Press release 2q14 empresas aquachile s a

Page 1

EMPRESAS AQUACHILE S.A. RESULTS FOR SECOND QUARTER 2014

August 2014


1.

About Empresas AquaChile S.A.

03

2.

Quarterly Summary

04

3.

Analysis of Results

06

4.

Balance Sheet Analysis

13

5.

Cash Flow Analysis

15

6.

Financial Covenants and Productivity Indicators

16

7.

Relevant Events

17

8.

Outlook

18

9.

Consolidated Balance Sheet

19

10.

Consolidated Income Statement

20

11.

Historical Harvests and Smolts Stocking

21

2


ABOUT EMPRESAS AQUACHILE S.A.

Empresas AquaChile S.A. is a Chilean Company that produces food from aquaculture-farmed species such as Atlantic salmon, Pacific salmon, Sea trout and tilapia. AquaChile has operations in Chile, Costa Rica, Panama and the United States, selling and marketing their products around the world. The company is made up of a group of companies that strategically farm, produce and market food. It gives employment to more than 5,900 people in Chile, the United States, Costa Rica and Panama (as of December 31th, 2013) and it is one of the main producers of Sea trout and Pacific salmon in the world, being the main provider of fresh Tilapia to the United States. AquaChile is the main Salmon and Sea trout producer in Chile with a market share of 12.2% in 2013 in terms of exported net volume (source: Infotrade). The Company has 151 aquaculture water licenses, giving them a solid base for growing and diversifying. The company exports their products to more than 330 customers in more than 30 countries. The company is also an important Tilapia producer in Costa Rica and it is starting to harvest in Panama, being one of the main fresh Tilapia provider in the United States with a 26% market share in 2013 (source: Urner Barry).

CONTACT EMPRESAS AQUACHILE S.A. Investor Relations investor.relations@aquachile.com Tel. (56-65) 2433600 / 550 For more information, visit www.aquachile.com

03


QUARTERLY SUMMARY

EBITDA pre fair value adjustment of US$ +15.0 million during the 2Q14, this is higher than the US$ -11.9 million reported for the same period the previous year. Margin EBITDA of +8.8%, this is higher than the -6.2% margin reported for the same period the previous year. A loss of US$ -5.0 million, this is less than the US$ -27.9 million loss reported during the 2Q13. Ratio of financial leverage of 1.05x dropping from the 1.18x level reported for the 4Q13.

AquaChile reported accumulated sales of US$ 397.5 million on June 30, 2014. This is a 16% increase in comparison to the same period in 2013 (∆+US$ 53 million), mainly due to the increase in the valued sale of the Atlantic salmon (∆+US$ 31 million) and sea trout (∆+US$ 9 million). At operating level the EBITDA pre fair value adjustment during the first semester 2014 (this is before the value adjustment of the fish biomass at fair value) reached US$ 54.2 million, this is higher than the US$ -33.1 million reported during the first semester the previous year. This meant a 13.6% achievement on the margin over the company’s consolidated sales. The company’s earnings for the first semester 2014 was US$ +6.1 million, this is higher than the US$ -33.2 million reported during the same period the previous year. The exporting price scenario for the first semester 2014 in comparison to the same period the previous year was fa-

vorable for all of species, noticeably the observed increase in the sales price for sea trout (∆+52%), Pacific salmon (∆+40%) and Atlantic salmon (∆+22%). The company has achieved normal growth parameters during the first semester 2014, as also in mortality rates and has obtained improvements in feed conversion rates. The increase in the average weight of the harvested fish during the period in comparison to the same period of the previous year has been noticeable. This is due to the sanitary and productivity improvements seen during this period in the industry. It is important to note that part of the sanitary and productive improvements seen during the period has been a decrease of Caligus (sealice) in the environment. This has been driven by the collaborative action of the industry to deal with this parasite, which includes coordinating the treatment applications in wide geographical areas; also the coordinated rotation of the drugs and an improvement on how to apply the treatments.

1 EBITDA Pre FV Adj. (hereinafter, EBITDA): Income from ordinary activities minus Cost of Sales (i.e. Gross Earnings pre Fair value), minus Administration Expenses minus Distribution Costs plus Adjustment from Depreciation and Amortization Expenses. All these figures are obtained directly from the Income Statement and the note 16 (PP&E) from the company Financial Statements.

04


QUARTERLY SUMMARY

The Company’s consolidated sales totalled US$ 171.7 million during the 2Q14, this is an 11% decrease in comparison to the valued sales reported for the 2Q13. It is true that during the second quarter there was a decrease in the physical sales of Atlantic salmon (∆-39%), Pacific salmon (∆-74%) and tilapia (∆-26%), showing a 7% increase in sea trout in comparison to the same period the previous year. This was partially compensated by an increase in the sales price of Pacific salmon (∆+48%), sea trout (∆+30%), Atlantic salmon (∆+15%) and Tilapia (∆+8%) in comparison to the same quarter 2013. The consolidated EBITDA reached US$ +15.0 million during the 2Q14, which can be positively compared to the US$ -11.9 million reported for the same period 2013. This

increase is mainly due to the higher margins observed in all of the species due to an increase in the sales price, together with the improvement in costs of Atlantic salmon and the sea trout. AquaChile reported a US$ -5.0 million loss during the 2Q14, which is positive in comparison to the US$ -27.9 million loss reported during the same period 2013. The Company’s net financial debt saw a total of US$ 243.0 million on June 30, 2014, showing a US$ 33.5 million decrease in comparison to the close of the 4Q13. This decrease is due to the increase in the company’s “Cash and Cash Equivalent" account which reached US$ 44.5 million on June 30, 2014, this is higher than the US$ 17.9 million reported on December 31, 2013.

05


ANALYSIS OF RESULTS

SUMMARY OF MAIN CONSOLIDATED FIGURES figures in thus$

2q14

2q13

∆qoq

acum. 2014

acum. 2013

∆yoy

2013

SALES

171,737

192,532

-11%

397,528

344,095

16%

737,875

EBIT PRE FV ADJ.

