeds therefrom, the Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is Incurred would be at least 2.50 to 1.00, and (B) on the date of such Incurrence and after giving effect to the Incurrence of such Indebtedness and the receipt and application of the proceeds therefrom, the Consolidated Leverage Ratio would be equal to or less than 3.50 to 1.00. The first paragraph of this covenant will not prohibit the Incurrence of any of the following items of Indebtedness: (1) Existing Indebtedness; (2) Indebtedness of the Company and the Guarantors represented by the Notes (other than Additional Notes) and the related Note Guarantees; (3) Indebtedness of the Company or any Restricted Subsidiary represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, Incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the business of the Company or such Restricted Subsidiary (including any reasonably related fees or expenses Incurred in connection with such acquisition, construction or improvement), in an aggregate amount, including all Permitted Refinancing Indebtedness Incurred to refund, refinance or replace any Indebtedness Incurred pursuant to this clause (3), not to exceed the greater of US$25.0 million and 2.0% of Consolidated Net Tangible Assets at any time outstanding; (4) Permitted Refinancing Indebtedness of the Company or any Restricted Subsidiary in exchange for, or the net cash proceeds of which are used to refund, refinance or replace Indebtedness that was permitted by the Indenture to be Incurred under the first paragraph of this covenant or clauses (1), (2), (3), (4), or (13) of this paragraph; (5) Indebtedness of the Company or any Restricted Subsidiary owing to and held by the Company or any Restricted Subsidiary; provided, however, that: (a) if the Company or any Guarantor is the obligor on such Indebtedness, such Indebtedness must be unsecured and, unless held by the Company or any Guarantor, expressly subordinated in right of payment to the prior payment in full in cash of all Obligations with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; provided that if the Company or any Guarantor is the obligor on such Indebtedness and such Indebtedness is not expressly subordinated as provided in this subclause (a), any event that results in such Indebtedness being held by any Person 116
other than the Company or any Guarantor will be deemed, in each case, to constitute an Incurrence of such Indebtedness by the Company or such Guarantor, as the case may be, that was not permitted by this clause (5); and (b) any event that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary (except for any pledge of such Indebtedness constituting a Permitted Lien until the pledgee commences actions to foreclose on such Indebtedness) will be deemed, in each case, to constitute an Incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (5); (6) the Guarantee by the Company or any Restricted Subsidiary of Indebtedness of the Company or a Restricted Subsidiary that was permitted to be Incurred by another provision of this covenant; (7) Indebtedness of the Company or any Restricted Subsidiary under Hedging Obligations that are Incurred for the purpose of fixing, hedging or swapping interest rate, commodity price or foreign currency exchange rate risk (or to reverse or amend any such agreements previously made for such purposes), and not for speculative purposes; (8) Indebtedness of the Company or any Restricted Subsidiary arising from agreements providing for indemnification, adjustment of purchase price or similar obligations, or Guarantees or letters of credit, surety bonds or performance bonds securing any obligations of the Company or any Restricted Subsidiary pursuant to such agreements, in any case Incurred in connection with the disposition of any business, assets or Capital Stock of a Restricted Subsidiary (other than Guarantees of Indebtedness Incurred by any Person acquiring all or any portion of such business, assets or Capital Stock of a Restricted Subsidiary for the purpose of financing such acquisition), so long as the amount does not exceed the gross proceeds actually received by the Company or any Restricted Subsidiary in connection with such disposition; (9) Indebtedness of the Company or any Restricted Subsidiary arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business, provided, however, that such Indebtedness is extinguished within five Business Days of its Incurrence; (10) Indebtedness of the Company or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, or other Indebtedness with respect to reimbursement obligations regarding workers’ compensation claims; provided that, upon the drawing of such letters of credit or the Incurrence of such Indebtedness, such obligations are reimbursed within 30 days following such drawing or Incurrence; (11) Indebtedness of the Company or any Restricted Subsidiary to the extent the net cash proceeds thereof are promptly deposited to defease or to satisfy and discharge the Notes as described under “—Legal Defeasance and Covenant Defeasance” or “—Satisfaction and Discharge”; (12) Indebtedness of any Person that is acquired by or merged into the Company or any Restricted Subsidiary in accordance with the terms of the Indenture; provided that such Indebtedness was not Incurred or issued, as applicable, in connection with, or in contemplation of, such acquisition or merger; provided, further, that, in each case, after giving effect to such acquisition or merger, (i) the Company would be permitted to Incur at least US$1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test and the Consolidated Leverage Ratio test set forth in the first paragraph of this covenant or (ii) the Company would have a Consolidated Leverage Ratio that is equal to or less than the Company’s Consolidated Leverage Ratio immediately prior to such acquisition or merger and the Company would have a Fixed Charge Coverage Ratio that is equal to or greater than the Company’s Fixed Charge Coverage Ratio immediately prior to such acquisition or merger; and (13) additional Indebtedness of the Company or any Restricted Subsidiary in an aggregate amount at any one time outstanding, including all Permitted Refinancing Indebtedness Incurred to refund, refinance or 117
replace any Indebtedness Incurred pursuant to this clause (13), not to exceed the greater of US$125.0 million and 10.0% of Consolidated Net Tangible Assets. For purposes of determining compliance with this covenant, in the event that any proposed Indebtedness meets the criteria of more than one of the categories described in clauses (1) through (13) above, or is entitled to be Incurred pursuant to the first paragraph of this covenant, the Company will be permitted to classify, and may later reclassify, such item of Indebtedness or a part thereof in any manner that complies with this covenant. For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the U.S. Dollar Equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred (or first committed, in the case of revolving credit debt); provided that if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable U.S. dollar denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced. The principal amount of any Indebtedness incurred to refinance other Indebtedness, if incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such respective Indebtedness is denominated that is in effect on the date of such refinancing. The Company will not Incur any Indebtedness that is subordinate in right of payment to any other Indebtedness of the Company unless it is subordinate in right of payment to the Notes at least to the same extent. The Company will not permit any Guarantor to Incur any Indebtedness that is subordinate in right of payment to any other Indebtedness of such Guarantor unless it is subordinate in right of payment to such Guarantor’s Note Guarantee at least to the same extent. For purposes of the Indenture, no Indebtedness will be deemed to be subordinated in right of payment to any other Indebtedness of the Company or any Guarantor, as applicable, solely by reason of any Liens or Guarantees arising or created in respect thereof or by virtue of the fact that the holders of any secured Indebtedness have entered into intercreditor agreements giving one or more of such holders priority over the other holders in the collateral held by them. Limitation on Liens The Company will not, and will not permit any Restricted Subsidiary to, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind (other than Permitted Liens) upon any of their property or assets, now owned or hereafter acquired, unless all payments due under the Indenture and the Notes or Note Guarantees are secured by a Lien on such property or assets on an equal and ratable basis with the obligations so secured (or, in the case of Indebtedness subordinated to the Notes or the related Note Guarantees, senior in priority thereto, with the same relative priority as the Notes will have with respect to such subordinated Indebtedness) until such time as such obligations are no longer secured by a Lien. Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to: (1) pay dividends or make any other distributions on its Capital Stock (or with respect to any other interest or participation in, or measured by, its profits) to the Company or any Restricted Subsidiary (it being understood that the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on Common Stock shall not be deemed a restriction on the ability to make distributions on Capital Stock); (2) pay any liabilities owed to the Company or any Restricted Subsidiary;
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(3) make loans or advances to the Company or any Restricted Subsidiary (it being understood that the subordination of loans or advances made to the Company or any Restricted Subsidiary to other Indebtedness Incurred by the Company or any Restricted Subsidiary shall not be deemed a restriction on the ability to make loans or advances); or (4) transfer any of its properties or assets to the Company or any Restricted Subsidiary. However, the preceding restrictions will not apply to encumbrances or restrictions: (1) existing under, by reason of or with respect to Existing Indebtedness or any other agreements in effect on the Issue Date and any amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacements or refinancings thereof, provided that the encumbrances and restrictions in any such amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacements or refinancings, taken as a whole, are not materially more restrictive than those contained in the Existing Indebtedness or such other agreements, as the case may be, as in effect on the Issue Date; (2) set forth in the Indenture, the Notes and the Note Guarantees; (3) existing under or by reason of applicable law, rule, regulation, order or decree; (4) with respect to any Person or the property or assets of a Person acquired by the Company or any Restricted Subsidiary existing at the time of such acquisition and not incurred in connection with or in contemplation of such acquisition, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, and any amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacements or refinancings thereof, provided that the encumbrances and restrictions in any such amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacements or refinancings, taken as a whole, are not materially more restrictive than those in effect on the date of the acquisition; (5) that restrict in a customary manner the subletting, assignment or transfer of any property or asset that is a lease, license, conveyance or contract or similar property or asset; (6) existing by virtue of any transfer of, agreement to transfer, option or right with respect to, or Lien on, any property or assets of the Company or any Restricted Subsidiary not otherwise prohibited by the Indenture; (7) arising or agreed to in the ordinary course of business, not relating to any Indebtedness, and that do not, individually or in the aggregate, detract from the value of property or assets of the Company or any Restricted Subsidiary in any manner material to the Company or any Restricted Subsidiary; (8) existing under, by reason of or with respect to any agreement for the sale or other disposition of all or substantially all of the Capital Stock of, or property and assets of, a Restricted Subsidiary that restrict distributions or transfer by that Restricted Subsidiary pending such sale or other disposition; (9) on cash or other deposits or net worth, which encumbrances or restrictions are imposed by customers or suppliers or required by insurance, surety or bonding companies, in each case, under contracts entered into in the ordinary course of business; (10) on the transfer of assets subject to any Permitted Lien; (11) arising from customary restrictions imposed on the transfer of copyrighted or patented materials; (12) arising from customary provisions in joint venture agreements and other similar agreements entered into in the ordinary course of business and which the Board of Directors of the Company determines in good faith will not adversely affect the Company’s ability to make payments of principal or interest on the Notes; and (13) with respect to any agreement governing Indebtedness of any Guarantor that is permitted to be Incurred by the covenant described under the caption “—Limitation on Indebtedness” above and any extensions, 119
renewals, replacements, amendments or refinancings thereof permitted to be Incurred by the covenant described under the caption “—Limitation on Indebtedness” above. Maintenance of Priority The Company shall ensure that its payment obligations with respect to the Notes will constitute its direct, unconditional and general senior unsecured obligations and will rank senior or pari passu (except for Indebtedness that is subordinated in right of payment to the Notes) in priority of payment and in all other respects with respect to its future Indebtedness, except for certain obligations that in case of the Company’s insolvency or bankruptcy are granted preferential treatment pursuant to the laws of Peru. Each Guarantor shall ensure that its payment obligations with respect to its Note Guarantee will constitute its direct, unconditional and general senior unsecured obligations and will rank senior or pari passu (except for Indebtedness that is subordinated in right of payment to its Note Guarantee) in priority of payment and in all other respects with respect to its future Indebtedness, except for certain obligations that in case of such Guarantor’s insolvency or bankruptcy are granted preferential treatment pursuant to the laws of Peru. Merger, Consolidation or Sale of Assets The Company. The Company will not, directly or indirectly: (1) consolidate or merge with or into another Person (whether or not the Company is the surviving Person), or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties and assets of the Company and the Restricted Subsidiaries, taken as a whole, in one or more related transactions, to another Person, unless: (1) immediately after giving effect to such transaction, no Default or Event of Default exists; (2) either: (a) the Company is the surviving corporation; or (b) the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, conveyance or other disposition will have been made (the “Surviving Entity”) (i) is a Person organized or existing under the laws of Peru, the United States of America, any state thereof or the District of Columbia or any other country that is a member country of the European Union, provided that in the case where such Person is not a corporation, a co-obligor of the Notes is a corporation and (ii) assumes all the obligations of the Company under the Notes and the Indenture pursuant to a supplemental indenture; (3) immediately after giving effect to such transaction on a pro forma basis, the Company or the Surviving Entity, as the case may be, (i) will be permitted to Incur at least US$1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test and the Consolidated Leverage Ratio test set forth in the first paragraph of the covenant described above under the caption “—Limitation on Indebtedness” or (ii) would have a Consolidated Leverage Ratio that is equal to or less than the Company’s Consolidated Leverage Ratio immediately prior to such transaction and would have a Fixed Charge Coverage Ratio that is equal to or greater than the Company’s Fixed Charge Coverage Ratio immediately prior to such transaction; (4) each Guarantor, unless such Guarantor is the Person with which the Company has entered into a transaction under this covenant, will have confirmed to the Trustee in writing that its Note Guarantee will apply to the obligations of the Company or the Surviving Entity in accordance with the Notes and the Indenture; and (5) the Company delivers to the Trustee an Officers’ Certificate (attaching the arithmetic computation to demonstrate compliance with clause (3) above) and Opinion of Counsel, in each case stating that such transaction and such agreement comply with this covenant and that all conditions precedent provided for in the Indenture relating to such transaction have been complied with; provided, however, that clause (3) above will not apply to any consolidation, merger, sale, assignment, transfer, conveyance or other disposition of assets between or among the Company and any Restricted Subsidiary. 120
Upon any consolidation, merger, sale, assignment, transfer, conveyance or other disposition in accordance with this covenant, the Surviving Entity formed by such consolidation or into or with which the Company is merged or to which such sale, assignment, transfer, conveyance or other disposition is made will succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, assignment, conveyance or other disposition, the provisions of the Indenture referring to the “Company” will refer instead to the Surviving Entity and not to the Company), and may exercise every right and power of, the Company under the Indenture and the Notes with the same effect as if such Surviving Entity had been named as the Company in the Indenture and the Notes. In addition, the Company and the Restricted Subsidiaries may not, directly or indirectly, lease all or substantially all of the properties or assets of the Company and the Restricted Subsidiaries considered as one enterprise, in one or more related transactions, to any other Person. Although there is a limited body of case law interpreting the phrase “all or substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, in certain circumstances there may be a degree of uncertainty as to whether a particular transaction would involve “all or substantially all” of the property or assets of a Person. The Guarantors. A Guarantor will not, directly or indirectly: (1) consolidate or merge with or into another Person (whether or not such Guarantor is the surviving Person), or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties and assets of the Guarantor, in one or more related transactions, to another Person, other than the Company or another Guarantor, unless: (1) immediately after giving effect to that transaction, no Default or Event of Default exists; and (2) either: (a) the Guarantor is the surviving corporation, or the Person formed by or surviving any such consolidation or merger (if other than the Guarantor) or to which such sale, assignment, transfer, conveyance or other disposition which has been made (i) is organized or existing under the laws of the jurisdiction of the Guarantor’s organization or under the laws of Peru, the United States of America, any state thereof or the District of Columbia or any other country that is a member country of the European Union, (ii) agrees to pay any Additional Amounts that may be payable in respect of its jurisdiction of organization and (iii) assumes all the obligations of that Guarantor under the Indenture, including its Note Guarantee, pursuant to a supplemental indenture; or (b) such sale, assignment, transfer, conveyance or other disposition or consolidation or merger complies with the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales.” Limitation on Transactions with Affiliates The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into, make, amend, renew or extend any transaction, contract, agreement, understanding, loan, advance or Guarantee with, or for the benefit of, any of their Affiliates (each, an “Affiliate Transaction”), unless: (1) such Affiliate Transaction is on fair and reasonable terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable arm’s-length transaction by the Company or such Restricted Subsidiary with a Person that is not an Affiliate of the Company or any Restricted Subsidiary; and (2) the Company delivers to the Trustee: (a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of US$5.0 million, a Board Resolution set forth in an Officers’ Certificate certifying that such Affiliate Transaction or series of related Affiliate Transactions complies with this 121
covenant and that such Affiliate Transaction or series of related Affiliate Transactions has been approved by a majority of the members of the Board of Directors of the Company; and (b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of US$20.0 million, an opinion issued by an independent accounting, appraisal or investment banking firm of international standing stating that such Affiliate Transaction or series of related Affiliate Transactions is fair to the Company or such Restricted Subsidiary from a financial point of view. The following items will not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of the prior paragraph: (1) transactions between or among the Company and/or its Restricted Subsidiaries; (2) Restricted Payments that are permitted by the provisions of the Indenture described above under the caption “—Limitation on Restricted Payments;” (3) any issuance or sale of Equity Interests (other than Disqualified Stock) of the Company; (4) transactions pursuant to agreements or arrangements in effect on the Issue Date and described in this offering memorandum, or any amendment, modification, or supplement thereto or replacement thereof, as long as such agreement or arrangement, as so amended, modified, supplemented or replaced, taken as a whole, is not materially more disadvantageous to the Company and the Restricted Subsidiaries than the agreement or arrangement in existence on the Issue Date; (5) payments by the Company (and any direct or indirect parent thereof) and its Subsidiaries pursuant to tax sharing agreements among the Company (and any such parent) and its Subsidiaries on customary terms to the extent attributable to the ownership or operation of the Company and its Subsidiaries; provided that in each case the amount of such payments in any fiscal year does not exceed the amount that the Company, its Restricted Subsidiaries and its Unrestricted Subsidiaries (to the extent of amounts received from Unrestricted Subsidiaries) would be required to pay in respect of foreign, U.S. federal, state and local taxes for such fiscal year were the Company and its Subsidiaries (to the extent described above) to pay such taxes separately from any such parent entity; (6) payment of reasonable and customary fees to, and reasonable and customary indemnification arrangements and similar payments on behalf of, directors of the Company or any Subsidiary thereof; (7) any employment, consulting, service or termination agreement, or reasonable and customary indemnification arrangements, entered into by the Company or any Restricted Subsidiary with officers and employees of the Company or any Subsidiary thereof and the payment of compensation to officers and employees of the Company or any Subsidiary thereof (including amounts paid pursuant to employee benefit plans, employee stock option or similar plans), so long as such agreement, arrangements or payment (i) have been approved by a majority of the members of the Board of Directors of the Company and (ii) are substantially consistent with the practice of the Company or such Restricted Subsidiary, as the case may be, at or prior to the Issue Date; and (8) transactions conducted on an arm’s-length basis on the same terms as would be conducted with a nonAffiliate involving the purchase and sale of goods and services with Affiliates in the ordinary course of business and consistent with prior practice; provided that the Company shall provide an Officers’ Certificate to the Trustee within 30 days of the end of each fiscal year certifying that all such transactions made pursuant to this clause (8), taken as a whole, were no less favorable than those that could reasonably be expected to be obtained in a comparable transaction at such time on an arm’s-length basis from a Person that is not an Affiliate of the Company.
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Designation of Restricted and Unrestricted Subsidiaries The Board of Directors of the Company may designate (a “Designation”) any Restricted Subsidiary other than Casa Grande, Cartavio, San Jacinto and Azucarera Olmos to be an Unrestricted Subsidiary; provided that: (1) any Guarantee by the Company or any Restricted Subsidiary of any Indebtedness of the Subsidiary being so designated will be deemed to be an Incurrence of Indebtedness by the Company or such Restricted Subsidiary, as the case may be, at the time of such designation, and such Incurrence of Indebtedness would be permitted under the covenant described above under the caption “—Limitation on Indebtedness;” (2) the aggregate Fair Market Value of all outstanding Investments owned by the Company and the Restricted Subsidiaries in the Subsidiary being so designated (including any Guarantee by the Company or any Restricted Subsidiary of any Indebtedness of such Subsidiary) will be deemed to be an Investment made as of the time of such designation and that such Investment would be permitted under the covenant described above under the caption “—Limitation on Restricted Payments;” (3) such Subsidiary does not hold any Capital Stock or Indebtedness of, or own or hold any Lien on any property or assets of, or have any Investment in, the Company or any Restricted Subsidiary; provided that such Subsidiary may hold Indebtedness of the Company or any Restricted Subsidiary if, at the time of and after giving pro forma effect to such Designation, Incurrence of such Indebtedness would be permitted under the covenant described above under the caption “—Limitation on Indebtedness” and any such Indebtedness will be deemed to be an Incurrence of Indebtedness by the Company or such Restricted Subsidiary, as the case may be, at the time of such Designation; (4) the Subsidiary being so designated: (a) is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company; and (b) is a Person with respect to which neither the Company nor any Restricted Subsidiary has any direct or indirect obligation (i) to subscribe for additional Equity Interests or (ii) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; provided that the Company or any Restricted Subsidiary may have a direct or indirect obligation to subscribe for additional Equity Interests in such Person, if, at the time of and after giving pro forma effect to such Designation, the Company or such Restricted Subsidiary would be permitted under the covenant described above under the caption “—Limitation on Restricted Payments” to make a Restricted Payment in an amount equal to the amount of the subscription obligation and the Company or such Restricted Subsidiary will be deemed as having made such Restricted Payment at the time of such Designation; and (5) no Default or Event of Default would be in existence following such designation. Any designation of a Restricted Subsidiary as an Unrestricted Subsidiary will be evidenced to the Trustee by filing with the Trustee the Board Resolution giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the preceding conditions and was permitted by the Indenture. The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that: (1) such designation will be deemed to be an Incurrence of Indebtedness by a Restricted Subsidiary of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation will only be permitted if such Indebtedness is permitted under the covenant described under the caption “—Limitation on Indebtedness;”
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(2) all outstanding Investments owned by such Unrestricted Subsidiary will be deemed to be made as of the time of such designation and such designation will only be permitted if such Investments would be permitted under the covenant described above under the caption “—Limitation on Restricted Payments;” (3) all Liens upon property or assets of such Unrestricted Subsidiary existing at the time of such designation would be permitted under the caption “—Limitation on Liens;” and (4) no Default or Event of Default would be in existence following such designation. Limitation on Sale and Leaseback Transactions The Company will not, and will not permit any Restricted Subsidiary to, enter into any Sale and Leaseback Transaction; provided that the Company or any Restricted Subsidiary may enter into a Sale and Leaseback Transaction if: (1) the Company or such Restricted Subsidiary, as applicable, could have (a) Incurred Indebtedness in an amount equal to the Attributable Debt relating to such Sale and Leaseback Transaction and (b) incurred a Lien to secure such Indebtedness pursuant to the covenant described above under the caption “—Certain Covenants—Limitation on Liens;” (2) the gross cash proceeds of that Sale and Leaseback Transaction are at least equal to the Fair Market Value of the property that is the subject of that Sale and Leaseback Transaction; and (3) the transfer of assets in that Sale and Leaseback Transaction is permitted by, and the Company applies the proceeds of such transaction in compliance with, the covenant described above under the caption “— Repurchase at the Option of Holders—Asset Sales.” Business Activities The Company will not, and will not permit any Restricted Subsidiary to, engage in any business other than Permitted Businesses, except to such extent as would not be material to the Company and the Restricted Subsidiaries taken as a whole. Listing Application has been made to the Irish Stock Exchange for the Notes to be admitted to the Official List and to trading on the Global Exchange Market which is the exchange regulated market of the Irish Stock Exchange. Irish Listing Agent Arthur Cox Listing Services Limited is the Irish listing agent in respect of the Notes. The Company will maintain such appointment so long as the Notes are listed on the Global Exchange Market of the Irish Stock Exchange and the rules of the exchange so require. The address of Arthur Cox Listing Services Limited is set forth on the inside back cover of this offering memorandum. Reports For so long as the Notes remain outstanding, the Company will provide to the Trustee the following items in English: (1) its (a) consolidated annual financial statements audited by an internationally recognized firm of independent public accountants (which may be its current independent public accountants) within 120 days of the end of each fiscal year, and (b) consolidated quarterly financial statements within five Business Days after the earlier of (i) the date on which such quarterly financial statements are required to be delivered to the SMV and (ii) the date on which such quarterly financial statements are delivered to the SMV and, in case the Company is no longer obliged to deliver such quarterly financial statements to the SMV, within 60 days of the end of each of the first three fiscal quarters of each fiscal year. These annual and quarterly financial statements will be prepared in accordance with IFRS and such annual financial statements will be 124
accompanied by a management discussion on its results of operations for the periods presented; provided that for the period of six (6) consecutive months immediately following the date on which any Guarantor or Restricted Subsidiary became a Subsidiary of the Company, any such financial statements provided to the Trustee during such six-month period (but not thereafter) need not include any financial data or other information for such Guarantor or Restricted Subsidiary; and (2) any information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act so long as the notes are not freely transferable under the Securities Act. Events of Default and Remedies Each of the following is an “Event of Default”: (1) default for 30 days in the payment when due of interest on the Notes; (2) default in payment when due (whether at maturity, upon acceleration, redemption or otherwise) of the principal of, or premium, if any, on the Notes; (3) failure by the Company or any Restricted Subsidiary to make or consummate an Offer to Purchase in accordance with the provisions described under the captions “—Repurchase at the Option of Holders— Change of Control,” “—Repurchase at the Option of Holders—Asset Sales” or to comply with the provisions described under the caption “—Certain Covenants—Merger, Consolidation or Sale of Assets;” (4) failure by the Company or any Restricted Subsidiary for 45 days after written notice by the Trustee or Holders representing 25% or more of the aggregate principal amount of Notes outstanding to comply with any of the other agreements in the Indenture; (5) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness by the Company or any Restricted Subsidiary (or the payment of which is Guaranteed by the Company or any Restricted Subsidiary) whether such Indebtedness or Guarantee now exists, or is created after the Issue Date, if that default: (a) is caused by a failure to make any payment when due at the final maturity of such Indebtedness (a “Payment Default”); or (b) results in the acceleration of such Indebtedness prior to its express maturity, and, in each case, the amount of any such Indebtedness, together with the amount of any other such Indebtedness that is then subject to a Payment Default or the maturity of which has been so accelerated, aggregates US$20.0 million or more; (6) failure by the Company or any Restricted Subsidiary to pay final judgments (to the extent such judgments are not paid or covered by insurance provided by a reputable carrier) aggregating in excess of US$20.0 million, which judgments are not paid, discharged or stayed for a period of 60 days; (7) except as permitted by the Indenture, any Note Guarantee will be held in any judicial proceeding to be unenforceable or invalid or will cease for any reason to be in full force and effect or any Guarantor, or any Person acting on behalf of any Guarantor, will deny or disaffirm its obligations under its Note Guarantee; and (8) certain events of bankruptcy or insolvency with respect to the Company, any Guarantor or any Restricted Subsidiary that is a Significant Subsidiary of the Company (or any Restricted Subsidiaries that together would constitute a Significant Subsidiary of the Company). In the case of an Event of Default described in clause (8) above, all outstanding Notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately by notice in writing to the Company specifying the Event of Default. 125
Holders of the Notes may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to the terms of the Indenture, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of premium or interest on, or the principal of, the Notes. Subject to the terms of the Indenture, the Holders of a majority in principal amount of the then outstanding Notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or the Indenture, that may involve the Trustee in personal liability, or that the Trustee determines in good faith may be unduly prejudicial to the rights of Holders of Notes not joining in the giving of such direction and may take any other action it deems proper that is not inconsistent with any such direction received from Holders of Notes. A Holder may not pursue any remedy with respect to the Indenture or the Notes unless: (1) the Holder gives the Trustee written notice of a continuing Event of Default; (2) the Holders of at least 25% in aggregate principal amount of outstanding Notes make a written request to the Trustee to pursue the remedy; (3) such Holder or Holders offer the Trustee indemnity reasonably satisfactory to the Trustee against any costs, liability or expense; (4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity; and (5) during such 60-day period, the Holders of a majority in aggregate principal amount of the outstanding Notes do not give the Trustee a direction that is inconsistent with the request. However, such limitations do not apply to the right of any Holder of a Note to receive payment of the principal of, premium, if any, or interest on, such Note or to bring suit for the enforcement of any such payment, on or after the due date expressed in the Notes, which right will not be impaired or affected without the consent of the Holder. The Company is required to deliver to the Trustee annually within 90 days after the end of each fiscal year a statement regarding compliance with the Indenture. Within five Business Days of becoming aware of any Default or Event of Default, the Company is required to deliver to the Trustee a statement specifying such Default or Event of Default. No Personal Liability of Directors, Officers, Employees and Stockholders No director, officer, employee, incorporator, stockholder, member, manager or partner of the Company or any Guarantor, as such, will have any liability for any obligations of the Company or the Guarantors under the Notes, the Indenture, the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under the U.S. federal securities laws. Legal Defeasance and Covenant Defeasance The Company may, at its option and at any time, elect to have all of its obligations discharged with respect to the outstanding Notes and all obligations of the Guarantors discharged with respect to their Note Guarantees (“Legal Defeasance”). Legal Defeasance means that the Company and the Guarantors will be deemed to have paid and discharged the entire indebtedness represented by the outstanding Notes on the 91st day after the deposit specified in clause (1) of the second following paragraph except for:
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(1) the rights of Holders of outstanding Notes to receive payments in respect of the principal of, or interest or premium, if any, on such Notes when such payments are due from the trust referred to below; (2) the Company’s obligations with respect to the Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust; (3) the rights, powers, trusts, duties and immunities of the Trustee, and the Company’s and the Guarantors’ obligations in connection therewith; and (4) the Legal Defeasance provisions of the Indenture. In addition, the Company may, at its option and at any time, elect to have the obligations of the Company and the Guarantors released with respect to certain covenants in the Indenture (“Covenant Defeasance”) and thereafter any omission to comply with those covenants will not constitute a Default or Event of Default with respect to the Notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, reorganization and insolvency events) described under “Events of Default” will no longer constitute Events of Default with respect to the Notes. In order to exercise either Legal Defeasance or Covenant Defeasance: (1) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the Notes, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, or interest and premium, if any, on the outstanding Notes on the Stated Maturity or on the applicable redemption date, as the case may be, and the Company must specify whether the Notes are being defeased to maturity or to a particular redemption date; (2) in the case of Legal Defeasance, the Company will have delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that (a) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (b) since the Issue Date, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel will confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (3) in the case of Covenant Defeasance, the Company will have delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (4) in the case of Legal Defeasance or Covenant Defeasance, the Company shall have delivered to the Trustee (i) an Opinion of Counsel to the effect that, based upon Peruvian law then in effect, the Holders will not recognize income, gain or loss for Peruvian tax purposes, including withholding tax except for withholding tax then payable on interest payments due, and the amounts to be payable shall not be subject to any deposit or temporary freezing of funds, as a result of Legal Defeasance or Covenant Defeasance, as the case may be, and will be subject to Peruvian taxes on the same amounts and in the same manner and at the same time as would have been the case if such Legal Defeasance or Covenant Defeasance, as the case may be, had not occurred or (ii) a ruling directed to the Trustee received from tax authorities of Peru to the same effect as the Opinion of Counsel described in clause (i) above; (5) no Default or Event of Default will have occurred and be continuing either: (a) on the date of such deposit; or (b) in the case of Legal Defeasance, insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of deposit;
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(6) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under, any material agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; (7) the Company must have delivered to the Trustee an Opinion of Counsel to the effect that, assuming no intervening bankruptcy of the Company or any Guarantor between the date of deposit and the 91st day following the deposit and assuming that no Holder is an “insider” of the Company under applicable bankruptcy law, after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally, including Section 547 of the United States Bankruptcy Code and Section 15 of the New York Debtor and Creditor Law; (8) the Company must deliver to the Trustee an Officers’ Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders over the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; (9) if the Notes are to be redeemed prior to their Stated Maturity, the Company must deliver to the Trustee irrevocable instructions to redeem all of the Notes on the specified redemption date under arrangements satisfactory to the Trustee for the giving of notice of such redemption by the Trustee in the Company’s name and at the Company’s expense; and (10) the Company must deliver to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with. Satisfaction and Discharge The Indenture will be discharged and will cease to be of further effect as to all Notes issued thereunder (other than those provisions which by their express terms survive), when: (1) either: (a) all Notes that have been authenticated and delivered thereunder (except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust) have been delivered to the Trustee for cancellation; or (b) all Notes issued thereunder that have not been delivered to the Trustee for cancellation (x) have become due and payable (by reason of the mailing of a notice of redemption or otherwise), (y) will become due and payable at Stated Maturity within one year, or (z) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the Company’s name and at the Company’s expense, and in each such case the Company has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on the Notes not delivered to the Trustee for cancellation for principal, premium, if any, and accrued interest to the Stated Maturity or redemption date, as the case may be; (2) no Default or Event of Default will have occurred and be continuing on the date of such deposit or will occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Company or any Guarantor is a party or by which the Company or any Guarantor is bound; (3) the Company or any Guarantor has paid or caused to be paid all sums payable by it under the Indenture and the Notes; and 128
(4) the Company has delivered irrevocable instructions to the Trustee under the Indenture to apply the deposited money toward the payment of the Notes issued thereunder at Stated Maturity or the redemption date, as the case may be. In addition, the Company must deliver an Officers’ Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied. Amendment, Supplement and Waiver Except as provided in the next two succeeding paragraphs, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), and any existing default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes); provided that no amendment or waiver may release any Guarantor from any of its obligations under its Note Guarantee or the Indenture without the consent of the Holders of at least seventy-five percent (75.0%) in principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes). Without the consent of each Holder affected, an amendment or waiver may not (with respect to any Notes held by a non-consenting Holder): (1) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver; (2) change the Stated Maturity of the principal of, or any installment of interest on, any Note; (3) reduce the principal amount of, or premium, if any, or interest on, any Note; (4) change the optional redemption dates or optional redemption prices of the Notes from those stated under the caption “—Optional Redemption”; (5) waive a Default or Event of Default in the payment of principal of, or interest, or premium on, the Notes (except, upon a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the Notes, a waiver of the payment default that resulted from such acceleration) or in respect of any other covenant or provision that cannot be amended or modified without the consent of all Holders; (6) make any Note payable in money other than U.S. dollars; (7) make any change in the amendment and waiver provisions of the Indenture; (8) impair the right to institute suit for the enforcement of any payment on or with respect to the Notes or the Note Guarantees; (9) amend, change or modify the obligation of the Company to make and consummate an Offer to Purchase with respect to any Asset Sale in accordance with the covenant described under the caption “Repurchase at the Option of Holders—Asset Sales” after the obligation to make such Offer to Purchase has arisen, or the obligation of the Company to make and consummate an Offer to Purchase in the event of a Change of Control Repurchase Event in accordance with the covenant described under the caption “Repurchase at the Option of Holders—Change of Control” after such Change of Control Repurchase Event has occurred, including, in each case, amending, changing or modifying any definition relating thereto; or (10) except as otherwise permitted under the covenants described under the captions “―Certain Covenants―Merger, Consolidation or Sale of Assets” and “―Note Guarantees―Future Note Guarantees,” consent to the assignment or transfer by the Company or any Guarantor of any of their rights or obligations under the Indenture. 129
Notwithstanding the preceding, without the consent of any Holder of Notes, the Company, the Guarantors and the Trustee may amend or supplement the Indenture or the Notes: (1) to cure any ambiguity, defect or inconsistency; (2) to provide for uncertificated Notes in addition to or in place of certificated Notes; (3) to provide for the assumption of the Company’s or any Guarantor’s obligations to Holders of Notes in accordance with the Indenture in the case of a merger or consolidation or sale of all or substantially all of the Company’s or such Guarantor’s assets; (4) to make any change that would provide any additional rights or benefits to the Holders of Notes or that does not materially, in the good faith determination of the Board of Directors of the Company, adversely affect the legal rights under the Indenture of any such Holder; (5) to comply with the provisions described under “―Certain Covenants―Guarantees;” (6) to evidence and provide for the acceptance of appointment by a successor Trustee; (7) to provide for the issuance of Additional Notes in accordance with the Indenture; or (8) to conform the Indenture or the Notes to any provision of this “Description of the Notes” to the extent such provision is intended to be a verbatim recitation thereof as evidenced by an Officers’ Certificate of the Company. Waiver of Immunities To the extent that the Company may claim for itself or its assets immunity from a suit, execution, attachment, whether in aid of execution, before judgment or otherwise, or other legal process in connection with the Notes or the Indenture and to the extent that in any jurisdiction there may be immunity attributable to it or its assets, whether or not claimed, the Company, for the benefit of the holders of the Notes, irrevocably waives and agrees not to claim such immunity to the fullest extent permitted by law. Currency Indemnity U.S. dollars are the sole currency of account and payment for all sums payable by the Company under or in connection with the Notes, including damages. Any amount received or recovered in a currency other than dollars (whether as a result of, or of the enforcement of, a judgment or order of a court of any jurisdiction, in the winding-up or dissolution of the Company or otherwise) by any holder of a Note in respect of any sum expressed to be due to it from the Company will only constitute a discharge of the Company to the extent of the dollar amount which the recipient is able to purchase with the amount so received or recovered in that other currency on the date of that receipt or recovery (or, if it is not practicable to make that purchase on that date, on the first date on which it is practicable to do so). If that dollar amount is less than the dollar amount expressed to be due to the recipient under any Note, the Company will indemnify such holder against any loss sustained by it as a result. In any event, the Company will indemnify the recipient against the cost of making any such purchase. For the purposes of the preceding paragraph, it will be sufficient for the holder of a Note to certify in a satisfactory manner (indicating the sources of information used) that it would have suffered a loss had an actual purchase of dollars been made with the amount so received in that other currency on the date of receipt or recovery (or, if a purchase of dollars on such date had not been practicable, on the first date on which it would have been practicable; it being required that the need for a change of date be certified in the manner mentioned above). These indemnities constitute a separate and independent obligation from the other obligations of the Company, will give rise to a separate and independent cause of action, will apply irrespective of any indulgence granted by any holder of a Note and will continue in full force and effect despite any other judgment, order, claim or proof for a liquidated amount in respect of any sum due under any Note.
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Concerning the Trustee Citibank, N.A. is initially serving as Trustee under the Indenture. Citibank, N.A. and its affiliates may have other business relationships with the Company from time to time. The Indenture provides that in case an Event of Default occurs and is continuing, the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. The Indenture provides that the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any Holder of Notes, unless such Holder will have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. Certain Definitions Set forth below are certain defined terms used in the Indenture. Reference is made to the Indenture for a full description of all such terms, as well as any other capitalized terms used herein for which no definition is provided. “Adjusted Consolidated Cash Flow” means, for any period, the Consolidated Net Income of the Company for such period plus: (1) the consolidated income tax expense of the Company and the Restricted Subsidiaries for such period, to the extent that such income tax expense was deducted in computing such Consolidated Net Income; plus (2) Fixed Charges of the Company and the Restricted Subsidiaries for such period, to the extent that any such Fixed Charges were deducted in computing such Consolidated Net Income; plus (3) depreciation, amortization (including amortization of intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of the Company and the Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income; minus (4) non-cash items increasing such Consolidated Net Income for such period, other than the accrual of revenue in the ordinary course of business; in each case, on a consolidated basis and determined in accordance with IFRS. Notwithstanding the preceding, the provision for taxes based on the income or profits of, the Fixed Charges of and the depreciation and amortization and other non-cash expenses of, a Restricted Subsidiary will be added to Consolidated Net Income to compute Adjusted Consolidated Cash Flow of the Company (A) in the same proportion that the Net Income of such Restricted Subsidiary was added to compute such Consolidated Net Income of the Company and (B) only to the extent that a corresponding amount would be permitted at the date of determination to be dividended or distributed to the Company by such Restricted Subsidiary without prior governmental approval (that has not been obtained), and without direct or indirect restriction pursuant to the terms of its charter or any agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Subsidiary or its stockholders. “Affiliate” of any specified Person means (1) any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person or (2) any executive officer or director of such specified Person. For purposes of this definition, “control,” as used with respect to any Person, will mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” will have correlative meanings. “Applicable Premium” means, with respect to a Note at any date of redemption, as determined by the Independent Investment Bank, the excess of (A) the present value at such date of redemption of (1) the redemption price of such Note at August 2, 2017 (such redemption price being described under “—Optional Redemption”) plus 131
(2) all remaining required interest payments due on such Note through August 2, 2017 (excluding accrued but unpaid interest to the date of redemption), computed using a discount rate equal to the Treasury Rate plus 50 basis points, over (B) the principal amount of such Note. “Asset Sale” means: (1) the sale, lease, conveyance or other disposition (each, a “Transfer”) of any assets by the Company or any Restricted Subsidiary; and (2) the issuance of Equity Interests by any Restricted Subsidiary or the Transfer by the Company or any Restricted Subsidiary of Equity Interests in any of its Subsidiaries (other than directors’ qualifying shares and shares issued to foreign nationals to the extent required by applicable law). Notwithstanding the preceding, the following items will be deemed not to be Asset Sales: (1) any single transaction or series of related transactions that involves assets or Equity Interests having a Fair Market Value of less than US$5.0 million; (2) a Transfer of assets that is governed by the provisions of the Indenture described above under the caption “—Repurchase at the Option of Holders—Change of Control” and/or the provisions described above under the caption “—Certain Covenants—Merger, Consolidation or Sale of Assets;” (3) a Transfer of assets or Equity Interests between or among the Company and the Restricted Subsidiaries; (4) an issuance of Equity Interests by a Restricted Subsidiary to the Company or to another Restricted Subsidiary; (5) a Transfer of any assets in the ordinary course of business; (6) a Transfer of Cash Equivalents; (7) a Transfer of accounts receivable in connection with the compromise, settlement or collection thereof in the ordinary course of business or in bankruptcy or similar proceedings; (8) a Transfer that constitutes a Restricted Payment that is permitted by the covenant described above under the caption “—Certain Covenants—Limitation on Restricted Payments” or a Permitted Investment; (9) a Transfer of any property or equipment that has become damaged, worn out or obsolete; and (10) the creation of a Lien not prohibited by the Indenture (but not the sale of property subject to a Lien). “Attributable Debt” in respect of a Sale and Leaseback Transaction means, at the time of determination, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such Sale and Leaseback Transaction, including any period for which such lease has been extended or may, at the option of the lessor, be extended. Such present value will be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with IFRS. “Azucarera Olmos” means Azucarera Olmos S.A. “Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” will be deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition. The terms “Beneficially Owns” and “Beneficially Owned” will have a corresponding meaning.
