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
â&#x2C6;&#x2020;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
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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.
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