7,908

-19,761

-

38,898

-46,927

-

-42,974

15,030

-11,886

-

54,160

-33,125

-

-15,501

8.8%

-6.2%

-

13.6%

-9.6%

-

-2.1%

NET INCOME

-5,045

-27,924

82%

6,101

-33,231

-

-9,454

SALMON AND SEA TROUT SALES - WFE TONS

18,527

31,617

-41%

49,302

60,726

-19%

116,180

0.40

-0.63

-

0.80

-0.77

-

-0.33

4,914

6,627

-26%

10,520

12,701

-17%

23,806

0.11

0.03

274%

-0.03

-0.01

-313%

-0.18

(1)

EBITDA PRE FV ADJ. (2) EBITDA PRE FV ADJ. MARGIN

EBIT / KG WFE SALMON AND SEA TROUT TILAPIA SALES - WFE TONS EBIT / KG WFE TILAPIA

1 EBIT Pre FV Adj. (hereinafter, EBIT): Income from ordinary activities minus Cost of Sales (i.e. Gross Earnings pre Fair value), minus Administration Expenses minus Distribution Costs. All these figures are obtained directly from the company Income Statement. 2 EBITDA Pre FV Adj. (hereinafter, EBITDA): Income from ordinary activities minus Cost of Sales (i.e. Gross Earnings pre Fair value), minus Administration Expenses minus Distribution Costs plus Adjustment from Depreciation and Amortization Expenses. All these figures are obtained directly from the Income Statement and the note 16 (PP&E) from the company Financial Statements. Source: AquaChile

The Sales Revenue for the quarter reached US$ 171.7 million, this is less than the US$ 192.5 million reported during the same period 2013. In fact, Atlantic salmon revenues decreased 30% (∆-US$ 23.9 million), Pacific salmon 62% (∆-US$ 23.6 million) and tilapia 20% (∆US$ 3.9 million). However, sea trout revenues increased 39% (∆+US$ 11.6 million). The sales for Pacific salmon decreased in comparison to the same period the previous

year due to the sales strategy of the 2012/2013 season, where the company planned to decrease the sales speed of this mentioned season with the idea of achieving better incomes for this species, selling a big part (approximately 70%) during the first semester 2013. The decrease in the sales of Atlantic salmon in comparison to the same period of previous years is mainly because of the seasonality of harvesting the species during the first months of 2014.

06


ANALYSIS OF RESULTS

QUARTERLY SALES TREND (USD MILLIONS)

226 193 166

158

172

152

136 103

97

202

191

100

96 56

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14

QUARTERLY CONSOLIDATED SALES ANALYSIS (PRICE AND VOLUME EFFECT) (USD MILLIONS) Sales 2Q13

193

Atlantic Salmon

Sea Trout

Pacific Salmon

Tilapia

Fish feed

Other Sales incomes 2Q14

18

2

9

3

20

172

1 -36

-42

∆ Price

-5

-1

∆ Volume

07


ANALYSIS OF RESULTS

QUARTERLY EBITDA TREND (USD MILLION) 39 33

33

25

19 19

17

15

12 0.3 -2 -12

-12 -18

-21

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14

QUARTERLY NET INCOME TREND (USD MILLION) 37 26

10

11

10 2 -2

-2

-5

-5

-10 -17

-17 -28

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13

2Q13 3Q13 4Q13 1Q14 2Q14

08


ANALYSIS OF RESULTS

The consolidated EBITDA pre Fair Value adjustments2 (*) reached US$ 15.0 million during the second quarter 2014, which is a positive comparison to the US$ -11.9 million of the same period the previous year. The reason for this observed improvement is the improved observed margins in all of the farmed species due to an increase in the sales price together with the improvement of the costs in Atlantic salmon and sea trout. That is why the EBITDA margin (EBITDA over the revenues) reported during the 2Q14 is +8.8%, in comparison to the 6.2% reported during the same period 2013. The company recognizes a US$ -12.5 million loss during the second quarter 2014 for the “Net Effect of valuing the biomass at fair value�, this is less than the US$ -10.8 mil-

lion loss reported during the 2Q13. The reasons for this are mainly: i) recognition of a higher cost due to valuing at fair value during the 2Q14 of US$ -13.3 million, this is less than the higher cost of US$ -3.6 million reported during the same period of the previous year, mainly because of the positive difference presented between the prices that the biological assets of the Atlantic salmon and sea trout were valued at; ii) to the record of a provision for a lower value of the finished product of US$ -1.8 million less than the US$ -0.3 million provision reported for the same period the previous year. All of the above was partially compensated by the recognition of the value adjustment of the fish biomass being reared of US$ +2.5 million, this is higher than the US$ -6.9 million reported during the same period the previous year.

2 (*): In order to measure financial performance under the IFRS, AquaChile used the EBIT pre Fair Value adjustments parameters (before adjusting the revalue of the fish biomass at fair value). The fair value adjustments of the fish biomass come from a regulation under the IFRS to value the biomass at a fair value. Changes in the price and composition of the biomass during the period can have an impact on its value. AquaChile reported its EBIT before the fair value adjustments to show the performance of its operations during the period. It is important to emphasize that the fish biomass that is being reared and is now at a commercial weight is valued at fair value in accordance to the IFRS and for the effect, AquaChile considers the market price. The market price is obtained for the sales most recently made by the company for the previous month and/or conservatively the price that was observed in the market that could be applied to future sales. Furthermore, AquaChile considers the most basic product obtained in the processing plants for these estimates, that is to say, the gutted fish with head on HON (Head On) for Atlantic salmon, and gutted fish without head HG (Headed and Gutted) for Sea trout and Pacific salmon or Coho, without taking into consideration the prices of a mix of products that have a higher adder value. It is important to point out that among the fish species that it farms and commercializes the company has Pacific salmon, which is a highly seasonal species. For this reason, it normally stocks the farm sites between the months of November and March of each year and harvests between the months of October and February when the fish reach the optimal commercial weights. However, many times the fish that are being reared reach an average weight that is higher than 2.5 kg WFE at the end of December or the 4th quarter of each year, and in accordance to the company’s policies, are classified to be valued at fair value, generating an effect on the results due to the natural growth of the biomass. For weights that are too low to be considered fair value, their accumulated cost is considered at the closing date. However, given certain adverse conditions that might affect the salmon market and/or the sanitary conditions of the fish, the Company carries out an impairment test on its biomass that is being reared projected forward to harvest and whose net accumulated effect is presented in the results.