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“Board of Directors” means: (1) with respect to a corporation, the board of directors of the corporation or, except in the context of the definition of “Change of Control,” a duly authorized committee thereof; (2) with respect to a partnership, the Board of Directors of the general partner of the partnership; and (3) with respect to any other Person, the board or committee of such Person serving a similar function. “Board Resolution” means a resolution certified by the General Manager of the Company to have been duly adopted by the Board of Directors of the Company and to be in full force and effect on the date of such certification. “Business Day” means any day other than a Legal Holiday. “Capital Lease Obligation” means an obligation that is required to be classified and accounted for as a capital lease for financial reporting purposes in accordance with IFRS; and the amount of Indebtedness represented thereby at any time shall be the amount of the liability in respect thereof that would at that time be required to be capitalized on a balance sheet in accordance with IFRS. “Capital Stock” of any Person means any and all shares, interests (including general or limited partnership interests, limited liability company or membership interests or limited liability partnership interests), participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock. “Cartavio” means Cartavio S.A.A. “Casa Grande” means Casa Grande S.A.A. “Cash Equivalents” means: (1) United States dollars and such local currencies held by the Company or any Restricted Subsidiary from time to time in the ordinary course of business; (2) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof), maturing, unless such securities are deposited to defease any Indebtedness, not more than one year from the date of acquisition; (3) securities issued or directly and fully guaranteed or insured by the Peruvian government or any agency or instrumentality thereof (provided that the full faith and credit of the Republic of Peru is pledged in support thereof), maturing, unless such securities are deposited to defease any Indebtedness, not more than one year from the date of acquisition; (4) demand deposits, certificates of deposit and time deposits with maturities of six months or less from the date of acquisition, bankers’ acceptances with maturities not exceeding one year and overnight bank deposits, in each case, with (a) any commercial bank organized under the laws of the United States or any state, commonwealth or territory thereof or any non-U.S. bank, in each case having capital and surplus in excess of US$500.0 million and a rating at the time of acquisition thereof of P-1 or better from Moody’s or A-1 or better from S&P or such local equivalent thereof or, (b) with respect to the definitions of “Permitted Investments” and “Permitted Liens” in this “Description of the Notes”, (i) with respect to Cash Equivalents of any Person whose principal place of business is in a jurisdiction other than the United States or any member state of the European Union, a bank operating in such other jurisdiction having capital and surplus in excess of US$250.0 million, (ii) any branch or Subsidiary of a bank (such bank, the “parent institution”) organized under the laws of the United States or any state, commonwealth or territory thereof or the European Union or any member state thereof, if the rating of such parent institution at the time of acquisition thereof is P-3 or better from Moody’s or A-3 or better from S&P or such local equivalent thereof, (iii) any bank to the extent the Company or any of its Subsidiaries maintains any deposits with such bank in the ordinary course of business, so long as any such deposit is outstanding for less than thirty (30) 133
days and (iv) any other bank, specified in the Indenture, with which the Company or any of its Subsidiaries maintains any deposit at the Issue Date; (5) repurchase obligations with a term of not more than thirty (30) days for underlying securities of the types described in clauses (2) and (4) above entered into with any financial institution meeting the qualifications specified in clause (4) above; (6) commercial paper having the highest rating obtainable from Moody’s or S&P and in each case maturing within one year after the date of acquisition; (7) securities issued and fully guaranteed by any state, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, rated at least “A” by Moody’s or S&P and having maturities of not more than one year from the date of acquisition; (8) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (7) of this definition; and (9) instruments equivalent to those referred to in clauses (1) through (8) above denominated in U.S. dollars or any other foreign currency comparable in credit quality and tenor to those referred to above and customarily used by corporations for cash management purposes in any jurisdiction outside the United States to the extent reasonably required in connection with any business conducted by the Company or any Restricted Subsidiary organized in such jurisdiction. “Change of Control” means the occurrence of any of the following: (1) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Company and the Restricted Subsidiaries, taken as a whole, to any “person” (as that term is used in Section 13(d)(3) of the Exchange Act) other than the Permitted Holders; (2) the adoption of a plan relating to the liquidation or dissolution of the Company; (3) the Permitted Holders cease to be the Beneficial Owner, directly or indirectly, of a majority in the aggregate of the total voting power of the Voting Stock of the Company, on a fully diluted basis, whether as a result of issuance of securities of the Company, any merger, consolidation, liquidation or dissolution of the Company, or any direct or indirect transfer of securities by the Company; or (4) individuals appointed by the Permitted Holders cease for any reason to constitute a majority of the members of the Board of Directors of the Company. “Change of Control Repurchase Event” means the occurrence of both a Change of Control and a Rating Downgrade Event. “Commission” means the United States Securities and Exchange Commission. “Common Stock” means, with respect to any Person, any Capital Stock (other than Preferred Stock) of such Person, whether outstanding on the Issue Date or issued thereafter. “Comparable Treasury Issue” means the United States Treasury security or securities selected by an Independent Investment Bank as having an actual or interpolated maturity comparable to the remaining term of the Notes to be redeemed to August 2, 2017 that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a comparable maturity to the remaining term of such Notes to August 2, 2017. “Comparable Treasury Price” means, with respect to any redemption date, (A) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (B) if the Independent Investment Bank obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations. 134
“Consolidated Leverage Ratio” means, as of any Transaction Date, the ratio of (i) the aggregate amount of Indebtedness of the Company and its Restricted Subsidiaries on a consolidated basis outstanding on such Transaction Date, to (ii) the aggregate amount of Adjusted Consolidated Cash Flow of the Company and its Restricted Subsidiaries for the Company’s most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding such Transaction Date (the “Four Quarter Period”). For purposes of calculating the Consolidated Leverage Ratio: (1) pro forma effect shall be given to any Indebtedness that is to be incurred or repaid on the Transaction Date; (2) acquisitions and dispositions of business entities or property and assets constituting a division or line of business of any Person that have been made by the Company or any Restricted Subsidiary (or by any Person that has subsequently become a Restricted Subsidiary or has subsequently merged or consolidated with or into the Company or any Restricted Subsidiary), including through mergers or consolidations, and the designation or redesignation of an Unrestricted Subsidiary, in each case, during the Four Quarter Period or subsequent thereto and on or prior to the Transaction Date will be given pro forma effect as if they had occurred on the first day of the Four Quarter Period and Adjusted Consolidated Cash Flow for the Four Quarter Period will be calculated on a pro forma basis, but without giving effect to clause (3) of the proviso set forth in the definition of Consolidated Net Income; (3) the Adjusted Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with IFRS, will be excluded; and (4) whenever pro forma effect is to be given to an acquisition or disposition, the pro forma calculations will be made in good faith by a responsible financial or accounting officer of the Company. “Consolidated Net Income” means, for any period, the aggregate of the net income (loss) of the Company and the Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with IFRS; provided that: (1) the net income (loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting will be included only to the extent of the amount of dividends or distributions paid in cash to the Company or a Restricted Subsidiary (subject, in the case of dividends or distributions paid to a Restricted Subsidiary, to the limitations contained in clause (2) below); (2) the net income (but not the net loss) of any Restricted Subsidiary will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that net income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its equityholders; (3) the net income (loss) of any Person acquired during the specified period for any period prior to the date of such acquisition will be excluded; (4) any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with: (a) any sale of assets outside the ordinary course of business of the Company; or (b) the disposition of any securities by the Company or a Restricted Subsidiary or the extinguishment of any Indebtedness of the Company or any Restricted Subsidiary, will be excluded; (5) any extraordinary gain or loss, together with any related provision for taxes on such extraordinary gain or loss, will be excluded; (6) any non-cash compensation expense realized for grants of performance shares, stock options or other rights to officers, directors and employees of the Company and any Restricted Subsidiary will be excluded; provided that such shares, options or other rights can be redeemed at the option of the holder only for Capital Stock (other than Disqualified Stock of the Company); and 135
(7) the cumulative effect of a change in accounting principles will be excluded. “Consolidated Net Tangible Assets” of any person means, as of any date, (a) all amounts that would be shown as assets on a consolidated balance sheet of such person and its Restricted Subsidiaries prepared in accordance with IFRS, less (b) the amount thereof constituting goodwill and other intangible assets as calculated in accordance with IFRS, less (c) current liabilities, excluding current maturities of long-term debt. “Default” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default. “Disqualified Stock” means any Capital Stock that, by its terms, by the terms of any security into which it is convertible, or for which it is exchangeable, or by contract or otherwise, is, or upon the happening of any event or passage of time would be, required to be redeemed on or prior to the date that is one year after the date on which the Notes mature, or is redeemable at the option of the holder thereof, or is convertible into or exchangeable for debt securities in any such case on or prior to such date. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Company to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale will not constitute Disqualified Stock if (i) the “asset sale” or “change of control” provisions applicable to such Capital Stock are no more favorable to the holders of such Capital Stock than the provisions contained in “—Repurchase at the Option of Holders—Asset Sales” and “—Repurchase at the Option of Holders—Change of Control” covenants described herein and (ii) such Capital Stock specifically provides that such Person will not repurchase or redeem any such stock pursuant to such provision prior to the Company’s repurchase of such Notes as are required to be repurchased pursuant to “—Repurchase at the Option of Holders—Asset Sales” and “—Repurchase at the Option of Holders— Change of Control” covenants. The term “Disqualified Stock” will also include any options, warrants or other rights that are convertible into Disqualified Stock or that are redeemable at the option of the holder, or required to be redeemed, prior to the date that is one year after the date on which the Notes mature. “Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). “Equity Offering” means any (i) public sale or (ii) underwritten private offering in accordance with Rule 144A, Regulation S and/or another exemption under the Securities Act, in each case of Capital Stock (other than Disqualified Stock) of the Company in excess of US$50.0 million (other than pursuant to a registration statement on Form S-8 or otherwise relating to equity securities issuable under any employee benefit plan of the Company) to any Person other than any Subsidiary thereof. “Existing Indebtedness” means the aggregate amount of Indebtedness of the Company and the Restricted Subsidiaries (other than Indebtedness under the Notes and the related Note Guarantees) in existence on the Issue Date after giving effect to the application of the proceeds of the Notes. “Fair Market Value” means the price that would be paid in an arm’s-length transaction between an informed and willing seller under no compulsion to sell and an informed and willing buyer under no compulsion to buy, as determined in good faith by the Board of Directors of the Company, whose determination, will be conclusive if evidenced by a Board Resolution. “Fitch” means Fitch Inc., a Subsidiary of Fimalac, S.A. “Fixed Charge Coverage Ratio” means for any period, the ratio of the Adjusted Consolidated Cash Flow of the Company for such period to the Fixed Charges of the Company for such period. For purposes of calculating the Fixed Charge Coverage Ratio: (1) in the event that the Company or any Restricted Subsidiary Incurs, repays, repurchases or redeems any Indebtedness or issues, repurchases or redeems Preferred Stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the “Calculation Date”), then the Fixed Charge Coverage Ratio will be calculated giving pro forma effect to such Incurrence, 136
repayment, repurchase or redemption of Indebtedness, or such issuance, repurchase or redemption of Preferred Stock, and the use of the proceeds therefrom as if the same had occurred at the beginning of such period; (2) acquisitions and dispositions of business entities or property and assets constituting a division or line of business of any Person that have been made by the Company or any Restricted Subsidiary (or by any Person that has subsequently become a Restricted Subsidiary or has subsequently merged or consolidated with or into the Company or any Restricted Subsidiary), including through mergers or consolidations, and the designation or redesignation of an Unrestricted Subsidiary, in each case, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date will be given pro forma effect as if they had occurred on the first day of the four-quarter reference period and Adjusted Consolidated Cash Flow for such reference period will be calculated on a pro forma basis, but without giving effect to clause (3) of the proviso set forth in the definition of Consolidated Net Income; (3) the Adjusted Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with IFRS, will be excluded; (4) the Fixed Charges attributable to discontinued operations, as determined in accordance with IFRS, will be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the Company or any Restricted Subsidiary following the Calculation Date; (5) whenever pro forma effect is to be given to an acquisition or disposition, the amount of Adjusted Consolidated Cash Flow relating thereto and the amount of Fixed Charges associated with any Indebtedness Incurred in connection therewith, unless otherwise specified, the pro forma calculations will be made in good faith by a responsible financial or accounting officer of the Company; (6) Fixed Charges attributable to interest on any Indebtedness (whether existing or being Incurred) computed on a pro forma basis and bearing a floating interest rate will be computed as if the rate in effect on the Calculation Date (taking into account any interest rate option, swap, cap or similar agreement applicable to such Indebtedness if such agreement has a remaining term in excess of 12 months or, if shorter, at least equal to the remaining term of such Indebtedness) had been the applicable rate for the entire period; and (7) Fixed Charges attributable to interest on any Indebtedness incurred under a revolving credit facility computed on a pro forma basis will be calculated based on the average daily balance of such Indebtedness for the four fiscal quarters subject to the pro forma calculation to the extent that such Indebtedness was Incurred solely for working capital purposes. “Fixed Charges” means, for any period, the sum, without duplication, of: (1) the consolidated interest expense of the Company and the Restricted Subsidiaries for such period, whether paid or accrued, including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings, and net of the effect of all payments made or received pursuant to Hedging Obligations; plus (2) the consolidated interest of the Company and the Restricted Subsidiaries that was capitalized during such period; plus (3) any interest expense on Indebtedness of another Person that is Guaranteed by the Company or one of the Restricted Subsidiaries or secured by a Lien on assets of the Company or a Restricted Subsidiary, whether or not such Guarantee or Lien is called upon; plus (4) the product of (a) all dividends, whether paid or accrued and whether or not in cash, on any series of Disqualified Stock of the Company or a Restricted Subsidiary or Preferred Stock of a Restricted Subsidiary, other than dividends on Equity Interests payable solely in Equity Interests (other than 137
Disqualified Stock) of the Company or to the Company or a Restricted Subsidiary, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined U.S. federal, state, local statutory tax rate of the issuer of such Disqualified or Preferred Stock, expressed as a decimal, in each case, on a consolidated basis and in accordance with IFRS. “Government Securities” means securities that are direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged. “Guarantee” means, as to any Person, a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner, including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness of another Person, but excluding endorsements for collection or deposit in the normal course of business. “Guarantors” means: (1) the Initial Guarantors; and (2) any other subsidiary that executes a Note Guarantee in accordance with the provisions of the Indenture; and their respective successors and assigns until released from their obligations under their Note Guarantees and the Indenture in accordance with the terms of the Indenture. “Hedging Obligations” means, with respect to any specified Person, the obligations of such Person under: (1) any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or other similar agreement or arrangement; (2) any commodity forward contract, commodity swap agreement, commodity option agreement or other similar agreement or arrangement; or (3) any foreign exchange contract, currency swap agreement or other similar agreement or arrangement. “Holder” means a Person in whose name a Note is registered. “IFRS” means the International Financial Reporting Standards as adopted by the International Accounting Standards Board which are in effect from time to time. “Incur” means, with respect to any Indebtedness, to incur, create, issue, assume, Guarantee or otherwise become directly or indirectly liable for or with respect to, or become responsible for, the payment of, contingently or otherwise, such Indebtedness (and “Incurrence” and “Incurred” will have meanings correlative to the foregoing); provided that (1) any Indebtedness of a Person existing at the time such Person becomes a Restricted Subsidiary will be deemed to be Incurred by such Person at the time it becomes a Restricted Subsidiary and (2) neither the accrual of interest nor the accretion of original issue discount nor the payment of interest in the form of additional Indebtedness with the same terms or the payment of dividends on Disqualified Stock or Preferred Stock in the form of additional shares of the same class of Disqualified Stock or Preferred Stock (to the extent provided for when the Indebtedness or Disqualified Stock or Preferred Stock on which such interest or dividend is paid was originally issued) will be considered an Incurrence of Indebtedness. “Indebtedness” means, with respect to any specified Person, whether or not contingent: (1) all indebtedness of such Person in respect of borrowed money; (2) all obligations of such Person evidenced by bonds, notes, debentures or similar instruments; 138
(3) all obligations of such Person in respect of banker’s acceptances, letters of credit or similar instruments (or reimbursement obligations in respect thereof); (4) all Capital Lease Obligations of such Person and Attributable Debt; (5) all obligations of such Person in respect of the deferred and unpaid balance of the purchase price of any property or services, except any such balance that constitutes an accrued expense or trade payable; (6) all Hedging Obligations of such Person; (7) all Disqualified Stock issued by such Person, valued at the greater of its voluntary or involuntary liquidation preference and its maximum fixed repurchase price plus accrued dividends; (8) all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person), provided that the amount of such Indebtedness will be the lesser of (A) the Fair Market Value of such asset at such date of determination and (B) the amount of such Indebtedness; and (9) to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person. For purposes hereof, the “maximum fixed repurchase price” of any Disqualified Stock which does not have a fixed repurchase price will be calculated in accordance with the terms of such Disqualified Stock as if such Disqualified Stock were repurchased on any date on which Indebtedness will be required to be determined pursuant to the Indenture. The amount of any Indebtedness outstanding as of any date will be the outstanding balance at such date of all unconditional obligations as described above and, with respect to contingent obligations, the maximum liability upon the occurrence of the contingency giving rise to the obligation. The amount of any Indebtedness described in clauses (1) and (2) above will be: (1) the accreted value thereof, in the case of any Indebtedness issued with original issue discount; and (2) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. For purposes of determining any particular amount of Indebtedness, (x) Guarantees, Liens or obligations with respect to letters of credit supporting Indebtedness otherwise included in the determination of such particular amount shall not be included, and (y) any Liens granted pursuant to the equal and ratable provisions referred to in the “Limitation on Liens” covenant shall not be treated as Indebtedness. “Independent Investment Bank” means one of the Reference Treasury Dealers appointed by the Company. “Initial Guarantors” means Casa Grande, Cartavio, San Jacinto and Azucarera Olmos. “Initial Purchasers” means Merrill Lynch, Pierce, Fenner & Smith Incorporated and Citigroup Global Markets Inc. “Investments” in any Person means all direct or indirect investments in such Person in the form of loans or other extensions of credit (including Guarantees), advances, capital contributions (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities issued by such Person, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with IFRS. If the Company or any Restricted Subsidiary sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary, the Company will be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Investment in such Subsidiary not sold or disposed of. The 139
acquisition by the Company or any Restricted Subsidiary of a Person that holds an Investment in a third Person will be deemed to be an Investment by the Company or such Restricted Subsidiary in such third Person in an amount equal to the Fair Market Value of the Investment held by the acquired Person in such third Person unless such Investment in such third party was not made in anticipation or contemplation of the Investment by the Company or such Restricted Subsidiary and such third party Investment is incidental to the primary business of such Person in whom the Company or such Restricted Subsidiary is making such Investment. “Investment Grade” means (1) with respect to Moody’s (or any successor company acquiring all or substantially all of its assets), a rating of Baa3 (or its equivalent under any successor rating category of Moody’s) or better; (2) with respect to S&P (or any successor company acquiring all or substantially all of its assets), a rating of BBB- (or its equivalent under any successor rating category of S&P) or better; (3) with respect to Fitch (or any successor company acquiring all or substantially all of its assets), a rating of BBB-(or its equivalent under any successor rating category of Fitch) or better; and (4) if any Rating Agency ceases to exist or ceases to rate the Notes for reasons outside of the control of the Company, the equivalent investment grade credit rating from any other “nationally recognized statistical rating organization” within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act selected by the Company as a replacement agency. “Issue Date” means the first date Notes are issued under the Indenture. “Legal Holiday” means a Saturday, a Sunday or a day on which banking institutions in The City of New York, New York, United States of America, Lima, Peru, or at a place of payment are authorized or required by law, regulation or executive order to remain closed. “Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction. “Moody’s” means Moody’s Investors Service, Inc. and its successors. “Net Available Cash” means the aggregate proceeds, including payments in respect of deferred payment obligations (to the extent corresponding to the principal, but not the interest component, thereof), received in Cash Equivalents by the Company or any Restricted Subsidiary in respect of any Asset Sale (including, without limitation, any Cash Equivalents received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of (1) the direct costs relating to such Asset Sale, including, without limitation, legal, accounting, investment banking and brokerage fees, and sales commissions, and any relocation expenses incurred as a result thereof, (2) taxes paid or payable as a result thereof, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements, (3) in the case of any Asset Sale by a Restricted Subsidiary, payments to holders of Equity Interests in such Restricted Subsidiary in such capacity (other than such Equity Interests held by the Company or any Restricted Subsidiary) to the extent that such payment is required to permit the distribution of such proceeds in respect of the Equity Interests in such Restricted Subsidiary held by the Company or any Restricted Subsidiary and (4) appropriate amounts to be provided by the Company or the Restricted Subsidiaries as a reserve against liabilities associated with such Asset Sale, including, without limitation, pension and other postemployment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale, all as determined in accordance with IFRS; provided that (a) excess amounts set aside for payment of taxes pursuant to clause (2) above remaining after such taxes have been paid in full or the statute of limitations therefor has expired and (b) amounts initially held in reserve pursuant to clause (4) no longer so held, will, in the case of each of subclause (a) and (b), at that time become Net Available Cash. “Note Guarantee” means a Guarantee of the Notes pursuant to the Indenture. 140
“Obligations” with respect to any Indebtedness means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing such Indebtedness. “Offer to Purchase” means an offer to purchase Notes by the Company from the Holders commenced by mailing a notice to the Trustee and each Holder stating: (1) the provision of the Indenture pursuant to which the offer is being made and that all Notes validly tendered will be accepted for payment on a pro rata basis; (2) the purchase price and the date of purchase, which shall be a business day no earlier than 30 days nor later than 60 days from the date such notice is mailed (the “Payment Date”); (3) that any Note not tendered will continue to accrue interest pursuant to its terms; (4) that, unless the Company defaults in the payment of the purchase price, any Note accepted for payment pursuant to the Offer to Purchase shall cease to accrue interest on and after the Payment Date; (5) that Holders electing to have a Note purchased pursuant to the Offer to Purchase will be required to surrender the Note, together with the form entitled “Option of the Holder to Elect Purchase” on the reverse side of the Note completed, to the Paying Agent at the address specified in the notice prior to the close of business on the business day immediately preceding the Payment Date; (6) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the third business day immediately preceding the Payment Date, a telegram, facsimile transmission, letter or other written notice setting forth the name of such Holder, the principal amount of Notes delivered for purchase and a statement that such Holder is withdrawing his election to have such Notes purchased; and (7) that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered; provided that each Note purchased and each new Note issued shall be in a principal amount of US$100,000 or an integral multiple of US$1,000 in excess thereof. On the Payment Date, the Company shall (a) accept for payment on a pro rata basis Notes or portions thereof (and, in the case of an Offer to Purchase made pursuant to “Repurchase at the Option of Holders―Asset Sales,” any other Pari Passu Debt included in such Offer to Purchase) tendered pursuant to an Offer to Purchase; (b) deposit, on the Business Day prior to such Payment Date, with the Paying Agent money sufficient to pay the purchase price of all Notes or portions thereof so accepted; and (c) deliver, or cause to be delivered, to the Trustee all Notes or portions thereof so accepted together with an Officers’ Certificate specifying the Notes or portions thereof accepted for payment by the Company. The Paying Agent shall promptly mail or send by wire transfer to the Holders of Notes so accepted payment in an amount equal to the purchase price, and the Trustee shall promptly authenticate and deliver to such Holders a new Note equal in principal amount to any unpurchased portion of the Note surrendered; provided that each Note purchased and each new Note issued shall be in a principal amount of US$100,000 or an integral multiple of US$1,000 in excess thereof. The Company will publicly announce the results of an Offer to Purchase as soon as practicable after the Payment Date. The Trustee shall act as the Paying Agent for an Offer to Purchase. The Company will comply with Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder, to the extent such laws and regulations are applicable, in the event that the Company is required to repurchase Notes pursuant to an Offer to Purchase. To the extent that the provisions of any securities laws or regulations conflict with the provisions of the Indenture relating to an Offer to Purchase, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under such provisions of the Indenture by virtue of such conflict. “Officer” means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice-President of such Person.
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“Officers’ Certificate” means a certificate signed on behalf of the Company by at least two Officers of the Company, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Company, that meets the requirements of the Indenture. “Opinion of Counsel” means an opinion from legal counsel who is reasonably acceptable to the Trustee (who may be counsel to the Company) that meets the requirements of the Indenture. “Pari Passu Debt” means (a) any Indebtedness of the Company that ranks equally in right of payment with the Notes or (b) any Indebtedness of a Guarantor that ranks equally in right of payment with such Guarantor’s Note Guarantee. “Permitted Business” means any business conducted or proposed to be conducted (as described in this offering memorandum) by the Company and the Restricted Subsidiaries on the Issue Date and other businesses ancillary thereto. “Permitted Holders” means the Rodríguez Family. “Permitted Investments” means: (1) any Investment in the Company or in a Restricted Subsidiary; (2) any Investment in Cash Equivalents; (3) any Investment by the Company or any Restricted Subsidiary in a Person, if as a result of such Investment: (a) such Person becomes a Restricted Subsidiary; or (b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys all or substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary; (4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales;” (5) Hedging Obligations that are designed solely to protect the Company or its Restricted Subsidiaries against fluctuations in interest rates, commodity prices or foreign currency exchange rates (or to reverse or amend any such agreements previously made for such purposes), and not for speculative purposes, and that do not increase the Indebtedness of the obligor outstanding at any time other than as a result of fluctuations in interest rates, commodity prices or foreign currency exchange rates or by reason of fees, indemnifies and compensation payable thereunder; (6) (i) stock, obligations or securities received in satisfaction of judgments, foreclosure of Liens or settlement of Indebtedness and (ii) any Investments received in compromise of obligations of any trade creditor or customer that were incurred in the ordinary course of business, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any such Person; (7) advances to customers or suppliers in the ordinary course of business that are, in conformity with IFRS, recorded as accounts receivable, prepaid expenses or deposits on the balance sheet of the Company or the Restricted Subsidiaries and endorsements for collection or deposit arising in the ordinary course of business; (8) commission, payroll, travel and similar advances to officers and employees of the Company or any Restricted Subsidiary that are expected at the time of such advance ultimately to be recorded as an expense in conformity with IFRS; (9) an Investment existing on the Issue Date, and any Investment that replaces, refinances or refunds an existing Investment; provided that the new Investment does not increase the amount of the Investment so replaced, refinanced or refunded except by an amount equal to any premium or other reasonable amount 142
paid in respect of the underlying obligations and fees and expenses incurred in connection with such replacement, refinancing or refunding; (10) repurchases of the Notes and the related Guarantees made (i) in the open market in an aggregate amount not to exceed US$30.0 million since the Issue Date pursuant to this subclause (i) or (ii) as a result of any offer to all Holders to purchase their Notes, including where any such offer is made in accordance with the provisions set forth in the covenant described under the caption “Repurchase at the Option of Holders— Asset Sales”; provided that any such repurchased Notes (and related Guarantees) must be delivered to the Trustee for cancellation or held continuously by the Company or any Restricted Subsidiary after any such repurchase and may not be transferred by any means to any Person other than the Company or any Restricted Subsidiary; (11) Investments in one or more Permitted Joint Ventures having an aggregate Fair Market Value that do not exceed in the aggregate US$5.0 million in any calendar year (with unused amounts in any calendar year being carried over to the next succeeding calendar year subject to a maximum of US$10.0 million in the aggregate in any calendar year) (with the Fair Market Value of each Investment being measured at the time made and without giving effect to subsequent changes in value); (12) Investments in one or more Qualified Acquisitions having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (12) since the Issue Date, not to exceed US$30.0 million; and (13) other Investments in any Person having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (13) since the Issue Date, not to exceed US$10.0 million. “Permitted Joint Venture” means any agreement, contract or other arrangement between the Company or any Restricted Subsidiary and any Person engaged principally in a Permitted Business that permits one party to share risks or costs, comply with regulatory requirements or satisfy other business objectives customarily achieved through the conduct of such Permitted Business jointly with third parties. “Permitted Liens” means: (1) Liens in favor of the Company or any Restricted Subsidiary that is a Guarantor; (2) Liens on property of a Person existing at the time such Person is merged with or into or consolidated with the Company or any Restricted Subsidiary; provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the Company or the Restricted Subsidiary; (3) Liens on property existing at the time of acquisition thereof by the Company or any Restricted Subsidiary of the Company, provided that such Liens were in existence prior to the contemplation of such acquisition and do not extend to any property other than the property so acquired by the Company or the Restricted Subsidiary; (4) Liens securing the Notes and the Note Guarantees; (5) Liens existing on the Issue Date; (6) Liens securing Permitted Refinancing Indebtedness; provided that such Liens do not extend to any property or assets other than the property or assets that secure the Indebtedness being refinanced; (7) Liens on property or assets securing Indebtedness used to defease or to satisfy and discharge the Notes; provided that (a) the Incurrence of such Indebtedness was not prohibited by the Indenture and (b) such defeasance or satisfaction and discharge is not prohibited by the Indenture; 143
(8) Liens securing obligations that do not exceed the greater of US$50.0 million and 5.0% of Consolidated Net Tangible Assets at any one time outstanding; (9) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (3) of the second paragraph of the covenant described under the caption “—Certain Covenants—Limitation on Indebtedness;” provided that any such Lien (i) covers only the assets acquired, constructed or improved with such Indebtedness and (ii) is created within 365 days of such acquisition, construction or improvement; (10) Liens on Cash Equivalents securing Hedging Obligations of the Company or any Restricted Subsidiary (a) that are Incurred for the purpose of fixing, hedging or swapping interest rate, commodity price or foreign currency exchange rate risk (or to reverse or amend any such agreements previously made for such purposes), and not for speculative purposes, or (b) securing letters of credit that support such Hedging Obligations; (11) Liens incurred or deposits made in the ordinary course of business in connection with worker’s compensation, unemployment insurance or other social security obligations (including any Lien securing letters of credit issued in connection therewith in the ordinary course of business consistent with past practice); (12) Lien, deposits or pledges to secure the performance of bids, tenders, contracts (other than contracts for the payment of Indebtedness), leases, or other similar obligations arising in the ordinary course of business; (13) survey exceptions, encumbrances, easements or reservations of, or rights of other for, rights of way, zoning or other restrictions as to the use of properties, and defects in title which, in the case of any of the foregoing, were not incurred or created to secure the payment of Indebtedness, and which in the aggregate do not materially adversely affect the value of such properties or materially impair the use for the purposes of which such properties are held by the Company or any Restricted Subsidiary; (14) judgment and attachment Liens not giving rise to an Event of Default and notices of lis pendens and associated rights related to litigation being contested in good faith by appropriate proceedings and for which adequate reserves have been made; (15) Liens, deposits or pledges to secure public or statutory obligations, surety, stay, appeal, indemnity, performance or other similar bonds or obligations; and Liens, deposits or pledges in lieu of such bonds or obligations, or to secure such bonds or obligations, or to secure letters of credit in lieu of or supporting the payment of such bonds or obligations; (16) Liens in the ordinary course of business in favor of collecting or payor banks having a right of set-off, revocation, refund or chargeback with respect to money or instruments of the Company or any Subsidiary thereof on deposit with or in possession of such bank; (17) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created in the ordinary course of business for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods; (18) Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other property relating to such letters of credit and products and proceeds thereof; (19) any interest or title of a lessor, licensor or sublicensor in the property subject to any lease, license or sublicense (other than any property that is the subject of a Sale and Leaseback Transaction); (20) Liens for taxes, assessments and governmental charges not yet delinquent or being contested in good faith and for which adequate reserves have been established to the extent required by IFRS; (21) Liens arising from precautionary UCC financing statements regarding operating leases or consignments; (22) Liens of franchisors in the ordinary course of business not securing Indebtedness; 144
(23) Liens imposed by law, such as (i) carriers’, warehousemen’s and mechanics’, materialmen’s, landlords’, or repairmen’s Liens, or (ii) other like Liens arising in the ordinary course of business securing obligations which are not overdue by more than 60 days or which if more than 60 days overdue, the period of grace, if any, related thereto has not expired or which are being contested in good faith by appropriate proceedings; provided that a reserve or other appropriate provision shall have been made therefor as appropriate in accordance with IFRS; (24) Liens on assets of Restricted Subsidiaries that are not Guarantors securing Indebtedness of such Restricted Subsidiaries permitted to be incurred under the covenant described under “Certain Covenants—Limitation on Indebtedness”; (25) Liens on Capital Stock or other securities or assets of any Unrestricted Subsidiary that secure Indebtedness of such Unrestricted Subsidiary; and (26) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods in the ordinary course of business. “Permitted Refinancing Indebtedness” means any Indebtedness of the Company or any Restricted Subsidiary issued in exchange for, or the net cash proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Company or any Restricted Subsidiary (other than Indebtedness owed to the Company or to any Subsidiary of the Company); provided that: (1) the amount of such Permitted Refinancing Indebtedness does not exceed the amount of the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued and unpaid interest thereon and the amount of any reasonably determined premium necessary to accomplish such refinancing and such reasonable expenses incurred in connection therewith); (2) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes or the Note Guarantees, such Permitted Refinancing Indebtedness is subordinated in right of payment to the Notes or the Note Guarantees, as applicable, on terms at least as favorable, taken as a whole, to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (4) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is Pari Passu Debt, such Permitted Refinancing Indebtedness ranks equally in right of payment with, or is subordinated in right of payment to, the Notes or such Note Guarantees; and (5) such Indebtedness is Incurred by either (a) the Restricted Subsidiary that is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded or (b) the Company or a Guarantor. “Person” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity. “Preferred Stock” means, with respect to any Person, any Capital Stock of such Person that has preferential rights to any other Capital Stock of such Person with respect to dividends or redemptions upon liquidation. “Qualified Acquisition” means the acquisition by the Company or any Restricted Subsidiary of any Person, subject to the following conditions: (1) immediately prior to such acquisition, such Person was not an Affiliate of the Company; (2) immediately after giving effect to such acquisition, the Company properly designates such Person as an Unrestricted Subsidiary in accordance with the Indenture; and 145
(3) immediately after giving effect to such acquisition, the Company, directly or indirectly, owns the majority, but not all, of the aggregate of the total voting power of the Voting Stock in such Person, on a fully diluted basis (without regard to directors’ qualifying shares or Investments by foreign nationals mandated by applicable law). “Rating Agency” means each of Moody’s, S&P, Fitch and, if any of Moody’s, S&P or Fitch ceases to exist or ceases to rate the Notes for reasons outside of the control of the Company, any other “nationally recognized statistical rating organization” within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act selected by the Company as a replacement agency. “Rating Downgrade Event” means the rating on the Notes is lowered from their rating then in effect by any of the Rating Agencies on any date during the period (the “Trigger Period”) commencing 60 days prior to the first public announcement by the Company of any Change of Control (or pending Change of Control) and ending 60 days following consummation of such Change of Control (which Trigger Period will be extended following consummation of a Change of Control for so long as any of the Rating Agencies has publicly announced that it is considering a possible ratings change); provided that a Rating Downgrade Event otherwise arising by virtue of a particular lowering in rating will not be deemed to have occurred in respect of a particular Change of Control (and thus will not be deemed a Rating Downgrade Event for purposes of the definition of Change of Control Repurchase Event hereunder) if the Rating Agency making the lowering in rating to which this definition would otherwise apply does not announce or publicly confirm or inform the Trustee in writing in response to a request made at the direction of Holders of a majority in principal amount of the then outstanding Notes that the reduction was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, the applicable Change of Control (whether or not the applicable Change of Control shall have occurred at the time of the Rating Downgrade Event). Notwithstanding the foregoing, no Rating Downgrade Event will be deemed to have occurred in connection with any particular Change of Control unless and until such Change of Control has actually been consummated. “Reference Treasury Dealer” means each of Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc., plus three others or their affiliates which are primary U.S. Government securities dealers, and their respective successors; provided, however, that if any of the foregoing or their affiliates shall cease to be a primary U.S. Government securities dealer in The City of New York (a “Primary Treasury Dealer”), the Company shall substitute therefor another Primary Treasury Dealer. “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Independent Investment Bank, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Bank by such Reference Treasury Dealer at 3:30 p.m. New York time on the third business day preceding such redemption date. “Replacement Assets” means (1) non-current assets that will be used or useful in a Permitted Business, (2) substantially all the assets of a Permitted Business, or (3) a majority of the Voting Stock of any Person engaged in a Permitted Business that will become on the date of acquisition thereof a Restricted Subsidiary. “Restricted Subsidiary” means any Subsidiary of the Company that is not an Unrestricted Subsidiary. “Rodríguez Family” means (i) Vito Modesto Rodríguez Rodríguez, Jorge Columbo Rodríguez Rodríguez and Claudio José Rodríguez Huaco, (ii) any spouse or child of the individuals referred to in the preceding clause (i) and (iii) any non-natural Person that is an Affiliate of any of the Persons referred to in the preceding clauses (i) and (ii) and with respect to which a Person or Persons listed in the preceding clauses (i) and (ii) owns the majority of the aggregate of the total voting power of the Voting Stock in such non-natural Person, on a fully diluted basis. “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. and its successors. “Sale and Leaseback Transaction” means, with respect to any Person, any transaction involving any of the assets or properties of such Person whether now owned or hereafter acquired, whereby such Person sells or otherwise transfers such assets or properties and then or thereafter leases such assets or properties or any part thereof 146
or any other assets or properties which such Person intends to use for substantially the same purpose or purposes as the assets or properties sold or transferred. “San Jacinto” means Agroindustrias San Jacinto S.A.A. “Significant Subsidiary” means any Subsidiary that would constitute a “significant subsidiary” within the meaning of Rule 1-02(w) of Article 1 of Regulation S-X of the Securities Act. “SMV” means the Peruvian Superintendencia del Mercado de Valores, or any successor entity. “Stated Maturity” means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such installment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. “Subordinated Indebtedness” means any Indebtedness that by its terms is subordinated in right of payment to the Notes or any Note Guarantee. “Subsidiary” means, with respect to any Person: (1) a corporation a majority of whose Voting Stock is at the time owned or controlled, directly or indirectly, by such Person, one or more Subsidiaries thereof or such Person and one or more Subsidiaries thereof; and (2) any other Person (other than a corporation), including, without limitation, a partnership, limited liability company, business trust or joint venture, in which such Person, one or more Subsidiaries thereof or such Person and one or more Subsidiaries thereof, directly or indirectly, at the date of determination thereof, has at least majority ownership interest entitled to vote in the election of directors, managers or trustees thereof (or other Person performing similar functions); provided that Fideicomiso Mercantil Consorcio Azucarero Ecuatoriano and its Subsidiaries (together, the “La Troncal Trust Group”) will be deemed to be Subsidiaries of the Company so long as the results of the La Troncal Trust Group are fully consolidated into the consolidated results of the Company in accordance with IFRS. “Transaction Date” means, with respect to the incurrence of any Indebtedness by the Company or any of its Restricted Subsidiaries, the date such Indebtedness is to be incurred. “Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semiannual equivalent yield to maturity or interpolated (on a day count basis) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date. “U.S. Dollar Equivalent” means with respect to any monetary amount in a currency other than U.S. dollars, at any time for determination thereof, the amount of U.S. dollars obtained by converting such foreign currency involved in such computation into U.S. dollars at the spot rate for the purchase of U.S. dollars with the applicable foreign currency as published in The Wall Street Journal in the “Exchange Rates” column under the heading “Currency Trading” on the date two business days prior to such determination. “Unrestricted Subsidiary” means any Subsidiary of the Company that is designated by the Board of Directors of the Company as an Unrestricted Subsidiary pursuant to a Board Resolution in compliance with the covenant described under the caption “—Certain Covenants—Designation of Restricted and Unrestricted Subsidiaries,” and any Subsidiary of such Subsidiary. “Voting Stock” of any Person as of any date means the Capital Stock of such Person that is ordinarily entitled to vote in the election of the Board of Directors of such Person. “Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing: 147
(1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (2) the then outstanding principal amount of such Indebtedness. Book Entry; Delivery and Form The Notes are being offered and sold in this initial offering in the United States solely to “qualified institutional buyers” under Rule 144A under the Securities Act and outside the United States in offshore transactions to persons other than U.S. persons, as defined in Regulation S under the Securities Act, in reliance on Regulation S. Following this offering, the notes may be sold:
to qualified institutional buyers under Rule 144A;
outside the United States in compliance with Regulation S; and
under other exemptions from, or in transactions not subject to, the registration requirements of the Securities Act, as described under “Transfer Restrictions.”
Exchanges between the Global Notes Transfers by an owner of a beneficial interest in a Regulation S Global Note to a transferee, who takes delivery of that interest through a Note offered and sold in the United States to qualified institutional buyers pursuant to Rule 144A Global Note, will be made only in accordance with applicable procedures and upon receipt by the trustee of a written certification from the transferee of the beneficial interest in the form provided in the indenture to the effect that the transfer is being made to a qualified institutional buyer within the meaning of Rule 144A in a transaction complying with the requirements of Rule 144A. Transfers by an owner of a beneficial interest in a Rule 144A Global Note to a transferee who takes delivery of the interest through a Regulation S Global Note will be made only upon receipt by the trustee of a certification from the transferor that the transfer is being made outside the United States to a non-U.S. person in accordance with Regulation S. Any beneficial interest in one of the Global Notes that is transferred to a person who takes delivery in the form of an interest in another Global Note will, upon transfer, cease to be an interest in that Global Note and become an interest in the other Global Note and, accordingly, will then be subject to any transfer restrictions and other procedures applicable to beneficial interests in the other Global Note. Global Notes Upon receipt of the Regulation S Global Note and the Rule 144A Global Note, DTC will credit, on its internal system, the respective principal amount of the individual beneficial interests represented by such Global Note to the accounts of persons who have accounts with DTC. Such accounts initially will be designated by or on behalf of the Initial Purchasers. Ownership of beneficial interests in a Global Note will be limited to persons who have accounts with DTC (“DTC Participants”), including Euroclear Bank S.A./N.V., as operator of Euroclear System (“Euroclear”) and Clearstream Banking, sociétè anonyme (“Clearstream”), or persons who hold interests through DTC Participants. Ownership of beneficial interests in the Global Notes will be shown on, and the transfer of that ownership will be effected only through, records maintained by DTC or its nominee (with respect to interests of DTC Participants) and the records of DTC Participants (with respect to interests of persons other than DTC Participants). So long as DTC, or its nominee, is the registered owner or holder of a Global Note, DTC or such nominee, as the case may be, will be considered the sole owner or Holder of the Notes represented by such Global Note for all purposes under the Indenture and the Notes. Except as described in “—Certificated Notes”, owners of beneficial interests in a Global Note will not be entitled to have any portions of such Global Note registered in their names, will not receive or be entitled to receive physical delivery of Notes in certificated form and will not be considered the owners or holders of the Global Note (or any notes represented thereby) under the Indenture or the Notes. In 148
addition, no beneficial owner of an interest in a Global Note will be able to transfer that interest except in accordance with DTC’s applicable procedures (in addition to those under the Indenture referred to herein and, if applicable, those of Euroclear and Clearstream. Euroclear and Clearstream will hold interests in the Global Notes on behalf of their account holders through customers’ securities accounts in their respective names on the books of their respective depositaries, which, in turn, will hold such interests in the Global Notes in customers’ securities accounts in the depositaries’ names on the books of DTC. Payments of the principal of and interest on Global Notes will be made to DTC or its nominee as the registered owner thereof. Neither we nor any Initial Purchaser will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the Global Notes or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. We anticipate that DTC or its nominee, upon receipt of any payment of principal or interest in respect of a Global Note representing any Notes held by its nominee, will credit DTC Participants’ accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of such Global Note as shown on the records of DTC or its nominee. We also expect that payments by DTC Participants to owners of beneficial interests in a Global Note held through such DTC Participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers registered in the names of nominees for such customers. Such payments will be the responsibility of such DTC Participants. Transfers between DTC Participants will be effected in accordance with DTC’s procedures, and will be settled in same-day funds. The laws of some jurisdictions require that certain persons take physical delivery of securities in certificated form. Consequently, the ability to transfer beneficial interests in a Global Note to such persons may be limited. Because DTC can only act on behalf of DTC Participants, who in turn act on behalf of indirect participants and certain banks, the ability of a person having a beneficial interest in a Global Note to pledge such interest to persons or entities that do not participate in the DTC system, or otherwise take actions in respect of such interest, may be affected by the lack of a physical certificated note in respect of such interest. Transfers between accountholders in Euroclear and Clearstream will be effected in the ordinary way in accordance with their respective rules and operating procedures. Subject to compliance with the transfer restrictions applicable to the Notes described above, crossmarket transfers between DTC participants, on the one hand, and directly or indirectly through Euroclear or Clearstream account holders, on the other hand, will be effected in DTC in accordance with DTC rules on behalf of Euroclear or Clearstream, as the case may be, by its respective depositary; however, such cross-market transactions will require delivery of instructions to Euroclear or Clearstream, as the case may be, by the counterparty in such system in accordance with its rules and procedures and within its established deadlines. Euroclear or Clearstream, as the case may be, will, if the transaction meets its settlement requirements, deliver instructions to its respective depositary to take action to effect final settlement on its behalf by delivering or receiving interests in the Global Notes in DTC, and making or receiving payment in accordance with normal procedures for same day funds settlement applicable to DTC. Euroclear and Clearstream account holders may not deliver instructions directly to the depositaries for Euroclear or Clearstream. Because of time zone differences, the securities account of a Euroclear or Clearstream account holder purchasing an interest in a Global Note from a DTC Participant will be credited during the securities settlement processing day (which must be a business day for Euroclear or Clearstream, as the case may be) immediately following the DTC settlement date and such credit of any transactions in interests in a Global Note settled during such processing day will be reported to the relevant Euroclear or Clearstream accountholder on such day. Cash received in Euroclear or Clearstream as a result of sales of interests in a Global Note by or through a Euroclear or Clearstream account holder to a DTC Participant will be received for value on the DTC settlement date but will be available in the relevant Euroclear or Clearstream cash account only as of the business day following settlement in DTC. DTC has advised that it will take any action permitted to be taken by a Holder (including the presentation of Notes for exchange as described below) only at the direction of one or more DTC Participants to whose account or accounts with DTC interests in the Global Notes are credited and only in respect of such portion of the aggregate principal amount of the Notes as to which such DTC Participant or DTC Participants has or have given such 149
direction. However, in the limited circumstances described above, DTC will exchange the Global Notes for certificated Notes (bearing a restrictive legend, unless the Company determines otherwise in compliance with applicable law), which will be distributed to its participants. Holders of indirect interests in the Global Notes through DTC Participants have no direct rights to enforce such interests while the Notes are in global form. The giving of notices and other communications by DTC to DTC Participants, by DTC Participants to persons who hold accounts with them and by such persons to holders of beneficial interests in a Global Note will be governed by arrangements between them, subject to any statutory or regulatory requirements as may exist from time to time. DTC has advised as follows: DTC is a limited purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the Uniform Commercial Code and a “Clearing Agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for DTC Participants and to facilitate the clearance and settlement of securities transactions between DTC Participants through electronic book-entry changes in accounts of DTC Participants, thereby eliminating the need for physical movement of certificates. DTC Participants include security brokers and dealers, banks, trust companies and clearing corporations and may include certain other organizations. Indirect access to the DTC system is available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly (“indirect participants”). Although DTC, Euroclear and Clearstream have agreed to the foregoing procedures in order to facilitate transfers of interests in the Regulation S Global Note and in the Rule 144A Global Note among participants and accountholders of DTC, Euroclear and Clearstream, they are under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. Neither we nor the Initial Purchasers will have any responsibility for the performance of DTC, Euroclear or Clearstream or their respective participants, indirect participants or accountholders of their respective obligations under the rules and procedures governing their operations. Certificated Notes If (1) DTC or any successor to DTC is at any time unwilling or unable to continue as a depositary for a Global Note and a successor depositary is not appointed by us within 90 days, (2) any of the Notes has become immediately due and payable in accordance with “—Events of Default and Remedies” or (3) if the Company, at its sole discretion, determines that the Global Notes will be exchangeable for certificated notes and the Company notifies the Trustee thereof, the Company will issue certificated notes in registered form in exchange for the Regulation S Global Note and the Rule 144A Global Note, as the case may be. Upon receipt of such notice from DTC or a paying agent, as the case may be, the Company will use its best efforts to make arrangements with DTC for the exchange of interests in the Global Notes for certificated Notes and cause the requested certificated Notes to be executed and delivered to the Registrar in sufficient quantities and authenticated by the Registrar for delivery to Holders. Persons exchanging interests in a Global Note for certificated Notes will be required to provide the Registrar with (a) written instruction and other information required by the Company and the Registrar to complete, execute and deliver such certificated Notes and (b) certification that such interest is being transferred in compliance with the Securities Act. In all cases, certificated Notes delivered in exchange for any Global Note or beneficial interests therein will be registered in the names, and issued in any approved denominations, requested by DTC. Certificated Notes will not be eligible for clearing and settlement through the DTC, Euroclear or Clearstream.
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TAXATION The following discussion summarizes certain Peruvian and U.S. federal income considerations that may be relevant to you if you invest in the notes. This summary is based on laws, regulations, rulings and decisions now in effect in Peru and the United States, which, in each case, may change. Any change could apply retroactively and could affect the continued validity of this summary. This summary does not describe all of the tax considerations that may be relevant to you or your situation, particularly if you are subject to special tax rules. You should consult your tax advisors about the tax consequences of holding the notes, including the relevance to your particular situation of the considerations discussed below, as well as of state, local and other tax laws. Peruvian Tax Considerations The following summary of certain Peruvian tax matters as in force on the date of this offering memorandum describes the principal tax consequences of an investment in the offered notes by a person who is not a resident of Peru and does not hold the offered notes or a beneficial interest therein in connection with the conduct of a trade or business through a permanent establishment in Peru (“non Peruvian holder”). This summary is not intended to be a comprehensive description of all of the tax considerations that may be relevant to a decision to make an investment in the offered notes. In addition, it does not describe any tax consequences: (a) arising under the laws of any taxing jurisdiction other than Peru or (b) applicable to a resident of Peru or to a person with a permanent establishment in Peru. For purposes of this section, “non-Peruvian holders” means either: (i) a legal entity which has not been incorporated in Peru, except that the notes are assigned to a branch, agent or a permanent establishment in Peru of a foreign entity or (ii) an individual who is not a Peruvian tax resident. For Peruvian tax purposes, an individual is deemed to be a Peruvian tax resident if such individual is (i) a Peruvian citizen and has a regular residence in Peru, or (ii) not a Peruvian citizen but has resided or has remained in Peru for more than 183 calendar days during any 12month period. Peru has entered into treaties to avoid double taxation with Brazil, Canada, Chile, and the Andean Community countries. Additionally, Peru is in the process of approving a similar treaty with Mexico. Income Tax Payment of interest Interest, commissions, premiums and other financial expenses in connection with the notes are subject to Peruvian Income Tax, as Peruvian source income, considering that we are domiciled in Peru. Therefore, accrued interest on the notes received by non-Peruvian holders that are legal entities will be subject to a 4.99% withholding tax. Similarly, interest payments derived from the notes received by non-Peruvian holders who are individuals is subject to withholding income tax at a rate of 4.99%, provided that interest does not derive from a transaction “from or through a tax haven.” If the latter requirement is not fulfilled, the applicable withholding rate will be 30%. In addition, in order to qualify for the preferential withholding income tax rate of 4.99%, the nonPeruvian holders and the Company must not be deemed related parties. We are required to act as withholding agent for income tax, if any, due with respect to interest paid on the notes. We have agreed, subject to specific exceptions and limitations, to pay additional amounts to the holders of the notes in respect of the Peruvian income taxes mentioned above. See “Description of the Notes—Additional Amounts”. Capital gains Proceeds received by a non-Peruvian holder on a sale, exchange or disposition of a beneficial interest in the Global Notes held through a Clearing System will not be subject to any Peruvian withholding or capital gains tax. In the event that the beneficial interests in the Global Notes are exchanged for definitive notes, any capital gain arising from the sale, exchange or other disposition of these notes by non-Peruvian holders would be subject to Peruvian income tax with a 5% rate, only if these two requirements are satisfied: (i) the notes are registered in the 151
Securities Public Registry and (ii) the notes are negotiated in a Peruvian Stock Market. Otherwise, capital gains will be taxable at a 30% rate. Capital gain would be the positive difference between the sale value and the acquisition value, taking into consideration that the acquisition value has to be certified by Peruvian Tax Administration through a request submitted by the seller. This certification is not required if the sale is through the Peruvian Stock Market. The Income Tax Law provides a temporal exemption on the assessment of income tax on capital gains resulting in the sale of securities issued by Peruvian entities performed by individuals (Peruvian or foreign), for the first S/.18,250 (5 UIT) gained in a calendar year. This exemption will be in effect until December 31, 2012. Nevertheless, it is customary to extend the validity of these exemptions. Prospective purchasers should discuss with their own tax advisors the application of any income tax described herein to their particular situations. Value Added Tax (VAT) Payments of interest on the notes made to holders of the notes shall be subject to Peruvian value added tax (Impuesto General a las Ventas) provided that the proceeds from the offering of the notes will be used in Peru. On June 9, 2011, an amendment was introduced to the Peruvian Value Added Tax Law, which includes a new exemption. Said amendment exempts from VAT the payment of interest generated by securities registered in the Securities Public Registry (“Registro Público del Mercado de Valores”) and issued by Peruvian entities which were offered in an international issuance if (i) it has a local tranche within Peru and (ii) the issuance is made pursuant to the Peruvian Securities Law or the Peruvian Investment Fund Law. This exemption will expire on December, 31, 2012. Such exemption has been commonly extended, however, we cannot assure that such exemption will be renewed after December 31, 2012. We expect to comply with the exemption requirements, and therefore, the payment of interest under the notes shall be VAT-exempt until December 31, 2012, unless such exemption is extended. Financial Transaction Tax Finally, it is important to mention that in Peru there is a Financial Transactions Tax (“FTT”) which is a tax at a 0.005% rate on debits and credits in Peruvian bank -or other financial institutions- accounts, either in national or foreign currency. If the interest from the notes or the issue price paid for the notes is deposited in a Peruvian Financial System (“PFS”) bank account, such amount will be levied at the corresponding FTT tax rate. The taxpayer of the FTT is the holder of the PFS bank account. U.S. Federal Income Tax Considerations The following is a description of certain U.S. federal income tax considerations relevant to the acquisition, ownership, disposition and retirement of notes by a holder thereof. This description only applies to notes held as capital assets and does not address, except as set forth below, aspects of U.S. federal income taxation that may be applicable to holders that are subject to special tax rules, such as:
financial institutions,
insurance companies,
real estate investment trusts,
regulated investment companies,
certain former citizens or long-term residents of the United States,
grantor trusts,
tax-exempt organizations, 152
dealers or traders in securities or currencies, including those that mark to market,
holders that will hold a note as part of a position in a straddle or as part of a hedging, conversion or integrated transaction for U.S. federal income tax purposes,
holders that will hold the notes through a partnership or other pass-through entity, or
U.S. Holders (as defined below) that have a functional currency other than the U.S. dollar.
Moreover, this description does not address the U.S. federal estate and gift tax or alternative minimum tax consequences of the acquisition, ownership, disposition or retirement of the notes and does not address the U.S. federal income tax treatment of holders that do not acquire the notes as part of the initial distribution at their issue price including purchasers of additional notes. The “issue price” of a note is equal to the first price to investors (not including bond houses, brokers or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers) at which a substantial amount of the notes is sold for money. Each prospective purchaser should consult its tax advisor with respect to the U.S. federal, state, local and foreign tax consequences of acquiring, holding and disposing of the notes. This description is based on the Internal Revenue Code of 1986, as amended (the “Code”), existing and proposed Treasury Regulations (“Regulations”), administrative pronouncements and judicial decisions, each as available and in effect on the date hereof. All of the foregoing is subject to change, possibly with retroactive effect, or differing interpretations which could affect the tax consequences described herein. For purposes of this description, a “U.S. Holder” is a beneficial owner of the notes who for U.S. federal income tax purposes is:
an individual who is a citizen or resident of the United States;
a corporation or any other entity treated as a corporation for U.S. federal income tax purposes organized in or under the laws of the United States, any state thereof or the District of Columbia;
an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
a trust (1) that is subject to the primary supervision of a court within the United States and the control of one or more U.S. persons as described in Section 7701(a)(30) of the Code or (b) that has a valid election in effect under applicable Regulations to be treated as a U.S. person.
A Non-U.S. Holder is a beneficial owner of notes that is neither a U.S. Holder nor a partnership (or any other entity treated as a partnership for U.S. federal income tax purposes). If a partnership (or any other entity treated as a partnership for U.S. federal income tax purposes) holds the notes, the tax treatment of the partnership and a partner in such partnership generally will depend on the status of the partner and the activities of the partnership. Such partner or partnership should consult its own tax advisor regarding the specific consequences of the acquisition, ownership and disposition of the notes. TREASURY DEPARTMENT CIRCULAR 230 DISCLOSURE PURSUANT TO TREASURY DEPARTMENT CIRCULAR 230, WE HEREBY INFORM YOU THAT THE DESCRIPTION SET FORTH HEREIN WITH RESPECT TO U.S. FEDERAL TAX ISSUES WAS NOT INTENDED OR WRITTEN TO BE USED, AND SUCH DESCRIPTION CANNOT BE USED, BY ANY TAXPAYER FOR THE PURPOSE OF AVOIDING ANY PENALTIES THAT MAY BE IMPOSED ON THE TAXPAYER UNDER THE CODE. SUCH DESCRIPTION WAS WRITTEN TO SUPPORT THE PROMOTION OR MARKETING OF THE NOTES. TAXPAYERS SHOULD SEEK ADVICE BASED ON THE TAXPAYER’S PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.