09


ANALYSIS OF RESULTS

ANALYSIS OF PHYSICAL SALES, VALUED, AND MARGIN BY SEGMENT 2q14

2q13

∆qoq

acum. 2014

acum. 2013

∆yoy

2013

9,127

14,924

-39%

22,259

21,145

5%

51,293

56,954

80,890

-30%

140,355

109,036

6.24

5.42

15%

6.31

5.16

22%

5.61

MUS$

-1,185

-11,629

90%

15,582

-18,758

-

-18,108

US$ / KG WFE

-0.13

-0.78

83%

0.70

-0.89

-

-0.35

TON WFE

6,734

6,308

7%

12,995

17,514

-26%

29,716

MUS$

figures in thus$

ATLANTIC SALMON SALES VOLUME SALES AVERAGE PRICE EBIT EBIT / KG WFE

TON WFE MUS$ US$ / KG WFE

29% 287,838

SEA TROUT SALES VOLUME SALES AVERAGE PRICE EBIT EBIT / KG WFE

41,645

30,062

39%

82,419

73,074

13%

142,970

US$ / KG WFE

6.18

4.77

30%

6.34

4.17

52%

4.81

MUS$

4,941

-10,665

-

14,148

-27,628

US$ / KG WFE

0.73

-1.69

-

1.09

-1.58

-

-0.97

TON WFE

2,666

10,384

-74%

14,048

22,067

-36%

35,171

MUS$

134,294

- -28,838

PACIFIC SALMON SALES VOLUME SALES AVERAGE PRICE EBIT EBIT / KG WFE

14,384

37,970

-62%

67,584

75,927

-11%

US$ / KG WFE

5.40

3.66

48%

4.81

3.44

40%

3.82

MUS$

3,613

2,338

55%

9,469

-453

-

8,259

US$ / KG WFE

1.36

0.23

502%

0.67

-0.02

-

0.23

TON WFE

4,914

6,627

-26%

10,520

12,701

-17%

23,806

MUS$

68,508

TILAPIA SALES VOLUME SALES AVERAGE PRICE EBIT EBIT / KG WFE

15,489

19,430

-20%

32,317

36,995

-13%

US$ / KG WFE

3.15

2.93

8%

3.07

2.91

5%

2.88

MUS$

540

195

178%

-300

-88 -242%

-4,288

US$ / KG WFE

0.11

0.03

274%

-0.03

-0.01

-39%

59,822

73,427

-313%

-0.18

The Atlantic Salmon business had a 30% decrease (∆-US$ 23.9 million) in its income during the 2Q14 in comparison to the same period 2013, due to a 39% decrease in the sales volume (∆-5,797 WFE tons), which could not be compensated by the 15% increase in the sales price. On its part the accumulated EBIT Pre FV Adj. presented a US$ -1.2 million loss which is a positive comparison to the US$ -11.6 million reported during the same period 2013. At unit level, the accumulated EBIT Pre FV Adj. / Kg WFE reached US$ -0.13 / Kg WFE (in comparison to the US$ -0.78 / Kg WFE for the same time the previous year). The improvement observed in margins is because of an increase in the price as well as a decrease in the sales cost. However it is necessary to note that during this period the James 1 farm site was harvested. This farm site suffered a big loss in the biomass due to a very important high tide during May 2013. Furthermore, the biomass that has been harvested has had a poorer productive performance in comparison to the rest of the fish biomass of the company, causing a negative effect on the cost of the raw material sold during the quarter. The Sea Trout business saw a 39% (∆+US$ 11.6 million) increase during the 2Q14 in comparison to the same period 2013, due to a 7% increase (∆+426 WFE tons) in the sales volume and a 30% increase in the sales price. On its part, the accumulated EBIT Pre FV Adj. presented a US$ +4.9 million profit which is a positive comparison to the US$ -10.7 million reported for the same period 2013. At unit level, the accumulated EBIT Pre FV Adj. / Kg WFE reached US$ +0.73 / Kg WFE (in comparison to the US$ 1.69 / Kg WFE the same time last year). The observed increase in the margins is due to the increase in the price and also because of the decrease in the sales cost.

The Pacific or Coho Salmon business saw a 62% decrease (∆-US$ 23.6 million) during the 2Q14 in comparison to the same period 2013, due to a ∆74% (∆- 7,718 WFE tons) decrease in the sales volume, which was slightly compensated by the 48% increase in the sales price. On its part, the accumulated EBIT Pre FV Adj. presented a US$ +3.6 million profit, which is a positive comparison to the US$ +2.3 million reported for the same period 2013. At unit level, the accumulated EBIT Pre FV Adj. / Kg WFE reached US$ 1.36 / Kg WFE (in comparison to the US$ +0.23 / Kg WFE the same period the previous year). The reason why margins increased is because the sales price increased, which was slightly compensated by the increase in the cost of the raw material for the species due to specific increase in mortality caused by SRS in some of the farm sites during the 2013/2014 season.

The Tilapia business saw a 20% (∆-US$ 3.9 million) decrease in its income during the 2Q14 in comparison to the same period 2013, due to a 26% decrease (∆- 1,793 WFE tons) in the sales volume which was slightly compensated by a 8% increase in the sales price. The accumulated EBIT Pre FV Adj. showed a US$ +0.5 million profit which is a positive comparison to the US$ +0.2 million reported during the same period 2013. At unit level the accumulated EBIT Pre FV Adj. / Kg WFE reached US$ 0.11 / Kg WFE (in comparison to the US$ 0.03 / Kg WFE the same time the previous year). An increase in the margins is due to the increase in the sales price.

TOTAL SALES VOLUME SALES AVERAGE PRICE EBIT EBIT / KG WFE Source: AquaChile

TON WFE

23,441

38,244

MUS$

128,471

168,352

US$ / KG WFE

5.48

4.40

24%

MUS$

7,908

-19,761

-

US$ / KG WFE

0.34

-0.52

-

-24% 322,676 295,032 5.39

4.02

38,898 -46,927 0.65

-0.64

-19% 139,986 9% 633,610 34%

4.53

- -42,974 -

-0.31

10


ANALYSIS OF RESULTS

CONSOLIDATED INCOME STATEMENT figures in thus$

2q14

2q13

∆qoq

acum. 2014

acum. 2013

∆yoy

2013

SALES

171,737

192,532

-11%

397,528

344,095

16%

737,875

OPERATIONAL COST

-147,646

-195,922

-25%

-326,285

-360,870

-10%

-720,853

OPERATIONAL MARGIN

24,091

-3,389

-

71,243

-16,775

-

17,022

OTHER COST AND OPERATING EXPENSES (2)

-9,061

-8,497

7%

-17,083

-16,350

4%

-32,523

EBITDA PRE FV ADJ.

15,030

-11,886

-

54,160

-33,125

-

-15,501

DEPRECIATION & AMORTIZATION

-7,122

-7,875

-10%

-15,262

-13,802

11%

-27,473

EBIT PRE FV ADJ.

7,908

-19,761

-

38,898

-46,927

-

-42,974

-12,486

-10,810

-16%

-28,058

14,731

-

47,693

EBIT POST FV ADJ.

-4,578

-30,571

85%

10,840

-32,196

-

4,718

FINANCIAL EXPENSES

-2,259

-2,324

-3%

-4,587

-4,388

5%

-9,269

(1)

NET REVENUES FROM BIOLOGICAL ASSETS (3)

FINANCIAL INCOME

195

121

62%

329

331

-1%

589

OTHER NON OPERATING ITEMS (4)

-86

-4,832

98%

1,145

-5,057

-

-5,998

1,684

9,683

-83%

-1,626

8,081

-

505

-5,045

-27,924

82%

6,101

-33,231

-

-9,454

INCOME TAXES NET INCOME

1 “Cost of sales” deducted “Adjustment from depreciation and amortization expenses” 2 “Distribution costs” plus “Administration expenses” 3 “Fair Value of biological assets harvested and sold” plus “Fair Value of biological assets for the year” (See Note 10 to the Financial Statements. Biological Assets) 4 “Other income, by function” plus “Other expenses, by function” plus “Exchange rate differences” plus “Results from adjustment units” Note: All the figures are obtained directly from the Income Statement and the note 16 (PP&E) from the company Financial Statements. Source: AquaChile

11


ANALYSIS OF RESULTS

The Operating Costs saw a total of US$ -147.6 million in the quarter, 25% less than what was achieved for the 2Q13, this is mainly due to the decrease in the sales volume during the quarter as well as the improvement of the sales costs for Atlantic salmon and sea trout. Furthermore, if one compares the operating cost (measured as a percentage over the sales) this achieved 86% of the revenues, 15.8 percentage points under the reported percentage for the 2Q13.

NET EFFECT OF THE FAIR VALUE ADJUSTMENT OF THE BIOMASS Fair Value of the biological assets of the year: The natural growth effect of the fish biomass being reared expressed by its reasonable value at the close of each period (this is the sales prices minus the estimated costs at the point of sale), is recognized in accordance to the assessment done at each farm site and it is based on the existing fish biomass at the close of each month. The details include the total number of fish being reared, their estimated average weight and the cost of the fish biomass. The value is estimated in the calculation according to the average weight the biomass has, multiplied by the value per kilogram seen at market price. The market price is obtained from the international price index or else from the most recent sales done by the company. The higher or lower resulting value is reported in the Income Statement, under the concept “Fair Value of the biological assets of the year”. This concept saw a US$ +0.8 million profit during the 2Q14, which is a positive comparison to the US$ -7.2 million loss reported for the 2Q13. This concept can be broken down in the following manner: i) US$ +2.6 million (US$ -6.9 million reported for the 2Q13) corresponds to “Value adjustment for the fish

biomass being reared”; and ii) US$ -1.8 million (US$ -0.3 million for the 2Q13) correspond to a provision that was reported at net value of the finished products. The higher cost of the harvested and sold fish from this revaluation is reported in the Income statement under the concept “Fair Value of the harvested and sold biological assets” which saw a US$ -13.3 million loss for the 2Q14 (US$ -3.6 million for the 2Q13). The net value of both revaluation effects are expressed in the line of “Net effect of the fair value adjustment of the biomass” which reached US$ -12.5 million for the 2Q14. This is lower than the US$ -10.8 million reported for the 2Q13. (To see more details see Note 10 of the Financial Statements: Biological Assets) The Other Operating Costs and Expenses showed a 7% increase in comparison to the same period of the previous year. In fact, Distribution Costs presented a 11,8% increase due to higher trading activities and sales from the company, while the Administrating Expenses did not show any significant variation (∆+0,1%). The Non-operating results presented a US$ -2.2 million loss for the quarter, a positive comparison to the US$ -7.0 million loss for the same period the previous year. The difference can be explained mainly to the US$ -6.0 million reported for the 2Q13 due to the high tides that occurred at an Atlantic salmon farm site in May 2013. Expense for Income Tax presented a US$ 1.7 million provision in comparison to the US$ 9.7 million the same period the previous year. The company presented a US$ -5.0 million loss for the 2Q14 which is a positive comparison to the US$ -27.9 million loss reported for the same period 2013.

12


BALANCE SHEET ANALYSIS

CONSOLIDATED BALANCE SHEET 2013 figures in thus$ CURRENT ASSETS

2014

1q13

2q13

3q13

4q13

1q14

2q14

486,530

440,131

420,735

475,711

496,337

468,978

∆2q14 o 4q13

-1.4%

NON CURRENT ASSETS

396,059

409,874

410,542

423,345

410,387

413,430

-2.3%

TOTAL ASSETS

882,589

850,005

831,277

899,056

906,724

882,408

-1.9%

CURRENT LIABILITIES

200,549

214,043

195,261

227,429

224,698

309,574

36.1%

NON CURRENT LIABILITIES

290,840

272,680

274,664

268,149

267,681

163,534

-39.0%

TOTAL LIABILITIES

491,389

486,723

469,925

495,578

492,379

473,108

-4.5%

EQUITY

382,443

354,309

352,709

394,173

405,205

400,113

1.5%

8,757

8,973

8,643

9,305

9,140

9,187

-1.3%

882,589

850,005

831,277

899,056

906,724

882,408

-1.9%

MINORITY INTEREST

TOTAL EQUITY AND LIABILITIES Source: AquaChile

Current Assets presented a 1.4% decrease (∆-US$ 6.7 million) in comparison to the observed numbers of the 4Q13. This is mainly explained by: i) a US$ -36.1 million decrease in the “Trade and other receivable accounts, bank accounts” mainly associated with the sale of the 2013/2014 season of Pacific salmon and to the recovery of generated returns; ii) a US$ -7.5 million decrease in the “Current and Stocked Biological Assets” mainly associated to the reverse of the fair value of the fish biomass in water due to the harvests that were carried out during the first semester 2014 that were valued on December 31, 2013; and iii) a US$ -3.9 million decrease in the “Assets of the Current Taxes” account. This was partially compensated by a US$ 26.5 million increase in