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Interest It is expected, and this discussion assumes, that the notes will not be issued with original issue discount (as such term is described under the Regulations) for U.S. federal income tax purposes. Therefore, if you are a U.S. Holder, interest paid to you on a note, including Additional Amounts, if any, with respect thereto as described under “Description of the Notes—Additional Amounts,” will be includible in your gross income as ordinary interest income in accordance with your usual method of U.S. federal income tax accounting. In addition, interest on the notes will be treated as foreign source income for U.S. federal income tax purposes. We may redeem all or part of the notes at any time at a redemption price equal to 100% of the principal amount of notes redeemed plus the applicable “make-whole” premium (see “Description of the Notes—Optional Redemption”). Similarly, you may require us to repurchase your notes in the event of a change of control repurchase event (see “Description of the Notes—Repurchase at the Option of Holders—Change of Control”). Under the Regulations governing contingent payment debt instruments (“CPDIs”), the possibility of a contingent payment on a note may be disregarded if the likelihood of the contingent payment, as of the issue date, is “remote or incidental.” We believe that as of the expected issue date of the notes, the likelihood of either a change of control repurchase event or our redemption of the notes is, for this purpose, remote and, therefore, we do not intend to treat the notes as CPDIs. Our determination, however, is not binding on the Internal Revenue Service (“IRS”), and if the IRS was to challenge this determination, you may be required to accrue income on the notes that you own in excess of stated interest, and to treat as ordinary income rather than capital gain any income realized on the taxable disposition of such notes before the resolution of the contingency. In the event that such contingency were to occur, it would affect the amount and timing of the income that you recognize. U.S. Holders are urged to consult their own tax advisors regarding the potential application to the notes of the CPDI rules and the consequences thereof. The remainder of this discussion assumes that the notes will not be treated as CPDIs. Subject to the discussion below under the caption “—U.S. Backup Withholding Tax and Information Reporting,” if you are a Non-U.S. Holder, payments to you of interest on a note generally will not be subject to U.S. federal income tax unless the income is effectively connected with your conduct of a trade or business in the United States. Sale, Exchange, Retirement or Other Taxable Disposition If you are a U.S. Holder, upon the sale, exchange, retirement or other taxable disposition of a note you will recognize taxable gain or loss equal to the difference, if any, between the amount realized on the sale, exchange, retirement or other taxable disposition, other than accrued but unpaid interest which will be taxable as ordinary interest income, and your adjusted tax basis in the note. Your adjusted tax basis in a note generally will equal the cost of the note to you. Any such gain or loss will be capital gain or loss. If you are a noncorporate U.S. Holder, the maximum marginal U.S. federal income tax rate applicable to the gain will be lower than the maximum marginal U.S. federal income tax rate applicable to ordinary income (other than certain dividends) if your holding period for the notes exceeds one year (i.e., such gain is long-term capital gain). Any gain or loss realized on the sale, exchange, retirement or other taxable disposition of a note generally will be treated as U.S. source gain or loss, as the case may be. The deductibility of capital losses is subject to limitations. Subject to the discussion below under the caption “—U.S. Backup Withholding Tax and Information Reporting,” if you are a Non-U.S. Holder, any gain realized by you upon the sale, exchange, retirement or other taxable disposition of a note generally will not be subject to U.S. federal income tax, unless:
the gain is effectively connected with your conduct of a trade or business in the United States; or
if you are an individual Non-U.S. Holder, you are present in the United States for 183 days or more in the taxable year of the sale, exchange, retirement or other taxable disposition and certain other conditions are met.
U.S. Backup Withholding Tax and Information Reporting A backup withholding tax and information reporting requirements apply to certain payments of principal of, and interest on, an obligation and to proceeds of the sale or redemption of an obligation, to certain holders of notes that 154
are U.S. persons. Information reporting generally will apply to payments of principal of, and interest on, notes, and to proceeds from the sale or redemption of, notes within the United States, or by a U.S. payor or through certain U.S.-related financial intermediaries, to a holder of notes that is a U.S. person (other than an exempt recipient). The payor will be required to backup withhold on payments made within the United States, or by a U.S. payor or through certain U.S.-related financial intermediaries, on a note to a holder of a note that is a U.S. person, other than an exempt recipient, if the holder fails to furnish its correct taxpayer identification number or otherwise fails to comply with, or establish an exemption from, the backup withholding requirements. Payments within the United States, or by a U.S. payor or through certain U.S. -related financial intermediaries, of principal and interest to a holder of a note that is not a U.S. person will not be subject to backup withholding tax and information reporting requirements if an appropriate certification is provided by the holder to the payor and the payor does not have actual knowledge or a reason to know that the certificate is incorrect. The backup withholding tax rate is 28% for taxable years beginning before January 1, 2013. Backup withholding is not an additional tax. You generally will be entitled to credit any amounts withheld under the backup withholding rules against your U.S. federal income tax liability provided the required information is furnished to the IRS in a timely manner. In the case of payments to certain trusts or certain partnerships, the persons treated as the owners of the trust or the partners of the partnership, as the case may be, will be required to provide the certification discussed above in order to establish an exemption from backup withholding tax and information reporting requirements. Medicare Tax For taxable years beginning after December 31, 2012, a U.S. Holder that is an individual or estate, or a trust that does not fall into a special class of trusts that is exempt from such tax, will be subject to a 3.8% tax (the “Medicare tax”) on the lesser of (1) the U.S. Holder’s “net investment income” (in the case of individuals) or “undistributed net investment income” (in the case of estates and trusts) for the relevant taxable year and (2) the excess of the U.S. Holder’s “modified adjusted gross income” (in the case of individuals) or “adjusted gross income” (in the case of estates and trusts) for the taxable year over a certain threshold (which in the case of individuals will be between US$125,000 and US$250,000, depending on the individual’s circumstances). A U.S. Holder’s net investment income generally will include its interest income on the notes and its net gains from the disposition of the notes, unless such interest income or net gains are derived in the ordinary course of the conduct of a trade or business (other than a trade or business that consists of certain passive or trading activities). U.S. Holders that are individuals, estates or trusts should consult their own tax advisors regarding the applicability of the Medicare tax to their income and gains in respect of the notes. “Specified Foreign Financial Asset” Reporting Under legislation enacted in 2010, owners of “specified foreign financial assets” with an aggregate value in excess of US$50,000 (and in some circumstances, a higher threshold), may be required to file an information report with respect to such assets with their U.S. federal income tax returns. “Specified foreign financial assets” generally include any financial accounts maintained by foreign financial institutions as well as any of the following, but only if they are not held in accounts maintained by financial institutions: (i) stocks and securities issued by non-U.S. persons, (ii) financial instruments and contracts held for investment that have non-U.S. issuers or counterparties and (iii) interests in foreign entities. U.S. Holders are urged to consult their tax advisors regarding the application of this legislation to their ownership of the notes. The above description is not intended to constitute a complete analysis of all tax consequences relating to the ownership of the notes. Prospective purchasers of notes should consult their own tax advisors concerning the tax consequences of their particular situations.
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PLAN OF DISTRIBUTION Subject to the terms and conditions contained in a purchase agreement between us and the initial purchasers, we have agreed to sell to the initial purchasers, and each of the initial purchasers has, severally and not jointly, agreed to purchase from us, the principal amount of the notes that appears opposite its name in the table below. Initial Purchasers
Principal Amount of Notes
Merrill Lynch, Pierce, Fenner & Smith Incorporated ..................................................................................................... Citigroup Global Markets Inc. .............................................................................................. Total.......................................................................................................................................
US$162,500,000 162,500,000 US$325,000,000
The purchase agreement provides that the obligations of the initial purchasers to purchase the notes offered hereby are subject to certain conditions precedent and that the initial purchasers will purchase all of the notes offered by this offering memorandum if any of the notes are purchased. After the initial offering, the initial purchasers may change the issue price and other selling terms. We have agreed to indemnify the initial purchasers against certain liabilities, including liabilities under the Securities Act, and to contribute to payments the initial purchasers may be required to make in respect of any of these liabilities. The notes have not been registered under the Securities Act. Each initial purchaser has agreed that it will offer or sell the notes only (1) in the United States to qualified institutional buyers in reliance on Rule 144A under the Securities Act or (2) in offshore transactions in reliance on Regulation S under the Securities Act. See “Transfer Restrictions”. New Issue of Securities The notes are a new issue of securities with no established trading market. Application has been made to the Irish Stock Exchange for the notes to be admitted to the Official List and to trading on the Global Exchange Market which is the exchange regulated market of the Irish Stock Exchange. However, we cannot assure you that the application will be approved. The initial purchasers may make a market in the notes after completion of the offering, but will not be obligated to do so, and may discontinue any market-making activities at any time without notice. Neither we nor the initial purchasers can provide any assurance as to the liquidity of the trading market for the notes or that an active public market for the notes will develop. If an active public trading market for the notes does not develop, the market price and liquidity of the notes may be adversely affected. No Sales of Similar Securities We and the Guarantors have agreed that we will not, for a period of 90 days after the date of this offering memorandum, without the prior consent of the initial purchasers, offer, sell, contract to sell, pledge, otherwise dispose of, or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) by us or any of our direct or indirect subsidiaries, directly or indirectly, or announce the offering, of any debt securities issued or guaranteed by us (other than the notes), and having a tenor of greater than one year, except in an offering exclusively offered, directed and sold within Peru. Stabilization Transactions In connection with the offering of the notes, the initial purchasers may engage in over-allotment and stabilizing transactions, but are not required to do so. Over-allotment involves sales in excess of the offering size, which creates a short position for the initial purchasers. Stabilizing transactions involve bids to purchase the notes in the open market for the purpose of pegging, fixing or maintaining the price of the notes. Stabilizing transactions may cause the price of the notes to be higher than it would otherwise be in the absence of those transactions. If the initial purchasers engage in stabilizing covering transactions, they may discontinue them at any time. 156
Sales Outside the United States Neither we nor the initial purchasers are making an offer to sell, or seeking offers to buy, the notes in any jurisdiction where the offer and sale is not permitted. You must comply with all applicable laws and regulations in force in any jurisdiction in which you purchase, offer or sell the notes or possess or distribute this offering memorandum, and you must obtain any consent, approval or permission required for your purchase, offer or sale of the notes under the laws and regulations in force in any jurisdiction to which you are subject or in which you make such purchases, offers or sales. Neither we nor the initial purchasers will have any responsibility therefor. Peru In Peru, this offering will be considered a public offering directed exclusively to institutional investors under CONASEV Resolution No. 079-2008-EF/94.01.1. The notes and this offering memorandum have been registered with the SMV in accordance with the procedure set forth in SMV Resolution No. 004-2011-EF/94.01.1, applicable to international offerings with a placement tranche in Peru executed in reliance with Rule 144A of the Securities Act. In order to purchase the notes, institutional investors in Peru must sign a statement representing that they understand (i) differences which exist among the accounting and tax treatment in Peru and the country or countries where the notes will be traded, and (ii) the terms and conditions of the notes. Notice to Prospective Investors in the European Economic Area In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), each initial purchaser has requested and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”), it has not made and will not make an offer for the notes which are the subject of the offering contemplated in this offering memorandum to the public in that Relevant Member State other than: A. to any legal entity which is a qualified investor as defined in the Prospectus Directive; B. to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated and Citigroup Global Markets Inc.; or C. in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of notes shall require the Issuer, the initial purchasers or the Guarantors to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive. Each person in a Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”) who receives any communication in respect of, or who acquires any notes under, the offers to the public contemplated in this offering memorandum will be deemed to have represented, warranted and agreed to and with each initial purchaser and the Issuer that: (a) it is a qualified investor within the meaning of the law in that Relevant Member State implementing Article 2(1)(e) of the Prospectus Directive; and (b) in the case of any notes acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, (i) the notes acquired by it in the offering have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than qualified investors, as that term is defined in the Prospectus Directive, or in circumstances in which the prior consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated and Citigroup Global Markets Inc. has been given to the offer or resale; or (ii) where notes have been acquired by it on behalf of persons in any Relevant Member State other than qualified investors, the offer of those notes to it is not treated under the Prospectus Directive as having been made to such persons. 157
For the purpose of the above provisions, the expression “an offer to the public” in relation to any notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the notes to be offered so as to enable an investor to decide to purchase or subscribe the notes, as the same may be varied in the Relevant Member State by any measure implementing the Prospectus Directive in the Relevant Member State and the expression “Prospectus Directive” means Directive 2003/71/EC (including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member States) and includes any relevant implementing measure in the Relevant Member State and the expression “2010 PD Amending Directive” means Directive 2010/73/EU. Notice to Prospective Investors in the United Kingdom Each of the initial purchasers has represented and agreed that: (a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 ("FSMA")) received by it in connection with the issue or sale of any notes in circumstances in which Section 21(1) of the FSMA does not apply to the Issuer or the Guarantors; and (b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the notes in, from or otherwise involving the United Kingdom. In addition, in the United Kingdom, this document is being distributed only to, and is directed only at, and any offer subsequently made may only be directed at persons who are “qualified investors” (as defined in the Prospectus Directive) (i) who have professional experience in matters relating to investments falling within Article 19 (5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”) and/or (ii) who are high net worth companies (or persons to whom it may otherwise be lawfully communicated) falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). This document must not be acted on or relied on in the United Kingdom by persons who are not relevant persons. In the United Kingdom, any investment or investment activity to which this document relates is only available to, and will be engaged in with, relevant persons. Republic of Chile The notes will not be registered under Law 18,045, as amended, of Chile with the Superintendencia de Valores y Seguros (Chilean Securities Commission), and accordingly, they may be not be offered to persons in Chile, except in circumstances that do not constitute a public offering under Chilean law. Republic of Colombia The notes have not been and will not be offered in Colombia through a public offering of securities pursuant to Colombian laws and regulations, nor will they be registered in the Colombian National Registry of Securities and Issuers or listed on a regulated securities trading system such as the Colombian Stock Exchange. Other Relationships Some of the initial purchasers and their affiliates have engaged in, and may in the future engage in, investment banking and other commercial dealings in the ordinary course of business with us or our affiliates. They have received, or may in the future receive, customary fees and commissions for these transactions. In addition, in the ordinary course of their business activities, the initial purchasers and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities activities may involve securities and/or instruments of ours or our affiliates. Certain of the initial purchasers or their affiliates that have a lending relationship with us routinely hedge their credit exposure to us consistent with their customary risk management policies. Typically, such initial purchasers and their affiliates would hedge such exposure by entering into transactions which consist of either the 158
purchase of credit default swaps or the creation of short positions in our securities, including potentially the notes offered hereby. Any such short positions could adversely affect future trading prices of the notes offered hereby. The initial purchasers and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments. Settlement Delivery of the notes is expected on or about August 2, 2012, which will be the fifth business day following the date of pricing of the notes. Purchasers who wish to trade notes on the date of pricing or the next succeeding business day will be required, by virtue of the fact that the notes initially will settle in T+5, to specify an alternate settlement cycle at the time of any such trade to prevent a failed settlement. Purchasers of the notes who wish to trade the notes on the pricing date or the next succeeding business day should consult their own advisor.
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TRANSFER RESTRICTIONS The notes have not been registered and will not be registered under the Securities Act, any U.S. state securities laws or the laws of any other jurisdiction (other than Peru), and may not be offered or sold except pursuant to an effective registration statement or pursuant to transactions exempt from, or not subject to, registration under the Securities Act and the securities laws of any other jurisdiction. Accordingly, the notes are being offered and sold only:
in the United States to qualified institutional buyers (as defined in Rule 144A) in reliance on Rule 144A under the Securities Act; and
outside of the United States, to certain persons, other than U.S. persons, in offshore transactions meeting the requirements of Rule 903 in reliance on Regulation S under the Securities Act.
The notes are being offered in Peru only to “institutional investors” (as such term is defined in the Seventh Final Disposition of CONASEV Resolution No. 141-98-EF/94.10.1). Purchasers’ Representations and Restrictions on Resale and Transfer Each purchaser of notes (other than the initial purchasers in connection with the initial issuance and sale of notes) and each owner of any beneficial interest therein will be deemed, by its acceptance or purchase thereof, to have represented and agreed as follows: (1) it is purchasing the notes for its own account or an account with respect to which it exercises sole investment discretion and it and any such account is either (a) a qualified institutional buyer and is aware that the sale to it is being made pursuant to Rule 144A or (b) a non-U.S. person that is outside the United States; (2) it acknowledges that the notes have not been registered under the Securities Act or with any securities regulatory authority of any U.S. state or any other jurisdiction (other than Peru) and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except as set forth below; (3) it understands and agrees that notes initially offered in the United States to qualified institutional buyers will be represented by a Global Note and that notes offered outside the United States pursuant to Regulation S will be represented by a separate Global Note; (4) it will not resell or otherwise transfer any of such notes except (a) to us, (b) within the United States to a qualified institutional buyer in a transaction complying with Rule 144A under the Securities Act, (c) outside the United States in compliance with Rule 903 or 904 under the Securities Act, (d) pursuant to another exemption from registration under the Securities Act (if available) or (e) pursuant to an effective registration statement under the Securities Act; (5) it agrees that it will give to each person to whom it transfers the notes notice of any restrictions on transfer of such notes; (6) it acknowledges that prior to any proposed transfer of notes (other than pursuant to an effective registration statement), the holder of such notes may be required to provide certifications relating to the manner of such transfer as provided in the indenture governing the notes; (7) it acknowledges that the trustee, registrar or transfer agent for the notes will not be required to accept for registration the transfer of any notes, except upon presentation of evidence satisfactory to us that the restrictions set forth herein have been complied with; (8) it acknowledges that we, the initial purchasers and other persons will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements and agrees that if any of the acknowledgements, representations and agreements deemed to have been made by its purchase of the notes are no longer accurate, it will promptly notify us and the initial purchasers; and 160
(9) if it is acquiring the notes as a fiduciary or agent for one or more investor accounts, it represents that it has sole investment discretion with respect to each such account and it has full power to make the foregoing acknowledgements, representations and agreements on behalf of each account. Representations and Restrictions on Resale and Transfer in the European Economic Area Each person in a Relevant Member State who receives any communication in respect of, or who acquires any notes under, the offers to the public contemplated in this offering memorandum will be deemed to have represented, warranted and agreed to and with each initial purchaser and the Issuer that: (a) it is a qualified investor within the meaning of the law in that Relevant Member State implementing Article 2(1)(e) of the Prospectus Directive; and (b) in the case of any notes acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, (i) the notes acquired by it in the offering have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than qualified investors, as that term is defined in the Prospectus Directive, or in circumstances in which the prior consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated and Citigroup Global Markets Inc. has been given to the offer or resale; or (ii) where notes have been acquired by it on behalf of persons in any Relevant Member State other than qualified investors, the offer of those notes to it is not treated under the Prospectus Directive as having been made to such persons. Representations and Restrictions on Resale and Transfer of Peruvian Purchasers The notes are being offered in Peru only to “institutional investors” (as such term is defined in the Seventh Final Disposition of CONASEV Resolution No. 141-98-EF/94.10.1). The notes in Peru are subject to the transfer and resale restrictions and may not be transferred or resold in Peru except as permitted under CONASEV Resolution No. 079-2008-EF/94.01.1. Legends The following is the form of restrictive legend which will appear on the face of the Rule 144A Global Note (unless we determine otherwise in compliance with applicable law), and which will be used to notify transferees of the foregoing restrictions on transfer: “THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY U.S. STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES FOR THE BENEFIT OF THE ISSUER THAT THIS NOTE OR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) TO THE ISSUER, (2) SO LONG AS THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A) IN ACCORDANCE WITH RULE 144A, (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT, (4) PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT (IF AVAILABLE) OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND IN EACH OF SUCH CASES IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER APPLICABLE JURISDICTION. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, REPRESENTS AND AGREES THAT IT SHALL NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO ABOVE.
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THIS LEGEND MAY BE REMOVED SOLELY AT THE DISCRETION AND AT THE DIRECTION OF THE ISSUER.” The following is the form of restrictive legend which will appear on the face of the Regulation S Global Note (unless we determine otherwise in compliance with applicable law), and which will be used to notify transferees of the foregoing restrictions on transfer: “THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY U.S. STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES THAT NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY OTHER APPLICABLE JURISDICTION. For further discussion of the requirements (including the presentation of transfer certificates) under the indenture to effect exchanges or transfers of interest in Global Note and certificated notes, see “Description of the Notes”.
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LEGAL MATTERS The validity of the notes will be passed upon for us by Milbank, Tweed, Hadley & McCloy LLP, our U.S. counsel, as to matters of U.S. Federal and New York law and for the initial purchasers by Shearman & Sterling LLP, U.S. counsel to the initial purchasers, as to matters of U.S. Federal and New York law. Certain matters of Peruvian law relating to the notes will be passed upon for us by Rubio Leguía Normand, our Peruvian counsel. Miranda & Amado Abogados, Peruvian counsel to the initial purchasers, will pass upon certain matters of Peruvian law relating to the notes for the initial purchasers.
INDEPENDENT AUDITORS Our audited consolidated annual financial statements as of December 31, 2011 and 2010 and at January 1, 2010 (transition date) and for the years ended December 31, 2011 and 2010, included in this offering memorandum have been audited by Dongo-Soria Gaveglio y Asociados Sociedad Civil de Responsabilidad Limitada, a member firm of PricewaterhouseCoopers, independent auditors, as stated in their audit report appearing herein. Dongo-Soria Gaveglio y Asociados Sociedad Civil de Responsabilidad Limitada are certified public accountants under the applicable rules of the Association of Public Accountants of Lima, Peru (Colegio de Contadores Publicos de Lima).
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LISTING AND GENERAL INFORMATION 1.
The Global Notes have been accepted for clearance and settlement through DTC, Euroclear and Clearstream. The CUSIP and ISIN numbers for the notes are as follows: Rule 144A Global Note CUSIP ................................................................................................ 21987V AA2 ISIN ................................................................................................... US21987VAA26
Regulation S Global Note P31353 AA6 USP31353AA66
2.
Copies of our (i) audited consolidated annual financial statements at and for the years ended December 31, 2011 and 2010, (ii) unaudited condensed consolidated interim financial statements at and for the period ended March 31, 2012, (iii) future audited consolidated annual financial statements, and (iv) any future unaudited condensed consolidated interim financial statements, if any, and copies of our articles of association and our by-laws (estatutos sociales), copies of the articles of association and by-laws of each of the Guarantors, as well as the indenture (including forms of notes and the guarantees), may be obtained free of charge at our principal executive office at Av. República de Panamá 2461, La Victoria, Lima 13, Peru. For the life of the listing particulars, the documents referred to this paragraph may be inspected, by physical or electronic means.
3.
Except as disclosed in this offering memorandum, there has been no material adverse change, or any development reasonably likely to involve an adverse material change, in our and the Guarantors’ condition (financial or otherwise) and in our and the Guarantors’ general affairs since December 31, 2011, the date of our latest audited financial statements included in this offering memorandum and there has been no significant change in our or the Guarantors’ financial or trading position since March 31, 2012.
4.
Except as disclosed in this offering memorandum, we and the Guarantors are not involved in any legal, governmental, litigation or arbitration proceedings (including any such proceedings of which we are aware), during a period covering the last 12 months), relating to claims or amounts that are material nor so far as we or each of the Guarantors are aware is any such legal, governmental, litigation or arbitration threatened.
5.
Application has been made to the Irish Stock Exchange for the approval of this document as Listing Particulars. Application has been made to the Irish Stock Exchange for the notes to be admitted to the Official List and to trading on the Global Exchange Market which is the exchange regulated market of the Irish Stock Exchange. The Global Exchange Market is not a regulated market for the purposes of Directive 2004/39/EC. We will comply with any undertakings assumed or undertaken by us from time to time to the Global Exchange Market of the Irish Stock Exchange in connection with the notes, and we will furnish to them all such information as the rules of the Global Exchange Market of the Irish Stock Exchange may require in connection with the listing of the notes.
6.
The issuance of the notes was authorized by our shareholders on July 16, 2012. The issuance of each of the guarantees was authorized by the respective Boards of Directors of Casa Grande, Cartavio, San Jacinto and Azucarera Olmos on July 16, 2012.
7.
We and the Guarantors accept responsibility for the information contained in this offering memorandum. To the best of our knowledge, having taken all reasonable care to ensure that such is the case, the information contained in this offering memorandum is in accordance with the facts and does not omit anything likely to affect the import of such information.
8.
Arthur Cox Listing Services Limited is acting solely in its capacity as listing agent for the Issuer in connection with the notes and is not itself seeking admission of the notes to trading on the Global Exchange Market of the Irish Stock Exchange.
9.
Coazucar was incorporated on October 26, 2005 in Lima, Peru, pursuant to registration number 11810689 and its registered address is Av. República de Panamá 2461, La Victoria, Lima 13, Peru.
10. Casa Grande was incorporated on May 13, 1997 in Trujillo, Peru, pursuant to registration number 11001178 and its registered address is Av. Parque Fábrica s/n Casa Grande, Ascope, La Libertad, Peru. Its Board of 164
Directors consists of Jorge Columbo Rodríguez Rodríguez (President), Vito Modesto Rodríguez Rodríguez, Claudio José Rodríguez Huaco, José Odón Rodríguez Rodríguez and John Carty Chirinos, all of whose business address is Av. República de Panamá 2461, La Victoria, Lima 13, Peru. Two members of its Board of Directors, Jorge Columbo Rodríguez Rodríguez and Vito Modesto Rodríguez Rodríguez, indirectly own a majority ownership interest in Casa Grande. Coazucar owns 57.1% of the outstanding shares of Casa Grande. The rights of Coazucar as shareholder of Casa Grande are contained in Casa Grande’s bylaws. Casa Grande operates in accordance with its bylaws and with the provisions of Peruvian law. 11. Cartavio was incorporated on April 28, 1997 in Trujillo, Peru, pursuant to registration number 11003296 and its registered address is Plaza la Concordia Nº 18 Centro Poblado de Cartavio Distrito de Santiago de Cao, Ascope, La Libertad, Peru. Its Board of Directors consists of Vito Modesto Rodríguez Rodríguez (President), Jorge Columbo Rodríguez Rodríguez and Claudio José Rodríguez Huaco, all of whose business address is Av. República de Panamá 2461, La Victoria, Lima 13, Peru. Two members of its Board of Directors, Jorge Columbo Rodríguez Rodríguez and Vito Modesto Rodríguez Rodríguez, indirectly own a majority ownership interest in Cartavio. Coazucar owns 87.2% of the outstanding shares of Cartavio. The rights of Coazucar as shareholder of Cartavio are contained in Cartavio’s bylaws. Cartavio operates in accordance with its bylaws and with the provisions of Peruvian law. 12. San Jacinto was incorporated on June 22, 1992 in Trujillo, Peru, pursuant to registration number 11170681 and its registered address is Plaza la Concordia Nº 18 Centro Poblado de Cartavio Distrito de Santiago de Cao, Ascope, La Libertad, Peru. Its Board of Directors consists of Jorge Columbo Rodríguez Rodríguez (President), Vito Modesto Rodríguez Rodríguez and Claudio José Rodríguez Huaco, all of whose business address is Av. República de Panamá 2461, La Victoria, Lima 13, Peru. Two members of its Board of Directors, Jorge Columbo Rodríguez Rodríguez and Vito Modesto Rodríguez Rodríguez, indirectly own a majority ownership interest in San Jacinto. Coazucar owns 82.6% of the outstanding shares of San Jacinto. The rights of Coazucar as shareholder of San Jacinto are contained in San Jacinto’s bylaws. San Jacinto operates in accordance with its bylaws and with the provisions of Peruvian law. 13. Azucarera Olmos was incorporated on May 9, 2012 in Lima, Peru, pursuant to registration number 12847508 and its registered address is Av. República de Panamá 2461, La Victoria, Lima 13, Peru. Its Board of Directors consists of Jorge Columbo Rodríguez Rodríguez (President), Vito Modesto Rodríguez Rodríguez and Claudio José Rodríguez Huaco, all of whose business address is Av. República de Panamá 2461, La Victoria, Lima 13, Peru. Two members of its Board of Directors, Jorge Columbo Rodríguez Rodríguez and Vito Modesto Rodríguez Rodríguez, indirectly own a complete ownership interest in Azucarera Olmos. Coazucar owns 100.0% of the outstanding shares of Azucarera Olmos. 14. We estimate the expenses in relation to admitting the notes to the Official List and to trading on the Global Exchange Market of the Irish Stock Exchange to be €10,440.
165
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INDEX TO FINANCIAL STATEMENTS Audited Consolidated Financial Statements of Coazucar as of December 31, 2011 and 2010 and at January 1, 2010 (transition date) and for the years ended December 31, 2011 and 2010 Independent Auditors’ Report .................................................................................................................... Consolidated Statement of Financial Position ............................................................................................ Consolidated Statement of Comprehensive Income ................................................................................... Consolidated Statement of Changes in Equity ........................................................................................... Consolidated Statement of Cash Flows ...................................................................................................... Notes to the Consolidated Financial Statements.........................................................................................
F-2 F-4 F-5 F-6 F-7 F-8
Unaudited Condensed Consolidated Interim Financial Statements of Coazucar as of March 31, 2012 and for the three months ended March 31, 2012 and 2011 Condensed Consolidated Interim Statement of Financial Position............................................................. Condensed Consolidated Interim Statement of Comprehensive Income.................................................... Condensed Consolidated Interim Statement of Changes in Equity ............................................................ Condensed Consolidated Interim Statement of Cash Flows....................................................................... Notes to the Condensed Consolidated Interim Financial Statements .........................................................
F-58 F-59 F-60 F-61 F-62
F-1
F-2
F-3
F-4
8 9 11 12
16 11
6 7 8
Note
4,241,937
278,204 300,395 117,317 114,277 810,193
2,805,594 202,727 378,978 29,811 6,410 8,224 3,431,744
At 31 December 2011 S/.000
The accompanying notes on pages 7 to 56 are part of the consolidated financial statements.
TOTAL ASSETS
CURRENT ASSETS Biological assets Inventories Trade and other accounts receivable Cash and cash equivalents Total current assets
NON-CURRENT ASSETS Property, plant and equipment Intangible assets Biological assets Investments in associates Deferred income tax assets Trade and other accounts receivable Total non-current assets
ASSETS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CORPORACION AZUCARERA DEL PERU S.A.
2010 S/.000
2,800,440
222,099 80,870 102,017 70,982 475,968
2,025,253 130,743 155,721 1,303 3,470 7,982 2,324,472
2,440,966
111,105 76,385 84,938 21,367 293,795
1,907,566 131,477 82,726 1,306 3,650 20,446 2,147,171
At 1 January 2010 S/.000
13 14 15 3.3
CURRENT LIABILITIES Borrowings Trade and other accounts payable Provisions and other liabilites Derivative financial instruments Total current liabilities
TOTAL EQUITY AND LIABILITIES
Total liabilities
13 14 15 16 3.3
17
Note
NON-CURRENT LIABILITIES Borrowings Trade and other accounts payable Provisions and other liabilites Deferred income tax liabilities Derivative financial instruments Total non-current liabilities
EQUITY Share capital Cumulative translation adjustment Legal and other reserves Retained earnings Equity attributable to equity holders of the parent Non-controlling interest Total shareholders equity
EQUITY AND LIABILITIES
-
4,241,937
1,755,982
291,657 412,384 6,316 10,558 720,915
259,973 296,047 8,566 470,481 1,035,067
287,011 (8,941) 44,039 1,053,024 1,375,133 1,110,822 2,485,955
At 31 December 2011 S/.000
2010 S/.000
-
2,800,440
1,260,372
186,335 302,425 3,161 491,921
347,284 43,153 9,086 353,854 15,074 768,451
287,011 44,674 687,375 1,019,060 521,008 1,540,068
-
2,440,966
1,316,275
159,476 326,310 1,147 486,933
284,201 192,187 8,197 329,574 15,183 829,342
270,136 21,299 425,181 716,616 408,075 1,124,691
At 1 January 2010 S/.000
CORPORACION AZUCARERA DEL PERU S.A.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Note Sales of products Cost of products sold Gross profit Initial recognition and change in fair value of biological assets Profit before operating expenses Selling expenses Administrative expenses Other operating expenses, net Profit from operations before financing and taxation Finance income Finance expenses Exchange difference, net Financial results, net Profit before income tax Income tax expense Profit for the year Other comprehensive income: - Exchange differences on translating foreign operations, net of deferred income tax - Fair value change in cash flow hegde, net Total comprehensive income for the year
For the year ended December 31, 2011 2010 S/.000 S/.000
18 19 8 19 19 21 22 22
16
Attributable to: Equity holders of the parent Non-controlling interest
Earning per share attributable to the equity holders of the parent during the year Basic and diluted earnings per share
24
The accompanying notes on pages 7 to 56 are part of the consolidated financial statements.
F-5
1,304,415 (705,229) 599,186 188,355 787,541 (30,248) (66,386) (157) 690,750 2,461 (47,446) 18,354 (26,631) 664,119 (104,584) 559,535
937,854 (498,467) 439,387 177,852 617,239 (18,563) (42,924) (19,623) 536,129 1,621 (45,388) 11,096 (32,671) 503,458 (75,769) 427,689
(13,336) (877) 545,322
-
(5,141) 422,548
365,586 179,736 545,322
279,347 143,201 422,548
1.27
0.97
F-6 23
17
287,011
-
16,875 16,875 287,011 -
-
270,136 -
(8,941)
(8,941) (8,941)
-
-
-
(47) (47) 44,039
(588) (588)
26,776 (2) 26,774 44,674 -
(3,399) (3,399)
21,299 -
(9,465) (9,465) 1,053,024
375,114
(26,776) 6,771 (547) (20,552) 687,375 375,114
282,746
425,181 282,746
Attributable to equity holders of the controlling interest Cumulative Legal and Share translation other Retained capital adjustment reserves earnings S/.000 S/.000 S/.000 S/.000
The accompanying notes on pages 7 to 56 are part of the consolidated financial statements.
Balances at 1 January 2010 Profit for the year Other comprehensive income: Fair value change in cash flow hegdes, net Total comprehensive income for the year Equity transactions with owners: Contributions Dividends distribution Transfer to legal reserve Acquisition of non-controlling interest in subsidiaries Others Total equity transactions with owners Balances at 31 December 2010 Profit for the year Other comprehensive income: Exchange differences on translating foreign operations Fair value changes in cash flow hegdes, net Total comprehensive income for the year Equity transactions with owners: Dividend distribution Non controlling interest of subsidiaries acquired Others Total equity transactions with owners Balances at 31 December 2011
Note
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEARS ENDING 31 DECEMBER 2011 AND 2010
CORPORACION AZUCARERA DEL PERU S.A.
(9,512) (9,512) 1,375,133
(8,941) (588) 365,585
16,875 6,771 (549) 23,097 1,019,060 375,114
(3,399) 279,347
716,616 282,746
Total S/.000
(38,922) 450,051 (1,052) 410,077 1,110,822
(4,395) (289) 179,737
(8,058) (23,060) 850 (30,268) 521,008 184,421
(1,742) 143,201
408,075 144,943
Noncontrolling interest S/.000
(38,922) 450,051 (10,564) 400,565 2,485,955
(13,336) (877) 545,322
16,875 (8,058) (16,289) 301 (7,171) 1,540,068 559,535
(5,141) 422,548
1,124,691 427,689
Total S/.000
CORPORACION AZUCARERA DEL PERU S.A.
CONSOLIDATED STATEMENT OF CASH FLOWS
Note
CASH FLOW FROM OPERATING ACTIVITIES Cash generated from operations Income tax paid Net cash generated from operating activities
For the year ended December 31, 2011 2010 S/.000 S/.000
25
466,853 (79,026) 387,827
185,399 (39,546) 145,853
23 6
(49,470) (186,486) 2,946 (991) (8,897) (44,604) 2,137 (285,365)
(34,769) (193,937) (294) 50,819 17 (178,164)
CASH FLOW FROM FINANCING ACTIVITIES Proceeds from issuance of ordinary shares Proceeds from borrowings Repayments of borrowings Dividends paid to non - controlling interests Interests paid Net cash used in financing activities
406,358 (388,348) (38,922) (38,255) (59,167)
16,875 332,708 (228,016) (8,058) (31,583) 81,926
Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at the end of year
43,295 70,982 114,277
49,615 21,367 70,982
CASH FLOW FROM INVESTING ACTIVITIES Acquisition of subsidiaries, net of cash acquired Purchase of property, plant and equipment Proceeds from sale of property, plant and equipment Purchase of intangible assets Purchase of investment in Producargo S.A. Loans granted to related parties Interests received Net cash used in investing activities
7
12
The accompanying notes on pages 7 to 56 are part of the consolidated financial statements.
F-7
CORPORACION AZUCARERA DEL PERU S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED 31 DECEMBER 2011 AND 2010 AND 1 JANUARY 2010 1
GENERAL INFORMATION Corporación Azucarera del Perú S.A. (hereinafter indistinctly the “Company” or “Coazucar”) is a holding company primarily engaged, through its operating subsidiaries, in sugarcane agro-industrial activities (production of sugar and ethanol). These activities are carried out through operations in Perú, Ecuador and Argentina. The Company and its operating subsidiaries are collectively referred to hereinafter as the “Group”. The Company was established in Peru on 10 October 2005 and has subsequently grown significantly both organically and through acquisitions. See note 27 for the description of the Group companies. The Company is the Group´s ultimate parent company and is an entity incorporated and domiciled in Peru. The address of its registered office is Avenida República de Panamá 2461, La Victoria - Lima, Peru. The issuance of these consolidated financial statements as of and for the year ended 31 December 2011, was approved by the Board of Directors in its meeting held on 2 July 2012.
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated. 2.1
Basis of preparation
The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS), issued by the International Accounting Standard Board (IASB), effective as of 31 December 2011 and they are the first consolidated financial statements prepared by the Group in accordance with IFRS. Until 31 December 2010, the consolidated financial statements of the Group were prepared under generally accepted accounting principles in Peru (Peruvian GAAP). Except for certain mandatory exceptions and for certain permitted exemptions for the IFRS transition period, described in note 30, the Group has consistently applied accounting policies in the preparation of its statement of financial position at 1 January 2010 and in all the periods presented, as if such accounting policies had been always effective. Note 30 explains the effect of the Group’s IFRS transition on its financial position, its performance and cash flows of the Group, including the nature and effect of the major changes made in accounting policies as compared to those used in the preparation of its consolidated financial statements for the period ended 31 December 2010 under Peruvian GAAP. Presentation in the consolidated statement of financial position differentiates between current and noncurrent assets and liabilities. Assets and liabilities are regarded as current if they mature within one year or are held for sale. The consolidated financial statements are presented in thousands of Nuevos Soles, the local currency in Peru, unless otherwise specifically stated.
F-8
The consolidated financial statements have been prepared under the historical cost convention as modified by derivative instruments and biological assets measured at fair value. The preparation of consolidated financial statements according to IFRS requires the use of certain critical accounting estimates. It also requires Management to exercise its judgment in the process of applying the Group’s accounting policies. The areas involving a high degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are described in note 4. a) Standards, amendments and interpretations to existing standards effective in 2011, and adopted by the Group in 2011 There are no new standards, amendments and interpretations to existing standards that are effective for the first time for the year beginning on 1 January 2011 that would be expected to have a material impact on the Group. b) Standards, amendments and interpretations to existing standards effective in 2011, but not relevant to the Group’s operations An amendment to IAS 32 “Financial Instruments: Presentation” was issued in October 2009. The amendment clarifies that rights issues, options and warrants denominated in a currency other than the issuer’s functional currency and offered on a pro-rata basis to all owners of the same class of equity must be classified as equity. Such rights issues have so far been accounted for as liabilities. The change relates only to issuances of a fixed number of shares at a fixed foreign-currency exercise price. The amendment is to be applied for annual periods beginning on or after 1 February 2010. Earlier application is permitted. The amendment was effective for the Group’s year ended 31 December 2011, and did not have an impact on the presentation of the Group’s financial position, results of operations or earnings per share. The IASB issued IAS 24 (revised) “Related Party Disclosures” in November 2009. The revision provides a partial exemption on the disclosure requirements for government-related entities and simplifies the definition of a related party. The revision is applicable for accounting periods beginning on or after 1 January 2011. Earlier application is permitted. The revised standard was effective for the Group’s year ended 31 December 2011, and did not have an impact on the presentation of the Group’s financial position, results of operations or earnings per share. In November 2009, the IFRIC issued IFRIC 19 “Extinguishing Financial Liabilities with Equity Instruments”. The interpretation addresses the accounting treatment in cases where a company settles all or part of a financial liability by issuing equity instruments to the creditor. It is to be applied for annual periods beginning on or after 1 July 2010. Earlier application is permitted. The amendment was effective for the Group’s year ended 31 December 2011, and did not have an impact on the presentation of the Group’s financial position, results of operations or earnings per share. In November 2009 amendments were issued to IFRIC 14 “IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction”, an interpretation of IAS 19 “Employee Benefits”. The amendments apply when a company is subject to minimum pension plan funding requirements. They enable prepayments of the respective contributions to be recognized as an asset. The amendments are to be applied for annual periods beginning on or after 1 January 2011. Earlier application is permitted. The amendment was effective for the Group’s year ended 31 December 2011, and did not have an impact on the presentation of the Group’s financial position, results of operations or earnings per share. On 6 May 2010, the IASB issued Improvements to IFRSs – a collection of amendments to seven IFRSs – as part of its program of annual improvements to its standards. The amendments are effective for annual periods beginning on or after 1 July 2010 and 1 January 2011 (thus effective for the Group’s year ended 31 December 2011), although entities are permitted to adopt them earlier.
F-9
These amendments relate to IFRS 1 “First Time Adoption of IFRS”, IFRS 3 “Business Combination”, IFRS 7 “Financial Instruments: Disclosures”, IAS 1 “Presentation of Financial Statements”, IAS 27 “Consolidated and separate financial statements”, IAS 34 “Interim Financial Reporting” and IFRIC 13 “Customer Loyalty Programmes”. The amendments did not have a material impact on the presentation of the Group’s financial position, results of operations or earnings per share. c) Standards, amendments and interpretations to existing standards which are not yet effective The following standards, amendments and interpretations to existing standards have been published and are mandatory for the Group’s accounting periods beginning on or after 1 January 2012 or later periods and the Group has not early adopted them: In November 2009, the IASB issued IFRS 9 “Financial Instruments”. The standard incorporates the first part of a three-phase project to replace IAS 39 “Financial Instruments: Recognition and Measurement”. IFRS 9 prescribes the classification and measurement of financial assets. IFRS 9 requires that financial assets are subsequently measured either “at amortized cost” or “at fair value”, depending on whether certain conditions are met. In addition, IFRS 9 permits an entity to designate an instrument, that would otherwise have been classified in the “at amortized cost” category, to be “at fair value” if that designation eliminates or significantly reduces measurement or recognition inconsistencies. The prescribed category for equity instruments is at fair value through profit or loss, however, an entity may irrevocably opt for presenting all fair value changes of equity instruments not held for trading in other comprehensive income. Only dividends received from these investments are reported in profit or loss. In October 2010, the IASB issued further additions to IFRS 9. These bring forth the guidance for derecognizing financial instruments and most of the requirements for the classification and measurement of financial liabilities currently included within IAS 39. The additions include amortized cost accounting for most financial liabilities, with bifurcation of embedded derivatives. The main change is that in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather than the statement of income, unless this creates an accounting mismatch. The remaining phases of the project, dealing with impairment of financial instruments and hedge accounting, have not yet been finalized. IFRS 9, as well as its additions, shall be applied retrospectively for annual periods beginning on or after 1 January 2015. Earlier adoption is permitted. The Group is currently analyzing the resulting effects on the presentation of the Group’s results of operations, financial position or cash flows. In October 2010, the IASB issued an amendment to IFRS 7 “Financial Instruments: Disclosures”. The amendment requires additional disclosures in respect of risk exposures arising from transferred financial assets. The amendment includes a requirement to disclose by class of asset the nature, carrying amount and a description of the risks and rewards of financial assets that have been transferred to another party yet remain on the entity’s statement of financial position. Disclosures are also required to enable a user to understand the amount of any associated liabilities, and the relationship between the financial assets and associated liabilities. The amendment to IFRS 7 shall be applied for annual periods beginning on or after 1 July 2011, with earlier application permitted. The amendment is not expected to have a material impact on the presentation of the Group’s results of operations, financial position or cash flows. In December 2010, the IASB amended IAS 12 “Income taxes”, to introduce an exception to the existing principle for the measurement of deferred tax assets or liabilities arising on investment property measured at fair value. The IASB has added another exception to the principles in IAS 12: the rebuttable presumption that investment property measured at fair value is recovered entirely by sale. This presumption is rebutted if the investment property is depreciable (for example, buildings and land held under a lease) and is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale before the end of its economic life. The presumption cannot be rebutted for freehold land that is an investment property, because land can only be recovered through sale.
F-10
The amendments are effective for annual periods beginning on or after 1 January 2012. The amendment is not expected to have an impact in the Group’s results to the extent it does not have investment properties measured at fair value. On May 2011, the IASB issued IFRS 10 “Consolidated Financial Statements” which establishes principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities. IFRS 10 replaces the consolidation requirements in SIC 12 “Consolidation - Special Purpose Entities” and IAS 27 “Consolidated and Separate Financial Statements” and is effective for annual periods beginning on or after 1 January 2013. Earlier application is permitted. IFRS 10 builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard provides additional guidance to assist in the determination of control where this is difficult to assess. The Group is in the process of analyzing the resulting effects on the presentation of the Group’s results of operations, financial position or cash flows. On May 2011, the IASB issued IFRS 11 “Joint Arrangements” which provides for a more realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement, rather than its legal form (as is currently the case). The standard addresses inconsistencies in the reporting of joint arrangements by requiring a single method to account for interests in jointly controlled entities. IFRS 11 is effective for annual periods beginning on or after 1 January 2013. Earlier application is permitted. The Group is in the process of analyzing the resulting effects on the presentation of the Group’s results of operations, financial position or cash flows. On May 2011, the IASB issued IFRS 12 “Disclosure of Interests in Other Entities”. IFRS 12 is a new and comprehensive standard on disclosure requirements for all forms of interests in other entities, including subsidiaries, joint arrangements, associates and unconsolidated structured entities. IFRS 12 is effective for annual periods beginning on or after 1 January 2013. Earlier application is permitted. The application of IFRS 12 is likely to increase the disclosures required for subsidiaries and joint arrangements. On May 2011, the IASB issued IFRS 13 “Fair Value Measurement” which replaces the fair value measurement guidance currently dispersed across different IFRS standards with a single definition of fair value and extensive application guidance. IFRS 13 provides guidance on how to measure fair value and does not introduce new requirements for when fair value is required or permitted. It also establishes disclosure requirements to provide users of financial statements with more information about fair value measurements. IFRS 13 was developed in a joint project with the US Financial Accounting Standards Board (FASB) and the guidance in IFRS 13 is largely converged with FASB’s ASC Topic 820 Fair Value Measurement and Disclosures. IFRS 13 is effective for annual periods beginning on or after 1 January 2013. Earlier application is permitted. The Group is in the process of analyzing this standard although it expects it will not have a material impact on the Group’s results of operations, financial position and cash flows. However, the application of IFRS 13 is likely to increase the disclosures required about fair value measurements. In June 2011, the IASB issued an amendment to IAS 1 “Presentation of financial statements”. The amendment improves the consistency and clarity of the presentation of items of other comprehensive income (“OCI”). The main change is a requirement for entities to group items presented in OCI on the basis of whether they are potentially reclassifiable to profit or loss subsequently (reclassification adjustments). The amendment to IAS 1 shall be applied for annual periods beginning on or after 1 July 2012, with earlier application permitted. The Group is in the process of analyzing the resulting effects on the presentation of the Group’s results of operations, financial position or cash flows. There are no other standards, amendments or interpretations that are not yet effective that would be expected to have an impact on the Group.
F-11
2.2
Scope of consolidation
The consolidated financial statements include the assets, liabilities and results of the Company and of all of its subsidiaries as from the date that control commences to the date that control ceases. The consolidated financial statements also include the Group´s share of the after-tax results of its interest in associates on an equity accounting basis as from the date at which significant influence commences, to the date that it ceases. a) Subsidiaries Subsidiaries are all entities over which the Group has the power to govern their financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group until the date in which control ceases. The Group accounts for acquisitions using the purchase method of accounting as prescribed by IFRS 3R. Consideration is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of consideration over the fair value of the Group’s share on the identifiable net assets acquired is recorded as goodwill (see note 23 for details). Inter-company transactions, balances and unrealized gains on transactions between Group companies are eliminated. Unrealized losses are also eliminated unless they are assessed as an impairment indicator of the asset transferred. Accounting policies of subsidiaries are changed where necessary to ensure consistency with the policies adopted by the Group. b) Transactions with non-controlling interest in a subsidiary without change in control Transactions with non-controlling stockholders that do not result in loss of control are accounted for as equity transactions, that is, as transactions with owners in their capacity as owners. The difference between fair value of any consideration paid and the corresponding share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on a disposal of noncontrolling interests in a subsidiary, which does not imply a change of control over the subsidiary, are also recorded in equity (see note 17.b iii). c) Associates Associates are all entities over which the group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognized at cost, and the carrying amount is increased or decreased to recognize the investor’s share of the profit or loss of the investee after the date of acquisition. The group’s share of post-acquisition profit or loss is recognized in the income statement, and its share of post acquisition movements in other comprehensive income is recognized in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
F-12
The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognizes such amount as income (loss) attributable to associates. 2.3
Segments information
According to IFRS 8, operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The Board of Directors is responsible for allocating resources and assessing performance of the operating segments and steering the business success of the segments and is considered the Chief Operating Decision-Maker within the meaning of IFRS 8. 2.4
Foreign currency translation
a) Functional and presentation currency Items included in the financial statements of each of the Group´s entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in Nuevos Soles, which is the Group’s presentation currency. b) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of transactions or valuation date where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement, except when deferred as “other comprehensive income” in transactions that qualify as cash flow hedges. The Group’s foreign exchange gains and losses are presented in the statement of comprehensive income under “exchange difference, net”. c) Group companies The results and financial position of all of the Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: i)
Assets and liabilities of each statement of financial position presented are translated at the rate prevailing at the date of that statement of financial position;
ii) Income and expense for each statement of income are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the date of the transaction), and iii) All resulting exchange differences are recognized in other comprehensive income. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.
F-13
2.5 Property, plant and equipment Property, plant and equipment are recorded at cost, less accumulated depreciation and impairment losses, if any. Historical cost comprises the purchase price and any costs directly attributable to the acquisition. Where individual components of an item of property, plant and equipment have different useful lives, they are accounted for as separate items, which are depreciated separately. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to the statement of income during the period in which they are incurred. Assets in the construction stage are capitalized as separate components. At their completion, the cost is transferred to the adequate category. Work in progress is not depreciated. Land is not depreciated. Depreciation on other assets is calculated using the straight-line method, to allocate their cost to their residual values over their estimated useful lives, as follows: Years Buildings and other construction Machinery and equipment Furniture and fixtures and others Vehicles
Up to 40 between 3 and 30 between 3 and 10 between 3 and 25
The assets’ residual values and useful lives are reviewed and adjusted, if appropriate, at the date of each statement of financial position. An asset’s carrying amount is immediately written down to its recoverable amount if it is greater than its estimated recoverable amount. Gains and losses on disposals correspond to the difference between the proceeds and the carrying amount of the assets, which are included in the consolidated statement of comprehensive income. 2.6
Leases -
The Group classifies its leases at the inception as finance or operating leases. Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Finance leases are capitalized at the lease’s inception at the lower of the fair value of the leased property and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included as “Borrowings” in the statement of financial position. The interest element of the finance cost is charged to the statement of income over the lease period. Property, plant and equipment acquired under finance leases is depreciated over the shorter of the asset’s useful life and the lease term. Payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of income on a straight-line basis over the period of the lease.
F-14
2.7
Goodwill
Goodwill represents future economic benefits arising from assets that are not capable of being individually identified and separately recognized by the Group on a business acquisition. Goodwill is computed as the excess of the consideration over the fair value of the Group’s share of net assets of the acquired subsidiary undertaking at the acquisition date and is allocated to those cash generating units expected to benefit from the acquisition for the purpose of impairment testing. Goodwill arising on the acquisition of subsidiaries is included within “Intangible assets” on the statement of financial position, whilst goodwill arising on the acquisition on associates forms part of the carrying amount of the investments. Goodwill arising on the acquisition of foreign entities is treated as an asset of the foreign entity denominated in the local currency and translated at the closing rate. Goodwill is not amortized but is tested for impairment on an annual basis, or more frequently if there is an indication of impairment. 2.8
Other intangible assets
Other intangible assets that are acquired by the Group, which have finite useful lives, are measured at cost less accumulated amortization and impairment losses, if any. These intangible assets comprise computer software and are amortized on a straight-line basis over their useful lives estimated to be of 4 years. 2.9
Impairment of assets
Goodwill For the purpose of impairment testing, assets are grouped at the lowest levels for which they separately generate identifiable cash flows. This group of assets is known as cash-generating units. If the recoverable amount of a cash-generating unit is less than the carrying amount of the assets within the unit, an impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit on a pro-rata basis based on the carrying amount of each asset in the unit. Goodwill impairment losses recognized cannot be reversed in a subsequent periods. The recoverable amount of goodwill is the higher of its fair value less costs to sell and its value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted (see note 4 for details). Property, plant and equipment and finite useful live intangible assets At each statement of financial position date, the Group reviews the carrying amounts of its property, plant and equipment and finite useful live intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent, if any, of the impairment loss. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash generating unit to which the asset belongs. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. An impairment loss is recognized immediately in the statement of income. Where an impairment loss subsequently reverses the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, which should not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in the statement of income.
F-15
2.10
Biological assets
Biological assets comprise the plantations of sugarcane which are assets capable of produce more than one harvest (bearer biological assets). The Group distinguishes between mature and immature biological assets. “Mature” biological assets are those that are able to sustain regular harvests (for bearer biological assets). “Immature” biological assets are those assets other than mature biological assets. The Group presents biological assets (sugarcane) as current and non-current assets based on their nature. For that purpose, the Group estimates of the portion of biological assets that will be consumed over a period of 12 months or less to be able to classify said portion as a current asset. Costs are capitalized as biological assets if, and only if, (a) it is probable that future economic benefits will flow to the entity, and (b) the cost can be measured reliably. The Group capitalizes costs such as: planting, harvesting, weeding, seedlings, irrigation, agrochemicals, fertilizers and a systematic allocation of fixed and variable production overheads that are directly attributable to the management of biological assets, among others. Costs that are expensed as incurred include administration and other general overhead and unallocated production overhead, among others. Biological assets, both at initial recognition and at each subsequent reporting date, are measured at fair value less costs to sell, except where fair value cannot be reliably measured. Cost approximates fair value when little biological transformation has taken place since the costs were originally incurred or the impact of biological transformation on price is not expected to be material. Gains and losses that arise on measuring biological assets at fair value less costs to sell and measuring agricultural produce at the point of harvest at fair value less costs to sell are recognized in the statement of income in the period in which they arise in the line item “Changes in fair value of biological assets”. Where there is an active market for a biological asset, quoted market prices in the most relevant market are used as a basis to determine the fair value. Otherwise, when there is no active market or market-determined prices are not available, fair value of biological assets is determined through the use of valuation techniques. Therefore, the fair value of biological assets is generally derived from the expected discounted cash flows of the related agricultural produce. The fair value of agricultural produce at the point of harvest is generally derived from market determined prices. The determination of the fair value of sugarcane is based on the Group’s business segments as follows:
The fair value of sugarcane depends on the variety, location and maturity of the plantation. The sugarcane is accounted for as plantations and is felled until their optimum economic age for use has expired, generally between 7 to 9 years.
Sugarcane, for which biological growth is not significant, is valued at cost, which approximates its fair value. When sugarcane has attained significant biological growth, it is measured at fair value.
The fair value of sugarcane considers estimated revenues based on yearly production volume (which will be destined the production of sugar, mainly). The sale price of sugar is calculated as the average of its daily prices in the local market of each country where the Group operates. Projected costs include maintenance, land lease, harvesting and transportation.
The operating cash flows are discounted at a discount rate, which reflects current market assessment of the time value of money and risks involved.
2.11
Inventories -
Inventories comprise raw materials, finished goods (including harvested agricultural produce) and others. F-16
The cost of finished products comprises the fair value of the agriculture produce less cost necessary to sell at the harvest point (an amount transferred from biological asset to productive process) plus the cost incurred in the industrial production process, such as direct labor, other direct cost and overhead production costs. Inventories are measured at the lower of cost and net realizable value. Cost is determined using the weighted average method, except for in-transit inventory, which is stated by using the specific identification method. The net realization value is the estimated sales price of the product during the ordinary course of business, based on the current price less estimated costs to complete its production and expenses to place inventory in sales conditions. 2.12
Financial assets
Classification The Group financial assets qualify only as loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the date of the statement of financial position. Loans and receivables comprise “trade and other receivables” and “cash and cash equivalents” in the statement of financial position. Recognition and measurement Loan and receivables are initially recognized at fair value plus transaction costs, if any. Loans and receivables are subsequently carried at amortized cost using the effective interest method. The Group assesses at each statement of financial position date whether there is objective evidence that a financial asset or a group of financial assets is impaired. Impairment testing of trade receivables is described in note 11. Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously. 2.13
Derivative financial instruments and hedging activities
Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. The fair value of interest rate swaps has been calculated using a discounted cash flow analysis. The Group manages exposures to financial risk using hedging instruments that provide the appropriate economic outcome. The principal hedging instruments used may include foreign exchange forward contracts and interest rate swaps. The Group does not use derivative financial instruments for speculative purposes. The Group’s policy is to apply hedge accounting to hedging relationships where it is permissible under IAS 39, practical to do so and its application reduces volatility, but transactions that may be effective hedges in economic terms may not always qualify for hedge accounting under IAS 39. Any derivatives that the Group holds to hedge these exposures are classified as “held for trading” and are shown in a separate line on the face of the statement of financial position. Gains and losses on interest rate and foreign exchange rate derivatives are classified within ‘Financial results, net’ and “Exchange difference, net”, respectively. F-17
2.14
Trade receivables -
Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less allowance for trade account receivables. An allowance for trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization, and default or delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. 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 statement of income within selling expenses. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against selling expenses in the statement of income. 2.15
Cash and cash equivalents -
Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less. 2.16 Trade payables Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade payables are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method. 2.17 Borrowings Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortized cost using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the date of the statement of financial position. Borrowing costs associated with qualifying assets are capitalized during the period of time that is required to complete and prepare the asset for its intended use. 2.18
Provisions -
Provisions are recognized when (i) the Group has a present legal or constructive obligation as a result of past events; (ii) it is probable that an outflow of resources will be required to settle the obligation; and (iii) a reliable estimate of the amount of the obligation can be made. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. 2.19 Current and deferred income tax The Group’s tax expense for the year comprises the charge for current tax payable and deferred taxation attributable to the Group’s operating subsidiaries. Tax is recognized in the statement of income, except to the extent that it relates to items recognized directly in equity. In this case, the tax is also recognized in equity.
F-18
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the date of the statement of financial position in the countries where the Group’s subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects either accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the date of the statement of financial position and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. Deferred income tax is provided on temporary differences arising on investments in associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. 2.20
Revenue recognition -
The Group’s primary activities comprise agricultural and agro-industrial activities. The Group’s agro-industrial activities comprise the selling of manufactured products (i.e. sugar, ethanol, among others). Sales of manufacture products are measured at the fair value of the consideration received or receivable, net of returns and allowances, trade and other discounts, net of sales taxes, as applicable. The Group recognizes revenue when the amount of revenue can be reliably measured, it is probable that the future economic benefits will flow to the entity and when the Company has delivered the products to the customers in the designated mode of transport (the products are delivered to the customer in the store of the seller) ,considering the risks and benefits associated with such property are transferred and when the collection of accounts receivable is reasonably assured. For export shipments, transfer occurs upon loading of the goods onto the relevant carrier. 2.21 Basic earnings per share Basic earnings per share is calculated by dividing the net income for the period attributable to equity holders of the controlling interest by the weighted average number of ordinary shares outstanding during the year. Diluted net earnings per share is computed by dividing the net income for the period by the weighted average number of ordinary shares outstanding, and when dilutive, adjusted for the effect of all potentially dilutive shares. 3
FINANCIAL RISK MANAGEMENT 3.1 Financial risk factors The Group’s activities are exposed to a variety of financial risks. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize the Group’s capital costs by using suitable means of financing and to manage and control the Group’s financial risks effectively. The Group uses financial instruments to hedge certain risk exposures.
F-19
The Group’s approach to the identification, assessment and mitigation of risk is carried out by the Board of Directors, which focuses on timely and appropriate management of risk. The Board of Directors has overall accountability for the identification and management of risk across the Group. The principal financial risks arising from financial instruments traded by the Group are: i) exchange rate risk, ii) interest rate risk, iii) liquidity risk, iv) credit risk and v) end-product price risk. This section provides a description of the principal risks and uncertainties that could have a material adverse effect on the Group’s strategy, performance, results of operations and financial condition. The principal risks and uncertainties facing the business, set out below, do not appear in any particular order of potential materiality or probability of occurrence. i)
Foreign exchange risk
The Group’s functional currency is the New Peruvian sol, therefore the Group’s cash flows, performance and financial position are exposed to the risk of fluctuations in exchange rates of other currencies. Currency risks as defined by IFRS 7 arise on account of monetary assets and liabilities being denominated in a currency that is not the functional currency. A significant amount of the Group’s business activities is conducted in the respective functional currencies of its subsidiaries (Nuevos Soles, Argentine Pesos and in US Dollars). However, certain transactions of the Group are performed in currencies other than the respective functional currencies of its subsidiaries. The following tables show the Group’s net monetary position broken down by various currencies for each functional currency in which the Group operates for all the periods presented. All amounts presented below are stated in Nuevos Soles.
Net monetary position (Liability)/Asset Argentine Peso US Dollar Nuevos Soles Total
Net monetary position (Liability)/Asset Argentine Peso US Dollar Nuevos Soles Total
Net monetary position (Liability)/Asset Argentine Peso US Dollar Nuevos Soles Total
2011 Functional currency Argentine US Peso Dollars ( ( (
20,711) 29,630) 50,341)
( (
321,296) ) 321,296)
2010 Functional currency Argentine US Peso Dollars -
-
1 January 2010 Functional currency Argentine US Peso Dollars -
-
F-20
Nuevos Soles ( ( (
337,613) 310,993) 648,606)
Peruvian New Sol ( ( (
253,316) 444,900) 698,216)
Peruvian New Sol ( ( (
278,340) 557,083) 835,423)
Total ( 20,711) ( 688,539) ( 310,993) ( 1,020,243)
Total ( ( (
253,316) 444,900) 698,216)
Total ( ( (
278,340) 557,083) 835,423)
The Group’s analysis is carried out based on the exposure of the functional currency of each subsidiary against the New Peruvian sol. Considering other variables constant, the Group estimates that, a 3% devaluation (revaluation) of the respective functional currencies of the subsidiaries against the Nuevos Soles at year-end would have had decreased or (increased) reported profit (loss) before income tax for the years ended 31 December 2011 and 2010 and 1 January 2010, as follows:
Net monetary position sensibility (Liability)/Asset Argentine Peso US Dollar Nuevos Soles (Increase) or decrease in profit before income tax
Net monetary position sensibility (Liability)/Asset Argentine Peso US Dollar Nuevos Soles (Increase) or decrease in profit before income tax ii)
2011 Functional currency Argentine US Peso Dollars (
n/a 889) )
(
889)
-
-
Total
n/a -
(
9,330) n/a )
(
10,219) )
-
(
9,330)
(
10,219)
2010 Functional currency Argentine US Peso Dollars n/a -
Peruvian New Sol
Nuevos Soles
Total
)
n/a -
(
13,347) n/a )
(
13,347) )
)
-
(
13,347)
(
13,347)
End-product price risk
Prices of the products traded by the Group have historically been cyclical, reflecting overall economic conditions and changes in capacity within the industry affecting the profitability of entities engaged in the agribusiness industry. The Group’s commercial team combines different actions to minimize price risk. The Group manages minimum and maximum prices for each product. The Group does not use derivative financial instruments to hedge end-product price risk. Considering other variables constant, the Group estimates that, for the years ended 31 December 2011 and 2010 a 5% increase (or decrease) in prices of the Group’s end products would have (increased) or decreased reported profit (loss) before income tax by approximately S/.33.2 millions and S/.25.2 millions, respectively. iii) Liquidity risk The Group is exposed to liquidity risks, including risks associated with refinancing borrowings as they mature, the risk that borrowing facilities are not available to meet cash requirements and the risk that financial assets cannot readily be converted to cash without loss of value. Failure to manage financing risks could have a material impact on the Group’s cash flow and statement of financial position. Prudent liquidity risk management includes managing the profile of debt maturities and funding sources, close oversight of cash flows projections, maintaining sufficient cash, and ensuring the availability of funding from an adequate amount of committed credit facilities and the ability to close out market positions. The Group’s ability to fund its existing and prospective debt requirements is managed by maintaining diversified funding sources with adequate lines o credit available; preferably long-term lines of credit. As of 31 December 2011, cash and cash equivalents of the Group totaled S/.114.3 millions, which could be used for managing liquidity risk. F-21
The table below analyses the Group’s non-derivative financial liabilities and derivative financial liabilities into relevant maturity groupings based on the remaining period at the statement of financial position to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows and as a result they do not reconcile to the amounts disclosed on the statement of financial position except for short-term payables when discounting is not applied. Less than 1 year S/.000 At 31 December 2011 Borrowings (excluding finance leases liabilities) Leases Trade and other accounts payables At 31 December 2010 Borrowings (excluding finance leases liabilities) Leases Trade and other accounts payables At 1 January 2010 Borrowings (excluding finance leases liabilities) Leases Trade and other accounts payables
iv) Interest rate risk -
Between 1 and 2 years S/.000
Between 2 and 5 years S/.000
Over 5 years S/.000
Total S/.000
310,149 2,319 257,903 570,371
108,490 780 62,059 171,329
195,971 298 54,512 250,781
8,891 135,940 144,831
623,501 3,397 510,414 1,137,312
200,274 2,615 192,222 395,111
160,944 2,023 25,492 188,459
223,948 994 27,687 252,629
11,256 274 11,530
596,422 5,632 245,675 847,729
171,128 4,645 201,108 376,881
204,242 3,474 25,492 233,208
72,496 3,589 27,691 103,776
28,120 846 28,966
475,986 11,708 255,137 742,831
The Group’s financial costs may be affected by interest rate volatility. Borrowings under the Group’s interest rate management policy may at fixed or floating rates. The Group maintains adequate committed borrowing facilities and holds most of its financial assets primarily in short-term that are readily convertible into known amounts of cash. The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at floating rates expose the Group to cash flows interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The Group occasionally manages its cash flows interest rate risk exposure by using floating-to-fixed interest rate swaps. Such interest rate swaps have the economic effect of converting borrowings from floating to fixed interest rates. The following table shows a breakdown of the Group’s fixed-rate and floating-rate borrowings per currency denomination and functional currency of the subsidiary obligor of the loans (excluding finance leases). 2011 Functional currency Argentine US Nuevos Rate per currency denomination Peso Dollars Soles Total Fixed rate: Argentine Peso US Dollar Nuevos Soles Subtotal fixed-rate borrowings
1,700 35,305 37,005
F-22
-
137,893 250,916 388,809
1,700 173,198 250,916 425,814
Rate per currency denomination Variable rate: Argentine Peso US Dollar Subtotal variable-rate borrowings Total borrowings as per analysis Finance leases Total borrowings as per statement of financial position
Rate per currency denomination Fixed rate: US Dollar Nuevos soles Subtotal fixed-rate borrowings Variable rate: US Dollar Subtotal variable-rate borrowings Total borrowings as per analysis Finance leases Total borrowings as per statement of financial position
2011 Functional currency Argentine US Peso Dollars
Nuevos Soles Total
5,436 2,658 8,094 45,099 280
-
114,620 114,620 503,429 2,822
5,436 117,278 122,714 548,528 3,102
45,379
-
506,251
551,630
2010 Functional currency Argentine US Peso Dollars
Nuevos Soles
Total
-
-
45,698 318,127 363,825
45,698 318,127 363,825
-
-
164,717 164,717 528,542 5,077
164,717 164,717 528,542 5,077
-
-
533,619
533,619
At 31 December 2011 and 2010, if interest rates on floating-rate borrowings had been 1% higher (or lower) considering all other variables constant, profit (loss) before income tax for each year would have (increased) or decreased as follows:
Rate per currency denomination
2011 Functional currency Argentine US Peso Dollars
Variable rate: Argentine Peso US Dollar Total effect before income tax
Rate per currency denomination Variable rate: US Dollar Total effect before income tax
54 27 81
-
2010 Functional currency Argentine US Peso Dollars -
-
F-23
Nuevos Soles -
Total 54 1,173 1,227
1,146 1,146
Nuevos Soles 1,647 1,647
Total 1,647 1,647
The sensitivity analysis has been determined assuming that the change in interest rates had occurred at the date of the statement of financial position and had been applied to the exposure to interest rate risk for financial instruments in existence at that date. The 100 basis point increase or decrease represents management’s assessment of a reasonable possible change in those interest rates, which have the most impact on the Group (specifically the United States and Argentina rates), over the period until the next annual statement of financial position date. v) Credit risk The Group’s exposure to credit risk takes the form of a loss that would be recognized if counterparties failed to, or were unable to, meet their payment obligations. These risks may arise in certain agreements in relation to amounts owed for physical product sales and the investment of surplus cash balances. The Group is also exposed to political and economic risk events, which may cause nonpayment of foreign currency obligations to the Group. The current credit crisis could also lead to the failure of companies in the sector, potentially including customers, partners, contractors and suppliers. The Group is subject to credit risk arising from outstanding receivables, cash and cash equivalents. The Group’s policy is to manage credit exposure to trading counterparties within defined trading limits. All of the Group’s significant counterparties are assigned internal credit limits. The Group sells manufactured products and agricultural products to a large base of customers. Type and class of customers may differ depending on the Group´s business segments. No credit limits were exceeded during the reporting periods and management does not expect any losses from non-performance by these counterparties. If any of the Group’s customers are independently rated, these ratings are used. Otherwise, if there is no independent rating, the Group assesses the credit quality of the customer taking into account its financial position, past experience and other factors. The Group may seek cash collateral, letter of credit or parent company guarantees, as considered appropriate. Sales to customers are primarily made by credit with customary payment terms. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position after deducting any impairment allowance. The Group’s exposure of credit risk arising from trade receivables is set out in note 11. The Group is exposed to counterparty credit risk on cash and cash equivalent balances. The Group holds cash on deposit with a number of financial institutions. The Group manages its credit risk exposure by limiting individual deposits to clearly defined limits. The Group cash deposits are maintained in high quality banks and financial institutions. The maximum exposure to credit risk is represented by the carrying amount of cash and cash equivalents in the statement of financial position. As of 31 December 2011 and 2010, the total amount of cash and cash equivalents mainly comprise cash in banks and short-term bank deposits. The Group is authorized to work with banks rated “BBB+” or higher. The Group does not have investment in securities or other financial instruments for which risk may have increased due to the financial credit crisis. The Group’s exposure to credit risk arising from cash and cash equivalents is set out in note 12. 3.2 Capital risk management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for members and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, it may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Group monitors capital on the basis of the gearing ratio.
F-24
This ratio is calculated as total debt (including current and non-current borrowings and trade and other accounts payable as shown in the consolidated statement of financial position, if applicable) divided by total capital. Total capital is calculated as equity, as shown in the consolidated statement of financial position, plus total debt. During the year ended 31 December 2011, the strategy, which was unchanged from 2010, was to maintain the gearing ratio no greater than 1.5, as follows: At December, 31 2011 2010 S/.000 S/.000 Total debt Total equity Total capital Gearing ratio
1 January 2010 S/.000
1,260,061) 2,485,955) 3,746,016)
879,197) 1,540,068) 2,419,265)
962,174 1,124,691) 2,086,865
0.34)
0.36)
0.46
3.3 Derivative financial instruments As part of its business operations, the Group uses derivative financial instruments to manage its exposure to currency exchange rate risk and interest rate risk. As part of this strategy, the Group may enter into (i) interest rate derivatives to manage the composition of floating and fixed rates debt; and (ii) currency derivatives to manage the currency composition debt; the Group’s policy is not to trade speculative derivatives. Derivative financial instruments involve, to a varying degree, elements of market and credit risk not recognized in the financial statements. The market risk associated with these instruments resulting from price movements is expected to offset the market risk of the underlying transactions, assets and liabilities, being hedged. The counterparties to the agreements relating to the Group’s contracts generally are large institutions with credit ratings equal to or higher than BBB+. The Group continually monitors the credit rating of such counterparties and seeks to limit its financial exposure to any of these financial institutions. While the contract or notional amounts of derivative financial instruments provide one measure of the volume of these transactions, they do not represent the amount of the Group’s exposure to credit risk. The amounts potentially subject to credit risk (arising from the possible inability of counterparties to meet the terms of their contracts) are generally limited to the amounts, if any, by which the counterparties’ obligations under the contracts exceed the Group’s obligations to the counterparties. Cross currency interest rate swap The Group through one of its subsidiaries issued a USD-denominated floating rate bond. The subsidiaries functional currency is the Nuevos Soles. The facility comprises a three-year US$49.8 million loan bearing interest at 180 - day LIBOR plus a spread per annum. Since the above transaction exposed the Group to the risk of foreign currency and interest rate, in March 2009, the Group entered into a receive-floating pay fixed cross currency swap. The cross currency swap designated as the hedging instrument in a cash flow hedge of the USD bond. Through the combination of the USD bond and the cross currency swap, the Group obtained synthetically a Nuevos Soles fixed-rate liability. The notional amount of the instrument is US$49.8 million and expires on 6 November 2012. As of 31 December 2011, 2010 and 1 January 2010, the Group recognized a liability amounting to S/.10.6 millions, S/.15.1 million and S/.15.2 millions, respectively, that corresponds to the estimated fair value of the swap at each of those dates. The bond and the cross currency swap expired on 6 November 2012.
F-25
The Group evaluated the impact of changes in the fair value on the interest rate swap considering an immediate 100 basis point change in the interest rates. As of 31 December 2011 and 2010, a 100 basis point increase/decrease in the interest rates would have resulted in an approximate S/.0.04 millions and S/.0.03 millions increase/decrease in the fair value of the interest rate swap, respectively. The fair value of the swap has been calculated using a discounted cash flow analysis. 4
CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS Critical accounting policies are those that are most important to the portrayal of the Group’s financial condition, results of operations and cash flows, and require management to make difficult, subjective or complex judgments and estimates about matters that are inherently uncertain. Management bases its estimates on historical experience and other assumptions that it believes are reasonable under the circumstances. The Group’s critical accounting policies are discussed below. Actual results may differ from estimates used in employing the critical accounting policies and, as such, could have a material impact on the Group’s results of operations. The Group also has other policies that are considered key accounting policies, such as the revenue recognition accounting policy. However, these other policies, which are discussed in the notes to the Group’s financial statements, do not meet the definition of critical accounting estimates, because they do not generally require estimates to be made or judgments that are difficult or subjective. a) Business combinations – purchase price allocation Accounting for business combinations requires the allocation of the Group’s purchase price to the various assets and liabilities of the acquired business at their respective fair values. The Group uses all available information to determine this fair value, and for major acquisitions, may hire an independent appraisal firm to assist in estimating fair values. In some instances, assumptions with respect to the timing and amount of future revenues and expenses associated with an asset might have to be used in determining its fair value. Actual timing and amount of net cash flows from revenues and expenses related to that asset over time may differ materially from those initial estimates, and if the timing is delayed significantly or if the net cash flows decline significantly, the asset may become impaired. b) Biological assets The nature of the Group’s biological assets and the basis for determining their fair value are explained under in note 2.10. The discounted cash flows model requires the input of highly subjective assumptions which include observable and non - observable data. Generally the estimation of the fair value of biological assets is based on models or inputs that are not observable in the market and the use of non - observable inputs is significant to the overall valuation of the assets. Non - observable inputs are determined based on the best information available, for example by reference to historical information of past practices and results, statistical and agronomical information, and other analytical techniques. Key assumptions include future market prices, estimated yields at the point of harvest, estimated production cycle, future cash flows, future costs of harvesting and other costs, and estimated discount rate. Market prices are generally determined by reference to observable data in the principal market for the agricultural produce. Harvesting costs and other costs are estimated based on historical and statistical data. Yields are estimated based on several factors including the location, environmental conditions, infrastructure and other restrictions and growth at the time of measurement. Yields are subject to a high degree of uncertainty and may be affected by several factors out of the Group’s control including but not limited to extreme or unusual weather conditions, plagues and other crop diseases, among other factors.
F-26
The key assumptions discussed above are highly sensitive. Reasonable shifts in assumptions including but not limited to increases or decreases in prices, costs and discount rates used would result in a significant increase or decrease of the fair value of biological assets. In addition, cash flows are projected over a number of years and based on estimated production. Estimates of production by themselves are dependent on various assumptions, in addition to those described above, including but not limited to several factors such as location, environmental conditions and other restrictions. Changes in these estimates may materially impact on estimated production, and therefore may affect estimates of future cash flows used in the assessment of fair value. Valuation models and their assumptions are reviewed annually, or quarterly if required, and, if necessary, adjusted. Major assumptions for the calculation of the fair value of biological assets are as follows: At 31 December 2011
Unit Sugarcane Stock of sugar cane Harvested cane in the period Harvested hectares in the period
Ton Ton Has
Forecasts Cane forecasts Sugarcane cuts Life of the cane plant Hectares of cane Hectares of harvested cane Market price per ton of cane Discount rate
Ton Number Years Has Has Nuevos Soles %
(
4,553,135) 4,384,382) 37,307)
At 1 January 2010
2010
(
3,833,664) 3,535,604) 22,612)
(
4,036,822) 2,975,908) 20,473)
19,674,037 6 7 48,707 160,779
15,480,260 6 8 33,170 98,967
18,678,070 6 7 33,578 110,748
119 12.00%
89 11.70%
75 14.00%
The increase in the market price per sugar cane ton is basically explained by the increase of the prices of sugar per bags in the countries where the group operates. The market price of sugar cane per ton was based on historical prices (obtained from prices at which the Group invoices to its clients) multiplied by a factor of sugar back/packs per ton of cane. Additionally, Management carried out a price analysis prospectively and considers that its estimates are consistent with the market and current economic conditions of the agribusiness sector at each country. The decrease in the discount rate is substantially explained by the changes in the weighted average cost of capital of the Group (adjusted to take account of the way in which the market would assess specific risks associated with the estimated cash flows) and by the inflation rates of each year. The following is shown the effect of a table reflects the sensitivity analysis to a reasonably possible change in the discount rate, on the Group’s pre-tax profit, assuming with all other variables held constant: Change in fair value 31.12.2011 31.12.2010 1.1.2010 +1% -1% +0.5% -0.5%
( (
14,111) 14,718) 7,129) 7,282)
( (
6,155) 6,368) 3,104) 3,156)
( (
3,632) 3,775) 1,833) 1,869)
Following is shown the effect of a reasonably possible change in sugar prices, on the Group’s pre-tax profit, assuming all other variables constant:
F-27
Change in fair value 31.12.2011 31.12.2010 + + -
1% 1% 0.5% 0.5%
( (
16,467) 16,467) 8,233) 8,233)
( (
9,854) 9,854) 4,928) 4,928)
1.1.2010 ( (
9,234) 9,234) 4,617) 4,617)
c) Impairment testing At the date of each statement of financial position, the Group reviews the carrying amounts of its property, plant and equipment and intangible assets with finite useful lives to determine whether there is any indication that their carrying values are impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent, if any, of the impairment loss. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Generally the Group’s property, plant and equipment items do not generate independent cash flows. Goodwill on acquisition is initially measured at cost being the excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities acquired. As of the acquisition date, any goodwill is allocated to the cashgenerating unit (‘CGU’) expected to benefit from the business combination. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is tested for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying amount of the asset may be impaired. The impairment review requires management to undertake certain judgments, including estimating the recoverable value of the CGU to which the goodwill relates, based on either fair value less costs-to-sell or the value-in-use, as appropriate, in order to reach a conclusion on whether the goodwill is impaired or not. For purposes of the impairment testing, each CGU represents the smallest identifiable group of assets that generate cash inflows that are largely independent from the cash inflows of other assets or group of assets. Management has identified of six CGUs. CGUs tested using the value-in-use model for the years ended 31 December 2011 and 2010: The Group has identified 4 CGUs located in Peru, 1 CGU located in Ecuador and 1 located in Argentina. The Group tested all the CGUs identified using the value-in-use model. In performing the value-in-use calculation, the Group applied pre-tax rates to discount the future pre-tax cash flows of each CGU. In each case, key assumptions of management reflect its past experience and are consistent with relevant external sources of information, such as appropriate market data. Key assumptions used by management to determine the value-in-use which are considered to be the most sensitive to the calculation are:
F-28
Financial projections Yield average growth rates Future pricing increases Future cost increases Discount rates Perpetuity rate
31 December 2011
2010
covers 5 years between 1% and 9% between - 1% and 0% between - 3% and 13% 9.91% 2.50%
covers 5 years 8% between 0% and 1% -5% 9.67% 2.50%
Discount rates are based on the risk-free rate for U.S. government bonds, adjusted for a risk premium to reflect the general increased risk of investments in South America and in particular in Peru. The risk premium adjustment is assessed by factors specific to the respective CGUs and reflects the country in which the CGU operates in. The following table shows the CGUs to which goodwill was allocated as of 31 December 2011 and 2010 and the corresponding book value of the goodwill allocated to each CGU: 2011 S/.000 CGU / Country Casagrande / Peru San Isidro / Argentina La Troncal / Ecuador Closing net book amount of goodwill allocated to CGUs Closing net book amount of PPE items and other assets Total assets allocated to 3 CGUs
128,609 8,600 63,177 200,386 2,366,578 2,566,964
2010 S/.000 128,609 128,609 1,398,904 1,527,513
No goodwill was allocated to the remaining identified CGUs: Cartavio, San Jacinto and Sintuco. Based on the value in use testing above, the Group has determined that none of the CGUs were impaired as of 31 December 2011 and 2010. Management considers views these assumptions in the value in use calculations as conservative and does not believe that any reasonable change in the assumptions would cause the carrying value of these CGU’s to exceed the recoverable amount. d) Income taxes The Group is subject to income taxes in numerous jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain. The Group recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made. Deferred tax assets are reviewed each reporting date and reduced to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are not discounted. In assessing the recoverability of deferred tax assets, management considers whether it is probable that some portion or all of the deferred tax assets will not be realized.
F-29
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. e) Fair value of derivative financial instruments The fair value of interest rate swaps has been calculated using a discounted cash flow analysis (see note 3.3). 5
SEGMENT INFORMATION IFRS 8 “Operating Segments” requires an entity to report financial and descriptive information about its reportable segments, which are operating segments or aggregations of operating segments that meet specified criteria. Operating segments are components of an entity about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. The CODM, which has been identified as the Board of Directors, evaluates the business based on the different locations. The amounts reported by each segment is the measure reported to the Board for these purposes. The Group operates in three geographic segments: Peru, Ecuador and Argentina as of December 31, 2011. In 2010, the Group operated only one segment. The measurement principles for the Group’s segment reporting structure are based on the IFRS principles adopted in the consolidated financial statements. Revenue generated and goods exchanged between segments are calculated on the basis of market prices. The following table presents information with respect to the Group’s reportable segments. Certain other activities of a holding function nature not allocable to the segments are disclosed in the column ‘Corporate’. Ecuador La Troncal S/.000
Peru S/.000 31 December 2011 Sales of products Cost of products sold Gross profit Initial recognition and change in fair value of biological assets Profit before operating expenses Selling expenses Administrative expenses Other operating expenses, net Profit from operations before financing and taxation
(
( ( (
1,129,134) 605,128) ( 524,006) 189,776) ( 713,782) 21,596) ( 38,084) ( 1,592) 652,510)
31 December 2011 Property, plant and equipment Biological assets Investment in associates Goodwill Inventories Total segment assets Borrowings Total segment liabilities
2,012,798 595,625 832 128,609 127,789 2,865,653 280,758 280,758
F-30
Corporate S/.000
Total S/.000
98,098) 49,050) ( 49,048)
77,183) 51,051) 26,132)
-
1,304,415) ( 705,229) 599,186)
1,236) 47,812) 3,593) 21,305) 1,114) 24,028)
185) 25,947) 4,290) ( 4,033) ( 356) 17,268) (
-
188,355) 787,541) 769) ( 30,248) 2,964) ( 66,386) 677) ( 157) 3,056) 690,750)
Ecuador La Troncal S/.000
Peru S/.000
Argentina San Isidro S/.000
471,804 49,964 63,177 142,455 727,400 -
( ( ( (
Argentina San Isidro S/.000
-
197,488 11,593
Corporate S/.000
Total S/.000
8,600 23,421 241,102
123,504 28,979 6,730 159,213
2,805,594 657,182 29,811 200,386 300,395 3,993,368
45,379 45,379
225,493 225,493
551,630 551,630
Peru S/.000 31December 2010 Sales of products Cost of products sold Gross profit Initial recognition and change in fair value of biological assets Profit before operating expenses Selling expenses Administrative expenses Other operating expenses, net Profit from operations before financing and taxation
Corporate S/.000 937,854) 498,467) 439,387) 177,852) 617,239) 17,892) 41,468) 20,740) 537,139)
(
( ( ( Peru S/.000
31 December 2010 Property, plant and equipment Biological assets Investment in associates Goodwill Inventories Total segment assets
671) 1,456) 1,117) 1,010)
( ( (
937,854) 498,467) 439,387) 177,852) 617,239) 18,563) 42,924) 19,623) 536,129)
Total S/.000
1,916,162 377,820 832 128,609 77,639 2,501,062
109,091 471 3,231 112,793
2,025,253 377,820 1,303 128,609 80,870 2,613,855
316,179 316,179
217,440 217,440
533,619 533,619
Peru S/. 000
Borrowings Total segment liabilities
(
(
Corporate S/.000
Borrowings Total segment liabilities
1 January 2010 Property, plant and equipment Biological assets Investment in associates Goodwill Inventories Total segment assets
( (
-
Total S/.000
Corporate S/. 000
Total S/. 000
1,880,466 193,831 832 128,609 73,532 2,277,270
27,100 474 2,853 30,427
1,907,566 193,831 1,306 128,609 76,385 2,307,697
247,697 247,697
195,980 195,980
443,677 443,677
Total segment assets are measured in a manner consistent with that of the consolidated financial statements. These assets are allocated based on the operations of the segment and the physical location of the asset. The Group’s investment in the associate (acquired in December 2011) is located in Ecuador and therefore, the Group’s share of profit or loss after income taxes and its carrying amount will be reported within this segment. Total reportable segments’ assets are reconciled to total assets as per the statement of financial position as follows: 31 December 2011 S/.000 Total reportable assets as per Segment information Intangible assets (excluding goodwill) Deferred income tax asset Trade and other accounts receivables Cash and cash equivalents Total assets as per the statement of financial position
3,993,368 2,341 6,410 125,541 114,277 4,241,937
2010 S/.000 2,613,855 2,134 3,470 109,999 70,982 2,800,440
1 January 2010 S/.000 2,307,697 2,868 3,650 105,384 21,367 2,440,966
Total segment liabilities are measured in a manner consistent with that of the consolidated financial statements. These liabilities are allocated based on the operations of each segment. Total reportable segments’ liabilities are reconciled to total assets as per the statement of financial position as follows:
F-31
31 December 2011 S/.000 Total reportable liabilities as per Segment information Trade and other accounts payable Provisions and other liabilities Derivative financial instruments Deferred income tax liability Total liabilities as per the statement of financial position
1 January 2010 S/.000
2010 S/.000
551,630 708,431 14,882 10,558 470,481 1,755,982
533,619 345,578 12,247 15,074 353,854 1,260,372
443,677 518,497 9,344 15,183 329,574 1,316,275
The following table presents information with respect to the Peru segment consisting of 4 CGUs: Casa Grande, Cartavio, San Jacinto and Sintuco: Casa Grande S/.000 31 December 2011 Sales of products Cost of products sold Gross profit Initial recognition and change in fair value of biological assets Profit before operating expenses Selling expenses Administrative expenses Other operating expenses, net Profit from operations before financing and taxation
(
( ( (
583,390) 277,175) 306,215)
401,718) 267,529) 134,189)
24,819) ( 65,906) 159,008) 141,487) 10,380) ( 670) 14,516) ( 12,518) ( 4,114) ( 1,613) (
913) 9,216) 948) 82)
11,772) -
( ( ( (
12,054) 2,426) 13,364) 4,021)
189,776) 713,782) ( 21,596) ( 38,084) ( 1,592)
367,761)
138,226)
8,350)
11,772)
(
285)
652,510)
1,202,117) 355,773) ( ) 128,609) ( 71,730) 1,758,229) (
( ( (
Borrowings Total liabilities of Peru
56,211) ( 56,211)
105,406) ( 105,406)
San Jacinto S/.000
Cartavio S/.000
490,760) 233,833) 256,927)
(
362,134) 242,790) 119,344)
(
Sintuco S/.000
122,687) 70,926) 51,761)
55,138) 12,322) ) ) 222) 67,682) -
(
13,972) 7,054) 6,918)
(
) ( ) (
42,641) 31,927) 10,714)
(
10,714) -
( ( ( (
341,582)
119,321)
54,200)
11,690)
10,714)
(
1,109,470) 247,369) ( ) 128,609) ( 42,065) 1,527,513) (
(
158,439) 158,439)
428,050) 77,123) ( 5,109) ) 30,638) ( 540,920)
324,336) 42,335) ( 399) ) 4,792) ( 371,862)
53,152) ( 53,152)
104,588) ( 104,588)
F-32
( ( ( ( (
) ( ) (
6,277) 837) 9,090) 4,018) 368)
Elimination S/.000
54,306) 10,993) ) ) 144) 65,443) -
-
280,758) 280,758)
Total S/.000
94,340) 88,063) 6,277)
(
5,538) 12,456) 769) 3)
Sintuco S/.000
) ( )
Elimination S/.000
19,774) 71,535) 245) 16,258) ( 832) (
San Jacinto S/.000
1,129,134) ( 605,128) 524,006)
Total S/.000
-
20,352) ( 139,696) 8,834) ( 12,964) ( 1,423) (
Cartavio S/.000
82,333) 70,279) 12,054)
) 2,012,798) ) ( 595,625) 4,676) 832) ) 128,609) ) ( 127,789) 4,676) 2,865,653)
( ( ( (
Corporate S/.000
(
(
132,188) 389,115) 9,650) ( 20,567) ( 17,316)
Casa Grande S/.000 31 December 2010 Property, plant and equipment Biological assets Investment in associates Goodwill Inventories Total assets of Peru
334,305) 116,097) ( 399) ) 11,133) ( 461,934)
(
Elimination S/.000
Sintuco S/.000
421,238) 111,433) ( 5,109) ) 44,704) ( 582,484)
119,141) 119,141)
Casa Grande S/.000
San Jacinto S/.000
Cartavio S/.000
(
Borrowings Total liabilities of Peru
126,686)
(
46,040) 34,268) 11,772)
Total S/.000
98,138) 404,353) 12,972) ( 23,466) ( 154)
(
164,855) 89,274) 75,581)
Elimination S/.000
Corporate S/.000
15,464) 7,161) 8,303)
31 December 2011 Property, plant and equipment Biological assets Investment in associates Goodwill Inventories Total segment assets
(
Sintuco S/.000 (
(
Casa Grande S/.000
31 December 2010 Sales of products Cost of products sold Gross profit Initial recognition and change in fair value of biological assets Profit before operating expenses Selling expenses Administrative expenses Other operating expenses, net Profit from operations before financing and taxation
San Jacinto S/.000
Cartavio S/.000
937,854) ( 498,467) 439,387)
( ( (
177,852) 617,239) 17,892) 41,468) 20,740) 537,139)
Total S/.000
) 1,916,162) -) ( 377,820) 4,676) 832) ) 128,609) ) ( 77,639) 4,676) 2,501,062) -
) ( )
316,179) 316,179)
Casa Grande S/.000 1 January 2010 Property, plant and equipment Biological assets Investment in associates Goodwill Inventories Total assets of Peru
1,072,168) 119,473) ( ) 128,609) ( 37,853) 1,358,103) (
Borrowings Total liabilities of Peru
6
Cartavio S/.000
(
109,677) 109,677)
San Jacinto S/.000
Elimination S/.000
Sintuco S/.000
430,077) 55,128) ( 5,109) ) 33,576) ( 523,890)
323,670) 13,474) ( 399) ) 2,030) ( 339,573)
93,660) ( 93,660)
44,360) ( 44,360)
54,551) 5,756) ) ) 73) 60,380) -
( ( ( ( (
) ( ) (
Total S/.000
) 1,880,466) -) ( 193,831) 4,676) 832) ) 128,609) ) ( 73,532) 4,676) 2,277,270) -
) ( )
247,697) 247,697)
PROPERTY, PLANT AND EQUIPMENT a) The movement of the property, plant and equipment and the related accumulated depreciation for the years ended 31 December 2011 and 31 December 2010, and 1 January 2010 was as follows:
Land S/.000 At 1 January 2010 Cost Accumulated depreciation Net book value Year ended 31 December 2010 Opening net book value Additions Disposals Transfers and adjustments Depreciation charge (note 19) Closing net book value At 31 December 2010 Cost Accumulated depreciation Net book value
At 31 December 2011 Cost Accumulated depreciation Net book value
Machinery and equipment S/.000
Vehicles S/.000
Furniture and fixtures and others S/.000
Work in progress S/.000
Total S/.000
1,330,077) ( 1,330,077)
531,315) 374,296) ( 157,019)
659,184) 427,168) ( 232,016)
75,233) 43,939) ( 31,294)
48,739) 15,739) 33,000)
1,330,077) 65,954) ( 1,255) ( 4,421) ( 1,399,197)
157,019) 6,178) 204) ( 37,171) 10,308) ( 189,856)
232,016) 425) 1,195) ( 101,074) 37,157) ( 295,163)
31,294) 52) 82) ( 12,199) ( 6,453) ( 37,010)
33,000) 124,160) 1,907,566) 22,284) 99,044) 193,937) 15,684) ( 18,420) 4,179) ( 150,844) ( 158) 3,754) ( 57,672) 31,667) 72,360) 2,025,253)
709,619) (414,456) ( 295,163)
84,432) 47,422) ( 37,010)
48,512) 16,845) 31,667)
1,399,197 ( 1,399,197
Land S/.000 Year ended 31 December 2011 Opening net book value Acquisition of subsidiaries (*) Exchange differences Additions Disposals Transfers and adjustments Depreciation charge (note 19) Closing net book value
Buildings and other constructions S/.000
569,296) 379,440) 189,856)
Buildings and other constructions S/.000
Machinery and equipment S/.000
Vehicles S/.000
Furniture and fixtures and others S/.000
1,399,197) 369,657) ( 7,347) ( 1,293) ( 38) ( 305) ( 1,763,067)
189,856) 142,719) 2,737) ( 358) 528) ( 22,151) 14,735) ( 337,084)
295,163) 140,161) 2,688) ( 4,383) 13) ( 88,951) 47,232) ( 478,725)
37,010) 5,865) 112) 176) 56) 6,978) 8,636) 41,225)
1,763,067 1,763,067
730,443) (393,359) ( 337,084)
941,242) 462,517) ( 478,725)
96,866) 55,641) ( 41,225)
( ( ( (
124,160) 2,768,708) ( 861,142) 124,160) 1,907,566)
72,360 2,883,416) ( 858,163) 72,360 2,025,253) Work in progress S/.000
Total S/.000
31,667) 72,360) 2,025,253) 3,389) 23,171) 684,962) 65) ( 444) ( 13,393) 10,350) 169,926) 186,486) 492) ( 1,009) ( 2,136) 4,227) ( 114,521) ( 363) 4,612) ( 75,215) 36,010) 149,483) 2,805,594) 53,895) 17,885) 36,010)
149,483) 3,734,996) ( 929,402) 149,483) 2,805,594)
(*) Includes fixed assets of Vehra S.A. and Grupo Azucarero EQ2 for S/.196.9 million and S/.488.0 million, respectively (see note 23). b) Work in progress comprises all assets under construction and/or in set-up process, the costs of which are accumulated until such assets are ready for their intended use /operation; time in which when they are transferred to their final classification asset account.