the “Cash and Cash Flow” account and to a US$ +12.2 million increase in the “Accounts receivable to the current related companies”. Non-current Assets presented a 2.3% decrease (∆-US$ 9.9 million) in comparison to the observed numbers of the 4Q13. This is mainly explained by: i) a US$ -5.8 million decrease in “Properties, plants and equipment” which includes US$ 0.9 million related to the assets that were damaged in the fire that occurred on April 1, 2014 which affected the cold storage and storehouses of the Cardonal processing plant; ii) a US$ -2.5 million decrease in the “Non-current biological assets”; and iii) a US$ -1.8 million decrease in the “Assets of the Deferred Taxes”.

13


BALANCE SHEET ANALYSIS

The Current Liability presented a 36.1% increase (∆+US$ 82.1 million) in comparison to the observed numbers of the 4Q13. This is explained by: i) a US$ +97.0 million increase in the “Other current financial liabilities” account associated to reclassifying the US$ 103.9 million from a long to short term, net capital payment and the interests carried out during the first semester 2014. This is partially compensated by: i) the US$ -7.0 million decrease in the “Trade payables and other accounts payable”; ii) the US$ -2.3 million decrease in the “Accounts receivable to current related companies”; and iii) the US$ -4.1 million decrease in the “Other non-financial current liabilities” account.

The Non-current Liability presented a 39.0% decrease (∆-US$ 104.6 million) in comparison to the numbers observed for the 4Q13. This is explained by the reclassifying of the debt amortizations of the next 12 months from long term to short term. Total Equity (including the non-controlling interests) of the company, presented a US$ 5.8 million increase in comparison to December 2013, which is mainly explained by the US$ +6.1 million profit reported during the first semester 2014.

AQUACHILE FINANCIAL DEBT 2013

2014

figures in thus$

1q13

2q13

3q13

4q13

1q14

2q14

∆2q14 o 4q13

(I) OTHERS FINANTIAL LIABITIES CURRENT

11,259

25,253

31,409

31,579

34,251

128,546

307.1%

(II) OTHERS FINANTIAL LIABITIES NON CURRENT

281,356

266,039

266,446

262,894

262,812

158,949

-39.5%

TOTAL INTEREST BEARING DEBT (I) + (II)

292,615

291,293

297,854

294,473

297,063

287,495

-2.4%

37,185

11,201

14,026

17,935

49,697

44,451

147.8%

255,430

280,091

283,828

276,537

247,366

243,044

-12.1%

CASH AND CASH EQUIVALENTS NET INTEREST BEARING DEBT Source: AquaChile

Furthermore, AquaChile’s net financial debt reached US$ 243.0 million, showing a US$ 33.5 million decrease in comparison to the close of the 4Q13. The reason for this decrease was the increase in the company’s Cash and Cash Equivalent which reached US$ 44.5 million on June 30, 2014, and this is higher than the US$ 17.9 million reported on December 31, 2013. This increase is associated to the favorable investment flow in fixed assets

and requirements of the working capital. It is interesting to note that the Pacific salmon biomass, which is a seasonal species that is stocked between the months of November and March each year and harvested between the months of October and February, generally reach their biomass peak during the months of September and October therefore increasing the working capital investment until the month when the harvesting begins. 14


CASH FLOW ANALYSIS

CONSOLIDATED CASH FLOW

figures in thus$

acum. 2014

2013

acum. 13

NET CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES

47,845

24,241

-3,907

NET CASH FLOWS FROM (USED IN) INVESTMENT ACTIVITIES

-10,276

-38,264

-23,348

NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES

-10,579

19,895

26,140

NET INCREASE (DECREASE) OF CASH AND CASH EQUIVALENTS

26,516

5,013

-1,721

CASH AND CASH EQUIVALENT AT THE START OF THE PERIOD

17,935

12,922

12,922

CASH AND CASH EQUIVALENT AT THE END OF THE PERIOD

44,451

17,935

11,201

Source: AquaChile

The behavior of the consolidated Cash Flow main components on June 30, 2014 in comparison to June 30, 2013 is the following: The company presented a total net cash flow of US$ +26.5 million on June 30, 2014. At the same time the previous year there was a US$ -1.7 million cash flow reported. The operating activities on June 30, 2014 generated a US$ +47.8 million cash flow, this is higher than the US$ -3.9 million reported for the same period 2013. This increase is

associated to the favorable scenario of the growth rate in the company’s production. The investment activity meant an expenditure of US$ -10.3 million on June 30, 2014. At the same period the previous year the expenditure was US$ -23.3 million. The financing activities generated a US$ -10.6 million flow on June 30, 2014, this is less than the US$ +26.1 million generated for the same period 2013

15


FINANCIAL COVENANTS AND PRODUCTIVITY INDICATORS

FINANCIAL COVENANTS The company’s financial liabilities contracts consider financial obligations (covenants) calculated over the Consolidated Financial Statements of Empresas AquaChile S.A. on December 31, 2011 and on the 31st of March, 30th of June, 30th of September and 31st of December of the following years in reference to keeping the maximum leverage (net financial leverage) at a minimum coverage level of the net financial expenses and a maximum net-debtto-EBITDA ratio.