F-33
Work in progress comprises: At 31 December 2011 S/.000 Buildings Machinery and equipment Other
2010 S/.000
50,049 95,900 3,534 149,483
(
At 1 January 2010 S/.000 14,599 53,465 4,296 72,360
33,243 90,876 41 124,160
During 2011 and 2010 investment projects in progress developed in Peru are related to: i) the acquisition of energy power generators for sugar plant, ii) freezing equipment, installation of sugar plant, mill expansion, improvements on centrifuge process, installation of irrigation equipment, mechanical harvester machine, construction of Garrapon Dam. c) The depreciation for the years ended 31 December was recorded in the following line items: 2011 S/.000 Cost of products sold (note 19) Selling expenses (note 19) Administrative expenses (note 19)
2010 S/.000 68,113 375 6,727 75,215
55,509 306 1,857 57,672
d) The net carrying amount of machinery and equipment, vehicles and furniture and fixtures acquired under lease or leaseback agreements comprises the following: At 31 December 2011 S/.000 Cost Depreciation Net
10,774) 4,828) 5,946)
(
At 1 January 2010 S/.000
2010 S/.000 (
10,774) 4,390) ( 6,384)
13,772) 2,798) 10,974)
e) Certain of the Group’s assets have been pledged as collateral to secure its borrowings and other payables. The net book value of pledged assets amounts to S/.297 million as of 31 December 2011 (2010: S/.228 million). f) As of 31 December 2011, assets recognized in the financial statements as property, plant and equipment are insured up to a value of US$95 million. Management believes that the amount insured is consistent with international practices in the industry and takes into account the nature of the assets in estimating the risk of eventual damages. 7
INTANGIBLE ASSETS The movement on intangible assets and its related accumulated amortization for the years ended 31 December 2011 and 2010 has been as follows: Goodwill S/.000 At 1 January 2010 Cost Accumulated amortization Net book value
128,609 128,609 F-34
Software S/.000 (
5,330) 2,462) 2,868)
Total S/.000 (
133,939) 2,462) 131,477)
Software S/.000
Goodwill S/.000
8
Year ended 31 December 2010 Opening net book amount Additions Amortization charge (note 19) Closing net book value
128,609 128,609
At 31 December 2010 Cost Accumulated amortization Net book value
128,609 128,609
Year ended 31 December 2011 Opening net book amount Acquisition of subsidiary (*) Additions Disposals Amortization charge (note 19) Closing net book value
128,609 71,777 200,386
At 31 December 2011 Cost Accumulated amortization Net book amount
200,386 200,386
(
(
( (
(
Total S/.000
2,868) 294) 1,028) 2,134) 5,624) 3,490) 2,134) 2,134) 1,211) 991) 1,079) 916) 2,341) 6,747) 4,406) 2,341)
(
(
( (
(
131,477) 294) 1,028) 130,743) 134,233) 3,490) 130,743) 130,743) 72,988) 991) 1,079) 916) 202,727) 207,133) 4,406) 202,727)
(*) Includes goodwill of Vehra S.A. and Grupo Azucarero EQ 2 for S/.8.6 million and S/.63.2 million respectively (see note 23).The total of the amortization charge for the years ended 31 December 2011 and 2010 is included in administrative expenses in the consolidated statement of comprehensive income. BIOLOGICAL ASSETS Changes in the Group’s biological assets were as follows: At 31 December 2011 S/.000 Beginning of the year Cost incurred during the year Acquisition of subsidiaries (*) Harvest Initial recognition and changes in fair value of biological assets (due to price and physical changes) Exchange difference End of the year
(
(
377,820) 246,239) 64,318) 217,934) 188,355) 1,616) 657,182)
2010 S/.000
(
)
193,831) 189,766) 183,629) 177,852) 377,820)
At 1 January 2010 S/.000
( ( )
268,493) 165,423) 179,941) 60,144) ) 193,831)
(*) Includes biological assets of Vehra and Grupo Azucarero EQ 2 for S/.11.3 million and S/.53.0 million, respectively (see note 23). The balance of the biological assets account is shown in the statement of financial position as follows:
F-35
At 31 December 2011 2010 S/.000 S/.000 Non-current Current Total biological assets 9
378,978 278,204 657,182
155,721 222,099 377,820
At 1 January 2010 S/.000 82,726 111,105 193,831
INVENTORIES This item comprises: At December 31, 2011 2010 S/.000 S/.000 Raw materials Products in process Finished products (a) Packaging and casing Other supplies (b)
3,589 6,541 188,778 1,754 99,733 300,395
696 3,052 37,664 1,994 37,464 80,870
At January 1, 2010 S/.000 533 2,771 32,050 1,878 39,153 76,385
(a) Finished products comprise 134,665 tons of sugar the book value of which amounts to S/.163.9 million (35,287 and S/.25.5 million, and 25,779 tns and S/.20.7 million, at 31 December 2010 and 1 January 2010, respectively) y 7,185,102 Its of alcohol the book value of which amounts to S/.13.4 million (5,567,704 Its and S/.8 million, and 4,695,001 Its and S/.6.6 million, at 31 December 2010 and 1 January 2010, respectively). (b) This account comprises spare parts, materials and supplies used in connection with the maintenance of the sugar plants located in Perú, Ecuador and Argentina.
10
FINANCIAL INSTRUMENTS BY CATEGORY The following table shows the carrying amounts of financial assets and financial liabilities by category of financial instrument and reconciliation to the corresponding line item in the statements of financial position, as appropriate. Since the line items “Trade and other accounts receivable”, “Trade and other accounts payable” and “Provisions and other liabilities” contain both financial instruments as well as non-financial assets and liabilities (such as taxes receivables or payments in advance), the reconciliation is shown in the columns headed as “Non-financial assets” and “Non-financial liabilities.” Loans and receivables S/.000
31 December 2011 Assets as per statement of financial position: Cash and cash equivalents Trade and other accounts receivable Total
114,277 86,826 201,103
F-36
Subtotal financial assets S/.000
114,277 86,826 201,103
Nonfinancial assets S/.000
38,715 38,715
Total S/.000
114,277 125,541 239,818
Liabilities as per statement of financial position: Borrowings (excluding finance lease) Finance lease Trade and other accounts payables Provision and other liabilities Total
Other financial liabilities S/.000
548,528 3,102 604,223 1,155,853 Loans and receivables S/.000
31 December 2010 Assets as per statement of financial position: Cash and cash equivalents Trade and other accounts receivable Total
Liabilities as per statement of financial position: Borrowings (excluding finance lease) Finance lease Trade and other accounts payable Provision and other liabilities Total
70,982 87,901 158,883 Other financial liabilities S/.000
528,542 5,077 297,669 831,288 Loans and receivables S/.000
1 January 2010 Assets as per statement of financial position: Cash and cash equivalents Trade and other accounts receivables Total
Liabilities as per statement of financial position: Borrowings (excluding finance lease) Finance lease Trade and other accounts payable Provision and other liabilities Total
21,367 88,559 109,926 Other financial liabilities S/.000
433,091 10,586 455,845 899,522
Subtotal financial liabilities S/.000
548,528 3,102 604,223 1,155,853 Subtotal financial assets S/.000
Nonfinancial liabilities S/.000
104,208 14,882 119,090 Nonfinancial assets S/.000
70,982 87,901 158,883 Subtotal financial liabilities S/.000
528,542 5,077 297,669 831,288 Subtotal financial assets S/.000
22,098 22,098 Nonfinancial liabilities S/.000
-
Nonfinancial assets S/.000
21,367 88,559 109,926 Subtotal financial liabilities S/.000
433,091 10,586 455,845 899,522
47,909 12,247 60,156
16,825 16,825 Nonfinancial liabilities S/.000
-
62,652 9,344 71,996
Total S/.000
548,528 3,102 708,431 14,882 1,274,943
Total S/.000
70,982 109,999 180,981
Total S/.000
528,542 5,077 345,578 12,247 891,444
Total S/.000
21,367 105,384 126,751
Total S/.000
433,091 10,586 518,497 9,344 971,518
Other financial liabilities are carried at amortized cost. The account “Other financial liabilities” includes liabilities under finance leases in which the Group acts as the lessee, therefore such balances are measured
F-37
in accordance with IAS 17. The categories disclosed above have been determined by reference to IAS 39. Finance leases are excluded from the scope of IFRS 7. Therefore, finance leases have been shown separately. Derivative financial instruments are accounted for under “hedge accounting” as defined by IAS 39 (see note 3.3). Because of the short maturities of trade accounts receivable and payable, other receivables and liabilities, their carrying amounts at the dates of the statements of financial position do not differ significantly from their respective fair values. The fair value of long-term borrowings is disclosed in note 13.
Income, expenses, gains and losses on financial instruments shown in the statement of comprehensive income correspond to the following categories: Loans and receivables S/.000 31 December 2011 Interest income Interest expense
-
31 December 2010 Interest income Interest expense
-
2,461
1,621)
Other financial liabilities S/.000
(
(
-
-
Total S/.000
47,446)
(
2,461 47,446)
45,388)
(
1,621 45,388)
Fair values determination IAS 39 defines the fair value of a financial instrument as the amount for which a financial asset could be exchanged, or a financial liability settled, between knowledgeable, willing parties in an arm’s length transaction. All financial instruments recognized at fair value are allocated to one of the valuation hierarchy levels of IFRS 7. This valuation hierarchy provides for three levels. The initial basis for the allocation is the “economic investment class”. Only if this does not result in an appropriate allocation the Group deviates from such an approach in individual cases. The allocation reflects which of the fair values derive from transactions in the market and where valuation is based on valuation models because there is lack of market transactions. For the years ended 31 December 2011 and 2010, the financial instruments recognized at fair value on the statement of financial position comprise only derivative financial instruments. In the case of Level 1, valuation is based on unadjusted quoted prices in active markets for identical financial assets that the Group can refer to at the date of the statement of financial position. A market is deemed active if transactions take place with sufficient frequency and in sufficient quantity for price information to be available on an ongoing basis. Since a quoted price in an active market is the most reliable indicator of fair value, this should always be used if available. The Group does not have financial instruments allocated to this level for any of the years presented. Not traded derivatives allocated to Level 2 are valued using models based on observable market data. For this, the Group uses inputs directly or indirectly observable in the market, other than quoted prices. If the financial instrument concerned has a fixed contract period, the inputs used for valuation must be observable for the whole of the period. The financial instruments the Group has allocated to this level comprise interest-rate swaps and foreign-currency interest-rate swaps. In the case of Level 3, the Group uses valuation techniques not based on inputs observable in the market. This is only permissible insofar as no observable market data are available. The inputs used reflect the Group’s assumptions regarding the factors which market players would consider in their pricing. The Group uses the best available information for this, including internal company data.
F-38
The Group does not have any financial instruments allocated to this level for any of the years presented. 11
TRADE AND OTHER ACCOUNTS RECEIVABLE This item comprises: At 31 December 2011 2010 S/.000 S/.000 Non-current Accounts receivables to related parties (note 28) Current Trade accounts receivable Trade accounts receivables to related parties (note 28) Trade accounts receivable Prepaid expenses Value Added Tax (VAT) Tax claims Loans to third parties Payments in advance of the income tax Accounts receivable to related parties (note 28) Miscellaneous accounts receivable Total other accounts receivable Total current accounts receivable Total trade and other accounts receivable
At 1 January 2010 S/.000
8,224
7,982
20,446
36,029
21,203
28,728
17,827 53,856 6,031 21,057 8,152 10,665 3,475 2,569 11,512 63,461 117,317 125,541
47,508 68,711 6,319 8,449 4,773 5,009 2,557 2,476 3,723 33,306 102,017 109,999
28,145 56,873 2,779 2,514 9,473 2,436 2,059 1,994 6,810 28,065 84,938 105,384
The fair values of current trade and other accounts receivable approximate their respective carrying amounts due to their short-term maturity. The fair values of non-current trade and other accounts receivable approximate their carrying amount, as the impact of their discount is not significant for the financial statements taken a whole.
The carrying amounts of the Group’s trade and other accounts receivable are denominated in the following currencies (expressed in Nuevos Soles): At December 31 2011 S/.000 Currency Nuevos Soles US Dollars Argentine Peso
52,625 47,812 25,104 125,541
January 1 2010 S/.000
2010 S/.000 56,094 53,905
109,999
44,682 60,702 105,384
The Group recognizes an allowance for doubtful trade accounts receivable when there is objective evidence that the Group will not be able to collect all amounts due according to their original terms. Delinquency in payments is considered an indicator that the trade accounts receivable may be impaired. However, management considers all available evidence in determining when a receivable is impaired. Generally, trade accounts receivable, which are more than 180 days past due are fully provided for. However, certain accounts receivable which are more than 180 days overdue are not provided for based on a case-by-case analysis of the credit quality of the account. Furthermore, accounts receivables, which are not more than 180 days overdue, may be provided for if specific analysis indicates their potential impairment.
F-39
As of 31 December 2011 and 2010 and 1 January 2010, the allowance for doubtful trade and other accounts receivable amounted to S/.14.8 million. The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above (see note 3.1.v). 12
CASH AND CASH EQUIVALENTS At 31 December 2011 2010 S/.000 S/.000 Cash at bank and on hand Short-term bank deposits
13
113,419 858 114,277
At 1 January 2010 S/.000
64,329 6,653 70,982
16,334 5,033 21,367
BORROWINGS This item comprises: At 31 December 2011 2010 S/.000 S/.000
Non-current Promissory notes Leases Current Overdrafts Promissory notes Leases Total borrowings
At 1 January 2010 S/.000
258,982 991 259,973
344,526 2,758 347,284
277,657 6,544 284,201
1,763 287,783 2,111 291,657 551,630
918 183,098 2,319 186,335 533,619
1,442 153,992 4,042 159,476 443,677
These loans are mainly collateralized by property, plant and equipment and shares of certain subsidiaries of the Group as disclosed in note 26 d). The maturity of the Group’s borrowings (excluding obligations under finance leases) and the Group’s exposure to fixed and variable interest rates are as follows: At 31 December 2010 2011 S/.000 S/.000
Fixed rate: Less than 1 year Between 1 and 2 years Between 2 and 5 years More than 5 years Variable rate: Less than 1 year Between 1 and 2 years Between 2 and 5 years More than 5 years Total borrowings
F-40
At 1 January 2010 S/.000
215,802 80,347 121,006 8,659 425,814
142,820 60,984 149,129 10,892 363,825
119,346 82,713 22,544 3,010 227,613
73,744 12,377 36,593 122,714 548,528
41,196 72,157 51,364 164,717 528,542
36,088 108,472 37,170 23,748 205,478 433,091
The carrying amounts of the Group’s borrowings are denominated in the following currencies (expressed in Nuevos Soles): At 31 December 2011 2010 S/.000 S/.000 Nuevos Soles Argentine Peso US Dollar
250,916 7,136 290,476 548,528
At 1January 2010 S/.000
318,127 210,415 528,542
177,470 255,621 433,091
Group’s borrowings with fixed rates in the following currencies, are as follows: At 31 December 2011 2010 % % Nuevos Soles Argentine Peso US Dollar
6.90 - 7.75 1.50 - 15.00 2.11 – 14.00
At 1January 2010 %
3.92 - 7.75 2.80 – 3.43
5.40 - 11.50 6.24 - 7.63
The exposure of fixed interest bearing borrowings to changes in market interest rates and their corresponding reprising date at year-end is shown in the liquidity risk assessment in note 3.1.iii. Obligations under finance leases The maturity of the Group’s minimum lease payments is as follows: At 31 December 2011 2010 S/.000 S/.000 Minimum payments Lower than 1 year From 1 to 5 years Future financial charges Present value of lease obligations
(
2,319) 1,078) 3,397) 295) 3,102)
(
2,615) 3,017) 5,632) 555) 5,077)
At 1January 2010 S/.000
(
4,645) 7,063) 11,708) 1,122) 10,586)
The Group estimates that the carrying amount of short-term loans approximates their fair value due to their short-term nature. The Group estimates the fair values of long-term bank loans based on current rates available for the Group for debt of similar terms and maturities. The Group’s fair value of longterm bank loans was not significantly different from the carrying value at December 31, 2011 and 2010 and 1 January 2010. 14
TRADE AND OTHER ACCOUNTS PAYABLE At 31 December 2011 2010 S/.000 S/.000 Non-current: Trade accounts payable to related parties (note 28) Tax debt Payroll and social security payable Account payable from acquisition of subsidiaries (note 23) Other accounts payable Total non-current portion
F-41
1 January 2010 S/.000
10 52,339 12,594
27,687 4,194 7,656
27,691 2,877 150,171
227,009 4,095 296,047
3,616 43,153
11,448 192,187
At 31 December 2011 2010 S/.000 S/.000
1 January 2010 S/.000
Current Trade accounts payable Trade accounts payable to related parties (note 28) Payroll and social security payable Accounts payable from acquisition of subsidiaries (note 23) Accounts payable from acquisition of associate (*) Income tax payable Dividends payable Payments in advances to customers Other accounts payable Total current portion
97,681 87,744 104,205 18,486 19,619 38,521 12,416 13,348 20,364 412,384
61,130 103,217 78,193 24,022 19,693 16,170 302,425
73,057 85,505 93,248 11,158 48,617 14,725 326,310
Total trade and other accounts payable
708,431
345,578
518,497
(*) This account corresponds to the amount outstanding for the acquisition of 50% of the shares of Compañía Producargo S.A. amounting to S/.28.5 million (US$10.6 million) according to the agreement signed on 14 December 2011. The fair values of current trade and other accounts payable approximate their respective carrying amounts due to their short-term maturity. The fair values of non-current trade and other accounts payable approximate their carrying amounts, as the impact of their discount is deemed to be insignificant. 15
PROVISIONS AND OTHER LIABILITIES The Group is subject to several laws, regulations and business practices in the countries where it operates. In the ordinary course of business, the Group is subject to certain contingent liabilities with respect to existing or potential claims, lawsuits and other proceedings, including those involving labor and social security and civil amounting to S/.11 million and S/.3.8 million respectively (S/.8.9 million and S/.3.3 million respectively at 31 December 2010 and S/.6.1 million and S/.3.3 million respectively at 1 January 2010) The Group accrues liabilities when it is probable that future costs will be incurred and their amounts can be reasonably estimated. The Group bases its accruals on up to-date developments, estimates of the outcomes of the matters and legal counsel experience in contesting, litigating and settling matters. As the scope of the liabilities becomes better defined or more information is available, the Group may require to change its estimates of future costs, which could have a material effect on its results of operations and financial condition or liquidity. The table below shows the movements in the Group’s provisions for other liabilities: Total S/.000 At 1 January 2010 Additions At 31 December 2010 Additions At 31 December 2011
( (
9,344) 2,903) 12,247) 2,635) 14,882)
The balance of the provisions and other liabilities account is shown in the statement of financial position as follows:
F-42
At 31 December 2011 S/.000 Non-current Current Total provisions and other liabilities 16
8,566 6,316 14,882
At 1 January 2010 S/.000
2010 S/.000 9,086 3,161 12,247
8,197 1,147 9,344
TAXATION Coazucar is subject to the applicable Peruvian general tax regulations. The Group’s income tax has been calculated on the estimated assessable taxable profit for the year at the rates prevailing in the respective foreign tax jurisdictions. The subsidiaries of the Group in the jurisdictions where the Group operates are required to calculate their income taxes on a separate basis; thus, they are not permitted to compensate subsidiaries´ losses against subsidiaries income. The details of the income tax charged to the statement of comprehensive income for the years ended 31 December are as follows: 2011 S/.000 Current income tax Deferred income tax Income tax expense
2010 S/.000 79,248 25,336 104,584
51,309 24,460 75,769
The details of the provision for the Group’s income tax by country are as follows: 2011 S/.000
Current income tax: Perú Argentina Ecuador Deferred income tax: Peru Argentina Ecuador
(
Total
2010 S/.000 67,369 6,664 5,215 79,248
51,309 51,309
27,077) 65) 1,806) 25,336)
24,460 24,460
104,584)
75,769
The statutory tax rate in the countries where the Group operates for all of the years presented are: Tax jurisdiction Peru (*) Argentina Ecuador
Income tax rate 30% 35% 22%
(*) According to Peruvian tax legislation currently in effect, entities engaged in the agro-industrial activity have a temporary tax holyday by means of a reduction of the general income tax rate to 15% until 31 December 2021.
F-43
The analysis of deferred tax assets and deferred tax liabilities is as follows:
Deferred income tax asset Recoverable in 12 months Recoverable in more than 12 months Total assets Deferred income tax liabilities Recoverable in 12 months Recoverable in more than 12 months Total liability Net
At 31 December 2011 S/.000
2010 S/.000
( ( (
( ( (
4,126) 9,272) 13,398)
At 1January 2010 S/.000 847) 8,936) 9,783)
24,832 452,637 477,469 464,071
( ( (
2,184) 9,380) 11,564)
17,245 342,922 360,167 350,384
14,065 323,423 337,488 325,924
The movement in the deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows: Property Plant and equipment S/.000
Deferred income tax liabilities
At 1 January 2010 Charged / (credit) to Statement of Comprehensive Income At 31 December 2010 Charged / (credit) to Statement of Comprehensive Income Acquisition of subsidiary At 31 December 2011
Deferred income tax assets
At 1 January 2010 Charged / (credit) to Statement of Comprehensive Income At 31 December 2010 Charged / (credit) to Statement of Comprehensive Income Charged / (credit) to other comprehensive Income At 31 December 2011
Cumulative trans lation adjustment S/.000
Others S/.000
Total S/.000
330,049)
6,907
532)
337,488
(
3,880) 326,169)
26,678 ( 33,585 (
119) 413)
22,679 360,167
( ( (
3,213) 86,739) 409,695)
28,135 ( 5,834 ( 67,554 (
193) ) 220)
24,729 92,573 477,469
Derivatives S/.000
Provisions and vacations payable S/.000
Provision for inventory impairment S/.000
-
Others S/.000
Total S/.000
-
(
4,555) (
2,202) (
1,602)
(
3,205) (
11,564)
-
(
33) ( 4,522) (
71) ( 2,273) (
15) ) 1,617) (
1,834) 1,371) (
1,781)) 9,783))
1,355) (
874) (
135) )
- ) ) 3,167) (
) ) 3,147) (
( (
Biological assets S/.000
4,222) 4,222) (
-
261)
) ) 1,752) (
-
) ( 1,110) (
607) 4,222) 13,398)
The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows: 2011 S/.000
Income before income tax as per each entity of the Group’s financial statements Income tax by applying at the tax rates applicable to profits in the respective countries Non-deductible items Non-taxable income Tax losses for which no deferred income tax asset was recognized Others Income tax expense
( ( (
F-44
2010 S/.000
664,119)
503,458)
106,347) 4,231) 7,228)
75,428) 2,812) 3,622)
1,696) 462) 104,584)
( ( (
898) 253) 75,769)
17
EQUITY a) Capital As of 31 December 2011 the Company’s authorized, issued and paid – in capital is represented by 287,011,574 common shares of S/.1.00 par value each (287,011,574 and 270,135,574 common shares as of 31 December 2010 and as of 1 January 2010, respectively) from which the Company owns 99.99% interest. The remaining interest is held by three other stockholders. b) Legal and other reserves (i)
As established under Peruvian Corporate Law, a legal reserve is made with a transfer of 10% of the annual profits obtained until it reaches a 20% of the paid-in capital. If not undistributed profits or freely available reserves exist, the legal reserve may be applied to offset tax losses, but it has to be replenished with profits to be obtained in subsequent periods. This reserve may be capitalized, but it has to be subsequently replenished.
(ii)
As established under Ecuador Corporate Law, a legal reserve is made with a transfer of 10% of the annual profits obtained until it reaches a 50% of the paid-in capital. As established under Argentine Corporate Law, a legal reserve is made with a transfer of 5% of the annual profits obtained until it reaches a 20% of the paid-in capital.
(iii)
Acquisition of additional interest in a subsidiary On March 2010, the Company acquired an additional 10.01% of the issued shares of Agroindustrias San Jacinto S.A.A. (SJ) for a purchase consideration of S/.13.9 million. After this acquisition, the Group holds an 82.63% interest in SJ. The carrying amount of the noncontrolling interest in SJ on the transaction was S/.17.9 million. The Group derecognized the non-controlling interest of S/.17.9 million and recorded an increase in the equity attributable to the owners of the parent of S/.3.6 million. On August 2010, the Company acquired an additional 12.40% of the issued shares of Empresa Agrícola Sintuco S.A. (EAS) for a purchase consideration of S/.2.3 million. After this acquisition the groupholds a 57.69% interest in EAS. The carrying amount of the noncontrolling interest in EAS on the date of transaction was S/.5.1 million. The group derecognized non-controlling interest of S/.5.1 million and recorded an increase in equity attributable to the owners of the parent of S/.3.2 million. The effect of changes in the ownership interest of Coazucar S.A. on the equity attributable to owners of the Company during 2010 is summarized as follows: S/.000 Carrying amount of non-controlling interests acquired Consideration paid to non-controlling interests Excess of consideration paid recognized in parent’s equity
(
23,060) 16,289) 6,771)
There were no transactions with the non-controlling interest in 2011. c) Retained earnings Under Peruvian current legislation, there are no restrictions on the remittance of dividends or for the repatriation of capital to foreign investors. In Ecuador, dividends distributed to individuals and entities domiciled in tax heavens are subject to a 24% income tax rate as from fiscal 2011. In Argentina dividends are not subject to taxes.
F-45
18
SALES OF PRODUCTS Revenue for the years ended December 31 comprises: 2011 S/.000
Sugar: - Brown - White - Organic Ethanol Other 19
2010 S/.000
738,892 375,215 52,121 93,401 44,786 1,304,415
581,121 248,811 74,912 33,010 937,854
EXPENSES BY NATURE The following table provides the nature of expenses and their relationship to the function within the Group: Administrative expenses 2011 2010 S/.000 S/.000
Cost of products sold Selling expenses 2011 2010 2011 2010 S/.000 S/.000 S/.000 S/.000 Inventory variance Raw materials Cost of products sold Other manufacturing expenses Consumables used in manufacturing activities Salaries and social security expenses (note 20) Fees, commissions and legal advisors Transport and travel expenses Freights Maintenance and repairs Export taxes / selling taxes Depreciation (note 6) Amortization (note 7) Services Other
20
( 107,487) ( 5,695) 413,964) 264,627) ) 32,094) ) 23,956) 94,143) 67,400) 36,290)
14,076
118,635)
64,285)
- ) ) - ) - ) 27,169) 7,282) - ) 68,113) ) 55,509) ) - ) ) 22,308) ) 7,027) ) ) ) 705,229) 498,467)
-
-
-
-
-
-
-
-
2,615
526
14,321
4,062 1,156 19,503 15 144 375 280 2,098 30,248
2,850 55 14,185 7 20 306 330 284 18,563
8,870 1,853
-
1,346 5,374 6,727 916 10,439 16,540 66,386
Total 2011 S/.000 ( )
2010 S/.000
107,487) ( 5,695) 413,964) 264,627) 32,094) 23,956) 94,143) 67,400) 36,290)
14,076)
12,649
135,571)
77,460)
2,437 1,005 ) 151 4,522 1,857 1,028 4,999 14,276 ( 42,924 (
12,932) 5,287) 3,009) 1,060) 19,503) 14,185) 28,530) 7,440) 5,518) 4,542) 75,215) 57,672) 916) 1,028) 33,027) 12,356) 18,638) ( 14,560) 801,863) 559,954)
SALARIES AND SOCIAL SECURITY EXPENSES The salaries and social security expenses for the years ended 31 December comprises the following: 2011 S/.000 Wages and salaries Social contributions Bonus Employees’ severance indemnities Worker’s profit sharing Vacation leave Other benefits
58,621 8,060 4,748 3,711 55,753 1,996 2,682 135,571
F-46
2010 S/.000 28,298 1,486 3,670 2,324 37,637 2,190 1,855 77,460
21
OTHER OPERATING EXPENSES The other operating expenses for the years ended 31 December comprises the following: 2010 S/.000
2011 S/.000 Other operating income: Profit from fixed asset sale Recovery of tax claims Recovery of provisions Equipment rentals Other income
1,231) 1,547) 1,419) 1,362) 1,994) 7,553)
Other operating expenses: Write-off of property, plant and equipment Labor and legal claims Loss from fixed asset sale Destruction of products Other expenses
22
( ( ( ( ( ( (
784) 2,635) ) 1,086) 3,205) 7,710) 157)
) 1,897) 1,492) 634) 6,412) 10,435) ( ( ( ( ( ( (
17,949) 2,903) 155) 2,560) 6,491) 30,058) 19,623)
FINANCIAL INCOME (EXPENSES) The financial income (expenses) for the years ended 31 December comprises the following: 2011 S/.000
Financial income: Interests on bank deposits Interest on loans Other Total financial income Financial expenses: Interest on borrowings Interest on other obligations Interest on commercials loans Interest on tax debts Loss on financial instruments Other financial expenses Total financial expenses 23
2010 S/.000 1,591 229 641 2,461
361 539 721 1,621
40,138 713 197 445 3,993 1,960 47,446
29,096 3,651 45 2,652 8,748 1,196 45,388
BUSINESS COMBINATIONS a) Acquisition of Verha S.A. (Ingenio San Isidro) On August 2011, the Group acquired 60% of the issued share capital of Verha S.A., an Argentinebased company involved in the sugarcane agricultural industry. The purchase price of S/.90.8 millions was fully paid in cash. The activities of Verha are developed in the plantations and facilities jointly named “Ingenio San Isidro”. Ingenio San Isidro is located in the city of Campo Santo, some 59 kilometers away from the city of Salta.
F-47
In the period from its acquisition to 31 December 2011, Verha contributed revenues of S/. 77.2 million and profits before taxation of S/.22.2 millions to the Group’s consolidated results. If Verha had been acquired on 1 January 2011, combined revenues of the Group would have been S/.107.8 millions (unaudited) and profits would have been S/.6.4 millions (unaudited) for the year ended 31 December 2011. Results, assets and liabilities of Verha as from the acquisition date are included within the Argentina segment. Details of the net assets acquired and goodwill are as follows: S/.000 Consideration at 31 August 2011 - Cash paid Total purchase consideration Fair value of net assets Non - controlling interest Fair value of net assets acquired Goodwill (note 7)
(
90,750) 90,750) 136,916) 54,766) 82,150) 8,600)
Goodwill generated on the acquisition was attributable mainly to the Group’s expected benefits from diversification and expansion into high-yield potential farmland properties. The assets and liabilities at the date of acquisition are as follows: S/.000 At 31 August 2011 Property, plant and equipment (note 6) Biological assets (note 8) Inventories Trade and other accounts receivables Cash and cash equivalents Borrowings Trade and other accounts payables Payroll and social security liabilities Deferred income tax liabilities (note 16) Fair value of net assets
( ( ( (
196,956) 11,299) 25,176) 36,975) 2,371) 47,583) 16,405) 12,796) 59,077) 136,916)
The cash flow and cash equivalents on the acquisition can be calculated as follows: Cash paid Cash and cash equivalents of the acquired subsidiary Net cash outflow from acquisition
( (
90,750) 2,371) 88,379)
b) Acquisition of a company in Ecuador On September 2011, the Group acquired 36.4% of the issued share capital of Grupo Azucarero EQ2 S.A, an Ecuadorian company involved in the sugarcane agricultural industry. The purchase price includes an upfront cash payment of S/.37.3 millions and a long term liability amounting S/.252.1 millions bearing interest at 5%. The liability is payable over a 15 year-period. Grupo Azucarero EQ2 S.A. is known in Ecuador as Ingenio La Troncal. The sugarcane plantations and mills are located in the province of Cañar, South East of Guayaquil and 128 km North West of the city of Cuenca.
F-48
In the period from acquisition to 31 December 2011, Grupo Azucarero EQ2 S.A contributed revenues of S/. 98.1 million and profits before taxation of S/. 25.5 million to the Group’s consolidated results. If Grupo Azucarero EQ2 S.A had been acquired on 1 January 2011, combined revenues of the Group would have been S/.48.9 millions (unaudited) and profits would have been S/.6.3 millions (unaudited) for the year ended 31 December 2011. Results, assets and liabilities of Grupo Azucarero EQ2 S.A as from the acquisition date are included within the Ecuador segment. Details of the net assets acquired and goodwill are as follows: S/.000 Consideration at September, 2011 - Cash paid - Present value of outstanding purchase price (*) Total purchase consideration Fair value of net assets Non-controlling interest Fair value of net assets acquired Goodwill (note 7)
(
37,342) 252,066) 289,408) 621,516) 395,285) 226,231) 63,177)
(*) Discounted at present value as of the date of acquisition using the interest rate of 8.34% (note 14). The goodwill generated on the acquisition was attributable mainly to the Group’s expected benefits from diversification and expansion into high-yield potential land properties. The assets and liabilities at the date of acquisition are as follows: S/.000 At September 2011 Property, plant and equipment (note 6) Intangible assets (note 7) Biological assets (note 8) Inventories Trade and other accounts receivables Cash and cash equivalents Trade and other accounts payables Payroll and social security liabilities Income tax payable Deferred income tax liabilities (note 16) Fair value of net assets
( ( ( (
488,006) 1,211) 53,019) 136,529) 99,991) 76,251) 168,618) 20,296) 11,083) 33,494) 621,516)
The cash flow and cash equivalents on the acquisition can be calculated as follows: S/.000 Cash paid Cash and cash equivalents of the acquired subsidiary Net cash received from acquisition 24
( ( (
37,342) 76,251) 38,909)
EARNINGS PER SHARE Basic earnings and diluted per share is calculated by dividing the profit attributable to equity holders by the weighted-average of outstanding common shares as of the date of the statement of financial position. For all periods presented, there were no differences in the weighted-average outstanding common shares used for the calculation of the basic and diluted earnings per share since the Company does not have any financial instrument with dilutive features. F-49
2011 S/.000 Profit for the year attributable to equity holders of the Group Weighted average number of shares in issue (thousands) Basic and diluted earnings per share 25
2010 S/.000
365,586
279,347
287,012 1.27
287,012 0.97
CASH FROM OPERATING ACTIVITIES The reconciliation from profit before income tax to cash generated from operations is as follows: 2011 S/.000 Profit before income tax Adjustments: - Depreciation (note 6) - Amortization (note 7) - Fair value of biological assets (note 8) - Fair value gains on derivative financial instruments (note 3.3) - Loss (profit) on disposal of property, plant and equipment - Write-off of property, plant and equipment items - Other provisions Net changes - Biological asset - Inventories - Trade accounts and other accounts receivables - Trade accounts and other accounts payables Cash generated from operations
26
( ( (
( (
2010 S/.000
664,119)
503,458)
75,215) 916) 188,355) 5,393) 1,231) 784) 2,635)
57,672) 1,028) 177,852) 109) 1,243) 16,773) 1,571)
28,305) 219,525) 30,156) 135,837) 466,853)
( ( (
( ( (
6,137) 4,485) 17,848) 199,047) 185,399)
COMMITMENTS, CONTINGENCIES AND GUARANTEES a) Environment The Group, in compliance with the Peruvian General Environmental Law No. 28611 and as a factor of strategic development and competitiveness has prepared its Environmental Management Program (PAMA) which involves preliminary monitoring and follow-up activities such as its baseline studies; to identify possible environmental contamination sources as well as those major environmental components that may have a significant impact on the environment as a way to: 1. Mitigate the environmental impact and the hazard to health resulting from productive activities, 2. Optimize the consumptions of raw materials, resources and energy, and 3. Adequately dispose of waste and emissions This will be reflected in significant economic benefits. With respect to Verha and subsidiaries, since its major product is organic sugar, it does not use chemical products in its plantations and manufacturing processes; it has 8 ha. dedicated to treat VINAZA and transform solid waste into organic fertilizer, thus contributing to the environment protection and conservation. With respect to Group Azucarero EQ 2 is in the process of lifting the ex post Environment Impact Study to obtain an environmental license issued by the Ministry of Environment. According to legal counsel, there is no environmental liability related. F-50
Once the Environmental Strategic Planning was executed, the Group began developing environmental instruments such as: Environmental Management Programs as well as programs for the management of solid waste, identification of environmental hazards, risks and impacts and record management and contingency plans. As required by applicable laws and regulations in Peru, expert advice has been obtained from environmental consulting firms which are assisting the Group in updating authorizations and studies required by the authorities. The Company's Environmental Management Program (PAMA) has already been approved by the environmental agency of the Peruvian Ministry of Agriculture (Dirección General de Asuntos Ambientales del Ministerio de Agricultura) dated 4 December 2011. This document contains a diagnosis of the environmental aspects and proposes pollution prevention and control actions required to prevent, control and mitigate the environmental impacts as contained in this document. b) Contingencies Management has not considered necessary to make any additional provision other than the amount recognized in the financial statements (see note 15). (note 15). c) Commitment to purchase fixed assets The investment expense not recognized at the date of the statement of financial position is as follows: 31 December 2011 2010 S/.000 S/.000 Property, plant and equipment
109,000
1 January 2010 S/.000
24,000
30,000
d) Guarantees given At December 31, 2011 the Company maintains liens, mortgages and shares pledged for up to S/.160 million, 19 millions Argentinean pesos and US$46.5 million to secure borrowings with financial institutions (S/.151 million and US$ 27.5 million, at December 31, 2010). Additionally, it has performance bonds signed with financial institutions amounting to US$184,000. 27
GROUP COMPANIES The following table details the companies making up the Group as of December 31, 2011 and 2010: ActivitiesCountry
Percentage of interest 2011 2010
Detail of principal subsidiary Undertakings: Operating companies: Cartavio S.A.A. Casa Grande S.A.A. Empresa Agrícola Sintuco S.A. Agroindustrias San Jacinto S.A.A. Ecudos S.A. Sacorpren S.A. Prosal S.A. Verha S.A. Persol S.A. Pracmac S.A. Agrícola Agriflorsa S.A. Broxcel S.A. Defaxcorza S.A. Agrícola Chimborazo Chimsa S.A. Emaisa S.A. Esdestiva S.A. Podec S.A. Bio San Isidro S.A.
(a) (a) (a) (a) (a) (a) (a) (a) (b) (b) (b) (b) (b) (b) (b) (c) (c) (d)
Perú Perú Perú Perú Ecuador Ecuador Argentina Argentina Ecuador Ecuador Ecuador Ecuador Ecuador Ecuador Argentina Ecuador Ecuador Argentina
F-51
87.17 57.09 57.69 82.63 36.40 36.40 59.40 60.00 36.40 36.40 36.40 36.40 36.40 36.40 39.15 36.40 36.40 52.92
-
87.17 57.09 45.29 72.62
Percentage of interest 2011 2010
Activities
Country
-
Ecuador
52.00
-
(d)
Ecuador
36.40
-
Holdings companies:
Fideicomiso Mercantil Consorcio Azucarero Ecuatoriano
Principal associate: Producargo S.A. (a) (b) (c) (d)
28
Mainly sugarcane Mainly land or equipment rentals to group companies Mainly loading and unloading services to group companies Mainly ethanol
RELATED PARTIES The balances of receivable and payable with related parties were as follows: At 31 December 2011 2010 S/.000 S/.000 Non-current accounts receivable Other accounts receivable: Empresa Agraria Chiquitoy S.A. Tableros Peruanos S.A. Other Total non-current accounts receivable Current accounts receivable Trade accounts receivable: Deprodeca S.A.C. Gloria S.A. Tableros Peruanos S.A. Trupal S.A. Other Other accounts receivable: Deprodeca S.A.C. Gloria S.A. Quequeña S.A. Tableros Peruanos S.A. Other Total current accounts receivable Non- current accounts payable Other accounts payable: Deprodeca S.A.C. Total non-current accounts payable
F-52
At 1 January 2010 S/.000
6,618 799 807 8,224
7,149 833 7,982
19,589 857 20,446
13,131 2,267 1,305 1,043 81 17,827
20,184 15,472 967 10,790 95 47,508
24,606 1,852 554 1,122 11 28,145
195 163 332 825 1,054 2,569 20,396
-
2,140 2,476 49,984
10 10
27,687 27,687
-
4 332
-
13 4 332 1,645 1,994 30,139
27,691 27,691
At 31 December 2011 2010 S/.000 S/.000 Current accounts payable Trade accounts payable: Deprodeca S.A.C. Gloria S.A Industrias Cachimayo S.A.C. Racionalización Empresarial S.A. Yura S.A. Trupal S.A. Suiza Fruit Corporation Other
2,110 2,252 3,107 1,311 650 785 129 10,344
Other accounts payable: Lakebar Holding S.A. Deprodeca S.A.C. Gloria S.A. Jose Rodriguez Banda S.A. Clarcrest Investments S.A. Other
-
25,492 6,718 111 308 44,441 330 77,400 87,744
Total current accounts payable
At 1 January 2010 S/.000
827 991 57 3,875 1,231 1,011
-
434 8,426
25,492 22,205 424 316 46,255 99 94,791 103,217
304 1,350 2,079 6,875 593 144 7 11,352 25,492 17,892 760 322 29,660 27 74,153 85,505
a) Major inter-company transactions were as follows: 2011 S/.000 Sales of goods Sale of services Purchase of goods Purchase of services Interest on loans received Interest on loans granted Loans granted Loans received
252,607 6,702 51,918 11,108 713 182 45,698 1,094
2010 S/.000 235,973 9,075 25,861 14,512 2,479 136 2,409 53,228
b) Long-term accounts receivable and payable Empresa Agraria Chiquitoy S.A. has been submitted to a procedure before the relevant Peruvian consumer protection agency (Procedimiento Concursal Ordinario ante el Instituto Nacional de Defensa de la Competencia y de la Protección de la Propiedad Intelectual) INDECOPI. Empresa Agraria Chiquitoy S.A. granted a first and preferential lien in favor of Cartavio S.A.A. for up to US$4 million on a total of 280,000 tons of sugar cane. The said lien has been registered with the Peruvian public registry office in the name of Cartavio S.A.A. During 2010, Cartavio S.A. did not acquire new debt (S/.1.6 million in 2009). These loan debts bear an annual interest rate of 4% per year for first order debts and 1% for fifth order debts. During 2011 and 2010, no financial income has been recorded for the application of the abovementioned interest rate since they will be recognized to the extent that they are actually collected. Management estimates that the recovery of the account receivable is feasible, considering that it has been classified in the third category; additionally, the restructuring of this entity has been approved in which a flow of payment has been determined in favor of Cartavio S.A.A., which will include interest and will be paid in approximately 14 years.
F-53
The balance of the account payable to Deprodeca S.A.C. does not have specific guarantees and bears an annual interest rate of 6%. The balance payable to Lakebar Holding S.A. corresponds to a loan for the purchase of shares of Casa Grande S.A.A.; this balance has no definite due date, does not bear interest and has no guarantees. The balance payable Clarcrest Investments S.A.corresponds mainly to a loan for the purchase of shares of Cartavio S.A.A. and Agroindustrias San Jacinto S.A.A.; this balance has no definite due date, does not bear interest and has no guarantees. c) Commitments The Group has provided guarantees in favor of financial institutions at 31 December 2011 and 2010 and at January 1 2010. d) Key personnel remuneration Key personnel remuneration includes managerial services and management personnel. Key management personnel and managerial services amount to S/.10.7 million in 2011 (S/.0.8 million in 2010). The Group does not provide long-term benefits to its key management personnel. The fair value of accounts with related parties is as follows: At December 31, 2011 2010 S/.000 S/.000 Trade accounts receivable to related parties Other accounts receivable to related parties Long-term accounts receivable Trade accounts payable to related parties Current accounts payable to related parties Non-current accounts payable to related parties
17,827 2,569 10,759 12,721 52,066 25,502
47,510 2,476 22,145 22,207 69,683 53,179
At January 1, 2010 S/.000 29,997 1,994 23,388 15, 967 48,840 53,183
The fair value of non-current accounts payable to related parties was determined based on the forecasted and discounted cash flows at a rate of 6.2% (4.54% in 2010 and 6.8% at 1 January 2010) which represents a market rate for similar transactions. 29
EVENTS AFTER THE BALANCE SHEET DATE In May 2012, the Group, through a new subsidiary Azucarera Olmos S.A. created in the same month, entered into a purchase agreement for the acquisition of 11.100 acres of land of the Olmos Irrigation Project for an amount of US$ 8.3 million and the right to use irrigation civil works for US$ 41.5 million. In accordance with this agreement, the ownership of the land will be transferred on the date that the Group will make the first payment. As of this date, the Group has not made any payments. Future payments related to the acquisition of land have been guaranteed to the seller through a warranty note of US$49.8 millions issued by a local bank on behalf of the Group.
30
FIRST –TIME ADOPTION OF IFRS The Peruvian Superintendencia del Mercado de Valores (SMV, formerly CONASEV) issued on October 14, 2010 Resolution No.102-2010-EF/94.01.1, by means of which all entities under its oversight are required to adopt IFRS issued by IASB and effective for periods ending 31 December 2011. In compliance with this regulation, the Group has adopted IFRS for the first time in the preparation of its general purpose financial statements. These are the Group’s first consolidated financial statements prepared in accordance with IFRS. Until 2010, the Group prepared its consolidated financial statements in accordance with Peruvian GAAP. The Group has prepared financial statements under the IFRS applicable for the year ended 31 December 2011, together with the comparative information at 31 December 2010, as described in the respective accounting policies. F-54
In preparing its opening IFRS statement of financial position at 1 January 2010, the Group’s transition date, the Group has adjusted the amounts reported previously in financial statements prepared under Peruvian GAAP, including the statement of financial position prepared at the transition date and its financial statements for the year ended 31 December 2010 previously released and distributed. 30.1 Optional exemptions and mandatory exceptions to the retroactive application of IFRS: IFRS 1, “First-time Adoption of International Financial Reporting Standards”, offers the entity adopting IFRS for the first time to apply certain optional and mandatory exclusions when applying retrospectively certain standards at the transition date. Optional exemptions The following are the optional exemptions applied by the Group: a)
Exemption for business combinations -
IFRS 1 provides the option to apply IFRS 3, ‘Business combinations’, prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date. The Group elected to apply IFRS 3 prospectively to business combinations occurring after its transition date. Business combinations occurring prior to the transition date have not been restated. b)
Fair value as an assumed cost of property, plant and equipment
The value of certain items of property, plant and equipment corresponds (deemed cost) fair value at the transition date (1 January 2010), which was determined by independent appraisers using the methodology of the replacement cost of a similar new item. As a result of this process, the Group increased the value of these items by S/.88.2 million, and it reviewed their remaining useful lives. The depreciation for 2010 increased by S/.8.8 million as a result of these adjustments, deemed costs and reviewed useful lives, which were recognized with a charge to the cost of sales. The net adjustment to the statement of financial position at 31 December 2010 was S/.79.4 million. Mandatory exception The only mandatory exception applied by the Group is related to accounting estimates. In accordance with such exception, the accounting estimates applied in preparing the financial statements under IFRS at 1 January and at 31 December 2010, are consistent with those considered at the preparation date of the financial statements under Peruvian GAAP (after carrying out adjustment to reflect any difference with accounting policies). 30.2
Reconciliation between Peruvian GAAP and IFRS
IFRS 1 requires that an entity reconciles the balances of its equity, comprehensive income and cash flows of prior periods. The Group’s first-time adoption of IFRS did not have an impact on the total operating cash flows, investments and financing. The tables below show the reconciliations performed between Peruvian GAAP and IFRS: -
Statement of comprehensive income for the years ended December 31, 2010. Equity as of 1 January and 31 December 2010.
F-55
30.2.1
Reconciliation of statement of comprehensive income
For the year ended 31 December 2010: Note Sales of product Cost of product sold Gross profit Initial recognition and change in fair value of biological assets Profit before operating expenses
(
(30.4.d)
Operating expenses: Selling expenses Administrative expenses Other operating expenses, net Operating profit Finance income Finance cost Exchange difference Financial results, net Profit before income tax Income tax expense Profit for the year
(*)
Peruvian GAAP S/.000
( ( (
( ( (
Reclassi fications (*) S/.000
Adjustments S/.000
921,611) 443,878) ( 477,733)
13,907) 13,019) ( 888) (
IFRS at 31 December 2010 S/.000
2,336) 41,570) ( 39,234)
937,854) 498,467) 439,387)
77,612) 555,345)
100,240) ( 101,128) (
) 39,234)
177,852) 617,239)
18,446) 40,778) 5,063) ( 491,058)
-
117) ( 2,150) ( 10,217) ( 51,718)
18,563) 42,924)) 19,623) 536,129)
1,621) 45,496) 6,063) ( 37,812) 453,246) 105,975) ( 347,271)
-
-
1,621) 45,388) 11,096) 32,671) 503,458) 75,769) 427,689)
( 4) ( 4,343) ( 96,789) (
) ) 96,789) 7,431) 89,358)
( ( ( ) (
108) ( 5,033) 5,141) ( 46,577) 37,637) ( 8,940)
Includes mainly adjustment for workers’ profit sharing for S/.7.3 million and deferred tax for S/.14.7 million and reclassification of workers’ profit sharing for S/.37.6 million.
30.2.2
Reconciliation of equity Note
Equity under Peruvian GAAP Effect on retained earnings of the adjustment in: Deferred income tax Worker´s profit sharing Property, plant and equipment Biological assets Impact of income tax of IFRS adjustments Other Total IFRS adjustments
At 1 January 2010 S/.000
1,527,579) (30.4.a) (30.4.b) (30.4.c) (30.4.d) (30.4.e)
Equity under IFRS
30.2.3
At 31 December 2010 S/.000
(
( (
150,040) 107,269) 79,381) 12,433) 11,688) 12,489) 1,540,068)
1,200,758) ( ( ( ( (
150,040) 101,821) 88,205) 100,238) 1,353) 17,168) 76,067) 1,124,691)
Reconciliation of Statement of cash flows
IFRS transition has had a impact of S/.75.6 millions on the reconciliation of the operating activities stated in the statement of cash flows, relating to the lower depreciation determined as a result of determining depreciation rates based on useful lives; nevertheless, no impact was detected on the cash balances and total balances of operating, financing and investing activities.
F-56
30.4 Notes to the reconciliation of the statement of financial position and statement of comprehensive income at 1 January 2010 and at 31 December 2010 a) Deferred income tax, change in rate Correspond to the effect of the deferred tax on temporary differences reversing after the tax holiday period for Peruvian entities (note 6). b) Worker´s profit sharing Under Peruvian GAAP, workers profit sharing was recognized following accounting criteria under IAS 12 “Income Tax” the effect of temporary differences between assets and liability balances in the financial statements and its tax value. Under IAS 19 “Benefits to employees” workers profit sharing related to services are recognized in the period that services are rendered. Due to workers profit sharing are expenses for income tax purposes, and the deferred portion was calculated at rate of 23.5% and not at rate of 15%. Adjustments to eliminate the deferred workers participation portion and to correct the amount of deferred income tax at 1 January 2010 amounts to S/.102.3 million and S/.108.9 million at 31 December 2010. The effect in comprehensive income of 2010 amounts to S/.6.6 millions. c) Property, plant and equipment Under Peruvian GAAP, fixed asset items were depreciated using the useful lives established in the income tax law applicable to these assets. Depreciation of fixed asset items under IFRS is calculated using the straight-line method to allocate their cost less their residual value over their estimated useful lives. At the IFRS transition date, the Group recognized an increase in the account of properties, plant and equipment of S/.88.2 million net of its accumulated depreciation for the reconstruction of the historical cost of these assets. This adjustment was recognized against retained earnings. The effect in depreciation of 2010 resulted in an adjustment of S/.8.8 million, which was charged to the cost of sales. d)
Biological asset -
At IFRS transition date, the Group includes the cost of land leases based on IAS 41 requirements. e) Impact on income tax of IFRS adjustments IFRS adjustments have given rise to temporary differences that were recognized as deferred income tax amounting to S/.148.7 million at 1 January 2010 and S/.162.5 million at 31 December 2010.
F-57
CORPORACION AZUCARERA DEL PERU S.A. UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS AS OF 31 MARCH 2012 AND FOR THE THREEMONTH PERIODS ENDED 31 MARCH 2012 AND 2011
F-58 8 9 10
10
6 7 8
Note
278,204 300,395 117,317 114,277 810,193
4,241,937
4,328,088
2,805,594 202,727 378,978 29,811 6,410 8,224 3,431,744
At 31 December 2011 S/.000
249,234 267,595 122,520 191,800 831,149
2,816,804 203,135 430,069 31,560 8,405 6,966 3,496,939
At 31 March 2012 S/.000 (Unaudited)
The accompanying notes on pages 62 to 72 are part of condensed consolidated interim financial statements.
TOTAL ASSETS
CURRENT ASSETS Biological assets Inventories Trade and other accounts receivable Cash and cash equivalents Total current assets
NON-CURRENT ASSETS Property, plant and equipment Intangible assets Biological assets Investment in associates Deferred income tax assets Trade and other accounts receivable Total non-current assets
ASSETS
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
CORPORACION AZUCARERA DEL PERU S.A.
Total liabilities TOTAL EQUITY AND LIABILITIES
CURRENT LIABILITIES Borrowings Trade and other accounts payable Provisions and other liabilites Derivative financial instruments Total current liabilities
NON-CURRENT LIABILITIES Borrowings Trade and other accounts payable Provisions and other liabilites Deferred income tax liability Total non-current liabilities
EQUITY Share capital Cumulative translation adjustment Legal and other reserves Retained earnings Equity attributable to equity holders of the parent Non-controlling interests Total shareholders' equity
EQUITY AND LIABILITIES
11 12 13
11 12 13
16
Note
1,755,982 4,241,937
1,816,342 4,328,088
-
291,657 412,384 6,316 10,558 720,915
259,973 296,047 8,566 470,481 1,035,067
287,011 (8,941) 44,039 1,053,024 1,375,133 1,110,822 2,485,955
At 31 December 2011 S/.000
300,046 478,754 9,117 10,104 798,021
243,198 299,906 6,745 468,472 1,018,321
287,011 (12,397) 43,892 1,110,748 1,429,254 1,082,492 2,511,746
At 31 March 2012 S/.000 (Unaudited)
CORPORACION AZUCARERA DEL PERU S.A.
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME
Note
Sales of products Cost of products Gross profit Initial recognition and change in fair value of biological assets Profit before operating expenses Selling expenses Administrative expenses Other operating expenses, net Profit from operations before financing and taxation Financial income Financial expenses Exchange difference, net Income attributable to associate Profit before income tax Income tax expense Profit for the three month period Other comprehensive income: - Exchange differences on translating foreign operations, net of deferred income tax - Fair value changes in cash flow hegde, net Total comprehensive income for the year Attributable to: Equity holders of the parent Non-controlling interest Earnings per share Basic and diluted earnings per share
8
14
For the three-month period ended 31 March 2012 2011 S/.000 S/.000 (Unaudited) (Unaudited) 377,185 (228,157) 149,028 175 149,203 (8,606) (25,936) (1,924) 112,737 506 (17,294) 5,966 1,750 103,665 (16,277) 87,388 (5,155)
-
(219) 82,014
(1,285) 146,511
54,983 27,031 82,014
96,859 49,652 146,511
0.192
0.337
The accompanying notes on pages 62 to 72 are part of condensed consolidated interim financial statements.
F-59
309,162 (145,824) 163,338 31,786 195,124 (4,710) (8,762) (1,364) 180,288 787 (7,591) 268 173,752 (25,956) 147,796
F-60
.
287,011
-
43,892
(12,397)
(3,456)
-
(3,456)
(147) (147)
44,039 -
(8,941)
43,824
-
(850) (850)
44,674 -
-
-
-
287,011 -
-
-
-
-
287,011
-
287,011 -
The accompanying notes on pages 62 to 72 are part of condensed consolidated interim financial statements.
Balances at January 1, 2012 Profit for the period Other comprehensive income: Exchange defferences on translating foreign operations Fair value changes in cash flows hegdes, net Total comprehensive income for the period Equity transactions with owners: Dividend distribution Others Total equity transactions with owners Balances at March 31, 2012
Balances at January 1, 2011 Profit for the period Other comprehensive income: Fair value change in cash flows hegdes, net Total comprehensive income for the period Equity transactions with owners: Dividend distribution Others Total equity transactions with owners Balances at March 31, 2011
(861) (861) 1,110,748
-
(861) (861) 1,429,254
-
(3,456) (147) 54,982
1,375,133 58,585
1,053,024 58,585 58,585
5,956 5,956 1,121,874
-
(850) 96,858
1,019,060 97,708
Total S/.000
5,956 5,956 791,039
-
97,708
687,375 97,708
Attributable to equity holders of the controlling interest Cumulative Legal and other Retained Share translation earnings capital adjustment reserves S/.000 S/.000 S/.000 S/.000
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY FOR THE THREE-MONTH PERIODS ENDED 31 MARCH 2012 AND 2011
CORPORACION AZUCARERA DEL PERU S.A.
(55,065) (297) (55,362) 1,082,492
(1,699) (72) 27,032
(55,065) (1,158) (56,223) 2,511,746
(5,155) (219) 82,014
2,485,955 87,388
(38,922) (60) (38,982) 1,647,596
(38,922) (6,016) (44,938) 525,722 1,110,822 28,803
(1,286) 146,510
1,540,068 147,796
Total S/.000
(436) 49,652
521,008 50,088
Noncontrolling interest S/.000
CORPORACION AZUCARERA DEL PERU S.A.
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
Note
CASH FLOW FROM OPERATING ACTIVITIES Cash generated from operations Income tax paid Net cash generated from operating activities CASH FLOW FROM INVESTING ACTIVITIES Purchase of property, plant and equipment Purchase of intangible assets Loans granted to related parties Loans repayments received from related parties Others Net cash used in investing activities
For the three-month period ended 31 March 2012 2011 S/.000 S/.000 (Unaudited) (Unaudited)
16
150,559 (25,699) 124,860
6 7
(44,391) (667) (10,456) 19,733 1 (35,780)
119,117 (28,156) 90,961
-
(35,857) (25,785) (118) (61,760)
CASH FLOW FROM FINANCING ACTIVITIES Proceeds from borrowings Repayments of borrowings Interests paid Net cash used in financing activities
44,810 (53,196) (3,171) (11,557)
22,897 (34,557) (5,742) (17,402)
Net increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at the end of period
77,523 114,277 191,800
11,799 70,912 82,711
The accompanying notes on pages 62 to 72 are part of condensed consolidated interim financial statements.
F-61
CORPORACION AZUCARERA DEL PERU S.A. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS AS OF 31 MARCH 2012 AND FOR THE THREE-MONTH PERIODS ENDED 31 MARCH 2012 AND 2011 1
GENERAL INFORMATION Corporación Azucarera del Perú S.A. (hereinafter indistinctly the “Company” or “Coazucar”) is a holding company primarily engaged, through its operating subsidiaries, in sugarcane agro-industrial activities (production of sugar and ethanol). These activities are carried out through operations in Perú, Ecuador and Argentina. The Company and its operating subsidiaries are collectively referred to hereinafter as the “Group”. The Company is the Group’s ultimate parent company and is an entity incorporated and domiciled in Peru. The address of its registered office is Avenida República de Panamá 2461, La Victoria - Lima, Peru. The issuance of these condensed consolidated interim financial statements was approved by the Management on 2 July 2012.
2
BASIS OF PREPARATION The information presented in the accompanying interim three-month condensed consolidated financial statements is unaudited and in management’s opinion reflect all adjustments necessary to present fairly the financial position of the Group as of 31 March 2012, its results of operations and its cash flows for the three-month period ended 31 March 2012 and 2011. All such adjustments are of a normal recurring nature. In preparing the accompanying condensed consolidated interim financial statements, management has made certain estimates and assumptions that affect the reported amounts in the financial statements. Actual results may differ from those estimates. The results for interim periods are not necessarily indicative of annual results. These condensed consolidated interim financial statements follow the same accounting policies and methods of their application as the Group's audited annual financial statements as of 31 December 2011. Accordingly, these condensed consolidated interim financial statements should be read jointly with the audited financial statements of the Group as of such date. These condensed consolidated interim financial information as of 31 March 2012 and for the threemonth periods ended 31 March 2012 and 2011 have been prepared in accordance with IAS 34, “Interim financial reporting”. The annual financial statements for the year ended 31 December 2011 have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and the Interpretations of the International Financial Reporting Interpretations Committee (IFRIC). These condensed consolidated interim financial statements are presented in thousands of Nuevos Soles, the local currency in Peru. A complete list of standards, amendments and interpretations to existing standards published but not yet effective for the Group is disclosed in note 2.1 to the annual financial statements. None of those standards became effective for the Group during the three-month period ended 31 March 2012. During the three-month period ended 31 March 2012, the IASB did not issued new standards that would have a material impact on the Group’s financial statements as they become effective.
F-62
Seasonality of operations The Group´s business activities are inherently seasonal. The sugarcane harvesting period varies by country. In Peru, the harvest period of sugar cane is done throughout the year, while in Ecuador and Argentina harvesting period begins in July and May, respectively. This creates fluctuations in sugarcane inventory, usually peaking in December to cover sales between crop harvests. As a result of the above factors, there may be significant variations in the results of operations from one quarter to another, as planting activities may be concentrated in a specific quarter whereas harvesting activities may be concentrated in another quarter. In addition, quarterly results may vary as a result of the effects of fluctuations in the price of commodities, production yields and costs used in determining the fair value of biological assets on initial recognition and as of the reporting date. 3
FINANCIAL RISK MANAGEMENT The Group continues to be exposed to the risks inherent to its financial instruments. These risk include: end product price risk, exchange rate risk, interest rate risk, liquidity risk and credit risk. A thorough explanation of the Group’s risks and its approach to their identification, assessment and mitigation is disclosed in note 3 to the annual financial statements. There have been no changes in the Group’s exposure and risk management principles and processes since 31 December 2011 (readers should refer to the annual financial statements for information).
4
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS The Group's critical accounting policies are also consistent with those disclosed in note 4 to the audited annual financial statements for the year ended 31 December 2011.
5
SEGMENT INFORMATION The Group operates in three reporting segments: Peru, Ecuador and Argentina. The measurement principles for the Group’s segment reporting structure are based on the IFRS principles adopted in the annual consolidated financial statements. Revenue generated and goods exchanged between segments are calculated on the basis of market prices. The following table presents information with respect to the Group’s reportable segments. Certain other activities of a holding function nature not allocable to the segments are disclosed in the column “Corporate”. Peru S/.000 31 March 2012 (unaudited) Sales of products Cost of products sold Gross profit Initial recognition and change in fair value of biological assets Profit before operating expenses Selling expenses Administrative expenses Other operating expenses, net Profit from operations before financing and taxation
( ) ( ( (
Ecuador S/.000
291,107) 170,276) ( 120,831)
Argentina S/.000
Corporate S/.000
72,386) 45,928) ( 26,458)
13,692) 11,953) 1,739)
) (
104) ( 1,418) ) 120,935) 25,040) 7,072) ( 799) ( 8,699) ( 15,235) ( 2,044) ( 233) ( 103,120) 8,773) )
1,489) 3,228) 735) 1,709) 10) 774)
) ) ( ( ( (
F-63
Total S/.000
-)
) )
377,185) ( 228,157) 149,028)
-
)
175) 149,203) ( 8,606) ( 25,936) ( 1,924) 112,737)
293) 363) 70)
Peru S/.000 31 March 2012 (unaudited) Property, plant and equipment Biological assets Investment in associates Goodwill Inventories Total segment assets
2,025,028) 606,133) 832) 128,609) 135,283) 2,895,885)
(
Borrowings Total segment liabilities 31 March 2011 (unaudited) Sales of products Cost of products sold Gross profit Initial recognition and change in fair value of biological assets Profit before operating expenses Selling expenses Administrative expenses Other operating expenses, net Profit from operations before financing and taxation 31 December 2011 Property, plant and equipment Biological assets Investment in associates Goodwill Inventories Total segment assets
Ecuador S/.000
( ) ( ( (
Borrowings Total segment liabilities
459,666) 55,241) ) 63,177) 106,014) 684,098)
Corporate S/.000
Total S/.000
200,609) 17,929) ) 8,600) 19,664) 246,802)
131,501 30,728 6,634 168,863
2,816,804) 679,303) 31,560) 200,386) 267,595) 3,995,648)
63,710) 63,710)
215,212 215,212
543,244) 543,244)
264,322) 264,322)
-
309,162) ( 145,824) ( 163,338) (
-
-
( (
-)
31,786) 195,124) 4,710) 7,313) 1,392) 181,709)
-
-
) ( ( ( ) (
) 31,786) ) 195,124) ) ( 4,710) 1,449) ( 8,762) 28) ( 1,364) 1,421) 180,288)
2,012,798) 595,625) 832) 128,609) 127,789) 2,865,653)
(
Argentina S/.000
( ( ( ( ( (
) )
471,804) 49,964) ) 63,177) 142,455) 727,400)
280,758) 280,758)
-
309,162) ) ( 145,824) 163,338)
197,488) 11,593) ) 8,600) 23,421) 241.102)
123,504 28,979 6,730 159,213
2,805,594) 657,182) 29,811) 200,386) 300,395) 3,993,368)
45,379) 45,379)
225,493 225,493
551,630) 551,630)
) )
Total segment assets are measured in a manner consistent with that of the consolidated financial statements. These assets are allocated based on the operations of the segment and the physical location of the asset. Total segment liabilities are measured in a manner consistent with that of the consolidated financial statements. These liabilities are allocated based on the operations of the segment. The following table presents information with respect to the Peru segment consisting of 4 CGUs: Casa Grande, Cartavio, San Jacinto and Sintuco: Casa Grande S/.000
31 March 2012 (unaudited)
Sales of products Cost of products sold Gross profit Initial recognition and change in fair value of biological assets Profit before operating expenses Selling expenses Administrative expenses Other operating expenses, net Profit from operations before financing and taxation
(
( ( (
153,270) 82,056) 71,214)
Cartavio S/.000
San Jacinto S/.000
Sintuco S/.000
Corporate S/.000
(
95,749) 70,331) 25,418)
(
48,430) 25,850) 22,580)
(
4,760) 1,596) 3,164)
27,050) ( 98,264) 3,596) ( 4,433) ( 1,623)
5,582) 19,836) 3,359) 3,427) 194)
( ( ( ( (
24,632) 2,052) 27) 2,983) ( 416) (
3,268) 6,432) 172) 14)
(
88,612)
13,244)
(
6,246)
)
F-64
5,478)
(
)
Elimination S/.000
13,970) 13,289) 681)
(
681) )
( ( ( ( (
681)
(
-
(
Total S/.000
25,072) 22,846) 2,226)
291,107) ( 170,276) 120,831)
-
(
( 2,226) 90) 2,316 185)
104) 120,935) ( 7,072) ( 8,699) ( 2,044)
185)
103,120)
)
Casa Grande S/.000 31 March 2012 (unaudited) Property, plant and equipment Biological assets Investment in associates Goodwill Inventories Total segment assets Borrowings Total segment liabilities
1,214,502 388,759 128,609 ( 73,324 1,805,194 (
31 March 2011 (unaudited)
(
106,801 106,801
( ( ( (
175,678) 70,361) 105,317)
31 December 2011 Property, plant and equipment Biological assets Investment in associates Goodwill Inventories Total segment assets Borrowings Total segment liabilities
6
Cartavio S/.000 99,362) 63,907) 35,455)
11,079) 94,238) 5,570) ( 4,486) ( 933)
12,655) 48,110) 1,890) 3,048) 1,867)
83,249)
45,039)
Cartavio S/.000
1,202,117) 355,773) ( ) 128,609) ( 71,730) 1,758,229) (
(
119,141) 119,141)
San Jacinto S/.000
55,240 16,046 ( 220 ( 71,506 ( -
( (
Sintuco S/.000
Total S/.000
2,025,028 606,133 4,676) 832 128,609 ) ( 135,283 4,676) 2,895,885 -
) ( )
Corporate S/.000 9,896) 7,553) 2,343)
(
( ( (
27,924) ( 49,193) 13) 3,099) ( 680) (
2,286) ( 4,573) ( 90) 47) )
2,343( 150) )
) ( ( ( (
(
46,761)
4,530)
2,193)
(
(
San Jacinto S/.000
(
4,330) 2,043) 2,287)
Elimination S/.000
Sintuco S/.000
421,238) 334,305) 111,433) ( 116,097) ( 5,109) 399) ) ) 44,704) ( 11,133) ( 582,484) 461,934) 56,211) ( 105,406) ( 56,211) 105,406)
55,138) 12,322) ) ) 222) 67,682) -
( ( ( ( (
) ( ) (
264,322 264,322
Elimination S/.000
(
(
42,243) 20,974) 21,269)
Elimination S/.000
Sintuco S/.000
54,040 ( 103,481 ( 54,040 103,481
(
Casa Grande S/.000
San Jacinto S/.000
420,445 334,841 107,087 94,241 5,109 399 48,871 ( 12,868 ( 581,512 442,349
(
Casa Grande S/.000 Sales of products Cost of products sold Gross profit Initial recognition and change in fair value of biological assets Profit before operating expenses Selling expenses Administrative expenses Other operating expenses, net Profit from operations before financing and taxation
Cartavio S/.000
(
Total S/.000
22,347) 19,014) 3,333)
309,162) ( 145,824) 163,338)
-
(
) 3,333) 2,913) 3,410) 3,053)
31,786) 195,124) ( 4,710) ( 7,313) ( 1,392)
63)
181,709)
Total S/.000
) 2,012,798) ) ( 595,625) 4,676) 832) ) 128,609) ) ( 127,789) 4,676) 2,865,653) -
) ( )
280,758) 280,758)
PROPERTY, PLANT AND EQUIPMENT Total S/.000 (unaudited) Three-month period ended 31 March 2012 Opening net book amount as at 1 January 2012 Additions Disposals Transfers and adjustments Exchange difference Depreciation and amortization Closing net book amount as at 31 March 2012
( ( ( ( )
Three-month period ended 31 March 2011 Opening net book amount as at 1 January 2011 Additions Disposals Transfers and adjustments Depreciation and amortization Closing net book amount as at 31 March 2011
2,025,253) 35,856) ( 532) 164) ( 15,454) ) 2,045,287) F-65
2,805,594) 44,391) 1,132) 236) 5,981) 25,832) 2,816,804)
For the three-month period ended 31 March 2012 and 2011, the additions include capital expenditures of investment projects which development isin progress in Peru relating to: i) the acquisition of energy power generators for sugar plant, ii) freezing equipment, installation of sugar plant, mill expansion, improvements on centrifuge process, installation of irrigation equipment, mechanical harvester machine, construction of Garrapon Dam. As of 31 March 2012, property, plant and equipment include fixed assets acquired under finance leases for S/.6 million (S/.6.9 million as of 31 March 2011) net of their corresponding accumulated depreciation. The corresponding liabilities are secured with the same assets leased. As of 31 March 2012, assets recognized in the financial statements as property, plant and equipment are insured up to a value of US$95 million. Management believes that the amount insured is consistent with international practices in the industry and takes into account the nature of the assets in estimating the risk of eventual damages. Certain of the Group’s assets have been pledged as collateral to secure its borrowings and other payables. The net book value of pledged assets amounts to S/.293 million as of 31 March 2012 and S/.297 million as of 31 December 2011. 7
INTANGIBLE ASSETS Total S/.000 (unaudited)
8
Three-month period ended 31 March 2012 Opening net book amount as at 1 January 2012 Additions Exchange differences Amortization Closing net book amount as at 31 March 2012
( ( (
202,727) 667) 25) 234) 203,135)
Three-month period ended 31 March 2011 Opening net book amount as at 1 January 2011 Amortization Closing net book amount as at 31 March 2011
( )
130,743) 195) 130,548)
BIOLOGICAL ASSETS Changes in the Group´s biological assets during the three-month periods ended 31 March 2012 and 2011 were as follows: 31 March 2012 S/.000 (unaudited) Beginning of period Cost incurred during the period Decrease due to harvest Initial recognition and changes in fair value of biological assets (price and physical changes) Exchange difference End of period
F-66
(
657,182) 90,217) 67,609)
( (
175) 662) 679,303)
31 March 2011 S/.000 (unaudited)
(
377,820) 53,326) 54,309)
(
31,786) ) 408,623)
Biological assets as of 31 March 2012 and 31 December 2011 are presented in the statement of financial position as follows: 31 March 2012 S/.000 (unaudited) Non-current Current 9
31 December 2011 S/.000
430,069 249,234 679,303
378,978 278,204 657,182
INVENTORIES This item comprises: At 31 March 2012 S/.000 (unaudited)
At 31 December 2011 S/.000
17,439 26,149
Raw materials Products in process Finished product Packaging and casing Other supplies (*)
123,769 2,785
97,453 267,595
3,589 6,541
188,778 1,754
99,733 300,395
(*) This account comprises spare parts, materials and supplies used in connection with the maintenance of the sugar plants located in Perú, Ecuador and Argentina.
10
TRADE AND OTHER ACCOUNTS RECEIVABLE This item comprises: 31 March 2012 S/.000 (unaudited) Non-current Accounts receivable to related parties (note 15)
31 December 2011 S/.000
6,966
8,224
29,990 12,117 42,107
36,029 17,827 53,856
Prepaid expenses Value Added Tax (VAT) Tax claims Loans to third parties Payments in advanced of the income tax Other accounts receivable to related parties (note 15) Miscellaneous accounts receivable Total other accounts receivable Total current accounts receivable
7,395 27,351 7,806 12,586 3,475 2,190 19,610 80,413 122,520
6,031 21,057 8,152 10,665 3,475 2,569 11,512 63,461 117,317
Total trade and other accounts receivable
129,486
125,541
Current Trade accounts receivable Trade accounts receivable from related parties (note 15) Trade accounts receivable, net
F-67
The fair values of current trade and other accounts receivable approximate their respective carrying amounts due to their short-term maturity. The fair values of non-current trade and other accounts receivable approximate their carrying amount, as the impact of their discount is not significant for the financial statements taken a whole. The carrying amounts of the Group’s trade and other accounts receivable are denominated in the following currencies (expressed in Nuevos Soles): At 31 March 2012 S/.000 (unaudited) Currency Nuevos Soles US Dollar Argentine Peso
81,545 21,410 26,531 129,486
At 31 December 2011 S/.000
52,625 47,812 25,104 125,541
The Group recognizes an allowance for doubtful trade accounts receivable when there is objective evidence that the Group will not be able to collect all amounts due according to their original terms. Delinquency in payments is considered an indicator that the trade account receivable may be impaired. However, management considers all available evidence in determining when a receivable is impaired. Generally, trade accounts receivable, which are more than 180 days past due are fully provided for. However, certain accounts receivable which are more than 180 days overdue are not provided for, based on a case-by-case analysis of the credit quality of the account. Furthermore, accounts receivable, which are not more than 180 days overdue, may be provided for if specific analysis indicates their potential impairment. The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. 11
BORROWINGS This item comprises: At 31 March 2012 S/.000 (unaudited) Non-current Promissory notes Finance leases Current Overdraft Promissory notes Finance leases Total
At 31 December 2011 S/.000
242,432 766 243,198
258,982 991 259,973
2,074 296,267 1,705 300,046 543,244
1,763 287,783 2,111 291,657 551,630
The maturity date of the promissory notes is between 2012 and 2017 and bear an annual interest rate which ranges between 6.90% and 7.75% for notes denominated in local currency (Nuevos Soles); between 1.50% and 15.00% for notes denominated in Argentine Pesos and between 2.42% and 14.00% for notes denominated in U.S. dollars (between 6.90% and 7.75% for those denominated in local currency (Nuevos Soles), between 1.50% and 17.70% for those denominated in Argentine Pesos and between 2.11% and 14.00% for those denominated in U.S. dollars at 31 December 2011).
F-68
The maturity of the Group’s borrowings (excluding obligations under finance leases) and the Group’s exposure to fixed and variable interest rates is as follows: At 31 March 2012 S/.000 (unaudited) Fixed rates borrowings: Less than 1 year Between 1 and 2 years Between 2 and 5 years More than 5 years Variable rates borrowings: Less than 1 year Between 1 and 2 years Between 2 and 5 years Total borrowings
At 31 December 2011 S/.000
233,644 58,394 134,378 4,330 430,746
215,802 55,538 145,815 8,659 425,814
64,697 12,324 33,006 110,027 540,773
73,744 12,377 36,593 122,714 548,528
The carrying amounts of the Group’s borrowings are denominated in the following currencies (expressed in Nuevos Soles): At 31 March 2012 S/.000 (unaudited) Nuevos Soles Argentine Peso US Dollar 12
242,569 4,403 293,801 540,773
At 31 December 2011 S/.000 250,917 7,136 290,475 548,528
TRADE AND OTHER ACCOUNTS PAYABLE This item comprises: At 31 March 2012 S/.000 (unaudited) Non-current: Trade accounts payable to related parties (note 15) Tax debt Payroll and social security payable Accounts payable from acquisition of subsidiaries Others Carried forward:
F-69
10 55,614 9,128 224,399 10,755 299,906
At 31 December 2011 S/.000
10 52,339 12,594 227,009 4,095 296,047
At 31 March 2012 S/.000 (unaudited) Brought forward: Current Trade accounts payable Trade accounts payable to related parties (note 15) Payroll and social security payable Accounts payable from acquisition of subsidiaries Accounts payable from acquisition of associates Income tax payable Dividends payable Advances received from customers Interest payable Other accounts payable Total trade and other accounts payable 13
At 31 December 2011 S/.000
299,906
296,047
103,288 84,954 52,901 18,486 19,437 19,793 96,153 47,373 12,820 23,549 478,754
97,681 87,744 104,205 18,486 19,619 38,521 12,416 13,348 6,410 13,954 412,384
778,660
708,431
PROVISIONS AND OTHER LIABILITIES The Group is subject to several laws, regulations and business practices in the countries where it operates. In the ordinary course of business, the Group is subject to certain contingent liabilities with respect to existing or potential claims, lawsuits and other proceedings, including those involving labor and social security, and civil. The Group accrues liabilities when it is probable that future costs will be incurred and their amounts can be reasonably estimated. The Group bases its accruals on up to-date developments, estimates of the outcomes of the matters and legal counsel experience in contesting, litigating and settling matters. As the scope of the liabilities becomes better defined or more information is available, the Group may require to change its estimates of future costs, which could have a material effect on its results of operations and financial condition or liquidity. There have not been any material changes in the claimed amounts and in the status of current proceedings since 31 December 2011.
14
TAXATION Interim period income tax expense is accrued using the tax rate that would be applicable to expected total annual earnings, that is, the estimated average annual effective income tax rate applied to the pre-tax income of the interim period. Income tax expense is recognized based on management’s estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual tax rate used for the three-month period ended 31 March 2012 is 15.73% (the estimated tax rate for the three-month period ended 31 March 2011 was 15.05%). The increase in the estimated income tax rate is mainly explained by the incidence of higher non-deductible expenses for income tax purposes.
15
RELATED PARTIES The balances of accounts receivable and payable with related parties were as follows:
F-70
At 31 March 2012 S/.000 (unaudited) Non-current accounts receivable Other accounts receivable: Empresa Agraria Chiquitoy SA Tableros Peruanos S.A. Other Total non-current accounts receivable
-
Current accounts receivable Trade accounts receivable: Deprodeca S.A.C. Gloria S.A. Tableros Peruanos S.A. Trupal S.A. Other Other accounts receivable: Deprodeca S.A.C. Gloria S.A Quequeña S.A. Tableros Peruanos S.A. Trupal S.A. Other Total current accounts receivable Non-current accounts payable Other accounts payable: Deprodeca S.A.C. Total non-current accounts payable Current accounts payable Trade accounts payable: Deprodeca S.A.C. Gloria S.A Racionalización Empresarial S.A. Yura S.A. Trupal S.A. Suiza Fruit Corporation Other Other accounts payable: Lakebar Holding Deprodeca S.A.C. Gloria S.A Jose Rodriguez Banda S.A Clarcrest Investments S.A. Other Total current accounts payable
F-71
At 31 December 2011 S/.000
6,175 791 6,966
6,618 799 807 8,224
6,336 3,243 1,393 1,105 40 12,117
13,131 2,267 1,305 1,043 81 17,827
13 35 332 844 108 858 2,190 14,307
195 163 332 825 151 903 2,569 20,396
10 10
10 10
669 2,655 1,393 1,330 256 1,365 168 7,836
2,110 2,252 3,107 1,311 650 785 129 10,344
25,492 6,722 463 305 43,972 164 77,118 84,954
25,492 6,718 111 308 44,441 330 77,400 87,744
At 31 March, major inter-company transactions were as follows: 2012 S/.000 (unaudited) Sales of goods Sales of services Purchase of goods Purchase of services Interest on loans received Interest on loans granted Loans granted Loans received
2011 S/.000 (unaudited)
85,659 7,859 19,619 5,795 1,297 132 10,456 19,733
252,607 9,075 51,918 11,108 713 182 1,094 45,698
The Group has granted guarantees in favor of financial institutions that at 31 March 2012 and 31 December 2011. Key personnel remuneration includes managerial services and management personnel. The remuneration of key management personnel and managerial services for the three–month period ended 31 March 2012 amounted to S/.3,882,390 (S/.3,943,760 for the same period of 2011). The Group does not provide long-term benefits to its key management personnel. 16
CASH FROM OPERATING ACTIVITIES 2012 S/.000 (unaudited) Profit before income tax Adjustments: - Depreciation (note 6) - Amortization (note 7) - Fair value of biological assets (note 8) - Fair value gains on derivative financial instruments - Loss from disposal of property, plant and equipment - Write-off of property, plant and equipment items - Share of profit from associates - Other provisions Net changes: - Biological asset - Inventories - Trade accounts and other receivables
( ( ( ( (
- Trade accounts and other payables Cash from operations
17
)
2011 S/.000 (unaudited)
103,665(
173,752)
25,832) 234) 175) 235) ) 1,132) 1,750) -
15,454) 195) 31,787) 519) 513) 5) 35)
22,608) 32,800) 13,222)
24,886) 150,559)
( (
( (
) )
835) 34,897) 5,497)
1,028) 119,117)
EVENTS AFTER THE BALANCE SHEET DATE No significant events subsequent to 31 March 2012 have ocurred that should be reported, other than those reported in the anual financial statements as of 31 December 2011.
F-72
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ISSUER Corporación Azucarera del Perú S.A. Av. República de Panamá 2461 La Victoria, Lima 13 Peru TRUSTEE, REGISTRAR, PAYING AGENT AND TRANSFER AGENT Citibank, N.A. 388 Greenwich Street, 14th Floor New York, NY 10013 USA IRISH LISTING AGENT Arthur Cox Listing Services Limited Earlsfort Centre Earlsfort Terrace Dublin 2, Ireland LEGAL ADVISORS TO THE ISSUER AND THE GUARANTORS As to United States Law Milbank, Tweed, Hadley & McCloy LLP One Chase Manhattan Plaza New York, NY 10005 USA
As to Peruvian Law Rubio Leguía Normand Av. Dos de Mayo 1321 San Isidro, Lima 27 Peru
LEGAL ADVISORS TO THE INITIAL PURCHASERS As to United States Law Shearman & Sterling LLP 599 Lexington Avenue New York, NY 10022 USA
As to Peruvian Law Miranda & Amado Abogados Av. Larco 1301 Torre Parque Mar, Piso 20 Miraflores, Lima 18 Peru
INDEPENDENT AUDITORS Dongo-Soria Gaveglio y Asociados Sociedad Civil de Responsabilidad Limitada Av. Santo Toribio 143, Piso 8 San Isidro, Lima 27 Peru
16JUL201201162235
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Anexo: JP Morgan - India SMID (Sugar Sector)
Asia Pacific Equity Research 09 July 2014
India SMID Sugar Sector - Improving but not yet sweet
Recent reform impetus is a short-term positive… A number of measures have been announced by the government off late i.e. subsidy on exports of Rs 3300/Ton, interest free loans to industry to clear arrears, increasing import duty and improving ethanol blending ratio to 10% from 5%. This, along with actions taken in Apr-13 (levy scrapping, removing quantitative restrictions), are a net positive to the industry. These measures, though temporary, should result in removing excess surplus in the domestic market and improving sugar realizations. However, some of these announcements are temporary in nature and cannot be relied on as lasting schemes. Linking input costs (cane pricing) to output prices (sugar realization) will be key to improving industry profitability: The big reform in the sector will be linkage of cane prices to sugar realizations. A few states like Karnataka, Maharashtra have made a positive move around this. However, Uttar Pradesh (key sugar producing region) is yet to move to this policy. Whilst the industry is making out a strong case towards this given mounting cane arrears, loss of profitability - political constraints exists. In 2013, cane prices were almost 97% of ex-mill sugar prices in the state, a situation which is likely unsustainable. An eventual movement towards this (inline with global practices) can potentially help the sugar industry turn to profit.
India SMID Saurabh Kumar
AC
(91-22) 6157-3590 [email protected] Bloomberg JPMA KUMAR J.P. Morgan India Private Limited
Gunjan Prithyani (91-22) 6157-3593 [email protected] J.P. Morgan India Private Limited
Leon Chik, CFA (852) 2800-8590 [email protected] J.P. Morgan Securities (Asia Pacific) Limited
Price performance of Sugar companies vs. BSE Sensex since F10 400 300 200 100 -
Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14
Domestic demand-supply balance for sugar likely to improve: The sugar industry’s demand-supply balance appears to be finally improving after a gap of almost 3 years. As per industry estimates (source: ISMA), India’s sugar production will decline to 24 million tons in season ending Sep-14 vs. 25.1 million tons last year. Against this domestic consumption is expected to grow 4% to 24 million tons. Erratic weather further adds to uncertainty on production going ahead. Not only India, even global production could potentially suffer on this account thus reducing inventory levels. International sugar prices have moved up 11% from end-Jan levels and domestic sugar prices have moved up 18%.
SHRS
BJH
BRCM
Sensex
Source: Bloomberg
Table 1: India Sugar industry – FY14 Financials of key listed players Rs B Shree Renuka Bajaj Hindustan Balrampur Chinni
Mcap 24.1 17.9 19.5
Revenues 115.5 43.4 26.6
EBITDA 9.2 4.6 2.2
PAT (14.8) (3.2) 0.1
Debt 77.3 80.0 12.1
Net worth (4.9) 42.2 12.2
Source: Bloomberg. Pricing as of close of 8th July.
See page 10 for analyst certification and important disclosures, including non-US analyst disclosures. J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. www.jpmorganmarkets.com
Saurabh Kumar (91-22) 6157-3590 [email protected]
Asia Pacific Equity Research 09 July 2014
Sugar Industry- Domestic demand-supply moving towards balance from a period of oversupply As per various industry organizations (ISMA), sugar production is estimated to decline to 24.2 million tons in season ending Sep-14 vs. 25.1 million tons last year. Against this domestic consumption is expected to grow 4% to 24 million tons. This should then help improve the demand-supply balance in the industry after 3 years of high surplus over 2011-13. However, given the oversupply witnessed over the last few years, inventory levels have been high in the system and are expected to be 7.5m tons by end of Sep (8.2m ton last year). The international market is also pointing to a more balanced situation in 2014-15. Global sugar output is forecast to be flat during 2014-15, according to the US Department of Agriculture, while consumption is forecast to increase. Figure 1: India Sugar Industry - Demand supply and stock M Tonnes
28 26 24 22 20 18 16 14 12 10
8.2
7.6
7.1
7.5
4.6
0.1 2009
2010
2011 Production
2012 Consumption
2013
9 8 7 6 5 4 3 2 1 0
2014E
Stock
Source: ISMA
Weather could play a spoilsport on production Weak monsoons and El Nino pose downside risks to sugar production in India and even other major sugar producing parts of the world. Deficit monsoons could adversely impact the cane yields and sugar production. As per ISMA, this will likely impact crop production estimates for 2014/15. Commodity brokers (Source: Bloomberg) have already raised shortage estimate for 2014/15 to 2MT. Sugar prices, however, have firmed up in recent months probably capturing some increase on this account. A similar situation was also evinced in the 2009 drought year, which impacted sugar production and pushed up world sugar prices to a record high.
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Asia Pacific Equity Research 09 July 2014
Figure 2: Domestic Sugar prices (Rs/ Qntl) 4500 4000 3500 3000 2500
Jun-14
Mar-14
Dec-13
Sep-13
Jun-13
Mar-13
Dec-12
Sep-12
Jun-12
Mar-12
Dec-11
Sep-11
Jun-11
Mar-11
Dec-10
Sep-10
Jun-10
Mar-10
Dec-09
Jun-09
2000
Sep-09
Saurabh Kumar (91-22) 6157-3590 [email protected]
Source: Bloomberg
Figure 3: Global Sugar - Production and Consumption
Source: USDA
Recent regulatory changes are progressive but key remains linking cane prices to sugar Regulations have been the bane of profitability for the domestic sugar industry despite having efficient private manufacturers. The government of India announced a series of measures over the last year to support the sugar industry and enable them to clear the dues to the sugarcane farmers (Rs110B outstanding). A landmark change was the partial de-control of the sugar sector in Apr-13 with CCEA accepting some of the recommendations of Rangarajan Committee. The marketing and distribution of sugar was de-controlled with the removal of quantitative and timing restrictions on sugar sales. Further, the government announced additional sops recently like higher import duty, export subsidies, increased ethanol blending, etc. Below we enumerate the key regulation changes done over the last year.
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Saurabh Kumar (91-22) 6157-3590 [email protected]
Asia Pacific Equity Research 09 July 2014
Partial de- control done in Apr-13a) Abolishment of release mechanism thereby removing quantitative restriction on sugar sales in both domestic or export markets; b) Scrapping of levy on sugar obligation, which was earlier mandated to sell 10% of the produce to the government at subsidized rates (discount of 40% to market price) and moving to open market purchase of PDS requirement; c)
Free trade policy making import and export of sugar completely free except for the relevant duties applicable.
Figure 4: India Sugar industry - Partial de control done
Source: ISMA
Additional measures taken recently d) Increased import duty to 40% from 15%, to prevent cheaper inflows. e)
Subsidy on exports to help mills clear cane dues - Cash incentive of Rs3300 per metric ton on raw sugar exports, which should help reduce domestic surplus.
f)
Increase blending of ethanol with gasoline to 10% - This helps balance sugar production surplus (by diverting to ethanol) and improve realization for the millers.
g) CCEA cleared Rs66B of interest free loans to the millers to settle the farmer dues last year. Additional interest-free loan of up to Rs44B was also announced in Jun-14 for mills to pay arrears to cane growers.
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Asia Pacific Equity Research 09 July 2014
Figure 5: Sugar Industry - Export import trade (m tone) 5.0
6 4
3.4
2.6
2
0.2
0.2
2.0
1.5
-
0
-
-
-
-2 -2.4
-4
-4.1
-6 2006-07
2007-08
2008-09
2009-10 Imports
2010-11
2011-12
2013-14
Exports
Source: ISMA
Impact These measures, in our view, are steps in the right direction and would provide relief to the millers by improving their liquidity and some boost to sugar prices. Sugar companies expect a 10% increase in sugar prices on the back of these measures. Importantly, it will help them clear the farmer dues, which are at elevated levels. Sugar prices have increased by Rs2-3Rs/ kg to Rs33-34/ kg in North (Delhi) over the last few months on the back of more balanced demand-supply and recent positive measures announced by govt. in the domestic market. Figure 6: Cane Price Arrears - Rs B 120.0
110.0
100.0
89.2
80.0 60.0
51.9
40.0 20.0
11.9
-
16.7
28.2
30.5
20.8
8.8
9.7
43.2 27.2
23.2
12.3
Cane Arrears - Rs B Source: Company
Figure 7: Domestic Sugar prices (Rs/ Qntl) 4500 4000 3500 3000
Jun-14
Mar-14
Dec-13
Sep-13
Jun-13
Mar-13
Dec-12
Sep-12
Jun-12
Mar-12
Dec-11
Sep-11
Jun-11
Mar-11
Dec-10
Sep-10
Jun-10
Mar-10
Jun-09
2000
Dec-09
2500
Sep-09
Saurabh Kumar (91-22) 6157-3590 [email protected]
Source: Bloomberg
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Saurabh Kumar (91-22) 6157-3590 [email protected]
Asia Pacific Equity Research 09 July 2014
Cane to sugar price linkage establishment will be key towards sustainability. However this may require political will Key issue facing the industry is cane (input) pricing, which is not linked to sugar price. Millers are unable to cover their cost of production at current sugar prices given fixed cane pricing and hence operating at losses. Cane pricing is currently based on the government’s fair & remunerative price (FRP), which considers realization from farm by products. Few states including UP (largest sugar producing state) follow state advised price (SAP), which is at premium to fair and remunerative price (FRP). This has resulted in high cane price arrears especially in UP (65% of total arrears) because of political SAP and no linkage to sugar price. In 2013, sugar cane prices were almost 97% of ex-mill sugar prices 2012-13 as against the Rangarajan Committee recommendations of 75%. Given the losses at mills there is an increasing demand from the industry to link the cane price to revenue realization from sugar and by products. The Rangarajan Committee report proposes cane prices be determined at either 70% of revenue realized from sugar and first stage by-products or 75% of revenue realized from sugar only. This is consistent with pricing mechanism in international markets. This will not only help millers cover their costs but also curb farmers’ arrears and the cyclicality in the sugar production. Among key states, Karnataka moved to the revenue sharing formula (though there is still debate how sugar prices/ cane prices need to be calculated and based on which years realization). Maharashtra too as in Dec-13 passed a cabinet note to link cane and sugar prices. However, UP (Uttar Pradesh) remains ambiguous. Our interaction with the industry experts (ISMA, companies) suggests that the industry is putting up a strong front to the government to move to a linkage formula given mounting losses of millers and the need for a longer term viable solution for the industry. Figure 8: Cost of production and ex mill sugar price 4,000 3,500
3,225
3,000 2,500
2,031
2,939
3,200 2,7502,812
3,500 3,050
3,150
2,288
2,000 1,500 1,000 2008-09
2009-10
2010-11
Cost of sugar production (Rs / Qtl) Source: ISMA
6
2011-12
Ex mill Sugar Rate (Rs / Qtl)
2012-13
Saurabh Kumar (91-22) 6157-3590 [email protected]
Asia Pacific Equity Research 09 July 2014
Figure 9: Sugarcane pricing in key countries
Non linkage of sugar prices with cane also results in price signals not fully transmitting to farmers and hence there tends to be little linkage between production and demand resulting in the infamous sugar cycle, which either has high deficits or high surplus. Figure 10: Sugar Cycle (m tones) 30.0 26.0 22.0 18.0 14.0 10.0
Production
Consumption
Source: ISMA
Ethanol blending program has the potential to balance sugar production The government of India notified fuel ethanol mandate requires oil marketing companies (OMCs) to sell 10% ethanol blended petrol (5% blending was introduced in Jan-13) across the country. Ethanol blending provides an alternative market for sugarcane farmers as it can help control the sugar surplus as cane juice is diverted into ethanol. Currently ethanol blending is around 2.5% vs. mandated 10%, thereby providing ample scope for increase. Also, as against the fixed pricing, sugar companies are allowed to participate in tenders based on competitive bidding for market linked pricing of ethanol. This helps millers achieve better realizations and cash flows. Current price range for ethanol is in the range of Rs37-38 per liter. Ethanol blending program can also help save substantial forex especially given increasing crude prices, making sugarcane for fuel ethanol lucrative. As per industry
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Saurabh Kumar (91-22) 6157-3590 [email protected]
Asia Pacific Equity Research 09 July 2014
estimates, 10% ethanol blending can help reduce sugar production by 1.7 m tons and save forex of $1.6bn to $1.7 bn on crude imports. Table 2: Progress on Ethanol Blending program Oct-07
CCEA decision for mandatory 5% blending With fixed procurement price of INR 21.50 per litre
Nov-09
Mandatory 5% blending reiterated by CCEA and Procurement price re-fixed at INR 27 per litre
Aug-10
Mandatory 5% blending again reiterated by CCEA Expert Committee formed for final ethanol pricing policy
Nov-13
Mandatory 5% blending reiterated OMCs floated requirement for 2 seasons
Jun-14
Increase ethanol blending to 10%. Currently, ethanol blending is around 2.5%.
Source: ISMA
Sugar Industry in India – Quick Facts 1.
Around 664 sugar factories in India widely dispersed over UP, Maharashtra Karnataka and other states.
2.
Rs800B industry, cane payment of Rs690B. Located in the rural heartland, directly contributes to rural economic development & employment
3.
About 2.4% of cultivable land is under sugar cane
4.
Uttar Pradesh [in North] and Maharashtra [in West] produce 60% of sugar in India
5.
Ownership of sugar sector – 55% private sector and 45% in co-operative & Govt. Sector
6.
Cultivation of cane largely monsoon depended
7.
Sugar industry has potential to play a major role in development of rural India.
8.
Area Under Sugarcane 5.1MM Hectares
9.
Sugar Cane Production 345MM Hectares
10. Avg Capacity of Sugar Mills 3800 TCD 11. Sugar Production 24.2M Tonnes (2013-14) 12. Average per capita consumption of Sugar 21.2 Kg of Sugar and 6Kg of other sweeteners 13. Refinery 4.5MM Tonnes
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Saurabh Kumar (91-22) 6157-3590 [email protected]
Asia Pacific Equity Research 09 July 2014
14. Direct employment provided to 0.6MM Workers 15. Annual contribution to exchequer Rs 27B
Financials of key listed sugar companies Below we list financials of some key sugar companies (all Not Covered) in India. Despite having a reasonably decent turnover most are essentially loss making given mounting costs on debt, payment arrears and non linkage of sugar cane prices to end product. Table 3: India Sugar industry – F14 Financials of key listed players Rs B Shree Renuka
Revenues 115.5
EBITDA 9.2
PAT (14.8)
Debt 77.3
Net worth (4.9)
Bajaj Hindustan
43.4
4.6
(3.2)
80.0
42.2
Balrampur Chinni
26.6
2.2
0.1
12.1
12.2
Source: Bloomberg
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Saurabh Kumar (91-22) 6157-3590 [email protected]
Asia Pacific Equity Research 09 July 2014
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Asia Pacific Equity Research 09 July 2014
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12
Anexo: MCC Seminario - Inicio de Cobertura Coazucar
Coazucar Sector Agroindustrial - Perú Enero 2014
Iniciamos nuestra cobertura con una recomendación de Sobreponderar el Cozcar ’22. Consideramos que el crédito, a un offer-price de 84.00, y con un YTW de 9.12% (662 bps en z-spread), ofrece un retorno atractivo que creemos compensa la caída del precio del azúcar y el riesgo sectorial al que se encuentra expuesto. Consideramos que el rendimiento actual incorpora la posibilidad de un downgrade, tras el deterioro en las métricas experimentado a lo largo del 2013 (Deuda/EBITDA de 4.3x 3Q13LTM y cercana a 5.0x FY13E).
Alonso Alcorta Departamento de Research Lima, Perú + 511 712 8285 [email protected]
Elevada productividad otorga significativas diferencias en la producción: La elevada productividad de la compañía en sus ingenios locales (160 TM/Ha vs. 80 TM/Ha en los grandes productores de azúcar brasileros), así como la capacidad de cosechar a lo largo del año, otorgan factores de diferenciación a la compañía, que se traduce en un cash cost sumamente competitivo en los ingenios peruanos (entre 12 y 13 cvs/lb), inferior al promedio de los principales exportadores a nivel mundial (cerca de 16 cvs/lb en Brasil e incluso superior en Tailandia, Australia e India, países en los que el cash cost se encuentra más cercano a 20 cvs/lb).
Andrea Valdettaro Departamento de Research Lima, Perú + 511 712 8229 [email protected]
La liquidez representa un objetivo vital para la compañía: La empresa reenfocó el proyecto de alcohol que planeaba realizar en Olmos a un proyecto de azúcar, de menores requerimientos de CAPEX (el cual esperan sea de entre USD 90-95 MM en el 2014, considerando lo requerido para el mantenimiento de operaciones y con discrecionalidad en la ejecución en caso el precio del azúcar se reduzca aún más), en busca de no deteriorar su posición de liquidez en el entorno actual de precios. En este sentido, Coazucar cuenta con una cobertura de deuda de corto plazo que consideramos bastante adecuada y notablemente superior a la de sus comparables (Caja/Deuda CP de 1.9x de la empresa vs. 0.2x en el caso de Aralco, 0.1x en el caso de Virgolino y 1.2x en el caso de Tonon), además de un perfil de amortización concentrado en el largo plazo (más de 5 años). Asimismo, la cobertura de intereses de la compañía no desciende de 2.0x incluso en un escenario de precios del azúcar más débil (14 cvs/lb en el 1Q14). En línea con este objetivo, la empresa no planea repartir dividendos en el 2014.
Oscar Pomar Departamento de Research Lima, Perú + 511 712 8274 [email protected]
Fernando Pastor, CFA Trading Institucional Lima, Perú + 511 712 8237
Sólida base de activos e importante respaldo de conglomerado empresarial: La base de activos de la empresa (cercana a los PEN 4,700 MM) incluye cerca de 80,000 Ha propias (de las cuales cerca de 55,000 se encuentran en producción), lo que la diferencia de los modelos brasileros de arrendamiento de tierra (por ejemplo, Tonon, Aralco y Virgolino son propietarios del 0.0%, 6.0% y 10.3% de la tierra en la que producen, respectivamente). Por su parte, la empresa cuenta con el respaldo del grupo Gloria, importante conglomerado peruano presente en varios países de la región, con inversiones en los sectores de cemento, lácteos, papel y empaques, con más de 70 años de experiencia y una capitalización de mercado que asciende a PEN 3,300 MM.