Nevertheless, and due to the low price scenario that the salmon industry presented during 2012 and the beginning of 2013, the company agreed with the Creditor banks to suspend the measure of those covenants which include EBITDA in its calculation until June 2014 inclusive.

NET LEVERAGE (1)

2q14

2013

covenant

status as of 03.31.2014

1.05

1.18

< or = 1.10x

ACCOMPLISH

1 (Total current liability + Total non-current liability – Cash flow and cash equivalent) / (Total Equity) Source: AquaChile

PRODUCTIVITY INDICATORS figures in thus$ SALMON AND SEA TROUT HARVEST HARVESTED FISH FARMS OR FISH FARMS THAT ARE BEING HARVESTED

TONS WFE #

SALMON AND SEA TROUT HARVEST / HARVESTED FISH FARMS OR FISH FARMS THAT ARE BEING HARVESTED TONS WFE USED FISH FARMS* SALMON AND SEA TROUT HARVEST / USED FISH FARMS*

# TONS WFE

2q14

2q13 acum. 2014

2013

15,892

21,827

52,807

13.0

16.0

26.0

42.0

1,222

1,364

2,031

2,435

102,252

41

46

41

40

388

475

1,288

2,556

FARMING DENSITY** ATLANTIC SALMON

KG / M3

6.50

6.00

6.50

8.38

PACIFIC SALMON

KG / M3

2.90

2.80

2.90

9.68

SEA TROUT

KG / M3

4.30

4.30

4.30

5.88

ATLANTIC SALMON

%

87%

79%

88%

83%

PACIFIC SALMON

%

-

-

86%

86%

SEA TROUT

%

89%

77%

87%

76%

SURVIVAL CLOSED GROUP***

* Corresponds to fish farms that were in use at the end of the analyzed period. ** Farming density for sea licenses with farming at sea. *** Survival rate of the farmed fish groups closed. Source: AquaChile

The company presents a Salmon and Sea Trout harvest (in tons WFE) / harvested farm sites or in harvest during the period June 30, 2014 of 2,031 tons WFE. The farming densities on June 30, 2014 from the on-growing aquaculture sea licenses per species are the following: i) Atlantic Salmon: 6.5 Kg / m³ ; ii) Pacific Salmon: 2.9 Kg / m³; and iii) Sea Trout: 4.3 Kg / m³. Furthermore, survival rates observed in the groups that closed on June 30, 2014 were the following: i) Atlantic Salmon: 88%; ii) Pacific Salmon: 86%; and iii) Sea Trout: 87%. 16


RELEVANT EVENTS

RELEVANT EVENTS

On March 11, 2014 the Superintendency of Securities and Insurance was informed of the changes in Administration: the company’s Board of Directors who met in an extraordinary meeting were informed of and agreed to accept the voluntary resignation presented by Mr. Alfonso Márquez de la Plata Cortés, who was the General Manager of the company, based on personal reasons. The Board agreed to put it on record the profound gratitude from each member of the Board to Mr. Alfonso Márquez de la Plata Cortés for his valuable work carried out for more than 10 years as an executive in the Empresas AquaChile S.A.. Due to this resignation the Board of Directors agreed to designate Mr. Torben Petersen as General Manager of the company starting from April 1, 2014. Mr. Torben Petersen has a broad and well-known trajectory and experience in the salmon industry and has been linked at the same time with the company through the Salmones Chaicas S.A. project, an affiliate of the Company. On April 2, 2014 a basic fact was sent to inform regarding the Fire Accident that occurred in the facilities of the Car-

donal Processing Plant, located in Puerto Montt. There are fire insurance and contents and damage coverage for the contracted suspension. On April 24, 2014 there was an Ordinary Shareholders’ Meeting where they adopted the following agreements: the Annual Report, Balance, Financial Statements and report of the External Auditors Company, all of these in reference to the year completed on December 31, 2013; the remuneration for the members of the Board of Directors was fixed for 2014; the Board of Directors’ expense account was approved for 2013; the remuneration of the members of the Board Committee was fixed as also the budget for the Directors Committee for 2014; the PricewaterhouseCoopers firm was designated as the external independent auditors for reviewing the accounting, inventory, balance and the financial statements of 2014; and the El Mostrador newspaper was designated for carrying out all of the publications of the company.

17


OUTLOOK

GROWTH AND PROJECTED HARVEST VOLUME FOR THE 3Q14 - A 5% increase in total harvests in comparison to the same period the previous year. - A 12% increase in Salmon harvests in comparison to the same period the previous year. - A 19% decrease in Tilapia harvests in comparison to the same period the previous year. The harvesting plans for the third quarter 2014 projects 23,541 WFE tons of Salmon and Sea Trout, and 5,249 WFE tons of Tilapia.

HISTORICAL AND PROJECTED HARVESTS 2013

2014

1q13

2q13

3q13

4q13

2013

1q14

2q14

3q14

∆qoq

wfe tons

Real

Real

Real

Real

Real

Real

Real

Proj.

3q14E/3q13

ATLANTIC SALMON

7,527

16,529

15,249

13,814

53,119

14,720

10,108

18,372

20%

TROUT

11,876

5,298

5,780

5,186

28,139

11,073

5,784

5,169

-11%

PACIFIC SALMON

9,407

0

12

11,575

20,994

11,122

0

0

-100%

28,810

21,827

21,041

30,574

102,252

36,915

15,892

23,541

12%

6,074

6,627

6,485

4,620

23,806

5,633

4,853

5,249

-19%

34,884

28,454

27,525

35,195

126,058

42,548

20,745

28,790

5%

TOTAL SALMONIDS TILAPIA COSTA RICA & PANAMA TOTAL SALMONIDS AND TILAPIA

Source: AquaChile

AquaChile does not have the policy to make public their projections of their results or of the variable that could influence them in a significant way. However, we expect the international exporting prices of Salmon and Sea trout to maintain or continue with their upwards

trajectory, considering that the Chilean industry has moderated the fish stocking, the Norwegian industry is at its limits in production and so the salmon supply in the short and medium term will grow in line with the growth of demand, which continues to show itself to be robust in all of the markets where the company participates. 18


CONSOLIDATED BALANCE SHEET

CONSOLIDATED BALANCE SHEET 2012 figures in thus$ CURRENT ASSETS CASH AND CASH EQUIVALENTS OTHER FINANCIAL ASSETS - CURRENT OTHER NON FINANCIAL ASSETS - CURRENT ACCOUNTS RECEIVABLES - CURRENT ACCOUNTS RECEIVABLESWITH RELATED COMPANIES - CURRENT

2013

2014

1q12

2q12

3q12

4q12

1q13

2q13

3q13

4q13

1q14

2q14

445,298

410,090

470,823

434,232

486,530

440,131

420,735

475,711

496,337

468,978

-1%

104,305

64,066

62,408

12,922

37,185

11,201

14,026

17,935

49,697

44,451

148% -101%

∆ 2q14 o 4q13

999

516

199

1,165

0

0

0

0

0

0

2,652

4,666

4,456

4,428

4,459

2,867

2,455

1,263

2,548

3,242

157%

104,811

77,361

92,698

85,338

82,551

95,977

79,577

109,409

117,802

73,314

-33% 140%

5,823

6,331

7,913

8,951

8,018

8,697

6,925

8,739

8,668

20,974

221,382

256,499

301,527

314,577

347,044

316,223

311,728

332,538

311,850

325,045

-2%

TAX ASSETS - CURRENT

5,325

651

1,622

6,851

7,273

5,166

6,024

5,827

5,772

1,952

-67%

NON CURRENT ASSETS

382,420

402,711

442,510

397,594

396,059

409,874

410,542

423,345

410,387

413,430

-2%

10,694

10,440

10,289

11,378

11,378

11,378

11,378

11,378

11,378

11,378

0%

1,261

1,229

1,256

1,190

1,117

1,052

1,071

1,013

933

857

-15%

BIOLOGICAL ASSETS - CURRENT - INVENTORY

OTHER FINANCIAL ASSETS - NON CURRENT OTHER NON FINANCIAL ASSETS - NON CURRENT DOCUMENTS RECEIVABLES - NON CURRENT ACCOUNTS RECEIVABLES WITH RELATED COMPANIES - NON CURRENT INVESTMENTS USING PARTICIPATION METHOD

150

150

150

150

150

150

150

150

150

150

0%

1,580

1,580

1,794

1,883

1,972

2,018

2,105

2,222

2,380

2,670

20%

4,179

4,938

4,187

3,595

3,482

3,727

3,737

1,413

1,339

1,403

-1%

INTANGIBLE ASSETS

38,250

37,052

37,167

38,962

37,479

37,652

37,712

40,728

40,707

40,676

0%

GOODWILL

51,448

51,448

53,247

54,989

59,349

59,423

59,314

54,989

54,989

54,989

0%

PROPERTIES, PLANTS & EQUIPMENTS

173,749

186,115

200,277

200,229

201,630

204,053

202,376

234,017

230,203

228,224

-2%

BIOLOGICAL ASSETS - NON CURRENT

27,192

26,789

27,533

27,174

23,395

27,062

28,409

26,251

20,515

23,715

-10%

ASSETS BY DEFERRED TAX

73,917

82,970

106,610

58,044

56,107

63,359

64,290

51,184

47,793

49,368

-4%

TOTAL ASSETS

827,718

812,801

913,333

831,826

882,589

850,005

831,277

899,056

906,724

882,408

-2%

CURRENT LIABILITIES

146,755

125,350

175,516

176,554

200,549

214,043

195,261

227,429

224,698

309,574

36%

13,197

11,799

12,820

9,111

11,259

25,253

31,409

31,579

34,251

128,546

307%

OTHER FINANCIAL LIABILITIES, CURRENT

122,178

104,776

150,259

154,237

172,493

159,021

134,733

167,311

164,011

160,296

-4%

ACCOUNTS PAYABLES WITH RELATED COMPANIES - CURRENT

ACCOUNTS PAYABLE - CURRENT

3,190

6,169

9,106

10,437

13,943

25,551

23,714

20,340

19,605

18,004

-11%

LIABILITIES FOR CURRENT TAXES

5,536

684

1,006

314

189

11

0

1,896

1,964

23

-99%

373

387

473

226

469

518

592

249

700

721

190%

2,281

1,535

1,852

2,229

2,196

3,689

4,813

6,054

4,167

1,984

-67%

NON CURRENT LIABILITIES

228,153

252,356

312,720

258,739

290,840

272,680

274,664

268,149

267,681

163,534

-39%

OTHER FINANCIAL LIABILITIES, NON CURRENT

185,469

198,773

251,882

251,705

281,356

266,039

266,446

262,894

262,812

158,949

-40%

OTHER ACCOUNTS PAYABLE - NON CURRENT

2,879

2,779

1,034

941

1,151

1,020

1,018

1,267

1,125

1,048

-17%

0

0

0

0

0

0

0

0

0

0

-

39,805

50,804

59,804

6,093

8,332

5,621

7,200

3,988

3,744

3,537

-11%

TOTAL LIABILITIES

374,908

377,706

488,236

435,293

491,389

486,723

469,925

495,578

492,379

473,108

-5%

EQUITY

431,228

414,012

404,099

387,654

382,443

354,309

352,709

394,173

405,205

400,113

2%

21,582

21,083

20,998

8,879

8,757

8,973

8,643

9,305

9,140

9,187

-1%

827,718

812,801

913,333

831,826

882,589

850,005

831,277

899,056

906,724

882,408

-2%

PROVISIONS FOR EMPLOEYEE BENEFITS - CURRENT OTHER NON FINANCIAL LIABILITIES - CURRENT

OTHER PROVISIONS - NON CURRENT LIABILITIES BY DEFERRED TAX

MINORITY INTEREST TOTAL EQUITY AND LIABILITIES Source: AquaChile

19


CONSOLIDATED INCOME STATEMENT

CONSOLIDATED INCOME STATEMENT 2012 figures in thus$

2013

2014

1q12

2q12

qt12

4q12

1q13

2q13

3q13

4q13

1q14

2q14

157,855

99,839

95,743

56,101

151,563

192,532

191,393

202,387

225,791

171,737

-11%

-126,938

-92,874

-100,839

-67,443

-164,948

-195,922

-184,697

-175,286

-178,639 -147,646

-25%

30,917

6,966

-5,096

-11,342

-13,385

-3,389

6,695

27,102

47,152

24,091

-

OTHER COST AND OPERATING EXPENSES (2)

-6,048

-6,674

-6,597

-6,415

-7,853

-8,497

-8,261

-7,912

-8,022

-9,061

7%

EBITDA PRE FV ADJ.