[email protected]
Tabla 1: Resultados Financieros (PEN MM) 1Q13
2Q13
3Q13
3Q13LTM
Ventas Netas
262
320
300
EBITDA
64
57
58
306
25%
18%
19%
24%
Márgen EBITDA
1,296
Gastos Financieros
22
24
30
99
Caja
260
290
218
218
Deuda CP
100
94
113
113
Deuda LP
854
920
917
917
Deuda de Adquisición Ecuador Deuda Total
267
274
277
277
1,221
1,288
1,307
1,307
Deuda Neta
961
998
1,088
1,088
Patrimonio
2,615
2,603
2,581
2,581
Deuda/EBITDA (x)
2.8x
3.3x
4.3x
4.3x
Deuda Neta/EBITDA (x)
2.2x
2.6x
3.6x
3.6x
Cash/Deuda CP (x)
2.6x
3.1x
1.9x
1.9x
EBITDA/Gastos Fin. (x)
5.3x
4.2x
3.1x
3.1x
Deuda/Patrimonio (%)
46.7%
49.5%
50.6%
50.6%
Esperamos estabilización de las métricas en el corto plazo: Consideramos que el apalancamiento bruto debería alcanzar niveles cercanos a 5.0x y se mantendría cercano a estos niveles hasta el 2H14, trimestre en el que esperamos un mayor EBITDA producto de la conclusión de la planta de azúcar refinada en Casagrande, que el management espera agregue, en un escenario conservador, cerca de USD 20 MM de EBITDA anuales, además de permitir la negociación de contratos más importantes de este subtipo de azúcar. Asimismo, consideramos que un potencial downgrade ha sido incorporado a los niveles actuales de rendimiento del crédito, tomando en consideración el apalancamiento que experimenta la compañía. Mejores perspectivas para el azúcar en el 2014: Consideramos que el desbalance entre oferta y demanda debería reducirse en el 2014, producto de: i) una mayor molienda destinada a etanol en Brasil en ésta y la próxima temporada, ii) la limitada viabilidad de desarrollar proyectos nuevos en los principales países exportadores dado el precio actual del azúcar y iii) una reducción del área destinada al cultivo de caña de azúcar, dado el limitado retorno que este producto ofrece. Estos problemas inherentes a la oferta, producto de un costo de producción superior al precio internacional, deberían dar soporte al precio del commodity, que esperamos se mantenga cercano a los niveles de 15 cvs/lb en la primera mitad del año y se recupere en la segunda mitad del 2014. Los fundamentos del crédito lo vuelven atractivo frente a comparables HY: Creemos que los fundamentos del crédito lo diferencian significativamente de las azucareras brasileras. Más aun, la fuerte ampliación de spread experimentada por el Coazucar ’22 (662 bps frente a 485 bps hace 60 días) lo vuelve atractivo frente a créditos como Maespe ’19 (que, a 711 bps en z-spread, consideramos presenta un mayor riesgo de crédito dado sus estrechos márgenes, su débil cobertura de deuda de CP y sus elevados requerimientos de CAPEX) y Pesexa ’20 (que, a 743 bps, consideramos que se encuentra sujeto a un mayor riesgo sectorial). Emisor
Clasificación
Outlook
Cupón (%)
Monto (USD MM)
Vencimiento
Z - Spread
YTW (%)
Offer Price
Coazucar
NR/BB+/BB
NR/Neg/Stab
6.375
325
02/08/2022
662
9.12
84.00
1.
Tesis de inversión
Elevada productividad y ubicación geográfica ofrecen una ventaja comparativa a la compañía en relación a sus comparables: La elevada productividad de caña por hectárea de la que disponen las azucareras en Perú (cerca de 125 TM/Ha) representa un factor de diferenciación relevante frente a sus comparables brasileros (cerca de 80 TM/Ha), que deriva en un cash cost sumamente competitivo (12-13 cvs/lb en los ingenios en Perú). Más aun, Coazucar posee una productividad superior al promedio nacional (cerca de 160 TM /Ha). En conjunto con esto, el clima del país permite a la compañía cosechar a lo largo del año, reduciendo parte de la volatilidad del flujo de caja que pueden experimentar algunas empresas en la industria.
Gráfico 1: Perfil de amortización de deuda al 3Q13 (en USD MM) 500 387
400
Respaldo de importante conglomerado industrial: La familia Rodriguez, propietaria del 100% de la compañía, es propietaria también del Grupo Gloria, corporación peruana con presencia en varios países (Perú, Colombia, Ecuador, Argentina, Uruguay, entre otros) e industrias (como lácteos, cementos, papel, empaques, entre otros), con una capitalización de mercado al 23/01/2014 de PEN 3,300 MM y ventas agregadas de USD 1,300 MM.
300
Fuente: Reportes de la compañía
Esfuerzos de la compañía por mantener la liquidez: La compañía tiene en cartera el proyecto Olmos, ubicado en la región de Lambayeque. Este proyecto, que será desarrollado en dos etapas, agregaría cerca de 8,300 hectáreas en su primera etapa, e iniciaría operaciones comerciales en el 2016. Pese a analizar anteriormente la construcción de una planta de alcohol con una capacidad de cerca de 100 MM de litros, la compañía reorientó el proyecto hacia la producción de azúcar con el propósito de reducir requerimientos de CAPEX y no afectar su liquidez, en el entorno débil de precios en el que se encuentra la industria. En línea con este objetivo, la empresa no planea repartir dividendos en el 2014.
La empresa no planea repartir dividendos en el 2014, con miras a no deteriorar la liquidez y no comprometer su reducido plan de CAPEX.
Estabilización del apalancamiento después de significativo descenso en el precio del azúcar: La caída en el precio del azúcar redujo significativamente el EBITDA de la compañía (de PEN 503 MM en el 2012 a PEN 306 MM 3Q13 LTM) y deterioró sus métricas crediticias de forma notoria (el apalancamiento bruto alcanzó niveles de 4.3x al 3Q13LTM desde niveles de 2.4x en el 2012). Esperamos que el apalancamiento bruto alcance niveles cercanos a 5.0x a fines del 2013 y que se mantenga en estos niveles antes de experimentar una reducción hacia fines de año. Esperamos que el EBITDA registre un incremento modesto (cercano a USD 10 MM, en un escenario conservador) tras el inicio de operaciones de la planta de azúcar refinado Casa Grande, en el segundo semestre del 2014. Esta planta permitirá a la empresa conseguir importantes contratos comerciales que podrían incrementar aún más la contribución del EBITDA de la misma. Estimamos que incluso en un escenario de precios aún más bajos (14 cvs/lb en el 1Q14, nivel considerablemente inferior a los costos de producción de los principales exportadores), la cobertura de intereses no desciende de 2.0x y el apalancamiento no experimentaría mayores desviaciones de los niveles de este año.
200 100
47
8
10
11
8
24M
36M
48M
60M
0 12M
72M+
Esperamos una mejora en el precio del azúcar en el 2014: Consideramos que el desbalance entre oferta y demanda debería reducirse en el 2014, producto de: i) una mayor molienda destinada a etanol en Brasil en ésta y la próxima temporada, ii) la limitada viabilidad de desarrollar proyectos nuevos dado el precio actual del azúcar y iii) una reducción del área destinada al cultivo de caña de azúcar, dado el limitado retorno que este producto ofrece. Estos problemas inherentes a la oferta, producto de un costo de producción superior al precio internacional, debería dar soporte al precio del commodity, que esperamos se mantenga cercano a los niveles de 15 cvs/lb en la primera mitad del año y se recupere en la segunda mitad del 2014. Comparamos la nota de Coazucar al 2022 con sus principales comparables a nivel regional, entre los que se encuentra el bono de Tonon Bioenergía al 2020, el Virgolino de Oliveira (GVO) al 2022, el Aralco al 2020 y en menor medida, el Cosan al 2023.
Tabla 2: Comparables en la industria de azúcar y etanol Comparables
Coazucar Tonon Bioenergía GVO Aralco Cosan
Coazucar es propietaria del 94.0% de las tierras en las que cultiva, mientras que sus comparables brasileros no son propietarios de la mayoría de tierras de cultivo.
Las compañías comparables en Brasil presentan bajos niveles de liquidez en la mayoría de los casos evaluados.
Vencimiento
Deuda Neta/EBITDA
YTW (%)
Z- spread (bps)
Offer Price
Duración
Rating
02/08/2022
3.6x
9.12
662
84.00
6.03
NR/BB+/BB
24/01/2020
3.3x
14.84
1,262
79.50
4.26
NR/B/B
09/02/2022
6.3x
23.66
2,157
58.00
3.93
B3/B/B
07/05/2020
5.6x
41.92
4,025
31.00
2.96
NR/CCC+/CCC
14/03/2023
3.1x
6.62
396
89.00
6.94
Ba2/BB/BB+
El Tonon ’20 (NR/B/B), crédito que opera a 1,262 bps en z-spread, es otro importante productor de etanol y azúcar en Brasil. La compañía opera tres molinos con una capacidad agregada de molienda de 8.2 MM TM/año, tras la adquisición de Paraiso Bioenergía en la primera mitad del 2013. Pese a presentar un apalancamiento neto inferior a sus comparables (3.3x vs. 4.6x correspondiente al promedio brasilero) y una posición de liquidez adecuada (1.2x Caja/Deuda CP), creemos que la significativa prima en relación a Coazucar se explica por: i) la empresa cuenta con un plan de expansión (que ampliaría su capacidad de molienda de 8.2 MM TM/año a 9.7 MM TM/año) que podría mantendría bajo presión su flujo de caja hasta el 2016 y ii) la compañía no es propietaria de las tierras en las que produce. Ambos factores en un entorno débil de precios presionan el flujo de caja de la compañía (CAPEX estimado para la temporada 2014/2015 de USD 156 MM y un EBITDA de USD 151 MM 3Q13 LTM). El GVO ’22 (B3/B/NR), a 2,157 bps en z-spread, ofrece una mayor exposición al sector de azúcar y etanol en Brasil. Virgolino de Oliveira, con ventas que bordean los USD 620 MM al 3Q13 LTM, opera cuatro molinos en la zona Centro-Sur de Brasil; con una capacidad agregada de molienda de 12 MM TM. Las ventas de la compañía están compuestas en un 56.0% por azúcar y 39.0% por etanol. Justificamos la significativa prima que paga la azucarera brasilera en i) sus deterioradas métricas crediticias (cobertura de intereses de alrededor de 1.5x 3Q13LTM), en conjunto con ii) severos problemas de liquidez (Caja/Deuda CP de 0.1x 3Q13 LTM), iii) su bajo nivel de mecanización en relación a sus comparables brasileras (alrededor de 50.0% vs. cerca de 90.0% en el caso de Cosan, 80.0% en el caso de Aralco y 85.0% en el caso de Tonon) y iv) bajo porcentaje de propiedad de las tierras en las que produce (10.3%). A su vez, el Aralco ’20 (NR/CCC+/B) tiene un z-spread de 4,025 bps. Como crédito, el Aralco también ofrece exposición de azúcar y etanol, con un énfasis en la producción y comercialización de este último (cerca de 65% de las ventas). La compañía cuenta con cuatro molinos y una capacidad total de molienda de 7.2 MM TM/año. Justificamos la prima que paga sobre el bono de Coazucar en i) su limitada proporción de tierras propias (6.0%), ii) menor dimensión de negocio (EBITDA 3Q13LTM de 70 MM) y iii) limitada cobertura de deuda en el corto plazo (0.2x Caja/Deuda CP 3Q13 LTM), acompañada de un elevado apalancamiento neto (5.6x 3Q13 LTM) y riesgos significativos de refinanciación. El Cosan ’23 (Ba2/BB/BB+), negociado a 396 bps en z-spread, ofrece exposición al sector azucarero (12.2% de las ventas en el 2013), energético (72.4% de las ventas) y logístico en Brasil a través de sus subsidiarias y Joint Ventures. La compañía opera 24 molinos a través de Raizen (subsidiaria energética brasilera en la que comparten accionariado con Royal Dutch Shell), y cuenta con una capacidad de molienda agregada cercana a 65 MM TM/año, que utiliza para la producción y comercialización de azúcar y etanol. Justificamos el menor z-spread de Cosan producto de i) una mayor diversificación sectorial, incluyendo distribución de combustibles, gas natural, servicios logísticos y lubricantes que reducen la volatilidad del flujo de caja, ii) una mayor dimensión de negocio, con ventas que superan los USD 16,000 MM y un EBITDA cercano a USD 1,800 MM y iii) mejores métricas crediticias (apalancamiento neto de 3.1x 3Q13 LTM).
Tabla 3: Métricas crediticias y operativas (3Q13 LTM) Gráfico 2: Evolución del z-spread del Coazucar ‘22
dic/2013
ene/2014
nov/2013
oct/2013
sep/2013
jul/2013
jun/2013
ago/2013
abr/2013
may/2013
feb/2013
mar/2013
ene/2013
700 650 600 550 500 450 400 350
Aralco
GVO
Tonon
Cosan
Prom. Brasil
Coazucar
Métricas Crediticias Cobertura de Intereses
0.6x
2.4x
3.0x
5.8x
3.0x
3.1x
Deuda/EBITDA
6.0x
6.6x
4.0x
3.7x
5.1x
4.3x
Deuda Neta/EBITDA
5.6x
6.3x
3.3x
3.1x
4.6x
3.6x
Caja/Deuda CP Métricas Operativas Cap. de Molienda (MM TM/año) Hectáreas Propias
0.2x
0.1x
1.2x
0.9x
0.6x
1.9x
7.2 6%
12.0 10%
8.2 0%
65.0 N.A
5%
8.6 94%
May-Oct
May-Oct
May-Oct
May-Oct
May-Oct
72
75
79
81
77
Ene-Dic (Per) 178/78/62 (Per/Ecu/Arg)
Temporada de Cosecha Productividad (TM de caña/Ha)
Cozcar '22
Nota: Dato de Coazucar considera propiedad sobre el área de producción (55,733 hectáreas). En total, la empresa posee más de 80,000 hectáreas propias.
Coazucar ’22 vs. HY peruano Gráfico 3: Evolución del diferencial de z-spread (Coazucar ’22 – CEMBI LatAm)
Cozcar '22 - CEMBI LatAm
ene/2014
dic/2013
nov/2013
oct/2013
sep/2013
jul/2013
ago/2013
jun/2013
may/2013
abr/2013
feb/2013
mar/2013
dic/2012
ene/2013
oct/2012
nov/2012
sep/2012
jul/2012
ago/2012
350 300 250 200 150 100 50 0 -50
Promedio
Gráfico 4: Evolución del diferencial de z-spread (Coazucar ’22 – Interpolado de Peru ’19 y Peru ‘25)
El Coazucar ’22 (NR/BB+/BB) experimentó una significativa ampliación de spread en los últimos meses del año pasado, a raíz de un descenso importante en el precio del azúcar que deterioro significativamente sus métricas. Así, el crédito peruano se encuentra actualmente negociado a niveles de +662 bps en z-spread vs. un nivel de +485 bps en z-spread observado hace 60 días. Como consecuencia de esto, el diferencial de spread entre el Coazucar ’22 y el Maespe ’19 (+711 bps en z-spread) se encuentra cercano a -50 bps y el diferencial entre el Coazucar ’22 y el Pesexa ’20 se encuentra alrededor de -80 bps (+743 bps). Creemos que, pese al riesgo inherente al precio internacional del azúcar, los fundamentos del crédito son sólidos por las razones expuestas a lo largo del reporte y justifican un nivel de spread menor, en torno a los +500 bps (bastante por debajo de los 662 bps en z-spread a los que se encuentra negociado el crédito a los niveles actuales). Coazucar vs. CEMBI LatAm y Peru ’19 – Peru ‘25 El Coazucar ’22 se encuentra operando a un diferencial significativamente mayor al experimentado a lo largo de su historia en relación al CEMBI LatAm; principalmente explicado por el price action en las azucareras en la región ante la debilidad del precio internacional del azúcar. Así, de niveles cercanos a +75 bps, la diferencia entre el Coazucar ’22 y el índice se encuentra en +290 bps.
600
500 400 300 200 100
Diferencial Cozcar '22 - Interp. Peru '19 y '25
dic/2013
Promedio
ene/2014
oct/2013
nov/2013
sep/2013
ago/2013
jul/2013
jun/2013
abr/2013
may/2013
feb/2013
mar/2013
dic/2012
ene/2013
oct/2012
nov/2012
sep/2012
jul/2012
ago/2012
0
En relación a los bonos globales del gobierno peruano, el crédito azucarero muestra un diferencial de spread cercano a los +550 bps si se le compara contra el spread interpolado entre el Perú ’19 y el Peru ‘25, cuando la media de 60 y 252 días de este diferencial se ha ubicado en +400 y +330 bps, respectivamente. En ambos casos, consideramos que la corrección que ha tenido el crédito frente al índice y frente al gobierno peruano es exagerada y corresponde a un efecto contagio del sector más que a un fuerte deterioro del crédito. Destacamos que los fundamentos de la compañía se mantienen sólidos, justificados por i) un cash cost sumamente competitivo (12-13 cvs/lb vs. 16 cvs/lb promedio en Brasil) lo cual lo mantiene aún como un negocio rentable, ii) una sólida base de activos (94% de las hectáreas productivas son propias) frente a modelos de negocios que operan a través de leasings de tierras, los cuales son más vulnerables ante caída de precios internacionales; iii) una adecuada posición de liquidez (Caja/Deuda CP de 1.9x vs. un promedio de 0.6x de Brazil) y iv) un incremento esperado en producción y márgenes producto del negocio de azúcar refinada la cual cuenta con una prima vs. el azúcar
rubia de 3cv/lb y espera contribuir con USD 10 MM de EBITDA adicional en el 2014 y por lo menos de USD 20 MM en el 2015. Todos estos motivos, en un contexto en el cual se espera una estabilización en el precio internacional del azúcar y una recuperación en el transcurso de 2014 por temas inherentes a la oferta como ya fue mencionado. Estos motivos diferencian significativamente a Coazucar de los productores brasileros, por lo que creemos está corrección es una oportunidad de compra en el papel.
Iniciamos nuestra cobertura con una recomendación de Sobreponderar Consideramos que el crédito, a un offer-price de 84.00, y con un YTW de 9.12% (662 bps en z-spread), ofrece un retorno atractivo que compensa el riesgo sectorial al que se encuentra expuesto. Creemos que el precio actual incorpora la posibilidad de un downgrade, tras el deterioro en las métricas experimentado a lo largo del 2013 (Deuda/EBITDA de 4.3x 3Q13LTM y cercana a 5.0x FY13E). Esperamos el apalancamiento de la compañía se reduzca a niveles cercanos a 4.3x hacia fines del año, tras el inicio en operaciones de la planta de azúcar refinada en Casagrande y la sobreoferta de azúcar se reduzca.
2. Descripción de la compañía Corporación Azucarera del Perú (NR/BB+/BB) – Coazucar – es la empresa productora de azúcar más importante del Perú, además de ocupar el segundo puesto en la producción de alcohol a nivel nacional. La empresa es propietaria de cinco ingenios azucareros, tres importantes molinos y seis destilerías en el país, además de importantes activos productivos en Ecuador y Argentina. Gráfico 5: Estructura de Accionistas
A nivel consolidado, la capacidad total de molienda de la compañía es de 8.6 MM TM de caña por año, concentrándose cerca del 70% de ésta en Perú. Asimismo, la capacidad agregada de producción de alcohol alcanza los 111.9 MM de litros, también concentrada en el país, con cerca del 80.4% de la misma. 50%
50%
Vito Rodriguez Rodriguez
La totalidad de las acciones de Coazucar son propiedad de la familia Rodriguez, propietaria también del Grupo Gloria. El Grupo Gloria, importante conglomerado industrial peruano, es un importante actor en la industria de lácteos, cementos, papel y con Coazucar, agregaron exposición al sector agroindustrial en el 2005. Así, la compañía creció principalmente a través de adquisiciones.
Jorge Rodriguez Rodriguez
En Perú, la empresa es propietaria de los ingenios San Jacinto, Sintuco, Chiquitoy, Cartavio y Casa Grande. Los dos últimos son las dos unidades azucareras más grandes del país. Al 3Q13, las ventas de las subsidiarias peruanas representaban el 61.9% del total de las ventas de la compañía y los activos en el país representaban cerca del 69.2% del total de activos de la compañía.
Tabla 4: Volúmen de azúcar vendido (en TM) Azúcar Vendido (en TM) Azúcar Rubia Azúcar Blanca Azúcar Orgánica
FY11 559 368 175 16
FY12 666 368 273 25
1Q13 144 78 61 5
2Q13 187 101 81 5
3Q13 169 101 62 6
La compañía inició operaciones en Ecuador tras la adquisición del Ingenio La Troncal, a fines del 2011. Coazucar acordó pagar al gobierno ecuatoriano cerca de USD 130 MM por el activo, obteniendo facilidades para pagar cerca de USD 100 MM en quince años, en una estructura con cuotas crecientes (en la cual el pago correspondiente al año 2014 es de sólo USD 1 MM). La Troncal, ubicado en la región de Guayas, cuenta con una capacidad de molienda de 1.8 MM TM/año y una capacidad de producción anual de 14.4 MM de litros de alcohol. Al 3Q13, las ventas de La Troncal representaron el 27.6% de las ventas totales de la compañía (de 25.6% de las ventas en el mismo trimestre del año anterior).
El 60% del Ingenio San Isidro, activo productivo de la compañía en Argentina, fue adquirido en el 2011 por S/. 90.8 MM. Esta unidad azucarera cuenta con una capacidad de molienda de 0.8 MM TM/año, además de capacidad para producir 7.5 MM de litros de alcohol. Las operaciones en este país destacan por la producción azúcar orgánica, de mayor valor agregado para el mercado de exportación. La operación en Argentina representa el 10.4% de las ventas consolidadas. Futuro de la Empresa: El proyecto de expansión más importante de la compañía es el proyecto Olmos, en la región de Lambayeque. Este proyecto, dividido en dos etapas, consta del desarrollo de un complejo azucarero en el megaproyecto de irrigación del mismo nombre, que agregaría cerca de 8,300 hectáreas en el 2016 y cerca de 5,000 hectáreas adicionales hacia el 2020. En este complejo, la compañía planeaba inicialmente desarrollar una destilería de importantes magnitudes con una capacidad de producción de 100 MM de litros de alcohol al año, casi duplicando la capacidad agregada de producción de alcohol. El desarrollo de este proyecto consideraba una inversión cercana a USD 120 MM.
La compañía redujo su plan de CAPEX como medida de preservar la liquidez en un entorno de precios deprimido.
Dado el débil contexto de precios actual y la presión que este ha ejercido sobre la liquidez de la compañía, la empresa redirigió sus esfuerzos de CAPEX hacia el desarrollo de un proyecto azucarero con su respectivo proceso fabril, de menores requerimiento de CAPEX. En el 2014, la empresa espera que el CAPEX ascienda a entre USD 90-95 MM (considerando USD 20-25 MM de CAPEX de mantenimiento). Asimismo, en la segunda mitad del 2014, se concluiría la construcción de una planta de azúcar refinado que la empresa viene desarrollando en el Ingenio Casa Grande. Esta planta incrementaría el volumen de azúcar refinada que la empresa es capaz de producir, permitiendo no solo comercializar un mayor volumen de esta (que es vendida a una prima de aproximadamente S/. 200 por tonelada sobre el azúcar rubia), sino también capturar contratos comerciales para la distribución de la misma a clientes industriales. En un escenario conservador, la gerencia espera que la implementación de esta planta contribuya anualmente cerca de USD 20 MM al EBITDA de la compañía, lo que se capitalizaría en su totalidad en el 2015.
3. Situación del sector La industria de azúcar y alcohol se encuentra expuesta a volatilidad de precios, estacionalidad, clima y regulaciones gubernamentales específicas a cada país. La oferta de azúcar es menos estable que la demanda dado que la primera depende de los niveles de cosecha de caña de azúcar, afectados por i) condiciones climáticas, ii) antigüedad de la caña de azúcar, iii) el rendimiento por hectárea de caña, iv) rendimiento por tonelada de caña molida, entre otros factores. Así, el precio del azúcar se encuentra principalmente ligado al inventario global y a los desbalances entre la oferta y la demanda en esta industria. La acumulación de inventarios globales de azúcar ha reducido significativamente el precio de este commodity en los últimos años. Así, el precio del contrato #11 de azúcar rubia era de 30.7 cvs/lb en el 1Q11 y descendió hasta 23.7 cvs/lb en el 1Q12. En el 2013, este registró un descenso de 12.6%, pasando de 19.8 cvs/lb en el 1Q13 a 17.3 cvs/lb en el 3Q13. Actualmente, el contrato #11 se encuentra negociado en 15.22 cvs/lb.
Mercado mundial: La demanda mundial de azúcar es cercana a 170 MM TM, mientras que la producción global de este producto fue de 174 MM TM en la temporada 2012/2013, con un rendimiento promedio de 65.6TM/Ha en 22 millones de hectáreas cosechadas alrededor del mundo. Este cultivo ha obtenido relevancia no solo en la industria de alimentos sino también en la de biocombustibles con el desarrollo y producción de etanol (subproducto del procesamiento de la caña de azúcar). Por el lado de la oferta, Brasil lidera la producción mundial; con una participación cercana al 20% del total de la producción, seguido por India (cerca de 15%), China (7%) y Tailandia (6%).
Gráfico 6: Acumulación/(reducción) de inventarios globales de azúcar 15
12
9
10
6
5 MM TM
0 -1
-5 -10
-10 -15 2008/2009
2009/2010
2010/2011
2011/2012
2012/2013
Acumulación de inventario de azúcar (en MM TM)
Fuente: Moody’s Investors Service
Gráfico 7: Mix de cosecha de caña para azúcaretanol en región Centro-Sur de Brasil 2013/2014E
55% 50%
50%
2011/2012
52%
48%
2010/2011
55%
45%
2009/2010
57%
43%
2008/2009
60%
0%
El mix de utilización de caña de azúcar para la producción de azúcar y etanol en Brasil es, por ejemplo, un factor que es tomado en consideración para evaluar la evolución de la producción de azúcar a nivel mundial. El etanol posee una demanda consolidada en Brasil, siendo ampliamente utilizado por la flota vehicular del país. Asimismo, el país latinoamericano es uno de los principales productores mundiales de etanol, responsable por cerca del 30% de la producción global.
45%
2012/2013
20%
40%
40% Etanol
Fuente: Moody’s Investors Service
Es importante resaltar que la mayor parte del azúcar producido es consumido en el país en el que se produce, por lo que el mercado mundial es de significativo menor tamaño (cercano a 60 MM TM). Las importaciones globales sumaron 54 millones de toneladas para la temporada 2012/2013, siendo Europa, China y Estados Unidos los países/regiones con mayor participación en las mismas, representando el 20% del total. En relación a las exportaciones, la relevancia de Brasil es significativamente mayor (cerca del 50% de las exportaciones globales). Otros exportadores importantes son Tailandia, India y Australia. La importante participación de Brasil en la exportación de este producto genera que el desenvolvimiento de la cosecha y molienda de azúcar en este país tenga una elevada influencia sobre precio.
60% Azúcar
80%
100%
La fuerte caída en el precio del azúcar ha generado incentivos a destinar una mayor proporción de caña de azúcar a la producción de etanol. Se espera que en la temporada 2013/2014 que viene desarrollándose en Brasil, una mayor cantidad de caña se destine a la producción de etanol frente al azúcar (55%/45% vs. 50%/50% en la temporada 2012/2013). Esta situación no debería revertirse en el corto plazo dado el nivel de precios en el cual se encuentra el azúcar, por debajo del cash cost de producción promedio de los principales exportadores (cercano a 16 cvs/lb).
En India, el costo de producción en importantes regiones productivas excede el precio de venta al cual los molinos pueden vender el azúcar.
Esperamos que el desbalance entre oferta y demanda se reduzca hacia fines del 2014, dando soporte al precio del commodity en los niveles actuales y recuperándose hacia fines de año.
Otro factor importante que afecta significativamente el precio internacional del azúcar es el volumen de producción en los otros dos grandes exportadores, Tailandia e India. El primero, con una producción cercana a 10 MM TM, representa aproximadamente el 15% de las exportaciones mundiales mientras que el segundo es responsable por cerca de 5% de las mismas. Actualmente, la exportación de azúcar en India se ha visto fortalecida por un posible subsidio a la exportación (con un tamaño aún por definirse), que permitiría a los molinos de dicho país cubrir parte de las elevadas deudas que poseen con los productores de caña, pues el precio actual del azúcar no permite el pago de las mismas, dado su nivel inferior a los costos de producción. En regiones como Uttar Pradesh, región productora al norte de India, al 21 de Enero, el costo de producción de azúcar asciende a 35 rupias por kg (USD 0.57 – 25 cvs/lb), cuando el precio de venta por kg post-molino se ubica en cerca de 26 rupias (USD 0.42). Este fenómeno es observado en la mayoría de regiones productivas del país. En Maharashtra, otra región productora ubicada al oeste del país, el costo de producción asciende a 30 rupias por kg (USD 0.49) lo que equivale a cerca de 22 cvs/lb en dólares americanos, por lo que el subsidio es de amplio interés de los molinos. Sobre la base del escenario actual de producción, consideramos que el desbalance entre oferta y demanda debería reducirse hacia fines del 2014, producto de: i) una mayor molienda destinada a etanol en Brasil en ésta y la próxima temporada, ii) la limitada viabilidad de desarrollar proyectos nuevos dado el precio actual del azúcar y iii) una reducción del área destinada al cultivo de caña de azúcar, dado el limitado retorno que este producto ofrece. Estos problemas inherentes a la oferta, producto de un costo de producción superior al precio internacional, debería dar soporte al precio del commodity, que esperamos se mantenga cercano a los niveles de 15 cvs/lb en la primera mitad del año y se recupere en la segunda mitad del 2014.
Perú:
Las tierras en Perú gozan de un elevado rendimiento de caña por hectárea cercano al doble de sus pares brasileros, además de la capacidad de cosechar a lo largo del año.
Por su parte, Perú es el cuarto mayor productor de América del Sur, mostrando un rendimiento promedio de 127.5 TM/Ha, uno de los mayores rendimientos a nivel mundial. Asimismo, las condiciones climáticas en el Perú lo ponen en ventaja con respecto a otros países debido a que no existe estacionalidad en el cultivo de caña de azúcar, siendo capaces de cultivar a lo largo de todo el año, además de contar con un clima húmedo y tropical indispensable para el crecimiento de la caña. A pesar de que Perú es gran productor del azúcar, el país es un importador neto del producto debido a la gran demanda existente que la oferta nacional no puede abastecer íntegramente. Así, el saldo comercial en los últimos cinco años ha sido negativo, habiéndose importado, en el 2012, cerca de 300,000 TM de azúcar. En el 2013, las importaciones de azúcar se redujeron significativamente. Por ejemplo, la importación de azúcar refinada se redujo en 40.8% en el año. Los precios del azúcar en el Perú son libremente establecidos siguiendo los precios internacionales, sin embargo, estos pueden aumentar debido a los costos de almacenamiento, flete, importación e inventario. La producción de Casa Grande, Cartavio, Paramonga y Laredo representan cerca del 60% del volumen agregado nacional (que ascendió a 1.1 MM TM en el 2012). Por su parte, el consumo interno de azúcar ha crecido a una tasa CAGR de 4.3% desde el 2004. As regiones de La Libertad y Lambayeque mantienen la mayor participación del consumo interno, con 36.3% y 37.0% respectivamente.
4. Riesgos
Volatilidad en la producción de azúcar a nivel mundial: El azúcar y el alcohol son commodities con elevada volatilidad de precio. Así, la industria azucarera se encuentra sujeta a los volúmenes de producción de países como Brasil (cerca del 50% de la exportación de azúcar mundial) y en menor medida a la producción en India, China y Tailandia. Elevados niveles de producción en estos países pueden generar inventarios excesivos que presionen significativamente el precio del azúcar y con esto, el EBITDA y la generación de caja de la compañía.
Riesgos climáticos: La empresa se encuentra sujeta a fenómenos climáticos como sequías, exceso de lluvias o fenómenos de mayor magnitud como el Fenómeno del Niño, que podrían desencadenar inundaciones que podrían dañar el área cultivable de la compañía.
Estacionalidad: La cosecha en Ecuador y Argentina se encuentra sujeta a estacionalidad, pues se concentra en el último semestre del año. Estos desfases de producción requieren un manejo efectivo de capital de trabajo. En Perú, la compañía es capaz de cultivar a lo largo del año.
Importaciones: El precio de venta en el mercado local se ha visto presionado por elevados volúmenes de importación en los últimos años, deteriorando la capacidad de Coazucar de vender por encima del precio internacional. En el 2012, la importación de azúcar registró un crecimiento significativo a 300,000 TM desde cerca de 180,000 en el 2011, lo que favoreció significativamente la reducción de la diferencia entre el precio local e internacional. En el 2013, el volumen de importación de azúcar se redujo considerablemente, básicamente debido a la reducción de la brecha entre el precio local y el precio internacional. Por ejemplo, en el caso del azúcar refinada, el volumen de importación se redujo 40.8% en el 2013.
5. Descripción de las Notas Corporación Azucarera del Perú emitió USD 325.0 MM a 6.375% el 08/02/2012 con vencimiento al 2022. El rating otorgado a esta emisión fue NR/BB+/BB (S&P/Fitch). Los net proceeds de esta emisión fueron usados para: i) el prepago de deuda de subsidiarias peruanas, ii) la adquisición de tierras en el proyecto de irrigación Olmos iii) requerimientos de CAPEX de la compañía y iv) gastos corporativos generales. Subsidiarias que garantizan la emisión: Las notas al 2022 se encuentran garantizadas por Cartavio S.A.A., San Jacinto S.A.A., Olmos y Casa Grande S.A.A. (hasta por un monto de USD 162.5 MM en el caso de Casa Grande). Limitation on Indebtedness: La empresa o sus subsidiarias no podrán incurrir en deuda adicional si su Fixed Charge Coverage Ratio es menor a 2.5x y su Consolidated Leverage Ratio es superior a 3.5x, a excepción de i) endeudamiento adicional que no exceda USD 125 MM o el 10% de los activos tangibles consolidados, el que fuera mayor; ii) deuda de refinanciación; iii) deuda intercompañía; iv) obligaciones de leasing, y v) financiamiento hipotecario que no exceda USD 25 MM o el 2% de los activos tangibles consolidados, el que fuera mayor. Investment Grade: Si la empresa es calificada como grado de inversión por al menos 2 compañías calificadoras de riesgos, se eliminan las restricciones impuestas al endeudamiento adicional, pagos y dividendos que afecten a subsidiarias que garantizan, garantías, venta de activos, transacciones con relacionadas, consolidación y fusión. Make Whole Premium: La emisión al 2022 cuenta con una redención anticipada @T +50bps. Equity Clawback: Antes del 08/02/2015, la empresa puede repagar hasta 35% del principal de las notas con los recursos provenientes de una emisión de equity, a un precio de 106.375%. Change of Control Downgrade: Opción de put @101 del principal más intereses corridos y no pagados si ocurre un cambio de control seguido de un downgrade por parte de dos agencias calificadoras dentro de 90 días del cambio de control. Otras consideraciones: Limitation on asset sales, Limitation on liens, Limitation on restricted payments, Limitation on transactions with affiliates, Limitations on dividends and other payment restrictions affecting restricted subsidiaries.
A pesar de los esfuerzos desarrollados para verificar la información utilizada y reproducirla en el documento de manera apropiada y confiable, MCC Seminario (en adelante la “Empresa” o “MCC”) no garantiza la veracidad de todos los contenidos del presente documento y declara expresamente que algunos de ellos podrían estar sujetos a errores, inexactitudes u omisiones. Nuestra empresa no asumirá ninguna responsabilidad por cualquier daño que pueda sufrir un tercero como consecuencia de la circulación, publicación, reproducción o uso del presente informe. Por último, cabe señalar que el presente informe no constituye una oferta expresa o implícita, ni proporciona toda la información que pudiera ser necesaria para efectuar inversiones en las empresas evaluadas.
Anexos: Información Financiera Estado de Pérdidas y Ganancias (PEN MM) Ventas Costo de Ventas (Cash Cost) Utilidad Bruta
2011 1,305 -637 668
2012 1,462 -822 640
2013E 1,181 -785 397
2014E 1,198 -770 428
2015E 1,373 -810 564
Márgen Bruto
41.0%
51.2%
43.8%
33.6%
35.7%
Gastos de Ventas
-30
-48
-60
-51
-59
Gastos de Administración
-59
-95
-87
-88
-101
-1 579 44.3%
6 502 34.4%
4 254 21.5%
0 288 24.0%
0 403 29.4%
Otros Ingresos/Gastos EBITDA Márgen EBITDA Ajuste por Valor. por Activos Biológicos
188
-77
16
0
0
- Depreciación y Amortización
-76
-107
-115
-123
-133
Utilidad Operativa
691
318
155
164
270
Ingresos Financieros Gastos Financieros Diferencia en Cambio, Neto Ingresos por participación en asociados Otros ingresos/gastos Utilidad antes de IR Impuesto a la Renta Utilidad Neta
2 -47 18 0 0 664 -105 560
6 -75 42 7 0 298 -65 233
6 -99 -106 5 -1 -38 -21 -59
3 -105 0 0 0 62 -12 50
3 -92 0 0 0 181 -34 147
Márgen Neto
42.9%
16.0%
-5.0%
4.2%
10.7%
Balance General (PEN MM) Cash y Equivalentes Cuentas por Cobrar Comerciales Otras Cuentas por Cobrar Cuentas por Cobrar a Relacionadas Inventarios Activos por Impuestos Otros Activos No Financieros Activo Corriente Inversiones Aplicando el método de Part. Otras Cuentas por Cobrar Cuentas por Cobrar a Entidades Relacionadas Activos Biológicos PP&E, Net Activos Intangibles Activos por Impuestos Diferidos Goodwill Otros Activos no Financiero Activo No Corriente Activo Pasivos Financieros Cuentas por Pagar Comerciales Otras Cuentas por Pagar Cuentas por Pagar a Relacionadas Provisión por Beneficios a Empleados Otras Provisiones Pasivos por Impuestos a las Ganancias Otros Pasivos no Financieros Pasivo Corriente Pasivos Financieros Cuentas por Pagar Comerciales Otras cuentas por Pagar Cuentas por Pagar a Relacionadas Otras Provisiones Pasivos por Impuestos Diferidos Pasivos No Corrientes Pasivos Patrimonio Pasivos + Patrimonio Deuda Total (Incluye Deuda de Adquisición de Ecuador)
2011 114 54 51 3 300 3 6 532 30 1 10 657 2,806 2 6 200 0 3,712 4,244 292 110 103 78 85 6 39 11 723 260 0 296 0 9 470 1,035 1,759 2,486 4,244 818
2012 293 58 67 36 401 10 8 873 37 5 1 648 2,830 4 0 200 59 3,786 4,659 94 117 68 9 77 11 23 1 400 841 0 275 66 6 444 1,633 2,032 2,626 4,659 1,194
2013E 189 62 86 2 434 21 37 831 44 5 2 687 2,902 5 0 200 59 3,905 4,736 145 127 87 7 42 13 5 0 425 884 0 316 72 3 439 1,714 2,139 2,597 4,736 1,305
2014E 136 66 76 3 444 9 37 770 44 5 2 687 3,031 5 0 200 59 4,034 4,804 142 130 103 5 62 15 4 0 462 884 0 297 72 3 439 1,695 2,157 2,647 4,804 1,300
2015E 104 71 82 3 483 7 37 787 44 5 2 687 3,051 5 0 200 59 4,054 4,841 33 136 111 5 65 16 4 0 371 884 0 278 72 3 439 1,676 2,047 2,794 4,841 1,179
Flujo de Caja (PEN MM) Utilidad Neta (+) Depreciación y Amortización (-) Cambios en WK (-) Cambios en Activos Biológicos (-) Cambios en cuentas no corrientes y ajustes no monet. (+) Gastos Financieros Operating Cash Flow (-) Inversión y prestamos a relacionadas (-) CAPEX Unlevered Cash Flow (-) Pago de Intereses y Gastos Financieros (-) Pago de principal Levered Cash Flow Adquisición de Subsidiarias (-) Dividendos (+) Emisión de Deuda Cash Flow Variación de Tipo de Cambio Cash Position
2011 560 76 -133 -279 320 47 590 0 -928 -338 -47 -388 -774 450 -39 406 43 0 114
2012 233 107 -353 9 29 75 100 0 -207 -107 -19 -958 -1,084 0 -83 1,347 179 0 293
2013E -59 115 -44 -39 60 99 130 7 -166 -29 -91 -85 -205 0 -21 98 -128 23 189
2014E 50 123 47 0 -16 105 310 0 -252 58 -105 -148 -195 0 0 142 -53 0 136
2015E 147 133 -31 0 -8 92 334 0 -154 180 -92 -120 -32 0 0 0 -32 0 104
Métricas Crediticias Deuda/EBITDA Deuda Neta/EBITDA Cobertura de Intereses EBITDA / Debt Service (EBITDA - CAPEX) / Debt Service (Operating Cash Flow - CAPEX) / Debt Service
2011 1.4x 1.2x 12.2x 1.3x -0.8x -1.0x 0.4x
2012 2.4x 1.8x 6.7x 0.5x 0.3x -0.1x 3.1x
2013E 5.1x 4.4x 2.6x 1.4x 0.5x 5.8x 1.3x
2014E 4.5x 4.0x 2.7x 1.1x 0.1x 1.4x 0.9x
2015E 2.9x 2.7x 4.4x 1.9x 1.2x 6.3x 2.2x
Cash/Deuda CP (incluyendo Deuda de Adquisición de Ecuador)
Anexo: Morgan Stanley Commodities Research (Abril 9, 2014) - Sugar Update
April 9, 2014 Morgan Stanley Commodities Research MORGAN STANLEY RESEARCH Global
Sugar Update Crushed By Rising Inventories
Cents/lb Bull Case Base Case Bear Case Forward*
We remain bearish on sugar prices from current levels, as the fourth year of global production surplus lifts global inventories.
Adequate northern hemisphere production and limited incremental demand should pressure prices through MYE 13/14. Even with Indian production mildly disappointing, the start of the Brazilian crush and limited additional stockpiling demand should pressure prices through MYE.
Morgan Stanley & Co. LLC
Lowering Our 13/14 Price Forecast 2013/14 17.3 16.6 16.2 17.4
2014/15 20.0 17.9 15.8 18.5
Source: Bloomberg, ICE, Morgan Stanley Commodity Research estimates Note: Forecasts are marketing year (Oct – Sep) averages of the front month futures contract. *For 13/14, “Forward” consists of the average of front-month futures contract closing prices MYTD as well as the average price implied by the forward curve through MYE
Production Surplus to Shrink in 14/15 Global production surplus, mln mtrv 12
A shrinking surplus and limited reinvestment should conspire to lift prices YoY in 14/15. Our base case envisions a global production surplus of 1.8 mln MT — representing the 5th straight year of production surplus. However, this surplus does not leave much room for error, and could easily be wiped out by adverse weather in a single large producer. Uncertainty over the sustainability of government production subsidies should also help keep a risk premium in newcrop prices.
9 6 3 0 -3 -6 -9 -12 07/08 08/09 09/10 10/11e 11/12e 12/13e 13/14e Source: USDA, Morgan Stanley Commodity Research estimates
For important disclosures, refer to the Disclosure Section, located at the end of this report.
14/15e
Bennett Meier [email protected] +1 (1)212 761 4967
Neel Mehta [email protected] +1 (1)212 761 8582
MORGAN STANLEY RESEARCH
Sugar Update: Crushed by Rising Inventories April 9, 2014
RISK-REWARD ESSENTIALS
Sugar Prices: Cyclical Downturn to Persist Through 13/14 30
Investment Thesis
$/lb
28 26 24
13/14
22
20.8 19.8
20 18.2 18
17.1
16
15.6 14.9
14 12 Sep-11
Mar-12
Sep-12
Historical Performance
Mar-13
Sep-13
Mar-14
Base Case Avg
14/15 20.7 19.2 18.6
18.2
17.6 15.9
16.8
16.6 16.4 15.6
Sep-14
16.3 15.1
Mar-15
Forward Curve
We use a multivariate regression model driven off price-sensitive supply/demand balances for sugar and Brazilian ethanol. Bull 13/14
14/15
Price (cents/lb)
17.3
20.0
BZ Production (mln MT)
39.7
38.1
Global Surplus (mln MT)
4.4
-1.5
Base 13/14
14/15
Price (cents/lb)
16.6
17.9
BZ Production (mln MT)
39.7
39.3
Global Surplus (mln MT)
6.0
1.8
13/14
14/15
Bear Price (cents/lb)
16.2
15.8
BZ Production (mln MT)
39.7
39.3
Global Surplus (mln MT)
7.0
4.9
Late-season rainfall and weaker than expected yields cut Indian production by 1.25 mln MT from our base case, reducing 13/14 exports by 20%. Indian farmers struggle to access capital, prompting reduced 14/15 cane plantings. 14/15 C/S Brazilian production falls ~6% YoY, as drought pressures cane yields and/or El Niño-linked rainfall reduces late season crush. In 13/14, Indian production disappoints due to heavy rainfall in UP impacting yields and delaying crush. In 14/15, production in C/S Brazil falls less than 1% YoY, as drought fears prove overblown. Strong ethanol demand leaves the C/S sugar mix at a 5-yr low of 44%, and Brazil’s total output down 1% YoY.
The onset of the new Brazilian crush, coupled with limited demand from traditional importers, should pressure prices through the remainder of 13/14. In 14/15, declining production and consumption growing at the 5-yr CAGR of 1.7% should pull the global surplus down ~70% YoY, leaving less of a buffer against weather disruptions. Brazil will remain a key determinant of 14/15 global supply. While drought concerns have likely been overstated, a modest decline in C/S cane crush (on slightly lower yields) and rising hydrous ethanol demand should lower Brazil’s sugar output YoY. Although government supports should permit continued production increases in India, Thailand and the EU, poor planting economics and/or unfavorable weather conditions should prompt declines in China, Australia, US and others, more than offsetting any gains.
Potential Catalysts
A timely start to the Brazilian crush season, with sugar production roughly in line with last year’s levels, should force producers to discount prices.
Investment Risks
A prolonged tail to the crushing season allows 13/14 Indian and Mexican cane production to surprise to the upside. Drought/El Niño have a minimal impact on C/S Brazil yields leaving cane production at 610 mln MT in 14/15. Strong ethanol demand leaves the sugar mix at 42%, and total sugar output down 1% YoY.
Adverse weather conditions in one of the key producers (Brazil, India, or Thailand) could push the global 14/15 balance into deficit, sending prices toward our bull case. An unexpected increase to Brazil’s gasoline price cap or a higher mandated anhydrous blend rate (>25%) would bolster ethanol demand, supporting sugar prices as well. An end to China’s sugar stockpiling program could lead to a steep decline in import demand, forcing exporters to deeply discount supplies in order to find buyers.
2
MORGAN STANLEY RESEARCH
Sugar Update: Crushed by Rising Inventories April 9, 2014
Positioning: Net-Long Investors and Well Hedged Producers Could Challenge Prices Weather concerns in C/S Brazil have sparked a rally in sugar prices in recent months. Since Feb 1, prices have risen 12% forcing speculators to reduce their short positions. Money managers now long sugar. Although sugar was a consensus short going into 2014, the latest CFTC positioning data suggests that funds have been net long since the end of February. Net length currently sits at 122K lots, the highest since November 2013. However, this increase in net length has been driven almost entirely by weather-related short covering rather than added length — suggesting limited conviction that fundamentals will push prices sustainably higher. Money managers have reduced their net short position in sugar from nearly 210 K lots in early Jan to 61K lots (71%). Producers using spec short covering as opportunity to hedge. The latest run-up in sugar prices has provided producers (particularly in Brazil) a second opportunity to hedge significant production volumes at profitable levels. Since the beginning of the year, producers/merchants have increased their gross short interest from 414K lots to 543K lots (an increase equivalent to 6.6 mln MT of sugar), largely offsetting the decrease in spec short interest. Increasingly hedged producers could lead to lower production elasticity through the growing season.
Net Spec Length Back Near Seasonal Highs… Managed money net length, ‘000 lots
…With Producers Capitalizing on Declining Spec Short Interest Gross short positioning, combined futures and options, ‘000 lots
250
1,000
200
900 800
150
700
100
600
50
500
0
400 300
-50
200
-100 -150 Jan
100 Feb Mar
Apr May
2010
Jun
2011
Jul
Aug Sep Oct
2012
Nov Dec
2013
Source: CFTC, Bloomberg, Morgan Stanley Commodity Research.
2014
0 Jan '07
Jan '08
Jan '09
Managed Money
Jan '10
Jan '11
Jan '12
Jan '13
Jan '14
Producer/Merchant
Source: CFTC, Bloomberg, Morgan Stanley Commodity Research.
3
MORGAN STANLEY RESEARCH
Sugar Update: Crushed by Rising Inventories April 9, 2014
Investor Debates How Much Sugar Will Brazil Produce in 14/15?
Consensus view: Industry consensus pegs 14/15 C/S crush at around 580 mln MT, plus/minus ~15 mln MT, leaving sugar production estimates in a range of 32-34 mln MT. Our view: We remain higher than consensus on C/S crush, forecasting 593 mln MT of cane and sugar production of 33.9 mln MT, as a declining cane age should support agricultural yields . Where we could be wrong: As always, weather is a production risk, though we see the possibility of El Niño induced rains late in the season as a bigger risk to production than the Jan – Mar drought.
Is There A Near-Term Floor For Sugar Our view: While in the past, we have relied on the concept of “ethanol parity” to define a floor, frictions in switching production capacity and the lack of a single producer parity point have Prices?
rendered this method largely ineffective. Ethanol switching dynamics are still influential to fullseason prices, however, our findings suggest Brazilian consumers are slow to switch fuels even once spot ethanol prices have fallen below parity.
Have We Witnessed the End of the Indian Sugar Cycle?
Our view: While efforts to liberalize elements of India’s sugar policy are likely to reduce the amplitude of future production swings, we question the sustainability of other government interventions, including export incentives and interest free loans, in light of India’s fiscal challenges and rising complaints from other producing nations. Without these programs, India’s sugar production would be unprofitable at our forecasted prices. Where we could be wrong: The emergence of ethanol as an alternative fuel has provided a highvalue use for molasses (a by-product of sugar production). If molasses-based ethanol penetration exceeds our expectations, it could help stabilize mill cash flow and (by extension) production.
What Price Is Needed to Promote Global Production Growth?
Our view: While Brazil remains one of the lowest-cost global producers, excluding subsidies, the presence of governmental supports in many competing producers leaves Brazilian cane production comparatively price-elastic. At current exchange rates, we see a long-term price of at least $0.17/lb as necessary to continue to promote adequate maintenance of current plantings. Where we could be wrong: Brazilian unit production costs remain largely levered to the BRL, which has traded in a 25% range over the last year. The difference between the BRL’s 52 wk high and 52-wk low corresponds to a band of nearly $1.54 c/lb in the long-term sugar incentive price. 4
MORGAN STANLEY RESEARCH
Sugar Update: Crushed by Rising Inventories April 9, 2014
Debate #1: How Much Sugar Will Brazil Produce in 2014/15? We model 14/15 C/S sugar production down 1.2% YoY, as cane crush declines and stronger ethanol demand diverts TRS away from sugar. Combined with expected NNE production of 3.6 mln mttq, C/S production of 33.9 mln mttq would leave all-Brazil sugar output down 1% YoY. Weather remains a risk to C/S production, though not in the way the market expects. Sugar prices have surged in recent months as poor Jan-Mar precipitation across C/S Brazil left soil moisture in severe deficit. While we do not question that drought could have an impact on cane yields, we highlight that the cane crop had 9-12 months to develop under normal conditions prior to the onset of drought in Jan. With dryness actually conducive to crushing, we expect drought to have a limited impact on early-season sugar/ethanol production. More concerning, in our view, is a rising risk of El Niño (which typically results in higher than normal rainfall totals) in 2H14, which could pose a larger risk to late-season crush. Declining cane age should aid yields in 14/15, while lower renewal rates could pose upside risk to harvested area. After expanded renewal efforts in 12/13 and 13/14, we expect the average age of the C/S cane crop to decline to 3.2 cuts (the lowest in at least 4 years). However, in light of falling prices and financial distress among many small mills, we see a risk that overall cane renewal efforts could suffer in 14/15. While this reduction would not impact 14/15 yields, a decline in the renewal rate from 13/14’s 17% to 15% this year (in-line with 11/12) would increase C/S harvested area by 187K ha YoY, leaving production down less than 1% YoY at 593 mln MT. Slightly lower production volumes out of NNE (just under 10% of C/S production) should result in an all-Brazil cane crush of 651 mln MT, 0.5% lower YoY.
Drought in C/S Brazil a Risk to 14/15 Yields
14/15 Cane Crush Down Only Modestly Area harvested ('000 ha) NE CS Total Area planting ('000 ha) NE CS Area total ('000 ha) NE CS
70% of Brazil’s Sugar Production
Yield (MT/ha) NE CS Avg Production ('000 MT) NE CS Total
Source: USDA FAS, Morgan Stanley Commodity Research
2011/12
2012/13
2013/14
2014/15
1,133 6,914 8,046
1,143 7,022 8,165
1,125 6,873 7,998
1,112 7,019 8,131
1,106 7,205 8,312
200 988 1,188
190 1,239 1,429
208 1,509 1,716
221 1,438 1,659
227 1,272 1,498
1,333 7,901 9,234
1,333 8,261 9,594
1,333 8,382 9,714
1,333 8,457 9,789
1,333 8,477 9,810
55.9 80.6 77.1
57.3 70.2 68.4
49.7 77.5 73.6
52.1 84.9 80.4
52.1 82.3 78.3
63,358 556,945 620,303
65,425 493,264 558,689
55,930 532,758 588,688
57,920 596,187 654,107
57,638 592,905 650,542
Source: Morgan Stanley Commodity Research estimates
5
MORGAN STANLEY RESEARCH
Sugar Update: Crushed by Rising Inventories April 9, 2014
Debate #1 (cont): How Much Sugar Will Brazil Produce in 14/15? Rise in Total Recoverable Sugars (TRS) should help boost sugar and ethanol production in 14/15. While dry conditions in C/S Brazil could modestly suppress cane yields, they may result in better concentration of TRS, improving industrial yields. We model a modest increase in C/S TRS from 133.9 kg/MT in 13/14 to 135.8 kg/MT in 14/15 (effectively flat with 12/13). Rising ethanol demand should push C/S sugar mix to 5-year lows. Falling sugar/ethanol prices should render hydrous ethanol increasingly competitive with gasoline C, sending the 14/15 hydrous share of total Brazilian cane consumption to a 4-year high of 38.1%. Despite a declining gasoline share, 14/15 will benefit from an additional month of 25% anhydrous blending than 13/14, which should still push full-season anhydrous demand to a new record of 9.9 mln cbm. Combined, these trends should increase the call on C/S ethanol production to 26.3 mln cbm, reducing sugar’s share of TRS (“the sugar mix”) to a 5-year low of 44%.
Higher TRS To Compensate Lower 14/15 Cane Yields
C/S Sugar Mix Seen Declining to Lowest Level Since 09/10
Left axis: total recoverable sugar (TRS), kg/MT of cane; right axis: cane yields, MT/ha
C/S cane crush mix, %
90
150
80 145 Avg. TRS in Brazil
140
70 60 50 40
135
30 20
130
10 0
125 04/05
06/07
(LHS) Brazil TRS
08/09
10/11
(LHS) C/S TRS
Source: Morgan Stanley Commodity Research estimates
12/13
14/15e
(RHS) C/S Yields
Avg. of 46% sugar mix
60% 50% 40% 30% 20% 10% 0% 04/05
06/07 Sugar
08/09 Hydrous
10/11
12/13
14/15e
Anhydrous
Source: UNICA, Morgan Stanley Commodity Research estimates
6
MORGAN STANLEY RESEARCH
Sugar Update: Crushed by Rising Inventories April 9, 2014
Debate #2: Is There A Near-Term Floor for Sugar Prices? With prices once again trending lower from recent weather-driven highs, attention will likely soon turn to finding a fundamental floor for sugar prices. While in the past, we have relied on the concept of “ethanol parity” (the point at which mills are more profitable producing ethanol than sugar) to define this floor, we have not found this method particularly successful in calling the bottom. While ethanol parity remains a useful concept for calibrating price targets on a quarterly or annualized basis, more often it is weather headlines or politically-driven stockpiling decisions which prove the more consistent catalyst for reversals. Frictions in switching production capacity and lack of a single producer parity point all challenge the short-term effectiveness of “ethanol parity” as a floor price. In our conversations with producers, we often hear push-back against the notion that ethanol switching provides an easy mechanism to influence sugar prices. While it is true that on a nation-wide basis, Brazil’s can swing nearly 10% of its annual production capacity from sugar to ethanol, the process on an individual mill level is not as simple. Divergent regional price relationships can also limit the amount of switching that takes place at a given global sugar price. Ethanol switching dynamics will still influence full-season prices. Higher gasoline prices YoY should leave hydrous ethanol competitive in the fuel stream at a sugar-equivalent price of ~$0.167/lb. However, historically Brazilian consumers have been slow to switch fuels, even when spot ethanol prices dip below this parity point. This lag in demand could allow sugar/ethanol prices to trade below this level for as long as 1-2 quarters, in our view, before hydrous demand picks up enough to materially tighten the ethanol balance, lifting sugar prices back above 17 cents.
In Surplus Markets, Ethanol Parity Not the Floor
Ethanol Demand Price-Sensitive, Though On a Lag
Left axis: sugar-ethanol parity, %; right axis: global production surplus, mln mtrv
Left axis: sugar price, c/lb; right axis: hydrous ethanol demand, mln cbm
1.4
14
1.0
10
19
Better to produce sugar
0.6
6
0.2
2
1.5
18
Q2 14/15
17
Q1 14/15
16
Q4 13/14 Q3 13/14
15
-2
(0.6)
Better to produce ethanol
-6
(1.0) -10 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Hydrous
Anhydrous
Global Production Surplus
Source: Bloomberg, Morgan Stanley Commodity Research estimates
1.3 1.2 1.1
14
(0.2)
1.4
1.0
13 12
0.9
11
0.8
10 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15
0.7
Realized Quarterly Price
MS Quarterly Forecast
Parity Price
Hydrous Ethanol Demand
Source: UNICA, Morgan Stanley Commodity Research estimates
7
MORGAN STANLEY RESEARCH
Sugar Update: Crushed by Rising Inventories April 9, 2014
Debate #3: Have We Witnessed the End of the Indian Sugar Cycle? Government supports and favorable weather have forestalled a cyclical decline in Indian production. Driven by boom and bust cycles in industry cash flows, historical Indian sugar production cycles have lasted an average of 5 years, peak to peak, with output falling an average of 31% peak-to-trough in the last 3 cycles. However, 5 years from the last cyclical trough, government interventions and favorable weather appear to have averted a large-scale decline in 13/14 production. Assuming normal weather, government policy should sustain production in 14/15. Though weakening global prices this season would normally discourage sugarcane acreage (and sugar production) next year, the Indian government is taking a more active role in curbing cyclicality. Liberalization of domestic marketing controls last year, the approval of a INR 66 bln ($1.1 bln) interest-free loan to the sugar industry in Dec and a recently approved $54/MT raw sugar export incentive have all helped sugar mills maintain their cash flow, slowing the build up of cane arrears (IOUs to cane farmers). With mills paying for cane in a timely fashion, farmers should have enough capital to keep cane plantings flat YoY. However, we are not ready to declare the Indian cycle dead, as sustained production relies on continued government supports. As recent years have shown, India is consistently willing to intervene in the sugar markets, keeping domestic mills just profitable enough to support continued plantings. However, these supports have also discouraged structural reforms in the industry, leaving Indian sugar production uncompetitive on the global market ex-subsidies — illustrated by the nearly $835 mln worth of cane arrears which the industry had built up before approval of the export subsidy. With the future of these subsidies uncertain, due either to India’s fiscal constraints or emerging WTO complaints, we question whether India’s current production level is truly a “new normal.” Where we could be wrong: Ethanol. India’s imposition of a 5% ethanol blending mandate in Jul 2013 created a new profitable outlet for molasses (a by-product of sugar production and the primary feedstock for domestic ethanol). While higher by-product revenues should help mill profitability marginally, we do not see this development as a game changer yet for the industry — particularly in light of missed demand targets, limited production capacity and competition from US exports.
Indian Sugar Production Becoming Less Cyclical
Export Subsidy Improving Mill Profitability
Left axis: absolute Δ in cane area, ‘000 ha; right axis: production, mln mtrv
Profitability at Uttar Pradesh mills, USD/MT
1200 1000 800
35,000
100
30,000
80
600
25,000
400
20,000
200
Export Subsidy Approved
60 40 20
0
15,000
-200
10,000
0
-400
5,000
-600 -800
0 01/02
03/04
05/06
07/08
09/10
Change in Cane Area
11/12
13/14e
Production
Source: USDA, Morgan Stanley Commodity Research estimates
-20 -40 -60 -80 Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Source: USDA, Bloomberg, ICE, NYSE-LIFFE, Morgan Stanley Commodity Research
8
MORGAN STANLEY RESEARCH
Sugar Update: Crushed by Rising Inventories April 9, 2014
Debate #4: What Price Is Needed to Promote Global Production Growth? Over the past two decades, the downside to sugar prices has generally been assumed to be the price needed to coax acreage expansion in Brazil. However, in recent years, government supports in countries like Thailand and India have ensured stable or growing production in regions with higher (unsubsidized) cost bases. With global consumption growing at an estimated 1.7% pa (vs. 14/15 production growth of -0.75%), the world continues to require Brazil to increase its production. At present, Brazil can grow production more cheaply by improving domestic yields through increased renewal rates rather than expanding total acreage. Maximizing current Brazilian crushing capacity could allow the world to maintain a production surplus for at least two more years. Current prices still too low to encourage optimal Brazilian renewal. Although costs of inputs, namely land and labor have risen sharply over the last 3 years, a weakening BRL has helped mitigate this cost inflation. Still, operations which once needed sugar prices of just $0.15-0.16/lb to grow production now need prices of nearly $0.17 simply to justify renewal. A weakening BRL could lower these costs further (in dollar terms) in the coming year. Our Morgan Stanley FX team sees the BRL weakening to $2.65 by 4Q 2015. If this materializes, the cost of expansion would decline to $16/lb.
Brazilian C/S Cost Of Production ~ $0.17/lb… Cost Items
Sugar Value in US$c/lb
Agricultural costs Harvest Cultivation crop area Cultivation planting area Investment in planting Industrial and G&A Industrial cost G&A Logistic Freight cost Elevation cost Total cost ex-lease Lease cost Suppliers cost Total costs with leases & suppliers Capital charges (Capex/WC) Total costs
4.04 2.32 0.93 0.79 2.75 1.49 1.26 2.39 1.82 0.58 9.18 1.21 4.31 14.71 2.54 17.25
…Though Costs Highly Levered to BRL BRL CoP, Renewal (US ¢/lb)
1.8 19.1
2 18.2
2.2 17.5
2.4 16.9
2.6 16.4
Source: Company Data, Bloomberg, ICE, Morgan Stanley Commodity Research estimates
9
MORGAN STANLEY RESEARCH
Sugar Update: Crushed by Rising Inventories April 9, 2014
Australia: Renewed Queensland Drought Could Once Again Constrain 14/15 Output Production to fall modestly in 13/14 on lower yields, pressuring ending stocks. We model Australia’s 13/14 cane production declining 1.2% YoY to 29.1 mln MT. Although harvested area is expected to rise 3%, flooding in early 2013 and the spread of canopy syndrome disease across parts of Queensland, contributed to a 4% YoY decline in cane yields, leaving the country’s sugar production at 4.2 mln MT (-1.2% YoY). With exports seen rising 5% to 3.1 mln MT and domestic consumption holding roughly flat YoY, we see stocks-to-use falling to 5.1% in 13/14. Drought in Queensland is a potential threat to 14/15 sugar cane crop. Yields in Queensland (which accounts for ~95% of Australia’s production) could be adversely impacted by lack of rainfall since the start of the growing season. Although it is not uncommon for parts of Queensland to face excessively dry conditions, 80% of the state had been declared to be in drought as of early March, including key cane growing regions. The possible return of El Niño (which has historically brought lower-than-average rainfall to Australia) may also prove incrementally negative for yields.
S/U to Tighten as Production Declines, Exports Rise
Drought in Queensland May Be Problematic for 14/15 Cane Crop Seasonal % of normal precipitation, 10/1/13 – 1/31/14
Left axis: mln MT, right axis: % 18%
6
16%
5
Queensland
14%
4
12% 10%
3
8%
2
6% 4%
1
2%
0
0% 00/01
02/03
04/05
Production (LHS)
06/07
08/09
10/11
Exports (LHS)
12/13
14/15e
S/U (RHS)
Source: USDA, ABARES, Morgan Stanley Commodity Research estimates
Source: USDA Crop Explorer, Morgan Stanley Commodity Research
10
MORGAN STANLEY RESEARCH
Sugar Update: Crushed by Rising Inventories April 9, 2014
Thailand: Poised for Two Consecutive Years of Record Production Thailand’s 13/14 sugar production is on pace to reach a record high. After recent reductions to (optimistic) local production estimates, we forecast a 9.6% YoY increase in sugar production to 11.27 mln MT, stemming from a 5.4% rise in area harvested (to 1.15 mln ha) and a 4% YoY increase in yields. Production volumes MYTD still support this projection, with weekly output running well above the 5-yr range for most of the season. As of April 1, sugar production was 14% higher YoY MYTD. Export growth should pull ending stocks lower despite increased supply. We expect exports from Thailand to expand by as much as 10.6% to nearly 9 mln MT owing to continued import demand from China. Despite lower prices, 14/15 cane area is expected to grow 5.4% YoY on government efforts to wean farmers off of rice. The Thai government is increasingly pressuring farmers to diversify production from rice to other cash crops, including sugar cane. Last year, the Ag Ministry declared that acreage in 33 provinces devoted to rice was unsuitable for the crop and that cane should be grown instead. Although farmers have been slow to react, we expect continued government pressure to support a modest rise in cane area next year. Our current estimate for sugar production in 14/15 is 11.88 mln MT, up 5.4% YoY, though higher exports and domestic consumption should leave ending stocks relatively flat YoY.
13/14 Thai Sugar Production Volumes Outpacing 5-Yr Range
Record Production Should Continue to Support Export Growth
Weekly sugar production, mln mttq
Left axis: production, mln mtrv; right axis: mln MT
1.20
14
1.00
12
0.80
10
0.60
8
10 9 8 7 6 5
6
0.40
4 3
4
0.20
2
2
0.00 28 Nov
26 Dec
5-Yr Range
23 Jan
20 Feb
Average
19 Mar 2012/13
1
0
16 Apr 2013/14
Source: Thai Cane and Sugar Board, Morgan Stanley Commodity Research
0 00/01
02/03
04/05
06/07
Production (LHS)
08/09
10/11
12/13
14/15e
Exports (RHS)
Source: USDA, Morgan Stanley Commodity Research estimates
11
MORGAN STANLEY RESEARCH
Sugar Update: Crushed by Rising Inventories April 9, 2014
Russia: Production Strength To Keep Import Needs Low Lower prices and better wheat crops curbed 13/14 sugar beet area. After two consecutive years of strong production in Russia, lower sugar prices and better conditions in the country’s winter wheat crop reduced 13/14 sugarbeet area 19.2% YoY to just 906K ha, the lowest planted area since 2009/10. However, record yields should leave production down only modestly. Favorable soil moisture conditions during the growing season resulted in estimated record yields of ~5.3 tons/ha, up 18.2% YoY. This should translate to production declines of a more modest 4.6% — to 4.8 mln MT. Despite lower output, import needs remain low vs. history. We expect Russian raw sugar imports to rise as much as 50% YoY to 900K MT, to meet the needs of the domestic refining industry. In Jan, Russia imported 142K MT of raw sugar, up 144% versus the same month last year, with much of this volume coming from Brazil. However, we note that our estimate still pales in comparison to the 10-year average of 2.5 mln MT. Improving domestic prices should bode well for 14/15 production. Flat wheat prices YoY and a substantial improvement in domestic beet prices should help promote an estimated 10% YoY increase in beet planted area. Local sources indicate that the Russian beet campaign has gotten off to an early start due to warm weather. Assuming normal weather through the remainder of the growing season, we expect Russian output to remain flat YoY as yields fall back from last year’s highs. This, combined with higher beginning stocks YoY, should once again reduce the country’s raw sugar imports by ~11% YoY.
Normal Weather Conditions Benefitted 13/14 Beet Yields
Favorable Economics Prompting Acreage Increases in 14/15
Seasonal % of normal precipitation, 04/01/2013 – 09/30/2013
Left axis: mln mtrv; right axis: ‘000 ha 6
1400
5
1200 1000
4
800 3 600 2
400
1
Key Sugar Beet Growing Areas
200
0
0 00/01
02/03
04/05
06/07
Sugar Production (LHS)
Source: USDA Crop Explorer, Morgan Stanley Commodity Research.
08/09
10/11
12/13
14/15e
Harvested Area (RHS)
Source: USDA, Morgan Stanley Commodity Research estimates
12
MORGAN STANLEY RESEARCH
Sugar Update: Crushed by Rising Inventories April 9, 2014
India: Wet Weather Expected to Pressure 13/14 Output Indian production forecast lowered for 13/14 amid cane crush delays and weather concerns. We currently model production at 23.75 mln mtwv (down 3.5% YoY), as local sources indicate that sugarcane crops in eastern Uttar Pradesh have been damaged due to heavy rainfall. This coupled with delays in crushing largely due to cane payment disputes between millers and farmers (See slide 9) have lowered Indian output prospects in recent months. The Indian Sugar Mills Association (ISMA) reported that India’s sugar mills produced 21.5 mln mtwv of sugar between Oct 1 – Mar 15, nearly 7% lower compared to last year. India’s raw sugar export subsidy of $54/MT will keep white sugar exports uncompetitive. Since the approval of the raw sugar export subsidy in mid-Feb, Indian domestic white sugar prices have climbed 9%--outpacing the recent gains in global prices. This has effectively closed the white sugar export arb, as it has become more profitable for Indian millers to offload their supply into domestic markets. In contrast, raw sugar exports have soared in recent weeks — with India stealing market share from Brazil in certain markets including Iran, Bangladesh and Malaysia — though not enough to reach the 4 mln MT cap. We project full-season 13/14 exports at 2.5 mln mtrv, up more than 100% YoY. Projecting a modest rise in production in 14/15 on trend yields and flat acreage. We model cane area flat YoY, as improving sugar economics and more timely cane payments discourage farmers from further acreage switching. This coupled with slightly higher yields should allow production to rise for the first time in 3 years. Though El Niño is a threat, a normal monsoon season in Maharashtra and Uttar Pradesh would leave production at 24.1 mln mtwv, up 1.6% YoY.
Indian Production Seen Lower in 13/14
White Sugar Export Economics Deteriorating
Mln mtwv
Indian export arb, $/MT 7
35
250
Indian Export arb, PROFITABLE TO $/MT EXPORT
200
30
6
25
5
20
4
50
15
3
-
10
2
5
1
(150)
0
0
(200)
150
00/01
02/03
04/05
06/07
Production (LHS)
08/09
10/11 Exports (RHS)
Source: USDA, Morgan Stanley Commodity Research estimates
12/13
100
(50) (100)
(250) Jan-09
UNPROFITABLE TO EXPORT Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Source: Bloomberg, NYSE-LIFFE, Morgan Stanley Commodity Research estimates
13
MORGAN STANLEY RESEARCH
Sugar Update: Crushed by Rising Inventories April 9, 2014
China: Import Demand To Remain Strong Through 13/14 Chinese import demand for sugar has yet to show signs of slowing. China’s import volumes through the first 5 months of the 13/14 MY rose 95% YoY, despite falling domestic prices. To date, the Chinese government has shown no intention of halting its price support policy for sugar and will continue stockpiling in an effort to keep domestic production margins supported. Improving supply in Thailand and India and falling prices may only prompt China to stockpile more, sending imports up 16.3% YoY (to 4.42 mln MT). 13/14 production seen accelerating despite reduced profit margins for Chinese sugar mills. China’s 13/14 sugar beet production is seen down 15.2% YoY at 1 mln MT due a 19.4% decrease in harvested area, after farmers in the Xinjiang province switched acreage from beets to more profitable crops such as corn. However, increased cane sugar production — expected to rise 7.6% to 13.8 mln MT on record cane plantings and rising yields — should more than offset the decline in beet area. We forecast total sugar production at 14.8 mln MT — the highest since 2007/08. 14/15 production seen declining on normalizing yields. Although we have limited color on Chinese production prospects in 14/15, we currently model beet and cane yields at their 5-yr averages of 4.2 MT/ha and 6.7 MT/ha. Assuming price supports manage to keep cane and beet area remain flat YoY, we see production at 13.1 mln MT, down 11.7% YoY.
China’s YoY Import Growth Remains Resilient Despite Falling Domestic Prices
13/14 Production Highest Since 07/08 on Record Cane Area
China sugar imports, ‘000 MT
Left axis: production, mln MT; right axis: area, ‘000 ha
800
18
2,000
700
16
1,800
14
1,600
600
1,400
12
500
1,200
10
400
1,000
8
800
300
6
200
4
400
100
2
200
600
0
0 Oct
Nov 10/11
Dec
Jan
Feb 11/12
Mar
Apr
May
12/13
Jun
Jul
Aug
13/14
Source: China customs, Bloomberg, Morgan Stanley Commodity Research
Sep
0 00/01
02/03
04/05
Cane Production
06/07
08/09
Beet Production
10/11
12/13
Beet Area
Source: USDA, Morgan Stanley Commodity Research estimates
14/15e Cane Area
14
MORGAN STANLEY RESEARCH
Sugar Update: Crushed by Rising Inventories April 9, 2014
Mexico: Late Harvest Seen Hampering 13/14 Production Prospects 13/14 production is expected to fall YoY as yields normalize. After reaching a record high in 12/13, we project sugar production declining 12% YoY to 6.51 mln mtrv on account of normalizing yields. A dry start to the 13/14 growing season, particularly in the states of Tamaulipas and Veracruz, should bring cane yields down an estimated 13.2% YoY to 8.8 tons/ha—in line with the 5 year average. The Mexican harvest is off to a slow start due to excessive rains and delays in payments to cane growers. As of Mar 23, cumulative sugar production was down 12% YoY at 36 mln mttq. Although production has been catching up lately, it is unlikely to meet the USDA’s forecast of 6.73 mln mtrv. Despite falling production, favorable US prices keeping exports supported. Assuming roughly flat demand YoY (in-line with the 10-yr CAGR), our production estimate should leave exports flat YoY at 1.99 mln mtrv. Mexican imports into the US have thrived MYTD (up 86% YoY between Oct and Jan) in part because US prices have been artificially supported by the USDA, making it the most profitable home for Mexico’s excess sugar supply given current weak global prices. High fructose corn syrup (HFCS) demand to strengthen again 14/15. USDA forecasts Mexican HFCS consumption of 1.49 mln MT in 13/14, down from last year’s 1.57 mln MT figure, as high corn costs have left sugar attractively positioned against the alternative sweetener. However, we expect HFCS demand to pick up again in 14/15, as falling feedstock costs lower HFCS prices relative to sugar.
Mexican Sugar Production Off to Slower Start Cumulative sugar production, mln mttq
US Sugar Imports from Mexico up 86% MYTD vs. 12/13 US sugar imports from Mexico, ‘000 mttq
450
70
400
60
350 50
300
40
250
30
200 150
20
100
10
50
0 1
3
5
7
9
11 13 15 17 19 21 23 25 27 29 31 33 35 10/11
11/12
12/13
13/14
Source: CONADASUCA, Morgan Stanley Commodity Research
0 Oct
Nov
Dec
Jan
5-Yr Range
Feb
Mar 13/14
Apr
May
Jun
12/13
Source: USDA, Morgan Stanley Commodity Research
Jul
Aug
Sep
Average
15
MORGAN STANLEY RESEARCH
Sugar Update: Crushed by Rising Inventories April 9, 2014
United States: Low Domestic Prices Curbing Supply Growth After a record high in 12/13, US 13/14 production is expected to decline modestly. Sugar beet production is seen down 6.8% YoY at 29.8 mln MT on account of lower yields stemming from delayed spring planting and acreage switching away from beets due to slumping sugar prices. Cane production is expected to fall to 29.7 mln MT due to reductions in harvested area and yields in Louisiana and Florida. Total sugar production should come in at 7.91 mln MT, 3% less than 12/13. USDA’s price support policy should be supportive of imports despite the 2nd largest production in 13 years. Under its non-recourse loan rate program, USDA currently guarantees sugar prices at ~20.94 c/lb. While US prices have recently rebounded above that level, our 3Q 13/14 global price forecast of $15.6 c/lb would leave US prices once again below that threshold (assuming the 2-year avg spread between #11 and #16 sugar holds). If the USDA once again buys sugar in 13/14, a widening spread between US and global prices would likely continue to encourage imports from Mexico (see slide 16). Lower domestic prices should discourage US production in 14/15. In 2013, domestic prices declined 9% against the backdrop of higher production in US and Mexico. Sugar farmers saw their profit margins erode and processors have been forced to default on government-backed loans. The USDA’s prospective plantings report showed US sugar beet acreage declining 3.6% YoY to a 6-yr low of 450K ha. This should equate to a 2% decline in production to 7.73 mln MT (assuming average yields), which should increase the call on US imports by nearly 30% to keep S/U flat YoY at 13.5%.
US 13/14 Sugar Production Trending Below 12/13…
…but USDA May Still Need to Purchase Sugar Again in 13/14
US monthly sugar production, mln short tons, raw value
Raw sugar prices, c/lb
1.8
45
1.6
40
1.4
35
1.2
30
1.0
25
0.8
20
0.6
20.69
20.44
20.94
15
0.4
MSe
10
0.2 0.0 Oct
Dec. 10-yr Range
Feb 2013/14
Apr
June 2012/13
Source: USDA, Morgan Stanley Commodity Research.
Aug 10-yr Avg
5 Oct-09
Jun-10
Feb-11
No. 11 (Global)
Oct-11
Jun-12
No. 16 (US)
Feb-13
Oct-13
Jun-14
Est. Min. Price to Forfeit
Source: USDA, Bloomberg, Morgan Stanley Commodity Research estimates
16
MORGAN STANLEY RESEARCH
Sugar Update: Crushed by Rising Inventories April 9, 2014
Global Production Timeline
Local MY Brazil (C/S) MAY To APR Brazil (N/NE) MAY To APR India OCT To SEP China OCT To SEP Thailand DEC To NOV United States OCT To SEP Australia JUL To JUN Russia OCT To SEP
2013/14 2014/15 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May 2013/14: 34.3 mln MT 2014/15: 33.9 mln MT 2015/16 2013/14: 3.6 mln MT 2014/15: 3.6 mln MT 2013/14: 25.4 mln MT 2014/15: 25.8 mln MT 2013/14: 14.8 mln MT 2014/15: 13.1 mln MT 2013/14: 11.3 mln MT 2014/15: 11.9 mln MT 2013/14: 7.9 mln MT 2014/15: 7.7 mln MT 2013/14: 4.2 mln MT 2014/15: 4.2 mln MT 2013/14: 4.8 mln MT 2014/15: 4.7 mln MT
Jun
Jul
Aug
Sep
2015/16
Peak Production
Source: USDA, Morgan Stanley Commodity Research estimates.
17
MORGAN STANLEY RESEARCH
Sugar Update: Crushed by Rising Inventories April 9, 2014
Global Supply/Demand Overview USDA Morgan Stanley Commodity Research Actual Estimates 2007/2008 2008/2009 2009/2010 2010/2011 2011/2012 2012/2013 2013/2014 2014/2015
('000 MTRV) Total Sugar Production World YoY %
Brazil YoY %
EU (27) YoY %
India YoY %
China YoY %
US
163,536
144,014
153,403
161,923
171,931
176,033
174,089
-1%
-12%
7%
6%
6%
2%
-1%
172,783 -1%
31,600
31,850
36,400
39,916
37,628
40,064
39,664
39,284
0%
1%
14%
10%
-6%
6%
-1%
-1%
15,834
14,290
16,897
15,939
18,320
18,020
16,821
17,129
-12%
-10%
18%
-6%
15%
-2%
-7%
2%
28,630
15,950
20,637
26,574
27,820
26,322
25,413
25,810
-7%
-44%
29%
29%
5%
-5%
-3%
2%
15,898
13,317
11,429
11,199
12,341
14,000
14,800
13,069
24%
-16%
-14%
-2%
10%
13%
6%
-12%
7,396
6,833
7,224
7,104
7,697
8,147
7,906
7,727
YoY %
-3%
-8%
6%
-2%
8%
6%
-3%
-2%
Thailand
7,820
7,200
6,930
9,663
10,504
10,284
11,271
11,879
YoY %
Russia
16%
-8%
-4%
39%
9%
-2%
10%
5%
3,200
3,481
3,444
2,996
5,545
5,000
4,772
4,744
YoY %
2%
9%
-1%
-13%
85%
-10%
-5%
-1%
Australia
4,939
4,814
4,700
3,700
3,683
4,250
4,200
4,200
YoY %
-5%
-3%
-2%
-21%
0%
15%
-1%
0%
151,332
154,063
154,860
155,508
158,863
164,625
168,080
170,963
0%
2%
1%
0%
2%
4%
2%
2%
11,400
11,650
11,800
12,000
11,500
11,200
11,356
11,515
Total Use World YoY %
Brazil YoY %
EU (27) YoY %
India YoY %
China YoY %
US
6%
2%
1%
2%
-4%
-3%
1%
1%
16,716
17,036
17,610
18,040
18,200
18,177
18,434
18,746
-22%
2%
3%
2%
1%
0%
1%
2%
22,021
23,500
22,500
23,050
23,993
24,685
25,255
25,759
8%
7%
-4%
2%
4%
3%
2%
2%
14,250
14,500
14,300
14,000
14,200
15,100
16,000
16,186
6%
2%
-1%
-2%
1%
6%
6%
1%
9,711
9,624
10,075
10,379
10,205
10,659
10,932
11,125
YoY %
7%
-1%
5%
3%
-2%
4%
3%
2%
Thailand
2,000
2,000
2,220
2,400
2,510
2,570
2,650
2,726
YoY %
Russia
-1%
0%
11%
8%
5%
2%
3%
3%
5,990
5,500
5,715
5,538
5,715
5,515
5,415
5,415
YoY %
1%
-8%
4%
-3%
3%
-3%
-2%
0%
Australia
1,250
1,246
1,252
1,333
1,156
1,218
1,220
1,222
YoY %
0%
0%
0%
6%
-13%
5%
0%
0%
Surplus/Deficit
World
12,204
-10,049
-1,457
6,415
13,068
11,408
6,009
1,820
Surplus/Defict as % of Use
World
8%
-7%
-1%
4%
8%
7%
4%
1%
Source: USDA, Morgan Stanley Commodity Research estimates.
18
MORGAN STANLEY RESEARCH
Sugar Update: Crushed by Rising Inventories April 9, 2014
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MORGAN STANLEY RESEARCH
Sugar Update: Crushed by Rising Inventories April 9, 2014
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Anexo: Tasación Molino Galindo
Anexo: Tasación Predio Agrícola Roma
Índice de Anexos Confidenciales 1. 2. 3. 4. 5. 6. 7. 8. 9.
Rendimiento histórico TCHM y estimado para los próximos cinco años Impacto de un posible Fenómeno del Niño Ventas de azúcar (Precios y unidad de venta local y exportación) Rendimiento histórico comercial mensual de la caña de azúcar y estimado para los próximos cinco años Toneladas de azúcar rubia producidas mensualmente Detalle de los costos de conversión Detalle del precio de venta de azúcar Rendimiento de melaza para producción de alcohol Deuda financiera y líneas de crédito disponibles (Ex préstamo Coazucar)
Anexo: Rendimiento histórico TCHM y estimado para los próximos 5 años
Ton de caña x Ha ENE FEB MAR ABR MAY JUN JUL AGO SEP OCT NOV DIC ACUM.AÑO
TCH - Toneladas Caña/Ha
2012
144.0 145.0 134.1 135.4 145.0 0.0 167.1 195.0 194.9 188.3 184.8 172.6 162.4
2013
172.3 156.1 144.8 156.6 155.0 165.8 189.5 180.9 175.2 199.2 214.1 203.5 173.2
2014
192.8 168.3 191.6 161.8 176.7 176.7 187.5 194.1
179.5
2014E
2015E
2016E
2017E
2018E
2019E
179.1
174.7
172.6
173.6
173.1
173.4
Anexo: Impactos de un posible fenómeno del niño - Explicar impacto del Fenómeno del Niño (FEN) en la producción de caña de azúcar Afectación por el fenómeno del niño: explicación de cómo influye en la planta de caña de azúcar 3 de los fenómenos meteorológicos que intervienen en el proceso de crecimiento de las plantas: Temperatura La tasa de fotosíntesis depende de la temperatura al igual que muchos procesos bioquímicos que controlar la actividad meristematica de la hoja y los brotes La eficacia del proceso de fotosíntesis de la caña de azúcar depende linealmente de la temperatura en el intervalo del 8C – 34C, las noches frescas y una madrugada que no supere los 14C en invierno y 20C en verano perjudican el proceso de fotosíntesis. La temperatura influye también el crecimiento del tallo Las temperaturas inferiores a 14C – 19C perjudican el crecimiento de las hojas, las noches frescas seguidas de días soleados ralentizan el crecimiento de la planta y el consumo de carbono al tiempo que el proceso de fotosíntesis continua lo que favorece la acumulación de sacarosa, por lo tanto si la temperatura es más alta la tasa de crecimiento aumenta perjudicando la acumulación de sacarosa. Radiación La radiación solar es la fuente de energía más importante para producir la fotosíntesis y es responsable den la desecación del terreno y de las plantas. En caso se presente el fenómeno del niño la afectación del clima reduce la radiación y con ello perjudica el proceso de fotosíntesis reduciendo el contenido de sacarosa en la caña. Precipitaciones (lluvias) Las lluvias, que en nuestro clima solo se presentan en determinados meses del año de diciembre a enero máximo febrero, y en pequeñas cantidades, tendrán un efecto negativo si se produce el fenómeno del niño ya que su incremento nos produciría problemas en la cosecha de los campos, tanto en los caminos que recorren nuestros maquinarias y equipos como en el proceso de cosecha. También este aumento de precipitaciones ocasionarían desborde en los ríos así como en nuestras acequias que riegan nuestros campos por gravedad pudiendo estos inundarse o ser arrasados por estas corrientes, debido a que colmatarían los cauces. La empresa permanentemente trabaja en la defensa ribereña, haciendo limpieza en los cauces que pudiesen colmatarse y también reforzando las riveras para evitar que se desvíen de su curso estos caudales de agua. Todos estos factores se darán en mayor o menor grado dependiendo de la intensidad del fenómeno del niño, otro tema es que debido a que nosotros no tenemos Zafra o sea cultivamos cosechamos y fabricamos azúcar todo el año el impacto es menor que en un país que hace zafra, ya que si se da en el periodo no zafra pierden toda la cosecha.
Anexo: Ventas de Azúcar - Precios y unidad de Venta local y exportacion 2012 Venta Local Volumen Valor Venta Bls 50 Kg S/. /bls
ENE FEB MAR ABR MAY JUN JUL AGO SEP OCT NOV DIC ACUM.AÑO
361,985 99.14 534,133 97.04 496,596 96.86 393,191 96.79 362,133 96.93 101,624 98.21 199,202 96.82 336,073 92.77 299,403 86.42 330,381 82.69 304,813 76.35 393,452 71.21 4,112,986 90.91 (*)01 TM = 20 Bls 50kgs
2013 Exportación Volumen Valor Venta (ton) S/. /ton
0 1 0 0 0 18,795 4,440 0 0 0 10,923 3,920 38,079
0 2,014 0 0 0 1,986 1,986 0 0 0 1,341 1,294 1,730
Venta Local Volumen Valor Venta Bls 50 Kg S/. /bls
275,504 370,870 397,236 386,068 383,112 371,811 387,064 402,973 328,461 466,696 388,791 385,476 4,544,062
68.21 65.15 63.23 62.86 63.25 62.28 61.96 61.55 61.19 62.20 64.77 67.89 63.60
2014 Exportación Volumen Valor Venta (ton) S/. /ton
0 0 0 13,053 0 0 0 13,298 0 0 18,435 23,577 68,363
Venta Local Volumen Valor Venta Bls 50 Kg S/. /bls
993
315,933 301,842 526,995 437,226 368,487 355,590 551,226 537,821
66.50 63.46 62.50 62.72 62.63 65.03 65.96 68.43
1,464 1,194 1,334
3,395,120
64.77
1,752
Exportación Volumen Valor Venta (ton) S/. /ton
14,788
1,192
3,574
1,249
18,362
1,203
Anexo: Rendimiento histórico comercial mensual de la caña de azúcar y estimado para los próximos 5 años
Azúcar / Caña ENE FEB MAR ABR MAY JUN JUL AGO SEP OCT NOV DIC ACUM.AÑO
2012
11.4% 10.4% 11.2% 11.3% 10.7% 10.4% 10.9% 11.2% 11.6% 11.1% 11.4% 11.1%
2013
10.0% 11.0% 9.3% 10.8% 10.1% 10.5% 10.5% 11.4% 11.6% 11.4% 12.1% 10.9%
2014
10.3% 11.2% 10.9% 10.9% 10.4% 9.9% 6.3% 10.2%
10.5%
2015
2016
2017
2018
2019
10.9%
11.0%
11.0%
11.0%
11.0%
Anexo: Toneladas de azúcar rubia producidas mensualmente En TM ENE FEB MAR ABR MAY JUN JUL AGO SEP OCT NOV DIC ACUM.AÑO
2012
21,416 24,496 25,240 27,171 10,920 18,827 28,738 28,667 28,305 27,634 25,176 266,589
2013
17,158 24,927 19,633 28,077 24,903 26,036 0 19,149 31,979 31,597 29,551 30,152 283,162
2014
21,798 27,251 24,954 29,065 29,328
132,397
Anexo: Detalle de los costos de conversión - Brindar Detalle del costo de conversión (insumos directos a la producción, envases y embalajes y embalajes, suministros, mano de obra, mantenimiento, energía eléctrica, energía térmica y costos indirectos de fabricación) AÑO 2012 Elemento de Costos
ene-12
feb-12
mar-12
abr-12
may-12
jun-12
jul-12
ago-12
sep-12
oct-12
nov-12
dic-12
Total
Soles
Soles
Soles
Soles
Soles
Soles
Soles
Soles
Soles
Soles
Soles
Soles
Soles
Insumos directos a la produccion 101,032 Envases y embalajes 88,804 Suministros 1,888 Mano de obra 283,291 Mantenimiento 2,294,776 Energia electrica 885,528 Energia termica 4,326,692 Costos indirectos de fabricacion 1,802,965 Costo de Conversion 9,784,975
133,507 375,075 6,694 285,187 2,308,216 1,189,752 5,251,033 2,368,640 11,918,103
148,550 380,000 6,410 269,210 2,470,979 802,882 4,569,980 2,963,623 11,611,632
152,390 387,181 6,626 296,879 2,470,173 1,004,474 5,405,118 2,852,752 12,575,593
72,289 194,257 3,887 115,790 1,282,578 360,428 1,579,207 1,073,067 4,681,503
0 0 0 0 0 0 0 0 0
131,941 282,755 5,047 251,904 2,056,614 845,235 4,225,724 1,548,900 9,348,121
152,301 431,001 7,673 283,520 1,704,959 737,270 4,765,969 1,906,698 9,989,392
166,957 250,680 4,787 331,961 2,178,603 1,072,465 4,897,932 1,971,402 10,874,786
154,946 378,758 7,445 317,332 2,121,879 1,042,567 4,359,185 1,872,092 10,254,202
150,105 415,863 8,029 299,278 2,455,089 1,235,075 5,760,889 1,991,405 12,315,733
194,241 378,572 6,365 323,125 2,234,540 1,238,689 4,718,898 3,988,713 13,083,143
1,558,258 3,562,946 64,850 3,057,477 23,578,406 10,414,364 49,860,626 24,340,257 116,437,184
AÑO 2013 Elemento de Costos
ene-13
feb-13
mar-13
abr-13
may-13
jun-13
jul-13
ago-13
sep-13
oct-13
nov-13
dic-13
Total
Soles
Soles
Soles
Soles
Soles
Soles
Soles
Soles
Soles
Soles
Soles
Soles
Soles
Insumos directos a la produccion 165,936 Envases y embalajes 249,806 Suministros 3,940 Mano de obra 303,622 Mantenimiento 2,852,284 Energia electrica 837,943 Energia termica 3,588,459 Costos indirectos de fabricacion 1,447,764 Costo de Conversion 9,449,755
199,850 367,124 6,000 316,184 2,154,674 910,850 3,672,468 1,308,826 8,935,977
212,979 293,695 4,968 295,439 2,120,388 1,076,827 3,869,899 1,896,055 9,770,249
174,408 252,973 4,551 312,506 2,621,739 1,154,598 4,368,756 1,348,099 10,237,630
162,196 372,400 6,643 309,267 2,864,713 958,605 3,809,139 2,045,149 10,528,112
145,665 361,525 6,687 318,726 2,513,053 956,201 3,962,244 1,143,618 9,407,719
0 0 0 4,855 2,429 266 0 6,064 13,614
89,105 245,741 4,818 221,321 4,018,839 546,841 4,657,779 1,284,914 11,069,359
161,604 483,638 8,848 328,246 1,120,169 1,232,467 4,461,915 1,593,003 9,389,890
220,511 347,090 6,081 292,797 3,423,444 1,198,092 4,317,464 1,366,565 11,172,044
184,110 188,332 3,390 426,791 3,218,320 1,384,866 4,170,866 1,370,598 10,947,273
171,651 245,176 4,820 519,668 3,375,687 1,214,668 4,874,015 2,739,683 13,145,368
1,888,016 3,407,499 60,747 3,649,423 30,285,740 11,472,224 45,753,002 17,550,338 114,066,990
Anexo: Detalle de Precios de Venta de Azúcar - Detallar la composición y la evolución histórica mensual de la prima cargada al precio internacional (NY 11) para obtener el precio final de venta en el mercado local por cada tipo de cliente COMPARATIVO NY11 VS. PRECIO AZUCAR RUBIA MDO LOCAL AZUCAR RUBIA CASAGRANDE
1Q12
2Q12
3Q12
4Q12
2012
1Q13
2Q13
3Q13
4Q13
2013
1Q14
Vol Mdo Nacional (Ton)
69,636
42,847
41,734
51,432
205,649
52,181
57,050
55,925
62,048
227,203
57,239
Precio x Ton Soles Mdo Nacional
1,950
1,940
1,829
1,528
1,818
1,305
1,256
1,232
1,295
1,272
1,277
Libras x Ton
2,205
2,205
2,205
2,205
2,205
2,205
2,205
2,205
2,205
2,205
2,205
Tipo de cambio
2.679
2.674
2.612
2.574
2.635
2.585
2.721
2.795
2.789
2.722
2.811
Rubia Casa Grande (US$ cents/lb)
33.0
32.9
31.8
26.9
31.2
22.9
21.0
20.0
21.1
21.2
20.6
Precio NY 11 (US$ cents/lb)
23.7
22.2
21.6
20.4
22.0
19.8
18.3
17.3
17.7
18.3
16.4
Var % CasaGrande vs NY 11
39.3%
49.3%
51.9%
28.0%
41.7%
15.5%
23.4%
11.0%
19.8%
16.8%
25.5%
Spread US$ Cent/ Lb Spread US$ / MT
9.3
10.7
10.2
6.5
9.2
3.1
2.6
2.7
3.4
2.9
4.2
205.5
236.1
223.9
143.5
203.7
67.8
57.5
58.8
75.4
64.1
92.2
jul-12
ago-12
sep-12
oct-12
nov-12
dic-12
4,466 1,162,188 260.2
5,093 1,578,461 310.0
4,172 1,230,781 295.0
6,776 1,598,167 235.9
6,610 1,788,298 270.6
6,384 1,704,800 267.0
jul-13
ago-13
sep-13
oct-13
nov-13
dic-13
5,480 1,384,163 252.6
5,580 1,426,778 255.7
4,892 1,222,399 249.9
4,303 1,225,239 284.8
5,633 1,520,633 269.9
Anexo: Rendimiento de Melaza para producción de Alcohol - Rendimiento mensual de la melaza para la produccion de alcohol AÑO 2012 INDICADOR
U/M
Consumo de Melaza TM Alcohol Total Producido L Alcohol / Melaza L/TM
ene-12
feb-12
mar-12
abr-12
4,750 1,108,866 233.4
5,167 1,278,269 247.4
6,230 1,579,577 253.5
7,033 1,758,368 250.0
ene-13
feb-13
mar-13
abr-13
may-13
jun-13
5,204 1,322,037 254.0
5,899 1,679,035 284.6
6,639 1,738,795 261.9
5,657 1,356,333 239.8
6,528 1,722,832 263.9
5,702 1,494,232
may-12
jun-12
3,256 813,989 250.0
Total
59,938 15,601,764 260.3
AÑO 2013 INDICADOR
U/M
Consumo de Melaza TM Alcohol Total Producido L Alcohol / Melaza L/TM
3,810 911,173 239.1
Total
65,327 17,003,649 260.3
Anexo: Deuda Financiera y líneas de crédito disponibles
Cronograma de deuda financiera BANCO: Landesbank Baden- Württemberg Importe financiado 2,114,528 Moneda DOLARES N° cuotas 10 Tasa 2% + libor 6m Fecha inicio 14/05/2012 Exportador BMABraunschweigische Maschinenbauanstalt AG Centrífugas y equipos correspondientes a producción de azúcar N° CUOTA 5 6 7 8 9 10
FECHA 02/02/2015 03/08/2015 01/02/2016 01/08/2016 01/02/2017 01/08/2017 TOTAL
Lineas de Credito En miles de USD BANCO BCP BBVA SCOTIABANK INTERBANK SANTANDER TOTAL
PRINCIPAL 211,453 211,453 211,453 211,453 211,453 211,453
INTERÉS 15,207 10,690 8,552 6,414 4,323 2,126
CUOTA 226,660 222,143 220,005 217,867 215,776 213,579
1,268,717
47,313
1,316,030
Linea Autorizada Linea UtilizadaLinea Disponible 12,000 0 12,000 15,500 0 15,500 10,500 0 10,500 14,050 0 14,050 10,000 0 10,000 62,050 0 62,050
SALDO 1,057,264 845,811 634,358 422,906 211,453 0