24,870

292

-11,693

-17,757

-21,238

-11,886

-1,566

19,190

39,130

15,030

-

SALES OPERATIONAL COST (1) OPERATIONAL MARGIN

DEPRECIATION & AMORTIZATION EBIT PRE FV ADJ. NET REVENUES FROM BIOLOGICAL ASSETS (3)

∆ tot

-4,811

-3,927

-3,597

-4,066

-5,927

-7,875

-6,384

-7,287

-8,140

-7,122

-10%

20,060

-3,635

-15,290

-21,823

-27,166

-19,761

-7,950

11,902

30,990

7,908

-

-22,899

-10,582

-7,037

-3,774

25,540

-10,810

8,246

24,716

-15,572

-12,486

16%

EBIT POST FV ADJ.

-2,840

-14,217

-22,327

-25,597

-1,625

-30,571

296

36,619

15,418

-4,578

-85%

FINANCIAL EXPENSES

-2,050

-1,949

-2,247

-2,243

-2,065

-2,324

-2,201

-2,679

-2,328

-2,259

-3%

1,208

-132

-99

1,568

210

121

96

162

134

195

62%

FINANCIAL INCOME OTHER NON OPERATING ITEMS (4)

-582

755

-11

2,756

-226

-4,832

214

-1,151

1,231

-86

-98%

INCOME TAXES

5,979

-1,906

14,684

6,091

-1,602

9,683

-335

-7,241

-3,310

1,684

-83%

NET INCOME

1,714

-17,448

-9,998

-17,424

-5,308

-27,924

-1,930

25,709

11,146

-5,045

-82%

1 “Cost of sales” deducted “Adjustment from depreciation and amortization expenses” 2 “Distribution costs” plus “Administration expenses” 3 “Fair Value of biological assets harvested and sold” plus “Fair Value of biological assets for the year” (See Note 10 to the Financial Statements. Biological Assets) 4 “Other income, by function” plus “Other expenses, by function” plus “Exchange rate differences” plus “Results from adjustment units” Note: All the figures are obtained directly from the Income Statement and the note 16 (PP&E) from the company Financial Statements Source: AquaChile

20


HISTORICAL HARVESTS AND SMOLTS STOCKING

HISTORICAL HARVESTS 2011 wfe tons

2011

real

2012 1q12

2q12

real

real

2013

3q12

4q12

real

real

2012

real

2014

1q13

2q13

3q13

4q13

real

real

real

real

2013

1q14

2q14

real

2014/2013

real

real

∆ qoq

ATLANTIC SALMON

15,224

2,181

3,873

6,120

4,959

17,132

7,527

16,529

15,249

13,814

53,119

14,720

10,108

-39%

TROUT

26,458

10,367

7,661

7,424

7,652

33,104

11,876

5,298

5,780

5,186

28,139

11,073

5,784

9%

PACIFIC SALMON

25,578

13,801

0

648

20,124

34,574

9,407

0

12

11,575

20,994

11,122

0

-

TOTAL SALMONIDS

67,260

26,350

11,534

14,192

32,735

84,810

28,810

21,827

21,041

30,574

102,252

36,915

15,892

-27%

TILAPIA COSTA RICA & PANAMA

17,232

5,368

5,607

5,359

5,007

21,341

6,074

6,627

6,485

4,620

23,806

5,633

4,853

-27%

84,492

31,718

17,141

19,551

37,742

106,151

34,884

28,454

27,525

35,195

126,058

42,548

20,745

-27%

2011

1q12

2q12

ATLANTIC SALMON

10,647

5,668

TROUT

16,675

4,456

10,519

8,576

1,438

0

0

10,014

4,198

4,080

0

37,842

18,699

8,311

6,943

6,454

40,408

10,724

10,613

7,661

TOTAL SALMONIDS AND TILAPIA

Source: AquaChile

HISTORICAL SMOLTS STOCKING 2011 thousands smolts

PACIFIC SALMON TOTAL SALMONIDS

real

2012 real

2013

3q12

4q12

2012

2,392

4,174

3,665

15,899

4,486

4,481

2,770

2,789

14,495

2,040

real

real

real

real

1q13

real

2q13

3q13

4q13

2,534

5,511

4,706

17,237

8%

3,999

2,150

2,196

10,385

-28%

0

8,278

-17%

6,902

35,900

-11%

real

real

real

2013 real

∆ qoq

2013/2012

Source: AquaChile

21


NOTE ON FORWARD-LOOKING STATEMENTS

This report includes forward-looking statements. These may include words like “anticipates”, “estimates”, “expects”, “projects”, “intends”, “plans”, “believes” or other comparable expressions. Forward-looking statements do not represent past events, including statements on the beliefs and expectations of the company. These statements are based on current plans, estimates and projections, and therefore cannot be overrated. Forward-looking statements entail certain risks and uncertainties. The company notes that a significant number of factors could result in current results to differ materially from those contained in any forward-looking statement. These factors and uncertainties include in particular those described in the document that the company submitted to the Chilean Securities and Insurance Commission (SVS), section on Risk Factors. Forwardlooking statements are related only to the date when they are made and the company assumes no obligation to publicly update any such statements in the presence of new information, future events or otherwise. This document purports to deliver general information on Empresas AquaChile S.A. Under no circumstance does it constitute an exhaustive analysis of the financial, productive, commercial and health situation of the company, and therefore any consideration on the advisability of acquiring or selling securities of the company would require the interested party to conduct an independent analysis. In accordance with applicable standards, Empresas AquaChile S.A. has sent its financial statements and notes to the Securities and Insurance Commission, which are available for consultation and analysis on its webpage at www.svs.cl and also at www.aquachile.com.

22


Turn static files into dynamic content formats.

Create a flipbook
Issuu converts static files into: digital portfolios, online yearbooks, online catalogs, digital photo albums and more. Sign up and create your flipbook.